Trading OTC derivatives: new technology with familiar interface

1. Trading OTC derivatives: new technology with familiar interface Eugene Rasskazov March 14th 2012

2. CONTENTS Background Market data for pre-trade analysis and revaluation Trading OTC derivatives Post-trade STP 2

4. THOMSON REUTERS RESPONSE TO OTC DERIVATIVES TRADING REGULATIONS While working closely with legislators and regulators we defined the necessary changes to our Dealing service and have made them in preparation for the switch over, in particular: New Dealing is regulated SEF/MTF service – Thomson Reuters already has a licensed MTF in Europe; in the US, RTS LLC, which is licensed as a broker dealer under FINRA, will acquire the necessary SEF registration when appropriate Additional asset classes added to the existing offering – FX options, IRS, OIS Bilateral confirmation Hosted infrastructure providing links to CCPs (Central Clearing Counterparties) to clear trades links to TR (Trade Repository) / SDR (Swap Data Repository) to report trades storage for all trades and messages to meet compliance requirements. Thomson Reuters has worked closely with Legislators in both Washington and Brussels We have built firm relationships with legislators around the world and they understand our position within the Financial Markets and therefore are keen to work with us Due to our ongoing interaction with the legislators we are able to base our enhancements on real facts which enable us to be ahead of the game We will continue to enable you to trade with your trusted community on a secure network The first point is the most important. We are not looking to introduce new trading products, yes we are making enhancements and changes to the workflow, but fundamentally, they will still be using Dealing with the same community of users and contacts. By upgrading our existing services, we will provide a regulated trading platform to enable you to fulfil your regulatory obligations We have consulted and met with many customers to ensure that we design this upgrade in a way that not only ensures that we can provide a regulated trading platform, but that they can also use that platform to continue to trade non-cleared instruments, so no having to work out which service to use for which trade based on whether it is cleared or not, no swapping between applications. They can continue to use Dealing for non-cleared, but meet all of their regulatory obligations by using the service, once it has been upgraded. We will provide a new service, providing hosted links to the different venues, to enable you to outsource the reporting of trades to trade repositories and send trades to CCP for clearing But regulation does bring in new requirements, or at least make existing requirements/ workflows mandatory and as such we have focused on the Post Trade piece of the service to ensure that once the trade is completed, the business can implement the relevant services to enable electronic STP through the trade repositories and CCP’s. So you cost effectively get the systems and communication links you need from a single point of access to enable clearing via the relevant CCP, whilst reducing your processing errors and increasing overall efficiencies So we’ve not only focused on how to meet regulatory requirements, but by focusing on the overall workflow, we’ve ensured that end to end we’re enhancing the service thus improving efficiency through reduced errors and cost effectiveness of the services we provideThomson Reuters has worked closely with Legislators in both Washington and Brussels We have built firm relationships with legislators around the world and they understand our position within the Financial Markets and therefore are keen to work with us Due to our ongoing interaction with the legislators we are able to base our enhancements on real facts which enable us to be ahead of the game We will continue to enable you to trade with your trusted community on a secure network The first point is the most important. We are not looking to introduce new trading products, yes we are making enhancements and changes to the workflow, but fundamentally, they will still be using Dealing with the same community of users and contacts. By upgrading our existing services, we will provide a regulated trading platform to enable you to fulfil your regulatory obligations We have consulted and met with many customers to ensure that we design this upgrade in a way that not only ensures that we can provide a regulated trading platform, but that they can also use that platform to continue to trade non-cleared instruments, so no having to work out which service to use for which trade based on whether it is cleared or not, no swapping between applications. They can continue to use Dealing for non-cleared, but meet all of their regulatory obligations by using the service, once it has been upgraded. We will provide a new service, providing hosted links to the different venues, to enable you to outsource the reporting of trades to trade repositories and send trades to CCP for clearing But regulation does bring in new requirements, or at least make existing requirements/ workflows mandatory and as such we have focused on the Post Trade piece of the service to ensure that once the trade is completed, the business can implement the relevant services to enable electronic STP through the trade repositories and CCP’s. So you cost effectively get the systems and communication links you need from a single point of access to enable clearing via the relevant CCP, whilst reducing your processing errors and increasing overall efficiencies So we’ve not only focused on how to meet regulatory requirements, but by focusing on the overall workflow, we’ve ensured that end to end we’re enhancing the service thus improving efficiency through reduced errors and cost effectiveness of the services we provide

5. I ll talk with focus on Russia and CIS countries.I ll talk with focus on Russia and CIS countries.

6. Moscow Money Market Offered Rates (MOSPRIME) ------------------------------------------------------------- National Foreign Exchange Association fixing of Money Market exchange rates for ON-6M tenors are based upon the rates supplied by 10 major Moscow banks and is an independent market indicator. Reuters manages the technical part of the process in behalf of NFEA, collecting the rates from the contributed pages, applying quality control and calculating the fixing values. An individual MOSPRIME Contributor Bank should send the indicative rate to its MOSPRIME page prior to 11:45 MT. At 11:46 MT the rates are ranked by order and averaged arithmetically disregarding the highest and the lowest rates. In case less than 4 banks provide the quotes, MOSPRIME is averaged on the existing rates. Reuters publishes calculation basis and the results on page <MOSPRIME2>. Manifest errors can be corrected over the next 45 minutes by phoning a person in charge on Reuters site. The rate is calculated every business day. It is published at 12:30 MT on page <MOSPRIME1>, <MOSPRIME=> and NFEA's website http://www.nva.ru Time period: TOM Quotation basis: Actual/Actual Fixing basis: the same day Decimal places: 2 Moscow Money Market Offered Rates (MOSPRIME) ------------------------------------------------------------- National Foreign Exchange Association fixing of Money Market exchange rates for ON-6M tenors are based upon the rates supplied by 10 major Moscow banks and is an independent market indicator. Reuters manages the technical part of the process in behalf of NFEA, collecting the rates from the contributed pages, applying quality control and calculating the fixing values. An individual MOSPRIME Contributor Bank should send the indicative rate to its MOSPRIME page prior to 11:45 MT. At 11:46 MT the rates are ranked by order and averaged arithmetically disregarding the highest and the lowest rates. In case less than 4 banks provide the quotes, MOSPRIME is averaged on the existing rates. Reuters publishes calculation basis and the results on page <MOSPRIME2>. Manifest errors can be corrected over the next 45 minutes by phoning a person in charge on Reuters site. The rate is calculated every business day. It is published at 12:30 MT on page <MOSPRIME1>, <MOSPRIME=> and NFEA's website http://www.nva.ru Time period: TOM Quotation basis: Actual/Actual Fixing basis: the same day Decimal places: 2

7. NFEA FX SWAP RATE ----------------------------------------------------------- National Foreign Exchange Association fixing of USD/RUB and EUR/RUB swap rates for 1W-5Y tenors are based upon the rates supplied by major 14 Moscow banks and is an independent market indicator. Thomson Reuters manages the technical part of the process in behalf of NFEA, collecting the rates from the participants' pages, applying quality control, calculating the fixing value, outright and implied yield for each tenor. An individual FX SWAP Contributor Bank should send the indicative rate to its page prior to 15:45 MT. At 15:46 MT the rates are ranked by order and averaged arithmetically by disregarding 2 of the highest and the lowest quotes. In case 5 or less quotes are provided, FX SWAP is averaged on the existing rates. Manifest errors can be corrected over the next 45 minutes by phoning a person in charge in Thomson Reuters. over the next 30 minutes. The rate is calculated every business day and is published at 16:30 MT on <NFEAFIX1>, <RUBSFIX=> and NFEA's website http://www.nva.ru Time period: TOM Quotation basis: Actual/Actual Fixing basis: the same day Scaling factor: 4 NFEA FX SWAP RATE ----------------------------------------------------------- National Foreign Exchange Association fixing of USD/RUB and EUR/RUB swap rates for 1W-5Y tenors are based upon the rates supplied by major 14 Moscow banks and is an independent market indicator. Thomson Reuters manages the technical part of the process in behalf of NFEA, collecting the rates from the participants' pages, applying quality control, calculating the fixing value, outright and implied yield for each tenor. An individual FX SWAP Contributor Bank should send the indicative rate to its page prior to 15:45 MT. At 15:46 MT the rates are ranked by order and averaged arithmetically by disregarding 2 of the highest and the lowest quotes. In case 5 or less quotes are provided, FX SWAP is averaged on the existing rates. Manifest errors can be corrected over the next 45 minutes by phoning a person in charge in Thomson Reuters. over the next 30 minutes. The rate is calculated every business day and is published at 16:30 MT on <NFEAFIX1>, <RUBSFIX=> and NFEA's website http://www.nva.ru Time period: TOM Quotation basis: Actual/Actual Fixing basis: the same day Scaling factor: 4

8. NFEA RUONIA OIS FIXING (ROISfix) ---------------------------------------------------------- National Foreign Exchange Association RUONIA overnight index swap fixing rates for 1W-6M tenors are based upon the rates supplied by 9 major banks and is an independent market indicator. Thomson Reuters manages the technical side of the process in behalf of NFEA, collecting the rates from the contributed pages, applying quality control and calculating the fixing values. An individual ROISfix Contributor Bank should send the indicative rate to its page prior to 11:45 MSK. At 11:46 MSK the rates are ranked by order and averaged arithmetically disregarding the highest and the lowest rates. In case less than 6 banks provide the quotes, ROISfix is averaged on the existing rates. TR publishes calculation basis and the results on page <ROISFIX2>. Manifest errors can be corrected over the next 45 minutes by phoning a person in charge on TR site. The rate is calculated every business day. It is published at 12:30 MSK on page <ROISFIX1>, <RUBOISFIX=> and NFEA's website http://www.nfea.ru Time period: Quotation basis: Actual/Actual Fixing basis: Decimal places: 2 NFEA RUONIA OIS FIXING (ROISfix) ---------------------------------------------------------- National Foreign Exchange Association RUONIA overnight index swap fixing rates for 1W-6M tenors are based upon the rates supplied by 9 major banks and is an independent market indicator. Thomson Reuters manages the technical side of the process in behalf of NFEA, collecting the rates from the contributed pages, applying quality control and calculating the fixing values. An individual ROISfix Contributor Bank should send the indicative rate to its page prior to 11:45 MSK. At 11:46 MSK the rates are ranked by order and averaged arithmetically disregarding the highest and the lowest rates. In case less than 6 banks provide the quotes, ROISfix is averaged on the existing rates. TR publishes calculation basis and the results on page <ROISFIX2>. Manifest errors can be corrected over the next 45 minutes by phoning a person in charge on TR site. The rate is calculated every business day. It is published at 12:30 MSK on page <ROISFIX1>, <RUBOISFIX=> and NFEA's website http://www.nfea.ru Time period: Quotation basis: Actual/Actual Fixing basis: Decimal places: 2

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17. SpotMatching has also got wider functionality starting from Depth of book where you can see cumulative quantities on bid and offer with proper VWAP’ed prices, improved screen flexibility.SpotMatching has also got wider functionality starting from Depth of book where you can see cumulative quantities on bid and offer with proper VWAP’ed prices, improved screen flexibility.

18. REUTERS SPOT MATCHING IN RUSSIA & CIS

19. POST-TRADE STP 19 Similarly to sending today a formatted record on spot or overnight deposit deal through Ticket Output Feed to Deal Tracker or other system new types of deals will be sent. New version of Deal Tracker already works with all these new deal types.Similarly to sending today a formatted record on spot or overnight deposit deal through Ticket Output Feed to Deal Tracker or other system new types of deals will be sent. New version of Deal Tracker already works with all these new deal types.

20. OTC DERIVATIVES MARKET IN RUSSIA & CIS