Industry Liaison

Elizabeth Menzies-Gabb

September 17, 2008

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VisionThe BDUG Industry Liaison is the conduit for communication

between our members and the industry

Discuss and find best practices and solutions to Industry challenges and concerns on issues affecting Custody Banks.

Share knowledge and information on Industry trends from and with our members

Change Advocate

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Role

Duties include:

Identify industry “hot items” and influence solutions through member participation

Coordinate / draft responses to white papers

Communicate regulatory changes

Participate in other industry working committees

Present “The Year in Review” at the BDUG annual meeting

Represent BDUG on Industry issues impacting Custody banks

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Current Initiative Class Actions

2007 Annual meeting generated the topic “Class Actions”

• Three major industry concerns identifiedo Closed accounts

o Standardized reporting

o Responsibility

• Created Class Actions focus groupo Appointed chair and co-chair

o Created Committee responsibilities

• Held three (3) focus group meetings YTDo Invited Claims administrator

o Over 28 member banks / 70 members

• Invited Class Actions speakers to the 2008 annual meeting

• Break Out session at Annual meeting to continue discussions

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Shift in Client Behavior

Challenging Year for the Financial Industry

Why ?

• Financial markets have tightened

o Market volatility

o Regulatory oversight

o Securities Quality and Servicing

o Increase in risk

o New products

o Unknown effects

Our clients are paying close attention to their Service Providers and closely scrutinizing our performance regarding their Securities handling.

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Industry Issues and Trends

Examples:

• Variable Rate Demand Obligation

• Mortgage Failures

• Auction Rates Failure

• Lack of standardization

• Demand for clear, concise and timely information

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Regulatory ChangesTax Code Section 302 & 304

Perceived Weakness

In Tax Code

Initial Impact

Regulatory Implementation

Regulatory Oversight

1) Certain CA events seem to give loophole for tax avoidance. Self Tenders and Consents

1) Industry confusion in interpretation

2) Process in-efficiencies

3) Foreign client complaints

1) Seek to capture NRA tax on self tenders and Consent payments to clients

1) IRS implemented new codes 302/304 to cover participation of foreign holders in self tenders and Consent offers

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Going Forward•Continue to build cooperative working relationships with other

industry groups

•Promote continuous flow of generative ideas

•Create workshops /committees to address issues and concerns

•Create partnerships and strategic links

•Communicate through round table discussions, conference calls and webinars

•Implement end results

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Your ContributionsTo be successful, to add value and to make a difference on

industry issues and concerns

Feedback

Changes Participation

DirectionSolution

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Contact information:

Liz Gabb

Telephone: 813-604-1149

Tampa, Florida

Email: elizabeth.m.menziesgabb@citi.com

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