innovation at acsda csds march 2011

Innovation at ACSDA CSDsMarch 2011

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1. DCV in figures

2. Innovation at DCV

3. In detail, Central Repository for Forward Contracts

1. The Derivatives Market in Chile Overview

2. Central Repository for Forward Contracts Background Current issues with existing operating

procedures Features of the new service Service model Phase 2 Conclusions

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DCV in figures

Chile’s national CSD with 18 years of experience in the market

171 participants

Shareholders:Pension Funds

27%Banks

27%Santiago Stock Exchange

21%DTCC holding ILLC

10%Life Insurance Cos.

9%Electronic Exchange

5%Others

1%

US$ 250 billion under custody in local securities

Transactions registered in 2010: US$1,234 billion

Transactions registered in 2010: 1,6 million

Through DCV Registros (subsidiary) maintains Corporation’s shareholders registries

Role of NNA, issuing ISINs for Chilean securities

International custody services for local participants investing abroad

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Innovation at DCV

International marketMILASome of the initiatives related with the Relationship Agreement signed with DTCC

Fund/SERV USA and eligible mutual funds quotas – pension fundsOMGEO – stockbrokers

Local marketLocal Mutual Funds quotas – pension fundsInvoices – pension fundsElectronic registration of pledges – banksOffering of new stocks – stockbrokersCentralized Registry of powers of attorney – stockbrokers and banksRepo transactions – banks and stockbrokersCentral Repository for Forward Contracts – Pension funds and banks

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The Derivatives Market in Chile

Overview:Active OTC derivatives market in Chile

Forwards (82%)Swaps (18%)

Currencies in Forwards ContractsCLP - US dollar (95%)Euro – US dollar (2%)US Dollar – Yen (2%)Others (1%)

Volumes in Forwards ContractsNotional amounts: US$ 1,5 billion (daily average) # of CLP – US dollar contracts: 70,000 annual basis

Potential new gross income2011 USD 175,0002012 USD 500,000

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Central Repository for Forward Contracts

Background:

The idea was originated from the need to provide a comprehensive and centralized solution for pension funds / banks regarding their forward contracts: subscription, registration and custody

This is an opportunity to generate a new source of funds for DCV

We worked together to define the scope, objectives and commitments

An agreement between Pension Funds and Banks took place in March 2010; this became the business reason for the project

The potential market also considers current institutional participants

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Current issues with existing operating procedures

Lack of standard procedures

Too many administrative procedures (Too much time-consuming paperwork)

Need to keep updated records of representatives authorized to sign the contracts

Receiving contracts with inaccurate data

Receiving signed contracts several days after the respective operations agreements

Involved many operational and financial risks

High operating costs

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Features of the new service

Electronic and centralized subscription, registration and custody

Official legal record

Digital certificate with an advanced electronic signature

Control over the representatives with power of attorney to sign

Control of expiration dates

On-line information (100% reliable)

Pension Fund Services: Daily reports to the Pension Funds Superintendence

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Phase 2:

Expanding to other types of Forwards contracts

Including Swaps

“Re-couponing” functionality on signed contracts

Payment instructions to banks

Supporting collateral management

Integration with the Exchanges

Registration of contracts between a participant and their customers

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Conclusions:

Service started on last March 15th

Smooth incorporation of new participants

Aims to build a modern, standard and competitive infrastructure to provide high efficiency and safety levels to the market

THANK YOU!

innovation at acsda csds march 2011

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