Omgeo’s Role in the US and Global Settlement Landscapes

Marianne Brown, Omgeo

8 October, 2007

Agenda

•Who is Omgeo?

•An Institutional Trade

•Omgeo and the Institutional US Tradeflow

•Measuring Success

Who is Omgeo?• Leading provider of post-trade, pre-settlement automated services and products to Investment Managers (“IMs”), Broker-Dealers (“BDs”) and Custodians

• Global joint venture between DTCC and The Thomson Corporation’s post-trade, pre-settlement businesses.

• Established in May 2001

• Over 6,000 clients in 44 countries

• Process 1.5 million trades a day globally

• Manage settlement information on over 4.8M accounts

• 15 office locations globally

• 500+ Employees

Who is Omgeo?Governance

•DTCC and Thomson Financial are 50/50 joint owners

•As the regulated entity, DTCC maintains control over any matters related to US regulated aspects of Omgeo

•Omgeo’s industry controlled Board of Managers:• Has 7 of 11 voting Managers from industry (e.g., Merrill

Lynch, Morgan Stanley, Northern Trust Company)• Plays vital role in ongoing governance and industry oversight• Represents interests of clients in decisions about strategy

and operations

Who is Omgeo?Governance

•Board Of Managers: 1. Rick Macek, Chairman - DTCC representative

2. Michael Bodson, DTCC representative

3. Sharon Rowlands, TF representative

4. Jim Toffey, TF representative

5. Taylor Bodman, Brown Brothers Harriman

6. John Devine, Merrill Lynch

7. Marianne Doan, Northern Trust

8. Robert Gartland, Morgan Stanley

9. Robert Kaplan, State Street Corporation

10. JP Marson, BNP Paribas

11. Marcus Ruetimann, Schroeder Investment Trust

12. Marianne Brown, Omgeo (CEO) - Non-voting member

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Who is Omgeo?Where We Fit in the Institutional Trade Lifecycle

Pre-TradeOrder

ProcessingTrading Post-ExecutionPost-Execution

OperationsOperationsSettlement

Notice of ExecutionNotice of Execution

Trade AllocationTrade Allocation

Trade AcceptanceTrade Acceptance

Trade ConfirmationTrade Confirmation

Trade AffirmationTrade Affirmation

Bank NotificationBank Notification

Omgeo

Investment Manager

Broker/Dealer

Custodian

Depository (DTC)

Purchasing Investor Investment

Manager

Buy Order Buy Order

Buying Broker

Exchange or OTC

Pre

-Tra

de

Po

st-

Exe

cu

tio

nS

ettl

em

en

t

Omgeo OASYS

Omgeo ALERT

Omgeo TradeMatch and TradeSuite

Investment Manager sends trade block (total) and allocation details

Broker/Dealer accepts trade block and

allocation details

OASYS sends trade blocks and allocation details to TradeMatch 3 Broker sends data to

TradeSuite to create confirm 4

TradeMatch compares OASYS allocation to

TradeSuite confirmations

5Matched or matched

affirmed confirmations distributed to all parties

of a trade

For DTC-eligible securities, trade

information is sent from Omgeo to DTC;

settlement of DTC-eligible trades, including transfer

of cash and securities, occurs at DTC.

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Omgeo and the Institutional US Trade Flow

Notice of Execution

Notice of Execution

Measuring Success

•With the Omgeo TradeSuite/DTCC model:• Affirmed trades are 75 times less likely to be reclaimed than

unaffirmed trades• 91% of trades are settled by noon on T+2

– This allows a full day to reconcile trades, detect any errors, failures, etc.– Other methods often don’t reach DTCC until T+3 – less time rectify any

errors/trade fails– Failed trades cost institutions 250 USD per domestic trade and 535 USD

per cross-border trade • Trades are sent to DTCC in real-time: better business continuity,

greater efficiency, lower costs• Since Omgeo’s inception, volumes through TradeSuite have doubled,

but affirmation rates remain constant