Global SMPG Meeting, Frankfurt 23 – 25 April 2013 ~ Updates ~

Global SMPG Meeting, Frankfurt 23 – 25 April 2013 Updates

Overview General session held on 23 Apr 2013 APAC Regional Director Election Position was up for re-election 2 applications received: Anthony Sim (Standards Chartered - SG) and Jonathan Rodda (State Street - HK) SMPG elected Anthony Sim as the new APAC Regional Director 3 Working Groups (WG): Settlement and Reconciliation (S & R), Corporate Action (CA) and Investment Funds (IF) Cross WGs discussion on MyStandards held on 24 Apr 2013 Sharing of issues encountered when creating MPs in MyStandards Agree on the level of granularity across the WGs MyStandards

Settlement and Reconciliation WG 1) IPO Global Market Practice Further updates to be included eg. Bonds, prefunding information, parties involved MT567 instead of MT564 for the notification of effective listing date? Consult with CA WG on the use of CA message in the IPO MP Multiple bid options and MAXF Anthony Sim will help to obtain inputs from APAC region Each NMPG representative is to add the IPO specifications for their respective market to this draft MP document and send to Cindy Foo for the identification of commonalities between the different markets 2) Depositary Receipts (DR) Global Market Practice Written by Korean market with input from the three major US depository banks (Citibank, JPM, Deutsche Bank) Further feedback received on the DR MP documents which will be accepted into the document and shared with the Group The description of the Deposit Agreement in the MP document will be simplified to make it more concise 3

Settlement and Reconciliation WG 2) Depositary Receipts (DR) Global Market Practice (cont’d) US representative raised the issue about the representation of Private Placement DR in a SWIFT message as the security identifier of a Private Placement contains special characters. A remark has been added to the sample message templates to indicate that ISIN is not available for Private Placement and CUSIP will be used instead. Overall, the Group is agreeable on the format of the DR Global MP document, the Main Activities descriptions, the Flow Diagrams and the Sample Message Templates. The MP document will be updated and recirculated to the Group for review 4

Settlement and Reconciliation WG 3) MT54x/MX cash amount qualifier usage matrix A Summary Matrix spreadsheet was reviewed by the WG This spreadsheet will be shared with all NMPGs which will provide their feedback to SWIFT Discussion about what qualifier to use for clearing fees in Malaysia. This has been further discussed at the Malaysia NMPG meeting. 4) Debit/Credit Usage 15022 vs 20022 – Clarification on N Sign Usage Purpose of that exercise was to clarify the Receipt and Delivery norm for the usage of qualifiers available for field 19A in sequence E3 as the usage rule in the SWIFT UHB is too vague: “Sign is used when the Amount is credited while the practice or the transaction type would normally imply that the Amount should be debited (or vice versa)”. Generally, a loss is represented with a negative sign which is a debit and vice versa for a credit. The WG reviewed each qualifier in the spreadsheet to confirm if implicit (implied) or explicit rule as a credit/debit item. All NMPGs are to validate the input in the spreadsheet 5

Settlement and Reconciliation WG 5) Financial Transaction tax (All) – Dedicated qualifier? TRAX is the right qualifier to use for Transaction Tax SMPG’s recommendation is the usage of TRAX qualifier for identifying all transaction taxes The WG voted to ensure consensus on the recommendation French MPs on FTT will be posted on the SMPG website for comments 6) Summary Matrix - field 95a DEAG/REAG (Usage of BIC vs Local Code) A Matrix spreadsheet was reviewed by the WG The updated matrix will be circulated for review by all NMPG representatives Additional markets which were not represented will be followed up by SWIFT 7) Field 97a A and Option E Option A Option :4!c//35x (Qualifier)(Account Number) Option E (Qualifier)(International Bank Account Number) :4!c//34x 6

Settlement and Reconciliation WG 7) Field 97a Option A and Option E (cont’d) With SEPA introduction in 2014, all cash account will have to be IBAN account but it will also be possible to use 97A to provide the IBAN. The WG was agreeable on the removal of option E Switzerland and Netherlands will jointly raise a CR for this 8) MT535 Business Case for discussion Business case raised by Standard Chartered Bank Request is to be able to provide the MT535 holdings statement per registry account that highlights holdings for each broker trading account MT 535 has not been built for such a granular trading level reporting SMPG’s recommendation is to populate the SUBBAL sequence with the 94F::SAFE//CUST/BIC and create an MCR for a new 94F:: BKBR qualifier for the broker trading account ID Anthony from SCB will raise the CR 7

Settlement and Reconciliation WG 9) Market Practices (Status) The Group updated the status of current MPs eg. Repo, Block Trades, Auto registration reporting, Sell Buy-Buy Sell Back, S & R Draft Portfolio Transfer Cust to Cust Communication, Partial Settlement, Tri-Party Repo MP, Securities Collateral MP The MPs will be completed by assigned WG members The Buy Sell Back MP has been approved by the WG and will be posted on the smpg website 10)Specifics from ISITC (International Securities Association For Institutional Trade Communication): There was discussion to convert the MT396 FX status MUG into a SMPG MP document. A proposed sub-group to be created within SMPG focusing on securities related payments/FX will discuss this document.

Settlement and Reconciliation WG 10) Specifics from ISITC (International Securities Association For Institutional Trade Communication) (cont’d): There was discussion on consolidation of bi-lateral and tri-party segregated collateral MP documents. The WG agreed to post the 3 documents of Tri Party Repo Collateral Management draft SMPG MP, Bi-lateral Security Collateral SMPG MP draft and this new Segregated Cash/Security Collateral MP create a 1 page overview of these different documents on SMPG website (see US NMPG website/Collateral Documents) A proposed sub-group to be created within SMPG focusing on securities related payments/FX will discuss on the MT304 Spot/Forward FX MP. There was discussion on the consolidation of MT202/210/103 and MX equivalents into 1 document instead of MT202/210/MX equivalent vs MT103 document. The draft document will be reviewed by SMPG/PMPG.

Settlement and Reconciliation WG 11) Translation Rules – SWIFT’s new proposed approach The objective of that presentation was to explain a new approach for the translation rules that SWIFT is proposing which is to translate the key fields and key scenarios only (80/20 rule). Less often used fields’ translation can be handled by individual projects through consultancy services (for a fee). There was no positive response from the Group towards this proposal Questions raised need to be checked back with the project manager in charge of this SWIFT initiative 12) AOB: Market Practices in the “T2S world” Repo/Reverse Repo Market Practice Matrix

Corporate Actions WG 1) SR2013 Maintenance WG Followup Items Fractional Entitlement - The fraction’s indemnification (in cash), which may be known at the CA payment date but processed after, will be announced in 2 messages by the issuer, the agent, the CSD or the account servicer. If fraction’s indemnification details is known at or before pay-date , the cash indemnification will be confirmed through the same MT566 payment. Hence, the usage of 1 or 2 MT566s are both equally valid. - The ISITC MP will be updated to document the differences regarding the use of CONB (Confirmed Balance), ELIG (Total Eligible for Corporate Action Balance) and AFFB (Affected Balances) in lottery events (DRAW) in the MT566. The Accumulation Event (ACCU) UK MP is almost ready and will be published soon DE NMPG has produced a Real Estate Property Income (REES) rate type code MP 2) Consent Events MP There is a need to revert back to Korea NMPG and clarify on the usage of either CHOS with CONY as default or VOLU with NOAC as default and finalise the CONS document 11

Corporate Actions WG 2) Consent Events MP (cont’d) There is a need to create SR2014 CRs for: - addition of new event BMET - creation of a new indicator for distinguishing between scenarios 1a (Change in Terms) and (Due & Payable) - Modification of the CONS definition as proposed in the document 1b 3) New CAMV code or Option code for disclosure / certification Ongoing discussions on the proposed solutions A grid will be created based on the discussions describing the different business scenarios, and the various possible solutions with pros and cons 4) Overelection/Oversubscription market practice review The WG discussed the two examples (PRIO & EXRI) and the different flows for oversubscription, particularly the use of QREC vs. QINS. A MP regarding the use of QINS and QREC will be drafted for NMPGs to provide feedback for implementation in 2014 12

Corporate Actions WG 5) Disclosure (DSCL) event - Clarify usage / market practice The WG reviewed the different scenario of disclosures defined in the Excel matrix which has been built All NMPGs will review the matrix and provide comments 6) Placement of Interest Shortfall (SHRT) ISITC would like to include SHRT together with RLOS (realised gain/loss), which is also in D today. The group will check with ISITC if they would like to create a CR to move SHRT and RLOS to E/E2. 7) Capital Increase offered to public The group’s decision is that it cannot be considered as a corporate action and therefore the SMPG does not support a CR for the creation of a new CAEV for this. 13

Corporate Actions WG 8) Do we need to keep Processing Status INFO (25D::PROC//INFO) SMPG’s decision is to keep PROC//INFO but update its definition. A CR will be created to add a new indicator to specify the type of INFO. 9) New Date Code when Ex-Date is not announced The WG discussed about how to communicate that the ex-date is not announced in a country The group agrees that the best possible solution is to track the support for Ex-Date in the different countries and to provide this information in the existing Record Date tracking table. 14

Corporate Actions WG 10) French Transaction Tax FR ATAX will be used in France to report the transaction tax amount The group recommends waiting for the European transaction tax to be clarified before making any final decisions. This should occur in June. The SMPG will create a sub group for Financial Transaction Tax with representatives from S&R, CA & IF for future discussions. 11) Harmonised local MP for processing of fictitious CAONs in Instruct SMPG is to recommend a global MP to follow the same ISITC guideline when the service provider’s option number cannot be supported. This will prevent markets from following different practices and will allow for adoption by institution. 15

Corporate Actions WG 12) Use of DEVI (Declared Dividend Rate) for Depositary Receipts SMPG’s decision is that DEVI will not to be used for DRs Reason: According to the usage rule in the standards reading “The Declared Rate DEVI may only be used if the dividend or interest declared by the issuer is actually paid in a different currency than the declared one.” 13) CAOP//PRUN Unknown Proceeds existing MP question Keep the current usage rule and MP for PRUN when possible, but recommend use of ADTX for the rare events when the issuer cannot even provide details of the possible movements or have many different alternatives 16