sharing a look into our future - abn amro clearing sharing a look into our future upgrading our...

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Sharing a Look into our FutureUpgrading our securities services

ConfidentialRelationship ManagementNovember 2011

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Table of contents

Introduction. 3

Upcoming Changes:

1 Legal Aspects 4

2 Account Structure 6

3 Settlements 7

4 Corporate Actions and related services 8

5 Reporting & Instructing 11

6 Fees 17

7 Additional Services 19

Timing 24

Conclusion 25

Annex I – Supported SWIFT messages 26

Contact details 27

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Introduction

Business rationale behind upcoming changes.

ABN AMRO Clearing (AAC) is a dedicated business unit within the ABN AMRO group, with a clear focus on delivering quality services in securities and derivatives processing for its professional clients. To realise our strategic objectives we have decided to invest in a new, high-standard platform for securities safekeeping, settlements and cash movements processing.

Clients have previously made comments on the strict operational split between our clearing and custody services. Both services are currently operated on different platforms/systems and via separate legal entities. With the introduction of our new operating platform for clearing, custody and banking services our service offering will be more integrated.

In line with our current market position, and subsequent growth in volumes, we plan to increase both the processing capacity as well as to enhance the Straight-Through-Processing (STP) capabilities. The new system platform will allow an increase in overall quality of our services and will at the same time reduce the through-put time significantly within our operational units.

Our new operating system, named BaNCS, will have advantages for all our clients: substantial service improvement on corporate actions processing, cash management services, instruction transmission and processing as well as account reporting via ‘GRIP’, being our reporting and instruction tool which will replace both i-Custody and Money Manager for Windows.

This project will of course have an impact on the way we operate and communicate with our respected clients. Please be advised that our top priority is with our clients and as such we will make every effort to ensure that the migration will be smoothly and with a limited impact on your day-to-day operations.

This presentation will provide an insight in the anticipated changes, impact and timing related to the implementation of our new operating system.

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1. Legal Aspects

ABN AMRO Bank N.V. (AAB) – is the legal entity for the provision of custody and auxiliary services.

ABN AMRO Global Custody Services N.V. and ABN AMRO Effectenbewaarbedrijf II N.V. are the safekeeping vehicles with respect to the custody activities.

ABN AMRO Clearing Bank N.V. (AACB) is a 100% subsidiary of ABN AMRO Bank N.V. and provides clearing services to professional market participants and uses ABN AMRO Clearing Safekeeping N.V. as its bankruptcy remote safekeeping vehicle.

Current Situation

ABN AMRO Clearing Bank N.V. ABN AMRO Bank N.V.

Clearing Services Custody Services

100% subsidiary

ABN AMRO Global Custody Services N.V. ABN AMRO Effectenbewaarbedrijf II N.V.

Operational unit Nominees

ABN AMRO Clearing Safekeeping N.V.

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1. Legal Aspects

New Situation

On 11 November a legal merger took place between ABN AMRO Global Custody Services N.V. (AAGCS) and ABN AMRO Clearing Safekeeping N.V. (AACS). AACS is the disappearing company and AAGCS is the acquiring company due to the fact that AAGCS already holds accounts with a wide range of sub-custodians. All AACS' rights and liabilities have been transferred by operation of law to AAGCS.

We anticipate the change in operations by Q3 2012 and AAB will furthermore transfer the custody and banking services to its 100%subsidiary ABN AMRO Clearing Bank NV (“AACB”).

AACB is regulated by the Netherlands Authority for Financial Markets (AFM) and the Dutch Central Bank (the “Supervisory Authorities”).

We will transfer the existing contracts with our clients trough novation from AAB to AACB

ABN AMRO Clearing Bank N.V.

Clearing Services Custody Services

ABN AMRO Global Custody Services N.V.

ABN AMRO Bank N.V.100% subsidiary

What we require you to do:

□ Update your records for the legal entity change of your service provider

□ Sign and return novationletter

What we will do:

□ Provide documentation to govern the novation of your existing legal contracts with AAB to AACB

403 Declaration

ABN AMRO Group N.V. issued a 403 declaration to support ABN AMRO Clearing Bank N.V ’s contractual obligations

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2. Account Structure

ABN AMRO Clearing will maintain the account structure and account numbers to smoothen the transfer as much as possible. Clients can have an account, holding both securities and cash.

The cash accounts are multi-currency accounts, meaning that all various currencies are known under one account number for the same legal entity.

Accounts are based on the 024.xx.xxxxx format and can be used for (external) payments using IBAN/BIC (Equens enabled).


Discuss the account structure with your Relationship Manager

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3. Settlements

Market Practice as reference.

ABN AMRO Clearing will follow the standard market practice, in line with the so-called Standard Markets Practice Group (SMPG). The changes to the current service offering are limited, as listed below:

Settlement Instructions:

− Format Market practice is key.

− Tool Instructions can be sent either via SWIFT, MQ; SFTP, ETI or GRIP (online web application)

− Processing No major changes, we will continue to process your instructions in real-time, however:

- No automatic reinstruction of failed settlements (National Bank of Belgium)

- Additional status information: not supported in first phase (repair reason and status & reason details)

- Change in format parent-child trades (“block trades”)

- REPO trades: two separate instructions


□ Make sure that your SWIFT instructions are formatted in accordance with the SMPG-standard

□ Issue separate instructions for first and second leg REPO-transactions

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4. Corporate Actions and related services

4.1 Corporate Actions processing on CSD/Custodian level.

We currently process CA events based on the main place of safekeeping of that particular security. Potential changes in processing, deadlines or level of information from other places of safekeeping are not taken into account in the current modus operandi.

Current Situation.

CREST Euroclear (NL)

HSBC

10,000 unitsRoyal Dutch

GB00B03MLX29

ABN AMRO Bank N.V.


GB00B03MLX29

Client

1 SWIFT MT564 detailing 2 holdings (50.000 units NL and 10.000 units UK) But with NL Event details (like deadline and value date).

Example for holdings in Royal Dutch

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4.1 Corporate Actions processing on CSD/Custodian level.

In BaNCS all CA processing is done on the level of “depot event”. So, for each Custodian where eligible position is deposited a separate event is created on which actual processing takes place. Consequences for clients are:

You will receive an announcement for each depot-event. Details applicable like deadlines can differ and depend on Custodian of the eligible position of the Client. Specific details in the announcements per Custodian will be mentioned for each such Custodian.

For voluntary events, you will have to instruct per depot- event mentioning the related so called CORP reference of that depot-event

New Situation.

Example for holdings in Royal Dutch.

CREST Euroclear (NL)

HSBC


GB00B03MLX29



GB00B03MLX29

Client

SWIFT MT564 detailing holdings of 10.000 units UK with UK event details (like deadline and value date).

SWIFT MT564 detailing holdings of 50.000 units NLwith NL event details (like deadline and value date).

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4.2 Changes in our way of processing CA events.In order to enhance our STP-rate, efficiency and subsequently our service level, certain rules will be observed more strictly. We wish to outline the following points:

Client response deadline. The deadlines will be mentioned in the announcement to our clients per different place of holding and reminders will be sent at pre-defined moments during the CA-lifecycle. Advantage will be improved instruction deadlines, as we will apply separate deadlines per depot-event.

Actual value date will be used as provided upon receipt of the MT566. This means that the payment is executed only after receipt of the MT566, even if this is later than the original payment date of the respective event. This is a change with the current situation, where in this case the original pay date of the event is currently being used as the applicable value date.

BaNCS will handle Corporate Actions using the “Golden Copy” principle. This means that CA info from CSDs, Custodians and Data Vendors will be matched to ensure the most reliable CA info messages; a true added value of the new system.


□ Check for possibly required system updates to process upcoming changes in CA announcement and SWIFT format

□ Issue your CA instructions per separate depot event

□ Check and align split holdings in cross border securities

4.3 Communication related to Corporate Action processing. There will be some changes in the format of outgoing messages, both SWIFT and e-mail. More detailed information on the upcoming

changes to the format will be shared at a later stage.

AACB will send the default action in each MT564 message. A standing instruction is no longer possible. Any remaining uninstructed balance will be processed following the “event default”, and no longer your standing instruction.

With voluntary events where instructions were sent on subaccount level each separate MT565 will be confirmed by MT567 message but no MT566 will be sent per instruction on sub account level, but only per option, i.e. per choice.

No Longer MT566 for tax reclaim, but through MT940.

Proxy Voting will not be handled by AACB in BaNCS, so no MT567 proxy notifications will be sent

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5. Reporting and Instructing

5.1 Online Tool “GRIP”

Global Reporting & Integrated Portal (“GRIP”) will replace the current online product suite named I-Custody and Money Manager.

GRIP has the following functionalities:

− Corporate action instructing and query tools

− Settlement instructing functionality and query tools

− Transaction movement and position screens

− Payment module and cash position screens

Access to GRIP

− The existing Verisign certificate will give access to GRIP.

− To ensure optimal protection, a new token authentication will be introduced for entering instructions.

− Different user profiles (e.g. payments only, view only, validation level) are possible on clients request

− ABN AMRO Clearing will create and manage user-id’s for efficient processing of your demands.

− Access separate URL or via ABN AMRO Clearing main portal

− GRIP is open 24/7 for inquiries.

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Start screen

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5.1 Online tool “GRIP”

Generic functionality

− Client can define own starting page within GRIP for fast access next logon

− Templates can be created for recurrent settlement or corporate action instructions.

− File load functionality available for settlements and corporate action instructions in case of large number of instructions

− Only the cash results of derivative movements are visible in GRIP as one cash line per day. Those cash movements will be recognizable (e.g. cost of derivatives, IRS or FX)

Instructions

− Four eye principle at client location possible, different levels of authorisation and validation

− Increased security level for validating instructions, based on token / smart card.

− Grouped validation of instructions is possible.

Corporate Actions

− Colors are used to indicate the deadline of a client instruction.

− All Corporate Action types are supported, which is a huge advantage compared to the current i-Custody CA tools.

− Manual instructions no longer needed.

Payments

− Payments from own IBAN/Equens account(s) to another IBAN or BIC-code

− Address book available

− Possible to register recurrent payments


Identify and inform us with the users and their respective level of authorisation (user profiles)

What we will do:

□ Create required user profiles

□ Provide support and/or training

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Corporate Actions Instructions Screen

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5.2 Generic Remarks.

SWIFT

− ABN AMRO Clearing will have its own SWIFT BIC (ABNCNL2A) code as from Q2 2012. All clients migrated to the new platform will have to use this new SWIFT BIC (ABNCNL2A) as from Q3 2012.

− The complete set of messages which we support is attached in annex I

− SWIFT messages are also available via MQ (Messaging Queue) and FTP (File Transfer Protocol)

− E-mail reporting will be available (for Corporate Actions only).

− Final SWIFT messaging layout will be presented to our clients in detail. Some small changes in SWIFT format and content might occur.

Interest

− Monthly interest statements are reported out of the clearing system, including the day-to-day accrued interest

Deposits and Loans

− Clients trading deposits are reported out of the clearing system. A separate report bears all deposit details.


□ Adjust your records to support our new SWIFT BIC-code

□ Check correct SWIFT-format

□ SWIFT BIC-code keys need to be exchanged

May – August 2012 is set for dress rehearsals

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Settlement Search Screen

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6. Fees

6.1 General.

Each client of AAB will receive a new fee schedule with ABN AMRO Clearing Bank N.V., to reflect the processing changes following the migration to BaNCS.

Fees will be generated from 2 different systems:

− Execution and Clearing fees will be calculated and reported from our clearing system

− Settlement, Safekeeping, CA and other billable items will be calculated and reported by BaNCS.

Fees are directly debited except for the safekeeping fees. Safekeeping fee is debited in the 3rd week of next month. All fees will be booked in the agreed currency, which can be different than euro. On client's request all charges can be debited against a client's dedicated charges account.

A monthly report is available providing details of all fees related to settlement, safekeeping and CA, rendered last month. This report shows all fees as stated in your fee agreement. This report will be sent by e-mail. As far as services rendered are VAT liable, a monthly invoice will be issued too. The execution and clearing related fees will be charged on a daily basis into your account per currency. This booking will be marked as “transaction fee”. A detailed breakdown will be available in the clearing output.


□ Review and validate new fee schedule

□ Advise us in case separate charges accounts are required

□ Advise e-mail address to be used for monthly fee report

What we will do:

□ Provide a new fee schedule

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6. Fees

6.2 Specific Fee Items. Instruction fees

− Breakdown in internal fee, external fee and additional costs (e.g. manual instructions, specific third party costs)− All-inclusive fee still possible, where specific additional costs will be added (e.g. non STP processing).− More detailed pricing possible: different instruction fees per custodian or CSD and per transaction type.− All instructions will categorize as an ‘event’, potentially generating a settlement fee (example cancel and repair)

Safekeeping fees− Safekeeping fees based on average positions per instrument over the month instead of month-end positions.− The valuation of these average positions is based upon:

− The nominal value for fixed income instruments − The market value on the 5th business day before the end of the month for equities, funds (Net Asset Value), warrants and other

equity-linked instruments (e.g. speeders, turbo and strips).− If none of the previously mentioned prices are available, the calculation will be based on either the last market price or the

nominal value (non-listed securities), or the issuing price (warrants).− Floor tariffs, if any, as applied in specific markets / CSDs will be copied.

Cash Service Fees will be based on:− Direction: Incoming vs. outgoing transfers− Currency: EUR vs. Non-EUR transfer− Beneficiary: European bank vs non-European Bank− Process: STP or non-STP instruction− Process (2): RTGS tag or not.

Interest− Interest on an account is going to be calculated according to the Interest base type it belongs to. Currently three types are available.− Interest will be booked on a monthly basis, with a preliminary booking in the beginning of the month and a final booking at month

end.

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7. Additional Services

7.1 Clearing Services. Gain access to global clearing services via your custody account. With this project, our operating platform for clearing and custody services will be further integrated, enabling our clients to benefit by combining our products and services more easily than under the current set-up.

Current Situation.

Custody clients that want to benefit from our global clearing services must contract with AACB.

Cleared positions are held with AACB, not with AAB. However, AAB is the client’s custodian.

Complex legal and operational set-up to benefit from both services.

This system will be replaced.

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$

$

$

Exchange

CCP

CSD

Custody system

Clearing system

Client ATrader 2

Client ATrader 1

Client BTrader 1

Client BTrader 2

Trades

Account allocation

Client ANetted

Match Instruction

Settlementconfirmation

Netting

Client allocation

Trades

Client ANetted

Match instruction

Settlementconfirmation

Matchinstruction

Trades


New Situation

New “custody system, street side system

New operational principle, individual accounts per client

Advantages for current AAB clients:

Access to multi-product offering

Exchange listed instruments

OTC derivatives (e.g. IRS)

Commodities

Energy

FX clearing

3 time zones coverage

US

Asia Pacific

Europe

One Stop Shop – clearing and custody services from 1 provider, being AAC.

One contract, one account.

Select the markets and services you want.

7.1 Clearing Services. Gain access to global clearing services via your custody account.

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We are a leading independent global clearing services provider,

processing over 10 million trades per day,

covering 85 of the world’s leading exchanges

across Europe, the Americas and Asia Pacific

7.1 Clearing Services. Gain access to global clearing services via your custody account.

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7.2 Cash Management and Payment Services

Accounts

− Current clients’ accounts will be migrated from the current platform to the new platform.

− Accounts will remain multi-currency.

− No changes to the account numbers, however; current IBAN numbers will change following the change of the BIC-code.

− A sweeping facility to another account and/or currency including automatic FX transaction is available.

Payments

− Support of all relevant SWIFT message types, enabling Straight Through Processing.

− Payment orders can be instructed by use of either SWIFT or GRIP (AACB’s online tool that will replace Money Manager for Windows).

− BaNCS payments system is reachable for Equens, EBA, TARGET and SEPA.

− No changes in cut-off times for cash payments and receipts.

− Value dating of payments remains as-is.

− All cash transactions, related reporting and query handling will be processed via ABN AMRO Clearing.

− Standing orders are supported.

− Direct Debits, Bank cards and other retail banking payment services like Clieop03 and Ideal are not supported.

− Payment fee-structure will in some cases be simplified; accrued fee amounts will be charged on a monthly basis.


□ Adjust your records to support our new BIC Code and to use your new IBAN Numbers

□ Provide your counterparts with the new standard payment instructions

□ Arrange access and authentication for users of our new reporting and instruction tool “GRIP”

□ Use GRIP instead of MMfW(Money Manager for Windows) for instructing payments

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7.2 Cash Management and Payment Services

Term Loans & Deposits and FX deals (FX/MM)

− Existing FX/MM contracts with ABN AMRO Bank N.V. can be migrated

− New MM deals can be done with ABN AMRO Clearing

− New FX deals can be done with ABN AMRO Clearing, ABN AMRO Bank or a third party.

− A sweeping facility to another account and/or currency including automatic FX transaction is available. This sweep can be activated per transaction or at a certain time.

Interest on current accounts

− All major benchmarks for base rates are supported; in some cases current base interest rate agreements will be simplified.

− Interest calculation available, but only per month (quarterly option no longer supported).

− Notional Pooling is available.

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Timing – Custody Clients

Q4 2011Q3 2011 Q1 2012 Q2 2012 Q3 2012Q2 2011

• 2011 June - Strategy update letterLatest developments in the ABN AMRO Clearing organization.

• 2011 August - Follow up Strategy letterIntroduction of IT system enhancement plans

• November 2011- Strategy letter 3Presentation IT enhancement program on the current service offering

• November - December 2011 - Visit / Conference CallOur relationship management will be happy to answer your questions.

• May-August - Dress rehearsals

• May - Strategy letter 6 Migration plan will be confirmed to you.

• As of September - Migration Period

Check online: www.abnamroclearing.com/bancs

• January - Strategy letter 4Interface specifications will be send to you.

• March - Strategy letter 5You will receive more information on the planning

of the dress rehearsals

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Conclusion

Legal ABN AMRO Clearing Bank N.V. will provide custody services instead of ABN AMRO Bank N.V. Existing custody contracts will be novated from ABN AMRO Bank N.V. to ABN AMRO Clearing

Bank N.V. Streamline existing set-up with safekeeping vehicles reflecting legal changes in the Netherlands

Account Structure Existing account number will remain operational Securities and Cash accounts, Multi-currency

Settlements Focus is on standard market practice New online instruction tool “GRIP” Only actual no contractual service offered

Corporate Actions CA Event set-up per depot / holding; instructions per event per holding. Improved cut-off times. Only actual no contractual service offered

Fees Calculation of safekeeping fees based on “average monthly value” Change in fee structure, event driven fees with in detail overview.

Reporting & Instructions New BIC for ABN AMRO Clearing Bank N.V. (as from Q2 2012). New online reporting and instructing tool “GRIP”

Direct access to additional servicesABN AMRO Clearing Bank N.V.

Cash ServicesCash Services

Clearing

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Annex I

Supported SWIFT message types

MT description To Client From ClientRequest for transfer 101Single customer credit transfer 103Single customer credit transfer 103+Request to cancel payment 192Queries (free format) 195Answers (free format) 196 196Free format message 199 199 (mailbox)General financial institution transfer 202Notice to receive (streetside) 210Cancellation of a message (e.g. MT202) 292 292Queries (free format) 295 295Answers (free format) 296 296Free format message 299 299 (mailbox)Intra-position advice 508Statement of holdings 535Statement of transactions 536Statement of pending transactions 537Receive free of payment settlement instruction 540Receive against payment settlement instruction 541Deliver free of payment settlement instruction 542Delivery against payment settlement instruction 543

MT description To Client From ClientReceive free confirmation 544Receive against payment confirmation 545Deliver free confirmation 546Delivery against payment confirmation 547

Settlement status and processing advice 548CA notification consolidated 564CA instruction 565CA confirmation 566CA status 567CA narritive 568Settlement allegement 578Free format 599 599 (mailbox)Confirmation of debit (pre advice) 900Confirmation of credit (pre advice) 910Customer statement message 940Statement message 950

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Adriaan BakkerHead of Relationship Management

ABN AMRO Clearing Bank N.V.Gustav Mahlerlaan, Amsterdam, The NetherlandsP.O.Box 283, HQ0090 1000 EA AmsterdamTelephone +31 (0)20 343 50 88Mobile +31 (0) 6 512 716 18E-mail [email protected]

This presentation was prepared by ABN AMRO Clearing for information purposes only. This presentation does not constitute an offer or solicitation for the sale or purchase of any service, security or other financial instrument in any jurisdiction. Although reasonable care has been taken to ensure that the information contained herein is complete and not misleading, no representation is made as to its accuracy, completeness or fairness, no reliance should be placed on it and no liability is accepted for any direct or consequential loss howsoever arising from reliance on it. The information in this presentation is confidential and is intended only for the party to whom it is transmitted. This information package may not be reproduced or used, in whole or in part, for any other purpose.

Frank de GraafSenior Relationship Manager

ABN AMRO Clearing Bank N.V.Gustav Mahlerlaan 10, Amsterdam, The NetherlandsP.O.Box 283, HQ0090, 1000 EA AmsterdamTelephone +31 (0)20 343 50 90Mobile +31 (0) 6 534 063 75E-mail [email protected]

Contact details

Marc OnselaereSenior Relationship Manager

ABN AMRO Clearing Bank N.V.Gustav Mahlerlaan, Amsterdam, The NetherlandsP.O.Box 283, 1000 EA, HQ0090 AmsterdamTelephone +31 (0)20 343 51 01Mobile +31 (0) 6 536 577 28E-mail [email protected]

Nancy EversSenior Relationship Manager

ABN AMRO Clearing Bank N.V.Gustav Mahlerlaan 10, Amsterdam, The NetherlandsP.O.Box 283, 1000 EA HQ0090, AmsterdamTelephone +31 (0)20 343 5089Mobile +31 (0) 6 533 97 31E-mail [email protected]

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