Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

Custom House Ltd.

July 20, 2010

Mark Frey – Regional Director

Custom House’s ValueProposition

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

Today’s Agenda

Who we are?

What we do?

What makes us different?

Our risk management philosophy

Tools for managing currency risk Forward Contracts Currency Options

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

Current Market Themes

The world’s largest non-bank FX brokerage company

Trade roughly $30B USD per year globally

Founded in Canada, HQ in Victoria, presence in seveninternational markets

Acquired by Western Union in September 2008 Balance sheet strength Resources for growth

More than 40 global banking counterparties Deutsche, BOA, Citi, Barclays, UBS, Credit Suisse, BMO, ANZ

Focus on international payments and risk management

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

Global Payment Solutions

Wires in 153 currenciesWires in 153 currencies Remote draft printing in 63 currenciesRemote draft printing in 63 currencies Employ our own nostro accounts and/or local correspondents in most casesEmploy our own nostro accounts and/or local correspondents in most cases In-house investigations and payment servicesIn-house investigations and payment services Global expertise, local deliveryGlobal expertise, local delivery A/P and A/R outsourcingA/P and A/R outsourcing

Online, multiple payments, multiple currencies at one time, 24 hours a day, Online, multiple payments, multiple currencies at one time, 24 hours a day, 7 days a week7 days a week

Online system (MPP) can be fully integrated with accounting softwareOnline system (MPP) can be fully integrated with accounting software MPP – multiple approval and/or booking limitsMPP – multiple approval and/or booking limits SPP – consumer driven, single paymentsSPP – consumer driven, single payments

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

FX Risk Management

Competitive ratesCompetitive rates

Proactive serviceProactive service

Hedging products and solutionsHedging products and solutions Limit Orders, Forward Contracts, FX Swaps, Vanilla and Structured OptionsLimit Orders, Forward Contracts, FX Swaps, Vanilla and Structured Options

Flexible collateral terms and hedging facilitiesFlexible collateral terms and hedging facilities

Phone execution and/or online execution 24 hours a dayPhone execution and/or online execution 24 hours a day

Market information and analysisMarket information and analysis

154 currencies, 63 forward currencies including BRIC nations154 currencies, 63 forward currencies including BRIC nations

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

FX Hedging Process

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It rarely makes sense to hedge 100% of your known requirements

Psychologically optimal ratio is 50%

Typical risk averse Corporates hedge 70 to 85% of known requirements

The narrower the margins the higher the ratio

The wider the margins the lower the ratio

Known and contracted requirements vs. forecasted requirements

Optimal Hedge Ratios

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Hedging Rationale A hedge should be initiated at a level that is consistent with; and protects the operating margin within the business

A hedge should not simply be booked opportunistically or at a rate that one simply thinks will be favorable at expiry

If the latter is chosen, a poor MTM result will often negate the value delivered by hedging

If you choose the former, the your business will be protected and you will see value from having engaged in hedging

Hedging Rationale

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

Forward Contracts:Future-dated settlement

Benefits

Deliverable and non-deliverable Any date - Any amountExtremely liquidNo upfront costs or fees

Drawbacks

Commitment to buy or sell a foreign currency vs. an option

Cannot participate in favourable market moves

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Plain Vanilla Option An option gives the buyer the right, but not the obligation, to buy or sell a predetermined amount of one currency for another at a pre-specified rate at or before an agreed upon point in the future.

An option gives the seller the obligation to perform the terms of the option should the buyer decide to exercise the option.

This is fundamentally, and importantly different from a forward contract.

Allows for a known worst case rate and upside participation.

Plain Vanilla Option

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The Value of Structured Options

Protect against the downside while maintaining the ability to participate in a favorable market movement

Structured options vary in four main ways: 1. Efficiency of Protection – How close is the hedge rate to the ATM Fwd2. Upside Participation3. Sensitivity to Volatility4. Risk vs. Reward – Payoff Scenarios

Combine the efficiency of a forward, avoid paying premiums and participate in favourable market movement

Can completely customize the payoff scenario to the customer’s unique requirements

Custom House Confidential ©2009 Western Union Holdings, Inc. All Rights Reserved.

Hedging Recommendations

What you want to achieve? – Alignment of objectives

Balanced portfolio – forwards and options (where appropriate)

Protect your budgeted rate

Maintain flexibility

Participate in potential market gains