New Infrastructures for OTC Derivatives

Central Repository for Forward Contracts

November 2011

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1. DCV in figures

2. In detail, Central Repository for Forward Contracts

i. The Derivatives Market in Chile Overview

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

procedures Features of the new service Service model Some statistics Phase 2 & Phase 3 Conclusions

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DCV in figures

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

176 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 2011 (sept): US$1,037 billion

Transactions registered in 2011 (sept): 1,2 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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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 income2012 USD 100,0002013 USD 150,000

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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 considers the rest of current participants… and also their institutional customers

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Central Repository for Forward Contracts

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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Central Repository for Forward Contracts

Features of the new service

Electronic and centralized subscription, registration and custody

Official legal record

Digital certificate with an advanced electronic signature

Control of expiration dates

On-line information (100% reliable)

Pension Fund Services: Daily reports to the Pension Funds Superintendence

STP with the Electronic Stock Exchange

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Central Repository for Forward Contracts

Some Statistics

21 Participants have adhered the service8 Participants operating13 Participants in the road to activate their accounts

Up to september 984 contracts registered

Up to september 161 contracts matured

Central Repository for Forward Contracts

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N° Total de Registros por Mes

520

45 4121

29

2

102

148

200

136

178

218

0

50

100

150

200

250

Marzo Abril Mayo Junio Julio Agosto Septiembre

Vencimiento Suscripción

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Central Repository for Forward Contracts

Phase 2:

Registration of contracts between a participant and their corporate customers

Expanding to other types of Forwards contracts and Swaps

Payment instructions to banks

Supporting collateral management

Phase 3:

Interconnection with a CCP, managed by banks

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Central Repository for Forward Contracts

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!