Integrated Report 2016 Integrated report 1

Transcription

1 Integrated Report 2016 Integrated Report 1

2 Presented to shareholders by the Board of Directors on April 24, 2017 As established in the corporate bylaws, Santiago Exchange presents its shareholders with its first Integrated Report for the year ended December 31, This document provides an account of our management efforts and results during 2016 relating to financial, strategic and corporate governance matters, as well as our commitment to the market, our customers, our associates, our suppliers and the community. This inaugural edition integrates the sustainability approach that the company has adopted for its activities, projects and future challenges throughout the entire report. This report demonstrates Santiago Exchange's interest in outlining for shareholders, customers and stakeholders in general the path that the organization is taking to foster the sustainable development of the securities market. Integrated Report 2

3 Letter from the Chairman G4-1 Dear Shareholders: On behalf of the Board of Directors, it is my pleasure to present Santiago Exchange's Annual Report for Sustainability is one of the newest and greatest challenges imposed by today's market. It involves properly integrating social, environmental and corporate governance aspects into each company or institution's management model. Given our full commitment to meeting this challenge, we decided to publish our first Integrated Report this year. In addition to describing our performance over the course of the last year, this report addresses key aspects of our development in social, environmental and governance matters. The sustainable development of the capital market involves addressing and responding to the multiple needs of those who take part in or could potentially take part in the market. We also believe it is important for corporations' development that they adopt sustainable management, which generates value for their shareholders, employees, suppliers, customers, the community and the environment. At Santiago Exchange, we are committed to promoting these issues in the capital market and embracing them internally, as evidenced by the demutualization process and other efforts currently underway. In this sense, the sustainable development of the capital market involves addressing and responding to the multiple needs of those who take part in or could potentially take part in the market, creating incentives for the market to grow based on best practices in a setting of trust, transparency, competition and responsible investment. Integrated Report 3

4 Consequently, over the last year we actively focused our strategy on continuing to incorporate international best standards, broadening our product and service offering, making the Chilean securities market more visible, further improving self-regulation and risk management and strengthening ties with our customers. We would like to specifically mention our collaborative work alongside issuers, intermediaries and institutional investors to incorporate and develop best practices for corporate governance and market operations. We have proposed that regulators make changes to standards and exchange operations that will help build trust and transparency and increase liquidity in the Chilean capital market. One of our challenges has been to drive responsible investment with a special emphasis on encouraging best practices in regulation, transparency and innovation. In this spirit, we have drafted and are fervently promoting a financial literacy plan designed to give people the tools they need to play an active role in managing their savings. We believe that self-regulation and appropriate risk management are also essential to both the market and our own business. As a result, we have placed special emphasis on market monitoring, including automated alerts and subsequent auditing processes. At the same time, we have intensified our broker auditing program, performing 60 reviews this year. These efforts have confirmed the high level of regulatory compliance by our intermediaries, with only five customer grievances filed and one penalty issued by the Best Practice Committee, the independent body in charge of analyzing and resolving any grievances and audits. In risk matters, Santiago Exchange has been incorporating all recommendations made by specialized international bodies for market infrastructure into its Comprehensive Risk Management Policy. In parallel, we have continued to work on the corporate commitments undertaken by the Exchange as a member of the Sustainable Stock Exchanges Initiative (SSE). This global association of exchanges encourages companies listed on their markets to publicly and voluntarily increase and enhance their disclosure of environmental, social and governance aspects (ESG), in order to promote transparency, sustainable capital markets throughout the world. In the area of corporate governance, we are confident in the bylaw reform approved by the shareholders by a wide margin in order to achieve demutualization, and we hope to implement it once it is approved by the Chilean Superintendency of Securities and Insurance. In addition to separating exchange ownership from the ability to act as a broker, demutualization will introduce increased levels of competition, strengthen our capital markets and enhance efficiency and transparency, thus benefiting issuers, investors and intermediaries that take part in the market. Looking ahead, our sustainability management efforts will involve making a firm commitment to the development of the Exchange and the securities market alike; to ethical, transparent governance in all of the organization's dealings, building solid relationships with all counterparties; to value creation for our customers, establishing long-term, trustbased relationships; and to mastery, training and wellbeing for our team, working to strengthen our associates' abilities and skills. Finally, I would like to give very special thanks to the entire team at Santiago Exchange for their ongoing effort and commitment to long-term development and their ability to adapt to the new challenges facing our organization, which was clearly demonstrated by the progress we made over the last year. I would also like to thank our customers for choosing Santiago Exchange and for the trust they place in us and our shareholders for their constant support. Juan Andrés Camus Chairman Santiago Exchange Integrated Report 4

5 Letter from the Chief Executive Officer Dear Shareholders: In addition to confirming our well-established leadership in the domestic securities market, Santiago Exchange faced important challenges during The strategic decision to sustainably project each of our actions and our work as a whole in order to contribute to the adequate development of the Chilean capital market in the long term was the lens used to address all of those challenges. From this perspective, one of the main objectives last year was to make progress on initiatives, products and services that helped enhance our market by implementing best practices, aligning with international standards and creating new opportunities for investors, issuers and intermediaries. We also made the decision to disseminate and promote the implications of sustainability for investors and to support them on the incorporation of environmental, social and governance (ESG) aspects into their decision-making and investment practices. Along these lines, we led the organization of the Ring the Bell for Gender Equality initiative in Chile in collaboration with UN Women and the UN Global Compact. The event featured the participation of the President of Chile, Michelle Bachelet, and other distinguished authorities and market representatives. We made progress on initiatives, products and services that contributed to the enhancement of our market. We also developed three other important initiatives: The first was the Dow Jones Sustainability Chile Index (DJSI Chile), which currently includes 21 companies from a variety of industries in Chile, an increase of nine companies from the inaugural portfolio in The second was the Sustainability Reporting Guide, designed to provide issuers with guidance on how to disclose the environmental, social and governance aspects on which they are working. The third was the launch of the first Guide to Responsible Investment, in which we teach investors how to incorporate environmental, social and governance factors into their decision making. Together with the task of fostering responsible investment, the Exchange's Financial Literacy Area was relocated to the Commercial Division to oversee several initiatives to train and educate individuals about how the securities market works and underscore the market's importance to the country's economic development and the wellbeing of all Chileans. Integrated Report 5

6 One of this area's most important initiatives is the Investment Portfolio Contest (CCI in Spanish), which is a simulation designed to teach participants how to invest CH$20 million in a diversified portfolio of stocks and the IPSA ETF. The CCI attracts over 20 thousand participants each year, all of whom compete to create the best performing portfolio in one of three categories: Open, University and High School. Last year we conducted another National Financial Literacy Tour, visiting 22 schools in Antofagasta, La Serena, Concepción and Osorno, where close to 1,500 students learned more about how securities markets work. In an effort to increase the visibility of the Chilean securities market, we signed an agreement with S&P Dow Jones to develop stock indices for the Fixed Income and Equity markets in Chile. This alliance combines Santiago Exchange's experience and solidity with the multiple strengths of a supplier of independent indices with global presence, distribution and leadership. As a result of this agreement, the indices currently developed by Santiago Exchange will be built, marketed and sold together with all indicators developed by S&P Dow Jones Indices. In order to deepen the market in general and strengthen the Derivatives Market launched last year, we submitted a proposal to the Chilean Superintendency of Securities and Insurance containing new General Regulations for the Options Market, which are designed to establish the general standards that will regulate the operations of the Options Market being developed by Santiago Exchange. This initiative seeks to broaden investment alternatives for both institutional and individual investors, and thereby to continue contributing to the development and growth of the local capital market. As part of our exceptional customer service, last year we recertified our processes under ISO 22,301 (2012 version) and ISO 27,001 (2013 version) from the British Standards Institution (BSI). This marks the culmination of a successful process that places Santiago Exchange on the cutting edge of process certification in order to guarantee information security and business continuity. Regional and global integration will continue to be long-term challenges. As a result, in 2016 we made important strides in investor relations, with innovations in our commercial strategy and customer communication channels, as well as initiatives to promote our market internationally. The Commercial Division participated in several major international events in important financial centers in Brazil, New York and Canada primarily to promote our securities market. We also continued the integration process through the Integrated Latin American Market (MILA), which closed 2016 with total market capitalization of US$790 billion, representing growth of 2.5% over With 705 issuers, 37 interconnected intermediaries and over 1,000 securities available, MILA has positioned itself as a hub for investment in Latin America. The market's stocks and investment funds are automatically available to be traded in any member country, thus offering issuers, intermediaries and investors attractive market access opportunities. Finally, I am excited to update you on our joint work with the Ibero-American Federation of Exchanges (FIAB), a non-profit organization that brings together 23 securities, derivatives and other types of exchanges and markets in Latin America, Spain and Portugal. Santiago Exchange was chosen to lead the organization for the period, which further strengthens our commitment to the task of integrating securities markets. Santiago Exchange has several new projects and initiatives in the pipeline aimed at enhancing and growing our market and our Institution. We have a great team that is committed to carrying out all of the tasks that we have planned. We hope to continue to work with them to improve our performance in order to contribute to the development of a sustainable capital market. José Antonio Martínez Chief Executive Officer Santiago Exchange Integrated Report 6

7 Contents I THE EXCHANGE AT A GLANCE II SUSTAINABLE BUSINESS III CORPORATE GOVERNANCE IV SUSTAINABLE PERFORMANCE 9 Our Objective is To Make the Market Work 10 Sustainability Matters of Importance to Our Stakeholders 11 Our History 15 The Exchange in Numbers 20 What the Exchange Does 21 Economic Figures 32 Focus on Sustainability 35 Excellent Service 39 Internationalization 40 Market Development 51 Governance Structure of Santiago Exchange 69 Ethics and Transparency 71 Comprehensive Risk Management 74 Milestones in Governance and Sustainability 77 Customer Management 81 Labor Performance 90 Supplier Management 91 Community Relations 94 Environmental Commitment 43 The Exchange's Role in Sustainable Market Development 48 Milestones in Financial Literacy V ABOUT THIS REPORT VI LEGAL INFORMATION VII GRI INDEX VIII FINANCIAL STATEMENTS 97 About this Report 102 Company Information 121 GRI Content Index 133 Financial Statements 98 Principle of Materiality 103 Major Shareholders 215 Statement of Responsibility 100 Identification and Prioritization of Stakeholders 104 Our Business 106 Risk Factors 106 Investment and Financing Policies 107 Subsidiaries and Associates 112 Distributable Profit 113 Dividend Policy 114 Share Transactions 115 Information on Material Events 119 Comments and Proposals from Shareholders Integrated Report 7

8 Chapter I The Exchange at a Glance We make the market work, contributing to the country's development. Integrated Report 8

9 Our Objetive is to Make the Market Work G4-56 Santiago Exchange plays a leading role in the development of the Chilean securities market. Given its objective to lead and develop the market, Santiago Exchange contributes to both the securities market and the country, working to ensure maximum security and transparency throughout all stages of a transaction and in disclosing information and promoting good practices among market players in matters of corporate governance, compliance and environmental commitment. It offers high-quality products, services and IT infrastructure, guaranteeing the excellence and operational continuity that a sustainable market requires in order to help companies access financing, generate value for shareholders and give intermediaries and customers the chance to trade financial instruments in a trusted, transparent and sound environment. Our Business Values Transparency and Sustainability Acting in accordance with strict ethical principles, safeguarding compliance with standards, regulations and corporate sustainability policies and thereby ensuring sustainable market development. Excellent Service Focusing on results, providing high-quality service, meeting promises and building solid, lasting relationships. Innovation Anticipating new challenges, being conscientious of needs and offering customers the best business opportunities. Mission To provide the best service infrastructure for the growth of the securities market, thus contributing to Chile's development. Vision To be leaders in the exchange industry, developing a transparent market and exceptional products and services for our customers. CHAPTER I Integrated Report 9

10 Sustainability Matters of Importance to Our Stakeholders G4-19; G4-20; G4-21 In conversations with stakeholders, Santiago Exchange has identified the sustainability issues of most importance to both the organization and external players based on the role the Exchange plays in relation to the securities market, its participants, customers, shareholders, suppliers, the community and the environment. The priority issues create a framework of sustainability issues that define the contents of this Integrated Report in response to the expectations of the organization's diverse stakeholders 1. Material Issues Dimension Material Issues (1) Internal External Customer management Business expansion, market development, products and services Customer satisfaction. Customer relations: taking an interest in investors and understanding their needs. Safeguarding of confidential customer data. Transparency and security of information. Development of new markets, products and services (innovation). Product and service excellence and quality. Demutualization. STAKEHOLDER COVERAGE Continuity and operational excellence Operational continuity and response capacity. Safeguarding of operational risk. IT infrastructure. Leadership in promoting good practices. The Exchange's role in sustainable market development Contribution to the development of a safe and transparent securities market. Financial literacy and the role of the Exchange. Involvement in public policy. Recognizing the value of sustainable companies and contributing to corporate confidence. Labor practices Relationship with the community and the environment Internal development and culture. Financial literacy for the community. Structure and functioning of corporate governance. Corporate governance Self-regulation and broker conflicts of interest. Risk management (strategic and reputational). Transparency, ethics and integrity, conflicts of interest and monitoring of financial crimes. 1 The chapter About this Report describes the process of surveying and analyzing materiality and prioritizing the Exchange's diverse stakeholders. CHAPTER I Intensity Greater intensity Integrated Report 10

11 Our History Over 120 years of continuous operations is an accomplishment that few institutions can claim. Santiago Exchange has been committed to Chile's development since November 27, 1893, when it was founded with capital of CH$50,000, distributed into 50 shares valued at CH$1,000 each. Since 1917 it has operated in its current corporate building on Calle La Bolsa, a landmark located in Santiago's historic district and declared a historical monument in Over the past 50 years, Santiago Exchange has witnessed major milestones in the Chilean market: the process to modernize the capital market starting in 1980; the beginning of electronic trading in the late eighties; the inauguration of the International Securities Market in 2000; the creation of the Self-Regulation Committee (currently the Best Practices Committee) in 2006; and concluding with one of the most recent projects undertaken by the Exchange demutualization. CHAPTER I Integrated Report 11

12 Milestones in Our History 2016 Shareholders approve demutualization of the Exchange The Integrated Latin American Market (MILA) begins operations Santiago Exchange and S&P Dow Jones Indices launch the first sustainability index in Chile and trading begins on the Derivatives Market Sector indices are officially launched and large, medium and small market cap indices are created Santiago Exchange joins the Sustainable Stock Exchanges Initiative (SSE) and creates a Venture Exchange with TSXV. It also obtains certifications that guarantee the security of its services and operational continuity The Self-Regulation Committee is created SEBRA is implemented as the computerized system for Santiago Exchange's operations The International Securities Market and the Central Securities Deposit (DCV), an associate of Santiago Exchange, are created Amidst festivities to celebrate the institution's 100th birthday, Santiago Exchange inaugurates an electronic trading board with online data. CHAPTER I Integrated Report 12

13 1991 Santiago Exchange joins the World Federation of Exchanges (WFE) and the Investment Fund Market is formed The electronic auction system for fixed income and money market instruments is created The first computerized stock trading system (Telepregon) is developed Chilean pension funds (AFPs) are authorized to invest in stocks Santiago Exchange is incorporated as a founding member of the Ibero- American Federation of Exchanges (FIAB) The first network of terminals with information in real time is implemented. The Exchange's headquarters building is declared a national historical monument The General Stock Price Index (IGPA) is created The Selective Stock Price Index (IPSA) is created The building currently housing the Exchange is inaugurated Santiago Exchange is founded. Santiago Exchange has positioned itself nationally and internationally as an exchange that is on the cutting edge of global requirements and standards governing securities markets. CHAPTER I Integrated Report 13

14 Information on the Company G4-3; G4-7 The special 2 corporation Bolsa de Comercio de Santiago was incorporated by public instrument on November 27, 1893, before Santiago notary Eduardo Reyes Lavalle. In Supreme Decree 3,015, dated December 29, 1893, the Company was licensed to operate and its bylaws were approved. It was registered in the Santiago Commerce Registry on page 9, number 14 on January 22, It is currently governed by Law No. 18,045 on Securities Markets published in Santiago Exchange has 48 duly issued shares distributed among 40 shareholders. As of December 31, 2016, only one shareholder held more than 10% of the Company's shares (BM&FBOVESPA S.A., Bolsa de Valores, Mercadorias e Fu- turos, Rut , which owns five shares representing 10.42% of the Company's total shares) 3. 2 See Chapter VI of this report for legal information on Santiago Exchange. 3 In accordance with Title XIII of Law No. 18,046, Special Corporations are corporations that are subject to special rules that are formed, exist and approved by public instrument and must obtain a ruling and special certificate from the SVS authorizing their operations and registration. Special corporations include insurance and reinsurance companies, corporations that manage mutual funds, securities exchanges and other companies expressly defined by law. CHAPTER I Integrated Report 14

15 The Exchange in Numbers G4-9 Market Statistics Trades** Trades* TRADING VALUE** TRADING VALUE* EQUITY MARKET *** 3,238, % MUS $27, % FIXED INCOME MARKET 362, % MUS $189, % MONEY MARKET 820, % MUS $452, % IPSA VALUE** IGPA VALUE** Inter-10 Value** Issuers** Capitalization** brokers** TOTAL VALUE SETTLED BY CCLV** 4,151 points 20,734 points 4, MUS $209, MUS $305,343 *12.80% return *14.22% return *14.68% return Exchange rate for the last trading day of the year. * Comparative figures 2015/2016 ** Figures 2016 *** Includes Stocks, Investment Funds and International Securities. CHAPTER I Integrated Report 15

16 Revenue by Business Line THE FIGURES ARE EXPRESSED IN CH$ THOUSANDS 4% DMA Connectivity Services 16% Trading Stations % Exchange Access Rights 6% Listings 19% Data Systems and Services 14% CCLV 2% Other 26% Front, Middle and Back Office Systems Profit for the Year: CH$ 10,616,956 Earnings per share: CH$ 221,187 Interim Dividends DISTRIBUTED DURING THE YEAR: CH$ 3,360,000 RETURN ON EQUITY: 30.43% Excludes investment portfolio and extraordinary income CHAPTER I Integrated Report 16

17 The Chilean Economy in 2016 POPULATION Unemployment Exports 18.2 MILLION 6.1% MUS$ 59,917 GDP Inflation Imports MUS$ 247, % MUS$ 55,360 GDP PER CAPITA (PPP) Rating US$23,969 AA - ; A+ GDP GROWTH BALANCE OF TRADE 1.59% MUS$ 4,557 Note: Projected population according to National Statistics Institute (INE). Source: National Statistics Institute (INE) - Chilean Central Bank - Ministry of Finance - Santiago Exchange. CHAPTER I Integrated Report 17

18 Comparative Figures 2016 LATIN AMERICAN EXCHANGES MARKET CAPITALIZATION (MUS$) 209, , ,541 80, ,133 NUMBER OF LISTED COMPANIES SHARE TRADING VALUE (MUS$) 24,836 14, ,388 3, ,596 AVERAGE DAILY SHARE TRADING VALUE (MUS$) , ANNUAL RETURN OF MAIN MARKET INDEX IPSA COLCAP IPC S&P/BVL Peru Gen IBRX % 17.16% 6.20% 58.06% 36.82% Source: World Federation of Exchanges - Santiago Exchange CHAPTER I Integrated Report 18

19 Chapter II Sustainable Business We promote the sustainable development of the market and our business. Integrated Report 19

20 What the Exchange Does According to article 38 of the Securities Market Law, securities exchanges are entities whose corporate purpose is to provide members the necessary implements for them to effectively carry out securities transactions via continuous public auction mechanisms and so they may engage in other securities brokerage activities permitted by law. Superintendency of Securities and Insurance (SVS): The public body that supervises activities and entities that participate in the securities and insurance markets in Chile. WHAT MARKETS DOES THE EXCHANGE OPERATE? it had a market share of 93.5% among equity markets and 99.3% in all markets in aggregate. Santiago Exchange is a securities exchange whose main role is to provide buyers and sellers of securities with technological infrastructure to conduct transactions through services provided by securities brokers. G4-6; G4-8 Santiago Exchange participates in the securities market and has a strong leading position in the Chilean market. In 2016, TYPES OF MARKETS OPERATED BY THE EXCHANGE WHO ARE THE MARKET PLAYERS? (4) Issuers: Mainly publicly held corporations that issue stocks and debt securities for placement and subsequent trading on the Equity Market in order to raise funds. Investors: Individuals or legal entities or companies (institutions) that invest in financial instruments, representing financial market demand. Brokers: Securities intermediaries that participate in a securities exchange. Equity Market MILA Debt Market Derivatives OTC Market Stocks Stocks Treasury Bonds Index Futures Fixed Income Investment Funds Investment Funds Corporate Bonds FX Futures Interest Rates Mutual Funds Mutual Funds Mortgage Bonds Interest Rate Futures FX ETF ETF Commercial Paper Fixed Income Futures International Securities Fixed Term Deposits Currency Securities Venture Securities (4) Source: Santiago Exchange - Superintendency of Securities and Insurance. CHAPTER II Integrated Report 20

21 Economic Figures 2016 Securities Market Summary Trading values trended upwards during 2016, rising 17% from January to December. 8.5% Rise in number of trades from 2015 to 2016, marking an historical annual record. Trading Value and Number of Trades for ,000, ,000 Trading Value (MCH$) 50,000,000 48,000,000 46,000,000 44,000,000 42,000,000 40,000, , , , , , ,000 Total Number of Trades 38,000,000 0 Month Jan Apr Aug Dec Trading Value (MCh$) Total Number of Trades Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 21

22 2016 Securities Market Summary Santiago Exchange reported a 1% increase in market capitalization over Market Capitalization and Number of Listed Companies Market Capitalization (MCH$) 200,000, ,000, ,000, ,000, ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000, Number of Listed Companies Year Market Capitalization (MCH$) Number of Listed Companies Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 22

23 2016 Securities Market Summary The 10 most traded stocks accounted for 45.8% of total share trading value in Ten Most Traded Stocks in % CENCOSUD 9.59% FALABELLA 4.49% LAN 4.23% SQM - B 3.45% CHILE 3.28% BSANTANDER 3.26% COPEC 54.17% Other 3.08% CMPC 2.98% AGUAS-A 2.89% CCU Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 23

24 2016 Securities Market Summary In 2016, the Money Market boasted the largest trading value, accounting for 54.3% of total trading value. During the same year, there was a significant rise in trades of Investment Funds, doubling historic trading value for this market. Participation by Market % INTERNATIONAL SECURITIES 2.98% STOCKS 54.31% MONEY MARKET 0.34% INVESTMENT FUNDS 19.61% CURRENCY SECURITIES 22.74% FIXED INCOME Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 24

25 2016 Securities Market Summary In the past 10 years, the Money Market has accounted for over half of all trades. Participation by Market % INTERNATIONAL SECURITIES 4.95% STOCKS 0.18% INVESTMENT FUNDS 21.50% CURRENCY SECURITIES 50.41% MONEY MARKET 22.95% FIXED INCOME Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 25

26 2016 Securities Market Summary Santiago Exchange's stock indices performed well in 2016, especially the industrial sector index with a variation of 42.5%. STOCK MARKET Indices of Santiago Exchange - Change in 2016 IPSA IGPA IGPA Large IGPA Mid IGPA Small Inter-10 Banking Commodities Const. & Real Estate Food & Beverage Industrial Retail Utilities Change Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 26

27 2016 Securities Market Summary In the last 10 years, the average accumulated return of the Exchange's main indices (IGPA, IPSA and INTER-10) was 48.4%. STOCK MARKET Indices of Santiago Exchange - Change IPSA IGPA IGPA Large IGPA Mid IGPA Small Inter-10 Banking Commodities Const. & Real Estate Food & Beverage Industrial Retail Utilities -50% 0% 50% 100% 150% 200% Change Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 27

28 2016 Securities Market Summary Share trading value rose 10.7% in 2016 in the Equity Market. Number of trades rose by 19.5% over Equity Market Growth ,000,000 3,500,000 Trading Value (MCH$) 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 Total Number of Trades 5,000, , Year Trading Value (MCH$) 34,590,705 24,606,950 26,490,606 34,579,130 32,679,797 25,927,954 26,018,340 21,049,690 15,062,757 16,677,332 Total Number of Trades 996, ,387 1,047,832 1,882,672 2,234,004 1,968,889 2,137,447 2,205,044 2,695,141 3,221,212 Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 28

29 2016 Securities Market Summary 42.1% Growth in total trading value over last 10 years. Number of trades increased 118.8% during the same period. Trading Value and Number of Trades All Markets ,010,000 7,000,000 Trading Value (MCH$) 600,010, ,010, ,010, ,010, ,010, ,010,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Total Number of Trades 10,000 0 Year Trading Value (MCH$) 394,107, ,571, ,160, ,525, ,524, ,542, ,266, ,123, ,374, ,211,506 Total Number of Trades 2,810,754 2,776,482 3,125,058 3,980,773 4,522,334 4,504,662 4,869,829 5,120,032 5,666,795 6,150,122 Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 29

30 2016 Securities Market Summary The DJSI Chile outperformed the IPSA in 2016, reporting 5.88% greater returns. DJSI Sustainability Index , % 1, , , % 4% Points 1, % 0% -2% Change % Month Jan Apr Aug Dec Points 960,26 969,22 1, , , , , , , , , , Change Source: Santiago Exchange For more information on the securities market click here CHAPTER II Integrated Report 30

31 Economic Value Generated G4-EC1 Santiago Exchange contributes to Chile's economic development by sustainably growing its business and generating value for its customers. The figures in this chart reflect the company's cash flows for the years ended December 31, 2015 and 2016, which explains why they do not match the Statements of Comprehensive Income. ECONOMIC VALUE GENERATED AND DISTRIBUTED CH$ THOUSANDS Direct economic value generated (EVG) Revenue 29,684,369 29,465,992 Finance income a 189, ,123 Other income b - 3,793,715 Total 29,873,395 33,735,830 Economic value distributed (EVD) Operating expenses 12,385,925 12,700,509 Wages and employee benefits 9,894,918 8,659,804 Payments to capital providers c 6,039,452 7,858,581 Payments to governments d 1,546,481 2,138,598 Fixed capital investment 1,222,764 1,210,885 Total 31,089,540 32,568,377 Net effect of financing activities 759, ,118 Economic Value Retained (EVR)* (456,199) 1,919,571 Notes: (a) Income from interest and dividends from the proprietary trading portfolio. (b) Income from sale of land in (c) Dividend payment to shareholders. (d) Monthly provisional tax payments (PPM) * Formula: Value generated (EVG) - Value distributed (EVD) = Value retained (EVR). CHAPTER II Integrated Report 31

32 Focus on Sustainability Exchanges have a fundamental role in building sustainable securities markets. As a meeting point for the diverse players that make up the market, they play a leading role in setting standards and developing and promoting good practices and transparency. For this reason, Santiago Exchange has worked both internally and externally to provide instruments and opportunities to facilitate the teaching, understanding and implementation of the highest standards of sustainability within the institution and in the market. It participates in diverse collaborative initiatives and activities involving sustainable development, such as the United Nations' Sustainable Stock Exchanges Initiative (SSE) and the Sustainability Working Group (SWG) of the World Federation of Exchanges. These associations promote the exchange of information on sustainability with other market entities to encourage them to make a public, voluntary commitment to disclose environmental, social and governance (ESG) aspects, thus promoting transparent, sustainable capital markets throughout the world. As part of this international commitment, member exchanges are working on a plan to comply with the United Nations Sustainable Development Goals (SDG), specifically those relating to gender equality, sustainable reporting, climate action and partnerships for the goals. Under these commitments, Santiago Exchange has also proposed recommendations for issuers in order to strengthen the securities market's transparency and enhance extrafinancial information provided by companies. In addition, it has developed tools to encourage responsible investment in the capital market, including the Sustainability Reporting Guide, a Guide to Responsible Investment and the first local sustainability index, the Dow Jones Sustainability Chile Index (DJSI Chile). One of the most important commitments made by the Exchange in 2016 was its pledge to strengthen its financial literacy program. This nationwide program is designed to encourage savings and responsible investment; promote regulated, accessible investment alternatives and generate educational content about the market. These and other related activities are part of Santiago Exchange's ongoing sustainability agenda and its daily interactions with issuers, investors and the community at large. Sustainable Development Strategy In 2016 the organization worked to formulate a Sustainable Development Strategy based on a comprehensive institutional diagnostic involving internal and external stakeholders. This diagnostic led to the creation of a Sustainability Map, a tool illustrating how environmental, social and governance aspects are integrated into the Exchange's management and strategic leadership. The Sustainability Map identifies five core concepts and establishes a corporate commitment for each. The commitment provides guidance as to the actions that must be carried out in order to implement the institution's sustainability management efforts and measure progress. These core concepts are related to the Exchange's corporate values (Innovation, Transparency and Excellence) and are fundamental, institution-wide attributes that reflect its performance. The process of drafting the strategy also included defining a Sustainable Development Policy, a formal, corporate statement that defines sustainability for the institution. CHAPTER II Integrated Report 32

33 Sustainability Map Santiago Exchange's sustainability map combines the institution's core sustainability concepts and a corporate commitment for each concept. CUSTOMERS Committed to value creation for our customers, establishing long-term, trust-based relationships. CORE SUSTAINABILITY CONCEPTS We work to ensure comprehensive customer management with a seal of excellence on our products and services, building trust-based, reliable relationships. THE MARKET Committed to our role in forming sustainable capital markets. We seek to safeguard the development of a sustainable, reliable, secure and transparent capital market that meets international standards, strengthen institutional regulations and offer our customers excellent services and products. CORPORATE GOVERNANCE Committed to ethical and transparent corporate governance in all dealings by the organization, cultivating solid relationships with its strategic partners. We work to ensure that our operations and performance abide by best practices in corporate governance, ethics and transparency and that the organization is cognizant of its sustainable management efforts, seeking to maximize returns and long-term value. INNOVATION TRANSPARENCY Our Team The Market Customers EXCELLENCE The Community and the Environment Corporate Governance Innovating and Developing Capital Markets THE COMMUNITY AND THE ENVIRONMENT Committed to the development and creation of benefits for the community and the environment, which includes both the social and physical environments in which we do business. Santiago Exchange is committed to supporting the development and generation of benefits for the community and the environment. We work to publicize and promote the capital market among specialized and non-specialized audiences, intertwining our sustainability agenda with our business strategies. OUR TEAM Committed to the wellbeing and development of our team. We strive to ensure the wellbeing of our associates and strengthen their competencies and skills. CHAPTER II Integrated Report 33

34 SUSTAINABILITY Business and Technology MANAGEMENTCommittee G4-35; G4-36 Sustainability matters at Santiago Exchange and its subsidiary, CCLV Contraparte Central S.A., are centrally coordinated by the Communications and Sustainability Area, which reports to the CEO. This area regularly briefs the Business and Technology Committee, which in turn informs the Board, on the processes, progress and results of sustainability matters. The Board and senior management define guidelines to be followed for such matters in accordance with the organization's objectives and strategic planning. These guidelines are communicated to operating areas by the committee and the Communications and Sustainability Area. FOCUS Business ON INNOVATION and Technology Committee The Exchange's business strategy seeks to make innovation a core value in all processes, particularly in the planning and development of new products and services with a focus on customer management. Innovation efforts are managed by the Innovation and Project Unit, which reports to the Planning and Development Division. In addition, the institution has an Innovation Management team comprised of representatives from several different areas that worked to develop a Comprehensive Innovation Policy in The general guidelines of this policy outlined three dimensions: innovating in processes to create products and services; promoting an internal culture of innovation; and communicating this integral approach to stakeholders. CHAPTER II Integrated Report 34

35 Excellent Service G4-4 The products and services offered by Santiago Exchange address the operating needs of the Exchange and the financial needs of companies, customers and intermediaries, placing high-quality technological solutions at their disposal. This offering, which includes comprehensive trading services, management services for financial institutions and investors and market data, positions the Exchange and the Chilean market as the port of entry for portfolio investing in Chile. Comprehensive Trading and Exchange Development Services Management Services for Financial Institutions and Investors DMA Connectivity Services Trading Stations Contraparte Central y Liquidación de Valores (CCLV) Listings Products and Services Front, Middle and Back Office Systems Services that allow universal connectivity for orders to directly access the Exchange. Santiago Exchange's DMA operates through a FIX communications protocol, which is used by the most important exchanges in the world. Electronic quotation and trading platform. Present at all trading desks in the market. Clearing and settlement service for securities transactions. Quoting and trading of and data on issuers' securities. Technological solutions to support the comprehensive operational, financial and commercial management of an entity. Santiago Exchange presents itself as a supplier of front, middle and back office services in the MILA market. Based on an alliance signed in 2015 with the German multinational SAP, Santiago Exchange developed the Optimus system, a technological solution based on SAP Hana with a global perspective targeted towards stock brokers. This helped the Exchange close an important deal in mid-2016 with a financial services entity operating on the Lima and Colombia stock exchanges, marking the start of its expansion as a supplier of these services within Latin America. MARKET DATA SERVICES Data Systems and Services Products and services focused on distributing realtime and historical market data to intermediaries and investors, domestic and international alike. CHAPTER II Integrated Report 35

36 Comprehensive Offering The products and technology services offered by Santiago Exchange cover all stages of a market transaction and are available for the different types of instruments traded on the Exchange, spanning a transaction's entire value chain. This comprehensive offering is designed to meet the requirements of a range of customers, from issuers to diverse investors to brokers or intermediaries. CUSTOMER-FOCUSED TECHNOLOGY SERVICES MARKETS SERVICES CUSTOMERS Issuers Investors Brokers Order Routing Transactions Equity Debt Derivatives Data Systems and Services Back Office Management Systems Clearing and Settlement Services CHAPTER II Integrated Report 36

37 Figures for CCLV Contraparte Central S.A Cámara de Compensación y Liquidación (CCLV) Contraparte Central S.A., is a subsidiary of Santiago Exchange that offers market participants clearing and settlement services, acting as the central counterparty to eliminate counterparty risk and working to ensure the highest levels of excellence and risk management. CCLV settles transactions carried out by authorized participants of the Chilean capital market, acting as the central counterparty for transactions in the Equity and Derivatives markets, and as a clearing house for the Debt and Repo Transaction markets ,693,522 56,000, ,752, % 36.54% 100% 99.91% 99.85% Settlement agents. Indirect settlement agents. Clearing orders. Total net balance settled by CCLV (MCH$). Total gross balance settled by CCLV (MCH$). Financial clearing. Physical clearing. Of transactions were settled on the correct day. Of cash settlements were completed by the set deadline. Of position settlements were completed by the set deadline. CHAPTER II Integrated Report 37

38 Excellence and Operational Continuity Santiago Exchange provides its customers world-class technological infrastructure that is capable of supporting uninterrupted, secure and reliable market transactions executed within the Exchange. The quality of this infrastructure enables the organization to trade financial instruments, driving the development and trading of new instruments and successfully integrating with other international markets. It also enables it to offer intermediaries the best management services for their operational, financial and commercial needs as well as transaction clearing and settlement services. tors issue an opinion on the appropriateness of the design and operational effectiveness of these controls. In 2016, their report contained no observations for either institution, reflecting the high standards applied by both. Consequently, the Exchange clearly provides the market with the utmost reliability, transparency and security in operating and managing information. Santiago Exchange and its subsidiary CCLV Contraparte Central S.A., have earned important certifications that demonstrate this excellence and enable them to operate under the highest international standards in such matters. The British Standards Institution (BSI), a global leader in business standards, certified Santiago Exchange in December 2014 and February 2015 under ISO 27,001 and 22,301, respectively, acknowledging that the Exchange and its subsidiary have information security and business continuity management systems in place for their main organizational processes. Follow-up audits were conducted for both standards in November 2015 and The companies performed well in the audits and are scheduled to be recertified during the last quarter of The relevance and compliance of both entities' internal controls are independently examined using assurance standard AT-801 (Type 2 report). Based on this review, external audi- CHAPTER II Integrated Report 38

39 Internationalization G4-6; G4-8 One of Santiago Exchange's strategic objectives is to internationalize its business and actively build ties with foreign markets. In response to this challenge, it promotes the Chilean capital market abroad, seeks to attract international investors and moves forward in developing best practices. Contributing to Regional Integration In 2015, Santiago Exchange took on the role of president of the Ibero-American Federation of Exchanges for a two-year term. The work plan designed for this period calls for the development of an Ibero-American market model for trading, settling and clearing securities traded on the Exchange's Equity and Fixed Income markets. By implementing this model, the FIAB aims to promote progressive integration, foreign investors, intraregional flows and cross-border issuances. In other areas, the FIAB made progress on strengthening ties with regulators and multilateral organizations in order to understand and incorporate best market practices and promote public policies that are consistent with the growth and development of capital markets. Chile in the Integrated Latin American Market MILA The Integrated Latin American Market (MILA) is the world's first transnational exchange that does not involve mergers or corporate integration, and the top ranked Latin American market based on number of listed companies currently over 700 issuers with market capitalization in excess of US$ 790 billion as of year-end Launched in 2011, members include exchanges and securities depositories in Chile, Colombia, Mexico and Peru. Its mission is to foster the growth of exchange activity in member countries by increasing exposure to their markets and providing a larger variety of products and opportunities for both investors from MILA member countries and international investors, offering efficient, competitive infrastructure. MILA's Fifth Anniversary MILA celebrated five years in operation in May In this time, it has worked to expand opportunities for regional integration in order to support securities trading by facilitating intermediation, standardizing market models, improving reporting and adapting mechanisms for clearing and settling transactions. MILA continues to be one of the region's most important investment hubs MILA ended 2016 with total market capitalization of US$ 790 billion, representing growth of 2.5% over The Peruvian and Colombian markets merit special mention as they increased market capitalization by 36.3% and 18%, respectively. With 705 issuers, 37 interconnected intermediaries and over 1,000 securities available, MILA has positioned itself as a hub for investment in Latin America. The market's stocks and other securities are automatically available to be traded in any member countries, thus offering issuers, intermediaries and investors attractive market access opportunities. CHAPTER II Integrated Report 39

40 Market Development In exercising its fundamental role of contributing to the development of capital markets, the Exchange conducts research on and implements new markets in Chile, thus enhancing its offering and stimulating the organization's domestic and international growth. By creating the required institutional regulatory frameworks and making suitable financial and technological infrastructure available, the Exchange promotes the trading, clearing and settling of new instruments that broaden the range of business options for local and international investors. Alliances for New Markets Derivatives Market, with BM&FBovespa, Brazil In a joint initiative from Santiago Exchange and CCLV Contraparte Central S.A., and in strategic partnership with the Brazilian securities market BM&FBovespa, the Derivatives Market was launched in The following futures are traded on this market: IPSA, dollar, UF, ICP, UF-05, UF-10. Santiago Exchange participated in a series of events to promote this market, including the FIA International Derivatives Expo 2016 held in October 2016, in order to publicize opportunities to invest in the Chilean capital market and attract more foreign investors to boost local market liquidity. In 2016, after the Exchange launched a new commercial model to promote this market, BCI Corredores de Bolsa became the first liquidity provider for futures on the Derivatives Market, placing buy and sell orders each day for IPSA and IPSA Mini futures. Developing the Options Market presents the Exchange with another short-term challenge. In 2016, the Exchange met with representatives from BM&FBovespa in order to understand in detail that exchange's experience with operations and models for an Options Market. The meeting was designed to validate and refine product, trading, data, clearing, risk, back office and IT infrastructure models for the new Options Market being developed by Santiago Exchange and CCLV. In October, CCLV Contraparte Central S.A., was included on a list published by the European Securities and Markets Authority (ESMA) of authorized central counterparties that have formally requested certification under the European Markets Infrastructure Regulation (EMIR) to offer derivative clearing and settlement services to investors from the European Union. In addition, the Exchange submitted a proposal to the SVS containing new General Regulations for the Options Market, which are designed to establish the general standards that will regulate the operations of the Options Market being developed by the Exchange. CHAPTER II Integrated Report 40

41 Santiago Exchange Venture Market with the Toronto Venture Exchange (TSXV) The Santiago Exchange Venture Market is the first venture capital market in Chile. Based on an agreement signed with TSXV, all companies listed on that exchange automatically qualify to be dually listed on the Santiago Exchange Venture Market. In other words, through a simple listing process, companies can have their securities traded on both the Chilean and Canadian exchanges. The objective is to promote the financing and listing of companies in early development stages so they can fund projects in need of start-up capital through the securities market. By year-end 2016, 12 companies listed on the Toronto Exchange and a family of 12 ETFs chose to be dually listed on Santiago Exchange, thanks to the regional exposure it offers through MILA. To promote this initiative, in September 2016 the Exchange's Commercial Division participated in a conference entitled Chile Explore, that addressed a variety of topics regarding the agreement between Chile and the Toronto Exchange (TSXV). That same month, both entities and the Canadian Embassy in Chile organized a gathering with mining companies and authorities to analyze the current Chilean mining industry and promote the benefits of the Santiago Exchange Venture Market. In 2016, the Exchange worked hard to promote this project, participating in several domestic and international events such as the international convention put on by the Prospectors & Developers Association of Canada (PDAC), the most important mining trade fair in the world for individuals, companies and organizations connected to mining exploration. The Exchange also participated in a seminar in Chile entitled The Mining Exploration Market in Chile: Perspectives and Future Challenges, developed during the 14th Expomin International Congress Memorandum of Understanding (MOU) with KRX, South Korea In 2015, a memorandum of understanding (MOU) was signed with Korea Exchange Inc. (KRX). In addition to sharing general and market data, both parties agreed to explore future collaboration on joint research, development projects or any other mutually beneficial project or issue related to corporate affairs, operations and systems disclosures, market and systems surveillance operations, among others. With this agreement, Santiago Exchange hopes to continue to broaden it product offering on the local and international markets, since Korea Exchange is one of the world's most important options markets. This agreement was signed for a two-year period and is then renewable for a subsequent two years. Latin American Expo: A Region in Transition In order to boost investment and attract foreign investors, in June 2016 the Exchange participated in the Latin American Expo: A Region in Transition, organized by BNP Paribas in New York City. The event, which brought together different authorities and experts on Latin America, was mainly intended to promote debate and the exchange of opinions on regional financial market trends. Santiago Exchange was also present at the international seminar Bonds, Loans and Derivatives, held in Chile, where it introduced participants to new options for foreign investors to electronically trade fixed income securities and futures, and discussed investment outlooks for Chilean and MILA assets listed on Santiago Exchange. CHAPTER II Integrated Report 41

42 Agreement with S&P Indices In August 2016, the Exchange signed a strategic agreement with S&P Dow Jones Indices to develop a new generation of exchange indices for the Equity and Fixed Income markets in Chile. The agreement will give the Exchange and the market access to international standards for developing indices and knowledge of the international market, expanding its product offering and giving more visibility to the Chilean securities market by developing new products backed by innovative methodologies that are global in scope. The agreement includes integrating operating and business strategy processes that will enable new indices to be developed, licensed, distributed and managed for the Fixed Income and Equity markets in Chile, as well as improvements to the Exchange's current portfolio of over 20 indices. CHAPTER II Integrated Report 42

43 The Exchange's Role in Sustainable Market Development Santiago Exchange plays a key role in the sustainable development of the capital markets by promoting and practicing the highest standards of transparency, responsible investment and good corporate governance. Trust and security are deep-rooted values that make a financial market sound, enabling it to attract more investors and helping create value for companies that incorporate sustainability and corporate social responsibility aspects into their business practices. Initiatives for a Sustainable Market Sustainable Stock Exchanges G4-15; G4-16 To further its objective of adopting international sustainability standards, in 2015 Santiago Exchange officially became a part of the Sustainable Stock Exchanges Initiative (SSE). This initiative was created by the United Nations in 2009 to encourage sustainability and good corporate practices in order to promote responsible investment. Fifty-nine exchanges around the world participate in the initiative, including New York, London, Frankfurt and Johannesburg. Latin American participants include Mexico, Colombia, Brazil and Lima. Upon joining the initiative, the Exchange made a commitment to promote the disclosure of sustainability matters and responsible investment. As a result of this commitment, throughout 2016 the Exchange worked on drafting documents to provide guidance for companies on market disclosures of extrafinancial information such as the Guide to Responsible Investment and the Sustainability Reporting Guide. Dow Jones Sustainability Index Chile Santiago Exchange and S&P Dow Jones Indices ( S&P DJI ) announced in October 2015 that they were launching the first sustainability index in Chile. The Dow Jones Sustainability Chile Index, known as the DJSI Chile Index, is the first of its kind using the Dow Jones Sustainability Indices calculation methodology and the first to use the IPSA as a base. Through this index, Santiago Exchange seeks to maintain its leadership in promoting responsible investment. It also aims to encourage the incorporation of sustainable processes at companies participating in the Chilean securities market, thus helping create value for these companies. In April 2016, the Exchange and S&P Dow Jones Indices, invited 55 companies on the General Stock Price Index (IGPA) to a seminar to mark the beginning of the selection process for the DJSI Chile Index for that year. The new portfolio for the index was announced in September. This second version is larger with a total of 21 companies representing different industry sectors. In June 2016, the Exchange participated in a seminar entitled Assessment of Corporate Sustainability Reporting in Chile 2015, organized by Universidad del Desarrollo to promote the DJSI Chile and its guidelines on transparency, corporate social responsibility, caring for the environment and good governance practices. CHAPTER II Integrated Report 43

44 Recommendations to Strengthen Securities Market Transparency and Enhance the Flow of Information from Issuers to Investors After analyzing international best practices for exchanges, regulators and local and international issuers, Santiago Exchange issued a series of recommendations for issuers regarding the disclosure of information that enables investors to evaluate their performance in transparency and sustainability matters. Grouped into three categories (exchange operations, financial matters and company-investor relations), the recommendations aim to integrate best business practices and internal policies for such disclosures. Another initiative involving issuers was the Digital Issuers Guide, published annually since This newsletter contains comprehensive information on companies listed on the Exchange and allows readers to compare the main stocks traded on the local Equity Market. It also provides a complete list of indicators that facilitate the comparison and analysis of information from issuers' financial statements and market information reflected in stock rankings and subrankings. The guide was published in 2016 in the magazine El Mercurio Inversiones. In March 2016, Santiago Exchange recognized the 40 companies that make up the Selective Stock Price Index (IPSA), publicizing and promoting the advantages of the Chilean market and generating an environment of trust, transparency and competitiveness. World Federation of Exchanges - Sustainability Working Group Santiago Exchange is a member of the World Federation of Exchanges Sustainability Working Group. This initiative is a learning platform that allows stock exchanges to work together on environmental, social and corporate governance issues. It also allows members around the world to share their progress on sustainability issues, helping to create value and build an environment of trust and transparency for investors. Global Compact - Transparency Commission Report. The Global Compact Transparency Commission aims to promote transparency within Chilean companies, entities and educational institutions by addressing matters related to anti-corruption. In March 2016, Santiago Exchange participated as a technical body, sharing its experiences with methodologies and tools for responsible investment and sustainability in the local capital market. Bell Ringing for International Women's Day As part of the festivities to commemorate International Women's Day, the President of Chile, Michelle Bachelet, participated in early March in the Ring the Bell for the Gender Equality ceremony organized by Santiago Exchange, UN Women and UN Global Compact. The objective of the event was to share different visions on the role women play in the corporate world. More than 30 securities markets around the world took part, including two exchanges in Latin America: Santiago Exchange and the Lima Stock Exchange. CHAPTER II Integrated Report 44

45 Financial Literacy G4-SO1; G4-FS16 A sustainable market requires society to be cognizant of the financial and securities markets and to participate by making responsible investment and savings decisions to finance projects and retirement needs. Consequently, the Exchange has implemented a financial literacy program that provides training on market concepts to a broad audience ranging from high school and university students to the general population. The program includes both in-person sessions and other innovative channels. "KNOW THE EXCHANGE" PROGRAM participants "KNOW THE EXCHANGE" PROGRAM TOURS CHILE participants Antofagasta La Serena Concepción Osorno Courses for Investors participants INVESTMENT PORTFOLIO CONTEST (CCI) participants Heritage Day 2,164 1, ,958 6,479 Communication channels as of December 2016 VISITORS 116,158 USERS (Monthly average for 2016) 22,839 FANS 22,868 FOLLOWERS 2,900 FOLLOWERS CHAPTER II Integrated Report 45

46 FINANCIAL LITERACY PROGRAM Program Objective: To provide information on financial and capital markets to all Chileans, including current and potential investors, in order to assist them with financial planning and encourage them to invest responsibly. Target Audience: The target audience for financial literacy initiatives varies by activity. It includes society at large and all individuals, considered individual investors, that are interested in learning more about market-related topics, particularly high school and university students. In 2017, the Exchange hopes to incorporate more advanced courses and training for market professionals into its curriculum. Core Program Concepts: The program is based on three core concepts that help it meet its objectives: 1. Responsible Investment To drive and promote regulated, responsible investment among the different securities market players with a special emphasis on endorsing best practices. 2. Transparency To promote Santiago Exchange as a regulated, fair, equitable, transparent and orderly securities market, creating value for financial market participants, the country and its citizens. 3. Innovation To provide tools to meet the challenges of a continuously evolving market, anticipating the needs of the different players taking part in the securities market. CHAPTER II Integrated Report 46

47 FINANCIAL LITERACY PROGRAM 2016 Investment Portfolio Contest Market simulation contest to teach participants how to invest under real market conditions and prices. Courses for Investors and Other Market Agents in Partnership with Universidad Adolfo Ibáñez "Know the Exchange" Program "Know the Exchange" Program Tours Chile Financial Literacy Month Financial Literacy Fair Investment Desks at Universities "Invest in the Exchange" Section on Our Website Heritage Day This multi-level program is open to anyone interested in learning more about a variety of topics such as the role the securities market plays in economic development and financial planning, regulated investment instruments and how to invest. Talks for high school and university students. This initiative provides basic tools for participants to learn about the securities market's role in economic development and savings management, covering subjects like market operations, what instruments are traded, the risks involved, available information and how to access the market, among others. Series of talks in areas outside Santiago. This program enables the Exchange to reach out to the community and provide basic tools for individuals to learn about the securities market's role in economic development and savings management, covering subjects like market operations, what instruments are traded, the risks involved, available information and how to access the market, among others. Activity organized by several regulatory agencies to increase public awareness of the importance of understanding financial topics and encourage responsible investment. The Exchange took part in the Financial Literacy Fair to publicize its educational activities. Thanks to investment desks installed at two universities, students can access actual market data through the Exchange's IT platform, SEBRA. With this real-time information, schools can offer practical classes using the investment desks. The Exchange has investment desks at Universidad de los Andes and Instituto Profesional Los Leones. The Exchange's website features educational content on how to autonomously invest in the market, with a direct link to platforms that brokers make available to their individual customers, in order to encourage responsible investment in a regulated environment. Each year Santiago Exchange opens its doors for the community to tour its building and learn more about the role the capital markets play in economic development. The Exchange has participated in the activity, organized by the Chilean National Monument Council, since its inception, and always attracts a large crowd. CHAPTER II Integrated Report 47

48 Milestones in Financial Literacy Investment Portfolio Contest - CCI In this investment simulation game, individuals invest in the Equity Market using fictitious resources (each participant starts the game with CH$ 20 million). The participant with the best returns on his or her investments is the winner. A total of 15,958 people participated in the 2016 contest, which culminated with a closing ceremony on the Exchange's Trading Floor. At the ceremony, the top ten participants in each of three categories were recognized: Open, University and High School. Know the Exchange Program Every Wednesday between 11:00 a.m. and 12:00 a.m., the Exchange welcomes groups of high school and university students interested in knowing more about the Exchange, featuring a video explaining the financial market and a guided tour of the Trading Floor. Partnership with Universidad Adolfo Ibáñez Through this partnership, the Exchange offers high-level academic training and tools to educate investors and market professionals. In 2016, both introductory courses and a degree certificate program were offered. Introductory Talk on the Equity Market (CIMA in Spanish) This two-hour talk provides an introduction to how the market works and is given at no cost. The audience is made up of individuals that are interested in learning more about the institution. In 2016, five CIMA talks were given. Introduction to Technical Analysis (CIAT in Spanish) and Introduction to Analysis of Market Fundamentals (CIAF in Spanish) These courses are designed to introduce students to theories used to analyze charts and market trends, or market fundamentals, respectively. Both courses are designed as a first approach to topics such as how to make investment decisions. Each session is open to 50 participants. In 2016, three CIAT courses and two CIAF courses were given. Certificate in Managing Stocks (DGA in Spanish) This program gives participants extensive knowledge and practical skills for operating in the Equity Market based on current capital market conditions. Financial Literacy Month 2016 Since financial literacy is a responsibility shared by the entire financial industry, several initiatives involve both the market and regulators. Financial Literacy Month, held in October of each year, is a collaborative effort from the Superintendency of Banks and Financial Institutions (SBIF), the Superintendency of Pensions (SP) and the SVS. The month-long calendar of activities was inaugurated in 2016 with a ceremony on the Exchange's Trading Floor. Santiago Exchange and the superintendencies also participated in the SBIF's Financial Literacy Fair held during the same month. CHAPTER II Integrated Report 48

49 Stakeholder Engagement G4-24, G4-25, G4-26, G4-27; G4-37 Santiago Exchange engages with stakeholders using a longterm perspective, confirming its corporate responsibility and commitment to sustainable market development. During 2016, the Exchange made progress in drafting an Engagement Policy that will determine the communications guidelines and rules of engagement that the institution and its diverse divisions must abide by when relating to stakeholders. Through this policy, the Exchange aims to consolidate its relationships and become a source of information and knowledge for society. The Exchange has carried out a diagnostic of internal and external data to define its stakeholders. This analysis considers all people or groups of people that have a significant impact on the business, or vice versa. Santiago Exchange has put forth considerable effort to understand the expectations, opinions and suggestions of its stakeholders regarding how the organization must conduct itself in these areas and focus on its business objectives, taking into account the interests of all players that interact with the Exchange. The Exchange has identified a variety of channels for communicating with stakeholders. These channels facilitate ongoing dialog and help develop responsible and sustainable relations. STAKEHOLDERS Shareholders Board of Directors Associates Customers The Community and the Environment Suppliers Authorities and Regulators Other Market Players Stakeholder Communication COMMUNICATION CHANNELS Shareholder meetings, annual reports and specific requests. Board and committee meetings. Intranet, training, committees, workplace climate surveys, performance evaluations, newsletters and expanded semi-annual reports. Customer relations teams (relationship managers), meetings with customers, customer focus groups, customer service, training, satisfaction surveys, active surveys, market newsletters and other online channels. Financial literacy programs, communication media (interviews, press articles, events, regular relevant information, social networks, etc.). Technical terms and conditions for executing services and training. Development of regulations to improve the market. Participation. CHAPTER II Integrated Report 49

50 Chapter III Corporate Governance We work to safeguard best business and transparency practices. Integrated Report 50

51 Governance Structure of Santiago Exchange At Santiago Exchange, corporate governance consists of the institutional structures that work to ensure the functioning and performance of the organization's best practices in management and transparency, seeking to develop sustainably and maximize long-term value. G4-34; G4-38; G4-41; G4-42 Aspects related to shareholders, the Board and management are governed by Law No. 18,046 on Corporations, while the Company's bylaws must adhere to Title VII of Law No. 18,045 on the Securities Market. The organization has also implemented regulations and internal procedures as a framework for its governance actions, including the Santiago Exchange Regulations, codes of Ethics and Conduct, and the Regulations of the Best Practice Committee. Shareholders' Meetings Board of Directors Business and Technology Committee Risk Committee Regulations and Audit Committee Audit and Control Division Best Practice Committee 5 Ethics and Discipline Committee 5.1 The governance structure is comprised of shareholders, the Board and management. Shareholders elect the Board and participate in governance through annual general and extraordinary meetings. The Board meets each month and is supported by board committees. The Audit and Control Division reports directly to the Board. Management is led by the chief executive officer. The organization's different divisions and the Risk Unit report directly to the CEO. Chief Executive Officer Chief Financial Officer Chief Commercial Officer Chief Information Officer Chief Operating Officer Chief Planning and Development Officer Risk Unit 5 The Best Practice Committee is an independent body whose members are elected by the Board. 5.1 The Ethics and Discipline Committee is an independent body. Two members are elected by shareholders and the third is a board member. CHAPTER III Integrated Report 51

52 Shareholders' Meetings Shareholders are considered one of the Exchange's main stakeholders and they play an important role in corporate policy-making. In accordance with Law No. 18,046 on Corporations, shareholders exercise their authority in annual general and extraordinary meetings. The first type of meeting includes the responsibility to examine the company's financial situation and reports and approve its balance sheet and financial statements; profit distributions and dividends for each year; elect or revoke directors or alternates, liquidators and management inspectors or any other matter that should be decided at annual general meetings. Annual general meetings are held once a year within four months of the financial reporting date and are summoned by the Board. At extraordinary meetings, shareholders may make decisions regarding the continuity or transformation of the company and its bylaws; issuances of bonds or debentures that are convertible to shares; or the granting of real or personal guarantees as permitted by law. Extraordinary shareholders' meetings are held when called by the Board. As of year-end 2016, the Exchange had 48 shares, distributed among 40 shareholders, of which 25 are brokers that are members of the Exchange. CHAPTER III Integrated Report 52

53 Our Board of Directors 1. Juan Eduardo Correa García Degree in industrial engineering from Universidad Católica de Chile. Vice-chairman of Banco Bice, chairman of Bice Vida Compañía de Seguros S.A., director of Colbún S.A, CEO of BICE- CORP S.A., Director of Santiago Exchange since April Jaime Larraín Vial 3. Oscar Von Chrismar Carvajal 4. Rodrigo Manubens Moltedo 5. Álvaro Donoso Barros Broker on Santiago Exchange since November 11, Partner at brokerage house Jaime Larraín y Cía. Corredores de Bolsa Ltda. Director of Santiago Exchange since April Degree in civil engineering from Universidad de Santiago. Vice-chairman of Banco Santander. Director of Sinacofi. Director of Santiago Exchange since April Degree in business administration from Universidad Federico Santa María and Universidad Adolfo Ibáñez. Master of Science from the London School of Economics. Director of Banco de Chile, chairman of Banchile Seguros de Vida, director and chairman of Directors' Committee of Aguas Andinas. Director of Santiago Exchange since May Degree in business administration from Universidad Católica de Chile and a Master of Economics from the University of Chicago. Director of CorpResearch. Director of Santiago Exchange since April Juan Andrés Camus Camus Chairman Degree in business administration from Universidad Católica de Chile. Founding partner of Celfin Capital in 1988, CEO until 2008 and then chairman. Chairman of BTG Pactual-Chile until 2016, which merged with Celfin Capital in Member of Executive Council of CEP. Director of Santiago Exchange since April 2010 and chairman since April Pedro Salah Ahués Degree in chemical engineering and accounting 8. Eduardo Muñoz Vivaldi Vice-chairman from Universidad Católica de Chile. Founder of Degree in industrial engineering from Universidad Caja de Compensación La Araucana. Director of de Chile. Chairman and founding partner Santiago Exchange since April of Negocios y Valores S.A., Corredores de Bolsa. Director of Santiago Exchange since April Hernán Somerville Senn 10. Nicholas Davis Lecaros 11. Fernando Larraín Cruzat Degree in law from Universidad de Chile. Director of Enel Américas S.A., partner and director of Fintec Ltda. Director of Santiago Exchange since April Chairman of EuroAmerica S.A., EuroAmerica Seguros de Vida S.A., EuroAmerica Administradora General de Fondos S.A., and EuroAmerica Servicios Financieros S.A., vice-chairman of Fundación Generación Empresarial. Director of Santiago Exchange since April Degree in business administration from Universidad Católica de Chile and an MBA from Harvard Business School. Executive President of LarrainVial S.A., chairman of Larraín Vial SAFI Perú, member of the boards of Watt s, Activa SPA, Larrain Vial Asset Management, Grupo Educar and Fundación Las Rosas. Director of Santiago Exchange since April CHAPTER III Integrated Report 53

54 Board Diversity G4-39; G4-40 The Board of Directors of Santiago Exchange has 11 members 6. Directors are elected for three-year terms and may be re-elected at the annual general meeting. The Board elects a chairman, which has been held since 2014 by Juan Andrés Camus. He does not hold any other executive positions within the organization. AGE The company does not have a controlling shareholder. Years in Position Under 30 - Less than 3 years GENDER MEN years WOMEN years NATIONALITY 9-12 years CHILEAN 11 FOREIGN - More than 13 years Over 70 6 Directors in office as of December 31, CHAPTER III Integrated Report 54

55 Board Compensation Board compensation is defined by shareholders and is divided into three categories: allowances for attending Board meetings, allowances for attending committee meetings, and allowances for acting as the Trading Floor Director. The latter replaces any allowances for other concepts. In 2016, the Board was paid the following allowances and other compensation: CH$ THOUSANDS MANAGEMENT POSITION TRADING FLOOR ALLOWANCE DIRECTOR OTHER Annual Compensation ALLOWANCE 2016 Juan Andrés Camus Camus Chairman 93, ,752 Eduardo Muñoz Vivaldi Vice-chairman 15,630-3,903 19,533 Juan Eduardo Correa García Director 10,408 7,833 1,952 20,193 Nicholas Davis Lecaros Director 14,328-1,948 16,276 Álvaro Donoso Barros Director 14,331-2,589 16,920 Fernando Larraín Cruzat Director 13, ,003 Jaime Larraín Vial Director 10,419 7,817-18,236 Rodrigo Manubens Moltedo Director 10,433 7,795 3,263 21,491 Pedro Salah Ahués Director 15,630-3,903 19,533 Hernán Somerville Senn Director 13,010-4,572 17,582 Oscar Von Chrismar Carvajal Director 15,630-2,595 18,225 TOTAL 226,574 23,445 24, ,744 * The directors have not received any other type of compensation or stipend from the subsidiary CCLV, Contraparte Central S.A., unless any member serves on one of the subsidiary's committees. Board compensation was approved at the annual general meeting on 4/25/2016. (-) No compensation was received for this concept. CHAPTER III Integrated Report 55

56 Board Orientation and Training The Board has formal procedures in place for new director orientation and training. The orientation procedure for new directors applies to both the Exchange and CCLV, Contraparte Central S.A. Based on these guidelines, the CEO is in charge of briefing directors on relevant business information needed to perform their duties. CHAPTER III Integrated Report 56

57 Honorary Chairman and Honorary Members The distinction of Honorary Member is a long-standing tradition at Santiago Exchange reserved for a select group of people. It is bestowed on individuals with a long track record at the institution who are deserving of recognition and appreciation from shareholders and brokers for their exemplary and selfless service in benefit of the institution and the brokerage profession. The distinction of Honorary Chairman was created in January 1989 and given for the first time in the institution's history to one of our most esteemed members, a man who served with success and dedication as the chairman of Santiago Exchange for over 21 years. Honorary Chairman: Eugenio Blanco Ruiz Honorary Members: Daniel Covarrubias Ortúzar Gustavo de la Cerda Acuña Tomás Hatton Aguirre Alberto Le Blanc Donaldson Luis Lira Montt Manuel José Ureta Mackenna CHAPTER III Integrated Report 57

58 Board Committees G4-49; G4-50 Board committees 7, consisting of a minimum of three individuals, are charged with studying, analyzing and making recommendations to the Board regarding aspects of the Exchange's management such as regulations, auditing, management control, risks, new business and technology, etc. They are the formal channel the Board relies on to be informed of, evaluate and form an opinion on management, initiatives, proposals and projects of the Exchange's different divisions and associates. These committees help improve decision making, strengthen governance and promote the Exchange's corporate values, core concepts and efficiency. 7 All committee members, whether standing or alternate, are in office as of December 31, CHAPTER III Integrated Report 58

59 Business and Technology Committee This committee is responsible for evaluating and proposing measures regarding Santiago Exchange's operations, business development and use of technology. It also addresses sustainability matters. The members of this committee in 2016 were: Standing Members Nicholas Davis Lecaros Fernando Larraín Cruzat Rodrigo Manubens Moltedo Hernán Somerville Senn Alternates Gonzalo Peña Lertora Claudio Larraín Kaplan Gonzalo Jiménez Parada Matías Repetto Vergara MAIN ACTIVITIES IN 2016 Alliance with S&P Dow Jones Indices The committee approved a strategic alliance between Santiago Exchange and S&P Dow Jones, to manage and distribute new stock indices. Change of Lead Data Center A commercial agreement was signed with Entel as the Exchange's new leading data center provider Commercial Derivatives Policy Since the Derivatives Market began operating in 2015, the Exchange has worked continuously to develop the market. This year, the committee approved the Liquidity Provider program, which is a new commercial model to stimulate trading on the Futures Market. Through this program, banks, foreign funds, brokers and Chilean institutional investors can qualify as liquidity providers. New Broker Data Protocol by Customer Type In order to strengthen good practices in broker-customer relations, in 2016 an internal communications project was approved to request monthly reports from brokers on trading values of buy and sell orders for equity market instruments as well as the number of trades by customer and investor type. Optimus Peru The committee approved a commercial agreement to implement the OPTIMUS Full Business Managementprogram. The Exchange had a total of 50 special requirements, which were implemented over a period of 18 months starting in October 2016, transforming Santiago Exchange into a supplier of back office systems for the Peruvian market. CHAPTER III Integrated Report 59

60 Business Regulations and and Technology Audit Committee This committee is responsible for analyzing and proposing improvements to the institution's internal regulations, overseeing its financial position and budgets and supervising external and internal audits. The members of this committee in 2016 were: Standing Members Jaime Larraín Vial Pedro Salah Ahués Oscar Von Chrismar Carvajal Alternates Jaime Larraín Concha Pablo Valenzuela Mardones MAIN ACTIVITIES IN 2016 Updating the Internal Audit Statutes The committee approved new Internal Audit Statutes, incorporating changes to the audit methodology flowchart (from a plan based on critical process to a risk-based plan), the structure of the flowchart for preparing reports and the scope of the division's duties to include both the Exchange and CCLV. Broker and Market Audits The committee approved the 2016 Broker and Market Audit Plan. A total of 101 audits were conducted during the year, based on brokers segmented by oversight level and market alerts Comprehensive audits Specific audits Immediate audits Market monitoring audits Other audits Internal Audits The committee approved the 2016 Internal Audit Plan, based on the risk management model. A total of 32 internal audits were conducted in Ongoing monitoring Operational audits ISO audits Computer audits CHAPTER III Integrated Report 60

61 Business Risk Committee and Technology Committee The Risk Committee is charged with issuing guidelines for comprehensively managing the main risks to which the institution is exposed. More specifically, it makes proposals to the Board on risk management policies, measurement mechanisms, limitations, controls and reporting of different risks. It also proposes accepted risk levels for material risks and, if necessary, recommends that the Regulations and Audit Committee order special audits to be conducted. Its work is governed by current laws, bylaws, regulations, policies, internal manuals and definitions issued by the Board. The Risk Committee was formed in October Prior to that date, its duties were carried out by the Regulations and Audit Committee. The members of the Risk Committee in 2016 were: Standing Members Juan Eduardo Correa García Álvaro Donoso Barros Eduardo Muñoz Vivaldi MAIN ACTIVITIES IN 2016 Comprehensive Risk Management The committee worked throughout 2016 on monitoring 30 financial and operational risk indicators defined in the Comprehensive Risk Management Model. It reviewed guarantee requirement models, currently under consult with the SVS, and guarantee valuation models, which are currently being used. It also analyzed the results of business continuity exercises conducted during the year. In November 2016, maintenance audits were performed by the British Standards Institution (BSI), for the ISO 27,001: 2013 and 22,301: 2012 certifications. As a result of successful audits, the Exchange maintained its certifications. Market Monitoring In August 2016, a market surveillance system was implemented based on a statistical analysis of patterns with real-time alerts for fixed income and money market instruments from the Chilean Central Bank and the Chilean Treasury, and corporate bonds, thus fulfilling commitments in the action plan. Guidelines were also set for regular reports to be provided to the Board. RISK MANAGEMENT MODEL The policy defined by the Board provides guidelines for managing risks that are inherent to the organization's processes. First, the Board defines a maximum level of tolerable risk. When this level is reached, mandatory mitigating measures must be taken. However, even before this defined level is attained, the Board recommends that process owners, together with the Risk Unit, consider applying other measures to alleviate risk, depending on their complexity, during the following year. CHAPTER III Integrated Report 61

62 Self-Regulation Committees In 2016, Santiago Exchange modified its bylaws to create a Best Practice Committee. This autonomous body is charged with analyzing and resolving grievances and regulatory violations, as well as suggesting best practices and corrective measures. External members that are independent from the organization sit on this committee. The Exchange also has an Ethics and Discipline Committee to resolve any conflicts that may arise among brokers regarding exchange-related matters. CHAPTER III Integrated Report 62

63 Business and Technology Committee Best Practice Committee The mission of the Best Practice Committee is to support self-regulation in the securities market in order to promote an equitable, competitive, orderly and transparent market. It acts independently and its work complements, but does not replace, current oversight authorities. It is responsible for hearing and resolving any grievances arising among brokers or between one or more brokers and their customers for violations of their bylaws, regulations, laws or standards issued by the SVS. In the event of violations, the committee applies penalties and discloses them publicly to the market. It also makes recommendations of best practices and corrective measures to improve market operations and may adopt agreements, order audits or make suggestions to brokers or the Exchange itself. This committee receives, analyzes and resolves cases filed with the Exchange through its public grievance mechanism established for this purpose. The members of this committee in 2016 were: Standing Members Lisandro Serrano Spoerer Jorge Jaramillo Selman Jorge Tarzijan Martabit MAIN ACTIVITIES IN 2016 Alternates Gonzalo Delaveau Swett Fernando Lefort Gorchs Analysis of Proceedings to File Charges and Recommendations for Year-End Operations In 2016, the committee investigated potential violations for transactions carried out by brokers between 2009 and Once the proceedings were finalized, the committee agreed to qualify as a bad practice transactions in which a customer buys stocks and then sells them to the original seller at similar price and settlement conditions in order to obtain benefits beyond those arising from the inherent nature of securities market transactions. Analysis of Audit Reports and Other Reviews Conducted by the Exchange The committee analyzed reports from comprehensive audits and other reviews conducted by the Exchange in order to identify any potential violations of exchange regulations. DMA Transactions In order to continue strengthening market security and trust, in 2016 the committee initiated a process to study diverse regulatory aspects of transactions performed using Direct Market Access (DMA), and the role brokers should play in this matter. CHAPTER III Integrated Report 63

64 Business Ethics and and Discipline Technology Committee Committee This committee is responsible for hearing and resolving any controversies that may arise among brokers over market transactions based on Santiago Exchange's Broker Code of Ethics. The committee is made up of one director and two brokers appointed each year at the annual general shareholders' meeting. The members of this committee in 2016 were: Standing Members Alternates Patricio Parodi Gil José Luis de la Rosa Muñoz Gonzalo van Wersch Calderón Ramón Eluchans Olivares René Peralta Moreno The committee may issue warnings and make recommendations to the Board regarding corrective measures to be ordered in the event of a violation. This committee does not hold regular meetings. It only meets when convened for special reasons. It did not meet during CHAPTER III Integrated Report 64

65 Good Governance Practices G4-SO6; G4-SO7 1. Board Code of Conduct This code applies to both the Exchange and its subsidiary CCLV. The most recent version was approved in March It contains the key principles that govern the actions of the Board as it performs its duties. It also defines, identifies and addresses the possible conflicts of interest that may arise and describes the procedures that must steer the Board's actions in such circumstances. This code is reviewed and updated every three years. 2. New Guidelines to Strengthen Governance at Santiago Exchange The new bylaws approved at the extraordinary shareholders' meeting in March 2016, which are currently pending SVS approval, introduce significant amendments to the Exchange's governance. These changes aim to strengthen the Exchange's role in developing the securities market and enhance efficiency and transparency, thereby benefiting issuers, investors and intermediaries that take part in the market. As a special corporation, the new bylaws will take effect once the amendments are approved by the SVS. The new bylaws introduce the following changes to the Exchange's governance structure: - There must be a minimum of three directors not related to brokers, which reinforces their independence and reduces the possibility of conflicts of interest. In addition, one of the unrelated directors must also be independent from the corporations listed on the Exchange. - The Board will have a Corporate Governance Code, which will define the rules and complementary procedures applicable to board elections. -The Board may create committees that include market participants in order to help it draft proposals involving market development, regulatory enhancement and exchange operations. In other words, these are formal opportunities for the Exchange's governance to communicate with its priority stakeholders, such as customers. 3. Managing Information and Conflicts of Interest Among the guidelines that govern the actions of the Board, management and associates, the Board drafted a Market Information Manual for Santiago Exchange. The objective of this manual is to regulate the accurate, timely and transparent disclosure of information to investors. 4. Broker Code of Ethics As part of its objective to provide more self-regulation tools for the market, Santiago Exchange has developed a Code of Ethics specifically for brokers. This code establishes general rules of good faith, honor and professional dignity. Such values strengthen the day-to-day dealings of brokers and prevent the risk of unfair or outrightly unlawful practices. This code also poses guidelines for broker relations with their customers in terms of safeguarding information and conflicts of interest; with other brokers in terms of unfair practices or exchange conflicts; and with authorities in terms of timely disclosure. 5. Adoption of GCS 385 As a special corporation, and as a sign of transparency, the Exchange has voluntarily applied SVS General Character Standard No. 385 since Through this initiative, Santiago Exchange manifests to the market its real and profound interest in promoting the importance of governance mechanisms, transparency and good leadership and business control practices in the financial sector. This rule mandates the use of a self-assessment tool to evaluate corporate governance, corporate social responsibility and sustainable development practices employed by the Exchange and its subsidiary. 6. Donations Policy Santiago Exchange's Donations Policy establishes the general framework for making corporate donations and verifying that benefiting entities are not involved in unlawful activities. These entities must be Chilean non-profit organizations. Government organizations and political campaigns are excluded. Donation amounts are previously defined in the annual budget approved by the Board. CHAPTER III Integrated Report 65

66 Our Management Santiago Exchange's management team consists of the chief executive officer and several operating areas. Among other duties, the CEO must execute all agreements made by the Board. The Risk Unit reports directly to the CEO. 1. Nicolás Almazán Barros / Chief Planning and Development Officer Chilean National ID: Degree in business administration from Universidad de Chile and a Master in Financial Management from Universidad Adolfo Ibáñez. He joined Santiago Exchange in June Chief planning and development officer since November Role: To efficiently develop markets, products and services, to expand securities market activity and to satisfy customer needs in order to add value and strengthen the Exchange's relationship with the market. 2. Juan Ponce Hidalgo / Chief Operating Officer Chilean National ID: Degree in financial engineering from Universidad Diego Portales. He joined Santiago Exchange in July Chief operating officer since July Role: To manage market operations in line with current regulations and to ensure that market data is properly reported to regulators, serving as the liaison to align regulations and market operations. 3. Lucy Pamboukdjian / Chief Commercial Officer Chilean National ID: Degree in business administration with certificate in financial economics from Universidad Mackenzie de Sao Paulo, Brazil, and a Master of Economics (MSc) from Pontificia Universidad Católica de Sao Paulo. Leads activities of the MILA Commercial Committee. She joined Santiago Exchange in May Role: To serve all customers in order to survey market and technology business opportunities and promote the Exchange's added value among shareholders and market agents, to market and expand its product and service offering and to strengthen relations with local and foreign investors, issuers, brokers and intermediaries. 4. José Antonio Martínez Zugarramurdi / Chief Executive Officer Chilean National ID: Degree in industrial engineering from Universidad de Chile and Master in Business Law from Universidad Adolfo Ibáñez. He joined Santiago Exchange in May Chief executive officer since September Role: As the Exchange's representative and the person responsible for its management, the CEO's role includes leading staff development efforts; defining management priorities with a focus on excellent, comprehensive service; supporting the development of stock and financial markets and generating added value for shareholders, all within the framework defined by the Exchange's Board. 5. Andrés Araya Falcone / Chief Information Officer Chilean National ID: Degree in IT engineering from Universidad Diego Portales, degree certificates in financial risk and advanced financial management and MBA from Universidad Católica de Chile. Leads activities of the MILA Technology Committee. He joined Santiago Exchange in January Chief information officer since April Role: To implement technology to improve business and operational processes to benefit Santiago Exchange and its customers. To implement high-quality, effective IT solutions that allow market participants to strengthen their business and ensure continuity and risk control. 6. Patricio Rojas Sharovsky / Chief Financial Officer Chilean National ID: Degree in industrial engineering and MBA from Universidad Católica de Chile. He joined Santiago Exchange in September Chief financial officer since August Role: To prepare, analyze and control revenue projections and expense and investment budgets; prepare financial statements; manage investor relations; supervise financial investments; and comprehensively manage human resources and the supply of internal services with a focus on efficiency and profitability. 7. Carlos Niedbalski Chacón / Chief Audit and Control Officer Chilean National ID: Degree in business administration from Universidad de Santiago, degree in accounting from Universidad de Chile and MBA from Universidad Católica de Chile. He joined Santiago Exchange in February Chief audit and control officer since January Role: To contribute to market transparency and trust, to ensure that member brokers comply with current regulations and to support management in safeguarding the Exchange's assets and strengthening internal controls over business processes. CHAPTER III Integrated Report 66

67 Diversity in Management 8 AGE YEARS OF SERVICE GENDER MEN 6 Under 30 - Less than 3 years WOMEN years - NATIONALITY years - CHILEAN 6 FOREIGN years More than 13 years Total compensation received by senior management in 2016: CH$ 1,170,947 Over CH$ 1,035, CH$ 992,741 8 Management as of December 31, The figures are expressed in CH$ thousands CHAPTER III Integrated Report 67

68 Customer Focus Groups: Good Stakeholder Practices These are formal opportunities for the Exchange to meet with market players to present work proposals and gather opinions on topics of mutual interest. They also help strengthen securities market practices as part of our external consultation efforts. These meetings also help management design the products and services that the Exchange offers its customers. Equity focus group Fixed income focus group Derivatives focus group Short-sale and forward focus group In 2016, ten focus groups were held. More information on these focus groups is available in the Customer Management section. CHAPTER III Integrated Report 68

69 Ethics and Transparency G4-56; G4-57; G4-SO3 Santiago Exchange plays a key role in the transparent development of the securities market by providing the market's diverse players with an ethical framework that regulates and guides their actions. This role is in line with the goals of responsibility and sustainability that the organization sets for stakeholder engagement. The main issues involving ethics and integrity that affect the Exchange are related to conflicts of interest between market participants and compliance with rules and regulations for a transparent market. To accomplish this, the organization has diverse rules and regulations that apply to the Board as well as brokers, associates and its supply chain. COMPLIANCE Code of Conduct Santiago Exchange has a Code of Conduct, which applies to both the Exchange and its subsidiary CCLV, that establishes an ethical framework of principles, values and conducts to govern the job performance and behavior of directors, associates, suppliers and/or advisors. The Code of Conduct has been in force since It is updated each year and any changes are approved by the Board. CRIME PREVENTION MODEL In 2011, Santiago Exchange developed a crime prevention model for the Exchange and CCLV, in compliance with Law No. 20,393 on Criminal Liability of Legal Entities, to prevent financial crimes (asset laundering, terrorism financing, bribery and reception of stolen property). The model is updated each year and any changes are approved by the Board. This model applies to, and outlines the rights and obligations of, the entire organization, shareholders, associates, suppliers and third parties. Topics Addressed in the Code of Conduct: Values - Excellence, quality and customer focus - Honesty - Talent and innovation Principles - Excellence - Integrity - Commitment - Respect - Honesty - Responsibility Business Conduct - Conflicts of interest - Confidential information - Gifts and invitations to associates - Consumption of alcohol and drugs - Sexual harassment - Health, safety and the environment - Political activities Criminal Liability of Legal Entities - Asset laundering - Terrorism financing - Bribery - Receiving stolen property CHAPTER III Integrated Report 69

70 GRIEVANCE MECHANISMS G4-LA16; G4-HR3; G4-HR12; G4-SO11; G4-58 These are mechanisms for filing grievances regarding possible cases, situations or practices that violate the Crime Prevention Model, the Code of Conduct described above, or other codes, regulations, policies, procedures and internal and external standards involving ethical conduct. These mechanisms are public and open to both internal and external stakeholders. They apply for both Santiago Exchange and CCLV, as well as third parties that do business with these companies, such as suppliers and customers. They are confidential, anonymous and regulated by the Grievance Mechanism User Manual. How Grievance Mechanisms Work They are managed internally by the Audit and Control Division and involve personnel from the Board, Best Practice Committee, Human Resources Division and legal advisors. There is one mechanism for the Exchange and another for CCLV, Contraparte Central S.A. G4-SO4 All associates employed by the Exchange and CCLV have been informed of the Crime Prevention Model, the Code of Conduct and the grievance mechanisms. These topics are also addressed in the annual training plan and orientation courses. G4-SO5; G4-SO7 No grievances were filed through these mechanisms in 2016 related to bad business practices, discrimination or any other violation of human, social or labor rights. 1. FILING GRIEVANCES - By . - On the website. - By phone. - Directly with the Head of Crime Prevention. 2. Monitoring Grievances - Three people simultaneously receive the grievance. - Cases are rerouted to the Best Practice Committee, Human Resources Division, legal advisors or another appropriate division. - Information is reviewed to determine whether the grievance merits investigation. The outcome of the case is decided. - The informant is notified that the information has been received and given updates on the status of his or her grievance and the outcome. 3. Resolving Grievances - For confirmed cases, the types of penalties are de fined. - The informant is notified of the measures taken. - If the informant is not satisfied, he or she can resubmit the grievance in writing directly with the Board or the Regulations and Audit Committee. canaldedenuncias@bolsadesantiago.com canaldedenuncias@cclv.cl CONTACT DETAILS FOR FILING GRIEVANCES Grievances can be sent to the following addresses: comitedebuenaspracticas@bolsadesantiago.com A website is also available and can be accessed by clicking on the logo of the respective institution. CHAPTER III Integrated Report 70

71 Comprehensive Risk Management G4-2; G4-45; G4-46; G4-47 Santiago Exchange and its subsidiary CCLV, Contraparte Central S.A., approved Risk Management Policies in 2014 and 2011, respectively. This policy lays out the guidelines for comprehensively managing risks within the organization. These efforts, implemented through the Risk Management Manual, apply to processes that support the organization's business dealings. Comprehensive Risk Management (CRM) is defined as coordinated management and handling of risks within the organization. It requires having full knowledge of the different areas and using that information in decision-making processes in order to avoid, mitigate or manage risks. At the Exchange, CRM relies on a governance model, which is based on NCh Standard - ISO 31,000: 2009 and the Principles for Financial Market Infrastructures from the Bank for International Settlements 2012, which outlines three lines of defense to ensure efficient and effective risk management. Comprehensive Risk Management System at Santiago Exchange and CCLV, Contraparte Central S.A. FIRST LINE OF DEFENSE OPERATIONAL MANAGEMENT INTERNAL CONTROL RISK COMMITTEE SENIOR MANAGEMENT AUDIT COMMITTEE SECOND LINE OF DEFENSE RISK MANAGEMENT FINANCIAL CONTROL INFORMATION SECURITY BUSINESS CONTINUITY THIRD LINE OF DEFENSE INTERNAL AUDIT The Risk Unit communicates risk management matters to the Risk Committee, which in turns reports to the Board. EXTERNAL AUDITORS REGULATORS First Line of Defense The business areas at the Exchange and CCLV are the parties primarily responsible for managing their risks. This activity must be incorporated into their ongoing daily work processes. Second Line of Defense The Risk Unit is responsible for supporting risk management efforts by the different business areas. It is also responsible for establishing a risk management policy and controlling risk. Third Line of Defense The Internal Audit Division is responsible for providing an independent perspective and assurance with respect to the risk management system. CHAPTER III Integrated Report 71

72 Implementing Comprehensive Risk Management The process of implementing CRM involves ongoing communication and consultation throughout each of the stages of risk assessment, while continuously monitoring and reviewing risk. The three lines of defense take part in this process. Risk management: ESTABLISHING THE CONTEXT - Contributes to the organization's ability to achieve goals and improve performance. COMMUNICATION AND CONSULTATION ASSESSING RISKS IDENTIFYING RISKS ANALYZING RISKS ASSESSING RISKS MONITORING AND REVIEW - Allocates resources to problems detected by process owners. - Generates continuous improvement through problem solving. - Indicates the status of risks and how the organization's controls are working. - Increases the profitability of Santiago Exchange and CCLV through informed decision making that balances risk and return. ADDRESSING RISKS CHAPTER III Integrated Report 72

73 Identifying the Organization's Risks Since Santiago Exchange does business in a new, changing and variable environment, risk is an inherent part of the strategic short- and long-term objectives it establishes. With this in mind, the Risk Unit has grouped the organization's different risks into eight main categories based on definitions from the Bank for International Settlements: 1. Operational Risk: The risk of loss resulting from inadequate or failed internal processes, people and systems and/or applicable internal controls or from external events. 2. Reputational Risk: The risk of loss incurred by an organization due to discredit, corporate image problems, negative publicity, whether true or not, regarding the institution and its business practices that causes losses to its customers, decreases in revenue or legal actions. 3. Legal Risk: The risk of the unexpected application of a law or regulation, usually resulting in a loss. 4. Custody and Investment Risk: The risk of loss on assets held in custody in the event of a custodian s (or subcustodian s) insolvency, negligence, fraud, poor administration, or inadequate recordkeeping. 5. Systemic Risk: The risk of the inability of one or more participants to perform as expected, which could cause other participants to be unable to meet their obligations when due. 6. Credit Risk: The risk that a counterparty, whether a participant or other entity, will be unable to meet fully its financial obligations when due, or at any time in the future. 7. Liquidity Risk: The risk that a counterparty, whether a participant or other entity, will have insufficient funds to meet its financial obligations as and when expected, although it may be able to do so in the future. 8. General Business Risk: Any potential impairment of the financial condition (as a business concern) of the organization due to declines in its revenues or growth in its expenses, resulting in expenses exceeding revenues and a loss that must be charged against capital. Risk Training: The Exchange's Comprehensive Risk Management guidelines are included in its annual training plan. As part of this plan, all associates must take mandatory e-learning classes that test their knowledge of matters related to risks, business continuity and information security. CHAPTER III Integrated Report 73

74 Milestones in Governance and Sustainability In 2016, Santiago Exchange made progress on corporate governance and sustainability issues by carrying out a variety of initiatives and activities designed to align the Exchange with international standards. Shareholders of Santiago Exchange Approve Bylaw Amendments to Move Forward with Demutualization At an extraordinary shareholders' meeting held in March 2016, with 79.2% of validly issued shares represented, the shareholders of Santiago Exchange approved amendments to its bylaws that were needed in order to complete the demutualization process. Santiago Exchange Participates in Panel Discussion on Business Ethics In December, the chairman of Santiago Exchange, Juan Andrés Camus, participated in a panel discussion organized by KPMG and the Business School at Universidad Adolfo Ibáñez to launch the book Corporate Governance and Ethics in Business. Brokers Commence Monthly Reporting of Trading Values of Buy and Sell Orders by Customer Type In order to foster transparency and enhance market disclosure, in October 2016 the Board of Santiago Exchange agreed to request monthly reports from brokers on trading values of buy and sell orders for the Equity Market as well as the number of trades by customer and investor type that took place in the Exchange's trading systems. Round Table on GCS 395 In August 2016, Santiago Exchange, in collaboration with Diligent organized a round table on corporate governance entitled Investing in Trust, Good Practices and Responsible Investment,. At the event, participants analyzed the lessons learned from SVS General Character Standard (GCS) No Santiago Exchange took part in a panel on Best Practices and Applications of Standard 385, which discussed trends in international corporate governance standards. CEO Conference on Sustainability with IPSA Companies The first CEO Conference on Sustainability and Corporate Governance was held in August At the event, the Exchange participated alongside the CEOs of several IPSA companies in a debate on the relevance of these matters for market sustainability. Santiago Exchange Participates in UN Global Compact Commission on Transparency and Responsible Investment In November 2016, Santiago Exchange participated in a UN Global Compact Commission on Transparency. The commission aims to promote transparency within Chilean companies, entities and educational institutions in order to advance this concept on the basis of one of the Global Compact pillars: anti-corruption. CHAPTER III Integrated Report 74

75 A Demutualized Exchange G4-13 Demutualization is a process by which ownership of the Exchange is transformed, separating ownership rights from brokerage activity and listing the Exchange on the market it manages. The Strategic Development Committee, comprised of several members of the Board, was created to study the demutualization processes in other markets. In 2015, the committee concluded that this transformation would introduce increased levels of competition, strengthen Chile's capital markets and enhance efficiency and transparency, thus benefiting all market players. In order to complete the full demutualization process (the Exchange already met several requirements), shareholders had to approve certain amendments to the bylaws that will take effect once approved by the SVS. Demutualization will improve the Exchange's ability to face challenges and opportunities and give it better tools to adapt to market needs. Key Aspects of Demutualization The number of shares in which the Exchange's capital is divided is increased from 48 to 48,000,000 shares. As a result, each existing share of Santiago Exchange will be exchanged for one million new shares in order to increase liquidity and facilitate trading of exchange shares on the market. The requirement that one must be a shareholder of the Exchange in order to carry out the dut ies of a broker is eliminated and replaced by an operating agreement between the parties. This will enable new shareholders and market players to purchase shares of the Exchange. A concentration limit is established so that no individual or legal entity may individually, or collectively with related parties, own, directly or indirectly, more than 25% of the Exchange. The Exchange's corporate governance structure is modified to incorporate three members that are not related to the Exchange, its subsidiaries and associates, brokers or the business, into the existing 11-member Board. This measure reduces the possibility of conflicts of interest since these directors do not take part in the Exchange's activities as a market and regulator of broker activity. Other governance-related measures include the drafting of a Corporate Governance Code, the formation of user committees involving issuer, investor and broker representatives and adjustments to several bylaws related to provisions in Law No. 18,046 regarding the Board. CHAPTER III Integrated Report 75

76 Chapter IV Sustainable Performance We strive to maximize performance in a long-term relationship with our stakeholders. Integrated Report 76

77 Customer Management Santiago Exchange's commercial strategy focuses on excellent service, customer satisfaction and the generation of value for market players, under a plan of ongoing engagement with intermediaries, issuers and investors, domestic and international alike. In order to attract new players to the Chilean securities market, the Exchange seeks to fully understand its customers' businesses in order to drive the development of products, services and new markets and, in turn, achieve integration with international markets. The Exchange develops technological products and solutions for its customers related to trading and market data, as well as providing services to support the exchange business. It also promotes the sustainable development of the securities market by generating self-regulation standards and good practices that create conditions for the existence of a sound, secure, reliable and transparent market. OUR CUSTOMERS Lipigas Completes Listing Process Empresas Lipigas was listed on the Exchange in November 2016 following a secondary placement of a 20% stake in the company. New investors purchased 22,714,903 shares at a price of CH$4,500 per share, which is equivalent to over CH$102 billion (more than US$ 150 million). Our Customers Santiago Exchange defines its customers as all parties related to the securities market and that operate on it, either directly or indirectly, as well as suppliers of financial services that outsource services from the institution, intermediaries and issuers Issuers (Data as of year-end 2016) Brokers (Data as of year-end 2016) Intermediaries Institutional Investors Professional Foreign Individual ISSUERS Suppliers of financial services Brokers that are members of Santiago Exchange. Regulated Chilean financial entities* that operate on the Exchange through intermediaries. They purchase technology and connection services directly from the Exchange. Chilean holding companies and other types of institutional investors that operate on the Exchange through intermediaries. They purchase technol ogy and connection services directly from the Exchange. Any type of investor incorporated abroad. They can operate on the Ex change through intermediaries. They purchase technology and connec tion services directly from the Exchange. Individuals that invest in the Exchange through intermediaries. Companies and institutions that issue securities that are listed on Santiago Exchange. Companies that purchase, and/or connect to the Exchange to distribute, exchange data. *Regulated institutions that provide financial services, such as pension funds (AFP), asset management companies (AGF), insurance companies, banks. CHAPTER IV Integrated Report 77

78 Customer Communications Customer communications are channeled through the Commercial Division, specifically its commercial relationship, customer service and product-specific teams, in order to cultivate long-term relationships and centralize all requirements and requests asked of the Exchange's different internal areas. This enables the institution, within its role as a supplier of market infrastructure services, to forge bonds between the Exchange and its customers, and to maintain continuous communication with them, looking to support the development of the securities market itself as well as its customers, thus driving securities market growth. Following a major restructuring in 2016, the Commercial Division targeted its customer service processes by customer type, thereby strengthening direct communication with investors, issuers and foreign customers. Through this segmentation, it seeks to understand its customers' financial instrument needs, as well as to identify improvements that need to be made to the market and exchange technology services, in order to develop solutions that generate ongoing customer satisfaction and trust in a long-term relationship with the Exchange. COMMUNICATION CHANNELS Customer Meetings Issuer Events CUSTOMER FOCUS GROUPS CUSTOMER SERVICE Satisfaction Surveys Active Surveys "Bolsa News" Newsletter Issuer Guide CONTACT FORM GRIEVANCE MECHANISMS DESCRIPTION Frequent opportunities to contact customers to listen to and understanding them, in order to incorporate their needs into product and service development processes. Events held with issuers to promote corporate governance and corporate sustainability matters. Focus groups with customers to discuss challenges and developments in the different markets operated by the Exchange. Customer service to collect requests and grievances, which are resolved and/or rerouted to the appropriate unit among the Exchange's diverse business areas. This channel can be accessed by phone or . Ongoing monitoring of customer satisfaction levels. Specific monitoring on websites and social networks, among other sites. Monthly publication with news and summarized market data. Newsletter containing market data and analyses on listed companies that allows readers to compare the main stocks traded on the local Equity Market. Available on institution s website. Channel open to any individual or institution to file grievances on legal violations or breaches of ethical conduct. CHAPTER IV Integrated Report 78

79 Customer Communications Customer Meetings: New Opportunities for Feedback In 2016, the Exchange focused its customer relations efforts on a new relationship methodology. This included forming a team of relationship managers responsible for each group of customers among the different types of financial institutions in Chile. The objective of this relationship model was one of the Commercial Division's core concepts during this period, placing particular importance on ongoing, fluid communication with its customers in order to expand its knowledge of their business model and develop solutions to fit their needs. By meeting regularly with customers, the division included them in the process of developing products and services. These efforts were intended to enhance quality and create more user-friendly tools in order to boost customer satisfaction with the products and services provided. Customer Focus Groups 2016 The Exchange structured focus groups of specialists from among its customers in the capital markets in order to present work proposals and gather opinions on topics of interest that promote the development of the Exchange and the capital markets, thus benefiting all participants. One group was formed for each market. Each group was responsible for structuring debate on the progress of the Chilean securities market and prioritizing the Exchange in developing markets, products and services, ultimately creating new business opportunities for participants and growth and liquidity for the Exchange's operations. Four customer focus groups were organized in 2016: Fixed Income Focus Group. The group met in April, August and November to discuss the creation of electronic DMA trading for the Exchange's Debt Markets, how to attract foreign investors to trade these instruments, criteria for voiding transactions and prioritization of improvement projects for Fixed Income market operations, among others. Equity Focus Group. The group met in March and September to address a variety of initiatives to make the local market more visible and improve liquidity, such as the agreement between Santiago Exchange and S&P Dow Jones to generate market indices or international activities to attract foreign investors, such as the creation of a centralized asset lending model. It also discussed the Exchange's work with issuers to promote good corporate governance and transparency by disseminating these practices among issuers on the Exchange's website, among other topics. Derivatives Focus Group. This group met in May and October to discuss advances in the Futures Market; CCLV's application to be recognized as an international central counterparty by the European market regulator (ESMA); the creation of the Liquidity Provider model for the Futures Market; the Exchange's participation, along with a delegation of Chilean market participants, in the FIA Expo in Chicago; as well as the business model for the equity options project. Short-sale and Forward Focus Group. This group met in June to address the taxation of securities loans and the new short-sale and securities lending projects in both the administrative and trading systems. Issuer Events Promoting corporate governance, transparency and business sustainability guidelines among issuers is key to improving equity market liquidity indices and driving the corporate development of issuers. Therefore, the Exchange organizes diverse events with issuers to convey the importance of incorporating transparency and good corporate governance standards into their management practices and communicating them efficiently to investors. In 2016, the Exchange met with the CFOs and investor relations teams from 100% of the companies on the IPSA index. CHAPTER IV Integrated Report 79

80 Customer Service Customer Protection The Exchange's help desk, known as SAC, receives customer requests, inquiries and suggestions by phone and and then reroutes them to the appropriate areas within the organization for processing and resolution. In 2016, SAC handled 34,705 phone calls and s, of which 23,997 (69% of total) resulted in call tickets being generated for follow-up. The remaining 31% involved information, requests or questions that were resolved by the customer service agents themselves. In addition, 63% of the call tickets for follow-up were resolved on the same business day they were created thanks to team work between SAC and the Exchange's different operating areas, thus reinforcing the organization's commitment to resolving customer needs as efficiently as possible. The Exchange challenges itself to progressively improve the efficiency and customer focus of the service SAC provides, honing the executives' analytical and preventative skills in order to continuously improve their response capacity and incorporate innovation into the service process, thereby anticipating customer needs. G4-PR8; G4-PR9 Information is a very valuable, strategic asset for Santiago Exchange. As a result, the organization works to protect how it is obtained, accessed, processed, transmitted and stored. Information security measures ensure the confidentiality, integrity and availability of information. Efforts to safeguard private, confidential information regarding exchange customers are based on a set of policies, procedures and manuals prepared in accordance with ISO 27,001. Santiago Exchange and CCLV Contraparte Central S.A., and their Information Security Management System, are certified in the 14 domains established in the standard. In 2016 no grievances were filed regarding customer privacy violations or data leaks. CHAPTER IV Integrated Report 80

81 Labor Performance Human resource management at Santiago Exchange and its subsidiary CCLV Contraparte Central S.A., strive to build a customer-centered culture and excellent service, in accordance with the organization's strategic objectives. Management efforts are focused on building working conditions and associate skills so employees can effectively and efficiently interact with customers, bring innovation to work processes and develop competitive products and services, thus helping the organization expand business and grow sustainably. In order to implement these guidelines, the organization is concerned with creating the best experience for its associates, focusing on their personal and professional development and promoting activities that foster a sense of belonging and make evident their contribution to the Exchange and society in general. Workforce Profile G4-10; G4-LA12 Santiago Exchange and its subsidiary CCLV Contraparte Central S.A., employ 282 associates in several different areas. Of the total workforce, 99% (278 people) have indefinite contracts and 1% (four people) have fixed-term contracts. All associates work full time. Broken down by nationality, 2% of associates are foreign (one Brazilian, one Bolivian, two Uruguayans and three Venezuelans). The following table profiles the workforce by gender, age group and employee category. Workforce as of December 31, 2016 Employee Category Men Women Total Executive Officers Deputy Managers / Department Heads Area / Project Managers Professionals / Technicians Other positions* Total Associates by Age Group and Gender * Other positions include: Administrative staff, aides, security guards and assistants AGE GROUP Men Women Total Over Under TOTAL CHAPTER IV Integrated Report 81

82 Workforce Profile Associates by Years of Service Turnover 34% Less than 3 years 18% More than 12 years 7% 9-12 years G4-LA1 In 2016, associate turnover reached 16.9, which is similar to the prior year figure of Given the high degree of specialization and knowledge required to work in the securities market, it is important for the Exchange to maintain and/or reduce turnover rates and employ associates for extended ASSOCIATES THAT LEFT THE EXCHANGE IN 2016 periods of time. Its strategy for achieving this objective is to attract and retain talent using policies that promote personal development and wellbeing and help cultivate a positive working environment. 29% 3-6 years 12% 6-9 years Executive Officers Deputy Managers / Department Heads Under Over 50 CONSOLIDATED TOTAL Men Women Total Men Women Total Men Women Total Men Women Total Area Managers Professionals / Technicians Other positions* Total Turnover Rate (9) Calculation of turnover rate: (exits/total workforce) x 100 * Other positions include: Administrative staff, aides, security guards and assistants CHAPTER IV Integrated Report 82

83 Workforce Profile New Hires in 2016 UNDER OVER 50 CONSOLIDATED TOTAL Men Women Total Men Women Total Men Women Total Men Women Total Executive Officers Deputy Managers / Department Heads Area Managers Professionals / Technicians Other positions* Total New Hire Rate (10) * Other positions include: Administrative staff, aides, security guards and assistants 10 Calculation of new hire rate: (new hires/total workforce) x 100 CHAPTER IV Integrated Report 83

84 Workforce Profile Absenteeism G4-LA6 Absenteeism is defined as not showing up for work for causes such as inability, accidents, leave or illness. This calculation excludes employee vacation and parental leave. Absenteeism Indicators Hours of Absenteeism Absenteeism Rate (%) (11) YEAR Men Women Total Men Women Total ,146 8,407 17, Calculation of absenteeism rate: (hours of absenteeism / theoretical working hours) x 100 Theoretical working hours: (170 (hours per month) x 12 months) * Total workforce and by gender. Hours of absenteeism include: common medical leave + other leave (marriage - 5 days; birth - 5 days; death of relative - 1 to 5 days) CHAPTER IV Integrated Report 84

85 People Development In 2016 the Exchange implemented a new People Development Model. The guidelines of this model are structured around the objectives in the organization's strategic plan. Santiago Exchange defines personal development as the chance to access better personal and professional conditions by combining effort, perseverance and individual merit with the tools and opportunities that the organization makes available to its associates for these purposes. EDUCATION AND TRAINING G4-LA9; G4-LA10 Based on this policy, the Exchange has an organization-wide training plan for all associates that features technical and professional training programs and diverse opportunities for developing competencies, skills and leadership. The workforce averaged 59 training hours per associate, completing a total of 19,153 hours and reaching 323 associates (12). The following education programs were conducted in 2016: Education Programs in 2016 Program Number of Beneficiaries (13) Beneficiaries / Total Workforce (%) Undergraduate scholarships Graduate scholarships Knowledge programs Skill programs Other The total number of persons trained exceeds the total number of associates as of December 31, 2016, because the calculation includes associates that left the company during the year. 13 The total number of persons trained exceeds the total number of associates as of December 31, 2016, because the calculation includes associates that left the company during the year. CHAPTER IV Integrated Report 85

86 Internal Mobility In accordance with its Selection and Hiring Policy, the Exchange favors internal recruiting when selecting personnel. This encourages vertical and horizontal mobility as a priority mechanism for developing associates. In 2016, 28 associates (16 men and 12 women) were selected for positions in other areas within the organization as a result of this process. Career Plans The Exchange has an organizational structure based on the duties of each position. This structure is published on the Intranet to ensure that all associates understand the internal mobility requirements to reach a certain position, thus generating greater clarity as to possible career paths within the Exchange. 360 Performance Evaluation G4-LA11 In 2014 the Exchange began gradually implementing a 360 performance evaluation model for associates. This model now covers 100% of the workforce. Compensation G4-LA13; G4-51; G4-52; G4-54 The Exchange has a Compensation Policy that defines salary ranges by position. Thanks to this policy, there are no significant salary gaps within the organization based on gender, years of service or any other concept other than the specific duties of the position. The ratio of the compensation of the highest paid individual to the median annual total compensation for all associates in 2016 was (14). The Exchange has decided that associate compensation must be at least equal to the median compensation for the financial market. To determine this range, an external entity periodically performs a market compensation study and updates the organization's compensation standards annually based on these studies. Ratio of base wages of women to men by employee category (15) Executive Officers 1.07 Deputy Managers Department Heads Area Managers Project Managers Professionals / Technicians This calculation is the ratio of the annual total compensation for the organization s highest-paid individual to the median annual total compensation for all employees (excluding the highest-paid individual). The CEO's compensation is excluded. 15 Calculation: average wages for women / average wages for men, where: Value over 1: there is a gender pay gap. Example: a value of 1.4 means that women's wages are 40% greater than men's wages. Value of 1: there is no gender pay gap. Value of less than 1: there is a gender pay gap. Example: a value of 0.9 means that women's wages are 90% of men's wages, or women's wages are 10% less than men's wages. CHAPTER IV Integrated Report 86

87 Quality of Life and Benefits G4-LA2 In order to attract and retain talent, the Exchange provides a series of benefits to associates in addition to their wages. The corporate human resources Intranet page describes these benefits, including their purpose, how to access them, conditions and requirements. Benefits and social assistance are available to all exchange associates regardless of their position or years of service. Family Description ASSOCIATE BENEFITS Education Agreements Assistance Materials and Cash Bonuses Health and Wellbeing Events and Special Occasions Leave Intended to reward or finance activities to increase associates' knowledge and skills. Benefits arising from agreements between the organization and diverse institutions to give discounts or preferential payment conditions to associates to use or purchase goods/services. Loans with preferential terms and other types of assistance for associates. Instruments and materials that the organization provides associates so they can perform their duties. Designed to improve associates' quality of life through agreements with other companies or assistance with extraordinary circumstances. Practices to improve associate wellbeing through recreational and social events and observance of special occasions. Practices to help associates manage their time in order to cultivate contentment and wellbeing and improve their quality of life. - Financing and co-financing of technical and graduate study programs - Institutional training plan - Coaching-Leadership Program - English classes - University scholarships - Coronary Unit Agreement - Corporate Mobile Phone Plan - Institutions of Higher Learning - Dental Health Providers - Automotive Insurance - Taxi Service - Fitness Center - Benefits for Birth of a Son or Daughter - Marriage Bonus - Cost-of-Living Adjustments - Allowance for Death of an Associate - Outplacement for Executive Positions - Childcare Allowance - Special Loans - Yearly Variable Bonus - Excellence Bonus - Uniforms - Sports Activities - Dress Code - Corporate Cafeteria - Medical Leave - Life Insurance - Supplementary Health Insurance - Preventative Health Checks - Birthday Gifts - Christmas Gifts - Gift for Birth of Son or Daughter - Year End Party - Performance Awards - Camaraderie Lunches - Little Exchange Tour for Children of Associates - Bank Holidays - Special Working Hours - Leave for Residential Moves - Birthdays - Legal and Additional Leave for Death of a Direct Family Member - Unpaid Leave CHAPTER IV Integrated Report 87

88 Occupational Health and Safety The health and safety of its associates are very important to Santiago Exchange. Therefore, the institution's corporate human resources Intranet page contains the following policies involving personal safety and caring for the workplace environment: Safety Instructions for Exchange Facilities; Floor-by-Floor Evacuation Plan for Monitors; Exchange Evacuation Plan; Instructions for Evacuation Monitors 2016; Information on Professional Illnesses and Handling of Portable Fire Extinguishers. Accident Rates Severity Index (16) Frequency Rate (17) Calculation of severity index: (Number of days lost / Total hours worked) x 1,000, Calculation of frequency rate: (Number of lost-time accidents / Total hours worked) x 1,000,000 Accident Rates G4-LA6; G4-LA7 Bolsa de Santiago and CCLV Contraparte Central S.A., reported no professional illnesses and a very low accident rate, with two associates incurring 362 lost days for medical leave in Joint Committees G4-LA5 The Exchange has a Joint Committee that represents 100% of associates. It meets monthly to address employee-related issues. The committee has 13 members that actively work to understand associate concerns or needs and evaluate and suggest solutions. By law, since Santiago Exchange has more than 25 associates, it must have a joint committee. However, all agreements and activities also apply to associates of CCLV Contraparte Central S.A. Initiatives for Wellbeing of Associates Health Week Every year the Human Resources Department organizes a series of activities related to associate health and wellbeing known as Health Week. In 2016, the week-long event covered topics such as stress management, prevention, healthy eating, fitness breaks and also provided flu vaccines. Throughout the year, the Exchange carries out these and other initiatives to promote associate health and wellbeing, incorporating these matters into the annual training plan. CHAPTER IV Integrated Report 88

89 Work Climate While everyone that works at the organization is responsible for cultivating a good workplace climate, team leaders have a particular duty in this regard. In order to promote a positive work environment, Santiago Exchange and its subsidiary CCLV Contraparte Central S.A., drafted a Work Climate Policy that establishes general principles and action guidelines to direct efforts to evaluate, publicize, manage and enhance the organization's internal environment. Results of Work Climate Study 2016 Average Score per Dimension (scale of 1 to 7) In accordance with these guidelines, a climate survey has been conducted each year since 2011 that covers 100% of associates. Once the results are available, each division defines action plans to reduce gaps and improve the internal environment, with support from the Human Resources Department In 2016, 97.5% of associates participated in the survey, resulting in an average satisfaction score of 5.85 (on a scale of 1 to 7), reflecting improvements in five of the seven dimensions measured with respect to the prior year Communication Workplace Conditions Development and Expectations Duties My Boss Organization Teamwork Based on these results, the best-evaluated dimensions were Teamwork, Communication and My Boss. Increase from 2015 results Decrease from 2015 results CHAPTER IV Integrated Report 89

90 Supplier Management G4-12; G4-LA14; G4-LA15 Santiago Exchange thinks of its suppliers as strategic partners and recognizes their value and importance to the value chain. In this spirit, the Exchange establishes strong, long-term relationships with its suppliers, guaranteeing them fair commercial treatment and promising to meet its commitments as a customer. It also promotes good compliance and labor relations practices and incorporates contractor employees into the organizational culture. Supplier Profile In 2016, Santiago Exchange had 1,105 suppliers with master agreements in force, including strategic and business support suppliers. 1,105 1, Suppliers Chilean suppliers International suppliers CH$ 12,700,509 Total payments to suppliers Sustainability in the Supply Chain The Exchange's strategic suppliers provide services that are essential to guaranteeing business excellence and continuity, making them a key component of the institution's value chain. Therefore, the Exchange is concerned with promoting the sustainability of its supply chain and has established compliance standards that outline performance commitments for its critical suppliers. Adherence to Sustainability Principles The Exchange is concerned with knowing the sustainability guidelines and declarations of its strategic suppliers. Service Level Agreements For suppliers of information technology services, the Exchange has signed Service Level Agreements (SLA) that set a compliance level of 99% for operational continuity, incident resolution and server management and monitoring. Information Security and Business Continuity Procedures to incorporate controls associated with ISO 27,001 on information security and ISO 22,301 on business continuity also deserve mention. Santiago Exchange was recertified under both standards in Crime Prevention Model Santiago Exchange invites all suppliers to commit to its Crime Prevention Model (CPM) by signing a contract addendum. Contractor employees providing services directly at the Exchange are incorporated into training plans on this model. Labor Relations Strategic suppliers must file a monthly report with the Exchange indicating that all social security payments for associates providing services to the Exchange are up to date. The figures are expressed in CH$ thousands CHAPTER IV Integrated Report 90

91 Community Relations G4-SO1 Through charitable actions by our associates, Santiago Exchange seeks to actively contribute to improving the community, thereby strengthening the institutional culture as a pillar of corporate social responsibility. Community Initiatives Community Scholarships and Agreements Community scholarships are contributions that the Exchange makes through the government agency Sence-OTIC, using surplus tax credits from the institutional training budget. Through this initiative, which is part of the Exchange's annual training program, the organization funds trade course for relatives or close friends of associates that need assistance in order to increase their income generating capacity, thus helping improve the productive capacity of those in need. A different trade is offered each year. The Exchange is responsible for managing all aspects of each course, including bidding processes, suppliers, materials, infrastructure and general logistics. In 2016, the program's fifth consecutive year, 15 people benefited from a course on carpentry and furniture restoration services that also included basic business topics. Alliance with Aguas Late Through an agreement with Aguas Late, Santiago Exchange provides financing to transport children with cancer from the foundation Fundación de Ayuda al Niño Oncológico Casa de La Sagrada Familia, that must travel with a care giver to receive medical treatment. Jeans for Charity Day and Associate Volunteering Jeans for Charity Day is an initiative presented by the associates themselves that was the winner of the first innovation contest held in It was created to raise funds to support community activities. Along with raising money, associates volunteer their time to charitable activities based on community needs. These activities are proposed by the associates themselves. In 2016, associates provided assistance to the following foundations, children's homes and soup kitchens: Aldeas Infantiles SOS, Comedor Solidario Iglesia Pentecostal P. Alto, Hogar de Menores Acógeme María Ayuda and Teletón CHAPTER IV Integrated Report 91

92 Donations To comply with its objective of supporting initiatives that benefit the community, the institution's annual budget includes economic contributions to certain charities. The Exchange's Donations Policy mandates that the amounts and beneficiary institutions must be properly identified in the annual donation plan. Hogar de las Hermanitas de los Pobres and Hogar de Cristo Annual charitable donation to help improve the lives of the people assisted by these foundations. Fundación Paz y Familia Foundation that provides resources and emotional and social assistance to children of police officers killed in the line of duty. For over 20 years, the Exchange has donated Christmas gifts for these children, teenagers and young adults up to 25 years of age. Corporación Cultural de Vitacura The Exchange makes an annual donation to help finance the foundation's activities. SOCIAL INVESTMENT VOLUNTEERING DONATIONS CH$ CH$ CH$ Community scholarships and agreements INSTITUTIONAL DONATIONS 2016 Jeans for Charity Day Beneficiary institutions 18,250, ,630 12,210,385 TOTAL CONTRIBUTIONS CH$ 31,427,226 Amounts in Chilean pesos CHAPTER IV Integrated Report 92

93 The Exchange Building: An Historical Monument G4-EC7 Santiago Exchange's corporate building, which was inaugurated on December 25, 1917, and has housed the institution's operations since then, was declared a National Historical Monument in 1981 by the National Monument Council because of its historical and architectural significance. In addition, it is located in a neighborhood with great heritage value. As a National Historical Monument, the building must adhere to diverse regulations on the scope of any physical interventions, such as Law No. 17,288 on National Monuments, Instructions on Interventions in Typical Areas, the Zoning Plan of the Bureau of Municipal Works and the General Ordinance on Urbanism and Construction. The historical value of the Exchange's building provides an opportunity for it to teach the public about its operations. This challenge is part of the institution's sustainability guidelines in light of its role of promoting the domestic securities market. Heritage Day Santiago Exchange takes part in Heritage Day, celebrated each year on the last Sunday in May, by opening its doors to the general public. In 2016, it welcomed 6,479 visitors. In an event to celebrate the historical value of Chile's infrastructure, interested parties toured the historical Trading Floor, where market transactions historically took place, and other important areas of the building to get to know more about how the financial market works. This activity is designed to teach the public about the Exchange's operations, which is in line with its guidelines and objectives regarding market education. VISITS THROUGHOUT THE YEAR As part of the ongoing efforts of the Exchange's Education Area, the institution opens its doors each day for visitors to see the Trading Floor and its historical building. Likewise, every Wednesday, the Exchange's Education Area welcomes people interested in learning more about the importance of the capital markets and the institution's business dealings, offering talks that address topics related to the securities market. This educational activity, which must be reserved beforehand, includes the showing of a video, a presentation in the building's auditorium and a guided tour of the Trading Floor. NEW GUIDING PLAN Given the importance the Exchange places on its building's designation as an Historical Monument, in 2015 it began to develop a policy to clarify the handling of future interventions based on its corporate values and attributes, as well as assistance and regulations from the National Monument Council, the Municipality of Santiago and the Law and Ordinance on Urbanism and Construction. This document, which is scheduled to be completed in late 2017, will outline the guidelines for preserving the building's original use and making adaptations required for it to function in harmony with business needs. 31,800 Visits throughout the year. CHAPTER IV Integrated Report 93

94 Environmental Commitment G4-14 Santiago Exchange is committed to managing its activities in a sustainable and preventative way in order to minimize the possible impacts they could have on the environment. It also implements initiatives to increase awareness among associates in order to further minimize impact. From this perspective, the Exchange focuses on reducing energy consumption and increasing energy efficiency. It also works to ensure that waste is properly managed, promoting greater awareness of the use of materials and inputs at work. Energy Consumption G4-EN3; G4-EN4; G4-EN5 Santiago Exchange's energy consumption for the reporting period was gigajoules (GJ), which includes internal and external consumption at its headquarters and leased offices. Electricity consumption comes mainly from lighting systems, HVAC systems and technology. The Exchange has implemented several important initiatives over the past few years to reduce energy consumption. Direct and Indirect Energy Consumption SOURCE Unit of Measure 2016 Direct Cooling consumption (data center) MWh 49 Liquid gas (boilers and hot water) MWh 186,443 Total MWh 186,492 Total GJ* 671,371 Indirect Electricity MWh 228 Total MWh 228 Total GJ* 821 Total Direct + Indirect GJ* 672,192 External Energy Consumption SOURCE Unit of Measure 2016 Electricity use by other leased assets MWh Moneda building MWh 165 New York 17 offices MWh 53 Total MWh 218 Total GJ* 785 Internal + External Energy Consumption SOURCE Unit of Measure 2016 Total GJ 672,977 Total workforce Employees 282 Intensity of Internal and External Energy Consumption 2,386 * Conversion factor to GJ: 3.6 CHAPTER IV Integrated Report 94

95 Energy Savings Initiatives G4-EN6 Another of the Exchange's initiatives to reduce consumption involved transforming two operational boilers (for heating and hot water) from diesel to natural gas in Both have been certified by regional health authorities (SEREMI de Salud de la Región Metropolitana), which allows them to be operated even during government-declared environmental emergencies. The Exchange also implemented a project in 2016 to replace existing fluorescent and incandescent lighting with LED fixtures. This project resulted in energy savings of close to 30% during its first year. The goal is to attain 80% savings in 2017, once the process is completed for all lighting fixtures. G4-EN7 Energy Savings Requirements for Exchange Services Consolidating Storage Among its parameters for evaluating projects to upgrade technology, Santiago Exchange must consider both the energy consumption and the optimal temperature conditions for its data center equipment to properly function. In order to reduce energy requirements, in 2015 the Exchange worked on a project to consolidate storage, which enabled it to reduce its storage needs from four platforms to only one mid-high range platform. With this reduction, it managed to duplicate its storage capacity, reduce energy requirements and temperature conditions and decrease the physical space needed for storage. It attained total energy savings of 12% with respect to the consumption by the previous four platforms. Upgrading the HT Platform The project to upgrade the HT platform, launched in 2016, consists of replacing the Exchange's current trading platform with 56 servers by using virtualization technology to decrease the number of servers to 16. This initiative will enable it to reduce its energy, temperature and space requirements for the Exchange's trading services. Results of these efforts will be seen in 2017 once the project is fully implemented. The Exchange expects to achieve energy savings of approximately 40% of this platform's current consumption. Paper Santiago Exchange has focused its paper reduction efforts on generating digital reports for both the Board and the market. For example, in 2016 it began digitally publishing the traditional daily market bulletin with web and PDF versions. The annual reports of both the Exchange and CCLV Contraparte Central S.A., are exclusively published in digital format since Waste In order to guarantee that highly complex electronics are properly disposed of, Santiago Exchange has included contractual clauses in agreements with suppliers whereby each supplier takes responsibility for its products once their useful life at the company has ended. As a result of these clauses, waste is handled by companies specialized in final disposal. CHAPTER IV Integrated Report 95

96 Chapter V About this Report Guidelines for Santiago Exchange's First Integrated Report. Integrated Report 96

97 About this Report G4-28; G4-29; G4-30; G4-32; G4-33; G4-48 This report was prepared based on the guidelines of the Global Reporting Initiative (GRI), specifically its Sustainability Reporting Guidelines (version G4) and the Financial Services Sector Supplement (FSSS), using the "core" option. This report presents the main processes and management results of Santiago Exchange for the year ended December 31, 2016, including CCLV Contraparte Central S.A., relating to financial, strategic and corporate governance matters, as well as our commitment to the market, our customers, our associates, our suppliers and the community. This publication marks the beginning of an annual process to disclose our sustainability commitments, our progress and new internal and external challenges. Our first Integrated Report was reviewed internally by our Sustainability Team and senior management. This first report did not include an external assurance process. CHAPTER V Integrated Report 97

98 Principle of Materiality G4-18; G4-19; G4-20; G4-21 The contents of this report were defined in accordance with the principle of materiality established by the GRI, and were identified by analyzing relevant sustainability issues. Material aspects were identified by surveying diverse internal and external stakeholders, as well as members of the Exchange's management and governance. Corporate, sector-specific and specialized documents on sustainability matters were also reviewed, taking into consideration the principles and commitments to which the Exchange adheres. PHASE 1 - IDENTIFICATION This includes gathering data to identify all topics that are pertinent to the purpose of the study in order to generate a list of all topics that emerged from the survey process. This phase included the following activities: interviews and surveys with internal and external stakeholders, analysis of internal documents and international sustainability standards, industry benchmarking and press analyses. PHASE 3 - VALIDATION This is the review and confirmation of the results of the materiality analysis by the organization. Material topics were approved by the Exchange's Sustainability Team and senior management. They were also presented to the Business and Technology Committee, which advises and makes recommendations to the Board on sustainability matters, among other topics. The structure and content of the Report were determined on the basis of this validation. All topics were incorporated in this document in response to our stakeholders' expectations. PHASE 1 IDENTIFICATION PHASE 4 REVIEW PHASE 3 VALIDATION PHASE 2 PRIORITIZATION PHASE 2 - PRIORITIZATION In the second phase, the Exchange prioritized the topics on this extended list based on the impact that each had on the organization and its stakeholders. More information is available on the following page. PHASE 4 - REVIEW This is the phase in which materiality and the report are evaluated to define relevant issues for the next period. CHAPTER V Integrated Report 98

99 Prioritization Matrix for Relevant Topics Corporate governance The Exchange's role in sustainable market development Customer management FINANCIAL LITERACY BUSINESS EXPANSION Continuity AND OPERATIONAL EXCELLENCE Importance to Stakeholders Human rights Relationship with the Community and the Environment LABOR PRACTICES Suppliers Environment Importance to BUSINESS CHAPTER V Integrated Report 99

100 Identification and Prioritization of Stakeholders The methodology used to identify and prioritize the Exchange's stakeholders is based on the Practitioner's Handbook on Stakeholder Engagement from the Accountability Institute of Social and Ethical Accountability. The stakeholder diagnostic is divided into three stages: identification, prioritization and validation. In order to complete this process, the Exchange conducted research by interviewing stakeholders classified as internal or external and met with market players considered key to the organization to obtain the final results. SANTIAGO EXCHANGE STAKEHOLDERS SHAREHOLDERS This process will be reevaluated each period in accordance with sustainability standards and the organization's internal engagement policies, thus meeting the interests and expectations of the Exchange's diverse stakeholders. BOARD OF DIRECTORS AUTHORITIES AND REGULATORS Stages of the Diagnostic: ASSOCIATES CUSTOMERS 1 Stakeholder Identification - Generating a list of stakeholders. - First validation. 2 Stakeholder Prioritization - Working group to prioritize stakeholders based on influence and interest. SUPPLIERS THE COMMUNITY AND THE ENVIRONMENT 3 Final Stakeholder Validation - List of relevant stakeholders. OTHER MARKET PLAYERS CHAPTER V Integrated Report 100

101 Chapter VI Legal Information Integrated Report 101

102 Company Information BASIC INFORMATION Legal Name: Bolsa de Comercio de Santiago, Stock Exchange Legal Address: La Bolsa 64, Santiago Taxpayer ID No.: Type of Entity: Special Corporation ARTICLES OF INCORPORATION Bolsa de Comercio de Santiago was incorporated by public instrument on November 27, 1893, before Santiago notary Eduardo Reyes Lavalle. In Supreme Decree 3,015, dated December 29, 1893, the Company was licensed to operate and its bylaws were approved. It was registered in the Santiago Commerce Registry on page 9, number 14 on January 22, CONTACT INFORMATION Address: La Bolsa 64, Santiago Telephone: (56-2) P.O. Box: 123-D Santiago Web Address: CHAPTER VI Integrated Report 102

103 Main Shareholders Santiago Exchange has 48 duly issued shares distributed among 40 shareholders. As of December 31, 2016, only one shareholder held more than 10% of the company's shares (BM&FBOVESPA S.A., BOLSA DE VALORES, MERCADORIAS E FUTUROS, Chilean Taxpayer ID , which owns five shares representing 10.42% of the company's total shares). CHAPTER VI Integrated Report 103

104 Our Business PRODUCTS, BUSINESSES AND ACTIVITIES PROPERTY Understanding Our Business The company is governed by Law No. 18,045 on the Securities Market. Article 40 of this law states: In all matters not contrary to this law, Securities Markets shall be governed by the rules applicable to publicly-traded corporations and shall be supervised by the Superintendency of Securities and Insurance. Within the financial sector, the company conducts business particularly within the secondary securities market, including the Futures and Options markets. Some activities in these markets are carried out in collaboration with its subsidiary CCLV and its associate Depósito Central de Valores S.A., Depósito de Valores. The following sections describe key elements to understanding our business: The main products and services offered by Santiago Exchange are targeted primarily to stock brokers and institutional and individual investors. The institution's revenue comes mainly from exchange access rights; computer services, which include leasing trading stations and IT services; data services, which consist of selling market data to vendors, banks and other segments; and fees from corporations listed on our exchange. Santiago Exchange has no significant suppliers to disclose. SUPPLIERS AND CUSTOMERS The company's main real estate properties include: Building located at Bandera 63, registered in the institution's name in the Santiago Real Estate Registrar for the year 1913, on page 801, number 1,657. This building houses the Exchange's administrative offices and service facilities, the trading floor and broker offices. Fourth floor of building located at Moneda 1,025, registered in the institution's name in the Santiago Real Estate Registrar for the year 1990, on page 16,888, number 12,896. This building houses other administrative offices. Third floor of building located at Nueva York 17, registered in the institution's name in the Santiago Real Estate Registrar for the year 1987, on page 76,434, number 60,072. This building houses other administrative offices. EQUIPMENT The company selects those suppliers offering the best products and/or services based on quality and price. The Exchange's main customers are our brokers, which are also our shareholders. Santiago Exchange has the equipment it needs to operate its business, including computer and communications infrastructure; trading, data and management systems; office equipment and other facilities to run its building. It also has a contingency site and state-of-the-art emergency generation equipment to ensure business continuity. CHAPTER VI Integrated Report 104

105 Insurance Trademarks and Patents Financing Activities The Exchange's main assets, real estate, computer equipment and content are insured against the risk of fire, earthquake and other miscellaneous events. It also has coverage for professional liability, errors and omissions, directors and officers civil liability and general civil liability. Contracts The Exchange has routine contracts for computer stations and maintenance of computer equipment and buildings and facilities. The following trademarks are registered by the institution in the Department of Industrial Property: 1. BOLSA DE COMERCIO DE SANTIAGO 2. BOLSA DE COMERCIO DE SANTIAGO BOLSA ELECTRONICA 3. BOLSA DE COMERCIO SANTIAGO CHILE 4.. BOLSA DE VALORES DE SANTIAGO 5. BOLSA NACIONAL DE COMERCIO 6. BOLSA OFF SHORE 7. BOLSATICKER 8. CCLV 9. CCLV CONTRAPARTE CENTRAL 10. CIBE CENTRO DE INFORMACION BURSATIL ELECTRONICO 11.. CONCURSO DE CARTERAS DE INVERSION, CCI 1.2 EXPOBOLSA 13. FULLSTOCK 14. I.G.P.A. 15. IGPA 16. INFORMATIVO BURSATIL 17. INTER IPSA 19. MILA 20. MILA MERCADO INTEGRADO LATINOAMERICANO 21. OTC TRADE 22. SANTIAGO STOCK EXCHANGE 23.. SEBRA SERVICIOS BURSATILES Y RED DE APLICACIONES 24. STOCKVIEW 25. TELEPREGON 26. VENTURE CAPITAL EXCHANGE (BSV) Santiago Exchange engages in financing activities to manage its cash surpluses and investment portfolio. It has a highly liquid portfolio comprised of different stocks, fixed income instruments and fixed term deposits. These investments are detailed in the notes to the financial statements. The institution does not have any debt with financial institutions. Research and Development Given the particular nature of the market in which the Exchange does business, it has established research and development policies to keep it at the forefront of its industry. It allocates human resources and materials to research and development efforts as needed in order to deliver quality services. CHAPTER VI Integrated Report 105

106 Risk Factors Investment and Financing Policies The main risk factors that could affect the company include general domestic and international economic conditions, which could alter the institution's movement and activity. The Exchange's investment policy calls for providing the materials and human resources needed to efficiently meet its objectives. It has a portfolio of high-grade marketable securities diversified by issuer to cover its liquidity needs. Its financing policy calls for always funding projects with company resources. This explains the leverage ratios in the Financial Statement Analysis. However, the Exchange does not rule out the use of outside resources to fund future projects. In that case, such funding will first be properly evaluated, communicated and approved by the appropriate bodies within the company. CHAPTER VI Integrated Report 106

107 Subsidiaries and Associates Subsidiary: Cclv, Contraparte Central S.A. CORPORATE AND LEGAL INFORMATION CCLV, Contraparte Central S.A., is a subsidiary of Santiago Exchange. The entity began as Cámara de Compensación B de C Stgo S.A. (Santiago Exchange Clearinghouse in English), which was incorporated by public instrument on January 19, 1990, signed before notary Raúl Iván Perry Pefaur. An abstract of that instrument was registered on January 29, 1990, on page 2,971, number 1,592, in the Santiago Commerce Registry and published in the Official Gazette on January 31, At an extraordinary shareholders' meeting on September 8, 1994, shareholders agreed to amend the bylaws to include the new provisions of Law No. 18,045. At an extraordinary shareholders' meeting on November 16, 2009, shareholders approved the following: a) Amendments to the bylaws in order to adapt them to the provisions of Law No. 20,345 on Clearing and Settlement Systems for Financial Instruments, including: Changing the company's name to CCLV, CONTRAPARTE CENTRAL S.A.. Changing its corporate purpose. Its exclusive corporate purpose is to manage financial instrument clearing and settlement systems, acting as either a central counterparty or a clearinghouse for financial instruments and engaging in other complementary activities authorized by law or regulators (SVS) through a general character standard. Increasing capital by CH$ 2,715,212,280 by issuing 660 rights issues with no par value at the price of CH$ 4,113,958 each. Santiago Exchange subscribed and paid for 639 of these shares, for a total of CH$ 2,628,819,162. Forming committees. Forming reserve and guarantee funds. b) Approval of new combined text of corporate bylaws. The minutes from the extraordinary shareholders' meeting were summarized in a public instrument dated December 21, 2009, signed before Ulises Aburto Spitzer, the acting notary for Santiago notary Raúl Iván Perry Pefaur, under notary archive number 48,252. CCLV, Contraparte Central S.A., began operating on September 1, SUBSCRIBED AND PAID-IN CAPITAL As of December 31, 2016, the company's subscribed and paid-in capital is CH$ 4,735,151* divided into 1,320 shares with no par value. As of December 31, 2016, the subsidiary has only operated within its line of business. * The figure are expressed in CH$ thousands CHAPTER VI Integrated Report 107

108 BOARD AND MANAGEMENT Chairman Directors Juan Andrés Camus Camus Juan Eduardo Correa García Nicholas Davis Lecaros Álvaro Donoso Barros Fernando Larraín Cruzat Jaime Larraín Vial Rodrigo Manubens Moltedo Eduardo Muñoz Vivaldi Pedro Salah Ahués Hernán Somerville Senn Oscar Von Chrismar Carvajal Chief Executive Officer Chief Financial Officer Chief Commercial Officer Chief Audit and Control Officer Chief Information Officer Chief Operating Officer Chief Planning and Development Officer José Antonio Martínez Zugarramurdi Patricio Rojas Sharovsky Lucy Pamboukdjian Carlos Niedbalski Chacón Andrés Araya Falcone Juan Ponce Hidalgo Nicolás Almazán Barros OWNERSHIP INTEREST As of December 31, 2016, Santiago Exchange has a 97.42% ownership interest in its subsidiary CCLV, Contraparte Central S.A. CHAPTER VI Integrated Report 108

109 BOARD AND MANAGEMENT POSITIONS IN SANTIAGO EXCHANGE AND ITS SUBSIDIARY NAME Position at Santiago Exchange Juan Andrés Camus Camus Chairman Chairman Eduardo Muñoz Vivaldi Vice-chairman Director Juan Eduardo Correa García Director Director Nicholas Davis Lecaros Director Director Álvaro Donoso Barros Director Director Fernando Larraín Cruzat Director Director Jaime Larraín Vial Director Director Rodrigo Manubens Moltedo Director Director Pedro Salah Ahués Director Director Hernán Somerville Senn Director Director Óscar von Chrismar Carvajal Director Director Position at CCLV, Contraparte Central S.A. José Antonio Martínez Zugarramurdi Chief Executive Officer Chief Executive Officer Patricio Rojas Sharovsky Chief Financial Officer Chief Financial Officer Lucy Pamboukdjian Chief Commercial Officer Chief Commercial Officer Carlos Niedbalski Chacón Chief Audit and Control Officer Chief Audit and Control Officer Andrés Araya Falcone Chief Information Officer Chief Information Officer Juan Ponce Hidalgo Chief Operating Officer Chief Operating Officer Nicolás Almazán Barros Chief Planning and Development Officer Chief Planning and Development Officer BUSINESS RELATIONSHIPS WITH THE SUBSIDIARY As of December 31, 2016, Santiago Exchange received CH$ 1,078,275 in revenue for services provided by the Exchange (office leases, computer services and management services, etc.). AGREEMENTS AND CONTRACTS WITH THE SUBSIDIARY On March 1, 2010, the companies signed an agreement to lease offices located on the second floor of the Exchange's building. On August 20, 2010, the companies signed an agreement for the provision of financial management, accounting, tax, human resources, custody guarantee, capital event and general services. On August 23, 2010, the companies signed an agreement for the provision of computer platform services for clearing, settlement and SCL guarantees, for the Risk Area and for payment systems. On January 2, 2012, the companies signed an agreement for the provision of senior management services. PERCENTAGE OF INVESTMENT IN SUBSIDIARY As of December 31, 2016, the investment in the subsidiary represented 16.57% of Santiago Exchange's total assets. OWNERSHIP As indicated above, Santiago Exchange has a 97.42% stake in this entity as of December 31, The remaining 2.58% is held by brokers. The figures are expressed in CH$ thousands CHAPTER VI Integrated Report 109

110 Associate: Depósito Central de Valores S.A., Depósito de Valores CORPORATE AND LEGAL INFORMATION Depósito Central de Valores S.A., Depósito de Valores (DCV) (Central Securities Depository in English) is an associate of Santiago Exchange. It was incorporated in a public instrument dated March 15, 1993, granted before notary René Benavente Cash and an abstract was published in the Official Gazette on March 22, The company is governed by the provisions of Law No. 18,876 of 1989 and instructions issued by the SVS. The company is not required to register in the Securities Registry. In Exempt Ruling 264 dated December 29, 1993, the SVS licensed the company to operate as a Securities Depository and approved its internal regulations and the deposit contract to be used. SUBSCRIBED AND PAID-IN CAPITAL As of December 31, 2016, the company's subscribed and paid-in capital is CH$ 4,089,817, divided into 156,112 nominative shares with no par value. BOARD AND MANAGEMENT Chairman Vice-chairman Directors Chief Executive Officer Chief Financial and Planning Officer Chief Operating and Services Officer Chief Commercial and Legal Officer Chief Information Officer Chief Architecture and Development Officer Controller and Chief Compliance Officer Sergio Baeza Valdés Arturo Concha Ureta Jorge Claude Bourdel Arturo del Río Leyton Mario Gómez Dubravcic José Antonio Martínez Zugarramurdi Fred Meller Sunkel Juan Carlos Reyes Madriaza Guillermo Tagle Quiroz Maximiliano Vial Valenzuela Sr. Fernando Yáñez González Rodrigo Roblero Arriagada Claudio Garín Palma Javier Jara Traub Nelson Fernández Benavides Gabriela Finkelstein Jaime Fernández Morandé CORPORATE PURPOSE AND ACTIVITIES The company's exclusive purpose is to receive in deposit publicly-traded securities from the entities indicated in article 2 of Law No. 18,876 and facilitate the transfer of these securities, in accordance with established legal and regulatory procedures, and engage in other activities authorized by that or other laws, their regulations and express instructions from the SVS. Chief People Officer Legal Counsel OWNERSHIP INTEREST Sandra Valenzuela Nievas Domingo Eyzaguirre Pepper *Directors as of December 31, As of December 31, 2016, Santiago Exchange holds 32,315 shares, corresponding to a 23.00% interest in its associate Depósito Central de Valores S.A., Depósito de Valores. The figures are expressed in CH$ thousands CHAPTER VI Integrated Report 110

111 BOARD AND MANAGEMENT POSITIONS IN SANTIAGO EXCHANGE AND ITS ASSOCIATE Name Position at Santiago Exchange Position at Depósito Central de Valores José Antonio Martínez Chief Executive Officer Director Zugarramurdi market. On the same date, an appendix to that addendum was signed that describes the delivery versus payment transaction settlement service. PERCENTAGE OF INVESTMENT IN ASSOCIATE As of December 31, 2016, the investment in the associate represented 4.27% of Santiago Exchange's total assets. BUSINESS RELATIONSHIPS WITH ASSOCIATE As of December 31, 2016, Santiago Exchange has conducted business with Depósito Central de Valores (DCV) related to deposit and transaction registration agreements for a total expense of CH$ 54,390 for Santiago Exchange. OWNERSHIP As of December 31, 2016, Santiago Exchange has a 23.00% ownership interest in this associate. AGREEMENTS AND CONTRACTS WITH ASSOCIATE On May 10, 2006, Santiago Exchange signed a deposit agreement with its associate (this agreement replaces the prior agreement from March 31, 1999), mainly related to Law No. 18,876 and its regulations. This agreement is also governed by the provisions contained therein, its corresponding appendices and the internal regulations of the DCV. On July 16, 1998, Santiago Exchange signed a transaction registration agreement related to cleared settlements of transactions through clearinghouse operators. On November 24, 2005, an addendum to the deposit agreement was signed to include the electronic payment, settlement and transaction payment service for the securities The figures are expressed in CH$ thousands CHAPTER VI Integrated Report 111

112 Distributable Profit RECONCILIATION BETWEEN PROFIT FOR THE YEAR AND DISTRIBUTABLE PROFIT DIVIDENDS DISTRIBUTED AND CHARGED TO PROFIT FOR THE YEAR INTERIM: DIVIDENDS PAID PER SHARE IN THE LAST THREE YEARS CH$ THOUSANDS CH$ THOUSANDS CH$ THOUSANDS As of December 31, 2016 Payment Date Amount per Share (Historical) Total Amount (Historical) Calendar Year Amount per Share (Historical) Profit for the year 10,616,956 Distributable profit (*) 9,551,386 06/24/ , ,000 09/23/ ,000 1,920,000 12/23/ , ,000 Total 70,000 3,360, , , ,000 The ratio of interim dividends distributed as of December 31, 2016, to distributable profit was 35.18%. This ratio varies based on the amount of the final dividend determined and approved at the annual shareholders' meeting. FINAL: Final dividends will be proposed by the Board and approved at the annual shareholders' meeting. (*): Distributable profit is approved at the annual shareholders' meeting. It is equal to profit for the year less exchange differences, gains or losses from indexed assets and liabilities and gains arising from differences in the market value of financial instruments, if positive. CHAPTER VI Integrated Report 112

113 Dividend Policy The Board proposed the following dividend policy to shareholders at the annual meeting: 1. Distributing three interim dividends charged to 2016 profit, equivalent to 40% of final net profit. For these purposes, the following formulas will be used at each payment date: Final net profit will be calculated using the most recent balance sheet presented to the Board. The base for distributing dividends shall be equal to profit for the year less any positive exchange differences, gains on indexed assets and liabilities and gains arising from differences in the market value of financial instruments. Final net profit Distribuable Profit = of most recent balance X sheet adjusted for unrealized values 0.40 Interim Dividends Distributed 2. Final dividends will be proposed by the Board and approved at the annual shareholders' meeting. 3. In accordance with SVS Ruling 687 dated February 13, 1987, this policy reflects the Board's intention but compliance is conditional upon: the profits actually obtained, the outcome of periodic projections that may affect the company and any special conditions that may arise in the future. CHAPTER VI Integrated Report 113

114 Share Transactions TRANSACTIONS During the year 2016, the chairman, chief executive officer and senior management did not engage in any transactions involving the Exchange's shares. However, on July 8, 2016, one share of the Exchange was sold to BM&FBOVESPA S.A., BOLSA DE VALORES, MERCADORIAS E FUTUROS, Chilean Taxpayer ID , at a price of CH$1,680,000,000. As a result, this entity now holds five shares, or 10.42%, of the Exchange, making it the majority shareholder as per Article 12 of Law No. 18,045. MARKET TRANSACTION STATISTICS The following table details share transactions in historical Chilean pesos: CH$ THOUSANDS Year Quarter No. of Shares Traded Total Trading Value (Historical) Average Price (Historical) 2014 I II III IV I 1 2,000,000 2,000,000 II 3 2,200,000 2,200,000 III IV I II III 1 1,680,000 1,680,000 IV CHAPTER VI Integrated Report 114

115 Information on Material Events This section details the material events that occurred in 2016: Extraordinary Shareholders' Meeting An extraordinary shareholders' meeting was held on March 17, 2016, for shareholders to vote on a new (amended) text for the Exchange's bylaws that included the following amendments: 1. Increase the number of shares in which the Exchange's capital is divided from 48 to 48,000,000 shares. 2. Establish a concentration limit of 25% for the Exchange's shares. 3. Eliminate the requirement that one must be a shareholder of the Exchange in order to carry out the duties of a broker. 4. As a result of the elimination of this requirement, eliminate the provisions that regulate the requirements for being a broker of the Exchange, their application, the authorization procedure in the event of transfers of 10% of more of capital by a broker, and penalties applicable to brokers, all of which are transferred to the Exchange Regulations. 5. Incorporate the concept of unrelated director and set the requirement that the Board must have 11 members, three of whom must be unrelated: (i) a minimum of two must be unrelated to the Exchange, its subsidiaries and its related companies, brokers, and the Exchange's business, and (ii) at least one must also be unrelated to the companies listed on the Exchange. 6. Incorporate, among the matters that require the vote of two thirds of the voting shares, any amendment, replacement or elimination of the new article 9 of the bylaws that establishes the 25% concentration limit for ownership of the Exchange; and 7. Other amendments such as creating board committees; ordering the Board to draft a Corporate Governance Code and adapting several bylaws to regulations in Law No. 18,046 on dividends and shareholders' meetings. Shareholders approved these amendments with 38 votes in favor, 6 against and 1 abstention, of a total of 45 shareholders present. CHAPTER VI Integrated Report 115

116 Annual General Shareholders' Meeting The annual general shareholders' meeting was held April 25, The main agreements made include: APPROVAL OF ANNUAL REPORT AND BALANCE SHEET DIVIDEND POLICY BOARD COMPENSATION The annual report, balance sheet, financial statements, profit and loss statement and independent auditors' report for 2015 were all unanimously approved. FINAL DIVIDEND PAYMENT Shareholders unanimously approved payment of an additional dividend of CH$76,000,000 per share, equivalent to a total of CH$ 3,648,000,000 payable on May 5, 2016, to shareholders registered as of April 29, 2016, to be charged to 2015 profit. The Board proposed distributing three interim dividends charged to 2016 profits for the equivalent of 40% of net operating profit. Dividends are expected to be distributed in June, September and December of this year. The final dividend will be proposed by the Board and approved at the next annual shareholders' meeting. Dividends will be communicated and paid in accordance with SVS Ruling 660 dated October 22, Shareholders unanimously approved the above agreement. In accordance with the Corporations Law and the company's bylaws, shareholders are responsible for determining the compensation to be received by directors for their services. The Board proposed that shareholders maintain the current policy of 50 Unidades de Fomento (UF, an inflation-adjusted unit) for attending one meeting per month and 25 UF per meeting if two are held during the month. Should more than two meetings be held, maximum compensation shall remain at 50 UF for the month. As in prior years, the chairman shall receive compensation of 300 UF per month regardless of the number of meetings held and the number he attends. Shareholders unanimously approved the compensation proposed by the Board. CHAPTER VI Integrated Report 116

117 COMPENSATION FOR BOARD MEMBERS SERVING AS TRADING FLOOR DIRECTOR COMPENSATION FOR BEST PRAC- TICE COMMITTEE COMPENSATION FOR BUSINESS AND TECHNOLOGY, REGULATIONS AND AU- DIT AND RISK COMMITTEES Shareholders are also responsible for determining the compensation to be received by directors serving as Trading Floor Director. The Board proposed to shareholders monthly compensation of 75 UF for directors performing this function. This compensation is in place of the monthly allowance for attending board meetings or performing other functions. Shareholders unanimously approved the compensation proposed by the Board. Regarding compensation for members of this committee, the Board proposed that shareholders maintain the monthly compensation at 60 UF for attending one single monthly committee meeting and 30 UF per meeting if two are held. Should more than two meetings be held, maximum compensation shall remain at 60 UF for the month. Similarly, the Board proposed that the committee chairman shall receive compensation of 90 UF per month regardless of the number of meetings held and the number he attends. Shareholders unanimously approved the compensation proposed by the Board for the members of the Best Practice Committee. The Board proposed that shareholders set compensation for the members of the Business and Technology, Regulations and Audit, and Risk committees at 25 UF for attending one meeting per month and 12.5 UF per meeting if two meetings are held during the month. Should more than two meetings be held, maximum compensation shall remain at 25 UF for the month. Shareholders unanimously approved the compensation proposed by the Board for the members of these committees. BOARD COMPENSATION FOR OTH- ER FUNCTIONS APPOINTMENT OF INDEPENDENT AUDI- TORS Shareholders are also responsible for determining the compensation to be received by directors for performing other functions. The Board proposed that shareholders maintain the current policy of monthly compensation of 25 UF for directors performing functions other than participating in board meetings or serving as Trading Floor Director, such as participating in board committees that meet in a given month. This compensation is in addition to the monthly allowance for attending board meetings during the same month. Shareholders agreed to appoint PricewaterhouseCoopers Consultores, Auditores y Compañía Limitada as the company's independent auditors. Shareholders unanimously approved the compensation proposed by the Board. CHAPTER VI Integrated Report 117

118 Extraordinary Shareholders' Meeting and Sale of Real Estate Case No. C in the 5th Civil Court of Santiago An extraordinary shareholders' meeting was held on April 25, 2016, for shareholders to vote on the plan to sell the lot, specifically known as part D of the Hijuela Quinta or Las Casas de Lo Prado estate in the district of Pudahuel, property number , measuring approximately 6.76 hectares, to Construcciones y Proyectos Los Maitenes S.A., or its representative, under the terms of the Purchase Promise Agreement signed on April 1, 2016, before Santiago notary Patricio Zaldívar Mackenna, under notary archive No. 4,884/2016, between the Exchange (as the Promising Seller) and Construcciones y Proyectos Los Maitenes S.A. (as the Promising Buyer). Inversiones Fox S.A. (Fox). filed a possessory action against the Exchange seeking restitution of the shares that it holds in custody to Fox. On August 18, 2016, the chief executive officer of the Exchange was served the lawsuit in accordance with article 44 of the Civil Procedural Code. There are no other material events to disclose for the year Shareholders approved the sale of the property by acclamation. Santiago Exchange sold the lot, specifically known as part D of the Hijuela Quinta or Las Casas de Lo Prado estate in the district of Pudahuel, property number 25978, which is a non-agricultural rural lot measuring approximately 6.76 hectares, to Construcciones y Proyectos Los Maitenes S.A., and received payment on July 5, The sale agreement was recorded in public instrument on June 13, 2016, granted before Santiago notary Patricio Zaldívar Mackenna, under notary archive No. 8884/2016. The sale price and funds received totaled CH$3,763,172,300. CHAPTER VI Integrated Report 118

119 Comments and Proposals from Shareholders There are no comments or proposals from shareholders. CHAPTER VI Integrated Report 119

120 Chapter VII GRI Index Integrated Report 120

121 GRI Content Index GENERAL STANDARD DISCLOSURES GRI Code Description Page/Response STRATEGY AND ANALYSIS G4-1 Statement from the most senior decision maker of the organization. 3 G4-2 Description of key impacts, risks, and opportunities. 71 ORGANIZATIONAL PROFILE G4-3 Name of the organization. Back cover, 14, 102 G4-4 Primary brands, products, and services. 35 G4-5 Location of the organization s headquarters. Back cover G4-6 Number of countries where the organization operates, and names of countries where either the organization has significant operations. 20, 39 G4-7 Nature of ownership and legal form. 14 G4-8 Markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries). 20, 39 G4-9 Scale of the reporting organization. 15 CHAPTER VII Integrated Report 121

122 GRI Code Description Page/Response G4-10 Total number of employees by employment contract and gender, permanent employees by employment type and gender, total workforce by employee type, region and gender. 81 G4-11 Percentage of total employees covered by collective bargaining agreements Santiago Exchange does not have any employee unions. G4-12 Description of the organization's supply chain. 90 G4-13 Significant changes during the reporting period. 75 G4-14 Whether and how the precautionary approach or principle is addressed by the organization. 94 G4-15 Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses. 43 G4-16 Memberships in associations and national or international advocacy organizations. 43 CHAPTER VII Integrated Report 122

123 GRI Code Description Page/Response IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES G4-17 All entities included in the organization s consolidated financial statements or equivalent documents. Chp. VIII G4-18 Process for defining report content and the Aspect Boundaries. 98 G4-19 All the material Aspects identified in the process for defining report content. 10, 98 G4-20 Aspect Boundary within the organization for each material Aspect. 10, 98 G4-21 Aspect Boundary outside the organization for each material Aspect. 10, 98 G4-22 Effect of any restatements of information provided in previous reports, and the reasons for such restatement. Restatements of economic and market figures are due to data updates from the Chilean Central Bank. G4-23 Significant changes from previous reporting periods in the Scope and Aspect Boundaries. No materiality studies have been previously conducted. STAKEHOLDER ENGAGEMENT G4-24 Stakeholder groups engaged by the organization. 49 G4-25 Basis for selection of stakeholders with whom to engage. 49 G4-26 Organization s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process. 49 CHAPTER VII Integrated Report 123

124 GRI Code Description Page/Response G4-27 Key topics and concerns that have been raised through stakeholder engagement. 49 REPORT PROFILE G4-28 Reporting period for information provided. 97 G4-29 Date of most recent previous report (if any). 97 G4-30 Reporting cycle (annual, biennial, etc.) 97 G4-31 Contact point for questions regarding the report or its contents. Back cover G4-32 The in accordance option the organization has chosen. 97 G4-33 Organization s policy and current practice with regard to seeking external assurance for the report. 97 GOVERNANCE G4-34 Governance structure of the organization, including committees of the highest governance body. 51 CHAPTER VII Integrated Report 124

125 GRI Code Description Page/Response G4-35 G4-36 G4-37 Process for delegating authority for economic, environmental and social topics from the highest governance body to senior executives and other employees. Whether the organization has appointed an executive-level position or positions with responsibility for economic, environmental and social topics, and whether post holders report directly to the highest governance body. Processes for consultation between stakeholders and the highest governance body on economic, environmental and social topics. If consultation is delegated, describe to whom and any feedback processes to the highest governance body G4-38 Composition of the highest governance body and its committees. 51 G4-39 G4-40 Whether the Chair of the highest governance body is also an executive officer (and, if so, his or her function within the organization s management and the reasons for this arrangement). Nomination and selection processes for the highest governance body and its committees, and the criteria used for nominating and selecting highest governance body members G4-41 G4-42 Processes for the highest governance body to ensure conflicts of interest are avoided and managed, and whether conflicts of interest are disclosed to stakeholders. Highest governance body s and senior executives roles in the development, approval, and updating of the organization s purpose, value or mission statements, strategies, policies, and goals related to economic, environmental and social impacts G4-45 G4-46 G4-47 Highest governance body s role in the identification and management of economic, environmental and social impacts, risks, and opportunities. Highest governance body s role in reviewing the effectiveness of the organization s risk management processes for economic, environmental and social topics. Frequency of the highest governance body s review of economic, environmental and social impacts, risks, and opportunities CHAPTER VII Integrated Report 125

126 GRI Code Description Page/Response G4-48 Highest committee or position that formally reviews and approves the organization s sustainability report and ensures that all material Aspects are covered. 97 G4-49 Process for communicating critical concerns to the highest governance body. 58 G4-50 Nature and total number of critical concerns that were communicated to the highest governance body and the mechanism(s) used to address and resolve them. 58 G4-51 Remuneration policies for the highest governance body and senior executives. 86 G4-52 G4-54 Process for determining remuneration. Report whether remuneration consultants are involved in determining remuneration and whether they are independent of management. Report any other relationships which the remuneration consultants have with the organization. Ratio of the annual total compensation for the organization s highest-paid individual to the median annual total compensation for all employees (excluding the highest-paid individual) ETHICS AND INTEGRITY G4-56* The organization s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics. 9, 69 G4-57 Internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related to organizational integrity, such as helplines or advice lines. 69 G4-58 Internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity, such as escalation through line management, whistleblowing mechanisms or hotlines. 70 CHAPTER VII Integrated Report 126

127 SPECIFIC STANDARD DISCLOSURES GRI Code Description Page/Response FINANCIAL RESULTS G4-EC1 Economic value generated and distributed. 31 G4-EC7 Extent of development and impact of infrastructure investments and services supported. 93 ENVIRONMENTAL PERFORMANCE G4-EN3 Energy consumption within the organization. 94 G4-EN4 Energy consumption outside of the organization. 94 G4-EN5 Energy intensity. 94 G4-EN6 Reduction of energy consumption. 95 G4-EN7 Reductions in energy requirements of products and services. 95 G4-EN10 G4-EN11 Percentage and total volume of water recycled and reused. Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. Water is taken directly from the public drinking water system and, therefore, no recycled water is consumed and no waste water is recycled. G4-EN12 G4-EN13 G4-EN14 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. Habitats protected or restored. Total number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk. Santiago Exchange's operations are located in an urban setting and, therefore,do not affect natural protected areas or areas of high biodiversity value. CHAPTER VII Integrated Report 127

128 GRI Code Description Page/Response G4-EN20 G4-EN21 G4-EN24 a. Report production, imports, and exports of ozone-depleting substances (ODS) in metric tons of CFC-11 equivalent. b. Report substances included in the calculation. c. Report standards, methodologies, and assumptions used. d. Report the source of the emission factors used. NOx, SOx and other significant air emissions. Total number and volume of significant spills. Santiago Exchange's business activities do not generate significant greenhouse gas emissions. Santiago Exchange's business activities present no risk of significant spills. G4-EN25 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. Given the nature of Santiago Exchange's business, this type of activity is not carried out. G4-EN26 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the organization s discharges of water and runoff. Santiago Exchange's operations are located in an urban setting and, therefore, do not affect the biodiversity value of water bodies and related habitats. G4-EN27 Extent of impact mitigation of environmental impacts of products and services. The products and services provided by Santiago Exchange do not generate relevant environmental impacts. G4-EN28 Percentage of products sold and their packaging materials that are reclaimed by category. Santiago Exchange does not manufacture any products. G4-EN34 Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms. There were no environmental grievances during the period. CHAPTER VII Integrated Report 128

129 GRI Code Description Page/Response LABOR PERFORMANCE DMA Description of how the organization manages the material Aspect or its effects. 81 G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region. 82 G4-LA2 G4-LA5 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by 87 major operations. Percentage of total workforce represented in formal joint management worker health and safety committees that help monitor and advise on occupational health and safety programs. 88 G4-LA6 Safety and absentee rates. 84, 88 G4-LA7 Workers with high incidence or high risk of diseases related to their occupation. 88 G4-LA8 Health and safety topics covered in formal agreements with trade unions. Santiago Exchange does not have any employee unions. G4-LA9 Average hours of training per year per employee by gender, and by employee category. 85 G4-LA10 G4-LA11 G4-LA12 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. Percentage of employees receiving regular performance and career development reviews, by gender and by employee category. Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity G4-LA13 Ratio of basic salary and remuneration of women to men by significant locations of operation. 86 G4-LA14 Percentage of new suppliers that were screened using labor practices criteria. 90 G4-LA15 G4-LA16 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken. Number of grievances about labor practices impacts filed, addressed, and resolved through formal grievance mechanisms CHAPTER VII Integrated Report 129

130 GRI Code Description Page/Response HUMAN RIGHTS G4-HR3 Total number of incidents of discrimination and corrective actions taken. 70 G4-HR12 SOCIAL PERFORMANCE Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms. 70 DMA Description of how the organization manages the material Aspect or its effects. 69, 91 G4-SO1 G4-SO3 Percentage of operations with implemented local community engagement, impact assessments, and development programs. Total number and percentage of operations assessed for risks related to corruption and the significant risks identified G4-SO4 Communication and training on anti-corruption policies and procedures. 70 G4-SO5 Confirmed incidents of corruption and actions taken. 70 G4-SO6 Total value of political contributions by country and recipient/beneficiary. 65 G4-SO7 G4-FS16 Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes. Initiatives to enhance financial literacy by type of beneficiary CHAPTER VII Integrated Report 130

131 GRI Code Description Page/Response PRODUCT RESPONSIBILITY G4-PR1 G4-PR2 Percentage of significant product and service categories for which health and safety impacts are assessed for improvement. Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes. The products and services provided by Santiago Exchange have no impact on the health and safety of its customers. G4-PR3 G4-PR4 Type of product and service information required by the organization's procedures for product and service information and labeling, and percentage of significant product and service categories subject to such information requirements. Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcome. The products and services provided by Santiago Exchange are not governed by labeling requirements. G4-PR8 G4-PR9 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services CHAPTER VII Integrated Report 131

132 Chapter VIII Financial Statements Integrated Report 132

133 Financial Statements Financial Statements of Santiago Exchange as of December 31, 2016 and Consolidated Statements of Financial Position. Consolidated Statements of Comprehensive Income. Consolidated Statements of Changes in Equity. Consolidated Statements of Cash Flows. CH$ Chilean pesos US$ United States dollars UF Unidad de Fomento Notes to the Consolidated Financial Statements. CHAPTER VIII Integrated Report 133

134 INDEPENDENT AUDITORS' REPORT Santiago, January 23, 2017 To the Shareholders and Directors of Bolsa de Comercio de Santiago, Bolsa de Valores We have audited the attached consolidated financial statements for Bolsa de Comercio de Santiago, Bolsa de Valores and its subsidiary, which are comprised of the consolidated statements of financial position as of December 31, 2016, and the corresponding consolidated statements of comprehensive income, of changes in net equity and of cash flows for the year then ended, and our corresponding notes to these consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). This includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free of material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bolsa de Comercio de Santiago, Bolsa de Valores and subsidiary as of December 31, 2016, and the results of their operations and cash flows for the year then ended, in accordance with International Financial Reporting Standards. Other Matters - Previous Auditor The financial statements of Bolsa de Comercio de Santiago, Bolsa de Valores for the year ended December 31, 2015, were audited by other auditors, who issued an unqualified opinion in their report dated January 25, The above translation of the auditors' report is provided as a free translation from the Spanish language original, which is the official version. Such translation has been made solely for the convenience of non-spanish readers. Claudio Gerdtzen S. Chilean National ID: CHAPTER VIII Integrated Report 134

135 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2016 AND 2015 CH$ THOUSANDS Note Assets Current assets Cash and cash equivalents 5 6,750,426 4,814,254 Other current financial assets 6 18,529,980 17,834,375 Other current non-financial assets 288, ,638 Current trade and other receivables 7 1,301,815 1,804,535 Accounts receivable from related parties, current 8 1,078,768 1,618,254 Total current assets other than assets or disposal groups classified as held for sale or as held for distribution to owners 27,949,454 26,240,056 Total current assets 27,949,454 26,240,056 Non-current assets Other non-current non-financial assets 9 3,135,519 2,220,556 Investments accounted for using the equity method 10 2,318,278 1,955,126 Intangible assets other than goodwill 11 3,217,364 3,185,004 Property, plant and equipment 12 15,851,606 15,927,834 Investment property ,000 Deferred tax assets 14 1,425,670 1,210,318 Total non-current assets 25,948,437 24,754,838 Total assets 53,897,891 50,994,894 CHAPTER VIII Integrated Report 135

136 Note Equity and liabilities Liabilities Current liabilities Current trade and other payables 16 2,545,606 3,828,068 Current tax liabilities , ,796 Current employee benefit provisions , ,814 Total current liabilities other than liabilities included in disposal groups classified as held for sale 3,724,519 4,555,678 Total current liabilities 3,724,519 4,555,678 Non-current liabilities Other non-current financial liabilities 20 7,538,168 7,157,817 Deferred tax liabilities 14 4,763,063 5,227,943 Non-current employee benefit provisions 15 2,372,955 1,285,353 Other non-current non-financial liabilities ,927 - Total non-current liabilities 15,046,113 13,671,113 Total liabilities 18,770,632 18,226,791 CHAPTER VIII Integrated Report 136

137 Note Equity Issued capital 17 5,804,188 5,804,188 Retained earnings 14,950,866 11,340,911 Other comprehensive loss (1,551,002) (481,782) Other reserves 15,689,637 15,877,311 Equity attributable to owners of the parent 34,893,689 32,540,628 Non-controlling interest 233, ,475 Total equity 35,127,259 32,768,103 Total liabilities and equity 53,897,891 50,994,894 CHAPTER VIII Integrated Report 137

138 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2016 and 2015 CH$ THOUSANDS Note Profit for the year Revenue 21,735,057 21,243,231 Other income, by nature - 7,980 Employee benefit expenses (7,070,035) (7,175,515) Depreciation and amortization expense (2,106,881) (1,925,791) Other expenses, by nature (4,491,491) (4,817,006) Other gains (losses) 3,285,418 (63,832) Finance income 113, ,502 Share of profit (loss) of equity method associates and joint ventures , ,595 Exchange differences 18 (28,515) 82,496 Gain on indexed assets and liabilities 19 55,284 40,075 Gains arising from the difference between the prior carrying amount and the fair value of financial assets reclassified at fair value 1,010, ,674 Profit before taxes 13,034,734 8,595,409 Income tax expense 14 (2,387,906) (1,581,958) Profit from continuing operations 10,646,828 7,013,451 Profit for the year 10,646,828 7,013,451 Profit attributable to Profit attributable to owners of the parent 10,616,956 6,989,593 Profit attributable to non-controlling interest 29,872 23,858 Profit for the year 10,646,828 7,013,451 CHAPTER VIII Integrated Report 138

139 Note Statement of Comprehensive Income Profit for the year 10,646,828 7,013,451 Other comprehensive loss (1,256,894) (163,222) Total comprehensive income 9,389,934 6,850,229 CHAPTER VIII Integrated Report 139

140 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 CH$ THOUSANDS Statement of Changes in Equity ISSUED CAPITAL OTHER MISCELLANEOUS RESERVES Total Other Reserves OTHER COMPREHENSIVE INCOME Retained Earnings Equity Attributable to Owners of the Parent Non-controlling interest Total Equity Opening balance current period as of Increase (decrease) due to changes in accounting policy Increase (decrease) due to error correction 5,804,188 15,877,311 15,877,311 (481,782) 11,340,911 32,540, ,475 32,768, Restated beginning balance 5,804,188 15,877,311 15,877,311 (481,782) 11,340,911 32,540, ,475 32,768,103 Total comprehensive income Profit for the year ,616,956 10,616,956 29,872 10,646,828 Other comprehensive loss - (187,674) (187,674) (1,069,220) - (1,256,894) - (1,256,894) Dividends (7,008,000) (7,008,000) - (7,008,000) Increase (decrease) due to transfers and other changes (23,777) (22,778) Total changes in equity - (187,674) (187,674) (1,069,220) 3,609,955 2,353,061 6,095 2,359,156 Closing balance as of ,804,188 15,689,637 15,689,637 (1,551,002) 14,950,866 34,893, ,570 35,127,259 CHAPTER VIII Integrated Report 140

141 ISSUED CAPITAL OTHER MISCELLANEOUS RESERVES Total Other Reserves OTHER COMPREHENSIVE INCOME Retained Earnings Equity Attributable to Owners of the Parent Non-controlling interest Total Equity Opening balance prior period as of ,804,188 15,877,311 15,877,311 (318,560) 10,243,946 31,606, ,041 31,816,926 Restated beginning balance 5,804,188 15,877,311 15,877,311 (318,560) 10,243,946 31,606, ,041 31,816,926 Changes in equity Total comprehensive income Profit for the year ,989,593 6,989,593 23,858 7,013,451 Other comprehensive loss (163,222) - (163,222) - (163,222) Equity issuance Dividends (5,904,000) (5,904,000) - (5,904,000) Increase (decrease) due to transfers and other changes ,372 11,372 (6,424) 4,948 Total changes in equity (163,222) 1,096, ,743 17, ,177 Closing balance as of ,804,188 15,877,311 15,877,311 (481,782) 11,340,911 32,540, ,475 32,768,103 CHAPTER VIII Integrated Report 141

142 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 CH$ THOUSANDS Cash flows provided by (used in) operating activities Classes of revenue from operating activities Proceeds from sales of goods and services 29,465,992 29,684,369 Classes of payments Payments to suppliers for goods and services (12,700,509) (12,385,925) Payments to and on behalf of employees (8,659,804) (9,894,918) Dividends received 64,599 84,524 Interest received 411, ,502 Income taxes paid (2,138,598) (1,546,481) Net cash flows provided by operating activities 6,443,204 6,046,071 Cash flows provided by (used in) investing activities Proceeds from sale of property, plant and equipment 3,793,715 - Purchases of property, plant and equipment (1,210,885) (1,222,764) Other cash inflows 15,425 9,021 Net cash flows provided by (used in) investing activities 2,598,255 (1,213,743) CHAPTER VIII Integrated Report 142

143 Cash flows provided by (used in) financing activities Dividends paid (7,858,581) (6,039,452) Other cash inflows 736, ,925 Net cash flows used in financing activities (7,121,888) (5,288,527) Increase (decrease) in cash and cash equivalents before effect of exchange rate changes 1,919,571 (456,199) Effect of exchange rate changes on cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents 16,601 15,548 Increase (decrease) in cash and cash equivalents 1,936,172 (440,651) Cash and cash equivalents at beginning of period 4,814,254 5,254,905 Cash and cash equivalents at end of period 6,750,426 4,814,254 CHAPTER VIII Integrated Report 143

144 Note 1 Corporate Information a) Information on the Reporting Entity Bolsa de Comercio de Santiago, Bolsa de Valores (hereinafter "Santiago Exchange" or "the Company"), is registered as a Securities Exchange in public registries kept for these purposes by the Chilean Superintendency of Securities and Insurance (SVS), which is responsible for overseeing the Company. In Supreme Decree 3015, dated December 29, 1893, the Company was licensed to operate and its bylaws were approved. Its legal address is Bandera No. 63, Santiago, Chile. The Company's initial corporate purpose was to create and maintain one or several meeting points to conduct all types of business, which was amended and approved at an extraordinary shareholders' meeting held November 30, The amended corporate purpose is as follows: Its exclusive corporate purpose shall be to provide members the necessary implements for them to effectively carry out, in the locations provided to them, securities transactions via continuous public auction mechanism and other activities permitted by law. Notwithstanding the corporate purposes that the Company may set for itself, in general terms, these are the purposes inherent to a Securities Exchange in accordance with its bylaws and article 38 of Law No. 18,045, which literally sets forth: Securities Exchanges are entities whose corporate purpose shall be to provide members the necessary implements for them to effectively carry out, in the locations provided to them, securities transactions via continuous public auction mechanisms and so they may carry out other securities brokerage activities permitted by law. The regulations governing the Company are contained in Law No. 18,045 on the Securities Market, which states the following in article 40: In all matters not contrary to this law, Securities Markets shall be governed by the rules applicable to publicly-traded corporations and shall be supervised by the Superintendency of Securities and Insurance. The Company carries out its economic and business activities in the financial sector, specifically the securities market sector, especially the secondary securities market. b) Ownership and Control The Company has one sole shareholder (BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS), which holds five shares, accounting for 10.42% of the Company's total shares. c) Investment, Financing, Research and Development Santiago Exchange's investment policy calls for providing the materials and human resources needed to efficiently meet its objectives. The Company engages in financing activities to manage its cash surpluses and investment portfolio. It has a portfolio of high-grade marketable securities diversified by issuer to cover its liquidity needs. Given the particular nature of the market in which the Company does business, it has established research and development policies to keep it at the forefront of its industry. It allocates human resources and materials to research and development efforts as needed in order to deliver quality services. d) Risk Factors The main risk factors that could affect the Company include general domestic and international economic conditions, which could alter the institution's movement and activity. CHAPTER VIII *All figures are expressed in thousands of Chilean pesos Integrated Report 144

145 Note 2 Basis of Preparation a) Basis of Preparation The Company's consolidated financial statements as of December 31, 2016 and 2015, and for the years then ended have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and instructions from the Chilean Superintendency of Securities and Insurance (SVS). The financial statements as of December 31, 2016, were approved by the Company's Board of Directors in a meeting held on January 23, b) Periods Covered These financial statements were prepared as of December 31, 2016 and The Statements of Income were prepared for the years ended December 31, 2016 and The Statements of Changes in Equity and Cash Flows were prepared for the years ended December 31, 2016 and c) Functional and Presentation Currency The functional currency of Santiago Exchange and its Subsidiary has been defined as the currency of the economic environment in which the Company operates. Consequently, the consolidated financial statements are presented in Chilean pesos, which is the Company's functional and presentation currency. Transactions in currencies other than the functional currency are considered to be in foreign currency and are initially recorded at the exchange rate in force on the transaction date. Monetary assets and liabilities denominated in foreign currency are valued using the observed exchange rate on the last business day of the month and any differences are charged or credited to profit or loss in the account Exchange Differences. d) Management Responsibility and Estimates In preparing the consolidated financial statements, certain estimates made by the Company s management have been used in order to quantify some assets, liabilities, income, expenses and commitments recorded in such statements. These estimates basically refer to: The useful life and residual values of property, plant and equipment. The probability of occurrence and the amount of contingent liabilities or liabilities whose amount or timing is uncertain. The basis for calculating employee benefits (employee termination benefits, actuarial calculations). Hypotheses regarding the generation of future taxable income, where taxes on this income is deductible from deferred tax assets. Although these estimates have been based on the best information available at the date of issuance of these consolidated financial statements, it is possible that events may occur in the future that will require a change (increase or decrease) in future periods, which would occur prospectively, recognizing the effects of such change in estimate in the corresponding future consolidated financial statements. CHAPTER VIII Integrated Report 145

146 e) Basis of Consolidation These consolidated financial statements include the assets, liabilities, income, and cash flows of the Company and its subsidiary. The effects of transactions with the subsidiary have been eliminated, with the interest of minority investors recognized in the statements of financial position and of comprehensive income. Subsidiaries The subsidiary is an entity controlled by the Company. The subsidiary's financial statements are included in the consolidated financial statements from the date control begins until the date control ends. The Company controls an investee when it has exposure, or rights, to variable returns from the investor s involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor s returns. The subsidiary's financial statements are included in the consolidated financial statements from the date control begins until the date control ends. The following company has been consolidated: Loss of Control When the Company loses control over a subsidiary, the Company derecognizes the subsidiary's assets and liabilities, any related non-controlling interest and other components of equity. Any resulting gain or loss is recognized in profit and loss. If the Company retains any interest in the former subsidiary, it shall be valued at its fair value as of the date on which control is lost. CHILEAN TAXPAYER ID COMPANY NAME COUNTRY OWNERSHIP INTEREST CCLV, Contraparte Central S.A. Direct Indirect Total Direct Indirect Total Chile f) Basis of Conversion The figures in these consolidated financial statements and their notes are expressed in thousands of Chilean pesos, which is the Company's functional and presentation currency, since its income and expenses are in that currency Ch$ Ch$ Unidades de Fomento UF are considered indexation units. They are converted to Chilean pesos and any changes are recorded in gain (loss) on indexed assets and liabilities. The respective values are the Chilean peso amounts in which the transactions are carried out except for rights or obligations with contractual exchange rate indexation clauses. Assets and liabilities in foreign currency or other conversion units have been expressed in the reporting currency (Chilean pesos) using the following year-end exchange rates: US dollar (US$) Unidad de Fomento (UF) , , CHAPTER VIII Integrated Report 146

147 Note 3 Summary of Significant Accounting Policies The following section describes the main accounting policies used by the Company in preparing the consolidated financial statements, which have been applied uniformly to all periods presented in these consolidated financial statements. a) Financial Assets Cash and cash equivalents: Cash and cash equivalents include cash on hand and balances in bank current accounts, as well as short-term, highly liquid investments maturing within 90 days of the acquisition date that are easily convertible to cash, have insignificant risk of changes in value and are part of the Company's normal management of cash surpluses. These items are recorded at amortized cost or at fair value through profit and loss. Other current financial assets: They consist of financial assets with fixed or determinable payments that are quoted on an active market. This account includes investments in bonds issued by the Chilean Central Bank in UF (BCU), mortgage bonds and bonds issued by international companies in US$, and bonds issued by the Chilean Central Bank in Chilean pesos (BCP) that are valued at fair value through profit and loss using the effective interest method, based on the rate used to determine the instrument's price on the purchase date, adjusted to reflect the market rate as of the reporting date. Investments in time deposits in the Chilean financial system maturing in over 90 days are presented at fair value as of the reporting date in accordance with IFRS 9. This account also includes investments in shares of other companies in which the Company does not have significant influence. Listed shares are valued at their average closing price while unlisted shares are recorded at fair value (their known value that represents the investment value). The Company classifies its financial assets into the following categories: At fair value through profit and loss and financial assets at amortized cost. The classification depends on the purpose with which the financial assets were acquired. Management determines the classification of its financial assets upon initial recognition. Classification of Financial Assets (i) Initial Recognition Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit and loss. Financial assets at fair value through profit or loss are initially recognized at fair value and transaction costs are recorded in profit or loss. (ii) Subsequent Valuation Financial assets at fair value through profit or loss are subsequently recorded at fair value. Financial assets at amortized cost are accounted for at their amortized cost using the effective interest method (i.e. they accrue interest at the agreed-upon rate), while financial assets through other comprehensive income are subsequently accounted for at fair value. Investments are derecognized when the rights to receive cash flows from an investment have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. As of each reporting date, Santiago Exchange assesses whether there is objective evidence that a financial asset or a group of financial assets may be impaired, when the subsequent valuation is at amortized cost. Beginning December 1, 2014, the Company's Board authorized the transfer of equal parts of the portfolio of financial instruments to Banchile Corredores de Bolsa and Santander CHAPTER VIII Integrated Report 147

148 Corredores de Bolsa, in order to generate profits on these investments. The instruments reported by the fund managers are classified as Other current financial assets (available-for-sale) and any gain or loss on the portfolio is recorded in Gains (losses) arising from the difference between the prior carrying amount and the fair value of financial assets reclassified at fair value. b) Financial Liabilities and Other Financial Liabilities As of the reporting dates, the Company does not have any financial liabilities. Other non-current financial liabilities. This account includes financial liabilities for benefits received for equities deposited in custody by third parties. c) Trade and Other Receivables The amounts presented in Trade and other receivables are recognized at the total invoice value and do not present significant risk of uncollectibility based on the age and -or amount of the debt. Therefore, the Company has decided to not record an allowance for doubtful accounts as of each reporting date. d) Property, Plant and Equipment Property, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses in cases where assets must be regularly tested for impairment. Items with different useful lives are recorded as separate items. Periodic maintenance, conservation and repair expenses are recorded directly in income as an expense for the period in which they are incurred. The useful life assigned to assets with different useful lives as of December 31, 2016 and 2015, is tested by the technical area responsible for each item and based on instructions from suppliers, taking into account the use that will be assigned to each asset. For assets in property, plant and equipment that were reevaluated and whose useful life was determined by appraisers during the IFRS conversion process, historical cost is subsequently used. e) Depreciation of Property, Plant and Equipment Depreciation is recognized in profit or loss on a straight-line basis over the assigned useful lives of each item of property, plant and equipment. For property that was appraised (only once) during the IFRS conversion process, the useful life defined in each appraisal is used to calculate depreciation. f) Intangible Assets other than Goodwill Research and Development Expenses Expenses for studies, optimization and research for new projects incurred by the Company as part of its normal course of business are charged directly to profit or loss for the period in which they are incurred. The Company has not incurred in any research and development expenses for concepts and amounts that require detailed disclosure. Other Identifiable Intangible Assets These intangible assets are mainly IT applications (software). They are initially recognized at their acquisition cost and are subsequently valued at cost net of accumulated amortization and any impairment losses that may have occurred and will be tested for annually. The useful life used to amortize the Company's intangible assets is based on the periods agreed in licensing agreements or a technical estimate of the time of optimal use for the license or software. g) Amortization of Intangible Assets Other than Goodwill Amortization for each period has been calculated using historical values (net cost) for the intangible assets on a straight-line basis based on their estimated useful lives. h) Investment Property Property classified as investment property corresponds to a lot located in the District of Pudahuel that is not used for the Company's business and is maintained for capital appreciation. It is recorded at its commercial appraisal value, which was determined in a one-time study performed by Compañía de Valoración de Activos y Servicios Inmobiliarios Arenas y Cayo S.A.. The lot was sold in July i) Investments Accounted for Using the Equity Method Investments in associates are valued using the equity method. This valuation methodology includes recognizing the Company's share of profit or loss on an accrual basis. CHAPTER VIII Integrated Report 148

149 j) Current and Deferred Taxes Income tax expense includes both current and deferred taxes. It is recognized in profit or loss, except when related to a business combination or items recognized directly in equity and other comprehensive income. Current Taxes Current taxes include taxes that the Company expects to pay or receive on its taxable income or loss for the year and any tax adjustment payable or receivable related to prior years. They are calculated using tax rates that have been enacted or substantively enacted as of the reporting date. Current taxes also include any tax arising from dividends. Income Taxes On September 29, 2014, the Chilean Tax Reform Law was passed. This law, among other changes, defines the default tax regime applicable to the Company and the first category (corporate income) tax rate that will apply to companies by default between 2014 and It also allows companies to choose between one of two tax regimes (attributed or semi-integrated), which will be subject to different tax rates beginning in The attributed regime is applicable to sole proprietorships, individual limited liability companies, communities and partnerships when they are formed exclusively by individuals domiciled and resident in Chile; and the semi-integrated system applies to all other taxpayers, such as publicly and privately held corporations, simplified corporations or partnerships whose partners are not exclusively individuals domiciled or resident in Chile. The default tax regime applicable to the Company beginning January 1, 2017, is the semi-integrated system. Deferred Taxes Deferred taxes are recognized for temporary differences between the book value of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred taxes are not recognized for: Temporary differences recorded upon initial recognition of an asset or liability in a transaction other than a business combination that did not affect the book- or tax-basis profit or loss; Temporary differences related to investments in associates and joint ventures to the extent that the Company can control the timing of the reversal and it is likely that the temporary differences will not be reversed in the near future; and Taxable temporary differences that arise from the initial recognition of goodwill. Deferred tax assets are recognized for unused tax losses, tax credits and temporary deductible differences, to the extent that it is likely that future taxable gains will exist against which these can be used. Deferred tax assets are reviewed at each reporting date and reduced when it is not likely that the related tax benefits will be obtained; this reduction will be reversed to the extent that it is likely that sufficient tax-basis profits are available. At the end of each reporting period, an entity will reevaluate unrecognized deferred tax assets and will record a previously unrecorded deferred tax asset when it is likely that future tax-basis profits will be available to recover the deferred tax assets. Deferred taxes must be measured at tax rates expected to be applied when temporary differences are reversed, using rates that have been enacted or substantively enacted as of the reporting date. Measurement of deferred tax liabilities will reflect the tax consequences of how the Company expects, at the end of the reporting period, to recover or settle the carrying amount of their assets and liabilities. For this purpose, it is presumed that the carrying amount of investment property measured at fair value will be recovered through sale and the Company has not refuted this presumption. CHAPTER VIII Integrated Report 149

150 Deferred Taxes Deferred taxes are measured at tax rates expected to be applied when temporary differences are reversed, using rates that apply by default as of the balance sheet date, as indicated below: YEAR SEMI- INTEGRATED % % % % % k) Non-Current Employee Benefit Provisions The Company has no contractual obligations with its personnel for employee termination benefits based on years of service. However, a provision has been recorded for each employee based on an actuarial calculation of employee termination benefits in accordance with IAS No. 19 based on Company practice. l) Vacation Accrual The cost of personnel vacation is accounted for during the year in which the right is accrued, regardless of the year in which the employees make use of this right. It is presented in Employee benefit provisions. m) Revenue The Company recognizes revenue from its line of business on an accrual basis in order to record income generated by its operations in the corresponding period. n) Statement of Cash Flows Cash equivalents correspond to short-term investments that are highly liquid, easily convertible into known amounts of cash and have insignificant risk of changes in value. Their maturity does not exceed 90 days. The statement of cash flows reflects cash movements during the period, determined using the direct method. The terms used in these cash flow statements are defined as follows: Cash Flows: Inflows and outflows of cash or cash equivalents, which are defined as highly liquid investments maturing in less than 90 days with a low risk of change in value. Operating Activities: Activities that comprise the main source of operating income for the Company and its Subsidiary, as well as other activities that cannot be classified as investing or financing. Investing Activities: Activities that involve acquiring, selling or otherwise disposing of non-current assets and other investments not included in cash and cash equivalent. Financing Activities: Activities that bring about changes in the size and composition of net equity and financial liabilities. o) Impairment of Assets The Company tests assets for impairment on a yearly basis, as indicated in IAS 36. As of December 31, 2016 and 2015, the Company has not recorded any impairment losses. p) Minimum Dividend The Company, based on the dividend policies approved by shareholders, distributes interim dividends charged to profit for the year that exceed the established legal minimum. This legal minimum requires listed corporations to distribute an annual cash dividend to their shareholders, in proportion to their shares or the proportion established in the en- CHAPTER VIII Integrated Report 150

151 tity's bylaws if it has preference shares, of at least 30% of profit for each year, except when accumulated losses from prior years must be absorbed. Interim and final dividends are deducted from Net equity as soon as they are approved by the competent body, which in the first case is normally the Company s Board of Directors and in the second case is shareholders at the Annual General Shareholders Meeting. q) Current and Non-Current Classification In the attached statement of consolidated financial position, balances are classified based on maturity (i.e. current balances mature in no more than 12 months and non-current balances in more than 12 months). r) Earnings per Share Basic earnings per share is calculated as the ratio between net profit for the year attributable to the parent divided by the weighted average number of common shares in circulation during the year. CHAPTER VIII Integrated Report 151

152 Note 4 International Financial Reporting Standards a) The following new standards and interpretations have been adopted in these financial statements: New Standards and Amendments IAS 36, Impairment of Assets Recoverable Amount Disclosures for Non-Financial Assets Mandatory Effective Date Annual periods beginning on or after January 1, IAS 39, Financial Instruments: Recognition and Measurement Novation of Derivatives and Continuation of Hedge Accounting IAS 27, Separate Financial Statements, IFRS 10, Consolidated Financial Statements and IFRS 12, Disclosures of Interests in Other Entities. All of these amendments are applicable to investment entities. They introduce an accounting treatment exception and eliminate the consolidation requirement. Annual periods beginning on or after January 1, Annual periods beginning on or after January 1, IAS 32 and IFRS 7: The amendment focused on four main areas: the meaning of "currently has a legally enforceable right of set-off", the application of simultaneous realization and settlement, the offsetting of collateral amounts and the unit of account for applying the offsetting requirements. Annual periods beginning on or after January 1, IFRS 9, Financial Instruments Annual periods beginning on or after January 1, Earlier application is permitted. New Interpretations IFRIC 21, Levies Annual periods beginning on or after January 1, Earlier application is permitted. CHAPTER VIII Integrated Report 152

153 b) The following new IFRS -IFRIC and -or amendments take effect after December 31, 2015: New IFRS Mandatory Effective Date IFRS 14, Regulatory Deferral Accounts Annual periods beginning on or after January 1, IFRS 15, Revenue from Contracts with Customers Annual periods beginning on or after January 1, Earlier application is permitted. IFRS 16: Leases. Annual periods beginning on or after January 1, Earlier application is permitted. Amendments to IFRS IAS 1, Disclosure Initiative Annual periods beginning on or after January 1, IFRS 11, Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations Annual periods beginning on or after January 1, IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortization IFRS 10, Consolidated Financial Statements and IAS 28, Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IAS 27, Separate Financial Statements, IFRS 10, Consolidated Financial Statements and IFRS 12, Disclosure of Interests in Other Entities. Applying the Consolidation Exception. IAS 27, Separate Financial Statements, Equity Method in Separate Financial Statements Annual periods beginning on or after January 1, Effective date deferred indefinitely. Annual periods beginning on or after January 1, Annual periods beginning on or after January 1, New Accounting Pronouncements The application of these new standards has not had a significant impact on the Company's accounting policies and the amounts reported in these Consolidated Financial Statements, but may affect the accounting of future transactions or agreements. CHAPTER VIII Integrated Report 153

154 Note 5 Cash and Cash Equivalents The balances of cash and cash equivalents presented in the Consolidated Statement of Financial Position are detailed as follows: CH$ THOUSANDS As of As of Notes to be deposited 20,018 21,738 Bank balances 3,482,601 3,428,433 Time deposits up to 90 days 3,247,807 1,364,083 Total cash and cash equivalents 6,750,426 4,814,254 CHAPTER VIII Integrated Report 154

155 As of December 31, 2016, consolidated investments in current time deposits are detailed as follows: CH$ THOUSANDS Institution Placement Date Maturity Date Days Past Due Initial Amount Exchange Differences Interest Accrued Amount as of BICE ,000-2, ,372 BCI , ,286 BICE ,000-6, ,168 BCI ,000-6, ,168 BANCO DE CHILE ,000 1, ,232 BANCO DE CHILE , ,492 BICE ,000 2,981 2, ,626 BICE ,000 1,835 1, ,463 Total 3,220,000 6,771 21,036 3,247,807 The consolidated balance of current deposits is detailed as follows: The Company's time deposits as of the reporting date mature within 90 days and have no restrictions. CHAPTER VIII Integrated Report 155

156 As of December 31, 2015, consolidated investments in current time deposits are detailed as follows: CH$ THOUSANDS Institution Placement Date Maturity Date Days Past Due Initial Amount Exchange Differences Interest Accrued Amount as of CHILE ,000 3, ,202 CHILE ,000 2,788 1, ,476 CHILE ,000 6, ,405 Total 1,350,000 12,374 1,709 1,364,083 CHAPTER VIII Integrated Report 156

157 Note 6 Other Current Financial Assets As of December 31, 2016 and 2015, consolidated investments in other current financial assets, valued as described in Note 3a), are detailed as follows: CH$ THOUSANDS INSTRUMENT As of As of Stocks 93,130 73,928 Chilean Central Bank bonds (BCP and BCU) - 302,019 Gold coins 13,538 12,600 Santander investment portfolio 9,321,665 8,733,720 Banchile investment portfolio 9,101,647 8,712,108 Total other current financial assets 18,529,980 17,834,375 As of December 31, 2016, investments in equities are detailed as follows: CH$ THOUSANDS STOCKS NUMBER OF UNITS UNIT MARKET VALUE As of TOTAL MARKET VALUE As of CH$ BCI 2,304 33, ,038 CHILE 151, ,868 Other - - 3,224 TOTAL 93,130 CHAPTER VIII Integrated Report 157

158 Gold coins as of December 31, 2016, are detailed as follows: CH$ THOUSANDS INSTRUMENT NUMBER OF UNITS UNIT MARKET VALUE As of TOTAL MARKET VALUE As of CH$ Gold coins ,500 13,538 TOTAL 13,538 The Santander investment portfolio as of December 31, 2016, is detailed as follows: CH$ THOUSANDS INSTRUMENT As of Stocks 1,773,821 Time deposits and repo agreements 1,054,403 Chilean Central Bank bonds 2,494,373 Corporate bonds 3,887,326 Transactions pending settlement 116,679 Accounts payable (4,937) Total Santander portfolio 9,321,665 CHAPTER VIII Integrated Report 158

159 The Banchile investment portfolio as of December 31, 2016, is detailed as follows: CH$ THOUSANDS INSTRUMENT As of Stocks 1,807,602 Chilean Central Bank bonds in UF 262,247 Bank bonds 4,144,360 Corporate bonds 820,000 Corporate bonds in US$ 1,401,928 Time deposits 561,684 Mutual fund units 105,874 Accounts payable (2,047) Total Banchile portfolio 9,101,648 As of December 31, 2015, investments in equities are detailed as follows: CH$ THOUSANDS STOCKS NUMBER OF UNITS UNIT MARKET VALUE As of TOTAL MARKET VALUE As of CH$ BCI 2,265 26, ,617 CHILE 147, ,659 Other - - 2,652 Total 73,928 CHAPTER VIII Integrated Report 159

160 Chilean Central Bank bonds in UF (BCU) as of December 31, 2015, are detailed as follows: CH$ THOUSANDS Instrument Date of Carrying Amount Market Value MARK TO MARKET Purchase Maturity Rate BCU , ,019 - Total 302, ,019 - Gold coins as of December 31, 2015, are detailed as follows: CH$ THOUSANDS Instrument NUMBER OF UNITS UNIT MARKET VALUE AS OF Market Value AS OF CH$ Gold coins ,000 12,600 Total 12,600 CHAPTER VIII Integrated Report 160

161 The Santander investment portfolio as of December 31, 2015, is detailed as follows: CH$ THOUSANDS INSTRUMENT As of Stocks 1,564,024 Time deposits and repo agreements 1,624,386 Chilean Central Bank bonds 1,994,094 Corporate bonds 3,253,796 Transactions pending settlement 302,039 Accounts payable (4,619) Total Santander portfolio 8,733,720 The Banchile investment portfolio as of December 31, 2015, is detailed as follows: CH$ THOUSANDS INSTRUMENT As of Stocks 1,771,385 Chilean Central Bank bonds in UF 339,492 Bank bonds 3,906,956 Corporate bonds 488,543 Corporate bonds in US$ 1,403,598 Indexed time deposits 778,191 Mutual fund units 25,935 Accounts payable (1,992) Total Banchile portfolio 8,712,108 CHAPTER VIII Integrated Report 161

162 The Company classifies its financial instruments into one of three levels: Level 1: Observable prices in active markets for the specific type of instrument or transaction to be measured. Level 2: Market quotes do not exist for the specific instrument, or observable prices are sporadic. For this level, the valuation is based on inferences from observable factors; quoted prices for similar instruments on active markets. Level 3: The market parameters used in the valuation are not observable through quotes or cannot be inferred directly from active markets. Transactions are valued by calculating the fair value (Mark to Market). CH$ THOUSANDS LEVEL 1 LEVEL 2 LEVEL Investment securities Stocks 3,674,553 3,409, Treasury bonds 2,756,620 2,635, Bank and corporate bonds 10,253,614 9,052, Time deposits 1,616,087 2,402, Other financial instruments 229, , Total 18,529,980 17,834, CHAPTER VIII Integrated Report 162

163 Note 7 Current Trade and Other Receivables Consolidated trade and other receivables as of December 31, 2016 and 2015, are detailed as follows: Trade receivables do not accrue interest and generally are due within 30 to 90 days. CH$ THOUSANDS AS OF AS OF Trade receivables 1,301,815 1,804,535 Total 1,301,815 1,804,535 Since the collection period does not exceed 90 days on average as of December 31, 2016 and 2015, no allowances for doubtful accounts have been recorded for non-current receivables. Note 8 Balances and Transactions with Related Parties Balances receivable from related parties arise during the normal course of the Company's business activities and do not accrue interest. These transactions correspond mainly to: Balances with related parties as of December 31, 2016 and 2015, are detailed as follows: CH$ THOUSANDS AS OF AS OF For Santiago Exchange, they consist of trading floor rights, data services and office leases, and for CCLV Contraparte Central S.A. they consist of charges for transaction clearing and settlement services. Services receivable Brokers 1,078,768 1,618,254 Total 1,078,768 1,618,254 CHAPTER VIII Integrated Report 163

164 The disclosure criteria for reporting balances in detail in this note is to include transactions carried out by Brokers that are members of the Board of Directors of Santiago Exchange. Collection (payment) conditions for transactions with related parties are as follows: a) Income from trading: Invoiced and charged monthly. b) Income from data services: Invoiced and charged monthly. c) Income from office leases: Invoiced and charged monthly. d) Services provided by CCLV: Invoiced and charged monthly. Movements in this account for the year ended December 31, 2016, are detailed as follows: CH$ THOUSANDS Entity Item Balance as of Receivable Trading Value Including VAT NET PROFIT (LOSS) Brokers Transaction settlements 1,078,768 19,599,219 16,501,556 Movements in this account for the year ended December 31, 2015, are detailed as follows: CH$ THOUSANDS Entity Item Balance as of Receivable Trading Value Including VAT NET PROFIT (LOSS) Brokers Transaction settlements 1,618,254 14,569,320 12,288,923 CHAPTER VIII Integrated Report 164

165 Consolidated Notes and Accounts Receivable from Related Parties CH$ THOUSANDS CHILEAN TAXPAYER ID BROKER RECEIVABLE BTG PACTUAL CHILE S.A. 59,881 51, BANCHILE CORREDORES DE BOLSA S. A. 81,877 75, BICE CORREDORES DE BOLSA S.A. 15,009 13, SANTANDER INVESTMENT S.A.C. DE B. 20,965 17, NEGOCIOS Y VALORES S. A. C. DE B. 12,029 37, LARRAIN VIAL S.A. CORREDORA DE BOLSA 152, , EUROAMERICA CORREDORES DE BOLSA S. A. 12,544 13, JAIME LARRAIN Y COMPANIA C. DE B. LTDA. 9,880 10,192 Other shareholders (non-directors) 713,878 1,042,089 Total 1,078,768 1,618,254 CHAPTER VIII Integrated Report 165

166 Note 9 Other Non-Current Non-Financial Assets (Projects under Development) As of December 31, 2016 and 2015, this account includes projects that are being developed and have not been capitalized as of the reporting date. These projects involve services related to the Company's operating activities. Once the project begins operating, these assets will be classified as either property, plant and equipment or intangible assets. Balances of projects under development as of December 31, 2016 and 2015, are detailed as follows: CH$ THOUSANDS As of As of Computer equipment 285, ,965 Software and licenses 2,153,629 1,570,398 Other projects 696, ,193 Total 3,135,519 2,220,556 CHAPTER VIII Integrated Report 166

167 Note 10 Investments in Associates Accounted for Using the Equity Method Investments in related parties are valued as of December 31, 2016 and 2015, using the equity method. This valuation methodology includes recognizing the share of profit or loss on an accrual basis. The Company's interest in its associate as of December 31, 2016, is detailed as follows: CH$ THOUSANDS CHILEAN TAXPAYER ID COMPANY NAME COUNTRY INTEREST AS OF % Equity Method Value ACCRUED PROFIT (LOSS) Depósito Central de Valores S.A., Depósitos de Valores Chile ,318, ,635 The Company's interest in its associate as of December 31, 2015, is detailed as follows: CH$ THOUSANDS CHILEAN TAXPAYER ID COMPANY NAME COUNTRY INTEREST AS OF % Equity Method Value ACCRUED PROFIT (LOSS) Depósito Central de Valores S.A., Depósitos de Valores Chile ,955, ,595 CHAPTER VIII Integrated Report 167

168 Note 11 Intangible Assets As of December 31, 2016 and 2015, intangible assets mainly consist of computer software and licenses used to develop the Company's business. Intangible assets are amortized over a period of two to ten years. Intangible assets as of December 31, 2016, are detailed as follows: CH$ THOUSANDS ASSETS Gross Asset Amortization Net Asset USEFUL LIFE (YEARS) Computer software and licenses 14,272,119 (11,054,755) 3,217, Total 14,272,119 (11,054,755) 3,217,364 Intangible assets as of December 31, 2015, are detailed as follows: CH$ THOUSANDS ASSETS Gross Asset Amortization Net Asset USEFUL LIFE (YEARS) Computer software and licenses 13,049,438 (9,864,434) 3,185, Total 13,049,438 (9,864,434) 3,185,004 CHAPTER VIII Integrated Report 168

169 Note 12 Property, Plant and Equipment The main consolidated assets in this account are detailed as follows: a) Buildings, Infrastructure and Land: These correspond to the Company's headquarters at Bandera No. 64; the office at Nueva York No. 17, the fourth floor of the building at Moneda No and the land on Calle Bandera where the Company's headquarters are located. b) Machinery and Equipment: This basically includes computer equipment, furnishings, fittings and general office equipment. Summary of consolidated property, plant and equipment as of December 31, 2016 and CH$ THOUSANDS DESCRIPTION USEFUL LIFE (YEARS) AS OF AS OF Bandera building ,295,820 13,405,703 Nueva York No. 17 office , ,396 Moneda - Ahumada floor , ,915 Computer equipment 2 to 5 870, ,425 Furnishings, fittings and equipment 2 to , ,395 Total 15,851,606 15,927,834 CHAPTER VIII Integrated Report 169

170 Property, plant and equipment as of December 31, 2016: CH$ THOUSANDS DESCRIPTION OPENING VALUE ADDITIONS 2016 ACCUMULATED DEPRECIATION 2016 DEPRECIATION FOR THE YEAR 2016 CLOSING VALUE Bandera building 13,955,117 - (549,414) (109,883) 13,295,820 Nueva York No. 17 office 277,733 - (16,337) (3,267) 258,129 Moneda - Ahumada floor 788,319 - (33,404) (6,681) 748,234 Computer equipment 9,210, ,144 (8,439,735) (523,879) 870,258 Furnishings, fittings and equipment 3,805, ,774 (3,069,825) (265,004) 679,165 Total 28,037, ,918 (12,108,715) (908,714) 15,851,606 CHAPTER VIII Integrated Report 170

171 Property, plant and equipment as of December 31, 2015: CH$ THOUSANDS DESCRIPTION OPENING VALUE ADDITIONS 2015 ACCUMULATED DEPRECIATION 2015 DEPRECIATION FOR THE YEAR 2015 CLOSING VALUE Bandera building 13,955,117 - (439,531) (109,883) 13,405,703 Nueva York No. 17 office 277,733 - (13,070) (3,267) 261,396 Moneda - Ahumada floor 788,319 - (26,723) (6,681) 754,915 Computer equipment 8,583, ,160 (7,996,055) (444,248) 770,425 Furnishings, fittings and equipment 3,752,000 70,423 (2,830,077) (256,951) 735,395 Total 27,356, ,583 (11,305,456) (821,030) 15,927,834 CHAPTER VIII Integrated Report 171

172 Note 13 Investment Property Recognition As of December 31, 2016 and 2015, this account is detailed as follows: CH$ THOUSANDS INVESTMENT PROPERTY San Pablo lot - 256,000 This item is a lot located in the district of Pudahuel (formerly known as "Fundo Lo Prado"). Based on information in the property deed and plans, this is an irregularly shaped vacant lot with a surface area of 75,500 square meters. It is recorded at its commercial appraisal value, which was determined in a one-time study performed by Compañía de Valoración de Activos y Servicios Inmobiliarios Arenas y Cayo S.A. as part of the IFRS conversion process. Santiago Exchange sold the lot, specifically known as part D of the "Hijuela Quinta or Las Casas de Lo Prado" estate in the district of Pudahuel, property number , which is a non-agricultural rural lot measuring approximately 6.76 hectares, to Construcciones y Proyectos Los Maitenes S.A., and received payment on July 5, The sale agreement was recorded in public instrument on June 13, 2016, granted before Santiago notary Patricio Zaldívar Mackenna, under notary archive No The sale price and funds received totaled CH$3,763,172,300. CHAPTER VIII Integrated Report 172

173 Note 14 Current and Deferred Taxes a) Profit Losses Tax Basis As of December 31, 2016 and 2015, the Company recorded corporate (first category) tax profits and earnings of CH$10,572,127 and CH$ 7,505,047, respectively. As of December 31, 2016 and 2015, the Company's subsidiary recorded corporate (first category) tax profits and earnings of CH$ 905,903 and CH$ 784,977, respectively. As of December 31, 2016 and 2015, the Company had a taxable basis of CH$ 2,515 and CH$ 2,216, respectively, subject to 35% tax as established in article 21 of the Income Tax Law. As of December 31, 2016 and 2015, the Company's subsidiary had no taxable basis subject to 35% tax as established in article 21 of the Income Tax Law. CH$ THOUSANDS As of As of Income tax provision (2,731,636) (1,806,239) Single tax provision (35% article 21) (880) (776) Monthly taxes (247,671) (239,631) Monthly provisional tax payments 2,179,365 1,592,634 Recoverable income taxes 159, ,001 1% training tax credit 54,045 52,215 Total (587,158) (166,796) Current Taxes As of December 31, 2016 and 2015, current taxes are detailed as follows: CHAPTER VIII The figures are expressed in CH$ thousands Integrated Report 173

174 The following concepts are included in this group: 1) Income Tax Provision This is the corporate (first category) tax provision payable on profit generated as of each reporting date. 2) Single Tax Provision (35% article 21) This is the tax provision detailed in article 21 of the Income Tax Law as of each reporting date. 3) Monthly Taxes This is value added tax as of each reporting date. 4) Monthly Provisional Tax Payments These are monthly provisional tax payments made during 2016 and 2015 credited towards annual taxes. 5) Recoverable Income Taxes This is the balance of recoverable taxes from the prior year. b) Current and Deferred Tax Benefit (Expense) Income tax is detailed as follows, including the effect on profit or loss for the year of recognizing current and deferred taxes: CH$ THOUSANDS As of As of Current tax expense (2,732,516) (1,807,015) Benefit for deferred tax assets or liabilities for the year 344, ,057 Income tax expense (2,387,906) (1,581,958) 6) 1% Training Tax Credit These are training expenses for the period incurred in 2016 and CHAPTER VIII Integrated Report 174

175 c) Deferred Tax Assets and Liabilities CH$ THOUSANDS As of DEFERRED TAXES Asset Liability Differences Unearned revenue 292,673 - Vacation accrual 150,897 - Provision for other expenses 120,374 - Receivables for export services - 37,503 Intangible assets - 847,624 Employee termination benefits 605,103 - Invoice write-offs 44,651 - Increased value of marketable securities ,327 Property, plant and equipment 140,234 3,785,609 Employee benefits provision 71,489 - Total 1,425,670 4,763,063 CHAPTER VIII Integrated Report 175

176 CH$ THOUSANDS As of DEFERRED TAXES Asset Liability Differences Unearned revenue 289,598 - Vacation accrual 134,595 - Provision for other expenses 155,478 - Receivables for export services - 25,628 Intangible assets - 813,490 Investment assets - 61,440 Employee termination benefits 308,485 - Increased value of marketable securities 34, ,383 Property, plant and equipment 140,686 3,792,002 Employee benefits provision 147,354 - Total 1,210,318 5,227,943 CHAPTER VIII Integrated Report 176

177 d) Calculation of Effective Tax Rate As of CH$ THOUSANDS % CH$ THOUSANDS EFFECTIVE RATE (%) Book-basis profit before taxes 14,134,615 Taxes at current rate 24.00% 3,392, % Temporary differences: Legal holiday provision 30,941 7,426 Employee benefits provision (583,928) (140,143) Market value differences, marketable securities (126,722) (30,413) Value differences, PP&E 38,344 9,203 Receivables for export services (40,287) (9,669) Unearned revenue (58,923) (14,141) Provisions for other expenses (175,768) (42,184) Software licenses 199,797 47,951 Permanent differences: Price-level restatement, tax equity (800,137) (192,033) Price-level restatement, financial assets 1, Price-level restatement, PP&E 71,817 17,236 Price-level restatement, investments in companies 237,129 56,911 Value differences, investments in companies (1,631,516) (391,564) Other permanent differences 180,834 43,400 CHAPTER VIII Integrated Report 177

178 CH$ THOUSANDS % CH$ THOUSANDS EFFECTIVE RATE (%) Less: Credit for property taxes paid Credit for additions to PP&E (23,092) Total current tax expense 2,731,636 Total deferred tax benefit (344,610) Total income tax expense 2,387,026 Provision for 35% tax 880 Total income tax expense 2,387, % CHAPTER VIII Integrated Report 178

179 d) Calculation of Effective Tax Rate As of CH$ THOUSANDS % CH$ THOUSANDS EFFECTIVE RATE (%) Book-basis profit before taxes 9,446,335 Taxes at current rate 22.50% 2,125, % Temporary differences: Legal holiday provision 19,642 4,420 Employee benefits provision (109,074) (24,542) Market value differences, marketable securities 138,709 31,210 Value differences, PP&E 248,304 55,868 Receivables for export services 54,291 12,215 Unearned revenue (81,028) (18,231) Provisions for other expenses 200,676 45,152 Software licenses 88,578 19,930 Permanent differences: Price-level restatement, tax equity (938,530) (211,169) Price-level restatement, financial assets 45,180 10,166 Price-level restatement, PP&E 89,538 20,146 Price-level restatement, investments in companies 306,720 69,012 Value differences, investments in companies (1,299,522) (292,392) Other permanent differences 80,203 18,046 CHAPTER VIII Integrated Report 179

180 CH$ THOUSANDS % CH$ THOUSANDS EFFECTIVE RATE (%) Less: Credit for property taxes paid (36,539) Credit for additions to PP&E (22,478) Total current tax expense 1,806,239 Total deferred tax benefit (225,057) Total income tax expense 1,581,182 Provision for 35% tax 776 Total tax expense 1,581, % CHAPTER VIII Integrated Report 180

181 Note 15 Employee Benefit Provisions a) Current Provisions Vacation Accrual CH$ THOUSANDS AS OF AS OF Vacation accrual 591, ,814 Total 591, ,814 b) Non-Current Provisions Employee Termination Benefits The Company has no contractual obligations with its personnel for employee termination benefits based on years of service. However, a provision has been recorded for each employee based on an actuarial calculation of employee termination benefits in accordance with IAS No. 19 based on Company practice. The consolidated provision for employee termination benefit, classified as current and non-current, is detailed as follows: CH$ THOUSANDS MOVEMENTS IN PROVISION Opening balance 1,285,353 1,256,863 Increase due to actuarial calculation 1,337, ,486 Provisions used (250,303) (130,996) Closing balance of provision 2,372,955 1,285,353 In accordance with IAS 19, the difference in the actuarial calculation arising mainly from variations in interest rates, wage increases and payments made during the year amounted to CH$ 1,087,602 in 2016 and (CH$ 28,490) in The effect of the adjustment for the actuarial calculation, presented net of taxes in the statement of changes in equity in Other comprehensive income, was (CH$ 1,069,220) in 2016 and (CH$ 163,222) in (1) The expense provision consists of the following concepts: - Interest cost - Service cost - Payments during the year CHAPTER VIII The figures are expressed in CH$ thousands Integrated Report 181

182 Note 16 Current Trade and Other Payables Trade and other payables as of December 31, 2016 and 2015, are detailed as follows: CH$ THOUSANDS AS OF AS OF Dividends payable ,740 Withholding 329, ,325 Unearned revenue (1) 1,174,632 1,236,896 Accounts payable (2) 1,040,412 1,363,107 Total 2,545,606 3,828,068 (1) Unearned revenue correspond to agreements on rights charged to institutional investors such as pension funds (AFPs), mutual funds, investment funds and others. (2) The item current trade and other payables corresponds to contractual obligations for general facility maintenance, legal counsel, IT maintenance for operating continuity and other miscellaneous expenses that will be made in the short term. CHAPTER VIII Integrated Report 182

183 Note 17 Net Equity Movements in equity during the years ended December 31, 2016 and 2015, are detailed in the Statement of Changes in Equity. Capital Management The Company has one single series of shares outstanding, with no par value, which have been fully paid in. This number of shares is the Company's authorized capital. CH$ THOUSANDS SERIES SUBSCRIBED CAPITAL PAID-IN CAPITAL Single 5,804,188 5,804,188 For these purposes, the following formulas will be used at each payment date: a) Final net profit will be calculated using the most recent balance sheet presented to the Board. The base for distributing dividends shall be equal to profit for the year less any positive exchange differences, gains on indexed assets and liabilities and gains arising from differences in the market value of financial instruments. b) Calculation of distributable profit, which is equal to: The final dividend will be proposed by the Board and approved at the next Annual General Shareholders' Meeting. In accordance with SVS Ruling 687 dated February 13, 1987, this policy reflects the Board's intention but compliance is conditional upon: the profits actually obtained, the outcome of periodic projections that may affect the company and any special conditions that may arise in the future. Number of Shares The Company has not acquired and does not hold any treasury shares for the years ended December 31, 2016 and Distributable Profit = Final Net Profit of Most Recent Balance Sheet Adjusted for Unrealized Values X 0.40 Interim Dividends Distributed Dividend Policy The Board proposed distributing three interim dividends charged to 2016 profits for the equivalent of 40% of net operating profit. Dividends will be distributed in June, September and December CHAPTER VIII Integrated Report 183

184 Interim Dividends for 2016 In compliance with the dividend policy, the following interim dividends were paid in 2016: DATE APPROVED CH$ THOUSANDS DATE PAID CH$ THOUSANDS , , , ,920, , ,000 Total 3,360,000 Distributable Net Profit CH$ THOUSANDS Profit as of ,616,956 Non-distributable adjustments Gain on indexed assets and liabilities (positive) 55,284 Gains (losses) arising from differences in the market value of financial instruments 1,010,286 (1,065,570) Distributable net profit 9,551,386 CHAPTER VIII Integrated Report 184

185 Note 18 Exchange Differences Assets and liabilities denominated in foreign currency as of December 31, 2016 and 2015, have been expressed in Chilean pesos, which had the following effect on profit or loss: CH$ THOUSANDS INDEXATION UNIT Gain (loss) from exchange differences US$ (28,515) 82,496 Note 19 Gain (Loss) on Indexed Assets and Liabilities Assets and liabilities expressed in other indexation units have been adjusted as of December 31, 2016 and CH$ THOUSANDS INDEXATION UNIT Gain on indexed assets and liabilities UF 55,284 40,075 CHAPTER VIII Integrated Report 185

186 Note 20 Other Non-Current Financial Liabilities This account is detailed as follows: CH$ THOUSANDS Benefits received for stocks deposited in custody by third parties 7,538,168 7,157,817 Note 21 Other Non-Current Non-Financial Liabilities This account is detailed as follows: CH$ THOUSANDS Provision legal fees for current lawsuits 371,927 - CHAPTER VIII Integrated Report 186

187 Note 22 Guarantees Obtained From Third Parties Guarantees obtained by the Company from third parties are detailed as follows. Securities in custody and -or guarantee received from brokers and third parties to guarantee performance of exchange transactions as of December 31, 2016, are detailed as follows: CH$ THOUSANDS INSTRUMENT BROKERS OTHER NON-BROKERS TOTAL AS OF Guarantee Custody Stocks 294,478, ,366 12,629, ,701,422 Performance bonds 1,088, ,088,488 Fixed-income instruments 2,694, , ,000 3,021,559 Time deposits 3,810, ,318-4,805,865 Gold - 2,727,540-2,727,540 Insurance policies 8,722, ,722,762 US dollars 21,972, ,972,537 Cash CH$ 6,517,548 40,038-6,557,586 Mutual fund units Investment fund units 24,143,807 2,108,334-26,252,141 Total 363,428,818 6,576,259 12,844, ,849,900 CHAPTER VIII Integrated Report 187

188 Securities in custody and -or guarantee received from brokers and third parties to guarantee performance of exchange transactions as of December 31, 2015, are detailed as follows: CH$ THOUSANDS INSTRUMENT BROKERS OTHER NON-BROKERS TOTAL AS OF Guarantee Custody Stocks 294,428, ,177 12,605, ,527,255 Performance bonds 1,074, ,074,141 Fixed-income instruments 4,555, , ,775 4,813,166 Time deposits 5,655,804 1,510,760-7,166,564 Gold - 2,162,256-2,162,256 Insurance policies 8,997, ,997,348 US dollars 10,645, ,645,898 Cash CH$ 4,280, ,280,778 Mutual fund units Investment fund units 14,872, ,872,088 Total 344,509,348 4,270,503 12,759, ,539,494 CHAPTER VIII Integrated Report 188

189 Financial Information for Guarantee and Research Funds, CCLV, Contraparte Central S.A. As of December 31, 2016 and 2015, the Company has formed Guarantee Funds and Reserve Funds for central counterparty and clearing house operations, which are detailed as follows: Detail of funds as of December 31, 2016: CH$ THOUSANDS FUND CASH AND CASH EQUIVALENTS AMOUNTS IN FINANCIAL INSTRUMENTS TOTAL FUNDS Central Counterparty Reserve fund 124, , ,505 Guarantee fund 2,086,568 7,890,199 9,976,767 Guarantee fund - derivatives 221, , ,128 Clearing House Reserve fund 150, , ,154 Guarantee fund 1,155,831 7,129,673 8,285,504 CHAPTER VIII Integrated Report 189

190 Detail of funds as of December 31, 2015: CH$ THOUSANDS FUND CASH AND CASH EQUIVALENTS AMOUNTS IN FINANCIAL INSTRUMENTS TOTAL FUNDS Central Counterparty Reserve fund 3, , ,110 Guarantee fund 1,804,909 8,515,505 10,320,414 Guarantee fund - derivatives 110, , ,981 Clearing House Reserve fund 161, , ,873 Guarantee fund 1,010,596 6,055,486 7,066,082 CHAPTER VIII Integrated Report 190

191 Note 23 Contingencies and Restrictions Required disclosures are detailed below: As of December 31, 2016, the Subsidiary CCLV, Contraparte Central S.A. has formed the following guarantee funds for the central counterparty and clearing house: Reserve fund for central counterparty system Reserve fund for clearing house system Guarantee fund for central counterparty system Guarantee fund for clearing house system Guarantee fund for central counterparty system - derivatives Lawsuits and other legal actions in which the Company is involved are detailed as follows: Lawsuit in 12th Civil Court of Santiago. On April 3, 2008, the Exchange was notified of a plenary lawsuit (case No ) filed before the 12th Civil Court of Santiago by Sergio Hernán Espinoza Rivera and Irma Judith Rivera Véliz against Banco de Crédito e Inversiones ( BCI ), asking the court to declare invalid the notice of share auction and sale given using the special process set forth in Law No. 4,287 on special pledges in favor of banks. Other defendants in this lawsuit include Bolsa de Comercio de Santiago, Negocios y Valores S.A. Corredores de Bolsa and Mr. Luis Alberto Marracacini Valenzuela. All defendants filed dilatory pleas. It bears mentioning that this lawsuit is asking the court to declare invalid the court auction of 3,100 shares of the privately held corporation Hotel Paradise Inn Desert SAC, which were auctioned by court order and would have been transferred at the price of CH$71 each, as stated in the lawsuit. To date, the file is in the pre-archiving stage. In the opinion of our legal counsel and management, the Company does not need to record any liabilities or obligations for this lawsuit. Case No. 30, in the 16th Civil Court of Santiago, entitled Inversora Río Blest S.A. et al. v. Bolsa de Comercio de Santiago, Bolsa de Valores. On October 22, 2009, the Exchange was served a lawsuit filed by Inversora Río Blest S.A. et al., clients of the bankrupt broker Raimundo Serrano y Cía. Corredores de Bolsa S.A., seeking payment of compensation for damages plus interest, indexation and court costs. In the opinion of our legal counsel and management, no liabilities or obligations should arise from this lawsuit for the Company. Case No. 36, in the 17th Civil Court of Santiago, entitled Lanas Bunster, Luis Felipe et al. v. Bolsa de Comercio de Santiago, Bolsa de Valores et al. On January 12, 2010, the Exchange was served a lawsuit filed by Luis Felipe Lanas Bunster et al., clients of the bankrupt broker Raimundo Serrano y Cía. Corredores de Bolsa S.A., seeking payment of compensation for damages plus dividends, interest, indexation and court costs. In November 2015, the lawsuit was fully rejected in a final, enforceable ruling from the Supreme Court. Case No. 32, , in the 10th Civil Court of Santiago, entitled FCMI Toronto Mining S.A. et al. v. Raimundo Serrano Mc Auliffe Corredores de Bolsa S.A. et al. On April 6, 2010, the Exchange was served a lawsuit filed by FCMI Toronto Mining S.A. et al., clients of the bankrupt broker Raimundo Serrano y Cía. Corredores de Bolsa S.A., seeking payment of compensation for damages plus interest, indexation and court costs. In the opinion of our legal counsel and management, no liabilities or obligations should arise from this lawsuit for the Company. Case No. 24, , in the 10th Civil Court of Santiago, entitled Mulet Figueroa, Cristián v. Raimundo Serrano Mc Auliffe Corredores de Bolsa S.A. et al. On December 22, 2010, the Exchange was served a lawsuit filed by Mulet Figueroa, Cristián, a client of the bankrupt broker Raimundo Serrano y Cía. Corredores de Bolsa S.A., seeking payment of compensation for damages plus interest, indexation and court costs. In the opinion of our legal counsel and management, no liabilities or obligations should arise from this lawsuit for the Company. Case No. 3, , in the 25th Civil Court of Santiago, entitled Sociedad Comercial El Rodeo y Cía. Ltda. v. Bolsa de Comercio de Santiago, Bolsa de Valores. On May 12, 2011, the Exchange was served a lawsuit filed by Sociedad Comercial CHAPTER VIII Integrated Report 191

192 El Rodeo y Cía. Ltda., a client of the bankrupt broker Raimundo Serrano y Cía. Corredores de Bolsa S.A., seeking payment of compensation for damages plus interest, indexation and court costs. The Exchange filed a motion to contest jurisdiction, which was accepted in a ruling dated December 20, 2011, and, therefore, the 25th Civil Court of Santiago abstained from hearing the lawsuit filed by Sociedad Inmobiliaria y Comercial El Rodeo y Cia. Ltda. against the Exchange. Consequently, and in light of article 21 of the Civil Procedural Code, Sociedad Comercial El Rodeo y Cía. Ltda. may only be party to Case No. 30, , entitled Inversora Río Blest S.A. et al. v. Bolsa de Comercio de Santiago, Bolsa de Valores, et seq before the 16th Civil Court of Santiago, respecting all prior proceedings in that lawsuit. In the opinion of our legal counsel and management, no liabilities or obligations should arise from this lawsuit for the Company. Case No. 12, in the 27th Civil Court of Santiago, Elton y Cía. filed a plenary lawsuit against the Exchange, asking the court to declare the 12,569,014 shares it holds in custody as presumably lost. Together with this declaration, Elton y Cía. also requested that the court order the Exchange to surrender the securities and dividends from these shares so it could initiate, in relation to these and those, the proceedings regulated by articles 629 et seq of the Civil Code. With respect to the status of this lawsuit, the final judgment was issued on August 31, 2012, rejecting the lawsuits of Elton y Cía. and the Municipality of Santiago, and awarding court costs. The Exchange was served the judgment in person on September 4th and the plaintiffs were served by official notice on September 5th. The Municipality of Santiago lodged an appeal on September 14, Elton y Cía. appealed the final judgment on September 20th. On September 21, 2012, the Court accepted the motion to appeal and ordered the case file to be sent to the Santiago Court of Appeals. On October 2, 2012, the case entered the Santiago Court of Appeals and was assigned case number On October 2, 4 and 5, 2012, the two plaintiffs and the Exchange joined in the second instance proceedings. Arguments were heard on January 23, On January 27, 2014, through a ruling dated January 23, 2014, the 12th Chamber of the Santiago Court of Appeals, presided over by Judge Juan Cristóbal Mera Muñoz and also including Judge Marisol Rojas Moya and Attorney Rodrigo Asenjo Zegers, indicated it was in agreement. On January 30, 2014, the 12th Chamber of the Santiago Court of Appeals issued a judgment by which it confirmed the first instance judgment that rejected these lawsuits. On September 16, 2014, the Third Chamber of the Supreme Court rejected the motions for cassation on the merits filed by Elton y Cía. Ltda. and the Municipality of Santiago against the Exchange. Case No. 9, , in the 10th Civil Court of Santiago, entitled Knoop Líbano, Roberto v. Raimundo Serrano Mc Auliffe Corredores de Bolsa S.A. et al. On July 7, 2011, the Exchange was served a lawsuit filed by Knoop Líbano, Roberto, a client of the bankrupt broker Raimundo Serrano y Cía. Corredores de Bolsa S.A., seeking payment of compensation for damages plus interest, indexation and court costs. In the opinion of our legal counsel and management, no liabilities or obligations should arise from this lawsuit for the Company. Case No. C in the 5th Civil Court of Santiago, Inversiones Fox S.A. (Fox) filed a possessory action against the Exchange seeking restitution of the shares that it holds in custody to Fox. On August 18, 2016, the chief executive officer of the Exchange was served the lawsuit in accordance with article 44 of the Civil Procedural Code. Other Contingencies: As of December 31, 2016, there are no other contingencies involving the Company's assets. Restrictions: As of December 31, 2016, the Company has no open positions in the futures and options markets and, consequently, no securities have been given as margin to the company CCLV Contraparte Central S.A. CHAPTER VIII Integrated Report 192

193 Note 24 Environment The Company has no production processes that can significantly affect the environment, given the nature of our business as a Stock Exchange. However, in light of the environmental problems in Santiago, we strive to incorporate new technologies such as natural gas in our central heating and hot water boilers in order to comply to the best of our ability with standards from the Environmental Health Service (SESMA). We are under the maximum emissions limits and, therefore, our sources are not shutdown even when environmental emergencies are declared. We have contracted advisory services from Fernando González Rivas (Inspector authorized by SESMA) and maintenance services from Empresa Central de Restaurantes Aramark Multiservicios Limitada, which total 5,000 for the year 2016, to ensure the operation and conservation of these sources. In order to comply with established standards, LABS & TESTING CHILE S.A., was hired once again to renew our annual CH-3 A method sampling as required by the Metropolitan Region SESMA. It was found to be valid. Based on existing environmental conditions, the central heating boilers operated from May 2016 to early October Note 25 Financial Risk Management The portfolio of time deposits has minimum exposure to interest rate risk because it is properly diversified and has mainly short-term maturities, which enable the Company to quickly adjust profitability based on changes in interest rates. The banks in which the deposits are held have an N1 risk rating. The Company has no liabilities for loans that involve a financial burden and it is not exposed to increases in interest rates that can affect its margins or require a specific hedging policy. The Company has financial assets in foreign currency and, therefore, is exposed to changes in the exchange rate. These are mostly hedged by the interest rate and maturity of the investment, which enables the Company to reverse any differences over time. The Company has sufficient liquidity in its Financial Statements to cover its short-, medium- and long-term obligations based on the current composition of its assets, liabilities and cash flows. The Company does not extend credit to its customers. The Company's exposure to credit risk is low (receivables) given the nature of its customers. The Company's customers are mainly credible financial institutions with a payment history with the Company. The probability of this risk occurring is low. The Company has a structured collections policy in place designed to make customer debt rotation efficient and uniform over time. The Company's risk management is supervised by the Board, which is responsible for developing and monitoring risk management policies. CHAPTER VIII Integrated Report 193

194 Note 26 Subsequent Events No subsequent events have occurred between December 31, 2016, and the date of issuance of these financial statements. Note 27 Declaration as National Monument The building owned by the Company on Calle La Bolsa was declared a Historic Monument in Decree No. 3,705 from the Ministry of Public Education published in the Official Gazette on August 11, 1981, and ratified by the Supreme Court on March 22, CHAPTER VIII Integrated Report 194