Key Economic Figures in the CEE

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2 2 3 Key Economic Figures in the CEE COUNTRY POPULATION (mln person) REAL GDP GROWTH RATE - volume (% change on previous year) REAL GDP PER CAPITA GROWTH RATE ( EUR per capita) GDP at market prices (mln EUR) INVEST- MENTS (bn EUR) EXPORT of goods and services (in % of GDP) Poland Austria Greece Czech Republic Romania Hungary Slovakia Bulgaria Slovenia Poland has the largest population in CEE with about 38,5 mln people, equal to 7,6% of the population of the EU Member States and 34% of the population of the CEE region (including Austria). Poland had the EU s 8th largest GDP in 2014 and the largest in the CEE region. GDP of Poland in 2014 was ,9 mln EUR, equal to 3% of the GDP of the EU Member States and 28% of the GDP of the CEE region (including Austria). 2nd place belongs to Austria, 3rd place to Greece, 4th to Czech Republic. EU (28 countries) *Source: Eurostat, 2014

3 4 5 Capital markets in the CEE Number of Companies Value of Equity Trading (EUR mln) Market Capitalisation (EUR mln) Athens 81 Bucharest 366 Bulgarian Budapest Ljubljana Prague 96 Vienna Warsaw Athens 910 Bucharest 98 Bulgarian Budapest 196 Ljubljana Prague Vienna Warsaw Athens Bucharest Bulgarian Budapest Ljubljana Prague Vienna Warsaw Number of IPOs Athens Bucharest Bulgarian Budapest Ljubljana Prague Vienna Warsaw

4 Capital Markets in the CEE Region 6 7 Cash market in the CEE Region (CEE=100%) traded derivatives value (CEE = 100%) Currency CSD CCP Warsaw 42.8% 84.3% PLN KDPW KDPW_CCP ATHEX Group 23.8% 12.6% EUR ATHEXCSD ATHEXCLEAR Vienna 20.6% 0.6% EUR OeKB CCP Austria Budapest 5.2% 2.6% HUF KELER KELER CCP Prague 5.0% CZK CSD Prague Bucharest 1.2% RON Depozitarul Central Ljubljana 0.5% EUR KDD Bulgarian 0.3% BGN CDAD Zagreb 0.4% HRK SKDD Bratislava 0.1% EUR CDCP SR TOTAL 100% 100%

5 CCPs in CEE Region CCPs, Own Capital [2014] CCP EUR [%] KDPW_CCP % ATHEX Clear % 8 9 Markets CCP cleared transactions from local SE CCP KDPW_CCP ATHEX Clear KELER CCP Cash market turnover [2014] Other markets cleared OTC derivatives, repo, securities lending and borrowing Commodity derivatives Commodity derivatives traded derivatives value [2014] (mln EUR) [%] (mln EUR) [%] Warsaw % % ATHEX % % Vienna % % CEESEG Budapest % % TOTAL % % KELER CCP % CCP Austria % TOTAL % CEE Leader The KDPW Group not only provides the broadest range of services for the financial market in CEE but also holds European authorisations of services, which confirms compliance with international regulations and opens the door to provision of services across the European Union. This has significantly improved the international credibility of the Polish financial market and gives a quality guarantee of post-trade services offered in Poland. Selected post-trade services in CEE Seperation of CCP and CSD Authorisation of CCP Trade repository Issuance of LEI

6 KDPW_CCP: Ready to Develop Regional CCP KDPW and KDPW_CCP Clearing of he largest financial market in the CEE Region Cash market, derivatives market, OTC market KDPW_CCP s own capital EUR 54 M EMIR authorisation (PLN) EUR authorisation in progress; Ready to authorise in other currencies OTC clearing: FRA, IRS, OIS, Basis Swaps, Repo Professional risk management (SPAN and VaR) Reliable ownership structure (KDPW: 100% of shares) High class IT solutions Registered TR KDPW_TR; Reporting to KDPW_TR (with no additional costs) LEI Assigning In-house advanced technology and top qualified IT team 20 links to foreign CSDs 100% Numbering Agency Reporting to KDPW_TR Registered TR Numbering Agency (ISIN, CFI, FISN, LEI) 20 links to foreign CSDs Planned CSD authorisation EMIR authorisation (3rd in Europe) Own capital: EUR 54 M (PLN 228 M) Reporting to KDPW_TR OTC clearing service

7 12 13 KDPW Services (CSD) CORE SERVICES Maintaining securities accounts at the top-tier level ANCILLARY SERVICES Corporate Actions processing COMMERCIAL SERVICES Trade Repository Securities settlement system Regulated market Alternative Trading System OTC cash market Central Depository of Securities Numbering Agency (LEI, ISIN, CFI, FISN) Initial recording of securities in a book-entry system Operational links to foreign CSDs Clearing House (GIR KDPW) Tri-Party Repo KDPW_CCP is a part of KDPW Group. The Group offers also CSD sevices as well as Trade Repository service. Omnibus accounts for foreign investors Collective depository accounts at the CSD level, with option to segregate by investor/group of investors Hold/Release mechanism (optional) Cash settlement in central bank: money PLN in Polish Central Bank (NBP), EUR in TARGET2 Agent for Securities lending & borrowing - automatic and negotiated Settlement and collateral management for tri-party repo service (Tri- -party Repo agent) guaranteed by KDPW_CCP or non-guaranteed - co-operation with Treasury BondSpot Poland - Opportunity to transform the sell-buy back market in Poland into tri-party repo Partial settlement Corporate Actions: information, distribution of proceedings, tax services Trade repository and LEI assigning local operating unit (LOU) - Dominant position and flexible services for Polish clients operating in the Polish market - Seeking status of Approved Reporting Mechanism (under MIFID II) extension of reporting for cash market trades - Assigning LEI Change of market settlement cycle from T+3 to T+2 (in line with CSDR on 6 X 2014) Preparation for CSD authorisation under CSDR

8 KDPW_CCP Services CORE SERVICES Clearing of trades Central counterparty functionality through novation European authorisation under EMIR Netting in cash (obligatory) and securities (optional) - More attractive clearing solution for foreign investors (prop-shops, HFT) and day traders Segregation of accounts Clearing of OTC market: - Currently: PLN (FRA, IRS, OIS, Basis Swap, REPO) - In the process of authorisation: EUR (FRA, IRS, OIS, Basis Swap) OTC derivatives clearing based on MarkitWire instructions Guarantee system for negotiated securities lending transactions - Currently limited to clearing liquidity system; following introduction of lending platform by WSE will enable negotiated lending to be used for short-selling - Removing barriers for banks after introduction of single license Margins calculated on intra-day and daily basis STP with WSE trading system (UTP - NYSE Euronext) Default waterfall and procedures compliant with EMIR KDPW_CCP own capital: PLN 228 million (EUR 54 million) PLN account in the SORBNET2 NBP System EUR account in the TARGET2 NBP System Regular market ATS OTC derivatives OTC REPO Clearing risk management SPAN VaR PLN Collateral management T-bonds T-bills WIG20 shares Supplementary services Derivatives trade reporting to KDPW_TR

9 Basic Statistics IT Infrastructure Effective Support for Business Lines KDPW participants 1174 Issuers (of which 82 are foreign) EUR 143 billion Capitalisation of shares in KDPW 37 KDPW_CCP participants regulated market 1149 Deposited equities issues 16 KDPW_CCP participants OTC market 1701 Deposited bond issues EUR 151 billion Capitalisation of bonds in KDPW Protecting the investment - stability Core services supported by the service platform developed since the inception of KDPW Experienced support team technical staff with long-time experience Vendor management based on long-time relations and a practical track record High-end core service server platform Access to innovative state-of-the-art solutions Direct support of manufacturers access to broad technical infrastructure Relations with top-class specialists Cost efficiency Server platform virtualisation / centralisation Scalability server platform and telecommunication architecture supports scalability of performance and capacity Security, reliability, availability DRP (Disaster Recovery Plan) using Back-up Site resources Infrastructure availability - No single point of failure Cryptographic solutions As of 31 August 2015

10 KDPW_CCP - Markets & Products CASH MARKETS DERIVATIVES MARKET Regulated ATS OTC Regulated OTC - Warsaw (GPW) - BondSpot - NewConnect - Catalyst - BondSpot - Matching Engine for REPO - Warsaw (GPW) - OTC (MarkitWire) shares, bonds, subscription rights, allotment certificates, investment & structured certificates, index participation units, mortgage bonds, warrants, ETFs sahres, allotment certificates, bonds, mortgage bonds T-Bonds futures contracts, options, index participation units Forward Rate Agreements, Interest Rate Swaps, Overnight Index Swaps, Basis Swaps

11 Participation in the clearing house KDPW_CCP 2. Determining contributions to the guarantee system: - Margins - Mark-to-market and CRR - Guarantee funds 3. Settlement instructions Eligible as a KDPW_CCP participant is any legal entity which is 1. Registration of trades in the clearing system an investment firm a bank a foreign investment firm Clearing 4. Collateral management a financial institution other than those mentioned above an entity with a registered office outside the Republic of Poland which performs clearing of transactions concluded in financial instruments trading a company operating a clearing house Settlement KDPW_CCP participants can be Clearing Participants in organised and OTC trading. Different capital requirements apply depending on the market and the type of participant status. Securities settlement Cash settlement

12 Regulated market: OTC market: GENERAL CLEARING MEMBER GENERAL CLEARING MEMBER PLN 50 million (ca. EUR 12 million) plus a multiple of PLN 5 million (ca. PLN 1.2 million) per entity represented by the clearing member within a specific scope in transaction clearing performed by KDPW_ CCP banks PLN 15 million (ca. EUR 3.5 million) plus a multiple of PLN 2 million (ca. EUR 0.5 million) per entity represented by the clearing member within a specific scope in transaction clearing performed by KDPW_ CCP brokerage houses PLN 100 million (ca. EUR 25 million) INDIVIDUAL CLEARING MEMBER PLN 50 million (ca. EUR 12.5 million) CLEARING HOUSE PLN 100 million (ca. EUR 25 million) PLN 100 million (ca. EUR 25 million) clearing house DIRECT CLEARING MEMBER PLN 25 million (ca. EUR 6 million) banks PLN 4 million (ca. EUR 1 million) brokerage houses

13 Transaction clearing guarantee system Clearing guarantee system default waterfall: Credits of the defaulting member KDPW_CCP s transaction clearing guarantee system complies with the international standards and regulations and relies on four pillars Margins:initial deposit > initial margin > additional margin Resources of the relevant default fund contributed by the defaulting member financial and precautionary requirements for participants margin deposits Dedicated resources of KDPW_CCP (in the amount corresponding to at least 25% of the capital requirements taking into account the allocation of the resources in relation to the size of the fund) Clearing funds KDPW_CCP own funds Contributions of other KDPW_CCP clearing members to the relevant default fund For organised trading, the risk management model is based on the SPAN model. The VaR (Value at Risk) model is used on the OTC market. Own funds of KDPW_CCP (up to 110% of the capital requirements) Additional contributions of other KDPW_CCP clearing members to the relevant default fund (not more than 50% of the last contributions) Remaining own funds of KDPW_CCP

14 26 27 OTC_clearing Communication Since the end of 2012, KDPW_CCP has been operating a system of clearing and guaranteeing the liquidity of transactions in OTC derivatives. Key functionalities of the OTC derivatives clearing service Bank A Bank B Repo confirmation platform in KDPW_CCP SWI SWI National Bank of Poland (NBP) (payments) Trade Repository (KDPW) clearing transactions accepted to the OTC clearing system and acting as an intermediary in settlement resulting from clearing CSD (KDPW): repo settlement risk management collateral administration function of the central counterparty (CCP) using novation reporting to the KDPW_TR trade repository

15 and everything s cleared KDPW_CCP S.A. ul. Książęca 4, Warszawa T: (48) E: ccp@kdpw.pl