Commenting Institution BOOKIN

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1 Title Description Acronym In the field of transfer systems, it refers to the inclusion of a transfer order in the system s operations for further processing, possibly after various checks regarding for example technical standards, as specified in the rules of the system Acceptance ACCEPT A T2S user that does not hold a T2S securities account nor a cash account, but acts on the behalf of others via power of attorney. Account operator ACCTOP A message used to advise an account owner that a counterparty has alleged an instruction against its account and no corresponding instruction by the account owner was found. Allegement ALLEG Services provided by a CSD or a custodian in connection with the custody and/or safekeeping of financial instruments such as Asset servicing corporate actions, events, redemption, etc ASSET SE An automated intraday credit operation in central bank money triggered when cash is insufficient on the buyer's side (or below a threshold defined by the buyer) in order to facilitate the settlement of securities-related transactions in T2S. Intraday credit provision will be guaranteed with collateral on stock (already held by the beneficiary of the credit) or with collateral on flow (securities being acquired). In addition to this automated provision of intraday credit, settlement banks will remain able to get intraday credit in CeBM on demand for other purposes, e.g. for their payment business in T2. Commenting Institution Alternative definition / description Explanations / Comments Auto-collateralisation AUTO A group of orders (payment orders and/or securities transfer Batch orders) to be processed together. BATCH Beneficiary The final recipient of funds or securities. BENEFICI A transfer of securities performed without transferring physical Book Entry certificates BOOKEN It designates the process of updating securities and cash balances of each party to the transaction by posting a number of debits and Booking credits to their respective accounts. BOOKIN

2 Correspondent Central Banking Model Central Counterparty Central Bank Money Commercial Bank Money Collateral Conditioned Securities Delivery Cross-CSD settlement CSD in T2S Custody data dump Dematerialisation Correspondent Central Banking Model. A model established by the Eurosystem where National Central Banks act as custodians for other national central banks. The aim of the arrangement is to ensure that a counterparty incorporated in a euro area country can also use assets that are located in another country of the euro area as collateral for Eurosystem credit operations. CCBM An entity that interposes itself between the counterparties to the contracts traded in one or more financial markets, becoming buyer to every seller and seller to every buyer. CCP Central Bank Money. Liabilities of a central bank that take the form of banknotes or of bank deposits at a central bank which can be used for settlement purposes. CeBM Commercial Bank Money. A liability of a commercial bank that takes the form of deposits at a commercial bank which can be used for settlement purposes. CoBM An asset or third-party commitment that is given by the collateral provider to secure an obligation vis-à-vis the collateral taker. COLL A procedure enabling to coordinate a Free of Payment delivery in T2S with a cash settlement outside T2S. CONDEL Settlement that takes place between participants of different CSDs where both the seller and buyer CSD participate in T2S. CROSCSD A CSD that 1) fulfills the Article 10 of the Settlement Finality Directive; 2) settles in central bank money in a T2S eligible currency; and 3) is a legal entity that has entered into a contractual relationshipon T2S. CSD-T2S The safekeeping and the account-keeping and administration of securities and other financial instruments on behalf of customers. Holding a security in custody creates an obligation to process corporate events as to that security. CUSTODY A data dump refers to end of day data extraction from T2S to the CSDs where e.g. all changes in balances, instruction status or static data since the last data dump are extracted from the T2S databases and submitted to the CSDs. DATADUMP The elimination of physical certificates or documents of title that represent ownership of securities so that securities exist only as accounting records. DEMA

3 Direct holding system Direct CSD Participant Double-entry bookkeeping An arrangement for registering ownership of securities whereby each and every final investor in the security is registered by a single body, which can be the issuer itself, a CSD or a registry. In some countries the direct holding system is mandatory by law Acustomer ofa CSD that has a legal or contractual relationship with that CSD and isinvolved inopening of a settlement account. An accounting principle whereby, for each credit/debit made on the account of the beneficiary, there exists a corresponding entry on the account of the counterparty. A mechanism which links two securities transfers in such a way as to ensure that delivery of securities in the one transfer occurs if, and only if, securities in the other transfer are delivered DIRECTHO DIR-PART DOUB EN Delivery versus delivery DvD A mechanism which links a securities transfer and a funds transfer in such a way as to ensure that delivery occurs if, and only if, Delivery-versus-Payment payment occurs DVP The process of updating an instruction by adding additional Instruction enrichment information. ENRICH External CSD A CSD that is not using T2S settlement services. EXTCSD A transaction that does not settle on the contractual settlement Fail, failed transaction date, but is upheld and may settle thereafter. FAIL The delivery of securities which is not linked to a corresponding Free-of-payment delivery payment of funds. FOP A security that is interchangable, i.e., the security is allowed to be Fungible Security replaced by another security, without loss of value. FUNGSEC Gross Settlement The settlement of transfer orders one by one. GROSS SE Gross Settlement A transfer system in which orders are settled one by one. system GROSS SS The difference between the market value of an asset and the value which it can collateralize. Haircuts are applied by the collateral taker in order to protect itself from losses owing to declines in the market value of the security, in case the need arises to liquidate Haircut collateral. HAIR A multi-tiered arrangement for registering ownership of securities in which final investors are identified at the level of the custodian Indirect holding system IND HOLD

4 Indirect CSD participant A participant in a funds or securities transfer system with tiering arrangement, that uses a direct CSD participant as intermediary to perform some of the activities allowed in the system (in particular settlement). IND PART Indirect party A T2S non-user that is a securities account holder in a CSD in T2S but does not have a contractual relationship withit (e.g. the Finnish "end user"). INDPARTY One party involved in the settlement participates in TARGET2- Securities but the other one does not. In- / Out-T2S settlement INOUTT2S Instructing User Entityauthorised to send instructions directly to T2S INS-USER Intra-CSD transaction A transaction can be called intra-csd in case both parties involved have their securities accounts with the same CSD. (The file attached gives an overall picture of the different terms used in this context). INTRACSD Intra-T2S transaction It is the generic term covering the terms "intra-csd" and "cross- CSD". (The file attached gives an overall picture of the different terms used in this context.) INTRAT2S Intraday Corporate Refers to intraday activities that might occurwhilea Corporate Action is being processed (e.g. collection of corporate action instructions for voluntary corporate actions). To supportintraday Corporate Action Activities of the CSDs, T2S needs to provideintraday balance queries and intraday blocking of balances. Action Instruction INTRCA Investor CSD A CSD that is not the CSD where a security has been issued.see CSD. INV CSD International Securities Identification Number ISO 6166; Identifies securities traded internationally. The number consists of 12 digits, with the first 2 digits containing the ISO country code, followed by 9 NSIN digits (national security identification number) and the last digit being the check digit. ISIN Issuer CSD A CSD that is the CSD of issuance of a security.see CSD. ISS CSD Locked- in instructions Instructions that go directly to the settlement process. They cannot be modified nor cancelled nor put in hold status. To be used exclusively in the context of batch processing. LOCKED Matching The process used for comparing the settlement details provided by the buyer and the seller of securities or financial instruments in order to ensure that they agree on the terms of the transaction MATCHING

5 Netting Net Settlement System Non-Trade Related Transactions Notification Optimisation cycle Partial Settlement An agreed offsetting of mutual obligations by participants in a clearing or settlement system. The process involves the calculation of net settlement positions. NET A funds or securities transfer system which settles net settlement positions at one or more discrete intervals, and usually at prespecified times during the business day. NET SS Instructions that are the result of some events related to securities different fromtrading ones (e.g. corporate actions); securities lending generated by CSD for covering fails are considered nontrade transactions. NTRAD-IN Information sent to the counterparty on the status of an instruction or other relevant lifecycle information. NOTIF Optimisation cycles are specific processes aiming at increasing settlement efficiency. Such processes detect and resolve settlementgridlockswith a view to settle new instructions as well as instructions that could not settle in an earlier attempt. OPTIM The process by which an instruction that could not settle due to lack of cash or securities is broken down into two new instructions, with a view to adjust one of them to the cash or securities available on the counterparties' accounts and ensure that it can settle. This process enables to ensure the partial settlement of the initial instruction and minimises the amount of instructions remaining unsettled. PARTSET The payment capacitymaterialises the abilityof settlement banksto fund their purchases. It is composed of each settlement bank's relevant aggregate position on CeBM accounts, as well asof the potential intraday credit the settlement can get from its National Central Banks against its available eligible collateral. Payment Capacity Prioritisation or Sequencing Provisioning Pull mode Both terms are considered equivalent and refer to the order in which eligible instructions are forwarded to settlement. It consists of verifying that there are sufficient securities and Liquidity Reserve positions available for the settlement. Away to provide information. Pull mode means that the one who wants to get some information has to send a request "asking" for the information. The information will be delivered as a response to that request. PAY-CAP PRI/SEQ PROV PULL

6 Purging Push mode Query Recycling Report Repurchase agreement Ready-for-settlement instructions Real-time Gross Settlement system Segregation Settlement This is the process whereby rejected or invalid instructions are removed from the system at the end of the settlement day. Away to provide information. Push mode means that the information is automatically delivered to receiver. There is no need to send a request to "ask" for the information. PURG PUSH A query refers to real-time functionality to fulfil ad hoc information demands. Queries can be sent to T2S continuously throughout the day, and will be answered in real-time. Queries are generally performed in a pull mode. QUERY This refers to the process whereby instructions continue to be attempted for settlement, even if the first attempt failed. RECY A report refers to information demands which repeatedly occur at specific points of the day (or other time frames like week, month, quarter of a year, etc.), so that it makes sense from T2S point of view to standardize the required information distribution. Instead of setting up a related query, the information distribution is then triggered from within T2S, and the information is distributed in a standardized format. In other words, reports refer to event driven information distribution in push mode and in standardized format. The term reports should therefore be understood as a pre-defined set of standard reports REP Repurchase agreement. A contract to sell and subsequently repurchase securities Repo Instructions that meetthe criteria (e.g. the settlement date) defined by T2S in order to beforwarded tothe settlement process. RFS-INST Real-time Gross Settlement system. See Gross settlement system. RTGS A method of protecting client assets by holding them separately from those of the custodian. SEG Settlement is the completion of a transaction: the seller transfers securities or financial instruments to the buyer and the buyer transfers money to the seller. Settlement may be provisional or final. When settlement is provisional, one of the parties retains the right by law or agreement to reschind the transfer of the assets. When settlement is final, the transfer of assets is unconditional and irrevocable SETTL

7 Settlement module Settlement Bank Settlement Instruction Settlement Transaction Settlement user Shaping Standard Settlement Instructions Substitution of securities SWIFTStandards Third-party user Tiering arrangement A subset of the T2S system containing settlement processes. A T2S User holding both a securities account and a cash subaccount. In most cases, the pre-condition for settlement is the receipt of the buy side settlement instruction and the sell side settlement instruction. Both instruction will have to be validated and matched before a settlement transaction is generated. A single settlement transaction is generated by a successful matching of the buy side settlement instruction and the sell side settlement instruction. This transaction will then be processed in the settlement cycle. A T2S user holding a securities account but no cash sub-account. The process whereby an instruction whose amount exceeds a certain threshold is divided into several instructions of lower amounts. A set of data (such as cash account, CSD information, agent information) needed to settle transactions with a counterparty. Normally SSIs are exchanged between back offices before trading with a counterparty, to have the settlement instructions stored in the trading system. A situation in which an institution which has lent securities (or has deposited them as collateral) recalls them and replaces them with other securities of equivalent market value. SWIFTStandards mission is to serve the community s needs to reach a single standard for the whole financial industry. SWIFTStandards is there to support the definition and the implementation of standards, so that the financial community can benefit from interoperability and potential cost savings, eliminate inefficiencies by increasing STP, and smoothly expand into previously untapped markets A T2S User that has no securities account nor a cash account, and does not act on behalf of others via power of attorney, but may instruct on its own behalf. An arrangement which exists in a system whereby (indirect) participants require the services of (direct) participants to carry out their transactions. SET MOD SETTLB SETLINST SETLTRAN SETTLUS SHAP SSI SUBS SEC SWIFTSta TH-USER TIER

8 Trade Related Instructions Transfer order Use Case T2S User Validation Instructions which are the result of trading (e.g. OTC trading, Stock Exchange trading, etc) TRAD-INS An order or message requesting the transfer of funds or securities from the debtor to the creditor TRANSFER A use case is a sequence of messages/activities linked together from a business point of view to formulate a business scenario. It includes the interactions of T2S with all actors involved. Actors may be users and/or other systems at CSDs, CSDs participants, etc. The single use cases can be grouped together to groups of use cases. Use Case A legal entity that has a contractual relationship with a CSD in T2S for the purpose of holding or transferring of securities.a T2S user can be further categorised: see settlement bank, settlement user, account operator,third-party user. USER The process of checking whether an instruction can be considered acceptable by the system. It includes format and syntax checking of the required instruction fields, as well as any other additionalcheck related to authorisation, appropriateness of the information, etc VAL