Korea Securities Depository

Youngho Park Managing Director

Korea Securities Depository

KSD’s Value Added Services

April 2012

Korea’s Only Central Securities Depositary KSD Korea’s Only Central Securities Depository KSD

Primary market support

Deposit & settlement of securities

KSD Overview

Established in 1974

Offers comprehensive securities services as a core infrastructure of the Korean securities market

Asset management market services

Derivative market services

Cross-border clearing & settlement

Various specialty services as well as traditional services

1996 Securities lending & borrowing service

1999 Tri-party repo service

2004 FundNet service

1994 Cross-border clearing & settlement service

1974 Transfer agent service

Value Added Services

Various specialty services as well as traditional services

Securitieslending &borrowing

Cross-borderclearing & settlement

Tri-partyRepo

Transferagent

FundNet

Central Deposit & Settlement System

KSD Centralized SLB System Process

Central securities depository (CSD) in the role of an SLB intermediary

Intermediary(CSD)

1) Application

4) Credit(+) 4) Debit(-)

Lender

A/C book(borrower)

A/C book(lender)

1) Application

2) Collateral

Borrower 3) Matching report 3) Matching report

Intermediary(CSD) LenderBorrower

A/C book(borrower)

A/C book(lender)

Advantages of KSD SLB System

- Saves time and cost of searching for available securities

- Settlement guaranteed by the CSD SLB intermediary

- Facilitates market monitoring through centralized data management

Increased Efficiency by using the CSD System

Safety of SLB Transactions

Efficient Market Monitoring

- Enables effective decision from the price aspect- Quick processing of large volume transactions- Optimizes corporate actions administration

- Collateral securities held at CSD account- Daily marking to market of collateral securities

 

KSD’s Tri-Party Repo Services

Borrower Lender

SettlementTrading

Collateral managementRights management

Taxation

Trade management(Securities)

Trade management(Cash)

Participant A/C Book(Repo A/C)

Tri-partyRepo Agent

(CSD)

Tri-partyRepo Agent

(CSD)

Borrower Lender

Trade

Advantages of KSD Tri-Party Repo Service

Tri-partyRepo Agent

(CSD)

Tri-partyRepo Agent

(CSD)

· Transactions managed in a dedicated a repo account

· Risk reduced by DVP settlement and marking to market

Stability

· Offers repo services as a third party

Fairness

· Offers same level of CA management services as in the deposit system

· Convenient tax management

Convenience

· Allows customers to freely decide transaction conditions such as trade value, term and repo rate

Flexibility

KSD FundNet Service

CSD

The first case in the world a CSD established STP for the entire back-office operations of the asset management market

Asset managingcompany

Fund servicingcompany

Trustee

Other

Sellingcompany

Broker

Bank of Korea

Overseascustodian

Establishment & redemption system

Integrated trade confirmation system

Management instruction delivery system

DVP fund settlement system

Fund-by-fund deposit system

Efficiency and transparency ensured byimplementing STP for the asset management industry

Effects of KSD FundNet

Strengthened the role of CSD as

a local STP platform

CSDMinimized

settlement risk

Securities company

Reduced costs and opera-tional/settlement risk

Asset management company

Enhanced timely monitor-ing & compliance func-

tions

Trustee

Efficiency and transparency ensured byimplementing STP for the asset management industry

KSD Cross-border Clearing & Settlement System

CSD

Local investor Overseasbroker

Overseascustodian

3) Settlement instruction

4) Settlement instruction

5) Payment

Local broker1) Application 2) Application

NoticeLocal investor Overseas

broker

Overseascustodian

Local broker

CSD

One-stop service through the central deposit & settlement systemOne-stop service through the central deposit & settlement system

EfficiencyEfficiency

SafetySafety

ConvenienceConvenience

Cost-competitiveness

Advantages of KSD Cross-border Clearing & Settlement System

Customers can invest in overseas securities through the same processes

Process standardization and automation is easily achieved

CSD provides custody and management services for foreign currency

Fees for overseas custodians are low due to economy of scale

Cost-competitiveness

applied to domestic securities

securities

KSD Cross-border Clearing & Settlement Network

Overseas Network Overseas Network

Boston, USNY, USBrussels, BelgiumLuxemburg

4 overseas custodians

Network covers 36 overseas marketsNetwork covers

4 overseas custodians

Standardization/AutomationStandardization/Automation

Processes international operations during local business hours

Provides a standardized business envi-ronment Provides a standardized business envi-ronment

Processes international operations during local business hours

SWIFTSociety for World InterbankFinance Telecommunication

SAFE+KSD’s on-line network

SWIFTSociety for World InterbankFinance Telecommunication

Transfer Agent ServiceProtects shareholders’ rights and facilitates convenient rights exerciseProtects shareholders’ rights and facilitates convenient rights exercise

Reduces issuers’ costs and promotes market efficiencyReduces issuers’ costs and promotes market efficiency

Offers useful policy instrument to securities supervisory authorities Offers useful policy instrument to securities supervisory authorities

Stock Ex-change

CSD

Issuing company

Deposit/safe cus-tody

Public offering administration

TransferAgent

• Management of total number of shares issued and capital• Stock administration consulting• Management of beneficial shareholder records

Entrust stock administration

Aligned process within

CSD

Effects of Transfer Agency Service Offered by KSD

Management of shareholders' list

Deposit/safe-custody of securities

Management of beneficial shareholders, voting rights exercise

CA processing for overseas securities

Effective back- office service for the stock market

Transfer of title

Notification of share-holder rights

Deposit systemTransfer Agent

Effective back- office service for the stock market

Deposit systemTransfer Agent

Global Business DepartmentKorea Securities Depository

Phone : 82-2-3774-3357 Fax: 82-2-3774-3462E-mail: minsoo@ksd.or.kr Homepage : www.ksd.or.kr