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Payment, Clearing and Settlement Systems

An essential part of the worldwide financial system, payment, clearing and settlement systems, also known as Financial Market Utilities (“FMUs”), provide payment and securities services to financial institutions. Membership in FMUs allow financial institutions to serve customers and clients around the globe.

Câmara Interbancária de Pagamentos

The Interbank Payments Clearinghouse (“CIP”- Câmara Interbancária de Pagamentos) is a not-for-profit civil association, operating the Brazilian SITRAF and SILOC clearing systems.  The SITRAF (Sistema de Transferência de Fundos) Funds Transfer System is a hybrid settlement system operated by CIP, which uses continuous net settlement. The system accepts credit orders only, and settlement is carried out using funds at the Banco Central do Brasil.  The SILOC (Sistema de Liquidação Diferida das Transferências Interbancárias de Ordens de Crédito) Deferred Settlement System for Interbank Credit Orders settles interbank obligations related to Document of Credit (DOC), Special Credit Transfer (TEC) and “bloqueto de cobrança” presenting value lower than R$5,000.

Clearing House Automated Payment System

The Clearing House Automated Payment System (“CHAPS”) is the U.K.’s interbank payment system for large value sterling payments. CHAPS is operated by CHAPS Clearing Company Limited (“CHAPS Co”). For its normal operation, CHAPS depends on the real-time gross settlement (“RTGS”) IT infrastructure of the Bank of England (“BoE”).

Clearing House Interbank Payments System

Clearing House Interbank Payments System (“CHIPS”), a US payments system, is a service of The Clearing House Payments Company L.L.C. (“The Clearing House”), which in turn, is owned by the world’s largest commercial banks. CHIPS is a large value wire transfer payment system with real-time final settlement of payments. Payments become final on completion of settlement, which occurs throughout the day. CHIPS processes a large proportion of US dollar cross-border payments and an increasing volume of US domestic payments.

Continuous Linked Settlement

CLS Bank International (“CLS Bank”) is a multi-currency cash settlement system. Through its CLS Settlement platform, CLS Bank settles payment instructions related to trades in foreign exchange (“FX”) spot contracts, FX forwards, FX options, FX swaps, non-deliverable forwards, credit derivatives and 17 major currencies. CLS Bank’s parent company, CLS Group Holdings AG, is a Swiss company that owns CLS U.K. Intermediate Holdings, Ltd., which in turn owns CLS Bank and CLS Services Ltd., a company organized under the laws of England that provides technical and operational support to CLS Bank. As an Edge Act corporation, CLS Bank is regulated and supervised in the US by the Federal Reserve. In the United Kingdom, HM Treasury has specified CLS Bank as a recognized payment system, and it is subject to regulation by the BoE. CLS is a “user-owned” financial market utility used to mitigate settlement.

Chicago Mercantile Exchange Group Clearing

Chicago Mercantile Exchange Group (“CME”) provides clearing and settlement services for futures, options, and over-the-counter derivatives products. These clearing and settlement services are provided by the CME Clearing division of CME’s wholly owned subsidiary, Chicago Mercantile Exchange, Inc. CME Clearing clears and settles futures and options contracts traded on the Chicago Mercantile Exchange, Inc. and five other futures and options exchanges: Board of Trade of the City of Chicago, Inc., New York Mercantile Exchange, Inc., Commodity Exchange, Inc., the Dubai Mercantile Exchange and the Global Emissions Exchange. CME Clearing backs the clearing and settlement services for over-the-counter derivatives transactions, provided through CME’s ClearPort platform. CME wholly owns CME Clearing Europe Limited, which was established in 2011 and began providing clearing services for various over-the-counter derivatives in Europe.

The Depository Trust & Clearing Corporation

The Depository Trust & Clearing Corporation (“DTCC”) operates through 10 subsidiaries. Specifically, The Depository Trust Company (“DTC”) is a central securities depository providing depository and book-entry services for eligible securities and other financial assets to its participants, which are principally banks and broker-dealers. The National Securities Clearing Corporation (“NSCC”) provides clearing, settlement, risk management, central counterparty services and a guarantee of completion for certain transactions for virtually all broker-to-broker trades involving equities, corporate and municipal debt, American depositary receipts, exchange-traded funds and unit investment trusts. The Fixed Income Clearing Corporation (“FICC”), a US securities clearing agency is owned by its users, including major banks, broker-dealers and other financial institutions. FICC operates two divisions, the Government Securities Division (“GSD”) and the Mortgage-Backed Securities Division (“MBSD”). Each division offers services to its own members pursuant to separate rules and procedures.

Electronic Payment Network

Electronic Payments Network (“EPN”) is an electronic payment system providing automated clearing house (“ACH”) services that is owned and operated by The Clearing House. The ACH system facilitates exchanges of batched debit and credit payments among business, consumer and government accounts. The system processes preauthorized recurring payments such as payroll, Social Security, mortgage and utility payments and non-recurring payments such as telephone-initiated payments and the conversion of checks into ACH payments at lockboxes and points of sale. It also processes inbound and outbound cross-border ACH payments through foreign gateway operators.

Eurex Clearing AG

Eurex Clearing AG (“ECAG”) is a central counterparty (“CCP”) organized under the laws of Germany. ECAG is the CCP of EUREX. ECAG provides central counterparty clearing services for derivatives traded on the EUREX, EUREX Bonds (a fixed income trading platform), EUREX Repo (a trading platform for repo), Frankfurt Stock Exchange and Irish Stock Exchange.

Euroclear Bank

Euroclear Bank (“Euroclear”) provides International Central Securities Depository services and settlement services for cross-border transactions involving domestic and international bonds, equities, derivatives, and investment funds. Euroclear is a primary provider of settlement services for Eurobonds. The Euroclear group includes Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear U.K. & Ireland, which provides settlement services in their respective local markets. Euroclear also provides related banking services to its settlement participants.

FedACH Services

FedACH Services (“FedACH”) is an electronic payment system providing ACH services that is owned and operated by the Federal Reserve. The ACH system exchanges batched debit and credit payments among business, consumer and government accounts. The system processes pre-authorized recurring payments such as payroll, Social Security, mortgage and utility payments and non-recurring payments such as telephone-initiated payments and the conversion of checks into ACH payments at lockboxes and points of sale. It also processes outbound cross-border ACH payments through the FedGiobal service.

Fedwire Funds Service/Fedwire Securities Service

Fedwire Funds Service (“Fedwire”) is operated by the Federal Reserve and enables financial institutions to electronically transfer funds between its more than 9,000 participants. Fedwire is the primary US network for large value or time-critical domestic and international payments, and it is designed to be highly resilient and redundant. Fedwire is not managed for profit, but law mandates it charges small fees to recoup costs. Both participants in a given transaction pay a small fee. Fedwire includes an overdraft system for participants with approved accounts. Fedwire Securities Service (“Fedwire Securities”) is a national securities book entry system that is owned and operated by the Federal Reserve. Fedwire Securities conducts real-time transfers of securities and related funds on an individual and gross basis. Fedwire Securities conducts issuance, transfer and settlement for all marketable Treasury securities, for many federal government agency and GSE securities and for certain international organizations’ securities. It also offers a safekeeping function (electronic storage of securities holding records in custody accounts) and a transfer.

ICE Clear Credit LLC/ICE Clear Europe /ICE Clear US

ICE Clear Credit LLC (“ICE Clear Credit”) is a central clearing facility for North American CDS. It is a subsidiary of ICE, which operates futures and options exchanges, trading platforms, and clearing houses for global trading in commodities, currency, credit, and equity indices. ICE is a publicly owned corporation, whose shares are listed on the New York Stock Exchange. ICE Clear Europe, a London-based clearing house, is a subsidiary of ICE. ICE operates exchanges, trading platforms, and clearing houses for global trading in commodities, currency, credit, and equity indices. ICE Clear Europe provides clearing and settlement services for all futures and options trades on the ICE Futures Europe exchange, as well as for over-the-counter swaps affected through ICE’s global OTC markets products. ICE, a US clearing and settlement agency, is a subsidiary of ICE Futures US, which in turn, is owned by Intercontinental Exchange. ICE operates futures and options exchanges, trading platforms and clearing houses for global trading in commodities, currency, credit, and equity indices. ICE Clear US provides clearing and settlement services for all futures and options traded on ICE’s New York-based ICE Futures US exchange. ICE Clear US also provides clearing and settlement services for over-the-counter derivatives transactions.

LCH.Ciearnet Limited/LCH.Ciearnet SA

LCH.Ciearnet Limited (“LCH”) is a CCP incorporated under the laws of England and Wales. For U.K. regulatory purposes, LCH is a “recognized clearing house” under the Financial Services and Markets Act 2000. It is regulated by the Financial Services Authority (“FSA”) and is also subject to the oversight of the BoE. LCH also is a Derivatives Clearing Organization in the US and is subject to Commodity Futures Trading Commission rules and the US Commodity Exchange Act. LCH is a whollyowned subsidiary of LCHCiearnet Group Limited. The group is currently majority-owned by its users.  LCH Clearnet SA is a central counterparty incorporated under the laws of France. LCH Clearnet SA is an authorized cred it institution in France (i.e., a bank) with branches in Amsterdam and Brussels and a representative office in Portugal. LCH Clearnet SA is also regulated in the U.K. by the FSA as a recognized overseas clearing house. LCH Clearnet SA is a wholly-owned subsidiary of LCH Clearnet Group Limited. The group is currently majority-owned by its users.

Options Clearing Corporation

Options Clearing Corporation (“OCC”) is a US futures and options clearing agency. OCC is regulated as a clearing agency by the Securities and Exchange Commission (“SEC”) with respect to clearing and settlement services for put and call options on common stocks and other equity issues, stock indexes, foreign currencies, interest rate composites and single-stock futures and by the Commodities Futures Trading Commission with respect to clearing and settlement services for transactions in futures and options on futures. In addition, OCC provides central counterparty clearing and settlement services for securities lending transactions.

SIA (Società Interbancaria per l’automazione)

The Italian Interbank Company for Automation (SIA), established in 1977 by CIPA (Convenzione Interbancaria per i Problemi dell’Automazione), has the objective of providing operational support for the Italian banking system’s automation projects. It manages the national interbank network (RNI) and is responsible for the development and operation of an integrated system of services and procedures which constitute the technological platform supporting the payment system and the financial market. Recently, a project to integrate the RNI in SWIFT was launched given the convergence of network systems towards internet protocols. At the beginning of 2000 the Bank of Italy completed the disposal of its stake in the SIA, which in 1999 had merged with CED-Borsa (a software company which manages stock exchange trading systems), thereby integrating the management of IT systems in market and settlement systems.

SWIFT

The Society for Worldwide Interbank Financial Telecommunication, Societe Cooperative a Responsabilite Limitee (limited co-operative society) (“SWIFT”) is a member-owned co-operative. SWIFT provides a telecommunication platform for the exchange of standardized financial messages between financial institutions and corporations. SWIFT is neither a payment system nor a settlement system though the SWIFT messaging standard is used in many payment and settlement systems. SWIFT’s customers include banks, market infrastructures, broker-dealers, corporates, custodians, and investment managers. SWIFT is subject to oversight by the central banks of the Group of Ten countries.

TARGET2

The Trans-European Automated Real-time Gross settlement Express Transfer system (“TARGET2”) is the settlement system for cross-border payments in Euro. Participating commercial banks access the TARGET2 system via the national central banks of eurozone Member States. TARGET2 has to be used for all payments involving the eurosystem, as well as for the settlement of operations of all large-value net settlement systems and securities settlement systems handling the euro (e.g., Euro1 ). Payment transactions are settled .one by one on a continuous basis in central bank money with immediate finality.

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