1

Novation Interoperability– Eliminate Novation Consent by Email by the end of 2008 avoiding multiple vendor connections

Novation Consent MessagesLegal Novation Confirmation MessagesExternal Voice process

CPTY ARemaining

Party

DTCCTIW

NOVATIONCONSENT

TRADE CONFIRMATION

CPTY BStep In

CPTY CStep Out

DTCC ConfirmMatch GUI

(Markit Bloomberg,

TradeWeb, etc)

DTCC Novation GUI or T-Zero

Message ‘hub’ in 2008: Recommendation to keep existing flows for near term

Dealer IT or vendorsolution

Phase 1 Infrastructure:

•Three solutions available to clients today: T-Zero, DTCC Novation GUI, and Direct to DTCC via MQ (Spec released in December)

•Non-electronically eligible trades would continue to go via email, or if/when available, via ‘outside novation’ comment/attachment process via above solutions (essentially just replacing email)

•Markit, Bloomberg, Tradeweb and other vendors have committed to sending messages through the DTCC Novation consent messaging service.

•Currently Dealers would need to keep open: email, T-Zero, and the DTCC Nov GUI. Or they could build a solution to incorporate these internally

•Recommendation to focus on e-mail elimination for flow products in 2008 and proceed with above existing workflows (with DTCC largely acting as ‘messaging hub’) for coming few months

•2009 plan to be discussed and proposed through Credit Implementation Working Group

•Step Out parties are expected to send their request for consent via their chosen platform by 6pm EST. Remaining Parties will ensure any requests for consent received by 6pm will be processed on Trade Date.

Phase 1 Process:

Scenario 1: all three parties use DTCC Novation Gui

• Client goes into the DTCC Novation Gui, finds original trade and requests consent. •Remaining Party sees request for consent in the DTCC Gui, performs the necessary checks internally, and provides consent in the DTCC Novation Gui. •Both Client and Stepping In Party see provision of consent. •Following provision of consent all three parties send their side of the tri party novation confirmation to the DTCC confirmation matching engine. Client, if they wish can rely on the DTCC Novation Gui to send their side of the tri party novation confirmation to the DTCC Confirmation matching engine.

Scenario 2: all three parties use T-Zero

• Client goes into the T-Zero Novation Gui, finds original trade and requests consent. •Remaining Party sees request for consent in the T-Zero Gui, performs the necessary checks internally, and provides consent in the T-Zero Gui. •Both Client and Stepping In Party see provision of consent. •Following provision of consent all three parties send their side of the tri party novation confirmation to the DTCC confirmation matching engine. Client, if they wish can rely on the T-Zero Novation Gui to send their side of the tri party novation confirmation to the DTCC Confirmation matching engine.

Scenario 3: client uses Markit, TradeWeb or Bloomberg and Dealers use DTCC

• Client goes into the either Markit, TradeWeb or Bloomberg’s Novation Gui, finds original trade and requests consent. •Remaining Party sees request for consent in the DTCC Gui, performs the necessary checks internally, and provides consent in the DTCC Novation Gui. • Client sees provision of consent in either Markit, TradeWeb, or Bloomberg Novation Gui • Stepping In Party sees provision of consent in the DTCC Gui.•Following provision of consent all three parties send their side of the tri party novation confirmation to the DTCC confirmation matching engine. Client, if they wish can rely on the Markit, TradeWeb or Bloomberg Novation Gui to send their side of the tri party novation confirmation to the DTCC Confirmation matching engine.