Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Yes. All segments of the Swiss financial market are represented on the board of directors of the FSG Swiss Financial Services Group AG, the holding company of which SIS is a wholly owned subsidiary, and on the board of SIS itself. The Board of Directors consists of 12 members drawn from the different banking groups (see below) which are both market participants as well as owners of FSG Swiss Financial Services Group AG. Additionally, the Swiss Bankers Association, the Swiss National Bank (Central Bank) and the Swiss Exchange SWX each have one seat on board. The directors are appointed by the shareholders they represent and are elected by the AGM.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	The entire share capital of SIS is held by FSG Swiss Financial Services Group AG, which in turn is owned by the following institutions and market sectors: Share register of FSG Swiss Financial Services Group AG UBS AG* Credit Suisse ** Cantonal banks Private banks Asset management banks Commercial banks Foreign banks Regional banks Others * UBS Group consolidated ** Credit Suisse Group consolidated 30.67% 19.98% 18.69% 10.23% 7.17% 3.85% 3.97% 3.67% 1.77% 32.98% 22.19%
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	SIS operates on a "not-for-profit" basis. Profits that are above the budgeted base-level are 'given back' to users through price reductions and rebates. Revenues are generated through transaction and custody fees, calculated by "activity based costing" methods. Services are therefore usually not cross subsidised. Exceptions may be decided by the board in the initial build-up of a new service, where the start-up investment cost may include initial operational losses while volumes build up.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	SIS maintains a "Strategic Board Committee" formed of representatives from the board of directors together with members of the executive board, to decide on issues of relevance for the strategic direction of SIS. The combination of the members of the committee ensures the protection of the interests of the market community. In addition, a "Consulting Group", comprised of business representatives of the participants, meets regularly with SIS management to discuss issues resulting from the daily business, new initiatives and user needs. Internally SIS has comprehensive procedures in place to ensure that problems and/or concerns are escalated properly and gain management attention at the appropriate level. SIS processes and procedures are ISO 9001 certified. Periodically SIS conducts "client satisfaction surveys" to detect areas where service levels can be improved.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	Besides the issuance of an annual report, containing the financials and plans for the future development of SIS, and an annual general meeting, to which shareholders and eminent representatives from the entire financial community in Switzerland are invited, the communication between SIS and its stakeholders and users is multi-layered: Changes in the overall infrastructure of the financial market are usually communicated through consultation papers, direct mailings and road shows in the main regions and languages of the country. New services or changes in existing services are communicated by means of brochures and service description documents. They are also published on the SIS website (www.sisclear.com). The website also contains statistical information and information on the corporation in a wider context. A professional team of client relationship managers ensures the exchange of ideas and more general information through regular customer visits. For questions arising in daily business operations, a team of specialists acts as the first point of contact to the users. Changes in market procedures, corporate actions and other operational information is broadcast to members whenever necessary. The media include Internet, e-mail, and fax. Client surveys have also proven to be a valuable tool in the communication strategy.