Update on the SCCP Give-up/Take-up Facility

May 24, 2011 PSE MEMO FOR BROKERS NO. 03-0511 FOR : The Investing Public SUBJECT : Update on the SCCP Give-up/Take-up Facility Last 21 January 2011, we issued our Memo for Brokers No. 06-0111 and sought your comments on our proposed Rules and Operating Procedures for the Give-up/Take-up Facility of SCCP which were approved by the SCCP Board of Directors on 19 January 2011. In addition, we also received comments and recommendations during meetings which were attended by clearing members and by representatives from the four (4) foreign custodian banks and institutional investors who are the potential users of the Give-up/Take-up facility the first being on 07 February 2011 and the second, on 22 February 2011. Taking into consideration the comments and recommendations we received, the SCCP Board approved the revisions to the original Rules and Operating Procedures for the Give-up/Take-up facility of SCCP during its regular meeting held on May 18, 2011, and they cover the following: a. To be consistent with the Rule that a Give-up/Take-up transaction will not affect the contractual obligation of the Assigning Clearing Member such that, in the event of default by the Settling Participant, the Assigning Clearing Member remains principally liable for the assigned trade, the Assigning Clearing Member, and not the Settling Participant, continues to be responsible for the Mark-to-Market Collateral and Margin Requirements of SCCP, as well as the payment of clearing fees and contributions to the Clearing and Trade Guaranty Fund; b. Early Delivery of cash or securities by the Settling Participant will no longer be mandatory; c. The deadline for taking up the trade by the Settling Participant has been moved to 3:00 PM of T+2 from 12:00 Noon of T+2; d. SCCP shall require the Settling Participant to notify the Assigning Clearing Member and SCCP, not later than 11:00 AM of T+3, of its inability to deliver, in whole or in part, the settlement obligation to SCCP; and e. SCCP reserves the right to reject any notice of a Give-up/Take-up transaction from any party that habitually fails to fulfill an obligation it has agreed to take up. The Give-up/Take-up facility is an optional facility which we will make available to all eligible parties once approved by the Securities and Exchange Commission for implementation. For your information. Thank you. (SGD.) RENEE D. RUBIO Chief Operating Officer