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Chart 70: What is the primary challenge related to the new clearing rules? 60% 50% 40% 30% 20% 10% 0% The rising cost, | The complexity around The lack of dealers None particularly in the infrastructure and __ offering the capabilities amount of collateral different country rules given their challenges required Source: BofA Merrill Lynch Global Research « Panel participants believe that the election/shift in regulatory outlook might lead to a slowdown of products being added to the clearing mandate, with FX being the biggest unknown. ¢ Going forward, firms are tackling U.S. vs Europe collateral harmonization/transfer (DTCC and Euroclear are working on a collateral transfer initiative that is expected to launch in 1Q17), collateral management through firms including BNY Mellon, and Cleared repo could also be on the horizon (CME has filed an application with the SEC but no timeline given). « We asked investors what the biggest potential risks are in the clearing mandate and CCPs, and 33% of voting investors thought collateral concentration issues with cybersecurity (27%) coming in 2nd. Chart 71: What is the biggest potential risk in the clearing mandate and CCPs? 35% 33% 30% 25% 20% 15% 10% 5% 0% Much more There willbe | CCPrisk models Dealer/FCMs fail Cybersecurity collateral will be collateral fail needed in stress concentration times issues Source: BofA Merrill Lynch Global Research 48 2016 Future of Financials Conference | 17 November 2016 Bankof America 2 Merrill Lynch HOUSE_OVERSIGHT_014362