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Unlike exchange trades and most prime broker trades, most institutional delivery transactions do not currently flow through NSCC’s Continuous Net Settlement system (“CNS”). Rather these institutional transactions settle at DTC. The ID Net Service allows subscribers to the service to net all eligible Affirmed Transactions against their CNS transactions, if any.

Eligibility for the ID Net Service requires that a participating entity be: (i) a Member of NSCC and a Participant of DTC (“ID Net Firm”), or (ii) a bank that is a Participant of DTC (“ID Net Bank”) (collectively, “ID Net Subscribers”). In addition, eligibility for ID Net processing is based on the underlying security being processed, the type of transaction submitted for processing and the timing of affirmation/matching. Participation in the ID Net Service is voluntary and is governed by the DTC Rules and Procedures applicable to the ID Net Service. All ID Net Subscribers are required to enter into separate ID Net Subscriber agreements with NSCC and/or DTC, as applicable which govern their use of the ID Net Service.

To facilitate the processing of ID Net transactions, NSCC maintains two securities accounts at DTC on behalf of all ID Net Firms that have elected to use the ID Net Service: the “ID Netting Subscriber Deliver Account” and the “ID Netting Subscriber Receive Account” (collectively referred to as the “ID Netting Subscriber Accounts”). NSCC is the owner of both accounts and acts as agent for the ID Net Firms. NSCC processes ID Net transactions through these accounts on behalf of participating ID Net Firms. While NSCC directs transactions through these accounts on behalf of ID Net Firms, the ID Net Firms, not NSCC, are responsible for satisfying applicable DTC risk management controls and Participant Fund requirements for their respective activity through the ID Netting Subscriber Accounts.

The ID Net Service offers netting efficiency and reduced security movements for ID Net Subscribers that are NSCC Members. NSCC Members, however, may need to make system changes to reflect how institutional deliveries are processed through their system. For ID Net Banks the ID Net service was specifically designed to minimize development and to make ID Net processing as transparent as possible.

Note: A Participant should contact its Relationship Manager for more information.

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