Circular D4/EB/2001/3 Electronic Transmission of Financial Data - Modifications to Reporting

COMMISSION BANCAIRE ET FINANCIERE Prudential Supervision of Investment Firms Louise Avenue 99, B-1050 Brussels telephone +32(2)535.22.11 - fax +32(2)535.23.08 Brussels, December 10, 2001 CIRCULAR D4/EB/2001/3 TO STOCK EXCHANGE COMPANIES Electronic Transmission of Financial Data of Stock Exchange Companies Modifications to the accounting and financial reporting to be communicated periodically to the Banking and Financial Commission pursuant to Article 91 of the Law of April 6, 1995

Madam, Sir,

This circular aims to modify the reporting tables communicated quarterly to the Commission by stock exchange companies in accordance with Circulars 90/2 of March 13, 1990 and 91/7 of December 18, 1991, which established respectively a periodic statement and a securities balance sheet. Through this circular, the Commission also intends to inform the sector that in its session of November 8, 2001, it approved a decree which, on the one hand, modifies the decree of June 24, 1997 regarding periodic information to be communicated concerning the application of regulations relating to the own funds of stock exchange companies and the placement of client funds, and on the other hand, establishes, by March 31, 2002 at the latest, the electronic transmission of the accounting and financial data of stock exchange companies. The adaptations made to the various tables, the reasons justifying them, as well as the procedures for the electronic communication of accounting and financial data are set out below.

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For the sake of efficiency, the Commission establishes, effective December 31, 2001 (statements to be submitted for January 31, 2002) and, at the latest, by March 31, 2002 (statements to be submitted for April 25 or 30, 2002), an automated procedure for the transmission of the accounting and financial statements of stock exchange companies (periodic statements, securities balance sheets, reports on regulations relating to own funds and the placement of client funds) which currently reach it on "paper" support. Stock exchange companies will submit their financial data based on a structured text file format conforming to the technical prescriptions included in Annex 5 of this document. To this end, companies that wish to do so may use the data entry program communicated in the annex of this document on CD-Rom (application named "Reporting CBF") whose "export tables" option automatically generates the file. This program has the advantage of including tests for coherence, plausibility, and completeness of data, thus allowing companies to verify the quality of the encoded data before sending it to the Commission. Companies that do not encode their data in the data entry program may, however, import the content of the text files intended for the Commission using an "import datas" option and launch a general verification of their data via the "global check" option.

Data pertaining to the same period should preferably be grouped in a single file. This file will be sent to the Commission, either on a magnetic medium (floppy disk) via simple or registered mail, or sent to the following E-mail address: reporting.eibo@cbf.be.

COMMISSION BANCAIRE ET FINANCIERE Circular D4/EB/2001/3 2 In the case of email, companies are invited to secure the transfer of their data by encrypting the file beforehand using an encryption program (Acrypt or any other "freeware" that allows coding an email and/or an "attachment" without purchasing a license). The code used to decrypt the file will be sent beforehand to the Commission via duly signed postal mail by the management.

The financial data as of December 31, 2001 must be transmitted electronically to the Commission. However, "paper" support will still be processed by the Commission for reports up to and including February 28, 2002. In other words, all stock exchange companies must have adopted electronic reporting by March 31, 2002 (statements to be submitted for April 25 or 30, 2002) at the latest.

The validity of the financial data transmitted electronically to the Commission is subject to the condition that the company retains a copy of the various reports sent, duly signed by the authorized person(s). A global print option has been expressly provided for this purpose within the application. These copies, grouped by accounting period, must remain permanently available to the Commission at the company's headquarters.

A separate letter containing the identification code assigned to your company is attached to the dispatch of this circular. It goes without saying that this code must be scrupulously respected when sending all financial data of your company as well as, where applicable, the consolidated financial data of the group of which your stock exchange company is the parent company.

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The modifications made to the regulation relating to the own funds of stock exchange companies of December 5, 1995 following the decrees of the Banking and Financial Commission of July 4, 2000 and May 8, 2001 have made it necessary to adapt some of the reporting tables relating to own funds. These modifications concern:

• Table 10.10 relating to own funds adequacy tests, in which the notion of "exchange risk" is replaced by the notion of "exchange and base products risk";
• Table 10.40 relating to "exchange and base products risk" within which the risk coverage requirements related to precious metals are replaced by new risk coverage requirements related to base products, the calculation method of which differs (see explanatory note in Annex 3 to this circular);
• Table 10.80 relating to settlement/counterparty risk, the calculation of the risk coverage requirement for off-exchange derivative instruments of which is limited to the market value-based method.

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COMMISSION BANCAIRE ET FINANCIERE Circular D4/EB/2001/3 3 The modifications in the architecture of financial markets and the launch of Euronext also have an impact on the reporting scheme of stock exchange companies. Indeed, the disappearance on November 27, 2000 of the futures market and the Euronext Brussels rollover system have rendered obsolete Annex 3 of the periodic statements relating to rollover operations as well as, partially1, Annex 2 relating to forward operations. Transactions with deferred settlement-delivery – where the settlement-delivery date is subsequent to the settlement date of the operation or where the settlement date is deferred (post J+3) – are still currently concluded and, given the risks they entail, it is important to maintain appropriate monitoring. Consequently, from January 1, 2002, the framework of Annex 3 of the periodic statements is extended to all transactions initiated by the order giver with deferred settlement-delivery on shares and other assimilable securities, executed in Belgium or abroad, on or outside a regulated market. In the annex, all these buy and sell operations that are ongoing at the end of the period will be reported, by category of order givers, along with any financing method used and the guarantees exchanged. As for Annex 2 of the periodic statements, it is abolished.

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Finally, the electronic transmission of financial data requires the revision of the structure of the various tables that make up the reporting. These adaptations are generally minor, often limited to a modification of the column order and more complete codification (rows/columns) of each table, or even the addition of an additional "code" column in the annexes of the periodic statements to provide the internal code of the client/counterparty concerned used by the company. The adaptations are, however, more significant for the following few tables:

• Table 10.80 relating to settlement/counterparty risk which has been split into two parts: the part reserved for unsettled operations subject to Table 10.8A, the remainder of Table 10.80 constituting Table 10.8B;
• Table 10.90 relating to large risks in which some additional information has been requested so that the additional own funds requirement can, where applicable, be automatically calculated.

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In consequence of the above, please find attached to this circular a new copy of all the tables and their comments constituting the accounting and financial reporting of stock exchange companies modified following the decree of November 8, 2001 mentioned above and this circular. These tables must be used for the establishment of reports from January 1, 2002. To be complete, a technical inventory of the modifications made to the various reporting tables is also communicated in Annex 4.

1 Namely, operations carried out on Euronext (formerly BXS) on the futures market for purchase (column 3) and sale (column 4).

COMMISSION BANCAIRE ET FINANCIERE Circular D4/EB/2001/3 4 A copy of this circular and its annexes is sent to the commissioner of your company. The Commission's services remain at your disposal for any additional information. Please accept, Madam, Sir, the expression of my distinguished sentiments.

The President, E. WYMEERSCH. Annexes