FIA Asia Derivatives Conference

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FIA Asia Derivatives Conference Doing business
in China Perspectives of Man Financial Mr.
Simon Raybould Chief Executive Officer Man
Financial Hong Kong Beijing August 2005
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Financial Services Authority and is a member of
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is a member of the Man Group. References to "MFL"
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or sale of any security, investment or
derivative. The information and opinions
contained in the Report were considered by MFL to
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• Doing business in China
• Man Financial profile business flows
• Perspective on the state of the Mainland
  Marketplace
• What are Man Financials strategic goals with
  regard to China?

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Man Financial profile business flows
Man Group, plcFocused on Exchange Traded Business
MF offices London, New York, Chicago, Paris,
Taipei, Singapore, Sydney
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Man Financial profile business flows
Man Financial Exchange rankings as at March 2005
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Man Financial profile business flows

• Man Metals
• 17 percent of market share on London Metal
  Exchange
• China business flows built upon end user hedging
  requirements

Man Market Share
Man side of every RT trade
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2004 Broker Rankingsinternational survey of
corporate risk managers
Man Financial profile business flows
BASE METALS RANKINGS 9

• Cash (Man Financial 1)
• Forwards (Man Financial 1)
• Options (Man Financial 1)
• Cash (Man Financial 1)
• Forwards (Man Financial 2)
• Options (Man Financial 1)
• Cash (Man Financial 1)
• Forwards (Man Financial 1)
• Options (Man Financial 1)

COPPER
ALUMINUM
OTHER BASE METALS
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State of the Mainland Marketplace

• State of Mainland Marketplace
• Strategic Relationships
• Joint Ventures acquisitions
• Closer Economic Partnership Agreement (CEPA)
• Recent Structural changes
• Access to Mainland Futures planned for Foreign
  Investors
• QFII quota increased
• Mainland futures brokers to trade international
  futures
• State of the Mainland Securities business
• State of Mainland Securities Brokerage Industry

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State of the Mainland Marketplace

• Access to Mainland Futures planned for Foreign
  Investors
• Plans to allow QFIIs to trade domestic futures
  market.
• Yang Maijun, director of CSRC Futures
  Supervision Dept
• Chinas futures market is short of big
  institutional players
• Development of the market hasnt caught up with
  investors demand
• Currently there are 11 Mainland futures
  contracts covering agriculture products, fuel oil
  and metals, with plans to approve contracts for
  sugar and steel wire.
• Yang Maijun CSRC would make agricultural and
  strategic resource commodities a priority for
  developing new future products.
• Bloomberg 30 May 2005
• China Economic Review July 2005

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State of the Mainland Marketplace

• QFII Quota increased
• Investment quota scheme on the amount invested
  by global money managers in Yuan denominated
  securities (ie A shares bonds)
• Total QFII quota amount to increase from 4bn
  (less than 1 of total market cap) to 10bn.
• Data suggests almost one-third of foreign
  investors QFII allocations are being kept in
  cash.
• Source Xinhua News Agency 13 July 2005
  Asiamoney, 1 April 2005

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State of the Mainland Marketplace

• Mainland futures brokers to trade international
  futures
• Pilot program approved by State Council
• Mainland futures brokerage firms to trade
  overseas futures on behalf of local mainland
  firms.
• Previously, only selected state-owned firms
  permitted to hedge physical requirements.
• AWSJ 17 June 2005

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State of the Mainland Marketplace

• State of the Mainland Securities Brokerage
  Industry
• Approx 120 brokerages majority of income is
  trading fees
• Brokerage Industry lost 15bn Yuan last year
• State media have reported a 45 percent drop in
  revenue for Chinese brokerages during the first
  half of 2005
• Mainland brokerages combined revenue 9.57bn
  Yuan (vs 17.47bn first half 04).
• Securities houses collected 8.3bn Yuan in
  brokerage (vs 15.26bn first half 04)
• Revenue from Underwriting 345m Yuan (vs 829m
  first half 04)
• Many Mainland brokerages have applied to PBOC
  for bailout loans. PBOC have said 10bn Yuan in
  cheap financing available for better performers.
• CSRC spokesman (SCMP 28 July 2005)
• hard to predict how many more of Chinas
  approximately 120 remaining brokerages would be
  shut down
• hinted that more closures were expected
• One-hundred-and-twenty brokerages is more than
  the market needs
• SCMP 2 July 2005 19 July 2005 28 July 2005,
  China Economic Review July 2005

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Man Financial Perspective

• Required developments from the perspective of Man
  Financial
• FX
• Banking procedures
• Corporate Governance
• Bond Market
• Money Market

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Man Financial Perspective

• Man Financial values building relationships with
• Regulators
• Peoples Bank of China (PBOC)
• State Administration of Foreign Exchange (SAFE)
• China Securities Regulatory Commission (CSRC)
• China Banking Regulatory Commission (CBRC)
• Exchanges
• Shanghai Futures Exchange
• Dalian Commodity Exchange
• Zhengzhou Commodity Exchange
• Shanghai Stock Exchange
• Shenzhen Stock Exchange

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Man Financial Perspective

• Differing Customer Profiles
• Man Financial
• China

• Need for Education

• Understanding the cash markets

• Transparency

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• China Mission Statement
• Continue to expand legitimate institutional
  customer base on the Mainland.
• Build links with Mainland brokers.
• Push for access to Chinese product base for our
  own international customer base.
• Be part of the educational process and
  development of the Chinese derivative markets.

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