International Conference CallCETIP

2nd Quarter 2011 Earnings ResultsAugust 12, 2011

Operator: Good morning ladies and gentlemen. At this time we would like to welcome everyone to CETIP’s 2nd Quarter 2011 Earnings Conference call. Today with us we have Mr. Luiz Fernando Fleury, CEO and Mr. Francisco Carlos Gomes, CFO and IRO.

We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the Company’s presentation. After the Company’s remarks are completed there will be a question and answer session for investors and analysts. At that time further instructions will be given. Should any participant need assistance during this call please press star zero (*0) to reach the operator. There will be a replay facility for this call for one week.

Before proceeding let me mention that forward-looking statements are based on the beliefs and assumptions of the Company’s Management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of the Company and could cause results to differ materially from those expressed in such forward-looking statements.

Now I will turn the conference over to Mr. Luiz Fernando Fleury, CETIP's CEO, who will begin the presentation. Please sir you may now begin.

Mr. Luiz Fernando Fleury: Good morning everybody, for attending another meeting with us to discuss the results of the company. It is a pleasure being here with you again even in this quite unstable and turbulent times. I am really glad that we are being able to respond to these more turbulent times in an adequate fashion.

As we will see throughout the presentation and throughout the numbers that Francisco will drive us through you will see that all the very key assumptions that we always carried on the business preposition and the business model of CETIP in terms of having or serving a well-diversified class of different assets and use them as a kind of amortizer in good times or bad times or in terms of boosting results or somehow being able to maintain our results in the descent trajectory, all of these assumptions remain on.

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Not a surprise that of course the GRV unit in terms of volume is being affected by some of the measures taken by the government in the beginning of the year mainly and in this last quarter also affected by - and I am sure most of you who follow the financial industry have seen it - some banks (mainly be privately owned ones) they have been experiencing some small leaps, some small increases in their loan loss provisions. So this is also somehow affecting the scenario.

In the other hand if you look at the consolidated numbers for the auto industry we see that numbers are still running at record high, which indicates that mostly clients are favoring to pay cash instead of financing.

One other discussion that we are also trying to provoke with our key clients in trying to understand this picture in a better way is to find out if there could be a switch as banks tightened up the credit scoring process as somehow clients could be using personal loans to... as a substitution to the traditional car loan.

On top of that GRV has also responded quite well and you will see when you look through the expense numbers in such a way that margins were kept intact and as such when you combine with the very, very strong results on the CETIP business unit we were able to come up with another very positive quarter.

With that said I would say to you not much differently than I have said when we were discussing 1Q results that CETIP's management remains bullish but responsibly bullish. We know these are times when it is very hard to predict how markets will act and behave from now on. In the other hand there is no reason for us not to believe that we will keep responding to the market needs the way they want.

With that said I will pass the word to Francisco who will drive you through the numbers and of course after he finishes both him and I will be of course available to answer any questions you may have. Thank you and we will get back as soon as he finishes with the numbers. Thank you.

Mr. Francisco Carlos Gomes: Good morning, thank you all for attending this conference call. Well, let us go through the presentation quickly to leave more room for questions. On the first slide you can see that the net revenues continue to present strong rates of growth. During 2Q the rates of growth was 47% when compared to 2Q10 and even you can see the acceleration of the speed of growth because in 2Q we grew 6.7% when compared to the extraordinary 1Q that we had this year.

When we look at the consolidated figures for the first semester we can see that our revenue is growing almost at a 50% rate.

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Expenses continue to be under control - they are growing of course - but still under control. We finished 2Q with almost 50 million in expenses. It represents only 26.5% of our net revenues. For the first semester we had 93 million in expenses representing 26% of our net revenues. This is the effect of the operating leverage of the company considering that the revenues grow at a greater rate. This operating in fact we will continue to be present in our operations.

On the next slide you can see the impact of devolution of revenues and expenses into the Ebitda, the adjusted Ebitda. We are growing at a pace of 63% when we look at the semestral figures with an Ebitda margin of 74 and you can see also the acceleration of such rate of speed because we are growing at 5% per quarter.

The same effect you can see in the adjusted net income (cash earnings). We ended 2Q with almost 100 million in cash earnings growing 24% when compared to the previous quarter and we are presenting rates of growth above 60%. In the semester we ended with 174 million in the cash earnings and that is equivalent to R$ 0.70/share. Probably we will accelerate this phase of the second half of the year because this is the most favorable period for the company.

On the next slide you can see the diversification of the business lines up CETIP, of the sources of revenue. There is no relevant change in the composition and this shows the resilience of our sources of revenues.

When we take into account on the next slide that registration is growing strongly - we grew 47% 2Q11 when compared to 2Q10 - we can see that we are growing around 50% in registration and 21 compared to the previous quarter. This means that we will create a resilient flow of revenues that will come from the stock of securities in our depository system and probably we will gather more revenues from depository services, custody servicers, transactions and so on.

This is the case, for example, of Letras Financeiras. At the beginning of August we had R$ 100 billion in Letras Financeiras under our system and this will provide a resilient flow of revenues, custody revenues, for the remaining two or three years and we do not have yet... we did not have yet any registration of Letras Financeiras with public placement. There are several issuances under analysis of the Brazilian SEC.

When we approach the custody revenues we see the strong results. Into this semester we presented 81% of rate of growth. When we look at 2Q it grew 85% when compared to 2010 and almost 13% when compared to the previous quarter. This is the effect of the increase in Letras Financeiras in the flow of new securities like CDs, instruments related to agribusiness and securities related to the real estate business.

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In the following slide you can see also the same pace of strong growth in the monthly utilization. We are growing at a rate above 60%. We ended the first half of this year with 61 million in revenues growing almost 64% when compared to 2010. When we look at the figures of 2Q we are going at 63, 64%.

And the same is true for transactions. Considering that the stock of securities increased the resulting consequence is that the level of transactions presented trend to increase in the upcoming periods and when we look at the semester we grew at a rate of almost 76%.

Well when we look at the GRV business we see that we are still growing - obviously not on the same pace or not with the same velocity that we presented in the business unit CETIP - but they continue to present strong rates of growth. Of the first half of 2011 the lien business grew at a rate of almost 15% and when we look at 2Q when compared to 2010 we grew almost at 17%.

And this is a very healthy growth because we have to take into account that we had more prudential measures from the central bank; more stringent credit criteria to approve by the banks; and also we had more... the interest rates were greater in this period according to the Mac for economic policy, the monetary policy of the government. And we continue to still present healthy rates of growth.

The business of contracts is impacted by the fact that we had some important states during 2010 and then we present a rate of growth around 90% into the semester and we still continue to grow. Obviously this business we have a market share of 68, 69% and probably we will maintain its market share during this year and we will start to increase its market share only after the end of this year.

There is no surprise in the composition of our expenses. As you can see personnel is the main item. Expenses, adjusted expenses are growing at a rate around 20%. We had during the first semester some issues related to the negotiation of wages with two unions and we expect that for the second half we will grow in a more normalized way - but expenses are under control and it is not the key success factor for the company; the key success factor for the company is to increase its level of output in order to improve Ebitda and net income figures.

In the next slide you can see the reconciliation of our adjusted cash earnings, adjusted net income. You can see the impact of the tax shield created by the acquisition of GRV. Nowadays... we had in 1Q and effective tax rate of 12%, something like that; during 2Q because we defined the interest on network we have an effective tax rate of 2%. On average our effective tax rate is around 5 to 6%.

Finally you can see devolution of our Capex. Nowadays our Capex accounts only for 3% of our natural revenues. Probably this figure will increase in the second half

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of the year, we have several projects being analyzed: the implementation of the fixed income trading platform; the implementation of... the surveys related to the implementation of GRV's mortgage business. But Capex is not a problem for the company. We generate a lot of cash, this is a cash-cow business and we have enough resources to support any increase in our required Capex. As you can see technology as the main item of our Capex with product development.

This is the summary of our figures. You can see a detailed presentation in our earnings release and then I will leave room for the Q&A now. I think it is more useful for both of us. Thank you very much.

Q&A Session

Operator: Thank you. Ladies and gentlemen the floor is now open for questions from investors and analysts. If you have a question please press star one (*1) on you touch-tone phone. If at any point your question is answered you may remove yourself from the queue by pressing star two (*2).

Our first question comes from Mr. Marcelo Telles from Credit Suisse.

Mr. Marcelo Telles: Good morning, good morning Fleury, good morning Chico, thanks for your time. I have two questions, a more specific one on GRV contratos. What can we expect in terms of the ramp-up of GRV contratos for this year and the next? I understand you are at 68% coverage, I believe you still have to incorporate Rio de Janeiro and maybe Bahia; so if you can tell us what we can expect going forward and what is actually preventing these states from actually being incorporated into GRV contratos?

And my other questions are more like a strategic question. Since the acquisition of Advent by ICE can you give us an update on what your conversations have been so far with Ice, if you would expect any type of contribution from them into your business and how that would affect potentially your agreement with Deutsche Burse? Thank you.

Mr. Fleury: I will start with the second one then I will pass the word to Francisco and first of all good morning Telles, nice hearing from you again. The thing is the following: after the replacement it was actually more than a replacement because the state that was purchased by ICE was actually bigger than the stake that Advent had when they sold. They bought in the market some extra one, they got a position of around, if I am not wrong, 13.4% and of the equity capital of the company.

For us so far it has been extremely encouraging and positive. Both myself and Francisco we have been to Atlanta actually two weeks ago. We have had the chance to overlook with them the existing portfolio of products they have. They are

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well known not only in the US but I would say within the entire financial community of being an extremely innovative exchange.

If you remember... I do not know if we will be able to deserve the same kind of credit that they already have; but that is pretty much what Francisco and I have been advocating for CETIP in terms of its strategy being innovation friendly; listening to the market; trying to be as far away as possible for carrying an imperial behavior - that is not the style here; we want to hear and we want to respond.

In terms of the short term thing... you also asked about the implications for potential implications with our agreement with Deutsche Burse. If you remember the agreement that we have with Deutsche Burse refers only to the - so far - only to the collateral management platform. It is a revenue sharing agreement. The platform itself is something that is very complimentary not only to what we do but also to ICE has and so we do not see any reason until today that could somehow jeopardize the intent to further increase number one the importance and number two hopefully the utilization of this platform in the future.

I have had myself in person spoken with the CEO of Clearstream, a very professional individual as you can imagine, and in their minds it is just another event happening in a company that is a big, big partner of them in a big, big market and so it is a win win proposition to everybody as we speak.

As for the future I am not the best person for you to ask; but I can give you the phone number of ICE's CEO so you can call him any time... but I do know, sincerely I do not know about the future. All I can say to you is that so far any and everything we have seen has been extremely encouraging.

As for the second before - and I am sure somebody will ask and Francisco has also addressed that on the Capex, under the Capex chapter - it is important that we keep in mind that the fact that we are still analyzing and still looking at it and still not decided who or what kind of platform we are going to bring to the local market.

If you remember during the discussion of 2Q... sorry, 1Q results I told you that we have - and probably this was the wisest decision we took on this - we have these two users groups working in parallel: there is one group working with improvement for the CETIP net. Even though volumes are not exploding, those who follow our numbers will probably see that that is coming, it is coming one way or the other. You have some very, very important players like Bradesco for instance through its asset management who have decided to actively participate because they also want to see this market moving.

So even though we did not spend a good money or good spending or the wise spending in terms of already being in the implementation phase of the new

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platform, CETIP net has been being updated and upgraded on a monthly basis and with that said I will let Francisco answer the thing on GRV.

Mr. Gomes: Hi Marcelo, nice to hear you.

Mr. Telles: Hi Chico.

Mr. Gomes: Well, 2011 is not a good year for bringing more DMVs to the GRV contracts platform for one reason: we had elections last year; after the elections they changed all DMV directors; when the DMV directors assumed their functions they started to analyze and understand and learn all the activities of the DMVs and then for this reason it is not easy to freeze our market share in this business.

Then conservatively we are working and maintaining the 68, 69% market share figure for the second half of the year. If we succeed in bringing more DMVs to the platform this will be a premium to the company and to the investors. We believe that we will start to increase this market share after this year, at the start of 2011... 2012 sorry, ok?

Mr. Fleury: As for the two markets specifically that you asked, Telles, Bahia remains being a work in progress. We are dealing with them on a daily basis. As Francisco said they are getting up to speed there and in the case of Rio there is that famous mandato de segurança, I think it is read of mandamus if I am not wrong the word in English for that.

So it is a court injunction that that has stopped not only CETIP but any other company to provide with the information so the banks are working that hard to believe there. Every time they have to seize a collateral, any car loan, they still have to dig in the dirt, go over the contract and collect handy information - which does not make any sense - but we understand. This sometimes is the first fight between the guys that are in favor of innovation, speed, time to market, etc. versus interests from certain activities.

But those are two important markets, you are right; but Bahia is work in progress, no reason to be pessimistic about it, no reason to be too optimistic about it. But it is work in progress.

Mr. Telles: Ok thank you very much and congratulations on the results.

Mr. Gomes: Thank you.

Operator: Our next question comes from Mr. Alexandre Spada from Itaú BBA.

Mr. Alexandre Spada: Hi gentlemen, good morning, congratulations on the results. I have two questions, the first is on collateral management. Can you just

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provide us an update on the business? How has it evolved since the launching? Have you already seen any pickup in the OTC derivatives because of the collateral management? And then I will come up with a second question.

Mr. Fleury: The first question on collateral management you wanted to know if we are seeing activity on it? Can you...

Mr. Spada: Yes, I mean the product is up and running, right? I just want to make sure if you already have any clients doing business using the collateral management platform, if you see any improvement in OTC derivatives.

Mr. Fleury: As usual even we as CETIP managers we always get surprised here. Believe it or not the first client on the collateral management was a state-owned bank, it was not the private sector, which was cool on a business perspective, because normally state-owned banks are the ones that are extremely cautious about innovation, etc., and we were really glad the first one was them.

There are some other deals that are already registered and being collateralized under CETIP's systems. The total amount today is around 350 million if I am not wrong.

In terms of the derivatives volume I think Francisco can talk to you about but yes, there was an increase in if you look at what the central bank has recently done together with the finance ministry I hope, I sincerely hope you do not ask me what I think will happen because I do not know. Actually it was expecting you guys what you think will happen because nobody knows.

Apparently the way the IOF is to be computed and paid we have many more questions than answers. Questions are still open. As you guys know we were working together with our colleagues from BM&FBOVESPA and Febraban (the national Federation of Banks) as well and Anbima (the national Federation of broker-dealers).

We were all working with them because as you can... those that are more familiar with the issue if you look at the way the resolution was published in some of the contracts I can guarantee that it is impossible to be calculated the latest indicated there. So it is a work in progress as well.

Mr. Gomes: Hi Spada, nice to hear you.

Mr. Spada: Hi Chico.

Mr. Gomes: Well, as Fleury mentioned it is too early to evaluate the path of growth in the collateral management business. We have only one month after the introduction of the product. Our commercial people is working with financial

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institutions trying to speed up the learning curve. They have to know the functionalities of the system, the benefits of the product and so on. Then it is too early to see any impact on the registration of the OTC derivatives business.

I think we will start to have more precise figures after the end of this year. In our budget we did not take into account any flow of revenues related to the collateral management and any impact of the collateral management in the derivatives business for this year.

Yes. But we have some growth that came from the collateral management but it is not significant, it is negligible for a while.

Looking at the impact of the IOF measures that Fleury mentioned it is too early also to figure out how will be the impact. The numbers that we have now show that we had an increase in the number of transactions after the introduction of the IOF; but a small decrease in the notional value registered. Then these contradictory figures imply that it is too early to evaluate the impact. Let us wait some period of time to have more precise figures and to see the consequences, ok?

Mr. Spada: Ok Chico, that is very clear, thank you, thank you Fleury. I have a second question though and that is on the custody is more specific. We have seen a surge in the revenues from other assets under custody line and that has been driven totally by prices. Can you provide us some color on what is going on on prices? Is there mix or have you adjusted any of those prices? Thank you.

Mr. Gomes: Let me check the figures. Spada, there were not any change in price. This was provoked by a change in mix of securities under deposit, ok?

Mr. Spada: Ok thank you.

Mr. Gomes: Bye-bye.

Operator: Our next question comes from Mr. Henrique Caldeira from Barclays.

Mr. Henrique Caldeira: Thank you and hi to everyone. A question on Letras Financeiras. Now this segment clearly has really surpassed expectations for the year; how large do you think this can get to? Do you have any expectations for the rest of the year?

Mr. Gomes: Hi Henrique, how are you? Well, in our budget we estimated to have at the end of the year R$ 110 billion in Letras Financeiras and the got 100 billion in August. We think that this product will continue to grow at the same velocity of growth. We are waiting for the impact of the first public issuance to see how this instrument will be accepted by the retail market.

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We have, I think, three propositions being analyzed by the Brazilian SEC (two propositions from medium-size and small banks, another one done by a very large bank) and then we have to wait some period of time, one month or two months, in order to see how will be the performance of the public issuance. But we are very bullish with respect to this instrument.

Mr. Fleury: If I may add to what Francisco was saying it is important that we keep in mind that in the Letras Financeiras initiative that are two events that are triggering this very healthy growth: number one there is an overall increase in the tenor of assets side in the banking industry and so of course for matching purposes it is very healthy for them to try to increase their liabilities' tenor accordingly.

And number two we have to remember what we spoke when Letras Financeiras were created. If you guys remember when we were trying to do... as you know we do not give guidance; when we were trying to, jointly with the analysts community, to discuss how far it could go, we said that the stock on time deposits was around 1.4 trillion and we said "we can go all the way to 20%, 30%".

The interesting thing is the balance outstanding on the time deposits it has not decreased and so the 100 billion is not coming in substitution to the stock of time deposits but on top and above of it. So that is another reason both Francisco and I remain bullish about the product stop

Mr. Caldeira: Ok. In regards to derivatives can you comment on the federal pricing trend for OTC registration? Can you comment it this is a new strategy to replace... no more plain-vanilla products or do you think this high instability is the cause in this? And how sustainable do you think these higher prices will be? Thank you.

Mr. Gomes: Let me see if I understood Henrique.

Mr. Caldeira: The average prices especially on swap contracts and in other words the higher penetration for more structured products, do you think this is a short-term movement replacing more plain-vanilla products or do you think these high average prices will be sustainable going forward?

Mr. Gomes: Yes. Obviously this is... we do not have too much control on the choices of the banks with their customer base. We are ready to provide the proper services for plain-vanilla instruments as well as for more structured products. It seems to me that there is a trend into the market for using more complex instruments. Investors are getting more sophisticated, banks are offering more complex instruments and so on. Then it is my view that there is a trend of having more complex instruments for which we gather more revenues.

Mr. Fleury: And if I may add I am also... I would say the best word would be curious; I am also very curious to see depending on how this IOF discussion goes

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am very curious to see if this could be the trigger for the speed up of the utilization of our collateral management platform because the more sophisticated the products got or get the less standardized a become.

As such the OTC market should be favored; on the other hand in the past if you were to speak to any of the trading desks of the big banks they would say "yes, the bad thing in Brazil about OTC you that I have to keep track on the collateral; I have to inform, guarantees are not moved automatically" - the stuff that you know which was the thesis behind the idea of bringing the collateral management platform.

So I am curious. Let us see how it happens and it depending on the further sophistication of the derivatives thing I think the more utilized or the more likely utilization of the collateral management platform will be.

Mr. Caldeira: That is great, thank you Chico, Fleury and congratulations for the quarter. Thank you.

Operator: Our next question comes from Mr. Carlos Firetti from Bradesco.

Mr. Carlos Firetti: Good morning. I would like to go back to the question on ICE. If you could be a little more specific on what you have already discussed regarding opportunities from having ICE as a shareholder, for instance we know that ICE trades some very important commodity contracts that are very much traded by Brazilians, especially commodity producers. Would that have some way in which you could facilitate this trading offering collateral management or some sort of things for these clients? And how is your contact with ICE so far? Have you already discussed the opportunities? Thank you.

Mr. Fleury: Let us see if I can go a little further than I have already gone. Francisco and I have been to Atlanta, they have been to Brazil a couple of times. They will have a representative in our board of directors which is in the process, the guy is in the process of being elected.

On top of that this guy that is going to be elected as a new board member happens to be an individual with a very, very strong background in product innovation, product development, product implementation. I am... again I think the best word is curious, I am as curious as you are to see how fast we can act our act out.

The same curiosity you have is the same curiosity we have. We have not discussed specific products; we have discussed though specific initiatives. They can be a wonderful bridge for us in terms of bringing those heavily traded products enter Brazil - why not? - and that would be another boost to the business.

I would... my best recommendation to all of you would be to hold your horses. They are a 13.4% shareholder and they will have a board representative. CETIP has its

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own strategy, it is following its own strategy. So far you guys have been supportive of our strategy, the market seems to be supportive of our strategy. So I would just recommend people not to jump into conclusions because it may not happen.

Mr. Gomes: I think it is too early to discuss precisely such things as strategy also.

Mr. Firetti: Ok thank you.

Operator: Our next question comes from Mr. Paulo Ribeiro from HSBC.

Mr. Paulo Ribeiro: Good morning, congratulations again on the quarter, very good. A quick question on the personnel expenses if you could give us an idea of what... which portion of the increase that we saw this quarter was due to the application of reflective to January, February so we can have an idea of what is the run rate.

And what do you expect from the wage negotiations in September? I know you... two of three unions you negotiated now, one is during September; so I was trying just to get a sense of what to expect and then I have another question later.

Mr. Gomes: Ok. We have the end of the negotiation with the union of Rio de Janeiro and the union of Alphaville where GRV is located. We had R$ 2 million in additional expenses; 1 million was the retroactive application of the adjustment and then the increase was only 1 million.

Second personnel expenses increased also because we raised the provision for profit-sharing with the employees and then we had an increase of 1 million according to the profit-sharing program.

Mr. Ribeiro: Ok perfect and just what is the union you have to negotiate in September? Is it... I am trying to get a sense of if it is bigger than the two unions you have already negotiated or something similar in terms of increase, if we could expect 1 million or something?

Mr. Gomes: We will have in September the negotiation with the union of São Paulo. Probably we will have our rate of increase around 6% to 7% at most.

Mr. Ribeiro: Ok perfect in my second question...

Mr. Gomes: Let me make a remark: we are trying to make a company union agreement with such three unions in order to unify the dates and unify the criteria to adjust yearly the wages, ok?

Mr. Ribeiro: That would be easier for us and for you too - more importantly.

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Mr. Fleury: Very different negotiations with three different unions is not exactly...

Mr. Ribeiro: I can imagine that. So if this second change here to a more strategic topic. Can you just give some color more you mentioned SNG Mobiliário, if you could just tell what are the steps you have to take to develop that and where you stand or what are the difficulties in getting there and what you have done so far? Thanks.

Mr. Gomes: Ok. It is too early to speak about GRV Mobiliário. We hired a consultancy firm and they will help us to draw the value chain in this business in order to see in which points we can act, we can serve the market; points that make sense with the strategy of the company.

Also we will try to sign the market defining prices, comparing the market size and the market prices with other jurisdictions. We will try to define or to establish the required investment and also the Opex of such an operation. Probably we will have a more precise figure at the end of this year. We are at this stage of surveying such business.

Mr. Fleury: And to also address your question on what is needed I would like to remind you all that CETIP sponsored a real estate seminar in Brasília last Monday. We had 350 participants, they came from everywhere. The reason for picking Brasília as you can imagine is very simple: there are a lot, a lot of fine tuning that needs to be included within the legal architecture framework of constituting guarantees under clearinghouse environment.

Contrary to what you may have heard from other exchanges here in Brazil we are not sure, from a legal standpoint, that guarantees constituted under clearinghouses are 100% kept outside of bankruptcy law or kept outside of the reach of a court injunction, we have legal opinions indicating that to us.

On the other hand it was very clear in the seminar - CETIP was not the only presenter, there were people from the national association of construction companies and incorporators; there were people from the central bank, people from everywhere - so they all understand it is so simple to see the existing LCIs, etc., why is it that you have 99.9% of them coming from commercial mortgages or commercial rentals? Very simple: because you do not have the guarantee that you need coming from individual mortgages even under the new law that that mortgage could be non-reachable by a court injunction. It is as simple as that.

For the first time I think the government is becoming worried and may associate itself with our concerns because the recent projections indicate that by the end of 2012 we will simply run out of money for real estate projects; poupança will exhaust; people talk about the stocks, the renovation: do not buy it, it does not make sense. By 2012 there will be no resources available. So either we discuss

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that the right way in a very prudent, in a very adult manner, or we are going to be... again it is going to be a discussion like should we be building stadiums for the World Cup? It is a stupid thing.

We have to move, as simple as that. That was CETIP's that was my personal... regardless people liking or not that was my personal message during the seminar: we have to act; if we do not act Minha Casa Minha Vida, all these beautiful things they will not fly because there will be no money.

So it is as simple as that: we have to act together with the central bank, together with the Congress; I do not know who is going to act in the Congress by the way, is not going to be... but we have to address this in a very adult manner; just stop the bullshit and let us do it because it is going to exhaust the damn resources.

Mr. Ribeiro: Thank you, I love when management speak their mind and it was great. So just summarizing here this initiative you see as core, as central, as a way to unleash financing for construction going forward in Brazil. So it seems to me that something - even though under survey or at a preliminary stage - it is something that we will have to get done, right?

Mr. Fleury: Absolutely, absolutely. You are absolutely right, number one; number two I think CETIP can be the provider of choice. As Francisco said we are trying to do the best we can. We are trying to respond the best we can. We are working very closely with Anbima. Again, we do not want to be in the driving seat; we have seen a very similar situations where the provider of the infrastructure for the market tried to be in the driving seat and acted solely and then came with a ready to eat kind of dish just to see the market look and say "this is not what I want".

So we are trying to be as close as possible to Anbima, as close as possible... as you guys know we have bank representatives in our board of directors. We talked to them. It is the direction that we are going, but one would think that you believe we should be going on not. Can you help us in sensitizing the authorities to address this in a sound way? That is what we are doing and you are right, it will happen.

For the first time it is one of those situations that they will be forced to act, it is not that they are willing to act; but they will be forced to act. It is such a political issue, such a stupid thing that they will have to. As simple as that.

Mr. Ribeiro: Perfect, thank you very much.

Operator: Our next question comes from Mr. Luis Ahn from Orange Capital.

Mr. Luis Ahn: Hi good morning gentlemen. Most of my detailed questions have been answered; so maybe I could take a step back and you started talking about

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this, but I would like to get your thoughts on the outlook for your business 12 to 18 months and on one hand you have some macro headwind, banks talking about lower global growth, 2012 people talking about some more credit issues, macro prudential issues; on the other hand you have some great opportunities with the... initiative and other platforms working on. Letras Financeiras is meaningful but if you look some of the infrastructure and housing financing they really have not accelerated yet. Now you have a strategic partner in ICE which should present even more growth platforms.

So I would love to get your take on your outlook for growth in your business and specifically are you more concerned than excited, are you more excited than concerned and how does this compare to six months ago?

Mr. Gomes: Ok nice to hear you. Well, we are responsibly decided. We are responsibly optimistic. You have to keep in mind that the management works with long-term trends. In our view the long-term trends for our business are quite nice. What we see in the short term is fine-tuning of the rate of acceleration of the credit growth and so on and then there is no sign of that the fundamentals of the drivers of growth of CETIP have changed and then we are not worried about the current environment, the long-term trends or the long-term path of the company. It is pretty nice, we are comfortable. Is that ok?

Mr. Ahn: Yes, yes. Thank you.

Operator: Thank you. This concludes the question and answer session. At this time I would like to turn the floor back to Mr. Fleury for the closing remarks. Please sir go ahead.

Mr. Fleury: Thank you all, that is all we can say. It is a pleasure being here again. Francisco and I are very pleased to attend this meeting when we have a chance to talk with you guys, update you on what we think and just one apology from my side if I got too excited about the real estate thing. It is just that it bothers me a lot, so I am sorry. Thank you very much and we will see you soon. Thanks.

Operator: Thank you. This concludes today’s presentation. Thank you very much for your participation and have a nice day.

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