Euronext Nv Unsp/Adr

Hello and welcome to Uranus Q2 2024 results. My name is Alicia and I will be your coordinator for today's event. Please note this goal is being recorded and for the duration of the goal, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the goal. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to Stefan Bunja, CEO and Chairman of the Managing Board of Euronext, joined by Giorgio Modica, CFO. Thank you.

Good morning, everybody, and thank you for joining us this morning for the Euronext Second Quarter 2024 Results Conference Call and Webcast. I am Stephan Boujna, CEO and Chairman of the Managing Board of Euronext, and I will start with the highlights of this second quarter. Giorgio Modica, the Euronext CFO, will then develop the main business and financial highlights of the second quarter of 2024. As an introduction, I would like to highlight three main points. First, the Euronext diversified business model continues to drive strong top-line growth. We have delivered plus 12.2% revenue growth in Q2 2024 compared to Q2 2023, and that brings revenue and income to a new record level of €412.9 million. This very good performance was driven by solid growth in non-volume related businesses, combined with strong growth in clearing, especially in fixed income. Second, thanks to continued cost control in the inflationary environment, we increased or adjusted EBITDA by close to plus 12% year-on-year to $256.8 million, and we grew or adjusted EBITDA margin by plus 3.5 points to 62.2%. Third, we are entering the last phase of the Borset and Enneagroup integration. In May, we have migrated the MTS production data center to our core data center in Bergamo. In July, we have successfully migrated the clearing of Euronext commodity derivatives to Euronext Clearing. And this successful first phase paced the way for financial derivatives clearing migration, the very final step of our 2024 strategic plan, which would be accomplished and delivered in September 2024. This last step will complete our integration across our value chain and will deliver on the last remaining targeted synergies to reach $115 million of run rate EBITDA synergies in relation to the acquisition of the Vosay-Tenay Group. So we have been more efficient than anticipated in delivering this integration, and we plan to limit cumulative implementation costs to €130 million by the end of 2024, compared to €160 million announced in 2021. In Q2 2024, we also pursued a strategic bolt-on acquisition to further diversify Euronext Business Standard. Of course, as you may have seen it a few weeks ago, the acquisition of global rate set systems, in short, GRSS, positioning Euronext as a leading player now in the calculation and administration of interbank offered rate indices. This acquisition will strengthen the growth of Euronext non-volume related revenues. Lastly, we have continued to innovate for the benefit of the effectiveness of European capital markets for our clients. In July, we pioneered with the launch of your next wireless network or new microwave service. With this new offering, we became the first exchange in Europe to offer plug-and-play order entry in London via microwave technology to significantly enhance the speed of order transmission and offer unparalleled improvement in latency. Also, our midpoint match initiative focused on dark trading is continuing its ramp-up with increasing volumes month after month. Let me give you a quick overview of the performance in the second quarter of 2024 on slide four. As mentioned earlier, Euronext reported a very strong second quarter of 2024, posting revenues of plus 12.2% year-on-year, up to $412.9 million. This growth was supported by three main drivers. Non-volume-related revenue posted a strong performance overall, notably in listing in advanced data services. We remained the first listing venue in Europe, with 14 listings representing 40% of European activity. A third of those 14 companies were coming from countries outside of EUR-Lex footprints. Advanced data services was driven by increased demand for fixed income and electricity data. Second, our trading revenue grew by plus 20.7%. This was driven by another record quarter of fixed income trading revenue growing by 40.7%, fueled by the ongoing volatility. It was also boosted by positive dynamics in cash equity trading, as well as in diversified trading as commodity derivatives, power, and fixed income trade, and forex trading. Post-trade, combining clearing and CSE revenues grew by plus 16.9%. Euronext clearing performance continued to benefit from the expansion of Euronext clearing to cash markets across Europe, and dynamic fixed income and commodities clearing activities as well. Euronext security has also posted a very strong plus 9.4% increase in revenue this quarter, thanks to growth in custody and insurance. This translated into non-volume-related revenue accounting for 58% of the total Q2 revenues and covering 153% of underlying operating expenses, including DNA. As everyone appreciated, the share of non-volume-related revenue is slightly lower this quarter year-on-year due to the strong dynamic this quarter of our trading and clearing activities described earlier. We're continuing our trademark discipline approach to cost management. Due to 2024 underlying operational expenses excluding DNA, which 156.1 million, and this is in line with the underlying cost guidance of 625 million for the full year excluding DNA. Everyone understands that those numbers include OPEX to invest in organic growth projects to be deployed in the second part of the year. Consequently, our adjusted EBITDA grew by plus 18.8% to 256.8 million. Euronext adjusted EBITDA margin increased by 3.5 points to 62.2%. And this strong performance led to a plus 19% increase in adjusted EBS at 1.59 euro per share and to an adjusted net income of 165.2 million. On a reported basis, Our EPS for the second quarter increased by plus 21.7% to 1.37 euro. Our net debt to last 12 months adjusted the bid average 1.8 times at the end of June 2024. And this was impacted by the payment of our 2023 dividend of 257.3 million to shareholders at the closing of the, and also the impact of the closing of the acquisition of GRSS. As I mentioned earlier, we are now entering in the final phase of the Borsa-Italian Group integration and our growth for impact 2024 strategic plan. At the end of June 2024, we reached 84.2 million of community run rate EBITDA synergies out of the target to 115 million by the end of 2024. In May, we have migrated the MTS production data center to our core data center in Bergamo. This strategic move enables customers to access MTS market trading and data services through the same facilities as all your next trading venues, enhancing efficiencies in European capital markets. And numbers benefit from reduced latency, from the highest safety standards, and from the reduction of their carbon footprint thanks to the facilities in Bergamo that is powered by self-produced green energy. Most importantly, a few days ago, we have successfully migrated the clearing of UNX commodity derivatives to UNX Clearing, completing the first phase of our derivatives clearing migration. As of today, we only have one single remaining step ahead of us to complete the integration of the POSA-Italian Group, and this is the expansion of UNX Clearing to all financial derivatives listed on European markets that will be completed in September 2024, and this will be the final step to achieve the targeted delivery of 115 million of community-run-rate EBITDA synergies at the end of 2024. This will contribute to the integration of the European post-trade landscape to the benefit of our clients. Furthermore, the expansion of our clearinghouse will unleash new innovation capabilities and strategic organic growth opportunities for our clients. And I'm looking forward to sharing with you those innovation initiatives on our Capital Markets Day on the 8th of November 2024 in Paris. Finally, thanks to the efficient management of our integration projects, we now expect the cumulative implementation cost of the Borsa Italiana Group until the end of 2024 to reduce to 130 million, and this is 20 million less than guided in May 2022, and 30 million less than this 160 million announced in 2021. Everyone appreciates that over the past few years, our targeted EBITDA for the integration of Borsa Eternel Group increased from 60 million to 150 million. And over the recent years, the implementation cost to deliver those numbers decreased from 160 million to 130 million. So I now give the floor to Giorgio Modica for the review of our second quarter of 2024.

Thank you, Stefan, and good morning, everyone. Let's now, however, look at the strong performance of the second quarter of 2024. I'm now on slide seven. Total revenue reached 412.9 million euros, up 12.2% compared to last year, out of which 58% are non-volume-related revenues. We reported solid growth in both our non-volume-related businesses and trading activities across all asset classes. Six-income trading continued to be a key contributor to top-line growth. Let me deep dive into the drivers of this strong performance, starting with listing on slide 8. Listing revenue was 58.4 million euros, up 5.9%, driven by the strong performance of debt listing and of Euronext corporate services. Euronext sustained its leadership in equity listing in Europe with 14 new listings in the second quarter of this year. On the debt side, we reinforced our leadership worldwide with around 57,000 bonds listed on our platform. Euronext Corporate Service continues to deliver a solid growth with revenues of 12.8 million euros, up 8.8% compared to the same quarter last year. Slide 9 illustrates how data and investor services activity continue to drive growth this quarter. Advanced data services reached 60 million of revenues, up 5.4%, driven by the solid demand for fixed income and power trading data, as well as the continuous strong demand from retail. Revenues include one month of consolidation of GRSS, which was acquired at the beginning of June. Investor services reported €3.3 million in revenues in this quarter of 2024, representing a 17.7% increase compared to the second quarter of 2023, thanks to the successful commercial expansion of the franchise among the global largest investment managers. On the other hand, technology solutions reported €25.4 million of revenues, down 7%, mainly due to the termination of the double-run connectivity revenues following the completion of the migration of Italian cash and derivative markets to OPTIX, creating synergies and efficiency for clients. Moving now to slide 10, Euronext's trading revenues reached €142.7 million this quarter, up 20.7%. As mentioned earlier, this strong growth in our trading revenues was driven by a good performance across almost all asset classes, and especially fixed income trading. Cash trading revenue grew 13.8% to 74.2 million euros, reflecting increased volatility. Cash trading volumes grew 10.7% compared to the same quarter last year. Cash revenue capture averaged 0.53 basis points, despite the average order size remains still very high. Cash equity market share averaged 66%. Derivative trading revenue increased 6.6% to 13.9 million euros in the second quarter of 2024, reflecting higher financial derivative volumes with ADV up 10.8% and they continued very strong performance of commodity derivative volumes up 40.2% versus last year. Average revenue capture on derivative trading reached 0.32 euros per lot, affected by a higher share of equity future in the volume mix. Lastly, FX trading grew 28.7%, 7.9 million euros of revenues in the second quarter of 2024, supported by the favorable volatility environment. Continuing the review of our trading activity, I'm now moving on slide 11. Fixed income trading grew 40.7% and reached another record at 35.6 million euros in the second quarter of 2024. Our fixed income franchise continued to be supported by the favorable interest rate environment and good market volatility. It was especially driven by the strong performance of MTS Cash, with ADV up 67.7% year-on-year to 36.3 billion euros. MTS Repo recorded 449 billion of term-adjusted ADV. Power trading revenue grew to 11.1 million euros in the second quarter of 2024, up 30.1 percent compared to the same quarter last year this record performance was mainly driven by our intraday market with add up 91.3 percent i now conclude business review without post trade activity on slide 12 clearing revenue was up 33.2 percent to 39.2 million euros reflecting the increased activity in equity clearing following the expansion of Euronext clearing to the cash market in Belgium, France, Ireland, the Netherlands, and Portugal, and higher clearing revenues from the dynamic commodities and fixed income activity. Net treasury income amounted to 13.8 million euros in the second quarter of 2024, stable level compared to the same quarter last year. Lastly, revenue from custody, settlement, and other post-trade activity reached 69.7 million euros. This is a 9.4% increase year-on-year, reflecting growing assets under custody, which reached more than 7 trillion euros, and a dynamic issuance activity and higher settlement activity. On a like-for-like basis and at current currencies, custody, settlement, and other post-trade activity revenue was up 9.3%, compared to the second quarter of 2023. Moving on with the financial review of the quarter, starting with the EBITDA breach on slide 14. Euronext adjusted EBITDA for the quarter was up 18.8% to 256.8 million euros, mainly thanks to an increase of 43.8 million euros of revenues at constant perimeter, offset only by 3.7 million euros of additional costs. The underlying operational expenses excluding depreciation and amortization increased 2.7% compared to the second quarter of 2023, reflecting continued cost discipline. This translated into an adjusted EBITDA margin of 62.2%, up 3.5 points compared to the second quarter of 2023. Non-underlying costs for the quarter were 6.9 million euros. I would like to take this opportunity as well to confirm our 2024 guidance for underlying costs excluding DNA at 625 million euros. Moving now to net income on slide 15, adjusted net income this quarter was strongly up at 165.2 million euros, which represents an increase of 15.6 percent compared to the second quarter of 2022, and despite the sale of our stake in LCH in the third quarter of 2023. This reflects the strong EBITDA growth in this second quarter of 2024, and they continued high interest rate environments, which led to an increase in net financing income of 5.3 million euros. Depreciation and amortization were 47.9 million euros, 13.7% higher than in the second quarter of 2023 due to the completion of many migration projects and the related start of the amortization of CAPEX linked to those projects. Income tax for the second quarter of 2022 was 55.7 million euros. This translated into an effective tax rate of 27% for the quarter. Minority interest were up due to the excellent financial performance of Norpool and MTS. As a result, reported net income increased 18.2% to 141.7 million euros and adjusted EPS basic was up 19% in the second quarter of 2024 at 1.59 euro per share. I now conclude with some consideration on cash flow and leverage. In the second quarter of 2024, Euronext reported a net cash flow from operational activity of €111.5 million compared to €139 million in the second quarter of 2023, reflecting the movement in working capital related to Norfolk, and Euronext clearing CCP activities, which accounted for minus 41.1 million euros this quarter. Excluding the impact on working capital from Euronext clearing and Norpool CCP activities, net cash flow from operation activity accounted for 61% of EBITDA in the second quarter of 2024. Net debt to adjusted and reported EBITDA was at 1.8 times at the end of the quarter, impacted by the payment of the dividend and the acquisition of JRSS, as mentioned by Stefan. And with this, I would like to give back the floor to Stefan Buchner.

Thank you, Giorgio. As you have seen, Q2 2024 clearly demonstrated that the the benefits of our diversification strategy are coming through, translating into double-digit growth in revenue, double-digit growth in EBITDA, double-digit growth in EPS, boosted by non-volume-related and diversified trading and post-trade activity. Now that the integration phase is coming to an end, our efforts are focused on innovation for the benefit of the attractiveness of UNX and European capital markets. We are advancing in the exploration of strategic opportunities, which I'm looking forward to take a deep dive into at All Investors Day on the 8th of November 2024 in Paris. Thank you for your attention. We are now ready to take your questions together with Giorgio, with Anthony Attia, Global Head of Derivatives and Post-Trade, and with Nicolas Rivard, Global Head of Cash Equity and Data Services.

Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We'll take now the first question from Hubert Lam from Bank of America. Your line is open now.

Hi, good morning. Thanks for taking my questions. I've got three of them, please. Firstly, on costs, it seems like you are on track at the first half of the year to beat your cost guidance for the year. Why are you maintaining your guidance now? Should we expect a step up in the cost in the second half? Second question is on NTI. How should we think about this line going forward, as I think it should be benefiting from the clearing of migration revenues? So just wondering how we should forecast this NTI line. And lastly, just on potential for further bolt-on acquisitions, You acquired GRSS in advanced data services. Just wondering if you see any other potentially interesting opportunities that you're looking for within data services that you could possibly pursue. Thank you.

Thank you for your questions. I'll take the questions on M&A, and Giorgio will address your questions on cost and MTI. M&A is a tool. The objective is to accelerate growth and to accelerate diversification. Therefore, we are in a permanent monitoring of Bolton acquisitions that can contribute to those two objectives, more growth, more diversification of our revenues. In this context, we have a permanent monitoring dialogues, analysis of assets similar or bigger than the GRSS. Obviously, we'd always the same discipline about capital allocation, which is that we deploy Euronext capital when we are sufficiently confident that the return on capital employed after year three and five post synergies is above the work of the company. Over to you, Giorgio.

With respect to the cost, the reason why we maintain the 625 is because as we have highlighted at the end of last year, we have a 10 million envelope which is dedicated to growth projects and we will use that envelope mostly in the second part of the year. So if you combine the current trajectory of cost plus the envelope, we are around the cost guidance. With respect to NTI, I would separate the impact in Q3 this year and after Q3 this year. For the next quarter, for this quarter, you should not expect any major change in our P&L. There will be changes, but marginal. After that, you will observe a shift i.e. the net treasury income will increase of around 4-5 million euros, whereas the revenues from clearing will reduce similarly by the same amount. The reason for that is that today in our clearing revenues there is a component linked to a retrocession of NTI that we received from LCHSA. So to make a long story short, there is going to be starting from the fourth quarter this year a shift between clearing revenues and NTI. Clearly, we would make a little bit more than what is the current level of retrocession, but this is a small amount and included in the 115 million of synergies that we have already shared with the market.

Great. Thank you.

We'll take now the next question from Enrico Bolzani from J.B. Morgan. Your line is open now.

Thank you, good morning, and thanks for taking my question. So the first one, again, is on clearing. There was a lot of conversation when you said you were going to migrate clearing about the proportion of volumes that you would have been able to migrate on your clearing premises. Clearly, you printed a strong set of numbers today. Can you give us an update in terms of what proportion of the volumes that were previously being cleared on LCH you managed to retain. Is there more to come? So we could see a further increase there. So that's my first question. My second question is, again, sorry, on NTI, just one clarification there. So my understanding is that at the moment you are passing on to customer quite a big amount of the margin that is generated. partially because of pricing power. So I just wanted to understand if once you will have completed the migration of clearing, not only you expect to have greater volumes that clearly will increase the NTI, but also in a way you expect to have greater pricing powers that will allow you to retain a higher proportion of the interest rate that you generate. And then finally, just one update on the microwave technology, which clearly sounds quite exciting. Can you just give us some color in terms of how unique it is to have these plug-and-play features? And can you give us an indication of the size of the addressable market in terms of what is the potential revenue pool out there by rolling out this technology? Thank you.

Thank you. So, Nicola Riva will answer your question on that. the innovations that we have launched on the microwave technology offering. And Anthony Attia will answer your questions on the clearing migration, market share development, and NTI revenue generation prospects. And Giorgio will complement that part of the revenue generation in relation to NTI.

You go. Yes, thank you, Stéphane. Thank you for your question. So on the microwave technology, it's a technology which I've been around for a number of years now, but used mostly by certain specific participants. What we have done with this partnership with is to allow this technology to be widely accessible to brokers. So why is it unique? So it brings London closer to Bergamo by almost four milliseconds, which seems a small amount, but actually this is almost divided by two, the latency between London and Bergamo. And why is it important? Because it allows brokers to be more efficient when they interact with our market. This offering is unique for three reasons. The first one is that we democratize this. Typically, when you want to use a microwave network, you need to buy a large chunk of bandwidth. The barrier to entry or the ticket to entry is pretty high. We basically split the bandwidth into small pieces to allow brokers to get access easily to this technology. Second, we did the IT development with Mackey browser to allow it to be plug and play, which means you can use it as any connectivity to route your orders. So you don't have to do internal IT to use this complex technology. And thirdly, it's 100% fully redundant because it's completely seamless from the client, but in reality, we have a backup, a total backup with a fiber, and all orders are transmitted twice on microwave and on fiber. So it's a very unique proposition. We already, as you have seen in the press release, two clients connected, Goldman Sachs and Morgan Stanley. We have other clients interested, and the the target of clients are clearly brokers that are operating from London and are trading on Euronext.

Good morning, this is Anthony speaking. Thank you for your question on clearing. Let me clarify a few elements. Our clearinghouse today, Euronext Clearing, clears three different asset classes. One is cash equity. The second one is listed derivatives, including the commodity futures that we have migrated recently from LCHSA. And the third one is fixed income with Italian repo clearing. The competition with other CCPs for flow mainly happens on cash equity clearing. And for this, the migration was successfully performed last year in October and November, and through a very attractive value proposition on clearing fees and the risk model settlement fees and client support. we have managed to retain a very, very strong market share from Euronext cash equity trades. On the listed derivatives, Clearinghouse captures 100% of the flows coming from Euronext markets that have migrated on our TCP. And to grow this business in the Clearinghouse, we need to grow the volumes and the set of products coming from the market. As Stéphane explained earlier, we will leverage on the clearinghouse migration to boost innovation and launch new products. This is going to be detailed and announced in our strategy plan announcement in November.

With respect to NPI, I want to highlight a few elements. The first one is that at the moment, our investment policy is extremely conservative. And that was appreciated by S&P that some quarters ago when we changed the policy, reduced the negative notch in our rating. As you might remember, so pretty much 100% of the collateral is invested with ECB. Now, going forward and in the short term, our objective is to optimize collateral for clients and have our business growing. So I'm not sure that the pricing power is going to be the first ambition to grow this business. We would rather attract more volumes and indirectly increase the NTI rather than increasing the NTI through capturing higher margin from clients.

We'll take the next question from Johannes from HSBC. Your line is open now.

Good morning, everybody. Three questions from my side, please. First of all, we saw nice revenue momentum in power trading. How and will you benefit from the failed EEX NASDAQ deal or do you even see chances to get into talks with NASDAQ? Yeah, on the strong clearing revenues, if I look at the numbers, it seems to be mainly driven by LCH-related businesses and not by Euronext businesses, which is actually seasonally down. Can you elaborate more how you want to capture this momentum seen at LCH when you migrate some of the business from LCH to Euronext? And last but not least, net debt EBITDA level is nicely below 2%. If it's decreasing and you don't use the free space for M&A, when do you see room for the next share buyback? Thank you.

I'll take the last question and the first question, and Giorgio will clarify the questions on the nature of the clearing revenues. On the capital allocation policy, we are very clear. Capital allocation is an output of investment decisions. Investment decisions are a combination of organic growth ambitions that need to be funded by GAPEX and OPEX and unorganic M&A acquisitions that can contribute to the acceleration of growth and diversification. We are in the process of building a new strategic plan. This new strategic plan will be focused mainly on organic growth and will be presented to you at the beginning of November for sure, considering the very strong profile of our cash flow generation now that the company is massively diversified with a double diversification, diversification of our trading revenues and diversification away of trading revenues. we will revisit our policy in terms of returning capital to shareholders because the company is different from what it used to be and the ambitions would be different from what they used to be in terms of growth and expansion. So you should expect this particular issue where the share buyback is just one component of a much broader capital allocation ambition. You should expect this issue to be clarified very precisely at the investor day on the 8th of November. On the power trading dynamic, yes, Nopal is growing and expanding very quickly. The top line of Nopal grew by 30% quarter to quarter, and this growth is very impressive to organic development across Europe beyond the Nordic region. We are monitoring very closely the decisions, the consequences of the decisions of Deutsche Börse and NASDAQ to put an end to their discussions and to the deal they have contemplated. This has some, this creates some opportunities for Nordpool and for Euronext power businesses more broadly. And we are monitoring that and exploring how we can offer to clients solutions that are appropriate or commensurate with their needs in this sector. So definitely a decision that will have consequences for all of us. On the clearing revenues, Giorgio?

Yeah, absolutely. Let me try to clarify that in two steps. So the first one, as Anthony said, We have now, and what you see in the second quarter is the expansion of the equity clearing to pretty much all Euronext markets. But as far as derivatives are concerned, we will have access to 100% of the clearing when clients decide to trade with us because there is no open access for derivatives. So we do not anticipate any leakage. Then when it comes to the reasoning why you see the portion from LCHSA increasing, this is very simple. We have highlighted the exceptional performance of our commodities. Now, commodities are a rich product in trading, but even richer on clearing. So it is clear that with an increase of 40% of the volume traded and cleared, then the revenues in LCH, because still in the second quarter, the clearing of commodity was done at LCHSA, benefits from that. Having said that, as you know, we have already migrated the commodities, so to a certain extent, that part is already done, and the next one is going to be completed in the second quarter of in the third quarter of 2024. So to summarize, we don't anticipate any leakage, and the reason why of the overperformance of LCHSA is simply linked to the overperformance of commodity in the derivative mix.

Thank you.

We'll take now the next question from Benjamin Joy from Deutsche Bank. Your line is open now.

Yes, hi. Good morning, Benjamin Joy. Christian Lebiereke, Deutsche Bank and to question please one on clearing again and he paid 35 million clearing expenses last year. So how does that change. Christian Lebiereke, Going for one to have in sort of everything and then just the second one on this 10 million growth envelope could remind us what are your Christian Lebiereke, Criteria point return investment which areas you will boost particular and about payback periods on that. Thank you.

So Giorgio will take those two questions. Could you be more explicit on your first question to make sure that we understood?

So the 35 million clearing expenses which you're paying to LCH, so I'm wondering how it changes one day towards it. Very clear, okay.

So let me take that question. So today we have a formula which is as follows. We pay a fixed fee to LTHSA for their clearing activity plus a percentage of revenues. So it is clear then that the reason why you see clearing expense going up is because the overall revenues from clearing are going up. It's simple application of a formula with a six component and a variable component based on revenues then going forward that that number will will disappear because there is not going to be any more retrocession and the The clearing costs are going to be the euro next cost so you would have to split by nature So you will have you know salary cost and everything else, but that specific line. We will not have it anymore. So With respect to the envelope of 10 million, the answer is very simple. We are aiming to grow non-volume related activity, mostly related to services. And this is not linked, again, to additional cost of our BAU, but more to the expansion, mostly of our service activity. And this is in line with what we have announced last year. We will focus more on that in the second part of the year as the migrations are really about to be over very quickly.

Thank you.

We'll take now the next question from Gregory Simdon from BNP Paribas. Your line is open now.

Hi, good morning. Yes, three questions. The first is in cash equity clearing. It looks like the clearing revenue per trade is about half the level it was before the migration. I'm wondering if there's the potential to increase that revenue yield over time. Now you've got the volumes and market share. The second question is advanced data services revenue growth, like-for-like was 4%. That's a bit slower than where it was last year. Can we just update on what's the latest with kind of pricing and trends and trends and outlook there? And lastly, 66% of Nordpool and 63% of MTS in terms of ownership. Is there any appetite to increase

increase the ownership given the strong growth in these businesses thank you so i'll take the the last question and georgia will address the first two ones on clearing we have minority partners at mts and minority partners within nopal for historical reasons within mts this is a legacy of users, owners, contributors to the MTS business being around the table. And for Norpool, this is a legacy of former owners who are clients and partners of NoPool. So we have no plans to significantly change the presence of minority shareholders around the table because this is part of the construct of the market architectures for those two asset classes. here and there we can increase our stake when there is a desire from certain minority investors to leave the equity of the company as we have done in the past for some minor stakeholders in MTS. But this is not a trend that will fundamentally evolve and we have no plans and there is no desire of the minority shoulders to leave the company. So it's a part of the success of MTS and a part of the success of Notebook is embedded in these strong partnerships with those minority shoulders.

Yeah, then when it comes to your first question, you're absolutely right. The revenue capture is significantly reduced, but it is in line with our business case. So what has happened is that we brought to Italian clients a significantly more efficient level of ease, more in line with European standards, and that was the plan since the beginning. So pretty much before migration, you were seeing the way Euronext was operating on a purely Italian base. Now on an international setup, this is the overall level of fees, which is again very in line with the European market trend. This is in line with the business case, and we are happy with the current level. So this addresses your first question. With respect to your second question, here we see a trend of different components. So what you have is a price increase, as you are aware, which happens once per year. And then the second variable is clearly the number of clients and the number of terminals. And here what we see It's a bit of a diverging trend where we see more interest from retail terminals, and we start to see a mild erosion of the professional terminal. This explains why, to a certain extent, even if our price increases, we're in the mid-single-digit type of increase, then on a like-for-like basis, we are slightly more than 4%.

Thank you. We'll take now the next question from Bruce Halmington from Morgan Stanley. Your line is open now.

Thanks, and thanks for the presentation. Sorry, another one on the clearing business and costs for the four years. So to understand, I get that if we sort of annualize the first half and add 10 million, we get 6 to 5 million of costs, which makes sense. But shouldn't you get some benefit from those LCH, the cost you're paying to LCH dropping away? Or I know you incur some cost to provide clearing, but wouldn't that still be a net gain in terms of the cost base in the second half? And then in terms of the treasury income linked to derivatives clearing migration, I think the collateral pool's around 10 billion. And shouldn't that drive an increase in NTIU, saying that that is completely offset by what you're currently getting from LCH that you will no longer receive? So just to clarify, that would be helpful. And then in terms of the MTS business, obviously very, very strong. Could you maybe help us understand a little bit about any sort of, you know, the impacts of BTP issuance in Italy and how that may fade versus the longer-term opportunity from internationalization and your ambitions there over the next two, three years. That would be very helpful. Thank you.

So I will cover briefly your last question, and Giorgio will answer your question on clearing costs and treasury income. MTS is going extremely well, plus 40% year-on-year, because of the volatility around the Italian currency. sovereign bond instruments and clearly the Italian related trading is still the most significant part of the MTS business. However, there are two developments that are starting to yield since MTS became part of Euronext. We have a cross-marketing program to make MTS closer to the debt management offices of all the countries where Euronext operates and where the focus on the primary dealers approach was more present than the appetite for electronic transplant platform. And some countries where we operate were close to MTS, others were not as close as they are today. In particular, one of the largest issuers of GOVI in Europe is France, and the quality of the dialogue between MTS and Agence France-Préserve has improved significantly, and we are confident that in the context of the development of the French sovereign debt, we will be able to get more deployment of French assets on the MTS platform. The other development, which is more tangible because it's real now, is the fact that MTS, thanks to the joint effort of the teams at MTS and at Euronext, was appointed as the ECN platform for the secondary trading of next generation EU bonds, approximately 700 to 800 billion euro of European Commission issuance. And this is real. Volumes are growing, and we have just started to charge clients at the beginning of July. So you will see in Q3 and Q4 the beginning of the revenue contributions of European sovereign bonds being traded on MTS platform. Volumes are there, and they are growing significantly, but revenues are not yet there. You will see them in the future. I leave the floor to Giorgio for clearing costs and treasury income.

On the clearing costs, let me try to clarify as much as I can. You are right, what is going to happen is that at some point the clearing costs will As mentioned in our P&L in the moment, will to a certain extent disappear once the derivative clearing arrangement is going to be terminated. However, on the other side, what is going to happen is that a part of the costs which today are accounted as non-underlying, linked to what we call the double run, i.e. the cost of running two platforms in parallel, then those costs will go back to underlying costs. So you will have a positive impact coming from the termination of the DCA contract and a negative impact coming from a shift from non-underlying to underlying costs. Clearly, the net result is going to be positive and part of the synergies because reported earnings will go up and non-underlying costs will progressively trend to a very small number and potentially to zero. So this is what is going to happen. And taking into consideration our projection of costs for the next two quarters, again, we confirmed the 625% Then when it comes to the NTI, as I said, in the LCHSA part of fees that you see highlighted in our presentation, there is a component link to the treasury income retrocession. So there is going to be a shift. The shift, as I said, then, you know, when you're dealing with numbers which are relatively small, four or five million per quarter, this shift is not going to be completely neutral, i.e., we are aiming to earn an additional spread from that, but it's not going to be that material. So, again, I confirmed a shift in between four or five million from LCH cost to NTI, potentially with some additional margin on our side, but not material increase with respect to the current levels.

Got it. Very helpful. Thank you.

We'll take now the next question from Herb Jouet from CIC. Your line is open now.

Yes, good morning. Thank you. Three questions as well on my side. First one, with the T plus one settlement coming, do you think it will give you an opportunity to increase your tariffs and pricing power with your clients? Is there some leverage there you think you can use in settlement and even potentially clearing? That's the first question. Second question, Regarding competition, within the value chain where you currently are, where do you think which part could be more challenged in your view in the, let's say, two or three coming years? And what do you think about, you know, in the press there were some Some articles about potential activities from CBOE, for example, in listing, for example, or indices provision. And finally, in terms of where do you think you will expand further on? I mean, can you confirm it would be more in non-volume related areas?

business you are likely to expand or is it going to be more you know geographically driven or more within the value chain thank you so thank you for your question I addressed the question competition and the questions on the location focus and Antonia chair will address your question and keep us one settlement implications on the competition side and as you can imagine The more diversified the business of Euronext is, and the business mix of Euronext is now extremely diversified, the more diverse and multiple the competition question is. Now, to take just one of the examples you have mentioned, on the cash equity trading business, we compete against CBOE, who is an aggressive player in Europe. But the hard fact is that for the moment, our market share is increasing in cash equity trading. And on this thing, the leadership of Euronext is confirmed quarter after quarter. And some people may issue press releases and announce intents and ambitions. But when you look at hard facts, the market share of Euronext on cash equity trading is increasing and the market share of your next in uh in listing is increasing so uh that's that's for the competition as you you have mentioned clearly there is a similar dynamic for power trading where the market share of normal is increasing across europe uh there is a a similar uh dynamic across most of all of our competitors most of all of our segments when it comes to diversification The focus of our non-organic growth, of our acquisition ambitions, is always the same. On the one hand, we want to capture any opportunity, if and when they become available, to deploy massive synergies by plugging on our single liquidity pool, single audiobook, single technology platform, other exchanges to add volumes to our single fixed cost base. and if we have an opportunity to do this type of consolidation in europe in the core exchange business we will do it for the moment there is no actionable situation and there is no winning seller of a material exchange in europe but we monitor those situations because they change from time to time and sometimes very quickly as we have observed in 2020 around the borsa italiana situation which was not for sale in january and february and and for which there was a and sales process and auction process in June and July of the same year. So that's for diversification. So that's for acquisition in the exchange world. That will be mainly focused on Europe. When it comes to non-exchange business, where the objective is not synergies, but diversification and growth acceleration, we are totally agnostic in terms of geography And we look every week, every month, at assets with decision-making centers in the U.S., decision-making centers in London. So we will continue to monitor assets in Forex, in the advanced data services, in post-trade, in all sorts of sectors. of areas where we believe that we can be the legitimate owner and those assets can accelerate our growth or accelerate the diversification of our revenues, whether they are paid in Europe or not. On T plus one,

As you know, it's a developing situation in Europe. We are working very closely with the market, with our clients and the authorities and the associations to set up an implementation planning that makes sense and to make sure that everyone is ready. I think it's a little bit too early. to answer your question about whether or not we see value in pricing power there. And so we need to see how our clients look at our services. So probably more to come next year on this one.

Okay. Thank you. Thank you for your answers.

We currently have no further questions, so I will hand you back to Stefan to conclude today's conference. Thank you.

Thank you very much for your time. All the investor relations teams at Euronext, Aurélie, Clément, Judith, are available to follow up on any questions you may have on these Q2 results. On that note, I wish you a very good day.

Thank you for joining today's call. You may now disconnect.