Hong Kong Exch & Clearing

Good afternoon, ladies and gentlemen. Welcome to HKEX 2025 Annual Results Analyst Presentation. Today, we are very pleased to have our Chief Executive Officer, Ms. Bonnie Y. Chen, our COO, Ms. Vanessa Lau, our Group CFO, Mr. Herbert Hui, our Group CIO, Mr. Richard Leung, and our Head of Market, Mr. Gregory Yu. Bonnie and Herbert will first give a presentation about our business highlights, strategic progress, and financial results. Then we're very happy to take some of your questions. Without further ado, over to you, Bonnie.

Good afternoon, everyone. Thank you for joining us today. I hope everyone had an enjoyable holiday season. I'm pleased to be presenting HKEX's annual results for 2025, in which I'm joined by a few members of our senior management team. Now, I will start things off with a quick overview of the highlights. Then, our Group Chief Financial Officer, Herbert Hoy, will share more details on our financial performance. After that, I will return to talk about what is on the horizon from a strategic perspective. So, let's begin. HKX delivered record results in 2025, reporting the Group's best-ever revenue and other income and best-ever profits for the second consecutive year. Herbert will go into these numbers in more details in a few moments. The very decisive return of issuers and investors last year rebuked confidence in Hong Kong's markets and unlocked liquidity. This enabled us to accelerate our strategic initiatives. For listing, we introduced new IPO price discovery rules that enable a more flexible, transparent, and fit-for-purpose pricing and allocation framework. and we continued to increase support for specialist technology issuers. In the securities market, we implemented the first phase of minimum spreads reduction, which very quickly began to demonstrate market efficiency enhancements. In the derivatives market, we launched the Hang Seng Biotech Index Futures, complementing our existing suite of biotech related offerings and flagship equity index derivatives. In 2025, we broke new ground in the development of Hong Kong's fixed income and currency ecosystem. Our agreement to acquire a 20% stake in CMU Omniclare will strengthen Hong Kong's position as the global hub for bond fundraising, risk management, and offshore RMB business. This lays the foundation for a vibrant FIC marketplace that mirrors the depth and liquidity of the equities markets. In commodities, the LME approval of warehouses in Hong Kong, now expanding to a total of 15, is an important milestone signaling the city's potential to becoming a global commodities trading hub. And we expanded our index business with the launch of the HKX Tech 100 Index, our first equity index focused exclusively on Hong Kong's technology sector. In addition to these initiatives, we also invested in establishing our permanent headquarters here in Exchange Square, highlighting our confidence in and commitment to Hong Kong's continued development as an international financial center. These are just some of the highlights of the strategic initiatives we implemented last year. But you can get a sense that in addition to the momentum of our markets, 2025 was also a year of progress driven by reforms and strategic investments. Now, I will return in a few moments to talk about how we are setting our journey ahead. First, let me hand over to Herbert to go over the HKEX Group Financial Review. Over to you, Herbert.

Thank you, Bonnie. Good afternoon and happy new year. I'm pleased to be here to share with you our 2025 full-year financial results. HKEX delivered a record financial performance in 2025 with revenue and profit both posting record highs for the second consecutive year. Driven by increasing international investors seeking diversification and opportunities in China-related assets, together with the greater participation from mainland China investors, trading volumes in Hong Kong cash and derivatives markets reached record highs. The group's commodities market also performed strongly, with LME Chargeable ADV reaching a new record high, surpassing the previous record set more than a decade ago. Revenue and other income of $29.2 billion was 30% higher than 2024. Profit after tax was $17.8 billion and EPS was $14.05 billion. both up 36% compared with the year before. The board has declared a second interim dividend of $6.52 per share, representing 90% of the group's profit attributable to shareholders, excluding the results of HKEX Foundation. Together with the first interim dividend of $6 per share, the 2025 full-year dividend is $12.52, up 35% against 2024. Turning to the detailed financials of the year, trading volumes reached record highs across all markets in 2025. Headline ADT of $249.8 billion was 90% higher than the year before, and both northbound and southbound stock connects saw all-time highs. The derivatives and commodities market also performed strongly with trading volumes increasing by 7% and 8% respectively, compared with 2024. Revenue and other income was 30% higher than 2024, driven by higher trading and clearing fees from increased volumes, higher depository fees and listing fees. Apex was up by 5%, mainly due to the non-recurring FCA fine of $90 million paid in 2025 and recovery of legal fees of $16 million in 2024, both relating to the LME nickel incident. This cost growth is below our historic cost growth trendline. The group's effective tax rate increased to 15.7% in 2025 as compared to 11.4% in 2024 due to the provision of top-up tax under BEPS 2.0 taking effect January last year. Turning to the next page where we look at the fourth quarter 2025 financials against the same period last year. Revenue and profit were both up 15%, driven by increased trading and clearing fees from higher cash market and commodities market volumes. An increase in depository fees and listing fees, partially offset by lower net investment income from margin funds, due to higher rebates payable to participants following the implementation of revised margin rebate arrangement in the fourth quarter of last year. Moving on to the 2025 results against the historical trend line, driven by the positive market momentum since Q4 2024, 2025 performance is above the historical trend line. Throughout the years, HKEX continues to maintain an attractive EBITDA margin, reflecting the successful diversification of our business in recent years and our cost discipline. As we have been building and enhancing our product offerings, market microstructure and technology platform over the last few years, We were well positioned to capture the opportunities arising from this positive momentum. Next, we take a look at our investment income. Total net investment income of internally managed funds in 2025 was 8% higher than 2024, primarily driven by the increase in margin fund size as a result of higher margin requirements and higher open positions. for stock options and the non-recurring fair value gains on our unlisted equity investment, partly offset by lower investment returns and higher rebates to participants. External Portfolio was fully redeemed in May 25 to fund the acquisition of HKX headquarters here, with the proceeds returning to us after the applicable lock-up periods. As at 31st December 25, we have already recovered over 80% of the funds. Now let's look at our operating expenses. OPEX was up 5% in 25 compared with the year before due to a $90 million FCA fine and a recovery of LME legal fees, $60 million in 2024. Excluding these items and the charitable donations, UpEx was up 2% due to high staff costs from payroll adjustments as well as higher IT costs from inflationary increases. In summary, the 2025 financial results were characterized by record trading volumes, disciplined cost management, and successful execution of our strategy. Looking ahead to 2026, we started the year strongly, both in terms of turnover and IPO pipeline. However, net investment income is expected to be affected by our revised margin collateral arrangements that's going to have the full year impact. Hong Kong dollar rate movement and redemptions from our external portfolio. Our strong financial performance and solid financial position have positioned us well to invest in the future and we will continue to enhance and expand our multi-asset ecosystem to support the long-term development of Hong Kong's capital markets. With that, I will now hand back to Bonnie for our business update and outlook.

Thank you, Herbert. Now, when we look at the broader landscape ahead of us, we expect to maintain and even accelerate the pace of strategic progress of the last year. In 2025, we held the top global position for IPO fundraising, and we are starting 2026 with a robust pipeline of quality companies from a diversity of high growth sectors, from AI, robotics, and new energy to healthcare and consumer. years of continuous enhancements to our listing framework put us in an unrivaled position to capture emerging trends, such as the pace of development and innovation sectors, especially in the Chinese mainland. At the same time, follow-on issuance in 2025 totaled more than HK$500 billion, including two of the world's top five ECM transactions, demonstrating the deep liquidity here. And in 2025, the secondary market remained very vibrant, fueled by renewed global interest in Hong Kong equities, rising demand for short-dated options and ongoing microstructure enhancements. Headline ADT saw a 90% year-on-year increase. The ADV of the derivatives market was up 7%, while the ADT of the exchange-traded products market nearly doubled from a year earlier. So, stepping back a little bit, what is behind this momentum, which we have been seeing since late 2024 and continue to see into 2026? Perhaps let's zoom out a bit and quickly look at the macro landscape. And there, we see two major forces at play. The first is a broad trend of global capital diversification. We are living in a time of persistent uncertainty. And global investors are starting to react to this in a very predictable way. That is, they have begun seeking out diversified growth opportunities. This is pushing capital into Asia. Then there is a second force, pooling capital into our markets. And that is being driven by the evolution of China's development model. The country's great focus on technology innovation was most dramatically demonstrated by the deep-seek moment earlier in 2025. Following that, at HKEX, we welcomed a wave of companies that are pushing the frontiers of global innovation. We're also seeing the emergence of Chinese mainland multinational companies that are expanding internationally. Almost half of the companies we welcome to our markets in 2025 were mainland businesses with over 50% revenue coming from international business. And these and other companies attracted abroad and diverse representation of cornerstone investors, including from North America, Europe, the Middle East, and other Asian markets. Okay. So, with these structural changes increasing the effectiveness of our market, what are we going to do next? Well, in the last decade, since the launch of Stock Connect, our efforts were focused on developing capital market connectivity to the Chinese mainland. We developed a highly comprehensive product ecosystem around our cash equities market. This was supported by our equity derivatives franchise. And that attracted global liquidity, diversity and vibrancy to our markets. Going forward, we will continue to reinforce this unique connectivity to the Chinese mainland. This is our greatest advantage as a global exchange. But the next decade will also be about strengthening the connectivity between the markets of the Chinese mainland and other Asian economies, connecting the region's capital to its biggest opportunities. and then connecting global investors to an even bigger regional pool of liquidity and growth potential. More specifically, with a growing appetite for China assets, we see an opportunity to expand what we offer. Now, what we've heard from investors is that they want more tools to tap into Asia and China. And as I touched on a moment ago in the last decade, We have developed a comprehensive product ecosystem built around our cash equities, and we have continuously developed this ecosystem in step with the evolving needs of global investors. But now the investors are looking beyond equities, and so are we. Of course, we will continue to play to our strengths as the cash market of choice in the region. Now, in 2025, we further increase our connectivity with markets in the Middle East and Southeast Asia, adding to our growing network of partnership with stock exchanges, as well as welcoming IPO listings from both regions and establishing our new office in the Middle East. Looking ahead, we will be leveraging this connectivity to creating a regional liquidity pool with a powerful global gravitational pool. We will also be exploring products that are tailored for clients in Asia and especially the growing retail class of investors here. In the last year, especially in the southbound channel of Stock Connect, we've seen very vibrant activity from retail investors in this region, and yet there is still vast growth potential there. ETPs are another area of the cash market with strong potential. We introduced 48 new ETP listings in 2025, including several market-first innovations. We will continue to expand and innovate our ETP product suite, cementing Hong Kong's position as Asia's leading ETP ecosystem. But looking beyond cash equities, we will also be making long-term investments in other asset classes, as we enhance a multi-asset ecosystem. This will provide a diverse range of global investors with all the tools they need to invest, trade and manage risk in Asia. We have already broken new ground in the fixed income space with our investment in CMU Omniclear. Through our partnership with HKMA, we will accelerate the development of Hong Kong's post-trade securities infrastructure into a major central securities depository in the region. Specifically, this will include the continued commercialization of CMU and the pursuit of business development initiatives in areas such as the expansion of its investor CSD services, asset classes coverage, and Collateral Management Services. Commodities. That is another asset class with great potential. I have already mentioned the approval of LME warehouses in Hong Kong, which is an important milestone in the physical market connectivity. As the complexity of the macro environment continues to drive the trend of capital diversification, there will also be demand for products, such as for gold futures, for example, that gives investors broader accessibility to commodities. We will also continue to enhance the tools investors need to manage risk in the region, and we will be enhancing these tools across asset classes, most notably in our derivatives ecosystem. In derivatives, we will continue to build on our success in product expansion. such as by growing our portfolio of monthly and weekly single stock options, and by developing derivatives that reflect the innovative companies that continue to list on our markets. And running through all our asset classes will be our investment in adjacent capabilities, including the data and index business. A highlight of this in 2025 was the launch of the HKX Tech 100 Index, Our first equity index focused exclusively on Hong Kong's technology sector. These investments and adjacent capabilities will support our core business by driving capital flows and liquidity. But it's not just about products. We also must ensure that our markets are as accessible as possible if we want to fully capture the opportunity of global capital diversification. Over the years, Our investment in technology and market reform have helped us generate the liquidity that has been attracting high quality issuers and investors to our markets. Earlier, I highlighted some of the strategic market structure enhancement initiatives we introduced in 2025. We will continue to future-proof our technology and operations in the years ahead. to meet the greater demand for China assets and to optimize the conditions for cooperation with our market infrastructure partners in the region. From leading market-wide discussion on finding a suitable settlement cycle for Hong Kong to removing manual and paper-based processes and from delivering on the modernization of our derivatives platform to adopting emerging technologies such as AI in our operations. So wrapping up. 2025 was a year of strong momentum, progress and transformation. We had record results. We led the world in IPO fundraising and we had record volumes in our markets. It was also a year in which we have made strong progress in delivering strategic initiatives. Looking at the macro landscape, while we see a lot of uncertainty, we also see great opportunities that we are well positioned to capture. As we move forward into 2026, we will be focusing on enhancing our multi-asset ecosystem, doubling down on the strength of our equities markets while developing other asset classes. And we will be looking at ways to make it as frictionless as possible to invest, trade, and manage risk in our markets. We are confident that our efforts and investments in recent years will ensure our business remains competitive in this global landscape and will support Hong Kong in its role as a global IFC facilitating capital flows in Asia and in China and in Asia more broadly and between this region and the rest of the world. Thank you very much for listening. My team and I are now very happy to take your questions.

Thank you.

Thank you, Bonnie and Herbert, for your sharing. We'll now take some of your questions. In fact, there are some questions awaiting, Operator, could you please give the audience the instruction how to raise questions either via webcast or audio? Thank you.

Thank you. If you wish to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again.

We will take the first question.

The question comes from Richard Zhu from Morgan Stanley. Please go ahead. Your line is open.

Thank you. Congratulations on the very strong results. I got two questions. One is, Bonnie, you mentioned there's Also, potential expansion of connectivities with the rest of the regions, like Malaysia and others. Could you elaborate a little bit on that? You know, what are the initiatives and how we can connect more closely with the rest of the regions? Certainly, we're seeing capital inflows to that region in general. Secondly is cost. You know, there are a lot of initiatives. I have seen very good cost discipline in the past few years. But with all of these increasing initiatives, does it mean the cost will need to grow with the revenue, in line with the revenue, a little bit more? Or, you know, there's more investments in people, technology, including like AI, right? I mean, there's a lot of initiatives there. I guess two questions from me. Thank you.

Thank you. Thank you, Richard. So first of all, your first question, the rest of the region. So first of all, why are we aspiring to do this? is really because we see an increase in demand. If you think, well, just to throw some figures, January this year, you know, I've been reading some statistics. Broadly in Asia Pacific, if you look at the equities markets, about 75% of the trading volume actually can be attributable to the mainland Chinese and the Hong Kong markets. 75% of the total APEC liquidity, if you may. That's a huge figure. And that gives us a belief that there is actually a lot of appetite from the rest of the region to connect with the opportunities in both the Hong Kong market as well as the Chinese mainland market. And of course, you know that we have built the infrastructure already, which is our franchise Stock Connect program, and it's not just stock. It covers more asset classes. So we really want to take advantage of this momentum and through, I think, a few things. On the issuer side, you're aware that we are already doing or we have already been approached with more opportunities to do dual listings and join hands with other exchanges to support fundraising needs of Asian-based issuers. Last year, for example, we saw companies from Thailand, from Indonesia, and even farther away from Kazakhstan doing, in the case of the Kazakhstan company, doing a dual listing between us and Astana. That's on the issuer side. On the investor side, there is a very strong desire to build more connectivity, and I'll ask Greg to elaborate on that. That could be through jointly exploring cross-listing, et cetera, but I'll let him supplement on that. Now, in terms of cost discipline, I think we have to responsibly Follow good cost discipline. I mean, that is just, I think, a good habit of doing business. But that doesn't mean we do not invest for the future. As I mentioned in my presentation, we see very good momentum and the macro backdrop is very positive. There is a strong desire to make use of our market and to really diversify And that is not confined to the equities market, which historically is our core business. And therefore, since we believe that this trend and this momentum will continue, I think it is important for us to make the necessary and thoughtful investment into other areas, be it fixed income, be it currency, be it commodities. Because Our belief is that this desire from global investors to continue to diversify is not going to abate in any time soon, right? So while we will continue to maintain good cost discipline, we will at the same time be very thoughtful about where and how we make investments where we think is going to yield us the best opportunity set. But let me pass over to Greg to talk about the regional aspirations we have.

Thanks Bonnie. And so I think first of all, right, the importance of bonding it together with other, you know, regional exchanges The main reason is you see that global investors are diversifying, right? And when they diversify, when they come to Asia, they're looking for various different assets. And if you want to keep their capital and investments in Asia, you need more assets and a wider base. So by bonding it together with other Regional Exchanges and Products and so forth. It would basically help us to grow a bigger ecosystem. So a few things I mean already mentioned, for example, like dual listing and so forth. It will help to create further liquidity into our equities markets as well as our peer markets equity liquidity. But on top of that, what we will build and what we are linking up on are derivatives products. So what we will look into are offering, you know, on both sides, you know, products that are referencing other exchanges exposures or others would offer, you know, our exposures in DR form and so forth. On top of that, you know, obviously ETF is an important instrument these days for investors. And one thing that is key for us is facilitating two-way flow. I mean, historically, we've been facilitating quite a lot of global investors going into Chinese mainland through the Northbound Connect. And we see a strong growth in the Southbound Connect side as well. And with the ETF Connect program now expanding into allowing what we call 60-40 allocation, 60% allocation in Hong Kong stocks, or Connect stocks, while 40% could be foreign equity exposures, that gives us more opportunity to build products around that and allowing Chinese mainland investors to enjoy offshore exposures. So all of these type of activities and product offering effectively allow us to build stronger liquidity around the region and keep the liquidity in Asia.

Thank you Bonnie and Greg. Operator, next question please.

Thank you. Please stand by. The question comes from Gary Lam from HSBC. Please go ahead. Your line is open.

Thank you, Bonnie, Herbert, Greg, and Ricky. Appreciate the presentation, particularly on the strategy side. The first question is related to the multi asset diversification, particularly on CMU Omniclear. Now, if we factor in like a three-year forecast in our model, to what extent should we start to think about the revenue contribution from here? How do you think about it in the way that you deploy sort of cause and investment should make reference to like globally leading central securities depository which are generating like over a billion euro of profit every year or it basically should you know take longer. Noting of course the participation right now is about 20% sticks. The second question perhaps is more on the global exchange competitive landscape noting that not only Hong Kong exchange global exchange leading ones indeed have underperformed their domestic market. I think part of the sort of market worry has been both on the threat coming from digital assets or maybe to data market related data fees So in whole exchange sort of context, where do you think are the sort of like key area of defense reason as to why our business model can hardly be disrupted from those developments? Thank you.

Thank you. Let me maybe start with the first question and I will let Vanessa elaborate on it. The investment into CMU OmniClear, I think there's just one step in the overall strategic, but a very important strategic step in our overall FIC strategy. Now, the initial investment is not a tremendous sum of money. For the 20% stake, we paid HK$455 million. But The potential, which Vanessa will explain, it's quite a big one. And also, you know, will tie in with other things, other ideas that we have in the FIC space. So while I think your question is quite specific in terms of asking for sort of, you know, when we're going to see return, et cetera, I would perhaps say that this will be a longer-term investment, but potentially going to yield a rather attractive return. Now, before I hand over to Vanessa, maybe to your second question about generally how exchanges around the world have been performing, and I guess you asked specifically threats from other Newer Emerging Exchanges such as those focusing on digital or virtual assets. I feel that first of all, we are in a more advantageous position compared to some of our peers. Now, if you think about simply on the primary market side, we were number one fundraising platform last year. We have a very solid pipeline of over 400 IPOs. I mentioned earlier that the desire from investors around the world to increase the exposure to China asset is increasing, and I'm not seeing it abating in any short term. And therefore, given that we have the Connect franchise, which is our unique selling point, I think that does set us apart from China. the other more traditional equities exchanges in the world. And that's something that we're very grateful about. Now, certainly there are other asset classes, you know, such as what you suggested, virtual assets or digital assets. That's a totally different playground altogether. I think for now we want to focus on what we believe we are most or we are the best position to do, starting with equities, derivatives into fixed income commodities, which of course we already have had a very important asset in the form of LME, and really focus on developing those instead of trying to sort of cover all grounds. I think that's how we will probably sort of, you know, compete the best and we will stick to that as the guiding principle in terms of setting out our future strategic imperatives. But perhaps on that note, let me pass over to Vanessa to give you a little bit more about our thinking around, first of all, the CMU investment, but more broadly where we are headed on our FICC journey.

Thank you, Bonnie. Thanks, Gary, for your question. If I answer very specifically on CMU, it's a 20% equity accounting treatment. And in the scheme of things, the contribution to our group results will be financially not so material, given the size of it in the coming years. But the way we should be thinking about it, both strategically and financially over the coming years, It's in terms of this whole FIC ecosystem that Bonnie has been describing. So, Gary, you know our business pretty well. So the way to look at it is the pieces that we already have, the strategic pieces that we invested in in the last numbers of years, like Bond Connect, like Swap Connect, like OTC Clear, and products such as interest rate swaps, and cross-currency swaps, and I could go on. Each of these is an important part of the puzzle that we're trying to pull together into an FIC ecosystem. In the past, admittedly, it was more like having a few products to try out and then having a few partnerships. But now the way we look at it, in the coming years is the whole FIC ecosystem. And what I mean by that is starting from bond issuance and bond marketing to trading to the repo market and having a yield curve, and then to clearing and settlement, depository and custodian services. Now, comparing what I just said, this ecosystem to what we currently have, we have some good pieces. And the latest addition to the family is CFU. So our 20% strategic stake is indeed very important because without that, then we wouldn't have our piece of the puzzle in terms of depository and custodian services, which is critical to Hong Kong having a comprehensive and competitive ecosystem. And without CMU, we would never be able to develop in Hong Kong the ICSD or the CSD that we currently are working on. And in terms of CMU itself, it's also gone through its own growth journey, and it is not insignificant. So right now, assets under custody has already reached HK$5 trillion, clearly boosted by the huge acceleration in CGB issuances, China government bonds, but there are also corporate bonds that are starting also to be deposited into CMU. So this partnership with the HKMA and supported by our regulator, the FSC, totally aligned with the roadmap that the two regulators published for FIC in September last year. You can just see how, in a way, the stars are aligning. All parties are working together towards building this ecosystem, not just for HKEX's strategy, but more importantly, for Hong Kong's Thank you Bonnie and Vanessa for the very comprehensive response.

Next question is coming from Harsh Modi from JP Morgan. I'll just read it here. There are actually three questions from Harsh from quite different perspective. Question number one, are you looking at the prediction market launch or investment? If so, what would be the regulatory and operational considerations around the market innovation? Question number two, how do you rate the probability of IPO pipeline converting in course of this year? Question number three, could you please just share the timeline of the southbound RMB counter and any key issues involved?

Thank you for the question, Harsh.

I'll answer them in turn. The first question is prediction market instruments, I believe. Short answer to your question is no, we're not. Looking to offer that. As I mentioned earlier, we prefer to focus on the building a multi-asset ecosystem. And we've already broadly mentioned that we want to replicate the success of our equities business into other areas such as fixed income, currency and commodities. So for now, that will be the focus. Second question, IPO conversion rate. I guess that's not an easy question to answer. I don't have the crystal ball. But I do want to say that, I mean, first of all, the pipeline looks very, very healthy. And when I say healthy, it's not just, you know, how many we have. It is really the diversity and the quality that I see. Now, since the beginning of the year, we've already completed 24 IPOs, raising over 10 billion US dollars. And you compare that with last year's figure, which was about 37.5 billion US dollars raised. We have essentially covered more than 25% in six weeks, actually. But the more exciting thing is that the demand is huge. I mean, if you look at the ones which we have already completed, all of them have performed quite well in the aftermarket. I think maybe except for one which has dropped slightly, everyone is staying above IPO price. And therefore, if that demand continues to stay strong, I really think that we will end up with another very solid year in terms of IPOs. Sorry, the third question is self-bound. Okay, so if you have paid attention to the budget speech that the FS, the Financial Secretary, has put out yesterday, there is a mention of South Bar RMB counter, and I think the wording he used was that he will be looking to accelerate the implementation. So for now, that's what I can share, but suffice to say that that's still being progressed, and as soon as we have news to share, we will do it ASAP.

Thank you, Bonnie. Next question, please.

Thank you. Please stand by. And the question comes from the line of Thomas Wang from Goldman Sachs. Please go ahead. Your line is open.

Thank you. Congrats on the results. A couple questions from me. I think just one is just kind of following up a previous question now on cost and expense. is quite a good number, only 2% growth once you take out equal fees, given you're implementing all these initiatives. Just looking for how you're thinking about that expense case, looking maybe for the next three to five years, are we looking at maybe a single digit number or something that could be even higher than that? Oh, and secondly, on the initiative that talked about yesterday at the budget meeting. I think one thing mentioned is the expedited launch of Chinese carbon bond futures in Hong Kong. Just wondering how important is this in your sort of setup, and do you have any visibility on that? Thank you.

Thank you for your question, Thomas. Perhaps on your first question about I'll let Herbert answer, but your second question, sorry, the line wasn't very clear, but I heard that you were referring to the budget speech, and there was also a mention of the T-Bone futures, which is in the works, and I think that was mentioned together, actually, with the South Bank RMB Council. Suffice to say that, obviously, this is something We understand the market has a strong demand for. We have been in close discussion with our Chinese mainland partners and work is very advanced. So as soon as we are in the position to announce further, we will let you know. But Herbert, would you like to answer the question on cost?

Okay. So on OPEX growth. The headline number is 5% growth. If you were to adjust for the NICCO-related costs in terms of FCA payments as well as the recovery of legal fees, it went down to 2%, as you just quoted. Now, So when I step back and look at the numbers, and I was thinking, so if we were really to do an apple to apple comparison, and there are certain non-recurrent items also in the OPEX, if I were to take them out, Such as, you know, the early investing or early vesting of the LTIs of staff. Moving those non-recurrent items aside or one-off items in nature aside, we are still looking at about 5% growth for 2025. So back to the headline number. I think this is a good number reflecting good cost discipline in terms of how we control staff costs. I think we have a very stringent process in controlling headcounts and and it will require top executives to sign off on all the headcount increases. So for 2025, we are looking at the headcount number that's pretty much flattish in numbers. So that's the OPEX situation we're looking at. Historically, I think for the past 10 years, the CAGR in OPEX is something around 7%. I think... Last year, we're doing well at 5%. Going forward, I think you heard a lot of initiatives that Bonnie mentioned and Greg and Vanessa mentioned. So we will have to invest into the future. So that's something that we also have to look after, not just on the side of pure cost discipline.

Thank you, Bonnie and Herbert. Operator, next question on the line, please.

Thank you. Your next question comes from the line of Betty Lee from Jefferies. Please go ahead your line is open.

Thank you so much, management, for the opportunity for the question and on the strong set of results. So my question regarding the IPO pipeline, I understand you also referring to the budget plan on 2026 to 2027. I understand there might be a revision of the IPO listing rules coming up, so I just wonder if there's anybody for us to share.

Yes, thank you, Betsy. The question is what to expect in terms of the work that we're doing to enhance our IPO framework. Actually, the way that we are thinking about it, multifold, but you can probably put that under the umbrella of increasing competitiveness. That's what we have. Exch & Clearing Exch & Clearing Exch & Clearing as a result of some of the reforms that we've done. For example, the introduction of Chapter 18A on biotechnology companies listing, 18C on specialist technology listings. That has brought a lot of very positive results to both the number of IPOs and fundraising on our platform, as well as, you know, These successful IPOs will bring additional liquidity into the secondary markets. More importantly, we are doing all these new chapters in response to demand from issuers and investors. They are looking for more bespoke chapters, and therefore I would share with you that we will continue the journey of making sure that our listing regime stays fit for purpose. Another category which was, you know, sort of previewed by the FS yesterday was potentially revisiting the WVL regime, weakened voting rights, which was a chapter we introduced to the market back in 2018. Now, that was eight years ago, and we are mindful that The market has moved on and maybe there could be some room for revisiting our rules and making enhancements. So those are just a couple of examples of areas that we are looking at. The way that my listing team consider reforms is really to closely engage with the market, listen to the feedback and see where we may be able to Thank you very much, Bonnie. I think we have time for one last question on the line. Operator, please.

Thank you.

Your question comes from the line of Michael Zhang from Citi. Please go ahead. Your line is open. Your line is open.

Please ask your question.

Hi, management. Can you hear me? Hello?

Yes, we can hear you.

Okay. Thanks for taking my question. So my question is on the follow-up questions regarding the multi-asset. Business. So, you're saying that you are investing to build a, you know, long-term growth around this fixed-income business. And I think in the past, we've already seen, you know, launching some initiatives and also seeing very healthy growth of these initiatives. But monetization has been a question for me, and we haven't really seen a lot of revenue contribution So could you, could management share your view on the monetization opportunities of the fixed income business compared with your, you know, equity business? And how do you see the overall revenue opportunities in the long term? And do you see, do you have any vision, let's say, you know, five, ten years later, how much of your total revenue could be contributed by this fixed income business? And you also have just made investments into OmniClear. So would you consider any additional investments or M&As to accelerate these initiatives? Thank you.

Thank you.

Yes, indeed. I think both Vanessa and Greg explained that in the past, we might have tried on a less sort of structured manner to dabble into certain products. But this time around is very, very different. I think we are very mindful of a shift in the macro picture. The timing is very interesting in the sense that we are seeing, and I think I've mentioned it a few times during my presentation, a desire from investors globally to diversify. And it's not confined to one asset class. I think we see investors you know, in the midst of the global uncertainty, be it geopolitical, be it macroeconomic, they want to make sure that they have a more diverse set of investment opportunities. And, you know, case in point, right, in the not too distant past, we see investors sort of trying to put more money in different markets, a lot of which, you know, we benefited from in Asia. Different asset classes from gold to silver. And even traditional, what is considered safe havens like US Treasuries, people are having second thoughts about. So with that as the backdrop, we do believe that the timing is right for us to, once again, revisit how we built a multi-asset ecosystem. But this time it has to be a more holistic approach. It has to be not just confined to launching a few products, but thinking about how we develop, with the help of partners, a more comprehensive ecosystem. And that's the thinking behind these initiatives that we are rolling out one by one. Now, I mentioned earlier, the CMU Omniclear investment is just one small step in that direction. Vanessa has explained that we have more planned out. To your specific question, so when are we going to see the return come back, right? I think that's very difficult to quantify and say exactly when, but suffice to say that, as we all know, right, compare the equities markets with the fixed income market. The fixed income market is exponentially much bigger, and therefore we do see tremendous opportunity in the FICC space. So, sorry and I'm not able to quantify it for you, but suffice to say that we do firmly believe that it is really worth our time and investment. I don't know if Mike wants to supplement what I said.

Thank you, Bonnie. I would maybe just paint a little bit the size of the opportunity. The reason why we are trying to capture this opportunity now versus, say, five years ago, well, why didn't we choose to build an FIC ecosystem then? The reason is very obvious. Whether you look at the issuances of China government bonds or the issuances of dim sum bonds in Hong Kong, you see... Almost this escalating curve upwards. And this is not a curve that is a prediction. This is an actual numbers curve, right? So five years ago or 10 years ago, that wasn't the case. I would also say that five years ago, 10 years ago, RMB internationalization as a government policy or as a central policy wasn't quite the same. So the tailwind is definitely there. The policy support is definitely there. and therefore this is the time to do it. Now, if this is the time to do it, to your question, is it actually worthwhile or is there a big prize at the end of it? It's tricky to suddenly put through forecasts based on a vision, but if you look at what other exchanges in the world are able to achieve in terms of their revenue from fixed income versus the rest of their revenue, Actually, Hong Kong Exchange is in a class of its own because we have a very strong equity franchise, an IPO franchise. How do other exchanges who don't have that make money? A lot of it actually comes from fixed income or fixed income-related products and ecosystem, and not to mention players in the world that actually specialize in CFDs. Centralized Securities Depository, which is basically what we're trying to do with our CMU acquisition. So putting all of those things together, a strong backdrop, policy support, and viable business models which have been proven in other parts of the world and in our peers, why wouldn't Hong Kong Exchange grab this opportunity now and build for the future? Greg, you have something?

Yeah, I guess Quickly, right, with the HKMASFC roadmap, it painted a very clear picture that when we talk about fixed income, it's quite comprehensive. We're talking about, obviously, Vanessa mentioned the government bonds, you know, circulation, and then maybe all the derivatives around it, clearing. Then you were talking about the potential build-up of a credit market. Now, once you have more of the offshore curve pricing, then you will have data, then you have index, then you have ETFs and so forth. And with the backdrop of global investors looking to diversify, I think I might have mentioned it before, equities market, yes, it's strong because people are coming over to Hong Kong, strong IPO pipelines and so forth. But truly, if you If people are wanting to diversify and want to keep their money split up in different geographical area or different asset class base or whatsoever, fixed income is the most important part, much more important part than equity. So with this particular backdrop, the policy support, and I think with our will in developing various different platforms and products around it, We have strong conviction that this will bring a good revenue diversification opportunity for us.

Thank you. I think this marks the end of today's session. Thank you, everyone, for joining us today on the line. And we look forward to continue to engage with you. And please reach out to myself and our team for any follow-up questions. Have a good evening.