Deutsche Börse AG (DB1) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Deutsche Borse's Investor Day 2022. My name is Jan Strecker, and I'm Head of Investor Relations. We are very pleased to see so many of you here again today in person. But since it's a hybrid event, there is also a broad number of participants following via the Internet. In the next 2 hours or so, members of our senior management team will present an update on the progress of our Compass 2023 strategy and dive deeper into our businesses and growth opportunities. Afterwards, we will be available for your questions. Let me now hand over to our first speaker today, Theodor Weimer, Chief Executive Officer of Deutsche Borse, who will give you the strategy update.

Thank you, Jan. Welcome, ladies and gentlemen, and thank you for joining our Investor Day. We're living in the turbulent and deciding times, and you don't need to be a little Einstein, in order to understand that we are at a historic turning point. And if it's right and necessary to be to set a frame before we are digging into today's presentation. . Today, we are joining -- you are joining us virtually or in person, we come together in reality that after more the 2 years living and dealing with an invisible threat that's harsh and unforgiven. We've emerged the latter days of more than 2 years of the pandemic into a terrible war in Europe. This aggravated the high-end rising inflation and has very tangible effects for all of us and for us the central banks around the globe to raise interest rates even further. In return, this leads to great uncertainty in the market and considerable losses in most asset losses and values since the beginning of the year. In light of this harsh reality, it would certainly be easier for us to keep it simple [indiscernible] who once said "the business of business is business." That might have been easy some 50 years ago, but in our times, ladies and gentlemen, business without [indiscernible] on declaring challenges of mankind is not business. It is negligence. Companies are no longer just poor and mere profit machines. Yes, it should be profitable. And yes, companies should be growing. But more importantly than ever they should have resilient and sustainable business models. And not to be mistaken about the fact that the very definition of what is resilient and sustainable has changed in the light of the transformative challenges we are facing. We need to act now in order to master these challenges and we at Deutsche Borse are just doing that. Our main focus in mastering these challenges is on what we are doing best, provide and transparent, reliable and stable infrastructure. By doing so, we create trust in the markets of today and tomorrow. This is our purpose, as you can see on the slide. And it has been put on test more than just once during the last couple of years. At the head of the COVID uncertainty in March 2020, for instance, many have requested to at least ban short selling. Some even have called for the exchanges to close, but we could convince the key decision makers to do the right thing, keep the markets open. In the first quarter of this year, we made a pretty similar situation regarding our power and gas trading venues, and Peter will talk about this later. Yes, it is far better both for the economy at large and for the community with market participants to keep trading activities in a transparent regulated environment as opposed to the inefficient and somewhat opaque OTC markets. This brings me to our Investor Day. The main purpose of today's meetings to give you an update on the strong progress we have made in implementing our strategy Compass 2023. When we first presented in November 2020, we could not possibly have been aware of all the challenges we have encountered since. Now that we could be entirely sure then we would master them as well as we eventually did. Compass 2023 lays out the plan until the end of next year, the end of 2023, which is why today is not just about looking back but also about sharing with you our fall for the rest of the year 2022 and 2023 and even a small glimpse beyond. We will continue our with full focus on the continued implementation of our strategic plan and a clear view on the changing mareconomic environment we are operating in. A new area, and I really like to call it a new area is currently emerging. Gone are the days of 0 interest rates, gone are the days of low inflation and gone are the days of abundant liquidity. We are in the midst of the beginning of a completely new economic cycle of rising interest rates, [indiscernible] the banks around the globe and their efforts to curb inflation. This is a major change in the macros compared to 2020 when we developed our Compass 2023 strategy, and we are willing to reflect this in our new strategy review going forward. Macroeconomic environment for the years to come. I will elaborate in a moment, and we'll provide you with further insight into our business segments and their respective growth opportunities. Stephan Leithner and Thomas Book will give you an update on data and analytics, trading and clearing as well as Fund Services. And in addition, we have also prepared 2 deep dives for you today with Peter Reitz on the commodities business side and Sam Riley on our security services business. Last but not least, yes, Gregor, our CFO, very well known to you, will give you a detailed analysis of our financials before we open up the Q&A. Let me begin with an overview of our attractive businesses on Slide 5 of our presentation. Since the first quarter of this year, we are presenting our financial results in 4 segments. This has significantly reduced the complexity of our reporting and improves the comparability of our businesses with peers. First, data and analytics contributes 15% to our net revenues already. Due to secular growth and M&A, this percentage has tripled over the last 3 years. In 2019, it stood only at 5%. We are now covering a broad range of high-quality index analytics and ESG solutions to support investment intelligence methods of the buy side. The increased relative share of data and analytics has also helped to improve our share of recurring revenues across the group to meanwhile, 55%. Second, in trading and clearing, which generates roughly half of our revenues, our strategy to operate common IT infrastructures across multiple assets. This includes Eurex, a leading financial derivatives exchange for European benchmark products. And EEX, the largest power trading platform globally, not to forget 360T, which is very well run by Carlo. Three, fund services make up roughly 10% of our revenues. We have become a leading European provider through a very successful string of the pearls M&A strategy that has given us the complete service offering that clients require. In particular, we have added to our offering in distribution and data. This has become and has been complemented by successful organic growth in winning new clients. Our security service offering, which amounts for 1/4 of our revenues, distinguishes us from most of our peers. As you pretty well know, we are a global player in the post trading industry, mainly for international fixed income securities and thus have earned a trust justice point later on. We have more than EUR 16 trillion, that's EUR 16,000 billion assets under custody with us. Our security services business has always been a very well-oiled and reliable machine, and this option is now with the new interest rate cycle increasingly as I tend to call it, this option is somehow in the money. Turning to Slide 6, please. Our combination of attractive business segments gives us a well-diversified portfolio of growth components. Key of our secular growth concept, we are trying to win new clients, and we are expanding our market share. These are the components of the secular growth. These are the key components of our organic growth. On the cyclical side, volatility is, as you all know, a major driver of our trading and clearing business and higher interest rates have a tailwind effect for securities services. M&A is the other component of our growth strategy we can actively influence. We targeted bolt-ons. We are feeling white spots in our offering. And as you can see on Slide 7, these 3 growth components have led to our Compass 2023 target of 10% average annual growth rate on the net revenue and earnings side between 2019 and 2023. I have called this more than once the famous Deutsche Borse, 10% growth formula, top line and bottom line. Where do we stand now? We are fully on track to achieve these targets. Since 2019, we have achieved 11% net revenue and 12% even EBITDA growth on average per annum so far. On secular net revenue growth, we are exceeding our target of 5% and have achieved 6% cyclical net revenue growth are still negative. And I remember the conversation we had in various analysts sell side and also with -- on the M&A growth side, we are fully in line with our expectations and our ambitious target of 5%. Slide 8, the fact that secular growth has become such a reliable and consistent driver for our business already since 2018. It's a real achievement, we are a little bit proud upon, given the past of our organization. Previously, it was mainly cyclical factors beyond our direct control that we're driving our business. Now we have a much tighter grip on a significant portion of our growth. In data and analytics, it is mainly the trend towards passive and sustainable investing. That's driving our growth. In trading and clearing, we benefit from the trend to owe to [indiscernible] an exchange which is structural, very well-known underlying trend. In Fund Services, it's the increasing outsourcing needs of clients in a still highly inefficient market. That is the reason why sale is doing services. We are further expanding our global footprint in the fixed income space. Turning to Slide 9. After more than a decade of historically low interest rates in Europe and depressed volatility in most asset classes, we saw a marked and violent shift in the environment. Inflation is rising fast, rates scramble to keep up and volatility is structurally spiking. As a result, cyclical tailwinds are emerging as an additional growth driver of our business. This has helped us to compensate the 4% cyclical net revenue decline last year. We are, therefore, currently in line already with our 0 cyclical growth guidance from Compass 2023. We further increased interest rates, however. We are now seeing a modest upside to our original expectation, besides the growth of directly interest-related areas like fixed income futures or and the net interest income. We also expect elevated volatility levels across most asset classes on an ongoing basis. Slides 10 and 11 describe the progress we have made on the M&A side in more detail. In terms of inorganic growth, we have persistently and successfully implemented our string of pearls M&A strategy. This has helped us to move into higher growth, sweet spots and complemented our services offerings for various secular growth opportunities as well. We successfully deployed a broad suite of financing formats for our M&A situations, ranging from full cash acquisitions with or without private equity partners to contributing to our own assets. The same thing applies to our integration approach from fully integration, like in the case of fund center to an advanced length approach with ISS. Above all, we made sure that we always kept discipline financially. Slide 11. As mentioned earlier, our M&A strategy has significantly helped to breathe our business mix as such towards higher growth businesses and directly contributing to an increase of recurring net revenues across the group of 55%. Around 75% of the investments made in M&A were spent in the data and analytics area, 3 out of 4 parts. All the acquired assets contributed around 15% of net revenues in 2022 year-to-date and the average EBITDA margin even on the M&A side as of today and year-to-date is around 35%. M&A is slightly financially dilutive, but it is strategically, yes, and we are brutally convinced about it. It is strategically right accretive. So we are generally quite happy with the financial performance of our M&A portfolio. Similarly, our minority investments done in the DB1 ventures have paid us strategically and financially, as you can see on Slide 12. Over the years, we have built up a very successful portfolio of venture investments, which includes a broad range of attractive businesses along our entire value chain. With this, we are supporting our core businesses to position themselves in and profits from a number of digital trends. Slide 13. In terms of international target setting -- of internal target setting, sorry, we are not just focusing on the financial performance indicators as part of our Compass 2023 midterm plan. We've also developed, as you can see on the slide, a well-balanced set of nonfinancial KPIs, which reflects our increased focus on ESG. Our sustainability framework comprises 4 angles: First, we will support the market to increase transparency through advice and services on ESG reporting; second, we provide solutions for market participants to directly deal with ESG issues; third, through our own ESG conduct and reporting, we will lead by example and encourage others in doing so; and four, we have developed specific KPIs, we measure our impact to constantly improve our own ESG strategy and performance. We already achieved most of our ESG targets. We are on a very good track to achieving them. Let me stress only 1 out of those are mentioned on the slides. Our employee satisfaction stands again above 71%. This is a very strong number. Before I conclude, let me give you, on Slide 14, a glimpse on growth opportunities beyond 2023. Clearly, our immediate focus lies on the successful implementation of Compass 2023. That's the homework we will deliver. But most of our business drivers will allow us to reap the benefits well beyond next year. I don't need to repeat the first 3 items mentioned here on the slide. We have already covered those, but new technologies like the cloud blockchain, artificial intelligence, initially viewed as potential disruptors. By the way, a couple of years ago, percent meanwhile, revenue and efficiency opportunities for us in the middle and long term. Technology partnerships offer interesting opportunities for the development of new technologies. We will also continue to have a clear eye on the famous scalability and further improve organic operating leverage. That is the topic where my CFO is stressing right at the topic every 14 days at least. This will be achieved through continued effective cost management, something I do consider meanwhile being part of the DNA of Deutsche Borse Group and something we will have to have an eye on given the inflationary environment now and going forward. Creation of strategic optionality, which is my most favored part -- famous part. Creation of strategic optionality is also very important for me personally to be prepared for all or hopefully all possible developments. The new setup of Clearstream with fund services and security services becoming more and more independent where we are carving out those 2 businesses. It's 1 very important and prominent example of this. Slide 15 summarizes my storyline of today. On cyclicality, our situation today clearly is different compared to 2020 when we had just launched our Compass 2023 strategy. With significant changes in the macro environment, we are now expecting to benefit from longer-lasting cyclical tailwinds starting this year. It is hard to say at this stage how long the cycle will last, and we are not specifying an end date today. But typically, one would look at least around 5 years for a complete rate cycle. In addition, our business mix has improved quite significantly and shifted towards higher growth businesses like data and analytics, like in fund services, which overall results in higher secular growth rates. As a result, we are now expecting organic growth of 7% to 9% on average per annum from this year onwards. This organic growth target comprises both secular and cyclical components. It compares with a 5% secular in the past and 0% cyclical growth. Organic growth will continue to be complemented by M&A with the same approach as previously. In total, ladies and gentlemen, average annual net revenue growth will therefore not just be around 10% as we have guided in the past, but it is expected to be more than 10% from this year onwards. To repeat the key messages, again, which are pretty simple, we are on a very good track, number one. Number two, we are even more bullish than we had been a couple of months and even weeks ago. We are expecting tailwinds from the macros. Number three, we will not spend less effort on secular growth or we will not spend less efforts in keeping costs under control. We'll continue with M&A. And last but not least, right, our primary goal is to finish up to conclude with our Compass 2023 strategy piece, which is a solid one, I think, a pretty convincing one. Next year, right, we will present to you a more far-reaching strategy but at its the year of next year. With this, I would like to complete the part of my presentation. Thank you for your attention. I've saved 45 seconds for my colleagues.

Excellent, Theodor. The next speaker today is Stephan Leithner. Stephan is executive member of Deutsche Borse. He's overall responsible for data and analytics, fund services and security services. And Stephan will now give you an update on the Data and Analytics segment.

Jan, thank you very much. The 45 seconds are virtually gone Theodor. So let me, however, kick it off with your point you made at the beginning, the data and analytics segment of the group has fundamentally changed over the last few years. When I was first, in 2019, presenting the data and analytics business, it was below EUR 200 million business at the time. Since then, we have formed Qontigo. We've invested last year and acquired ISS, and we have continued, even after the acquisition of ISS, with a number of bolt-on acquisitions 6 alone since we acquired ISS. So the result of that momentum is a business which, last year, our financials had EUR 480 million, but which really on a constant portfolio basis is around the EUR 540 million business by now. So we have reached a critical size. It's become a 15% of the group revenues. It has a significant footprint, which we didn't have on the buy side at the time. It's by now 2,500-plus buy-side clients, which we have through Qontigo as well as ISS and 93% of those revenues are recurring as they come with the subscription base in these businesses. It is a high-growth business, 17% in the last year-to-date numbers, as you can see here on an organic basis, and it offers continued room to grow through M&A. Now at the heart of our business are the 2 activities on the Qontigo and the ISS side. So let me start from that portfolio view for a second. There is around 40%, 45%, which are made up by Qontigo. We have described Qontigo to you before. It's a combination of our stocks and the Axioma businesses. It's a Global #1 in structured products. On the index side, it is a very strong franchise in the exchange business together with our colleagues from Eurex. I also believe that, in a minute, I will describe to you how it's changing and very adaptable because of the analytics expertise that we have. But the second part is truly the systems capability. And in that context, we are a provider of top-notch portfolio construction and risk management tools. And I can tell you from the intensity of the competition we see that our leading technology edge, the leading cloud-born approach that Axioma has always had is a distinctive feature in client dialogues as we win mandates these days. The second part of the portfolio is ISS, consisting of 36% of our total data and analytics on the ESG side and then 20% basically our Market Intelligence business inside of ISS, which is mostly oriented towards distribution service support, and I will come back to some of those linkage points later. ISS is a truly expertise-driven data business. It has a heritage of 35 years. It has a brand name that is really a bell ringing in a way in the industry. And at the heart of it, as I mentioned before, it has a set of deep client relationships, which are certainly pretty unique in the context of many new start-ups that struggle to get access to clients and be heard. What I'm most excited about is that the synergies across these different businesses as well as with the rest of the group are really starting to come through. Between ISS and Qontigo, the obvious link is ESG space. We see in the institutional index space, how the 2 together succeed. They're very prominent responsible index constructions, which now take the reference of both Qontigo/stocks and ISS. But we see the same when it comes to the ETFs, the recent launches by Amundi, which were then awarded the structured product index reference for year 2020 is a good example of that. The synergies go beyond that. We have made the ISS platform available for our clients on the cash market side, and it gives them a unique opportunity to directly publish and access and fill their responsibilities on ESG data. If I now look forward and let me just focus on the right-hand side of this chart with respect to Qontigo, what's the outlook. On the index side, I think it's important that while the focus uniquely has been on ESG last year, the themes have started to move so the depth of the factor expertise that is there within Qontigo coming from the Axioma side, and we have worked together on those topics long before the acquisition is a key theme as well as thematic. And you know it from your own sort of environment as investors, how the mood has partly changed a bit in that context. So these areas of expertise we can really bring to bear in a very much close client relationship-driven approach. A good example is what we are able to name here which is the BlackRock, not just singular seeding of new products, but index switches that we see into the factor expertise, that has been a big step of entry with significant volume into the U.S. markets, for example. On the analytics side, a truly key driver in this context is the broadening of the asset class coverage. I mean, alternatives as well as the fixed income side are becoming much more relevant again. So we have made those important investments and steps. But then, as I mentioned before, the technology edge that Axioma has always historically already had is critical and it's very helpful, especially since we are more and more able to leverage it in partnering. We are best of pre provider. So working, for example, with SimCorp in the announced partnership gives us momentum and no different, very attractive portfolio construction expertise of Axioma. It's known sort of best optimize driven model, very relevant for our wealth space that is increasingly looking for a high number, customized optimization processes. So when I look at the ISS side, the dynamics that is at the heart of ISS, the ESG attraction, the ESG growth momentum is unchanged. You see on this page on the right-hand side, again, if I focus a bit on what is the change dynamics, we have seen even in the governance solution space, significantly outperformance on growth, and that is really driven because the client demand in terms of proxy expertise, in terms of support is accelerating, is getting more sophisticated, is higher priced. In parallel to that, what really makes the ISS setup unique is that it not only is a very much investor-centric, but it has a genuine history around the corporate support on ESG. We see in our ISS global corporate support. We see a 30-plus percent growth rate, and we have a footprint that allows us to really leverage further products, for example, on the cyber risk and topics which are only emerging as new themes with respect to being covered and corporates wanting to give also to the capital market information. I mentioned before that among the mix of businesses within ISS, there is the Market Intelligence business, which gives research data, special insights, very targeted information on distribution. This has become more relevant than before as markets have become more turbulent, that intelligence around how different distribution channels are performing, which products are best selling where gaps that 1 individually as different distribution partners has is something that's become more important. Now we have made already 2 add-on acquisitions last year in this space, one of them rainmaker in Australia, it really gives us a foothold what I consider one of the most important markets simply by the size of alpha accumulation that is going on. And then discovery data, which brings us very special specific product expertise in the U.S. So if I look, therefore, at the bottom line of ISS, it's a very balanced portfolio, and it continues to offer us opportunities, as we mentioned, to bolt-on acquisitions. We have had, in total, 16 transactions since 2014, always bolt-on. Some of them very small, but very targeted. They can grow at the back of that enormous client footprint. We've done 6 of those acquisitions since we closed the ISS investment. Therefore, if I summarize our Data and Analytics segment, let me highlight that we have a business that has grown to the critical size. It's very, very important. At the same time, we have a portfolio of high-growth areas. We don't have a broad bulge data delivery. We're really focused on high-growth areas. We have within these high-growth areas, best-in-class assets. I can truly say that the feedback that we get on the quality of our assets, be it on the climate side, be it on the index side, be it on the analytics side really stands out and it's very impressive to hear from claims, which Deutsche Borse has been working for many years. We have increased the cooperation within the different areas and across the group with our data and analytics business, which is why, in summary, I'm bold enough to say we have a focused industry leader. The focus is a very important part in this that is proving with a 17% growth organic that it is delivering on the objective that Theodor has laid out, which is a continued outlook of 10% plus on an organic growth pattern for data and analytics. Let me hand it over with 22 seconds advance to our schedule left.

Thank you, Stephan. So our next speaker is Thomas Book. Thomas is member of the Executive Board of Deutsche Borse. He will present you an update on his area of responsibility, which is our trading and clearing segment.

Yes. Thank you very much. Thank you, and a warm welcome also here from my end to all those watching on screen, but also to those present here in the room, it's great to have audience. Let me start with the page here that gives you an overview of our portfolio in trading and clearing. With Eurex, 360T, Xetra and EEX, we have really a very exciting portfolio. We operate trusted markets in all major asset classes. And here said it earlier, trust is key these days. Market integrity and effective risk management are more important than ever. After the COVID crisis, the first quarter has proven again our operational capabilities and resilience in unprecedented times. And the trust in our markets is demonstrated well by the scale of risk transfer that we see. For example, Eurex peaked at an open interest record of 163 million contracts in early March this year. This makes Eurex a global leader. Our collateral pool has grown to record sizes across our 3 CCPs, more than EUR 150 billion compared to only EUR 50 billion a year ago. But in fact, not only our systems and operations have proven resilient but also our business model. And even more than that, our portfolio of leading markets is highly attractive and capturing cyclical and also structural growth dynamics going forward. And we have already seen the potential this year with the recent dynamic growth across all businesses in equities, fixed income, foreign exchange and commodities. And in our portfolio, we have strong synergies and complementary assets, the fully integrated business model of offering, trading, clearing and market data on a joint technology stack. And over the past years, we have also built a full multi-asset class coverage with leading global liquidity pools and strong price discovery in global benchmarks and this response to what our clients ask for. Going forward, our success factors, in my view, clearly are client centricity, innovation and agility and of course, our highly experienced top-notch management team we have in our business, and you will get to know 1 of them later when Peter will give you the deep dive on the commodities business. Last Investor Day, I spoke to you about the secular growth drivers based on our key industry trends that we see. And Theodor has outlined them earlier. They continue to be intact and profound. We see a shift from active to passive from OTC to on-exchange trading and from uncleared to cleared markets. And further to that, innovation, electronification and data-driven trading models drive our clients' business. But now there is more. We now face a totally changed market environment on top. After 7 years of negative interest rates in Europe, we are now entering a new cycle. And in fact, now we expect the first ECB rate increase in July since 2011. Markets reflect this at an unprecedented speed and in my view, this situation will not be short-lived. Market uncertainty is very high. Recession fears result in a growing need for hedging, and we see breaks in market correlations and more volatile product beds, all of these result in new trading opportunities for our clients. And of course, we see a strong preference in -- for trusted markets. Clients ask for effective risk management and safe operations. With our setup, we are well positioned to capture growth opportunities going forward. Our business model is clearly positioned in a sweet spot. And let me explain to you what I mean and how we translate the structural growth trends into growth on this page here, which gives you an overview on our activities. Again and again, we have developed market-leading solutions through strong partnerships and innovation, and this is true across our entire product range. We work closely together with our customers. Let's look at, for example, at Eurex derivatives. Equity and equity index derivatives have become a truly global benchmark business with the euro stocks family at its core, and we continue to drive innovation. Take, for example, futurization and ESG derivatives. Our fixed income funding and financing offering creates unique efficiencies by trading futures, repos and swaps side-by-side. And with our OTC clearing solution fully on track, we have now developed a very strong third pillar. All these products are executed under a single industry-leading risk management framework. But let's not forget the mid- and long term, a further driver in our industry is technology. And with 360X, we are creating a leading tokenizer for new asset classes. You can have the world in your wallet from arts and music to real estate. But -- and that is the bottom of this page for all our business, top on our agenda is to support the biggest challenge for the planet, the climate change. In our role as market organizer, we offer ESG solutions and products to optimize the resource capital and risk allocation. So we support the transformation of real economies towards a more sustainable world. with our financial products. But beyond, we are also directly active in the energy sector in our commodities business, and we'll later hear more to that. Next page, 25. I mentioned product innovation being a key lever in our global lead, and this slide shows you a few examples on how we build not only new products but new product ecosystems successfully in our Eurex index franchise. On the left, you see where we have already created new product segments successfully, which are now being scaled up. On the right, you see more nascent products at an earlier stage where we are building liquidity currently. And let me just pick here 1 example today, total return futures. They are an example of how we can grow into adjacent product families. We have been truly a first mover and innovator by introducing a listed alternative to OTC total return swaps and the demand for effective risk management is strong. When starting the segment, we could piggyback on the unmatched liquidity and the global benchmark status of the underlying euro stocks contract. And with our risk capabilities, we can deliver a product that is robust and efficient in risk management and that completely matches OTC conventions and delivers margin efficiencies. It has already grown to be a double-digit million contributor to our top line this year. And overall, new products are a key driver of Eurex's performance. New ETD products are expected to generate around EUR 100 million in revenue in this year and are thereby the most important single driver of our structural growth. Let me turn to the next Page 27. This slide on our Eurex fixed income business summarizes how well our business model responds and loads driven by the changes in market conditions. We are 1 of the 2 exchange groups in the world, offering the magic combination of exchange-traded futures and options, repo and OTC derivatives in a single legal framework, infrastructure and risk management. And we are the only ones to offer this portfolio in euro-denominated products, and this makes Eurex the home of the euro yield curve. And it provides unique efficiencies in the new environment ahead of us. After a Period of facing an extraordinarily poor market environment, we now see strong cyclical tailwinds in all our fixed income products. We see double-digit growth in our benchmark futures and options business. Our repo business grew by an extraordinary 39%. And also, with regard to OTC interest rate clearing, we are very well on track. And you know this is a hot topic between EU and U.K. The European Union has clearly stated that it wants to bring more euro clearing into the EU to reduce its systemic risk dependence, and we are committed of providing a market-led solution. We work jointly with customers and regulators on our path to structurally boost EU CCP's competitiveness and attractiveness and thereby, we develop the -- development of -- we support the development of a strong, sound and resilient economic and financial system. And we can see good progress. We have already onboarded more than 500 clients and clearing members, and we increased client activation by 25% compared to the previous year. But as you can see here on the slide, 50% of clients are still potential. Our margin pool in interest rate swaps alone is now at around EUR 40 billion. And by May, we have already reached a market share of 22%. So we are on track. Looking at Page 27 and our cash market business. We operate the market for German equities and have built the leading European marketplace in ETFs, and we continue to expand this position and also expect further growth from listing of new products. And this, for example, will be driven by an increasing ESG focus of ETF investors and issuers. We can also benefit from investment trends such as digital assets being the leading player for crypto ETNs. And in cash market, we also drive and implement our agenda for digital assets, along with other group initiatives, Sam will speak about that later for security services. We have made a first important step with developing our offering with the acquisition of crypto finance last year. I am convinced digital assets are here to stay. We will see that blockchain-based assets will increase manyfold despite the current market conditions. Rather, the current market conditions highlight the need for trust and regulation in this segment. And in my view, trusted markets, as we can offer, will play a key role for digital assets in the future. And therefore, our ambition is to enable exchange trading of digital assets in a regulated institutional framework. So to put it briefly, we create markets for digital assets that are trusted. Let me turn to the next Page 28, which is the last of my deck here and which focuses on foreign exchange. Our foreign exchange business is operated by 360T. It has developed very well on the background of the changing market situation we face. For 360T, the first quarter in '22, was the best quarter ever. The FX market sentiment has been improving throughout this year with volumes and spot volatility increasing. And in 2022, 360T Group average daily volumes have been growing strongly by 24% year-to-date, driven by the positive development in all the main products. But more importantly, our secular growth drivers in the large and growing FX market are strong. Specifically, the ongoing shift to electronic execution to automation and multidealer platforms. And also our strong reputation and regulatory status as a trusted provider is key in these markets. But 1 of the main drivers of growth is our global asset manager initiative. We have successfully onboarded key players in the asset manager and also hedge fund space further are in ramp-up phase and the client pipeline remains strong. Therefore, 360T is an excellent position for further growth as an innovator in the space with a holistic FX offering on a global scale. And with that, let me conclude my part here today and to put it in a nutshell for U.S. key takeaways, first, we have a highly complementary business portfolio of globally leading liquidity pool to capture growth opportunities. Second, we have a strong track record in developing and implementing new products, and we will always do this. We're in very close collaboration with our customers, and we will continue to invest in our future and especially in our technology. And third, you can rely on us. We make markets work even in times of crisis and fundamental change. And therefore, we are very well on track to achieve our targets, our mix of businesses and the structural and cyclical growth drivers that we see make me very confident for the years to come. And with that, I would like to thank you very much and hand it back to you, Jan. Thank you.

Thank you, Thomas. Next speaker now is Peter Reitz. Peter is the CEO of European Energy Exchange, and he will present a deep dive into our commodities business now. Peter, the floor is yours.

Thank you very much, Jan, and welcome, everybody. Great to be here. I want to talk about our commodity business of Deutsche Borse Group, which we have bundled in the EEX group. So EEX started as a local power exchange based in Leipzig and has grown into a global commodity business, nowadays, operating out of 19 locations worldwide on 4 continents covering all 3 time zones. Our mission is to build secure, successful and sustainable markets globally together with our customers. The commodity business in the EEX group makes up about 10% of the revenue of Deutsche Borse Group. The EEX Group is a multi-commodity business with a clear focus on energy. Within EEX Group, we operate 4 exchange markets: EEX Asia, based in Singapore, focusing on the freight market; Nodal Exchange in the U.S., a strong power market; and over here in Europe, EEX itself and EPEX SPOT exchange for the short-term trading of power. Also part of the group are 2 clearing houses, 1 here in Europe called ECC, European commodity Clearing and 1 in the U.S., Nodal clearing, clearing all of our U.S. business. We also have extension to our core value of trading and clearing that are, for example, covering registry businesses or risk management tools for the commodity business, so extensions of our ecosystem and our value chain. Commodities is a growth business, and it has been for many years. If we look at the last 10 years on the Slide 32, you see that we've grown that business with a CAGR in net revenues of 23%. And I'm happy to say that in the first 5 months of this year, that business is also growing at about 20% versus obviously, 2021, which was our record year so far. We focus on 2021. On Slide 33, you see on the left side, the growth rates for our revenue of 13% and our EBITDA growth rate of 27% in 2021. You also see here on the right side, breakdown of our revenue, with clearly the power, gas and environmental business being the core focus. There's a bigger part here in other revenues, which comprises annual fees, technical connection fees and collateral handling fees that we charge on the securities and the cash that our customers place with us. So let me take you through our main asset classes. Starting with power. As Theodor pointed out, EEX Group is the biggest power exchange in the world. And Europe is our core market. In Europe, you can trade anything from the next 15 minutes of power all the way out to power delivered in 10 years. And we're covering all the major markets across Europe with 19 different trading areas, which are usually the countries within Europe. In the U.S., we acquired Nodal Exchange in 2017, which has become the biggest power exchange by open interest in the U.S. market since then. It's also a fast-growing business in the first 5 months this year. We've seen volume growth of 40%. And we also see opportunities in Asia. We launched a power offering for the Japanese market, which has just been deregulated over the last couple of years from a monopoly situation to a competitive regulation, which allows us to create an offering for risk management. That is a market that is still small, but we have more than 80% market share in this market, and it has a lot of potential for growth. Let me continue with the gas market. We are the market leader in short-term trading, which is called the spot market in gas in Europe with over 80% market share. In Gas Derivatives which is a bigger market we have about 5% market share with the market leader ICE. But our volume is growing fast also on the Derivative side. In the U.S. market, the gas business is dominated by ICE and CME, who have been in this business for decades. We have created an offering for the U.S. gas market as well because we see some synergies with power. 40% of gas in the U.S. is used to produce power. And the other way around, 40% of the U.S. power is generated through burning gas. So there are obvious synergies between the power market and the gas market as well in the U.S., and that's why we see some business opportunity there as well. In the Asian market, the biggest driver for the gas business is the LNG market, so the liquefied natural gas. We see that as a long-term opportunity, but it's a market that's still in its early phase of development. And thirdly, our emissions business. Again, Europe is the core. We are the primary auction platform for all of the EU member states, and we've been in this business for 17 years. And we're using that experience to help other regions to build emissions market globally. Good example of that is our launch of the platform for the New Zealand government that we did last year, together with a local partner. And our cooperation in China to help create a Chinese nationwide emissions market. In the U.S., we offer the largest set of environmental contracts globally, and we've just launched our first product for the Voluntary Carbon Market, and we will extend that offering also to Europe in the second step. Ladies and gentlemen, the energy markets are under stress. After the Russian invasion in Ukraine and the sanctions on Russian coal, oil and the uncertainty on the gas supply from Russia to Europe, we've seen unprecedented price levels both in gas and power. Unprecedented volatility which has created an increased need for hedging and increased need for hedging and increased awareness of counterparty risk and an increased need for central, transparent price signals. Exchanges and clearing houses like EEX and ECC provide a safe heaven in these very uncertain times. And that's been a key driver for our business in the last 6, 7 months because it actually started before the Russian invasion. If you look back at our track record in M&A, just quickly. The Nodal business, when we acquired in 2017, was still relatively small, but we've seen tremendous growth in the power business there. Nodal is also very well positioned in the carbon market with the broadest set of products, as I mentioned. We also, in 2019, acquired the commodity business of NASDAQ, which made us the #2 worldwide in the freight market with a market share of about 1/3 of the trading volume and about 50% of the open interest in that global market. Powernext, which we initially acquired in 2015 and then merged into EEX in 2020 is the basis for our gas business, which is actually our fastest growing asset class at the moment. So what's our strategy going forward? First of all, we are in a regulated business. Compliance with all regulatory requirements and adapting to new regulation is the basis for our business going forward. We are also in a highly competitive business. If you want to trade German power, you have a choice of 6 different exchanges and even more broker platforms that you can use. So operational excellence and making use of the synergies that we have with other parts of Deutsche Borse Group using the same trading infrastructure, using the same clearing technology is a key focus and a big advantage for us. And then if we look at trading and clearing markets, globally, what our customers want is all of the markets that they are operating in out of one hand. They are trading and clearing on many different markets, and we can offer all the ones that are related to energy on our platform. One example of that is our regional expansion into the Japanese market where we see that a lot of our international customer base are now also trading that new market. And then, of course, we want to also provide services around our core trading and clearing that help our customers to maintain the overall ecosystem. That includes our data business and also includes risk management services for commodities. And last and certainly not least, sustainability is at the core of everything that we do. By operating energy and carbon markets, we have the biggest leverage for the whole economy to reach the net zero targets. So that is a key element of our strategy, not only for us as a company, but also for the economy as a whole. Let me finish up with an outlook on how we see our markets develop going forward. Commodities will continue to be a growth business. And there are 4 major trends that support this. Still a large part of the commodity business is traded OTC and uncleared. And we've seen a trend over the last decade from OTC on to exchange and especially on to cleared businesses. And that trend has actually been accelerated by the recent crisis. Our customers are going beyond their core markets. They are globalizing their business and their trading activities, which gives new opportunities for us. It creates new markets that they're active in. And as we offer a broad range of these markets, we see growing volume from these customers in markets that they expand into. This -- globally a trend to more renewable business, especially in generating power. And as renewables are less predictable, that also creates additional need for hedging, especially in the short-term. So our short-term so-called spot business is also seeing growth rates as the renewables take a higher share of the overall market. And then last but not least, the carbon markets are growing very fast, and some elements of the carbon markets are even just beginning to be standardized enough to be ready for exchange trading. More countries are creating cap and trade CO2 pricing mechanisms, and we help develop these markets because ultimately, we're facing a global problem of CO2, and we need CO2 pricing around the globe. And secondly, the net zero commitment by many private companies are creating a totally new segment of the carbon market, the Voluntary Carbon Market, which also needs exchange-traded price signals and standardization that we can deliver through futures products. Because of all of that, we are confident that we can continue the growth story of commodities in Deutsche Borse. Thank you very much for your attention. Happy to take questions later. Over to you.

Thanks, Peter. We are running well in time with regards to our schedule. So I suggest we take a short break of like 15 to 20 minutes and resume promptly at 2:25 here in the room and for the audience on the screen. Thank you. [Break]

Thank you, everyone, for being back. We will now resume the session with Stephan Leithner presenting an update on our Clearstream business, which is fund services and security services. Stephan, over to you.

Thank you very much, Jan. It's exciting to present Clearstream. The heightened interest in what used to be one of the Steady Eddie businesses of Deutsche Borse Group is exciting to see. The development has already been happening over a number of years. But today, also having Sam Riley with me here as well as later on for the Q&A Philippe Seyll that a number of you have already met in the deep dives on the Fund business, which we have done before. Let me start out by setting the context on a Clearstream level. Clearstream is a business that over the last 10 years has gone through different phases of the interest rate cycle. That's why one of the very important points for us to highlight is the focus around the underlyings. The underlyings of the business is the general revenues outside of NII. If you look back 10 years, then Clearstream has been growing at 7% on average. And that's very impressive in the industry context growth, has been really been driven by a number of underlyings, 4% assets under custody growth and 11% settlement growth, which is a big driver. Keep in mind, I mean, we are a CSD. So at the heart of it, all it is about is the issuance and the settlement processes. And then alongside of that, the cash balances, which, again, Sam will come back in a minute. Now that long-term, very reliable growth has accelerated in the last 2 or 3 year. As you can see, in the middle of the chart, the Compass '23 growth rates, which we realized in the period in that sense since 2019, have been 32% on the Fund Services. We talked about some of those, and I'll give you more detail in a minute. But again, importantly, also on the Securities Services, the revenues without the NII dynamics have been growing at 7% in that period. So you see the acceleration in our Securities Services business. Looking forward, therefore, 2 themes that I would want to emphasize today and an update I will give you. The 2 themes is, on the 1 hand side, our strategic repositioning is continuing. And that means at the heart of it that we believe there is a stronger divergence in the opportunities between the Fund Services business and our Securities Services business and we are setting ourselves up to capture that strategically. The next point is that we believe the upside opportunities in the Securities Services business are bigger than we would have thought a few years ago, than we would have thought a year ago. And Sam is therefore, going to give you more detail. But before we go there, I will say a few words about our Fund business. And at the heart of that is the journey that I described, which is the underlying strategic belief that the opportunities around the fund distribution and services business are starting to increasingly diverge from what is the Securities Services. It starts with the type of business and client footprint. The Fund Services business is between asset managers and distributors, very much versus the Securities Services, which is centered around the sell-side banks as well as central banks, wealth managers and others. It's much broader, but it's quite different in the role that it plays. Also, from a regulatory perspective, we are now in the process of setting up a separate Fund Services bank in Luxembourg that will be governed by a regular bank regulation and MiFID rather than the CSDR regime that is operated for the entire CSD space in Europe that clearly is much more tightly market infrastructure focus. So therefore, what we are driving towards is a 9% of group revenues funds business today and the 25% security services business. If we now look for a second a bit more in detail at the Fund Business, which, as I mentioned, we have done a number of updates over the last year, and we have found broad interest. And the main message here is quite simple. It's a message of continued outperformance and therefore, high confidence looking forward. We have said in the Compass objectives, a 15% total net revenue growth, 10% organic secular and 5% M&A. Now we have delivered a 32% top line growth so far. Of that secular 15%, and it comes with a very strong margin expansion that has been going on as the Fund Business has been scaling and moving into higher margin businesses, in particular, the distribution services. So the key message here is we confirm the 10% outlook for our Fund Business, as you have already seen it on the chart of Theodor upfront. Why are we so confident? We're very confident because the mix of our business between execution services and distribution services, the trailer fee business in a historic way, is very robust and proves to be very expansion capable. We have really created an ecosystem between 700 distributors, and we have often talked about it. Our focus is big-sized, material distributors. We are less in the -- not at all in the singular IFA or small shop distributor on the wealth side. We are very much focused on the big distribution partners. And on the other side, there is 700 asset managers. We have really reached critical scale. We've continued to expand and invest the asset manager footprint since the time of the acquisition of the UBS business. So there are 4 directions that are now driving our strong continued growth. The first one is, acceleration of the client wins. We continue to win big portfolios on the order execution side and the cross-sell works very well. But we are increasingly now also winning big mandates on the distribution services side initially. Good examples around that are FNZ, but also in cases like Standard Chartered for Asia, a key driver, a very active partner that we see there. In addition to individual client wins, for us, the expansion into [ semi ] white spots on the geographic landscape proves a powerful mechanism. Two examples here: Italy through the Banca Corrispondente is a very attractive market. It clearly needs more competition in that market. We have set up now a partnering offering in Italy, and we see strong client interest. We'll go live in the next few weeks. All is ready to go, and we see more clients calling in on the subject. Latin America, an attractive growth market that continues. We have extended our asset management, our offering from a -- Fund offering in Mexico, and we have a partnership with State Street when it comes to big pension funds in Latin America. Now obviously, at the heart of what we have been doing has been extending the product range, and that journey continues. We are offering more quality data to our distribution partners, building on the assets we have in the group. In parallel to that, also to the asset managers, we need to deliver high-quality data and services. For example, Know Your Distributor, KYD offerings, which we have a partner with. At the end of it, there is a continued opportunity for inorganic growth. That's big portfolios, that's partnership with clients. But that's also -- and that was our most important recent step, the acquisition on the data side with Kneip. Kneip is a Luxembourg-based industry leader. It's a truly distinctive brand name, supporting asset managers in their publication responsibilities. It's been something that we have been following and partnering for many years. It's a family situation. The unique starting point that we had in those discussions have not only helped in making this very fast happen. We started at the beginning of the year, we announced in the last week of March, we closed on the first of April. I have done M&A all my life. I've never seen this before. But the most important point is that the integration is smooth that 2 days ago, we spent extensive time with our senior leadership team in Luxembourg and the Kneip senior group was already part of it. I feel the momentum we get on senior client calls. So it's just a good example how the next leg is really kicking in and Philippe deserves all the credit because it truly is a situation, which is based on the trust that we have in the Luxembourg market as a central place for international Fund distribution. So therefore, our portfolio is now very complete in terms of the Fund Services. And in summary, we see the net revenue growth story, as I said, continue in the Fund business and the 10% that we announced before is something that we are very comfortable with on an organic basis. So that's the Fund side that we talked a lot about. I'll hand it back to Jan to introduce properly Sam because the Securities Services is the underrepresented business in the last few years. It's great to see now getting the limelight that it deserves.

Thank you, Stephan. Next speaker now is Sam Riley. He is responsible for Investor Services at Clearstream. And Sam will present today a deep dive into the Securities Services segment. Sam, the floor is yours.

Thank you very much, Jan, and good afternoon and good afternoon, ladies and gentlemen. I'm actually super excited to talk about Clearstream Securities Services to you all. It's a great opportunity for me. I joined just over 2.5 years ago, Clearstream, coming from an exceptionally large American custodian. And I must say I was super attracted to the unique proposition that Clearstream had to offer with real upside, right? And when I think about what Clearstream Securities Services is? It really is a key global security services infrastructure. But the difference is we operate globally, and we operate with an extremely comprehensive custody setup. We are Europe's largest CSD by scale and by volume. And I think not only that, we are one of the global ICSDs with a truly global client offering. And that client offering is seamless to all our clients across the market. And in addition, as I said, the provision of value-add services across our platform to our clients, both to investors and the issuers, really providing that comprehensive custody setup is the real unique advantage. One of the things I wanted to cover here is really a breakdown and give you an opportunity to see the inside of how the revenue is built up within Securities Services. And here, we're showing the year-to-date percentages, which are pretty constant across the board. And you see custody. Well, what is custody made up of? Well, custody is obviously driven by the assets under the custody that we hold for our clients, those assets that we save keep for our clients. But it's also driven by the asset servicing that happens on the account. And more importantly, it's also driven by the captive nature of the issuance business that we issue as an issuer CSD, both here in Germany, in Luxembourg and the ICSD. What's really important, though, and hidden as a little gem underneath the custody and we've highlighted it here on the chart is the lending and collateral management, and I'll touch a little bit on lending and collateral management later. Settlement is driven by what it says on the tin. It's the volumes. It's the volumes of transactions that flow through our systems on a daily basis. And whilst probably the most volatile revenue area in our book, it is, as you can see, not the highest contributor to the overall revenue pie of Clearstream Securities Services. Thirdly, the other is that bucket, as with many of our other businesses, other comprises of another little gem, which is data and connectivity. And we actually provide services to our clients through reporting, through access to obviously our proprietary systems, but also more increasingly data products, which we're developing. Lastly and one that has been talked about both in Theodor's presentation, Stephan has mentioned it, and I'm sure Gregor will talk about it a bit later, but NII. And why don't I take the opportunity to hit the nail on the head and let's go into NII straight away, and then Gregor can follow up later if there's any other questions. NII for us obviously has been a headwind rather than a tailwind over the last couple of years. And certainly, we see with a changing macro environment that NII for us will be a growth story. And the reason for that, as you can see on the left-hand side of the chart, and Stephan alluded to it earlier, our cash balances actually remain pretty constant, right? And I'll come to kind of the background of that as well. And they remain a constant, in essence, because it's our clients funding their accounts. It's funding their accounts for the settlements. And so there are links, obviously, with the cash balances on the account with the assets under custody, but there's also a link to the transaction volume as well. However, I think one element is really important to see, and you can see this on this chart. And that is the sheer size of the U.S. dollar cash balances that we hold. And that has 3 real reasons: one, we are an issuance house, and we issue debt and other securities in the U.S. -- denominated in U.S. dollars; secondly, we also have a large part of our global network is our U.S. market that we provide access to our clients across the globe; and thirdly, we benefit from a number of Asian clients that we have. And those Asian clients, obviously, from a time zone perspective, inevitably have to prefund often a day before than they would if they were in a Western, Europe or U.S. environment. And that leaves obviously balances on the account. It's incredibly sticky. But I would just make a note that the macro environment around NII is not just affecting NII for our Securities Services business. And I touched on collateral management. We're already seeing a margin expansion in our collateral management business, which will continue as we move forward. Secondly, I think it's fair to say as well, we're seeing a continued strong, fixed income issuance market as well, and we believe that will continue as we move forward. And lastly, I think what is also important to say, we've talked about the assets under custody that we have included in Securities Services. And if we take out the Funds, we're at just over $13 trillion, 80% of those assets are fixed income. We really feel that, that's protecting us from a downside scenario as well. Let me -- If you can -- somebody can turn the next slide. Let me talk about the 5 unique areas that I want to talk about our strategy on. And these 5 unique capabilities really, I think, for us, are the baseline of why we feel we can outperform the market from a fee revenue perspective. Number one, we will continue to be the backbone of European capital markets; number two, our holistic Securities Services offering, real value-add products as well as our collateral management offering will drive fee revenues as we move forward. We continue to be a global player. We have 60 markets that we operate in across the board, and we'll continue to harness that data to be able to introduce new data products as we move forward. Fourth, is our industry-leading productivity. It's about scale, it's about driving scale. And fifth, is obviously our digital capability and our ability to be able to drive the digital platform of the future. And all of this, we believe, will funnel to those fly-wheel dynamics, which really significantly outperform the market on a net revenue growth. But let me take a couple of minutes to go into a little bit detail on some of these areas. And with -- the focus on being the largest European CSD and serving as a global gateway to Europe for our global clients. I think it's important to mention that we, as an infrastructure at scale, are #1 in T2S, we are actually made up of 50% -- over 50% of all T2S transactions in Europe flow through our pipes. And we provide 30% of all of the issuance, as you can see on the bottom of the page here, all of the issuance across Europe, and we continue to see that flow grow and, in many cases, exceed growth. And that's why we think we're at the center of gravity when it comes to being able to expand the dynamics for the European customer settlement market. And we're going to do this with 3 things: number one, we will expand our Go Direct model, where we are already today direct to 5 markets, not including, obviously, our Luxembourg CSD, which we now own, and obviously, the Germann CSD. We will do that in the Nordics. In the next couple of weeks, we're going live with Denmark. We'll do that in Switzerland, and we've selected a handful of European countries that we will do that. And that really brings efficiency to clients. It allows us to become more efficient and continue to dominate the European market when it comes to settlement and custody. Secondly, something that we're announcing today and something that I think if you're in the post-trade market, you will understand very well and happy to take questions on later. But we will offer direct access to T2S in the ICSD. And we're going to do that because we have all the experience on T2S. I've talked to you about how much we deal with T2S today and the infrastructure connectivity we have. And we're incredibly excited about that. And the last point I'd just touch on is expanding the trade flow through connecting to leading -- trading and clearing houses. And we're doing this for a real distinct reason because we feel as the center of gravity and where the clients hold their assets with us, they need to connect to other market players in order for them to keep their asset with us. And so we've done that, and we've proven it with EuroCCP, and we're going -- we've gone live with LCH Repo, and we will continue to do that over time. But if I continue, it's not just about settlement. It's a more holistic value-add services, far beyond the traditional CSD services with a real, strong collateral management position. And I think asset servicing has always been a focus for us. And we've done investments. You saw on Theodor's chart proximity, and we're really focused around asset services and servicing the assets of our client because we think in the value chain, that's where we can grow. And if I think about that, we will continue to focus on being the best at asset servicing. But I've talked about collateral management. And I think it's important to raise that collateral management for us this year, if you look to the bottom left, has increased to nearly $600 billion in terms of the outstanding triparty flat flow that we have on our portfolio. And that has increased 10% year-on-year. So it's already -- we're already seeing that growth. And more importantly as well, if you look to the right, that 2x the revenues that you're seeing is really driven by the fact that we charge for a collateral management fee, but we also incur a settlement that happens on reporting. And for those other aspects, we also charge. So there's real growth potential when we think about collateral management. So we'll grow triparty lending. And we'll do that with our collateral management proposition, making sure that we provide a real, true digital optimization tools. We just launched -- I think it was just last week, we launched OSCAR, which you can read about, which is our digital tool, providing optimization capabilities to our clients and particularly important in the current macro environment. And secondly and lastly, around collateral management is really just expanding the locations we cover and the asset classes we cover. Very dear to my heart, is data and analytics and I think the drive in digital innovation. And across our global proposition, we've already started to provide predictive and performance data solutions and are proven in the market place of post trade that these products are salable and revenue can be generated. And we will continue to do that as we move forward, and we've built the infrastructure to do that. What's been capturing the minds and hearts though -- or hearts and minds of our clients, the market players and our competitors, has been our announcement last year about D7. And D7 will bring the old world with the new world, but give the platform for digital securities of the future in the post-trade world environment. And I think we committed last year that the -- in the German market, we would be able to enable 80% of all license issued in Germany into the new digital register. And that will happen in the second half of this year, and we have clear clients and partners that are working with us to enable that. And so we're very, very, very proud of leading that in the post-trade industry. Productivity is incredibly important, and we're proud of it in Clearstream. And we're relentless on it because it's all about scale. Some of our volumes double, triple, quadruple, and they do that in periods of times of volatility, of course, but we need to be able to cope with that. And it's not like we add hundreds and hundreds of people to be able to manage it. So when we think about scale and driving efficiency and providing really an industry-leading productivity, we believe Clearstream has evidenced this over the last cycle. But we also believe that we continue need to -- need to continue to work on that. And we will do that through further expanding a very, very mature nearshoring site that we have in Prague, and we'll do that across the value chain. So it's not just always about operations and technology. And secondly is to accelerate our automation and digitization towards the fully growth agnostic operations, so where we can really scale continued in the future. And lastly, I think what's important is we've also been able to harness the power and scale of Deutsche Borse's technology and the capability and being able to build the best-in-class architecture, where we'll end up on one single platform across each of the areas and functional areas of the organization such that we can scale much further. In summary, I really feel that we have a winning strategy. I think if you look at the goals that we set when I actually just -- around the time I joined in 2019, was a CAGR of 0% to 3%, a secular growth of 3% to 5% and we delivered on the 0%. And you all know there was incredible headwinds when it came to NII that we went through the last couple of years. But what we've confirmed through what Theodor said, what Stephan has said, without NII, we've produced 7% secular growth. And that's been hidden away underneath and important that we come out and let you know that, that's happening. But more importantly, key to our DNA, our productivity has driven our EBITDA growth as well. And so for that reason, I feel comfortable and Clearstream Securities Services feels comfortable in an upward adjustment of an ambitious secular and cyclical growth guidance of 10%. And with that, I'm sure Gregor will talk through the numbers in a little bit more detail, but I'll hand it back to Jan. So thank you very much.

Thank you, Sam. This brings us to our final speaker today, Gregor Pottmeyer, CFO of Deutsche Borse, who will give you an update on our financials. Directly after that, we will start with the Q&A session. Gregor, over to you.

Yes. Thanks, Jan. The best is always at the end. Absolutely. Now Deutsche Borse is a great company. As you can see here, four different business segments. So the first one is Data & Analytics. It's 15% of the group, 93% is recurring. And from a capability point of view, we have all the ingredients what we need to compete with MSCI. So that's our ambition level. Yes, it's a EUR 600 million company from a revenue perspective, MSCI is 3 to 4x bigger. But nevertheless, from a qualitative perspective, we have all the ingredients to compete here. And we are winning market shares. We are winning customers here. Secondly, Funds Services. So a EUR 400 million business, Kneip, beginning of this year. We have also now all the capabilities we need. We have capabilities in the Funds processing. We have capabilities in the Funds distribution with the acquisition of UBS Fondcenter. And now other, I would call it, data business. So that's the third leg of what we needed to be complete now. And I think we are very well positioned to compete to old funds. And I think we are better positioned than old funds. And we see that when we have discussions with clients, we never lost any deal compared to old funds. So very strong. Trading & Clearing. So more than EUR 2 billion revenue company now or business segment, very competitive, obviously. And here in addition to the secular growth we expect here, we will have this cyclical upside now in this new cycle. Securities Services, let's say, EUR 1 billion net revenue business. Even there, 67% is recurring, so mainly driven by custody basically because that you can classify as recurring. On the next page, you can see that all the business segments contributed to our growth achievements. So I compare it now with the guidance we gave you 2 years ago. So for Data & Analytics, we said it's a growth rate we expect of more than 15%. We delivered in the first 2.5 years until end of May, 57%, so a much higher number. Obviously, mainly driven by the acquisition of ISS, clearly. But even if I extract Qontigo, so year-to-date, we have also a growth rate of 15%. Trading & Clearing, 6% to 9%. We guided it not directly because we said for Eurex, it's 7% to 10%; for EEX, it's 7% to 10%; for 360T, it's 10%; and for our cash equity business, it's 0% to 3%. So adding this up, what we did here leads to a 6% to 9% guidance that we gave 2 years ago. Here, we are slightly below our guidance. So with 5%. And the reason is very easy. We delivered fully on our circular growth, but the cyclical headwinds, specifically in last year for Eurex was very strong. But you can see here now, our year-to-date growth rate is plus 19%. So at the end of the year, most probably we are at the lower end of that growth. And even in next year, we will come back to that guided level. Fund Services. So 2 years ago, we guided some more than 15% CAGR for '19 to '23. So far year-to-date, after 2.5 years, we delivered 32%. So on the one hand side, we have higher secular growth as already shown, so we guided some 10% and it's 15% so we have more of secular growth and on top of your head more contribution from the M&A side. So outstanding performance from my perspective. Year-to-date, plus 11%. So that confirms basically our double-digit growth. Securities Services, and Sam already elaborated. So we outperformed on our business without NII. So we guided 3% to 5%, and we delivered 7%. Unfortunately, we had a 7% headwind from NII. And that obviously leads to the effect that currently, it's flattish. But obviously, with the new interest rate [indiscernible] we guided already that we expect now 10%. So far year-to-date, it's plus 7% again. Overall, we guided 2 years ago, 10% growth. So 5% secular growth, 0% cyclical, 5% M&A, we are now at 11%. And the reason for this overachievement is our secular growth, it's 6% instead of 5%. From an M&A perspective, so after 2.5 years, we delivered some EUR 430 million. And therefore, on this -- and at that point of time, we are widely on track here. From a cyclical perspective over the last 10 years, we had strong cyclical headwind. Low rates, even negative interest rates, low volatility, very difficult. But obviously, with the beginning of that year, that changed. And the interest rates will increase if you just take the Fed fund forward rates for year-end is 3.5%. If you take the EZB forward rates until the end, it's 1.3%. So we all do not know whether it's finally, but that's expected from the market. And with that kind of increases, obviously, we have strong tailwind in our NII. We already elaborated on that. So EUR 17 billion customer cash balances. If there's an increase of just 1%. It's additional EUR 170 million, top line and bottom line. So both as there are no additional costs related to that. Secondly, our fixed income products will have strong -- already shows a strong tailwind. So year-to-date, this year, it's more than 20% growth. Even in June, it's 40% growth. Our Index Futures. So higher volatility also year-to-date, more than 20% growth. So that will help us to ensure that we are able to achieve our targets. Operating costs. You heard Theodor that we will have an eye on it. We will continue to do prudent cost management and if you take the development over the last 2.5 years 8% cost growth, but -- 11% cost growth but 8% comes from M&A. So the organic cost growth was just 3%. That's even lower what we guided. So in principle, we say for at least 5% secular growth we need roughly 5% organic cost growth roughly. We are now below that level as last year when we had 4% cyclical headwind. We were able to manage our cost base on a flattish on a constant portfolio basis. So -- but that you should not expect for the future. So we want to invest. We want to grow. Therefore, for this 5% for secular growth we need 5% cost so that's also true for the next cycle. For this year, there's also a specific situation. Now you would think, now I come as higher inflation and so. Yes, inflation, obviously, we have but not the biggest impact. The biggest impact is FX, maybe you are surprised. So FX roughly triggers 3% additional costs. So far in Q1, we guided you, it was just 2%. But if you see the $1.05 from dollar euro, so it's exchange rate, if you continue to see that, then it will be 3% at the end of the year. So you can add up to our 5%, 3% just purely from an FX perspective. And it looks not so good on the cost side. But obviously, on the EBITDA side, it's net positive because we have more revenues than cost, obviously, U.S. dollar denominated. So the net positive impact is positive. And currently, what we also see is that we overachieved our targets, and that we've got some re-rating in the first 6 months from a share price performance that leads also to additional share-based payments and bonus. So -- but I think that's also okay. If we deliver over deliver, that bonus and share-based payments are also higher. But importantly, we will do prudent cost management also in the future. We have a continuous improvement process in place, where every line manager has a task to deliver, let's say, 2.5% efficiency increase so that we can cover normal inflation, obviously not very pleasant year-to-date but let's say it will come hopefully back in that kind of cycle over the next 3, 4, 5 years, also to a normal level, so that we can -- are able to manage our inflation. And last year, we have always a contingency budget in place. And you have seen we are able to execute here if we have a strong headwind. So these 2 instruments are very well implemented at Deutsche Borse. From an EBITDA perspective, we guided 10%. So far after 2.5 years, it's 12%. So we are slightly above that level. And also you can see here that our financial investments also give some positive contribution to that EBITDA development. Just to remind all of us, what are the key characteristics of our business model? High scalability. Whether we trade 10 million contracts a day or 15 million contracts a day, no additional costs are related to that. So all of that top line growth is bottom line growth, specifically in the Trading & Clearing area. Therefore, you can expect that we will continue to show operating leverage for our existing business. Via M&A? What Theodor showed you, it's roughly 35%. What we get EBITDA margin from our acquisitions obviously dilutes the overall margin of both last year, 58%. But we confirm again that we are able, with this kind of scalability, to keep the margins at least constant. So that's our ambition, including M&A. So that's our -- unchanged our ambition level. From a risk profile, it's a low-risk profile. mainly operational risk so 2/3 of our risks are operational risks and very low financial risk [indiscernible] everything is collateralized secured and so on. So we have very robust processes here in place. And that's also the reason why Standard & Poor's continues to give us a AA rating just at the beginning of the year, no change here. Due to the fact that we have a low risk profile, also it's a low capital intensity. So we are able to manage our capital in a very prudent way. From a capital expenditure perspective, EUR 200 million is what we currently roughly invest in CapEx every year. Deutsche Borse is a strongly cash-generating business. So every year, we generate more than EUR 1.5 billion cash flow after taxes. So that's very strong, I think. Our dividend policy, unchanged, 40% to 60% payout ratio. And in case we continue to increase our earnings, the payout ratio of the dividend will go down to a level of 40% over the next years. The remaining cash, so let's say, EUR 1.5 billion. We pay out some EUR 600 million for dividends. We invest on EUR 200 million for CapEx. Though the other we invest in M&A so that's our basic idea. I don't want to rule out share buybacks, but it's not on our agenda so far. We want to invest in M&A. Expectation for this year, so we already guided in Q1 that we expect to be above our guided levels, so above the EUR 3.8 billion net revenues what we guided above our EUR 2.2 billion EBITDA. And until May, we are roughly EUR 100 million ahead of our guidance here. So assuming that the rest of the year or 7 months in the year, so June to December, will have the numbers we planned, we would be at the end of the year, EUR 100 million higher on a net revenue basis. But so far, June is also above our expectations so a very positive development so far. That's top line. The EBITDA level is not as high because I already mentioned that we have increase on our cost side, like the FX, like share-based payments, so it will be somewhat below that EUR 100 million on the EBITDA side. What is our expectation for the new cycle? So you see here, 10% we guide so far for 2019 to 2023 unchanged here. Currently, we are a little bit ahead, but we do not say it will be much more. But when we take now '21 as our starting point for the new cycle, and we didn't say it's '26 or something, but let's say, some 5 years, so our growth expectation on business segment level is: For data analytics, 10%, it's basically unchanged; Trading & Clearing, again 6% to 9%, it's unchanged; Fund Services, roughly 10%, it's unchanged; Security Services is now 10%, strongly increased. So far, last time, we guided some 0% to 3% or on an organic basis, 3% to 5%. The reason for that is we see higher organic growth. And on top, we will have for this cycle, a very positive NII impact. So that gives us the confidence of 10% growth for the current cycle for our Security Services business. Adding these up, organic growth is 7% to 9%. M&A will be on top. So overall, we expect for that cycle we will have more than 10% average annual net revenue growth. With this, that's the end of the presentation. And now we can go to Q&A.

Thank you, Gregor. With this, we would like to open it up for your questions. We will start with questions from the audience here in the room, and then later on, turn to the participants that have dialed in via the telephone. We kindly ask all of the participants to initially limit their questions to one per person to allow for broader participation. [Operator Instructions] First question, last row. Johannes, please?

Johannes Thormann, HSBC. My first question would be on the NII topic. You mentioned already the forward rate of probably up to 5%. And then the big question for banks is always about the big deposit beta. And this would be also my question. I guess, customers won't share -- won't give you all the 100% up to 5%, where do you see a tipping point where you have to start sharing it? And then what would be the run rate afterwards?

So I didn't say 5%. So far, the market expectation, at least for U.S. dollar is above 3% or let's say, 3.5%. So -- and so far, we learned from Sam, that he said it's a very sticky business for these customer cash balances, so you need it for the settlement transaction and you have to ensure that all the settlement transaction will definitely happen. And therefore, we also expect that at a certain level of interest rate -- and the question is when does it start, that customers begin to use their liquidity more efficient, right? So today, if you do not care if you have additional EUR 100 million with Clearstream, so maybe you do not care, but in a higher interest rate level, if I take your 5%, then obviously, you would care. And you have seen that our customer cash balances slightly decreased between 2017 and 2019, there was a Fed fund rate. So it was 2.5%, maybe not all of us remember that. So there was a slight reduction. So in principle, at a certain point of time, we would expect a slight reduction from our customer cash balances, but obviously not a big one.

And in percentage level?

Yes, obviously, yes. That would start the discussion so far at a certain point of time. Again, it will not happen if you talk about the 2%, obviously. But if you would take the 5%, obviously, at a certain point of time, there will be also discussions around that level. But here, I think we have a good discipline. But nevertheless, you're right, at a certain point of time, there would be some discussions around that.

And if I may add, Johannes, if you apply the pure mathematics, right, you would come even a little bit above the 6% to 9% organically. And I'm sure you guys have to do your own calculations here. But we factored in, right, the fact that we always want to overachieve, right, what we are promising firstly. Secondly, at the horizon, there is somehow a recession. Nobody exactly knows what's going to happen. And therefore, we should not overly guess here about what's the true effect finally of the NII, but overall I think right, with the judgment from the senior guys here of 6% to 9% factoring in, right, a certain amount of NII, it seems to be reasonable. We have not stretched to the very end. Did I say 6% to 9%?

Yes.

7% to 9%. Sorry. 7% to 9%.

We have another question over there. Second row. Philip, please?

Yes. It's Philip Middleton from Bank of America. And at least, I can't leave my phone on mute this time. I wondered, could you talk a little bit about your -- the new format you're guiding in? Because you've guided very clearly between secular and cyclical throughout the recent past, which I find is quite helpful. Will you still do that as well as a more global target? Or are you just guiding for a total level of organic growth for the next few years?

Yes. So as shown in our presentation, we want to guide for organic growth. And there was always discussion what exactly do you define our secular growth versus cyclical growth, right? And we always say it's not science, it's a little bit art, right? So in principle, we have a good understanding what is the secular growth. So winning market share, winning new market segments, winning new customers, it's very easy. But when you define it from a product perspective, you always have some cyclical components also in that. So I think it's easier also for you, from my understanding that you say, okay, that's organic growth, and that's inorganic growth as the 2 main driver -- and -- but in detailed discussions, we could also give you additional information. But on a standard reporting, we would say we want to go for organic growth.

So what sort of cyclical component have you assumed -- what sort of cyclical tailwinds have you assumed in this period though, then?

Yes. Obviously, just the most prominent example is NII. So that's -- obviously so far, any NII increase, so we say that's basically cyclical -- but there are also -- we could argue now there are also 2 components. If you increase your customer cash balances as you increase custody and settlement, obviously, that's a secular impact. The rate increase, obviously, is a cyclical impact. So that's how we defined it so far as a main component here.

First row, Benjamin in the middle. Thank you.

Benjamin Goy, Deutsche Bank. One question, M&A. You mentioned your share price performance and actually, I think it is a relative free rating versus some peers in particular assets you tend to look at, let's call it data assets. Should we expect bigger transactions going forward as you might be more likely to make use of your own share price or your own equity? .

I'll take this. Benjamin. Thank you for the question. My response is as follows. Firstly, what is missing, right, until the period end of 2023, the compass period, right? We are missing, right, not more, even less than EUR 150 million of increased additional revenues stemming from M&A, even assuming the numbers we have achieved. So if you were to achieve the great numbers, what we currently expect the number what we need from external growth is even below. So I feel less than ever pushed towards M&A, point number one. Point number two, is, to say it loud and clear, it's good to see that the evaluations are coming down, especially in those areas where we are particularly interested in ESG data analytics, right, and this kind of stuff, which is good. Point number three, we see that the sellers' market, which we have seen over the last couple of years, have changed, which creates opportunities. Point number four, we'll not change our methodology on how we are doing. We will be even more, let's say, selective and judgmental when we look into M&A. We are not on a ride and not forced at all to go into bigger transactions, right, bigger transactions per se. That's not what is on the table, but it's also pretty clear, right? The current situation is -- on the organic side, we have tailwind. Therefore, we can even be a little bit more selective, to be very clear.

First row, on my left, please. Arnaud?

Could I ask about the private equity minorities you have in Qontigo? I think they have a put option. I'm wondering if you've achieved the growth hurdles for them to be able to exercise that and how you expect to finance it?

Well, in the context of the partnerships we have, there is quite some time left in the partnerships intrinsically. So there is no immediate momentum around that. And the focus is really on the continued growth of the business.

Michael Werner?

Mike Werner here from UBS. I guess following on Philip's question with regards to the secular versus cyclical revenue growth going forward now being targeted for 7% to 9%, should we continue to think that you will continue to try to grow -- or not continue to try to grow, but continue to invest in the company, which will drive cost growth of around 5%? In the past, we've seen 5% cost growth translating into 5% secular revenue growth. This time around, especially as we look forward and especially as it seems there's going to be less reliance on M&A. Certainly, we saw a 5% growth coming over the past couple of years. Does this allow for more operating leverage expansion than what we have seen over the past couple of years?

Yes. Clear answer is yes. And because now we can include also some cyclical tailwind. And so far, 2 years ago, we expected that we have a difficult situation. And therefore, we guided cyclical is basically 0. And if you have an average, let's say, 2% cyclical tailwind, obviously, you should be also able to ape and define a scalable business model that you have here some positive operating leverage. And -- yes, this 5% on cost growth is necessary to achieve and so far our run rate is even 6% on the secular side, so we will continue to do so. But M&A, I wouldn't say there's less focus. We think -- we will see what kind of opportunities are in the market. So as Theodor said, there's no pressure, no push to do something. So we will achieve our targets 2023. But nevertheless, when there are opportunities in the market, we have now stronger acquisition currently with our share price, obviously. We are strongly cash flow generating business. We are open for different formats, so you don't have to pay. You can bring in some assets, you don't need to own always 100%. So we are very flexible. If there are good opportunities from a strategic perspective, what makes also financially sense, we are very open to do so.

And as a CEO, if I may add, Mike, the following, you should not expect that we -- given the fact that we are now getting tailwind from the cyclical side that we focus less on the secular side, no way. Those of you who know me, right, we will continue to steer the business on the organic side, where we can drive market share customer wins and so forth. So we'll continue with the 5% or even 5% plus on the secular side, and that is the reason why we argue. We will -- we need 5% cost structurally because what -- the worst thing what they could do is to underinvest in a business which is growing per se, above 10%. And therefore, where it's pretty clear, our promise is 5% growth rate on the secular side, overall 7% to 9% organic, total more than 10%. And we keep -- we need to keep the operating level, the operate leverage, right? That is how we model, right? I cannot forgive and give up the scalability of the company because what is the worth and the value of growth if there is no operating leverage in it finally?

And just a quick follow-up, if that's right. With regards to the -- in the past, again, we have seen you guys flex your cost base depending on good years or bad years, right, to maintain margins. If you're expecting stronger organic growth, is there may be a tendency to maybe want to invest more, to generate more future growth? Is there any thinking there?

No, I think we clearly said. So our expectation is, from a secular perspective, to have at least 5%. And even if you look now that our product mix is better than 2.5 years ago, so we have more high-growth assets, so specifically in the data analytics and in the investment fund services area, right? So could be even 6% plus here. So to ensure that we get that kind of secular growth, we need to invest and we will invest. And -- but we will also continue with prudent cost management, even if you have now some tailwind, we will do prudent cost management.

We had a question here in the second row. Bruce, please? [Operator Instructions] Bruce, please?

Bruce Hamilton, Morgan Stanley. Just a question on sort of digital assets and blockchain. I guess, obviously, you've got a range of initiatives going on, so you look pretty well placed. But I guess there's a scenario where we move to a situation where core equity bonds markets move to the chain and that compresses settlement cycles and, therefore, could theoretically reduce quite a lot of the revenues that you're making in your post-trade business. So when you look at -- I think it was Page 47, the revenues in post-trade and I guess that potentially in clearing, how should we think about the risk that those revenues come down even if you are one of the players that takes the market in that direction? Is there a so big a cost offset in the business that, that's how you get to a net positive outcome. Or are there ancillary revenue opportunities or more volumes -- or how do you think about that? And then secondly, what's the sort of time frame of which this might happen? Is it 5 years, 10 years -- it seems it's a little away in the distance, but what is your base case on when we might get there?

It's a very important question for us in terms of our long-term strategic considerations. We are dramatically and I call it really dramatically proactive on the topic. But we are very focused on the areas that we take on, where we believe that, that transition has real immediate also client value. What we see to the gist of your 2 questions in a ways, we see at this point, an opportunity around an expansion of the base universe that are covered. I think this is a very, very important connotation around this as the transition into the digital space will make the role of a central network, credible party continued important. That doesn't go away. The role of the tokenizer, the role of a central network operator, that's what we see. That's what at the heart of the D7 idea if we talk about the securities market ventures. So therefore, while it's at this point, very hard to predict any of the time lines, it certainly is not a 2- or 3-year or 4-year time line, but there are some segments, and we alluded to the theme of the D7 German [indiscernible] that we can make eligible to be fully digitized this 80%. The retail structured products in Germany is a very important market segment. Europe is a big retail structure product market. And that transition, therefore, is one that will be faster. That's what we prepare for. And there we will see ourselves capturing market share and more volume from neighboring security types. And that makes us very comfortable together with the point that Sam very much emphasized, the data opportunity. So it's not just staying with the type of revenues we have. Those will become custody tokenization, with the settlement being the network operator. But then the third element is there is a totally different quality of data. And that opportunity, I think, is underestimated at this point. But again, that's the core securities. What was very important that we emphasized, we look at this opportunity much more holistic. And that's why Thomas alluded to 360X in some of those areas.

Yes. And of course, we don't see our core being disrupted, but rather the mid long-term potential of this technology, we see it, of course, also as an upside to enter this space. And our clear focus is to upgrade our value chain to be ready for tokenized assets more and more. That certainly starts in the crypto space. And therefore, despite the strong cyclicality that we've seen there, I think we have seen several waves. We are there clearly with the midterm perspective and with the focus, as I mentioned, on our contribution as a regulated and trusted operator.

All right. We had a question here. Second row. Gurjit, please?

It's Gurjit Kambo, JPMorgan. I've got 2 questions. First on Clearstream. I think the pricing appears to be slightly lower than -- sorry, the pricing at Euroclear is slightly lower than Clearstream, but I think that may affect the way their commercial agreements run. I guess the question is if their ownership changed and then they became more commercial, is that an opportunity for Clearstream? Or are there reasons why somebody would use Euroclear versus Clearstream aside from pricing? So that's the first question. The second one is just around the OTC versus exchange traded and commodities. That's clearly a trend. Do you have sort of any numbers around how much of the market is currently OTC? And what's the key regulation that would shift that onto exchange?

I think -- Sam, taking the first one?

Maybe I can take the first one. So with regards to Euroclear and Clearstream and you touched on the pricing. I think you got to look at the ownership structure of Euroclear, and that's driven kind of by who is using Euroclear as well. So if you look at the way in which Euroclear runs their business versus the way in which Clearstream is running their business. I wouldn't comment on the individual pricing as such, but I think the models are slightly different in terms of how we look at the commercial model.

Is there any reason like if they became a commercial organization owned by some, let's say, another exchange, for example, is there any reason why somebody would still use Euroclear versus Clearstream, or could they shift to Clearstream?

They can shift.

The second one to you?

Yes, let me probably start and you alluded, I think, specifically to the commodities market. We, of course, have seen a very, very turbulent first half of the year, driven by the crisis. We have seen a strong impacts of the strong price volatility that Peter has alluded to. And that has turned, of course, clients to turn to I mean, clear markets and also reliable infrastructure. So therefore, we have seen a shift there. Peter, happy for you to add on the dynamics, which clearly, of course, have shifted towards exchange-traded markets, please feel free.

Indeed, they have, in some markets that we operate in, liquidity has completely dried out in the OTC market, and has moved on to exchanges. So the trend that we've seen for many years before has been accelerated by this crisis. You asked for specific numbers. They differ very much from one market to the other. Let me give you 2 examples. The Italian power market is 90% plus cleared. And it's driven by the structure of the market. You have a lot of small players in this market that don't have bilateral contract with each other, bilateral lines of credit with each other. So they use a central marketplace, and it's all clear also because there's higher risk of these smaller players in terms of counterparty risk. That's sort of the one end of the spectrum. If you look at the biggest market in Europe, which is the German power market, last year was the first year where more than half of the volume was cleared and it was just 51% or so. And the vast majority of that is with us. But it also shows that there's another almost 50% that is still OTC uncleared. So there's still just potential of growth for us to move more of that onto the exchange and cleared market. Thank you.

On the left-hand side, again, second row. Andreas, [indiscernible] please.

Andreas [indiscernible] I have a question here to Peter again here about the gas market. So I would like to know what is the age of Nodal against the mighty ICE and CME business? Is it just winning business from OTC to on exchange? Or is it some price advantages or new product features or just to understand the positioning of Nodal against the other market players?

Yes. I referred to that in the main presentation. ICE and CME have been in this market for decades. And there's really no way you can create new product features because the product is defined and that is what people want to trade. So the only reason that we can convince some of our clients to use Nodal for the gas market is the synergies we can create between the power and the gas side. And it's mainly capital efficiency. We have a lot of clients that have huge open interest positions in Nodal Clear. I told you that Nodal Clear has more than 50% of the overall open interest in the U.S. power market. And that comes, especially in these very volatile times, with certain margin requirements. And our customers can reduce their margin requirements by also moving some of their gas positions into the same clearing house. And as many of these clients are both active in the power and gas market, I mentioned that 40% both ways, 40% of the gas is used to produce power. So there is capital efficiency gains that they can create by putting their gas business into the same clearing house they're already using for their power business. And that's been the main motivation for those who are already using Nodal Clear for the gas volume.

Ben, I think, had a question in the last row.

It's Ben Bathurst from RBC. I've got a question on for Gregor, I think. You mentioned that there's a 3% impact in terms of cost growth. I was hoping for some detail maybe on what the percentage impact is in terms of revenues, and if possible, if you could maybe give us a steer on where that's sitting in terms of organic versus M&A tailwind?

Yes. So obviously, as I said, it's net positive on an EBITDA level. So there's a more higher impact on the revenues compared to the cost side. So currently, it looks like it's more than 1%, but it will improve to maybe 1.5% and 2% basically. So that you see FX impact, overall, it's net positive. And the reason why the basis is now bigger. It's obviously due to our acquisitions, right? with acquisition of Qontigo and Axioma. That's obviously U.S. business. ISS has a lot of big share in the U.S. market. So -- and obviously, now NII with U.S. dollar will significantly increase. So therefore, the dependency on U.S. dollar is now much higher than in previous years, right? And so -- but overall, it's stronger U.S. dollar, is very positive for Deutsche Börse.

If you could pass on the microphone to Jochen, please.

I'm Jochen Schmitt from Metzler. I have a follow-up question on distributed ledger technology. just a clarification. So in the very long run, if DLT wants to lead to let's say, lower interest result at Clearstream because of possibly more efficient settlement procedures, you would be rather confident to offset that by market share gains and higher volumes; did I get that correct?

If you look at the very long term, and that's the scenario that we talk about, I think we feel very comfortable about the underlying business model, the client relationships as well as the technology leadership in the role we have to. So I hope this gives you a sense of confidence. I mean, how exactly the mechanics between different parts will work will depend on many parameters. Take the U.S. market, clearly, DTCC is a central operator in the U.S. market. I don't see that some of the dynamics that Sam was describing in prefunding for Asian clients that are totally out of the time zone, for example, will change.

Martin Price in the second row to my left-hand side, thank you.

Martin Price from Jefferies. I was just wondering if you could provide an update, please, on how you see the fund services industry consolidating, how that's shaping your strategy for the business? I think your strategy is more focused on onboarding existing client portfolios, but I'd just be interested to know for certain capabilities or geographies where you're still keen to add scale via potential acquisitions.

It's a tough one. Yes, if you look at the room and you need to look at these guys, they're not or not. So you're asking to -- you're asking whether Christmas is a good thing for the turkey. So -- no, joke apart, I think that we -- what you haven't seen in -- what is not detailed, and maybe we can speak about it tomorrow, what is not detailed in the 2-page document that Stephan came up with is the actually the underlying strategic elements. And there are several strategic elements, which are the countries in which we operate. So what -- where do we want to reach either the distributors or the asset managers and this could lead to further inclination to plug the current holes by targeted acquisitions, right? So that's -- it's important. Stephan mentioned, one is there was the [ bank ] correspondent in Italy, where we have clearly a need. We plugged that need with a collaboration with an existing provider. It's -- I would say that from my point of view, it is not satisfactory enough, right? So another element. So -- and then you can -- I can talk about Spain, I can talk about Asia, I can talk -- for the same purpose, right, with the same purpose in mind. Second strategic development or axis of strategy is the client segment that we address, the client segments that we are addressing. We are in a B2B segment. That's where we're comfortable with. I think that I will have to be forced to -- and I am being forced to get outside of my comfort zone into B2B2C segment. And this is something that probably will lead as well, if not acquisition, at least collaboration, right? And of course, I'll leave it to, maybe Stephan, to say a few more words on larger targeted acquisitions if -- or the [indiscernible] if they wanted to but -- I think that I would not exclude to summarize -- my purpose is the -- I would not exclude that we would be more inclined to look at nonorganic growth in very specific areas. It will be very, very targeted, right?

All right. Thank you, Martin. It seems we have a question on the telephone line, a question from Haley at Credit Suisse.

If I can be cheeky and just ask 2 quick ones, please. Firstly, just a follow-up on Fund Services. Would we be right in interpreting your 10%-plus growth ambition there as being more than 10% secular and offsetting a negative cyclical trend given the lower market levels at the moment? And then the second question, actually back to commodity trading. I hear what you said about the acceleration of existing structural trends by the current market environment. I guess the question for you would be where we have seen this perhaps of the pandemic crisis in the main cash equities markets where more liquidity went on to the main exchanges such as yourself? What are the protections in the commodity market that doesn't also reverse as we have been, I guess, more recently in cash equities with the market share coming back down again for the main exchanges. And I guess linked to that, on Slide 32, I just wondered if there was anything that we should be looking at in 2021 given the growth rate there was 13% year-on-year versus a much slower growth rate the preceding 2 years as to what is genuinely structural there versus cyclical?

First one is for Stephan. So Haley, you're calling us out on the point that was earlier made vis-a-vis also Greg, obviously, what does organic mean in the mix. I truly believe and we alluded to it, we are guiding -- continue to guide to 10%. I would guide a bit above the 10%, but I think that whether that's a balancing exercise, I don't really believe. I mean, underlyingly, the growth dynamics is very much intact. And we believe that, that outsourcing growth that we have always talked about as well as the product expansion growth that we have initiated is for sure compensating if there are, in certain areas, smaller negative cyclical effects. The total organic growth is really what we are focused on, and there, we feel very comfortable. Peter on the second one?

Yes, there were really 2 questions on the second question, so let me try to answer them both. First one, is there any insurance that our market share will stay up on the level where it is now? Simple answer is no. I mean, there's no insurance, but what we're seeing is a lot of new customers who previously had only traded OTC are now becoming exchange members and are using our platform. And I don't think that they will -- once they have made experience how to use standardized futures, will go back to the OTC market completely. But let's be also clear, our rising market share at the moment is driven by a shrinking overall market size that is much more affecting the OTC market than it is affecting the exchange market. So it may actually go down a bit again in our market share when the size of the market will grow again. That's what most of the analysts that look into this market expect. And the second question, on the 13% of 2021, yes, there's some element in this growth that is driven by this effect because we've seen the start of this development not only when the war breakout, it already started in October last year. So there's some element in the last 3 months that is included in the 13% overall growth of 2021.

Thanks, Peter. There is another question on the telephone coming from Ian White at Autonomous.

I hope you can hear me okay. I just wanted to ask, please, on EEX, can you just talk us through what the implications might be for the business in the event that we see power or gas rationing in Europe later this year? Are there any particular consequences for EEX as a result of that, please?

I can't see any scenario where we are rationing power. There's a plenty of opportunity to create power. Only possibility would be that if, let's say, in France, all nuclear plants would be shut down completely, but that is not on the horizon. But in the gas market, this story is a bit different. There are scenarios when we have a very long and very cold winter and the gas supply from Russia will be cut completely that there'll be a shortage of physical gas in Europe. That is not what we're seeing so far. So far, the physical flows lead to rising level of storage that are about on the average of the last 5 years of -- at this point in time. And there's still a couple of months ahead of us where currently the storage level rise every day. So physical flow is still net positive at the moment. But depending on how the winter will run, we see some scenarios that will end up in physical shortage. Now what does that mean for our business? There's a clear commitment where we will keep the markets open, and this has been discussed with both the regulators as well as the government that even in a scenario of physical shortage, a price signal from a regulated market is of value. So we expect that we can continue our business even in such a scenario where there's physical shortage.

Thank you, Peter. Another question on the telephone line comes from Andrew Coombs at Citi.

Another one for Peter, if I may. So when we think about EEX, we completely appreciate the cyclical tailwinds that you're seeing in the near term, the secular case you make in the medium term and the shift to OTC to exchange, if we think longer term, in multiple years, interested in a few more thoughts on what you think shift to renewables means the implications for that. You obviously touched upon carbon pricing as one initiatives you're looking a [indiscernible], 1% of your revenue contribution right now. So do you think the opportunity offset the risks on that front?

The answer is clearly yes. That's why I said several times, the commodity business is a growth business, and it will continue to be a growth business. because some of the facts that you mentioned will add new volume to the markets that we operate in. The share of renewables growing will increase the need for short-term hedging. Nobody knows months in advance, how much wind there will be and how much Sun there will be on a particular day. That's why the growth rate of our intraday market have been double digit every year for, I think, the last 10 years or so. So that's a clear driver where we see opportunities. The second one, carbon market, I talked a little bit about that. We are just in the beginning -- the European carbon system has been around for, I think, 17 years now, but it's only covering 40% of the emissions in Europe. And Europe is only a small percentage of the overall carbon that has been emitted every year. So there are -- in this market, there are several directions of growth. One, regional, there is more and more countries that are thinking about introducing a cap and trade price mechanism for CO2. So an exchange traded market will be needed there. Second dimension, industries. Currently -- as I said, the current system only covers 40% of the emissions. Actually, in Europe, there is already initiative started, and Germany is a front runner here to broaden this to also cover, apart from industry and power generation, the emissions coming from heating and cooling and from transportation. That's been starting in Germany, but now there's initiative on the European level that there will be a second emission trading scheme for those sectors, which also cover 40% of the total emission. So that's the second driver. And the third one is the voluntary carbon market, which would not be driven by a cap and trade mechanisms, but by commitments that you hear from a lot of companies globally to go to net zero. And net zero means that they're going to reduce their emissions wherever they can, but there will be some left that need to be compensated through projects they invest in finance. And that's a market that is projected to grow exponentially. It is very fragmented at the moment. We have just introduced 4 products on this market to help to standardize it, and we see that as a major growth opportunity. So that's, I think, the opportunities in the long term, which clearly, in our view, outweigh the risks that we see from the other elements of the crisis that we're going through.

Thanks, Peter. We've completed the questions of the participants on the telephone. So we can switch back to the room. Kyle, I think, was raising the hand before. So Kyle?

Kyle Voigt with KBW. The question is regarding the inflationary environment, clearly, it's elevated, but the market does expect that to normalize lower over the next few years. My question is regarding whether or not -- if this environment does continue of elevated inflation, would you view that as positive, neutral or negative to your EBITDA margins. And clearly, there's a cost component to this. But also on the other side, there may be areas or certain revenue lines where you may be able to take inflationary price increases as well.

Yes. So from my perspective, it's clearly positive because you see if you have high inflation, then the national bank rates have to be higher than they used to be, right? So in principle, I think [indiscernible] guided the market at 2.5% is a reasonable number. ECB says some 2%. But if you would continue to have an inflation above 5%, obviously, then you would be from an interest rate obviously higher, and there would be more movement or it would be more volatility so would be higher interest rates. So on a net basis, positive. Even if you have more higher cost base, but that will be clearly overcompensated by revenues.

Would the offsets on the revenue side just come through interest income? Or are there other parts of the business where you would be able to take inflationary pricing increases on subscription-type services?

All right. Let me ... Just pointing back to some extent to what Sam said, and this includes [indiscernible] in itself. It's a very powerful engine. I mean, there is the entire sort of lending margin environment that we see fundamentally changing. The market will be re-going back to a lot of scarcity pockets that will result. And then last -- and Sam alluded to it, but we have had entire sectors who have not been in the market basically because the central banks have been funding them. I mean, the entire financial services environment has -- the banks have been funding themselves through ECB. The amount of Eurobonds that we traditionally had out of the banking sector is in no proportion to what we have seen in the last few years. So in that sense, I think there is a lot of areas where we -- volume-wise and margin-wise, see quite positive beyond the narrow sort of NII calculation. And then the question back to some of the pricing corners. I mean, there are positive development certainly has been that we have expanded the subscription-based businesses. These businesses, again, they're based on quality, on work that is done, they're much less in itself only narrowly in a commodity sort of custody fee competition. And that expansion will help us to, again, appropriately maneuver on the price side. And that, of course, I mentioned it the same is true from a trading clearing perspective for Eurex. If we are in environment with higher rates, there is more demand for hedging. They are really coming out of very dire period of 7 years negative interest rates. And that, of course, will require not only more hedging, but more positioning and that will cost all the three product segments that we have. So ETD, futures and options, but also repo markets, which we see now again picking up and also, of course, the OTC derivatives markets.

Kyle, maybe you can hand the microphone to Johannes, one back. Thank you.

Follow-up from me, Johannes Thormann, HSBC. On Thomas said, Eurex is a [ home of the real curve ]. And if we look at the fixed income derivatives you're not only trading quite successfully German products, but also Italian and French. What is needed to jump start the Spanish as a fourth largest country, the Spanish product in this region. And probably also what is needed in the power exchange to move the most traded derivatives product from, I don't know, 3-day maturity to the level we see in the U.S. of 3 months, what is needed in this respect?

Another one -- here we go. On the power side if I -- you're referring to power markets, right? I can leave to Peter. Let me start probably with your first question. And that is really -- it's of course, a very interesting one, which is also alluding to not only the point of higher rates that we see, which requires more hedging, but of course, we see much more volatility also in the country spreads that we see among the countries opening new trading opportunities but also, of course, then allowing for better headwind in those different product segments. They are, of course, driven by macroeconomics. We, at Eurex, we have the full offering. We will continue to expand our offering. So for instance, of course, the European Union or the commission now starts to also become an issuer. Another product opportunity also for us. So for us it is important to offer a full suite of products and also tap into new opportunities, including green bond or might it also be, so we've started the European issuance. And probably you can speak about the maturity, Peter, on the contract side.

I have to admit. I'm not sure I fully understood the question because the maturity of what is traded in the power market as I said, ranges from the next 15 minutes to -- all the way out to 10 years.

But if you look at the product distribution, it's a rather very short term currently in Europe. And in the U.S., I think if I look at Nodal, it's longer term. Is it not happening anymore?

That's not what we're seeing. I mean we have seen the full use of all the ranges of 10 years. Currently, the focus is on the next 3 years. That's where everybody steers their liquidity. That's where you have major movement. Our biggest contract is always the front year. So delivery for -- in this case, we're middle of '22, all of '23. That's where the biggest volume is. And that is true across all our markets really. So the same is true in the U.S. Okay.

Yes. If there are no further questions, then I'll hand back over to you, Theodor.

Yes. Thank you, Jan. And thank you to the virtual room for attending today's Capital Markets Day of Deutsche Börse. Of course, special thank you to all of those who are in the room here. Great questions. And my initial reaction is the less questions are directed in my direction of the CEO, the better the Capital Markets Day is, point number one. Point number two, I think it was indeed -- and hopefully, it was helpful for you as well that we provided you with a chance to dig deeper with the deep dives. I think this is very helpful. We could continue doing so. And hopefully, we are not getting the situation that we have to focus on the CEO again. Thank you very much. Safe travels back for those who are about to fly back, good luck, right you reach your destinations today or latest tomorrow. Hopefully, not later. All the best. Thank you.

Thank you.