TP ICAP Group PLC (TCAP) Earnings Call Transcript & Summary

Good morning, and a very warm welcome to our virtual TP ICAP Capital Markets Day. Although we are in lockdown mode, we wanted to hold a virtual event as we are eager to explain our strategy in detail. So to get straight to it, the primary objective of TP ICAP strategy is to drive higher returns to shareholders over time. It's a strategy based on 3 pillars: electronification, aggregation of liquidity and diversification. It builds on our core strength and as a clear execution path. Furthermore, given the changes we are seeing in the market, it's clear that it is the right strategy for TP ICAP at the right time. In terms of building on our core strength, our strategy monetizes our market leadership in interdealer broking. It builds on our existing platforms and tech capabilities where only moderate future investment will drive a step change in electronification, which, in turn, will drive margin expansion. We have laid out execution plans for all our initiatives, and we have announced a cost management program, focusing on all aspects of our cost base, which Robin will explain in more detail later. Furthermore, electronifying our business will drive volumes and meaningfully increase broker productivity and contribution margin. As well as cost discipline, we will realize revenue opportunities from our high-growth business divisions of data and analytics and institutional services. We will also present today our plans to drive growth from our proposed acquisition of Liquidnet, an addition to our group that will accelerate all aspects of our strategy. So in a nutshell, what we will share today is how the right strategy, the right timing and a clear plan to execute will reinforce our position and deliver higher returns to shareholders. As you can see, we have a full agenda. I will articulate our clear strategy based around electronification, aggregation and diversification. And my most senior colleagues will then convey how they will implement it in their division. We're going to provide updates on our progress, explain our medium-term strategy and what investment this requires and set out clear targets to drive improved returns to shareholders. We will kick off with our group Head of Strategy, Joanna Nader, who will present on market context and its implications for our group. I will then be back to present our biggest business division, Global Broking. Andrew Polydor will then speak about our world-leading Energy and Commodities franchise. You will then hear from Eric Sinclair about how his award-winning team in Data and Analytics is driving growth. John Ruskin will then set out the next steps for his Institutional Services, and then you will hear more from Joanna about our proposed acquisition of Liquidnet. Next up will be Robin Stewart, our Chief Financial Officer, who will explain how our division revenue and margin targets combined at a group level. In addition, this section will address cost based and capital management framework. I will then sum up before we open the floor to Q&A. Regarding Q&A, you can submit questions at any time via the webcast platform, and we will address these plus any other questions you have in a live Q&A session at the end of the presentations. So to begin, let's look at TP ICAP today. We are one of the largest market infrastructure groups with the world's biggest interdealer broker, a leading Energy and Commodities broking franchise, and we are the leading provider of OTC data. We are organized around four divisions: Global Broking, Energy and Commodities, Institutional Services and Data and Analytics. As you can see in the top right of the slide, our group is home to a portfolio of premium brands. We have delivered revenue growth over the past 4 years with Global Broking being the largest contributor, followed by E&C, Data and Analytics and Institutional Services. As this slide shows, we are a global platform, operating in 26 countries. We employ around 5,000 staff. We are the #1 ranked interdealer broker in the world in terms of revenue. TP ICAP group is a global leader, which plays a systematically important role in financial markets infrastructure. To set the scene for this slide, when I became CEO in August 2018, my immediate priority was to ensure the successful integration of ICAP. Once this was achieved in 2019, our focus shifted to building a new strategy for growth. With our strategy finalized, the focus for 2020 was its deployment. And whilst we have started to do this, progress has been curtailed by COVID, which brings us to today, where we will share our strategy in detail with a clear intention to accelerate its execution in 2021. When building our strategy for growth, we analyze the changes in the market that are creating pressures on our sector and our group specifically. We are facing fee pressures from our largest clients, the investment bank, as they seek to cut their costs and look for more efficient ways to discover prices, access liquidity and get their trades confirmed. Competition remains intense, and we must manage our cost base against the backdrop of increasing tech, compliance and regulatory expense. The first conclusion, therefore, was easily drawn. Do nothing and the outcome will be revenue attrition. The second conclusion also quickly became clear, change breeds opportunity. And given our core strength, the opportunity to deliver sustainable shareholder value is compelling. We are the largest interdealer broker globally with a weighted average market share of 40%. We have deep relationships and strong brand recognition with investment banks. We are the leading provider of OTC data globally and have recorded double-digit compound organic growth in our data business since Tullett Prebon bought ICAP. We are valued for being an incisive and impartial intermediary. Electronification trends should concentrate liquidity down to fewer players, resulting in stickier volumes with higher profit margins. Our challenge was how to build on our core strength and how to take advantage of the changing environment to achieve our ambition of building a world-leading financial market infrastructure firm of the future. And if we look at how the market is currently valuing other market infrastructure providers and how we are currently valued, the size of the potential price is significant for our shareholders. So our strategy to drive higher returns is based on 3 pillars. The first is electronification. The IDB sector compared to other areas of the financial services industry is not as automated as you may imagine. It was founded and remained for a very long time, a voice business, even if we have seen various tactical deployment of technology. We intend to lead its transition to a more electronic future, which will benefit our clients, TP ICAP and our shareholders. We want to increase the amount of business we deliver electronically to improve client connectivity and to facilitate efficient workflows and post-trade processing. Being more electronic also improves our operating margins. Why? 2 reasons: it will help increase volumes, and it will help decrease costs. With more trades being transacted electronically, we will improve broker's productivity. And once we will retain some voice capability, our clients value it. We will better manage the firm compensation ratio over time as the platform increases the value of our franchise. Simply put, while we are willing and able to trade according to our clients' preferences, we are benefiting from a gradual electronification as are our brokers and clients. And we are making careful investments to realize gains from this inevitable trend. The second pillar is aggregation of liquidity. Tullett Prebon and ICAP brands have market leadership, respectively, in different asset classes, by using technology to display simultaneously Tulett Prebon and ICAP prices to the clients, we increased cross-selling benefits. To give our clients choice, we will continue to operate both premium brands, Tullett Prebon and ICAP. Some clients prefer one brand, some the other. But whomever they choose once on our platform rather than limit clients to dealing with just one brand, we will also offer them access to the liquidity of all our brands. The outcome is that clients find the best price while we grow our market share. The third pillar of our strategy is diversification. We're already seeing the benefits of diversification with our 3 fast-growing business divisions, delivering double-digit revenue growth in 2019. And we are seeing further good growth this year despite the challenging conditions. These growth divisions now represent 1/3 of our revenue and a higher proportion of operating profit. But there is scope to diversify our offering further to serve the buy-side in all those markets, maximize the value of our data and grow other non-broking revenues through both pre and post-trade services. Delivering these 3 pillars will grow our top line, increase our margins and improve the reliability and quality of our earnings, all significantly increasing returns to shareholders. Thanks to the hard work accomplished over the last 2.5 years, we have a company in much stronger shape. We have built the enablers for the future, such as improving our data management, our client connectivity, our invoicing on client on-boarding. We have upgraded our management team and embedded a new risk management framework. From these stronger foundations, over the next 5 years, we will focus on developing and delivering organic strategic initiatives, which will transform our business. You will hear in detail about each of these initiatives in the presentations, but let me give you a brief summary. Across our broking businesses, we are executing our hub strategy for rates, foreign exchange, credit and oil. The hubs will drive electronification and liquidity aggregation in our business. They offer a single sign-on on screen and access to multiple brands and linked products, all with a common look and feel. They also provide a robust post-trade processing and better connectivity. The overall outcome is that executing our hub strategy will institutionalize volume and client relationships. In Data and Analytics, we will focus on moving up the value chain in terms of our product offering, going beyond selling raw data to selling value-adding solutions, something for which clients are prepared to pay a premium. And we will innovate in how we distribute delivering these solutions through new state of the art channels. And in institutional services, we will look to expand our product coverage as well as build out regional customer coverage. We will cover our proposed acquisition of Liquidnet in greater detail later in the presentation. But I want to remind you at this point why the transaction is a strategic accelerator that will transform the growth prospects for our group. The logic of combining Liquidnet with TP ICAP works across multiple dimensions. And the rationale for doing it is very clear. We are highly complementary partners. The transaction provides diversification benefits. It will scale up TP ICAP's presence in cash equities, complementing well our large market share in rates, in fixed income and in commodities. It will also diversify our existing client base. As a complement to TP ICAPs client strength with dealers in Global Broking or hedge funds in Institutional Services. Liquidnet brings scalable access to the buy-side, especially real money investors. But the largest benefit the transaction brings is the electronic network capability of Liquidnet. Even if Liquidnet's biggest franchise is in the low-touch equity execution with over 1,000 buy-side clients, it is deepening its presence in the fast-growing electronic fixed income markets, where it has a network of over 500 buy-side clients. And we believe that these could be replicated into rates as well. They are already well-established players, such as Bloomberg, Tradeweb or MarketAxess in this space. But the rapid growth of the dealer-to-client electronic trading in rates and credit and desire on the part of users to see greater competition will facilitate the execution. This transaction paves the way for TP ICAP to become a higher growth hybrid platform with higher quality revenues and higher-margin earnings profile. Now let me take you through our high-level financial objectives. Later, our business unit CEOs will talk about the target for their business and how they will achieve them. And Robin will give you a consolidated group view. For revenue, on a TP ICAP and Liquidnet basis, we are targeting a 4% CAGR over the medium term. For underlying operating margin on a TP ICAP stand-alone basis, our target is circa 17% by 2023, rising to circa 20% over the medium term. With the addition of Liquidnet, we are targeting circa 18% underlying operating margin by 2023, rising to circa 23% over the medium term. In short, our target is to deliver revenue growth, better margins and higher returns to shareholders. That's it now for me. I will now hand over to Joanna Nader, our Group Head of Strategy, who will share with you market context and how this relates to TP ICAP.

In order to form a view on TP ICAP but also on our proposed acquisition of Liquidnet. Investors need to assess both cyclical and secular or structural influences on market activity. The cyclical is important for gauging prospects for our earnings in the short term. The secular is critical for assessing the multiyear prospects for our business and for evaluating the merits of our strategy. Cyclical factors are pretty easy to form a view on, and I'll also point you to some useful correlated public data. Evaluating secular growth potential requires understanding the structural underpinnings of markets, and this is more complex. Turning first to the cyclical. The main customers for our Global Broking business are the large Tier 1 banks. This has led some investors to look to the investment bank's results as offering a good read across to our revenue prospects. However, a better guide is actually public information on secondary volumes in the relevant markets. On this slide, we've highlighted the correlation of our revenue with market volumes using the futures and corporate bond trade data from the U.S. and Europe. As you can see, these are not perfect proxies. The lines do not move perfectly in sync. This is because the user bases are somewhat different. In Global Broking, our clients are a narrow group of large banks compared with the broad universe for futures. In Energy and Commodities, the distribution of our clients by type is actually proportionately more diverse than for futures. We have much more of our business coming from real economy users. In general, markets having some meaningful direction up or down is good for volume and having some volatility around that general direction is even better. Moving to the secular and structural. Regulation is the most important of secular influences and regulatory change can often have a multiyear impact. Major regulation responsible for material, direct and indirect impact on activity levels in the markets relevant to us includes MiFID II's best execution requirements, market risk capital and the Volcker Rule, the G20 central clearing mandate and the uncleared margin rules. It's useful to think of the market as comprising 3 main categories of participants, dealers, mainly banks, the buy-side, mainly asset managers; and marketplace operators, such as exchanges and IDBs. The key groupings of how participants interact with each other are: Dealer-to-dealer or D2D for short, dealer-to-buy-side or dealer-to-client, D2C for short and client-to-client, C2C. And we care about the venues where these interactions take place. Nico will explain TP ICAP's strategies for rates, FX and credit in his Global Broking presentation, and Andrew Polydor will explain the plans for oil hub when he talks about Energy and Commodities. What I want to do in this section is give you a flavor for market backdrop and how regulatory change has altered participant behavior, particularly in the D2D and D2C parts of the market so that you can understand why our strategy for TP ICAP makes sense and also why we want to acquire Liquidnet. For clarity, TP ICAP's Global Broking business is focused on dealer-to-dealer across asset classes and Liquidnet is currently focused on client-to-client in cash equities, and we want to take Liquidnet into the dealer-to-client space for corporate bonds and interest rates. So first, interest rate derivatives. The 2 key influences have been the central clearing mandate and MiFID II's best execution requirements for asset managers. With the introduction of clearing, counterparty credit risk disappeared. In itself, this prompted volume growth. With OTC, you get exactly the contract you want without any of the previous counterparty risk. With credit risk out of the picture, price became the principal focus for asset managers trying to deliver best execution. And electronic platforms make it easy to shop around for the best price. Platforms also provide a helpful audit trail of the pre to post-trade process, which supports the requirement to evidence best execution. So clearing and best execution have together driven growth in OTC volume and in electronic dealer-to-client trading. You can see the volume growth and also the explosion of the relative size of the D2C market in the top 2 charts. For the first time in decades, OTC has taken share from exchange traded. In contrast to the massive change in dealer-to-client activity, dealer-to-dealer trading was not directly impacted by regulation in any meaningful way. No best execution and dealers already cleared much of their business with each other. However, the second order impact on banks has been substantial. In addition to having much reduced pricing power, they now have to also pay to transact with their clients via only 2 major platforms, Tradeweb and Bloomberg. The bottom right chart shows the market concentration of these 2 operators in the U.S. The pressure on dealer profitability is a key driver of TP ICAP's rate sub strategy, which Nico will be talking about. We need to respond to the market forces that have impacted our customers and the structure of their trading desks by providing more efficient access to our markets. And a natural follow-on situation of considerable commission pressure from our bank clients, we need to use technology to improve our own operating margins. In the case of Liquidnet, it is the continued strong growth prospects in D2C electronic rates, the absolute size of the addressable market and the small number of current competitors that underpin our rationale for building a D2C offering. Interest rate swaps is a particular segment of interest. As you can see from the top right chart, about 70% of the market is dealer-to-client, and there are only 2 electronic platforms serving it. Note that the key barrier to entry in dealer decline electronic trading is connectivity, not liquidity. I can't stress this enough as it's not necessarily obvious. In dealer-to-client trading, liquidity is created bilaterally, not centrally, like on an order book. And TP ICAP has connectivity on the dealer side and Liquidnet has it on the client side. Moving to FX. The FX derivatives market is almost entirely over-the-counter, like interest rate swaps. However, FX escaped the central clearing mandate, which drove such an upsurge in OTC rates volumes. At least half of dealer-to-client FX trading is already electronic via multi-dealer and single-dealer platforms. Dealer-to-dealer is still mainly voice. Without a requirement to clear, there has so far been little regulatory impact on either electronic trading penetration or overall D2C volume growth. D2D and D2C markets have remained around the same relative size in contrast to interest rates. However, dealer margins have still felt the pressure of their clients' focus on achieving best execution. In the interdealer market, the uncleared margin rules are having a selective volume effect. You can see from the top right and bottom right charts, interbank trading of non-deliverable forwards or NDFs has surged. This is because the UMR incentivized banks to clear NDFs and the large dealers were the first group to be subject to the rules starting in 2016. This is analogous to the volume response to clearing that we just talked about for interest rate derivatives. We expect the same trend to emerge in dealer-to-client NDF trading as the UMR's last 2 phases in 2021 and 2022, bringing a lot more asset managers. Also because many asset managers prefer cleared to bilateral exposures, we might see a progressive shift towards non deliverable product formats. If this happens, we could see some of the same clearing driven uplift in trading volume that happened with interest rate swaps. So in FX derivatives, the medium-term outlook for volumes in both dealer-to-dealer and dealer-to-client trading is positive. As more of the market starts to clear, electronic trading will likely get another boost as clearing and electronic go well together. This market analysis underpins our Global Broking FX hub strategy, which Nicol will be talking about. For Liquidnet, although there's some industry interest in us exploring FX, we don't have immediate plans to enter that space as there's already a fair amount of competition in D2C electronic trading. Along with interest rate derivatives, the credit market was arguably the most affected by post-financial crisis regulation. And despite the passage of time, the market is still not functioning well for most participants. A typical bond trades maybe 5 to 10 times per year. Before the financial crisis, when the buy-side wanted to trade, banks provided immediate liquidity. In order to do this, banks have to use a lot of balance sheet and hold positions for a long time. Post-financial crisis, bank regulation increased the capital cost of holding illiquid positions and the Volcker Rule constrained them from proprietary trading. What you can see from the chart on the top left was that banks responded to this regulation by collapsing their balance sheet usage. For asset managers, there were the MiFID II rules on best execution. Many banks now behave more like agents. This means that the buy-side search process has become more complex. The efficiencies provided by electronic platforms, such as sending multiple requests for quote simultaneously have propelled buy-side adoption of electronic trading. Although trading volume is still growing, as you can see from the bottom left chart, the buy-side finds it hard to get the trades it wants done in the size they want. So trading outcomes relative to order intentions are suboptimal. The credit market dysfunction is a major driver of our deal rationale and strategy for Liquidnet. Both sell-side and buy-side need more options around platform, protocol and market models. And there are currently only 3 major platform operators in dealer-to-client electronic, MarketAxess, Bloomberg and Tradeweb. We don't think that this is enough. The need for better efficiency also underpins our plans for Credit Hub. Banks need more efficient and more streamlined solutions for managing their risk and minimizing balance sheet usage. The first major regulatory change impacting the structure of today's cash equities markets came into force in the mid-2000s with Reg NMS in the U.S. and MiFID 1 in the EU. With the aim of promoting transparency, best execution and a level playing field amongst venues, Reg NMS and MIFiD 1 should in an era of increasing fragmentation in equities markets. New lit venues emerged, smart order routing and algo trading took off and the average trade size pledged. Many asset managers began to view the lit markets is increasingly hostile to efficient order execution, leading to alternative dark venues springing up to help with larger size trade execution. Dark trading is now a critical and stable portion of global market activity, accounting for about 12% to 15% of trading in the U.S. and 8% to 10% in the EU, where there are more regulatory constraints on non-display transactions. The trend of electronification, algo arms race, market fragmentation and broker commission compression continued for the next decade until the next major piece of regulation, MiFID II in Europe. By forcing unbundling of payment for content and execution, raising the requirements for the buy-side to demonstrate best execution and introducing limits on dark trading, MiFID II both reinforce the trend of price competition and introduce further complexity to the execution landscape. With many asset managers operating globally, MiFID II has also indirectly impacted the U.S. market. ESMA's 2020 review of the EU transparency regime will likely result in further constraints on the use of dark execution for smaller trade sizes. Alongside regulation, that's mainly impacted institutional trading and cash equities, retail trading has also been growing over time, particularly in the U.S. The chart on the bottom right shows this trend as well as the very strong responsiveness of retail activity to changes in market volatility. And I point this out because institutional and retail trading behavior is often different in terms of the timing and the extent of the response. Cash equities is a large asset class and was a white space for TP ICAP. With Liquidnet, we gain exposure to this area. But importantly, we gain exposure via an electronic platform specialized in large size execution, which remains a critical need in the marketplace. I hope this provides some useful context for you as you listen to the presentations on TP ICAP's stand-alone strategy as well as to our plans for Liquidnet.

Thanks, Joanna. As some of you may remember, Global Broking is a business I used to run prior to my appointment as group CEO. Interdealer brokers operate some of the world's most important market infrastructure. But I think sometimes, our role is not as well understood as say that of the large listed exchanges. I want to talk to you briefly about how IDBs fit into the market landscape and how TP ICAP is positioned. I will then tell you how we plan to take this important business forward. Interdealer broking is a relatively simple service to understand and our role in the marketplace is critical. A variety of banks, whether regional, commercial or investment banks use interdealer brokers to execute trades between themselves. The principal purpose of this trace is to help trading desks manage their market risk exposures. Banks take on market risk when they trade with our clients, generally, asset managers, hedge funds and corporates. To the extent a bank does not have offsetting client trades and is outside its risk tolerance, that bank will seek to trade with another bank to transfer that risk. Why not trade directly with each other, that's a possibility. But for reasons of confidentiality and efficiency because often interdealer trades are large in size, Tier 1 dealers typically prefer to transact in an anonymous manner. IDBs provide our clients with anonymity, price discovery and liquidity, much the same as other types of market operators, but in all other content markets where liquidity is generally more intermittent than in the listed area. The interdealer broker market is quite concentrated. This concentration has been driven naturally by the liquidity advantages the larger operators have, but also reflects acquisition activity over time. Across products, we estimate that the largest three firms, TP ICAP, BGC partners and Tradition likely account for approximately 3/4 of IDB industry revenue. TP ICAP is the largest of the 3. Importantly, we estimate that TP ICAP accounts for the largest share of interdealer broking volume in the largest asset classes in the world, namely Rates and FX derivatives. The credit market is currently fragmented. The largest 3 IDBs together account for a smaller share of interdealer trading in Credit. And we estimate that TP ICAP is the second largest. IDBs, of course, compete with each other. They also compete to some extent with direct trading between banks and with the bank's ability to internalize offsetting client business. Unlike in the dealer-to-client market, as Joanna mentioned, regulation has not particularly encouraged electronic trading between dealers in the asset classes where we operate. And many traders still engaged with their brokers via voice or messaging rather than via platforms. The bank traders default action has often been to pick up a phone even after transacting with their own customers electronically. However, voice trading is expensive, both for us and for our clients. Recognizing this pressure, we believe the time is right for a more systematic approach to introducing low-touch electronic solutions. I will tell you more about this shortly, but let me first step back and give you a quick snapshot of TP ICAP's Global Broking business today. As I mentioned earlier, TP ICAP is the largest IDB in the world, and we come on a market share of around 40%. We serve our clients through a global network with offices in 25 countries across Europe, Americas and Asia Pacific. Our business is broadly balanced between the regions. Our activities are focused on 5 main segments: rates, FX and money markets, equities, credit and emerging markets. Emerging markets comprises local market activity across all these asset classes. But because many emerging market traders transact across product segments, we organize our activities with them the same way. Rates is our largest franchise, followed by FX and equities, which is mainly focused on equity derivatives. We operate 2 main brands, Tullett Prebon and ICAP. We do this because our clients want to see competition and choice. As I mentioned, going forward, we want to build on the strengths of our brands to streamline and aggregate the ways clients can access liquidity across the firm. Reflecting the importance of our role in the market structure, our revenue performance has been resilient over the past several years. Despite the changes in regulation and the profit pressure experienced by many of our large clients. As mentioned earlier, market structures are changing. Our clients are under margin pressure. We know they need more efficient ways to transact and to manage their risk. Our clients are increasingly transacting with their own clients electronically and bank traders are, therefore, more comfortable and familiar with using platforms to transact. This is increasingly evident in the statistics of usage of platforms we have already launched. What we want to do now is introduce low-touch solutions to our customers systematically and programmatically. Over the course of 2019, the senior management team spent a lot of time working on a new group strategy. We have already begun implementing this strategy. And as I will show to you later in the presentation, it's already working. We explore the dynamics of all the product segments in which we operate across Europe, the Americas and Asia Pacific. We conducted many interviews with our clients to really understand their needs, and we need substantial research on the structure, on the trends of the market in which we operate, to make sure we grasp fully the trends and impact of change on our clients as well as on us. From this, we constructed a detailed plan of action, an end state goal for every asset class and for every product within that asset class. I will not propose to take you through all the exhaustive detail of our plan. But I do want to tell you about its high level architectural framework, which is the hub. The hub is all about bringing to life in Global Broking, 2 of TP ICAP's core strategic themes, electronification and aggregation of liquidity. So what's a hub? A hub is essentially about helping our clients access our liquidity pools more efficiently, helping them to transact more easily. Specifically, we will enable traders to access our screens and platforms by a single log in, whereas previously they had many. Our new screens will look the same across instruments and brands, again, making it easier for traders who are active across multiple instruments and sometimes across multiple asset classes to both consume information and to transact. To this end, we will integrate more data and analytical tools directly into these platforms. We will have 3 hubs: rates, FX and credit. And rates and FX will eventually come together as the macro hub. I will take you through the high level plan for each of these on the next few slides. This will be a multiyear plan. Can we be sure our clients will support us? Well, the answer is yes. As I mentioned, we consulted heavily with our clients throughout the year-long process of developing our strategy. By aggregating access to our liquidity pools by harmonizing the look of our screens, by allowing information to be more easily consumed via API interface our clients will benefit from a better pre-trade view of the markets in which they are interested. Our clients will be able to transact in the way they want. Voice will still be an option, but so will a range of other execution protocols such as volume matching, request for quote and targeted streaming. And post trade, we will deliver to our clients a more seamless process of confirming and processing transactions. We have launched several electronic platforms in selected areas, and these are already demonstrating concrete benefits for TP ICAP. So what are these benefits? First, the hubs will result in increased revenues. Client volume tends to be stickier and brokerage rates more standardized. Also with silos between bank traders starting to erode, our hub approach will enable more cross-asset or cross instrument transaction activity. This means more overall volume. With more client activity conducted via platforms and common screens, there will also be more opportunity for us to provide targeted data and analytics products. Most basically, most importantly, lower costs, improved profitability as defined by contribution and better operating margins. Just to qualify here what I mean by contribution? Its revenue minus broker compensation minus other direct front office costs. From the electronic platforms that we have already launched, we see that our brokers are more productive, contribute more and generally do more business. Do our brokers want new electronic solutions. The answer here is absolutely. Our brokers see the value of tech to create new opportunities to do more business with our clients. Are we doing this because we feel threatened by other electronic platform operators? The answer is no. This is not a defensive strategy. There are no significant electronic platforms operating in the interdealer markets we serve, that we are threatened by electronic platform operators is a common misunderstanding. We are adopting this strategy because we believe it makes sense given market trends and the needs of our customers. The hub strategy will help institutionalize the relationship between TP ICAP and the clients and result in increased cross-sell of lower electronic transactions. As the world's largest IDB, we are in a strong position to do this, and it is a strategy supported by our customers. As I mentioned, this is a strategy we developed in detail in 2019. We gave a first indication of it at the interim presentation back in March, with the intention of telling you more in June when we had originally planned to have an Investor Day. However, COVID intervened. And while the pandemic certainly disrupted some of our 2020 plans. We did, nevertheless, begin to execute. Over the next few slides, I will give you a flavor of what we are planning for each of the rates, FX and credit hubs and what we achieved this year. In the rates segment, the key products we transact are interest rate swaps and options as well as inflation and cross currency swaps. Our plan for Rates Hub is to progressively bring these products together within a single platform, which will be used by both our brands. We will, in large part, be building on previous successes. For example, a couple of years ago, we introduced a simple matching platform for euro interest rate options. Over time, we have enhanced and improved it. We chose this product as it is complex, and therefore, the technology would be easy to replicate for simpler or more vanilla products. Our ICAP interest rates options platform is market-leading in terms of setting industry standards of user interface, connectivity and functionality. The broking desk works with customers to design next-generation instruments. This hybrid approach strengthens the overall brand franchise for ICAP, producing higher profitability per head than on the voice-only desks. So what did we achieve in 2020? Well, we introduced several enhancements to the options platform I mentioned and achieved our first cross-product electronic aggregation of liquidity by bringing inflation swaps index conventional gilts and interest rate swaps onto a single trading platform. And in another proof of concept, we achieved a cross-brand aggregation success when we introduced in September, the very successful ICAP interest rate options platform to the Tullett Prebon brand. In FX, our main products are G10 FX forwards, where we have a market-leading franchise, FX Options and non-deliverable forwards. Our plan for FX is similar to rates. We will seek to progressively bring together the various product offerings across our brands and regions into a harmonized platform environment. The highlight of our progress this year has been the launch of FXOhub, our cross-brand platform for trading FX Options. We launched the platform in March of this year, and it's been a success, helping us to improve our options market share by approximately 5 percentage points. Over the next few years, we will bring our other products into a common user interface, thus improving our client connectivity and straight through processing. Ultimately, we want to bring our rates and FX subs together into a macro hub, reflecting the trend of some banks combining rates and FX desks as well as the natural crossover of products like cross currency swaps. Our Credit Hub follows the same concept as rates and FX, and again, progress this year has been good. In terms of cross-product diversification, we've rolled out much book rebalance, a new product for cash bonds, which allows traders to reduce residual risks in their portfolio. Encouragingly, although this was built with the requirements of leading algo desks in mind, we are seeing many traditional traders also use the platform, highlighting its value and relevance. The platform is entirely electronic, meaning that we have automated every part of the trade life cycle. Turning to financial targets. Our client base in Global Broking is concentrated amongst the large global banks. And the trading divisions of these banks are under profitability pressure due to some of the trends in the client market that Joanna had discussed in an overview of market structure. As a result, revenue growth will be modest. So the central purpose of our Global Broking strategy is to improve profitability, to improve our contribution margin and operating margin by electronifying our pre to post-trade processes and by aggregating clients access to our liquidity pools as transactions migrate from high touch to low touch. Broker productivity will improve, even if revenue growth does not accelerate. That said, where electronic platforms have been deployed, we've indeed seen substantial revenue growth in both our interest rate options and our FX Options businesses. What's different about the hub strategy compared with our historical approach is that it comprehensively covers all our desks rather than a piecemeal approach. Our plans for each of rates, FX and credit comprise a logical timetable of progressive rollout with a defined end state that aligns with our clients' preference. Spending on our strategic investment program will be concentrated in the first 2 years. We are targeting a contribution margin of circa 40% by 2023, rising to circa 42% over the medium term. And we are targeting an operating margin of circa 19% by 2023, rising to circa 20% over the medium term. As a reminder, these improvements are an output of the electronification of our business through our hubs. This will lead to an increased share of low-touch revenue, increase broker productivity and an improved contribution margin. Many thanks for your time. Next, Andrew Polydor, CEO of our Energy and Commodities division, will tell you about his business and the Energy and Commodities strategic plan.

Many thanks, Nico. Good morning. By way of introduction, I'm Andrew Polydor, the CEO of Energy and Commodities for TP ICAP. I spent more than 2 decades in energy broking with my starting point being setting up Prebon Energy, Sydney in the late '90s. Fast forward a few years, and I took up the position of Global Head of Energy and Commodities in 2008. Since then, along with my team, we have set about developing our business through organic growth and targeted acquisitions, such as PVM in November 2014. The energy and commodity market is still a highly fragmented space with opportunity for further consolidation, which brings us to today, where I will use my time to provide you with an overview of our Energy and Commodities business, take you through our medium-term strategy and what we anticipate the output of the strategy will be. In E&C, we operate 3 world regarded brands: Tullett Prebon, ICAP and PVM across a range of products globally. We are the largest over-the-counter or OTC energy broker in the world, and we ranked #1 or #2 in the majority of markets in which we operate. We have 657 brokers in 19 locations, generating GBP 382 million in 2019, making us the largest by both headcount and revenue. We are the global leader in oil markets in both physical and OTC products. In terms of products we cover, oil is currently our biggest sector. We also hold strong positions in the power and gas markets across the globe. In addition to these strengths, we have a strong emerging franchises in biofuels, ethanol and environmental products, including weather, we are gaining a very good global reputation. Geographically, we have been concentrating on becoming more diverse. Recently, we are focused on expanding our offering in the U.S., and this has resulted in a 30% increase in our revenues. E&C also helps to diversify the TP ICAP group customer base. We are an all-to-all market with most of our revenues coming from trading houses, producers and corporates. We are not dependent on traditional IDB customer base. We only have 4 sell-side customers in our top 25 and only one in our top 10 to diversify further, we'll be making a push into the buy-side. Leading us to on-boarding several hedge funds over the past 12 months. As I say, oil is currently our biggest source of revenue. As with all products in E&C, global macro events are the primary drivers of activity. Real-world events, such as sanctions against rogue commodity-based nations or big weather events move our markets. As such, the pandemic prompted significant activity in the first 5 months of this year as the market started adjusting their positions for the year ahead. Planes not flying, goods not moving, people not commuting, all had marked effect on the oil markets during this period. Traditionally, we use ICE as a proxy for market activity. As you can see from this chart, we are tracking market volumes. After a very volatile start to the year, activity is now beginning to return to normal levels. In terms of strategy, our medium-term goal is to roll out oil hub, followed by a digital assistant, we call Darwin. Both initiatives represent true innovation in the market. Oil hub is conceptually like the hub approach, Nicolas outlined early in Global Broking. In essence, it's a global electronic platform for all our oil brands. It's important to remember that today, OTC oil markets still primarily operate over voice and instant messenger. In contrast to this, oil hub will aggregate our pricing from all our brands onto one platform and will change the way the brokers interact between themselves and the market. Complementing the oil hub, Darwin, a proprietary machine learning solution will further assist brokers by analyzing data to provide brokers with tools and information to predict trading activity. Oil hub will deliver several other benefits that will enable us to vastly improve our operational efficiencies, resulting in increased broker productivity and fewer errors. This, in turn, will create further seed value. Oil hub will also harvest data in a consistent manner to feed and enrich the analytics, the Darwin and our Data and Analytics division undertakes, meaning brokers and clients will be better informed to make better decisions. As I mentioned earlier, oil hub would also allow us to aggregate liquidity between brands, eventually allowing us to show our customers an aggregated view of our markets. In terms of execution, our target, which is aggressive, is to deploy oil hub on every broker desk by the beginning of Q2 2021. The digital assistant will follow shortly thereafter. Once deployed, we anticipate that the benefits outlined will flow through relatively quickly. Of course, the mega-trend effect in the oil markets is environmental, social and corporate governance, or ESG for short, and the transition to a greener future. For example, earlier this year, there was a specification change in the amount of sulfur permitted in fuel oil, which is used as a marine fuel. This change is designed to significantly reduce emissions generated by the shipping industry, and we are supporting our customers through this transition. Currently, oil volumes remain strong, but we are mindful of the oil majors like Shell and BP, being very vocal on ESG, stating their target to be carbon neutral by 2050. From our perspective, we are already well equipped to support our clients in their transition needs. We will continue to monitor what is a fast-moving environment and plan the future so that we remain relevant to our clients as they seek to decarbonize their business. You may be interested to know or in surprised that today, 40% of our revenues already come from positive, neutral or transitional products. Positive and neutral products include power, which is increasingly being derived from renewable sources, alternative fuels such as biodiesel, carbon credits and weather. Transitional products include liquefied natural gas or LNG for short and gas. Looking ahead, the transition segment of the market, which we'll see industry move away from high carbon fuels to lower carbon fuels such as gas, will be of increasing importance over the next 5 years, with LNG, in particular, playing a pivotal role. This increasing importance is reflected by the large investment in recent years in LNG infrastructure across the globe to enable gas to be shipped. This is transforming the gas markets from being essentially domestically traded markets to internationally traded, not unlike oil. With our established global footprint in gas, we are well positioned for this change and for the future. We are also monitoring the emergence of the hydrogen market, which will also leverage on LNG infrastructure. The focus on the ESG does not mean that oil is disappearing anytime soon, though. Why? Because demand for oil away from transportation will continue to grow for industrial purposes. Petrochemicals that are used for the manufacturer of plastic and polycarbonates is a good example of this. In particular, when you look at these products and their use in the automobile industry as it accelerates production of electric vehicles. Turning to financial targets, we anticipate the output of our strategy to result in improved metrics. Over the medium term, we are targeting 4% revenue CAGR. For contribution margin, we are targeting around 35% in 2023, rising to around 38% over the medium term. Our operating margin is started to reach 15% in 2023 and around 18% over the medium term. The payback for our investment in technology and the drivers of our improved operating margin will begin with increased broker productivity, specifically, more revenues, better quality revenues, thereby improving our broker contribution metric. We will also continue to be diligent around managing non-compensation costs to improve our bottom line. So in closing, we are the biggest energy and commodity franchise in the world. From this position of strength, our aim is to extend our leadership, being well positioned as we are to benefit from market transition ahead and shape the future of the OTC oil markets by being pioneers in its electronification. Thank you for your time, and I hand you over to Eric Sinclair.

Thank you, Andrew, and good morning, everyone. My name is Eric Sinclair, and I am the Chief Executive of TP ICAP's Data and Analytics business, a position I've held since November 2017. Before joining TP ICAP, I was President of the Market Insights division of the Toronto Stock Exchange. My prior experience also includes working for Reuters for 16 years. Today, much like my colleagues who have gone before me, I'm going to start with an overview of the business, take you through our medium-term strategy and then cover the outcomes for our shareholders that we expect from the strategy. Reflecting TP ICAP's position as the world's largest IDB, we are also the world's leading provider of neutral OTC content. Given the nature of the OTC markets, OTC content is scarce and therefore, valuable, and we are the provider of the greatest breadth and depth available, covering, but not limited to, rates, money markets, foreign exchange, fixed income, equity derivatives, credit and Energy and Commodities. As Nico pointed out in his Global Broking presentation, we are a neutral provider of essential content for price and liquidity discovery. Without taking positions in the products we broker, we are a trusted source of quality data. We have a growing list of well over 1,000 clients, including Tier 1 banks through the very small banks. Central banks, the world's largest sovereign wealth funds, asset owners, asset managers, hedge funds, exchanges, index providers, consultants, Corporates, governments and Energy and Commodities clients. Market data vendors are also major clients and an important part of our distribution capability. These clients are served by our dedicated team of over 180 people located all over the world in sales and channel management, product management, DevOps and global data operations. The quality and depth of our products, combined with our high client service is why we are growing at double the rate of the industry and why we have been voted by our clients the best broker data provider by inside market data for the past 10 consecutive years. Turning to our revenues. Most of our sales are generated from 2 year license agreements with a 98.5% renewal rate. This drives a high quality, reliable, predictable revenue stream, where over 94% of our revenues are recurring. We have achieved double-digit revenue growth, combined with operating leverage, driving a contribution margin of 50% and operating profit of 44%. The financial market data industry is a $38 billion industry with a growth rate of 4.5%. Despite data volumes growing at double-digit rates, the industry revenue growth has not followed suit. The IDBs represent just 0.6% of industry revenues. From this starting point, we believe we have excellent growth potential, growing well beyond the traditional IDB data business. We will achieve this by being surgically precise and pursuing opportunities where we have a competitive advantage and targeting the other 99.4% of the financial market data industry. Our strategy is to follow the money and pursue growth opportunities where we can leverage our neutral OTC data in sectors of the industry that are growing faster than the mean, such as benchmarks and indices and evaluated pricing, which have annual growth rates of around 10%. We also see excellent opportunities in providing RegTech solutions with greater demand being driven by increasing regulatory changes. There is also client demand for more sophisticated analytics. The 3 prongs to our strategy are: to provide new products and services that move our offering up the value pyramid by providing solutions that provide greater value to clients, expand our client base to include the buy-side and corporates and execute a distribution strategy that offers clients greater agility and optionality to obtain our products, including from new channel partners. For the last few years, we've made progress in monetizing proprietary data from both our Global Broking and Energy and Commodities divisions. This has proven to be successful. In the last 2 years, we have launched 25 new products, and 32% of sales have come from our new products. We have also grown our data partnerships to include over 15 third-party data sources. However, to develop our potential further, we need to add additional data sources so that we can move up the value pyramid to provide information products, such as those I mentioned earlier, benchmarks, indices, RegTech products, evaluated pricing and analytics. This is the real prize as this will result in higher levels of profitable revenues and mean we are able to compete for a piece of the financial market data industry spend outside of the traditional IDB sector. We have already started to execute our strategy. And earlier this year, we launched our first information product, bond evaluated pricing. Bond evaluated pricing combines our data with third-party data to create intraday transparent insight with observable pricing from our neutral broking partners. This has been well received as we created this product in response to demand from our clients who needed a more accurate tool to help them meet the regulatory requirements and run internal risk market tasks. From January 2021, we'll expand this offering to include other asset classes. We will also expand our role in important benchmarks, especially as it relates to the global transition of risk-free rates away from LIBOR. In addition, we'll launch new indices that leverage our industry-leading broker franchises. This includes an interest rate options volatility index-based on our Global Broking data and index partnerships in Energy and Commodities. These are very exciting projects for us that we aim to roll out in H1 2021. Our sell-side client base is strong. It is one that we will, of course, continue to invest in and manage. But the new area of focus is to target the buy-side. Our target is that 45% of our client mix will be from the buy-side in the medium-term from 15% currently. We have grown our client base well north of 1,000 clients with most of this growth coming from outside the sell side, including asset managers, asset owners, corporates, nonbank liquidity providers and hedge funds. These clients demand our scarcity available content to help them meet their regulatory requirements, assessing our observable pricing and liquidity. We also provide neutral content critical to the creation of benchmarks and indices. We will create new benchmarks and indices and work with partners to accelerate this and create advanced analytics. While our clients may suffer from data overload, they absolutely need the best OTC data, combined with advanced analytics to improve the signal-to-noise ratio and gain greater insights. We have established regional sales leadership to manage our territories globally. Going forward, our team will focus on specific client segments, including sell side, buy-side and corporates and Energy and Commodities. We also believe there are more opportunities in Energy and Commodities and intend to double the revenues by 2023 and then triple revenues in the medium term. Although not factored into our organic forecast for Data and Analytics, we see opportunities to leverage Liquidnet's 1000-plus client base as a source of buy-side client penetration. So in the medium term, we will continue to drive a growing business with the sell-side, which will be complemented by more buy-side clients and double the percentage of clients from Corporates and Energy and Commodities. The third prong is our distribution strategy. Today, we rely on 24 market data vendors to distribute our data to clients and have over 500 direct connections, providing content across our multiple broking brands. However, our clients need more choice to provide their business partners more agility and a lower total cost of ownership or TCO. To help meet this need, we have already achieved a great deal in 2020. We have launched a direct-to-client service known as Cervix, which provides clients direct access to our critical mass of breadth across multiple brands, including Tullett Prebon, ICAP and PVM and the easy to use, industry standard, fixed format. We have launched an online web store, which allows our clients to buy products from us directly, much as you would if you were using Amazon to buy books. We've expanded our channel partners to include the public cloud providers, allowing clients to move their market data infrastructure from their premises to the public cloud. As stated earlier, this will allow our clients to operate with greater agility and a lower total cost of ownership. Looking ahead, we will continue to expand our channel partnerships to include order management and execution management systems providers. To demonstrate how the 3 strategic prongs come together, we want to show you a case study. The first product that we will launch next year will move us up to the knowledge segment of the value pyramid, where we provide clients with greater context and insight for the decision-making. It is a solution to deliver pre and post-trade analytics. The new product was developed specifically for the buy-side, and will leverage the multi-asset neutral observable transactions sourced from our evaluated pricing service. The buy-side will be able to address their best execution deals using benchmarks based on our scarcity available content, and they'll be able to access it from a variety of easy to use channels, including from us directly. Pre and post-trade analytics advances our product strategy of moving up the value pyramid, meeting the unmet multi-asset needs of the buy-side and working with technology disruptors as our channel partners. Like most companies in the market data sector, we initially experienced a setback to growth early this year due to the impact of COVID-19. This led to clients deferring new initiatives and the regulators deferring compliance dates for new regulation, slowing down revenue growth. However, the need for data and analytics doesn't stop. And as we have all adjusted to remote working, we have seen a recovery in winning new business. Looking forward, we are excited about our medium-term strategy focused on delivering new solutions, winning new clients and providing new methods of distribution. We see revenue growth of 11% per annum, a contribution margin target of circa 53% and an operating margin target of circa 45% by 2023, rising to 48% over the medium term. We are confident in our capacity to execute. We have a critical mass of OTC content to be the leading provider. We now have a global team with a critical mass for service, and our business will provide operating leverage as we grow. We will continue to move up the value pyramid, expand and diversify our client base to include 45% buy-side clients and work with technology disruptors to provide clients with greater agility and a lower total cost of ownership. Finally, as we charter future growth, we are clear that the data and analytics division has benefited enormously from being part of the world's largest IDB and producer of high-quality neutral OTC content. So to help accelerate our expansion of content partnerships, move up the value pyramid, broaden our client base and work with technology disruptors, we believe we are best served from having a more distinct identity in the market. To this end, we will be unveiling a new brand for the Data and Analytics division in the first quarter of 2021. It is set to be an exciting time for our business, so continue to watch this pace. Many thanks, and now over to John Ruskin.

Many thanks, Eric. Good morning, everyone. My name is John Ruskin, CEO of Institutional Services. By way of short introduction, I've built my career around the agency execution business model that underpins institutional services. It is a model I fundamentally believe in. I joined TP ICAP via the 2017 acquisition of Coex Partners. This acquisition was the outcome of a successful longer-term JV partnership. The Coex transaction created the building block to establish Institutional Services division from both a revenue and a business model perspective. To briefly summarize our activity, Institutional Services exists to assist clients with their investment and execution process, from trade conception right through to post-trade analytics. We serve buy-side clients such as hedge funds, asset managers, corporates and family offices. Our mission is to compete for and originate new execution flows on to the world's largest trading venues. Those venues range from exchanges to bank and nonbank liquidity providers. Building on the momentum of the Coex brand, we continue to operate under that name. Initially based in London and the U.S., we have recently established a presence in both Paris and Singapore. Headcount stands at just over 100 people, executing client transactions across FX, listed derivatives, government bonds and interest rate swaps. Physical presence in all-time zones allows us to compete in local markets. It also enables us to serve large clients. These are traditional asset manager's who require their high-touch brokers to roll their order books across 3 time zones concurrently. A fundamental element of our success is our ability to recruit the best talent. Our business is driven by a group of proven and established sales leaders, many of whom have let senior posted investment banks to join us. IS has existed in its current format since 2017. Since then, revenues have grown at a compounded annual rate of approximately 21%. Annualizing our year to September numbers, revenue per head stands at GBP 920,000. There is no question that for now, we must remain in the build-out investment phase. However, in the next 3 years, we will naturally begin to transition those revenue gains into increased bottom line contribution. For example, in London and the U.S., our revenue growth is in a traction stage. And Paris and Singapore, revenues are in a very early growth phase, similarly by products. Our futures, government bond and FX products are in a more advanced stage than swaps, for example. Relatively rapid growth has been a function of continuous investment. We have added new products, each of which has required new settlement and operational capability. We have added new people and created strategic partnerships to access state of the art execution technology. We have also built more proprietary capability in algorithm execution while expanding our physical presence to new regions. So for now, we will continue to execute our strategy of broadening product coverage and geographical reach. In addition, we remain focused on facilitating more high-value electronic execution. Technology increasingly underpins our activity across all product groups. We are often asked what we mean by agency execution. We use the term in a fairly literal sense to describe the service where end clients, such as asset managers, hedge funds and corporates, empower us to act on their behalf to achieve their executed objectives in the marketplace. We have some natural advantages in taking on this responsibility. Firstly, we are not risk-taking agents. We do not market make, prop trade or carry inventory. As such, clients are comfortable that our interests are aligned to their own. Secondly, we are singly focused on execution. It is our core business. The right-hand side of the slide highlights some important background dynamics. We've listed just some of the factors that we consider as we frame our service offering. Our market has been subject to a relentless barrage of chain since financial crisis. Greater prudential regulatory burden on banks has led to more electronification and an attempt to increase the velocity of balance sheet use and reduce cost, the effect has been to see a rapid expansion of volume of trades and a simultaneous decline in the average size of trades. The Institutional Services division has welcomed this evolution. It plays to our strengths of managing complex execution flows. The futures industry was among the first to move to wholly electronic order books. So it's in our DNA to automate wherever possible. Almost half of the division's revenue already results from executions managed by our execution algorithms. Clients turn to us to get difficult to execute trades done, often at levels that they are able to achieve by dealer risk pricing. Furthermore, with liquid, transparent and more vanilla products, much larger historical data sets tend to be more available. This allows our teams to compete for client mind share through fruit-full analytics. We have a long history of producing timely commentary and trade ideas that clients greatly appreciate. We act as a trusted partner to clients in identifying training opportunities, supplementing clients' own resources to systematically come for rich, cheap opportunities with good risk and payout asymmetry. These ideas often stem from internal factors such as pricing dislocations, relative value, liquidity events, trends and cycles. Equally, our ideas may be borne out of external factors such as macro or regulatory developments. Or indeed more tangential elements such as funding costs or venue incentives and market structure. With our singular focus on agency execution, we seek to do more than merely meet regulatory best execution standards. We work to outperform and get clients better feels. The interaction of our experienced practitioners, execution algorithms and clients is a constant and iterative work. We have established a significant footprint where banks may consider this level of service to be insufficiently profitable to maintain a competitive presence. Meanwhile, clients have been facing the awkward challenge of improving their execution capability at the exact moment that returns are proving harder to generate and their own investment dollars are scarce. This is the paradigm for which we are positioned. By establishing institutional services, the group has brought together its agency execution style businesses to create a backbone of services to support them. As a result, our revenue mix is becoming more diverse. This ratifies our strategy and increases my comfort that we will hit our targets and maintain the right balance of ongoing investment. As we continue on our growth path over the next 2 to 3 years, we will work to identify the levers that will take our revenues to the next order of magnitude. One thing is for sure, we will need to leverage the resource and global footprint of TP ICAP. In terms of targets, we are focused on achieving a revenue CAGR of circa 12% over the medium term. For contribution margin, we are targeting circa 30% by 2023, rising to 34% over the medium term. And for operating margin, we are targeting 19% by 2023, rising to 24% over the medium term. In conclusion then, as we enter a period of fresh, geopolitical and regulatory uncertainty for markets that will continue to create strain on our larger balance sheet dependent peers. We are seeing a significant uptick in requests from investors that traditionally saw execution services exclusively from banks. We begin our next growth phase with an agile and scalable platform that retains its startup energy and proven growth model. We are the leading contender for what may be only 1 or 2 spots at the table for alternatives to the traditional bank dealer group with the world's real money community. Finally, we have the resources of a FTSE 250 plc to draw upon as we move quickly through our growth phases. The TP ICAP group is loaded with capabilities that ICE is already beginning to leverage. And that will enable us to remain focused on our clients, our people and the execution of our mission. Thank you.

As Nico mentioned earlier, we see the acquisition of Liquidnet as a unique opportunity to transform, diversify and grow TP ICAP's business. Liquidnet was founded 20 years ago, and today is a technology-driven global electronic trading network with more than 1,000 buy-side clients managing around $33 trillion of AUM. This network is closely integrated with asset managers end-to-end workflows from the portfolio manager to the trader to the mid and back office. Liquidnet's business is organized into 3 segments. The large majority of revenue is accounted for by cash equities focused on dark trading of larger-sized orders. It has a growing fixed income segment, which is focused on buy-side to buy-side corporate bond trading with roughly 500 clients and a nascent investment analytics business, which provides customers with a range of tools to help them filter and analyze data. There are 3 categories of activity where we see sizable opportunities from the combination of Liquidnet and TP ICAP. The first of these has been dealer-to-client trading of corporate bonds. The second is in dealer-to-client trading of rates, particularly of interest rate swaps; and the third is in data and analytics. At the heart of the credit and rates projects is our ability to leverage the Liquidnet global buy-side network and apply our own dealer connectivity and relationships. And I want to emphasize just how valuable this network is. Looking across asset classes, there are maybe 7 or 8 platforms in the world with comparable buy-side connectivity. Such networks are built over decades. Starting from scratch, it is hard and expensive and slow to achieve integrations with all the key order management and execution management system providers, OMS and EMS. And for those of you not familiar with this critical aspect of financial markets plumbing, at a high level, and OMS is a software application that manages communications between portfolio managers and traders as well as other aspects of workflows such as allocations and position management. EMS focuses on order execution and is used by traders to access electronic venues like Liquidnet and to manage the order execution process. Often the lines between OMS and EMS can be blurry. Now I would like to introduce Mark Pumfrey, who will provide an overview of the Equities business.

My name is Mark Pumfrey, and I'm global Head of the Liquidnet equity business. First of all, I want to say how excited we are at Liquidnet to be joining TP ICAP on its journey at this time of great change and opportunity for the global financial services industry. Our history at Liquidnet is founded on innovation and change in the fast-moving capital markets landscape. We started our equity business 20 years ago when we partnered with nearly 40 of the largest U.S. equity fund managers to break the mold in the way in which equities were traded. This started our buy-side membership model, which now comprises over 1,000 of the largest hedge funds and long-only asset managers around the world. Our technology-based and aligned interest model allowed these institutions to share their order indications anonymously with each other in our pool using a technology we call blotter sync. When the platform finds matches, a trade can be executed at mid-market price with little or no information leakage. Our high-match rates and high-average trade size reflects the global spread of our client base, Liquidnet's connectivity to most execution and order management systems in the market and the trusted access the system has to trade as blotters. Our ability to combine automation with a system that can protect sensitive information is why Liquidnet has been able to achieve a global block average execution size of $1.5 million, many multiples higher than other dark venues. In today's market, replicating such a network would be incredibly difficult, given the trust required to build it and the time it would take. From the beginning, our development approach has been based on intense collaboration with our buy-side membership. We work closely with our clients to innovate and create new tools that will enable them to expand their use of trading technology, reducing the daily burden on the trader, while continuing to minimize information leakage. In 2015, we invested to double down on our nascent algo offering, which is the perfect complement to the block business. algos are helpful when traders need to execute quickly, whereas blocks tend to be used for large orders where minimizing market impact rather than speed is the top priority. Since 2015, our algo business has trebled in terms of principal traded and today makes up 1/3 of our global equity revenue. In 2017, we acquired OTAS, a top-rated analytics platform to derive value-added statistical signals that we deliver to the buy-side via our OMS connectivity straight to trader's desktops. We are able to automatically push only statistically relevant signals direct to individual traders on a real-time basis. This again reduces the workload for the buy-side trader and improves execution outcomes. These signals are now being developed to power a new suite of algos beyond the dark towards lit markets where we see large untapped commission wallets, again making the traders life easier. We believe we have a very exciting future for our business, with events in 2020, providing a further accelerator for technology-based service offerings, as we've seen in many industries. As ever, we are working closely with our buy-side client base to deliver value-added services to them much as we've been doing for the past 20 years. This is the perfect time for Liquidnet to embark on the next stage of our development to complement the wide offering TP ICAP has created over many years. Of course, we're not yet one company, and the combination is subject to regulatory approvals, but we see tremendous opportunity for the combined group of companies in the future. Thank you.

Thank you, Mark. Turning to fixed income. Liquidnet launched client to client dark matching in September 2015, with U.S. and our European investment-grade and high-yield bonds. Liquidnet's credit revenues are currently small. However, the trading potential represented by the size of the connected customer base and the extent to which they actually show orders to the platform is substantial. As the top chart illustrates, Liquidnet actually ranks as the fourth most used platform amongst buy-side traders globally. Via their OMS and EMS integrations, buy-side clients show the platform approximately $13 billion of liquidity daily, and these are large mainstream asset managers. Liquidnet's 500 active buy-side clients include 47 of the top 50 bondholders globally. Where Liquidnet's business model has differed from the 3 other large platforms, Bloomberg, Market Access and Tradeweb is in its focus on client-to-client direct negotiation. At present, request for quote or RFQ protocols dominate trading patterns. This explains the disconnect between the size of Liquidnet's client base, what the platform sees in terms of order activity and the trades and by extension, the revenue actually achieved to date. Whereas electronic RFQ simply translates to the platform world, the previous practice of buy-side traders calling up to request quotes from dealers, the success of a client-to-client protocol requires buy-side traders to effectively become price makers. In the corporate bond world where there's little price transparency, it is traditionally the role of the bank to be the price maker and the buy-side trader to be the price taker. This is in contrast to the equities market, where the exchange traded price of a stock provides a useful real-time reference and makes matching between 2 buy-side counter-parties much easier. Although many in the market believe that client-to-client direct trading will grow for the moment, the RFQ family of protocols dominates. Responding to the persistent dominance of D2C, which accounts for approximately 4/5 of volume traded, Liquidnet has started to introduce more options for dealers to interact with its buy-side clients. Earlier this year, it began to allow some dealers identified as such to participate in the negotiation pool. And in addition, Liquidnet has also been developing an algo portal, which will allow buy-side clients to automatically send orders to dealers and for dealers to quote prices to buy-side customers. This brings me neatly to the first of our post-transaction projects, dealer-to-client trading of corporate bonds. As I mentioned in the market context section, credit was one of the asset classes most impacted by the post-2008 changes to regulation. Approximately 80% of the corporate bond market comprises some form of dealer to client trading. So this is a very large part of a big market, as you can see from the top left chart. As we discussed earlier, industry pressures such as best execution and the increased difficulty of finding liquidity have caused buy-side traders to turn more to electronic platforms. Last year, an estimated 30% of corporate bond trades were executed via an electronic platform, either fully electronically or negotiated outside the platform and processed electronically to make the buy-side traders workflow and audit trail capture more efficient. However, there's not much competition amongst platform providers serving this large segment. The 3 platforms listed on this page account for most platform activity. And when you think about the choices that exist for equities trading or even FX, the comparative thinness of platform options is arc. Why so little competition? It is because the barrier to entry in dealer to client trading is connectivity, not liquidity, connectivity between clients and dealers. And as both Mark and I mentioned, this connectivity takes years and years to build. You cannot just bring it into being because regulation changes. While pre-completion, we aren't able to discuss our plans in great detail, I'm able to tell you why we are confident that we'll be successful in the credit market. As one of our post-transaction areas of immediate focus, we tend to build a market-leading D2C offering. For this, together with Liquidnet, we have the inceptual ingredients. On the TP ICAP side, we bring strong dealer relationships. The main dealers in the credit market have been our clients for decades, and they trust us. We also bring substantial data assets, which we think we can deploy to make the marketplace work better. But more about this in a few minutes. Liquidnet brings more than 500 already connected buy-side clients. Liquidnet also brings tools such as the D2C oriented algo portal and the innovative blotter sync technology, which was originally developed for equities. These tools will be critical to building a differentiated D2C offering, because we do not intend to be a me-too platform. Upon closing, we'll be able to immediately start executing on our credit market plans, and we would anticipate being able to provide the market with data along the lines of what is provided by some of the other major platform operators. Turning now to rates. As we discussed in the market context section, regulation has triggered substantial changes in the interest rate market structure. In respect of our strategy for Liquidnet, the most important changes are the growth of dealer to client trading of interest rate swaps, which you can see from the orange bar on the chart on the top left and the increased use of electronic platforms by the buy side for the reasons we discussed earlier. However, although D2C electronic growth is strong, we believe the current market structure is not ideal for many participants. At present, there are only 2 meaningful platform offerings in the D2C electronic rate space, and interest rates is the largest asset class in the world and 70% of interest rate swaps volume is D2C. This is a very big market, and the market needs more competition in our view. And together with Liquidnet, we believe we can provide a powerful offering. As you know, TP ICAP has a leading global interdealer rates franchise. So we very much understand the global interest rate markets. We also have i-Swap, which is an exchange grade, very fast interest rate swaps trading platform, which we own in cooperation with a number of Tier 1 banks and which is connected to 41 banks. Liquidnet has its client network, and there is substantial overlap between credit and rates traders, particularly in Europe, and Liquidnet has its buy-side workflow integrations. These are the ingredients for a compelling D2C interest rate platform. Our rates offering won't be quite as out of the boxes for credit. In order to get rates live, we need to build the connectivity between Liquidnet's network and i-Swap and our other electronic platforms. Turning to the third area. Although we've mainly been talking about trading, the opportunity we see for our data and analytics business is also material, and there are a number of different strands. First, Liquidnet brings us a lot of new buy-side customers. As Erik has indicated, many of our existing and planned higher-value products are geared towards the buy side, and the buy side is a key target client base for us even on a stand-alone basis and having so many institutions already as customers makes the sale process easier. Second, we can also use our global DNA sales team to sell Liquidnet's analytics products. TP ICAP's distribution capability is much larger than Liquidnet's. Third, we can apply Liquidnet's data science tools to TP ICAP's data to create new products and services for free trade, post-trade and risk management and potentially for indices. We've heard loud and clear that the market needs more detail on our financial plan for the business post completion. We're clearly restricted by regulation from providing a profit forecast, so what we've done on this slide is try to provide you with some additional information on our assumptions to help you understand how we're thinking about the growth profile. Over the first 3 years post completion, we would expect to deliver cumulative average revenue growth of around 17%. A lot of this growth is expected to come from credit, as you can see from the shading of the bar chart. To provide further context of how this revenue could be generated, I would point you to our target year 3 share of corporate bond trading volume. We also provide you with a 5-year objective to give you some further context about our targeted growth profile beyond 3 years. The large listed platform operators provide a lot of information about volumes, market share, revenue and fees publicly, and we would urge you to look at this data. In equities, where the market is more mature, our top line assumption is to move in line with market trends. And I expect many of you cover operators of equities businesses and so could form a view on what that is. We do also think we can expand the equity's operating margin by at least low single digits. In rates, where we have some IT build requirements, we will get started on this right away. We expect to invest about GBP 25 million over the first couple of years. We assume revenue only from year 3. Rates is a big market, and we strongly believe that the current platform landscape could do with another competitor. Over the medium term, we will be targeting an EBITDA margin of around 35%. I do hope that this is at least somewhat helpful color for those of you attempting to build models. Now over to Robin, who will talk you through our group financials.

Thanks, Joanna, and good morning, everyone. I'm going to take you through select financial targets for TP ICAP over the next 3 years and the medium term on both a stand-alone basis and including the impact of Liquidnet. The term target should not be construed as a forecast but reflects the approximate outcome we are targeting for the business over the medium term. But before I do so, I wanted to take you through 2 important matters: the impact of the Jersey redomiciliation of TP ICAP's TopCo and the rights issue mechanics relating to the acquisition of Liquidnet. So let's look at the impact of the Jersey redomiciliation. As we announced in December 2019, the group is in the process of completing its redomiciliation by incorporating a new group holding company in Jersey. The redomiciliation will create a capital-efficient corporate structure that will provide the group with greater financial flexibility, stronger regional governance and greater competitiveness. The group currently has a deficit in its consolidated capital requirements under CRD4. The corporate structure that we create should enable the group to comply with these requirements as soon as the process is complete, and this will remove the need for a waiver. This will, therefore, alleviate the ongoing requirement we currently have of setting aside around GBP 25 million to GBP 30 million of tangible capital per annum until the end of 2026. We will be publishing the scheme documents, a circular and prospectus at the beginning of January 2021 and anticipate shareholder approval later that month. The scheme is expected to be effective by the end of Q1 2021. The completion of the redomiciliation is a condition precedent to completing the acquisition of Liquidnet. The second matter is the rights issue mechanics on the next slide. As you know, we are seeking to finance $425 million of the initial consideration for the acquisition of Liquidnet with a rights issue. I wanted to take you through the rights issue mechanics and the illustrative time line. The rights issue gives our shareholders the right to purchase new shares in the company in proportion to their existing shareholding on the record date prior to the general meeting. The rights issue is non-dilutive if shareholders take up their rights in full but also compensate shareholders who wish to sell their rights. In other words, if you're a shareholder who owns 1% of TP ICAP shares and take up your rights, you will continue to own 1% after the rights issue. If instead you choose not to take up your rights, we will sell those rights into the market and provide you with the proceeds. Investors must be shareholders on the record date to be able to participate in the rights issue. We expect to publish the circular and prospectus for the rights issue in the beginning of January 2021 in advance of a general meeting, which we expect to be 2 to 3 weeks later at the end of that month. The record date is the business day prior to the general meeting. This means investors wishing to build a meaningful shareholding beforehand will be limited by the trading liquidity in TP ICAP shares in the period leading up to the record date. The rights issue requires shareholder approval with a vote of at least 50% at the general meeting. The subsequent rights issue offer period takes place over the following 2 weeks. During this period, any shareholders who may not wish to take up their rights can sell them. Turning now to our targets, starting with revenue and operating margin. The chart on the top right shows the aggregate revenue growth of the 4 stand-alone TP ICAP businesses that we estimate over the medium term. Revenue is targeted to grow at a compound annual growth rate of around 3% over the period, showing the impact of the higher growth Institutional Services and Data and Analytics businesses. The stickiness of the subscription-based Data and Analytics revenue will reduce the revenue growth risk of that business. The chart on the bottom right shows the expansion of the underlying operating profit margin of the group from the 15.2% reported in 2019 to around a targeted 17% in 2023, with a medium-term target of around 20%. The margin expansion will not be linear over the period to 2023 as we plan to invest over 60% of the targeted increased GBP 100 million technology budget in the first 2 years to drive the improvement in business contribution. The margin expansion is driven by the revenue and contribution improvement from all the business divisions. The margin improvement derived from Global Broking and Institutional Services is mainly as a result of the improving contribution margin in the businesses. The benefit from Energy & Commodities results from both revenue growth and increased contribution margin. And in Data and Analytics, the impact of the group's underlying operating profit margin improvement comes from the strong revenue growth in the business, together with an already high but stable contribution margin. The GBP 35 million annualized cost savings we announced in the Q3 trading update should be achieved by the end of 2021. Half of these savings will be reflected in the improving contribution margin in Global Broking. The remaining savings should provide efficiencies in the support costs of the broking businesses. The next slide outlines the drivers to growth in the group's net income over the medium term. Net income improvement over the period is driven mainly by the margin expansion we are targeting from our 4 business lines. It will also be impacted by the group's financing expense and the group's effective rate of tax, which is uncertain following the recent U.S. elections and potential tax changes in the U.K. and other territories as a result of the COVID pandemic. As we have previously said, we will be reducing the financial year 2020 dividend by 50%. This enables us to reduce the amount of financing we are raising with the rights issue but has also enabled us to maintain a strong financial position to ensure we have retained our investment grade credit rating. For our ongoing dividend, we are reiterating that we will target 2x dividend cover for financial year 2021 onwards. The chart on the bottom right highlights the group's expected cash flow conversion. This is expressed as a percentage of reported free cash flow from operating activities, which is reported operating cash flow less CapEx divided by the underlying earnings attributable to the parent. We expect this to increase from around 61% in 2019 to around 80% by 2023. This improvement reflects the reduction in exceptional cash items over time but also anticipates the timing impact of technology CapEx investment as we grow. Looking at our investment and costs on the next slide. As we have indicated, we will be making strategic investments in the business over the next 3 to 5 years to drive earnings growth of the business over that period. The chart on the top right of the slide shows the estimated phasing of the incremental investment in technology that we expect to make over time. This reflects both operating expense and CapEx. It's not meant to show the overall impact on the income statement. This is additional to the existing expenditure that the group already incurs in its technology infrastructure base of around GBP 150 million per annum. We expect to invest around an incremental GBP 100 million in technology over that period, with around 60% invested in the first 2 years. About half of this will be invested in the Global Broking business, a quarter in Energy & Commodities and the remainder in data and analytics and shared infrastructure. The bar on the left shows the relative proportion of costs in the group in 2019. Front office costs include broker compensation and are variable with revenue. These represent over 62% of the group's revenue in 2019. The business support costs, comprising technology and other support functions, represent almost 23% of the revenue. This gave us an operating profit margin of 15.2% for 2019. As we seek to invest in more technology for the group over time, the overall cost base of the group decreases as a percentage of revenue to 83%, which drives an improvement in the group's operating margin to a target of around 17% by 2023. This is driven by improvement in front office costs as a percentage of revenue to around 60%. Technology costs, which are increasing as a result of the strategic investment, remain 9% of the growing revenue line. Support costs remain around 14% of revenue over the period. The trend continues over the medium term where we see a further reduction in front office costs as a percentage of revenue. And together with a reduction in technology investment costs, drives the operating margin growth target to around 20%. But finally, let's look at the combined financial targets for TP ICAP and Liquidnet over the medium term. As you can see from the chart at the top right-hand side of the slide, the overall revenue compound annual growth rate improved by 1 percentage point to 4% over the medium term with the addition of Liquidnet. The composition of the revenue that you can see in the bars on the slide shows the increasing proportion of mid and higher growth revenue. By the year 2023, around half of the group's revenue is targeted to be generated by these mid and higher-growth businesses, and this is targeted to increase over the medium term. The chart on the bottom right-hand side of the slide shows the underlying operating profit margin growth of the group with the addition of Liquidnet. It takes the bridge I talked about earlier and shows the margin improvement of the group in 2023, target to be around 18%, increasing to around 23% over the medium term, by which time we estimate the contribution of Liquidnet to the underlying operating profit margin growth to be around 3 percentage points. Thank you very much. I'll now hand you back to Nico.

Thank you, Robin. So this morning, you have heard in detail how we will plan to drive higher returns to shareholders over time. Our strategy is founded on 3 pillars: electronification, aggregation of liquidity and diversification. It builds on our core strength and has a clear execution path. TP ICAP stand-alone performance will continue to be resilient, given the deep pools of liquidity we help intermediate. We recognize, though, that there is pressure on our core investment banking clients, which is constraining revenue growth in the Global Broking division. To manage this and improve our operating margin, we will maintain a strict focus on cost discipline, for example, our plan to remove GBP 35 million per year from our cost base, as Robin has just explained. Furthermore, as you've heard, we're already seeing early evidence of success in the selected yet representative areas where we have electronified our Global Broking business. TP ICAP's 3 other businesses, Energy and commodities, Data and Analytics and Institutional Services will continue to deliver solid top line growth. With Liquidnet, we had a further engine for growth, one that when combined with our 4 existing businesses, will power a material lift in the groups of our growth prospects. Thank you for taking the time to listen to us this morning. I hope you found it interesting and worthwhile. Along with my colleagues, I am truly excited and motivated by our prospects. Our focus is singular, implement the strategy we have outlined today. The reward will be to enhance our position as a global leader in financial markets infrastructure and deliver higher returns to our shareholders. We will now open the floor to questions.

[Operator Instructions] Our first question comes from Portia Patel from Canaccord.

I've got 2 questions, please. Firstly, on Slide 54, where you've got the contribution from the different segments of Liquidnet. The contribution to revenue for credit looks like it's around $100 million. Can you just confirm if that's correct? And secondly, just sticking with credit. I was just wondering how your offering will compare to the incumbents that you mentioned in terms of price. So I'm just wondering really here what room the incumbents have to defend their market shares by being more flexible on price.

Thank you very much for your questions. The first one about the contribution of the credit segment of Liquidnet will be answered by our CFO, Robin Stewart, and will be complemented by Joanna Nader, especially on your second question.

We've given the targets of our contribution margin over the time frame for Liquidnet, but we haven't been detailed in stripping out the various lines. So unfortunately, I can't actually tell you whether that's right or not.

Joanna, would you like to?

Sure. With respect to pricing, we're restricted in providing a lot of detail at this stage on commercial plans post completion that I would maybe just stress that this is a market that's very much in its growth phase. We are conscious of the potential friction costs of adopting a new platform, so that will be something we're considering when we look at pricing models. But it's not a segment where I expect price competition to be the major engine of growth.

If I could just follow up on the answer. What do you perceive to be the most important factor in determining which platform a client chooses to use?

Well, I think that many clients use more than one platform, and the key thing really is the OMS EMS connectivity that we talked about in the presentation, and Liquidnet is very much connected to the large asset managers already. I think really what the market needs is just more protocols, and I think importantly, sort of more choice of protocols within a platform. And as I talked about in the presentation, the Liquidnet platform is very capable. It has that blotter sync capability. We expect to soon be launching the Algo portal capability. Those kinds of things can sort of work in concert, and we think that, that will make the platform sort of highly attractive for customers to use. And I think given the difficulties in searching for liquidity and the need for that given the best execution requirements, having more platforms and more choices around model and protocol is something the market definitely needs on both the dealer and the client side.

If I may, I would like just to add one word regarding the Liquidnet's credit offering. We've been talking to many asset managers, real money investors clients, and we have realized that many of them really value the possibility to put some blocks for execution on the client-to-client existing credit platform. But sometimes, when it doesn't match, they are pulling the trades and are using the platforms from the competition to execute those trades through RFQ models, for example. So our intent here is really to enlarge the choice and offer one-stop shop possibility to those clients tomorrow.

Our next question comes from Vivek Raja from Shore Capital.

Can you hear me, everyone?

Yes.

Okay. I had a couple of areas that I wanted a question. But the first is the blotter sync technology. So its application within the fixed income and then, I guess, down the line, the rates franchise. So I guess the application of that has been successful in equity to improve the, sort of, matching success rate. And I'm just wondering what your expectations are in fixed income and rates that's sort of implicit in your targets, sort of success rate of matching in those 2 franchises. And then the second question was about cost savings. So a loss of the weight of your cost savings looks to be in Global Broking and in the front office, so the broker compensation ratio. And...

We might have lost you...

What reassurance you can provide? What is different this time around in terms of that target? And what sort of confidence can you give to us that actually those -- that potentially is more achievable now?

You were cut for a split second on your second question, but I think it refers to the cost cutting. And mostly, you said on the Global Broking, front office cost, why it would be different this time. So let's -- okay. So let's start with the fixed -- your question about the fixed income and rates. We have to -- there are numbers that we are allowed to communicate. Others we are not, but we will try to give you an indication with Joanna who's built the financial model behind our assumptions.

Sure. Blotter sync is really all about trust, and what blotter sync basically does is enable the Liquidnet platform to look into the traders blotch or all the trades or that -- or orders that, that trader wants to get done, that day are visible to the platform. So that capability allows the platform to do quite a lot of work for the trader. So with a typical venue, the trader has to push the order into the market. With Liquidnet, the venue can pull the order into the market. So that is of great help in matching, but it's definitely a great help in a lot of other types of protocols because, again, sort of the platform can do quite a bit of the work. Like for example, say, a match wasn't possible, the platform could look for an algo trade. The platform could do something else. Essentially, it takes some of the workflow burden away from the trader and puts it on the platform itself, and that ability makes the possibility of execution, just that much higher because it's able to do that on a system-wide basis. And so I can't really sort of quantify for you that exact benefit and how that impacts our targets. As Nico mentioned, that's something that we can't really talk about at this stage, but it's something that is going to be unique and we believe a pretty good selling point in the marketplace.

Thank you, Joanna. Referring to your second questions, yes, I think cost discipline and cost reduction is at the heart of our plans. I think cost reductions control are coming from 2 areas: one is clearly on the support and management costs; the other is in the way we increase productivity in the front office areas. And it's all about contribution. The way we define contribution is revenue minus broker compensations minus other direct front office costs. And we think it's the best key performance indicators to measure the progress on improving the margins and the productivity going forward. What's different this time, frankly, is that we have a plan to deploy technology to electronify our business, not on a piecemeal or tactical basis. But really, over time, it's a multiyear plan where we will go desk after desk to implement this technology. And we believe that technology is the way to reduce over time the impact of compensation into the contribution rate. It's different this time because the clients are showing that they are ready to intermediate more of their volumes through electronic platforms. It's different this time also because the brokers are different -- adopted a different attitude towards electronification. They want to see more technology in their business, because that's the way for them to trade more volume and increase the amount of revenue and increase their productivity.

There are no more questions on the phone lines. Are there any questions from the webcast side, please?

Yes. Thank you very much. I'll kick off, if I may, with a message from Matt Franklin from Royal London Asset Management. And Matt asked, will the Jersey redomiciliation have any impact on requirement to hold existing cash on balance sheet for capital?

Yes. It's a very good question. You know that achieving the redomiciliation of our Topco has been an important project for us. And the reason why it's not finished yet is the COVID impact as we had to get approvals from 27 regulators across the world, but it's going to be completed at the very beginning of this year. But let me turn to Robin to talk about the benefits of the redom.

Thanks, Nico. Yes, without the redomiciliation, as you may know, we have an ongoing obligation to retain around about GBP 25 million to GBP 30 million of tangible capital until the end of 2026. And that's really in order to comply with the grandfathering of the waiver from consolidated capital supervision that we currently have. The benefit of the redomiciliation is clearly huge in that regard, because what it does is it allows us to restructure the group and have the consolidated capital supervision rules apply in the main to our EMEA subgroup, which ought to be compliant from the point that we complete that process. So what that does is it alleviates that ongoing obligation that we have, the future obligation of retaining around about GBP 25 million to GBP 30 million of capital for the next 6 years.

Next question, staying with the redom. Do you have a net margin figure ex the Jersey redom saving, please? And that's from Mick Chiu from Robin Tree Capital.

The redomiciliation doesn't impact the group's margin. I'm assuming you mean operating profit margin, if not, certainly, let me know. The redomiciliation is about our requirement to retain capital on the balance sheet and create a larger net assets for the group. And so it shouldn't impact that.

Thank you, Robin. A third question coming in from Barclays. What do you define as medium-term? 2025?

I'll answer that, Nico. I mean we have to be really mindful about all the stringent rules on profit forecast here, I'm afraid. And as you'll have seen from the financial targets that we've given over the presentation, we've been very clear on what our 3-year targets are. We can't be more definitive than that on the medium term. It's safe to say it's greater than 3 years. I hope you -- I can only apologize that I can't be more specific, but we're not able to.

Then a further question from Gurjit Kambo from JPM. What happened to i-Swaps? Why did this not gain traction as [ SF ] in electronic trading?

I-Swap is our platform for interest rate swaps. It's a co-owned platform with 12 banks. We have 41 Tier 1 banks streaming prices on to the platform. It's a pure D2D platform, and it's true that in the D2D rates market, we haven't seen a strong impact of electronification pushed by the regulators. And we have seen also that in the dealer-to-dealer space, the banks have the tendency to rely on spreading indication of interest to their brokers rather than firm interest like you have to do when you commit into a central limit order books. So we have a large market share in this electronic space on the dealer to dealer. But we think that the real opportunity for growth is to push that model into complementing that model into the dealer to client space, which is a fast-growing space, as Joanna has presented in her section.

Staying with JPM. As you launched the hubs, will you retain the different brands?

Yes, absolutely. I think it's always been part of our strategy to operate to retain the brands. That's something that, clearly, the competition authorities are favoring because they want to see choice in the market. Our clients also have their preferences depending on the asset class and the products, so we will definitely keep the brand separated. But what we are doing with the aggregation, which is the second pillar of our strategy, is definitely to give an improved and a seamless experience to our clients. We could, on a single log-in, benefit from the aggregation of liquidity from both brands. So that's really at the heart of our strategy.

I'll just check back in with the moderator to see if there are any further questions on the line. If there aren't, I've got actually 2 more to ask here, but would you check in with the moderator anymore on the call questions.

[Operator Instructions] We currently have a question from Nicholas Watts from Redburn.

Can you hear me all right?

Yes, perfectly. Thank you.

Okay. Great. I had a couple of questions. So I think the first one is perhaps a question on the Data and Analytics area, maybe a question for Eric. You mentioned in the presentation you've launched 25 new products since 2018. Just going forward, what sort of rate of product launch can we expect? And it'd be interesting to hear a little bit of context around in terms of bringing new products on stream, what is the -- what are the sort of areas to entry and how you get around those? That would be the first question. The second question is just to double check something. On the cost of the hub development across the 3 product areas you've talked about, can I just check that the sort of full cost of that development is embedded within the $100 million, sort of, spend that you've talked about? And then just following on from that, a third question around the hub development is perhaps around the timing. Andrew mentioned on Energy & Commodities sort of an aggressive target of having an oil hub up and running by Q2 2021. What sort of time frame should we think about the development across the financial product complex, so rates, FX and then equities. Nico, you mentioned it's been a sort of piecemeal approach. Is it a sort of 2-year time frame we should think about? Or was it -- is it longer than that? And then the last question I had was just a numbers double check that the GBP 25 million to GBP 30 million investment spend you talked about on the Liquidnet business, that is a separate number from GBP 100 million spend target that you've given today for the stand-alone entity. Apologies for all the questions.

Thank you very much for your questions. So the first one regarding Data & Analytics, yes, we've accelerated the launch rate of new products. I will turn to Eric, who will be, I think, pleased to answer that.

Okay. Thank you, Nico, and thank you for your question. Yes, we have launched 25 products. The history on that over the last couple of years has been to monetize the low-hanging fruit. So a lot of these products didn't take a lot of capital. They were easy to get off the ground, and we did the 25. On a go-forward basis, it will be a mixture with RFR and, ultimately, the retirement of LIBOR, which they do plan, I believe it's mid-2023. There will continue to be some low-hanging fruit products launched, but there'll be fewer of those products launched as we launch more sophisticated, higher-value products. As I mentioned in the presentation, we've launched our evaluated pricing service. We're launching our first knowledge product in H1 next year. And these are a richer endeavor that are going to provide far more value for our clients and produce more revenue for us. So rather than having a dozens of small products, you'll see a half dozen of larger products that will generate larger revenue per product.

Thank you, Eric. Turning to your second question regarding the cost of the hub development, I could maybe turn to Robin?

Sure, Nico. Yes, thanks for the question on the cost. Yes, just to be clear, you're right, the GBP 100 million incremental investment that I spoke about earlier in the presentation is in the main for the hub strategy. It also captures some shared infrastructure that is the base of that and -- but also some investment into the energy and commodities, artificial intelligence sort of machine learning tool that we're building. But it does cover the hub strategy. You'll probably also know that we have already started some of that investment during 2020. And we announced at the beginning of the year that we thought we're going to do about GBP 45 million of investment. That slowed. And at the half year, we reiterated we've done 15 -- we were going to do GBP 15 million of investment this year in 2020, but we'll give you more details on that on the preliminary announcement in March.

Regarding the development timing and the delivery of that hub strategy, yes, you referred to Energy & Commodities and what we referred before as our Nova oil project is deep in traction. We have increased the amount of investments this year, particularly by adding more developers into our Belfast development center. Regarding financial products, it is a 5 years plan. It's a multiyear plan with a clear -- each year with a clear plan to go for -- from one product to the other. So typically, this year, we've worked on the rates franchise. As I said earlier, we have delivered what we call the Sterling hub. So in the Sterling hub, we have aggregated inflation swaps, GILTs and interest rate swaps. So we will continue with the same -- doing the same thing on euros, the same thing on dollars. So we have a multiyear plan. The majority though of the investments will happen in the first 2 years or first 2.5 years, but it's a multiyear plan. Your last questions is about the investment in Liquidnet. Yes, it is separate from the GBP 100 million. But I turn to Joanna because she could give some clarity on why this investment at the beginning of the acquisition. Joanna, over to you.

Yes. So the GBP 25 million to GBP 30 million is mostly focused around the rates development, and that's because unlike with credit, we actually have to build the connectivity for those types of instruments, particularly for swaps with the Liquidnet platform. And so we've estimated these costs covering a range of products effectively sort of plugging in that connectivity. And as Nico mentioned, it probably will take sort of 18-ish to 24 months we've estimated to build that, which is why we're not forecasting revenues until year 3. But as I talked about in the presentation, rates is a huge market, largest asset class in the world, and there's really only 2 major platforms serving that marketplace on the dealer to client electronic side. And so we feel strongly that it's worthwhile spending that money to get to that market.

That's great. Could I possibly ask a follow-up question, if that's all right?

Please do so.

Sure. So the follow-up question was, it was actually just following on from the discussion around the Liquidnet fixed income business. And you sort of acknowledged obviously, the client-to-client adoption in that business has been quite slow. But there is interest. And then it sounded like from what you were saying, you will potentially look at launching an RFQ protocol, given that dominates the space. Could I just ask -- and this may be a little bit premature that the biggest player in that market, MarketAxess, has seen quite a lot of success with its all to all protocol. Is that something you would think about in terms of -- as you think about the options for developing that business once you hire?

Would you like to, Joanna?

Yes. So I think client-to-client trading, I think there's a lot of people in the market that think that this will take off, and it's just a matter of time. I think certainly, if you talk to a lot of buy-side traders at big asset managers, they do believe it will take off. And ultimately, asset managers have all the liquidity. They sort of know most of the information. I think the crucial difference is that they have to become price makers, which is maybe made more difficult in the context of also best execution. So I think really, that's why this initial stage of electronification has really favored the RFQ type protocols. But we will continue to invest in this space, and Liquidnet's platform is particularly oriented to very large transactions in the client-to-client space like in equities, and that's something that we do want to, sort of, continue to promote and support.

Do we have more questions?

There are no more questions on the phone line. Are there any questions from the webcast?

Yes. I have 3 more. So firstly, from Clive Beagels of J O Hambro Capital Management. Can you expand further on why Liquidnet's U.S. equity market share has softened in recent times? And what actions you are taking to address this?

I could take this question, John, if you're all right. I think from our discussions and our diligence exercise with Liquidnet, we've seen that having a good matching engine is very important, but you need to add liquidity management on top of it. So I think what we -- what the management of Liquidnet has described is a bit of a disparity of sales attitude in the U.K. and in the U.S., where in the U.K., there was a much more proactive attitude in terms of monitoring the matching of liquidities, interacting more with the asset managers in order to push the rate of matching. There have been some changes in the management team in the U.S., and we'll -- we are convinced and the management team at Liquidnet is convinced that it will be very beneficial in terms of recouping some of that market share.

Many thanks. The next question from Piers Brown at HSBC. Can you share any color on initial findings you may have had with dealers regarding their receptivity to the Liquidnet offering? Are there any significant costs or technical obstacles on the dealer side to on-boarding the Liquidnet trading system?

I have to say that since we've announced the transaction, we had fantastic response from our dealers, best clients. So we had a lot of expression of interest, because as it was presented earlier, a lot of dealer has unsatisfaction in terms of the offering that exists today, particularly in the credit space, offering around pricing, around the execution protocols. So the reaction from many of our top clients has been to see how we could collaborate to build these dealer to clients on credit and on rates. We have also received a lot of expression of interest for other asset class such as FX, but this is not in our current plan, because we've decided to prioritize credit and then rates. So a lot of positive interest so far.

And then finally, from Stuart Duncan from Peel Hunt. In the core broking business, can you talk about the competitive landscape with the other larger players? Is there any -- is there -- as such -- sorry, excuse me, is there as much movement in brokers as there has been in recent years? With the development of the various hubs, how does the work from a technology -- how does this work from a technology point of view? In other words, how much do clients need to do to implement the new interfaces?

So regarding the competitive landscape, it remains a competitive landscape despite the fact that this industry has consolidated a lot over the last 5 years. It remains highly competitive for talent. We think that we became an employer of choice for our brokers, because our strategy to invest in technology is actually increasing the value of the seat at TP ICAP. So we think that it's going in the right direction to achieve better contribution and better returns for our shareholders. Regarding the interfacing with our clients, the hub is actually giving the choice for clients for some who wants to keep voice access or messaging access but also others would want to write to our API. It's not something that the banks are not familiar with, so that's not going to request massive investment or delay in building the interfacing. Absolutely not.

No further questions on the webcast.

Well, in that case, thank you very much for your attention today. I hope you found this interesting and informative. Thank you, and goodbye.