Executives: Jan Strecker - Investor Relations Theodor Weimer - Chief Executive Officer Gregor Pottmeyer - Chief Financial

Officer
Analysts: Arnaud Giblat - Exane UK Benjamin Goy - Deutsche Bank Kyle Voigt - KBW U.S. Daniel Garrod - Barclays Capital UK Johannes Thormann - HSBC Germany Aron Jones - Citigroup Philip Middleton - Merrill Lynch Anil Sharma - Morgan Stanley UK Mike Werner - UBS Martin Price - Credit Suisse UK Jochen Schmitt - Metzler Equities, Roland Pfänder - Oddo

Seydler
Operator: Good afternoon, ladies and gentlemen, and welcome to the Deutsche Boerse AG Analyst and Investor Conference Call regarding Q4 and Financial Year 2017. At this time, all participants has been placed on a listen-only mode and the floor will be opened for questions following the presentation. Let me now turn the floor over to Mr. Jan Strecker.

Jan Strecker: Welcome, ladies and gentlemen, and thank you for joining us today to go through our fourth quarter and full-year 2017 preliminary results. With me are Theodor Weimer, CEO and Gregor Pottmeyer, CFO. Theodor and Gregor will take you through the presentation. After the presentation, we will be happy to answer your questions. The presentation materials for this call have been sent out via email and can also be downloaded from the Investor Relations section of our website.

As usual, the conference call will be recorded and is available for replay. Let me now hand over to you, Theodor.

Theodor Weimer: Thank you, Jan. Welcome ladies and gentlemen and good afternoon. I’m very excited here today together with Gregor, our CFO to present our 2017 results, the full-year results and the Q4 results for 2017 and to give business outlook for the year 2018 and last but not least I’m also happy to respond to your corrections.

Last year was not a particular easy year for Deutsche Börse, I’m not talking primarily about the merge of LSE and Deutsche Börse, I’m rather talking about a very low volatility levels we have seen in many of our asset classes even so and interest rate related net revenues increased overall cyclical net revenues declined by 2%. This is also why Deutsche Börse did not achieve its original financial targets. However, it is encouraging to see that net revenue from our secular growth initiatives increased as planned by 5% last year this give confidence by the way regarding our future development. On balance, net revenue in 2017 increased by 3% and amounted to around roughly €2.5 billion. Adjusted operating costs decreased slightly and thus EBITDA increased by 6% year-over-year to around €1.4 billion.

In the fourth quarter Deutsche Börse achieved its strongest quarter since 2008. This was primarily driven by the Clearstream segment. Overall, the Clearstream segment was up year-over-year 11%. This was primarily driven as I said by the Clearstream segment by the cash market and this business also contributed nicely to our growth. Against the background this result, we are proposing to increase dividend per share for 2017 by 4% to €2.45 per share, this would be equivalent to a payout ratio of 53% which is in line with our capital market, the capital management policy.

After all I think [indiscernible] Deutsche Börse, I’m feeling great comfortable regarding our growth opportunities. For 2018, we expect further secular net revenue growth of at least 5% and no further overall decline of cyclical net revenues compared to 2017. In terms of cyclical growth the start of the year has in fact been great encouraging. Furthermore, an efficient management of operating costs will help us to achieve full scalability of our business model, with that I can summarize/expect the secular net revenue in 2018 of at least 5% to result in at least 10% net income growth for this year. To highlight areas of cyclical and further increase transparency, we have decided to introduce a new breakdown of our financial segment reporting from first quarter 2018 onwards.

From currently four main reporting segments we will move to nine segments in future just to increase the transparency of our results massively. Gregor will explain in details in a moment. With regards to our mid-term opportunities, we are currently carrying out top-down strategic review of the different organic opportunities as well as our operating efficiencies. In parallel, there will be further personal and organizational changes as well as improvements of business processes and as we move along in order to increase our effectiveness further. We currently plan to present an updated roadmap and mid-term plan of our investment phase at our Investor Day in March, in May 30th then we will cover the three year plan.

With this, I would like to handover to Gregor to present the details of our results. Thank you.

Gregor Pottmeyer: Yes, welcome ladies and gentlemen. Let me start the preliminary full-year results on Page 2 of the presentation. Net revenue amounted to €2,462 million.

The increase of 3% was mainly driven by a double-digit growth in the Clearstream segment. Adjusted operating costs without depreciation declined by 1%. This is the result of the efficiency improvement we achieved last year, which also help us to offset inflation and higher share-based compensation. The adjusted EBITDA and net income increased both by 6% against the same period last year. The EBITDA margin stood at 58%.

The reported net income benefited from the sale of stakes in Bats Global Markets in corporation in the third quarter and ICE U.S. Holding company L.P. in the fourth quarter last year. With this the reported net income increased by 21%. With our secular initiatives, we generated around 5% net revenue growth last year which was in line with our plan, the main contributor custody, Investment Fund Services, new Eurox product, the Index Business, Collateral Management services and OTC Clearing.

This was partly offset by a 2% net decline into cyclical part of our business, main driver was the weaker development is index derivatives with a net revenue decline of around €50 million. This brings me to the fourth quarter preliminary results on Page 4. Net revenue increased by 3% to €639 million, which was at the highest levels since 2008. The part of net revenue, the net interest income across the globe, rose significantly to €37 million. Operating cost adjusted for exceptional items were down 3% as a result of ongoing efficiency improvements.

Exceptional items totaled €22 million, which among other included legal expenses, costs for M&A integration and restructuring charges. The adjusted EBITDA increased by 9% to €338 million. Besides the exceptional cost items, the EBITDA is adjusted for up to €74 million gain from the sale of the stake in the U.S. ICE Holding Company. The adjusted net income increased by 8% to a €194 million and the adjusted EPS amounted to €1.04.

I’m now turning into the quarterly results of the individual segment starting with Eurex on page 5. The Eurex development continued to be mainly driven by specifically Xetra equity index derivatives in line with low equity market volatility we observed last year. In our commodity business, the power derivatives business still suffered from the impact of the price are unchanged. However, liquidity continues to return from OTC markets into the new product and we expect to see these effects saving away over the next couple of months. In total, net revenue in the Eurex segment stood at €251 million, adjusted EBITDA at €122 million and the EBITDA margin at 49%.

In our cash market data, we saw an increase of the order turnover by 14%, therefore net revenue in this segment rose to €47 million. EBITDA on an adjusted basis improved to €23 million and the EBITDA margin stood at 48%. At Clearstream, total assets under custody increased by a 3% to €13.6 trillion, a 2% decline in the ICSD business was compensated by a 3% growth at the ICSD business and by a continued double-digit growth of 17% in the investment fund service business. Outstanding and global security financing business continued to be negatively affected from Central Bank Monetary Policies, which reduced the need for a secured money transaction. Due to more favorable business mix, this growth in the higher margin securities lending business, GSF net revenue increased by 5%.

The cash balances at Clearstream amounted to €13.1 trillion, slightly down against the previous year. In total, net revenue in the Clearstream segment amounted to €236 million, the adjusted EBITDA came to €129 million and the adjusted EBITDA margin stood at 55%. Net revenue in the market data and services segment increased by 5% year-over-year. This was mainly driven by a 19% net revenue closed in the index business. The major driver of this favorable development was a secular increase of assets under management [indiscernible].

Total net revenue in the Market Data and Services segment amounted to €105 million. The adjusted EBITDA reached €64 million and the EBITDA margin was 61%. This brings me to our dividend proposal for our 2017 on Page 9. As part of our longstanding distribution policy, we, in general aim to distribute 40% to 60% of the adjusted net income to shareholders in form of the regular dividend. Since the earnings of the group has been growing and we are expecting further growth.

We are now targeting the payout ratio more in the middle of the 40% to 60% range. For 2017, the proposal of the executive was combined to slight reduction of the payout ratio to 53% and increase of the dividend per share by 4% to €2.45. Out of the 1 billion proceed from the divestiture of ISE in 2016; we are currently implementing two share buyback programmes with a total volume of €400 million until the end of 2018. We are planning to complete the first program at the end of the first quarter. The remaining cash at hand and the recurring free cash is going to be invested into growth opportunities.

As Theodor mentioned at the beginning, we are going to introduce additional financial reporting segment with the publication of the first quarter 2018 results in April. On Slide 10, you can see the pro forma view for 2017 that altogether nine segments; Eurex which will be achieved to the financial derivative business of Eurex exchange, commodities which is now the EX part of Eurex, foreign exchange, which referred to 360T, [indiscernible] our cash market, Clearstream which is from then on due to the settlement and custody of equities and funds as well as net interest income. Investment Fund Services, which complied the settlement and custody of fund share as well as other fund services, global securities financing, which consist of collateral management and securities lending services, index which is primarily the stocks business and finally data, which encompasses exchange data and the new regulator reporting services. We have already reported net revenue for all of these areas, but from this year onwards, we will introduce an income statement down to the EBITDA line and some more details regarding business activity and net revenue development for each segment. The infrastructure services, which I included in the MD&S segment in last years’ results, will be split among the Xetra and Eurex segments, because they are largely related to those markets.

Implications for your model, B2B as this is primarily a new breakdown and this provides you with additional details that would hopefully be helpful for your model and methods of valuing our business. This brings me to the last page of today’s presentation and the outlook for 2018. We expect further secular net revenue growth of at least 5% this year. Major secular opportunities include, Euro Eureo OTC clearing, new Eurex products, Commodities, Foreign exchange, Clearstream T2S, and Investment Fund Services, as well as the index and data business. In addition, we expects no further overall decline of cyclical net revenue compared to 2017.

The start of the year with normalised equity market volatility has been encouraging and we also expect further savings from the interest rate environment. Ongoing efficient management of operating costs will help to ensure full scalability of our business model. Therefore, we expect at least 5% secular net revenue growth to result in at least 10% net income growth, this year. This concludes our presentation. We are now looking forward to your questions.

Operator: [Operator Instructions]. And the first question comes from Arnaud Giblat, calling from Exane.

Arnaud Giblat: Good afternoon. Question on OTC Clearing. So could you tell us how much you may see Clearing 2017 also you hopefully reported a seven fold increase in your OTC Clearing volumes, actually when we track the volumes on a daily basis, we see that has continued in February, but we are also noticing that the bulk of the volumes happened on Tuesday which coincides with reset and keeping much compression runs.

So my question is, is this significant uplift in volume as you are seeing coming from mostly dealer activities and if that's the case still for you like almost on an [indiscernible] basis, what should we be looking at in terms of incremental revenues?

Gregor Pottmeyer: Yes, thanks Arnaud for the question. So with regard to the OTC Clearing revenues in 2017, we already achieved net revenues of €10 million. With regard to the current development in January and February where we communicated that we have non-ADV of €35 billion and it even increased €40 billion and that's mainly in the dealer-to-dealer business and its on a short-term basis. But what you see here, that our incentive program really works, so if you put in the right [incentivation] (Ph) to do already in 2018 business with Deutsche Börse and specifically the Eurex Clearing. So the sharing of the economic and the sharing of the government is really very interesting to see.

And for us it’s really important that trust me, Eurex Clearing is now really competitive offer and it will be already offered from the bank side and we are not just on just screen in parallel to even much better. We get the same stretch, so that's really encouraging what we currently see here. Our estimation is still unchanged so our target is to get the market share of 25% and the dealer to buy that area, so we are clearly not there, but it steadily improved and maybe with regard to the political dimension, Theodor do you want to add you are clearing in general.

Theodor Weimer: We are basically applying Arnaud two strategy here. On the one hand side we do a lot of loving in Continental Europe in Brussels in Berlin of course where we want to make sure that given that the Brexit litigation we should do everything to ensure that there is outside London a Euro Clearing location.

It cannot be that from the risk perspective from the bank side that they leave all the Euro Clearing in London. Therefore we try to make the argument that there should be a Euro Clearing location in Continental Europe of the EU 2017 and at the area of course in Germany and Frankfurt. There we are quite aggressive if I may say so. And since we do not rely, we cannot rely on the support of the politicians. We came up with this partnership program, currently 25 banks are participating which is quite a success and as you indicated [indiscernible] went up from 5 billion and average daily in end of 2017 now at 35 to 40 million.

So we have significant increase or we do hope even if we are not getting political tailwind here that we will establish with our partnership program with two alternatives to the early age Euro Clearing apparatus.

Arnaud Giblat: Great, thank you very much.

Operator: And the next question comes from Benjamin Goy calling from Deutsche Bank.

Benjamin Goy: Hi, good afternoon. I’m Benjamin Goy from Deutsche Bank.

On your 2018 guidance, at least 5% net revenue growth and at least 10% net profit growth. I mean this basically implies there is no cost inflation. Just wondering whether this requires another major program or what is the number of small initiatives, which you basically have already in the bag and can be relatively cheaply executed to ensure scalability of the business model. Thank you.

Gregor Pottmeyer: The guidance you have arrived at Benjamin for 2018 is to be specific at 5% growth and on the top-line, a secular growth in Greece.

So we are not talking about possibly additional growth coming from the cyclical side. So minimum 5% is coming from the secular growth, why do we focus on this. We do focus on secular growth, because these are new products - these are initiative which we can manage [indiscernible]. And on the cyclical side we are dependent on the volatility and the reactions of the market participants. And therefore, if we grow 5% on the secular side, if we do assume higher volatilities structurally this year 2018 compared to 2017, so we will get an higher total growth for the year 2018 and as we also are determined to work on our structural cost blocks and we will come up with certain ideas, which we will show to you on the 30th of May, right.

So we do even more and then on the growth side, we will also address the cost side. This is not something, which is very revolutionary, we are not standing to lay off people, this is not necessary, but we have lots of structure cost box, so I think from event ending up with the marketing side right where we can address our cost structures. We also too many in these, right and we can also tackle this kind of issues.

Theodor Weimer: And with regard to the cost management perspective I think that we have here a continued improvement process in place, where the line manager has the pass to achieve efficiency at least by 2.5%, so to cover an inflation and salary increases, so that’s already implemented and in principal, we brought on automatization - on standardization of our process using digitization in a more advanced way. So already, we are here on way to do proactive and cost management to be prepared to achieve flattish costs if it would be necessary.

Benjamin Goy: Perfect. Thank you.

Operator: The next question comes from Kyle Voigt calling from KBW.

Kyle Voigt: Hi. Just a strategic question for Theodor.

You kept some revenue and net income growth set out under the accelerate program, but just strategically speaking, your predecessor was very active in M&A both small and attempted large scale M&A. Could you talk about your approach to M&A and maybe weaknesses that group may have and you may look to fill through M&A and just more broadly your thoughts on the feasibility of large scale M&A? Thank you.

Theodor Weimer: Thank you, Kyle for this question. I’m a trained M&A banker, was partnered at Goldman Sachs from the M&A side. So I think I’m quite familiar with M&A topic per se and given my background, I know that last formation deals need to be feasible, right and right now, we have free service changes, which are significantly larger as we are.

They are somehow out of reach for us [indiscernible] and the Hong Kong Stock Exchange they are completely off the table for us didn’t work out, and I’m realistic enough to see that nothing is going to happen here for us over the next couple of years and I’m very open now spoken here. And given the situation right, we can look at smaller exchanges; we can look on M&A things of cost approach, which we will do, right. We are covering quite broadly and nicely, the full value chain. We are probably the most and the broadest set up on the stock exchanges from the pre-trade to trading to the post-trade business and we see ample of opportunities for us in each and every segment of our value chain be it Data, be it [indiscernible], be it the commodity side, be it the Fund Services side, which is a very profitable and very nicely developing business, global securities lending we talked about Euro Clearing. So, we are currently doing an exercise where we go in a really very robust way through the alternatives of growth, which are in front of us.

And the longer I look into it, the more I’m getting convinced that we can grow organically the 5% structurally second growth and then top M&A feasible and I determine to grow externally as well. We are in the business, where we have high fixed cost, and therefore the more business we are putting on our machine, the higher the margin. And we are in the business, we need to keep the margins high, really even further increasing the margin.

Operator: Thank you. And next question comes from Danniel Garrod, calling from Barclays.

Danniel Garrod: Yes. Good afternoon. Danniel Garrod, from Barclays here. I had a question on the spectacular growth opportunities that you have outlined in the guidance. 5% revenue growth at least you talk of would be about at least of a €120 million, €130 million the whole sort of initiatives that you mentioned.

I wonder if you could provide anymore color about specific set of ranking within those greatest contribution to that sort of size of revenue and then I think, over the three year all three-year plan, you had spoken previously as sort of secular revenue opportunities between €400 million and €600 million, I wondered whether that still stood and whether that suggested that there was more of a saving towards 2019 of that original plan? Thank you.

Gregor Pottmeyer: Thanks, Danniel for the question. I think in general, we benefit from the general trend from moving from OTC to unexchange and that’s where all our asset classes. Obviously, we talked about OTC Clearing and the interest rate area, where we have now this Clearing obligation, where we gave the guidance that we expect to get a 25% market share with €50 million to €70 million, and net revenue so that’s still unchanged here. The next level where we see that is in the commodities and in the FX space in the commodities, so we really expect double-digit growth here over the next years.

First, we have the lower base level results from 2017 as we lost pricing on top of Germany, Austria I think, this will fade out now in the next week and month, so here we really expect this trend to continue from OTC to unexchange specifically, the gas business a strongly performance as clearly double-digit growth. So same on the FX side, where we have built now the central limit order book functionality in the first quarter, we will go live as our clearing in the second quarter and then we will benefit here from the structure trend on the FX side too. So, Eurex commodities’ FX no doubt that there should be the chance to grow that double-digit within the next year. Index business already growing since years, double-digit on net revenue basis, there is a trend to purchase in investment strategies that’s still unchanged and therefore also a strong business case here. Even Clearstream in 2017, we have seen 11% growth and other combination of cyclicality what is referred to the net interest income.

but also structurally we will benefit from the target to the securities and development as we owned the biggest liquidity through this 40%, so we can bring the biggest advantages to our customers, Investment Fund Services really double-digit growing business we have seen that in 2017 and there is no reason to believe it should not continue in the next year. So it’s a relatively broad portfolio, there is different opportunities that is also are at this point of time I’m pleased with guidance that we should at least grow on a secular basis that the 5% and the cyclical opportunities. We all have our own model, we learnt that last year as a prepaid fund from you that’s why we do not specific guidance from 2018. You will do your own assumption but the first six weeks looks quite encouraging.

Theodor Weimer: Daniel we had internal debate whether the NII close potential which we are having whether they are at least semi secular, because we are living off quite nicely of the increase of the - industry in 2017 helped us quite nicely we have moved around 70 million roughly in 2017 and we expect to come more.

So the NII business is probably semi or it’s a hybrid or secular growth in cyclical growth.

Danniel Garrod: Thanks very much.

Operator: Our next question comes from Johannes Thormann from HSBC.

Johannes Thormann: Good afternoon everybody. Johannes Thormann, HSBC.

First of all, a follow up question, did you say how much revenues you made in OTC Clearing, is there misses this or don’t you want to comment on this in 2017. And secondly in terms of your net income from banking, could you breakdown the current cash balances by currency 13 billion. Could you update us on the sanctions as well which influence business and last but not least to see guidance of €15 million revenue for each 25 interest rate increase still valid. Thanks.

Gregor Pottmeyer: Yes, so with regard to OTC Clearing, net revenues 2017, the number is €10 million.

Johannes Thormann: Okay, thank you.

Gregor Pottmeyer: With regard to the NII, €13 billion customer cash balances, so roughly 7 billion US dollars denominated where you get the higher increase. As always its more than 50%, roughly 30% is euro and the rest is other currencies like British pound, Austrian, Australian dollar et cetera where we also get higher rates already today. With regard to the guidance 15 million so what are you expecting it in the trailing two, so I didn’t get that.

Johannes Thormann: Historically, you said every 25 bid interest rate you are guiding for 15 million additional revenues.

Is this guidance still valid, has this changed?

Gregor Pottmeyer: No, our view is that if you ask €13 billion customer cash balance is, so a 1% increase overall as an average would increase our EBIT by a €130 million.

Johannes Thormann: Okay, thank you.

Theodor Weimer: But just assume Johannes that we could keep in a scenario of higher interest rate, if we could keep right the 30 billion with us and there is normally a certain let’s say a decrease, if interest rates are going up. We do lose normally a bit of our total balances.

Johannes Thormann: Okay, understood.

Thank you.

Operator: Next we have Aron Jones calling from Citigroup.

Aron Jones: Thank you. Good afternoon. A point of clarification, I think to start with just the Euro Clearing ambition is that Euro Clearing done by Continental European customers or is that of the total Euro Clearing activity that is done in Europe in terms of the UK? The second follow-up would be what are the interested assumptions to that 25%, because it is a scenario in which the UK accepts high level of over site then how does that 25% becomes more ambitious and obviously the reverse of that is that if activity does have the way from London and that 25% becomes very achievable and therefore quite low in that context.

So just any comments that you could provide as to what the assumptions are around that 25% maybe would be useful? Thank you.

Gregor Pottmeyer: Yes. So far when we talk about the Euro Clearing then we just refer to the currency euro so the bigger part is still in U.S. dollar and also in British pound. Our best guess estimation is that the Euro business is at least 30% of the overall OTC currencies - overall currencies and our 25% is specifically referring to the dealer to buy that business, so not dealer-to-dealer business where we still would assume that the far majority will be the [indiscernible].

But interestingly to see, and generally we already got some market shares specifically in the dealer-to-dealer business so maybe there are some chances too. But our focus is on the dealer to buyback business what just started here and our base case assumption with regarding the 25% comes although from the Clearing in the U.S. market as CME was able to get roughly that kind of market share, so it started to 25 maybe it’s closer to 20 currently. So that’s our assumption based on what happens in the U.S. market and in principal it just make sense to put not all eggs in one basket from a customer perspective so if I would be a CEO or Chief Risk Officer of a bank, so it clearly make sense from a systemic perspective not to have all your exposures towards one CCP.

Therefore, we still think it makes even from a systemic percentage point of view, perfectly sense to always have a good alternative and obviously Deutsche Börse is by far best alternative to get that. So that basically our base case assumption with regard to the 25% what we want to achieve and we are convinced to get without any political decisions regarding potential relocation of business obviously then the upside is more.

Aron Jones: Okay. Thank you. Just a very quick follow-up if I may.

What does that 25% equate to as a euro billion amount in today’s market, do you have that figure?

Gregor Pottmeyer: Yes. So overall, the daily volume is 1,000 billion so currently we reduced some 40 billion. So now you can calculate the 25%, but it really depends on what is the dealer-to-dealer business, what is the dealer to buy side business, what is the business mix here. So, that’s a little difficult to analyze in a more detailed way. But in principal, it should be [indiscernible] number to achieve that kind of more than 20% market share.

Theodor Weimer: And the 25% market share just to mention that we do not expect to get the full market share already in 2018, so our base redemption [indiscernible] connectivity process of some buyback customers like the big asset managers like what I said, that’s still not finalized. So, we expect to get that kind of market share in 2019.

Aron Jones: Okay, understood. Thank you.

Operator: The next question comes from Philip Middleton calling from Merrill Lynch.

Philip Middleton: Yes. Thanks, good afternoon. I wonder if you could tell us a little bit more about what is been going on inside the CSD, ICSD business in Clearstream, because that came in at a very strong performance in Q4, and in particular, is that sort of view that business is generating something we can think of those being replicating the coming few quarters?

Gregor Pottmeyer: Yes. We still believe that growth is sustainable what you have seen here in Q4. On the one hand side, roughly one-third out of that growth comes from NI, and you have your own model, so the basic assumptions are not that will do to two or three sets in 2018.

So, the net income could grow and so on, and that what we also expect. So, we will get some tailwinds here. Investment Fund Services business is really strongly performing. We have a clear customer pipeline, where we can show on a monthly basis, this customer will now transfer to our platform and do additional business, so the double-digit growth, we are really convinced that this will happen, with regard to the securities lending in our GSF business, we see strong support to get HQLA, high quality liquid assets. There is a strong demand here and we can deliver on that basis.

And this target to the securities I think that’s more a mid-term approach, where we are currently preparing ourselves to get the additional market shares in markets, where we are not covered today, [indiscernible] and I think we also expect here that we get additional market shares here.

Philip Middleton: Okay. So that you are saying in fact that the Q4 revenue, because in the CSD, ICSD, it’s a sustainable level for next year, are you?

Gregor Pottmeyer: Yes [indiscernible].

Philip Middleton: Okay. Thank you.

Operator: The next question from Anil Sharma, calling from Morgan Stanley.

Anil Sharma: Hello, I just had a few questions for you. The first one, so I think you mentioned in your remarks you can be some personnel and management changes, and I think in also one of questions that you focus on too many MDs. So, I’m just wondering if you could elaborate a bit more, is this a continuation of some of the programes that Carson was doing or is this something different that you are going to see now even for a little bit. Second one, just in terms financial segment reporting, I was hoping Gregor if you could give us some idea [indiscernible] some of these segments and in the release today.

And then the final one just to clarify on the OTC revenues €10 million, Gregor I think you said it was net revenues, so I’m assuming this is after the way to the banks. So, if the volumes continue to grow as they have been and as long as you kind of see the data year-to-date. Is that a leading relationship, so the pay rates of that goes, it doesn’t change as the volumes change is what I’m trying to understand.

Gregor Pottmeyer: Okay, I’ll take the first one and then on the management side in deed what we are doing right now is not follow-on of what Carson did in the past. It is currently as such when I [indiscernible] Deutsche Börse, and I specifically asked the [indiscernible] with a certain increase of freedom and we have two management board members, which are close to the retirement age and therefore, often specifically to save results for another year or so and I’m looking for succession in this regard.

It is one, the second area is the number of MDs which you were referring to and then in deed our structure is given the size of our exchange is over structured and therefore, we need to do if we get more effective and a little bit more leaner as well. And take the example of communication, we have in the communications department currently when we started we had three MDs and as of now, we are still the one MD is completely enough and therefore we go through the organization and my focus is pretty clear, we need to become more commercial. I’m completely right following on what customers are doing here, they need to work on the client side, they need to become more commercial. We need to overcome the finals and it’s just not necessarily a mean that we cannot face some structural costs here, right. And that’s what I was referring to.

Theodor Weimer: Yes. Second question is the segment regarding profitability. So, we pay out some we stated 2017 numbers to you that you when you do the modeling that you are prepared to do so. So, we are in the process to deliver all these additional information, but this approach I think it will be easier for you to do the modeling, because now you don’t have to take the blench after taking marketed and services that we are basically some close to 70% EBITDA margin business like the index business and you combined that with the 30% EBITDA margin and the infrastructure service business. So, splitting these now up doing the exact cost allocation to the different segment.

I think it should be easier to do all your comparison that the other exchanges of its other providers of the services and you will be prepared by this kind of information in short-time. With regard to OTC clearing net revenue, that is the 10 million we show on our books though it’s basically after sharing of the economics and your question is a linear or not, it’s not linear as there are some thresholds we find and there are some fixed costs of what we firstly have to cover and then later on its linear. So, you can’t risk immediately taking the volumes, so that not a linear function.

Anil Sharma: Okay. So can you just help me get some ideas if the volumes doubled clearly seeing the revenue then doubled to make about 50% or 25%, how do I think about it?

Gregor Pottmeyer: Yes.

So our basic assumption for 2018 is that 25 million net revenues out of OTC interest rates for business.

Anil Sharma: Okay. And then by 2019 that raise to 50 million.

Gregor Pottmeyer: Yes, I think so.

Anil Sharma: Yes.

Okay. Thank you. That’s helpful.

Operator: The next question comes from Mike Werner calling from UBS.

Mike Werner: Good afternoon.

Thank you. Two questions here. First on 360T platform, you mentioned roll out of some new functionalities in Q1 and Q2 of this year. Is there something we can expect to see in terms of revenue growth this year, are there any specific targets you have for this business as you do include it within that your secular growth drivers? And then the second question, just as a follow-up to the Philip’s question on the Clearstream ICSD and CSD business. We saw a substantial increase in revenues from Q3 to Q4 from EUR132 million to EUR150 million and I was just wondering if you can provide a little bit more granularity as to what drove that increase Q-on-Q? Thank you.

Gregor Pottmeyer: Yes, with regard to the 360T platform introduction in Q1 and Q2 so again as Q1 is trading for the center limit order book functionality what will go live in Q2 it’s a clearing functionality. It will be a slow start. We have to be realistic here as there is no obligation to use our platform, so it’s different with regard to the interest rate swaps. Therefore, we expect a slow start. So it on us to find some liquidity provider, some market provider who support us and then obviously we can start here.

So it’s a smaller [€100 million] (Ph) amount what we expect to flat in 2018, but it’s on us to get the advantage, to get the traction and we are the first ones in the market, we are convinced that for the next three to five years, it could be really an attractive market with some more than €50 million out of additional FX trading and clearing revenues, but it will take a little bit more time. With regard to what are the drivers in Q3 and Q4, first of all the increased settlement activity as the main driver where you see double-digit growth. Then we were also able on the pricing side though you are aware that we changed our pricing model target to securities, so we increased basically the [indiscernible] revenue to offset the settlement revenues. There is a constant discussion around rebates, volume rebates on clearing side and there are also some smaller effects in Q4 where we could even release some of this client rebate that we are able to defend our position and that's obviously is a good news.

Mike Werner: Thank you.

Operator: The next question comes from Martin Price, calling from Credit Suisse.

Martin Price: Good afternoon. Just a couple of quick questions for me please. First on the share buyback. I was wondering if you just confirm the stock you're repurchasing, the share is being held in treasury rather than being cancelled, what is going to change in policy there.

And second, you have a large bond, due to expire next month, I just wondering if you could confirm the times to refinance that rather than simply write it off? Thank you.

Gregor Pottmeyer: Yes, you are right, a bond of €600 million matures end of March and we are currently in the process to simply replace it and that's what we are preparing and our target is to do that until end of March. With regards to share buyback, in principle it’s our idea of these additional shares what we buyback that we cancel that.

Martin Price: Great, thank you, Gregor.

Operator: Next we have Jochen Schmitt calling from Metzler.

Jochen Schmitt: Thank you, just one question, summarizing your remarks on expenses, would it be rather conservative from today's perspective to expect operating expenses to increase broadly in line with inflation, that's my question.

Gregor Pottmeyer: Principally it’s our idea to compensate exactly that kind of inflation as I mentioned this continues improvement that's the types of every line manager. So, we want to make sure that you can see the scalability or our business model and I don't want to give now specific operating expense and guidance. So with the revenues and structural net revenue growth of at least 5% and as a consequence at least 10% net income growth and cyclicality comes. Again on top of that, it’s not our focused top line growth obviously and then we have to consider what is the cost increase also looking on our revenue opportunity and we should be also a little bit more flexible if we see some good ideas or specifically new technology that when it makes sense that we are also ready to invest here.

So overall, you will see the scalability of our business model and we don't want to give now specific OpEx guidance.

Jochen Schmitt: Thank you.

Operator: Next we have Roland Pfänder calling from Oddo Seydler.

Roland Pfänder: Thank you and good afternoon. Could you provide us with an outlook on the net interest income in the Eurex segment, really has there any positive impacts from your OTC Clearing initiatives going forward? Thank you.

Theodor Weimer: The net interest income in the Eurex segment is based on the amount of cash collaterals that - so you can deposit securities collaterals and cash collaterals. So first of all it depends on that mix and secondly as if we see volume growth in our business either from the traditional Eurex products from new products offer OTC clearing activities and we won’t expect that the amount of collateral is increasing and that’s what the Eurex and NII will increase. At the moment, we are collecting the 10 basis point admin fee on those cash collaterals if interest rates trying to turn positive, which did market development that might increase somewhat, so there is an opportunity and in our business case in terms of the OTC clearing activities, this elemental additional collaterals from OTC clearing also factors into the Eurex OTC clearing revenue, so that’s a component in terms of the business case and the way we are showing those revenues.

Roland Pfänder: Thank you.

Theodor Weimer: All right.

If there are no further questions in the pipeline, we would like to conclude today’s call. Thank you very much for your participation and have a good day.