NEX Optimisation Investor Day - October 2017
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NEX Optimisation Investor Day October 2017
Welcome and Strategy Overview Jenny Knott, CEO, NEX Optimisation Simplify complexity, optimise resources
Agenda
TOPIC PRESENTER
Welcome and strategy overview Jenny Knott
Trade and Portfolio Management Andrés Choussy
Analytics Guy Rowcliffe
Regulatory Reporting Collin Coleman
Break
Financial Resource Optimisation Stuart Connolly
Data Insights Kevin Taylor
Opportunities Steve Gibson
Technology Guy Naor
Conclusion Jenny Knott
Questions and answers
3
Key points to take away from this presentation
NEX Optimisation is … Delivers revenue growth Delivers cost savings
Transforming to solution pillars
Simplifying our operating model
Unifying data architecture through NEX Infinity
Leveraging converging technologies
Enabling agile products
For NEX and for our clients
OUTCOME NEX Optimisation Financial Aspirations 1
• Revenue CAGR2 > 10% through to 2019/20
• Annualised cost savings of circa £15m delivered by 2019/20
• Operating Margin > 40% delivered by 2019/20
1 As disclosed in the full year 2016/17 results presentation.
2 Compound Annual Growth Rate.
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 4
NEX Optimisation – positioned to seize
opportunities
“Our mission is to enable clients to optimise
operations and financial resources in real-time,
leveraging our technology enabled solutions and
global network of connectivity and liquidity.”
Building on our existing scale, relationships and expertise
• Established networks, with 6,500 existing connections
• Track record of innovation, agility and leveraging the latest technology
• 60+ individual products across the whole trade lifecycle
• Circa 1,000 clients, including banks, asset managers and hedge funds
• Talented and committed employees with subject matter expertise
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 5
NEX Optimisation can solve the legacy
challenges that burden our industry
8%
LEGACY IT AND
SILOED SYSTEMS
2016 Investment Bank
FRAGMENTED DATA, Return on Equity1
MULTIPLE RECONCILIATIONS
MASS OF REGULATIONS Facilitate growth
through innovation and agility,
$8bn+
The amount the world’s 8
while reducing costs largest investment banks
could save if blockchain-
PROLIFERATION
OF VENDORS
type trusted ledger
technology were
introduced2
COST AND MARGIN 1 Source: ‘Global Capital Markets
2017, Mastering The Value
PRESSURE Migration’, BCG, 2017
2 Source: ’Banking on Blockchain’,
Accenture, 2017
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 6
NEX Optimisation addresses both NEX and our clients’ demand for unification and simplification
Products are currently siloed
across the industry
SIGN ON
HOW WHY OUTCOME
NEX
• Unify data, services and • Eliminate duplication • Build once and use multiple times;
infrastructure to transform and facilitate agility Connect once and access multiple services
OPTIMISATION the market
• Facilitate interoperability
• Same software as a service • Connect once and access multiple services;
CLIENTS platform solves ours and Save money and trust their data
across the market
our clients’ challenges
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 7
Our response: Transformation to solution pillars Designed to reflect how our clients consume products NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 8
The solution pillars will be delivered through our unification architecture, NEX Infinity
Client data set is continuously enriched to deliver increasing value
Connect once, • Single data architecture
NEX Infinity seize opportunities • Secure vault for data storage and continuous enrichment
• Meaningful and sustained revenue and profit margin growth
Client data will be continuously enriched as it flows through the solution pillars,
delivering increasing revenue to NEX Optimisation
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 9
NEX Infinity will enable clients to access new products while reducing cost and complexity
HOW WHY OUTCOME
• Connect once to access • Eliminate duplication • Connect once and access
NEX Optimisation and and inefficiencies and multiple products
third party solutions facilitate agility • Clients save money and trust
their data
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 10NEX Infinity – Connect once, seize opportunities
NEX Infinity Will enable…
Single point of connection Agile access to new products
Case study: Third-party vendor for
settlement optimisation
Single data architecture Legacy technology retirement
Case study: Single point of connectivity
A secure cloud environment Trade lifecycle automation
Case study: Real-time portfolio
reconciliation
NEX and Third Party Solutions Real-time financial resource optimisation
Case study: Real-time market risk capital
optimisation
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 11The time is now -
convergence of new Converging technologies deployed
technologies enables
NEX to transform to deliver benefits now
industry data processing
and offer previously DISTRIBUTED SMART MICRO- CLOUD ARTIFICIAL
LEDGER CONTRACTS SERVICES & DATA INTELLIGENCE
impossible workflows
A single connection
simplifies operations
Trusted source A self-service
Improves controls, of data model
data accuracy and Encrypted, secure, cloud-hosted Cloud hosted solutions delivered as a
transparency vault used by all internal functions service accessible via a single portal
Remove processes and Transformative
retire technology and sustainable
Simplifying and standardising processes Delivered as a service, and compatible
Reduces costs Access to vended solutions with Distributed Ledger
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 12Summary
TRANSFORMING TO
> 10%
SOLUTION PILLARS Revenue CAGR
> 10% through to
2019/20
SIMPLIFYING OUR
OPERATING MODEL
UNIFYING DATA ARCHITECTURE
> 40%
THROUGH NEX INFINITY Facilitate growth Operating margin
through innovation and agility,
> 40% by 2019/20
while reducing costs
LEVERAGING CONVERGING
~ £15m
TECHNOLOGIES
Annualised cost savings
ENABLING AGILE PRODUCTS of circa £15m by
2019/20
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 13NEX Optimisation – Our business is in a position to seize opportunities
Revenue Performance1 Revenue by Pillar2
Trade & Portfolio
Management 38%
Analytics 3%
£240m Regulatory Reporting 2%
Financial Resource
£216M £220M £240M Optimisation 37%
2014/15 2015/16 2016/17 Data Insights 20%
Business Unit to Pillar Revenue Transition2
BUSINESS UNIT PILLAR
1 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison.
2 Full year 2016/17 revenue re-mapped from business unit to solution pillar.
NEX Optimisation today | Why Change | Solution Pillars | Infinity | Summary 14Trade and Portfolio Management Andrés Choussy, Head of Trade and Portfolio Management
Trade and Portfolio Management
TRADE & PORTFOLIO
MANAGEMENT
ANALYTICS REGULATORY FINANCIAL DATA
Connect once to establish trusted REPORTING RESOURCE INSIGHTS
trade and portfolio data for your OPTIMISATION
business Connect once to Connect once to Connect once to Connect once to
use your data to report the right use your enhanced gain insight based
understand the data for every data to optimise on real data, to
Our trade-processing network financial risks trade, in every resources and make the best
connects you to the world’s facing your regulatory regime deliver growth decisions for your
business business
markets. We translate and Our regulatory Our optimisation
normalise information from diverse Our smart tools reporting solutions solutions use your Our insight services
sources to give you transparency eliminate the enable you to keep trusted data set to draw on real data
complexity in risk, your business safe show you how to from trading
and confidence in your trade and finance and and compliant. We get the most from venues to give you
portfolio data. We reconcile your regulatory help you to your financial an accurate picture
data with the market, enabling you calculations. They understand what resources. Our of the markets. We
allow you to use you need to report networks have the offer a range of
to build a solid foundational data your data set to and where you depth and scale data covering
set for your business from one calculate and need to report it. needed to help you major asset classes
connection. analyse risk so your We ensure you are manage your risk, and markets, from
business can fully able to report optimise margin, indices to reference
Client data
understand the set is continuously
accurateenriched capital and liquidity rates. Our focus is
to deliver
implications of increasing value in all
information and redistribute to let you
each trade and your global regulatory resources to grow understand the full
portfolio. We regimes at the right from one market context
NEX Infinity
enable you to more times from one connection. around your
easily understand connection. business and give
the risks facing you fresh insights
your business from from one
one connection. connection.
16Trade and Portfolio Management
Connect once to establish trusted trade and portfolio data for your business
Solution Value Proposition Clients
Messaging and Matching Function: Operations
Established network of cross-asset trade We normalise and streamline trade data
workflow solutions processing across the financial industry Banks
helping clients connect to each other in the Asset Managers
Traiana Harmony Message Centre Segment:
Traiana ClientLInk
most efficient way Fund Administrators
Hedge Funds
Portfolio and Margin
We provide a platform so that financial Function: Operations
Reconciliation
industry participants can reconcile and
Established network of portfolio Banks
establish a trusted source of data for their
reconciliation solutions Asset Managers
portfolios, risk exposure, and funding Segment:
triResolve Portfolio Reconciliation, triResolve Fund Administrators
obligations
Margin and Initial Margin Exposure Manager1 Hedge Funds
Portfolio Management We provide workflow tools and actionable Operations and
Function:
Established network connecting market analytics that allow clients to act on Treasury
participants exposure, financing, cash and collateral Asset Managers
Segment:
ENSO Core / Edge management opportunities Hedge Funds
1 In collaboration with AcadiaSoft
17Trade and Portfolio Management
Areas driving future growth
Solution Growth Drivers
• Extending our network across all asset classes and key relationships
Messaging and Matching • Unifying and linking underlying data facilitating additional products
• Providing more valuable trade management tools
• Moving end of day batch processes to intraday reconciliations
Portfolio and Margin
• Increased use of portfolio and margin reconciliation, driven by regulation
Reconciliation
• Adding independent valuations to shorten error resolution timescales
• Providing holistic cash and collateral management products
Portfolio Management
• Delivering enhanced payment solutions
18NEX Infinity use cases delivered by this pillar
NEX Infinity Will enable…
Single point of connection Agile access to new products
Case study: Third-party vendor for settlement
optimisation
Single data architecture Legacy technology retirement
Case study: Single point of connectivity
A secure cloud environment Trade lifecycle automation
Case study: Real-time portfolio reconciliation
Real-time financial resource optimisation
NEX and Third Party Solutions Case study: Real-time market risk capital
optimisation
1 2 3 4 5 6
Agile access to new Legacy technology Trade lifecycle Complex calculations Real-time financial Enhanced
products retirement automation Case study: Real-time resource optimisation insights
Case study: Third-party Case study: Single Case study: Real-time calculations Case study: Real-time Case study: Real-time
vendor for settlement point of connectivity portfolio reconciliation market risk capital data insights
optimisation optimisation
19Trade and Portfolio Management
Connect once to establish trusted trade and portfolio data for your business
2016/17 Revenue Contribution to NEX Optimisation1 Revenue Performance2,3
£148m
£92m
£6m
£240m
c£240m
£92m
£86m
£79m £82m £92m
Other Optimisation - 62% Subscription - 93%
Trade & Portfolio Management - 38% Transactional - 7%
2014/15 2015/16 2016/17
Operational Metrics
Portfolio Reconciliation Treasury and Portfolio
Messaging and Matching Margin Reconciliation Management
1,000+ 700k 1,900+ 500k 100+ $1tn+
Number of users Avg. daily unique Number of users Avg. monthly party- Number of clients Client assets under
tickets processed party reconciliations advisory
1 Full year 2016/17 revenue re-mapped from business unit to solution pillar.
2 Full year 2014/15, 2015/16 and 2016/17 revenue re-mapped from business unit to solution pillar. Confidential | 27 SEPTEMBER, 2017
20
3 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison.Analytics Guy Rowcliffe, Head of Analytics
Analytics
ANALYTICS
TRADE & REGULATORY FINANCIAL DATA
PORTFOLIO REPORTING RESOURCE INSIGHTS
MANAGEMENT Connect once to use your data to OPTIMISATION
understand the financial risks
Connect once to Connect once to Connect once to Connect once to
establish trusted facing your business report the right use your enhanced gain insight based
trade and portfolio data for every data to optimise on real data, to
data for your trade, in every resources and make the best
Our smart tools eliminate the
business regulatory regime deliver growth decisions for your
complexity in risk, finance and business
Our trade- regulatory calculations. They allow Our regulatory Our optimisation
processing network reporting solutions solutions use your Our insight services
you to use your data set to calculate
connects you to the enable you to keep trusted data set to draw on real data
world’s markets. and analyse risk so your business your business safe show you how to from trading
We translate and can fully understand the and compliant. We get the most from venues to give you
normalise help you to your financial an accurate picture
implications of each trade and your
information from understand what resources. Our of the markets. We
diverse sources to portfolio. We enable you to more you need to report networks have the offer a range of
give you easily understand the risks facing and where you depth and scale data covering
transparency and need to report it. needed to help you major asset classes
your business from one connection.
confidence in your We ensure you are manage your risk, and markets, from
trade and portfolio able to report optimise margin, indices to reference
data. We reconcile Client data set is continuously
accurateenriched capital and liquidity rates. Our focus is
your data with the to deliver increasing value in all
information and redistribute to let you
market, enabling global regulatory resources to grow understand the full
you to build a solid regimes at the right from one market context
NEX Infinity
foundational data times from one connection. around your
set for your connection. business and give
business from one you fresh insights
connection. from one
connection.
22Analytics
Connect once to use your data to understand the financial risks facing your business
Solution Value Proposition Clients
Credit and Risk Management Function: Risk, Treasury and Finance
We provide a suite of products to help
Pre-trade credit checking, credit reallocation optimise the allocation of credit lines, in a
and credit agreement management world of increasingly constrained balance Segment: Banks
Traiana CreditLink, Traiana Limithub sheet and capital
Derivative Pricing and Risk Analytics Leveraging quantitative expertise and high Function: Risk, Treasury and Finance
Price, report and validate complex risk capacity cloud processing, we can offer
calculations users sophisticated risk and valuation Banks
triCalculate
capabilities Segment: Asset Managers
Hedge Funds
Margin and Funding Replication
Our analytical tools help funds predict and Function: Risk, Treasury and Finance
Real-Time Prime Broker statement validation
manage their end of day prime brokerage
ENSO Margin Replication, ENSO Finance margin and funding calls Asset Managers
Segment:
Replication Hedge Funds
23Analytics
Areas driving future growth
Solution Growth Drivers
• Enforcement of regulatory pre-trade clearing limit requirements
Credit and Risk Management • Client growth in FX credit limit allocation product
• Extending our network of trading venues
• Increasing prudential regulation requirements (e.g. FRTB1)
• Rising need for robust risk calculations
Derivative Pricing and Risk Analytics
• Independent trade valuations and initial margin sensitivity calculations
• Margin valuation adjustment – expected lifetime cost of initial margin
• Continuous addition of more prime brokerage valuation methodologies
Margin and Funding Replication
• Extending product to include pro-active optimisation functionality
1 Fundamental Review of the Trading Book
24NEX Infinity use cases delivered by this pillar
NEX Infinity Will enable…
Single point of connection Agile access to new products
Case study: Third-party vendor for settlement
optimisation
Single data architecture Legacy technology retirement
Case study: Single point of connectivity
A secure cloud environment Trade lifecycle automation
Case study: Real-time portfolio reconciliation
Real-time financial resource optimisation
NEX and Third Party Solutions Case study: Real-time market risk capital
optimisation
1 2 3 4 5 6
Agile access to new Legacy technology Trade lifecycle Complex calculations Real-time financial Enhanced
products retirement automation Case study: Real-time resource optimisation insights
Case study: Third-party Case study: Single Case study: Real-time calculations Case study: Real-time Case study: Real-time
vendor for settlement point of connectivity portfolio reconciliation market risk capital data insights
optimisation optimisation
25Analytics
Connect once to use your data to understand the financial risks facing your business
2016/17 Revenue Contribution to NEX Optimisation1 Revenue Performance2,3
£232m
£8m
£8m
£240m
c£240m
£8m
£8m £8m £8m
Other Optimisation - 97% Subscription - 100%
Analytics - 3% Transactional - 0%
2014/15 2015/16 2016/17
High Level EU Prudential Timeline
Expected EU implementation
2018 2019 2020 2021 2022 2023
e.g.
Expected application of EU •Leverage Ratio
capital reforms •FRTB (phase-in)
•Net Stable Funding Ratio
•Standardised Approach – Counterparty Credit Risk
1 Full year 2016/17 revenue re-mapped from business unit to solution pillar.
2 Full year 2014/15, 2015/16 and 2016/17 revenue re-mapped from business unit to solution pillar. 26
3 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison.Regulatory Reporting Collin Coleman, Head of Regulatory Reporting
Regulatory Reporting
REGULATORY
REPORTING
TRADE & ANALYTICS FINANCIAL DATA
PORTFOLIO RESOURCE INSIGHTS
MANAGEMENT Connect once to report the right OPTIMISATION
data for every trade, in every
Connect once to Connect once to Connect once to Connect once to
establish trusted use your data to regulatory regime use your enhanced gain insight based
trade and portfolio understand the data to optimise on real data, to
data for your financial risks resources and make the best
Our regulatory reporting solutions
business facing your deliver growth decisions for your
business enable you to keep your business business
Our trade- safe and compliant. We help you to Our optimisation
processing network Our smart tools solutions use your Our insight services
understand what you need to report
connects you to the eliminate the trusted data set to draw on real data
world’s markets. complexity in risk, and where you need to report it. We show you how to from trading
We translate and finance and ensure you are able to report get the most from venues to give you
normalise regulatory your financial an accurate picture
accurate information in all global
information from calculations. They resources. Our of the markets. We
diverse sources to allow you to use regulatory regimes at the right networks have the offer a range of
give you your data set to times from one connection. depth and scale data covering
transparency and calculate and needed to help you major asset classes
confidence in your analyse risk so your manage your risk, and markets, from
trade and portfolio business can fully optimise margin, indices to reference
data. We reconcile understand the Client data set is continuously enriched capital and liquidity rates. Our focus is
your data with the implications of to deliver increasing value and redistribute to let you
market, enabling each trade and your resources to grow understand the full
you to build a solid portfolio. We from one market context
NEX Infinity
foundational data enable you to more connection. around your
set for your easily understand business and give
business from one the risks facing you fresh insights
connection. your business from from one
one connection. connection.
28Regulatory Reporting
Connect once to report the right data for every trade, in every regulatory regime
Solution Value Proposition Clients
Function: Compliance and Operations
Regulatory Reporting Hub Through a secure and intuitive user
interface, clients are able to submit their Banks
Data normalisation, enrichment, Asset Managers
transactional data in multiple formats
determination, reconciliation and validation Segment: Hedge Funds
and from multiple sources
Professional Trading Firms
Corporates
Function: Compliance and Operations
Sophisticated, regime-agnostic data
Reporting Repositories analysis and process management for Banks
End-to-end multi-regime reporting MiFID / MiFIR, EMIR, SFTR and REMIT, as Asset Managers
well as emerging regimes in Segment: Hedge Funds
Switzerland, Asia and North America Professional Trading Firms
Corporates
Function: Compliance and Operations
Trade Repository Reconciliation
Reduces the client burden and in-house
Record validation, inter-repository resources required to meet regulatory Banks
reconciliation and cross-jurisdictional standards of regulatory reporting Asset Managers
matching accuracy Segment: Hedge Funds
Professional Trading Firms
Corporates
29Regulatory Reporting
Areas driving future growth
Solution Growth Drivers
• EMIR Trade Repository (TR)
Anticipated approval this calendar year
Regulatory Reporting Hub
EU27 domiciled TR
Data normalisation, enrichment,
determination, reconciliation and validation TR will open new client opportunities
• MiFID II / MiFIR
Go-live 3rd January 2018
Trade Reporting reported via Approved Publication Arrangement (APA)
Transaction Reporting via Approved Reporting Mechanism (ARM)
Reporting Repositories
Large numbers of clients are currently making purchasing decisions with NEX well
End-to-end multi-regime reporting positioned to win a significant proportion
• Securities Financing Transactions Regulation (SFTR)
Increased transparency of Securities Financing Transactions
Expected requirement to report relevant trades through approved trade repositories
Trade Repository Reconciliation Expected phased go-live starting Q1 2019
Record validation, inter-repository Significant revenue opportunity for NEX Regulatory Reporting
reconciliation and cross-jurisdictional • Leveraging NEX community
matching
Cross-selling opportunities from other parts of the NEX Group
NEX Infinity architecture and a single MSA provides a simple and seamless
onboarding for new clients
30Regulatory Reporting
Connect once to report the right data for every trade, in every regulatory regime
2016/17 Revenue Contribution to NEX Optimisation1 Revenue Performance2,3
£236m
£4m
£4m
£240m
c£240m
£4m
£1m £1m £4m
Other Optimisation - 98% Subscription - 100%
Regulatory Reporting - 2% Transactional - 0%
2014/15 2015/16 2016/17
Operational Metrics
100+ 15m 25% 20%
Number of Number of MiFID I EMIR Global regulatory end-
clients transactions volume volume point connectivity
processed daily market share market share • MiFID – ARM & APA
• EMIR – Trade Repository
Award Winning (pending approval)
Platform
1 Full year 2016/17 revenue re-mapped from business unit to solution pillar.
2 Full year 2014/15, 2015/16 and 2016/17 revenue re-mapped from business unit to solution pillar. 31
3 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison.Financial Resource Optimisation Stuart Connolly, Head of Financial Resource Optimisation
Financial Resource Optimisation
FINANCIAL RESOURCE
OPTIMISATION
TRADE & ANALYTICS REGULATORY DATA
PORTFOLIO REPORTING INSIGHTS
MANAGEMENT Connect once to use your enhanced
data to optimise resources and
Connect once to Connect once to Connect once to Connect once to
establish trusted use your data to report the right deliver growth gain insight based
trade and portfolio understand the data for every on real data, to
data for your financial risks trade, in every make the best
Our optimisation solutions use your
business facing your regulatory regime decisions for your
business trusted data set to show you how to business
Our trade- Our regulatory get the most from your financial
processing network Our smart tools reporting solutions Our insight services
resources. Our networks have the
connects you to the eliminate the enable you to keep draw on real data
world’s markets. complexity in risk, your business safe depth and scale needed to help you from trading
We translate and finance and and compliant. We manage your risk, optimise margin, venues to give you
normalise regulatory help you to an accurate picture
capital and liquidity and redistribute
information from calculations. They understand what of the markets. We
diverse sources to allow you to use you need to report resources to grow from one offer a range of
give you your data set to and where you connection. data covering
transparency and calculate and need to report it. major asset classes
confidence in your analyse risk so your We ensure you are and markets, from
trade and portfolio business can fully able to report indices to reference
data. We reconcile understand the Client data set is continuously enriched
accurate rates. Our focus is
your data with the implications of to deliver
information in all increasing value to let you
market, enabling each trade and your global regulatory understand the full
you to build a solid portfolio. We regimes at the right market context
NEX Infinity
foundational data enable you to more times from one around your
set for your easily understand connection. business and give
business from one the risks facing you fresh insights
connection. your business from from one
one connection. connection.
33Financial Resource Optimisation
Connect once to optimise resources and unlock capital, balance sheet and liquidity
Solution Value Proposition Clients
Reduces counterparty exposures, portfolio
Portfolio Balancing and Compression line items and gross notional outstandings Trading, Risk and Funding
Function:
Multilateral compression and rebalancing of to release balance sheet and regulatory desks
OTC derivative portfolios capital Banks
Segment:
triReduce and triBalance
Balances counterparty exposures to reduce Asset Managers
capital and funding costs
Basis Risk Mitigation Mitigates second order risk exposures Trading, Risk and Funding
Function:
Offsets basis risks across trading portfolios across trading books desks
multilaterally Fixing risk in interest rate swaps, non- Segment: Banks
RESET deliverable forwards and inflation swaps
Settlement & Payment Netting Trading, Risk and Funding
Reduces costs, operational risk and Function:
Cash and Collateral Optimisation desks
settlement exposures
Optimising payment and funding exposures Banks
Cash Flow Optimisation, Manages allocation of assets to reduce Asset Managers
margin and funding costs Segment:
ENSO Color, ENSO Broker Vote Hedge Funds
34Financial Resource Optimisation
Areas driving future growth
Solution Growth Drivers
• Balance sheet constraints of banks
• Expansion of compression capabilities into FX Options, FX Forwards and Swaptions
Portfolio Balancing and Compression
• Continuation of cleared interest rate compression
• Initial margin optimisation negating the impact of new margin rules
• Diversification into FX Options
• Likely increase in short dated global interest rates volatility
Basis Risk Mitigation
• Emergence from zero interest rate environment
• Improved user interface enhancing client experience and analytics
• New product and client growth
Settlement and Payment Netting
• Extending product across asset classes and instrument types
Cash and Collateral Optimisation
• Potential to net margin payments with cash flow payments
35NEX Infinity use cases delivered by this pillar
NEX Infinity Will enable…
Single point of connection Agile access to new products
Case study: Third-party vendor for settlement
optimisation
Single data architecture Legacy technology retirement
Case study: Single point of connectivity
A secure cloud environment Trade lifecycle automation
Case study: Real-time portfolio reconciliation
Real-time financial resource optimisation
NEX and Third Party Solutions Case study: Real-time market risk capital
optimisation
1 2 3 4 5 6
Agile access to new Legacy technology Trade lifecycle Complex calculations Real-time financial Enhanced
products retirement automation Case study: Real-time resource optimisation insights
Case study: Third-party Case study: Single Case study: Real-time calculations Case study: Real-time Case study: Real-time
vendor for settlement point of connectivity portfolio reconciliation market risk capital data insights
optimisation optimisation
36Financial Resource Optimisation
Connect once to optimise resources and unlock capital, balance sheet and liquidity
2016/17 Revenue Contribution to NEX Optimisation1 Revenue Performance2,3
£152m
£88m
£240m
c£240m £5m
£88m
£83m
£94m £93m £88m
Other Optimisation - 63% Subscription - 6%
Financial Resource Optimisation - 37% Transactional - 94%
2014/15 2015/16 2016/17
Operational Metrics
Portfolio Balancing and Compression Basis Risk Mitigation
TriReduce total notional Currencies interest RESET total notional risk
Currencies available
compressed since launch rate swaps available mitigated in the last 5 years
$1qn+ 28 $1qn+ 33
1 Full year 2016/17 revenue re-mapped from business unit to solution pillar.
2 Full year 2014/15, 2015/16 and 2016/17 revenue re-mapped from business unit to solution pillar. 37
37
3 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison.Data Insights Kevin Taylor, Head of Data Insights
Data Insights
DATA INSIGHTS
TRADE & ANALYTICS REGULATORY FINANCIAL
PORTFOLIO REPORTING RESOURCE
MANAGEMENT OPTIMISATION Connect once to gain insight based
on real data, to make the best
Connect once to Connect once to Connect once to Connect once to
establish trusted use your data to report the right use your enhanced decisions for your business
trade and portfolio understand the data for every data to optimise
data for your financial risks trade, in every resources and
Our insight services draw on real
business facing your regulatory regime deliver growth
business data from trading venues to give
Our trade- Our regulatory Our optimisation you an accurate picture of the
processing network Our smart tools reporting solutions solutions use your
markets. We offer a range of data
connects you to the eliminate the enable you to keep trusted data set to
world’s markets. complexity in risk, your business safe show you how to covering major asset classes and
We translate and finance and and compliant. We get the most from markets, from indices to reference
normalise regulatory help you to your financial
rates. Our focus is to let you
information from calculations. They understand what resources. Our
diverse sources to allow you to use you need to report networks have the understand the full market context
give you your data set to and where you depth and scale around your business and give you
transparency and calculate and need to report it. needed to help you
fresh insights from one connection.
confidence in your analyse risk so your We ensure you are manage your risk,
trade and portfolio business can fully able to report optimise margin,
data. We reconcile understand the Client data
accurate set is continuously
capitalenriched
and liquidity
your data with the implications of to deliver
information in all increasing
andvalue
redistribute
market, enabling each trade and your global regulatory resources to grow
you to build a solid portfolio. We regimes at the right from one
NEX Infinity
foundational data enable you to more times from one connection.
set for your easily understand connection.
business from one the risks facing
connection. your business from
one connection.
39Data Insights
Make smarter decisions with valuable intelligence from real data covering global markets
2016/17 Revenue Contribution to NEX Optimisation1 Revenue Performance2,3
£192m
£47m £1m
£240m
c£240m
£48m £48m
£34m £36m £48m
Other Optimisation - 80% Subscription - 98%
Data Insights - 20% Transactional - 2%
2014/15 2015/16 2016/17
Operational Metrics
Pricing and Analytics Indices and Benchmarks
400
MILLION US$ 1tn+ 20,000
NUMBER OF RECORDS
200
TRANSITION BACKED
DAILY UPDATES DAILY TRADING VOLUME DELIVERED TO CLIENTS ELECTRONIC INDICES
1 Full year 2016/17 revenue re-mapped from business unit to solution pillar.
2 Full year 2014/15, 2015/16 and 2016/17 revenue re-mapped from business unit to solution pillar.
3 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison.
40Data Insights
Make smarter decisions with valuable intelligence from real data covering global markets
PRODUCTS SPEND CLIENTS NEEDS
24%
Regional Banks Sales and Trading Price and Liquidity
Discovery
Pricing &
Analytics
28% Risk Management
Global Banks Price Verification
and Mark to Market
Compliance
28%
Investment, Low Latency
Hedge Funds Algo Trading
17% Portfolio Risk Management
Indices & Vendors, Management
Benchmarks Service Providers
3% Corporate Treasurers TCA / Best EX
Other*
* 3% in Risk, Treasury Support, Insurance, Government Agency, Corporates, Central Banks 41Data Insights
Areas for driving future growth Client Function
PRODUCTS GROWTH DRIVER
Expand our
Diversify the Expand our footprint with
Pricing & client base by Increase revenue Flexible Expand partners
new products
Analytics footprint with new
both client type within existing delivery and alliances
from NEX
products from NEX
and geography client base options programme
Optimisation
Optimisation
Be the leading Industry shift Expanding
Indices & transaction from unsecured index
Benchmarks backed index towards secured portfolio
provider funding
globally eg. Repo
42NEX Infinity use cases delivered by this pillar
NEX Infinity Will enable…
Single point of connection Agile access to new products
Case study: Third-party vendor for settlement
optimisation
Single data architecture Legacy technology retirement
Case study: Single point of connectivity
A secure cloud environment Trade lifecycle automation
Case study: Real-time portfolio reconciliation
Real-time financial resource optimisation
NEX and Third Party Solutions Case study: Real-time market risk capital
optimisation
1 2 3 4 5 6
Agile access to new Legacy technology Trade lifecycle Complex calculations Real-time financial Enhanced
products retirement automation Case study: Real-time resource optimisation insights
Case study: Third-party Case study: Single Case study: Real-time calculations Case study: Real-time Case study: Real-time
vendor for settlement point of connectivity portfolio reconciliation market risk capital data insights
optimisation optimisation
42Opportunities Steve Gibson, CEO, Euclid Opportunities
Industry view on the application of emerging technology trends Source: EY Report (produced in conjunction with Innovate Finance) “Capital Markets: Innovation and the FinTech Landscape”, 2016 45
Moving from the lab to enterprise: industry adoption of new technologies
ILLUSTRATIVE BENEFIT TRAJECTORY FOR ENABLING TECHNOLOGIES
Potential
game
changers
WHERE WE ARE
TODAY
Enterprise-
wide value
Cloud technology
LEVEL
OF Process and service
BENEFIT externalisation
Robotic Process
Automation
Point of
solutions Advanced Analytics
Digital
Transformation
Artificial intelligence
Smart contracts
Proof of
concept Internet of Things
Block chain
0-2 years 3-5 years 5 years & beyond
46
Source: EY Report (produced in conjunction with Innovate Finance) “Capital Markets: Innovation and the FinTech Landscape”, 2016Objective, mandate and status
Objective
To build an investment portfolio of fintech firms
Macro Market structure transformation Convergence of significant technology trends
Market drivers Electronification Regulation Standardiation
Mandate Solving Founders
Adjacencies Transformational, with significant Strategic value
substantial
and synergies scalable industry credibility and strong
industry
with NEX platforms, models and technology economic return
and client
Group or technology expertise on capital
challenges
Value creation New markets New products Synergies for NEX New technologies
Origination 2,500 business plans reviewed since launch
Status 8 portfolio companies
Product partnerships Source code agreements
2 acquisitions
Deliverables Consolidation Strong economic Ecosystem of products &
opportunities return on capital platforms for NEX clients
47We partner with leading fintech innovators and investors
October 2016 – NEX acquire Abide Financial
January 2017 – NEX Regulatory Reporting launched
Utility Settlement Coin
August 2016 – NEX Opportunities joined UBS, Santander,
Deutsche Bank and BNY Mellon to advance the Utility
Settlement Coin project. In August 2017, HSBC, Barclays, JP
Morgan, ING and RBC joined the project
Launched
March 2011
April 2016 – NEX acquire ENSO
April 2016 - NEX Opportunities invested in Cloud9
Technologies alongside JP Morgan and Barclays
2011 2012 2013 2014 2015 2016 2017
July 2015 – NEX Opportunities participated in AcadiaSoft’s
October 2016 - NEX Opportunities participated December 2016 - NEX Opportunities co-led
latest funding round. AcadiaSoft’s investors include Goldman
in OpenGamma’s funding round. Other Axoni’s $20m Series A funding round. Other
Sachs, Deutsche Bank, JP Morgan, Barclays, Citigroup, BNP,
OpenGamma investors include Accel Partners, investors include JP Morgan, Citi, Wells Fargo and
Credit Suisse, SocGen, State Street, UBS, BAML, HSBC and
FirstMark Capital and JSCC / JPX Goldman Sachs
Morgan Stanley
48Portfolio creating significant network effects
Product / Service
Market Opportunity
Data Insights
Approved Publication Regulatory
Arrangement Reporting Distributed Ledger
Technology
Trade & Portfolio
Management
Regulatory Reporting Client Experience
OpenFin
Community Edition
Capital
Optimisation MiFID II
Broker evaluation
Treasury &
Artificial Intelligence
Portfolio Management
Trade & Portfolio
OTC Margining Services Management Treasury optimisation
ENSO Control
triResolve NEX Treasury
A NEX Markets Service
49Technology Guy Naor, CTO, NEX Optimisation
Enabling growth through new technology
and best practices
MICROSERVICES DEVELOPMENT OPERATIONS
• Services developed independently • Continuous software updates
• Faster time to market • Ease of roll back and low risk
CLOUD BASED DISTRIBUTED LEDGER
• High capacity data storage • Permissioned access
• Agile deployment • Secure and immutable records
ARTIFICIAL INTELLIGENCE
• Analyse data and infer knowledge
• Translate and normalise data
51Conclusion Jenny Knott, CEO, NEX Optimisation
Roadmap to NEX Optimisation’s financial aspirations
Revenue CAGR 2016/17 to 2019/20
TRADE & PORTFOLIO
> 10%
MANAGEMENT > 10% Revenue CAGR
> 10% through to
2019/20
ANALYTICS > 10%
REGULATORY
> 40%
REPORTING > 50% Facilitate growth Operating margin
through innovation and agility, > 40% to be delivered by
while reducing costs 2019/20
FINANCIAL RESOURCE
~ £15m
OPTIMISATION > 5%
Annualised cost savings
DATA INSIGHTS > 10% of circa £15m by
2019/20
53We are positioned to deliver on our financial aspirations
EASIER AND MORE AGILE
PROCESS TO DELIVER
> 10%
NEW SERVICES Revenue CAGR
> 10% through to
2019/20
INTEROPERABILITY OF
TECHNOLOGY AND DATA
ELIMINATING INEFFICIENCIES
> 40%
FOR US AND OUR CLIENTS Facilitate growth Operating margin
through innovation and agility, > 40% to be delivered by
while reducing costs 2019/20
ACCESS TO SMARTER TOOLS
~ £15m
UNIFYING DATA ACROSS Annualised cost savings
THE INDUSTRY of circa £15m by
2019/20
54APPENDIX
How our businesses intersect with the new structure
TRADE & FINANCIAL
REGULATORY DATA
PORTFOLIO ANALYTICS RESOURCE
REPORTING INSIGHTS
MANAGEMENT OPTIMISATION
Messaging and Credit and Risk Regulatory Reporting Settlement and
Matching Management Hub (TR Connect) Payment Netting
Basis Risk
Mitigation
Regulatory Reporting
Hub & Reporting
Repositories
Portfolio and Margin Trade Repository Portfolio Balancing
Reconciliation Reconciliation and Compression
Pricing, Analytics,
Derivative Pricing
Indices and
and Risk Analytics
Benchmarks
Portfolio Margin and Funding Cash and Collateral
Management Replication Optimisation
56 56How our businesses revenue intersect with the new structure1,2
TRADE & FINANCIAL
PORTFOLIO REGULATORY DATA
ANALYTICS RESOURCE
MANAGEMENT REPORTING INSIGHTS
OPTIMISATION
£m £m £m £m £m
2014/ 2015/ 2016/ 2014/ 2015/ 2016/ 2014/ 2015/ 2016/ 2014/ 2015/ 2016/ 2014/ 2015/ 2016/
15 16 17 15 16 17 15 16 17 15 16 17 15 16 17
48 48 46 8 8 8 1 1 1 5 4 3
48 42 37
- - 3
31 34 39 - - - - - - 41 47 47
34 36 48
- - 7 - - - - - 2
Total 79 82 92 8 8 8 1 1 4 94 93 88 34 36 48
1 Full year 2014/15, 2015/16 and 2016/17 revenue re-mapped from business unit to solution pillar.
2 Full year 2014/15 and 2015/16 figures restated using 2016/17 FX rates to provide constant currency comparison. 57NEX Optimisation today – Our businesses
NEX Optimisation consists of a
range of underlying businesses
launched or acquired by
TriOptima offers portfolio compression, Traiana offers messaging & matching,
NEX Group to provide the best reconciliation, margin processing and credit management, connectivity,
possible service to our clients credit risk analytics clearing & reporting workflows
Reset lets clients trade off unwanted NEX Data delivers high-value price
risks using a sophisticated matching data and indices to a global and
engine diverse client base
Abide offers an end-to-end cross asset ENSO offers data analytics, treasury
regulatory reporting solution across key and portfolio finance workflows to the
global jurisdictions asset-management industry
Opportunities invests in and nurtures
innovative financial technology
disruptors of the future
58INVESTOR RELATIONS
Alex Dee
+44 (0)20 7050 7420
alex.dee@nex.com
nex.com
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