Borsa Italiana London Stock Exchange Media Presentation. 25 June 2007

Transcription

1 Borsa Italiana London Stock Exchange Media Presentation 25 June 2007

2 Two Highly Efficient and Complementary Businesses Europe s Leading Diversified Exchange Group Europe s leading business in listing and trading of equities Europe s leading business in trading of ETFs, securitised derivatives and fixed income products Primary European and global listings venue Broadly diversified product offering with strong and growing presence in derivatives and information products World leader in exchange technology Most efficient provider of post-trade services in Europe Unique global strategic position 2

3 Merger Highlights 4.90 LSE Group shares for each Borsa Italiana share Values Borsa Italiana at 1,103m ( 1,634m) and combined group at 3,900m ( 5,777m) (1) LSE shareholders will own approximately 72% and Borsa Italiana Shareholders approximately 28% (1) Cost synergies of at least 20m ( 29m) in FY 2010; Revenue synergies of 20m ( 29m) in FY 2011 Expected to be earnings neutral to positive in FY 2008 and accretive by at least 10 per cent. in FY 2009 (1) Based on closing price of 1,387p, / exchange rate of as of 19 June 2007 and assuming full acceptance of share offer by Borsa Italiana shareholders. 3

4 Bringing together two highly complementary businesses Borsa Italiana Distinctive and most efficient vertically organised open model Highly liquid equity market with significant retail participation Broad product offering with leading position in ETFs, securitised derivatives and wholesale bonds Leading European fixed income trading platform Most efficient post-trading infrastructure in Europe London Stock Exchange Premier global exchange brand delivering vision to be world s capital market Leading global market for UK and international equities International listings venue of choice Leading global growth market State-of-the-art cash trading technology driving structural change and fastest growth in order book of all major listed equity and derivatives exchanges in Europe and US in

5 Poised for additional growth Cross market access and selling Complementary investor bases and expertise Single cash trading platform with cross-market access Leveraging AIM to accelerate the SME marketplace in Italy A new force in the European fixed income market Extension of efficient and low-cost post-trade services Innovation and cross-selling of derivatives products Potential to unlock retail participation in the UK, building on the success of the Italian market in cash equities, ETFs and securitised derivatives Potential to leverage LSE s expertise with institutional investors (e.g. algorithmic traders) State of the art technology World leading next generation technology (TradElect) offered to customers in both markets Facilitates further structural shift in cash trading 5

6 Strategic Rationale Leading Market Positions #1 in Europe by number of listed companies 3,540 as at May 2007 #1 globally by number of new issues over 620 in 2006 #1 in Europe by market capitalisation 48% of FTSEurofirst 100 #1 in Europe by value and number of order book trades #1 in Europe in wholesale electronic bond trading #1 in Europe for electronic trading of ETFs and securitised derivatives Underpinned by: Advanced technology platform Efficient post-trade services 6

7 Strategic Rationale Benefits for Customers and other Stakeholders Continues to lower the all-in costs of trading and shares the benefits of increased scale with customers State of the art IT infrastructure, leveraging expertise from all parties Functional integration of the two equity markets with domestic regulatory oversight, thus maximising opportunities and minimising complexity Broadens product and service offering reducing operational costs and risks to customers New fixed income products through MTS platform Pan European equity derivatives European post-trade services via CC&G and Monte Titoli Reduces cost of capital for issuers as liquidity pool expands Competitive post-trade services in the new open access and interoperable environment 7

8 Business Profile London Stock Exchange Business Description Issuer 1,608 Main Market and 1,637 AIM companies at 31 March bn money raised, up 57% on prior year 503 new issues in FY 2007 across all markets Broker 353,000 average daily SETS bargains, up 58% on prior year SETS value traded up 37% at 1.6tn (FY 2006: 1.2tn) SETSmm average daily bargains doubled to 80,000 in FY 2007 Information 116,000 data terminals at 31 March, including 96,000 professional users Proquote terminals at 3,700, including 1,000 international screens Segmental Analysis Information Services 30% FY 2007 Revenue Breakdown 349.6m Other 5% Issuer Services 18% Broker Services 47% 8

9 Business Profile Borsa Italiana Business Description Cash Equities 318 listed companies as at May 2007 Daily shares trading average of 307,301 trades and 6.46bn Derivatives 95% market share of Italian equity derivatives trading MTS Europe s leading market for wholesale electronic fixed income products 1,166 market participants with total trade volumes of 18.7trn in 2006 MTS is controlled (60.37% owned) by a joint venture between NYSE Euronext (51%) and Borsa Italiana (49%) Borsa Italiana exercised its call on NYSE Euronext s stake last week Post-Trade Most efficient post-trade service provider in Europe Segmental Analysis Information & Other Services 17% FY 2006 Revenue Breakdown MTS 10% Settlement & Custody 23% Listing 11% 278.5m Clearing 13% Cash Trading 19% Derivatives Trading 7% 9

10 Diversified Business Model Revenue by business area (%) Services (2) Post-trading Listing Trading (3) LSE+ Borsa Italiana (1,4) (pro-forma) NYSE Euronext (4) Deutsche Börse (4) NASDAQ+ OMX (4,5) (1) LSE figures for year ending 31 March 2007 (2) Including Information and other services (3) Including both cash and derivatives (4) 2006 Annual Reports (LSE: 2007); exchange rates annual average: 1 = Euro; 1 =1.843$; 1 = Kr (5) OMX marginal post-trade revenues included in Trading, as not separately disclosed 10

11 Synergies At least 20m ( 29m) cost synergies expected in FY 2010 Revenue synergies of 20m ( 29m) expected in FY 2011 reflecting enhanced growth opportunities: Creating attractive cross-market access opportunities via the operation of both markets on TradElect, and enlarging the liquidity pool available to listed companies; Accelerating the development of the SME marketplace in Italy, and other European markets; Linking equity derivatives product offerings, creating a larger liquidity pool for existing and new products; Adding new bond products on to the MTS trading platform; and Expanding Borsa Italiana s highly efficient clearing services to other European markets. 11

12 Group and Board Structure Combined group incorporated in the UK with listing in London and intended listing in Milan Position Name Existing Seat Chairman (Non-Executive) Chris Gibson-Smith LSE Deputy Chairman (Non-Executive) Angelo Tantazzi Borsa Italiana Chief Executive (Executive) Clara Furse LSE Deputy Chief Executive (Executive) Chief Executive Borsa Italiana Massimo Capuano Borsa Italiana Finance Director (Executive) Jonathan Howell LSE 7 other non-executive directors 4 x LSE 3 x Borsa Italiana Massimo Capuano will be responsible for the integration of the combined businesses Boards of exchanges with executives from both markets and majority composition of local directors 12

13 Conclusion: A compelling vision for the future as a powerful and diverse global industry leader Exchange platform of choice for European and international customers To create an even stronger growth story Issuers Truly global network Pre-eminent exchange offering (products, brand) Intermediaries The largest European equity market Broad range of services offered efficiently in an open business model reducing the costs of trading Investors Unparalleled product offering and liquidity pool Largest pool of global capital Comprehensive information services offering Unique value proposition in the global exchange sector Building the World s Capital Market Comprehensive and efficient service offering Prime access point for global investors, intermediaries and issuers State-of-the-art IT to provide services Critical mass and unique business proposition to play a leading role: Global exchange Efficient along the whole value chain Local focus and domestic requirements preserved 13

14 Appendices 14

15 Creation of the largest European equities liquidity pool covering nearly 50% of FTSEuroFirst 100 companies Market capitalisation of domestic listed companies (May 2007, bn) Average daily turnover (YTD 07, electronic order book only, m) Number of listed companies (May 2007) LSE Borsa Italiana LSE + Borsa Italiana 3,835 LSE + Borsa Italiana 18,116 LSE + Borsa Italiana 3,540 Euronext 3,130 Euronext 12,307 BME 1 3,418 Deutsche Börse 1,470 Deutsche Börse 9,367 Euronext 1,196 BME 1,129 BME 6,405 OMX 809 SWX 983 OMX 4,103 Deutsche Börse 764 OMX 966 SWX 3,630 SWX Including 3,179 holding companies listed at MAB (Mercado Alternativo Bursatil) Source: FESE, exchange statistics and websites 15

16 Leveraging the leading global growth market AIM model proven as the most successful in attracting international IPOs Strong institutional and international investor base Borsa Italiana s strong brand and high velocity small cap trading Significant Italian SME base Strong retail, on-line and semi-professional investor base A new growth market targeted at Italian issuers and enhancing European and international profile Offering issuers an enlarged pool of available capital Acceleration of Borsa Italiana s SME market segments, complementing the MAC and Expandi New opportunities for the financial advisory community and broader choice for investors Accelerates development of the Italian equity markets through opportunities to increase GDP/market cap ratio of 55% 16

17 A new force in the European fixed income markets LSE s UK and international bond listing business A leading European player Broad coverage of primary and secondary markets in Europe Potential to enter new fixed income markets MTS European and global positioning, expertise and platform Opportunity to serve evolving investor needs and new types of market participant Improvement upon current inter-dealer and dealer to client models 17

18 Innovation and cross selling opportunities in derivatives London market power and investor community Unique linked exchange model pooling x-border liquidity Significant business potential to develop combined derivatives businesses Develop a market in UK and other European equity derivatives products, based on European market leadership in cash equities Leverage Borsa Italiana s market position in developing pan-european securitised derivatives offering Italian product design and expertise Enhance customer networks due to relatively low member overlap between IDEM and EDX 18

19 Leveraging the most efficient provider of post-trade services in Europe as the industry opens up Price per post-trade of cash transaction (per trade, single side) Borsa Italiana Clearing Settlement Borsa Italiana s post-trade pricing appreciably more attractive than competitors Sustainable advantage due to significantly lower costs London Euronext Paris Deutsche Borse Virt-X Opportunity to leverage Borsa Italiana s efficiency in post-trade services Using the principles set out in the European Code of Conduct Source: U Competition Commission report 19