Market Trends in Finance & Technology / An Open Platform for Business Growth

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1 Market Trends in Finance & Technology / An Open Platform for Business Growth Brennan Carley, Global Head of Enterprise Platform and Analytics November 2015

2 Agenda The market Regulation An open and agile platform Adding value on an open platform

3 Financial Services is Evolving Rapidly In today s world, what makes products and services competitive are the ways in which they remain adaptable, flexible and resourceful

4 Navigating Today s Market New Business Models & Entrants Platforms and ecosystems as winning models New entrants disrupting customers models Process externalisation, industry utilities Technology and Big Data Proliferation of data increases need for standards, structure and integration Value shifting from raw data to predictive analytics Early experiments in artificial intelligence Over 20k FinTech startups Changing needs and attitudes Regulation and Cost Not finished yet e.g., MFIR, Basel Data Standards Increasing cost of compliance Market structure still changing, future unclear Higher regulation spilling into supply chains Globalisation of Supply Chains Growth in global trade & international business relationships driving complexity & risk Away from Desktop and Feeds to integrated platform New generation of users with higher expectations (ubiquity, immediacy, self-service) Shift towards the ultimate investor, rise of passive investment Global Rebalancing Shifting global wealth distribution China internationalising

5 Anticipating Tomorrow s Market Drivers Bitcoin/Blockchain

6 Big Data, IoT, Social Media: Impact on Markets Social Media Big Data Technologies Predictive Analytics Driving Markets News Connectedness Sensor-based Tractors IOT Cameras Highway/Road Monitors Fundamentals TRADITIONAL DATA Reports / Filings Thermostats Satellites Irrigation Systems Smartphones Cars/GPS Research Market Data

7 Regulation and Impact

8 MiFID II An Overview Market structure Transparency and data OTC markets forced onto venues only FX Spot, large blocks and the most illiquid instruments are exempt Proliferation of venues expected need to onboard many and quickly Extensive new pre- and post-trade transparency requirements across all markets, including currently unlit markets bonds, SFPs and derivatives are most impacted Formal, regulated reporting entities (APAs), but likely to be fragmented Commercial restrictions mandatory aggregating / unbundling into very granular, individual feeds ; subject to reasonable commercial basis at source Increased importance of reference data for accurate, more detailed reporting Internal & external controls Investor protection Additional requirements for venues non-discriminatory fees, non-discriminatory access, clock synchronization, best execution, system resilience, etc. Universal conduct of business requirement including special requirements for Algorithms and HFT Position reporting and limits for commodity derivatives Ban on softing: bundling of research with dealing commission will be banned Further compliance rules on inducements, etc.

9 But Will MiFID II impact Russia? Questions: Do you trade any securities issued in the MiFID zone? Do you trade on venues (exchanges, MTFs ) in the MiFID zone? Do you service any customers in the MiFID zone? Do you trade with any firms who have operations, customers, or counter-parties in the MiFID zone? Do you trade with anyone who can answer yes to any of these questions? All financial markets participants will have to be ready for MiFID, whether required to be regulation or not.

10 Thomson Reuters MiFID II Initiatives Thomson Reuters will operate FXall as a Multilateral Trading Facility (MTF) Thomson Reuters will deliver a pretrade quote publication service. MTFs Pre-trade quote publication MiFID II Unbundling & disaggregation Thomson Reuters will support unbundling and disaggregation of MiFID II market data. Thomson Reuters will provide Approved Publication Arrangement (APA) post-trade publication services. APA posttrade publication Thomson Reuters will add new MiFID II fields to our reference database. Reference data fields Pre / post trade data collection & distribution Thomson Reuters will collect and distribution all major sources of pre-and post-trade MiFID II market data, to provide clients with a comprehensive view on market activity.

11 Delivering Value Through an Open Platform

12 Delivering Value to Customers We power and connect the global financial community PERFORMANCE CONNECTIVITY RISK MANAGEMENT

13 Harnessing Value With an Open Platform One that acquires, connects, matches and enables networks of providers and consumers to do business A PLATFORM BUSINESS EXAMPLE PROVIDERS CONSUMERS

14 Driving an Open Innovation Strategy A fully integrated, open platform business where the global financial community can connect, discover, build relationships and transact in a safe, effective and efficient way. Exchanges & venues 3 rd party content providers Research Providers Banks Brokers Developer Tools, APIs, Platform Access PROVIDERS THOMSON REUTERS OPEN PLATFORM Data Aggregation, Curation (Standards) and Integration Discovering, Creating & Delivering Value Transactions, Connections, Communications CONSUMERS Banks & Brokers Asset Managers Private Banking & Wealth Managers Hedge Funds & Private Equity Corporates Regulators Government 1,000s of other data sources Central banks Contracting, Billing, Permission, Network Distribution Unique Desktop Search & Discovery FinTech Innovation Analytics & End User/Machine Tools Utilities & Service Regulators Central banks

15 Driving an Open Innovation Strategy THOMSON REUTERS OPEN PLATFORM Developer Tools, APIs, Platform Access Data Aggregation, Curation (Standards) and Integration Transactions, Connections, Communications Example PROVIDERS Unique intelligence, intuitive technology, human expertise CONSUMERS Example Contracting, Billing, Permission, Network Distribution Unique Desktop Search & Discovery FinTech Innovation Analytics & End User/Machine Tools Utilities & Service Tools Gravitational Pull Flow

16 Key Benefits CRITICAL MARKET INFORMATION, STANDARDIZED TO THE HIGEST QUALITY INTUITIVE, INTELLIGENT, INNOVATIVE DESKTOP SOLUTIONS REAL-TIME AND NON REAL-TIME FEEDS, FOR FAST, INTELLIGENT TRADING AND DECISION MAKING A UNIQUE CHAT TONE THAT ALLOWS COMMUNICATION ACROSS MESSAGING PROTOCALS ACCESS TO LIQUIDITY VENUES AND TRADING PARTNERS, WITH EXECUTION CAPABILITIES DIGITAL SOLUTIONS AND MOBILE APPLICATIONS FOR YOU AND YOUR CLIENTS MANAGED SERVICES, HOSTED DEPLOYMENT AND LEADING INDUSTRY UTILITIES ABILITY TO INTEGRATE YOUR OWN AND THIRD PARTY DATA ACROSS A SCALABLE, RELIABLE TECH PLATFORM

17 Thomson Reuters Open, Agile Platform

18 Volume and Velocity of Information 1986: 500 ups 1998: 2,5k ups 2015: 4.4m ups 2017: 6-7m ups 2,000 terabytes = All US academic research libraries

19 Doing More With Less The Shift to Machines

20 Beyond Content: Adding Value Through Analytics

21 Elektron Analytics Strategy Analytics as a Service Powering Your Applications: Best Execution TCA Synthetics Elektron API VWAP (SU.T,10:00,12:00,5 min, Ex OTC) Basket Analysis Delivered Pre-Trade Analysis

22 News Analytics Overview MACHINE READABLE NEWS Anger Conflict Emotion vs. Fact Fear Gloom Joy Love Hate Market Risk Analyst Rating Debt Defaults Earnings Forecast Fundamental Strength Innovation Layoffs Litigation Long Short Long Short Forecast Optimism Sentiment Stress Trust Uncertainty Urgency Violence Management Change Management Trust Mergers Price Direction Price Forecast Volatility

23 Thomson Reuters Intelligent Tagging

24 From Data to Answering the Questions That Matter How do I best distribute my liquidity and generate flow? How do I ensure best execution, for me and my clients? How do I onboard new customers quickly, efficiently & safely? How do I understand and mitigate my supply chain risk? How can I best take my business, and my clients, digital? How do I turn regulatory burden into competitive opportunity? How do I optimize the use of my capital, while I keep compliant? How do I find Alpha? How do I optimise portfolio returns?

25 Thank you