FX Alliance Inc. Sandler O Neill Global Exchange & Brokerage Conference. June 7, 2012

Transcription

1 FX Alliance Inc. Sandler O Neill Global Exchange & Brokerage Conference June 7, 2012

2 Forward Looking Statements The following information contains, or may be deemed to contain, forward-looking statements. By their nature, forward-looking statements involve risks, assumptions and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of FX Alliance Inc. (the Company ) may vary from the results and performance expressed in, or implied by, such forward-looking statements, possibly to a material degree. For discussion of some of the important factors that could cause the Company s results and performance to differ from those expressed in, or implied by, the forward-looking statements contained in the following information, please refer to the Company s Annual Report on Form 10- K for the year ended December 31, 2011, in particular, the information under headings such as Forward-Looking Statements, Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations and in other filings and furnishings made by the Company with the SEC from time to time. The Company undertakes no obligation to update or revise any forward-looking statements. 2

3 Investment Highlights Market Leader in Fast Growing Electronic FX Market Diversified Institutional Client Base Proven and Experienced Management Team Investment Highlights Comprehensive Suite of Award Winning FX Products Significant Growth Opportunities Attractive and Scalable Business Model 3

4 Introduction to FXall Leading solutions provider to the institutional FX market 1300 asset managers, corporations, banks, broker dealers, hedge funds and other institutions Deeply embedded in the technology and workflow of clients Average daily trading volume of $88 billion in the first five months of 2012 Independent, institutional-only, fee-for-service business model FXall is a trading technology provider and market operator, not a market maker or broker FXall does not take principal positions FXall does not clear trades itself Broad capabilities and robust offerings Efficient FX price discovery, trading worfklow, trade execution and post trade services Includes FX Spot, FX Forwards, FX Swaps and Non-Deliverable Forwards ( NDFs ) Global footprint capitalizes on secular trend towards electronic trading >50% of all FXall trading volume attributable to non-u.s. clients Offices in New York, Boston, Washington, London, Zurich, Tokyo, Singapore, Hong Kong, Mumbai and Sydney 4

5 FX is the Largest and Fastest Growing Liquid Market Global FX Market Has Experienced Substantial Growth (1) Size and Scale of FX Market (2) Average Daily Turnover ($tn) $5.0 $4.0 $3.0 $2.0 $1.9 $3.3 $4.0 Total ADTV ($ In Trillions) $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 '01-'10 CAGR Equities 4.6% US Total Bond Market 7.2% FX 14.3% $1.2 $0.5 $0.2 $0.3 $ Equities US Total Bond Market FX Increasing Penetration of Electronic FX Trading (3) $4.0 80% $1.0 $0.0 $ % of Electronic Trading 60% 40% 20% 0% (1) BIS Triennial Central Bank Surveys. (2) BIS Triennial Central Bank Surveys, World Federation of Exchanges, sifma. (3) Aite Group and BIS Triennial Central Bank Surveys. 5

6 Supportive Macro Trends Virtuous Cycle of Future FX Volume Growth FX Volumes Over Time (Average Daily Trading Value) 2.0 ($ in trillions) Global Trade Regulatory Developments Cross- Border Investment 1.5 Better Transparency and Execution Electronic Trading 1.0 New Market Participants 0.5 Jan-09 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Source: CLS Group 6

7 Migration from Telephonic to Electronic FX Trading Pre 1990 s 1990 s 2000 s 2010 s Key FX Events Modern FX market began forming in the 1970s after Bretton Woods fails Hedging FX risks by corporations become prevalent to corporations due to globalization FX market grew an average of 14% annually starting in 2001 Euro entered circulation in January 2002 FX market hits $3.98 trillion daily volumes, April 2010 Regulatory framework proposed for FX derivatives Electronic FX Trading Developments Trades executed telephonically Development of electronic single bank and interbank trading systems Emergence of multi-bank platforms Growing FX active trading community Electronic FX volume grows faster than total FX volume Increased scrutiny of FX execution quality Greater participation by alternative market makers FXall Launches (5/01) Acquires and integrates Lava FX (1/10) Launches Settlement Center (12/02) Opens Mumbai office (3/11) Developments Launches Order Book (2/07) Recognized #1 Multibank Platform by Euromoney ( ) Launches Execution Quality Analytics (9/11) Opens Zurich office (11/11) Successful completion of Initial Public Offering (2/12) 7

8 Meeting the Needs of a Broad Institutional Client Base Trade to facilitate core business Facilitate trades / market making Trade to generate alpha Corporations Asset Managers Broker- Dealers Banks Hedge Funds CTAs HFTs Imports & Exports Hedging strategies Repatriation of earnings Cross-border M&A Foreign trade settlement Foreign dividend conversion Currency overlay management Market making FX brokerage Credit intermediation Market making Global payment services Agency treasury services Trading strategies Macro strategies Foreign trade settlement 58 of S&P Global 100 and 132 of the Fortune of top 100 U.S. institutional asset managers and 55 of the top 100 European institutional asset managers All of the top 25 banks in the FX industry globally as ranked by Euromoney 6 of the top 10 institutional hedge funds as ranked by Institutional Investor Relationship Trading Active Trading 8

9 Comprehensive Suite of Products and Capabilities Order & Execution Management Market Data & Reporting Trade Execution Post Trade Services Connectivity & STP Order and Execution Management Upload, evaluate, aggregate and manage orders at the best price on ECN or multi-dealer platform Trade Execution Single point access to multiple execution methods or trading mechanisms Post Trade Services Facilitates post-trade messaging between clients, counterparties, custodians and prime brokers Connectivity & STP Increases client efficiency and control in trade and operational workflows Market Data & Reporting Comprehensive real-time market data and analytics to assist in auditing trade execution activity and quality FXall s Robust Product Suite Creates Multiple Touch Points with its Clients Systems 9

10 Our Complete Trade Work Flow Automates Multiple Steps 1 Client requirements reach FXall Client FX OMS / TMS 2 Trade initiated Trade executed through FXall 4/5 Trading messages exchanged Order and Execution Management Order Management System Aggregator 11 6 Client trading systems notified /9 10 Details sent to Settlement Center Post-trade messages exchanged Post Trade messages matched Execution Mechanisms Collaborative Trading Proprietary Dealer Order Request for Stream Continuous Stream Order Book 3 10 Settlement Center Confirmation Matching SSI Enrichment Settlement Netting 11 Client back office systems notified rd parties notified Market Participants 3 rd Party Notifications Prime Broker Custodian CLS 10

11 FXall Technology Supports Multiple Trading Models Relationship Trading Active Trading Licensed White-Label Multi-Bank Model ECN Model Single-Bank Model Liquidity Provider Liquidity Provider Liquidity Provider Broker- Dealer Hedge Fund Bank One Liquidity Provider Bank ECN Platform Broker- Dealer White Label Corporate Asset Managers Hedge Fund HFT Asset Managers Hedge Funds, HFTs, CTAs Corporate Broker Dealers Banks Corporate Hedge Funds CTAs 11

12 Strong Growth in Diversified Institutional Client Base Consistent Client Growth Over Time 1,291 % CAGR , , % 5% % Relationship Trading Buy-Side Relationship Trading Liquidity Provider Active Trading Participants 12

13 80+ Bank Providers Serve our Institutional Client Base 13

14 Consistent Market Leadership Euromoney (#1 Multibank and Independent Platform) Profit & Loss (Best Trading Platform for Asset Managers) (Best Trading Platform for Corporations) 2010 FX&MM (#1 ECN Venue) 2010 Global Finance (Best Independent Online FX Trading System) Euromoney Japan (#1 Multibank FX Platform ) FX Week (Best Professional Electronic Trading Venue) (#1 Multibank Platform) Financial News (Best Foreign Exchange Trading Platform) 2008 & 2011 Asiamoney (Best Multibank FX Trading Platform)

15 Significant Growth Opportunities Expand our footprint Expand client base Benefit from continued migration from voice to electronic trading Maximize existing institutional client relationships Cross-sell additional products to existing clients Increase share of trading wallet Expand product offerings Capitalize on regulatory reform opportunities Offer complementary products and services, including FX options Additional pre and post trade services will also attract new clients and diversify revenues Regulation reinforces trend towards electronic trading FXall is developing the capability to become a Swap Execution Facility (SEF) Pursue strategic alliance and acquisitions Focus on opportunities that enhance technology and increase market share Cash flow to fund inorganic opportunities 15

16 Proven and Experienced Management Team FXall has a deep and experienced management team with an average of more than 16 years of electronic trading industry experience Name Position Years in Electronic Trading Prior Experience Phil Weisberg CEO 20 Managing Director and Global Head of Currency Derivatives, JP Morgan John Cooley CFO 12 CAO, Global Fixed Income, HSBC; previously at J.P. Morgan in Fixed Income and Structured Finance Steve Rubinow Chief Information Officer 20 Executive Vice President and Chief Information Officer of NYSE Euronext Jim Kwiatkowski Global Head of Sales 22 EVP of Sales & Services, FutureTrade; Senior management positions at Bridge and Reuters Jim Sullivan General Counsel 11 Assistant General Counsel, JP Morgan 16

17 Financial Overview

18 Attractive and Scalable Business Model High Barriers to Entry ~ 1,300 client relationships with deep integration into trading workflow Scalable Technology Platform Every trade generates revenues at high incremental margins Independent Service Provider Independent business model without conflicts of interest No Trading or Counter-Party Risk Do not make markets, take positions or trade for our own account 18

19 Financial Drivers Simple Revenue Model Revenues scale with volumes % of Revenue Q Transaction Fees Relationship Trading Active Trading 52% 24% Other Recurring Revenues User, Settlement & License Fees 24% 19

20 Strong Growth Across Key Drivers of Profitability Relationship Trading Relationship Trading Clients Average Daily Relationship Trading Volume ($ in billions) % : 6.2% $36.8 $49.8 $54.2 $42.3 $50.7 $66.4 $64.6 $ Active Trading Clients Active Trading YTD Average Daily Active Trading Volume ($ in billions) YTD $0.6 $0.8 $1.5 $2.3 $11.6 $17.1 % : 26.8% $15.2 $ YTD 1. Reflects average daily volume through May YTD 1 20

21 Solid Growth Across Transaction and Non-Transaction Revenue Transaction Fees Total Revenue ($ in millions) ($ in millions) $44.9 $57.8 $58.8 $48.7 $72.6 $90.3 % : 11% $20.5 $22.8 $98.9 $ Q1 '11 Q1 '12 Active Trading Relationship Trading $77.3 $81.0 $72.5 = $62.2 User, Settlement and License Fees ($ in millions) $17.3 $19.5 $22.3 $23.8 $26.3 $27.9 % : 4% $6.9 $7.2 % : 10% $27.4 $ Q1 '11 Q1 ' Q1 '11 Q1 '12 21

22 Strong Historical Bottom Line Growth Q results include non-recurring IPO-related expenses, new public company-related operating costs and investment spending ($ in millions) Adjusted EBITDA (1) $57.8 ($ in millions) Adjusted Net Income (2) $29.4 $46.6 $22.5 $36.6 $40.6 $35.6 $19.6 $18.9 $16.3 $23.6 $12.0 % : (12%) % : (12%) $12.6 $11.1 $5.9 $ Q1 '11 Q1 ' Q1 '11 Q1 '12 (1) Adjusted EBITDA includes adjustments for stock-based compensation expense. (2) Adjusted Net Income equals net income plus after-tax stock-based compensation expense. For 2006, Adjusted Net Income includes an adjustment for income taxes as if we were a tax paying corporation from January 1, 2006, as we converted to a C Corporation from a limited liability company in September

23 Investment Highlights Market Leader in Fast Growing Electronic FX Market Diversified Institutional Client Base Proven and Experienced Management Team Investment Highlights Comprehensive Suite of Award Winning FX Products Significant Growth Opportunities Attractive and Scalable Business Model 23

24 Appendix

25 GAAP to Non-GAAP Reconciliation Reconciliation to Adjusted Net Income Full Year Quarters $ thousands Q Q Net income $ 13,760 $ 16,122 $ 16,794 $ 14,943 $ 21,158 $ 26,066 $ 5,145 $ 4,624 Stock-based compensation expense, net of tax 2,275 3,497 2,086 1,337 1,310 3, Adjustment for taxes 1 (3,990) Adjusted net income $ 12,045 $ 19,619 $ 18,880 $ 16,280 $ 22,468 $ 29,389 $ 5,881 $ 5,169 Reconciliation to Adjusted EBITDA Full Year Quarters $ thousands Q Q Net income $ 13,760 $ 16,122 $ 16,794 $ 14,943 $ 21,158 $ 26,066 $ 5,145 $ 4,624 Interest and other income (1,612) (2,157) (1,223) (405) (157) (79) (90) (42) Depreciation and amortization 4,802 5,681 6,820 7,599 8,749 10,027 2,432 2,570 Stock-based compensation expense 3,857 5,904 3,682 2,373 2,377 5,406 1, Income tax expense 2,802 11,097 14,497 11,125 14,486 16,373 3,854 3,063 Adjusted EBITDA $ 23,609 $ 36,647 $ 40,570 $ 35,635 $ 46,613 $ 57,793 $ 12,636 $ 11,101 (1) For 2006, Adjusted Net Income includes an adjustment for income taxes as if we were a tax paying corporation from January 1,2006, as we converted to a C Corporation from a limited liability company in September

26 FXall Global Contacts FXall Americas 909 3rd Avenue 10 th Floor New York, NY E info@fxall.com T F FXall Washington 1250 Conn. Ave NW Suite 200 Washington, DC E info@fxall.com T FXall Europe CityPoint, 10th Floor 1 Ropemaker Street London, EC2Y 9HT E info@fxall.com T +44 (0) F +44 (0) FXall Asia #36-23 UOB Plaza 1 80 Raffles Place Singapore E info@fxall.com T F FXall Japan Otemachi 1st Square East, 4 th Floor Otemachi, Chiyoda-ku Tokyo E info@fxall.com T F FXall Boston 470 Atlantic Avenue 4 th Floor Boston, MA E info@fxall.com T F FXall Switzerland Regus City Center Stockerhof Dreikonigstrasse 31 a 8002 Zurich E info@fxall.com T F FXall India Level 1, Trade Center Bandra Kurla Complex Bandra (East) Mumbai E info@fxall.com T F FXall Australia 5 Lime Street King Street Wharf Sydney New South Wales 2000 E info@fxall.com T F FXall Hong Kong Suite 8 20/F One International Finance Center 1 Harbour View Street, Central Hong Kong E info@fxall.com T F FXall s services are not intended for, and are not available to, private customers, and are not intended for distribution into any jurisdiction where such distribution is restricted by law or regulation. FXall s services do not constitute investment advice or an advertisement, offer, or solicitation of an offer, for the purchase or sale of any investment, securities or other property, or a representation that any investment, security or other property is suitable for any person. In Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Greece, Ireland, Italy, Latvia, Netherlands, Portugal, Slovak Republic, Spain and Sweden, FXall acts through FX Alliance Limited (regulated by the Financial Services Authority), CityPoint, 1 Ropemaker Street, 10th Floor, London EC2Y 9HT. In Australia and Singapore, FXall acts through FX Alliance International, LLC (ARBN ), (a Delaware (USA) company, members' liability limited), 909 Third Avenue, 10th Floor, New York, New York In India, FXall acts through FXall International (Mumbai) Private Limited. In other jurisdictions, FXall acts through FX Alliance, LLC (a Delaware (USA) limited liability company), 909 Third Avenue, 10th Floor, New York, New York FXall, FXall Trading, Accelor, Settlement Center, Market Insight, QuickConnect, QuickFill, Portfolio OMS, QuickTrade, Order Book, Bank Stream, Accelorate, Treasury Service, Indicative Quotes, FXone and all associated logos, are the trademarks of FX Alliance, LLC. 26