Gregor Pottmeyer, CFO of Deutsche Börse AG, asserts that the company remains strong even without its merger with NYSE Euronext, achieving significant revenue growth and a solid market position. The strategic focus has shifted towards organic growth and enhancing technology services, primarily targeting unsecured markets and Asia for expansion. Despite regulatory challenges, including potential financial transaction taxes, Deutsche Börse anticipates a positive financial outlook for 2012, with projected revenue growth and investments in derivatives and Clearstream.

1. Interview
Gregor Pottmeyer, CFO of Deutsche Börse AG
Christopher Kalbhenn, Börsen-Zeitung
Is Deutsche Börse a strong and powerful company even without NYSE
Euronext?
Yes. We wanted the merger to work, but it wasn’t a must for us. We were thinking
about the potential that we could have exploited sooner if we joined forces. Even
without a partner to back it up, Deutsche Börse enjoys a solid, very strong position.
2011 was our second-best financial year: we increased our revenue by 6%, our EBIT
by 13% and our earnings per share by 16%. Our business model, which covers the
entire value chain, from trading through clearing and settlement to custody and
market data, enjoys role-model status and is being copied by other stock exchanges.
So in that respect, our model, which we intend to enhance further, gives us the edge
over our competitors.
How does Deutsche Börse fare in a peer group comparison?
It fares well. In terms of revenue, we’re the world’s number two after the US CME
Group and we’re actually the number one if we look at net income. In terms of our
own market capitalisation, we’re the fourth-largest exchange organisation. Based on
this figure, which comes in at almost 10 billion euros, we are by far Europe’s largest
stock exchange operator and the only one that is a truly global player. The market
capitalisation of the next-largest exchange organisation in Europe, the LSE, is only
one third as big as ours.
Has the M&A issue been shelved for good?
It’s important to remember that no major cross-border stock exchange transactions
were approved last year. In addition to the Deutsche Börse/NYSE transaction, these
include, for example, the attempted merger of the LSE with the Canadian TMX or the
Singapore Stock Exchange with its Australian counterpart. None of these projects
came to fruition due to concerns raised by politicians and regulators. This means that
we’re unlikely to see any major international stock exchange transactions over the
next year or two.
What would you say your strategic priorities are now that the merger hasn’t
been approved?
We now focus on accelerated organic growth. This will see us concentrate on three
main areas: new products for unsecured, unregulated markets, a wider range of
technology services and more business in growth regions, in particular in Asia.
We will only be looking at opportunities for inorganic growth, i.e. company takeovers,
on a small scale if we believe that a move would bring direct added value for our
company, our shareholders and our customers – as was the case last year when we
acquired a majority stake in the Leipzig-based EEX power exchange. We will look at
interesting opportunities as and when they arise.

2. What role does regulation play for Deutsche Börse?
A very important one – take EMIR, the new European Market Infrastructure
Regulation for OTC derivatives, for example. This regulation provides for
standardised OTC derivatives to be cleared and collateralised via clearing houses in
the future. At the moment, the regulators believe that around 80% of the OTC
derivatives market is suitable for standardisation. That’s a huge market that will be
opening up and we are confident that, with our excellent risk management tools, we
can gain market share and volume in this segment.
What makes you so confident?
Thanks to our portfolio margining, we can offer the very highest capital efficiency.
This means that deposited collateral can be put to optimum use, which is very
important in times of increased capital requirements. Because this enables margin
offset between OTC and our exchange-based derivatives, such as Bund or equity
index futures, less capital is required from market participants. Given the Basel III
regulations, it is very important for banks to be able to allocate capital as efficiently as
possible. This makes our clearing house an attractive option. What is more, we are
the only company that offers real-time risk management. Other competitors only offer
an item overview once or twice a day. This is another area in which we are well
ahead of the game.
What potential do you think is lurking in the problems associated with
unsecured markets?
That’s a question of trust in the fourth year since the outbreak of the financial crisis.
Today, collateral management is of key importance. With Clearstream, we give our
customers an opportunity to optimise their collateral management. We help
customers to mobilise all forms of collateral for deposit, irrespective of the time zone
or asset class. We do this using a system that shows, on a fully automated basis,
what collateral can be deposited efficiently for a specific transaction. We are
expanding this system by collaborating with other central securities depositories, for
example in Brazil, Australia, South Africa and Canada. But our offering is also of
interest to custodian banks. We have entered into a cooperation agreement with BNP
Paribas, for instance. This is another area in which we can offer added value and
generate growth.
What are you planning as far as technology services are concerned?
At the moment, we use this area primarily for our own needs. We also offer our
expertise to customers who are interested. The Xetra trading system, for example, is
used in Vienna, Dublin, Ljubljana and Sofia. To date, however, we haven’t been
pursuing the use of our expertise by externals as a systematic approach. We can
offer our service not only at trading level, but also in areas such as clearing,
settlement and custody. This makes us attractive to other stock exchanges, central
securities depositories and to banks that we can offer services via our networks.

3. How important are the emerging markets, particularly those in Asia?
We are in a good position in Asia, particularly with Clearstream. Clearstream is
already generating 20% of its international revenue with Asian customers and we
want to get this figure up to 30% by 2016. We also want to grow with Eurex in Asia
and we are focusing, among other things, on product cooperation moves in this
segment. By way of example, we are already offering trading in the Korean KOSPI
200 option, the world‘s most active contract, during European and US trading hours.
We also want to find new trading firms that use Eurex processes and products. We
currently have around 20 participants in Asia.
You have announced that you will be investing 160 million euros in growth
initiatives this year. What are the focal points of your investment?
We will be earmarking more than half for derivatives, because we believe that this
area offers the greatest growth potential. 35% will go to Clearstream, while the rest is
destined for the cash market and our data business.
What is your outlook for 2012?
We expect to see revenue growth of between 5% and 12%. We also forecast costs of
less than 1.2 billion euros and expect our EBIT to be up in a year-on-year
comparison to between 1.2 and 1.35 billion euros.
What impact will the takeover of the 15% stake in Eurex previously held by the
SIX Group have?
The acquisition will allow us to generate additional revenue of around 110 million
euros based on the 2011 figures. This will push our net income up by approximately
60 million euros.
In the past, the New York options exchange ISE has proven to be something of
a problem child due to hefty write-downs. How happy are you with the current
developments?
We are satisfied with the current developments. ISE increased its trading volume by
4% and stabilised its market share last year. This was due, in particular, to the launch
of the new Optimise trading system, which has brought massive improvements in
terms of speed and functionality. The system also means that we can launch new
functions far more quickly, namely within the space of four weeks. Optimise has
helped to boost market acceptance of ISE again.
And what do you think the future holds?
It’s difficult to know what lies ahead, but that applies to the entire derivatives trading
segment. In the first three months of this year, trading volumes for Eurex as a whole
were down by 16% and we’ll just have to wait and see how things develop. One
decisive factor will be whether volatility starts to increase again. We believe that this
will be the case over the next few quarters, which will help to boost the trading
volume, too. We are still forecasting growth for this year. It’s also worth bearing in
mind that the tough comparison, namely the prior-year quarter. And the picture was

4. already looking brighter in March, when the trading volume was up by 20% on the
first two months of this year. Nevertheless, even the volume for March fell short of the
very high prior-year level.
At Clearstream, assets held in custody in March were down slightly, namely by 2%,
year-on-year, at 11.1 trillion. The service business, which includes collateral
management, securities lending and triparty repo, continued to go from strength to
strength in March, growing by a total of 8% on the prior-year quarter in Q1/2012.
What risks do you believe are associated with regulation, such as the financial
transaction tax, in particular?
In principle, we can understand what the political motivation is for wanting to involve
the financial services sector in the costs of the crisis. But the tax is not the right way
to go about it, because it distorts the market. It would have a negative impact on
growth and would promote trading on non-transparent markets. If it does come into
force, it has to be imposed across the EU to prevent business from moving to
countries that do not levy the financial transaction tax. We also need a holistic
approach, i.e. the tax has to target high-risk, OTC trading in particular.
What consequences would the tax have for high-frequency trading and what do
you make of the concerns that politicians have raised in respect of ultra-high-
speed stock exchange trading?
High-frequency trading would suffer as a result of a financial transaction tax.
Business would shift to jurisdictions that don’t want to introduce the tax, for example
to London, Switzerland or Singapore. So it wouldn’t disappear – it would just move.
But we believe that high-frequency traders provide liquidity. This means that they
narrow the bid-ask spreads and facilitate more attractive prices for our customers. So
a European market without high-frequency trading would be a bit worse off.
What are the main points of your financial planning?
As I mentioned earlier, we expect to see revenue growth of between 5% and 12%,
costs of less than 1.2 billion euros and EBIT of between 1.2 and 1.35 billion euros.
We will be ramping up our investments in growth initiatives from 120 to 160 million
euros and our dividend per share will rise from 2.10 to 2.30 euros. There will also be
a special distribution per share of 1 euro, allowing us to offer an attractive dividend
yield of around 6-7%. We are also planning share buy-backs of up to 200 million
euros in the second half of the year, bringing the total distribution amount to around
800 million euros. We generally aim for a dividend payout ratio of 40% to 60%. If
additional cash is available and we don’t need it for investments that will add value,
we will buy shares back.
Why is the rating important to Deutsche Börse?
We are one of the few DAX companies to have an AA rating, and our outlook has
been restored to stable now that the merger hasn’t been approved. We have assets
under custody worth 11 trillion euros and a very large number of Asian clients. These
clients, in particular, attach a great deal of importance to a very good rating. They feel
secure knowing that their assets are in safe hands. Because this makes the rating
decisive for Clearstream, we aim to achieve an EBITDA-to-interest coverage ratio of

5. at least 16, which corresponds to an AA rating. In 2011, we had an interest coverage
ratio of 19, and we forecast a ratio between 19 and 21 for this year. So in this
respect, we have stabilised our rating.
Are Deutsche Börse's efficiency measures on track?
Yes. We approved a cost reduction programme worth 150 million euros in 2010, the
aim being to implement it in full by 2013. We will actually hit this target this year,
ahead of schedule. In 2011, we had already realised 130 million euros of the
programme, with a further 20 million set to be realised this year. Our personnel
measures were completed some time back, incidentally in a consistently amicable
and socially acceptable manner, i.e. without compulsory redundancies. We have no
plans for any new cost-cutting programmes at the moment. Rather, we are committed
to ongoing, stable cost management. Incidentally, the launch of the new Eurex
trading system will help to make us even more efficient.
What about the development in the tax rate?
The tax rate comes in at 26%, meaning that we have achieved our objective here,
too. We have planned for a tax rate of 26% for this year as well.