Good day and welcome to Euronext Full Year 2023 Results Call, hosted by Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, joined by Giorgio Modica, CFO. Throughout today's presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. You may press star one on your telephone keypad at any time to signal for questions. This meeting is being recorded. At this time, I'd like to hand the call over to Stéphane Boujnah. Please go ahead, sir.
Good morning, everybody, and thank you for joining us this morning for the Euronext fourth quarter and full year 2023 results conference call and webcast. I am Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext, and I will start with the highlights of the fourth quarter 2023, followed by the full year 2023 performance. Giorgio Modica, the Euronext CFO, will then develop the main business and financial highlights of the fourth quarter of 2023. As an introduction, I would like to highlight four important points. First, Euronext is today stronger than ever, thanks to our diversification efforts over the past few years. In 2023, we have delivered revenue growth close to 4% and even close to 8% in Q4. We have also significantly reinforced Euronext's leadership position in listing and trading in Europe. Second, we beat our 2023 cost guidance.
Thanks to our cost discipline, thanks to synergies and some positive one-offs, we continue to deliver ahead of schedule, and despite an inflationary environment that everyone knows, we continue to do better on cost. Third, we deliver a strong end of the year with Q4 2023 Adjusted EPS growing by +27.9% from last year. Fourth, we are now present on the entire trading value chain thanks to the expansion of Euronext Clearing to European equities. This clearing strategic milestone was a critical contribution to the EUR 74 million of cumulative run-rate synergies delivered at the end of 2023. This achievement is above our interim objective of EUR 70 million targeted for the end of 2023.
It is also significantly more than the initial objective of run rate synergies of EUR 60 million that was targeted, at the end of 2024, as announced in October 2020 and in April 2021 when we closed the acquisition of the Borsa Italiana Group. So we are perfectly on track to complete the integration of the Borsa Italiana Group and to achieve the upgraded target of EUR 115 million of annual run rate synergies by the end of 2024. Lastly, in 2023, we continued our innovation path. Following the successful opening of the test environment at the end of January 2024, Euronext confirms today the launch of dark, midpoint, and sweep functionalities in Q1 2024, hosted in our core data center in Bergamo. Let me start with the Q4 performance on slide 4. Euronext reported a strong fourth quarter of 2023, posting +7.8% revenue growth year-on-year to EUR 374.1 million.
The quarter was marked by strong dynamism of post-trade and non-volume-driven activities, together with record performance of fixed income and power trading. First, post-trade revenues grew significantly, driven by the first positive contribution of the Euronext Clearing expansion to cash instruments and also by a solid growth in our CSD business, together with growth in related net treasury income. Second, our trading revenue posted strong growth, supported by the record quarter for fixed income and power trading. This is the proof of the group's successful diversification. Despite the decreasing equity and derivatives volumes, our total trading revenues across asset classes grew by more than 7%. Third, non-volume-related revenue posted a strong performance overall, notably in listing, advanced data services, and technology. This translated into non-volume-related revenue accounting to 60% of the total Q4 revenue and covering 141% of underlying operating expenses, excluding D&A.
We continued our disciplined approach to cost control that offset inflationary pressures, and we recorded a positive one-off accruals release of EUR 6.3 million. As a consequence, Q4 2023 underlying operational expenses, excluding D&A, slightly decreased to EUR 157.8 million, down -0.9% compared to the cost base of Q4 2022. Overall, we reported a strong growth in Adjusted EBITDA of +15.2% to EUR 216.3 million, and an Adjusted EBITDA margin that increased by 3.7 points to 57.8%. This strong performance, combined with a positive interest rate environment for cash in the bank, led to a 27.9% increase in adjusted EPS at EUR 1.42 per share and to an adjusted net income of EUR 148.2 million. On a reported basis, EPS for this fourth quarter also benefited from a capital gain and increased by +34.2% to EUR 1.25. That brings me to our yearly 2023 performance on slide 5.
First, thanks to our diversified business model, we achieved +3.9% increase in revenue and income to reach close to EUR 1.5 billion. This performance was notably supported by our non-volume-related activities that accounting for 60% of total revenue last year. I would like to highlight the strong performance of our fixed income trading business and of our power trading business that both grew by +15% this year. Second, we obviously maintain our trademark cost discipline and reported better-than-expected cost at EUR 610 million, less than 1% of, the cost base of last year. This also compares to the revised guidance of EUR 618 million at the initial and, that compares to the initial cost guidance for 2023 provided a year ago, which was EUR 630 million. This good performance on cost, despite inflationary pressures, resulted from strong cost control and also from positive FX impact and a one-off accruals release.
Consequently, our 2023 Adjusted EBITDA grew by EUR 864.7 million, and we delivered an Adjusted EBITDA margin at 58.6%. Thanks to the positive interest rate environment, our strong cash position enabled us to fully offset the cost of our debt compared to last year. As a result, and supported by a EUR 53 million capital gain, reported net income increased by 17.3% in 2023 to EUR 513.6 million. Adjusted for non-underlying items, net income was up +5.3% to EUR 584.7 million, representing an adjusted EPS of EUR 5.51. Consequently, a dividend of EUR 2.48 per share will be proposed at our upcoming annual general meeting in May. The dividend represents a payout ratio of 50% of reported net income, as set up in our dividend policy. That's EUR 0.26 more than the 2.22 dividend per share, means an increase in the dividend of +12%.
As a reminder, we finalized the announced EUR 200 million share repurchase program in January 2024. Let me now share the key takeaways of our businesses in 2023. First, as I said, our non-volume-related activities delivered strong growth in 2023 and accounting for and accounted for 60% of total revenues. Following the successful migration of our core data center in Bergamo in 2022, we continued to bear fruit of this migration, notably with our collocation services. In 2023, we further scaled up our technology solution activity that grew close to 10% in 2023. Our advanced data services business also reported strong performance with revenue up +6%. This results from good performance across the data products offering and also solid demand for data activity products. Our post-trade franchise delivered a robust year. First, our custody and settlement business grew +5.5%, like-for-like at constant currency.
This was driven by growing assets under custody, improved revenue capture, and continued expansion of the services business. On a reported basis, this activity was impacted by negative forex impact from the Norwegian krone. Second, our clearing revenue was stable. Despite declining equity and derivatives, this results from two factors. First and foremost, our clearing flows are diversified. As a result, the strong fixed income clearing and commodities clearing activities partially offset the lower equity and financial derivatives clearing. Then, and what is, to me, probably the most important, we managed to capture additional business at Euronext Clearing following its expansion to all Euronext cash markets. Since 27 November, Euronext Clearing is the preferred CCP for six European cash markets. Last, net treasury income increased by +6% compared to 2022, underlying net treasury income, primarily reflecting higher collateral held.
As you would have understood, we are now a European top-ranking post-trade infrastructure operator. Once again, we remain also the leading listing venue in Europe for equity, attracting 64 new equity listings in 2023. We also consolidated our position as the leading listing venue for debt worldwide, now being the home for over 55,000 bonds. Our corporate services franchise continued to post double-digit growth, demonstrating the successful expansion of our software-as-a-service offering. Lastly, our trading franchise was resilient despite the lower volatility environment for equities. Indeed, while cash trading and derivatives trading volumes were down by over -10%, total trading revenues only decreased by -4.7%. This is again the demonstration of our more diversified business model. In 2023, our fixed income trading business reported a record year with double-digit growth in all asset classes, resulting in revenue up +15.6%.
In addition, our power trading business also posted a record year with a revenue of +14.5%, primarily supported by intraday power market, where volumes doubled compared to 2022. As I said, 2023 demonstrates a critical result of Euronext diversification. We delivered solid growth even in an environment not favorable to equities. Clearly, 2023 saw the continuation of the Euronext transformation, and we made good progress in our integration process and synergy delivery. In 2023, we delivered on several strategic milestones that were absolutely critical for us to achieve our transformation in 2024. First, on the trading side, we successfully completed for the fourth time since our IPO in 2014, the migration of cash equity markets to our single technology trading platform, Optiq.
The migration of Italian cash markets to Optiq did create benefits for trading members with a material improvement of the Italian market quality. This milestone paved the way for the migration of Italian derivatives trading to Optiq in the coming weeks. Second, we made very good progress to further strengthen our post-trade business. In 2023, we took an important step towards the European expansion of Euronext Clearing, expanding its offering on schedule to the cash markets in France, Ireland, the Netherlands, and Portugal. Euronext Clearing now clears equity, ETFs, structured products, warrants, and bonds across six Euronext markets, including Italy. This migration materially contributed to the synergies delivered over 2023 but also paved the way for the migration of listed financial and commodities derivatives in Q3 2024.
Such good progress on integration means we were able to reach EUR 74 million of run rate cumulative EBITDA synergy at the end of 2023. This is above the EUR 7 million target expected for the end of 2023 and already more and much more than the EUR 60 million targeted for the end of 2024, initially announced in October 2020 and in April 2021 when we closed the acquisition of the Borsa Italiana Group. Looking forward, the migration of Borsa Italiana's derivatives to Optiq and the expansion of Euronext Clearing to Euronext listed derivatives by Q3 2024 will complete our presence on the entire trading value chain. It will position Euronext, ideally, to capture future growth opportunities across Europe. The completion of these two critical projects will materially contribute to reaching our revised objective of EUR 150 million of run rate cumulative EBITDA synergies by the end of 2024.
I now give the floor to Giorgio Modica for the review of our fourth quarter, 2024.
Thank you, Stéphane, and good morning, everyone. Let us now have a look at the strong performance of these four quarters of 2023. I'm now on slide 9. As mentioned already, total revenue this quarter reached EUR 374.1 million, up 7.8% compared to last year and 9.1% at constant currency. 60% of our revenue is non-volume-related, highlighting the success of our diversification path. Those strong results were notably driven by the record performance in fixed income and power trading, the solid contribution of our non-volume-related businesses, and the incremental equity clearing business captured by Euronext since the widening of its offering across the Euronext markets on 27 November 2023. In addition, Q4 2023 revenue and income reflects an increase in net treasury income year-over-year, as the NTI in the fourth quarter of last year was still impacted by the runoff of the investment portfolio at Euronext Clearing.
I will now start the business review, and I'm now on slide 10. Listing revenue was EUR 56.2 million, up 6.9% like-for-like and at constant currencies, reflecting the good quarter of the listing and follow-on activities and the continued strong growth of our corporate service SaaS offering. Reported revenue was up 5%, reflecting the negative impact of the NOK on on the results of our Norwegian activities when reported in euros. Euronext demonstrated once again its leadership in equity listing in Europe, with 64 total listings in 2023. On the debt side, we reinforced our global leadership in listing with over 55,000 bonds listed on our markets, and we also strengthened our leading position in ESG bond listing.
Euronext Corporate Services, as mentioned, continue to deliver a solid performance, with revenue growing to EUR 12.3 million this quarter, up 28.8% compared to the fourth quarter of 2022, resulting from the strong progression of our SaaS offering. I'm now on slide 11. Other non-volume-related activity continued to grow this quarter. Advanced data services reached EUR 56.1 million of revenue, up 3%, driven by the strong performance across the data product offering and the solid demand for analytic products. Technology solutions reported EUR 27.6 million of revenue, up 2.6% thanks to the continued benefit from the internalization of our collocation services and the good performance of market connectivity services. Investor services reported EUR 3 million revenue in the fourth quarter of 2023, representing a 15.7% increase compared to the same quarter last year, thanks to the continued commercial expansion of our franchise across the largest global investment managers.
Moving now to trading on Slide 12. As I mentioned earlier, Euronext's solid trading revenues at EUR 124.5 million clearly benefit from the diversification of our trading activities. Cash trading volumes were down 4.1% in the fourth quarter 2023 compared to the same quarter last year. However, due to Euronext's strong management of cash trading fees and market share, revenue was only down 1.6%. Revenue capture averaged 0.53 basis points over the quarter, above the floor indicated for 2023 post-migration of Borsa Italiana markets to Optiq, and despite the average size of orders remains elevated.
Cash equity market share averaged 65.2%, here again well above the floor of at least 63% set for 2023. Derivative trading revenue decreased by 4.4% to EUR 12.8 million due to lower financial derivative volume, with ADV down 8%, partially offset by the strong performance of the commodity derivatives, with volumes up 27.2% versus last year.
Average revenue capture on derivative trading reached EUR 0.34 per lot. Lastly, an uptick in volatility draw affects trading vol ume, up 18.8% this quarter. Like-for-like and at constant currencies, FX trading revenue was up 4.8%. Revenue remained stable on a reported basis at EUR 6.7 million this quarter, as the growing volumes were offset by the depreciation of the U.S. dollar and an unfavorable volume mix with more disclosed activity. Continued with our trading activities on slide 13.
Fixed income trading reported another record quarter. Revenue grew 38% to EUR 30.6 million. In detail, MTS Cash ADV reached EUR 27.7 billion, up close to 80% year-on-year. This reflects continued market volatility as well as the contribution of MTS EU. The market launched in November 2023, contributed around EUR 1 billion of daily trading volumes. MTS Repo term-adjusted ADV was EUR 469.1 billion, up 18.2% compared to the fourth quarter of 2022.
Euronext fixed income retail franchise also continued to perform extremely well, with volumes up 27.9% to EUR 1.5 billion. Despite the FX headwinds from the NOK depreciation power trading revenue grew to a new record of EUR 10.4 million, up 16.9% compared to the fourth quarter of 2022. This performance reflects an all-time high intraday volumes and solid day-ahead volumes. On a like-for-like basis and at constant currencies, revenue was up 30.8%. I would like now to conclude this business review with our post-trade activity, and I'm now on slide 14. Q4 2023 clearing revenue grew by 11.5% to EUR 32.3 million. As mentioned earlier, we have expanded Euronext Clearing offering to Euronext Brussels on November 6, 2023, and to Euronext cash markets in France, Ireland, the Netherlands, and Portugal on 27 November 2023.
This quarter, we have generated for the first time revenues for the clearing of cash instruments on those markets to our CCP. In addition, bond clearing activity continued to be dynamic. This more than offset lower revenue received from LCH SA for the clearing of our derivative products. Non-volume-related clearing revenue accounted for EUR 9.2 million of the total clearing revenues in the fourth quarter of 2023. Net treasury income amounted to EUR 11.7 million. It is close to three times the amount it was in the fourth quarter of 2022 that was, as I explained, negatively impacted by the runoff of the investment portfolio of Euronext Clearing, and it is in line with what I've communicated last quarter as a new level of NTI until the delivery migration of clearing is going to be delivered.
As a reminder, following the introduction of the VaR-based margin methodology in October 2023, which creates efficiency for our clearing members, we expect around EUR 12 million NTI per quarter should the collateral level remain stable for the first two quarters at a level similar to the one we had in the fourth quarter of 2023. From the completion of the expansion of Euronext Clearing in Q3 2024 onwards, the NTI is expected to increase due to the addition of listed derivative flows. Lastly, revenue from commodity settlement and other post-trade activity was EUR 62.3 million this quarter. This represents an 8.9% increase compared to Q4 2022 at current constant currencies. These results are underpinning by growing asset under custody, which last quarter were at about EUR 6.7 trillion, higher settlement activity, and a strong performance of the services offering.
On a reported basis, revenue increased 4.6%, once again impacted by the weak NOK. I'm now on slide 16 on the cost guidance for next year. In 2023, we had a positive impact, as Stéphane highlighted, of EUR 11.4 million from the NOK depreciation on our cost base. In addition, underlying expenses were positively impacted by a one-off accrual release of EUR 6.3 million. In 2023, Euronext reported EUR 610 million of underlying expenses, excluding D&A, compared to initial guidance of EUR 630 million. For next year, for this year in 2024, Euronext will continue to be very disciplined on cost. We expect that savings and synergies will offset inflation, and 2023 costs ramp up.
As a result, Euronext expects its 2024 underlying expenses, excluding D&A, to be around EUR 625 million below the initial guidance for last year, including around EUR 10 million to finance growth projects and excluding potential impact from FX over the year. I'm now on Slide 17. Adjusted EBITDA for the quarter was up 15.2% to EUR 216.3 million, resulting from higher revenues and the positive impact of the one-off releases. This translated into an adjusted EBITDA margin of 57.8% in the fourth quarter of 2023. Non-underlying costs for the quarter were EUR 15.5 million, primarily linked to the delivery of cost synergies in Q4 and to the ongoing work related to the clearing expansion and the last phase of the Borsa Italiana derivative markets migration to Optiq.
Moving to net income on Slide 18, adjusted net income last quarter was strongly up 25.3% to EUR 148.2 million, resulting notably from, as we discussed, higher EBITDA thanks to the strong performance of our businesses and the well-contained cost base, higher net financing income resulting from higher interest income from our cash and cash equivalents. This is the second quarter we were earning more cash from our deposit than we paid as interest on our debt. Higher results from equity investment reflecting the EUR 11.4 million capital gain arising from the disposal of our stake in Tokeny and the dividend received from Sicovam. Lastly, income tax for the fourth quarter of 2023 was EUR 40 million. This translated into an effective tax rate of 22.6% for the quarter, positively impacted by tax-exempted gains, like the capital gain I just mentioned.
As a result, reported net income increased 31.5% to EUR 130.6 million, and adjusted EPS basic was up 27.9% at EUR 1.42 per share. To conclude with cash flow generation and leverage, as you can see from the slide, our balance sheet position is very solid, as well as our cash flow generation. In the fourth quarter of 2023, Euronext reported a net cash flow from operating activities of EUR 194.5 million compared to a negative cash flow of EUR 147.1 million in the fourth quarter of 2022, reflecting the movements in working capital related to Nord Pool and Euronext Clearing CCP activities. Excluding the impact on working capital, net cash flow from operating activities accounted for 87.4% of EBITDA in the fourth quarter of 2023. We continued to deliver this quarter despite the buyback that we just concluded.
Net reported net debt to Adjusted EBITDA was at 1.9x at the end of the quarter and 2x on a reported EBITDA basis. This concludes my presentation, and with this, I would like now to give the floor back to Stéphane.
Thank you very much, Giorgio. As you have seen and as you have heard, 2023 was definitely a pivotal year for Euronext. First, our diversification journey is now paying off, as we are posting growth driven by non-volume and diversified activities. Second, we maintain our consistent trademark cost discipline despite an inflationary environment. Third, we delivered several key projects of the Borsa Italiana group integration, enabling us to complete the value chain and to be on track to achieve our 2024 targets on synergies.
So, as we celebrate this year, the 10th anniversary of our IPO that took place in June 2014, I'm looking forward to deep dive into the opportunities that this transformation will offer for Euronext at our Investors' Day that we will hold in November 2024 in Paris. Thank you for your attention. We are now ready to take your questions together with Giorgio Modica and Anthony Attia, the global head of our derivatives and post-trade operations, and also Nicolas Rivard, global head of cash equity and data services.
Thank you, sir. As a reminder, to ask a question, please signal by pressing star one. And our first question comes Enrico Bolzoni from JPMorgan. Please go ahead.
Hi. Good morning. Thanks for taking my question. So, a couple on fixed income and the opportunity there. I told you you had a strong number in Q4.
Can you just provide some extra color in terms of how you think this line can evolve in the future? What are the key opportunities? And partially related to that, once you will have the clearing of derivatives in place, do you plan to step up also when it comes to launching new derivative products for fixed income, or the focus is going to be primarily for equities? And related to that, my understanding is that at the moment, there's a lack of, for example, derivative products for the European bonds. So, I was wondering whether you can comment on whether your combined capabilities, MTS, and derivatives can potentially create some opportunity there. So, this is my first question. And then the second question I wanted to ask is on capital distribution and the use of your capital, clearing, and delivery.
I appreciate you're going to have a capital market day, but can you give us some color in terms of what are you thinking now in terms of increasing the payout or special buybacks or use of capital and a general comment on what do you see from an M&A standpoint? What do you see out there? If there are opportunities, would be helpful. Thank you.
Thank you. On the fixed income business, MTS had its best year ever in 2023, driven by all sorts of developments in the interest rate environment and the related consequences in the govvie segment. But what is impressive is that we are making progress in the Europeanization of MTS, in accelerating the Europeanization of the MTS strategy, which for years was trying to penetrate further debt management offices beyond Italy and Spain.
The mobilization of all the resources of Euronext is paying off with those debt management offices. The most visible part of the efficiency of those commercial efforts is the fact that MTS was appointed by the European Commission at the end of 2023 as the platform, the electronic platform for the secondary trading of the Next Generation EU bond program, which, as you know, is going to reach, at its peak, EUR 750 billion of issuance. We are confident in the growth of the MTS business. We are supporting the commercial efforts of MTS across Europe, and the MTS platform and solutions relevance is getting traction with what is today one of the largest issuers in the continent, which is the European Commission.
As far as the development of derivatives offering related to the development of our clearing operations, this is definitely part of the roadmap, but we are not going to comment anything that is not a solution that is available to clients before it is available to clients. So, that's the whole point of having an Investors' Day in November 2024 to be very explicit on these points. On the capital allocation, I'll give the floor to Giorgio Modica. But again, the big picture is that we have a consistent dividend policy. We have done a one-off share buyback. We are going to work hard on developing a new strategic plan. And to a large extent, the capital allocation policy will be an output of the capital requirements for organic growth and for M&A developments as they will be decided by the end of this year.
But Giorgio, feel free to add color and flavor around this capital allocation.
No more questions. Stéphane, I believe you said it all. Last year, in total, we distributed between the dividend and the buyback around EUR 440 million. Clearly, this level is not sustainable. As Stéphane mentioned, the buyback last year is one-off. So, for this year, what you should expect is the application of our policy that until the next Investors' Day is going to remain a dividend payout of 50% of reported earnings. Then what will happen, as we commented before, before the Investors' Day, we will engage with stakeholders and shareholders to see whether the same policy that was applied in this plan is going to be suitable for the next plan. But as far as 2024 is concerned, we will apply the current policy. Okay.
Thank you. We'll now move to our next question from Hubert Lam from Bank of America.
Hi. Good morning. Thank you for taking my questions. I've got three of them. Firstly, can you talk about the revenue outlook for 2024? I think if you look at the cost guidance you've given for this year, it implies at least about EUR 1.6 billion of revenues. What's driving the growth for this year, and where do you see the upside, and where do you see the pressures? That's the first question. The second question is around costs. You're planning for additional EUR 10 million investment costs. Can you elaborate where it's going to and the expected payback for that? And lastly, again, on your cost guidance, what FX rates are you basing your expense guidance on? Is it the spot FX at the end of last year? I'm just wondering if the NOK can use depreciate.
Could this be a headwind for your cost guidance? Thank you.
Giorgio, we'll take your three questions on the revenue outlook for 2024, on the cost base targeted for 2024, and on the Forex rate assumptions.
Yeah. Absolutely. So, the first element that I would like to highlight is that we are not going to give you a target for revenue for 2024. However, we can help you to get a better understanding. And another element that I would like to confirm is our target in terms of CAGR EBITDA that will remain between 5%-6% as announced at the Investors' Day. So, in your bridge, there are two elements between the revenue of this year and the revenue of next year that you should take into consideration. The first one are price increases.
So, last year, around this time when we met, we told the market that, on average, we would have increased prices on non-volume related activity, accounting 60% of our revenues, with an increase averaging 5%. The increase that we anticipate and by the way, we have delivered that price increase last year, as announced. For 2024, we expect an average increase of price of around 3% on our non-volume related activities. So, this is the first element of the bridge. The second element is that you have seen a very small portion of the revenues coming from the clearing of equities. And for next year, you should expect a number which is around EUR 20 million. So, those are elements that will contribute to bridge the gap between this year and next year. I cannot add more elements on that. On the cost.
So, this is something on which I would like to spend a bit of time because I'm sure that many of you will have questions, and I would like to explain a little bit the bridge between the cost of 2023 and the cost of 2024. The first element that I would like to highlight is that if you look at our cost, it has slightly increased throughout the year. The reason is simple, because we are adapting Euronext to manage a larger business through the integration of CC&G and the migrations on clearing, the expansion of the service of Euronext Clearing. Therefore, when we make the comparison between 2023 and 2024, I mean, if you, to a certain extent, annualize Q4, you will get to a very different number than the full year. This is the first element. How do you make the bridge?
The first element, the correct starting point for the bridge should be EUR 216.3 million, which is the actual cost base underlying adjusted for this exceptional release of EUR 6.3 million, which happened in the last quarter. Then, for next year, there are going to be several impacts. The first one is you can see today that we have around EUR 35 million of clearing costs. And those costs are relating to the clearing derivative contract that we have in LCH SA.
And so, in those contracts, this contract is going to be terminated at the very beginning of the third quarter of 2024. So, for the bridge, you will need to consider 50% of debt, so a number which is in between EUR 15 million and EUR 17.5 million P&L impact, which is important for the target for next year, whereas on a run rate basis, this would be the EUR 35 million.
So, this is important to highlight. In the P&L of next year, you will have not the full run rate synergies. The second element that you will need to take into consideration is, on the one side, the impact of the synergies delivered in fourth quarter over the next year and further synergies that we will be delivering next year. And if you take all this number together, those should be sufficient to offset an inflation that we estimate of around 3% of our cost base, so around EUR 19.2 million.
And as we said, we add EUR 10 million of new investments. So, to summarize the different elements, we have a net increase of less than EUR 10 million, from EUR 216 million to EUR 225 million. And this is able to offset an inflation of around EUR 20 million and additional investment of EUR 10 million through the delivery of P&L synergies of around EUR 25 million.
And then the last question, sorry, I was forgetting the last part of your question. In the guidance, what we have used is an average rate for the fourth quarter of the year, which is consistent with our budget assumptions. And sorry, just to complete because you were hinting what happens if the NOK gets stronger. Yes, our cost base is going to be higher. This is a fact. But our revenues are going to be even higher. So, last year, we lost more than EUR 10 million of EBITDA due to the NOK. And therefore, a strengthening of the NOK might have a negative impact on the EUR 625 but a positive impact on overall EBITDA growth in euros.
Thank you.
We'll now take our next question from Bruce Hamilton from Morgan Stanley. Please go ahead.
Hi there. Morning. I was actually going to ask about cost, but you've given a very complete answer there. So, a couple of smaller questions. One, on the cash market share and pricing, obviously, you gave us what Q4 looked like which was encouraging. You haven't given us a guide for 2024, so should we assume you're still pretty confident of being above 0.52 bps and above 63%? That's the first question. Second one, just on the sale of Tokeny, does that signal that you don't really see any potential link to tokenization and trading of digital assets, or was it just the wrong sort of asset to achieve your goals there? And then finally, in terms of AI, are there any kind of use cases you're working on to drive efficiency across the organization?
And is that part of the kind of synergies to offset inflation, or is it sort of longer dated? Thank you.
I'll take the questions on AI and on Tokeny, and Giorgio Modica will answer the question on market share, on cash equity trading. On AI, we are embarking on a comprehensive 360-degree review of every single cost center and every single revenue generation center to identify potential use cases that can accelerate or expand the origination of new products or the penetration of new clients and also to impact significantly our cost base. This is work in progress. It's a comprehensive exercise which requires a careful approach of segregating what is buzzwords and what is real transformational processes. That's ongoing.
Again, the final cut will be shared on the Investors' Day in November 2024 because the reality, when you look at AI for real and when you go beyond superficial generative AI used by the general public, the proper analysis of what it takes to make it happen for real and what are the total economics of the use cases in terms of cost reduction and revenue expansion is more differentiated than many people think. So, that's the process we are embarked into. So, I'm not going to entertain you with slogans or punchlines about change of paradigm, etc. We are working hard to see how we can transform the company for real with these new tools. On Tokeny, we took a minority investment.
We decided to sell our stake and to crystallize the capital gain on that occasion, not before we had a fundamentally different view on tokenization, but because the allocation of capital to achieve this objective of being part of tokenization was not necessarily optimal as a minority shareholder into this company. There is sometimes a misconception which is, "I invent, hence I learn. I invent, hence I become an expert." When you take a minority stake, sometimes you do learn. Sometimes you become an expert.
Sometimes, for all sorts of specific situations around the dynamic of the company, you are in a situation where you believe that there are other ways of becoming relevant than just owning a minority stake in a company tagged here, "We tokenize assets." So, that's why we have decided, after successful experience, successful interactions, but a suboptimal return on capital employed and a suboptimal return on knowledge acquired for the investment to take the opportunity of the capital gain and to contribute to the sound, meticulous, disciplined asset rotation that we owe all shareholders when we believe that we can achieve the objectives with less capital allocation. That's for Tokeny. And then, on the market share, on cash equity trading, over to you, Giorgio.
Yeah. So, let me take the question. The first element we wanted to highlight is that the objective of Euronext remains always the same, which is top-line maximization. One of our jobs is to optimize the mix between the market share and the revenue mix. The last year, the reason why we did put the floor is that there was a sentiment in the market that we were not in control.
We wanted to give a very strong signal that we are in control, and I believe that we have overdelivered on the two, giving confidence to the market. I believe that this phase is over. There is more to that. The second element, which is important, is that I believe now is a good moment to share with you the way our market share is built and the reason why, in 2024, this might give signals that will need to be interpreted.
So, let me try to explain. Our market share is composed as following. On the denominator, you have our volumes. And on the denominator, you have the total of the lit markets plus the multilateral dark. So, to a certain extent, our market share of 65 does not really represent our market share on the lit, but our market share on the lit and multilateral dark. So, what we are experiencing and what the market is experiencing at the moment is that, given the uncertainty around the new regime that MiFIR will implement, so the move from the double cap at 8% to the new cap at 7%, the rules of the implementation are not stringent and defined. And what is happening is that what we are seeing is a significant increase of dark at the expense of the systematic internalization.
So, what is happening to our market share is that what we are seeing is that, at the beginning of 2023, there is a mild dilution, which is mainly triggered by abnormal volumes on the dark, not again at the expense of the lit, but at the expense of the Systematic Internalizer, which were not themselves part of the denominator of our market share. So, for all these reasons and as well for the reason that we are going to be competitive in the dark space for the first time, as Stéphane announced in the first quarter of this year, so we will be able to strengthen our position on the numerator, having as well our unique proposition on dark, we believe that the best way to adapt, be competitive, and maximize revenues is to have the strategic flexibility to set our objective in order to maximize revenues.
Very clear. Thank you.
We will now move to our next question from Arnaud Giblat from BNP Paribas. Please go ahead.
Yeah. Good morning. I've got three quick questions, please. Firstly, could I ask about the contribution from cash clearing that started on the 27th of November? How much EUR contribution was in the period? Just trying to figure out what the run rate could look like. My second question is, could you expand a bit more about the market share dynamics that are going on at MTS? I mean, clearly, it's been a key source of strength. I just wonder if you could put a bit more color there. And finally, I'm wondering how pricing discussions are going. I mean, you mentioned 5% price increases in 2023, 3% in 2024. We're seeing some of the market data peers out there seeing less capacity to increase prices.
Is this a source of pushback from your clients? Thank you.
So, Arnaud, I will answer your third question. And Giorgio will answer your questions on the contributions of cash clearing revenues and the run rate outlook. And he will answer also your question on the dynamic of the MTS market share. It's very complicated to make a blended answer to your question on pricing. What is real is that, like any properly managed companies, we have adjusted some of the prices in areas where prices have not been reviewed for a while. And there has been some contribution to the revenue expansion of last year. And there will be, again, in 2024, a contribution driven by a price increase because we realized, by doing this exercise, that we had a pricing power which was higher than initially anticipated.
But as you perfectly said, some of these pricing adjustment exercises are replicable. Others are not. The reason I don't want to give you a blended guidance is that the reality is extremely differentiated. We have some software contracts, for example, where you have CPIs, price adjustment clauses, where there were price adjustments and price increases that were embedded in this product and this business for years. We have other businesses where the proper price adjustment is embedded in the yield and market share management. That's the case of cash equity trading, where when you discuss market share and yield, you discuss price increases. You have areas that with much more discrete in English language as one-off type of adjustment, like the annual fees of listing. You have some market data contracts.
For the real-time dissemination market data contract, you have price adjustment but with the significant inertia, with the delay between the reference point of inflation or CPI and the year where it is implemented. So, it's extremely differentiated. What you should know is that, in an inflationary environment, we do two things as a company. We are super cautious in cost management. Giorgio was explicit about that. You can see the numbers. You can see that our cost base in Q4 was less than 1% above the cost base of one year before, despite inflation. So, we are very disciplined. The other way around, we try to see to what extent we can pass through price increases some of the pressure we have on our cost base to clients, if and when we can extract better value from our offering. That's not always the case.
As you said, sometimes we are touching the limit. Sometimes we are not touching the limit. It's extremely differentiated. Sorry for not giving you a sort of one-size-fits-all answer, but the diversification of our product, the very increased diversification of our revenues, which you have observed in the contribution to our top line, does translate in a diversification of the answer to your question. Giorgio?
Yeah. So, on the revenues from equity clearing, the amount that we have recorded in our account for the fourth quarter is around EUR 2 million. And you should appreciate the start in November, Brussels at the beginning, and the rest of the market at the end. And as I said, what we are expecting for the full year and you should appreciate that those are the very, very first days, as I mentioned earlier, is around EUR 20 million, 2-0.
Then, with respect to MTS, the market share, the market share of MTS in its core market, which is the D2D, is extremely elevated. I mean, I will not share with you a number, but it is a market share which is higher than the one we have in our cash business. The way for us to grow it is actually growing the market, as Stéphane explained, to make it more international. Today, most DMOs in Europe do not use electronic platform to improve the secondary trading of their sovereign bonds. So, their willingness is to bring more and more activity on the platform. On the other side, this is the answer. Very significant market share in excess of 70%. The ambition is to make the electronic market larger while keeping our very high market share.
Arnaud, I did answer. The cost base of Q4 2023 compared to the cost base of Q4 2022 did not increase by less than 1%. It was reduced by a bit less than 1%. So, the cost base of Q4 2023 was minus 0.9%. So, but the message is the same. The qualitative message is the same. We were able, over the year and in particular in Q4, to reduce our cost base at a time where inflation, year-over-year, was probably across Europe around 4%.
That's helpful. Thank you very much.
We will now take our next question from Iulian Dobrovolschi from ABN. Please go ahead.
Hello. Good morning, gentlemen. And thanks for taking my questions. I have two follow-ups on the expansion of the clearing business.
The first one is, if you can kind of give us a bit more, let's say, understanding on what sort of slippage you were able to see after the expansion of the Euronext Clearing to all the cash markets of Euronext, given the fact that you are running an open model over there. So, probably, there is a bit of optionality for the clients to decide to either opt in or opt out. And the second one, can you also give us some more color? How do you think about the pricing for the future clients on derivatives clearing, for example? So, after Q3, how will this compare to the one on the Italian markets, for example?
So, on that question, I'll give the floor to Anthony Attia, who is the head of our derivatives and post-trade business.
Good morning. And thank you for your questions. I understand that they are focusing on the cash equity clearing in the CCP. So, the open access model that we have in Europe are twofold. One, this is the one we have at Euronext, is called the preferred CCP model. And the other one is called the interoperable model. With the preferred CCP model, the exchanges pick one CCP of choice, otherly called default CCP. And in the case of Euronext, the exchanges, to the exception of Oslo, picked Euronext Clearing, a CCP of choice. And so, by default, all the trades will go to the CCP of choice except if the clearing members pick another CCP. And for the same trade, the other CCP is selected by the buyer and the seller. So, in concreto, there is a stickiness of the flow in the CCP of choice.
And we don't expect significant changes in the course of the year. And as Giorgio explained, we've done this migration on the cash equity clearing in November. And we already have the revenues in our P&L today. On your second question, I understand it was about the evolution of pricing. Again, Giorgio explained that we should expect a total full-year revenue on cash equity clearing around EUR 20 million with a harmonized pricing that was set up in November last year with a common approach for all Euronext markets, including Italy.
All right. Thank you.
We will now move to our next question from Ian White from Autonomous Research. Please go ahead.
Hi there. Thanks for taking my questions. Just a few follow-ups from my side, please. Just firstly, on cash equities and market share, if I look at like-for-like lit market share versus the largest competitor, the data does seem to suggest that, in 1Q24 so far, you've ceded about 100 basis points of market share to the largest lit competitor. And that's about 200 basis points versus 3Q levels. So, I'm just trying to understand how to square that with the comments you made earlier regarding reduction in market share being driven by an increase in multilateral dark trading rather than a like-for-like reduction in the lit market share. Basically, do you think the data I'm looking at is incorrect? Or were your comments referring more to the 4Q period rather than what we're seeing in 1Q?
That would be the first question, please. Just secondly, can you just clarify, please, the expectations for the remaining EUR 41 million of run rate synergies? I think you said earlier that EUR 35 million of clearing costs will be terminated. So, talking just EUR 6 million for the final part of the Optiq migration and derivatives clearing revenues collectively.
Is that the right interpretation? It's not very complex math. But have I got the message right there, please? And just finally, a follow-up on MTS. Can you just call out for us how much of the, I think it's about 75% year-over-year increase in volumes over the last four months on the cash trading. How much of that has come from the next-gen EU-issued debt versus just broader progress in the larger bond markets, please? Thank you.
Well, I'll take the question on the run rate synergies target. And Giorgio will answer this one because I think he wants to be more specific on the MTS one.
At this stage, we don't disclose the contribution of the MTS progress made with the Next Generation EU because there is an initial period, like any of these projects, where we don't charge the full amount to the market participant because it's all about building a prominent and leading liquidity pool before the competition does. This is happening. We will switch to a full pricing of these initiatives in the next few months. We will be able to answer your question when we have more visibility. What I can tell you is that, in terms of volumes, the liquidity has moved massively to MTS for the secondary trading of the Next NGEU. I'm confident that the pricing will take place as planned at the run rate level. But we cannot disclose and create expectations for the moment.
But it represents, approximately today, 4% of the volumes of MTS. And it's growing. So, we'll see how it can translate into incremental revenues in due course. So, I cannot answer your question specifically at this current moment because it's definitely working for us, as you should expect if you want to create liquidity first. Now, Giorgio, on the run rate synergies. And then, Nicolas Rivard will answer your question on the market share for cash equity trading. And we'll provide you the framework as to how to think about market share.
Well, thank you very much for the question. And, I mean, it's a question I appreciate. I like squaring things. It's a professional disease. So, the EUR 41 million missing, let's start from run rate. So, let's square first the run rate.
EUR 35 million, EUR 30 million, EUR 35 million is, on a run rate basis, the determination of the LCH SA derivative clearing agreement. And the rest are other optimizations. Let's call it this way, EUR 5, EUR 6 million of further optimizations. Then, how do es it translate into the EUR 25 million of P&L savings that we will have? The computation is the following. The EUR 35 million of clearing costs will translate into around EUR 17.5 million of P&L savings.
So, you would be missing around EUR 7.5 million. These EUR 7.5 million is the P&L impact of the run rate synergies. You remember, we discussed of the EUR 6 million that were missing to get to the EUR 41 million on the one side. And you have, as well, the impact in P&L of the cost savings that we delivered in the fourth quarter this year and will have a full impact on next year.
I hope that this does clarify. But if you have a follow-up question, happy to try again.
I just want to make sure I've got the I understand the run rate correctly. Sorry if it's just me that's not getting it. But it's EUR 35 million. In terms of the remaining EUR 41 million of run rate that's going to be delivered by the end of 2024, basically, it's EUR 35 million or so of clearing costs and then just about EUR 6 million for the other costs,
other optimizations. It's correct.
Yes. Okay. Okay. That's super. Thanks. That's very clear.
We'll now move to our next question from Mike Werner.
Sorry. There was a question on the market share computation. So, over to you.
Thank you. Yeah. And thank you for your question. I will provide two data points, which I think will illustrate our answer.
I think will help you understand the driver behind the market share. The first one, if you look at the market structure, so not looking at Euronext market share but looking at the relative market share of lit market versus dark and SI, there is no change over the last year, which means that the lit market market share compared to dark and SI is stable. I think this is a good illustration of what Giorgio was mentioning, that even though we see the dark volume increasing and the dark market share increasing, we see that the expense of the systematic internalizer. The second data point I want to share with you is regarding the lit market share of Euronext versus competitors. Here again, it has been pretty stable over the last year.
Actually, we are running slightly above last year in terms of market share on the lit market on Euronext shares.
Just to clarify the comment on the lit, when you talk about stability, up to and including where we are today, or are you talking about to the end of 4Q23? Just because, as I say, the data I'm looking at seems to suggest that the lit market share has come off in the early part of 2024.
About today or end of January for the latest numbers. But I'm talking about the recent development. Yes.
Okay. Okay. Got it. Thanks very much for your help. Really appreciate it.
Thank you. We'll now move to our next question from Mike Werner from UBS. Please go ahead.
Thank you very much. Just one question from me. Apologies if this was already addressed.
But in terms of the dark pool that you announced you'll be launching in Q1 of this year, how should we think about that from a revenue-generating perspective? Is this one I think the initial pricing was around 0.3 basis points, if I'm correct. But is this one where similar to what you saw with the EU bonds within MTS, where you offer discounts to participants until you generate a sufficient pool of liquidity and then ramp up the pricing after that sorry, normalize the pricing after that? And also, is there any adjacent revenues that you may get from this, say, from incremental colocation offerings? Thank you.
So, Giorgio and then Nicolas.
Absolutely. My part of the answer is going to be disappointingly short. Unfortunately, we cannot give you a target. But it's a great occasion to give the floor to Nicolas, that will explain you why we are so excited about that.
Thank you, Giorgio. Indeed, at the end of March this year, we are going to launch our dark offering on all Euronext markets. This dark offering will be included in our data center in Bergamo as part of our Optiq trading system. And therefore, we'll provide to customers a very simple and direct access to dark functionality with absolutely no latency. So, we are extremely confident that this value proposition is of interest of clients, which is what we are witnessing as we speak with clients. The clients are lined up in the test environment, which, as mentioned by Stéphane, opened at the end of January.
This dark functionality included in our Optiq platform will allow members, without being too technical, but to sweep from the dark to the lit, which means that sending an order, which we first will go to the dark. And if the order is not executed, we move without any latency to the lit order book. And this value proposition is quite appealing for clients because you're ensuring that you get the best liquidity from our dark pool and then from our deep liquidity pool on our lit market.
Thank you. We will now move to our next question from Tom Mills from Jefferies. Please go ahead.
Hi. Good morning. Thanks for taking my question. Sorry. I just wanted to follow up on the cash equity market share question again because it's still slightly confusing to me.
Are you saying the market share in 1Q, if we just sort of take the run rate to date, is likely to be flat versus 4Q23 or flat versus 1Q23 when it was 63.8%? Just because it does seem like there's been quite a significant leg down 1Q24 to date. And I'm just struggling to understand how it's stable based on what you're saying. Thank you.
So, Jess, let me try to clarify. So, Giorgio mentioned that the way and probably for historical reasons, the way we publish the market share of Euronext includes as the denominator the dark pools, so the multilateral facility offering dark functionalities, whereas Euronext does not, at the moment, offer such a system. And Giorgio mentioned that the dark volume in the beginning of the year have increased.
Giorgio mentioned the driver being most probably the uncertainty around the regulatory change of regime of the volume cap. Giorgio also mentioned that this is at the expense mostly as far as we see from the Systematic Internalizer. The other question, the other answer is that with regard to lit m arket share, so if we remove this effect on the dark volumes, the lit market share that we see is fairly stable in the range of the fluctuation and absolutely not dropping from the beginning of the year.
Thank you. Appears there are no further questions in the queue at this time. With this, I'd like to hand the call back over to Stéphane.