Hello, and welcome to the Euronext Q1 Results. Answer session. Just to remind you, this call is being recorded. I will now hand you over to Stephane Bushnell, CEO and Chairman of the Managing Board of Euronext. Please begin your meeting.
Good morning, everybody, and thank you for joining us this morning for the Euronext Q1 2018 results conference call and webcast. I am Stefan Muiznat, CEO and Chairman of the Managing Board of Euronext. And I will start with the highlights of the Q1 2018. Jordan Munizan, Euronext CFO, will then further develop the main financials and business drivers for the year before I conclude with my financial remarks. We would both welcome your questions at the end of the presentation with Antonia Achja, member of the Managing Board of IoNex.
Let us start with Slide 5. First, the Q1 was marked by return of volatility, which translated into double digit volumes growth in all asset classes, cash, derivatives and spot forex. In addition, our market share remained very strong as well as our revenue capture across our key markets contributing to the strong performance of the quarter. 2nd, transition to MiPIC II was another highlight of this Q1. 5 months after its implementation, I would like to share this with you a few key takeaways.
1st, Euronext was ready in day 1 without any major disruption. 2nd, the full impact of the new regulation is unfolding over time. For example, the cap and dog pool was postponed to 12 March following the announcement and rates of starts have been forbidden to be traded on dog pools. For the moment, we don't see massive transfers from OTC to lead venues. We rather observe a shift of OTC flows to systematic analyzers.
3rd, as far as M and A is concerned, we closed this quarter the acquisition of the Irish Stock Exchange, which was signed in November last year. The Irish Stock Exchange is now rebranded as Euronext Dublin and intervention is proceeding according to plans. Delray Summers, the former CEO of the Aristo Estrance, will join the Managing Board of Euronext after regulatory and shareholders approval and leads the Euronext Center of Excellence for debt and fund listings and ETFs. Euronext Dublin will start contributing to Euronext P and L from the Q2 of 2018. 4th, we added a new product to the corporate services suite with the acquisition of 80% of Insider Log in January, a Swedish company specializing in insider list management.
Finally, in April, we achieved another important milestone securing the $500,000,000 long term funding that will serve as a key pillar of our capital optimization strategy. The new financing extends the maturity of our financial liability to 2025. It reduces the cost and diversifies the financing mix of the group. With an order book of us describes 4.4x at €2,200,000,000 the success of our inaugural 500,000,000 bond 7 year A rated by S and P shows clearly the confidence of bond investors in Euronext model. On this occasion, F and P has released the 1st rating of Euronext at A stable outlook, showing the confidence of this 3rd party business model and strategy.
Moving to Slide 6. Here are the main triggers of the quarter. First, revenue increased by $20,000,000 to $146,700,000 driven by strong need, strong market share, strong volumes in cash trading, the strong performance of market data and indices and Fast Match as well as contribution from Agility for Growth initiatives. Only listing revenue was slightly down due to a mixed environment despite a strong IPO pipeline, but annual fees and corporate services remain strong. 2nd, our cost efficiency improved our operating leverage.
And as a consequence, EBITDA increased by 25.1 percent to €88,200,000 much faster than revenue and EBITDA margin reached 60.1% at
the group
level. EBITDA margin performance remains very solid even if there was a positive net €1,500,000 impact on costs this quarter. 3rd, on the core business and on the Agility for Growth perimeter excluding clearing, the May 2016 perimeter, the reported margin reached 63.5% this quarter, paving the way to reach 61% to 63% EBITDA margin target for 2019 for this perimeter. Agility for Growth initiatives generated $500,000 of EBITDA this quarter. 4th, we recorded around $16,200,000 of cost savings, up by almost $5,000,000 compared to the end of December.
As a consequence of all those good results and the lower impact of exceptional items, reported EPS increased by 30.5% to €0.82 per share. Slide 7 describes the recent development. Since last March, with Euronext Dublin, the group Euronext is now present in 6 core countries across Europe. As planned, Deborah Somers has been appointed CEO of Bjornex Dublin and is to join the Managing Board after regulatory and shareholders' approval. Has the responsibility for the Group Centre of Excellence for Debt and Trans Listing and ETFs.
The combined group is now a real global leader on many fields. Number 1 in debt listings with more than 37,000 listed bonds. Number 1 in funds listing with 50 with 5,600 funds and major players in ETFs with 1050 listings. ETF and BEST are really core elements of the ambitions of our Agility for Growth strategy and we are convinced that Tierney Dublin will serve as an accelerator for projects like Synapse and the new MTF for ETFs, gold ETF access. From a P and L perspective, Euronext Dublin will be consolidated starting in Q2 2018 as the transaction was closed at the end of Q1.
A few words though on Euronextraven's standalone Q1 results. Revenue increased by around 15%, driven by good listing volumes in different funds and annual fees and this despite volatility. 2nd, EBITDA margin was at 32%, down compared to last year, mainly due to the impact of significant one off staff costs and acquisition costs related to the transaction with Euronext. Please also note that Q1 2017 margin was exceptionally high marked by low IT and MiFID II costs. So on the EBITDA margin of the average stock exchange, there is a base effect for Q1 2017.
As a reminder, we plan to achieve €6,000,000,000 of cost synergies for 2,000 of cost synergies by 2021 on Euronext. In and progressively bridging the profitability gap with the rest of the Euronext Group. Integration works are progressing very well according to plan, supporting by the engaging energy of our new Irish colleagues. I now need the floor to Georgios Moniker for the presentation of our Q1 financial results.
Thank you, Stephane, and good morning, everyone. Let's start with Slide 9. Euronext consolidated revenues increased $20,000,000 or 15.9 percent in the Q1 of 2018 to $146,700,000 mainly thanks to stronger volumes in both cash and derivatives, the positive impact of Agility for Growth initiatives accounting in the quarter 4,200,000 and the acquisition of FastMatch contributing $5,200,000 to the top line. The Q1 of 2018 saw a favorable trading environment with the return on volatility and a supportive macro environment in Europe. The early disappointment of an otherwise excellent quarter was listing revenues at 18,000,000 dollars This decrease of 4.3% versus the Q1 of 2017 was driven by a weaker performance on IPOs despite the pipeline, which remains very strong and a decline in follow on activity.
Corporate services and annual fee partially mitigated those impacts and positively contributed to the result of the business. Cash market share remained strong at 65.3% and volume growth on both derivatives and cash contributed to the good performance of trading. In addition, the cash trading yield further strengthened at 0.52 basis points. I will come to that later on in the presentation. Our year on year top line growth see benefits from the base effect related to Fasmatch acquisition in the Q3 of 2017, with spot FX trading generating 5 point $2,000,000 this quarter.
Market data in indices performed extremely well with revenues up 15.4% to $29,700,000 as a result of new market data agreements and the good performance of indices. In total, our duty for growth initiative generated $4,200,000 in revenues in the Q1 of 2018, thanks to corporate service along with the first revenues from ATAR services. The non volume related revenues amounted to 42% of total group revenues, with the addition of fixed corporate service revenues being offset by the consolidation of Fast Match Trading revenues and the strong cash trading performance. The operating cost coverage ratio reached 104% in the Q1 of 2018. Moving to the next slide, let's discuss about listing.
The mixed listing environment translated into a reduction of revenues of 4.3% to $18,000,000 On the one hand, volatility pushed part of the IPO pipeline to next quarter. As last year, 6 new listings were completed with $800,000,000 raised versus $200,000,000 last year, including 2 large top companies, NIBC and BNS. As a reminder, the Q1 of 2017 was marked by the jumbo transaction like the listing of Technip FMC in our market. Euronext continues to attract tech SMEs from non Euronext market. The Q1 2018 saw the listing of a UK based company, Acacia Pharma and an Italian company, MediaLab, owned Euronext Access.
Following revenues decreased 41.4% compared to a very high level in the Q1 of 2017. That quarter was marked by large transactions such the one of OIBDF. On the other hand, annual fees increased 6.1 percent to $8,300,000 and corporate service generated $3,700,000 of revenues benefiting from the acquisition of IBABS and company webcast in the course of 2017. The revenue of corporate service this quarter is slightly down versus the Q4 2017, mainly due to some seasonality in the activity of company webcast. Commercial efforts continue to be strong with more than 50 new clients signed this quarter.
Moving to Slide 11, cash trading revenues increased nearly 20% to $55,700,000 on the back of strong revenue capture and market share in a volatile environment. Euronext cash trading ADV increased nearly 22% to $8,500,000,000 compared to the Q1 of 2017 and we reached on the 16 May 2018 nearly $20,000,000,000 ADV, which is the 2nd most active day since 2010. The average yield increased despite stronger volumes to 0.52 basis points and this is mainly thanks to new fee schemes reducing the sensitivity of the yield to volumes. The new market share remained pretty strong at 65.3%, up 3.9 points year on year, thanks to the success of those new fee schemes such as the non member Omega Pack and Best of Book now used by all retail brokers. Euronext remain at the forefront of innovation.
Euronext Fund Services launched last May, on boarded 33 asset managers. Euronext Block, our MTS block trading platform, connected the 1st wave of brokers we issued the technical document for ETF access, our new ETF for MTS to be launched at the end of the year And we are currently building a strong pipeline for Euronext sign ups, the MTS for corporate bonds, with many members already signed in Europe. Moving to the next slide, let's look at derivatives. Revenues increased 4 0.5% to $10,600,000 The yield is slightly down to 0.28 basis points on the back of a less favorable product mix. Derivative IADV is 14.9 up, mainly thanks to increased volatility and the improved market position on the Dutch market following the migration of option contract from the TORM platform in June 2017.
The decrease in commodity volume was due to the poor condition in the physical market. The new market participant program designed to develop the non physical market now involves more than 4 50 trading firms with more than 4 attracted by the new NMP program, which was launched in January this year. Finally, FASMED generated $5,200,000 in revenues this quarter, driven by Sportfx ADV up 14.3 percent to USD 20,200,000,000 Moving to the next slide. As I was commenting before, market data and indices performed well this quarter. It's up 15.4 dollars to nearly $30,000,000 revenues
due to
the new market data agreements and the good performance of indices. The revenues from market solution increased by 5.2% in the Q1 to nearly 9,000,000 dollars The business continues to benefit from new projects and revenues are supported by the delivery of the first commercial releases of OPTIC to international clients. Clearing revenues increased 10.3% to $13,000,000 in the Q1 of 20 18, reflecting stronger derivative trading activity as well as higher treasury income. Revenue from Interbult and Portugal increased 9.3% to $5,400,000 in the Q1 of 2018, driven by an increase of public debt and equity under custody compared to the Q1 of 2017. Other postpaid revenues of $100,000 were recorded in the Q1 of 2018, accounting for the first revenues generated by the APAR initiative, part of Agility for Growth.
Moving to Slide 14, the Euronext EBITDA grew 25.1% this quarter to $88,200,000 with a margin of 60.1%, up 4.4 points versus the Q1 of 2017. The good operating leverage and cost efficiency performance, with the reduction of cost in the core business compensating the additional cost coming from the acquired companies. Operating expenses excluding D and A grew only 4.3%, mainly due to the impact of new acquisition, mainly iBABS and Fast Match, savings on the core business and net positive one off, as mentioned by Stephane, of around $1,500,000 Cumulated core gross savings amounted to $16,200,000 this quarter as compared to the end of December. I remind you that the objective for 2019 is $15,000,000 of selling net of inflation, dollars 22,000,000 gross of inflation. Agility for growth generated an EBITDA of $500,000 this quarter.
If we look at the margin of the core business and Agility for growth, excluding Clearing, which is the perimeter used for our 61% to 63% EBITDA target for 2019, in this quarter, we reached a margin of 63.5%, up 6.8 points compared to the same period last year. We will continue our cost saving effort in the remaining part of the year with a progressive rundown of IT costs in the course of the second half of twenty eighteen. We recorded $1,500,000 of PPA for FastMatch and ABAP this quarter while we will start accounting for Euronext doubling PPA in the Q2 of 2018. The net income increased 30.6% in the Q1 of 2018 to 57.3%, mainly driven by EBITDA growth and less exceptional cost and financing expenses than last year. Net financial expenses for the Q1 of 2018 were $400,000 compared to net financial expenses of $1,100,000 in the Q1 of 2018 that was marked by one off items related to the previous term loan as well as the acquisition of the potential acquisition of LTH S.
A. Please note as well that we consolidate for the first time our 11.1% stake in LTH and we record $1,500,000 in the equity investment. As a reminder, we received last year at the same period $700,000 as a dividend from LCH Group. Income tax for the first quarter of 2018 was $25,200,000 representing an effective tax rate for the quarter of 30.4% stable versus last year. Adjusted EPS is up 28.1% year on year at $0.85 compared to $0.65 in the Q1 of 2017.
Let's move to Slide 15. Since the release of Agility For Growth, Euronext has changed significantly. The perimeter of our activity has changed, new targets have been set and therefore we decided to provide you with a table and simply finding the tracking of Euronext performance. I believe that the table is sufficiently self explanatory and I hope useful. As you remember and as we discussed, the 61% to 63% EBITDA margin included the core business, AGD for growth and excluding clearing.
In the Q1 of 2018, based on that definition, Euronext reached a 63.5 percent EBITDA margin. I would just like to add a few consideration on that margin. First, that EBITDA margin benefit from roughly $3,500,000 of positive one off, which on cost, without which the margin would be closer to the lower end of the range. The second is that these results strengthen our confidence in our ability to deliver the target of profitability of 2019. On the other side, that level of profitability cannot be simplistically extrapolated and applied to the next quarter of 2018.
On the other hand, what we call new perimeter, which is basically FastMatch and Neuronex doubling, recorded a very low margin at 6.2 dollars impacted by $2,000,000 of one off costs related to the Dublin acquisition. Without that, the profitability of FASMETS remains extremely solid at around 45%. Should you have any question on this table, please let me know during the Q and A session. Moving to Slide 16, I would like to start with a few words on our inaugural bond. In April, Euronext significantly restructured its liabilities through the launch of its $500,000,000 in annual bond.
With this strategy, we have secured 4 objectives. 1st, we will reduce the P and L cost of funds versus the previous term loan. The new cost of funding is going to be Urebor plus around 40 basis points. 2nd, we have extended the maturity of our liability to 7 years or 2025, which is a prerequisite for any capital optimization strategy. 3rd, we have diversified our financing mix outside of the banking channel, which provides additional financing flexibility.
4th, we secured resources for growth. Within this framework, we used the proceeds from the bond to finance our existing debt raised to acquire Fasmatch, iBABS and Euronext Dublin that totaled $338,000,000 at the end of 2018. Moving now to cash flow, the net operating cash flow to EBITDA ratio increased to 85% in the Q1 of 2018, up from 81% same quarter last year, mainly thanks to the good performance of EBITDA this quarter. Looking at the bottom right of the slide, you can see that our liquidity position remains healthy at $365,300,000 thanks to our strong cash generation and despite the acquisition of Euronext Dublin last March. Let me now leave the floor to Stephane Buschner.
Thank you, Georgios. As you have understood, Q1 2018 was a very strong quarter, driven by strong volatility impact on volumes, strong revenue capture and strong operating leverage. A few words on the initial trends we are seeing so far. 1st, clearly volatility has been softening those last weeks and volumes have been less dynamic than the very strong Q1 we experienced on all our businesses. While one must note that April 2017 was marked by high volatility related to political elections in some of our markets.
So there is clearly a base effect in the comparison between Q1 'seventeen and Q1 sorry, between Q2 'seventeen and Q2 '18. We will continue to be very active in our yield management to ensure the robustness of this business. The second, listing pipeline remains strong and we expect some IPOs at the end of Q2 and Q3 2018, depending obviously on volatility development and investor appetite. We should continue to benefit from the good dynamic of annual fees and development of corporate services, which represent an increasing part of our listing business. Our commercial efforts will continue on corporate services, but also on various initiatives towards potential issuers.
3rd, from a technological standpoint, after the migration to the market data gateway for cash and derivatives last year, we achieved another significant milestone with the migration of bond regulated markets trading to uptick order entry gate and matching engines. This first step on the trading platform usual bugs and we continue our active preparation for the migration of other cash trading markets in June on the Optik platform. 4th, our AGM will take place in a few minutes and we will propose dividends of €1.73 per share to be paid after approval on the 24th May. Our next presentation will take place on the 3rd August for the Q2 results. Anthony Attia, Georgiobudnik and I are now available for your questions.
Thank
you. Thank
And our first question comes from the line of Martin Price from Credit Suisse. Please go ahead, Martin. Your line is open.
This question was just on the cost base. And apologies if I missed this, but I think you indicated there was a one off cost benefit of €3,500,000 in the Q1. Could you just provide a little bit more detail on that, please? Secondly, I was just wondering if you could provide some indication as to how much expense you incurred for MiFID II and the OPTIC implementation costs in the Q1? Just begin to understand how the expense base could change as those projects draw to a close.
Okay. So, when it comes to the exceptional items, really, there are a number of those, which are mainly related to release of provisions for many matters, including releases for bonus provision and all that to work. The amounts are small, but the number of items is significant and they total up to around $3,500,000 When it comes to the exact breakdown of optic cost, we actually do not provide that. However, you can what we usually indicate is looking at the two lines, which are communication and professional services. Those are actually the 2 P and L lines where most of those costs are recorded.
And if you look in terms of trend, the evolution, you might have seen an increase of this cost throughout 2017 and 2016 as well. Well, those are the two lines we hope are going to reduce throughout 2018. And the other data point that I believe is useful is to look at the target in terms of savings. So we are at around $16,000,000 which means that to achieve the target now, we will need pretty much to beat inflation again into consideration that the objective for 2019 is $15,000,000 net of inflation.
Our next question comes from the line of Racine Van Welken from ING Bank. Please go ahead. Your line is open.
Let's start with the softer guidance for the 2nd quarter volumes. Could you give us an update on the fast much marketing specific? And what developments do you see there compared to last year? And then maybe as follow-up question on your statements of the IPO pipeline is building up, What is your view on the outlook for the rest of capital raising, so in follow on activities and bond revenues?
And then lastly Sorry, go ahead. If I
may, a third one. The derivative yield was down to 0.28 basis points due to the product mix. And do you expect to reverse this if the volatility remains at current levels?
Thanks. So, Georgiou will answer your first and third question
and Anthony Attia, who is our group head of listing, will answer your specific questions about outlook for the rest of the year on Listing.
Yes. So let me start with Fast Match. When it comes to growth, our ambition to growth are linked to a number of new initiatives that we will put into place. First, clearly, it's we're thinking to launch new products. 2nd is new data analytics to improve the use of the platform.
And 3rd, potentially is geographical expansion. So those are the 3 key areas that we would like to capitalize further expand the franchise of Fast Met. When it comes to the question on the derivative yield, this is simply a mechanical effect of the fact that the contribution of volumes coming from tonne comes mainly on the auction products, which are margin medium duty in terms of yield, which means that if the mix remains similar to what it is today, you should not expect ways to optimize the RFP schemes. And clearly, we will think of what is the best way to improve the performance of that business line.
Good morning, Antonietje. Speaking on the equity listing question, as we said before, the pipeline for Q2 is good for our IPOs. Companies are engaged in
the process. However, market environment prompts us
to remain cautious. On the follow on activity, we also expect some significant operations in Q2. Nevertheless, we remain cautious in the general trend as the capital increase operations are less important compared to last year. On the bond side, we are cautious on Euronext domestic countries. Nevertheless, we expect some dynamism coming from Dublin.
Thank you. Our next question comes from the line of Arnaud Giblan from Exane.
I've got three questions, please. First off, now that the Dublin acquisition has closed, I was wondering if you were looking at potentially redomiciling some of the profits to Ireland. Secondly, in terms of M and A, there are a number of cash equity businesses out there potentially for sale in Europe. Could you remind us what sort of framework you think about when considering these acquisitions? Is that to be part of the Eurozone or the evaluation, the key consideration?
What is the key framework? And particularly, how do you think that in conjunction with other potential deals that could be down the line like LCHSA in time over time. So maybe if you could help us frame your state of mind on M and A in cash equities, that could be helpful. And thirdly, Agility for Growth seems to have made some improvements over the quarter with costs coming down. Is the current level of profitability in Agility for Growth sustainable?
Thank you.
Okay, Arnaud. Thank you for your questions. I'll answer the first one and
the second one and then Georgiou will answer the agility for gross margin question. The first question, we have no intention whatsoever to reallocate profits to other locations. We pay taxes where we make revenues and profits. So, there will be no tax impact at group level of the acquisition of the Irish Stock Exchange. 2nd, on
M and A, the framework remains
the same. We believe that organic growth is important, but we believe that capturing some of growth opportunities is critical for the development of the group. And we will continue to explore 2 avenues. 1 is the diversification of our top line to enter into new asset classes or into non volume related businesses, hence the acquisition of Fast Match, hence the dialogues we had on possible other targets and hence to a certain extent the acquisition of the Irish Target Champ, which has a significant listing business, which is not volume related. And that will remain a significant part of our growth strategy of our external growth strategy.
The other avenue is to expand our federal model if and when opportunities arise in Europe to consolidate the European infrastructure world and to make it when 2 conditions are met. Number 1, when those independent exchange are willing to consider consolidation. But as of today, there is no such a dialogue and there is no such a situation because all the independent exchanges in Europe are very satisfied and happy with their current total independence. So they don't see the need to consolidate and that condition was different in the case of the Irish Trade Exchange, where the Irish Trade Exchange decided to start to explore alternative strategy following the reading they had on Brexit.
And the other condition is that even when those situations rise, we must make sure that it
creates value for the shareholders of Onex and all these exchanges are different. And some of those situations will create value, others will not create value. We are very happy with the acquisition of the Irish Stock Exchange, both for strategic reasons and also because we believe that we can bring the current 32% EBITDA margin to the level of the core businesses of Euronax. Situations might be different for other exchanges. So this
is the framework of our external growth strategy. Georgio, you want
to Yes. I wanted to complement the answer of Stefan on taxes. We have a mechanism whereby all the regulated exchanges within Euronext are equalized in terms of profitability. So the profitability of each of the exchanges of Euronext have the same margin. And we have an agreement with tax authorities whereby we pay taxes pretty much on the basis of the business, which is revenue.
So the tax rate of the group Euronext is the weighted average tax rate of the Euronext count is weighted by revenues, which is perfectly in line with what Stephane said. And when it comes to Agility for Growth, yes, we are very confident we can also improve that level of profitability. And the other thing I wanted to highlight is 2 fold. The first one is that at the moment, we have no business in the portfolio of Euronext, which is not capable to generate a profitability in excess of 50%. And the second one is that today, the profitability of corporate services is pretty much funding the development of other initiatives, which are not yet generating revenues.
Okay. Just a follow-up on that. Excluding any further acquisitions in for Growth, is it the case that any marginal revenue has no marginal cost attached?
On what segment, Agility for Growth? Yes, yes. I mean, Agility for Growth, it really depends on the business. When it comes to corporate services, I mean, it's really business by business. There are companies that operate software or platforms like iBabs in which it's fair to assume that increase of revenues will not translate 1 to 1 to traditional costs.
There are others in which variable costs are more significant like company webcast. But what I would say is that the only non platform business of Euronext is into the corporate service space. When we look at other initiatives like sign ups, for example, these are clearly all the benefit in terms of operating leverage as the other business of Euronext.
Okay. Can I just have a last follow-up? Sorry. On Market Data, just a last one, a very quick one. Is the step up in run rate revenues sustainable?
It sounded like you've repriced some contracts, so that might be the case.
So let me be clear on that one. There are several elements you need to consider. The first one, you have seen in previous quarters that there was a contribution from our audit findings. This quarter, this contribution is 0 practically, which means that this is not on the one side fully loaded quarter. On the other side, with MiFID II, we have new products that allow further disaggregation of the market data we sell, which means and this concept embeds the possibility for clients to optimize their data consumption, which means that over time, clients can take benefit from that opportunity and progressively reduce their spend.
On the other side, what we have seen so far is that the proactoriness of clients to manage this new product has been limited and therefore you have seen the result in our P and L. So which means that longer term, there might be some optimization. So far, the revenues continue to be strong.
Thank you.
Thank you. Our next question comes from the line of Anil Sharma from Morgan Stanley. Please go ahead. Your line is open.
Hey, guys. I just had actually one question. On Slide 15, the Agility for Growth initiatives, I mean, the Q1 number, I appreciate, is obviously dangerous to extrapolate. But if I time that and annualize that, you're running quite a bit below the 2019 target. So in terms of obviously, it takes time to do deals, but it just happened quickly.
So I'm just trying to think how you're going to sort of bridge that gap in the next sort of 18 months.
Sorry, the gap in terms of what?
So you've got a €55,000,000 target of revenues versus the €4,200,000 you've done in Q1. So I'm just saying if you take the €4,200,000 and annualize it, let's say, you're at €17,000,000, €18,000,000 dollars There's a big gap versus the 55,000,000. I appreciate you can't do M and A necessarily very quickly because it takes time to source deals, to close deals. So just trying to understand how you're going to bridge that gap to 55% within the next 18 months? Yes.
It's twofold. On the one side, the way you should look at that is that the corporate service, which is already delivering around €13,000,000 €15,000,000 on an run rate basis is increasing at a very fast rate, which means that we are comfortable that, that part of the business is going to deliver in line or close to the original target set at May 16. On the other side, we are working and we are pretty much ready on 2 platforms. And the key big ones are actually 3. 1 is the new MTF for ETF.
The second one is sign ups. And the third one is the partnership with Morningstar. Those are a platform that needs to collect liquidity. We believe that we are close to that point and we believe that each of those initiatives would be able to contribute for the gap. Again, it's less linear than the normal corporate service business, but we believe that those platforms have the capability to bridge that gap.
Okay. Got it. And so and the second question was just around now that the IFC acquisition is sort of closed, there any potential to kind of release some capital as you move the as you rebranded it, obviously, Dublin, you moved into the federal structure. So is there any sort of balance sheet optimization that can be done?
I mean, clearly, balance sheet optimization is one of our priorities. It's really too early to tell. We will start a number of discussions with regulators and we will see over time what are the possibility to further improve the capital structure.
Our next question comes from the line of Ron Heidenreich from ABN AMRO. Please go ahead. Your line is open.
Good morning, gentlemen. I have a few questions, starting off with could you basically talk through your market share developments in April May? What have you seen there? And what are the main drivers? Then secondly, your cash yield, you said you had some new fee schemes reducing the yield sensitivity to higher volumes.
Would that therefore mean that the 0.52 basis points is more or less sustainable going forward? And then finally, you were talking about the ISE PPA starting from the 2nd quarter onwards. Could you guide us on the quarterly run rate there?
Yes. So let me start. So the first question was related to the evolution of the market share. The evolution of the market share is linked to further optimization in our fee structure. And this is mainly due to the new program that we introduced at the end of last year, the non member Omega Pack and the best of book, which proved to be extremely successful.
Then when it comes to the impact on fees, it is not really that a part of these new schemes that I just mentioned, we did not change any other major component. The fact is that we have, to a certain extent, moved existing client for more dilutive fee structure to less dilutive fee structure and less sensitive to volumes. So another way to explain that is that we have fewer volumes running today through our SLP scheme and more volumes coming these new liquidity pools. And so your final question was? PPA.
Yes. PPA, we're working with auditors. So it's really too soon to tell. This is an analysis that we will finalize within the Q2. So I don't have the element to guide you.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Syed Akbar from Kempen. Please go ahead. Your line is open.
Hi, good morning. Just one question on the volumes. So you saw like significant increase in your market share, 65%. How sustainable do you see this going forward, especially considering that like there's other like systematic internalizers and other parties that are going to be entering the market? Do you see any pressures on this part?
Or do you not see it in the near time future? Just that. Thank you very much.
Yes. So clearly, there are a lot of moving parts. And what you mentioned is right. But what we see today is that the systemic internalizer impact is not having a strong impact on the lead market, but rather on the OTC part of it. And we see our 65% market share as sustainable.
And clearly, we will need to see what are the developments, but that level does not seem to us as unsustainable at the moment. Okay.
And if I may, just a follow-up on the ETF side. Other parties have reported that the volumes on MTS have gone up versus the lit exchanges. Have you seen something like this also happening on yours?
No, we didn't.
Thank you. Our next question comes from the line of Kyle Voigt from KBW. Please go ahead, Kyle. Your line is open.
Hi, good morning. Really just a follow-up for Georgio. On the revenue capture side, I think there was a question maybe a few participants ago just on the sustainability of the revenue capture from here at the 52 basis point level. And maybe I missed the response, but I understand that there was dynamics in the quarter that just in terms of the pricing changes that you kind of put through. But as we're looking out and the sustainability, I guess, of that 52 basis points for the
rest of the year, if
you could just provide some more color as to what you're seeing into the Q2 so far and if that is sustainable going forward? And just looking back at Silhouette, there hasn't been many periods on a year over year basis where we've seen this much volume growth and we haven't seen compression in the yield. So, I guess going forward, should we not expect as much compression in the yield if we do model volume growth in our models? Thank you.
Yes. So let me be more let me try to be more specific. Clearly, there are different price teams and a different pricing. And what has changed is not actually I mean, we introduced the Omega Pack and we introduced the best of book. And what has actually changed is that existing clients have moved within the price schemes that Euronext is offering.
And that move of clients, those moves have been towards schemes which are more profitable for us. And therefore, we believe that those are at the moment, the yield remains strong. So we don't have elements to predict a significant drop of the deals component. And yes, going forward, if clients remain in using the same tariff funds they are using today, you should predict in your model a reduced relationship between volumes and yield, which still exists, but is less direct than it was in the previous quarters.
All right. Very clear. Thank you.
Thank you. And as there are no further questions, I'll hand back the conference to our speakers.
Thank you very much and have a good day.