Conference is now being recorded. Good afternoon, ladies and gentlemen, welcome to Deutsche Börse AG analyst and investor conference call regarding the Q3 2019 results. At this time, all participants have been placed on a listen only mode. The floor will be open for questions following the presentation. Let me now hand the floor over to Mr. Jan Strecker.
Welcome, ladies and gentlemen, and thank you for joining us today to go through our second quarter 2019 results. With me are Theodor Weimer, CEO, and Gregor Pottmeyer, CFO. Theodor and Gregor will take you through the presentation today. After the presentation, we will be happy to take your questions. The presentation materials for this call have been sent out via email and can also be downloaded from the IR section of our website. As usual, this conference call will be recorded and is available for replay. Let me now hand over to you, Theodor.
Thank you, Jan. Welcome, ladies and gentlemen. Let me start with a short summary, as always, about the highlights of the reporting period Q2. Afterwards, Gregor then will present the results in greater detail. The favorable development of Deutsche Börse, in line with our strategic plan, also continued in the second quarter. We achieved a 6% increase of net revenue, which was primarily driven by our secular growth initiatives. Of particular note, we increased net revenues from Eurex OTC clearing business, as well as product innovation in the Eurex segment. In addition, our commodities business, EEX, continued to develop extremely well. Market shares both in Europe and in the United States are meanwhile.
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On record levels. Meanwhile, the cyclical development remained moderate across the group. While the higher U.S. interest rate level has supported the net interest income from banking business at Clearstream, we saw some headwinds from lower market volatility compared to a strong development in 2018. Our adjusted operating costs increased on a non-GAAP basis by 4%. This is fully in line with our expectation and reflects, on the one hand, organic growth investments, new technology trends such as blockchain and public cloud-
The conference is now being recorded.
Good afternoon, ladies and gentlemen, welcome to the Deutsche Börse AG analyst and investor conference call regarding Q3 2019 results. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions following the presentation. Let me now turn the floor over to Mr. Jan Strecker.
Welcome, ladies and gentlemen, thank you for joining us today to go through our third quarter 2019 results. With me are Theodor Weimer, Chief Executive Officer, and Gregor Pottmeyer, Chief Financial Officer. Theodor and Gregor will take you through the presentation today. After the presentation, we will be happy to take your questions. The presentation materials for this call have been sent out via email and can also be downloaded from the investor relations section of our website. As usual, this conference call will be recorded and is available for replay. Let me now hand over to you, Theodor.
Thank you, Jan. Also from my side, ladies and gentlemen, a warm welcome. Let me start with a short summary of the highlights of the reporting period. Afterwards, as always, Gregor will present the results in full detail. In addition to the continued secular growth in line with our strategic plan, we saw additional support in the third quarter from an improvement of the current equity market volatility. Our financial derivatives business, Eurex, and our commodities platform, EEX, continue to be the main drivers of our secular growth. Eurex saw further growth from product innovation, higher OTC clearing revenues, and positive pricing effects. At EEX, we benefited from, yet again, further increases of market share levels both in Europe and the U.S. The cyclical tailwind in the third quarter was a combination of increased net interest income and temporarily higher equity market volatility in the months of August and September.
Because of double-digit net revenue growth in the third quarter, the growth of the adjusted operating cost increased somewhat compared to the first and second quarter. This is fully in line, I repeat, this is fully in line with our expectation and was driven by a number of factors Gregor will outline in a moment. Because of this development, we saw a strong increase of our adjusted net profit in Q3 by 18%. As planned, we closed the Axioma acquisition mid-September and have created Qontigo as the new umbrella for our index and analytics businesses. Qontigo equips our clients to address trends reshaping the investment industry, including the rise of passive investing and smart beta, new technology infrastructure for scale, and the shift towards customization of services.
Considering the positive development over the course of 2019, we confirm hereby our guidance of around 10% adjusted net profit growth for the full year 2019. This strong set of quarterly results confirms again that we are well on track with regards to our organic growth ambitions. Beyond organic growth, we continue to actively pursue M&A opportunities. Only the combination of organic and inorganic growth fully unlocks the growth potential of this great company. Our M&A strategy is unchanged. We are aiming to increase the scale of selected, still smaller asset classes in our Group. With the Axioma transaction, we have strengthened our pre-trading offering significantly and improved access to the buy side for the entire Deutsche Börse Group. Qontigo now serves as the platform to also further grow inorganically in the analytics business.
In the trading and clearing area, we are generally offering well-established platforms, but size and scale of less mature businesses like commodities and FX can still be further improved. In investment fund services, we are considering all product service and geographies that add value to our already leading fund offering. With this, we are confident that we can create additional value through inorganic growth. Let me now hand over to Gregor to present the details of our Q3 results.
Thank you, Theodor, and welcome, ladies and gentlemen. Let me start with the group financials on page two. In the third quarter, Deutsche Börse saw a significant improvement of net revenue and earnings growth rates compared to the first and second quarter 2019. Total net revenue increased by 13%, which was a combination of continued secular growth in line with our expectation and a strong cyclical backdrop. As we mentioned during the last two quarterly calls, the implementation of IFRS 16 resulted in some shifts from operating expenses to depreciation. We adjusted last year's numbers in the presentation to ensure a like for like comparability. Operating costs amounted to EUR 274 million. They were adjusted for around EUR 46 million, mainly relating to the closing of the Axioma acquisition. Operating cost growth was mainly driven by higher investments, higher costs for share-based compensation, and consolidation effects.
Furthermore, the operating cost base in the third quarter 2018 was comparatively low. Some of the operating cost growth was offset by the efficiencies from the structural Performance Improvement Program. Due to the scalability of our business model, the adjusted net profit showed a disproportionate increase by 18% and reached EUR 283 million. Let us now turn to the quarterly results of the segments, beginning with Eurex on page three. The development of Eurex in the third quarter was driven by around 7% secular growth in net revenue from OTC clearing, new products, and pricing. In addition, cyclical net revenue increased by around 12%, mainly driven by the spikes of volatility of some of the trading days in August and September. Consequently, net revenue increased 19% and the adjusted EBITDA 25%. Our commodities business, EEX, continued to perform very well in the third quarter.
Net revenue increased by 14% and adjusted EBITDA by 32%. Net revenue growth continues to be mainly driven by power derivatives in Europe and the U.S. In both regions, we expanded our market share further. In Europe, we now see levels consistently above 40% compared to OTC in the main market, Germany. Levels in the smaller markets like France, Italy, and Spain are even higher. In the U.S., we continue to increase our market share versus the other exchanges to a record level of 44% in September. To continue this success, Nodal has expanded its gas offering in the third quarter. About 35% of the power generated in the United States is from natural gas, and it does have a significant impact on the price of power. When using Nodal for both products, participants benefit from significant capital efficiency through cross-margining.
Let me now turn to page five and the FX business. 360T's net revenue saw an increase by 17% to EUR 24 million. This is now for the first time since the consolidation of the GTX ECN last year, a like-for-like number. While the cyclical environment in the FX market continues to be difficult, as you can see from the development of some of our peers, 360T attracted further clients, in particular in the U.S. As a result, September was the best month ever for 360T. Adjusted EBITDA increased 30% and amounted to EUR 12 million. While equity trading volumes on the cash market declined slightly in the third quarter, Xetra further strengthened its position as a reference market for trading German blue chips and increased its market share to 72%. Also, on a positive note, trading volumes in exchange-traded funds increased 15% year-on-year.
As a result, Xetra net revenue stood at €55 million and adjusted EBITDA at €31 million. Our post-trading segment, Clearstream, continued to be mainly driven by growth of net interest income. Despite the recent rate reductions in the U.S., slightly high year-over-year rates and increased cash balances were contributing to this development. We saw solid growth in core settlement and custody activities, which more than offset the declining net revenue from managed services as part of third-party services. In total, net revenue in the Clearstream segment was up by 8% and reached €189 million. Adjusted EBITDA stood at €119 million. The investment fund services segment, which you'll find on page eight, showed a strong increase of net revenue by 29% to €48 million.
Approximately half of the growth is attributable to the consolidation of Swisscanto Fund Centre in the fourth quarter last year and the acquisition of Ausmaq, which we completed at the end of July. The organic growth of the funds business was fueled by the onboarding of new clients and high level of activity among existing clients in more volatile markets. The adjusted EBITDA grew by 35% and reached EUR 24 million. In GSF, average outstanding in the collateral management business increased by 7%, mainly driven by new client wins and growing volumes in initial margin segregation products. In contrast, market conditions in the securities lending business continued to be challenging because of negative interest rates and the ECB's monetary policy, putting added pressure on fees. However, volumes in securities lending recovered somewhat in the third quarter when compared to the first half of the year, supported by new client acquisitions.
Overall, the GSF segment net revenue declined by 10%. Therefore, adjusted EBITDA declined to EUR 10 million. Slide 10 shows the new Qontigo segment, which consists of the newly acquired analytics business, Axioma, and the index businesses of Deutsche Börse. As part of the creation of the new segment, we also transferred around EUR 3 million index-related net revenue from the data segment to the Qontigo segment. Historic figures are adjusted accordingly. The EUR 6 million net revenue we are showing for the analytics business refers to the period since closing of the transaction on September 13. However, due to the revenue recognition under IFRS 15, this number cannot be analyzed. For the full year 2019, we expect Axioma on a standalone basis to generate around EUR 65 million-EUR 70 million of IFRS net revenue. Year-over-year, the adjusted EBITDA of the Qontigo segment stood at EUR 29 million, an increase of 15%.
Please do keep in mind that around 22% of the net profit will be distributed to the minority shareholders of Qontigo going forward. Net revenue in the data segment was down by 8% on the previous year's figure. The decrease was mainly due to lower audit-related net revenue, as they were unusually high in the third quarter of 2018. As a result, the adjusted EBITDA stood at EUR 28 million. On page 12, I would like to put the Q3 result into the context of the first nine months of 2019. The much stronger net revenue growth rate in the third quarter has helped to achieve net revenue growth of 7% during the first nine months of the year, which was mainly driven by secular factors. At the same time, the adjusted operating costs increased by 6% and reached EUR 782 million.
In total, the adjusted net profit increased by 12% to EUR 863 million. Considering this development, we are confirming our guidance for the full year of around 10% adjusted net profit growth. On slide 13, we provide you with an overview of the three components of net revenue growth for the first nine months of 2019. Compared to the previous year, secular growth, being the key component of our strategy to increase net revenue, has developed very well. The increase of 5%, respectively EUR 105 million, was mainly driven by Eurex and EEX, but Qontigo, IFRS, and 360T contributed as well. On the cyclical side, the increased net interest income due to higher U.S. interest rates was still partly offset by lower market volatility. This is despite the pickup of volatility we saw in the third quarter. Consolidation effect resulted in further net revenue growth by altogether EUR 24 million.
The discontinuation of the managed services at Clearstream had a negative effect on net revenue, which amounted to roughly EUR 7 million. Adjusted operating costs, shown on page 14, increased in the first nine months of 2019 by around 6% and reached EUR 782 million. This includes inflationary pressure in staff and other operating expenses, which was largely offset by lower provisions for variable compensation. Savings from the structural performance improvement program made an important contribution to fund investments in growth initiatives, new technology, and regulations. Net investments grew by EUR 16 million. Consolidation effect from M&A activities resulted in an increase of operating costs, which was offset by the discontinuation of managed services at Clearstream. This concludes our presentation. Thank you for your attention. We are now looking forward to your questions.
Thank you. Ladies and gentlemen, if you'd like to ask a question, please press Nine, followed by the Star key on your telephone keypad. If you would like to withdraw your question, please press Nine, followed by the Star again. We kindly ask all participants to limit their questions to one question per person. The first question for today comes from Kyle Voigt, calling from KBW. Please go ahead.
Hi. Thank you for taking my question. If I could, just one on M&A, I guess. Now that FXall is off the table, could you just give us an update on the M&A environment? Specifically, I'm wondering if you could help us understand where you're seeing the most opportunities for further consolidation in those five key areas of focus for M&A. It doesn't seem like there's many sizable assets left in FX or index or fixed income. Should investors be more thinking about commodities and IFRS as a focus near term? Are there still plenty of opportunities left there? Thank you.
I'll take this one, Kyle. Theodor speaking. On the M&A side, we constantly screen opportunities alongside our value chain. Trust me, we are not getting tired of it. We understand the mechanics of scalability. Growth is important, and growth is stemming on the organic side and we need an add-on on the inorganic side, on M&A side. We stick to the areas we have communicated, which is data, FX, IFRS, commodities, and fixed income. You were asking whether there are certain areas which have maybe a little bit higher priority. Indeed, data has a high priority. FX continues to be one, but the available targets are limited, as you correctly said. On the post-trade side, we are looking into it, and also on the commodity side.
This is to your question, we will not fall into the trap to feel pressed to do any kind of transactions that are overpriced. You all have seen what happened with Hong Kong and LSE and this kind of stuff. We want to get it done. We are fully aware that the multiples in the market are very high. In some areas, they are extremely high, and we are very conscious not to overpay and create structures and situations where we can get it done and where we pay a reasonable price. We will stick to what I call financial discipline.
Okay. Thank you.
Thank you. The next question comes from Johannes Tholmann, calling from HSBC. Please go ahead.
Good afternoon. Johannes Tholmann, HSBC. Two questions, if I may. First of all, thanks for the update on Qontigo. Could you give us also a feeling for the costs associated with this business and the impact on minorities? Secondly, Peter Reitze of EEX gave an interview saying you enter the Japanese power market next year. Can you talk a bit about that? How far we are, is this still the situation, and so on? Thank you.
Johannes, thanks for the question. With regard to Qontigo, in my speech, you have heard that we guide for some EUR 65 million-EUR 70 million net revenues after IFRS. That is the net revenue number we guide for the full year. The cost base is roughly EUR 5 million below in the range of EUR 60 million-EUR 65 million. With regard to the minorities, yes, as you are aware that we own now 78% of Qontigo, 19 with GA and three with the management, basically. We own 78%, and the minority level is in the range of EUR 20 million.
Okay. Thank you.
With regard to enter in the Japanese market, yes, Jan, go ahead.
Yeah. I think this confirms how important the European Energy Exchange is on a global scale. It's the largest global power market, and therefore we have the ability here to enter into new markets, although this is going to be a small contribution in the beginning. Financially, I don't really think you have to start modeling it already, but it really confirms EEX position on a global scale. If it's about power trading, power derivatives trading, then we are usually approached to also assist other markets.
Okay, thank you.
Thank you. The next question comes from Chris Turner, who's calling from Berenberg. Over to you.
Yeah. Thank you. Good afternoon. It's Chris Turner from Berenberg. One question. Maybe one clarification, if I can. Firstly, the question, last week, a number of banks and asset managers published a white paper looking at clearing houses and suggesting they should hold more capital. I was wondering what your views on those proposals were. More generally, do you think clearing houses need to hold more capital? Just to follow up your question on M&A earlier, can you maybe share some thoughts about how the combined LSE-Refinitiv business may change the competitive landscape for Deutsche Börse in Europe? Thank you.
I can start with the white paper for the clearing houses. I think that the constant discussion in the market around the role of a CCP and the clearing house. Our view here is very clear. The clearing house does not go for its own risk, right? It's mitigating risk, and therefore we don't see that there should be a higher capital level, what is currently available. That's the dialogue again. We have a very clear view that a CCP is an instrument to mitigate risk in the market and does not basically keep all the risk here. With regard to M&A, you can do it, Jan.
Yeah, Chris, Theodor speaking. On the M&A, you asked the question whether LSE and Refinitiv together may change or will change the European and maybe even global landscape. On the M&A side, my clear answer is, it changes the chessboard for all the players, right? Because LSE is now busy with Refinitiv for the next couple of years. That is, for me, pretty clear, right? CME is busy with NEX, as you know, right? Everybody is looking what's going to happen with the Brexit as such. That comes on top of it. I do not see a fundamental change or that all the other major exchanges are coming into play. I do not see this. Actually, it's still the case that major and large stock exchanges are being perceived as a national domestic DNA, and therefore, it will almost be a kind of an exception.
This does not mean that one or the other cash market exchange may trade, right, or may come up to play. I think our approach, the competition on the M&A side will continue and continue to be very fierce on the asset side, right, on the asset class side. This will continue. Quite frankly, it is pretty clear we have not achieved to get FX matching done, right. There are other gears out, right, which we can go after, right. That is our situation. I don't see a massive fundamental change. What happened with Hong Kong and LSE, you have seen they started an initiative, and they pulled back quite early on.
That's fascinating. Thank you.
Thank you. The next question comes from Bruce Hamilton, calling from Morgan Stanley. Over to you.
Hi. Yes. Thanks, and good afternoon. Maybe a quick one on Clearstream. I just looking at Q3, obviously, you've grown EBITDA a fair bit less than revenue, so negative operating leverage. Why is that happening, and should we expect that going forward, firstly? Clearly, Clearstream offers good stability and cash flow generation to the group, but equally constrains you on strategic optionality. Particularly in the light of the LSE Refinitiv moves, have you in any way sort of rethought how core Clearstream is to the future of the business and the shape of Deutsche Börse Group? Thank you.
Yeah. Starting with the first question of the development, Clearstream in Q3. Overall, the performance in Q3 was quite positive, with basically seven, 8% revenue increase. You see now here also some decrease in the NII, obviously, as we have here now the rate cut from the Fed and what immediately is impacted our NII, and that's basically the main reason for that kind of development, that the profitability level is a little bit lower. The business without NII is right on track so far. Second question with regard to Clearstream strategic element, and you refer to the rating, obviously. From our perspective, Clearstream is a core business. We like that business.
If you see what happened with regard to our rating numbers, so as we constantly produce additional cash, as we constantly increase our earnings, obviously our cash on hand and our debt level capacity increases here. When I told you last time, I said it's roughly EUR 1.5 billion available firepower for M&A transactions. We are now in the level of roughly EUR 2 billion, as we have now a little bit more cash on hand, and the debt opportunity is also increased. That's EUR 2 billion. I think you can do something with that, and it's a reasonable number. With regard to this EUR 2 billion, as Theodor already mentioned, we are keen really here to do an M&A transaction to increase the capability of our company, to increase the scalability of certain business. So far, no need to change here something.
In addition, Bruce, from my side, if you look back over the last 10 years, and even if you look forward, on average every year, Clearstream has produced a 3%-5% fee revenue increase. Even without NII, it's a solid business. It's a very robust business. We are sitting on EUR 14 trillion of assets under custody and servicing. It creates lots of opportunities to consolidate the market in the backyard of our business. We are very nicely positioned. It's a duopoly game in Europe with one competitor out there, even despite the fact that we may have a disadvantage sharehold structure, if I may say so. We are more dynamic, we are very competitive, and our guys are very commercial.
It's a very robust business at the end of the day. Therefore, unless somebody comes to me and tells me, listen, you can get X with a super-duper EBITDA multiple and a huge growth, then I can theoretically consider. Why shall I sell or consider to sell a hugely profitable business which is growing nicely with a strong EBITDA margin?
Thanks. Very clear.
Thank you. The next question comes from Philip Middleton, who's calling from BofA Securities. Over to you.
Yeah, good afternoon. I wonder, could you say a little bit more, please, about pricing within Eurex? You cite that as one of your structural growth initiatives, but is there anything more you can say about that?
Philip, thanks for the question. As you are aware, two or three years ago, we changed our philosophy. Over the last 10 years, we didn't use pricing as an instrument to increase our secular growth, and this changed in the last two to three years. We even guided for 2017 and 2018, that overall we said pricing impact was roughly 1% of our net revenue number. Even in this year, maybe it's not exactly the same number, a little bit below, but there is a double-digit EUR million pricing impact also on Eurex side, where you see that the revenue per contract increases. Again, we use that on a constantly periodical basis, and there are opportunities for us what we are using.
Okay. Thank you.
The next question comes from Ian White, who's calling from Autonomous Research. Please go ahead.
Hi. Afternoon. Thanks for taking my questions. Maybe just a couple of clarifications on cost, please. First of all, on guidance for the rest of 2019, should we expect to see the usual seasonality that's on display in the cost base in 4Q, as we've seen in prior years? Relatedly, can you provide any updated guidance on cost outlook for 2020 at this stage? Just lastly, on the exceptionals, are you standing by your guidance for EUR 120 million for this year, please? Thank you.
Okay, Ian, starting with the first question, seasonality for Q4. Yes, there will be a comparable seasonality effect in Q4 2019, comparable to the level you have seen in 2018. On top, you should not forget in Q4 that we see the consolidation effect as I gave you some guidance with regard to the including of Axioma in the Qontigo segment for the full year. You should also not forget that another consolidation effect out of the Ausmaq on cost for investment fund services here. That's a consolidation effect, what you will see in Q4 and also for 2020, obviously, when we have the full consolidation of these two business. Therefore, we gave you exactly the guidance on revenue, on cost for these two business so that you are able to model that a little bit better.
With regard to the exception in 2019, you have seen now in Q3 that the EUR 46 million, a bigger increase compared to what we guided at the beginning of the year. That obviously good news as we were able to conclude our M&A transaction on Axioma. That was more than half of the EUR 46 million. Obviously, that will not happen in Q4. Nevertheless, I would expect that as a result, we will come sum up higher than the EUR 120 million we guided last time. With regard to the cost outlook for 2020, I think that's a little bit early. In general, we will give you guidance for 2020. Starting when we publish our full year results 2019, so roughly mid of February, then we give you some guidance for the 2020 development. Again, as in the past, we will not specifically guide on costs.
We will give you guidance on our secular growth. We will give you guidance around our earnings, and then you can see as a result what is basically then the cost impact out of that. Maybe Theodor, you want to-
In addition, Ian, and I listen now to the call and some of you raised question on the cost side, because we have seen and we reported now pro forma the increase on the cost of the same as 10% for Q3. I want to assure you, we don't have any time and any kind of a cost issue here at Deutsche Börse. To be very precise. What happened was we have the usual 5%-6% cost increase. We have a significantly higher increase on the revenue side. The scalability of our model perfectly works. What happened was we had a consolidation effect for the first time of Qontigo, and secondly the share price increased and therefore the negative effect on the compensation topic for the guys working for us. They were accounting for way over 60% of the increase.
Yeah. The concrete number for Q3 is if you see the 10% operating expense increase, roughly half of it, 5%, relates to consolidation and to share price payment increase. You see the other 5%, what is basically the normal development, what will you expect. Here, this consolidation topic and in this specific quarter also, the share- based payments are specific development, and we will consider how we will better communicate that in the future so that you get a better understanding and not the wrong impression that the cost management is not of high priority for the new management. It's just the opposite is the case.
Got it. It's really helpful. Thank you.
Thank you. The next question comes from Michael Werner, who's calling from UBS. Please go ahead.
Thank you very much. Good afternoon. I have three questions, please. One, I guess, as we look out to 2020, the focus continues to be on M&A. I guess, does that leave any room for the potential for share buybacks? I believe, if I recall at the beginning of this year, it was indicated that if you didn't see any M&A this year, that would be something that we could potentially see next year. I was just wondering your thoughts on that. Second, if you could just provide a little bit more granularity, and I apologize if I missed this earlier, in terms of the Ausmaq consolidation, how much that contributed to both revenues as well as expenses within IFS during the Q3?
Finally, just love to hear a quick update in terms of your steps taken towards migrating to the cloud with regards to your regulatory data and workflow. Is that still on track for 2020? Thank you.
Michael, thanks for the question. With regard to potential share buyback, as I mentioned earlier, roughly EUR 1 billion cash on hand, obviously, we have to do something with that. Our preferred solution is again, to do an M&A transaction. As you have heard from Theodor, we are very keen to do something here on a discipline approach. That's our basic understanding that we will invest that in M&A over the next months. If we see that this is not possible, let's say over the next months, obviously we have to consider also share buyback as you have seen in the past when we did roughly two times EUR 200 million one or 2 years ago. This shows our principal commitment to do share buyback if we have excess cash.
The basic assumption, the base case is that we invest that in inorganic initiatives. With regard to Ausmaq, on a quarterly basis, roughly, we have EUR 2 million net revenues and EUR 2 million costs, roughly on a quarterly basis. With regard to the migration into the cloud, yes, we make good progress here. You have seen our announcement that we found now good cooperations with Microsoft and with Google, we are also in discussion with Amazon Web Services, but with the first two, we have an agreement how to do business, how to migrate into the cloud. We are currently detailing our implementation plan. It will take three to four years, it's not done within 12 months to migrate certain elements of our IT infrastructure into the cloud, and in parallel to do the migration of our data center.
Therefore, we see also good chances to increase quality and increase efficiency with that kind of cloud strategy.
Thank you.
The last question for today comes from Benjamin Goy, who is calling from Deutsche Bank. Over to you.
Yes, hi, good afternoon. Whatever political Brexit will be, do you feel that your clients are increasingly Brexit ready and open for new projects, of course, with the particular link towards your Target2-Securities initiatives? Can we see more out of that in 2020, or should we expect post-trading to be driven by IFS going forward again? Thank you.
Benjamin, thanks for the question. Indeed, in this year, in 2019, there was a lot of focus of our customers on Brexit, and even today, we do not know what will finally happen out of that. Our view is that now all our customers are prepared for any Brexit scenarios. Therefore, we see a good chance that prioritization in 2020 goes more into our favor. We specifically expect that in the investment fund services business, where we have now really a very strong customer pipeline with high commitment and even with some signed contracts. Here we have a very high comfort level that on investment fund services, we get the right prioritization from a customer perspective. Also with regard to Target2-Securities, we see a better chance in 2020 to get additional revenues out of that. Our view is unchanged.
There should be a secular growth element for Clearstream, but again, it will take a little bit longer than originally planned.
Okay. Thank you.
With this, we would like to conclude today's call. Thank you very much for your participation, and have a good day.