Good afternoon, ladies and gentlemen, and thank you for joining us today to go through our preliminary 4th quarter and full year 2020 results. With me are Theodor Weimar, Chief Executive Officer and Gregor Pottmeyer, Chief Financial Officer. Teodorant Gregor will take you through the presentation today, and afterwards, we will be happy to take your questions. The presentation materials for this all have been sent out via e mail today and can also be downloaded from the Investor Relations section of our website. As usual, this conference call will be recorded and is also available for replay.
Let me now hand over to you, Theodor.
Thank you, Jan. Welcome, ladies and gentlemen. Let me be very brief quarter. Today, because the numbers speak for themselves, I will give you an overview on the results and the outlook. And afterwards, Gregor, as always, will present the details of the year 2020.
What is my perspective on the year? While 2020 was an exceptional year, for all of us, the resilience of our business model and our strategy helped us achieve very solid growth levels. Net revenue increased to €3,200,000,000 and benefited from this continued secular growth of 5 quarter in line with our plan. With that, and despite all challenges we all faced last year, We exactly reached our full year net profit guidance of SEK 1,200,000,000, which we issued 12 months ago, quarter by the way, prior to the pandemic. Based on this result, we are proposing to increase the dividend in 2020 for 2020 to EUR 3, which is an increase of 10%, which amounts to a payout ratio of 46%.
This proposal reflects both a commitment to continue to pay an attractive dividend as well as to increase our firepower for quarter. With 2020, we also completed our last midterm plan and achieved our overall quarter. Ambitious targets, 9% average annual net revenue growth and 12% average annual net profit growth are the key indicators quarter. Now as you perfectly know, we are all focused on the years ahead. And our new plan, COMPASS23, with its quarter.
Clear cut growth formula of 10% average annual net revenue, EBITDA and EPS growth, driven by ongoing secular growth and quarter accelerated M and A. With regard to the guidance for 2021, we all know that in the 1st quarters, we will be faced quarter. Very high comparables from the Q1 of the year 2020. But over the course of the year, we are reflecting an improvement of the growth dynamics. For the full year, we are planning to reach around EUR 3,500,000,000 net revenue, And our guidance for EBITDA is around €2,000,000,000 These are ambitious targets in the light of the continued exceptional operating environment, but we are fairly confident to achieve them.
Let me now hand over to you, Gregor.
Quarter. Thank you, Teodor. Let me start with the preliminary financials in the Q1 on Page 2 of the presentation. Quarter. After some weakness in the Q3, the Q4 was the 2nd strongest quarter last year in terms of net revenue.
This was due to good secular growth levels across all segments and some pickup of market activity, which both helped us overcompensates the much lower net interest income. In total, organic net revenue growth amounted to 6%. In addition, the consolidation of UBS Force Center and quantitative brokers added another 2% of net revenue growth. Quarter. Operating costs amounted to €334,000,000 It is adjusted for around €46,000,000 quarter items, which were mainly driven by financial restructuring charges out of our Structured Performance Improvement Program quarter as well as M and A expenses.
As anticipated, the operating costs were down compared to previous year. Quarter. The equity valuation of TradeGate in the Xetra segment, which delivered a very strong business performance in 2020, quarter. Again, resulted in a positive effect on income from strategic investments, which increased to €11,000,000 quarter. €1,000,000 of different smaller software impairments, I.
E, one off effects and around €5,000,000 of additional regular depreciation, mainly relating to the purchase price allocation of UBS Forcecenter. The financial result amounted to minus €26,000,000 The year on year decline was quarter. Higher provisions for interest on potential tax back payments. Altogether, we achieved 14% growth of the adjusted net profit of EUR 276,000,000 I'm now turning to the quarterly results of quarter segments, starting with Eurex on Page 3. The decline of the total numbers of derivative contracts traded by 8%.
Quarter that was only driven by lower margin single equity products. Net revenue across the 3 main product categories quarter. Net revenue with clearing of OTC interest rate swaps continued to increase and amounted to quarter. After we observed a continuous increase of market share in euro denominated products over the last 3 years, quarter. We for the first time crossed the 20% threshold in January this year.
Even more encouraging is the fact that our market share quarter in long dated euro interest rate swaps increased more than proportionally to euro level of 16%. While margin quarter. The increase came down compared to the peak in the second quarter, we still saw significant year over year growth. Other net revenue benefited from the consolidation of quantitative progress at the beginning of December. In 2021, we expect a quarterly contribution of around €5,000,000 to €6,000,000 quarter.
In our commodity business, EEX, shown on Page 4, We saw a recovery of activity compared to the COVID related headwinds in the Q3. Particularly strong was the development in European power quarter because of a significant increase of spot prices compared to the lows in the summer last year. Quarter. Let me turn to Page 5 and the FX business. While the FX market volatility continued to decline in the 4th quarter, Our business activity increased sequentially and year over year mainly because of business generated from new quarter.
I'm now turning to Page 6 and our cash market, Kritra, where we continue to see growing quarter activity and the increase in net revenue. Most of this was driven by equity market volatility, but there was also continuous particular contribution from a further increase in market share. In addition, the strong growth in exchange traded funds activity quarter relating to the trend towards positive investments continue to contribute to the performance of the segment. The quarter. CETRA data line item included around €20,000,000 of other operating income relating to the sale of the regulatory reporting hub quarter earnings call.
We expect additional income from the sale also this year. Quarter. The EBITDA in the Xetra segment benefited again from the higher at equity valuation of Tradegate, I mentioned earlier. Quarter. The additional €10,000,000 we booked in the 4th quarter now reflect the very strong preliminary full year results quarter.
As you can see on Page 7, in our post trading segment, Clearstream, we saw continued solid growth of quarter. Together with the tight management of operating costs, this had offset some of quarter decline of the net interest income we are still faced with. The Investment Fund Service segment, which you can find on Page 8, quarter. This was driven by both cyclical and secular factors. Settlement mainly benefited from higher market activity by custody and other revenues were mainly driven by onboarding of new clients.
Quarter. In addition, we started to consolidate the fund distribution business from UBS in the 4th quarter, which added quarter €14,000,000 of net revenue. For 2021, we are expecting a contribution of around €60,000,000 quarter. Slide 9 shows the Contigo segment, which after 2 more muted quarters delivered quarter performance. In Analytics, we saw some improvement of the sales and marketing activities after the negative impact of quarter COVID-nineteen in the preceding quarters.
Net revenue in the 4th quarter, among others, benefited from winning a significant new client. Quarter. Some of these contracts have been booked as point in time net revenue, so not everything will be recurring. Quarter. Similar to last year, the other licenses net revenue benefited from some backbilling, which is quarter typical year end exercise.
Let us now come back to the group financials on Page 10. Quarter. With the exceptional development in the Q1, a solid second quarter performance, cyclical headwind in the 3rd quarter and double digit earnings growth in the 4th quarter, we exactly achieved our full year guidance of an adjusted net profit of €1,200,000,000 quarter. This was certainly not the business development pattern we expected when we set our guidance. Quarter.
But the fact that we reached it under such adverse circumstances is another excellent proof point for the resilience of our business model quarter and the success of our growth strategy. On Slide 11, we provide an overview of the 3 components of net revenue growth in 2020. Consolidation effects resulted in additional net revenue of 2% or EUR 62,000,000 This was mainly driven by the addition of Axioma and UBS Force Center. Secular growth, being the key component of our strategy to increase net revenue, quarter. Developed as planned and increased by 5% or €165,000,000 All segments have achieved quarter with Eurex being the largest absolute contributor and 360T IFRS and Contigo showing the highest secular growth rate.
Quarter. The cyclical growth contribution amounted to 2% or €51,000,000 and results on the balance of the volatility driven growth in the Q1 and much lower net interest income thereafter. Adjusted operating costs shown on Page 12, totaled EUR 1213,000,000 in 2020. Quarter. 5 percentage points of operating cost growth was a result of consolidation effect from M and quarter.
Investments increased by 2% or €28,000,000 This was primarily driven by the planned investments in growth and technology, an increase in personnel to support growth and by the cost of implementing regulatory requirements such as CSDR. Net inflation was flat as inflationary pressure on staff and other Operating expenses was offset by savings from the structural performance improvement program. Due to the business and share price performance, quarter. This brings me to our dividend proposal for 2020 on Page quarter. As part of our long standing distribution policy, we generally aim to distribute 40% to 60 quarter.
The net income to shareholders via the regular dividend. Within this range, the dividend payout quarter mainly depends on the business development and dividend continuity considerations. Since the earnings of the group have been growing, the Payout ratio has come down over the last couple of years. For 2020, the proposal of the Executive Board combined reduction of the payout ratio to 46%, with an increase of the dividend per share by 3% to €3 We are planning to reinvest the remaining recurring free cash into the business to support our M and A strategy. Before we turn to our guidance for 2021, let me remind you that our KPIs quarter.
Going forward, it will be purely based on our reported income statement. This helps simplify the reporting significantly, quarter and it's also addressing some of your criticism in the past. At the last page of today's presentation, We would like to explain our guidance for 2021 in the context of the Compass 2023 midterm plan we presented at the Investor Day in November. We target net revenue growth of around 10% on average per annum until 2023. Quarter.
Secular initiatives are expected to contribute 5% growth and the M and A contribution is expected to increase to 5% as well. Quarter. In contrast to our last midterm plan, we are not expecting any significant cyclical tailwind across the group until 2023. This is mainly because of the more difficult COVID environment, which among others, resulted in an interest rate cut around the globe. Quarter.
However, to offset the lower net interest income at Clearstream, we expect modest increase of quarter cyclical market activity across all asset classes over the next year. In order to support secular revenue growth and our quarter. We will continue with our investments and anticipate operating costs to increase. Quarter. In the absence of cyclical growth, we expect the EBITDA margin to remain stable at quarter.
As a result, we expect 10% average annual EBITDA and earnings per share growth until 2023. Quarter. Because of the high volatility in the Q1 2020 and continued interest rate related headwinds, the beginning of 21 is going to be challenging, but we are very confident that we continue to achieve secular net revenue growth of 5% quarter and that overall growth rates will normalize starting in the Q2. In addition, we are expecting significant inorganic contributions from UBS Force Center and ISAS. The solutions from UBS Force Center and ISS.
The closing date for the ISS acquisition is still open, quarter, but we are targeting the March to April timeframe. In terms of modeling, please do keep in mind that there will be a few one off effects quarter from the consolidation in net revenue and operating expenses. The consolidation will also impact the depreciation from the purchase price allocation, quarter. The financial result from the debt financing and the minorities because we only own around 80% of the business. Quarter.
Including ISS, we expect overall net revenue to increase to around €3,500,000,000 in 2021, quarter, which is expected to result in a reported EBITDA of around €2,000,000,000 This concludes our presentation. Quarter.
Our first question comes from Michael Werner,
quarter. Good afternoon and thank you. Quarter. The question I have is really around cost. As we think about 2021, quarter.
Given the ambitious targets that you have set, both for revenues flat, is there on the cost base quarter after we saw certainly costs come down in Q4 and only grow by about 3% in full year 2020. Quarter. And then also somewhat tied to that, we have seen exceptional costs range, I think, from just under $100,000,000 to over 200,000,000 quarter per annum in each of the past 4 years. Assuming the base of 2020 in terms of exceptional costs, just under 150,000,000 quarter. Should we expect these exceptionals to grow in line with the rest of the cost base?
Or is it going to be more lumpy? And if that's the case, quarter. How should we think about 2021 exceptional cost given the ISS integration? Thank you.
Yes. Thanks, Mike, for the question. Quarter. So we gave you some guidance with regard to net revenues and EBITDA. So obviously, the difference is our operating expenses and we just have to reflect what is our equity results, what is mainly driven by TradeGate.
So starting with regard quarter. So obviously, it's not a one off. What you have seen here, this is structurally that the retail business quarter. It's significantly growing. So we expect also significant contribution out of our trade quarter investment in 2021.
So basically, then the next question you have to answer is what is the impact out of quarter, our ISS acquisition and obviously UBS Force Center. And so we don't want to give Additional guidance with regard to that. But overall, you see how we were able to react in quarter 2020. So in principle, we give you guidance that we said, in principle, we need some roughly up to 5% quarter increased costs for our secular growth initiatives as a principle statement. Quarter.
But you have also seen that we were able to react on that. So we have obviously a contingency case quarter here in place, and we are immediately able to react on that. If we see under quarter over the year that we are not able to achieve our revenue growth. But overall, we are quarter. Quite confident that we are able to achieve our growth rate on a revenue basis.
What we have guided quarter. Yes, there will be a very significant portion out of the consolidation impact out of ISS, but we basically expect that we close quarter in Q1.
Thank you.
Quarter. Quarter. Our next question comes from Andrew Kompst, Citi. Please go ahead. Your line is now open.
Quarter. Two questions. First, a very simple one. Given your hope in closing IFS by the end of Q1, Can you just confirm that in the CHF 3,500,000,000 revenue and CHF 2,000,000,000 EBITDA guidance, you are including 9 months' worth of ISS within that? Quarter.
That's the first question. And second question, coming back to Quantico. I think you mentioned in analytics that there was a large single client win quarter. That was booked in at point in time and therefore isn't necessarily a recurring revenue. Can you just give us an idea of the quantity of that please?
Thank you.
Quarter. Yes. You're right. And so our expectation is that we close it in Q1, quarter. And we will see finally when it will happen.
So yes, we include now ISS quarter for 9 to 10 months in that kind of forecast of the EUR 3,500,000,000. With regard to your second question, Contigo Analytics point in time recurring revenue. So in principle, our quarter. And obviously, it was good to see that Contigo performance in Q4 was much stronger than compared to the previous quarter. Quarter.
So our expectation clearly is, as always previously said, we want to grow double digit in that kind of business. And we see also opportunities here in place to benefit from secular trends like trend to passive investment, quarter. Also high interest of buy side customers to use risk analytics. So overall, we are confident to achieve double digit quarter growth rate in principle. That can deviate from quarter to quarter, so that's obviously a little bit challenging.
That We can also deviate from a quarter to quarter perspective at some point in time revenues and some recurring revenues. Quarter. So the principal statement here is for Quantigo, we expect double digit growth.
Just a follow-up there. What proportion of the Quantigo revenue base is point in time? I'd have thought the majority will be accrued over the subscription period, but quarter. Interested to know how big the point in time contribution is? Thank you.
Yes. So the point in time is relevant quarter part of the Risk Management Analytics business at Axioma, and it's in the smaller part.
Quarter.
Our next question is from Arnaud Giblat, Exane. Please go ahead. Your line is now
open. Yes, good morning. I've got 2 follow-up questions. Firstly, on the costs. Could you quarter.
In the guidance, could you quantify what how much you're seeing as restructuring and M and A costs? And my second question is a follow-up on Trevyat. I think volumes have tripled there, could be a big pickup in retail participation. I'm just wondering how This is in a context where when lockdowns come back, people go back to normal life in the context of maybe some people losing money. Quarter.
Do you think that retail prospection will remain as elevated as it has been? Thank you.
Quarter. Yes. So thanks, Arnaud. With regards to the cost, I think nothing to add from my side. So We gave you the overall net revenue and EBITDA guidance.
And again, as a difference, you have the cost. Quarter. If you calculate our equity result in an appropriate way, so nothing to add as we will not report anymore quarter. What is onetime effect? What is on an adjusted basis?
That's exactly why we will also do not give any guidance with regard to that. Quarter. Your second question around Tradegate. So really, we see here that's a structural shift here. Quarter.
We see a strong increase in the retail business. And you are aware that we own by 100 quarter. Trade gate exchange where these trades are executed and we own some 20% at the broker, so Trade quarter. And so we benefit in our equity results from this 20%. And really, we see here quarter.
That's a secular shift here that we see increased volumes on the retail side, also using new focus that quarter in place. So that we see as a secular element. So that's also why we expect quarter that we will see from a trade gate perspective also double digit €1,000,000 at equity contribution in 2021.
Quarter. Our
next question is from Benjamin Goy, Deutsche Bank. Please go ahead. Your line is now open.
Yes, hi, good afternoon. One question on OTC clearing, please. There was obviously no cliff edge quarter effect in January. But still, there's some remaining uncertainty. You mentioned 20% market share, quarter.
And I think the 25% is still the target. Maybe you can share some thoughts on discussion with clients and whether it is time to lift the 25% market share quarter for clearing. Thank you.
Yes, obviously, Our target is unchanged. We want to achieve that 25%. And we are also confident to achieve additional quarter market shares here over the next weeks months. So because and the reason is very easy. If you have 10, 20, 30 year terms of this long dated interest rate for client business, quarter.
Then you have to think about it from a client perspective. Do you want to put it in London, this is all quarter. The uncertainty around Brexit and whether EU and UK will come to an agreement or not, whether equivalents quarter. That will be provided or not. So that's completely uncertain.
And therefore, the safe haven 4th quarter. For that euro clearing business, Deutsche Borse with Eurex clearing. And also the European regulators made quarter. Very clear that they expect that U. K.
Quarter. Would follow appropriate EU rules. And if not, obviously, then they would also consider to reallocate that business in Europe. And you are aware that we are the only one in Europe who has a license to clear quarter. Your interest rate, that's what.
So that gives us some confidence and that's also our understanding from market participants. Quarter. And the best proof is that we already achieved some 16% market share in the long dated interest rates for client business. Quarter. That was last year's single digit number, now it's 16%.
And we also have a lot of discussions with quarter to switch existing portfolios. So that gives us the confidence that we quarter. We'll achieve our target of 25%. And if it will be more due to the discussions quarter. Equivalent of U.
K. And EU, we will see. So we did not include that upside potential in our forecast. Quarter. That's basically another optionality from our perspective.
Fantastic. Thank you.
Quarter. Our next question comes from Bruce Hamilton, Morgan Stanley. Please go ahead. Your line is now open.
Quarter. Hi, afternoon. Thanks guys for the presentation. Two questions. 1 on Clearstream and apologies if I missed this.
Quarter. I'm just trying to understand why custody fees have declined again. That's the 2nd sequential decline despite custody assets going higher. Is there anything one off in there? Quarter.
What am I missing? And in terms of the NII, I guess, we're obviously running below the €60,000,000 run rate quarter. You're still sort of confident in that number. And more generally, I guess, the hope around target to securities, would that be an opportunity for growth quarter. And I'm just kind of struggling to see that playing through.
Is that really just is that something you still believe in longer term? Or is it did it just take a while? And then secondly, on M and A, in terms of your bandwidth to do further deals, given you're about to close ISS and integrated. Obviously, the press is talking about other possible sort of fund service type things that could be out there. Quarter.
How do you think about management bandwidth to do more in the short term?
Quarter. So starting with your Clearstream questions. So yes, you see some on average custody fee reduction in Q4. That's usually driven by some quarter year end discussions around rebates. And therefore, it's a little bit difficult quarter to look from a quarterly perspective.
So overall, message here is that we have that topic quarter. A little bit better under control than in the past. So quarter. We are able to deliver this great services and people are also ready to pay for that. So Yes, yes.
Always pricing pressure and discussion with customers and some rebates we allow. But we are able quarter to compensate to offer new services to our customers. So that's the first question. 2nd question, NII, yes, it's quarter. Last year, we in 2020, we had some €100,000,000 NII.
Yes, this year, we expect in the range of €60,000,000 quarter. But really, that depends on the customer cash balances, on the settlement activity, but that's our base case assumption. Quarter. With regard to the more principal question, we expect that Clearstream will benefit from all these quarter. Local and European support programs on the EU level, it's €750,000,000,000 in Germany, it's a 3 digit €1,000,000,000 end, end, end.
Quarter. And so we should get at least our reasonable market share of that. So that gives and the majority of these programs are even not started, right? Quarter. And so that gives us some confidence that we are also benefiting from that and that quarter.
We can compensate the reduction on NII for Clearstream. Quarter. With regard to your M and A questions, so overall, yes, you are aware of the 6 quarter. Yes, Investment Fund Service is one of the areas where we are very interested. Quarter.
And due to our acquisitions we did over the last 3 to 4 years, we have even now more opportunities quarter. And we are now also in the funds distribution area with UBS Force and that's not just the settlement and custody, it's also in the quarter distribution area. So that gives us further opportunities in the market. And as we always say, there are quarter. Basically, 3 different options for us how to business customers business with us so they can purely connect to our quarter.
They can outsource or they can sell their business. And we are open for all of these three areas as we have a superior quarter process and IT solution. And if there are M and A opportunities, so we are certainly look at that. From a firepower perspective, so as our business and cash pick up very quickly, so we do more than one Generate more than EUR 1,000,000,000 cash every year. So we also expect that from that capacity perspective, quarter.
We will have another €1,500,000,000 end of 2021 for M and A deals.
Quarter.
Great. Thank you.
Our next question comes from Johannes Thormann, quarter. HSBC, please go ahead. Your line is now open.
Good afternoon, everybody. Anders Thormann, HSBC. First of all, quarter. Just on the run rate for TradeGate benefits, is it a double digit €1,000,000 amount quarter or per year. And what is the impact of the regulatory reporting hub disposal on Clearstream?
Do those 2 net each other out? Or Should we still see some structural growth driving SITRA as is also the Frankfurt market is benefiting from better retail volumes? Quarter. And then secondly, I have also to look at Clearstream, but we saw weaker settlement quarter. Also in stable settlement volumes in Q4 despite a much higher settlement activity or trading activity on markets.
Quarter.
All right. Thanks, Johannes. Quarter. So starting with the trade date, I would love to have a double digit on a quarterly basis, but So next question with regard to regulatory quarter. Yes, we had some EUR 20,000,000 last year.
And we expect quarter. Also a comparable amount this year out of that transaction. And finally, that depends how many customers will migrate at the quarter. But there will be also a significant portion in 2021. Quarter.
In principle, Xetra will also benefit from additional retail activities, quarter. As I already said, we own the trade gate exchange by 100% quarter and benefiting 20% out of our trade debt area. But we think that also has quarter to increase market activity in Germany in general. So that's a positive trend what we see here. And we also would expect quarter that we see here positive impact out of that.
With regard to your last questions around Clearstream and settlement activity. So overall, yes, in principle, You can say the more settlement activity you have, the higher the cash balance here is. Quarter. But to follow-up that on a quarterly basis, there can be some shifts. But on an annual basis, quarter.
There should be a more direct dependency.
Okay. Thank you.
Quarter. Our next question comes from Ian White, Autonomous Research. Please go ahead. Your line is now
quarter. Hi. Thanks very much for doing the call. Just a couple of questions from me on the revenue outlook, please. Quarter.
Can you just share a bit of
your thinking around the trajectory for Eurex, particularly on the listed derivative side over the course of 2021. So I noticed that business looks at quite a slow start to the year despite a reasonably quarter high level of market volatility. And so what are you seeing that gives you confidence that performance can improve significantly quarter from the Q2, I think you said in your opening remarks. And then just secondly on EEX, quarter. Is the fee capture there in 4Q 2020 at a sustainable level?
It looks like it was high quarter in basically all of the products. I wondered if that was to do with a particular price change that you've made or if it's kind of noise quarter and an assumption in line with 2020 average levels might be more realistic looking forward. Thank you.
Quarter. Yes. So starting with the revenue outlook and specifically EUROXX. Yes, We are convinced and also very confident that we achieved at least 5% secular growth also for Eurex. So a lot of product initiatives what we have here around dividend derivatives, MSCI derivatives, total return futures, OTC clearing opportunity, you are aware of all of quarter.
So high confidence that we continue to deliver on that side. With regard to the cyclicality, obviously, you have seen strong quarter tailwind in 2020. And that means most probably we have some headwind in 2021. Quarter. And that is a little bit challenging to guide cyclicality around some quarters.
Quarter. So that we will see. But in principle, if the situation of providing back end to all people, quarter. That obviously, the faster that is, the more optimism is in the market. And quarter.
If the markets do not talk about lockdowns anymore and are more positive, so that is our base case assumption quarter. That volatility will increase and market activity will increase again. And so that should happen later in the second half year 4th quarter for 2021. So this gives us some confidence here. And also the discussion around reinflation, right?
So what quarter. You see already some inflation starts here. And it's interesting to see that in the 1st 5 to 6 weeks, our fixed income products do increase, right? Quarter. So some market participants also see some concerns around inflation.
And obviously, that triggers quarter, our Eurex product. 2nd question around eX. Yes, We had some strong headwind in 2020 with regard to lockdown and lower energy consumption and even energy prices talk to negative territory. And now you have seen in Q4, so that's obviously a positive development. And we also quarter.
Expect if that kind of energy consumption, and again, it's also connected with corona back in and lockdown, etcetera. Quarter. But if we come over that kind of discussion, so that should be positive for EEX. Also, our Our secular initiatives to increase our market share, so power European Power Derivatives 40%. So that will continue to increase quarter over the next years.
We are confident on that level. And some pricing questions you asked around, so that's quarter. If some positive or some minus, so that's also a question of some product mix as PowerSpot is different from Power Derivatives and U. S. Quarter.
Power is different from European Power. So here you see also that this is influenced by some product mix.
Quarter. Thanks very much.
Our next question comes from Gugit Ghambo, JPMorgan. Please go ahead. Your line is now open.
Hi, good afternoon. Just two questions for me. So firstly, just to clarify, in terms of your revenue guidance of SEK 3,500,000,000, that's about a 9% growth year on year. Is that 5% secular and then 4% M and A? And then you just basically you're seeing flat on the cyclical side.
So that's just the first point of clarification. And then in terms of the quarter. Clearing side, are you building where are you in terms of building out other asset classes, whether it's DFX or just other products around the U. S. Clearing.
So any thoughts around that? Thank you.
Yes. Quarter. So with regard to our revenue guidance, obviously, with the integration of ISS and I told you quarter. Some March around that and then we will see whether it's 9 months, whether it's 10 months or whatever it is. So the M and A impact quarter is bigger than you assume.
So really, it depends, but Could potentially be that our secular growth, yes, obviously, is 5%. The M and A contribution could be in the range of 7%. So as a quarter. We see some cyclical headwind of 3%. So that is one way to look at that.
But quarter. So obviously, from a cyclical perspective, it's not flattish. We expect some headwind. And again, the headwind comes from quarter. The Clearstream NII from EUR 100,000,000 to EUR 60,000,000 and also the comparison around Eurex and Xetra is very quarter performance from a cyclical perspective in 2020.
With regard to your second question around clearing and different asset classes, quarter. Yes. OTC clearing interest rate swap was what we started, but we have also quarter partnership agreement around our repo business. So that's obviously where we expect quarter to see comparable growth rates here. And obviously, we are always in discussion with this market quarter.
There is a need to support here customer demand. Quarter.
Our next question comes from Martin Price, Jefferies. Please go ahead. Your line is now open.
Quarter. Hi, good afternoon. Just two quick questions for me, please. The first on EEX. I was just wondering if you could provide an update on plans for expansion outside the core markets in Europe and North America.
It looks like the offering in Japan is off to a good start. Quarter. Is that like to be the focus this year in terms of new markets? Or do you have other geographies on the radar there too?
Quarter. And then the second
one is on Eurex cash margin fees. The Q4 run rate was still fairly elevated. I was just wondering if you could provide some guidance Okay. With regard to your questions
about EEX, Okay. With regard to your questions about EEX, yes, you mentioned Japan. Obviously, that will be opportunity quarter. For us, it's a market now asked to help here. So it has some kind of deregulation.
But again, Japan is 10 years behind quarter. But nevertheless, it's an opportunity for us. And we also quarter. We have taken a lower single digit €1,000,000 out of that in 2021. So it will be not be significant quarter.
For 2021, but obviously, there's big opportunities because markets developed over 3, 4, 5 years. And if you miss the entry point, then you have no chance to benefit from that. Quarter. Therefore, Japan is very interesting for us. And hopefully, we will see good opportunities here.
Quarter. And that's also true for other markets as our ambition is clearly to be a global provider. Quarter. On top of Europe, we are also this model also could represent it in the U. S.
Market. Quarter. And we will continue to enforce our activities here. But also, solvenil could be of interest for us, But it's comparable with Japan, so markets have to deregulate. And if there are some need and some help that we quarter and support.
We are obviously open for that. But again, you should not expect big or significant or material impact out of this quarter. Our strategy for Europe and U. S, but it's strategically important. And maybe 3, 4, 5 years later, it could be significant for quarter.
Your second question, very detailed question on EURH cash margins. So obviously, And that was also influenced by some COVID related elements here As we have cash margins of more than €100,000,000,000 on the highest level, currently, it's below 70 quarter €1,000,000,000 So obviously, a significant decrease. And as this is the basis where we charge 10, 15 or 20 basis quarter for that on cash and on our securities. So in principle, quarter. And then you would expect that the margin level is lower than previous year, then this should be also a little bit lower.
Quarter. That's helpful. Thanks, Gregor.
Our last question comes from Karl Voie, KBW. Please go ahead. Your line is now quarter.
Hi, thanks for taking my questions. Maybe just two questions. First on quarter. Just the 5% secular growth. I'm wondering how much of that you expect to be related to pricing increases in 2021?
Quarter. And for Eurex specifically, are you contemplating any targeted pricing changes that could help revenue capture in the future's derivatives business? Quarter. Second question is just also related to Eurex. But in the U.
S, you've seen very quarter. From micro products and smaller sized products with growth in retail. Just curious, do you think there's demand for something similar in Europe quarter. You're contemplating any new product launches in that segment to really address the growth in retail that we've talked about in this quarter.
Yes, Kai. Thanks for the question. So The 5% secular growth, so what is the pricing component? That's basically your question. So Our focus is really to gain market share, to gain liquidity and focus is not so on pricing.
Quarter. Some competitors or other trading venues have a different view here, but our view and our focus is really to quarter. We have very attractive margins for our customers. And so as a consequence, the more liquidity you have, the more attractive is the offer. Nevertheless, we constantly review our products, our portfolio.
And in the past, we had some roughly 1% quarter. Out of this 5% to 6% secular growth was pricing related, right? So therefore, when we introduced some cash quarter securities, collateral fees, some rebate schemes. So we look at all of these things, but really focus is on getting additional liquidity and market shares. Your second question with regard to these micro contracts, quarter and what is basically strongly related to the retail business.
Yes, we look at that and And also we would consider to launch comparable products, but the impact wouldn't be as high as in other markets quarter because our retail contribution in Europe is much lower compared to the U. S. Market. But nevertheless, we are in discussions with market participants and also very open to launch that kind of product. Quarter.
But it's not our way to look at that, that we blow up our current our statistics around contracted numbers, right? So quarter. That's obviously, you can do very, very good because with this micro context, you earn much, much less compared quarter to the other contract. But if there is a market there, if there is a demand there, what we can support, obviously, we would consider to do that, quarter. That's obviously lower impact than in U.
S.
Excellent. This concludes our call today. Thank you very much for your participation, and we wish you a good day. Thank you.