Welcome to the Deutsche Börse Group analyst and investor conference call, Q3 2026. Today's presentation will be followed by a Q&A session. For those of you who have joined the Zoom webinar, you can use the raise hand function at the bottom of your Zoom screen at any time to join the queue to ask a question, and you will be called upon during the Q&A session. If you want to withdraw your question, please use the raise hand function again to lower your hand. Please limit yourself to one question only. If you have further questions, please use the raise hand function to rejoin the queue. Let me now turn the floor over to Mr. Jan Strecker.
Welcome, ladies and gentlemen, and thank you for joining us today to review our financial results for the third quarter 2026. Present on today's call are Stephan Leithner, our Chief Executive Officer, and Jens Schulte, our Chief Financial Officer. Stephan and Jens will take you through the presentation, and following their remarks, we will open the line for your questions. The presentation materials have been distributed via email and are also available on our investor relation website. The call is being recorded, and a replay will be made available shortly after the conclusion of today's session. With that, let me now hand over to you, Stephan.
Thank you, Jan, and welcome everyone. Q3 was a further proof point both on operational delivery and on strategic direction. The quarter's financials confirm the momentum of our business and support another upgrade to our full-year outlook. Three things for me personally stood out. SimCorp returned to double-digit growth, commodities recovered after the Q2 normalization, and the treasury result grew year-over-year for the first time since 2024. That combination gives us confidence to raise our guidance for the second time this year. Let me take you through four points and then add two strategic updates on Europe and digital assets. The first highlight I would like to make is the growth accelerated and the quality of growth remained strong. Net revenue without the treasury result grew 14% in the third quarter compared with 9% in Q2. Six of our eight businesses delivered double-digit growth.
I think this is a true testament to our portfolio. Importantly, this was not just a market-driven quarter. Around three-quarters of the growth, or more than 10 percentage points, was driven by underlying business fundamentals. The buy-side transformation, the euro fixed income ecosystem, fund outsourcing, collateral management, and the continued increase in demand for capital markets infrastructure.
That said, we also benefited from a supportive cyclical backdrop, mainly the strong derivatives activity we saw in September, driven by synchronized rate hikes from the ECB and the Fed. So far, this supportive environment has continued into Q4. Why does this matter? Because it shows that the business can deliver high single-digit growth on its own and can move clearly into double digits when the market conditions are supportive. Let me also directly address the three Q2 topics some of you raised. In software solutions, net revenue growth amounted to 10%.
The first component of the tier 1 EMEA client expansion that moved from Q2 to Q3 has now been signed. The Q2 slowdown was timing, not a change in momentum. We are seeing questions on ARR growth, and Jens Schulte will address those heads-on later on. In commodities, net revenue recovered to 11% growth after the Q2 normalization. In addition to the market environment, the underlying drivers, namely electrification, data center demand, the energy transition, the shift of OTC activity onto exchanges, and our expansion in Japan, are all playing out as expected. The third point, as I said earlier, the treasury result grew 7% year-over-year. That is the first year-over-year growth since 2024. We have been signaling this inflection for several quarters. It is now visible in the numbers. For the first nine months, total net revenue reached EUR 4.9 billion.
That is around 75% of our upgraded full-year target. This is consistent delivery across the portfolio. The second highlight I would like to make is the strongest growth came from the areas where we have been investing for years. Financial derivatives grew an exceptional 30%. In addition to the cyclical tailwinds in fixed income, the euro yield curve ecosystem continues to deepen. OTC clearing made further progress in client onboarding and activation, and the changed terms of our partnership program are improving the revenue quality of our OTC clearing business and supports the growth plan over the next quarters. With this, our fixed income business is on track to outperform the 2026 aspiration we set at our Investor Day in November 2023, an ambition that was met with some skepticism at the time.
What is particularly encouraging is that almost 60% of the fixed income growth we expected this year is secular in nature. The remaining 40% reflect a more volatile fixed income market environment and rising levels of debt outstanding, both of which were always also part of our thesis. Looking ahead, we see no reason why this elevated level of fixed income volatility should not continue into 2027. Among our investments, funds has been a big part, and fund services delivered 18% growth in Q3, accelerating from 14% level in Q1 and Q2. Outsourcing and the shift towards capital markets-based retirement savings continue to reinforce each other. On Allfunds, the regulatory work streams are progressing well. We continue to engage constructively with the European Commission and expect to end the pre-notification period and formally file in the near term.
Other regulatory approvals are advancing as planned, and completion in the first half of 2027 remains, from our standpoint, on track. The rationale for Allfunds is unchanged. Clearstream and Allfunds largely operate in different parts of the fund value chain with complementary geographies and client bases. This is also fully aligned with the European Savings and Investment Union agenda, which needs exactly this kind of cross-border fund infrastructure. Security services grew 10% in Q3, year-to-date 14%. Growth continues to benefit from fixed income issuance, retail participation, and collateral management. After the very strong first half, this is a healthy and sustainable growth level. Last on ISS STOXX, Ginny Gomez has moved quickly since taking over the CEO role in August. While there will be some restructuring to reflect the current environment, the focus is on executing the AI roadmap and reviewing the product portfolio.
The aim remains to position ISS STOXX for the next phase of growth within the framework we set out at the Capital Markets Day a year ago. My third highlight I would like to emphasize is the margins continue to expand. For the first nine months, EBITDA growth without treasury results reached 17%, and the overall EBITDA margin stood at 61% at the end of Q3. On costs, the headline increase in Q3 was 7%. The main driver was share-based compensation, a phasing effect linked to share price development. For the full year, we continue to expect operating cost growth of around 3%, excluding Allfunds-related exceptional costs. Jens will provide the bridge in more detail. The fourth and final highlight I would like to make is we are raising our guidance again. The core business is slightly ahead of the original plan.
We confirm our guidance for net revenue without treasury results, though based on the development in the first nine months, we see potential to slightly exceed this level. The treasury result is now expected to exceed EUR 0.8 billion, and as a result, total net revenue is now expected to exceed EUR 6.5 billion. This is the second guidance upgrade this year. It reflects three quarters of delivery, resilient growth in core business, expanding margins, and a treasury result that is now contributing to growth again. Let me close with two broader strategic updates. The first is Europe. The move from Capital Markets Union to the Savings and Investments Union is more than a change in terminology. It puts investors and investments at the center of Europe's capital market strategy.
The objective is clear: mobilize private capital at scale, reduce dependence on bank intermediation and public funding, and help finance Europe's innovation and growth agenda. The opportunity is large. EU households hold around EUR 35 trillion in financial assets, with around EUR 10 trillion still in bank deposits. Equity ownership remains far below the U.S. level. Even a modest shift from deposits into capital markets products would create a very large pool of long-term investment capital. We now see policy momentum from the bottom up to exactly support this. France has the PEA, which channels retail savings into domestic equities. Italy has the PIR, a tax advantage wrapper for long-term capital markets investment. Austria, my home country, just yesterday introduced the Zukunftsdepot, a tax-exempt securities account to build capital markets-based wealth for children from birth.
Poland, a year ago, has expanded its PPK system, enrolling millions of workers into capital markets-based workplace pension schemes. Now the big news and the big hype for the moment is around Germany, as Germany is moving forward with the Altersvorsorgedepot and the Frühstart-Rente, a similarly support system from children at birth or after six years. Adding a capital market-based component to both private and state pensions is a major step for Germany. Further national initiatives are being discussed. This is how change starts in Europe. Member states create working models, and then the EU framework begins to align around it. We are very optimistic. For us, this is directly relevant. More big institutional retirement funds and retail participation means deeper markets, more fund activity, more demand for data, trading, clearing, settlement.
It supports the full investment life cycle, exactly the space we are building out through our strategy Leading the Transformation. The second update I would like to give is around digital assets. Here as well, the move from concept to live market infrastructure is becoming more tangible. The ECB's recently launched Pontes initiative is an important building block. As a wholesale digital central bank currency, Pontes provides the digital cash leg that connects directly into Clearstream's digital securities infrastructure. This enables true delivery versus payment in central bank money for DLT-based assets, closing the gap institutional markets need before tokenization can scale. What gives us particular confidence is that we now have major sovereign governments and European supranational institutions in our pipeline as fully sized issuers. Not pilots, but real production use of our infrastructure. Luxembourg kicked it off just last week.
Beyond Clearstream, the Kraken partnership continues to develop across collateral management, stable coin connectivity, and tokenized asset distribution. MiCA and the broader European regulatory framework play to our strengths. Clients want digital innovation, but they want it inside of trusted, regulated infrastructure. That is where we intend to be leading. Let me conclude. We delivered 14% growth, upgraded guidance for the second time, and the pipeline is strong heading into Q4. The trajectory we laid out in the Capital Markets Day is intact, and it is accelerating. With that, let me hand it over to you, Jens.
Yes. Thank you, Stephan, and welcome everyone. Let me take you through the numbers and start with the nine-month overview on page 2. Net revenue without the treasury result grew 12% across the first nine months, driven by broad-based momentum across all four segments. What stands out is the quality of this growth. EBITDA without the treasury result grew 17%, five percentage points ahead of revenue, and the EBITDA margin expanded to 61%. Three quarters in, the operating leverage story is no longer a promise. It is in the numbers. Operating costs for the nine months increased by 5%. This includes approximately EUR 23 million of exceptional costs related to the Allfunds acquisition and an increase in share-based compensation linked to the strong development of our share price. Excluding these effects, underlying cost growth is in line with our guidance of 3%.
Net profit attributable to Deutsche Börse shareholders increased 14% to EUR 1.7 billion. Cash EPS also grew 14% to approximately EUR 10. Turning to page 3, the Q3 standalone view. Net revenue without the treasury results grew 14% with six of our eight businesses delivering double-digit growth. As Stephan noted, approximately three-quarters of this growth was structural in nature, which we regard as a particularly strong outcome. The treasury result reached EUR 218 million, up 7% year-over-year.
This confirms the inflection we have been signaling. As a result, total net revenue growth reached 13%. Operating costs increased by 7% to EUR 646 million. The headline number requires context. The main driver was a EUR 22 million year-over-year increase in share-based compensation. This is a phasing effect linked to the strong share price development in Q3 against a comparatively weak Q3 last year. It is not an underlying cost increase.
In addition, the quarter included EUR 4 million of Allfunds related exceptional costs. Excluding these effects, underlying operating cost growth was 3%, driven by inflation and targeted investments. The result from financial investments reflects a negative valuation effect in investment management solutions, which I will come to in a moment. This effect is partly offset by a mark-to-market gain in trading and clearing. Altogether, these effects result in a negative exceptional effect of EUR 9 million. EBITDA without the treasury result grew 19%. Including the treasury result, EBITDA reached EUR 978 million. The financial result was negative EUR 47 million compared with negative EUR 40 million in the prior year. This increase mainly reflects the senior bond issued earlier this year and the hybrid as well as the convertible bonds issued in September. All in, cash EPS increased 18% to EUR 3.28.
Now, let me turn to the segments, starting with investment management solutions on page 4. Software solutions delivered 10% net revenue growth to EUR 173 million, in line with our expectations. SaaS net revenue grew 13%, while on-premise grew 11%. The ARR reached EUR 727 million, up 13% in constant currency or 15% on a reported basis within our guided corridor of 13%-18%. The slightly lower ARR is also the result of a stronger euro. Growth remains broader based than in 2025, with close to 30 new client and expansion deals signed year to date. In Q3, approximately 45% of the ARR growth was driven by new clients and approximately 55% by the expansion of existing relationships. Regionally, APAC contributed 25% and the Americas 22% ARR growth.
For the full year, we continue to expect approximately 10% net revenue growth for software solutions, supported by a strong pipeline and continued momentum. In ESG and index, net revenue grew 4%. As part of that, index net revenue grew 16%, driven by growth in ETF licensees and other licensees, which now also includes the contribution from the recently acquired Scientific Beta business. ESG was broadly stable overall, reflecting a combination of stable governance solutions, a 7% net revenue increase in ESG analytics, and a small decline in corporate solutions. Market intelligence continued to decline at a mid-single-digit rate. Segment EBITDA declined to EUR 88 million. Two factors drove this. First, a negative result from financial investments of EUR 18 million related to a valuation effect of our minority investment in Clarity AI, which now has been sold to Glass Lewis.
Second, operating costs in the segment increased 16% in Q3, which was driven by higher legal costs in the ISS STOXX business, the consolidation of the recently acquired Scientific Beta business, and intra-year cost phasing and software solutions. On a year-to-date basis, segment cost growth of 6% is broadly in line with our expectations. Turning to page 5, trading and clearing. The segment delivered an outstanding quarter. Net revenue without the treasury result grew 19% to EUR 652 million. EBITDA without the treasury results surged 36%, the strongest operating leverage of any segment. The main reason for the significant increase is operational. However, I would note that the cost line benefited from a low double-digit one-time non-deductible VAT effect in the quarter. Financial derivatives was again the standout performer, with net revenue up 30% to EUR 357 million, the strongest quarterly growth rate since 2022.
Within derivatives, equity and index grew a solid 18%. Fixed income derivatives grew 48% to a new record of EUR 181 million net revenue. This performance was driven by both secular and cyclical factors. On the secular side, the deepening of our euro yield curve ecosystem continued, with all three pillars contributing strongly. OTC clearing benefited from further client activation, with a number of onboarded clients reaching 2,600, an activation rate of 20%, and more than 90 EU buy-side clients activated in 2026. We also saw activated clients scale their activity beyond regulatory minimums, taking advantage of our strong value proposition. Notional outstanding crossed EUR 60 trillion for the first time, up 25%, bringing our market share in euro-denominated OTC clearing products to 24%. Repo outstandings remained at record levels.
Prisma, our new portfolio risk margin methodology launched in May, is already delivering billions of funding efficiencies to clients and is increasing the attractiveness of the product. On short-term interest rate derivatives, we committed at Q2 to review the approach after the summer. Activity levels remain solid, with trading volumes up 43% quarter-over-quarter and a 25% open interest market share in €STR. However, the active account requirement has not yet had the disruptive force needed to shift substantial exposure. We remain committed to this franchise but are adjusting our investments to a commercially more sustainable level. The amended framework, effective from November, will have a positive net revenue impact of approximately EUR 10 million in 2027. On the cyclical side, the synchronized rate hikes in September provided a meaningful tailwind for interest rate products, helping to drive fixed income derivatives volumes to our highest level ever.
Commodities recovered to 11% net revenue growth after the normalization in Q2, supported by strong power derivatives volumes with 25% growth, improving European power spot markets, and continued strong momentum in Japan, where EEX extended order book trading to fully cover Asian Pacific business hours in September. Cash equities net revenue grew 3%, with seasonally slower activity and a lower single-digit million one-off effect in infrastructure last year. FX and digital assets net revenue grew 13%, driven by continued FX client wins and market share gains. The treasury results in trading and clearing grew 7% to EUR 62 million. This was driven by an increase in commodities, where margin fees rose due to heightened market uncertainty. This was partly offset by a decline in financial derivatives, where higher netting efficiency reduced margin fee income.
Moving to fund services on page 6, net revenue without the treasury result grew 18% to EUR 144 million. EBITDA without the treasury result grew 26%. Fund processing revenue grew 19%, fueled by record levels of assets under custody, which crossed EUR 5.2 trillion, and strong settlement activity. Fund distribution revenue also grew 19%, reaching a new record quarter, supported by a continued increase in assets under distribution, which amounted to approximately EUR 950 billion. This is now the third consecutive quarter of mid- to high teens growth, which reflects outsourcing trends, capital markets-based retirement savings, and equity index levels. Now turning to security services on page 7. Security services delivered another strong performance. Net revenue without the treasury result grew 10% to EUR 288 million. EBITDA without the treasury result increased 14%.
The growth was driven by record levels of assets under custody, reaching almost EUR 18 trillion, driven mainly by international debt issuance. Within custody, collateral management revenues grew 22% to EUR 34 million, reflecting the continued increase in demand for collateral optimization services. Collateral management outstandings remain solidly above the EUR 1 trillion mark. Settlement revenues grew 19%, despite a 10% decline in settlement transactions. The decline in transaction volumes is mainly due to a reallocation of ICSD transactions to the CSD team in the context of the return of the banking license in our domestic business. The treasury result in security services grew 7% year-over-year to EUR 140 million, mainly driven by higher cash balances. Finally, let me conclude with our updated outlook on page 8. As Stephan outlined, we are raising our full year guidance for the second time this year.
Let me confirm the numbers. For net revenue without the treasury result, we confirm our guidance of approximately EUR 5.7 billion. Based on the trajectory of the first nine months, we see potential to slightly exceed this level. Our own expectation, which is consistent with the current sell side consensus, is right between EUR 5.7 billion and EUR 5.8 billion. EBITDA, excluding the treasury results, are still expected to be around EUR 3.1 billion.
I would point out that this figure includes the exceptional costs related to Allfunds that we expect in 2026 and that were not part of the original guidance. After adjusting for these costs, the underlying EBITDA trajectory has also improved. The treasury result is now expected to exceed EUR 0.8 billion, upgraded from our more than EUR 0.7 billion before. This reflects the Fed and ECB rate path and higher than expected cash balances.
Accordingly, total net revenue is now expected to exceed EUR 6.5 billion, and total EBITDA is expected to reach approximately EUR 3.9 billion. Operating cost growth remains at approximately 3%, excluding the Allfunds related exceptional costs. To sum up, double-digit growth, expanding margins, treasury turning positive, and guidance raised for the second time. We are delivering. That concludes our presentation. We look forward to your questions.
Ladies and gentlemen, we will now begin our Q&A session. For those of you who have joined the Zoom webinar, if you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once called upon, please unmute your audio and ask your question. Please limit yourself to one question only. If you have further questions, please use the raise hand function to rejoin the queue. Our first question comes from Benjamin Goy at Deutsche Bank. Please unmute your line and ask your question.
Yes. Hi, good afternoon. Can you hear me?
Loud and clear.
Perfect. Also the new system seems to work. Thank you then. With SimCorp, one question. Thanks for reiterating the full year guidance, but just to double-check on that, given last year you had a strong Q4, it might have been the largest company win or the largest contract win in SimCorp's history. Just maybe you can talk a bit more about the pipeline going into Q4 and why it makes you confident to improve slightly your nine-month run rate towards the full year. Thank you.
Thanks, Benjamin, for the question, and focusing back in on SimCorp. Into Q4, indeed, the last year was very strong. It's part of the business nature, as we have said over the last few years. That hasn't really changed in that sense, as we have a very high pipeline expectation into Q4, despite many of our clients now signing up earlier. In this context, the client that has been driving the move between Q2 and Q3, we still have a material add-on and upsell part of that, and then it's a very broad-based pipeline that goes into Q4. We are very confident. But thanks for reminding us also how demanding it's going to be. We share that, but we are very confident. We see good progress. These situations are deep in discussions. These are not things that are on an ideal list.
This is all deep in discussions, and therefore it is often the timing, but we feel comfortable.
Thank you.
Thank you. Your next question comes from Arnaud Giblat with BNP Paribas. Please unmute your line and ask your question. Your line is now open.
Thank you. Good afternoon. I have got my questions on OTC clearing. Clearly, very significant growth year-over-year. I was just wondering if you could give us a bit more in terms of what quantum that represents. Looking for a split between the derivatives business and the repo business. Secondly, could you discuss a bit more detail the building blocks behind this boost? You did talk about some on the call, but just wondering if you could try and qualify whether it is the onboarding or the potential for end clients to trade more that is driving this, or what are the key drivers, and how sustainable is this going to the future? How do we think about the next two years playing out here? Thank you.
First of all, on the first part of your question, OTC clearing growth, as you know, it's part of the overall fixed income roadmap. We've been growing all elements, but OTC clearing has indeed also been growing by 40%, even ahead of volumes. It has a couple of effects in here that we also flagged over Q2 already. One was the fact that we have a tendency or let's say some trend towards non-packaged deals and engaging more buy-side clients in the game, and that actually helps us overall on less netting of deals before that. Second one is we had adjusted our partnership program terms a bit. That also generated some additional growth, and then the rest is really underlying growth of the franchise, if you wish. I would say that that's on OTC clearing. And second part of the question?
Repo business, similar. It's broadly EUR 100 million business. It benefits from the environment, so more demand for collateralized money market transactions. This is really largely structural in nature from our point of view.
Mike.
Thank you. Your next question comes from Michael Werner at UBS. Please unmute your audio and ask your question.
Thank you very much, and congrats on the results. A quick question, if you don't mind. We've seen you've raised guidance twice this year. You've indicated that the strength in terms of activity has continued into Q4. That means you're generating essentially more cash this year. How do you think about that in terms of flexibility, in terms of potential shareholder returns as we look out over the next six months or so? Thank you.
Yeah. Thank you for the question. Indeed, business performance is good, cash flow generation is also good. We will consider that when we dimension the dividend and also the share buybacks, of course, going into next year. As you know, our dividend policy in any case is already to gradually increase DPS over the years. You also know what our current step width is. That is something that we will consider and that also plays into that. Share buybacks, as we said, despite the fact that we are probably closing Allfunds, as we said, in the first half of next year, we will still nevertheless do share buybacks. As I said, we will dimension those share buybacks once we run into the beginning of next year. You are absolutely right, we will certainly consider the increased cash flow performance.
Thank you.
Our next question comes from Grace Dargan with Barclays. Please unmute your line.
Hi. Good afternoon. Thank you for taking my question. Maybe if I could just come back on SimCorp, but think more into 2027 and 2028, kind of ignoring the accounting change. How should we be thinking about the pipeline there? You have obviously seen a decline in ARR this year. Are those challenges still continuing? Or should we be thinking more about an underlying acceleration? I guess, how should we think about that growth in the U.S., your expansion, et cetera? Thank you.
Thanks a lot for the question around that, Grace. I don't think we see a change to what we observe right now, not meaning in a deceleration. That's more effect quarter by quarter that we have seen, which I think is in the context of the overall very good results, this gets highlighted. We don't see that as a slowdown at all. The 13% is this quarter. We will return to our normal pattern that we set before. I think you see that also in looking at our guidance out to 2028. We feel comfortable to have a continued strong momentum, and that will be made more visible, more reliable, after the accounting change that we're planning for the end of the year.
Understood. Thank you.
Our next question comes from Hubert Lam with Bank of America. Please unmute your line and go ahead.
Hi. Good afternoon. Just got one question. It seems like the ESG has finally stabilized this quarter. Just wondering from your point of view, has it bottomed, or how should we think about this going forward? Thank you.
Yeah. Overall, I would say the business is performing very well, and the underlying structural drivers, as we always said also in that business, are still intact. We still see that trend towards outsourcing in that industry, and still, as we're always confirming, we have a very stable client base that also is fully with us. Yeah. So, we would believe that stable momentum we will keep up, and then we gradually, as we said, work our way through the regulatory scrutiny situation. But yes, it's a good momentum in that business also considering the situation that we're in.
Thanks.
Our next question comes from Enrico Bolzoni with JP Morgan. Please unmute your audio and go ahead.
Yes, good afternoon. Thank you for taking my question and for the presentation. I had one on the German pension reform. Can you perhaps provide some additional color on what sort of actions you have taken or implemented to benefit from the various tailwinds that I suspect will come from this initiative? And I think about more trading, more retail trading, but also more custody, more settlements. So clearly your business might be impacted on multiple levels. So what have you done? How have you positioned the business, and what should we think in terms of timeline of these benefits materializing in your P&L? Thank you.
Thank you very much, Enrico. A question where I clearly need to be careful to not be too long in the answer because it truly penetrates across, and as I mentioned in my introductory remarks, this isn't only about Germany. It's very exciting to see Germany as the biggest economy really doing that and going through a paradigm change. But specifically to your question, we have prepared on a number of fronts. One is in the more narrow trading environment. If you just take our Xetra, we've tailored the offering on the exchange to the retail market. We've really emphasized very strongly the position on the ETF side. We have crossed 3,000 ETFs. We have the biggest ETF venue in Europe, far beyond on the continent, anywhere else is the case. That's an important part that feeds from that.
It goes more broadly, clearly from our side, that STOXX is the European brand on the index side. Much of this will happen in passive or semi-passive, if I call many of those active ETFs, in reality, are still heavily relying on indices. We feel well-positioned with a strong set of partners on the asset management on the issuer side. Then it really goes from there through the entire value chain, as you have outlined, and that's on the fund side in particular. It's a good reason why the fund distribution is so much at the core of our strategy. With Allfunds, one more time, we will not just cover this in Germany, but as I alluded to earlier, a number of the European markets where traditional Allfunds is strong are equally introducing new instruments. Again, Spain one of them, just two or three weeks ago.
I think it just shows that that system as a fund distribution will benefit in Germany and across Europe. Last but not least, all of that needs to be custodied, which isn't the case when we talk about cash deposits or bank deposits. We don't see any of those, obviously, from retail customers. The volume growth that you see in our funds business as well as in our domestic CSD business is very much supported by that. So I think it's a unique event in a way, across the value chain, which has many years to run.
Thank you. Our next question comes from Russell Quelch at Morgan Stanley. Please go ahead with your question.
Yeah, thanks for moving me on. You've maintained approximately 3% underlying cost growth for 2026 despite double-digit revenue growth. So just wondering how sustainable this level of cost discipline is into 2027, particularly given the inflationary pressures we're seeing on wage growth and technology, and then obviously you have the integration spending as well. Should we expect to see a similar degree of operating leverage next year? If I could just follow up on your opening remarks where you said there was a need for European capital markets infrastructure consolidation. I'm wondering, what are the main areas, beyond Allfunds obviously, where you see an opportunity to continue to play a part? Is it on the listing side or the exchange side, the CSD side? That would be appreciated. Thanks.
Sure. Thank you very much for the question. I take the first one on the opex side. Yes, we do confirm that for this year, and we will come out with a guidance for next year at the beginning of the year. But as we said, as part of our Leading the Transformation Capital Markets Day in December, we are confident to achieve that throughout the whole strategic period.
Right? As I said initially, of course, that is excluding Allfunds-related transaction, and also later on, integration costs, of course. But, apart from that, the whole model is actually generating enough productivity, right? First of all, it's a scalable business model with platform businesses, software as a service businesses that actually scale by nature. Second, we have a global footprint that we can very much benefit on and even still work on. Third, we can further basically scale the corporate center.
Last, also, AI and digitalization create additional efficiencies. Yes, of course, that is a lot of work. Such a productivity doesn't come by itself. But yes, we're confident to continue with that. With that, on the second question.
With respect to the European integration initiatives, they are widely affecting our system in virtually every one of our businesses. But let me try a bit more specific to give you some context, just out of the regulatory change that we expect and see. Big dynamics is around the on- and off-exchange dynamics. We've often talked about the undersized regulated market activity in Europe versus the off-exchange trading activities in dark pools and systematic internaliser. There's clearly going to come a shift on that, in the sense that the European political environment has understood that one of the reasons on the technical side for the bad IPO markets is that the transparent lit markets are not sufficiently developed at the expense of intransparent markets. We clearly see the integration possibility on the post-trade side.
Again, if I just emphasize that Clearstream is the only CSD that already today has a linkage into all the other CSDs in Europe. So we can offer Europe already on a flawless basis. This will be made much easier with what we now see coming. Last but not least, what is coming as part of that European integration package on the regulatory side is a further emphasis around the digital products, the DLT products. As I mentioned so often, we have been continuously investing for years now. These are not efforts that are caught up in a quarter or two. We have been the first one, and we will continue to be through Q4, the first ones to be the partners of choice for issuance of European supranationals and states into DLT at size. So the Luxembourg issue a week ago was EUR 1.7 billion.
We're not anymore talking on those test cases. I think those just shows you across those three areas. Again, I won't go over the fund story again, which I believe is a major driver. But from a pure regulatory change dynamics, you see it in the cash markets, you see it on the integration side when it comes to the CSDs, as I alluded.
Great. Thanks.
Our next question comes from the line of Tobias Lukesch at Kepler Cheuvreux. Please unmute your line and go ahead.
Yeah. Thank you. Stephan, you just elaborated on the DLT products. I was just wondering, with the size definitely increasing, how much of an incremental benefit will that be over the next one to three years, obviously being exponential here. How should we think about cannibalization with the current product setup? Thank you.
What we have seen in the first markets where we have introduced fully digitized products, for example, in the German retail structured product market, it is a bit the effect that we all have seen personally when we started to move on to text messages. It is not as though we use less of them. There is an exponential growth almost. I expect in many ways that the higher flexibility, the instant settlement.
Let us go back. That is the main contribution which the ECB has taken live just last week. We see in many ways, we will see much more atomic or smaller scale issuance activity in established issuance programs. All of that will, in our view, support the higher volume creation over time. Therefore, yes, Luxembourg last week issued a DLT bond and did not issue a traditional one. But fee-wise, that is not worse for us.
On the other side, it will result in much more activity that we expect.
Thank you.
Thank you. Our next question comes from Cara Thomson at Rothschild & Co Redburn. Please unmute your line and ask your question.
Hi, thanks for taking my question. Stephan, you talked about being involved in the Pontes pilot and just now the opportunity with blockchain-based settlement. Do you think the market is going to move to atomic settlement given the removal of netting benefits? Can you talk about what this shift might mean for Clearstream's treasury income? Thanks.
I do think we will continue to see quite some activity in that direction. I think the way we look at our treasury results and what we have seen also in the volumes is that it has proven very sticky and stable. I think this is not something that we see short-term any changes to.
Thank you. Your next question comes from Ben Bathurst at RBC Capital Markets. Please unmute your audio and go ahead with your question.
Good afternoon. My question is on the treasury results. Clearly, you've called the inflection there, but what should we be expecting looking forward from here, do you think? Given what we're seeing in terms of the prevailing environment, should we be expecting further growth in Q4? How comfortable are you that consensus is expecting growth year-over-year in 2027 from the treasury result? Thanks.
Yeah. Thank you for the question. Our midterm guidance that we brought out as part of the Capital Markets Day in December was such that we, as I said, we expect this inflection point to happen towards the end of this year. This has now happened a bit earlier, and from there, we essentially forecasted the overall treasury result by and large stable. It has several components to it, as you know. It also has a margin component to it, and margins we would expect to continuously go further down on the clearing side simply because of further clearing efficiency. There is a bit of a trend in the one direction. Then on the other hand, we have slightly increasing cash balances along the business growth, and then interest rates do what interest rates do here.
Overall, our guidance, as part of the Capital Markets Day, has been relatively stable from where we will finish this year, essentially.
Thank you.
Thank you. Our next question comes from Thomas Mills with Jefferies. Please go ahead.
Oh, hi. Good afternoon. I was intrigued to get your thoughts on the Tradeweb, Trumid deal. I guess you guys have got a small stake in Trumid, so you maybe get to book again there, which is nice. But I was kind of interested if, had you not been doing the Allfunds deal, whether that might have been an asset that you could have looked more carefully at adding, because it's kind of a gap in what you're currently offering, or do you feel like that's a space that you don't have the right to compete in? Just intrigued how you're thinking about that whole ecosystem. Thank you.
Thanks a lot, Tom. Trumid has been a great investment, or just to highlight, we have been partnering with them and in part of the share register since a number of years. It is just for clarity of those looking in our accounting. It doesn't affect the P&L. It's booked because of the small size of the stake. It's booked in our OCI, so it's a capital gain, but outside of the P&L, that's important. I think it is clearly in an attractive market. If I look at this in simplest terms, I think Allfunds in my last recollection is around EUR 600 million in revenues and is providing a EUR 300 million EBITDA line. I think it's highly accretive in all we're doing. I think it simply is the superior transaction.
There's many other ideas that one can have, and you rightfully state they would love to see some more build-out of our fixed income side, also in the cash market. But I think there's no question that Allfunds at this point is the absolute best transaction. I remind of my earlier speeches around what's happening in Europe.
Thank you, Stephan.
Our next question comes from Oliver Carruthers at Goldman Sachs. Please go ahead with your question.
Hi there. Oliver Carruthers from Goldman Sachs. I have one question, please. You called out Japan as one of the areas that you are really excited about for EEX. When we look at that business, we have seen the EEX power derivatives volumes more than double last year in 2025. It has had lots of momentum this year as well. What is driving this, and how big is the addressable here? Taking a step back more from a strategic perspective, the fact that you have been able to build this Japanese market organically, what does it mean for the future globalization of this business? Thank you.
Yes. Thank you for the question. I take that. Basically, the business size of, or let us say the business potential of that, if you just think about how large the Japanese energy market is, it is actually bigger than the German energy market. That gives you a feeling of how big the potential profit pool in that area is. At the moment, we are still the only power exchange being really active on ground, and we are continuously basically converting OTC trade onto our exchange platform. It is a low double-digit million amount of business, but it is growing very rapidly. We see that that potential in the medium term is very significant. As I said, it is bigger than Germany, the underlying energy market, so should be good. Organically, absolutely.
The point is that we have built this business basically from Leipzig, based on the platform that we run here. We did not even need to very significantly build new platforms. We can actually scale across the existing platform, and that is also exactly the way that we look into potential other markets. As we have been transparent with on potential next market could be Brazil in the next one or two years, and then we take it from there. We are always looking at markets that are large energy markets, that have a certain structure, that have a certain level of regulation, some sensible price-forming mechanisms, and then we go into this based on the platforms that we have and try to convert it on exchange. There is a lot of further potential going into the future in that business.
Thank you.
For our final question of today, we return to Mike Werner at UBS. Please go ahead.
Thank you. For a second question, I wanted to ask regarding the digitalization, particularly of the fixed income assets as they are being issued on chain. Where do you see the opportunity in terms of. First of all, how are these used from a collateral perspective? Are they able to be used currently across most platforms throughout Europe? Ultimately, as collateral becomes increasingly digitalized, how does Deutsche Börse sit in that ecosystem and ultimately from the ability to benefit from that? Thank you.
Thanks, Mike. It is a good question and highlights the importance one more time for the steps that the ECB has been taking in terms of digital currency. These, since this June, are fully collateral usable with the ECB. That is the most important. Now then, you clearly also have in our own systems, they are fully usable, and more widely, there is no constraint. They are the same quality per se. There is the technically bookability in a way which all the collateral locations need to get ready. At this point, as I say, the key decisive factor is the usability with the ECB. In our own positioning, we see the collateral mobility as an important part. We have been working on that for a long time to make collateral within our own institutions more fungible, and that will remain a priority as we move forward.
Thank you.
Great. There are no further questions in the pipeline, so we would like to conclude today's call. Thank you very much for your participation and looking forward to seeing many of you on the roadshow next week in London. Thank you.