Earnings Call: Q1 2021

Apr 28, 2021

Earnings release

Good day, ladies and gentlemen, and welcome to the London Stock Exchange Group Quarter 1 Investor and Analyst Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session through the phone lines and instructions will follow at that time. I will now hand over to Paul Fraud to open the presentation. Go ahead, sir. Thank you very much. Good morning, everyone. Thank you for joining us. On the call are David Schwimmer, Group CEO and Anna Manns, Group CFO. In terms of the format, first of all, Anna will talk through our Q1 results in just a moment, And then we'll open up the lines for Q and A. So just as a point of housekeeping, if you want to ask questions, then you need to be dialed in on the numbers provided in our release this morning. So with that, let me hand you over to Anna. Thanks, Paul, and good morning. I'm pleased to be here this morning to discuss our Q1 results. This is the first time we're reporting Alseg and Refinitiv as a combined group. And we've delivered good performance this quarter and made good progress on the integration of Refinitiv. But before I get started, I just wanted to remind everyone that as usual for our quarterly update, We've only disclosed income and cost of sales. We're not updating our financial targets, and they are unchanged. Our good performance in the quarter reinforces our continued confidence in their achievements. So let me turn to the results reported this morning. I'm going to focus on the pro form a results at constant currency and adjust this for the deferred revenue haircut This gives us a like for like comparison year on year and the best view of our underlying performance. Total income excluding recoveries rose 3.9 percent to 1,700,000,000 and gross profit was up 4% of $1,500,000,000 driven by new business and strong customer retention. In Data and Analytics, underlying revenue was up 4.7%, which is a strong performance. I'm going to unpack this for you by proposition. Trading and Banking Solutions fell by 2%. We saw good growth in Banking, offset by pressure in trading. We're pleased to see that the decline in trading has improved, And we saw good growth in our commodities, FX and Investment Banking offerings. This proposition will remain an area of focus in Investments, including the rollout of Apps of Workspace starting later this year. Enterprise data grew by 3.1%. It was driven by strong customer demand for our non real time pricing and reference service data. Enterprise data is on an improving growth trajectory. This reflects our ongoing investment in new datasets and growing market demand, more breadth and depth of data delivered by each. Investment Solutions, which contains our FTSE Russell business, grew 6.6%. This growth was underpinned by a pickup in subscriptions in FTSE Russell, which was up 8% and record ETF assets under management, which closed the quarter at €956,000,000,000 Wealth Solutions increased 4%. This reflects organic growth and the additional contribution from the Cy Vantage acquisition last year. Results were partly offset by The drop in the transaction related revenues of our beta business compared to the high trading volumes last year as a result of the pandemic related volatility. Finally, within Data and Analytics, the customer and third party risk business grew 34%. Part of this increase came from acquisitions of GX and RedFlag in the last quarter of last year and the remainder was strong organic growth, particularly in the entity screening business, WorldCheck. Moving on to Capital Markets. We're reporting here now by asset class, equities, FX and fixed income. Equity revenues were down 1.6%. We delivered good primary market performance with heightened IPO activity. Trading volumes in the secondary markets were lower against the strong prior year comparison, which benefited from COVID related volatility. FX trading revenues were down 6.3%, and this was a similar story to equities in relation to the strong prior year comparator. Finally, within Capital Markets, the Fixed Income Derivatives and Other segment delivered a 13% increase in revenues. Most of this line is driven by Tradeweb, and I'll release their Q1 update tomorrow. Tradeweb had a record quarter with over 1,000,000,000,000 dollars of average daily volume traded up 18% year on year. There was strong growth in the U. S. Government funds and European and U. S. Credit trading Volatility in those markets. Turning now to post trade business, where revenue growth was up 5.4%, excluding NTI. This was a resilient performance against strong figures last year. Total income fell 1%, reflecting the expected drop in NTI income. We split the post trade business into 4 revenue lines. This aligns with how we manage the business and gives better insight into some of the key revenue drivers such as non cash collateral. OTC derivatives revenue grew 1.1%, reflecting the resilience of Swat Clear. The large fall in overall notional cleared was offset by strength in client clearing volumes in March on longer dated swaps, This was driven by market volatility associated with the ongoing debate around potential reflation in Central Bank policy. Securities and reporting revenues grew 8.3%. There was strong growth in the euro denominated repo volumes as customers took advantage of balance sheet and settlement letting efficiencies provided by the service. Equity volumes continued to perform well, as a result of an increase in the average non cash collateral balances. The net treasury income or NTI was 16% lower, reflecting a strong prior year comparison. This quarter, the cash collateral balances and returns are at a more normalized level. Let me now touch on a few other areas. Our integration plans are being rolled out at pace. We've made a good start on synergies, having already achieved run rate cost savings of $40,000,000 This comes from immediate opportunities such as Headcount reduction and some property consolidation. I would not extrapolate this Q1 achievement as the ongoing run rate for the rest of the year. That said, we've made a really good start, and we're very confident of achieving our 25% run rate cost synergy target by the end of 2021. We've also made good progress on revenue synergies. These take longer to develop and to realize the benefit, I'm pleased that we started to build the foundation so quickly. We've launched 17 new or enhanced products as a direct result of the Refinitiv acquisition. And we're starting to cross sell our products, notably between FTSE vessel and our pricing and reference services clients. Some indices have already moved to our PRS data and other changes are in the pipeline. At the end of the Q1, we refinanced a significant proportion of the $8,000,000,000 bridge facility, which was drawn down at the We issued $5,000,000,000 in bonds, dollars 3,000,000 in euros, plus a range of maturities at historically low rates. The remainder of the bridge facility will be repaid from the proceeds from the divestment of Borsto Italiana. So having moved quickly, we're in a good financial position, and We're comfortably on track to achieve our target leverage ratio of 1 to 2 times within 24 months of the execution of the Refinitiv transaction. Finally, you'll have seen that we've announced an investor update on the 2nd July with a further event being planned for later in the year. We look forward to providing more insights on our business there and providing more information into our interim results in August. With that, I will pass to David. Thank you, Anna. I am particularly pleased with our results given the comparison to the strong Q1 in 2020 and the progress we're making. The integration of our people into one team is going well. We are seeing the benefits of the diversified global business of LSEG And our engagement with customers is benefiting from the increased opportunity set that we have. We delivered a good first quarter result. Integration is on track and going well, and we've made a strong start to realizing our target cost synergies. We Successfully refinanced the group at attractive low rates and are close to the divestment of CorSo Italia. So, as I said, I'm pleased with the progress and results so far. So let's now turn it over to Q and A. Operator, can you please open the line for our first question? Thank you. The first question comes from Philip Middleton from Bank of America. Please go ahead. Yes. Thank you both for that. Given that you both talked about increased confidence of realizing your targets and you're pleased with the results so far, I wonder if you could comment on a couple of things I keep being told. The first is that Refinitiv was not the business you thought you bought. When you unwrapped it, it wasn't the color you thought you clicked on, and therefore, you're frantically having to invest Deal with that, could you comment on that in the light of these results and commentary? And also presumably you're reaffirming your cost to achieve guidance, Which is not something that's been talked about a lot, but has to be in your cost base. So, could you comment on that one too, please? Sure. So, thanks for those questions. So, Refinitiv is exactly what we expected. We had done a lot of due diligence before We announced the transaction. We've done a lot of integration work before we closed the transaction and we're making good progress now that we've closed the transaction. And we are As excited, if not more excited now about the strategic transformation that this provides for Eltek. So, Feeling very good about that. Anna, do you want to take the cost to a few questions? Yes. So I'm Happy to reconfirm all of our targets that we'll deliver 3.50 or more of cost synergies and the cost to achieve will be 5.50 1,000,000 And I'm pleased that we're exactly where we expected to be at the end of the Q1. So far, we're well on track. Okay. Thanks very much. Thank you. Thank you. The next question comes from Andrew Coombs from Citi. Please go ahead. Yes. Good morning. 3 for me, please. Firstly, just to follow-up on Philip's question. There's obviously some confusion, I think, in the investor community on your investment spend guidance on the €1,000,000,000 that you outlined for this year. When you look at that number, I know you, obviously, haven't commented on today, you said focus more on revenues and on synergies. Perhaps you could just provide now that you've had 3 more months of insight, the breakdown there between Resilience, efficiency, growth and perhaps elaborate a bit more on how much is expected to occur Beyond this year versus not to repeat. That would be the first question. And second question is a more simple one. The acquisitions, Red Flag and GIACT and customer third party risk, could you just quantify the revenue contribution from those, please? And then finally, cost of sales, only up 1.7% year on year versus 3.7% increase in Revenues including recoveries, can you just give us a feel for what's driving the cost of sales? And should we expect that to continue to grow at a slower rate than the revenue line? Thank you. So taking those in order. So our guidance for the year is unchanged, which is mid single digit growth on a constant currency basis. And we've also guided to GBP 850,000,000 of CapEx. So nothing changed there. We're exactly where we expect to be. We're on track. At the full year, I talked everybody through that and just to sort of rephrase that a little bit. We've talked about an investment €1,000,000,000 which is €850,000,000 of CapEx and €150,000,000 of OpEx. On the CapEx, we've described run rate CapEx consistent with what the 2 groups spent previously of €650,000,000 or so €150,000,000 to €200,000,000 associated with Achieving the dispose of the quarter and delivering on the revenue and cost synergies of the Group. And we're exactly where we expect to be on those investments at this point. We talked about OpEx investment across a number of things, including resilience, efficiency and growth. And again, we're making those investments to improve our resilience. We're seeing we will see over time benefits in efficiency, And we're investing in the incremental sales people, incremental data sets that will support the sustained growth of the business. So that's just a quick recap on that. The cost of sales, I can't remember your So I'm not to give you the exact breakdown, but I'd So that the non acquisition related business grew Well, great double digit and with cost growth of that proposition. So that will allow you to size it. And cost of sales, so just to whip through that, Cost of sales don't relate directly to revenue, which is why you do see slight differences in MVMT. Just to give you some color, The data and analytics cost of sales includes things like the Thomson Reuters news agreement, some recovery, data recovery and things like that. And the things that don't fluctuate materially, there's been some small movement in the quarter, single digit million, And that's associated with some moves in beta cost and royalties. With respect to Capital Markets, again, it's a tiny number. Because it's a small number, a million move shows up. And really, what's Moving things there a little bit is that as we include Tradeweb, it's got slightly different margin. And with respect to post trade, It's the costs related to the OTC Services and NTI And it's associated with the share of SERC that's paid out to founder members. So as NTI has dropped, so has cost of sales in base trade. And you would expect to see that relationship continue. Thank you. That's helpful. Thank you. The next question comes from Mike Werner from UBS. Please go ahead. Thank you very much. Two questions for me and maybe a little bit of a follow-up. I was just wondering as well just with regards to kind of Red Flag GAC. Also maybe the contribution from Savantage within Wealth Solutions. Just trying to get down to more of a Organic growth rates, ex obviously your acquisition of Vicinitive. And then secondly, you indicated that your guidance hasn't Change in terms of cost as well as CapEx. But the €850,000,000 of CapEx, is that on a constant Rather than go into the detail by acquisition, maybe it would be helpful to say to you that the impact of the 3 acquisitions that Refinitiv made last year. On the data and analytics growth, it's about a point. And hopefully, that would just sort of help you with your last thing. Sorry, that's a point within data and analytics, 1 100 basis points within data? That's a point within data and analytics, therefore less And with respect to CapEx, those numbers were constant currency. Thank you. Thank you. The next question comes from Arnaud Jim Blatt from Exane BNP. Please go ahead. Yes. Good morning. I'm sorry, just to stay with cost, I think this is really where I want to mine for investors. I'll take I've got 3 questions here, if you could take them 1 by 1. My first question is just coming back to Your guidance, so €150,000,000 increase constant currency. You also indicated in Q4 that there was another 2% Growth thereafter, so that means on a growth basis sorry, on a gross basis, you're coming close to 10% increase in the cost base. And if I split it down, resilience efficiency and growth and I look at what's listed On Slide 15 in Q4, some of these items seem one off in nature or transitioning. I'm just wondering If these costs eventually fall away or if you've just given yourself more on your way to invest further down the line. So I think maybe we'll take your modeling offline because I don't recognize at all your 10% So maybe we can pick up on that one afterwards. If I may, I mean it's We're talking, I mean, call it, €120,000,000 €130,000,000 of synergies, net off. And you did indicate a 2% increase on costs roughly in 'twenty versus 'twenty one. So call it high single digit Increased on a gross basis. I'm just wondering if there's anything transitioning that. So we've guided to mid single digit cost growth in the current year. And it is made up of a number of things. It is made up of Investment in resiliency, which some of the cost investments will I mean the kind of 2, 3 years team, which is maybe the one you're looking to from the results. What you've got in those And of course, the CapEx costs, many of them are quite onetime in nature, like the cost To remove Borsa from the group, for example. So the OpEx costs are more ongoing in nature, but they are higher in the short term because we will have a more efficient Okay. Got it. And my second question is, I mean, obviously, there's quite a bit of investment going in. I think you're talking about investing And selling pretty versatile products to Refinitiv. Could you perhaps give us an indication of the investments required there? What they are right now? Many of them are quite onetime in nature, like the cost To remove also from the group, for example. So the OpEx costs are more ongoing in nature, but they are higher in the short term because we will have a more efficient Okay. Got it. And my second question is, I mean, obviously, there's quite a bit of investment going in. I think you're talking about investing In setting FTSE Russell products to Refinitiv. Could you perhaps give us an indication of the investments required there, what they are right now? Yes. My second question was relating to some of the investments. I would like to pick out what you highlighted back in Q4, Russell, in the season being sold through Refinitiv. Can you give a bit more color in terms of what those investments are and the So, as you know, this Q1 results is focused on the top line, but I'm happy to revisit the synergy opportunity in terms of bringing the Refinitiv data together with FTSE Russell index business and that's something where we've seen good progress already. So as you'll recall, we talked about the notion of Effectively internalizing some of the cost for Fushee Russell and by using So historically, FTSE Russell has sourced some of the data that is used in the indexes. Some of that has been our own data. Some of it has been from 3rd party providers. And 3rd party providers including Refinitiv. Now Refinitiv is part of LSEG. We are in the process of moving the sourced data that are maybe from other providers to Refinitiv and we're making good progress On that, other areas where we are making good progress is just in terms of existing index customers Now becoming customers of our data. And it makes sense if you are an asset manager or a PM, you want to have access to the constituent data at the same time as having access to the index that you might be benchmarking against. And then we also have seen some other areas of opportunity, including using Definitive data to expand the product set and roll out new products on the index side. We've rolled out a number of new products already since we closed the transaction. So, so far so good on that one. Maybe just to comment on the timing of realization. It's been really good actually The year won't be particularly material, but from my perspective, it's a really nice to see the lead indicators Where they should be because it affirms that synergy value through. But I wouldn't be expecting to see a material revenue impact in this year from it. That was helpful. And finally, can I ask On Workspace, in terms of rollout, should we expect this to be fully rolled out with clients in 2021? And Subsequently, is there a change in the pricing with clients on the back of the Workspace Reliance? So no change in pricing on the back of the rollout. We are as we mentioned in March, we're in the process of Rolling out Workspace, we talked about rolling it out to the wealth segment that is ongoing. We are also Now pulling it out to asset managers and portfolio managers and then early days of rolling it out to the banking segment as well. So Not that, but this will be a multiyear process. So, we plan to continue doing that and Many more to be done, but good progress so far. Thank you. Thank you. The next question comes from Bruce Hamilton from Morgan Stanley. Please go ahead. Yes. Thanks. Sorry, I'll just sort of follow on, on the question. So on the Workspace, can you point to any client wins in Wealth or any sort of Specific successes that maybe aren't yet in the numbers, but give you some encouragement that the progress is going in the right direction there. And then secondly, just on the post trade numbers, which obviously look pretty strong. In the securities reporting And in the non cash collateral lines, are those kind of sustainable levels? Is there anything sort of slightly one off in nature? Or is that just a function of Increasing activity on the back of steepening rates and more discussion there, just to check. Thank you. So, on the wealth business, there are some encouraging wins In that business, I'm not in a position to put the customer names out there, but we are seeing progress in terms of how that's being received. And then on the post trade business, it's actually I think the right way to think about the post trade business is that Our team in post trade is regularly working on expanding the opportunity set for that business. So whether and this we could have this conversation about each of the asset classes, whether it's swap clear, whether it's repo clear, CDS clear. And that can be the rollout of new products, new currencies, new currency pairs, new reference rates. And so it is not a situation where we're sort of sitting and waiting for market volumes Obviously, market volumes do have an impact on the business. But we are also working to get regulatory approval for new products. We may see some of that in the coming months. We are working to expand the client volumes. As you'll know, the members tend to pay on an all you can eat model, and so constantly expanding the client volumes is A good way to continue growing the business. So there are a bunch of different aspects of the post trade business, again across the different asset classes Where the team is regularly working to improve and increase the growth opportunity set. And I think we've seen that over this past year Where in, for example, RepoClear, the combination of Northern European Euro denominated repos and Southern In LTHSA in Paris, combined with the market environment, has led to a really attractive Pickup in volume there. And I think we had something like 8% year over year Growth in repos in repo there. And that some of that is market related, but a lot of that is due to The efforts of the team in improving the offering there. Got it. Helpful. Thank you. Yes. Thank you. The next question comes from Johannes Thornman from HSBC. Please go ahead. Good morning, everybody. Johannes Thormann, HSBC. Three questions, if I may. First of all, a follow-up on the cost of sales growth. Can you confirm that the future growth rate is always at a lesser rate than the total income growth rate? Or Are there any factors which could make the cost of sales growth exceed the total income growth rate? And secondly, On the data and analytics business, thank you for trying to provide more clarity on 2nd July. Do we get Also some more KPIs at that date where we can follow the business a bit more in detail. And could you at least now provide the usual FTSE Russell assets under Management or benchmark assets as you did before because to understand the FUTZERRASL performance a bit better in And last but not least, sorry, but the LCH business or the post trade business, You've owned for several years, so I struggle to understand why you couldn't provide pro form a figures for the previous years with the new breakdown of the revenue reporting. Could you at least explain how the revenues have shifted from The old OTC, non OTC and other business lines into the OTC derivatives, securities and reporting and so on. Thank you very much. So The way I think about it is for the most part, for data and analytics, yes, You would expect that to, in all likelihood, grow more slowly. That said, it's a small number. So changes in data sets could in any given period move it a little bit. Post trade It's going to be a little bit more lumpy because it reflects the member surpluses And of course, that changes with the market environment and really the levels of NTI income that we're seeing. So Broadly, what you're saying is right over time, but in any given period, it can be a little bit lumpy. And Capital Markets, Yes. At a business line level, cost of sales will grow more slowly than the revenues will. So that's that one. Do you want me to do KPIs? Sure. So we will provide KPIs at the half year for Data and Analytics. So do expect to see more. We know you need more KPIs to understand this In terms of assets under management and subscriptions, we absolutely intend to ensure that that continues to be visible. Sorry. Sorry, could you provide this data now at least for assets under benchmark? Yes. It's in the release. Yes. I think we closed the quarter at $956,000,000,000 Yes. Which is a reference, hi. And we broke the 2 growth rates out since the release as well. So 8% growth in subscriptions and about 7% growth in assets under management. Okay. Thank you. Didn't catch that. No problem. And the alignment of the post trade lines, do you want to just run through that for me to make sure that we're precise? Yes. So You'll see at the back of the R and S statement today that we've given the prior four quarters for 2020 on a pro form a basis with the new split out post trade. So you provided it there. In terms of what's moved, Yes. Broadly, the OTC is as it was, and we've also incorporated in the swap agents and compression. Securities and reporting It's the line that is equity clear, it's listed derivatives and it's repo clear. So it's just aggregating those clearing services together. And then non cash collateral is just splitting out the earnings that we get from the receipt of non cash collateral. So as you know, we call collateral in 2 forms: in cash, which is reported as NTI, and that's unchanged and then the noncash, we just split it out for the first time. That's the basis of the split that we've given. Okay. Thank you. Thank you. The next question comes from Ian White from Autonomous Research. Please go ahead. Hi, good morning. Thank you for taking my questions. So 2 for me, please. First, I think you shifted the sales model in FTSE Russell, Think about a year ago now to move away from regular price increases in favor of Kind of a more product linked introduction. What have you seen so far that has vindicated That change of approach, please, in your view. That's question 1. Secondly, I'm just wondering if you can provide any additional color around your Pricing model and specifically how you will monetize additional data content that is provided. I'm conscious that you're not pricing, I think by distribution channel or I think by user count. So I'm struggling a little bit to understand what exactly the chargeable unit of outputted on the data side. So, if you could provide any help with that, please, that would be much appreciated. Thank you. Sure. So, Ian, just on the shift in our model in FTSE Russell, it is A little over a year ago now that we had been focused on investing more in The product development and research within Putsi Russell investing more in new product rollouts and investing more in the customer relationships, so that those new products were What our customers were looking for. And I would say less emphasis on Price rises that were not necessarily attached to investment or value added in the product. And we are we saw good progress in that over the course of last year in terms of the number of new products rolling out, in terms The partnership dynamic with customers in terms of improvements in some of our customer surveys and that is consistent. So, we're continuing to see that. We have as we mentioned this morning, we've pulled out a number of new products already since the closing of Transaction and we're continuing to invest in our product capabilities in addition to the synergies of the transaction. And we're continuing to invest in the customer relationships there. So, I view this as Not an immediate or quick transition, but we feel we're making very good progress and we're We're in that transition now. And I would also say with respect to price rises, In terms of if we are adding value to our products and adding value that our customers are recognizing, And that is something that our customers recognize and are willing to pay for. So it's just about getting the balance right In terms of investing in the product, investing in the relationships, and then getting the appropriate return on that investment over time. On the pricing model, I'll touch on this and Anna if you want to jump in as well, feel free. There are a number of different aspects to our pricing arrangements. A number of them are contractual, in some cases multiyear contractual. And they depend on what the customer is Looking for in terms of access to products, access to certain workflow, access to content, And some of that is dependent on how they want to receive it. Some of that is dependent on What content that they are actually looking to receive and some of that is related to how many What is the quantity of consumption, if I may put it that way? And sometimes that's related to number of human beings, sometimes that is related to Quantity of data that is accessed through the cloud or APIs. So, I'm not sure if that answers your question explicitly, because we have a broad array of products and content and delivery Mechanisms, distribution channels, a one product arrangement or construct that we've talked about in the past is retentative access, Which gives it's close to being more of an enterprise model that gives a customer that uses A lot of our different services, it gives them access to All of those different services across the different distribution channels that they want. They tend to be multiyear arrangements. They tend to have A price rise on an annual basis that reflects some of the incremental investment that we are putting into those relationships to make sure that they are getting what they want From that arrangement. Hopefully, that gives you a little bit of a sense, but it's not a one size fits all. And I can't give you a specific description of how it works each time because it works in a number of different ways. Got it. That's helpful. Thank you. Okay. Thank you. The next question Next question comes from Gurit Ghambu from JPMorgan. It's Gurit Ghambu from JPMorgan. A couple of questions. Firstly, could you just elaborate a little bit more on the trading and banking solution? Just sort of the trends, I guess, within the trading Versus the sort of banking clients, what's going on there? So I think one's doing better than the other? That's the first one. And then secondly, just on the post trade, Around SwapClear, I would say SwapClear saw a couple of customers decreasing this quarter. Sort of what's sort of driving that? I know it's a small number. But within FX Clear and CVS Clear, member numbers again are broadly stable. I guess, how do we think about growth in those other two businesses? And what's the catalyst for those two areas to grow? So, those are the 2 questions. Thanks. Sure. So, within the Trading and Banking Solutions segment, I think probably the simplest way to describe that is that the premium trading Continues to have a modest decline, whereas FX, commodities and banking Sub segments within that are doing okay growing. So that's sort of the dynamic there. And then on post trade, and the question was specifically around how our Forex Clear and CDS Clear doing? Yes, that's right. Yes. So what's the I think that's sort of been broadly flat in terms of member growth and obviously notional is down. But yes, what sort of drives that going forward? Yes. So, CDS Clear, in terms of first of all, It's just worth highlighting that Swappler continues to be the significant contributor in that segment. CVS Clear, relatively small market, and we don't see an enormous catalyst for that to be growing dramatically as a market. Having said that, our market share in that market has picked up over the last year. And then with respect to ForEx Clear, this is one Where we expect to see growth picking up in line with what I'll call The tailwind of the uncleared margin rule, I think it's tranche 5 this September and tranche 6 next September On the uncleared margin rule rolling in and capturing a broader subset of a community that is Putting in place trading in and foreign exchange derivatives. And therefore, As they go over the notional amounts that are captured by these broader tranches of the un cleared margin rule, More and more of them will either have to allocate capital under the uncleared margin rule or they will see the benefits of clearing Their FX Derivatives. So, we are continuing our dialogue with clients in that area, Making sure that everyone understands the impact of this upcoming regulation. We are onboarding and working with more members. So We feel good about the potential for that business and the potential for growth in that business. But we also view that as a And that will be a multiyear trajectory. This is not something where we get to this September and we're going to see a massive spike up in Volumes, it is not a mandate to those customers to clear. It is basically an economic incentive in terms of capital efficiency And we think that economic incentive will have its impact over time. Yes. Thank you. And just on Swapclear, I know you said that you had 2 members reduced in the quarter, but any sort of driver behind that? And should we sort of assume Swap Clear members are now sort of maxed out. We sort of assume them being stable from here. So, in terms of Swap Clear, that's a global Platform has got 90% plus market share. I don't think we are expecting increase in membership to drive growth there. I think where we expect to see incremental opportunity is continuing growth in the client base, I. E. The clients who peer through the members, And there's more opportunity there. And then in terms of new product opportunities. And then of course the there's a broader question and we touched on this in our release. There's a broader question as to The growth that we've seen over the past 10 years has been delivered in an environment where central banks have been trying to indicate lower interest rates for longer and really minimize interest rate volatility. And it does feel as if the interest rate paradigm is shifting Going forward, we're not in a position to predict that at all. But we do think swap theory is very well positioned to take advantage of Uncertainty or volatility in the interest rate market that may be a result of either central banks changing their Over time giving different kinds of signals or the market reacting to any of that. And of course, the inflation Discussion has led to some incremental volumes that we've just seen over this past quarter. Thank you. Thank you. The next question comes from Ben Baffert from RBC. Please go ahead. Good morning. I've got two questions, please. Firstly, I was just wondering if there's any Update on the thinking with respect to the possible change in reporting currency. That was something you mentioned you were looking into. And I also wondered to what extent the accounting rules are kind of In that respect versus it being a decision that you can or judgment that you can make. And then the second question was just on the investor event. Is there anything more that you can say to preview the 2nd July? Should we be expecting that to be sort of an hour long event, a couple of hours or a day long? Any extra color there will be welcome. So reporting currency, we are looking at it. And while there are technical accounting rules, It is within our gift as to what currency you reported. And we'll update you in due course. Okay. Shall I take the question about the investor update? So at the moment, we're planning it to be a virtual event. So we're not going to take a full year day. So A couple of hours, we'll give an overview to the entirety of the Data Analytics business, but then we'll take some deeper dives into 3 of those areas Into the Trading and Banking Solutions business, into the Enterprise Data Solutions and into the 3rd party customer risk business as well. We will then follow that up later in the year. We haven't set an exact Yes, and we'll take some deeper dives into the other two areas that we won't cover in July. And we'll also take Look at some of the other businesses around Group 12 at that point. So hopefully, over the course of the next few months, you'll get the investor event Couple of hours, you'll get our half year results followed up as in August, an event towards the Start or the end of the autumn and then we'll be in Q3. So we've got multiple update points coming up in the next six So I think they're expecting quite a lot of information from us over that time period. Great. Thank you. Thank you. The next question comes from Kyle Voig from KBW. Please go ahead. Hi, good morning. Just a couple of questions on capital deployment. In the bridge refinancing, You issued a bit more long term debt than we previously expected. And it seems like most or all of the group's short term debt could potentially be repaid this year after the Borsa Italiana sale. Can you just talk about your preferred use of capital after you pay down that short term debt That's outstanding post Force Iteliana divestiture. And a follow-up question to that. You're in the middle of a very large integration. Just curious to hear how comfortable you would be executing on M and A as we get past the Borsa Italiana divestiture? And should we expect M and A to be limited to smaller type bolt on type of transactions as you work through the integration? Thank you. Thanks. So in the short term, we've been clear that Our intent is to reduce our leverage down to the 1 to 2 times target range. And we expect to be Well within comfortably within 24 months. But really in the short term, that is our focus. Do You want to talk about M and A, Damian? Sure. So Kyle, you are absolutely correct. We are in the midst of a large integration. And we are as Anna mentioned, we're focused on bringing our leverage down. We are focused on integrating the Refinitiv business. So, would we consider small bolt on acquisitions? Sure. The things that from a financial perspective don't really move the needle and from a strategic perspective we could digest easily. But you should not Expect us to be going out and doing a very large big M and A at this point. So Bringing down our leverage, focusing on our integration will be our priority. And it will fit into our returns criteria. Yes. Thank you. Yes. Thank you. There are no further questions on the conference line. I will now hand over the So as you just heard, there's no more questions. So thank you for everyone who did join us