Status Update

Nov 19, 2013

Morning and welcome to the InterContinental Exchange Group Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Kelly Loeffler, Senior Vice President of Corporate Communications, Marketing and Investor Relations. Please go ahead. Good morning and welcome to InterContinental Exchange Group's conference call. We will provide an update on the company's strategic plans and financial guidance following ICE's acquisition of NYSE Euronext. The presentation can be found in the Investors section of our website at theice.com. These items will be archived and our call will be available for replay. Today's call may contain forward looking statements. These statements, which we undertake no obligation to update, represent our current judgment and are subject to risks, assumptions and uncertainties. For a description of the risks that could cause our results to differ materially from those described in forward looking statements, please refer to the company's Form 10 ks and our joint proxy statement and prospectus, which was filed on April 30, 2013. Please note that the numbers discussed today refer to our adjusted operating results, which we believe are more reflective of our business performance. You'll find a non GAAP reconciliation in the presentation as well as an explanation of why we deem this information to be meaningful. With us on the call today are Jeff Brecher, Chairman and CEO Scott Hill, Chief Financial Officer and Chuck Veiss, President and Chief Operating Officer. I'll now turn the call over to Jeff. Thank you, Kelly, and good morning to everyone and thank you all for joining us. Last week, ICE completed its acquisition of NYSE Euronext. And today, we're going to lay out the framework for our strategic, operational and financial objectives. When we completed our own IPO in year 2,005 on the New York Stock Exchange, just 5 years after our founding, it enabled us to continue on a trajectory of growth and innovation. You can see an example of how this work is continuing with today's announcement of our agreement to acquire the Singapore Mercantile Exchange. I'll talk more about this transaction shortly, which gives ICE its first regulated Asian exchange and clearinghouse. But I want to begin the discussion of our NYSE Euronext integration plans by thanking both of our teams for delivering solid results for our shareholders and customers, while working diligently to complete the deal. This transaction has created a tremendous opportunity for us to come together and to leverage our strengths as a combined company. We've demonstrated our ongoing commitment to building shareholder value while improving markets and risk management. On our earnings call earlier this month, I talked about our accomplishments today. What we will discuss today is the future. On slide 3, I'll begin by defining ICE's operations. Today, we operate a network of 23 regulated markets including 16 exchanges and 5 central clearinghouses. As a result, we have a multi asset class derivatives and cash market franchise, spanning interest rates, equity and equity derivatives, credit, foreign exchange, energy, metals and agricultural commodities. We operate extensive treasury, cash and collateral management systems responsible for monitoring and moving 1,000,000,000 of dollars of capital every trading day. To bring all of this together for 1,000 of customers around the world, we've developed leading edge technology and connectivity infrastructure. Therefore, ICE is at its heart a global financial network that brings people together with markets and technology. To build on that, we've assembled a strong and experienced management team across our businesses, which we announced last week. Moving to some of our strategic opportunities on slide 4, you can see that our strategy is consistent with where we've been focusing the company's efforts over the past decade. We've curated our markets to focus on those where growth and evolution will benefit from our entrepreneurial approach. We're heavily engaged in the customer needs of our time, including capital efficiency, regulatory and compliance and safe, secure markets in which to trade, risk and raise capital. Today, we have an even broader platform to leverage in order to ensure that we lead in enabling our customers to navigate change. Through this, we must continue our leadership in the areas of clearing, technology, product development and service. Each of these will support our ability to meet the objectives in our futures markets, our OTC markets, our clearing, our cash trading and our listing businesses that we've outlined here. I'll just touch on a few ways this transaction amplifies our ability to address these objectives. First, since 2007, we've sought an efficient way to enter the interest rate and financial commodities markets. We're now clearing on average 3,000,000 interest rate futures contracts per day following the July transition to ICE Clear Europe. We'll soon be launching an ultra long GILT futures contract and we continue to build out our interest rate product suite. Another example of our opportunity set includes clearing for financial swap products. While Europe's financial reform policies are still being finalized under EMEA and mandatory clearing is still several months off, we have a solid start in clearing interest rates and financial products. We recently refined our margin model and we reduced the capital requirements for our customers by 4% in the aggregate, demonstrating our commitment to keeping low capital demands on our customers. On slide 5, you'll find the outcomes we're targeting with our strategic focus. Scott will walk you through these in detail, but I wanted to connect with the ways that we'll be delivering measurable results. In addition to expense synergies, earning accretion, strong cash flow and capital returns, we'll be refining the current portfolio of businesses to ensure the result of our integration is a company that is focused, nimble, responsive and growth oriented. We're looking at each business line to ensure that we're investing in a disciplined shareholder focused manner. In the areas where investments exceed returns, we'll deemphasize those business lines in favor of areas where profitable opportunities exist. And this is a good transition to a discussion of our revenue diversification on slide 6. As you can see here on the left side of the slide, this is the pro form a revenue diversification that we have today based on trailing 12 months ended September 30. What we show on the right side of the slide is our pro form a revenues following the IPO of Euronext and the sale of certain NYSE technology operations. We'll provide more detail on each of these in a moment. But first, you can see that exchange traded derivatives revenues rise from 44% of revenues to just over 50% of revenues. And our exchange traded derivative revenues, U. S. Equity options represent 6%, commodities represents 33% and financials including interest rates represent 13%. Cash trading revenues will decline from 10% of consolidated revenues to approximately 6%, which will represent the standalone NYSE trading revenue contribution. So how do we get to the right side of the slide? I'll now move into the detail of our strategic plans beginning on slide 7 with NYSE Life U. S. NYSE Life U. S. Is a futures exchange that lists a number of valuable products including the DTCC GCF repo, treasuries, euro dollars, MSCI indices and mini silver and mini gold futures contracts. Earlier this month, we reached a deal with our partners, which comprised of major dealers and trading firms to wind down the NYSE Life U. S. Exchange operations. We will write down that business and move these important contracts to our existing futures exchanges. And we're pleased that part of the work we've completed in the recent weeks is transferring the exclusive license to the DTCC GCF repo futures benchmark out of the old partnership and to our U. K. Exchange. This exclusive license enables us to support the growing role of the DTCC GCF repo benchmark in the overnight markets for hedging short term interest rates. This contract will be moved to the Life U. K. Exchange where it will trade alongside of our benchmark Eribor future together with our other interest rate products and it will clear at ICE Clear Europe. The MSCI Indices, the Mini Gold and Mini Silver Futures contracts will be listed on ICE alongside of our existing Russell indices and commodity futures contracts. We expect to complete the integration by mid-twenty 14, which will save $17,000,000 on an annual basis as a result. Transitioning over to Life U. K. On Slide 8. We have a number of opportunities to better leverage and grow Life's benchmark products. The first order of business, however, is to complete the extensive work required to separate Life from Euronext. There is a detailed work plan underway and we anticipate completing the separation work in the first half of twenty fourteen. There have been significant conversations with regulators and we've shared our vision with them. However, there will be ongoing regulatory approvals required as we undergo this complex reorganization, which must occur before any Euronext separation can take place. Upon the separation from Euronext, Life will be integrated with ICE Futures Europe, our London based futures exchange and the 2 will operate as a single subsidiary. We're currently electing identical Boards of Directors for ICE Futures Europe and for Life by adding new members to the ICE Futures Europe Board with interest rate and financial market expertise. And from a leadership perspective, David Pennequitt is the President and COO of both ICE Futures Europe and of Life. David has grown our futures business since 2,005 and has been with ICE for a dozen years. Moving to Slide 9, you can see how the ICE and Life businesses are coming together from a product and technologies perspective. ICE Futures Europe will offer a full range of interest rate, agricultural, energy, emissions and index futures and options creating a multi asset class exchange for global markets, while retaining its London base of operations. We're planning for the transition of the life markets to ICE's trading technology. We will be locating new hardware in the existing U. K. Data center and will operate the life markets from the U. K. We will also provide enhanced functionality to ensure the smooth operation of markets such as interval price limits and managed messaging policies. Access to the ICE platform will be via the ICE API, the Web ICE trading screen and the myriad of third party vendors who connect to the ICE platform. Customers that are currently co located or who operate infrastructure from the U. K. Data center will not be required to relocate. Most of these customers are already familiar with the ICE API interconnection requirements. The integration of ICE and Life will be completed by the Q4 of 2014. This work will deliver an enhancement to Life's customers by organizing multiple markets on one platform and reducing their connectivity costs. We'll be looking at an additional set of market efficiencies as we get into 2014, particularly around improvements to block trading and access to clearing. You can see the potential that our interest rate business has on slide 10 given the economic environment and monetary policy environment that we're in today. This is a very large asset class that has not experienced consistent volatility as a result of the financial crisis and 0 interest rate policies. In the meantime, we're developing products to be prepared for an eventual economic recovery and the volatility in interest rates. These include products like the ultra long GILT contract that we will launch in early 2014. Even with this environment, year to date Life's interest rate average daily volume is up 30% compared to 2012. Now on slide 11, we announced last week that the London based ICE Benchmark Administration business was formed. This summer, Life was awarded the contract to administer the LIBOR benchmark. The role of overseeing this vital benchmark is a role that we take very seriously. 100 of 1,000,000,000,000 of dollars are tied to LIBOR, as you can see the chart here. And we're going to work to restore confidence in the mechanism for establishing the LIBOR rate. We'll also be adding other key products. You can see on the slide the range of benchmarks and indices that ICE has developed or licensed ranging from energy benchmarks like the Brent Index, NGX, NGI and Platts to financial indices like the FTSE, MSCI, Russell and the DTCC GCF repo. The business is being organized with an independent Board of Directors and Finbar Hutchinson will lead ICE Benchmark Administration as we intend to build out financial index data and price assessment operations under Finbar's leadership. And we'll work closely with regulators to build confidence in this important activity. Moving to slide 12, I'll review the Euronext business and our efforts around establishing its increased independence and focus on the Continental European Capital Markets and exchange trading. We've agreed with regulators on the firm's governance and on a detailed plan of action for the separation of life and the creation of the new Euronext. Before we can take any action with the new Euronext, we must first separate the life business that will remain in London. There is no possibility of moving forward with an independent Euronext or its IPO until this work is completed, given the range of corporate structuring, governance and technology requirements for this new firm. You can see the perimeter of the new Euronext on the slide here, including contracts that each of the 4 Continental European Exchanges list. These include cash equities, options, equity indices, single stock futures and Continental European Derivatives. In other words, the new Euronext will trade physical commodities, financial derivatives, equities and equity indices becoming a multi asset class exchange group based in and focused on Continental Europe. Last month, Euronext agreed to new clearing terms with LCH Clearnet. This deal will maintain the existing Euronext clearing activity at Clearnet, which is based in Paris. In our opinion, it was more appropriate for the Euronext products to clear in Continental Europe and not move to ICE Clear in London. As a part of the new clearing deal with LCH Clearnet, Euronext participate in certain of the clearing economics under a new revenue sharing agreement, which will begin in April of 2014. We've agreed on the business, the intellectual property and the technology that will become part of the new Euronext. It will continue to develop the UTP platform for its own needs and for the needs of third parties with its existing Euronext technology team. In addition to the 4 Continental European Exchanges, the new Euronext will provide platform services to 4 exchanges outside of the Euronext group. Euronext is being led by Dominique Cerutti and we've assembled the senior management team and have several members selected. We believe they're going to make an excellent management team for this new public company. Looking at the proposed new Euronext organization and before any synergies that it may achieve as a standalone company, Euronext should have a trailing 12 month revenues of over US500 $1,000,000 with an operating margin in the 33% to 35% range. And this does not include the economics from the new clearing agreement with LCH Clearnet. We've laid out our plans to conduct an IPO of Euronext following its independence from life and we've had extensive conversation with bankers and stakeholders to inform our view about an IPO. We've agreed with regulators that the new shareholder base should include stable long term shareholders that will consider the long term interest of the new Euronext and its markets. And this could also include ICE remaining as a continuing shareholder in a reduced capacity for a period of time. We've had a number of conversation with potential large stable shareholders and we see their investment in Euronext as an attractive and attainable objective. Our hope is that Life and Euronext can be separated and all necessary intercompany agreements put in place during the Q1 of 2014, so that our auditors can create a set of pro form a financials that would allow Euronext to complete an IPO during the summer of 2014. To our U. S. Equities and Listing business on slide 13. We're pleased that Duncan Niederauer will remain with us through 2014 as the CEO of the New York Stock Exchange. Tom Farley is the Chief Operating Officer of NYSE and he'll be joining Scott Cutler and Joe McCain, who will continue to run listings and trading respectively. ICE operates its exchanges and clearinghouses by sharing centralized technology and corporate services. So as a result of the way we organize, a number of ICE managers will aggregate up the remaining processes of NYSE across its operations, technology, marketing, communications, HR, procurement and other key operational areas. Let me move to NYSE Technologies on slide 14, where you can see some of the initiatives that relate to existing technology investments. We intend to maintain the operation of NYSE's 2 state of the art data centers, 1 in the U. S. And 1 in the U. K. We performed an economic analysis of moving to 3rd party data centers and found that it was better to retain our own facilities. These will be included at fair market value on our balance sheet, which will reduce their D and A expense and we will continue to recognize colocation revenues at these facilities. As a result, we're able to very cost effectively maintain these data centers. Scott will walk through the depreciation impact in his remarks. NYSE operates its own network known as safety. We believe that we can improve the operational efficiency of safety given our shared businesses and resources. So we are intending to maintain and improve this business. Our intent is to relocate the Exchange's data distribution revenues that are currently reported in the NYSE Technology segment back to the exchanges themselves. This is how ICE reports and manages its market data activities. The remaining businesses in NYSE Technologies are some very interesting standalone technology businesses, but we've come to the conclusion that the best way to grow these assets is to find a new home for them. This includes the buy side sell side network known as Nifix, the fixed messaging technology known as Appia, the data software business of Wombat and the data dissemination business known as Superfeet, plus a handful of other small businesses. In the meantime, ICE is going to show the results of these businesses as discontinued operations in our income statement. Taken together, we expect that the salable businesses will have an approximate $120,000,000 revenue base and 17% EBITDA margins in 2014. Ben Jackson is overseeing the integration efforts with the various NYX technology businesses that we will keep and he will lead the sale process of the identified assets in the coming months, while he also remains the Head of ICE Futures U. S. Let me move to slide 15 and I'll walk through our announced acquisition of the Singapore Mercantile Exchange and the Singapore Mercantile Exchange Clearing Corporation. This transaction is part of our strategy to operate clearinghouses and exchanges in each major region of the world in which our customers operate. Following the financial crisis in 2,008, we took the view that the resulting financial markets reform would tend to push traders to be more locally regulated and locally focused. We felt that we would no longer be able to simply work from London or New York and access our customers around the globe as we had done for years leading up to the financial crisis. In 2008, when we began establishing our OTC clearinghouses for CDS, regulators were driving for more local control. So we built 2 separate OTC clearinghouses, 1 in the U. S. And 1 in the U. K, instead of building a single clearing infrastructure. Following this move, we diligently proceeded to reorganize ourselves on a more regional basis in case our customers decided to regionalize their global trading. More recently, we built out ICE Clear Canada and moved their clearing away from the Kansas City Board of Trade and onto our own systems. A few years ago, we partnered to form an exchange in Brazil known as BRICS and we became the largest shareholder in a publicly traded clearinghouse in Brazil known as CITIP. We acquired Ice Index in Amsterdam to give us our first base of operations in the Eurozone. And now we've acquired the Life Exchange and the associated businesses of NYSE Euronext. Yesterday, we announced that we're acquiring the Singapore Mercantile Exchange to better access our Asian customers with this exchange and clearinghouse in Singapore. So this resulting infrastructure in the U. S, in Canada, in Brazil, in the U. K, in the Eurozone and now in Singapore positions us well for shifts in business as regional regulation continues to unfold and as our customers are reorganizing to comply. Together with the NYSE Euronext acquisition, we'll operate 17 exchanges and 6 clearinghouses in 8 countries. We anticipate a period of business transition with the Singapore Mercantile Exchange and the Singapore Mercantile Exchange Clearing Corporation as we implement technology changes and work with market participants, clearing members and regulators to ensure that the product offering and clearing strategy will meet the needs of the region. And while we evaluate the offering for available participants, we're going to carefully select the markets and products in which we will participate. Summary, as you can see from the strategic plan that we've established, we're a multi asset network of exchanges and clearinghouses. We have a well organized plan to combine NYSE Life U. S. And the Life U. K. Exchanges with our existing exchange entities. We'll begin the process of creating an independent Euronext with a goal to complete that work next year. We'll maintain NYSE's U. S. And European data centers for our own use, while we rationalize their 3rd party IT hosting and services business. And we're going to reorganize the data dissemination and networking businesses, exiting those businesses that don't meet our core business objectives. There's been a lot of hard work in developing these plans by our team, who I would like to thank for their work and their patience while we close the transaction. Now, let me turn it over to Scott who will describe the financial impacts of the plans that I just described. Scott? Thanks, Jeff, and good morning, everyone. Jeff has just given you a good overview of our strategy. And now I'll quickly walk you through some financial information and we can then move to Q and A. Let's start on slide 16 with a look at the pro form a financials for the trailing 12 months ended September 30, 2013. Please note that for both the GAAP and non GAAP results, we have simply combined what each company has reported over the past 4 quarters. I'll focus on the non GAAP results as we believe they are more representative of the performance of our business. On a combined basis, 2013 revenue was essentially flat compared to the prior year. Adjusted operating expenses, however, were down 4% over the same period due to disciplined expense management. The net result was an 8% year to year increase in net income and operating cash flows, which grew to over $1,600,000,000 This strong operational cash flow was also enabled by declining capital expenditures which is a trend we expect to continue. The operational leverage and cash generative nature of our combined business is clear. As is common with M and A transaction, the financial statements of our combined entity are not unfortunately as simple as adding the results together. There are a number of accounting adjustments that must be considered. For example, as we mentioned last December, purchase accounting will eliminate the deferred revenue asset related to the NYSE listings business. This non cash adjustment will reduce revenue and operating income by $90,000,000 to $95,000,000 What we did not have visibility into back in December were other balance sheet adjustments, which would be made as part of purchase accounting. While we are not completely done with this analysis, we currently expect a $45,000,000 to $50,000,000 annual decrease in depreciation and amortization due to revaluation of assets on the balance sheet including data centers and developed software. We also anticipate a $45,000,000 to $50,000,000 reduction in interest expense related to a fair market value adjustment to NYSE Euronext outstanding €920,000,000 €0.1 billion €220,000,000 €0.1 billion €220,000,000 €0.1 billion €220,000,000 €0.1 billion €220,000,000 €0.1 billion The net of these adjustments is lower revenue, higher margins and a negligible impact to profit and importantly a meaningful improvement versus the guidance we provided in December. Finally, as you can see on this slide, we have already achieved 90 $5,000,000 of our original $450,000,000 of synergies. And combined with the additional reduction in D and A expenses I just mentioned, we now believe we can reduce operating expense by $500,000,000 So let's turn to slide 17 for an update on our expense synergies. As I just mentioned, we've already realized $95,000,000 in synergies, which means we have another $405,000,000 to go in order to achieve our new objective of $500,000,000 As Jeff mentioned, our teams have done a tremendous amount of work on integration plans over the last 11 months. Because of this and due to the greater visibility we have into each of the business lines today, we are not only increasing the synergy target, but also accelerating our timetable for realization. We now expect to realize 70% of the $500,000,000 in synergies on a run rate basis as we exit 2014 compared to our prior guidance of 80% of the synergies 2 years after closing. As you can see in the chart, the remaining synergies can be grouped into 3 general areas: corporate integration, life integration and business and portfolio rationalization. 1st, in the category of corporate integration, we expect roughly $155,000,000 of synergies from corporate officer redundancies, public company expenses, organizational restructuring, system and process efficiencies and real estate rationalization. The second category is the life integration where we expect approximately $100,000,000 of synergies. These savings will come from the transition of life clearing to ice clear Europe in addition to expense reductions from organizational restructuring and extensive technology integration. The 3rd category is portfolio rationalization where we expect $150,000,000 of synergies. These synergies will come from several areas. For example, we will realize benefits from the transition of Life U. S. To existing ICE exchanges. We will also derive benefits from resegmentation and rationalization of the NYX Technologies portfolio. This category also includes a reduced depreciation and amortization expense from the revaluation of data centers and developed software assets. We will of course continue to update you as we deliver on these synergies. Please now turn to slide 18 and I will discuss our debt profile and deleveraging plan. As of the close of our acquisition of NYSE Euronext, we now have around $5,250,000,000 in total debt. As you can see on the chart, the mix, term and interest rates of the various debt components are very favorable. The most expensive debt is also the debt which will mature the soonest and that debt is denominated in the same currency as the anticipated Euronext proceeds. And even with these higher priced euro bond, our all in cost of debt is modestly above 3%, which will contribute to a weighted average cost of capital between 8% 9%. We remain confident that our strong cash flows will enable us to reduce our leverage below 2.5 times by the end of 2013 and to reach our leverage target of 1.5 times or better within 18 to 24 months. Our annual interest expense is expected to be only slightly more than $100,000,000 And we anticipate that we will need a minimum cash balance of $500,000,000 to $600,000,000 to support our operations. Moving to slide 19, I'll provide financial guidance for the Q4 of 2013 for ICE Group as well as for ICE and NYSE Euronext as if they were standalone companies. Let me start by orienting you to the chart. On February 11, we will report 4th quarter earnings that will include half of NYSE Euronext's 4th quarter in our consolidated numbers, given that the closing date of this transaction was at the midpoint of the quarter. The guidance we are providing today shown in the first column reflects our expectations for the 4th quarter results as they will be reported in February. Please keep in mind these guidance numbers represent our best estimates at this time and are subject to change. And as we always do, if actuals look to be materially different, we will provide updated guidance. We expect approximately $157,000,000 in deal costs in the 4th quarter, which will be excluded from our non GAAP results. We expect adjusted operating expenses to be approximately $330,000,000 and our tax rate to be around 27%. In terms of depreciation and amortization expense, we expect that to be roughly $62,000,000 for the quarter. And operational capital expenditures are expected to be around $38,000,000 Finally, as we previously announced, we will pay a $75,000,000 dividend in the 4th quarter. Now let's move to the right hand side of the slide and talk about how we plan to provide you with information about the business. We will report 2 segments, ICE Group and Euronext. We will provide revenue and volumes for our global derivatives business, cash trading and listings and Euronext. We plan to begin reporting combined volumes for the company for the month of January 2014 and we'll issue our volumes release on the 3rd business day of each month, including our global derivatives business, cash trading business and Euronext. Within global derivatives, we plan to provide commodities, financials and equity derivatives. Commodities will include our energy, ag and metals businesses. Financials will include interest rates, indices and FX segments. Equity derivatives will be comprised of U. S. Equity options and single stock equity derivatives. We also plan to provide historical monthly volumes in our new reporting convention to make it easier for comparison purposes. This information will be available on our website in early 2014. So let me wrap up on Slide 20 with the key financial and operational milestones we've established. We intend to separate Life from Euronext in the Q1 of 2014 and fully integrate it with our iFutures Europe business by the Q4 of 2014. We intend to rationalize the MYX Technologies business in the first half of twenty fourteen. We expect to IPO the Euronext business in the summer of 2014. We have plans to exit 2014 on a run rate that reflects the realization of greater than 70% of our committed synergies. We anticipate earnings accretion in 2014 in excess of 20%. We believe we can delever to or below 1.5 times within 18 to 24 months and we have plans to exit 2015 on a run rate that achieves more than 90% of our committed synergies. Finally, along the way, we believe we can continue to invest in growth, return capital through dividends and share repurchases, address market structure issues in the U. S. Cash equity space, continue to gain share in global listing and expand our global derivatives and clearing footprint. And we are confident we can do all this while continuing to focus on the needs of our customers and the markets we serve, while continuing to generate meaningful value for our shareholders. Operator, we're now available to take questions. We will now begin the question and answer session. Our first question is from Alex Kramm of UBS. Please go ahead. Hey, good morning, everyone. Just wanted to quickly talk about the synergy numbers that you're throwing out here. So on the on one of the early slides, you're talking about synergies in excess of €450,000,000 And then obviously, you're talking about the €500,000,000 which to me that looks like it's basically just the D and A adjustment or it's accounting. So when you talk about synergies in excess of the $450,000,000 is that still something that you think from a core synergy numbers down the line? Or how should I be reading that? I guess as differently, how confident are you that you're going to be finding more as you dig deeper, which it sounds like you have done a lot already? So, Alex, I mean, I think of course synergies is what reduces operating expenses. So we as I mentioned on the call, we originally said $450,000,000 We've done $95,000,000 of that. We've got another $50,000,000 that comes from the revaluation of the balance sheet. That's a non cash item. But nonetheless, it decreases operating expenses. It increases margin. And it's reflective of, I think, the real cost of the data centers as we're going to use them. So I think that absolutely is an expense synergy we get as the acquirer of this business. With regards to your question whether or not there's more there, we're very focused right now on delivering those synergies that we've identified. We're very confident in the plans that we've got. But as you've seen historically for us, expense management doesn't run for a certain period of time and then stop. It's something we work on every day. Good. And then just secondly, maybe a quick one here. As it relates to the Euronext IPO, have you made a decision around how much debt that company is going to take with it? We have not made a decision on a precise number. It is we've clearly discussed what the capital structure of that business will look like. As you can look around at the vast majority of global exchanges that is a part of that capital structure. Clearly, as we get into the IPO process and as we work through our calls in coming quarters, we'll give you some more insight. So I would fully expect there will be debt in the capital structure, but we're not ready yet to talk about specific amounts. All right. Thank you. I'll jump back in the queue. Our next question is from Richard Repetto of Sandler O'Neill. Please go ahead. Yeah. Good morning. And first congrats on laying out the strategy here. The question first question is more on the Euronext, because I'm trying to understand the cash flows of the combined company. And to get a better feel, does the separation of the Euronext, does that preclude selling it? How much of percentage of an IPO would you actually spit out in the IPO? And on once the cash is in, I guess, do you have estimates on how much cash you're targeting to raise? And what would you do with it? Rich, this is Jeff. The first thing and one of the things we wanted to lay out in the prepared remarks is that as it exists today, Euronext includes the Life business as a single regulated entity. And so we can't do anything with the new Euronext until we separate Life. And the reason we want to separate Life is because we want to merge it into our existing U. K. Futures exchange. So we have work to do technology work and organizational work to separate those two businesses. We couldn't entertain any kind of transaction until that's done. So long story short is once we finish all of that work, we're going to have a standalone Euronext. And we've had now almost a year of conversation with the market, with regulators, potential stakeholders, bankers and others about how we could affect an IPO. So it's got quite a head of steam. I suppose anything could ultimately happen, but our shareholders are going to want us to affect the highest value transaction that is actionable in the shortest amount of time weighing the time value of money. So it just seems to us like the best outcome is an IPO. And as Jeff said, one of our objectives is to find the fastest path, because as I mentioned on one of the slides, we do have the euro bonds that we inherited from NYSE that come due in 2015. And so Rich to your question about where the proceeds from the sale would be used a first use particularly given that they'll be euro denominated will be to pay down that euro denominated debt which is a key part of our deleveraging plan. Okay. So I'm going to take from that answer that the agreements with the regulator doesn't preclude a sale, but and I'll move on to the follow-up question. But the follow-up question would be more on cash flow again. You've outlined potential source of cash from the technology business as well. And Scott, you also outlined a minimum. I think you said $500,000,000 to $600,000,000 on the balance sheet. So how would you and again, I know you're targeting the euro debt, but is there other potential uses of cash? And I know you got an outflow or I didn't see any terms of the Singapore Mercantile Exchange. Can you go through that a little bit? Yes. So the Singapore Mercantile Exchange is relatively speaking with a relatively immaterial purchase price amount. There's been a number that's reported in the press. And you can see from that it's not particularly meaningful. That clearly will use some of the cash. As I think I mentioned on one of the slides, we ended with over $1,000,000,000 of cash. So as I think about Rich's priorities, it's not any different than we've talked about the last couple of calls. We're generating nearly $1,600,000,000 of operating cash flows. We've committed a $300,000,000 dividend. As we've shown at the Singapore Mercantile Exchange, we're still going to be opportunistic on growth investments in a very disciplined manner. We have a $450,000,000 share repurchase that remains outstanding. So as I think I mentioned on the Q3 call that the thing that we feel good about is the strength of the cash flows of the combined company aren't really forcing us to make choices. We can delever. We can pay a dividend. We can continue to invest in growth and we're confident we can get to a point where we'll be able to repurchase shares as well. Okay. I won't go. Congrats and looking forward to watching this unfold. Our next question is from Chris Harris of Wells Fargo Securities. Please go ahead. Thanks. Hey, guys. So maybe I can ask a question on the revenues here. So we know there's going to be an impact from the sale of the NYXT businesses. Euronext, some portion of that will potentially go away. The deferred listings revenue impact you highlighted, is there anything else we should be thinking about other than those three items as we're trying to figure out the pro form a revenues for the combined entity? No. Those are the 3 major adjustments that you should work in your mind. What that obviously leaves out is the future growth opportunities that we're working on that Jeff talked about in his script. But in terms of pro form a adjustments, those are the 3 major ones. And just notably, you can run the math, but if you pull those revenue amounts and the estimated profit amounts out, where you have a pro form a business at 45% operating margin, it immediately goes to 50%. And if you roll the synergies through with no growth, we're right back to a 60% margin business. Okay, great. Maybe an unrelated question then. With respect to Life, Don't know if there's any other infrastructure or what have you that needs to go into that business? Not specifically for reform. We've been a leader in putting prophylactics around our platform to help our customers comply with regulation and to build fat finger and other error protections around it. We're going to be introducing those things now into the Life markets for the first time. But generally speaking, Life has a number of unique matching algorithms on the way it handles allocation in some of the low volatility markets, which is typical in those kinds of markets. We have that functionality built into our platform. We're just going to need to fine tune it and test it and then transition life onto that. And probably the biggest time value that we have is we need to build out the hardware and networks in the European data center. And so that will take some time as we make that transition. Okay. Thank you very much. Our next question is from Chris Allen of Evercore. Please go ahead. Good morning, everybody. I just want to ask about the revenue synergies, which you had mentioned in one of the earlier slides. I realize it's very difficult to quantify in terms of our new product development. But you've also mentioned around clearing. I was wondering if you could give us any metrics in terms of the potential opportunity around clearing revenue synergies? One of the things that it's subtle, but was in the prepared remarks is that what you see is we're moving our interest rate complex to one combined exchange and clearing infrastructure, so that we can have a multiprong interest rate offering that within the clearinghouse should be able to give economic offsets and take advantage of the extensive work that we've done in fine tuning our modeling for margin purposes. And then separately, we've got really quite a nice suite of index products that are growing. MSCI contract has actually been a very good grower for NYSE. And I think when we get that on our platform and coupled with the Russell indices and the FTSE, we're going to have quite a nice index platform that I think will be synergistic. So just by reorganizing the existing pieces, rolling out some rolling out the ultra long guilt. So we'll find other holes in the offering that will be I think relatively easy and quick for us to fill. And all of that I believe together will bring some great synergies. And I think Chris the other thing Jeff mentioned in his remarks is the clearing relationship that Euronext has secured with LCH ClearNet will be a nice synergy for that business. They have not historically gotten any clearing economics at all. There are no clearing economics in the revenue and margin estimates that we've provided in these charts. And so beginning in April 2014 Euronext will begin to participate in clearing revenues and profits associated with that. Got it. And then just on the data centers, do you have any plans to monetize these the the acquisition to put those data centers on the balance sheet at fair market value. The fair market value will essentially be developed as the value of the business as we use it, which will be the smaller footprint, if you will. And we'll have a lot of excess space, I guess, for future growth that should we need it. But generally speaking, we're going to exit the 3rd party hosting business unless it's directly related to our markets like colocation and other data services that one would traditionally in the Exchange business offer. Thanks guys. Thank you. Our next question is from Ken Worthington of JPMorgan. Please go ahead. Hi, good morning. Two questions. Maybe first for Scott. There was a lot of discussion in the NYSE merger qualifying as a reorganization under 368 of the IRS code. I guess first why is that so important? And is there a tax shield that's created upon the IPO of Euronext? If there is how big and maybe what can you do with that tax shield? Can I interrupt Scott and just say that's a pretty good Are you going to be disappointed when I say I don't know what IRS code he has quoted to me? Ken, look, I honestly don't know what IRS code you just quoted to me. If your question is with regards to whether or not we can get cash back out of Europe to fund our U. S. Business to pay our dividend to continue to invest and grow, the answer to that is yes. I'm not going to go into the details of how we're going to do our structuring to do it, but it's a fairly simple straightforward structure that we will put in place to ensure we can get our cash on to run our business. If your question is for investors, frankly, I'll have to get back to you because I don't know what you just quoted. Okay. And I guess that gets to the second question. You've generated so much earnings abroad. I think it's like about half, maybe a little bit more than half. What are your views on repatriation? Are you going to repatriate capital? And should we think about there being implications from a tax perspective? And if you don't repatriate, are there enough investment opportunities long term abroad to absorb all this foreign cash that's generated once the foreign debt is paid down? I think we will our current view is that we will be able to continue to not repatriate. However, as I mentioned briefly a moment ago, we feel confident in our ability to structure this deal in a way that will allow us to bring cash into the U. S. To use to run our operations to invest in our business. So net net, the heart of your question is the U. S. Is the cash we generate outside the U. S. Are we able to get at home to invest in the business? And the answer to that question is yes and it will come through the structure deal. If you think about it, we're buying a very material European operation from the U. S. And that will facilitate our ability to move those dollars back home. Okay. Awesome. Thank you very much. Our next question is from Alex Blostein of Goldman Sachs. Please go ahead. Great. Thanks. Good morning, everyone, and thanks again guys for providing all the incremental details on this. First question on the, I guess, longer term expense management, Scott. You guys have obviously proven to be a very good expense management company over time. Just curious how you guys think about the ongoing kind of core expense growth for the combined entity? And I guess what I'm trying to get to is, if you can sort of achieve almost a 60% margin with what you've just outlined, why can't this be back in the mid-60s type of margin business over time? Look, I said that's where we get to without synergies or with synergies and without growth. And as Jeff alluded to in his remarks, we think there's opportunity for growth. And so margin we have not transitioned into margin expansion via cost cutting and that's our only way. We are going to cut costs. We are going to then manage expenses, but we're also going to continue to grow the business. And so I think what you're going to see is an expansion in margins that comes from both expense management and revenue growth. We're not really in a different position than where we were back when we bought Creditex at the end of 2,008. That dropped our margins into the high 40s. And from there, we've moved right back into the mid-60s. So through expense management, through synergy realization and through the growth initiatives Jeff talked about, we're certainly not saying that there's not a possibility to drive this business back to our more traditional margin level. And in fact, I would tell you that is one of the objectives we've got. Got it. Understood. And then second question is again on capital. Just to go through some of the math that you put out there. It looks like you guys would have to delever maybe about $1,600,000,000 $1,800,000,000 or so. You're generating 1 point $6,000,000,000 of free cash flow today. There are some businesses that you're selling. You have excess of $600,000,000 of cash from balance sheet. So it feels like you guys could delever back to 1.5 times a little bit faster than 18 months. I guess why 18 to 20 month target? And then is there do you leave yourself I guess a little bit of room for buyback before you achieve the 1.5 times debt to EBITDA level? Yes. So there are a couple of variables that we don't control and that's the reason why we've given you the timeframe. So first of all, I don't know exactly when the IPO will happen. But more importantly, if you look at slide 18 of the earnings presentation, the euro bond that doesn't come due until middle of 2015. And that's really the key that we're going to need to pay off order to get down below that 1.5 times level. So we've got a lot of flexibility in the CP that's outstanding or that will be outstanding in our bank debts. But in order to get to the repayments, we'll need to get below 1.5 times, a portion of that's going to have to come from paying that debt down and it's simply not due until the middle of 2015. Okay. And the buyback in the interim is still kind of on the table until you guys get down to the 1.5? Yes. Got it. Thanks. Our next question is from Howard Chen of Credit Suisse. Please go ahead. Hi, good morning everyone. Thanks for hosting the call. Good morning. Jeff, just another follow-up on the data centers. The DNA advice has always been lightweight and not heavy and hard assets. So just curious as you evaluated all your options, I was hoping you could talk a bit more as to why the disposition option maybe wasn't more alluring right now and there's anything structural to what you own that maybe makes that option harder or easier over time? Thanks. It's a good question. Frankly, we entered the transaction and I specifically entered the transaction with the bias that we would likely sell those data centers. But as we got into the accounting economics of the way they're going to go on to our balance sheet and the massively reduced depreciation and amortization expenses around them. And then we looked at the revenues generation that comes from co location, which generally we do not participate in because up until now we've been in 3rd party data centers and the rents from 3rd parties taking space near us have gone to the owner of that 3rd party data center not specifically to us generally speaking, although we do have some arrangements in place. But when we looked at the real cost of running those businesses and we've taken a very deep look at them, it's actually much less expensive for us to operate those data centers on the balance sheet in the way they're going on than it would be to put that same infrastructure that we would need in a 3rd party location. Also, if you just look at how we have a lot of moving parts to over the next 18 months to get Life integrated to shut down Life U. S, to integrate Life U. K, to rationalize the technology business and to create an independent Euronext. I think also we didn't necessarily want to relocate the New York Stock Exchange trading in the middle of all of that. That's just one more moving part that didn't really seem to have a tremendous amount of benefit. We can revisit these decisions going forward and changes in custom and practice may suggest that we should get to a 3rd party data center and put these on the market. I would also tell you that in surveying the market, having high quality existing data centers, I think is going to be an appreciating asset. These things command a lot of power and they need to be located in places where you have access to multiple utility sources for redundancy purposes. And increasingly with the move to big data and cloud computing, a lot of the locations where you would want to put these things are being taken off the grid and new power plants are not coming to market fast enough in my mind to handle all of that. So when we talk to a lot of third parties, they said those are going to be very, very good strategic assets over the long haul. And all that together, particularly with the cost structure said we should just stay where we are. That's helpful context. And my follow-up, I realized the priority on Euronext is to execute the separation and that process is complex. But assuming a summer 2014 IPO track, how much would you ideally like to retain? I don't know. That's one of those things where I think the market is going to tell us how much the market wants. We're going to try to create this intersection of reducing our footprint to become a minority holder in the business. At the same time, we hope that there's next summer enthusiasm for the business in the public markets. And then we've got as I mentioned in my prepared remarks, we've had a lot of conversation. We already have a banking team that's engaged on this and has been engaged for months, who've been talking to a lot of third party shareholders, some of which have been reported on many of which have not. And that I think at today in today's market would be very, very interested in being shareholders. So it's really just a question of how will they feel next summer. Let me just tell you that I think that the business thesis of Euronext has not changed in my mind from when we did this transaction. And that is that it has a very stable cash flow. It will be able to pay a dividend and it will be levered very levered to the GDP recovery of Continental Europe. And I think there are and we have found investors that are interested in that thesis, a thesis where basically people are paid to be patient and wait for the recovery, paid via dividend to be patient to wait for the recovery and we'll have in our mind upside potential if that happens. Separately, once Euronext becomes an independent company, Dominique and his team will be able to go through and curate their own businesses in a better fashion than they have as part of the group. So we're hoping that they'll be able to find themselves expense and revenue synergies as an independent company that they didn't have before. Great. Thanks. Our next question is from Mike Carrier of Bank of America. Please go ahead. Thanks, guys. Hey, Jeff, maybe first question just on the revenue opportunities. You highlighted some of them, whether it's on the future side, clearing even the benchmark administration. I think it's one of the things that it's the most difficult thing in terms of trying to predict or assume both for us and I'm sure for you guys too. But when we think about those businesses even the U. S. Cash business, if you had to highlight 2 areas where you feel like ICE can bring something that's either differentiated or based on the client conversation on the innovative side, where do you think we can see the highest likelihood of some new revenues versus where you are today? It's a good question. I think the focus right now the primary focus of the ICE team and a huge focus of our customers is getting themselves organized for regulatory compliance, global regulatory compliance. And to a large degree that means accessing clearing and doing so in a way that minimizes capital, but still provides protection for the system. And so I honestly believe that we have built the best clearing infrastructure in the world. I really think we are unrivaled. And I we've had the luxury of building these businesses and attracting some of the best quants that we can find, coupling them with really good technology people to do modeling, back testing and sort of driving leadership in the way we think about managing capital. Scott's been building out a tremendous treasury team here. We started out our business in 2,000 and 7, I guess, where we outsourced all of our treasury functions. Today, we have increasingly taken over our investment in treasury. So I think that as customers look for solutions to meet the requirements of global reform, they're going to look at this really efficient clearing infrastructure that's been responsive to them. And that's been the focus, that's been a lot of the acquisitions that we've done has to give us multi asset class into that portfolio. You've seen CME has been very successful in their portfolio margin, which I think everyone would admit is very early days, still a lot of sneaker net going on, spreadsheet driven that kind of thing, but yet very powerful. As they build that out, I think most people to complement them, I think people can see the potential of what they're doing. And we have a much larger European footprint. Europe is not as far along in financial reform as the U. S. Is. It lags. And so I think we're arriving at a really interesting time. Lastly, I would say to you that the acquisition of the Singapore Mercantile Exchange is something that we proactively did. I reached out last spring to Financial Technologies, asked them if they would be willing to sell us that business. Events and circumstances led to an opportunity for us to acquire it and we jumped on it. Because I think that first of all it took them 3 years to set up that business. Secondly, it's the 1st non Asian owner of a major Asian exchange. I don't know how easy it's going to be for would have been for us to create an Asian exchange and clearinghouse. I think we're being very well received by market participants and regulators in Singapore as the owner of that company. And if you look at the incremental growth that is going on in the commodities markets, I really do believe it's Asia driven. One of the outcomes of the collapse of MF Global was a lot of our customers in Asia were upset that decisions were being made in the middle of their night in Chicago and New York on bankruptcy code that they didn't fully understand. And so people are asking us to have a bigger footprint there. I think there is a real growth opportunity as we better organize ourselves. And then lastly, as I try to say in my prepared remarks, ICE for many, many years had the luxury of sitting largely in London and accessing East West time zones. The balkanization of regulation is forcing our customers to reorganize. No one has the footprint that we have now. We are in the U. S, in Canada, in Brazil, in the U. K, on Continental Europe and now in Asia and Singapore. That is where our customers are located. And I think you couple our technology and clearing with that, the pressure on regulation, I just think that we are so well positioned. It's really I mean, we couldn't have possibly no one would have thought years ago, we could have actually rolled up the things we did ourselves the way we have for the environment that we're in. So that's where I think there has to be an element of trust that the winds of change are moving our way. All right. That's helpful color. And then Scott, maybe just a quick one. You mentioned the cash flow priorities, particularly over the next 2 years in terms of paying down the debt. I think maybe it's just too far in the future to even think about. But if I think about once you get to that 1.5 times target and you're still generating $2,000,000,000 a year even beyond the dividend, when you think about increasing the dividend maybe to a yield that's in line with the market picking up buybacks or do you still think you can invest 2,000,000,000 dollars in growth opportunities? Just want to try to figure out the priorities once you get the debt paid down. I honestly wouldn't even hazard a guess of what things are going to look like 2 years from now. I think the reality is, as I mentioned earlier, the thing we feel good about is we think the combined cash flows give us the opportunity to do the dividend, to make the investments, to repurchase shares. What the relative balance and mix of that will be will depend on where we think we can generate the highest returns on capital and generate the largest value for our shareholders. And what that looks like a couple of years out, I just don't know. Yes. Okay. All right. Thanks a lot, guys. Our next question is from Kenneth Hill of Barclays. Please go ahead. Hey, good morning guys. I just wanted to touch on a topic there on the last question set. So Singapore market seems like it's just the tip of the iceberg when coming into Asia. Just wondering how you're thinking about building out some of the opportunity sets there and maybe what kind of investment might be involved to really kind of expand that base? Well, I think the good news for us is that we consider ourselves the dominant energy player in Asia. We have for years really been the area that sets the price for Asian oil products and energy derivatives. And so we've got an extensive customer base already. We have already an office in Singapore that operates as a touch to our customers and we have a really good staff there. And so there may be products that we currently trade that we will move on to that exchange. We also had some ideas that we haven't yet made public of other products that we'd like to put into Asia that we think can be more successful locally than they would have been had we tried to do that from London or the U. S. And generally speaking, having clearing infrastructure there, where people can operate in a bankruptcy or default situation under local law in a local time zone is going to be in my mind a very, very strategic advantage. And so I suspect over time our Asian customers will be asking us to put more and more of their important contracts into that infrastructure. Okay. The other kind of follow-up question I had here was around the LIBOR benchmark. So it seems like an interesting opportunity since perspective from you guys from the benchmark administration group. Just wondering, given that there's a lot of regulatory scrutiny around the LIBOR benchmark, how you guys are going to go about improving the process for it and kind of getting regulators more comfortable with it going forward? Sure. Well, the first thing we're doing is we are organizing the activity as a separate business that's going to have a lot of independent board members and high profile board members that are going to help direct the company with a very strong regulatory event. We as a regulated exchange group already have strong relationships with regulators. We understand data dissemination and collection and customer protection of price discovery. And so we're very well positioned just from an infrastructure standpoint and organizational standpoint to move into this business. Obviously, we start with LIBOR, but there are a number of other IBORs around the world. And secondly, we LIBOR itself in the way it's compiled, there are opportunities we think to change the way that that contract is developed and discovered tying it back to real transactions and that are related. And those and all of that portfolio of prices, we think could help us develop other indices that will meet that will be relevant to the markets. We're going to have we're going to be in a really neat position of having a direct relationship with the regulators and the customers as we gather that data. We put BINVAR, Hutchinson in there with the idea of actually building that business along the financial markets to take on other responsibilities around the world. So we'll have to see how it goes, but it's an exciting opportunity for us, particularly the vote of confidence that we got from the current LIBOR market to take that over. Okay. Thanks for taking my questions. Our next question is from Jillian Miller of BMO Capital Markets. Please go ahead. Thanks guys. I had a question on the tax rate. I think in some of the pro form a statements you'd filed before, I was back into like a 25.5 percent rate ish. And since then, the U. K. Has reduced the corporate tax rate again, I believe. But in this presentation, in one of the slides, I saw a 27% rate. So I was just a little bit confused what we should be expecting for the combined company going forward. As of today, you should be expecting 27 in the 4th quarter. That's what we guided to. Again, it's half a quarter of them. It's a full quarter of us. There are a lot of moving parts on the tax rate. So, Jillian, I can't give you a forward looking tax rate guidance today. Clearly, we will do that when we get to the February call. What we wanted to do is give you a placeholder for your models for the Q4. I think 27% is the good placeholder right now. As I mentioned in my remarks on all of these points of guidance, not just the tax rate. To the extent we get better or more clear information and can give you updates, we'll do that. Okay. Thanks. And then on Euronext, can you tell us how much of the trailing 12 month revenues are attributable to those data businesses that are being kind of lumped in there versus the core trading? I'm sorry, how much is the technology businesses being lumped in versus the core trading? Yes. The technology businesses that we moved in there are relative. We haven't broken it out and we're not going to break that out. But I will tell you that the technology businesses that we moved in generated a small part of the overall $500,000,000 ish in revenues. Okay, thanks. Our next question is from Dan Fannon of Jefferies. Please go ahead. Thanks. I guess, can you talk about the time period for optimizing the technology portfolio or what's reasonable to assume some of these sales or exits to take place? Sure. The businesses that we think would be better owned by others are generally speaking standalone businesses. So they I think can be organized to become salable relatively quickly. We would expect we've already had inbound interest in some of these business with the anticipation that we may do this. So I think we'll be able to organize them up relatively quickly and in the start the process in the Q1 of next year. I would hope that by mid year that we would either be done or relatively far along and have transparency into the pricing and the ultimate buyers of those businesses. They're very good businesses. I think they do they will be attractive to others. They're just there are things honestly that I don't understand and that my colleagues here don't really understand. And I just don't think we should be in businesses that we don't really understand. We looked in the mirror and we asked ourselves 5 years from now, are we going to say, were we idiots to have sold those businesses? And honestly, we don't even understand them well enough to know whether or not we're going to look like idiots in 5 years. So that was pretty telling to me. And we probably will look like idiots and I'll give you the right to call us idiots, but looking in the mirror, we couldn't see it ourselves. So they just feel like businesses that would be better owned by others. Fair enough. And then, Scott, you mentioned 2014 accretion of 20%. Is that in relation to consensus estimates out there for ICE standalone? Yes, I'd say over 20%, because we did look at it relative to consensus. We also looked at it in terms of some of our internal models. But I think on either measure, it's likely to be in excess of 20%. Great. Thank you. The next question is from Robert Roachow of CLSA. Please go ahead. Hey, good morning. I was wanting to ask a question on the equity derivatives business in Europe. Can you tell us how much of the $500,000,000 in Euronext revenues is coming from equity derivatives you'll contribute? No. We haven't broken that business out in terms of the revenue component. As we get more into the IPO path early part of next year, we'll start to put some of those that information out. As we look to report and provide guidance on our earnings call in February, we'll start to give some of those details. But that's not detail we really want to put out there today. I will say that we as I mentioned in our prepared remarks, this is going to be a very interesting multi asset class exchange. The CAC index is very important index for Europe. The European wheat contract is like today life's largest commodity contract that we'll be putting in there. So it's going to have some interesting multi asset class opportunities to build out its franchise. And I think those are the proper locations for those contracts. And I think that management team will do a better job than we would do in focusing on them and building them out. Yes. And it's not just the French equity index. You've also got the Dutch equity index, which is also a major product within that I think is performing well. Okay. Thanks. Quick follow-up. Can you tell us what the headcount is associated with the technology businesses you'll be disposing of? Yes. I think I'll flip to the chart real quick. I think it was listed on the chart, I want to say 600. Yes, so Euronext was 850. We listed in around 600 related to the NWAC T. So if you kind of just to put that in perspective, so give or take a little bit that's 1400 people. The combined companies will be around 4,100 not including contractors consultants etcetera. So what that would say is if you take the starting point of 4,100 take those 14 100 out through divestitures you're looking at somewhere around $26,000 or $2,700,000 for the retained businesses on a combined basis. Great. Thank you. Our next question is from Akhil Bhatia of Rosenblatt Securities. Please go ahead. Hey, good morning, guys. Good morning. Just a quick question on Slide 16, you've got the combined adjusted net income for the group for the trailing 12 months of 11, 17. Just kind of trying to understand the combined company. On top of that, we would throw in the synergies going forward and then any core growth. But does that 117 number include all the interest expense or is there additional interest that came in that we need to incorporate into that number? I think I understand it because the trailing 12 months is very simply the last four quarters we've reported plus the last four quarters they've reported. If you take that as your starting base, the adjustments you're going to want to make are the reduction of the revaluation of the balance sheet, the reduction in interest expense from the revaluation of the Eurobond and then whatever synergies that you want to add in. So effectively, as I said earlier, if you take the full synergies, which we've committed to deliver and all those other adjustments, it get your operating margin up around 60%. I haven't run the math on what that would do to net income, but it would be a meaningful increase. Got it. And then also the interest expense associated with the bond that came in, in October? Yes. So the net number I gave you in terms of the interest expenses, a revaluation of the Eurobond and an increase from the debt that we've taken out. So I kind of netted those 2 together. The biggest driver was the big write down of the Eurobond. Okay. Got it. And then just the follow-up. What kind of revenue and ADV are you acquiring from Singapore on the Singapore deal? I think it's a loss making business right now, but we are not really acquiring it for its existing business. We're acquiring the infrastructure as a speed to market. Also by the way, we are very impressed with a lot of people that work there and the Board of Directors, the independent directors that they've assembled who are very high quality people and there are some very good people in there including some tremendous risk people that we're anxious to get a hold of. So we're really buying the infrastructure and the fact that we would avoid a 3 year process if we were to start on our own and the fact that it's not particularly easy in Asia for a Western company to start an exchange and clearing infrastructure. So all of that is really how we develop the purchase price. In many ways, this deal is analogous to our purchase of TCC a few years ago, where we had the clearing infrastructure, but we didn't have the CDS risk model. We found some really good risk people on that team. And we really made a buy versus build decision in acquiring that capability. If you look back at what the purchase price was that we put up on the books there, not that different than what we're talking about in this deal. Okay. Thank you. Our next question is a follow-up from Alex Kramm of UBS. Please go ahead. Hey, thanks again. Just one quick accounting question for you, Scott. The purchase accounting adjustment to the listings business, now that's basically all the I guess the initial listing fees are still getting amortized. So I guess going forward as you attract new listings will we actually have like a I think it's 10 year ramp where basically you get growth as more and more stuff gets amortized over year? Or are you going to use different accounting? So maybe you could just review how that's going to look? That's a really good question. Thank you by the way for not quoting the GAAP number that went with that question. So effectively, we will as you indicated, we'll treat the revenue the same way that the NYSE has. So as the annual listings are paid, as new listing fees are paid, we will defer those payments and we will recognize them over time. The annual over the course of the year, the upfront listings fee over the course of time. We're still evaluating over what number of years that will be amortized. There was a NASDAQ does it over a period that's a little shorter than what NYSE does. We're still working our way through. So effectively what you'll see is as we continue to succeed in the listings business, we'll rebuild that asset on our balance sheet. A little bit will flow through the income statement related to those new listing fees. And then over time, you'll see the revenues build as well. All right. Excellent. And then maybe just in terms of the cost outlook, maybe Jeff, you can talk a little bit about just the NYSE structure. I mean obviously you've already given all the business leaders now. But how do you I mean, I think historically the NYSE had a lot of management layers. So just curious how quickly you can get to more of like a flat ICE like organization and if you anticipate any sort of like pushback or things that might have to do in the interim before you can actually get to like an ICE mentality over there? Well, first of all, if you look at our presentation today, we didn't really talk about the New York Stock Exchange per se as a source of synergies. But that isn't to say, it isn't a large source of our focus in terms of how we can better prepare the company. Duncan and I, as you know, have a very good relationship and he and I have been working and having a lot of conversation about how to organize. There are 5 technology platforms in there under the UTP. ICE is already well along in rationalizing this down to get on a single platform and to use the infrastructure and technology and skill set that ICE has developed in derivatives and to put that into a single platform. Equity is equity is a very competitive space. There are some low cost competitors out there. I think that we can and will be the lowest cost competitor when we're done with this. Nobody will have an incremental margin like we do because of the breadth and footprint of operations that we have. I'm going to pass our people with being the lowest. And I think it's incrementally achievable for that. We in addition are looking at the whole way the business is organized and the people that are there. We're very impressed with a lot of people there by the way. And I've talked a lot to people about infusing our culture of taking calculated risks and being innovative and getting closer to our customers. And I think the regulatory trends, the market trends are really pushing things back towards transparent and regulated exchanges and clearinghouses. And so I think that same trend exists in equities and that it's actually a very, very well positioned company. We're the largest venue for equity trading in the United States and probably the highest profile venue for equity trading in the world. And so that's why I think it's incumbent on us to be the market leader in terms of the way we approach our customers and regulators. And so I've been outspoken on issues that I think need to be addressed and you'll continue to see us do that. I've been really pleasantly surprised that a lot of major CEOs that are in the equity trading business have been very supportive, are anxious to drive change, see a need for change, see a need to improve the market perception of equity trading in the United States, want to put more customer protections and market protections into the system. And all of those things are trends that surround that business that I think will ultimately make it a very, very interesting place for us to be. All right. Great. Thank you again. And our next question is a follow-up from Jillian Miller of BMO Capital Markets. Please go ahead. Thanks. I apologize if this has been asked already, but I must have missed it. What is the tax treatment on the Euronext proceeds? Or what do you expect the tax treatment would be for you guys in the Euronext proceeds? Jillian, I haven't gone through to determine what the tax proceeds are going to be on that deal. Are we going to sell it? Are we going to IPO it? I mean, I don't even know what the disposition looks like at this point. Jeff alluded earlier, we're still early in the process. Our first step is we have to extract life and then we'll move along that path. So we'll get back to you with more details as we have them. But as of this time, it's difficult to predict what the tax will look like until we really know what the disposition looks like. Okay. And also one of the things that we're in we want to make sure that the exit balance sheet of Euronext is a strong good balance sheet to give them a good start as an independent company. So we're still working on those balance sheet issues. Okay. Thanks. This concludes our question and answer session. I'd like to turn the conference back over to Jeff Sprecher for any closing remarks. Well, thank you, operator. Well, I hope that this has been helpful to be transparent and open with you early in the process of our acquisition and integration of these two businesses. We're excited to begin this next chapter in our growth story. And we'll continue to stay close to you and speak to you as events unfold around these businesses. So thanks again for joining us today and we'll be back soon.