Deutsche Boerse Group Annual Report 2016

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FY2016 Annual Report · Deutsche Boerse Group

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annual

On the year 2016 and prospects
for Deutsche Börse Group

a n n ua l 2016 C O n t E n t S

StatuS

ambitiOn

innOvatiOn

ambitiOn

One year of accelerate.
a look back
New structures, new products,
a new mentality: things are
changing at Deutsche Börse
Group. Efficiency and customer
focus are centre stage.

an alternative for Europe
When the British electorate
voted in favour of leaving the
EU on 23 June 2016, it came
as a shock. Now we must draw
the right lessons from this event.

the value of data
Data help us create extremely
useful products for our custom-
ers – incorporating features
which seemed unrealisable
only a few years ago. What’s
more, new data products now
allow for even more efficient
markets.

Energy trading in Europe: EEX
Trading in electricity and gas
has changed markedly over the
past few years. The European
Energy Exchange has its finger
on the pulse of the market and
its customers – and continues
its course for growth.

StatuS

RESpOnSibility

StatuS

ambitiOn

innOvatiOn

StatuS

ambitiOn

innOvatiOn

RESpOnSibility

innOvatiOn

ambitiOn

RESpOnSibility

ambitiOn

StatuS

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Deutsche Börse Group: overview
Our Supervisory Board and Executive Board
One year of Accelerate. A look back
An alternative for Europe
Exchanges and the real economy
Technology and the market of the future
Clearing: prepared for any eventuality
Post-trading services: issuers on a single platform
Regulation from A to Z
Integrated thinking: keeping an eye on everything
360-degree feedback: a drive towards more openness
The value of data
Energy trading in Europe: EEX
Working at Deutsche Börse Group
Opportunities and expectations
Key figures

Title: Deutsche Börse
Group employees at Willis
Tower, home of the com-
pany’s Chicago offices

This is the second edition of our “Annual”, the magazine section of our corporate report. You
can look forward to concise, vivid, easy-to-read reports – covering business topics in an attractive
magazine format. Find out about Deutsche Börse Group’s key achievements over the past
year, and about the projects the company envisages for the near future – and further ahead.

Our responsibility to society is a key aspect in this exercise of determining where we are, and
where we are going. To us, aligning our business conduct with the needs of our clients and
investors is just as important as considering the interests of those stakeholders that are indi-
rectly affected: our members of staff, the locations where we do business, and the regulatory
and political environment.

Once again, we can look back on a successful year. “Accelerate”, our strategy to boost growth,
is working. During 2017, we will adhere to our goal for Deutsche Börse Group to become the
top-ranked or second provider amongst all competitors, globally, in all of our businesses. We
have made quite some progress on our way to achieving this goal during the past year: we ful-
filled our forecast for growth while keeping costs under control. Net revenue was up by 8 per
cent as costs increased by a mere 1 per cent – resulting in net income rising by 14 per cent.
In addition, we intensified our efforts to support the real economy – particularly SMEs and
start-ups, with Deutsche Börse Venture Network® assisting companies even before their listings.

Likewise, we are driving innovation within our own enterprise. One example is the European
Energy Exchange (EEX), our stronghold in an asset class offering high growth rates: contracts
on energy and other commodities. The governance and control model that is in place at EEX
helps us achieve performance: clients – who are also co-shareholders – have a vested
interest in ensuring that their company is doing well. Another showcase for innovation is our
Content Lab, where we are developing and testing new ideas with the intention of turning them
into marketable products and services. Right now, the Lab’s work focuses on market data,
and on turning it into analysis and investment tools. As you can see, we are constantly working
on “Exchange 4.0”, everywhere throughout the company. Being a successful innovator also
requires an innovation-friendly corporate culture – which, in turn, requires constructive criticism.
We have taken an important step in this direction by introducing 360-degree feedback for
managers. We will not rest in our endeavours to continue pushing this cultural change through-
out 2017.

Dear readers, I also look forward to receiving your feedback at carsten.kengeter@
deutsche- boerse.com. Let me know your thoughts, and help make our Annual even better.

Enjoy reading!

Yours sincerely,

Carsten Kengeter
Chief Executive Officer

deutsche börse Group – annual S tat u S Overview

S tat u S – d Eu t S ChE b ö RS E G R O u p

Overview

1 pre-ipO and listing
2 trading
3 Clearing
4 Settlement
5 Custody
6 Collateral and liquidity management
7 market data
8 indices
9 technology

As a diversified exchange organisation, Deutsche Börse Group’s products

and services cover the entire value chain in the financial services sector.

Its business areas range from the admission of securities to listing, through

trading, clearing and settlement to custody services for securities and

other financial instruments, along with collateral and liquidity management.

Additionally, the Group provides IT services, indices and market data

worldwide. We have divided our products and services into nine groups,

as follows.

1
pre-ipO and listing

3
Clearing

Start-up companies often enter into a decisive phase
when their business requires liquid funds in order to
boost their market profile and to expedite growth. It is
specifically for companies in this phase that Deutsche
Börse launched Deutsche Börse Venture Network®. In
addition, Deutsche Börse invests in attractive fintech
companies via DB1 Ventures. An IPO (initial public
offering) on the stock exchange marks a company’s
debut on the capital market. When they list at the
Frankfurt Stock Exchange, companies of all kinds and
sizes – SMEs or large enterprises, domestic or interna-
tional – can raise equity or debt capital. Investors may
participate in the growth of the real economy – pro-
moting it at the same time by providing capital.

Our brands: Deutsche Börse, Deutsche Börse Venture
Network®, DB1 Ventures, Börse Frankfurt

2
trading

Deutsche Börse Group operates regulated markets for
equities, exchange-traded products (ETPs), bonds and
numerous other products for the two trading venues
Xetra® and Börse Frankfurt. The Group also facilitates
trading of derivatives – i.e. contracts derived from other
assets or reference values (including equities, indices,
German and European government bonds, foreign
exchange or commodities), which are traded on its
electronic T7® platforms. These also include a variety
of products of the European Energy Exchange, which
include not only energy (e.g. electricity) but also energy-
related products (e.g. emission allowances) as well as
commodity products (e.g. agricultural products). 360T
operates an off-exchange (over-the-counter, OTC) trad-
ing platform for financial instruments such as foreign
exchange, money market or interest rate products.
Additionally, 360T provides platform solutions for
closed user groups.

Our brands: Xetra®, Börse Frankfurt, Tradegate,
Eurex®, European Energy Exchange, 360T®

Eurex Clearing AG and European Commodity Clearing
AG, Deutsche Börse Group’s clearing houses, act as
partner to each buyer and each seller to minimise credit
default risk. In this manner, we reduce risk positions
and achieve financing and capital efficiency gains for
our customers. These benefits – along with the regu-
lators’ intent to boost clearing via central counterparties
(CCPs) – make CCP clearing both an anchor of stability
and a vital component of the financial services industry.
Deutsche Börse Group offers efficient clearing for deriv-
atives, securities and securities financing transactions
as well as foreign-exchange and commodity transactions.

Our brands: Eurex Clearing, European Commodity
Clearing

4
Settlement

Following trading and clearing, settlement involves
the accurate booking of individual items, with the
exchange of securities against money. The correct
booking of securities transactions to individual client
securities accounts also takes place during this pro-
cess. Clearstream, Deutsche Börse Group’s provider
of post-trading services, is responsible for efficient
global securities settlement.

Our brands: Clearstream, LuxCSD, REGIS-TR

5
Custody

Once assets have been settled correctly, they are held
in safe custody. Clearstream administers assets through-
out the period for which they are held, offering services
such as the handling of corporate actions and dividend
payments – across all types of securities. Moreover,
comprehensive reporting and the segregation of collat-
eral margins allow market participants to efficiently
comply with their regulatory obligations.

Our brands: Clearstream, LuxCSD

deutsche börse Group – annual S tat u S Overview

Company headquarters
The Cube, Eschborn

7
market data

Private and institutional investors make decisions
based on market data, creating new information in
turn. Deutsche Börse’s most prominent data products
include (real-time) price data generated from its various
trading systems, as well as historical market data, plus
analytical indicators from trading at its cash and deriv-
atives exchanges.

Our brand: Deutsche Börse

8
indices

Through STOXX Ltd., Deutsche Börse Group dissemi-
nates indices tracking markets around the world. The
index families are differentiated by country, region,
product type, investment theme or strategy; customised
indices facilitate tailor-made market analysis in real-
time. Among the Group’s benchmark products are the
EURO STOXX 50® index and the DAX® index, which
track the performance of the 50 industry-leading com-
panies in the eurozone and the 30 largest German
companies, respectively.

Our brands: STOXX®, DAX®

6
Collateral and liquidity management

9
technology

Through Clearstream’s Global Liquidity Hub, Deutsche
Börse Group offers financial institutions optimal collat-
eral and liquidity management. Due to its links to depos-
itory banks, trading platforms, central counterparties
and other national central securities depositories, the
open architecture provides real-time access to a rich
pool of liquidity.

Our brands: Clearstream, Eurex Repo®

Resilient, state-of-the-art IT systems provide the foun-
dation for virtually all capital markets services. Deutsche
Börse Group develops and operates IT systems for
trading and clearing as well as for settlement, custody
and market data services.

Our brands: Deutsche Börse, 7 Market Technology®:
C7®, F7®, M7®, N7®, T7®

deutsche börse Group – annual S tat u S Our Supervisory board and Executive board

Our Supervisory Board
and Executive Board

O uR S upERviS O Ry bOa Rd

O uR E X ECutiv E bO a Rd

F O R mE R mEm b E R O F t h E
S u pE Rv i S O Ry b O a Rd

Carsten Kengeter, * 1967
Chief Executive Officer

andreas preuss, * 1956
Deputy Chief Executive Officer
and responsible for IT & Operations,
Data & New Asset Classes

Gregor pottmeyer, * 1962
Chief Financial Officer

hauke Stars, * 1967
responsible for Cash Market,
Pre-IPO & Growth Financing

Jeffrey tessler, * 1954
responsible for Clients,
Products & Core Markets

Gerhard Roggemann, * 1948
(until 11 May 2016)
Senior Advisor
Edmond de Rothschild
Private Merchant Banking LLP, London
Nationality: German

E m pl Oy E E RE pR E S E n tat i v E S

marion Fornoff, * 1961
Staff member in the HR
Europe & US section
Deutsche Börse AG, Frankfurt/Main
Nationality: German

hans-peter Gabe, * 1963
Staff member in the HR Compensation,
Workforce & Talent Management section
Deutsche Börse AG, Frankfurt/Main
Nationality: German

Jutta Stuhlfauth, * 1961
Lawyer, M.B.A. (Wales) and
Head of the unit Policies & Procedures
Deutsche Börse AG, Frankfurt/Main
Nationality: German

Johannes Witt, *1952
Staff member in the Financial
Accounting & Controlling department
Deutsche Börse AG, Frankfurt/Main
Nationality: German

S h a RE h O l d E R RE pR E S E n tat i v E S

Joachim Faber, * 1950
Chairman
Independent Management Consultant, Grünwald
Nationality: German

Richard berliand, * 1962
Deputy Chairman
Management Consultant – Executive Director
Richard Berliand Limited, Ashtead Surrey
Chairman of the Management Committee
Renshaw Bay LLP, London
Nationality: British

ann-Kristin a chleitner, * 1966
(since 11 May 2016)
Scientific Co-Director Center for Entrepreneurial
and Financial Studies (CEFS) at the Technische
Universität München (TUM), Munich
Nationality: German

Karl-heinz Flöther, * 1952
Independent Management Consultant, Kronberg
Nationality: German

Craig heimark, * 1954
Managing Partner
Hawthorne Group LLC, Palo Alto
Nationality: US-American

monica m ächler, * 1956
Member of different supervisory bodies,
Pfäffikon
Nationality: Swiss

Erhard Schipporeit, * 1949
Independent Management Consultant, Hanover
Nationality: German

amy yip, *1951
Managing Partner
RAYS Capital Partners Limited, Hong Kong
Executive Director
Vitagreen, Hong Kong
Nationality: Chinese (Hong Kong)

As at 31 December 2016 (unless otherwise stated)

deutsche börse Group – annual S tat u S One year of accelerate

S tat u S – S t R at E G i C p E RS pE C ti v E S

One year of
Accelerate

In 2016, Deutsche Börse’s Group-wide growth strategy was the crucial

milestone for the company’s further development. The strategy’s motto

“Accelerate” has defined the relationship between us and our stake-

holders: our clients, employees, shareholders, other companies and

(potential) partners.

Title of our Annual 2015

Hauke Stars,
member of the Executive Board,
responsible for Cash Market,
Pre-IPO & Growth Financing

“In one and a half years, Deutsche Börse Venture Network – our
growth financing platform – has mobilised more than €1 billion
for funding innovative ideas. We are connecting European start-
ups and growth companies with an international investor base
to build an ecosystem for growth.”

FivE-ElEmEnt GROW th StR atEGy
Our long-term objective with “Accelerate” is to become
the global market infrastructure provider of choice –
being top-ranked in all our activities along the entire
value chain. Our focus is on our clients; they are the
ones who benefit from more efficient workflows.

these are the five elements “accelerate” is
comprised of:
1. to better fulfil client needs, through a more rigor-

ous organisation

2. to improve performance measurement and per-

formance-oriented remuneration

3. to review the medium-term financial planning
4. to exploit opportunities for external growth
5. to review and examine the portfolio of businesses

and investments

What have we done in the past year in order to imple-
ment these elements into our corporate practice?

bEt tER FulFilmEnt OF CliEnt nEEdS
Since the beginning of 2016, the core business seg-
ments of Deutsche Börse Group have been bundled in
the Executive Board portfolio of Jeffrey Tessler. Deputy
CEO Andreas Preuss, also responsible for market data
and IT, is head of the growth areas commodities and
foreign exchange (European Energy Exchange and 360T).
And the cash market business, headed by Hauke Stars,
has been expanded to include an additional area: a pre-
IPO ecosystem is being created – especially for young,
innovative companies. These organisational changes
will enable us to better meet new client needs, and
to tap sales potential which we have not been able to
explore to date. We have already successfully imple-
mented many parts of this programme.

With Group Sales, Group Business & Product Develop-
ment and Group Marketing, we have established three
centralised functions, thus already noticeably improving
coverage of our top clients, and enhancing our cross-

deutsche börse Group – annual S tat u S One year of accelerate

“Information technology is a competitive factor as well as a
driver of innovation. In this regard, we consistently focus on
state-of-the-art technology, processes and tools. Clients benefit
from our enhanced agility and innovative strength in product
development, whilst they can rely upon our established track
record in operations.”

Andreas Preuss,
Deputy CEO,
responsible for IT & Operations,
Data & New Asset Classes

divisional offers. The task of onboarding new clients is
now also in one hand, leading to a significant accele-
ration of the process.

State-of-the-art information technology is a key com-
petitive factor as well as a driver of innovation. Nowa-
days, our software development takes place within
the framework of a product organisation which realises
business objectives in cooperation with market opera-
tions. This strengthens profit responsibility, product
innovation and client orientation. At the same time, we
consistently pursue the introduction of modern tech-
nologies, processes and tools – such as cloud com-
puting and continuous deployment – in the development
and operation of our products. Combined with agile
working methods, we develop and operate top-quality
software that sets the standards within our industry. Our
clients benefit from the quick realisation of their require-
ments, and from enhanced product innovation – whilst
being able to rely upon the established track record of
our infrastructure in daily operations.

for members of the Executive Board and top level
management immediately beneath Executive Board
level in 2016: in the year under review, we used the
same performance param eters for both groups for the
first time. Step by step, we will roll out the performance
assessment system to cover further management levels.
We are now evaluating which elements of this system
will in future also be applied to our other employees.
Our objective remains the same: to raise the Group’s
attractiveness for the top talents in our sector, and also
to increase performance orientation on all levels.

FaStER GROW th
It remains our goal to invest into new markets and
asset classes at a faster pace than in the past. This
is why we revised our financial planning for the period
up until 2018, and already identified opportunities for
additional organic growth. We set clearly defined tar-
gets for profit growth, in the course of which we empha-
sise the importance of safeguarding the scalability of
our business model: that is, to distinctly expand the
number of transactions, at minimal cost.

RE WaRdinG GOOd pERFORmanCE
In order to strengthen the responsibility for profit and
loss, we have introduced a new remuneration system

As such, for 360T we invested into a new clearing
solution and a completely re-drafted open order book

Jeffrey Tessler,
member of the Executive Board,
responsible for Clients,
Products & Core Markets

“Our staff are dedicated to using further regulation and projects
like TARGET2-Securities as continuing opportunities to support
our customers’ business.”

for foreign-exchange trading. We expect this to gen-
erate further growth. EEX – principally an energy
exchange but also a comprehensive commodities
marketplace – is active in very dynamic markets which
offer further growth potential. The investment fund
services area of our post-trade services provider
Clearstream is also geared for growth. We also expect
further stimuli especially from TARGET2-Securities,
the European Central Bank project aimed at harmonis-
ing cross-border securities settlements within Europe.
As the largest participant in this new system, we can
use it to offer our clients additional services. Finally,
we also see growth opportunities in the index business,
as they provide the underlying instruments for passive
investment strategies – which are increasingly gaining
popularity.

On a long-term horizon, these initiatives also aim at
decoupling us from the cyclical nature of our core
markets. Historically low interest rates have had a
dampening effect on many of our business areas. We
want to mitigate this effect by carrying out activities
on markets with lower (or ideally contrasting) cyclicality,
thus creating favourable conditions for significant fur-
ther growth.

Against the background of these growth opportunities,
we will also adhere to the objectives of our financial
planning for the period up until 2018. Index deriva-
tives at Eurex, the index business and EEX have per-
formed particularly well during the financial year 2016.
We are also continuing our successful cost manage-
ment, with the objective of structurally reducing our
costs and, thus, enhancing our efficiency and creating
additional scope for growth.

EnhanCi nG OuR nEt WORK OF COOpER atiOnS
In the world of exchanges, growth is largely created
through consolidation. The largest exchange organisa-
tions owe their top positions – among other factors – to
successful acqui sitions and mergers. And Deutsche
Börse is no exception – a significant part of our growth
is attributable to consolidation. Indeed, we created our
integrated business model this way. We want to con-
tinue to actively shape the consolidation processes
within our sector. Thus, we want to create favourable
growth conditions and be able to meet the leading
exchanges in the US and Asia at eye level.

Our positive stance on cooperations in Asia also remains
unchanged. The fact that global wealth distribution is

deutsche börse Group – annual S tat u S One year of accelerate

“Our target is to grow earnings by 10 to 15 per cent every year.
We remain firmly committed to our active cost management
and attractive capital management.”

Gregor Pottmeyer,
Chief Financial Officer

undergoing changes in favour of China and India,
accompanied by the rise of an affluent middle class
in those regions, are two points no long-term oriented
business strategy can ignore. We are already success-
fully cooperating with the Korea Exchange and the
Taiwan Futures Exchange (TAIFEX), jointly offering
products based on their respective blue-chip indices.
We are also collaborating with the Bombay Stock
Exchange (BSE) via a strategic alliance. Since 2013,
BSE markets have been operating on T7®, Deutsche
Börse’s trading architecture. And with the launch of
CEINEX, we founded a worldwide unique cooperation
with key Chinese players in the capital markets.

EnhanCi nG OuR invEStmEntS
Pursuing a growth strategy also implies cutting loose
from low-growth stakes, and ceasing unsuccessful ini-
tiatives. In the past year, this included the divestiture
of the International Securities Exchange, the news
agency Market News International and the securities
information provider Infobolsa.

figo, a Hamburg-based fintech: figo is Europe’s first
“banking service provider”, offering third parties innov-
ative services through banking functionality. By inte-
grating figo’s application programming interface (API),
they can link their applications, products and services to
more than 3,100 financial sources in a very short time.

With DB1 Ventures we have introduced a platform
that invests in new holdings and actively manages
the already existing minority shareholdings of Deutsche
Börse. That way, we want to make use of the full
potential of our strategic investments. Our focus lies
on fintech businesses in their seed phase and growth
stage. We reinforce promising partnerships in our port-
folio, divesting those that fail to develop sufficient
potential. Sustainability is also an increasingly impor-
tant criterion.

Therefore, we will continue to examine our portfolio
of businesses and investments, whilst maintaining our
very sound balance sheet structure and attractive divi-
dend policy.

However, we also invested in Digital Assets, an inno-
vative company active in the field of blockchain tech-
nology. In November 2016, we acquired a stake in

The bottom line is: Deutsche Börse Group has laid
the groundwork for accelerated growth and structural

1 3

Carsten Kengeter,
Chief Executive Officer

“At Deutsche Börse, we are committed to supporting the real
economy throughout Europe – directly and indirectly. With a
broad set of pre-IPO services and an extensive overall product
portfolio, we aim to assist European companies to be able to get
ready to deal with the challenges of the future. It is our chief
objective to further increase the customer focus in our work.”

cost reduction. But there is still a lot left to do. We
will continue to exercise cost discipline and work at
reducing the dependence of our income on economic
cycles and at expanding our business model. Our
strength lies in setting up and operating liquidity pools

in which our clients’ transactions flow together – and
which are thus beneficial for private business as well
as for the public. Effective risk management is our top
priority. Growth and safety go hand in hand. That is
what “Accelerate” is all about.

“Accelerate” is our way to
become the leading market
infrastructure provider.

Frankfurt/Main: compact
and connected

deutsche börse Group – annual a m b i t iO n an alternative for Europe

a m bitiO n – S t RE n G t h E nin G t h E C a pita l m a RK E t S

An alternative
for Europe

The referendum decision on 23 June 2016 by British voters to leave the

European Union was a moment of shock. Now it is important to draw the

right lessons from this event. Deutsche Börse, a global company with firm

European roots, has a particular responsibility in this respect – like other

large companies in Europe.

Yet not everything is new since that 23rd of June.
Britons will remain Europeans, even if they are to leave
the EU. Hence, Brexit negotiations will be decisive for
the long-term future – not only as far as the European
Union is concerned. As Europeans we must uphold
our tried-and-tested fundamental principles of liberty,
even though these are not very popular right now.

These principles have brought us peace and prosperity
for many decades. Looking at current developments,
we can see that this is something we cannot take for
granted.

Continental Europe will therefore have to continue its
close cooperation with the United Kingdom. This is
something the market will realise, since the rules applic-

able to international markets and to competition do
not change overnight. But of course, these rules call for
new, more intelligent solutions in order to prevent
imbalances, especially in Europe. To maintain its stance
in global competition, Europe must do its homework.

Capital maRKEtS uniOn aS a RE aliStiC

OptiOn
It will thus be all the more important for financial market
players to focus on implementing the Capital Markets
Union envisaged by the European Commission. There
are numerous points in favour of such a union, with a
pragmatic view being the most compelling one right
now. In contrast to the integration of European countries
on other levels, harmonising financial markets appears
achievable, since it would neither interfere with the

deutsche börse Group – annual a m b i t i O n an alternative for Europe

Capital maRKEtS uniOn
The Capital Markets Union is a project of the Euro-
pean Commission, to mobilise capital for companies
and infrastructure projects and link savings with
growth potential. In September 2015, the European
Commission presented its Action Plan for Building a
Capital Markets Union, which set out a programme
until 2019.

rights of national governments nor their populations’
vested rights. Quite clearly, there is simply no accept-
ance for such extensive intervention from Brussels, as
evidenced dramatically by Brexit.

equally strong macroeconomic power that would heal
disparities caused by the European Monetary Union –
and, as a consequence, re-invigorate acceptance for the
single- currency project, with positive political feedback.

A fully fledged fiscal union, however welcome it may
be for very good reasons, would bring high-volume,
Europe-wide capital transfers in its wake, which would
only reinforce the feeling of politics and responsibility
drifting further and further apart. What we need is a
true European capital market – not in spite of, but
because of Brexit coming. A Capital Markets Union
would help secure a strong European position in the
face of global competition, and can count on the self-
interest-driven approval of the parties involved. Such a
union is a very effective solution to many of the chal-
lenges we as Europeans are facing today: developing
and preserving infrastructure, establishing sustainable
pension schemes, identifying and taking structural
action to reduce the high level of unemployment reign-
ing in certain countries, financing growth.

The European Commission’s push for a Capital Markets
Union is encouraging. It would be quite the opposite of
governmental intervention: in fact it could un leash an

OppORtunitiES p ROvidEd by a S inGlE

EuROpE an C apital maRKE t
It is as clear as day that more intensive cross-border
capital flows would flush significant benefits into
the European economy; it would make capital more
accessible all over Europe, and unlock new investment
potential that would then move in the market transpar-
ently, under the same conditions for everyone. Users
on all sides have already been identified. Large state
pension schemes as well as insurance companies are
currently looking for long-term investment opportuni-
ties. Countries in Europe are facing the challenge of
expanding and modernising infrastructure: railway lines,
motorways, bridges, airports, local transport in densely
populated regions – these are just a few examples for
areas where all European countries have some catching
up to do. It is especially in these areas that a swift and
sustained expansion would benefit the real economy –
and hence, the people. From large conglomerates to
tradesmen, from frequent fliers to holidaymakers,

“The Capital Markets Union offers a very effective
solution for numerous challenges we are currently
facing in Europe. For the real economy, it will provide
easy and secure access to capital.”

Carsten Kengeter,
Chief Executive Officer,
at the Luxembourg Financial
Markets Forum, 17 October 2016

and investment projects, regardless of whether banks
are involved, providing more long-term perspective. At
the same time, it would make European capital markets
more robust and diversified, providing a new level of
transparency that would facilitate infrastructure invest-
ments bringing bridges, rails, and school buildings to
the people who need them. But above all, the Capital
Markets Union will provide easier and safer access to
capital for the real economy, and for Europe’s growth
companies. Brexit is a warning signal as well as a call
to finally seize this opportunity.

whether you are in a car, on a local train or a long-
distance express train: we all need a reliable infra-
structure that is ready for the future.

Free movement of capital across Europe would provide
relief for public-sector budgets. Infrastructure bonds
tradeable across Europe would provide for efficient
flows of capital, in line with requirements. In addition,
this would create advantages for the countries and
societies where measures would be implemented and
buildings constructed – particularly as far as transpar-
ency, efficiency and jobs are concerned. This is because
such new funding would flow into areas with sufficient
transparency regarding planning, construction and
operations. Such an approach might be beneficial, for
instance, for regions where public funds have “trickled
away”: if transparency becomes a sine qua non for
investments, these will actually reach local people.
This would trigger a self-reinforcing process throughout
Europe – and in fact, it might be the starting point for a
more vibrant equity culture in Europe.

FinanCinG th E RE al ECO nOmy
The mechanism of a Capital Markets Union, as we have
outlined it here, would facilitate the matching of capital

deutsche börse Group – annual i n n O v at i O n Exchanges and the real economy

in n Ov atiO n – E XC h a n G E S a n d t h E RE a l E C O n O m y

Capital meets entre-
preneurial power

Creativity, ideas and courage can be found throughout Germany and Europe.

What is largely missing, however, is capital for faster growth. In the US,

garage start-ups have evolved into billion-dollar enterprises: a development

that Germany has largely missed out on.

As the Cologne Institute for Economic Research pointed
out in a policy paper on the topic of start-ups in early
2016: “Highly innovative start-ups that grow to become
global companies the size of Google or Amazon within
just a few years are not being founded here.”

For innovations to turn into solid businesses in Germany
as well, we need more openness towards young enter-
prises and disruptive innovations from a strong manu-
facturing industry and from the Mittelstand – Germany’s
sector of small and medium-sized enterprises (SMEs) –,
which rightly enjoys a great reputation, to open up to
young enterprises and disruptive innovations. We need
start-up centres at the universities – with young people
who know about economic interrelationships and who
have the courage to get something started. We also need
investors and capital. All of these elements together
may create a fruitful ecosystem. At Deutsche Börse, we
are actively working on fostering such an ecosystem
for growth.

In 2015, we took decisive steps to further develop the
pre- IPO growth market, i.e. the market for companies
preparing for an exchange listing: Deutsche Börse Venture

Network®, our platform for bringing together invest-
ors and founders, has mobilised more than €1 billion
for funding innovative ideas since its foundation. At
the end of September 2016, Würzburg-based va-Q-tec
AG was the first Venture Network company to go
public (see the
photo report). Venture Match is a
service that matches offers of capital and financing
projects reviewed by our experts. This improves the
“hit rate” of investments: it allows companies to focus
more strongly on their core business – rather than
devoting lots of energy to raising capital. At the same
time, transparency is enhanced in this important mar-
ket, as investors receive better insight into promising
companies.

Through our DB1 Ventures subsidiary, established
in June 2016, we are constantly looking for attractive
investments in the fintech area which suit Deutsche
Börse Group’s business portfolio well. We are firmly
determined to repeat a success story such as the
acquisition of 360T. At the same time, DB1 Ventures
has the goal of providing capital to trendsetting
companies from our environment – to enable them
to develop viable concepts, and to create growth.

Start-up in focus:
va-Q-tec in Würzburg

The company develops and manufactures high-performance
vacuum insulation panels as well as thermal packaging
which is rented out all over the world. Over the past 15
years, va-Q-tec has re-invented itself multiple times in
order to meet its customers’ needs. “In 2016, Deutsche
Börse Venture Network provided a major impetus for us,”
says founder Joachim Kuhn, who gave us some insight
into his company. “We are proud to be the first IPO to have
resulted from this growth network.”

Joachim Kuhn, CEO, and
Christopher Hoffmann,
CFO: “Development,
products, systems and
leasing – we basically
do everything the market
needs.”

Routing slips for contain-
ers: “Everything from
works of art and pallets to
medication and organs,
blood bottles … Medical
transports are currently
our main business.”

Containers on demand:
“Our containers are very
popular. We hold 80
patents and patent appli-
cations altogether.”

2 0

deutsche börse Group – annual i n n O v at i O n Exchanges and the real economy

On the factory floor in
Würzburg: “The special
film we use is flexible and
efficient to process.”

The vacuum panels con-
sist of porous nano-sized
sand covered with a high -
tech film. “We construct
a ‘rigid’ vacuum; other-
wise, the panel would
collapse immediately.”

With the FinTech Hub, we are looking to bring some-
thing of a start-up culture to Frankfurt. The city is home
to key regulatory authorities as well as national and
international banks.

On 1 March 2017, Deutsche Börse launched Scale, a
new exchange segment designed to enhance access to
investors and growth capital for SMEs. As a segment of
the exchange-based Regulated Unofficial Market, Scale
has replaced the Entry Standard for equities and cor-
porate bonds. The target group for the new segment
encompasses companies which have already established
their track record with investors: admission requirements
include cooperation with a Deutsche Börse Capital Market
Partner that will verify whether a company is suitable
for inclusion into the new segment. This includes a due
diligence process during which the company’s legal
and financial circumstances are carefully examined and
analysed. Admission and post-admission requirements
also comprise research reports designed to improve
liquidity and enhance transparency for investors. These
company analyses are mandatory – and independent,
since they are commissioned by Deutsche Börse. Fur-
thermore, companies listed in the segment are subject
to the EU Market Abuse Regulation, and are therefore
obliged to publish ad-hoc disclosures.

Bit by bit, these elements start to form an ecosystem
for growth, whose components support innovative,
high-growth companies at every stage of their develop-
ment. As the leading European market infrastructure
provider, Deutsche Börse Group contributes to devel-
oping this ecosystem. After all, we want young and
growing German and European enterprises to swiftly
turn into major businesses, too.

Focus on manufacturing:
“Our passive insulation
boxes can maintain consis-
tent temperature levels for
five days – without a power
supply.”

deutsche börse Group – annual i n n O v at i O n technology and the market of the future

2 3

in n Ov atiO n – t E C h n O l O Gy a n d t h E m a RK E t O F t h E F u t u RE

Data and networks,
innovation and security

How will companies still be able to be productive and profitable in 20 years?

New technologies and new market participants bring both opportunities and

challenges for established providers such as Deutsche Börse Group. We aim

to ensure that young and highly innovative providers experience Deutsche

Börse as the fast-acting and competent partner we have been for many years.

We are committed to building upon our track record as a pioneer in the

financial sector and to shaping its future, say Olga Wenge and Ankur Kamalia

from Deutsche Börse Group.

anKuR Kamalia: So, this is an interesting topic when
we talk about how we are seeing the world transform-
ing itself today. What is your perspective, what are these
trends [in key technologies] that are actually shaping
and changing the way we do business?

anKuR Kamalia: That’s true. It’s not that cloud com-
puting is new, but it seems that the financial services
landscape is only now starting to embrace the advan-
tages of this technology.

OlGa WEnGE: Over the last years, we have collected
a significant amount of information. If we wanted to
read all the information we have accumulated in just
one year, it would take us about 300 years. We will –
of course – need additional technologies to understand
or to be able to collect and process this information.
This has an impact on Deutsche Börse Group as well.
I think that currently, there are different technologies
which could be applied to our business, for example
cloud computing where we can work with new collab-
orative partners. Machine learning is another aspect
that could help us to understand the data and to engage
in predictive analytics regarding new products and
new customers.

OlGa WEnGE: What do you think? How will these new
technologies impact our markets?

anKuR Kamalia: There are three key trends. Number
one is collaboration – amongst clients, ourselves, regu-
lators, start-ups. Collaboration is critical to the adop-
tion of some of these new technologies. Why is this
relevant? Let’s look at fintech as an example: we ope-
rate in an environment where safety and security are
very important. Fintechs have great solutions and they
are building new ones enabled by some of these new
technologies. Partnering with people like us gives
them a much broader platform, because we have cli-
ent connectivity, we run reliable and scalable mar-
kets, we have regulatory expertise, and they are able

2 4

deutsche börse Group – annual i n n O v at i O n technology and the market of the future

Ankur Kamalia has been
Managing Director at
Deutsche Börse Group
since November 2015.
As Head of Venture
Portfolio Management
he is responsible for
DB1 Ventures.

“At the end of the day, it is very simply
about providing solutions.”

to leverage that. And for us, and organisations like us,
it is no longer enough, I believe, to just rely on inter-
nal innovation.

OlGa WEnGE: New ideas are coming up …

anKuR Kamalia: … Ideas and technology trends
that we have seen in the marketplace, and business
solutions. Number two is probably a shift towards
more B2B solutions. And I think the third – perhaps
most important – point which relates to what you
were saying is this: we are really starting to see early
signs of adoption of some of these technologies. This
is what is needed if we imagine that five or ten years
down the line, one of these new technologies will need
to become more mainstream within our value chain.

OlGa WEnGE: Do you think that some of these tech-
nologies, for example blockchain, will replace our
value chain or will the marketplace stay as it is?

anKuR Kamalia: If you ask the direct question
whether I believe blockchain is going to completely
replace the way we actually operate as a marketplace:

I do not believe that this is likely to be the case. There
are certain parts of our ecosystem which can be made
materially more efficient with the use of blockchain
technology. But it is not going to be dramatically diffe-
rent within the next two or three years. But I think we
will continue to see material progress being made in
parts of the value chain that we operate. And there will
be certain parts which will become a lot more rele-
vant, because of the use of some of these new tech-
nologies. But that is probably more of a five-to-ten-year
horizon. At the end of the day, whether you talk about
cloud computing, distributed ledger or artificial intelli-
gence and machine learning, the question is always
the same: what about external threats? Is the ecosys-
tem prepared to deal with them?

OlGa WEnGE: I think when you enter into collabora-
tions, risks increase: not only regulatory but also secu-
rity risks. Thus, we have to understand the ecosystem
of our collaborative partners to understand the tech-
nology and the level of security. Deutsche Börse as a
strictly regulated body is subject to a great number of
regulations. And we have to guarantee the protection
of the data of our customers.

2 5

“Sharing knowledge would bring us
advantages in creating securer products.”

Olga Wenge holds a
doctoral degree in
engineering and is an
IT expert. She works in
Group Compliance at
Deutsche Börse Group.

anKuR Kamalia: It is indeed very important for us to
continue to work with the regulators, to work with cli-
ents and other partners to ensure that we can manage
external threats and the like to ensure that we still have
a safe, secure and a very reliable marketplace.

OlGa WEnGE: I think that is the right direction, be-
cause the data is stored not only by Deutsche Börse,
it is a worldwide data flow. And the data is intercon-
nected with all our collaborative partners and with
governmental bodies – in different geographical and
jurisdictional locations. Sharing knowledge would bring
us advantages in creating securer products.

anKuR Kamalia: I think that’s a fair point – at the end
of the day, it is very simply about providing business
solutions. So we can leverage state-of-the-art technology
to provide the right solutions to our clients.

diStRibutEd lEdGER
A public ledger, allowing transactions to be recorded
and verified on a peer-to-peer basis. The blockchain
is the distributed ledger for transactions in bitcoin, a
digital currency. Applications for transactions involv-
ing other objects are being developed.

CybER attaCK
Targeted attack on an IT infrastructure from an exter-
nal source. Many attacks are directed at financial ser-
vices providers; governments and public administra-
tions are also often the focus of criminal attention.

aRtiFiCial intElliGEnCE
The attempt to simulate functions of human intelli-
gence using computer operations.

maChinE lEaRninG
Describes the analysis of patterns and “experience”
by computers, resulting in a learning system which
is not limited to pre-programmed responses and
capable of integrating and processing new data.

2 6

deutsche börse Group – annual S tat u S Clearing

S tat u S – C E n t R a l C O u n t E RpaR t y C l E aR inG

Prepared for
any eventuality

Managing risks arising from securities, currencies, commodities or

forward transactions by clearing such trades via a central counterparty

(CCP) will become more and more important, especially as CCP clearing

can include many different financial products.

2 7

By turning to a CCP, market participants can reduce
their credit risks vis-à-vis other parties, while at the same
time leveraging portfolio and netting effects to push
their financing and capital costs down, thereby increasing
profitability. To expand these efficiency gains, Eurex
Clearing has redefined access to the clearing house and
extended its product range.

ClE aRinG i S b ECOminG m ORE di RECt:

iSa d iREC t
Up to now, clearing members at Eurex Clearing, one
of the clearing houses of Deutsche Börse Group, con-
sisted primarily of banks. Investment funds, pension
funds or insurance companies, generally referred to as
the buy side, had only indirect CCP access. Within such
a structure, the buy side remains exposed to the credit
risk of the direct clearing participant, and must bear
significantly higher costs now than a couple of years
ago, when capital requirements for clearing banks were
more favourable.

Since summer 2016, a new service has been available
for buy-side clients who become direct participants with
Eurex Clearing. Under the new regime, certain services
that these clients so far have received from their clearing
bank remain with the clearing bank. One of the main
benefits of the new structure is that the buy-side client
can significantly reduce their counterparty risk. In addi-
tion, the model allows the clearing bank to substantially
cut down on capital costs, supporting return on capital
invested – even when reducing service fees for the
buy side.

This access model is currently available for OTC (over-
the-counter) interest rate swaps as well as repo transac-
tions (agreements on buying and buying back securities),
and is planned to be expanded to include securities lend-
ing and exchange-traded derivatives trans actions. Further
efficiency increases can be realised where a buy- side

OtC ClEaRinG
OTC derivatives are contracts that are traded directly
between two parties, without involving an exchange
(such as Xetra® or Eurex®) as an intermediary. Today,
products such as swaps, OTC forward transactions,
“exotic” options – and other “exotic” derivatives – are
traded almost exclusively in this way. OTC derivatives
is the world’s largest derivatives market segment.

Once an OTC transaction has been concluded on a
bilateral basis, these transactions are forwarded to a
clearing house for centralised netting and risk manage-
ment purposes. The clearing process of OTC transac-
tions in the CCP is nearly identical with the clearing
of exchange-traded derivatives. The difference lies in
the degree of standardisation of the products, and the
resulting complexity associated with measuring risk.

client uses more than one offering, especially with
regard to the use of securities collateral offered by
Eurex Clearing and Clearstream.

The new offer is called “ISA Direct” (ISA = individual
segregated account). ISA Direct is aimed at small and
medium-sized credit institutions, insurance and rein-
surance companies, pension funds and investment
funds. Apart from the advantages mentioned above,
clients benefit from a more stable clearing house and,
as a consequence, a more stable financial system – since
concentration of the clearing business upon only a small
number of clearing banks (as is the case at present) is
dissolved. On the flip side, in case of an emergency –
if a clearing bank fails to meet its obligations – the
size of the portfolios to be settled becomes smaller,
and the systemic risks in the clearing house are thus
reduced. The more buy-side clients opt for direct CCP
access, the better for Eurex Clearing participants and
the entire financial market.

CEntR aliSEd Cl E aRinG OF SEC uR itiES

lEndin G tR anSaCtiOnS
The mostly bilateral OTC transactions, e.g. between
two banks, continue to account for the lion’s share of
the securities lending market. Such OTC transactions
are generally concluded for a longer period of time, and
there are credit default risks that may threaten the per-
formance in case of one party defaulting.

2 8

deutsche börse Group – annual S tat u S Clearing

Effect of a counterparty default in a non-centrally and centrally cleared market

d E Fa u lt i n a nO n - C E n t R a l ly C l E a RE d m a R K E t

d E Fau lt i n a C E n t R a l ly C l E a RE d m a R K E t

CCp

Defaulting counterparty

Affected counterparty

Non-affected counterparty

Source: White paper Deutsche Börse Group, July 2014

By clearing transactions, a central counterparty mini-
mises counterparty risk – both in exchange trading and
OTC. The CCP nets positions, reviews, continuously
determines the risk associated with any given business
portfolio, and requests collateral from its clearing par-
ticipants. In other words, the clearing participants
associated with the CCP are protected on a daily basis,
and no bilateral (and non-transparent) risks accrue
(see
diagramme “Effect of a counterparty default in
a non- centrally and centrally cleared market”). The
risks converge instead in the CCP, where they are
netted and risk-adequately hedged.

SE CuRi tiES lEndinG tR anSaCtiOnS
Eurex Clearing is the first CCP worldwide to also offer
clearing services for securities lending transactions
between investors and banks. The so-called Lending
CCP enhances the security and efficiency of a market
that traditionally has been defined by OTC transactions:
it is important to involve a central counter party par-
ticularly for lending transactions to hedge against
changes in the credit risk profile – or even against a
counterparty default. This also allows positions to be
netted – so-called multilateral netting, which reduces
capital employed and therefore the costs associated
with a transaction.

The business customs of the securities lending market
influenced the design of the Lending CCP, which also
features the well-known strengths of the CCP clearing
service offered by Deutsche Börse. This approach
pursues the evolution of the markets, and their customs,
and takes the interests of market participants into
account. There are advantages not only for the individ-
ual clearing participants; the markets will become
more transparent and secure in general. This repre-
sents a truly sustainable offer from Deutsche Börse
Group for the financial sector.

ClEaRinG in FX tRadinG
“It is important to us that our clients have access to
comprehensive service and product range via a single
provider. With the acquisition of 360T by Deutsche
Börse, we have now added foreign exchange (FX) as
an additional asset class. Within the scope of our
EurexOTC Clear service, we plan to also offer an OTC
FX swaps, OTC FX spot and OTC FX forwards clearing
facility, as from summer 2017,” said Erik Tim Müller,
CEO of Eurex Clearing. “We are proud of these innov-
ative offers, as they will provide our clients with further
post-trading process and cost efficiency.”

deutsche börse Group – annual S tat u S po st-trading services

2 9

S t at uS – p O S t-t R a d in G S E Rv i C E S

Issuers on a single
platform: the Global
Issuer Hub

Investors use Deutsche Börse Group’s products and services to buy bonds

and other securities. Once the purchase as such has been cleared and

settled, Clearstream – Deutsche Börse Group’s post-trade services pro-

vider – assumes custody and management of the securities. Further innov-

ative offers are linked along the value chain, such as efficient collateral and

liquidity management, as well as securities lending.

OF FERS FOR iS SuERS
Approaching the issuers of securities directly is a more
recent concept. The following example of a specific
request clearly shows the great support Deutsche Börse
Group’s teams can offer issuers. Some three years ago,
a large European issuer was looking for an alternative

to its domestic central securities depository (CSD). It
was apparent even then that the significance and power
of the national CSDs would decline under TARGET2-
Securities (T2S). The issuer wanted to distribute its
offer widely in different markets, without having to
increase the expense and number of contacts if possible.

3 0

deutsche börse Group – annual S tat u S po st-trading services

How the Global Issuer Hub works

Global issuer hub

issuer

The issuer
places a
bond.

luxCSd S.a., luxembourg

For global markets, domestic currencies in central
bank money and commercial bank money

Clearstream banking aG, Frankfurt

For global markets, central bank money in €, other
domestic currencies in commercial bank money

Clearstream banking S.a., luxembourg

For the international market, currencies not tied
to a domestic market (US$, £, …)

The Global Issuer Hub allocates the bond to various
markets/currencies according to issuer specifications
or market conditions.

The client and post-trading experts at Clearstream
discussed this in depth. The issuer finally placed a large
tranche of mortgage bonds with Clearstream’s central
securities depository in Luxembourg, LuxCSD. With
the services of Clearstream’s so-called Global Issuer
Hub, this request was in the right hands. It allows
issuers to conduct settlements across the entire issu-
ing cycle via a single point of access: admission, dis-
tribution and administration. The hub is designed for
debt instruments, warrants, equities and investment
funds. Furthermore, Clearstream’s presence on more
than 50 markets supports the distribution from a sin-
gle source – in practical terms, therefore, issuers can
tap into all markets from a central location. Although they
are only in contact with one CSD, their issue has a global
presence via the link between LuxCSD and Clearstream’s
international central securities depository (ICSD).

CEn tR a l aCCESS tO CuRREnCy zOnES
CSDs as access points to domestic markets face
increased competition with the new European settle-
ment system T2S. At the same time, a growing number
of issues are being placed using central bank money.
Central bank money refers to money or balances which
a central bank credits in return for bills of exchange or
securities. Balances held with the central bank are
traded mainly between banks. Issuers can achieve
wide distribution of their issues via the Global Issuer
Hub, with minimised effort and reduced risk.

Clearstream settles the securities for all euro markets
centrally. It is no longer necessary to split across dif-
ferent CSDs, which used to be standard practice for

the issuers: Clearstream can carry out the settlement
in euro central bank money for different legal and regula-
tory systems within its own CSDs.

The Global Issuer Hub significantly reduces the effort
for issuers to place bonds efficiently and internation-
ally. The ICSD in Luxembourg additionally provides
the opportunity to reach currency zones outside the
euro area with their bonds, using central bank money.
For instance, there is a connection in place through
which securities can be issued in the Chinese offshore
renminbi. This is all available more cheaply than
before – the European Central Bank’s T2S initiative
is taking effect.

EFFiCiEnCy G ainS undER t2S
The new kind of cooperation encourages issuers to
integrate the services offered by Deutsche Börse Group
in their processes (more information about this in the
article “Integrated thinking”). Now is the right time
for issuers to review their placement strategies, as the
national CSDs may no longer have sufficient liquidity
to guarantee efficient placement in the markets on a
medium-term horizon. The central services available
via the Global Issuer Hub are the ideal solution to this
challenge.

Completely new solutions will evolve next year, devel-
oped both within the teams and in cooperation with
clients. It was ultimately a client request that prompted
us to address the new requirements of issuers.

Nathalie Zeghmouli,
Clearstream Banking,
responsible for the
Issuer Sales campaign,
London

“LuxCSD allows us to tailor a broad range of services to
meet the requirements of different issuers. With the largest
European central securities depository and LuxCSD, we
have very well-founded arguments when it comes to the
efficient issuance of securities.”

“The launch of T2S has been a success. In pushing the
standardisation process forward, T2S now represents a
key instrument to ensure the smooth functioning of the
capital market in Europe.”

Mehdi Manaa,
T2S Programme Manager,
European Central Bank,
Frankfurt/Main

3 2

deutsche börse Group – annual a m b i t iO n Regulation from a to z

Aau t hO RitiE S

Governments around the world have agencies in
place that regulate and oversee financial markets
and companies, e.g. the Basel Committee on
Banking Supervision or the Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFin, German
Federal Financial Supervisory Authority). One of
Europe’s most influential authorities is the European
Securities and Markets Authority (ESMA), whose
tasks include ensuring compliance with the harmo-
nised rulebooks for EU financial markets. ESMA is
the supervisor of credit rating agencies as well as
trade repositories such as Deutsche Börse Group’s
REGIS-TR.

bE n Ch m aRK REGul ati O n
Benchmarks are reference values, serving as a
yardstick for the performance of financial instru-
ments. As such, they are of vital importance to
financial markets. In order to combat manipulation
and ensure their integrity, the EU has adopted the
new Benchmark Regulation, set to become applica-
ble in 2018. Deutsche Börse Group publishes
around 10,850 global indices and benchmarks; its
STOXX® and DAX® indices serve as underlyings for
a range of financial products and are used to mea-
sure the risk and performance of investment activi-
ties. Deutsche Börse Group is already ensuring
compliance with various international benchmark
principles.

a m bitiO n – RE G u l at O Ry u pdat E S

Regulation from A to Z

As a provider of a highly regulated financial market infrastructure, Deutsche

Börse Group shares the objective of the national legislator, the European Union

as well as the G20 member states to strengthen transparent and regulated

markets. The Group helps its customers keep abreast of regulatory changes

and offers services to facilitate and ensure compliance.

C apita l m aRKE t S uniOn (Cmu)
The CMU is a flagship initiative of the European
Commission. Its central aim is to enhance economic
growth in the EU by strengthening the role of capital
markets and further integrating financial markets.
As a market infrastructure provider, Deutsche Börse
Group is actively involved in shaping the CMU and
has launched several market-led initiatives, such as
Deutsche Börse Venture Network®, Venture Match,
FinTech Hub, or the new growth segment Scale,
which it considers essential to the CMU’s success.

CnE W C apita l REquiREmEnt S

diREC tivE a nd REGul atiOn
(CRd v/CRR ii)
The EU’s CRR II package, proposed in November
2016, is the fourth revision of the original CRD for
credit institutions and investment firms of 2006.
The CRD’s key aim is to strengthen the resilience of
the EU banking sector by ensuring that institutions’
capital is of sufficient quantity and quality. It also
covers remuneration rules, corporate governance
principles and an EU-wide single rule book. In this
context, Deutsche Börse Group will continuously
analyse the capitalisation of its regulated entities,
adjusting it if needed, to ensure risks are ade-
quately covered.

3 3

CE n t R a l S E CuRitiE S dEpOSitO -
RiE S RE Gul atiOn (C S d R)
The CSDR is one of the key regulations adopted in
the aftermath of the 2008 financial crisis. A central
securities depository (CSD) is a post-trade infra-
structure which provides a central point for depos-
iting financial instruments, e.g. shares and bonds.
CSDs are not yet regulated on a European level.
The CSDR is set to close this gap and improve the
safety and efficiency of securities settlement. The
new requirements will likely become effective in
2018. Clearstream, Deutsche Börse Group’s CSD,
is actively involved in the legislative process and on
track with preparing its applications for licences.

Eu R OpE a n m a RK E t in F R a -
S t Ru C t u RE REGu l ati O n (E miR)
Regulators worldwide focus on derivatives markets.
New regulations mandate that all standardised
derivatives contracts must be cleared through
central counterparties. In addition, large parts of
off- exchange trading must be settled on a collate-
ralised basis and reported to central trade reposito-
ries. To meet these objectives, the EU implemented
EMIR in 2012. Deutsche Börse Group helps its
customers achieve EMIR compliance, e.g. via Eurex
Clearing’s client segregation models (ISA Direct) or
REGIS-TR’s trade repository services. Read more
about central counterparty clearing in the
“Clearing”.

article

miFid i i/ miFiR
The revised Markets in Financial Instruments
Directive (MiFID II) and the accompanying regula-
tion (MiFIR) regulate the provision of investment
services in a multitude of financial instruments – at
regulated trading venues as well as in OTC trading.
The revision will transform the European securities
market; key amendments include expanded trans-
parency provisions, measures to boost the stability
and integrity of the financial market infrastructure
and improvements to the quality and availability of
market data.

RE Gu l atO Ry tEChn O lO Gy
(REGtECh)
Regtech describes technology specifically designed
to meet regulatory mandates around the world.
Due to the sheer amount of data involved and
the rapid clip at which regulations are introduced
and amended, reporting obligations place high
demands on companies and regulators alike.
Regtech aims to provide agile and intelligent IT
solutions which ease this burden through digiti-
sation and automation, and which are capable of
quickly adapting to changing regulatory require-
ments. Learn more about innovative technology
article “Tech-
at Deutsche Börse Group in the
nology and the market of the future”.

RE C Ov E Ry a n d RE S O lu ti O n
REGu l ati O n FO R C Cp S
Recovery and resolution regulation for central
counterparties (CCPs) is the next legislative step
in implementing the G20 objectives, strengthening
the CCPs’ role as neutral risk managers for financial
markets. Its objective is to define measures to be
taken in extreme but plausible events of financial
distress in order to ensure orderly recovery and res-
olution of CCPs and thus exclude the use of public
resources. The EU Commission published a first
proposal in November 2016. Deutsche Börse
Group, with its clearing houses Eurex Clearing and
European Commodity Clearing, supports the spirit
of these efforts.

R
Tta R G Et 2 - SE Cu RitiE S ( t 2S)

T2S, a central platform for securities settlement
in central bank money, allows banks to reduce
cross-border settlement costs and pool collateral.
Clearstream migrated to T2S in February 2017.

Find further information on a broad range of regulatory topics on our

website www.deutsche-boerse.com/dbg-en/regulation

3 4

deutsche börse Group – annual i n n O v at i O n in tegrated thinking

in n Ov atiO n – in t E G R at E d t hin K in G

Keeping an eye
on everything

Looking beyond boundaries, thinking outside the box, seeing the

big picture – easier said than done. But how exactly do you do this?

Deutsche Börse Group looks in all directions, all the time.

in tOuCh With thE buSinESS
Sustainable business provides a major contribution to
a company’s ongoing success. Sustainability is thus not
just something that is “nice to have”, but a key part of
the business. In order to maximise the potential of our
own sustainability profile, we established the Group
Sustainability Board in 2016: its 16 members – from
all parts of the enterprise – contribute their expertise
in order to further enhance Deutsche Börse Group’s
sustainability performance along the entire value chain.
The Board convenes twice a year, to discuss opportu-
nities and risks related to environmental, social and
governance (ESG) aspects. The Group Sustainability
Board advises the Executive Board; it also develops
new business concepts based on sustainability –
discussing issues such as a code of conduct for employ-
ees or an infrastructure for sustainable investments.
These concepts are reviewed from all angles. This is
also evident in the corporate report: we have been pur-
suing the concept of integrated reporting since 2012.
ESG parameters are not shown in a separate annex –
instead, they form an integral part within all sections
of the report, demonstrating their interconnection with
traditional financial reporting.

pOOlEd CliEnt SERviCE
When it is about providing state-of-the-art products and
services to clients, holistic thinking and acting are
essential aspects: given the plethora of different issues

SuStainability KEy FiGuRES
The importance of so-called ESG information (details
concerning environmental, social and governance
aspects) has been increasing since the financial crisis
of 2008, as part of the comprehensive assessment
and medium- to long-term forecasts of entrepreneurial
performance. Various stakeholder groups – investors,
clients, analysts, and not least regulators – increasingly
insist that companies disclose ESG opportunities and
risks relevant to their core business, besides traditional
key financial indicators. This means that reporting
enter prises are required to keep an eye on the impact
of their entrepreneurial actions across the entire value
chain, and to provide a holistic view of their work.

pERSOnal COntaCtS – FaSt and
COmpEtEnt aSSiStanCE
Each client of Deutsche Börse Group has specified
contact persons, via clearly defined communication
channels: in this way, we implement client services –
effectively, and at all times. For instance, more than
100 staff members attend to more than 18,000 client
requests every month, around the clock. Whenever
necessary, additional experts are being involved in a
targeted manner in order to swiftly deal with specific
issues. After each instance of contact, every client is
given the opportunity to indicate whether they are
satisfied with the service provided – and once a year,
a comprehensive survey is conducted.

3 5

Office supports clients with detailed knowledge of pro-
cesses and regulations – during the onboarding process
as well as during regular operations. It handles specific
client requests – such as fee reporting, technical con-
nectivity, or price lists – across the Group.

So how does the Group-wide support concept resonate
with clients? “We have had a lot of positive feedback.
In fact, sometimes we can even help clients improve
their internal processes, because we have a compre-
hensive overview and can adopt an external perspective.
This is very valuable indeed,” explains Kracke. “Thanks
to the restructuring, we are able to offer our services
as a package across the entire Group. Our newly com-
posed international teams secure visible successes,
which are immediately noticeable to clients,” Kracke
summarises. “This is something we are proud of.”

along the value chain in the securities business, multiple
business areas ensure that knowledge does not disap-
pear – and that synergies are created across the entire
organisational structure, and used in the interest of
clients. This is why we have pooled product develop-
ment, sales and marketing in matrix structures: they
are key to providing new, integrated solutions.

Likewise, we have bundled our client services across
the Group, in Group Client Services & Administration,
headed by Berthold Kracke. This means that new and
existing clients will obtain all the services – trading,
clearing, post-trading, custody, as well as market data –
from a single source. Group Client Key Account Man-
agement maintains clients across all divisions. It is all
about client focus: rather than business divisions set-
ting the pace, business is driven by what clients actually
need. What are their requirements? In which way should
their accounts be structured? Which trading member-
ships and what technical connections are necessary –
and what is dispensable? Together with clients, Key
Account Managers and the Group Client Middle Office
analyse client needs, and define the specifications of
the requisite technology. “Key Account Managers have
profound product-specific knowledge – this is essential
for offering clients the right solution. These experts
exchange information, allowing clients to reap the ben-
efits of knowledge from all areas,” says Berthold Kracke.
At the same time, the division’s Group Client Middle

3 6

deutsche börse Group – annual R E S p O n S i b i l i t y 360-degree feedback

RE S p O n S ibilit y – 36 0 - d E G RE E F E E d b a C K

A drive towards
more openness

Deutsche Börse introduced its 360-degree feedback for executives in

summer 2016. The self-evaluation was compared with feedback received

from different groups of persons. The summary of the process is positive.

thE FiGuRES
348 feedback recipients
5,358 feedbacks were given
15 responses per feedback recipient
91 per cent response rate
(third-party and self-evaluation)

S a b i n E R O E C K l - S C h m i d t, h E a d O F hu m a n R E S O u R C E S
“The tool was well received by employees and executives; as shown by the large
number of assessments. Their quality is also very good: there is a desire for a
more open feedback culture, and the 360-degree feedback represents a step
towards achieving that. It also requires courage for the feedback recipient to be
open to the results – our executives have proven this, thus laying down a good
standard for a change in culture. Our task now is to really benefit from the feed-
back. Sportsmanlike ambition can even be applied to a very good result: there
is always another mountain that is worthwhile scaling.”

F EE d b aC K RE CipiE n t

3 7

F E R d i n a ya R z a d a , G R O u p b u S i n E S S & p R O d u C t d E v E l O p m E n t,

E S C h b O R n
“Constructive feedback is fundamentally very important to me, allowing me to
recognise my own individual strengths and where there is room for improvement.
It also helps me to consciously work on these areas. I am therefore always open
to relevant suggestions, and really appreciate them. Aspects were taken up
within the scope of the 360-degree feedback that might not have otherwise
been addressed outside the framework of such a process. In order to achieve
as diversified a feedback as possible and gain major insights, I consciously
included colleagues in my feedback group with whom cooperation was chal-
lenging at times. The feedback received matches my self-assessment in most
aspects. But I now have a much clearer picture of my strengths and scope for
improvement, especially thanks to the different perspectives. For example, in
certain situations where I should conduct myself differently, I recall the feed-
back very consciously, and try to implement it accordingly.”

R O b E R t ta b E t, R E l at i O n S h i p m a n a G E m E n t a S i a , S i n G a p O R E
“The 360-degree feedback is a fantastic tool. The feedback you receive prompts
you to reflect, and to take a closer look: how can I improve? What did I expect
in the first place? Moreover, this reminded me once again that I am not working
in isolation – I am surrounded by colleagues who are watching me, who have
an opinion of me. And they want me to improve – if it wasn’t for that, they
would not have given me feedback. I am convinced that there is always some-
thing I can work on. To me, my career is a journey during which you never
stop learning. For instance, 360-degree feedback has taught me that members
of my team want to have a more precise idea as to where we stand, and what
they can contribute towards achieving our goals. Now I try to give them more
frequent – and more structured – feedback.”

FEE d b aC K G i v E R

t h i lO W E S S E ly, S t R at E G i C E X E C u t i O n , E S C h b O R n
“I found it easy to offer open feedback to my supervisor because of the oppor-
tunity it gives me to become involved in the potential growth of the company,
in an alternative manner. Thanks to the 360-degree view, the tool is more
objective and informative than hierarchical evaluation models that involve only
two individuals. It also affords the opportunity to uncover and develop potential.
Because I appreciate an open culture of feedback, I would like to see the
360- degree feedback tool being extended to employees too, rather than restricting
it to executives only.”

m E l a n iE d a n n h E i m E R , C l E a R i n G d E S i G n , l O n d O n
“I am thrilled that feedback and the feedback culture were brought up. One
needs a structured process to start with, so as to establish a culture of open-
ness and to make feedback an everyday issue. I gave feedback to two of my
colleagues and found it good how detailed the questions were. It really forced
me to reflect on the evaluation. I offered my colleagues the opportunity to discuss
my feedback afterwards. They took my evaluation very seriously. I have the
impression that we now deal with one another in a more open fashion. You
get to know each other better. The 360-degree feedback also makes it easier
to cooperate with one another.”

3 8

deutsche börse Group – annual in n Ov at i O n the value of data

The value of data

in n OvatiO n – a l O O K in t O t h E C O n t E n t l a b

Market Data + Services has been one of Deutsche Börse Group’s reliable

growth areas for years. Its range of products and services comprises indi-

ces, market data (including real-time data), analytical data streams, regu-

latory data, as well as IT infrastructure and trading platforms. Given stable

demand and the ongoing trend of digitisation, a provider has every reason

to be content. However, this area in particular is also especially dynamic,

as technical opportunities and client requirements are changing rapidly.

3 9

Deutsche Börse created its Content Lab in mid-2016:
a “laboratory” which is not designed to develop any
concrete products. “We are the research department
within Deutsche Börse Group’s Market Data + Services
segment,” says Konrad Sippel, Head of the Content
Lab. “We are looking for solutions which are not
directly driven by specific client requests – that is
something other departments are already doing very
successfully” (see
chapter “Post-trading services”).
The Lab provides a space to work on new things –
beyond incremental improvements to existing solu-
tions – to anticipate customer needs and requirements
and try them out without any “self-imposed censorship”.

(or data products) must never put individual customers
at a disadvantage. “But from a research perspective,
it’s a thrill to be working with ‘real’ data – or with what
we call big data: data packages which are so big that
they cannot be processed in a regular way. It enables
us to prepare very attractive new offers.”

unE X pECtEd pROduCtS
In fact, the Lab just succeeded in creating a new product
in cooperation with their colleagues at foreign-exchange
(FX) trading platform 360T®: “360T has many points
generating interesting data. The Content Lab has ana-
lysed some of these data points, creating a new data

tRuE innOvatiOn
“We are not under any obligation to justify each and
every one of our steps along the way. The Lab is not
about any specific product – we are looking at con-
cepts which will be attractive for the next 10 to 20
years. It’s a true privilege within the company,” says
Sippel, a trained mathematician who holds an MBA
of Fuqua School of Business at Duke University.
“This degree of freedom means a huge challenge to
our team.” Nonetheless, Sippel is certain that this is
the only way to invoke true innovation. The Content
Lab’s “think tank” concept is thus a perfect match for
Deutsche Börse Group’s growth strategy: a small, agile
team that has the ability to swiftly try out things, being
able to think outside the box.

feed which highlights FX market movements much
faster than a simple aggregation of all data would do,”
Sippel explains. This is what he calls a “low-latency
product” – a solution involving minimum delay in mar-
ket data transmission. Developing the new product
was only possible through full access to 360T trading
data. At present, the new feed is being tested with a
few select customers and enhanced where possible.
“This is right in line with our company’s new vision of
closely cooperating with customers, making intelligent
use of technological opportunities, and of recognising –
and exploiting – new contexts.” Sounds abstract?
“Well, you need to think in abstract and networked
ways in order to come up with truly original solutions,”
Sippel states with certainty.

“We also have the opportunity to work with data –
in an encrypted, aggregated and anonymised form,
of course – that would never make it into specific
products, such as trading data on a participant level.”
Sippel emphasises that as a matter of principle, ideas

thE valu E OF data – FOR ma RKEtS
At the end of the day, customers are set to benefit –
as are the markets as a whole. “In the shape of various
products, our ideas and concepts are designed to help
clients make better investment decisions. At the same

4 0

deutsche börse Group – annual in n Ov at i O n the value of data

Konrad Sippel heads
Deutsche Börse Group’s
recently created Content
Lab.

“Data improves
our products.”

time, they are set to further enhance market trans-
parency – for us, as developers and providers of market
infrastructure, this is the rationale of sustainable products.”

At 360T, the potential inherent in the data paved the
way towards development of the product. At the Eurex
derivatives exchange, the Content Lab team chose a
different path: “from paper to practice” is how Sippel
summarises the team’s approach taken for developing
a model predicting credit default probabilities, based
on option premiums traded at Eurex. The starting point
was a complex scientific model that colleagues at Eurex
product development had discovered (and had already
patented) for application in options markets. “It then
became clear to us – as well as to our colleagues at
Eurex – that we are not only right at the source of the
necessary data, but that we also have the right tools
and skills in order to compute the model based on
empirical evidence, to validate it, and to optimise it for
application in practice.” At the moment, the model is
being validated and fleshed out further where ne -
cessary. “At the end of this process, we will have a
new, highly viable tool which will have been developed
across divisions, and which will have a plethora of
applications – from being a pure data product to serv-
ing as an underlying instrument for new futures and
options contracts.”

A further approach concerns predicting transaction
costs – another development where the Lab team
closely cooperates with customers of Deutsche Börse
Group. “We are interested in gaining insights into cus-
tomers’ internal decision-making processes – which
we would not obtain in the course of our everyday
business. We are delighted that within the framework
of the Lab, we can achieve at least selective intelli-
gence in this respect. This provides us with exactly
those parameters which subsequently help us optimise
the effectiveness of our offering for our customers.”
An offering which – provided it can be realised – will

enhance markets. “This is quite an essential aspect
when we’re talking about the value of data,” Sippel
says: “Data improves markets! All you need to do is
to compile and process it in a smart way. That sounds
much easier than it is – but we are working on it.”

lOnG -tERm pERSpECtivES
Personally, Sippel is particularly interested in the long-
term prospects: “Experience tells us that resources for
more long-term – and consequently riskier – research
and development projects are more difficult to obtain,
especially if normal, everyday business is already chal-
lenging. I’m sure this is something employees in the
modern business world are facing every day.” In fact,
this is the precise notion based on which the Content
Lab was founded. “Deutsche Börse has been a pioneer
in the digitisation of markets, and we are determined
to maintain our ground-breaking role in developing and
deploying new technologies in the financial markets,”
Sippel points out.

What are the scenarios for new products over the long
term? “How about an automated, self-learning asset
allocation function for pension funds and insurance
companies, to support and supplement portfolio spe-
cialists?” Sippel asks. For him, this is an artificial intel-
ligence (AI) issue. “Such a tool would not only know
all products and trading venues – it would also be able
to determine the impact of any potential orders in
advance, just prior to execution, enabling the specialist
to adapt his strategy on a short-term basis.” In con-
junction with the tool, he would be superhuman: “He
would perform better than a human being, in precisely
this aspect, given the vast amount of underlying data
and ultra-fast strategy adjustments.” Of course, Sippel
is well aware of the reservations against the so-called
robo advisors. “But combining big data and AI is a fas-
cinating concept – right now for our Content Lab, and
also for our customers, over a medium- to long-term
horizon.”

deutsche börse Group – annual a m b i t i O n Energy trading in Europe

a m biti O n – E nE R G y t R a d in G in EuR O pE

EEX: a global
multi-commodity
platform

The transition to renewable energies is turning the electricity markets up side

down. Power producers are facing rapid changes. “Our customers’ require-

ments change just as fast,” says Peter Reitz, Chief Executive Officer of

Leipzig-based European Energy Exchange (EEX).

Successful across
markets: the European
Energy Exchange

4 2

deutsche börse Group – annual a m b i t i O n Energy trading in Europe

ShORt-tERm tR adinG – 24/ 7
Systems buzzing, monitors flashing, and right in the
middle: the market surveillance team at work. Busi-
ness as usual, is what one might think. That’s simply
what electronic trading centres look like nowadays.
However, it is only quite recently that – driven by the
transition to renewable energies – electricity trading
has also started to become more and more of a short-
term market. Electricity trading is increasingly turning
into real-time trading, a development which is closely
linked to the new energy sources being tapped.

“When revenues from the feed-in of wind or solar
power are higher or lower than predicted – and that
happens all the time – we have to take countermea-
sures at very short notice. Current technology doesn’t
yet allow us to store great volumes of energy. Thus,
production and consumption must always be balanced.
‘Volatile’ situations on the electricity market – with
very high or even negative prices – aren’t unusual,”
Reitz explains. You may have heard about these phe-
nomena and the challenges involved from the many
press reports dealing with the technical consequences
of the Energiewende – Germany’s transition to alterna-
tive means of energy production. “To us, as a power
exchange, this is not an abstract discussion – our
trading systems have to be able to deal with the new
overall market situation.”

EuROpEan EnERGy EXChanGE at a GlanCE
■■ established in 2002 as a result of the merger of the

power exchanges in Leipzig and Frankfurt/Main

■■ 63 per cent of the shares held by Deutsche Börse AG
■■ fully incorporated into the consolidated financial
statements of Deutsche Börse Group since 2014

■■ EEX group includes Powernext, EPEX SPOT,

Cleartrade Exchange (CLTX), Gaspoint Nordic,
Power Exchange Central Europe (PXE) and European
Commodity Clearing (ECC)

■■ employing a total of 450 staff members at 15

locations

■■ clearing and settlement of trading transactions is

provided by ECC

local German power exchange into the leading European
energy exchange. Today, EEX group covers large parts
of the European continent: electricity markets in 16
countries, gas markets in nine countries and trading
with emission allowances in 27 EU Member States.
“Our capacities and technical possibilities are growing,
as is our product range,” Reitz adds. Overall, a record
spot and derivatives volume of 4,456 terawatt hours
(TWh – 1 terawatt is the equivalent of 1 trillion watts)
was traded in 2016, compared to 3,062 TWh in 2015.
PEGAS®, the gas trading platform (spot and futures
market) of EEX group, registered a total volume of
1,756 TWh in 2016, compared to only 1,042 TWh in
the previous year.

Compared to a few years ago, trading has changed
drastically. EEX’s customers are making use of the new
opportunities: “On the physical spot markets, i.e. when
trading with physical amounts of electricity, the stan-
dard nowadays is 15-minute contracts traded 24/7 and
up to 30 minutes before delivery,” says Reitz. “Our
derivatives market is responding to this development
as well.” Using new products, market participants can
not only hedge against increasingly volatile prices, but
also against the specific volume risks associated with
marketing renewable energy, e.g. due to deviations from
predictions concerning the feed-in of wind power.

StROnG GROW th
Established in 2002 as a result of the merger of the
two German power exchanges in Leipzig and Frank-
furt/Main, EEX has come a long way, evolving from a

Is there a secret to EEX’s success? “I wouldn’t call it a
secret, but it has worked anyhow,” is Peter Reitz’s
answer. “We rely on a combination of physical and deriv-
atives trading, and offer trading, clearing – settlement
and delivery – and reporting services, all from one
provider. All in all, our aim is to establish a firm part-
nership with our clients, some of whom are also our
shareholders.”

a bal an CEd GO vERnanCE m OdEl
EEX’s governance model accounts for a large part of
the company’s sustainable economic growth, and
strengthens the excellent competitive position of the
energy exchange. “We have a strong presence in the
area as well as local political support,” says Reitz. It
is natural for customers who are also shareholders to
be interested in the company’s positive strategic devel-

“Volatility and structural effects are closely
linked in our somewhat unique sector.”

4 3

Peter Reitz,
Chief Executive Officer,
European Energy Exchange AG

opment. As a result, strategic management decisions
are oriented towards the needs of the market and those
of the customers. As Reitz states: “We won’t make
decisions which don’t coincide with the market’s and
our customers’ requirements.”

In recent years, this approach has proven to be very
successful. EEX has gained considerable market
share – compared to off-exchange (over-the-counter,
OTC) trading – with its exchange model. A certain
degree of reliability, a decisive factor in this industry,
has also played a role. Sudden product and service
changes can cause uncertainty. EEX’s products and
services have become the market standard and are
trusted by market participants. One such example is
the Phelix future, which has become the established
market standard in the European wholesale electricity
market thanks to its liquidity. Reitz sums it up like this:
“We worked hard for this success. From where we are
now, it is our strategic objective for EEX to become a
leading global multi-commodity platform.”

thE E nERG y SEC tOR
“Volatility and structural effects are closely linked in
our somewhat unique sector,” Reitz explains. Both are
capable of being growth drivers for EEX – and already
have been in the past. However, Reitz is sure that
“there is only one type of growth that we, ourselves,
can shape in a sustainable manner, and that is struc-
tural growth.” He is referring to growth in core markets,
the geographic expansion of services, and venturing
into new business areas.

did yOu KnOW?
1 terawatt, 1012 watts or 1 billion kilowatts – equals
the output of around 1 billion vacuum cleaners. With
one terawatt hour, you could iron 15,000,000,000
shirts. Germany’s annual electricity usage amounts to
around 600 terawatt hours.

“It is possible for market volatility to boost trading activity,”
Reitz adds, citing the politically motivated shut-down
of nuclear power plants in Germany after the nuclear
disaster in the Japanese town of Fukushima as an
example. “But we can’t foresee these external events –
and their impact is hardly calculable. Therefore, they
don’t just offer great potential, but also pose risks.”

Meanwhile, the computers at EEX in Leipzig are still
humming although it is now late in the evening. The
company’s location, an attractive Saxon boomtown,
offers a tempting night life – but trading at the energy
exchange continues. The office is staffed all night.
“24/7 really means 24/7,” Reitz says, smiling.

4 4

deutsche börse Group – annual R E S p O n S i b i l i t y Working at deutsche börse Group

E m pl Oy E E
C O m mit m En t
Deutsche Börse Group promotes the social
commitment of its employees worldwide. For
instance, volunteers from Frankfurt gave
pupils the opportunity to gain an insight into
the economy. Staff in London helped maintain
a park, and Singapore employees painted
together with a group of special-needs youths.
This is only a snapshot of the wide variety of
actions taken last year.

m E n t O Rin G
Mentoring makes it easier for new employees
to get off to a good start at Deutsche Börse
Group. Experienced staff members assist them
in networking beyond their own department,
and offer a comprehensive cross-divisional
understanding of the company. The “New Role”
mentoring programme makes it easier for col-
leagues to take on a new management role.

t O p m a n a G E m E n t
d i a l O Gu E
Deutsche Börse Group managers come
together to hold intensive talks, where they
focus above all on overarching issues and
significant strategic initiatives.

RE S p O n S ibilit y – F O C uS O n C O R p O R at E C u lt u RE

Working at
Deutsche Börse Group

lu n Ch timE F O R u m S
Strengthening the exchange of views among
colleagues and enhancing inward transparency
are the strategic goals of the training and infor-
mation format for employees during lunch
time. The topics concern the working environ-
ment in general and important projects of the
individual departments.

t R a inin G
Employees benefit from a number of individual
training options, thus improving the company’s
efficiency and effectiveness. New employees
are given a comprehensive overview of
Deutsche Börse Group within the scope of
introductory events.

pR O mO tinG
WO m E n
Deutsche Börse Group views the promo-
tion of women as a strategic task, and
offers various tools for this purpose – such
as network events and training sessions
(see also the
performance indicators” in the combined
management report).

chapter “Non-financial key

b O O K C lu b
Employees are invited to talk about their
favourite book. Group discussions about the
works of literary fiction lead to a more
in-depth understanding and often reveal
surprising insights.

WO R K- liF E b a l a n C E
Specific courses to promote health and well-
being are central to the company’s work-life
balance programme. Employees are also made
aware of health aspects in order to achieve a
better balance between work and leisure.

a R t C O l lE C ti O n
dE u t S C h E b ö RS E
Deutsche Börse Group combined its commit-
ment to transmitting, promoting and collecting
art in the non-profit Deutsche Börse Photogra-
phy Foundation. Employees are afforded regu-
lar guided tours to view the latest art collection
directly at their place of work.

J O b R O tati On
Horizontal career moves promote employees’
mutual understanding and ongoing develop-
ment. This is facilitated by job rotation options
for employees and executives.

F i G u R E S a S at
31 d E C E m bE R 2 016

5,176
mEm b E RS
O F S ta F F
are employed by Deutsche
Börse Group.

Our corporate culture
has been enhanced by
76 0 n E W
E m pl Oy E E S
who joined since 2016.

E m pl Oy E E S
by RE G i O n
Germany: 43%
Luxembourg: 21%
Czech Republic: 15%
Ireland: 6%
Others: 15%

pa RE n t S’ n E E d S
We offer flexible solutions regarding working
hours and locations, which are adjusted to meet
the individual needs and family circumstances
of our employees. There is a parent- child office
available at several locations for employees with
children requiring care. Frankfurt offers its own
childcare service for short-term emergencies.

a G E S tR u C t u RE
by G En d E R
Age
<30
30–39
40–49
>50

Women Men
379
380
1,077
866
985
561
639
289

lu n C h datin G t O O l
Groups of employees selected at random from
different departments have lunch together. The
lunch dating tool allows employees to get to
know the work done in other departments and
teams, on a personal level.

a G E S tR u C t u RE
by l O C ati O n
Age
<30
30–39
40–49
>50

Germany Luxembourg
274
673
704
575

104
270
475
227

a m biti O n – O pp O R t u nitiE S a n d E X pE C tati O n S

The exchange of tomorrow

To be the partner of choice to our clients around the world, and to be top-

ranked in all of our business segments: this remains our long-term ambition.

Our “Accelerate” growth strategy is based around a clear
focus on growth, whether organically or through acqui-
sitions – to explore new asset classes, for example. Our
vision of “Exchange 4.0” will elevate our business to the
next level. We deliberately and consciously take the lead
with respect to relevant developments – be it in terms of
technology or in dealing with regulatory requirements –
thus creating new products and services which help our
clients face future challenges with ease. As a strong and
innovative partner, Deutsche Börse will join forces with
policymakers and regulators to create new perspectives
for Frankfurt as a financial centre, and indeed for Europe.

We are going to turn Deutsche Börse Group from a client-
oriented enterprise into a client-centric enterprise. In
order to achieve this, we constantly review what we
are doing, and establish new structures where neces-
sary. For instance, we have centralised product devel-
opment, sales and marketing for the entire Group –
which means that we now offer a one-stop service. Our
clients are already noticing the difference, and we antic-
ipate connecting a growing number of new clients.

Moreover, we are actively targeting fast and innovative
enterprises. Many of our potential clients were not even
on the market five or ten years ago.

A second key aspect of our “Accelerate” growth strategy
is the scalability of our business. This means generating
strong revenue growth with only moderate growth in
costs. In this way, we are growing the business in a
sustainable manner, and will gradually reduce our
dependence upon economic cycles. This remains our
overall strategic objective.

at thE lE adinG E dGE OF d E vEl OpmE ntS:

E XChanGE 4.0
The pace of change in the financial industry is getting
faster and faster. Big data, cloud computing and artifi-
cial intelligence are but a few of the factors driving this
change. Disruptive technologies such as blockchain will
redefine parts of the financial markets in just a few
years’ time. Deutsche Börse Group actively invests in
digital innovation – taking a pioneering role in shaping
this change.

deutsche börse Group – annual a m b i t i O n Opportunities and expectations

implementation in June 2016, Eurex Clearing developed
a central counterparty for the clearing of OTC deriva-
tives products. Transactions formerly executed on a
bilateral and uncollateralised basis are now increasingly
settled through a central clearing house.

Clearstream was connected to TARGET2-Securities
(T2S), the European Central Bank’s settlement plat-
form, in February 2017. This allows clients to use
Clearstream as a central access point for domestic
and international securities settlements, in commercial
bank or central bank money. It is in cross-border and
cross-market initiatives such as these that Deutsche
Börse Group sees an opportunity to contribute to the
stability of financial markets in Europe. T2S has in
turn facilitated the development of numerous products
which will gradually be introduced.

GROW th in many aRE aS
Bucking the general market trend, the foreign-exchange
trading platform 360T® continued its marked growth
during the year under review. New products will be
launched to generate further growth in 2017. Likewise,
European Energy Exchange successfully boosted its
market share to 30 per cent – in a market character-
ised by off-exchange trading. Amongst other factors,
this is due to demand for safe and structured solutions
for the trading and clearing of energy and commodity
products. We expect the need for protection in energy
trading will continue to support our business.

Lots of things are changing – at many points throughout
the company. Our way ahead will lead via sustainable
growth in various areas, safeguarding our technological
leadership under the heading of “Exchange 4.0”. For
2017, we expect consolidated net profit for the period
to increase between 10 and 15 per cent. Our approach
in this regard encompasses sustainability criteria – such
as the United Nations’ Sustainable Development Goals –
to be integrated into our business model and our
reporting.

With our FinTech Hub in Frankfurt and Deutsche Börse
Venture Network®, we are promoting a culture of inno-
vation and investment, bringing together innovative
companies and international investors. In March 2017,
we launched a new exchange segment for successful
small and medium-sized enterprises: “Scale” offers
benefits to innovative companies which have already
built a track record in the market. All of these are key
components of an ecosystem for growth.

Likewise, we invest in disruptive technology within
the company: jointly with Deutsche Bundesbank, we
showcased a prototype for securities settlements based
on blockchain technology in November 2016. Our
investment in Digital Asset Holdings LLC, a blockchain
pioneer, will also help us to realise the potential for
innovation in this area. Development projects in our
Content Lab include solutions based on artificial intelli-
gence, whilst the Product Development Lab, launched
in March 2017, conducts research into the potential
of cloud-based technology for the financial markets.

buildinG bR idGES Within EuRO pE
Yet, Deutsche Börse is not just pursuing its own growth
story, which started under “Accelerate”. We also live
up to our responsibility for a strong European market
infrastructure: this is about strengthening the Capital
Markets Union planned by the European Commission,
and ensuring the straightforward and efficient move-
ment of capital across Europe. This is in the interests
of individual countries, of pension and retirement funds,
and of savers looking to invest their assets over the
long term. Hence, the Capital Markets Union is also
in the best interests of people across Europe, whose
everyday lives benefit from modern and sustainable
infrastructure. These are just a few examples for our
motivation to remain actively committed to an inte-
grated European economy going forward.

KEEpin G a G lObal bal anCE: S tablE

FinanCial maRKE tS
Governments and central banks increased their focus
on financial markets regulation in the aftermath of the
financial crisis of 2008. In the view of Deutsche Börse
Group, regulation within the framework of the objectives
set by the G20 has been successful overall. Financial
markets have become safer. The EU drew up a regula-
tion (EMIR) designed to regulate over-the-counter (OTC)
derivatives trading. Even ahead of the start of EMIR

4 8

deutsche börse Group – annual S tat u S Key figures

Share price development
Closing price on 31 Dec 2016

€77.54
–5% 1)
Key
figures
2016

Operating costs

€1,317.4 million
+3% 1)

Earnings before
interest and tax 4)
(EBIT)

€1,108.2 million
+18% 1)

Cash flows from
operating activities
excluding CCP positions

€856.6 million
+8% 1)

dividend per share 2)

€2.35
+4% 1)

net revenue (total) 4)

€2,388.7 million
+8% 1)

net revenue by segment (€ million)

Eurex

1,032.2
+16% 1)

Clearstream

781.9
+5% 1)

Xetra

164.6
–11% 1)

Market Data + Services

410.0
+2% 1)

Return on shareholders’ equity 3)
annual average

19%

Credit rating deutsche börse aG

AA5)

1) Growth rate compared to 2015

2) Proposal to the Annual General Meeting 2017

3) Adjusted for non-recurring effects

4) Figure excluding International Securities Exchange, Inc., which was sold on 30 June 2016

5) On 19 December 2016, Standard & Poor’s confirmed the negative outlook.

You will find a detailed overview of all key figures and their composition in the
overview in the 2016 financial report.

five-year

Our locations

n O Rth a mERiC a

EuRO pE

a Sia

ChiC aG O
nE W yO RK

bEi Jin G
dubai
h On G KOn G
mumbai
SinG a pO RE
tO K yO

au S tR a li a

Sy d nE y

a mS tER da m
bERlin
bERn
bRuS SEl S
C O RK
E S ChbO R n
FR a nK Fu Rt/ m ain
lEip zi G
lO nd O n
luX EmbO uRG
m a d Rid
mil a n
m O S C OW
O S lO
pa RiS
pR aGuE
viEnn a
zu Ri Ch

a C K n O W l E d G E m En t S
published by
Deutsche Börse AG
60485 Frankfurt/Main
Germany
www.deutsche-boerse.com

Concept and layout
Lesmo GmbH & Co. KG, Dusseldorf
Deutsche Börse AG, Frankfurt/Main

photographs
Thorsten Jansen: title, portraits, photo report (va-Q-tec)
Jörg Baumann: street photography (London),
cityscape (Frankfurt/Main)
Laurence Chaperon: portrait, p. 3
Jean-Luc Valentin: architectural photography (The Cube)
Michael Chung: portrait (Robert Tabet)
EEX: office scene, p. 41; portrait, p. 43
iStock, Nikada: screen, p. 46

printed by
Kunst- und Werbedruck, Bad Oeynhausen

Editorial deadline
24 February 2017

In combination with the financial report, this Annual constitutes Deutsche
Börse Group’s corporate report 2016. Both are available in German and
English.

Order numbers
1000-4701 (German Annual)
1000-4702 (German financial report)
1010-4703 (English Annual)
1010-4704 (English financial report)

Registered trademarks
C7®, DAX®, Deutsche Börse Venture Network®, Eurex®, Eurex Repo®,
F7®, FWB®, M7®, 7 Market Technology®, N7®, T7® and Xetra® are
registered trademarks of Deutsche Börse AG. PEGAS® is a registered
trademark of Powernext SA. EURO STOXX 50® and STOXX® are
registered trademarks of STOXX Ltd. 360T® is a registered trademark
of 360 Treasury Systems AG.

bibliographical references
Deutsche Börse Group (2014): How central counterparties strengthen the
safety and integrity of financial markets. In: White Paper, July 2014, p. 12.

Institut der deutschen Wirtschaft (2016): Unternehmensgründungen –
Mehr innovative Startups durch einen Kulturwandel für Entrepreneurship?
In: IW Policy Paper, 2/2016, p. 4.

disclaimer
Any information herein relating to companies which are not part of
Deutsche Börse Group shall not constitute investment advice. Such
information is not intended for solicitation purposes but only for
illustration and use as general information.