Euronext - 2019 Universal Registration Document

Operating and financial review 7 Overview

Euronext Technology Solutions & Other Euronext Technologies & other revenue includes license fees and professional services fees for Optiq® software deployment, for managed IT services provided to third-party market operators (Optiq® as a Service), and for connection and data centre co- location services provided to market participants. Fees for software customisation and deployment services are recognised either on a time and materials basis or under the percentage completion method, depending upon the nature of the contract with the client. Percentage of completion is calculated based on the number of man days incurred to date as a percentage of the total estimated number of man days to complete the work. License fees, maintenance fees and support fees for deployed software are recognized pro rata over the life of the relevant contract. For Optiq® as a Service, setup fees and annual support fees are recognised pro rate over the life of the service contract. Connection and colocation service fees are recognised pro rata over the life of the client commitment. COMPONENTS OF EXPENSES Euronext’s operating expenses include salaries and employee benefits, depreciation and amortisation, and other operational expenses, which include systems and communications, professional services, accommodation and other expenses. Salaries and Employee Benefits Salaries and employee benefits expenses include employee salaries, incentive compensation (including stock-based compensation) and related benefits expenses, including pension and medical charges. Depreciation and Amortisation Depreciation and amortisation expenses consist of costs from depreciating fixed assets (including computer hardware and capitalised software) and amortising intangible assets over their estimated useful lives. Systems and Communications Systems and communications expenses include costs for development, operation and maintenance of trading, regulatory and administrative systems; investments in system capacity, reliability and security; and cost of network connectivity between customers and data centres, as well as connectivity to various other market centres. Systems and communications expenses also include fees paid to third-party providers of networks and information technology resources, including fees for consulting, research and development services, software rental costs and licenses, hardware rental and related fees paid to third-party maintenance providers. Professional Services Professional services expenses include consulting charges related to various technological and operational initiatives as well as legal and audit fees. 7.1.4

cash equities and are charged per lot in derivatives. Trading volume in equity products is primarily driven by price volatility in equity markets and indices. The level of trading activity for all products is also influenced by market conditions and other factors. Derivatives trading revenues received from transactions conducted on Euronext markets are variable, based on the volume and value of traded contracts, and recognised when executed. The principal types of derivative contracts traded are equity and index products and commodities products. Spot FX trading revenues consist of transaction-based fees for executing trades. These transaction fees are charged per executed order and based on value traded. Investor Services Investor services primarily encompass the activity of Commcise, that offers cloud-based research commission management, evaluation and accounting solutions and whose revenue model is based on recurring software licence fees Advanced Data Services The Group charges data vendors and end users, taking data via a direct feed, on a per-user basis for the access to its real-time data and Enterprise licenses are charged for non-display use, including advanced analytic products, and access to historic and reference data products. The Group also collects periodic license fees from vendors for the right to distribute the Group data to third parties. These fees are recognised on a monthly basis as services are rendered. The Group charges an index licence fee to trading desks, investment banks and asset managers for the creations of Structured Products (SP), Exchange Traded Products (ETPs) and exchange traded funds (ETFs) on Euronext owned (trademark) indices. The Group also collects fees for third party index calculations, iNAV calculation and partnerships stakes. The fees are recognized to the applicable period of the products. The Group operates Interbolsa, the Portuguese national CSD, and receives fees mainly with respect to the settlement instructions and the custody of securities registered/deposited in the centralised securities systems, namely listed and non-listed securities in Portugal. Euronext also operates VPS, the Norwegian national CSD and primarily receives fees with respect to the settlement instructions and the custody of securities registered/deposited in the centralised securities systems, namely listed and non-listed securities in Norway, as well as from ancillary services. Clearing Euronext also receives a share of clearing income based on treasury services resulting from placement of collateral and the number of cleared derivatives trades cleared through LCH SA, in exchange for which Euronext pays LCH SA a fixed fee plus a variable fee based on derivatives trading volume. Post-Trade Custody and Settlement Euronext operates two national CSDs.

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2019 UNIVERSAL REGISTRATION DOCUMENT