EURONEXT_Registration_Document_2017

OPERATING AND FINANCIAL REVIEW

Overview

Cash, Derivatives and Spot FX Trading Revenues from Euronext cash trading and derivatives trading businesses consist of transaction-based fees for executing trades on Euronext cash markets and derivatives markets. These transaction fees are charged per executed order and based on value traded in 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. Market Data and Indices 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 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. Post-Trade Euronext operates Interbolsa, the Portuguese national CSD, and receives fees mainly with respect to the settlement of trades/ instructions and the custody of securities registered/deposited in the centralised securities systems, namely the securities traded in Portugal. Euronext also receives a share of clearing income based on treasury services and the number of cleared derivatives trades cleared through LCH S.A., in exchange for which Euronext pays LCH S.A. a fixed fee plus a variable fee based on derivatives trading volume. Market Solutions & Other Market solutions & other revenue includes software license fees and IT services provided to third-party market operators and connection services and data centre co-location services provided to market participants. Licence fees for software that does not need significant customisation is recognised upon delivery or acceptance by the client. Fees for software customisation and implementation services are recognised either on a time and materials basis or under the percentage completion method, depending upon the nature of the contract. When standard UTP software requires significant customisation and implementation work, both software license and professional services fees are recognised together on a percentage of completion basis. The stage of completion is measured based on the number of man days incurred to date as a percentage of total estimated number of man days to complete. Software maintenance fees, managed services fees, connection and subscription fees, and annual license fees are recognised rateably over the life of the agreement.

securities are listed or admitted to trading on Euronext markets pay annual fees. Euronext has adopted a common set of admission and annual fees for the Euronext and Euronext Growth markets. Companies having equity securities listed or admitted to trading on Euronext or Euronext Growth markets are subject to the following types of fees:  initial admission fee charged based on the market capitalisation at first admission and calculated on a cumulative scale with decreasing rates and capped;  subsequent admission fees charged based on the amount of capital raised and calculated on a cumulative scale with decreasing rates and capped, and other corporate events related fees;  annual fees based on a variable decreasing percentage of the number of outstanding securities and a fixed fee based on the issuer’s market capitalisation over a threshold level. The annual fee is capped. Euronext distinguishes domestic issuers and non-domestic issuers. Non-domestic issuers primarily use Euronext markets to increase visibility, and the fees charged to this category of issuers have lower caps and lower flat fees. Admission fees for debt securities, issued both on a stand-alone basis or under a note program, are based on the maturity and principal amount admitted to trading, and, in respect of long-term debt (maturity over one year), number of years to maturity. Euronext offers lower admission fees for issuers that access the debt capital markets frequently and for issuers qualifying as SMEs. Euronext offers centralisation services for orders in connection with a public offer, a public tender offer or a sales facility, in respect of securities admitted or to be admitted to any Euronext markets whether regulated or not. A common set of admission and annual fees apply to ETPs. Issuers of ETPs listed and/or admitted to trading on Euronext markets are subject to the following types of fees:  for warrants & certificates traded via the quote driven model, issuers are invoiced listing fees based on the average size of their products range (grouped in packages). There are several discounts available for which issuers can qualify in order to reduce their listing fees. A one-time admission fee is charged to issuers of structured notes and certificates not traded via the quote driven model, as well as a market access fee per instrument;  primary and secondary listings of ETFs, exchange traded vehicles and exchange traded notes are charged initial admission fees. Additional admission fees are charged per cross and multi- currency listing; charges are also applicable on delisting and merger of instruments. An annual fee is charged each entire calendar year based on the value of the total shares outstanding under each ISIN;  fund issuers are charged a one-time admission fee and a flat annual fee per listed open-end investment fund. Amonthly service fee is also charged per fund traded on the net asset value trading facility. A flat delisting fee is charged per open-end investment fund.

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2017 REGISTRATION DOCUMENT