First Read Allfunds Group PLC H1:26 - Broadly in-line results

研报英文原文证据摘录

First Read Allfunds Group PLC H1:26 - Broadly in-line results

calculation where we value the NII

stream differently.

DB1 is exposed to a number of risks, the most important being regulatory. The

implementation of new regulations (such as an FTT) could have a material impact on the

bottom-line of DB1. DB1 is exposed to any regulations with regards to how they charge data

fees to market participants. These fees account for an important part of DB1's revenue base

and any regulation capping the market data charges could have a negative impact on the

exchanges. DB1 faces competitive risks from the number of alternative trading venues that

operate in Europe. These platforms have been winning market share from the exchanges over

the past 9 years and further market share gains threaten the earnings power of the

exchanges. DB1 is also exposed to market risk as equity and derivative volume growth have

an impact on the bottom-line of these institutions. As most of the exchanges calculate their

trading fees relative to the value of the transaction (rather than a flat fee per transaction),

higher equity markets tend to have a positive impact on the secondary trading fees collected

by the exchanges, and vice versa. On the derivative side, there is a general rule that the higher

the volatility in the markets, the stronger the volumes in derivatives as investors utilise the

hedging benefits of these instruments. So, an ideal market environment for an exchange with

exposure to cash equity and derivative trading would be a volatile, upward moving market.

DB1 operates a central (counter-party) clearinghouse that could be exposed to credit risk in an

environment where customers default and the clearinghouse is not able to receive sufficient

variation margins to protect itself from losses.