TriOptima – Swedish FinTech ICSA AGM, May 24 Viktor Johannsson, Co-head Business Management Introduction Scoffed at PP

How it all started… The story of TriOptima begun like a lot of other successful tech companies TriOptima founded 2000 Four founders Company was based on a brilliant idea; OTC derivative inventories can be greatly reduced IT bubble burst shortly after the company was founded

…and got going Financial Times, May 1, 2003 EUR 420 billion of IR swaps terminated in first ever multilateral termination cycle 17 banks participated in the run It was the biggest derivative transaction to date

…and got very busy TO’s services got stress-tested during the financial crisis 2008 During the crisis, reports from our services went to CFO-level of major dealers The weekend before Lehman defaulted we were on standby to run a compression cycle

Multilateral compression

Bank A B C D E Multilateral compression - Concept Consider your trades vs 5 counterparties: Net Market Exposure Bank A B C D E Payers Receivers 6 confidential - sensitive

Multilateral compression - Concept 1-to-1 terminations can (in theory) achieve: Net Market Exposure Bank A B C D E Payers Receivers 7 confidential - sensitive

Bank A B C D E Multilateral compression - Concept Multilateral compression eliminates more trades, without changing market exposure Net Market Exposure Bank A B C D E Payers Receivers 8 confidential - sensitive

Counterparty risk reduction via triReduce Counterparty risk before triReduce cycle Counterparty risk after triReduce cycle Peaks and troughs are flattened off Actual result from a triReduce cycle - Counterparty risk is flattened FinTech comes in: Huge optimization problem subject to 20 million constraints Need to complete the run in a short period of time while markets are closed triReduce supports compression of Interest Rate products in all

Reconciliation, Margining & Dispute management

Reconciliation, margining & dispute management Variation Margin (VM)

Reconciliation, margining & dispute management MarginDispute

triResolve’s network approach Bilateral model Network service model Dealer Buy-side firm Dealer Buy-side firm - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- Dealer - -- Asset Servicer Dealer Asset Servicer - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- Regional Bank Energy Firm Energy Firm Regional Bank Pre-Lehman Firms’ exchanged spreadsheets in event of disputes Highly re-active approach Web-based approach Facilitates a collaborative workflow Daily margin process Cost effective Network model allows analysis that’s not possible under a bilateral approach Benchmarking; how do I compare operationally to my peers? Industry average pricing; how do my valuation compare to my peers Financial technology challenge Provide a service which is faster and , yet serves Data: 60M transactions per week / 3 billion records per year - -- - --

Achievements to date 1,600+ banks & financial institutions subscribing to our services, including all of the top-100 banks >90% of global uncleared OTC derivatives now reconciled regularly through our services USD 750 trillion in notional amount terminated - 60M transactions reconciled each week Gross World Product is USD 77 trillion ~10 years of Gross World Product

Stockholm as a FinTech hub Stockholm has been ranked as the 2nd largest city for financial technology in Europe London number one FinTech companies in Stockholm has attracted significant funding the past five years

Strong engineering tradition Some examples include Ericsson, ABB, SAAB Aerospace But

Excellent infrastructure & high IT literacy Internet access by country Source: Wikipedia (2013 rankings) Source: Akamai Q4 2015 rankings Internet connection speed Strong infrastructure Good Internet coverage High connection speeds 5% of the population in Sweden is >80 years Large part of the population good knowledge of IT Strong infrastructure does not stop there. Central electronic registers of: Citizens and corporations Houses/properties Tax records Etc. This infrastructure is enabling financial electronic services For example: Electronic ID, it is possible to open a bank account or even take a mortage without visiting a local bank office You don’t even have to visit the bank to become a client

Swedish FinTech - roots from the 80s OM, Optionsmäklarna, one of the first electronic exchanges Spotify

Environment for FinTech companies Environment for FinTech companies - characterized by a high pace of change The following quote from Darwin puts it well: FinTech companies leverage technology that enables clients to do things smarter, faster, cheaper and better than before. The flip side is that new disruptive technology may be around the corner Must be in the FinTech company’s DNA to adapt to change I think we have very exciting time ahead of us Technology will enable significant change It will be possible to automate many routine tasks

Thank you! www.trioptima.com