1. Rainer Riess Sofia, 16 September 2008
A View from Outside: The Developed Exchanges as Partners and Providers of Innovations
Framework - The presented offering includes all components of Deutsche Börse IT (from consultancy over application development to data center services) and aggregates the offering of all entities in the IT segment
- The addressees are executives on board level and other decision-makers
- The presentation will be updated on a regular basis
(for potential customers in Luxembourg we have to make a few changes to focus more on the regulatory issues (PSF-approval))
Rainer Riess
Sofia, 16 September 2008

2. Agenda 1. Brief Introduction of Deutsche Börse
2. International Stock Market Trends
3. Partnership in South-East-Europe

3. Deutsche Börse Group – Innovation and Growth
1585 Foundation of Frankfurt Stock Exchange
1992 Deutsche Börse AG established as a joint stock company
1997 Launch of the electronic trading platform Xetra®
1998 Derivatives exchange Eurex established on the basis of a merger of DTB Deutsche Terminbörse and Swiss Soffex
2000 Merger of Deutsche Börse Clearing and Cedel to form Clearstream International
2001 IPO of Deutsche Börse AG, one year later share of Deutsche Börse AG included in the DAX® index
2003 Introduction of the Equity Central Counterparty
2006 Deutsche Börse and SWX form structured products JV “Scoach”
2007 Market capitalization of about EUR 25 bn, Deutsche Börse AG included in EuroStoxx 50 index
2008 Eurex takes over International Securities Exchange (ISE)

4. Deutsche Börse Group – Integrated Transaction Processing
Trading
Clearing
Settlement
Custody
Cash Market: Xetra
Eurex Clearing
Clearstream
Derivatives: Eurex
Operation of open electronic order books
Connectivity to international trading participants
Verification of trade-related information
Central counterparty (CCP)
Risk management
Delivery of securities (delivery vs. payment)
Financing services
Physical custody of securities
Related services, e.g. tax, corporate actions
Market Data & Analytics
Streaming data, data terminals, indices, reference data
Information Technology
External IT services, internal IT services, software development

5. Agenda 2. International Stock Market Trends
1. Brief Introduction of Deutsche Börse
2. International Stock Market Trends
3. Partnership in South-East-Europe

6.  Cross Border Trading: Diversification leads to Internationalization of Markets
Remote and world wide distribution of market data allow investors to access international liquidity pools at reasonable costs
Physical location of trading does not matter anymore
Intermediaries enlarge their product portfolio in securities services; limitations for cross border capital flows are reduced; Investors can diversify their portfolios more efficiently
Exchanges internationalize their customer bases
Largest active fund pool
About 3,500 active funds
Deutsche Börse:
USA
Ireland
Belgium
France
Spain
UK*
Germany
Gibraltar
Italy
Portugal
Denmark
Finland
Nether-
lands
Luxembourg
Sweden
Singapore
Australia
Hungary
Host
Access point
Participants
Cyprus*
Greece
Czech Republic
Slovenia
Austria
U.A.E.
Switzerland
Equity futures and options
About 600 equity derivatives
Largest stock market
About 9,000 shares traded
thereof about 8,000 international companies from 70 countries
Joint liquidity network
About 300 Xetra members and 400 Eurex members
Across 25 countries
Largest listed ETF
universe in Europe
Over 300 Exchange traded funds
Highest market share in Europe
Index futures and options
100 index/ETF derivatives
3 Volatility Index futures
Largest bond offering
10,000 bonds; thereof 2,000 international bonds
Largest settlement network
Settlement links into more than 45 international markets

7.  Consolidation and Competition: Maintaining and increasing Liquidity is Key for Exchanges
Very active market consolidation in 2007 including first cross-Atlantic deals (e.g. NYSE-Euronext, Nasdaq-OMX, Eurex-ISE) while economies of scale drive for increased system load
Competition increases as investment firm groups become marketplace operators (e.g. Turquoise) and new entrants emerge (e.g. Chi-X), supported by regulatory focus on Customer Protection and Interoperability
OTC markets capture large parts of the total order flow. Various so-called “Dark Pools” were established
Challenge for exchanges is still to uphold efficiency of public price discovery, to avoid the fragmentation of liquidity and to integrate OTC markets
Deutsche Börse:
Deutsche Börse actively manages the liquidity of its markets by continuously measuring liquidity costs and selecting the right market model for each instrument
Furthermore, Deutsche Börse consistently introduces new innovative products, e.g. Exchange-Traded Commodities (“ETCs”) and “Xetra-Gold” recently
Last but not least, cooperation and partnerships with other exchanges ensure economics of scale for Deutsche Börse's trading platforms.
On June 16, 2008 the Bulgarian Stock Exchange with its 81 members successfully went live on Deutsche Börse’s Xetra platform

8.  Algorithmic Trading: The Need for Speed – A Race to the Bottom?
Algorithmic Trading is
- a trading service that enables order submissions
- without human intervention
- via direct market-access channels
- based on quantitative models
- and a predefined benchmark concept.
Requirements:
Ultra fast market data feed
Low latency, high speed trading platforms
Proximity hosting services
Pricing models designed for high frequency trading
Deutsche Börse:
While the share of algorithmic trading increased to more than one third of trading volume and trading activity increased to more than 2 mn trades per day, Xetra latency (order action roundtrip time) could be reduced to 2 milliseconds for the fastest orders per day

9.  Risk Management: Central and Integrated Clearinghouses generate Trust
Risk management capabilities are becoming more important to every single market participant but also to the financial stability of the whole market
Introduction of central counterparties (CCP) can be seen as a logical consequence of electronic trading
Traders can build up heavy market exposure and positions change from long to short within milliseconds
This requires real-time risk management capabilities, fully electronic and seamlessly integrated with trading to allow for a continuous mark-to-market and risk based margining of trading positions
Deutsche Börse:
Deutsche Börse has ample experience in setting up and operating clearing and CCP services since Eurex Clearing AG, Deutsche Börse Group's integrated clearinghouse was founded in 1998
Eurex Clearing serves more than 114 clearing members located in 10 European countries and manages a collateral pool of approximately EUR 45 bn
In 2007, Eurex Clearing processed more than 2 bn transactions, ranking it the largest CCP in Europe

10. Agenda 3. Partnership in South-East Europe
1. Brief Introduction of Deutsche Börse
2. International Stock Market Trends
3. Partnership in South-East Europe

11. Partnership in South-East Europe
Motivation
Leading exchanges like Deutsche Börse are mostly active across various asset classes and the whole value chain of exchange trading
Their international network of trading & clearing member as well as settlement institutions, CSDs and data vendors provides high synergies and unique potential for smaller exchanges
Joint marketing & sales activities (e.g. road shows and investor conferences in major international financial centers) highly valued by local issuers
Re-using exchange infrastructure of an exchange partner comes only at marginal costs for smaller exchanges
Difficult projects (e.g. setting up derivatives trading and/or a full fledged clearing house) become feasible for smaller exchanges in a much shorter timeframe
Deutsche Börse's Approach
Concept of "Partner Exchanges" with various options and close integration into Deutsche Börse's infrastructure
Various success stories (latest: Bulgarian Stock Exchange) demonstrating development of time of such a partnership (first cash market infrastructure, expansion of asset classes, set-up of a CCP, CSD linkage)
Flexible engagement models offered
Highly attractive pricing possible due to synergies (re-using of existing hardware and trading networks)
Lessons Learnt
Trustful and long-term partnership required as well as strong commitment from both sides
Focus shall be on the whole value chain, not only on cash trading – right from the beginning
Exchange partner needs to be willing to act as a mentor rather than solely as a provider of trading software
Share of risks and benefits as a superior way to achieve full commitment on both sides

12. Co-operation has been started
Partnership in South-East Europe Bulgarian Stock Exchange & Deutsche Börse
The co-operation between the Bulgarian Stock Exchange and Deutsche Börse combines the experiences from both partners to expand the Bulgarian capital market.
Phase 1:
Co-operation has been started
Phase 2: Outlook
Successful implementation of a common state-of-the-art trading platform (Xetra) on 16 June, 2008
Acquisition of further international vendors for BSE market data; distribution of BSE data via Deutsche Börse’s network in parallel to BSE
Joint analysis of the product portfolio and potential business opportunities (e.g. derivatives listing)
Improvement of settlement infrastructure esp. for foreign members, e.g. by creating a CSD link between Clearstream and CDAD
Enlargement of member and end-customer base by attraction of foreign investors
Increase liquidity by potential introduction of specialists, joint marketing efforts etc.
Introduction of a derivatives market on a common trading platform considering local requirements
Joint cash market and product development (e.g. ETFs, certificates and warrants)
Setup of a clearinghouse and central counterparty for the Bulgarian Market

13. Thank you for your attention!

14. Scoach: The new European Exchange for Structured Products
SWX Group and Deutsche Börse AG have integrated their current business in structured products to become Scoach, the largest European trading venue for structured products
Scoach holding company is located in Luxembourg
Structured products are securitized derivatives (e.g. certificates or warrants*) on various underlyings, issued by a bank
Issuers of structured products have the choice of two different trading models (Issuer Trading Model or Specialist Trading Model) per instrument.
Trading takes place on Deutsche Börse‘s Xetra trading platform between 9.00 a.m. and 8.00 p.m. CET
All Xetra trading members (about 300 banks and brokers from 19 different countries) can trade structured products on Xetra or become issuer of structured products**
More than different structured products are currently offered for trading on Xetra
Overview
50%
+ 1 share
-1 share
100%
FWB segment
Structured Products D/EU
Agent (partly) for FWB
Scoach Schweiz Exchange Structured Products CH
Scoach Holding SA
Europa
Schweiz
* e.g. reverse convertibles, basket, bonus, discount, guaranteed, index/tracker, outperformance and other; plain vanilla, knock outs, exotic
** EU-wide listing enabled via EU-passporting procedure

15. International Securities Exchange (ISE): Creating the Largest Transatlantic Derivatives Marketplace
Purchase price of ISE was about USD 2.8 bn and deal was closed in December 2007
Largest transatlantic derivatives marketplace with about 600 exchange members and more than 2.7 billion contracts traded in 2007 was created
Combines two innovation leaders offering significant cross-selling and new product development opportunities
Provides new geographic expansion opportunities across multiple asset classes
Trading and clearing link planned providing access to ISE products through existing Eurex technical infrastructure, network and processes
Execution in ISE’s order book building on home market liquidity
Access through existing Eurex Clearing relationship and efficient use of collateral

16. Link-Up Markets: Direct Cross-Border Access facilitated by integration of European CSDs
Single point of access for CSDs to participating markets
Easy implementation of enhanced CSD-links in Central Bank Money leveraging TARGET2-Cash
Reuse of efficient local infrastructures
Absorbing differences in market standards
Best-in-class CSD services for all asset classes (excluding derivatives) and multiple currencies
Continuous harmonization of market practices
Flexible extension of market coverage in Europe and beyond
Launch in 1st half 2009