Flow Traders Ltd · EURONEXT:FLOW
Flow Traders — Investor Day (July 2022)
64 slides from Flow Traders's investor day presentation, Jul 22, 2022
Slide 1: Flow Traders Capital Markets Update
FLOW ® TRADERS Capital Markets
Slide 2: Disclaimer
+ This presentation is prepared by Flow Traders N.V. and is for information purposes only and the material contained in this document is provided “asis”. Itis not a recommendation to engage in investment activities and you must not rely on the content of this document when making any investment deci
Slide 3: A driving force for transparent, efficient, accessible markets
Flow Traders: Adriving force for transparent, efficient, accessible markets Financials and capital 2 Our strategic ambition Risk and Compliance 3 Current business and outlook 6 Concluding remarks and highlights
Slide 4: A driving force for transparent, efficient, accessible markets
Flow Traders: A driving force for transparent, efficient, accessible markets Dennis Dijkstra Chief Executive Officer FLOW ® TRADERS
Slide 5: Purpose and Mission
We are the driving force for an investment environment that is Pu rpose more transparent, efficient and and Mission lower-cost for end-investors, through the power of trading acumen, innovation and talent
Slide 6: Highlights of today's Capital Markets Update
Global multi-asset liquidity provider with unique market access, trading acumen, pricing excellence and enabled by sophisticated, proprietary echnology Expanding on market leading position in ETPs with growth in Fixed Income, Digital Assets, FX, and Commodities High lights of Capitalizing on evoluti
Slide 7: Flow Traders at a glance (1/2)
Flow Traders at a glance (1/2) Established track record, FY21 Robust financial results, FY21 Ye i Net Tradi a 18 «<> 384m Global presence, FY21 coe 6 O 5 Employees =) ch . we oo Years as a Normalized & 53° Nationalities ° public company a €175m_ eeiroa Net Trading 180 _ trading venues (2) €611m Capi
Slide 8: Flow Traders at a glance (2/2)
Flow Traders at a glance (2/2) Global connectivity on- and off-exchange EURONEXT 100 OT venues and XETRA pl Nasdaq exchanges @®CMEGroup $i London Stock Exchange >2 ,000 ~1,100 ; ~790 counterparties CJ 2017 2018 Note: Traded through portfolio trades, outright, and ETF creations and redemptions ~1,300
Slide 9: Flow Traders' core competencies
Flow Traders’ core competencies footprint Global connectivity on- and off- exchange, e.g., 180 venues and >2,000 institutional counterparties Trading talent Highly experienced trading team with strong know-how and expertise Pricing and hedging excellence Market neutral liquidity provider 24/5, excel
Slide 10: Success is a testament to company culture and diverse talent
Flow Traders’ success is a testament to company culture and diverse talent Premier graduate programs and targeted training Opportunities O ‘ Strong Dedicated graduate culture Q Performance-focused trading and software culture with ~75% development Participation in programs company share plans Contin
Slide 11: Sustained growth as a leading global multi-asset liquidity provider
Sustained growth as a leading global multi-asset liquidity provider Cumulated NTI (€bn) : fa — ~ - ate 2004 2007 2009 2010 2015 2017 2018 2020 2021 2022 Key achievements since the last Capital Markets Update in 2019 Business expansion: Fixed Income - single bond market making Further expanded Crypto
Slide 12: Our business is aligned to three distinct asset classes
Our business is aligned to three distinct asset classes and underlying focus groups EMEA traded ETP and index products AMER traded ETP and index products APAC traded ETP and index products EMEA traded ETP and cash bonds AMER traded ETP and cash bonds CCC: Currencies, Crypto, Commodities 12
Slide 13: Our strategic ambition
Our strategic ambition Mike Kuehnel Chief Financial Officer FLOW ® TRADERS
Slide 14: Five megatrends are shaping the future of financial markets
Five megatrends are shaping the future of financial markets Rise of ETP Emerging investing ecosystems Growth in VC and PE investments into AUM by 2025 FinTech/ innovative players ui vag Continuously growing Further trade : Institutional adoption of Shift in trends increases Increasing standards for
Slide 15: Strong growth fueled by increasing consumer awareness and macro trends
Strong growth fueled by increasing consumer awareness and macro trends RISE OF ETP INVESTING ATi Market size and expected growth Global ETF! AuM (Strn) . 15 10 . 5 . 1 0 | 2010 2020 2025E Legend: Key growth drivers Diversification across assets (Retail) investors eagerly diversify to reduce risk, th
Slide 16: Continued electronification of trading
Continued electronification of trading fication rate Inflection US Equity options > 90% 4 i EUR ETF > 90% point = EUR Covernment Debt ~80' rx spot 90% US Cash Equity > 90% US Government Debt ~65% @* EUR Investment Grade “w K US Investment Grade ~35% e EUR High Yield Corporate oar AY 9.7x 41x h Yield
Slide 17: Recent crypto volatility - long-term structural industry shift still expected
Recent crypto volatility - long-term structural industry shift still expected Remarkable growth in past 5+ years in major coins — Blockchain technology has seen remarkable adoption high Levels of volatility experienced in financial services and continues to evolve Increasing institutional flow and r
Slide 18: Financial markets evolve into an interconnected ecosystem
Financial markets evolve into an interconnected ecosystem GF bod ©) alls = Incumbent financial market players look for new value drivers as ~$150bn margin compression in the traditional business continues = Venture and PE financing as key enabler for development of the innovative value propositions
Slide 19: Increasing relevance of financial market regulation
(6) —— Increasing relevance of financial market regulation F = Ahighly regulated environment increases complexity and thus creates entry barriers for newcomers = To compliantly operate across multiple regimes, players require a breath of capabilities and institutional know-how * Global scale and fin
Slide 20: Leveraging unique connectivity to drive global innovation
Flow Traders is leveraging its unique connectivity to drive global innovation Legacy view: Capture bid-ask spread ween) Tr A HL Seller Liquidity provider Emerging role: Global connectivity and next-generation liquidity provider Transparency Lower , w—_ a On- and off-exchange t ti Nos, F L @) W | tra
Slide 21: Key elements of our strategic ambition
Key elements of our strategic ambition to become next generation liquidity provider Global access Asset universe Pricing excellence Providing liquidity anytime Trading any asset to Acting as market neutral provider anywhere across expand our presence 24/5 with strong hedging trading venues, exchange
Slide 22: Corporate Venture Capital Unit
Corporate Venture Capital Unit: Flow Traders supports and accelerates global financial market innovation through own corporate VC Flow Traders cc Flow Traders Capital €50m 2+ years Investment Deployment wallet period >20 10 years Long-term Investment investments horizon Innovative early-stage ventur
Slide 23: Actively shaping the global financial system by investing into innovative firms
Flow Traders actively shaping the global financial system by investing into innovative firms Equity MEM © ermertaree A May 2020, December 2021 RFQ-hub CONSORTIUM May 2022 Fixed Income LEDGER EDGE October 2021 Currencies, Crypto, Commodities ShapeQ — BE srecxoarmon July 2021 @PYTH October 2021 } Marc
Slide 24: Current business and outlook
Current business and outlook Folkert Joling Chief Trading Officer FLOW ® TRADERS
Slide 25: Current business and outlook — key takeaways
Current business and outlook — key takeaways = We operate in the largest global markets that offer multiple growth opportunities = Our distinct trading competencies shaped our success as an ETP powerhouse - As our business model evolves, we expand into underlying asset classes to become a truly glob
Slide 26: Global markets: Significant potential for growth across all asset classes
Global markets: Significant potential for growth across all asset classes r Global markets ADV (€bn), 2021 @ 8e@ 0.1° Equity ETP Fixed Income ETP Digital Assets ETP Crypto spot & derivatives 26 Single Single stocks bonds Note: On-exchange volumes only; Source: Tradeweb, Bloomberg, SIFMA, AFME, Asian
Slide 27: ETPs in EMEA and APAC demonstrate high potential to reach US level
Global markets: ETPs in EMEA and APAC demonstrate high potential to reach US level r Relation of ETPs to underlying assets traded volumes (%), 2021 Equity & Fixed Income US EMEA APAC 34% 6% T% Digital Assets Global 0.1% Source: Tradeweb, Bloomberg, SIFMA, AFME, Asian Development Bank, CoinGecko, Flo
Slide 28: Our strong heritage: A distinct trading profile
Our strong heritage: A distinct trading profile made us an ETP powerhouse Trading talent Highly skilled home-grown talent experienced at trading under all market circumstances Proprietary, modular and scalable platform for seamless execution and fast expansion into new products Pricing excellence Ex
Slide 29: Diversification across asset classes requires a broad set of capabilities
Diversification across asset classes requires a broad set of capabilities Trading capabilities Required capabilities: Research-based, microstructure know-how, standardized approach FLOW © travers CUlrent trading profile: Trading talent, macro-structure know-how, handling of exceptions A rn = Expansi
Slide 30: Global expansion and asset class diversification
We continue our global expansion and asset class diversification 3%, 3% 65% 2019 2020 2021 2019 2020 2021 mEMEA mUS BAPAC m Equity Fixed Income ccc! Other We build on our heritage as a European powerhouse We expand our position in ETPs and continue and continue active expansion globally diversifying
Slide 31: Strategic focus on three distinct asset classes
Organic value creation accelerated through strategic focus on three distinct asset classes Target asset class mix (% NTI) Equity 55% Fixed Income 20% Note: "CCC includes Currencies, Crypto, Commodities Operational KPls Quarterly growth trackers ——————————. Annual update— Equity NTI * Global traded v
Slide 32: Our financial ambition: €1bn NTI
Our financial ambition: €1bn NTI Our financial ambition * Organic annual growth of ~20% to reach €1bn NTI ambition mark Our enablers = Team: We attract and develop best talent yet maintaining strong cost discipline of related expenses ® Trading capital: Our trading capital is highly accretive, and w
Slide 33: Senior leadership with extensive industry experience
Senior leadership with average industry experience of 11 years Equity Fixed Income Currencies Crypto Commodities Alex Kieft Matheus Haserick- Michael Lie Today’s presenters Aernout Jorna Ramon Balje | | Marc Jansen Mark Pinckers Jasper Jansen Joshua Mathew 33
Slide 34: Asset class deep dives: Equity
Asset class deep dives Equity Alex Kieft Head of Equity Trading FLOW ® TRADERS
Slide 35: Equity: Attractive global ETP market with expected future growth
Equity: Attractive global ETP market with expected future growth Equity ETP - global market development ETP value traded (€trn) ETP AUM (€trn) = Strong overall past performance confirms attractiveness of the ee) global Equity ETP market aon ofo) oe ar oe AuM across all asset classes are expected to
Slide 36: Equity: Well positioned to further expand Equity business
Equity: Flow Traders well positioned to further expand Equity business Equity ETP — Flow Traders business development | Strengths and future focus Flow Traders Equity ETP value traded (€bn) = Market leader in EMEA ETPs consistently with 26.8% overall market share and 41% market share on- exchange "
Slide 37: Equity: Vast opportunities to pursue
a Equity: Vast opportunities to pursue International index products Further growth unlocked in core International ETPs and Futures business through scalable correlation- based pricing and hedging framework Adjacent growthin medium-term position trading New growth markets in APAC Regional expansion i
Slide 38: Asset class deep dives: Fixed Income
Asset class deep dives ') Fixed Income Matheus Haserick-Lara Head of Fixed Income Trading FLOW ® TRADERS
Slide 39: Fixed Income: Market growth and opportunities in ETPs and portfolio trading
Fixed Income: Market growth and opportunities in ETPs and portfolio trading Fixed Income - g L market development ETP value traded (€bn) 3,311 iO 1,960 2,048 1343 ail | 2018 2019 2020 2021 2022A Robust market growth in the past few years attributed to growing diverse investor interest in Fixed Incom
Slide 40: Fixed Income: Robust in-house capabilities for pricing
Fixed Income: Robust in-house capabilities for pricing Data Fueled Scalable Pricing Model driven engine capable of handling pricing for institutional counterparties, retail platforms, credit portfolios, and ETF baskets Cross asset class from corporate credit and equity trade data to ETF flow of fund
Slide 41: Fixed Income: Well positioned to further expand business
Fixed Income: Flow Traders well positioned to further expand Fixed Income business Fixed Income — Flow Traders business development r Annual ETP value traded (€bn) Annual single bond value traded (€bn) and counterparties (#) 1,164' 863 927 732 703 243 562 11 11 2020 2021 2022A 2020 2021 2022A ™ Gov
Slide 42: Fixed Income: Strategic focus areas
2 Fixed Income: Strategic focus areas ETP Ecosystem = Partner with ETP issuers for new innovative products with Fixed Income exposures = Facilitate fixed income underlying rebalances with ETP issuers = Amplify creation and redemption synergies with corporate bond market making Credit Trading = Incre
Slide 43: Asset class deep dives: Digital Assets
Asset class deep dives ») Digital Assets Michael Lie Head of Digital Assets Trading FLOW ® TRADERS
Slide 44: Digital Assets: Growing interest in regulated products
Digital Assets: Growing interest in regulated Digital Assets products Digital Assets — global market development ADV (Average Daily Volume) Deaasses traded Sbn 54 Hien 2019 2020 2021 H122 Spot = Derivatives Private investments in Digital Assets ventures Sbn 0.6 0.9 11 2015 2016 2017 Source: Tradeweb
Slide 45: Digital Assets: Leading Crypto ETP market maker
Digital Assets: Leading Crypto ETP market maker with large institutional network Digital Assets - Flow Traders business development | Strengths Crypto ETP ADV traded (€m) 38.6 . , 202) 28.8 = Track-record of leading Crypto ETP o> : market maker offering liquidity in a wide range of products 2.9 = Ex
Slide 46: Digital Assets: Opportunities and future focus
3 Digital Assets: Opportunities and future focus in Digital Assets business Digital Assets ETPs » Maintain leading position in Crypto ETP market making with prospects of further expansion across regions » Drive Digital Assets ETPs market with industry partners for more efficient access to Digital As
Slide 47: Financials and capital
Financials and capital Mike Kuehnel Chief Financial Officer FLOW ® TRADERS
Slide 48: Financials and capital — key takeaways
Financials and capital — key takeaways = Strong and consistent through-the-cycle financial performance — periods of higher volatility provide additional upside = Investments in designing and deploying robust and diversified trading strategies have improved trading returns relative to broad measures
Slide 49: Strong and consistent through-the-cycle financial performance
Strong and consistent through-the-cycle financial performance Market ETP Total AUM (€trn) Volatility (VIX) Flow Traders Net Trading Income (€m) % NTI growth over the past decade while delivering ~50% EBIT i various market cycles 0% CAGR 2 9.0 8.5 5.6 6.4 33 4.0 4.2 15 19 23 27 27 . Oo CI a 2011 2012
Slide 50: Robust and diversified trading strategies drive organic growth in daily NTI
Robust and diversified trading strategies drive organic growth in daily NTI Median Daily Net Trading Income (€k) | NTI/VIXt (€k) acre 1,242 870 o/ CAGR 20% 542 279 Ww 144 213 a ~~ —_ oe i 2010 2014 2018 2021 2010 2014 2018 2021 = Median Daily Net Trading Income =NTI/VIX! Investments in trading strat
Slide 51: Continued strong performance following exceptional performance in 2020
Continued strong performance following exceptional performance in 2020 Net Trading Income (€m) 933 383 384 i 216 | 237-232 2018 2019 2020 2021 4H121 4H122 = Net Trading Income Resilient trading performance in 2021 and H122 under more normalized market conditions compared to 2020 EBITDA (€m) Margin (
Slide 52: Operating expense progression in line with strategic priorities
Operating expense progression in line with strategic priorities Fixed operating expenses (€m) 99.8 90.8 16.5 39.7 43.6 2018 2019 m Employee expenses (fixed) 118.6 24.4 46.5 ATT 2020 122.1 77 49.8 58.9 63.2 8.1 24.2 54.6 26.6 2021 H121 H221 m Technology expenses | FTEs (#) 436 75.2 715 12.2 B34 28.7
Slide 53: Optimized and efficient capital base
Optimized and efficient capital base resulting in a strong regulatory capital position Regulatory Capital Requirements, 2021 Regulatory Own Funds Requirement (OFR) €m €m 540 | Unpaid dividends 483 515 Leverage Deferred variable 438 Prime compensation 75 203 Brokers 240 | 287 220 483 133 365 312 Of w
Slide 54: Global deployment of trading capital
Global deployment of trading capital constantly in line with strategic growth agenda Trading capital is highly accretive ... ..and deployed into asset diversifica 121% 2% 59% 63% 62% 915 772 619 611 611 7 CO J J 31-Dec-19 30-Jun-20 31-Dec-20 30-Jun-21 31-Dec-21 30-Jun-22 31-Dec-20 31-Dec-21 mam Tota
Slide 55: Capital allocation framework balancing growth with shareholder returns
Robust and highly developed capital allocation framework applied balancing growth with sustainable shareholder returns Invest Acquire Efficiently support a long- Strategic minority term market opportunity investments via newly created through disciplined OpEx S soln Corporate Venture Capital managem
Slide 56: Risk and Compliance
Risk and Compliance Britta Achmann Chief Risk Officer FLOW ® TRADERS
Slide 57: Risk Management and Compliance functions support the business
Flow Traders Risk Management and Compliance functions effectively support the business Aligned to business Focused on risk Experienced Standardized priorities prevention to team processes and tools enable business O PBR ae Compliance and Risk Focus on continuous Established seasoned End-to-end Suppo
Slide 58: Current Risk Management and Compliance priorities
Current Risk Management and Compliance priorities fully aligned to asset classes Equity Prime Broker strategy: Strategic approach enabling shift of assets between Prime Brokers on a short notice Fixed Income Margin methodology requirements: Improved key parameters on Corporate Debt book Haircut opti
Slide 59: Following regulatory developments impacting our business
Flow Traders closely follows the regulatory developments impacting our business EMEA US APAC Equity Fixed Income Consolidated Tape Improved transparency and access to data T+1 Settlement Reduces credit/ market/ liquidity risk, yet limited direct impact on Flow Traders CAT regulatory regime Fully ope
Slide 60: Digital Assets: Ongoing developments promote transparency and market efficiency
Digital Assets: Ongoing developments promote more transparency and market efficiency Digital Assets = AML travel rule: Discussion regarding exemption where both parties acting on own behalf, debate over privacy regarding un-hosted wallets EMEA Markets in Crypto Assets (MiCA) regulation: Authorizatio
Slide 61: Concluding remarks and highlights
Concluding remarks and highlights Dennis Dijkstra Chief Executive Officer FLOW ® TRADERS
Slide 62: Our financial ambition - recap
Our financial ambition - recap = We strive at organic annual growth of ~20% to reach €1bn NTI ambition mark « As a global multi-asset liquidity provider, we aim at target NTI mix of our focus asset classes - Equity, Fixed Income and Currencies, Crypto, Commodities = To track progress on our strategi
Slide 63: Highlights of today's Capital Markets Update
Global multi-asset liquidity provider with unique market access, trading acumen, pricing excellence and enabled by sophisticated, proprietary echnology Expanding on market leading position in ETPs with growth in Fixed Income, Digital Assets, FX, and Commodities High lights of Capitalizing on evoluti
Slide 64: Flow Traders offices
G FLOW ® TRADERS AMSTERDAM = CLU) ® HONGKONG = LONDON ® MILAN = NEWYORK ® PARIS ® SINGAPORE >»... . - -