London Stock Exchange Group PLC

LSE:LSEG

Earnings Call Transcript 2021-Q1

[Operator]

Good day, ladies and gentlemen, and welcome to the London Stock Exchange Group Quarter 1 Investor and Analyst Call. [Operator Instructions] I will now hand over to Paul Froud to open the presentation. Go ahead, sir.

[Paul Froud, Head of Investor Relations]

Thanks very much. Good morning, everyone. Thank you for joining us. On the call are David Schwimmer, Group CEO; and Anna Manz, Group CFO. In terms of the format, first of all, Anna will talk through our Q1 results in just a moment, and then we'll open up the lines for Q&A. So just as a point of housekeeping, if you want to ask questions, then you need to be dialed in on the numbers provided in our release this morning. So with that, let me hand you over to Anna.

[Anna Olive Magdelene Manz, CFO & Director]

Thanks, Paul, and good morning. I'm pleased to be here this morning to discuss our Q1 results. This is the first time we're reporting LSEG and Refinitiv as a combined group, and we've delivered a good performance this quarter and made good progress on the integration of Refinitiv. But before I get started, I just wanted to remind everyone that, as usual, for our quarterly update, we've only described income and cost of sales. We're not updating our financial targets, and they are unchanged. Our good performance in the quarter reinforces our continued confidence in our achievements. So let me turn to the results reported this morning. I'm going to focus on the pro forma results at constant currency and adjusted for the deferred revenue haircut as this gives us a like-for-like comparison year-on-year and the best view of our underlying performance. Total income, excluding recoveries, rose 3.9% to GBP 1.7 billion, and gross profit was up 4% at GBP 1.5 billion, driven by new business and strong customer retention. In Data & Analytics, underlying revenue was up 4.7%, which is a strong performance. I'm going to unpack this for you by proposition. Trading & Banking Solutions fell by 0.2%. We saw good growth in banking, offset by pressure in trading. We're pleased to see that the decline in trading has improved, and we saw good growth in our commodities, FX and investment banking offerings. This proposition will remain an area of focus and investment, including the [ rollout ] work, absent Workspace, starting later this year. Enterprise Data grew by 3.1%. It was driven by strong customer demand for our nonreal-time pricing and reference service data. Enterprise Data is on an improving growth trajectory. This reflects our ongoing investment in new data sets and growing market demand, more breadth and depth of data delivered by feet. Investment Solutions, which contains our FTSE Russell business, grew 6.6%. This growth was underpinned by a pickup in subscriptions in FTSE Russell, which was up 8%, and record ETF assets under management, which closed the quarter at GBP 956 million. Wealth Solutions increased 4%. This reflects organic growth and the additional contribution from the Scivantage acquisition last year. Results were partly offset by the drop in the transaction-related revenues of our Beta business compared to the high trading volumes last year as a result of the pandemic-related volatility. Finally, within Data & Analytics, the Customer and Third-Party Risk business grew 34%. Also, this increase came from acquisitions of GIACT and Red Flag in the last quarter of last year, and the remainder was strong organic growth, particularly in the entity screening business, World-Check. Moving on to Capital Markets. We're reporting here now by asset class: Equities, FX and Fixed Income. Equity revenues were down 1.6%. We delivered good primary market performance, with heightened IPO activity. Trading volumes in the secondary markets were lower against a strong prior year comparator, which benefited from COVID-related volatility. FX trading revenues were down 6.3%, and this was a similar story to Equities in relation to the strong prior year comparator. Finally, within Capital Markets, the Fixed Income, Derivatives and Other segments delivered a 13% increase in revenues. Most of this line is driven by Tradeweb, and they'll release their Q1 update tomorrow. Tradeweb had a record quarter with over $1 trillion of Average Daily Volume traded, up 18% year-on-year. There was strong growth in the U.S. government bonds and European and U.S. credit trading, reflecting volatility in those markets. Turning now to Post Trade business, where our revenue growth was up 5.4%, excluding NTI. This was a resilient performance against strong figures last year. Total income fell 1%, reflecting the expected drop in NTI income. We split the Post Trade business into 4 revenue lines. This aligns with how we manage the business and gives better insight into some of the key revenue drivers, such as noncash collateral. OTC Derivatives revenue grew 1.1%, reflecting the resilience of SwapClear. The large fall in overall notional cleared was offset by strength in client clearing volumes in March on longer-dated swaps, which attract higher fees. This is driven by market volatility associated with the ongoing debate around potential reflation in Central Bank policy. Securities & Reporting revenues grew 8.3%, with a strong growth in the euro-denominated repo volumes as customers took advantage of the Balance Sheet and Settlement netting efficiencies provided by the service. Equity volumes continued to perform well, although they were down on the high volumes from prior year. Noncash collateral revenues were up 16% as a result of an increase in the average noncash collateral balances. The Net Treasury income, or NTI, was 16% lower, reflecting a strong prior year comparator. This quarter, the cash collateral balances and returns are at a more normalized level. Let me now touch on a few other areas. Our integration plans are being rolled out at pace. We've made a good start on synergies, having already achieved run rate cost savings of GBP 40 million. This comes from immediate opportunities such as headcount reduction and some property consolidation. I would not extrapolate this first quarter achievement as the ongoing run rate for the rest of the year. That said, we've made a really good start, and we're very confident in achieving our 25% run rate cost synergy target by the end of 2021. We've also made good progress on revenue synergies. These take longer to develop and to realize the benefit, but I'm pleased that we've started to build the foundation so quickly. We've launched 17 new or enhanced products as a direct result of the Refinitiv acquisition. And we're starting to cross-sell our products, notably between FTSE Russell and our pricing and reference services clients. Some indices have already moved our PRS data, and other changes are in the pipeline. At the end of the first quarter, we refinanced a significant proportion of the $8 billion bridge facility, which was drawn down at the completion of the Refinitiv acquisition. We issued GBP 5 billion in bonds, mainly in dollars and in euro, across a range of maturities with historically low rates. The remainder of the bridge facility will be repaid from the proceeds from the divestment of Borsa Italiana. So having moved quickly, we're in a good financial position, and we're comfortably on track to achieve our target leverage ratio of 1 to 2x within 24 months from the completion of the Refinitiv transaction. Finally, you'd have seen that we've announced an investor update on the 2nd of July, with a further event being planned for later in the year. We look forward to providing more insight on our business then and providing more information at our interim results in August. With that, I will pass to David.

[David A. Schwimmer, Group CEO & Executive Director]

Thank you, Anna. I am particularly pleased with our results given the comparison to the strong Q1 in 2020 and the progress we're making. The integration of our people into one team is going well. We are seeing the benefits of the diversified global business of LSEG, and our engagement with customers is benefiting from the increased opportunity set that we have. We delivered a good first quarter result. Integration is on track and going well, and we've made a strong start to realizing our target cost synergies. We successfully refinanced the group at attractive low rates and are close to the divestment of Borsa Italiana. So as I said, I'm pleased with the progress and results so far. So let's now turn it over to Q&A. Operator, can you please open the line for our first question?

[Operator]

[Operator Instructions] The first question comes from Philip Middleton from Bank of America.

[Philip David Middleton, Analyst]

Given that you both talked about increased confidence of realizing your targets, and you're pleased with the results so far, I wonder if you could comment on a couple of things I keep being told. The first is that Refinitiv was not the business you thought you bought. When you unwrapped it, it wasn't the color you thought you clicked on, and therefore, you're frantically having to invest to deal with that. Could you comment on that in the light of LSEG's results and commentary? And also, presumably, you're reaffirming your cost to achieve guidance, which is not something that has been talked about a lot, but has to be in your cost base. So could you comment on that one, too, please?

[David A. Schwimmer, Group CEO & Executive Director]

Sure. So thanks for those questions. So Refinitiv is exactly what we expected. We had done a lot of due diligence before we announced the transaction. We've done a lot of integration work before we closed the transaction, and we're making good progress now that we've closed the transaction. And we are as excited, if not more excited now, about the strategic transformation that this provides for LSEG. So feeling very good about that. Anna, if you want to take the cost synergy question?

[Anna Olive Magdelene Manz, CFO & Director]

Yes. So I'm happy to reconfirm all of our targets, that we'll deliver GBP 350 million or more of cost synergies, and the cost to achieve will be GBP 550 million. And I'm pleased that we're exactly where we expected to be at the end of the first quarter. So, yes, so far, we're well on track.

[Operator]

The next question comes from Andrew Coombs from Citi.

[Andrew Philip Coombs, Director]

Three from me, please. Firstly, just to follow-up on Philip's question. There's obviously some confusion, I think, in the investor community on your investment spend guidance, on the GBP 1 billion that you outlined for this year. When you look at that number, I know you obviously haven't [indiscernible] on today, there's focus more so on revenues and on synergies. But perhaps you could just provide now, you've had 3 more months of insight, the breakdown there between resilient sufficiency growth and perhaps elaborate a bit more on how much is expected to occur beyond this year versus not to repeat. That would be the first question. And the second question is a more simple one. The acquisitions, Red Flag and GIACT and Customer Third-Party Risk, could you just quantify the revenue contribution from those, please? And then finally, cost of sales, only up 1.7% year-on-year versus 3.7% increase in revenues, including recoveries. Can you just give us a feel for what's driving the cost of sales? And should we expect that to continue to grow at a slower rate in the revenue line?

[Anna Olive Magdelene Manz, CFO & Director]

So taking those in order. So our guidance for the year in unchanged, which is mid-single-digit growth on our cost base on a constant currency basis. And we've also guided to GBP 850 million of CapEx. So nothing changed there. We're exactly where we expect to be. We're on track. At the full year, I talked everybody through that. And just to sort of reprieve that a little bit, we've talked about an investment of GBP 1 billion which is GBP 850 million of CapEx and GBP 150 million of OpEx. On the CapEx, we've described run rate CapEx consistent with what the 2 groups spent previously of GBP 650-or-so million and GBP 150 million to GBP 200 million associated with achieving the disposal of Borsa and delivering on the revenue and cost synergies as a group. And we're exactly where we expect to be on those investments at this point. We talked about OpEx investment across a number of things, including resilient efficiency and growth. And again, we're making those investments to improve our resilience. We're seeing -- we will see, over time, benefits in efficiency. And we're investing in the incremental sales piece and incremental data sets that will also support the sustained growth of the business. So that's just a quick recap of that. The cost of sales, I can't remember your next question, so I might...

[David A. Schwimmer, Group CEO & Executive Director]

[ Quantify ] the revenue contribution from Red Flag and [ GIACT ].

[Anna Olive Magdelene Manz, CFO & Director]

So [ I'll not ] give you the exact breakdown, but I'd say that the non-acquisition-related business grew well, grew double digits, with the growth of that proposition. So that will allow you to size it. And cost of sales, so just to walk through that. Cost of sales don't relate directly to revenue, which is why you do see slight differences in movement. Just to give you some color. The Data & Analytics cost of sales includes things like the Thomson Reuters News agreement, some recoveries, data recoveries and things like that. And there are things that don't fluctuate materially. There's been some small movements in the quarter, single-digit million, and that's associated with some moves in base costs and royalties. With respect to Capital Markets, again, it's a tiny number. Because it's a small number, a million may have -- shows up. And really, what's moving things there a little bit is that, as we include Tradeweb, it's got a slightly different margin. And with respect to Post Trade, it's the costs related to the OTC services and NTI, and it's associated with the share of SwapClear that's paid at [ founder members ]. So as NTI has dropped, so has cost of sales and trade, and you would expect to see that relationship continue.

[Operator]

The next question comes from Mike Werner from UBS.

[Michael Joseph Werner, Executive Director and Equity Research Analyst]

Two questions for me and maybe a little bit of a follow-up. I was just wondering as well, just with regards to kind of Red Flag, GIACT, also maybe the contribution from Scivantage within Wealth Solutions, just trying to get down to more of a organic growth rate ex, obviously, acquisition of Refinitiv. And then secondly, you indicated that your guidance hasn't changed in terms of cost as well as CapEx. But the GBP 850 million of CapEx, is that on a constant currency basis? Or is that on a notional basis?

[Anna Olive Magdelene Manz, CFO & Director]

Thank you for those questions. Rather than go into the detail by acquisition, maybe it would be helpful to say to you that the impact of the 3 acquisitions that Refinitiv made last year on the Data & Analytics growth is about [ 2 ] points. And hopefully, that would just sort of help you with your modeling.

[Michael Joseph Werner, Executive Director and Equity Research Analyst]

Sorry, and that's -- sorry, that's a point within Data & Analytics worth 100 basis points within Data?

[Anna Olive Magdelene Manz, CFO & Director]

That's a point within Data & Analytics performance, therefore, less for the group. Yes, and with respect to CapEx, base on this with constant currency.

[Operator]

The next question comes from Arnaud Giblat from Exane BNPP.

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

I'm sorry, just to stay with costs. I think this is really where -- front of mind for investors. I'll take -- I've got 3 questions, so if you can take them one by one. My first question is just coming back to your guidance of GBP 150 million increase constant currency. You also indicated in Q4 that there was another 2% growth thereafter. So that means, on a growth basis -- sorry, on a gross basis, you're coming close to 10% increase in the cost base. And if I split it down to resiliency efficiency and growth, and I look at what's listed on Slide 13 in Q4, some of these items seem one-off in nature or transitionary. I'm just wondering if these costs eventually fall away, or if you've just given yourself more leeway to invest further down the line?

[Anna Olive Magdelene Manz, CFO & Director]

So I think maybe we'll take your modeling offline because I don't recognize at all your 10% increase. So maybe we can pick up on that one afterwards.

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

So if I may, I mean, it's -- we're talking -- I mean, call it, GBP 120 million, GBP 130 million of synergies at net off. And you did indicate that 2% increase on costs, roughly, in '20 versus '21. So call it high single-digit increase on a gross basis. So I'm just wondering if there's anything transitioning that.

[Anna Olive Magdelene Manz, CFO & Director]

So we've guided to a mid-single-digit cost growth in the current year. And this is made up of a number of things. It is made up of investment in resiliency, which some of the cost of investments will mean the kind of 2, 3 years in, which is maybe the one you're looking to at from the results. What you've got in those, and of course, the CapEx costs, many of them aren't quite onetime in nature, like the cost to this -- to remove out -- to remove Borsa from the group, for example. So the OpEx costs are more ongoing in nature, but they are higher in the short term because we will have a more efficient operating model on the back of the [indiscernible].

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

Okay. Got it. And my second question is, I mean, obviously, there's quite a bit of investment going in. I think you're talking about investing for FTSE Russell products to Refinitiv. Could you perhaps give us an indication of the investments required there or what they are right now? Yes. My second question was relating to some of the investments. I would like to pick out what you highlighted back in Q4, Russell indices are being sold through Refinitiv. Can you give a bit more color in terms of what those investments are and the timing in terms of monetization?

[David A. Schwimmer, Group CEO & Executive Director]

So as you know, this Q1 results is focused on the top line, but I'm happy to revisit the synergy opportunity in terms of bringing the Refinitiv data together with the FTSE Russell Index business. And that's something where we've seen good progress already. So as you'll recall, we talked about the notion of effectively internalizing some of the cost for FTSE Russell and by using -- so historically, FTSE Russell has sourced some of the data that is used in the indexes so that has been our own data, some of it has been from third-party providers, and third-party providers, including Refinitiv. Now Refinitiv is part of LSEG. We are in the process of moving the sourced data that are maybe from other providers to Refinitiv, and we're making good progress on that. Other areas where we are making good progress is just in terms of existing index customers now becoming customers of our data. And it makes sense if you are an Asset Manager or a PM, you want to have access to the constituent data at the same time as having access to the index that you might be benchmarking against. And then we also have seen some other areas of opportunity, including using Refinitiv data to expand the product set and roll out new products on the index side. We rolled out a number of new products already since we closed the transaction. So, so far, so good on that front.

[Anna Olive Magdelene Manz, CFO & Director]

Maybe just to comment on the timing of realization. It's been really good, actually, to see in this first quarter that we've achieved our first sales with customers on some of these things. Now it's early days, and the revenue impact on the year won't be particularly material. But from my perspective, it's a really -- it's really nice to see the lead indicators where they should be because it affirms that synergy value through. So I wouldn't be expecting to see a material revenue impact in this year from it.

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

That was helpful. And finally, can I ask on Workspace and in terms of rollout? Should we expect this to be fully rolled out with clients in 2021? And subsequently, is there a change in the pricing with clients on the back of the Workspace rollout?

[David A. Schwimmer, Group CEO & Executive Director]

So no change in pricing on the back of the rollout. We are -- as we mentioned in March, we're in the process of rolling out Workspace. We talked about rolling it out to the Wealth segment, that is ongoing. We are also now rolling it out to Asset Managers and Portfolio Managers, and then early days of rolling it up to the banking segment as well. So that -- but this will be a multiyear process. So we plan to continue doing that and many more to be done, but good progress so far.

[Operator]

The next question comes from Bruce Hamilton from Morgan Stanley.

[Bruce Allan Hamilton, Equity Analyst]

I'll just sort of follow-on on the question. So on the Workspace, can you point to any client wins in Wealth or any sort of specific successes that maybe aren't yet in the numbers, but give you some encouragement that the progress is going in the right direction there? And then secondly, just on the Post Trade numbers, which obviously look pretty strong. In the Securities you're reporting and in the Noncash collateral lines, are those kind of sustainable levels? Is there anything sort of slightly one-off in nature? Or is that just a function of increasing activity on the back of steepening rates and more discussion there? Just to check.

[David A. Schwimmer, Group CEO & Executive Director]

So on the Wealth business, there are some encouraging wins in that business. I'm not in a position to put the customer names out there, but we are seeing progress in terms of how that's being received. And then on the Post Trade business, yes, it's actually -- I think the right way to think about the Post Trade business is that our team in Post Trade is regularly working on expanding the opportunity set for that business. So whether -- and we could have this conversation about each of the asset classes, whether it's SwapClear, whether it's RepoClear, CDSClear. And that can be the rollout of new products, new currencies, new currency pairs, new reference rates. And so it is not a situation where we're sort of sitting and waiting for market volumes to drive this business. Obviously, market volumes do have an impact on the business. But we are also working to get regulatory approval for new products. We may see some of that in the coming months. We are working to expand the client volumes, as you'll know, the member -- members tend to pay on an all-you-can-eat model. And so constantly expanding the client volumes is a good way to continue growing the business. So there are a bunch of different aspects of the Post Trade business, again, across the different asset classes, where the team is regularly working to improve and increase the growth opportunity set. And I think we've -- you've seen that over this past year, where in, for example, RepoClear, the combination of Northern European euro-denominated repos and Southern European euro-denominated repos in LCH SA in Paris, combined with the market environment, has led to a really attractive pickup in volume there. And I think we had something like 8% year-over-year growth in repos in RepoClear. And that some of that is market-related, but a lot of that is due to the efforts of the team in improving the offering there.

[Operator]

The next question comes from Johannes Thormann from HSBC.

[Johannes Thormann, Global Head of Exchanges and Analyst]

Johannes Thormann, HSBC. Three questions, if I may. First of all, a follow-up on the cost of sales growth. Can you confirm that the future growth rate is always at a lesser rate than the total income growth rate? Or are there any factors which could make the cost of sales growth exceed the total income growth rate? And secondly, on the Data & Analytics business, thank you for trying to provide more clarity on 2nd of July. Do we get also some more KPIs at that date where we can follow the business a bit more in detail? And then could you at least now provide the usual FTSE Russell assets under management or benchmark assets as you did before because -- to understand the FTSE Russell performance a bit better in the Investment Solutions?And last but not least, sorry, but the LCH business or the Post Trade business, you've owned for several years, so I struggle to understand why you couldn't provide pro forma figures for the previous years with a new breakdown of the revenue reporting. Could you at least explain how the revenues have shifted from the old OTC, non-OTC and other business lines into the OTC Derivatives, Securities & Reporting and so on.

[Anna Olive Magdelene Manz, CFO & Director]

Regarding cost of sales, so the way I think of that is, for the most part, for Data & Analytics, yes, you would expect that to, in all likelihood, grow more slowly. That said, it's a small number. So changes in data sets could, in any given period, [ may lead ] to little effect. Post Trade is going to be a little bit more lumpy because it reflects the, remember, surplus is paid, and of course that changes with the market environment and really the levels of NTI income that we're seeing. So broadly, what you're saying is right over time, but in any given period, it can be a little bit lumpy. And Capital Markets, yes, I'd say, I think business line level of the sales will grow more slowly than the record year. So that's [indiscernible] much to do. KPIs. So we will provide KPIs at the half year for Data & Analytics. So do expect a signal. We know you need more KPIs to understand this business. In terms of assets under management and subscriptions, we absolutely intend to ensure that, that continues to be visible.

[Johannes Thormann, Global Head of Exchanges and Analyst]

Could you...

[Anna Olive Magdelene Manz, CFO & Director]

At -- sorry?

[Johannes Thormann, Global Head of Exchanges and Analyst]

Sorry, could you provide this data now, at least for assets under benchmark?

[Anna Olive Magdelene Manz, CFO & Director]

Yes. It's in the release.

[David A. Schwimmer, Group CEO & Executive Director]

Yes. I think we closed the quarter at $956 billion report.

[Anna Olive Magdelene Manz, CFO & Director]

Yes.

[David A. Schwimmer, Group CEO & Executive Director]

So that's a record.

[Anna Olive Magdelene Manz, CFO & Director]

Which is a record high, as we break the 2 growth rates. That's in the release as well. So 8% growth in subscriptions and about 7% growth in assets under management.

[Johannes Thormann, Global Head of Exchanges and Analyst]

Okay, thank you. I didn't catch that.

[David A. Schwimmer, Group CEO & Executive Director]

No problem.

[Anna Olive Magdelene Manz, CFO & Director]

And the alignment, that's the Post Trade slides, do you want to just run through that?

[David A. Schwimmer, Group CEO & Executive Director]

Yes, start with that.

[Anna Olive Magdelene Manz, CFO & Director]

So that was [ concise ].

[David A. Schwimmer, Group CEO & Executive Director]

Yes. So Johannes, you'll see at the back of the RNS statement today that we've given the prior 4 quarters for 2020 on a pro forma basis with the new split out for our Post Trade. So we provided it there. In terms of what's moved, yes, broadly, the OTC is as it was. And we've also incorporated in there swap agents and compression. Securities & Reporting is the line that is equity clears, listed derivatives and it's RepoClear. So it's just aggregating those clearing services together. And then Noncash collateral is just splitting out the earnings that we get from the receipt of noncash collateral. So as you know, we call collateral in 2 forms in cash, which is reported as NTI, and that's unchanged. And then the noncash, we've just split it out for the first time. So that's the basis of the split given.

[Operator]

[Operator Instructions] The next question comes from Ian White from Autonomous Research.

[Ian White, Research Analyst]

Two from me, please. First, I think you shifted the sales model in FTSE Russell, I think about a year ago now, to move away from regular price increases in favor of kind of a more product-linked reduction. What have you seen so far that has vindicated that change of approach, please, in your view? That's question one. Secondly, I'm just wondering if you can provide any additional color around your pricing model, and specifically, how you will monetize additional data content that is provided? I'm conscious that you're not pricing, I think, by distribution channel or I think by user count. So I'm struggling a little bit to understand what exactly the chargeable unit of output is on the data side. So if you could provide any help with that, please, that would be much appreciated.

[David A. Schwimmer, Group CEO & Executive Director]

Sure. So Ian, just on the shift in our model in FTSE Russell, it is a little over a year ago now that we have been focused on investing more in the product development and research within FTSE Russell, investing more in new product rollouts and investing more in the customer relationships. So that those new products were what our customers were looking for and, I would say, less emphasis on price rises that were not necessarily attached to investment or value-added in the product. And we are -- we saw good progress in that over the course of last year, in terms of the number of new products rolling out, in terms of the partnership dynamic with the customers and in terms of improvements in some of our customer surveys. And that is consistent. So we're continuing to see that. We have -- as we've mentioned this morning, we've rolled out a number of new products already since the closing of transaction. And we're continuing to invest in our product capabilities in addition to the synergies of the transaction. And we're continuing to invest in the customer relationships there. So I view this as not immediate or quick transition, but we feel we're making very good progress. And we're in it, we're in that transition now. And I would also say, with respect to price rises, in terms of if we are adding value to our products and adding value that our customers are recognizing, and that is something that our customers recognize and are willing to pay for. So it's just about getting the balance right in terms of investing in the product, investing in the relationships and then getting the appropriate return on that investment over time. On the pricing model, I'll touch on this. And Anna, if you want to jump in as well, feel free. There are a number of different aspects to our pricing arrangements. A number of them are contractual, in some cases, multiyear contractual. And they depend on what the customer is looking for in terms of access to products, access to certain workflow, access to content. And some of that is dependent on how they want to receive it. Some of that is dependent upon what content sets they are actually looking to receive. And some of that is related to how many -- what is the quantity of consumption, if I may put it that way. And sometimes that's related to number of human beings. Sometimes that is related to quantity of data that is accessed through the cloud or APIs. So I'm not sure if that answers your question explicitly because we have a broad array of products and content and delivery mechanisms, distribution channels. A one-product arrangement or construct that we've talked about in the past is Refinitiv access, which gives -- it's close to being more of an enterprise model that gives a customer that uses a lot of our different services. So it gives them access to all of those different services across the different distribution channels that they want. They tend to be multiyear arrangements. They tend to have a price rise on an annual basis that reflects some of the incremental investment that we are putting into those relationships, to make sure that they are getting what they want from that arrangement. So hopefully, that gives you a little bit of a sense, but it's not a one size fits all. And I can't give you a specific description of how it works each time because it works in a number of different ways.

[Operator]

The next question comes from Gurjit Kambo from JPMorgan.

[Gurjit Singh Kambo, Head of Diversified Financials Research]

It's Gurjit here of JPMorgan. A couple of questions. Firstly, could you just elaborate a little bit more on the Trading & Banking Solutions, just sort of the trends, I guess, within the trading versus the sort of banking clients. What's going on there? So are you seeing one better than the other? So that's the first one. And then secondly, just on the Post Trade, around SwapClear. So SwapClear, so a couple of customers decreasing this quarter. Sort of what's sort of driving that? I know it's a small number, but within FXClear (sic) [ ForexClear ]and CDSClear, the numbers, again, are broadly stable. I guess, how do we think about growth in those other two businesses? And what's the catalyst for those 2 areas to grow? So those are 2 questions.

[David A. Schwimmer, Group CEO & Executive Director]

Sure. So within the Trading & Banking Solutions segment, I think probably the simplest way to describe that is that the premium trading continues to have a modest decline, whereas FX, commodities and banking subsegments within that are doing okay and growing. So that's sort of the dynamic there. And then on Post Trade, and the question was specifically around how our ForexClear and CDSClear are doing?

[Gurjit Singh Kambo, Head of Diversified Financials Research]

Yes. That's right, yes. So I think that's sort of been broadly flat in terms of member growth and, obviously, notionals down. But yes, what sort of drives that going forward?

[David A. Schwimmer, Group CEO & Executive Director]

Yes. So CDSClear, in terms of -- first of all, it's just worth highlighting that swap there continues to be the significant contributor in that segment. CDSClear, relatively small market, and we don't see an enormous catalyst for that to be growing dramatically as a market. Having said that, our market share in that market has picked up over the last year. And then with respect to ForexClear, this is one where we expect to see growth picking up in line with, what I'll call, the tailwinds of the Uncleared Margin Rule. I think it's tranche 5 in September and tranche 6 next September of the Uncleared Margin Rule rolling in and capturing a broader subset of a community that is putting in place trading and foreign exchange derivatives. And therefore, as they go over the notional amounts that are captured by these broader tranches of the Uncleared Margin Rule, more and more of them will either have to allocate capital under the Uncleared Margin Rule, or they will see the benefits of clearing their FX derivatives. So we are continuing our dialogue with clients in that area, making sure that everyone understands the impact of this upcoming regulation. We are onboarding and working with more members. So we feel good about the potential for that business and the potential for growth in that business. But we also view that as a -- and that will be a multiyear trajectory. This is not something where we get to this September, and we're going to see a massive spike up in volumes because it is not a mandate to those customers to clear. It is a -- basically, an economic incentive in terms of capital efficiency for them to clear, and we think that economic incentive will have its impact over time.

[Gurjit Singh Kambo, Head of Diversified Financials Research]

Yes. And just on SwapClear, I know it's 2 members reduced in the quarter. But any sort of driver behind that? And then should we sort of assume SwapClear members are now sort of maxed out, and we sort of assume them being stable from here?

[David A. Schwimmer, Group CEO & Executive Director]

So in terms of SwapClear, that is -- that's a global platform. It's got 90%-plus market share. I don't think we are expecting increase in membership to drive growth there. I think where we expect to see incremental opportunity is continuing growth in the client base, i.e., the clients who bear through the members, and there's more opportunity there, and then in terms of new product opportunities. And then, of course, the -- there's a broader question, and we touched on this in our release as a broader question, as to the growth that we've seen over the past 10 years has been delivered in an environment where Central Banks have been trying to indicate lower interest rates for longer and really minimize interest rate volatility. And it does feel as if the interest rate paradigm is shifting going forward. We're not in a position to predict that at all, but we do think SwapClear is very well positioned to take advantage of uncertainty or volatility in the interest rate market that may be a result of either Central Banks changing their policies over time, giving different kinds of signals, or the market reacting to any of that. And of course, the inflation discussion has led to some incremental volumes that we've just seen over this past quarter.

[Operator]

The next question comes from Ben Bathurst from RBC.

[Benjamin Edward Bathurst, Research Analyst]

I've got 2 questions, please. And firstly, I was just wondering if there's any update on the thinking with respect to the possible change in reporting currency because that was something you mentioned you were looking into? And I also wondered to what extent the accounting rules are kind of prescriptive in that respect versus being a decision that you can or judgment that you need to make? And then the second question was just on the investor event. Is there anything more that you can say to preview the second of July? Should we be expecting that to be sort of an hour-long event, a couple of hours or a day long? Any extra color there would be welcome.

[Anna Olive Magdelene Manz, CFO & Director]

So reporting currency, we are looking at it. And while there are technical accounting rules, it is within our guess as to what currency we report in. And we'll update you in due course.

[David A. Schwimmer, Group CEO & Executive Director]

Okay. Shall I take the question about the investor update? So at the moment, we're planning it to be a virtual event. So we're not going to take up all your day, so probably a couple of hours. We'll give an overview to the entirety of the Data & Analytics business, but then we'll take some deeper dives into 3 of those areas, into the Trading & Banking Solutions business, into the Enterprise Data Solutions and into the Third-Party Customer Risk business as well. We will then follow that up later in the year. We haven't set an exact date yet, and we'll take some deeper dives into the other 2 areas that we won't cover in July. And we'll also take a look at some of the other businesses around the group as well at that point. So hopefully, over the course of the next few months, you'll get the investor event for a couple of hours. You'll get our half year results followed up at in August, an event towards the start or the end of the autumn, and then we'll be in sort Q3. So we've got multiple update points coming up in the next 6 months. I think you'll expect to get quite a lot of information from us over that time period.

[Operator]

The next question comes from Kyle Voigt from KBW.

[Kyle Kenneth Voigt, Associate]

Just a couple of questions on capital deployment. In the bridge refinancing, you issued a bit more long-term debt than we previously expected. And it seems like most or all of the group's short-term debt could potentially be repaid this year after the Borsa Italiana sale. Can you just talk about your preferred use of capital after you pay down that short-term debt that's outstanding post the Borsa Italiana divestiture? And a follow-up question to that. You're in the middle of a very large integration. Just curious to hear how comfortable you would be executing on M&A as we get past the Borsa Italiana divestiture? And should we expect M&A to be limited to a smaller-type, bolt-on type of transactions as you work through the integration?

[Anna Olive Magdelene Manz, CFO & Director]

Thanks. So in the short term, we can clear that our intent is to reduce our leverage, add to the 1 to 2x type of range. And we expect to be there well within -- comfortably within a [ 12-month ] rotation that, really, in the short term, that is our focus. Do you want to talk about M&A, David?

[David A. Schwimmer, Group CEO & Executive Director]

Sure. So Kyle, you are absolutely correct. We are in the midst of a large integration. And we are, as Anna mentioned, we're focused on bringing our leverage down. We are focused on integrating the Refinitiv business. So would we consider small bolt-on acquisitions? Sure. The things that, from a financial perspective, overly mode the needle, and from a strategic perspective, we could digest easily. But you should not expect us to be going out and doing a very large or big M&A at this point. So being down our leverage, focusing on our integration will be our priorities.

[Anna Olive Magdelene Manz, CFO & Director]

And implicitly to our returns criteria.

[David A. Schwimmer, Group CEO & Executive Director]

Yes.

[Operator]

There are no further questions on the conference line. I will now hand over the presentation back to Paul Froud.

[Paul Froud, Head of Investor Relations]

Thank you very much. So as just said, there's no more questions. So thank you for everyone who did join us today. Please do reach out if you have any further questions to the IR team. But otherwise, we'll end the call now. Thank you.