Technology in the Exchange Industry Anders Fridlund December 3, 2007

OMX Fast Facts Owns and operates the Nordic Exchange Stockholm, Helsinki, Copenhagen, Iceland, Tallinn, Riga, Vilnius Delivers technology solutions to marketplaces worldwide 70 marketplaces, in over 50 countries are using technology solutions from OMX to operate their markets Technology staff approximately 800 persons In the process of merging with Nasdaq (~ Feb 2008) >700 listed companies, 150 trading members and 100 information vendors

Characteristics of OMX current technology customer base 70 customers in more than 50 countries: Covering all geographic regions Targeting established marketplaces but with some attraction to new entrants Ranging from very small exchanges to some of the largest in terms of size and volume Including substantially different asset classes (equities, energy, currencies, commodities, etc.) cash and derivatives Supporting multiple market models (pre-validation, CCP, multilateral credit, etc.) Addressing different market players (exchanges, regulators, interdealer brokers, multi-lateral trading facilities / internalizers) Covering entities across the transaction value chain (trading, clearing and settlement)

Issues on Developing Electronic Trading Systems Cost of ownership for technology solutions Consolidation, partneships and alliances Convergence of asset classes and instruments Performance and scalability Competition and customer orientation

Cost of ownership for technology solutions - - - Why are the technical systems so important? The technical systems account for up to 50-70% of the exchanges cost side Efficient trading systems enable fast time-to-market for intermediaries’ end-client offerings Technology can create a wide reach globally connecting investors and and investment opportunities in real-time Not being able to deliver accurate and timely price discovery mean loss of immediacy, confidence and ultimately future income Annual IT spending (MEUR) 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 1 2 3 4 5 Tier MEUR (6) (33) (62) (129) (170) 20 40 60 80 100 120 140 160 180 No. Players Top 6 exchanges (NYSE, Euronext, Deutsche Börse, Nasdaq, NSE, TSE) spend on average 180 MEUR annually on IT Annual cost for application development and support for these exchanges is on average 60 MEUR Source: Annual reports, WFE, OMX data, 2005

Cost of ownership for technology solutions - Costs vs Cost of ownership for technology solutions - Costs vs. evolving requirements Relative technology cost per trade under evolving requirements Most ”2nd Generation” solutions available today Significant updates to systems needed Significant updates to systems needed Relative cost per trade ”3d Generation” solutions designed for capacity and speed Time Cost and fees will continue to be in focus due to increased competition

Consolidation, partneships and alliances “NYSE to merge with Euronext” “ISE to be acquired by Eurex and Deutsche Börse” “SGX buys a stake in Bombay Stock Exchange” “OMX creates the Nordic Exchange” “London Stock Exchange acquires Borsa Italiana” “LSE and Tokyo Stock Exchange cooperates around new market”

Convergence of asset classes and instruments Algorithmic trading Separation of alpha and beta Integrated trading Exchange links Growth in clearing business Difficulties in adapting equities trading system to derivatives

Performance and scalability - Market trends affecting technology solutions Transaction volumes Derivatives contracts 6,000 7,000 5,000 6,000 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 95 96 97 98 99 00 01 02 03 04 05 06 07 95 96 97 98 99 00 01 02 03 04 05 06 07 Program trading Average trade size Transaction volumes = Top 10 exchanges in the world. Total number of trades in equity shares (Millions) Source: WFE statistics Derivatives contracts = Top 10 exchanges (excluding Korea Exchanges). Total number of contracts traded (Millions). Including Stock options, Single stock futures, Stock index options, Stock index futures, Bond options, Bond futures. Source: WFE Statistics Program trading = OMX estimates based on Aite Group research Average trade size = OMX estimates based on WFE statistics. Number of shares per trade. (Number of shares traded / Total number of trades in equity shares) 60% 1,400 1,200 50% 1,000 40% 800 30% 600 20% 400 10% 200 0% 04 05 06 07 08 09 99 00 01 02 03 04 05 06 07

Competition and customer orientation Successful exchanges must become more customer oriented, innovative and responsive Opportunities Addressing growth and innovation ouside of core cash equities Improvement in customer risk managementand cost and capital efficiency, capturing OTC share Integration / consolidation (cognisant of the stakeholder / regulatory barriers) Threats Margin pressure due to consolidating user base, changing order flow and new entrants Technological failure / cost ratcheting and capital markets growth Pricing pressure Regulation Strategic levers Core business optimisation Redefine role vis-á-vis customers Create alternative trading models Differentiate services Improve “commerciality” of customer interface in listings Expand service offering in information services Adjacency growth (services, customers) Leverage clearing to tackle OTC markets Smarter approach to new product creation Expansion into non-traditional asset classes Selective service provision to broker dealers and end customers

Summary - Market forces lead to a demand on technology Marketplace trends: Technology requirement: Consequence: Regulation and harmonization Consolidation Speed and performance Efficiency and cost Cross assets Customer orientation Regionalization Flexibility Cost Performance Robustness 1st generation 2nd generation 3rd generation