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Global FMI Sector Outlook 2022: Growth Initiatives Will Be Key To Increasing Earnings

S&P Global Ratings expects the outlooks for the global economy and the FMI sector to remain generally favorable in 2022. The buoyant market activity and strong asset prices that we saw in the sector in 2021 could continue, although IPO activity could cool off and market volatility spikes and asset-price falls are significant risks. We therefore expect cyclical trends to favor volume-based revenues, with flat or slightly lower cyclical revenues overall for most FMIs. This means that their organic and acquisitive structural growth initiatives will remain critical for earnings growth in 2022.

Sector leverage continues to creep up in support of market consolidation and acquisitive growth in data and analytics. However, the sector continues to generate strong cash flows and has good support from investors and generally low leverage. Combined with resilient earnings and high margins, this supports our typically high ratings in the sector (see chart 1). The continued predominance of stable outlooks reflects our view that the sector's credit quality will remain robust. Idiosyncratic events are more likely to drive rating actions than adverse sector-wide or geopolitical developments.

Chart 1


Supportive Economic And Market Conditions Could Sustain The Positive Trends Of 2021

After an unprecedented global recession and extraordinary market gyrations in 2020, 2021 was a year of economic recovery and buoyant market conditions across most asset classes. An improved outlook and copious liquidity supported asset prices and investor demand, spurring highs in equity and debt capital market activity not seen for many years. Daily trading volumes were generally down on 2020 levels as volatility reduced but remained robust, not least in the U.S., where the retail trading boom continued. The weak spot was in interest income, notably that accrued on clearing and settlement balances, as the quantum of interest-bearing assets typically fell and the full-year effect of 2020's rate cuts came through. Payment infrastructure providers saw a cyclical rebound in spending and continued to benefit from the multi-year structural growth in electronic, particularly online, payments. As a result of all this, we expect most FMIs' 2021 earnings to be at least in line with, or often even stronger than in 2020.

Our economists' macroeconomic base case for 2022 is one of sustained global recovery amid a very gradual tightening in interest rates and money supply (see tables 1 and 2). Nevertheless, we remain mindful that whereas 2021 was the year of the big rebound, with COVID-19 vaccines fueling a robust economic recovery and steadily improving credit markets, the recent emergence of the omicron variant is a stark reminder that we have not yet beaten the virus. Setbacks in the global economic recovery, persistently high inflation, and ongoing political tensions are just some of the factors that could yet lead the market into further bouts of high volatility and moderate asset-price falls in 2022, exacerbated by high global debt. These are some of the many topics covered in our "Global Credit Outlook: Aftershocks, Future Shocks, And Transitions," published Dec. 1, 2021.

Our FMI sector base case is that market activity will be similar to that in 2021, but that asset prices may have largely peaked, and some could see a modest decline. While equity issuance could cool off, we expect that cyclical trends will favor volume-based revenues, and that interest rate derivatives activity could pick up as expectations of tightening monetary policy develop worldwide. Depending on their asset class mix, this points to flat to slightly lower cyclical revenues for most FMIs, meaning that their organic and acquisitive structural growth initiatives will remain critical for earnings growth in 2022.

Table 1

Economic Indicators
Real GDP growth
(%) 2020 2021e 2022f 2023f
U.S. (3.4) 5.5 3.9 2.7
Eurozone (6.5) 5.1 4.4 2.4
China 2.3 8.0 4.9 4.9
Japan (4.7) 1.9 2.3 1.2
U.K. (9.7) 6.9 4.6 2.2
India (7.3) 9.5 7.8 6.0
Brazil (4.7) 3.2 2.6 2.6
Russia (3.0) 4.2 2.7 2.0
World (3.3) 5.7 4.2 3.7
Australia (2.4) 3.9 3.5 2.8
e--Estimate. f--Forecast.

Table 2

Policy Interest Rates
(%) 2020 2021e 2022f 2023f
U.S. (federal funds) 0.00-0.25 0.00-0.25 0.25-0.50 1.00-1.75
Eurozone (deposit rate) (0.50) (0.50) (0.50) (0.50)
Japan (0.10) (0.10) (0.10) (0.10)
U.K. 0.20 0.10 0.40 0.60
India* 4.00 4.25 4.75 5.25
Brazil 2.00 3.00 4.50 5.50
Russia 4.25 8.00 7.00 6.00
Australia 0.10 0.10 0.10 0.50
Sources: "Global Credit Outlook 2022: Aftershocks, Future Shocks, And Transitions" and "Latin America's Economic Recovery From The Pandemic Will Be Highly Vulnerable To Setbacks," published Dec. 1, 2021, "Economic Research: Eurozone Economic Outlook 2022: A Look Inside The Recovery", "Economic Research: Asia-Pacific: Ghosts Of COVID Past Hover Over 2022", and "Economic Outlook EMEA Emerging Markets Q1 2022: High Inflation And COVID-19 Threaten To Slow Recovery," published Nov. 30, 2021, and "Economic Outlook U.S. Q1 2022: Cruising At A Lower Altitude," published Nov. 29, 2021. e--Estimate. f--Forecast. *Fiscal year ending in March.

Mergers And Acquisitions (M&A) Will Remain Predominant As FMIs Continue Their Push For Consolidation And Data And Analytics Assets

After a spree of announcements in 2020, 2021 was predominantly a year of deal closures and bolt-on acquisitions. As we move into 2022, London Stock Exchange Group PLC (LSEG; acquiring Refinitiv), Euronext N.V. (acquiring Borsa Italiana), and SIX Group AG (acquiring BME) remain focused on delivering the operational integrations and investments that will allow them to realize promised cost and revenue synergies. LSEG, Euronext, Nasdaq, Inc., and Intercontinental Exchange, Inc. (ICE) are also in deleveraging mode as they seek to reduce net debt through 2022.

However, the sector remains hugely acquisitive, and fulsome equity and debt-financing capacity is likely to remain available to leading FMIs. While not yet part of our financial base case for any FMI, we anticipate further transactions in 2022 as players continue to accelerate growth, not least in data and analytics and technology. These business lines continue to offer some of the strongest structural growth prospects and an attractive base of annuity-like revenues (see ""Strategic Shifts Are Changing Both The FMI Industry And The Way We Analyze It,"," published Nov. 29, 2021.) For example, LSEG recently returned to the deal trail with the announced bolt-on acquisition of Quantile, which provides portfolio optimization services.

Digital Assets And Distributed Ledger Technology (DLT) Will Strengthen Their Foothold

Globally, and with few exceptions, FMI regulators find themselves in catch-up mode when it comes to the oversight and regulation of crypto assets. With the crypto genie now well and truly out of the bottle, and with increasing institutional demand for these assets, in 2022 regulators will need to determine conclusively how to mitigate concerns about financial stability and risks to consumers. This process is already well under way in the EU through the markets in crypto assets (MiCA) legislative proposal, and U.S. regulation will also undoubtedly evolve. While tightening regulation could disrupt aspects of crypto firms' businesses or operating models, it would also put the industry on a stronger legal footing and boost its expansion. We anticipate that this will favor firms like Coinbase Global Inc. that have diversified their client bases, offer a range of related services, from trading to custody and beyond, and have already anticipated regulatory oversight (see "Coinbase Global Inc.," published Dec. 22, 2021). Others set to benefit from tightening regulation in the crypto space are ICE, through its majority-owned subsidiary Bakkt, and PayPal Holdings Inc., with its recent acquisition of cryptocurrency startup Curv and its retail crypto trading offering.

Beyond the crypto specialists, we expect the incumbent FMIs' involvement in crypto to focus on offering linked futures and other derivatives contracts, listing crypto funds, and putting themselves forward as trusted custodians of crypto portfolios. However, whether aided by MiCA or similar regulations, we see the broader flourishing of digital assets, tokenization, and DLT-enabled infrastructure as the most relevant development for the broad FMI sector, and an essential feature of any FMI's strategic planning, even if the thinking is only exploratory at this stage.

While still nascent, SIX Group's new digital exchange and settlement infrastructure is one indication of how market infrastructure may develop (see ""SIX Group AG's Digital Bonds Break New Ground For Global Financial Market Infrastructures,"," published Nov. 18, 2021). Deutsche Börse AG's recent acquisition of a majority stake in Crypto Finance, a Swiss provider of digital asset infrastructure, and its creation of new post-trade platform D7 testify to its ambition to create a regulated and integrated ecosystem for investment, trading, and the post-trade of digital assets. Similarly, Cboe Global Markets' (Cboe's) pending acquisition of ErisX would give it a foothold in trade and post-trade digital assets.

Low latency and huge capacity are essential features of the trading environment, but are things that blockchain-enabled technology does not yet have. Thus other use cases are likely to center on the post-trade environment. ASX Ltd., operator of Australia's security exchange, was an early-adopter of DLT, and 2022 should see its blockchain-enabled replacement for its CHESS clearing and settlement system move to a full customer test environment before it goes live in 2023. In time, the result should be a more stable, resilient, and robust system that supports not only trade settlement but also efficiency in the wider investment ecosystem in Australia.

We see the emergence of the crypto asset class and related technologies primarily as an enabler and opportunity for incumbent FMIs. However, the technology is disruptive and the EU's planned pilot regime for DLT market infrastructure is evidence that policymakers are open-minded about the future shape of market infrastructure. In an era of decentralized finance, centralized institutions will need to demonstrate their value and importance to the market and be a source of financial stability.

Shifting Market Practices And Regulatory Changes Are Unlikely To Lead To Rating Actions

Regulatory tailwinds have generally supported the FMI sector's creditworthiness in recent years. However, regulation and policy remain a double-edged sword for the sector. Numerous initiatives, such as those below, remain in play, but individually are unlikely to change our view of any FMI's creditworthiness thanks to most players' good diversification.

Foreign company listings in the U.S.

The recent $40 billion Nasdaq listing of Grab Holdings Ltd. (Grab), a Singaporean fintech, is a reminder that U.S. equity markets remain by far the largest and deepest pool of capital globally and are likely to remain highly attractive to foreign companies that seek the best possible valuations. However, a series of frauds spurred toughened U.S. regulations on foreign companies, and strained U.S.-Chinese foreign relations and changing domestic policy in China have sparked a reversal in Chinese companies listing in the U.S. This was illustrated recently by the announced de-listing of Didi from the New York Stock Exchange and its plans to list instead on the Hong Kong exchange. This trend for Chinese issuers to turn to the Hong Kong market seems likely to persist in 2022. U.S. exchanges will look to increase their allure to foreign companies from other countries, but this is unlikely to bridge the gap. Still, since Chinese companies account for around 3%-4% of U.S. equity market capitalization, we see this as only a missed revenue opportunity for the U.S. exchanges, which are themselves part of diversified FMI groups.

Special purpose acquisition companies (SPACs)

The U.S. SPAC boom of 2020 carried through into a raft of deals in 2021 that, aside from Grab, ebbed in the second half of 2021. Through 2021, other global exchanges have sought to change their rules to make their markets more attractive to SPACs. In 2022, SPACs are likely to remain a key feature of IPO activity, not only in the U.S. but also globally.

The review of the second Markets in Financial Instruments Directive (MiFID II)

The EU's revision of MIFID II and the associated regulations are likely to be enacted in 2022. We anticipate that the changes will closely follow the European Commission's 2021 proposal. This would see a modest rollback of some provisions, including open access provisions for derivatives trading and clearing, and invoke a slightly tougher stance on systematic internalizers, namely, investment firms that routinely handle client orders outside regulated markets. This could marginally benefit regulated exchanges and multilateral trading facilities. That said, the EU and U.K.'s differing stances on market transparency and dark trading are notable areas of likely increasing regulatory divergence between the two markets. In time, this could fragment market liquidity in Europe.

European consolidated tape and U.S. SIP pilot

Under the EU's Capital Markets Union action plan, it will implement a single post-trade near-real-time consolidated tape for each individual asset class. In the U.S., the SEC has proposed to expand the content of low-cost consolidated market data feeds, so-called SIPs, to include data that exchanges today bundle into their costlier proprietary data products. This said, in October 2021, a U.S. court agreed to stay the implementation of the SEC's order requiring changes to the SIP governance structure. Although the decision is temporary, it might slow down--or entirely cancel out--the SEC's orders. Whether in Europe or the U.S., we see these plans as having the potential to erode exchanges' data revenues.

Payment for order flow (PFOF)

PFOF is the process by which retail brokers sell their clients' order flows to wholesale brokers. The early 2021 frenzy in the U.S. for meme stocks, which had garnered popularity through social media, has put renewed focus on the PFOF model of retail broker renumeration by liquidity providers and on whether it and the associated high volumes of off-exchange trading lead to detrimental outcomes for consumers and markets. As part of the MIFID II review, the EU has already announced plans to ban PFOF, which in any case is not common in Europe, and the SEC is considering a similar move. The impact on U.S exchanges of potentially banning PFOF is uncertain at this stage.

Retail brokers may channel retail orders directly to exchanges, improving lit exchanges' market share at the expense of dark pools. But PFOF revenues represent an important source of revenues for some retail brokers, and the loss of PFOF could force some players to reinstate transaction fees, which were cut to zero largely across the board in November 2019. This could harm retail trading volumes in general and exchanges' trading volumes. That said, the general upsurge in retail activity is unlikely to wane, and exchanges such as Cboe have launched nano derivatives contracts to meet retail investor demand.

Potential market microstructure reforms in the U.S.

Some of the reforms that the SEC's new chairman Gary Gensler envisages could benefit U.S. exchanges at the expense of wholesale market-makers and dark pools. Reducing the minimum tick size from the current one cent to half a cent, or mandating that odd-lot orders (orders of generally less than 100 shares) are included in the National Best Bid and Offer (NBBO) price, could make the NBBO more competitive and harder to beat for wholesale market-makers that buy the order flows of retail brokers and execute the majority of retail transactions in the U.S. An improvement in the price for the end customers from the NBBO price that they would obtain on exchanges could be harder to demonstrate. Consequently, wholesale market-makers may send more retail orders directly to the exchanges, as opposed to internalizing the transactions or executing them on dark pools, benefitting exchanges' trading volumes.

Transition away from LIBOR

Sterling and yen LIBOR have already lost recognition as interest rate benchmarks, and U.S. dollar LIBOR will end in June 2023. This year will reveal whether the secured overnight financing rate (SOFR) will achieve as widespread adoption as the preeminent U.S. dollar LIBOR alternative. While this transition opens the door to new entrants to pull interest rate futures liquidity away from the incumbent exchanges, notably ICE and CME Group Inc., we expect that they will retain market dominance.

Uncleared margin rules phase 6

The final wave of rules will come into force in September 2022 and require firms to start to post initial margins where they trade more than €8 billion in notional uncleared derivatives per year. This marks the end of a six-year tailwind that has incentivized firms to put more derivatives trades through clearing, of which LCH Ltd. has been a key beneficiary, and to switch from over-the-counter (OTC) to listed products. A lot of market activity will nevertheless remain OTC, providing a continued growth opportunity for technology solutions like LCH's SwapAgent product.

Euro swaps and futures clearing

In late 2021, the EU agreed to extend temporary permission for EU firms to clear with U.K. clearinghouses (CCPs) beyond June 2022, but the underlying EU regulatory and political discomfort about the reliance on U.K. CCPs for rates clearing has not gone away. Ahead of the soon-to-be-revised deadline, likely in 2023, the EU's eventual policy decision is likely to be informed by two potential developments in 2022. First, whether the European Securities and Markets Authority wins greater oversight of U.K. CCPs, and second, whether EU firms bow to soft regulatory pressure to meaningfully reduce their reliance on U.K. CCPs. We see the eventual outcome as important for LCH in particular, but note the breadth and depth of its global multicurrency SwapClear business and the growth in its foreign-exchange clearing proposition. These could support its business volumes, even if the EU derecognizes U.K. CCPs, which remains the worst-case scenario and outside our base case.

CCP Regulators Continue To Assess Recent Market Volatility

CCP risk management has strengthened markedly in recent years, which was one reason why CCPs managed to navigate periods of acute global market volatility in 2020, due to the pandemic, and in 2021, due to the meme stock frenzy in the U.S. However, margin procyclicality has been an issue, particularly outside Europe. CCP margin requirements rise when volumes rise, but some CCPs (notably National Securities Clearing Corp. and Options Clearing Corp.) tripled or quadrupled their margins in a matter of weeks. While in most circumstances they would have been able to absorb losses had one of their large clearing members defaulted during this period, the spike in margins also gave rise to significant procyclicality, which occurs when CCP margin calls withdraw liquidity from their members when liquidity is already scarce. Existing anti-procyclicality measures in European regulations were arguably successful in 2020, but in Europe, the U.S., and beyond regulators will soon announce whether they see a need to reinforce regulations in this area.

Sector Refinancing Risk Will Remain Low Even If Debt Markets Tighten

Buoyed by strong creditworthiness and supportive markets, FMI sector debt issuance was strong in 2021, albeit due principally to LSEG's refinancing of Refinitiv debt. This aside, activity was fairly muted relative to 2020. In 2022, financing conditions should remain supported by constructive economic forecasts, including global GDP growth of 4.2%; lower but continued central bank support; and the likely easing of default risk across many corporate sectors. However, as extraordinary accommodative measures recede, financing conditions are gradually tightening. It remains possible though that financing conditions could tighten sharply in 2022, for example, in the event of a central bank policy error, geopolitical risks, or reduced liquidity.

The FMI sector has around $8 billion of debt due in 2022. There is then a lull in 2023 and 2024 as issuers have taken advantage of favorable conditions to term out their debt structures (see table 2). Even if debt markets tighten dramatically, we see 2022 refinancings as highly manageable. FMIs are highly rated cash flow-generative companies, and Visa Inc. aside, each of them needs to do only one benchmark issuance in the year.

Table 3

Bond And Bank Loan Debt Maturities
Currency 2022 2023 2024 2025 Thereafter Total as of Dec. 31, 2021 FX rate* Total ($) as of Dec. 31, 2020

Cboe Global Markets

$ 160 1,150 1,310 1.00 1,310

CME Group Inc.

$ 750 750 1,950 3,450 1.00 3,450


15 1.13 17

Coinbase Global Inc.

$ 3,440 3,440 1.00 3,440

Depository Trust & Clearing Corp. (The)

$ 500 500 1.00 500

Deutsche Boerse AG

600 500 2,200 3,300 1.13 3,729
Euroclear Group 500 500 500


3,150 1.13 3,560
$ 200 200 1.00 200
£ 350 350 1.33 466

Euronext N.V.



3,550 1.13 4,012

Intercontinental Exchange, Inc.

$ 500 2,200 1,250 9,000 12,950 1.00 12,950

London Stock Exchange Group PLC

£ 500 500 1.33 665
500 500 2,500 3,500 1.13 3,955
$ 500 4,000 4,500 1.00 4,500

Mastercard Inc.

$ 1,000 750 10,400 12,150 1.00 12,150
700 950 1,650 1.13 1,865

Nasdaq, Inc.

$ 600



3,400 1.00 3,400


1,815 1.13 2,051

PayPal Holdings Inc.

$ 1,000 1,000 1,250 1,000 4,750 9,000 1.00 9,000

SIX Group AG

650 650 1.13 735
CHF 600 600 1.08 648

Visa Inc.

$ 3,250 4,000 13,750 21,000 1.00 21,000
Total in $ 93,600
Note: Data as of Dec. 31, 2021. The table does not capture commercial paper, certificates of deposit, or revolving credit facility drawings. *FX rate as of Dec. 31, 2021. FX--Foreign exchange. CHF--Swiss franc. Source:

As in other corporate sectors, the low cost of debt continues to depress debt-servicing costs for FMIs, meaning that leverage-based metrics are likely to remain the key determinant of our view of issuers' financial risk profiles. Between them, Visa, ICE, and Mastercard Inc. account for over half of the sector's $94 billion of outstanding debt, an amount that rose from $84 billion at end-2020, due mainly to LSEG's Refinitiv acquisition (see chart 2). Sector credit metrics remain healthy, with average S&P Global Ratings-adjusted debt to EBITDA likely to be close to 1.5x at end-2021. However, leverage appetite remains highly variable in the sector, with many players eschewing material leverage and others, such as ICE, Euronext, Nasdaq, and, to a lesser extent, LSEG, willing to take on materially higher leverage to pursue substantial acquisitions.

Chart 2


Table 4

Key Credit Metrics For Selected Global FMI Companies
--EBITDA margin (%)-- --Funds from operations to adjusted debt (%)-- --Debt to adjusted EBITDA (x)-- --EBITDA interest coverage (adjusted) (x)--
Company FRP assessment 2020A 2021E 2022F 2020A 2021E 2022F 2020A 2021E 2022F 2020A 2021E 2022F

Asigna Compensacion y Liquidacion

Minimal 53 41 42 N.M. N.M. N.M. 0.0 0.0 0.0 N.M. N.M. N.M.

ASX Ltd.*

Minimal 77 74 75 N.M. N.M. N.M. 0.1 0.1 0.1 N.M. N.M. N.M.

Cboe Global Markets

Minimal 69 67 >66 48 52 >52 1.5 1.4 1.4 21 24 23

Coinbase Global Inc.

Minimal 54 >60 >60 N.M. N.M. N.M. 0.0 0.0 0.0 N.M. N.M. N.M.

CME Group Inc.

Minimal 67 66 66 69 >60 >70 1.1 1.2 1.0 17 20 22

Depository Trust & Clearing Corp. (The)

Minimal 24 22 24 N.M. N.M. N.M. 0.0 0.0 0.0 N.M. N.M. N.M.

Deutsche Boerse AG

Minimal 49 48 48 76 44 54 1.0 1.8 1.4 35 51 59

Euroclear Bank S.A./N.V.

Modest 47 46 44 46 38 38 1.7 1.9 1.9 27 20 20

Euronext N.V.

Significant 58 56 58 50 20 24 1.5 3.7 3.1 29 40 23

Intercontinental Exchange, Inc.

Intermediate 65 65 65 19 24 27 3.9 3.2 2.9 11 12 13

LCH Group Holdings Ltd.

Minimal 57 57 57 N.M. N.M. N.M. 0.0 0.0 0.0 33 35 37

London Stock Exchange Group PLC

Modest 57 40 42 68 34 41 1.1 2.6 2.0 18 19 25

Mastercard Inc.

Minimal 60 60 60 117 87 88 0.7 0.9 0.9 23 25 25

Nasdaq, Inc.

Intermediate 55 54 52 36 25 26 2.1 3.4 3.3 13 14 14

PayPal Holdings Inc.

Minimal 29 >28 >28 N.M. N.M. N.M. 0.1 <1.0 <1.0 27 29 35

SIX Group AG

Minimal 27 29 28 34 53 54 2.1 1.6 1.6 25 102 76

Visa Inc.§

Minimal 70 71 71 96 135 120 0.8 0.6 0.9 29 33 29
*Fiscal year ends in June. §Fiscal year ends in September. A--Actual. E--Expected. F--Forecasted. N.M.--Not meaningful. Source: S&P Global Ratings. FRP--Financial risk profile. Where our previous publications have indicated a forecast range, we reflect the mid-point in this table.

Rating Changes Will Most Likely Arise From One-Off Events

With Asigna Compensacion y Liquidacion the only FMI not having a stable outlook due to sovereign rating pressures, upgrades and downgrades are unlikely in the FMI sector in 2022. As in previous years, debt-funded M&A remains the most likely cause of idiosyncratic rating actions, although LSEG and Euronext start the year in active deleveraging mode and deep in multi-year integration projects. Nor do we rule out rating actions in response to risky operational events, where rating actions would hinge on evidence of franchise damage or a material change in our view of an FMI's risk management. As such, a severe cyber attack or a series of outages would be more relevant to our ratings than the high-profile but sporadic events seen in previous years.

Looking beyond our relatively supportive base-case cyclical scenario for FMI revenues, a more negative macro scenario remains possible in which global economic growth is far slower and asset prices fall significantly and remain much lower. In the context of likely unchanged or even lower interest rates in this scenario, asset-price falls would signal an evaporation of investor confidence.

Overall, the effect on FMIs would not be severe--one reason why we see the FMI sector as having low industry risk is that sector earnings show quite high resilience even in a cyclical downturn. Sector resilience has further improved in recent years as the leading players have successfully diversified into data and analytics businesses, which generate annuity-like revenues. Nevertheless, the effect would not be felt evenly across the FMI sector. While trade volumes might briefly spike, as in March and April 2020, this environment could be distinctly unhelpful for the least diversified FMIs that continue to draw most of their income from securities listing, trading, and settlement activity and, because of their structure, have limited flexibility to cut costs.

We see very limited upside for FMI sector ratings for two reasons. If volumes and revenues outperform for cyclical reasons, it's likely that FMIs would reward shareholders with higher distributions, rather than reducing their leverage. Second, growth is likely to reinforce, rather than materially improve, our view of FMIs' already favorable business risk profiles.

Table 5

Report Card
Company Long-term rating and outlook Primary analyst Comment

Asigna Compensacion y Liquidacion

BBB+/Negative Alejandro Peniche We expect Asigna to continue generating the overwhelming bulk of its revenue from a limited number of clearing members and to retain a very conservative financial risk profile with zero debt. The high competition it faces from international players continues to be a key factor in management's decision-making, but we expect that in 2022, the company will expand its product offering and bolster its operating volumes and its diversification.

ASX Ltd.

AA-/Stable Lisa Barrett ASX's full-year earnings for fiscal 2021 (ended June 30) were in line with our expectations. ASX's reduced underlying earnings compared with fiscal 2020 reflected the impact of lower futures volumes and interest income, given the historically low interest-rate environment, offset by a record number of new listings. ASX's 74% fiscal 2021 EBITDA margin remains peer-leading, a trend we expect to continue. We forecast that ASX's capital expenditure will peak in the next two years as it completes its technology transformation with the rollout of a distributed ledger technology to replace its core clearing, settlement, and asset-registration system in early calendar 2023. ASX is likely to remain free of long-term debt, underpinning a durable financial profile, in our view.

Cboe Global Markets

A-/Stable Thierry Grunspan Cboe outperformed most of its peers in 2021, thanks to its strong market share in single-name and index equity options, the asset classes that benefited the most from the retail trading surge in the U.S. We expect that options overall will represent the majority of EBITDA for the year. Leverage remained low in 2021, at 1.4x, despite a string of relatively small acquisitions--notably Bids and Chi-X Asia Pacific--thanks to very high profitability in the options segment. The company has strong growth plans for 2022, in European derivatives, leveraging the recent EuroCCP acquisition; in Asia-Pacific cash equity trading; and in crypto, with the announced acquisition of Eris Digital Holdings, LLC.

Coinbase Global Inc.

BB+/Stable Prateek Nanda Coinbase had a strong 2021, reflecting its strong market share in crypto currencies in the U.S. We expect S&P Global Ratings-adjusted EBITDA to reduce to $2.0 billion-$2.5 billion in 2022, versus $3.0 billion-$3.5 billion in 2021, as retail transactional revenues (representing 88% of total net revenues) come down in the face of our expectation of lower volatility in crypto prices, retail margin compression, and intense competition from centralized and decentralized crypto exchanges. This will be partially offset by the double-digit growth we expect in institutional and subscription revenues. Leverage should remain very low, in our view, with debt to EBITDA well below 1.5x.

CME Group Inc.

AA-/Stable Thierry Grunspan We expect that CME had a relatively weak year overall in 2021, underperforming its U.S. peers. This follows low transaction volumes in the first three quarters of the year in fixed-income derivatives, its dominant asset class, contributing about a quarter of total net revenues, in an environment of close to zero and stable interest rates. We anticipate that revenues will pick up in 2022, with market expectations of a change in monetary policy in the U.S. Leverage should remain low, in our view, and profitability very high, with debt to EBITDA around 1.0x, one of the lowest ratios among FMI peers worldwide, and an EBITDA margin around 66%, above that of most peers.

Depository Trust & Clearing Corp. (The)

AA-/Stable Prateek Nanda DTCC's operating income increased 18% year over year in the first nine months of 2021 as its three systematically important subsidiaries (DTC, FICC, and NSCC) posted strong clearing and settlement revenues on the back of rising trading volumes in the U.S. DTCC has very low leverage, and we expect debt to EBITDA to remain 0.0x over the next two years.

Deutsche Boerse AG

AA/Stable Philippe Raposo We expect Deutsche Boerse's (DB1's) leading position in the European capital and derivatives markets will translate into net revenue of about €3.5 billion and EBITDA of close to €2 billion in 2021, supported by its strong Eurex and Clearstream segments. We believe that DB1's leverage was at its peak in 2021 following recent acquisitions. In 2022, we expect DB1 to post another year of strong revenues, with growth in the mid-single-digit range, allowing its leverage metrics to come back into line with its cautious financial policy of debt to EBITDA below 1.75x and funds from operations to debt above 50%.

Euroclear Bank S.A./N.V.

AA/Stable Francois Moneger We expect Euroclear to have had a strong 2021, despite the unsupportive effect on net interest income from the low policy-rate environment. We anticipate that revenues will have been supported by strong equity and debt market issuance, sustained high valuations and trading activity in the securities markets, and Euroclear's growth initiatives. We see Euroclear's acquisition of MFEX Group, a fund distribution platform, in September 2021 as having consolidated its very strong competitive position without materially weakening its financial leverage and cash flow metrics. A central assumption for our rating on Euroclear is that its debt to EBITDA will remain comfortably below 2.5x and funds from operations to debt will remain above 35% in the next few years.

Euronext N.V.

BBB/Stable Philippe Raposo 2021 was a seminal year for Euronext with the transformational acquisition of Borsa Italiana. As a result, Euronext has grown materially in scale, cementing its position as Europe's largest liquidity pool for cash equities, while diversifying and expanding its post-trade business. We expect the financial results for the full year to be robust, as evident in the first three quarters, which show solid growth in all segments compared with 2020. As a result, Euronext will probably be ahead of schedule on its deleveraging plan. We expect a further strengthening of the financial metrics in 2022 thanks to steady 4%-6% revenue growth, some additional recurring costs to achieve synergies through 2023, and a slight EBITDA margin improvement thanks to one-off transaction costs falling away.

Intercontinental Exchange, Inc.

A-/Stable Prateek Nanda ICE saw steady growth in earnings in 2021, with pro forma revenues (including Ellie Mae) increasing 7% year over year in the first nine months and recurring revenues accounting for about 49% of total revenues. Pro forma revenues at its mortgage technology segment (20% of total revenues) increased 24% in the period, despite a double-digit decline in origination volumes as the analog-to-digital trend accelerated across the mortgage workflow. ICE has deleveraged faster than we expected after the Ellie Mae acquisition, thanks to strong cash flow generation and the sale of its stake in Coinbase in April. We expect leverage in 2022 to remain at about 3.2x in 2022 as share repurchases resume.

London Stock Exchange Group plc

A/Stable William Edwards 2021 was all about LSEG closing the Refinitiv deal, kick-starting its complex integration and investment agenda, and laying the foundations for sustained organic growth. We see the emphasis for 2022 as proving the strategic thesis behind this transformative deal. We expect modest revenue growth of around 2%-4% in 2022, broadly in line with the 4% growth we expect for 2021. When combined with EBITDA margins moving above 41% through this year, we forecast S&P Global Ratings-adjusted EBITDA to rise above £3 billion in 2022 from around £2.9 billion in 2021. Assuming a reduction in net debt, we forecast debt to EBITDA approaching 2.0x at year-end 2022, from around 2.5x-2.7x at year-end 2021. While management laid the foundations for integration and organic growth through 2021, LSEG still has a lot of ground to cover to deliver fully on its ambitious medium-term programs. We reflect this in our one-notch negative adjustment to the group credit profile while we await further integration progress.

Mastercard Inc.

A+/Stable Brendan Browne After dropping sharply in 2020, Mastercard's earnings rose significantly in 2021 on the back of the robust economic rebound, solid consumer spending, and a long-term shift to electronic payments that the pandemic has accelerated. Revenue from cross-border spending has also continued to recover, though it remains below pre-pandemic levels. The Omicron variant may have limited the improvement in fourth-quarter earnings, but we still expect profitability to benefit from growth in the global economy and the ongoing incremental shift toward electronic payments and away from cash. In our base case, we expect Mastercard to maintain leverage of about 0.9x and an EBITDA margin of about 60%.

Nasdaq, Inc.

BBB+/Stable Thierry Grunspan Nasdaq had a solid 2021, and we expect that it outperformed most of its peers. This primarily reflects its leading position in U.S. equity options, the asset class that performed the best last year. This has enabled the company to reduce leverage, despite higher share repurchases than we had expected after the sale of its fixed-income business eSpeed in July 2021. With the acquisition of Verafin and solid organic growth prospects at its Solutions businesses (Investment Intelligence, Market Technology, and Corporate Platforms), the company continues to drive growth in non-transactional revenues (72% of total revenues as of Sept. 30, 2021). We expect leverage to further reduce to around 2.8x by the end of 2023, despite our expectation of a contraction in Market Services revenues from the highs recorded last year.

Options Clearing Corp.

AA/Stable Prateek Nanda Despite booming equity options volumes in the U.S., driven by retail trading, we expect a double-digit decline in revenues for OCC in 2021. This reflects reduced clearing fees by 2.5 cents per contract, effective June 1, 2021, and a clearing fee holiday for the months of November and December. OCC's revenues are largely determined by its new capital management policy, and a defined operating margin over expenses, approved by the SEC in January 2020. Expenses have largely stabilized after rising quickly between 2017 and 2019 due to investments in risk, compliance, and technology. We expect the company to keep operating with zero adjusted debt.

PayPal Holdings Inc.

A-/Stable Thierry Grunspan PayPal continues to benefit from the structural trend away from cash and checks and toward electronic payments, and from the shift to ecommerce that accelerated during the pandemic. Despite headwinds due to the loss of exclusivity of eBay payments and the gradual transition to Adyen, PayPal posted a strong 20% increase in revenues in the first three quarters of the year. The acquisition of Paidy in October 2021 for about $2.7 billion, mostly in cash, should meaningfully add to PayPal's existing buy now pay later capabilities in several markets and support growth. Likewise, tangible plans to improve profitability at popular peer-to-peer platform Venmo, which now represents close to 20% of total payment volumes for the company, and the generalization of PayPal QR codes at U.S. merchants to facilitate in-store digital payments, should support revenue growth next year. We expect the company to keep operating with very low leverage (below 1.5x) over the next two years.

SIX Group AG

A/Stable William Edwards 2021 marked the first full year of operations for the enlarged SIX group following its Swiss franc (CHF) 2.7 billion acquisition of BME in June 2020. We expect SIX to report total income growth of 8%-10% for the full-year 2021, led by its markets and securities divisions, and supported by good performance in its financial information business. We expect solid cost control as well, pushing the EBITDA margin toward 29%. SIX was an active issuer in 2021, completing the refinancing of its BME acquisition bridge facility and leaving it with CHF1.3 billion of outstanding senior unsecured notes at year-end 2021. These are split across three tranches, one of which is a novel digital bond, issued in November. We expect leverage of about 1.6x for end-2021, and the group to sustain this in 2022, even as revenues stabilize and it embarks on a fresh round of cost control.

Visa Inc.

AA-/Stable Brendan Browne Visa's earnings rebounded in fiscal 2021 (ended September) on the back of a robust economic rebound, solid customer spending, and a long-term shift to electronic payments that the pandemic has accelerated. Revenue from cross-border spending has also continued to recover, though it remains below pre-pandemic levels. The Omicron variant may have limited an earnings improvement in the quarter ending in December, but we still expect profitability to benefit from growth in the global economy and the ongoing incremental shift toward electronic payments and away from cash. In our base case, we expect Visa to maintain leverage well below 1.0x--even after acquiring Tink and Currency Cloud--and EBITDA margins of about 70%.
Intermediate holding company Euroclear Investments S.A. is rated AA-/Stable. Leverage metrics are on an S&P Global Ratings-adjusted basis unless indicated.

Related Research


Table 6

Debt Issuance By Rated FMIs, 2021
Rating date Issuer Issue credit rating Instrument Purpose
02/03/2021 Mastercard Inc. A+ $600 million 1.90% senior unsecured notes due 2031; $700 million 2.95% senior unsecured notes due 2051 General corporate purposes, refinaincing, and sustainability
02/15/2021 Deutsche Boerse AG AA €500 million 0% senior unsecured notes due 2026; €500 million 0.125% senior unsecured notes due 2031 Acquisition financing for ISS deal
06/04/2021 London Stock Exchange Group plc* A £500 million 1.63% senior unsecured notes due 2030; €500 million 0% senior unsecured notes due 2025; €500 million 0.25% senior unsecured notes due 2028; €500 million 0.75% senior unsecured notes due 2033; $500 million 0.65% senior unsecured notes due 2024; $1.0 million 1.38% senior unsecured notes due 2026; $1.0 billion 2.00% senior unsecured notes due 2028 $1.25 billion 2.50% senior unsecured notes due 2031 $750 million 3.20% senior unsecured notes due 2041 Post-acquisition financing for completed Refinitiv deal
05/06/2021 Euronext N.V. BBB €600 million 1.125% senior unsecured notes due 2026; €600 million 1.125% senior unsecured notes due 2031; €600 million 1.125% senior unsecured notes due 2041 Acquisition financing for Borsa Italiana deal
07/27/2021 Nasdaq Inc. BBB €615 million 0.90% senior unsecured notes due 2033 Refinancing of maturing debt
08/04/2021 Euroclear Bank S.A./N.V. AA $200 million 1.261% senior unsecured notes due 2026 Refinancing of maturing debt
08/06/2021 Depository Trust & Clearing Corp. (The) A $500 million preferred stock Refinancing of called hybrid and general corporate purposes
09/14/2021 Coinbase Global Inc. BB+ $1.0 billion 3.375% senior unsecured notes due 2028; $1.0 billion 3.625% senior unsecured notes due 2031 General corporate purposes
09/14/2021 SIX Group AG A CHF450 million 0.20% senior unsecured notes due 2029 Refinancing of bridge facility
11/15/2021 Mastercard Inc. A+ $750 million 2.00% senior unsecured notes due 2031 General corporate purposes
11/18/2021 SIX Group AG A CHF150 million 0.125% senior unsecured notes due 2026 General corporate purposes
*Debt also issued by financing subsidiaries LSEGA Financing PLC and LSEG Netherlands B.V., and guaranteed by LSEG. Data as of Dec. 31, 2021. CHF--Swiss franc.

Table 7

FMI Rating And Outlook Actions In 2021
Company From To Date Rationale
London Stock Exchange Group PLC A/Watch Neg/A-1 A/Negative/A-1 02/01/2021 Removed from Watch Neg and affirmed on Refinitiv acquisition, after Borsa divestment reduces prospective leverage
Intercontinental Exchange Inc. BBB+/Negative/A-2 BBB+/Stable/A-2 02/22/2021 Revision to stable as cashflows from strong financial performance allow deleveraging after Ellie Mae transaction
Euroclear Bank S.A./N.V.* AA/Stable/A-1+ AA/Stable/A-1+ 04/01/2021 Ratings affirmed on proposed acquisition of MFEX and solid financial performance
Euronext N.V. A-/Watch Neg/A-2 BBB/Stable/A-2 04/29/2021 Ratings lowered on leveraged acquisition of Borsa Italiana
Liquidnet Holdings Inc. BB-/Watch Pos/B NR 04/06/2021 Rating withdrawn after debt repayment, following acqusition by TP ICAP plc
PayPal Holdings Inc. BBB+/Positive/A-2 A-/Stable/A-2 06/03/2021 Upgrade on strong performance amid structural growth of e-commerce
Coinbase Global Inc. -- BB+/Stable/-- 9/13/2021 New rating
B3 S.A. Brasil, Bolsa, Balcao BB-/Stable/B NR 9/27/2021 Ratings affirmed and then withdrawn at the issuer's request
Intercontinental Exchange Inc. BBB+/Stable/A-2 A-/Stable/A-2 11/29/2021 Upgraded following review of structural subordination risk for holding company creditors.
Nasdaq Inc. BBB/Stable/A-2 BBB+/Stable/A-2 11/29/2021 Upgraded following review of structural subordination risk for holding company creditors.
London Stock Exchange Group PLC A/Negative/A-1 A/Stable/A-1 11/29/2021 Outlook revised to stable following review of structural subordination risk for holding company creditors.
NR--Not rated.

Table 8

Rating Factor Assessments
Company Business risk profile Financial risk profile C&S risk† Anchor Capital structure Financial policy Liquidity Management and governance Peer adjustment GCP ICR Outlook
Asigna Compensacion y Liquidacion Satisfactory Minimal -3 bbb Neutral Neutral Strong Satisfactory Favorable bbb+ BBB+ Negative
ASX Ltd. Strong Minimal 0 aa- Neutral Neutral Exceptional Satisfactory Neutral aa- AA- Stable
Cboe Global Markets, Inc. Satisfactory Minimal -1 a- Neutral Neutral Adequate Satisfactory Favorable a A- Stable
Coinbase Global Inc. Fair Minimal 0 bbb- Neutral Neutral Strong Fair Negative bb+ BB+ Stable
Clearstream Banking S.A. / Clearstream Banking AG* Strong Minimal 0 aa Positive§ Neutral Exceptional Strong Neutral aa AA Stable
CME Group Inc. Strong Minimal 0 aa Neutral Neutral Adequate Satisfactory Neutral aa AA- Stable
Depository Trust & Clearing Corp. (The) Excellent Minimal -1 aa Neutral Neutral Exceptional Strong Neutral aa AA- Stable
Depository Trust Co. (The) Excellent Minimal 0 aa+ Neutral Neutral Exceptional Strong Neutral aa+ AA+ Stable
Deutsche Boerse AG Strong Minimal 0 aa Neutral Neutral Strong Satisfactory Neutral aa AA Stable
Euroclear Bank S.A./N.V.* Strong Modest 0 a+ Positive Neutral Exceptional Strong Favorable aa AA Stable
Euronext N.V. Strong Significant -1 bbb- Neutral Neutral Strong Satisfactory Favorable bbb BBB Stable
Fixed Income Clearing Corp. Excellent Minimal -1 aa Neutral Neutral Exceptional Strong Neutral aa AA Stable
Intercontinental Exchange Inc. Strong Intermediate 0 a- Neutral Neutral Adequate Satisfactory Neutral a- A- Stable
LCH Ltd. and Banque Centrale de Compensation S.A. (LCH SA)* Strong Minimal 1 aa Neutral Neutral Strong Satisfactory Unfavorable aa- AA- Stable
London Stock Exchange Group PLC Strong Modest 0 a+ Neutral Neutral Strong Satisfactory Negative a A Stable
MasterCard Inc. Strong Minimal -1 a+ Neutral Neutral Strong Satisfactory Neutral a+ A+ Stable
Nasdaq Inc. Strong Intermediate -1 bbb Neutral Neutral Adequate Satisfactory Favorable bbb+ BBB+ Stable
National Securities Clearing Corp. Excellent Minimal 0 aa+ Neutral Neutral Exceptional Strong Neutral aa+ AA+ Stable
Options Clearing Corp. Excellent Minimal 0 aa+ Neutral Neutral Adequate Fair Neutral aa AA Stable
PayPal Holdings, Inc. Satisfactory Minimal -1 a- Neutral Neutral Strong Strong Neutral a- A- Stable
SIX Group AG Satisfactory Minimal 0 a Neutral Neutral Strong Satisfactory Favorable a+ A Stable
Visa Inc. Strong Minimal -1 aa- Neutral Neutral Strong Satisfactory Neutral aa- AA- Stable
Data as of Jan. 10, 2021. C&S--Clearing and settlement. GCP--group credit profile. *Except for DTC, NSCC, FICC, and Asigna, for which we show the stand-alone credit profile (SACP) in the table. *GCP construction reflects our assessment of, respectively, Clearstream Group, Euroclear Group, and LCH Group. §No notching benefit, as per Section G of "Corporate Methodology", Nov. 19, 2013. †Applies only to the FMI sector. In addition to the companies above, we rate certain subsidiaries of ASX Ltd. and SIX Group AG based on our view of their core or highly strategic group status to their parent.

Table 9

S&P Global Ratings FMI Sector Analysts
Analyst Office Telephone Email
Brendan Browne New York +1 (212) 438 7399
Thierry Grunspan Columbia +1 (212) 438 1441
Prateek Nanda Toronto +1 (416) 507 2531
Giles Edwards London +44 20 7176 7014
William Edwards London +44 20 7176 3359
Francois Moneger Paris +33 1 4420 6688
Philippe Raposo Paris +33 1 4420 7377
Lisa Barrett Melbourne +61 3 9631 2081
Nico DeLange Sydney +61 2 9255 9887
Ricardo Grisi Mexico City +52 55 5081 4494
Guilherme Machado São Paulo +55 11 3039 9700
Alejandro Peniche Mexico City +52 55 5081 2874

This report does not constitute a rating action.

Primary Credit Analyst:Giles Edwards, London + 44 20 7176 7014;
Secondary Contact:Thierry Grunspan, Columbia + 1 (212) 438 1441;

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