EEX Group Global Commodities

EEX Group Global Commodities

EEX Group Freight

The European Energy Exchange The European Energy Exchange is the Commodities exchange of Deutsche Börse Group. EEX offers a one-stop shop for power, natural gas, emissions, coal, freight, iron ore, ags and fertilisers to a broad network of participants including pan-european and local utilities and financial players Secured clearing and settlement of all transactions is done by European Commodity Clearing AG (ECC), the clearing house of EEX and its partner exchanges. 100% Owner of Cleartrade Exchange (CLTX) since April 2016. CLTX is a Singapore-based derivatives exchange offering freight, iron ore, fuel oil, containers, steel and fertilisers for trade registration. 2015 3

Markets of EEX Group EEX Group provides the central market platform for energy, energy related and commodity products Power Environmental Markets Emission Allowances, Guarantees of Origin Natural Gas Freight Dry Bulk Freight Coal Steam Coal, Coking Coal Metals Iron Ore, Steel Oil Fuel Oil Agricultural Markets Potatoes, Dairy Products, Livestock & Meat, Fertiliser 2016 4

The Dry Bulk Freight Market The Dry Bulk Market is the denomination for the fleet of large vessels which ship dry raw materials around the world : Large vessels ship iron ore, coal and grains Smaller vessels carry steel, phosphate rock, bauxite, alumina, scrap, cement and other raw materials The capacities of the vessels are measured in dead weight tonnes (dwt). Deadweight tonnage is a measure of how much mass a ship is carrying or can safely carry. 2015 5

The Dry Bulk Freight Market: Vessel Size There are 4 dry bulk ship categories (classified by size) which form the underlying for the FFA futures market: (1) Capesize (2) Panamax (3) Supramax (4) Handysize. 2015 6

The Dry Bulk Freight Market: Cape Routes 7

The Dry Bulk Freight Market: Panamax Route 2015 8

The Dry Bulk Freight Market: Supramax Route 2015 9

The Dry Bulk Freight Market: Handysize Route 2015 10

Time Charter Averages & Routes A Timecharter contract is the daily hiring of a vessel over an agreed period of time (e.g. a Capesize vessel for 20 days) A Timecharter Route is the daily hiring of a vessel on a prespecified route A Timecharter Basket of Routes is a weighted average of individual Timecharter Routes An Individual route contract is the freight cost applied to the transport of cargo from a port of load to a port of discharge (e.g. iron ore from Western Australia to Qingdao) 2015 11

The Dry Bulk Freight Market: Time Charter 2015 12

The Dry Bulk Freight Market: Trip Time Charter 2015 13

The Dry Bulk Freight Market: Voyage Charter 2015 14

The Baltic Dry Index (BDI The Baltic Dry Index (BDI) is dry bulk freight index, which is issued daily by the Baltic Exchange The index provides an aggregate assessment of the cost of shipping dry bulk commodities and is often viewed as a leading economic indicator The BDI came into operation in 1999 and since July 2009 it has been a composite of the Dry Bulk Timecharter Averages The BDI is calculated the Baltic Exchange s Timecharter Average indices as shown Futures contracts on all of these Timecharter Average indices are available 2015 15

BDI Constituents Timecharter Basket of Routes Timecharter Route Index Weight Capesize Timecharter Average of five routes (C5TC) - Gibraltar/Hamburg transatlantic round voyage (C8) 6.25% - Continent/Mediterranean trip China-Japan (C9) 3.13% - China-Japan transpacific round voyage (C10) 6.25% - China-Brazil round voyage (C14) 6.25% - Revised backhaul (C16) 3.13% Panamax Timecharter Average of four routes (P4TC) - Skaw-Gibraltar transatlantic round voyage (P1A) 6.25% - Skaw-Gibraltar trip to Taiwan-Japan (P2A) 6.25% - Japan South Korea transpacific round voyage (P3A) 6.25% - Japan-South Korea trip to Skaw Passero (P4) 6.25% Supramax Timecharter Average of six routes (S6TC)* - Canakkale trip via Med or Bl Sea to China-South Korea (S1B) 5.36% - North China one Australian or Pacific round voyage (S2) 7.14% - North China trip to West Africa (S3) 5.36% - US Gulf trip to Skaw-Passero (S4A) 3.57% - Skaw-Passero trip to US Gulf (S4B) 3.57% Handysize Timecharter Average of six routes (H6TC) - Skaw-Passero trip to Rio de Janeiro-Recalada (HS1) 3.13% - Skaw-Passero trip to Boston-Galveston (HS2) 3.13% - Rio de Janeiro-Recalada trip to Skaw-Passero (HS3) 3.13% US Gulf trip via US Gulf or north coast South America to Skaw-Passero - (HS4) 3.13% - South East Asia trip via Australia to Singapore-Japan (HS5) 6.25% - South Korea-Japan trip via North Pacific to Singapore-Japan (HS6) 6.25% * Changes to the Supramax Timecharter Average Index mean it is now calculated using five routes instead of six 16

BDI Performance Because of the ongoing recovery in freight rates the BDI has performed strongly since hitting an all-time low in February 2016 The BDI is much more volatile than the majority of equity and fixed income indices Given its low correlation with equity and fixed income investments*, the BDI offers diversification benefits when combined with a more traditional investment portfolio However, it is important that investors understand the unique risks associated with the dry bulk freight market * For the 01/01/15 to 31/03/17 time period, the correlation coefficient between the BDI and the EURO STOXX 50 Index was 0.17 and the correlation coefficient between the BDI and the EURO STOXX 50 Corporate Bond Index was -0.26 2015 17

FFA Futures: Volatility 2015 18

EEX Freight Futures & Options Pricing EEX is committed to being competitive on FFA trading fees. Temporary fee incentives from competitors are subject to change. EEX promises a permanent, low flat fee, in order to provide certainty to FFA traders in an uncertain market. Should you wish to provide liquidity to the EEX FFA Market, standard Market Support Agreements are available which can provide further benefit to your bottom line. FFA Contract EEX Futures & Options CTC 4 & 5 $4.00 PTC $4.00 Dry Timecharter STC $4.00 HTC $4.00 C3E (Tubarao Qingdao) $4.00 C4E (Richards Bay Rotterdam) Dry Voyage $4.00 C5E (W Australia Qingdao) $4.00 C7E (Bolivar Rotterdam) $4.00 P1A, P1E (Transatlantic RV) $4.00 Dry Trip P2A, P2E (Cont Trip Far East) $4.00 P3A, P3E (Trans Pacific RV) $4.00 2016 19

Initial Margin Comparison The ECC s valuation model for risk margining is executed on a daily basis. Therefore this can result in lower initial margins for our clients than otherwise available in the market. Daily valuation means that traders can be ensured the margin values reflect the current market risk. 2015 20

Full STP Ensures Instant Trade Registration Full STP at the ECC means trades are automatically confirmed and are never left in the clearing system overnight. This reduces trade processing risk and allows participants to view positions in real time*. OTC Trade Company A Trade Broker Trade Company B STP Channel Straight Through Processing Accept Company A Portfolio (Automatic) Confirmation by Company A Automatic Entry by Broker (Automatic) Confirmation by Company B Company B Portfolio Accept Clearing Member A Exchange Registration ECC Clearing Clearing Member B *please ask your KAM for available reporting options 2016 21

EEX Group Options Development The EEX Group has a proven track record in developing options markets through offering: Strategy rebates Clear and transparent margin calculations Onboarding specialist options brokers The FFA options market will benefit from EEX Groups expertise and successful track record in developing commodity option markets. 2015 22

MiFID and EMIR compliance of Trade Registration The trade registration facility provided by EEX according to the Trade Registration Rules qualifies as a regulated market according to the definition of Article 4(14) MiFID. With registration of trades in accordance with the Trade Registration Rules of EEX, these trades are executed on a regulated market within the meaning of MiFID which excludes them from the definition of OTC derivative according to Article 2(7) EMIR. Trades registered in accordance with the Trade Registration Rules of EEX do not qualify as OTC derivatives and do not need to be considered by so-called Non-Financial Institutions for calculation of the position to be held against the clearing threshold. Trades which qualify as derivative according to MiFID and were entered into OTC prior to their registration remain OTC derivatives until they are replaced by the new trades executed according to the Trade Registration Rules. After registration the new trade is not qualified as OTC Derivative in the sense of EMIR. 2015 23

Quickly Access Trading via your Clearing Bank and Preferred Broker 1 Set up Access to Trading via your Clearing Bank Choose a Clearing Bank partner of the ECC who is able to take up trades from the brokers You may already have a relationship with this bank No formal relationship with EEX or ECC required Start trading the moment your clearing account is open 2 Choose between leading Freight Brokers BRS Clarksons Freight Investor Services GFI ICAP SSY 2016 24

Broad range of Clearing Members available at EEX s clearing house * *available via third party clearing 2015 25

Iron Ore Market Overview

Introduction to the Iron Ore Market The iron ore market is dominated by Chinese imports with China importing nearly 70% of the total seaborne iron ore volume Total annual Chinese iron ore imports reached over a billion metric tonnes for the first time ever last year In the first four months of 2017, Chinese iron ore imports are 9 percent higher than for the same period in 2016 Growth in Chinese imports is expected to continue (in the short- to medium-term at least) as higher quality imports replace lower quality domestic supplies 2015 27

TSI Iron Ore 62% Fe Index The TSI Iron Ore 62% Fe index is issued daily by The Steel Index (TSI) It has become an industry benchmark since the collapse of the old annual fixed-price mechanism in 2010 It is based on spot market transaction data collected by TSI The index provides a reference price used by industrial companies and financial organisations around the world Swaps, futures and options contracts are traded against the TSI Iron Ore 62% Fe index Growth in traded volumes for iron ore derivatives has been very strong since market inception in 2010 (see next slide) 2015 28

TSI Iron Ore 62% Fe Derivatives Liquidity 2015 29

TSI Iron Ore 62% Fe Traded via CLTX (100% Subsidiary of EEX) EEX has held the majority of the shares in CLTX since January 2014 and 100% of the shares since April 2016 CLTX s market share of total swaps and futures volume has averaged 26% since 2013 The market share has been quite stable over time 2015 30

TSI Iron Ore 62% Fe Performance Iron ore prices are up by over 40% since the beginning of 2016 but have been on a downward trend for most of 2017 YTD Iron ore prices have been much more volatile than the majority of equity and fixed income indices in recent years Given its relatively low correlation with equity investments* and negative correlation with fixed income investments*, the iron ore offers diversification benefits when combined with a more traditional investment portfolio However, it is important that investors understand the unique risks associated with the iron ore market * For the 01/01/16 to 10/05/17 time period, the correlation coefficient between TSI Iron Ore 62% Fe and the EURO STOXX 50 Index was 0.72 and the correlation coefficient between TSI Iron Ore 62% Fe and the EURO STOXX 50 Corporate Bond Index was -0.42 2015 31

2016 Thank you for your attention. Thomas Schmitz Director Sales Cleartrade Exchange Head of Sales Global Commodities EEX Group tschmitz@cltx.com +65 6372 9557 +65 8809 7260 +44 7551 170 693