Financial report

Financial report 2017 www.deutsche-boerse.com

Deutsche Börse Group: an overview Deutsche Börse Group: key figures 2017 2016 Change in % Consolidated income statement Net revenue m 2,462.3 2,388.7 3 thereof net interest income from banking business m 132.6 84.0 58 Operating costs (excluding depreciation, amortisatisation and impairment losses) m 1,131.6 1,18 6.4 5 Earnings before interest, tax, depreciation and amortisation (EBITDA) m 1,528.5 1,239.2 23 Net profit for the period attributable to Deutsche Börse AG shareholders m 874.3 722.1 21 Earnings per share (basic) 4.68 3.87 21 Consolidated cash flow statement Cash flows from operating activities m 1,056.2 1,621.4 3 5 Consolidated balance sheet Non-current assets m 10,883.7 11,938.7 9 Equity m 4,959.4 4,623.2 7 Non-current interest-bearing liabilities m 1,688.4 1) 2,284.7 2 6 Performance indicators Dividend per share 2.45 2) 2.35 4 Dividend payout ratio % 53 3) 4) 54 3) 2 Employees (average annual FTEs) 5,183 4,731 10 Personnel expense ratio (staff costs / net revenue) % 26 25 4 EBITDA margin, based on net revenue % 62 52 19 Tax rate % 27.0 3) 27.0 0 Return on shareholders equity (annual average) 5 ) % 18 3) 19 3) 5 Gross debt / EBITDA 1.4 1.5 7 Interest coverage ratio % 32.7 25.3 29 Deutsche Börse shares Opening price 6 ) 77.54 81.39 5 High 7 ) 100.25 83.00 21 Low 7 ) 74.27 67.19 11 Closing price 96.80 77.54 25 Market indicators Xetra, Börse Frankfurt and Tradegate Trading volume (single-counted) bn 1,467.6 1,377.0 7 Eurex Number of contracts m 1,675.9 1,727.5 3 Clearstream Value of securities deposited (annual average) bn 13,465 13,075 3 Global Securities Financing (average outstanding volume for the period) bn 459.8 515.9 11 Transparency and stability key figures Proportion of companies reporting in accordance with maximum transparency standards 8) % 91 91 0 Number of calculated indices 12,422 11,975 4 Number of sustainable index concepts 117 100 17 Availability of cash market trading system 9) % 99.968 99.999 0 Availability of derivatives market trading system 9) % 99.967 99.962 0 Average monthly cleared volumes across all products 10) trillion 20.6 19.6 5 1) Bonds that will mature in the following year are reported under other current liabilities (2017: 599.8 million). 2) Proposal to the Annual General Meeting 2018 3) Adjusted for non-recurring effects; please refer to the consolidated financial statements for the respective financial year for adjustment details. 4) Amount based on the proposal to the Annual General Meeting 2018 5) Net profit for the period attributable to Deutsche Börse AG shareholders / average shareholders equity for the financial year based on the quarter-end balance of shareholders equity 6) Closing price on preceding trading day 7) Intraday price 8) Ratio of the market capitalisation of companies listed in the Prime Standard to the market capitalisation of all companies listed on the Frankfurter Wertpapierbörse (FWB, the Frankfurt Stock Exchange) 9) System availability ranks among the most important non-financial performance indicators (as defined in DRS 20 and section 289 (3) in conjunction with section 289 (1) sentence 3 of the HGB) for which a forecast is made. 10) Average monthly clearing volume, including exchange-traded and OTC derivatives, as well as securities and repo transactions. Clearing volumes are subject to double counting. Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Figures for the years 2008 to 2017 are available under www.deutsche-boerse.com / 2017-ten-year-review. C2

Deutsche Börse Group: an overview 1 Pre-IPO and listing 1 2 4 5 7 8 For start-ups, the crucial phase often comes when the business needs funding to drive growth. Deutsche Börse launched its Deutsche Börse Venture Network to help companies at this stage of their lives. The Group also invests in attractive fintech companies via DB1 Ventures. Large and medium-sized enterprises, both from within and outside Germany, can raise equity and debt capital by listing on the Frankfurt Stock Exchange. Our brands: Deutsche Börse, Börse Frankfurt, DB1 Ventures, Deutsche Börse Venture Network 3 6 9 2 Trading 1 Pre-IPO and listing 2 Trading 3 Clearing 4 Settlement 5 Custody 6 Collateral and liquidity management 7 Market data 8 Indices 9 Technology Deutsche Börse operates regulated markets for equities, exchange-traded funds (ETFs), bonds, certificates, options and many other products via the Xetra, Börse Frankfurt and Tradegate trading venues. Eurex is a trading platform for derivatives. The European Energy Exchange (EEX) group provides a market for energy and related products. 360T operates a trading platform for financial instruments such as currencies, money market products and interest rates. Our brands: Börse Frankfurt, Eurex, Eurex Repo, European Energy Exchange, Tradegate, Xetra, 360T 3 Clearing Deutsche Börse Group covers the entire value chain in securities, foreign-exchange and derivatives trading. Deutsche Börse Group is a diversified exchange operator whose products and services cover the entire value chain of financial markets. We have assigned these products and services to the following nine groups: Eurex Clearing AG, European Commodity Clearing AG and Nodal Clear, LLC Deutsche Börse Group s clearing houses minimise default risk by acting as partners for all buyers and sellers. This reduces our clients exposure and hence leverages financing and capital efficiencies. Deutsche Börse Group offers many efficient clearing options for all types of transactions. Our brands: Eurex Clearing, European Commodity Clearing, Nodal Clear C3

4 Settlement 7 Market data Settlement comes after trading and clearing, and ensures that the individual positions are recorded correctly and that cash is exchanged for securities. In addition, it ensures that the individual client securities accounts are credited. Clearstream, Deutsche Börse Group s post-trade services provider, is responsible for the efficient global settlement of securities transactions. Our brands: Clearstream, LuxCSD, REGIS-TR Institutional and private investors need timely and precise information to be successful on the markets. Deutsche Börse supports its customers with real-time data feeds and historical data from its trading systems. It also provides an innovative analytics and metrics portfolio based on big data analyses and machine learning. Our brand: Deutsche Börse 5 Custody 8 Indices Once they have been correctly settled, assets are held in custody. Clearstream manages them for the entire time they are held in custody and offers services, which include performing corporate actions and making dividend payments, for all types of securities. In addition, end-to- end reporting and ring-fencing of collateral that has been deposited allow market participants to meet their regulatory obligations efficiently. STOXX Ltd. is the operator of Deutsche Börse Group s index business and a global provider of index concepts. Its index families cover all countries, regions and sectors as well as all investment themes and strategies. The Group s blue-chip indices include the EURO STOXX 50 index and the DAX index, which track the performance of the 50 industry-leading companies in the eurozone and Germany s 30 largest companies respectively. Our brands: Clearstream, LuxCSD Our brands: DAX, STOXX 6 Collateral and liquidity management 9 Technology The Global Funding and Financing (GFF) business segment integrates Deutsche Börse Group s entire range of services for securities financing, cash funding and collateral management. This aligned service offering allows the Group to serve the growing needs of its clients in the areas of trading as well as risk and liquidity management as efficiently as possible. Our brands: Clearstream, Eurex Clearing, Eurex Repo Information technology is one of the main factors driving competitive advantage during the development and operation of our product portfolio. Deutsche Börse Group operates platforms along the entire capital market value chain, focusing on security, integrity, efficiency and innovation. Our brands: Deutsche Börse, 7 Market Technology : C7, F7, M7, N7, T7 C4

Financial report 2017 Contents C2 C3 Deutsche Börse Group: key figures Deutsche Börse Group: an overview 171 Consolidated financial statements / notes 2 2 6 7 8 17 Executive and Supervisory Boards Letter from the CEO The Executive Board The Supervisory Board Report of the Supervisory Board Combined management report 172 173 174 176 178 180 212 222 269 298 299 Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated cash flow statement Consolidated statement of changes in equity Basis of preparation Consolidated income statement disclosures Consolidated balance sheet disclosures Other disclosures Responsibility statement by the Executive Board Independent Auditor s Report 18 32 33 66 66 88 113 119 126 133 155 Fundamental information about the Group Deutsche Börse AG shares Report on economic position Report on post-balance sheet date events Combined non-financial statement Risk report Report on opportunities Report on expected developments Deutsche Börse AG (disclosures based on the HGB) Remuneration report Combined corporate governance statement and corporate governance report 307 308 314 C5 C6 C7 C8 Deutsche Börse Group worldwide Glossary Acknowledgements / contact Index of charts and tables About this report Facts and figures of Deutsche Börse AG shares Financial calendar

2 Deutsche Börse Group financial report 2017 Letter from the CEO Theodor Weimer Chief Executive Officer

Executive and Supervisory Boards Letter from the CEO Management report Financial statements Notes 3 Frankfurt / Main, 9 March 2018 Dear shareholders and readers, 2017 was not an easy year for Deutsche Börse Group. The merger attempt with the London Stock Exchange Group was unsuccessful. Subsequently, my predecessor Carsten Kengeter resigned as CEO. In November 2017, the Supervisory Board appointed me as his successor with effect from 1 January 2018. Before we turn to the future I d like to take stock of where we are now. And I d like to start by thanking you for standing by us in turbulent times. My thanks are also due to our employees, who have been unwavering in their efforts to drive forward our company s development. 2017 was also a year in which Deutsche Börse launched key projects. These activities benefit the European capital markets and hence you, our shareholders, as well. One of the projects I am talking about is the migration of Clearstream s settlement business to the ECB s new pan-eu settlement system, TARGET2-Securities. This has brought the European capital markets closer together. Another example is the introduction of our new T7 system for the cash market. The new technology has put the European capital markets on a state-of-the-art footing and has laid the foundations for further growth in trading volumes. The third area that springs to mind is the increased sales revenue generated by our investment fund and index services. Our core goal is to enhance capital market efficiency and transparency. Deutsche Börse Group s net revenue rose by 3 per cent to approximately 2.5 billion in the 2017 financial year. Our adjusted costs were around 1,040 million down slightly year-on-year. This led to earnings before interest, tax, depreciation and amortisation (EBITDA) of roughly 1,431 million a rise of more than 6 per cent. Adjusted net profit for the period attributable to shareholders of Deutsche Börse AG (consolidated net profit for the period) also increased by 6 per cent, to 857 million. Even more encouraging here is the major contribution made by structural growth elements, e.g. in our Clearstream business and with our new Eurex products. Regarding these structural drivers we hit our target of a 5 per cent rise in net revenue. This makes us optimistic for our future development. By contrast, we faced cyclical headwinds last year, especially in the area of Eurex index derivatives. Since market volatility hit an all-time low in 2017, participants hedging requirements were limited. As a result, we did not fully meet our growth targets of 5 to 10 per cent for net revenue and 10 to 15 per cent for earnings overall. Taken as a whole, though, we produced a highly respectable result given the market situation. Thanks to our broad-based business model, we can offset losses in certain areas with profits in others. Although we remain relatively dependent on developments in our market environment, we are working to steadily build a presence in business areas that are seeing structural growth. What s more, we can successfully handle large, complex projects such as our contribution to TARGET2-Securities. By doing so, we are making our company and Frankfurt as a financial centre fit for the future.

4 Deutsche Börse Group financial report 2017 As a result, we shall propose an increased shareholder dividend of 2.45 per share to the Annual General Meeting in May. This corresponds to 53 per cent of the adjusted consolidated net profit for the period. And it puts your share in our company s success in line with our guidelines, which provide for a distribution ratio of 40 to 60 per cent of consolidated net profit for the period. We ve also launched a share buy-back programme worth approximately 200 million. And we ve announced another one in the same amount. These are set to run until the end of March and the end of 2018, respectively. So where do we go from here? The appointment of a new CEO draws a line under a difficult 2017. I will do everything in my power to make 2018 the year for a fresh start. We can, we want to and we shall grow. That having been said, growth isn t an end in itself. We shall use the chance to build consensus-based relationships with our political and regulatory environment. After all, regulation is the third key driver for our business alongside technology and global market structures. Exchanges act as intermediaries between regulators and market participants. Our commitment to a Group-wide sustainability strategy is one aspect of this. Sustainability must become an automatic component of capital allocation. This is why we have signed up to the United Nations Global Compact. We support implementation of its principles in the areas of human rights, labour standards, the environment and anti-corruption. Deutsche Börse Group clearly expanded its sustainable finance activities in 2017. In May, we launched the Accelerating Sustainable Finance initiative together with key participants from Frankfurt s financial centre. We also established the Hub for Sustainable Finance Germany together with the Rat für Nachhaltige Entwicklung (Council for Sustainable Development). This will allow the financial sector to coordinate and further expand its sustainability activities at a national level. One of Deutsche Börse Group s strengths is its disciplined approach to implementing large projects. This is a critical success factor for the partnership that we ve agreed with more or less all of the world s key banks regarding the future of euroclearing. The foundations for action going forward will be laid here in 2018. We currently have a unique chance to establish a credible alternative location to London. Firstly, market participants have to protect themselves against a hard Brexit. And at the same time, they want to improve their risk diversification and no longer be dependent on a single provider.

Executive and Supervisory Boards Letter from the CEO Management report Financial statements Notes 5 I see a further growth opportunity in the data business. Those stock exchange organisations around the world that have caught up rapidly in recent years have grown, among other ways, by buying up data providers on a large scale. Acquisition-fuelled growth is a fundamental feature of our sector today. The reason is simple: running exchanges is a scale business. However, we need to be able to act from a position of strength in any mergers and acquisitions. Deutsche Börse enjoys very strong competitive advantages. In my opinion, we have a whole range of growth opportunities. We shall now focus on making better and faster use of them. And, on that note, I look forward to a long and mutually profitable relationship between you our shareholders and our company. Yours sincerely, Theodor Weimer Chief Executive Officer

6 Deutsche Börse Group financial report 2017 The Executive Board Theodor Weimer, * 1959 (since 1 January 2018) Dr. rer. pol. Wiesbaden Chief Executive Officer of Deutsche Börse AG Andreas Preuss, * 1956 Graduate degree in Business Administration (Diplom-Kaufmann) Frankfurt/Main Member of the Executive Board and Deputy Chief Executive Officer, Deutsche Börse AG, responsible for IT & Operations, Data & New Asset Classes Gregor Pottmeyer, * 1962 Graduate degree in Business Administration (Diplom-Kaufmann) Bad Homburg v.d. Höhe Member of the Executive Board and Chief Financial Officer, Deutsche Börse AG Former member of the Executive Board Hauke Stars, *1967 Engineering degree in applied computer science (Diplom-Ingenieurin Informatik), MSc by research in Engineering Königstein im Taunus Member of the Executive Board, Deutsche Börse AG, responsible for Cash Market, Pre-IPO & Growth Financing Jeffrey Tessler, *1954 MBA Luxembourg Member of the Executive Board, Deutsche Börse AG, responsible for Clients, Products & Core Markets Carsten Kengeter, * 1967 (until 31 December 2017) MSc Finance and Accounting BA Business Administration Graduate degree in Business Administration (Diplom-Betriebswirt, FH) Frankfurt/Main Chief Executive Officer of Deutsche Börse AG As at 31 December 2017 Executive Board (unless of Deutsche otherwise Börse stated) AG, from left to right: Jeffrey Tessler, Andreas Preuss, Hauke Stars, Carsten Kengeter, Gregor Pottmeyer

Executive and Supervisory Boards Management report Financial statements Notes The Executive and Supervisory Boards 7 The Supervisory Board Joachim Faber, * 1950 Chairman Independent Management Consultant, Grünwald Nationality: German Board member since 20 May 2009 Richard Berliand, * 1962 Deputy Chairman Independent Management Consultant, Lingfield, Surrey Nationality: British Board member since 7 October 2005 Ann-Kristin Achleitner, * 1966 Scientific Co-Director Center for Entrepreneurial and Financial Studies (CEFS) at the Technische Universität München (TUM), Munich Nationality: German Board member since 11 May 2016 Karl-Heinz Flöther, * 1952 Independent Management Consultant, Kronberg Nationality: German Board member since 16 May 2012 1) Employee representative Marion Fornoff, 1) * 1961 Staff member in the People Relations & Employee Engagement Germany, Switzerland, Czech Republic & USA section Deutsche Börse AG, Frankfurt/Main Nationality: German Board member since 16 May 2012 Hans-Peter Gabe, 1) * 1963 Staff member in the Performance & Compensation, People Analytics and Learning section Deutsche Börse AG, Frankfurt/Main Nationality: German Board member since 21 May 1997 Craig Heimark, * 1954 Managing Partner Hawthorne Group LLC, Palo Alto Nationality: US-American Board member since 7 October 2005 Monica Mächler, * 1956 Member of different supervisory bodies, Pfäffikon Nationality: Swiss Board member since 16 May 2012 Erhard Schipporeit, * 1949 Independent Management Consultant, Hanover Nationality: German Board member since 7 October 2005 Jutta Stuhlfauth, 1) * 1961 Lawyer, M.B.A. (Wales) Staff member in the Group Organisational Services department Deutsche Börse AG, Frankfurt/Main Nationality: German Board member since 16 May 2012 Johannes Witt, 1) * 1952 Former staff member in the Financial Accounting & Controlling department Deutsche Börse AG, Frankfurt/Main Nationality: German Board member since 21 May 1997 Amy Yip, *1951 Partner RAYS Capital Partners Limited, Hong Kong Nationality: Chinese (Hong Kong) Board member since 13 May 2015 As at 31 December 2017 (unless otherwise stated) Detailed information about the members of the Supervisory and Executive Boards, their additional appointments to super visory bodies of other companies or comparable control bodies, as well as their CVs can be found on the internet under: www.deutsche- boerse.com / supervboard www.deutsche-boerse.com / execboard

8 Deutsche Börse Group financial report 2017 Report of the Supervisory Board Joachim Faber Chairman of the Supervisory Board

Executive and Supervisory Boards Report of the Supervisory Board Management report Financial statements Notes 9 Deutsche Börse AG s Supervisory Board had three top priorities in 2017, which proved to be a demanding and challenging year. Firstly, we oversaw and advised the Executive Board regarding key decisions in connection with the planned merger with London Stock Exchange Group, which was ultimately prohibited, and with the investigation by the Public Prosecutor s Office against then Chief Executive Officer (CEO) Carsten Kengeter. Secondly, we monitored the continued development and implementation of Deutsche Börse Group s growth strategy. At the same time, we ensured that the Executive Board maintained the smooth running of day-to-day operations. Thirdly, we appointed Theodor Weimer as the new CEO after Carsten Kengeter s resignation, thus swiftly ensuring a strong transition. During the reporting period, we also discussed the company s position and prospects in depth, performing the tasks assigned to it by law and the company s Articles of Association and bylaws. We regularly advised the Executive Board on its management of the company and monitored its work, and were involved in all fundamental decisions. We held a total of 15 plenary meetings during 2017, including nine extraordinary meetings. In addition, one strategy workshop and two technology workshops took place. At our meetings, the Executive Board provided us with comprehensive and timely information in line with the legal requirements. The information covered the course of business as well as the company s and the Group s position (including the risk situation, risk management and compliance), as well as on the company s strategy and planning. We discussed all significant transactions for the enterprise in the plenary meetings and in the Supervisory Board committees, based on the reports provided by the Executive Board. The high frequency of both plenary and committee meetings ensured an active exchange of information between the Supervisory Board and the Executive Board. The Executive Board also submitted written reports on individual issues between meetings, and discussed individual topics with us. In addition, the CEO kept the Chairman of the Supervisory Board continuously informed of current developments affecting the company s business, significant transactions and upcoming decisions, as well as of the longterm outlook, and discussed these issues with him. The Executive Board submitted all measures requiring Supervisory Board approval in accordance with the law, the company s Articles of Association or bylaws to the Supervisory Board, and the Supervisory Board approved these measures. The Supervisory Board also satisfied itself in other respects that the Executive Board s actions were lawful, due and proper, and appropriate. All members of the Supervisory Board attended more than half of the meetings of the Supervisory Board and of the committees of which they were members during 2017. The average attendance rate for all Supervisory Board members was 97 per cent during the year under review.

10 Deutsche Börse Group financial report 2017 The Supervisory Board members detailed attendance record was as follows: Attendance of Supervisory Board members at meetings in 2017 Meetings (incl. committees) 1) Meeting attendance % Joachim Faber 29 29 100 Richard Berliand 27 26 96 Ann-Kristin Achleitner 29 29 100 Karl-Heinz Flöther 25 23 92 Marion Fornoff 22 20 91 Hans-Peter Gabe 18 18 100 Craig Heimark 19 19 100 Monica Mächler 26 26 100 Erhard Schipporeit 26 26 100 Jutta Stuhlfauth 23 19 83 Johannes Witt 25 25 100 Amy Yip 29 28 97 Average attendance rate 97 1) Since attendance at workshops is voluntary for Supervisory Board members, such workshops are not taken into account when calculating the average attendance rate. Topics addressed during plenary meetings of the Supervisory Board During the reporting period, we discussed the further strategic orientation of Deutsche Börse Group in detail. The planned merger with London Stock Exchange Group plc (LSEG), which ultimately could not be realised, played a major role in our discussions. Furthermore, we gave in-depth attention to the investigation of the Public Prosecutor s Office in Frankfurt/Main concerning the actions of then CEO Carsten Kengeter, which alleges insider trading and failure to release an ad-hoc announcement. The decision on whether or not to approve the Executive Board s decision to accept a prospective fine from the Public Prosecutor, thereby potentially ending the proceedings, was among the most difficult we had to make. We decided to approve this decision after intense discussion and thorough deliberation of the benefits and drawbacks for the company s wellbeing. Furthermore, a main focus of the Supervisory Board s activities during 2017 was placed on overseeing the implementation of the growth strategy. Numerous major projects were completed, new ones pushed ahead and acquisition projects continued. Another key focal point was the efficiency, appropriateness and effectiveness of internal control systems. We also dealt with the fundamental changes resulting from financial markets regulation and focused on digitisation, artificial intelligence, blockchain and big data. We also had in-depth discussions on succession planning for the Supervisory and Executive Boards. By appointing Theodor Weimer as the company s new CEO, we ensured an orderly change of leadership. In addition, the Executive Board regularly informed us about Deutsche Börse AG s share price performance, and those of its competitors. The Executive Board also reported on the business performance, financial position and results of operations of Deutsche Börse AG, its affiliated companies and Deutsche Börse Group as a whole. Our plenary meetings focused in particular on the following issues during the reporting period:

Executive and Supervisory Boards Report of the Supervisory Board Management report Financial statements Notes 11 At our first extraordinary meeting during the reporting period, on 6 February 2017, we discussed the status quo of EU antitrust proceedings related to the potential merger between Deutsche Börse AG and LSEG. We also concerned ourselves, in detail, with the investigations launched by the Public Prosecutor s Office in Frankfurt/Main against Carsten Kengeter. After extensive discussions with external experts and analysis of the unfolding of events in 2015 we expressed our full confidence in Mr Kengeter based on the information available at that time. We resolved to entrust an independent legal firm with advising the Supervisory Board in this matter. At our regular meeting on 15 February 2017, we addressed in detail the preliminary results for the 2016 financial year, and the dividend proposed by the Executive Board for that year. We also resolved the amount of the variable remuneration payable to the Executive Board for the 2016 financial year, following a detailed examination. The Executive Board presented possible remedies as well as its strategy for obtaining regulatory approval for the intended merger with LSEG, which we approved by way of resolution. We concerned ourselves, in detail, with the prevailing facts and legal situation regarding the investigation concerning Carsten Kengeter. We also adopted the corporate governance report and the corporate governance declaration for the 2016 financial year, and resolved measures to further enhance the efficiency of the Supervisory Board s work. At the extraordinary meeting on 21 February 2017, we once again discussed the status of EU antitrust proceedings related to the potential merger with LSEG. The Executive Board informed us about potential additional remedies, and concerning its strategy for dealing with the European Commission s antitrust concerns regarding the project. At the extraordinary meeting on 27 February 2017, the Executive Board reported on the decision by LSEG not to agree to the disposal of its majority stake in MTS S.p.A., as required by the European Commission. Our technology workshop on 10 March 2017 focused on the topic of digitisation, as well as resulting prospects for Deutsche Börse Group. At the regular meeting on 10 March 2017, we discussed the company s financial statements as well as the consolidated financial statements for 2016 and the remuneration report, in the presence of the external auditors. We approved the 2016 financial statements and consolidated financial statements, having carried out our own detailed examination, in line with the recommendation by the Audit Committee, which had already examined the documents in depth, in preparation for our meeting. We also adopted the report of the Supervisory Board for 2016, as well as the agenda for the 2017 Annual General Meeting. We once again discussed, in detail, the impending decision by the European Commission on the possibility of the intended merger with LSEG being approved. We discussed succession planning for the Executive Board, and the company s top management level. We also resolved to renew Gregor Pottmeyer s appointment as a member of Deutsche Börse AG s Executive Board, effective 1 October 2017, for a period of five years. With the support of our external legal advisors, we also concerned ourselves in detail with the prevailing facts and legal situation regarding the investigation concerning Carsten Kengeter. At the strategy workshop on 26 April 2017, the Executive Board provided us with a detailed status report regarding the implementation of the growth strategy. We also concerned ourselves with major industry trends, relevant political developments, the Group s competitive position, as well as with organic and inorganic growth opportunities. During the regular meeting held immediately prior to the Annual General Meeting (AGM) on 17 May 2017, we discussed the AGM with the Executive Board.

12 Deutsche Börse Group financial report 2017 At the extraordinary meeting on 24 May 2017, we once again discussed the investigation by the public prosecutor; the Executive Board gave a detailed account of the factual and legal situation, and on expected further steps. We discussed these, as well as the rights and obligations of the Supervisory Board in connection with this matter, in detail and with the support of our external legal advisors. At our regular meeting on 21 June 2017, we concerned ourselves with Deutsche Börse Group s risk management, information security, and the internal control and audit systems. We also discussed, in detail, the strategy of Eurex Clearing AG, Deutsche Börse Group s central counterparty, concerning exchange-traded and OTC derivatives, the reorganisation of information technology, and the company s client management strategy. We resolved on minimum targets for the share of female executives on the company s Executive Board and Supervisory Board. With the support of our external legal advisors, we once again discussed the investigation concerning Carsten Kengeter, in detail. All members of the Supervisory Board had the opportunity, on 26 July 2017 and 22 August 2017, to discuss questions concerning the factual and legal situation concerning the investigation with the Supervisory Board s legal advisors comprehensively and in detail. At our extraordinary meeting on 29 August 2017, we discussed an inorganic growth opportunity in the area of market data, indices and analytics. At the extraordinary meeting on 7 September 2017, we dealt with the report submitted by the Executive Board on the Group s control and risk functions. In particular, we discussed the results provided by an independent external auditor concerning compliance with the requirements of the EU Market Abuse Regulation, within the scope of internal processes. Once again, we discussed the prevailing facts and legal situation regarding the investigation concerning Carsten Kengeter, in detail. At the extraordinary meeting on 13 September 2017, the Executive Board reported on its intention, in connection with the investigation, to accept the prospective penalty notice as indicated by the prosecutor s office. Following a detailed discussion with the Executive Board, and with the legal advisors of the company and of the Supervisory Board, and having examined and considered the prevailing facts and legal situation in detail, we approved the Executive Board s resolution. Our technology workshop on 21 September 2017 focused on the topic of artificial intelligence, its impact on the Group s business activities, and the scope for specific practical applications. At the regular meeting on 21 September 2017, the Executive Board informed us about material developments and measures in the area of compliance. We concerned ourselves with Deutsche Börse Group s regulatory strategy, to support the growth strategy. We discussed the CSR-Richtlinien-Umsetzungsgesetz (German Act to Implement the EU CSR Directive), and passed a resolution on appointing the external auditors for the combined non-financial statement for the 2017 financial year. We also resolved to amend the remuneration system for members of the Executive Board specifically, a cap on annual payouts of 9.5 million gross, comprising fixed remuneration, variable remuneration, and company pensions. Following extensive discussion, we resolved measures relevant to the Supervisory Board concerning implementation of corporate governance requirements in the context of MiFID II. We also discussed succession planning for the Executive Board. At the extraordinary meeting on 26 October 2017, Carsten Kengeter informed us about his decision to step down as CEO of Deutsche Börse AG, with effect from 31 December 2017. His objective was to allow the company to re-focus its energy on its customers, its business and growth and to see it relieved of the burden placed on it by the ongoing investigations. We unanimously accepted Carsten Kengeter s request with deep regret and thanked him for having re-positioned the company and for having led it through the transformation.

Executive and Supervisory Boards Report of the Supervisory Board Management report Financial statements Notes 13 At the extraordinary meeting on 16 November 2017, we appointed Theodor Weimer as CEO of Deutsche Börse AG, with effect from 1 January 2018, for a period of three years. We also re-appointed Andreas Preuss as a member of the Executive Board and Deputy CEO, effective 1 June 2018, and re-appointed Jeffrey Tessler as a member of the Executive Board, effective 1 January 2018; both reappointments were made for a period of one year. Furthermore, we resolved amendment agreements and updated plan conditions with the members of the Executive Board, to implement adjustments to the remuneration system for the Executive Board. We discussed and adopted the budget for 2018 at the regular meeting on 5 December 2017. Moreover, we discussed Deutsche Börse Group s risk management, as well as the development of the Group s investments. We adopted further measures to implement the corporate governance requirements under MiFID II. We discussed the results of our examination of appropriateness of Executive Board remuneration, and of our annual efficiency review in accordance with section 5.6 of the Deutscher Corporate Governance Kodex (German Corporate Governance Code). Furthermore, we adopted the declaration of conformity pursuant to section 161 of the Aktiengesetz (AktG, German Stock Corporation Act) for the 2017 financial year. The declaration of conformity is available at www.deutsche-boerse.com/declconformity. Committee work The Supervisory Board maintained six committees during the reporting period. The committees are primarily responsible for preparing the decisions to be taken by, and topics to be discussed in, the plenary meetings. Additionally, the Supervisory Board has delegated individual decision-making powers to the committees, to the extent that this is legally permissible. The individual committee chairs report in detail to the plenary meetings on the work performed by their committees. The Chairman of the Supervisory Board chairs the Personnel Committee (or the Nomination Committee) and the Strategy Committee. Details on the members and duties of the Supervisory Board committees during the reporting period can be found in the Combined corporate governance statement and corporate governance report section. The committees focused on the following key issues: Audit Committee (six meetings during the reporting period) Financial issues, especially capital management and tax items Accounting: examination, in the presence of the external auditors, of the annual financial statements of Deutsche Börse AG and of the consolidated financial statements, of the combined management report and the audit report, as well as of the half-yearly financial report and the quarterly statements External auditors: obtaining the statement of independence from the external auditors, issuing the engagement letter to the external auditors and preparing the Supervisory Board s proposal to the Annual General Meeting on the election of the external auditors; agreeing the external auditors fee and defining the focal areas of the audit; discussing non-audit services rendered by the external auditors, assignment of the external auditor to conduct an audit of the combined non-financial statement Internal control systems: discussion of questions relating to risk management, compliance and the internal control and audit system, discussion of the methods and systems used and their efficiency, adequacy and effectiveness Deutsche Börse AG s dividend and the Group s budget Discussion and formal adoption of the Audit Committee s tasks Preparation of the Supervisory Board s resolution on the corporate governance report and the remuneration report as well as on the corporate governance statement in accordance with section 289f of the Handelsgesetzbuch (HGB, German Commercial Code) and the declaration of conformity in accordance with section 161 of the AktG Measures to close audit findings Deutsche Börse Group s investments

14 Deutsche Börse Group financial report 2017 Nomination Committee (three meetings during the reporting period) Preparations for the election of shareholder representatives by the 2018 Annual General Meeting Personnel Committee (seven meetings during the reporting period) Executive Board remuneration: discussion of the extent to which the members of the Executive Board had achieved their targets; determination of the variable remuneration for Executive Board members for 2016; preliminary discussion of the extent to which individual members of the Executive Board have achieved their targets for 2017; adoption of the individual targets for the members of the Executive Board for 2018; discussion of the remuneration report; preparation of recommendations to the plenary meeting to amend the procedure for paying out the 2015 tranche of the variable share-based payment and the 2016 tranche of the Performance Bonus Plan for Executive Board members; preparation of a recommendation to the plenary meeting to adjust the remuneration system for Executive Board members specifically, introduction of a cap; review of the appropriateness of Executive Board remuneration, and of members pensionable income Personnel matters: discussion of succession planning for the Executive Board; discussion and selection of candidates; preparation of a recommendation to the plenary meeting for the re-appointment of Gregor Pottmeyer, Andreas Preuss and Jeffrey Tessler as members of the Executive Board, and of Andreas Preuss as Deputy CEO; preparation of a recommendation to the plenary meeting for the appointment of Theodor Weimer as a member of the Executive Board, and his appointment as CEO of Deutsche Börse AG Risk Committee (five meetings during the reporting period, including one joint meeting with the Technology Committee) Quarterly compliance and risk management reports Ongoing enhancements to Group-wide compliance and risk management, and of harmonising internal control systems Deutsche Börse Group s risk strategy and risk culture Operational risk, information security, and business continuity management Managing credit and product-specific risks New regulatory requirements, especially under MiFID II/MiFIR and the Central Securities Depository Regulation (CSDR) Strategy Committee (three meetings during the reporting period) Deutsche Börse Group s strategic orientation, and the status of implementing the growth strategy in the various business areas Strategic discussion of major industry trends, relevant political developments, the Group s competitive position, as well as organic and inorganic growth opportunities (the latter especially in the areas of market data, indices and analytics) Cost and capital management Technology Committee (four meetings during the reporting period, including one joint meeting with the Risk Committee) Developments to, and implementation of Deutsche Börse Group s IT strategy Digitisation, and implementation of associated changes to the organisational structure and enterprise processes Cloud computing, cloud migration strategies, and relevant cloud security standards Information security, IT risk management, and quantification of cyber risk

Executive and Supervisory Boards Report of the Supervisory Board Management report Financial statements Notes 15 Audit of the annual and consolidated financial statements KPMG AG Wirtschaftsprüfungsgesellschaft, domiciled in Berlin, (KPMG) audited the annual financial statements of Deutsche Börse AG, the consolidated financial statements and the combined management report including the combined non-financial statement for the financial year ended 31 December 2017, together with the accounting system, and issued an unqualified audit opinion. The condensed financial statements and interim management report contained in the half-yearly financial report for the first six months of 2017 were reviewed by KPMG. The documents relating to the financial statements and the reports by KPMG were submitted to us for inspection and examination in good time. The lead auditors, Andreas Dielehner (Partner, KPMG) and Thomas Hommel (Senior Manager, KPMG), attended the relevant meetings of the Audit Committee and the plenary meeting of the Supervisory Board convened to approve the financial statements. The auditors reported on the key results of the audit; in particular, they focused on the net assets, financial position and results of operations of the company and Group, and were available to provide supplementary information. The auditors also reported that no significant weaknesses in the control and risk management systems had been found, in particular with respect to the financial reporting process. The audit of compliance with all relevant statutory provisions and regulatory requirements did not give rise to any objections. KPMG provided information on other services that it had rendered in addition to its audit services. There were no grounds for suspecting that the auditors independence might be impaired. The Audit Committee discussed the financial statement documents and the reports by KPMG in detail with the auditors and examined them carefully itself. It is satisfied that the reports meet the statutory requirements under sections 317 and 321 of the HGB in particular. The committee reported to the Supervisory Board on its examination and recommended that it approve the annual financial statements and consolidated financial statements. Our own examination of the annual financial statements, the consolidated financial statements and the combined management report including the combined non-financial statement for 2017 in a plenary meeting did not lead to any objections and we concurred with the results of the audit performed by the auditor. We approved the annual financial statements prepared by the Executive Board and the consolidated financial statements at our meeting on 9 March 2018, in line with the Audit Committee s recommendation. As a result, the annual financial statements of Deutsche Börse AG have been adopted. The Audit Committee discussed the Executive Board s proposal for the appropriation of the unappropriated surplus (Bilanzgewinn) in detail with the Executive Board, with particular reference to the company s liquidity and financial planning, and taking shareholders interests into account. Following this discussion and its own examination, the Audit Committee concurred with the Executive Board s proposal for the appropriation of the unappropriated surplus. After examining this ourselves, the plenary meeting of the Supervisory Board also approved the Executive Board s proposal.

16 Deutsche Börse Group financial report 2017 Personnel matters We resolved the following in respect of the Executive Board during 2017: We accepted the request of Carsten Kengeter to step down as CEO of Deutsche Börse AG, with effect from 31 December 2017, with deep regret. The Supervisory Board would like to unanimously thank Mr Kengeter, who took key strategic decisions for the company in challenging times, and who strengthened the company s competitiveness. We appointed Theodor Weimer as a member of the Executive Board, for a term of office of three years, and as CEO, with effect from 1 January 2018, thereby achieving a seamless transition at the top of the company. We re-appointed Gregor Pottmeyer as a member of the Executive Board, effective 1 October 2017, for a period of five years. We also resolved to renew the appointment of Deputy CEO Andreas Preuss, effective 1 June 2018, and of Jeffrey Tessler, effective 1 January 2018, for one year in each case. We have thus succeeded in safeguarding the necessary continuity in the work of the Executive Board. There were no personnel changes to the Supervisory Board during the reporting period. Management of individual conflicts of interest No conflicts of interest arose with regard to individual Supervisory Board members during the reporting period. The Supervisory Board would like to thank the Executive Board and all employees for their strong commitment and excellent achievements in 2017. Frankfurt/Main, 9 March 2018 For the Supervisory Board: Joachim Faber Chairman of the Supervisory Board

Executive and Supervisory Boards Management report Governance Financial statements Notes Combined management report 18 18 32 22 25 33 27 28 66 32 33 66 33 88 35 41 42 56 61 63 113 119 126 66 133 155 66 67 76 79 83 85 87 Fundamental information about the Group Overview of Deutsche Börse Group Objectives Deutsche and Börse strategies AG shares Internal management Research and development activities Takeover-related disclosures Report on economic position Report on post-balance Deutsche sheet date Börse events AG shares Report Combined on economic non-financial position statement Macroeconomic and sector-specific environment Risk report Regulatory environment Business Report on developments opportunities Results of operations Financial position Net assets Overall assessment of the economic position Deutsche by the Börse Executive AG Board Report on expected developments (disclosures based on the HGB) 126 Report on post-balance sheet Remuneration date events report 133 Combined corporate non-financial governance statement statement and corporate governance report 155 Employees Compliance including combat against corruption and bribery Social matters Product matters Respect for human rights in the supply chain Comparison with the forecast for 2017 88 89 92 95 112 113 113 114 119 119 119 120 124 125 126 Risk report Risk strategy and risk management Approaches and methods for risk monitoring Risk description Overall assessment of the risk situation by the Executive Board Report on opportunities Organisation of opportunities management Organic growth opportunities External growth opportunities Report on expected developments Developments in the operating environment Future development of results of operations Trends in non-financial performance indicators Future development of the Group s financial position Overall assessment by the Executive Board Deutsche Börse AG (disclosures based on the HGB) Remuneration report Combined corporate governance statement and corporate governance report

18 Deutsche Börse Group financial report 2017 Combined management report This combined management report covers both Deutsche Börse Group and Deutsche Börse AG and includes the combined non-financial statement according to the CSR directive. It follows the requirements in accordance with the Handelsgesetzbuch (HGB, German Commercial Code), the Deutscher Rechnungslegungs Standard Nr. 20 (DRS 20, German Accounting Standard No. 20) and the Deutscher Rechnungslegungs Änderungsstandard Nr. 8 (DRÄS 8, German Amendment Accounting Standard No. 8). This management report also takes into account the requirements of the Practice Statement Management Commentary issued by the International Accounting Standards Board (IASB). Fundamental information about the Group Overview of Deutsche Börse Group Business operations and Group structure Deutsche Börse AG, which is headquartered in Frankfurt/Main, Germany, is the parent company of Deutsche Börse Group. As at 31 December 2017, the Group employed 5,640 people at 39 locations in 29 countries. As one of the largest market infrastructure providers worldwide, Deutsche Börse Group offers its customers a wide range of products and services. These cover the entire financial market transactions value chain from trading through transaction clearing and settlement, securities custody, services for liquidity and collateral management, and the provision of market information, down to the development and operation of IT systems that support all these processes. Deutsche Börse AG operates the cash market at Frankfurter Wertpapierbörse (FWB, the Frankfurt Stock Exchange) with its fully electronic trading venue Xetra. It also offers trading in structured products (certificates and warrants) in Germany via Börse Frankfurt Zertifikate AG. In addition, Deutsche Börse AG operates the Eurex Exchange derivatives market via Eurex Frankfurt AG. Commodities spot and derivatives markets are operated by the Group s indirect subsidiary European Energy Exchange AG (EEX). Deutsche Börse AG operates a foreign-exchange trading platform via its subsidiary 360 Treasury Systems AG (360T). The Group also offers clearing services for the cash and derivatives markets (Eurex Clearing AG). Furthermore, Deutsche Börse sells price and reference data as well as other trading information; its STOXX Ltd. subsidiary develops and sells indices. All post-trade services that Deutsche Börse Group provides for securities are handled by Clearstream Holding AG and its subsidiaries (Clearstream Holding group). These include transaction settlement, the administration and custody of securities, as well as services for global securities financing and investment funds. Deutsche Börse AG and Clearstream Services S.A. develop and operate Deutsche Börse Group s technological infrastructure.