2010 Financial Report

Download the Newedge 2010 Financial Report

2010 marked an important year in the ongoing profitability and development of Newedge. Our success was rooted in our ability to capitalize on our existing leadership position and our ability as a firm to adapt to changing global dynamics. The resilience of the established Newedge business model – highlighted by our independent structure and agency broker approach – and our 3,000 professionals continued to help us remain profitable in the midst of fluctuating markets, near-zero interest rate environments, and regulatory changes. At the same time, the evolution of our organizational structure and corporate governance further improved our operational efficiency and risk profile, as well as the value we provide to our clients.

Increased Profitability

In 2010, Newedge generated net banking income of EUR 984 million, gross operating income of EUR 150 million, and net income of EUR 103 million. We continued to command a strong market share in listed derivatives,growing our volumes more rapidly than the market as a whole and posting 12.6% execution and 11.6% clearing market share on the world’s leading listed derivatives exchanges. Additionally, Newedge Prime Brokerage received several global awards and the No. 1 ranking in European sole mandates for Macro, Fixed Income and Futures fund strategies.

Given the challenging business environment, particularly with regard to interest rates, we achieved our profitability in part through better manage- ment of our costs, conducting a compensation reform, and an emphasis on client cross-selling.

Enhanced Governance and Business Model

The Newedge Board of Directors announced a significant change in our corporate governance during 2010, establishing the Chairman of the Board function as a full-time, independent position and naming Duncan Goldie- Morrison to that role. Additionally, the Board established two Vice Chairman positions, with representation from both Socie´te´ Ge´ne´rale and Cre´dit Agricole CIB.

At the same time as the Chairmanship change, was appointed CEO of Newedge Group from my previous role as Newedge’s Global Head of Sales and Front Office.

From a company perspective, Newedge successfully transformed into a global Business Lines organization during 2010. The Business Lines have been established as: Financial Futures & Options (FF&O) and Equities Execution; Clearing Sales & Professional Trading Groups (PTG); Fixed Income, Currencies and Commodities (FICC); and Prime Brokerage. Each Business Line contributed at least 20% to the firm’s net banking income in 2010.

Looking to the Future

Our priorities are two-fold: › We will continue to strengthen Newedge’s risk management framework.

In 2011, we will complete our three-year investment plan in risk systems while continuing to prioritize our internal controls and the diffusion of our compliance culture. We believe our ability to operate in a consistent manner, safely and efficiently, across large-scale, sophisticated business flows will represent a sustainable competitive advantage for Newedge.

› We will enhance our client-centric approach, offering first-in-class service to both our traditional clients and new market participants. We will continue to invest in our high frequency trading and risk monitoring infrastructure. We are planning to expand our coverage of frontier markets, while closely watching regulatory developments that could represent opportunities in the OTC swaps activities. Additionally, we will continue hiring talented front office personnel, with an emphasis on the Americas region.

As with any firm, our success is in part driven by the overall global economic recovery as well as the evolution of regulatory mandates. We have built Newedge to achieve success despite complex environments such as those we face today. Our business model and teams give us an advantage that has helped us achieve ongoing profitability and strong client relationships. Our customers will also be at the center of Newedge as we take on the challenges of tomorrow.

In summary, am pleased with our 2010 results given the headwinds we faced. am also confident that we are well positioned and well prepared to create tangible value for our clients and shareholders in 2011 and beyond.

Nicolas Breteau
CEO Newedge Group