Euronext 2004

Following the successful connection of Lisbon to NSC (Euronext's cash trading platform)
in late 2003 and the introduction of a single order book for all Euronext cash markets, 2004 was the first year in which the company and its users fully benefited from the integrated pool of liquidity linking the Amsterdam, Brussels, Lisbon and Paris exchanges. A harmonized fee structure introduced in January 2004 completed this unified landscape.

In 2004, the Cash and Listing SBU primarily worked on bringing its marketing and sales activities into line with its now cohesive infrastructure, to help Euronext deliver on its promise of a genuinely integrated pan-European exchange. The results prove that Euronext's business model provides the following benefits for both trading and listing activities:
• Innovation, particularly in the area of new products and services, the opening of two non-regulated markets and with the upcoming launch of Alternext;
• Further harmonization, with the launch of Eurolist by Euronext, which will provide a harmonized market structure across Euronext's regulated markets at all four locations;
• Technological edge, with an advanced trading platform and an extensive client network.

Introduction
Euronext's Cash and Listing SBU focuses on providing listing and trading facilities for cash instruments (equities, bonds, structured products such as warrants and certificates, and investment products such as exchange traded funds/trackers and investment funds). With regard to listing, Euronext aims to provide open access to all parties wishing to raise capital in Europe (primary market). In the area of trading (secondary market), Euronext operates fair, transparent, order-driven markets. Euronext's core purpose with regard to the secondary market is to ensure that NSC provides the highest level of processing efficiency. This integrated electronic trading platform has boosted liquidity on Euronext's markets and has facilitated the implementation of harmonized fee structures and a single rule book, benefiting users.

3.2.1.1 Listing
Euronext generates listing revenues from admitting securities to listing. Admission fees are paid when a company first issues shares or other financial instruments on one of Euronext's regulated markets (IPO) or issues additional shares. Issuers pay annual fees for their securities to continue to be listed on Euronext's markets.
The harmonization of the cash markets' rule book was completed in February 2005. Today, companies applying for admission to listing at Euronext follow the same listing rules regardless of the point of entry to the market they have chosen (Amsterdam, Brussels, Lisbon or Paris). Once admitted by the relevant regulatory authorities, the company is then included in the appropriate Euronext segment, and it selects a method of trading appropriate to the level of liquidity in its shares.

Business overview
A total of 52 new companies were listed on Euronext in 2004. Euronext handled a number of major IPOs, such as Autoroutes Paris-Rhin-Rhône (SAPRR), Pages Jaunes, Snecma and Belgacom, which was the biggest IPO in Europe, raising €3,590 million. A number of important public offers took place, including Sanofi Aventis.
As at 31 December 2004, 1,333 companies were listed on Euronext 999 of which were domestic, and 334 foreign.

Listing organization and development
Once a security has been admitted to listing, Euronext
handles all the corporate events related to the security and produces notices for the market. Corporate events include the issue of new securities giving direct or indirect rights to capital, public offers, exchange and squeeze-out offers, and trading suspensions that can occur when important information that could have a significant impact on the issuer's share price is about to be published. Euronext provides services for issuers and investors and promotes its markets via various workshops, events and other market initiatives, and through partnerships and sponsoring.
Euronext's list comprises all companies listed in Belgium, France, the Netherlands and Portugal. Inclusion on Euronext's list does not entail any regulatory requirements on top of those imposed by the local regulators.

The structure of Euronext's list is based on four factors.
Indices
Euronext's indices are based on a range of factors, including market capitalization, economic sector and market segment. A new range of indices for small and midcaps, weighted by free float, will be launched in 2005. The indices are compiled by the Group and are marketed by its subsidiary Euronext Indices B.V
(see section 3.2.3).

Liquidity
Liquidity has a bearing on the trading method
used (continuous trading or auctions). The most liquid securities are traded continuously during market sessions. Less liquid securities can be traded continuously with the aid of a liquidity provider, or exclusively in auctions. Liquidity providers (LPs) are traders that act on their own behalf and have undertaken, with the approval of the relevant market operator, to improve liquidity in a particular security. It is quite simple for an issuer to change the trading method used for its securities. Continuous trading can be arranged by appointing a liquidity provider to support trading in its security.

Inclusion in NextEconomy and NextPrime segments
These segments offer listed companies the possibility of increasing their visibility, regardless of their size. NextPrime represents traditional economic sectors, and NextEconomy new technology. Companies included in these segments are subject to additional obligations with respect to disclosure, transparency and liquidity, in line with European and international standards.

Sector classification
Every company listed on Euronext is assigned to a sector based on the FTSE classification system, which is an international system that places issuers with similar activities in the same sectors. Euronext is currently adopting the new FTSE-Dow Jones classification standard, the International Classification Benchmark (ICB) which covers over 50,000 companies around the world.

Recent developments and outlook
• There are positive signals that the IPO recovery begun last year will continue in 2005. Euronext should benefit from large privatizations, mainly in France and Portugal (such as EDF, GDF, Areva, SANEF, ADP and Transgas).

• Euronext is committed to achieving international growth, developing its international listing activities and becoming Europe's leading listing venue. The geographic areas it is specifically targeting in this respect are Eastern Europe, China and India. Euronext also intends to market its listing services in a more aggressive, commercial manner with the aim of increasing listing revenues.

• New non-regulated markets and Alternext
Responding to the new regulatory environment (Markets in Financial Instruments Directive - MiFID), Euronext opened two non-regulated markets in 2004: the Marché Libre in Brussels for companies aiming to raise capital with a minimum of constraints, and Mercados Estruturados in Lisbon, especially for issuers of structured products requiring fast-track listing.

Euronext also announced the launch of Alternext, a new, structured, organized market that is unregulated according to the directive. This market will help Euronext offer to companies that want to raise capital in the euro-zone simplified market access in exchange for a commitment to financial transparency and investor protection.

Special status for small and midcap experts
To highlight the expertise of brokers active in the small and midcap segments of the market, Euronext has created small and midcap expert (SME) status for intermediaries that set up teams dedicated to researching, marketing and selling of listed small and midcap equities. Moreover, Euronext will provide suitable support with a dedicated marketing programme.
To obtain SME status, intermediaries must undertake to provide promotional support and regular financial analyses for 60 small and midcap equities, including 20 with market capitalizations under €150 million and 10 with fewer than 2,500 trades a year. Launched first in Euronext Paris on 21 February 2005, this status will be extended to all Euronext cash markets in the course of the second quarter 2005.

Eurolist by Euronext

In order to simplifiy its market segmentation and further enhance the visibility of listed companies, Euronext took another step towards the harmonization of its markets at the beginning of 2005 with the introduction of Eurolist by Euronext. The shares listed on each market were transferred to a single list, placed in alphabetical order, and assigned a capitalization indicator.
At Euronext Paris, companies listed on the Premier, Second and Nouveau Marché were transferred to the new list on 21 February 2005 and assigned the indicator A, B or C, identifying companies with capitalizations of over €1 billion, between €150 million and €1 billion, and below €150 million, respectively.
Companies listed on the regulated markets of Amsterdam, Brussels and Lisbon are scheduled to switch on 4 April 2005.

From 2002 to 2004, the share of trading on each Euronext marketplace originating from members not located in the corresponding country (cross-border trading) increased from 9% to 20%

Membership overview: more connections
Connections to the cash trading platform increased, thanks to thirteen new members located in six European countries. At the end of 2004, a total of 284 members were connected to Euronext's cash markets.
A total of 440 permits(1) for cash trading access were provided to 208 active members in fourteen countries around Europe. Besides members from Euronext countries, the majority of members were located in the UK and Germany.

(1) Trading access = membership access to the four Euronext markets: 141 in Paris, 154 in Amsterdam, 104 in Brussels, 41 in Lisbon, making a total of 284 members (active and non active). The new permits for cash trading access registered in 2004 relate to 13 new members which joined the markets.

Product innovation: Euronext extends its product range and launches new services
Six new trackers were listed on the Euronext markets in 2004. Euronext was the first European exchange to offer trackers based on government bond real-time indices (EMTX) and real estate products (EPRA). It extended its trackers segment with a corporate bond tracker (Iboxx) and an SP500 tracker. A total of 51 trackers are listed on Euronext (almost 50% of the European total), representing assets under management of around
€22 billion (more than 30% of the European market according to Bloomberg).

Euronext introduced new traded products with turbo warrants and turbo certificates in Amsterdam, Lisbon and Paris. These leveraged products, which allow investors to take advantage of market conditions, are becoming popular among educated retail investors. As of the end of December, 142 turbo products were listed on Euronext.
The value of trading in Euronext's turbo products amounted to €515 million.

Thanks to product innovation and increased interest among retail investors, volumes in certificates rose by 148% to 359,850 transactions in 2004, generating turnover of more than €2.2 billion. The warrants market remained resilient at €4.6 billion in 2004, despite low volatility. This segment also offers continuous innovations, with new products such as warrants on gold listed in Brussels.

Euronext Value
In early 2004, Euronext launched the Euronext Value platform in order to provide asset management companies with diversified sources of information on the market prices of bonds and other debt instruments. By sourcing market prices from a wide variety of contributors, such as banks and brokers, Euronext Value allows asset managers to compute the value of their assets in compliance with the requirements of the relevant regulations.

Close to our users

In order to meet the needs of its clients, the Cash and Listing SBU organizes wide-ranging consultations with members in all locations (Amsterdam, Brussels, Lisbon, London and Paris). Members meetings occur on three different levels.
The Cash Advisory Committee (CAC) is made up of a selected panel of representative members. This committee meets three times a year to discuss local issues and projects; the members' point of view is then taken into account in potential improvements. In 2004, the topics discussed included VWAP (value weighted average price), NextStat and the reform of regulated markets. Local activity figures (volumes per member at each location) are analyzed in order to study trends in trading patterns and business conditions.
The International Cash Advisory Committee (ICAC) follows the CAC meetings. This committee consists of two representatives from each location. The subjects discussed by the ICAC have an impact on all of Euronext's locations. In 2004, the ICAC's main topic of discussion was the Investment Services Directive (ISD2).
The Euronext Policy Advisory Committee (EPAC) was set up at the end of 2004 to improve communication between Euronext's Managing Board members and the CEOs of certain clients with regard to strategic issues. The first meeting was held in Amsterdam. This will be extended to other locations in 2005.

At the end of 2004, six major French asset managers and nine contributors, including four in the UK, were active on the platform. About 825 products are now listed on EuronextValue, and around 950 valuation requests have been processed.
In 2005, buy-and sell-side clients will be approached in the Euronext countries and in Germany, Luxembourg, Switzerland and the UK.

Trading services: improved efficiency, easier access
New functionalities were introduced in 2004 to extend the trading services offered to members. These include trading at last and VWAP (value weighted average price) services.

Platform efficiency was also improved
In 2004, the trading platform handled its highest ever daily number of trades on 11 March, with 1,020,000 trades (double counted).

Platform performance improved during the year, with the time taken to open and close the market falling from an average of 1 minute and 30 seconds to an average of 15 seconds for the main blue chips (typically constituents of major national indices such as the CAC 40®, AEX®, BEL 20® and PSI 20®).

Compared to the end of 2003, the average response time in the daily continuous trading phase had decreased by a significant 25% at the end of 2004.

Outlook
2005 should see the completion of a number of major projects launched in 2004. These relate to organic growth initiatives in the areas of listing (in particular the development of international listings, and the launch of Alternext) and trading (the expansion the range of traded products). These projects are aimed at putting Euronext in an optimum position for benefiting from the recovery of the financial markets and higher volatility. In addition, new opportunities will be sought in the form of partnerships, helping to strengthen the Group's role in the integration of Europe's capital markets.

New fee strucure
In order for Euronext to diversify its trading revenue sources, a new fee structure was implemented in February 2005. The main features are the abolition of the order entry fee and the introduction of an ad valorem component. This is a further step in Euronext's customer driven policy designed to encourage greater orders flows, promote execution and stimulate new trading patterns.

Euronext.liffe is the international derivatives business of Euronext, comprising of derivatives markets in Amsterdam, Brussels, Lisbon, London and Paris. The exchange offers an extensive range of derivatives products to customers at 775 sites in 29 countries around the world.

Euronext.liffe aims to deliver shareholder value by meeting the demands of customers for simple and efficient international trading facilities in a wide range of derivatives products.
Each domestic market acts as a gateway to a single derivatives market, where customers can access over 450 financial, equity, index, commodity and wholesale products through a single connection to Euronext.liffe. The use of a single trading platform generates synergies for both customers and the exchange, by widening access to derivatives products, and simplifying the procedures for listing new trading products.

Business overview
2004 saw the successful completion of the technical integration of Euronext.liffe, with the migration of all derivatives markets to a single trading platform,
LIFFE CONNECT®. The replacement of multiple trading venues with a single market reduces costs for both Euronext.liffe and its customers, and makes cross-border trading cheaper and easier.
In November 2004, Euronext.liffe passed on cost savings to its customers by offering them fee reductions for equity options trading in the Amsterdam, Brussels, London and Paris derivatives markets, reducing the cost of trading by an average of 25%.

2004 was a successful year for LIFFE CONNECT® and its expansion.
The global distribution of LIFFE CONNECT® increased by 21% in 2004, from 642 sites to 775 sites. US distribution of LIFFE CONNECT® increased 26% in 2004, from 65 sites to 82 sites. Industry use and awareness of the system increased significantly in the US after it was adopted by the CBOT.
In January 2004 the CBOT migrated to e-cbot, a platform powered by LIFFE CONNECT® that supports electronic trading in all contracts. The success of CBOT's move to electronic trading was a key factor in the decision taken by three other North American commodities exchanges to adopt the electronic platform.
LIFFE CONNECT® , in the form of e-cbot, now supports overnight trading in Kansas City (KCBT), Minneapolis (MGE) and Winnipeg (WCE).

Products and services: performance
Performance
All products saw strong growth in 2004, and overall trading volume was up 14% on the previous year.

Close to our users

Euronext.liffe is committed to customers and maintains good relationships through on-going dialogue and regular contact. The exchange encourages feedback and suggestions, and seeks to adapt its services to meet its customers' needs. Advisory groups for equity derivatives and interest rate derivatives are being formalized. This will further enhance Euronext.liffe's close working relationship with its users..

• Interest rate products rose 14% compared with 2003. Interest rate futures volumes increased 20% on 2003, while option volumes were down slightly at 2%. Euribor futures performed well in 2004 (up 15% on 2003), as did sterling futures (up 21%) and long gilt (up 38%). As the ECB did not change its interest rate policy during 2004, Euribor option volumes were down 10% on the previous year. The Bank of England, however, raised interest rates four times in the course of the year, leading to a 51% increase in Sterling option volumes on the year before.

•Equity products rose 14% compared with 2003. Products based on individual equities were up 26% overall, with futures rising 93% and options 24%.
However, equity index products were down 5%. Index futures fell 7%, while index options declined 4%, due to a fall in CAC 40 contract volumes.
Trading volumes in products based on the AEX index and the FTSE 100 index showed an increase on the previous year.

•Commodity products performed very well in 2004, showing an increase in volumes of 21% on the previous year. Volumes were strongest in robusta coffee (up 34%) and white sugar (up 19%).

Development
In 2004, Euronext.liffe launched a number of new or enhanced products and services in response to customers' needs. Eurodollar futures and options contracts were launched on 18 March 2004, creating a single global market for the world's five major short-term interest rate (STIR) contracts: dollar, euro, sterling, Swiss franc and yen. Since its launch, the contract has attracted growing volumes and open interest.
The listing of the Eurodollar contract on LIFFE CONNECT® has brought a number of key benefits to the market, in the form of a single and transparent marketplace and direct access to trading. This avoids many of the peripheral costs associated with traditional floor trading and enhances capital efficiency since cross-margining is possible between all of Euronext.liffe's STIR contracts.

In 2004, Euronext.liffe also launched FLEX® and OTC facilities to further enhance its range of wholesale services. These services offer market users the flexibility and choice traditionally offered by the OTC market with the security and efficiency of exchange trading and clearing through a central counterparty. Over 1.5 million contracts have been traded via wholesale services since their launch.
The three wholesale services are:
• the MATCH Facility for Universal Stock Futures, designed by fund managers for fund managers to enable Universal Stock Futures to be traded directly between wholesale counterparties,
• the FLEX® Facility for individual equity options, offering customers European-style options with customized strike prices and expiry dates as far ahead as three years,
• the OTC Facility, providing trade administration and clearing services for transactions in European equity derivatives.

The FTSEurofirst indices have been adopted by a number of major institutions to launch structured retail products in the euro-zone. Several strategic partnerships have been formed, which will provide support in the ahead of derivatives products based on this indices.

The FTSEurofirst tradable indices offer a flexible and effective index solution. A dedicated group of Market Makers provide liquidity for the contracts and ensure tight spreads throughout the trading day. A new Designated Market Maker (DMM) scheme has been designed, in conjunction with customers, for implementation in 2005. The improved quality of the underlying market and the new DMM scheme will further enhance the contracts and generate increased volumes in the coming year.

In addition, Euronext.liffe is in the process of harmonizing its entire range of equity derivatives. Wherever possible, products are being standardized with the aim of offering customers seamless, simple cross-border trading facilities. Thanks to harmonization, all equity derivatives contracts now follow the same quarterly expiry cycle.
The fast track membership scheme continued to attract customers in 2004. This streamlined process enables Euronext.liffe members of one market to apply for membership of any other Euronext.liffe market by completing a simple application form. The exchange manages all administrative and regulatory matters on behalf of the member.

Outlook
Following the successful migration of all derivatives markets to LIFFE CONNECT® in 2004, Euronext.liffe will continue to increase further the efficiency and quality of its markets in 2005.

To meet the needs of customers, we will continue to focus on providing high quality service and products to increase and simplify cross border trading opportunities.

The wholesale services were launched to capture OTC business by offering market users the flexibility they require with the security of on-exchange trading and clearing through a central counterparty. In 2005, Euronext.liffe will further enhance the accessibility of these facilities.
The final step in harmonisation of equity derivatives is commencing in 2005 with resizing French equity derivatives contracts. The new contracts will be gradually introduced through the course of the year, running in parallel to existing contracts to ensure a seamless transition.

Financial information complements securities listing and trading activities, and is an essential aspect of communication with parties that are or want to be active on the markets. Euronext's Information Services SBU distributes and sells market data and market information, such as market prices, official market publications and press releases from listed companies. It is also responsible for managing the Euronext indices through its subsidiary, Euronext Indices B.V. Its clients include distributors, issuers, information suppliers and financial institutions.

In 2004, investment in future growth was the key focus of the Information Services SBU. It achieved a number of its goals, thereby generating significant synergies. The main impetus was the implementation of the new consolidated EMDS platform for the distribution of all Euronext market data. The system uses a single protocol to deliver all data to clients' systems via a consolidated data feed, which makes it easier and less expensive to access Euronext data.

Amsterdam derivatives data migrated to EMDS in July, and was followed by the migration of Euronext cash market data in mid-December. Other derivatives data will be integrated in EMDS early in the second quarter of 2005, bringing the technical consolidation of all market data to a successful completion. Thanks to the new platform, legacy systems can be phased out to save costs. The platform not only benefits Euronext but also its clients,who will achieve savings by using one consolidated data feed instead of separate connections to all Euronext markets. A consolidated market data contract was also signed this year.

2004 saw the implementation of a new consolidated index calculation platform to replace the four local platforms. The index team is currently finalizing a harmonized set of index rules that will apply to all of Euronext's markets.

Product range and developments
Market data services
Euronext provides real-time data (prices, indices, volumes and other data) to financial information distributors, market intermediaries (investment banks and brokerage firms), websites, press agencies and other institutions. Euronext collects annual subscription fees, distribution licence fees and fees charged on the basis of the number of terminals operated.
Approximately 160 data vendors distribute Euronext data in real time in 190,000 market data packages displayed on screens around the world. Many more receive delayed information, which is displayed with a 15-minute delay and is provided free of charge.

All market data services will be distributed via the new consolidated EMDS data feed using a single protocol and terrestrial lines. This data feed was developed to generate cost synergies and as a response to customer needs. In the coming years, EMDS is expected to grow by providing a greater range of facilities and content to meet the needs of market participants, incorporate new technological developments and perform additional calculations.

Indices
During 2004, the value of turnover in derivatives based on the equity indices owned or co-owned by Euronext remained steady compared with the previous year, while the value of assets under management in ETFs (trackers) that track these indices rose by over 50% to nearly €3 billion.

In 2004, Euronext Indices B.V. completed the implementation of its consolidated index calculation and distribution platform. Today, all index-related data used to support investments is generated in the same format. Euronext Indices B.V.'s portfolio includes the national blue-chip indices (AEX®, BEL 20®, CAC 40® and PSI 20®), as well as Euronext's cross-border indices and many others developed on behalf of or in conjunction with third parties.

In order to reflect Euronext's commitment to promoting small and midsize companies listed on its markets, while meeting the expectations of investors and funds managers specializing in this category, Euronext announced the launch of a new line of indices dedicated to small and midcap equities in Amsterdam, Brussels, Lisbon and Paris.

A brand new set of French indices was developed to supplement the CAC 40 ®. These new indices include the IT CAC 20 ®, the CAC Next 20 ®, the CAC Mid 100 ® and the CAC Small 90 ®, which were launched on 3 January 2005 on Euronext Paris. In the course of 2005 a broad index based on the French market will be launched, and the MidCAC, Nouveau Marché and Second Marché indices will be phased out.

Three other indices, the AScX®, the Bel Mid® and the Bel Small®, were launched on 1 March 2005 on Euronext Amsterdam and Euronext Brussels, respectively.

Preparations were also made for the launch of the Next CAC 70 ®, a tradable index consisting of Euronext's biggest blue chips. This was finalized on 31 January 2005.

Internet-related products
The www.euronext.com website is designed to meet the information needs of customers and investors. The site contains information about companies listed on Euronext, indices, and the whole range of products offered by the Group. It also provides prices, news, educational material and regulatory information, and can be used to help manage virtual portfolios. Currently, webvertising is generating revenues.
In the second quarter of 2004, the Information Services SBU launched a service for listed companies called ListQuote, which provides real time share price information for the websites of listed companies in real time. More functionalities will be added in the course of 2005.

Publication products
As news is crucial for investors in the financial markets, the Information Services SBU publishes a number of exchange newspapers such as the Cote Officielle in Paris, the Daily Bulletin in Lisbon, and the Euronext Amsterdam Daily Official List in Amsterdam. In 2004 improvements in the production process of newspapers led to significantly lower costs.
In addition, company press releases and Euronext notices are offered to data vendors and financial institutions in real time. News from listed companies is distributed in a cost-effective way via all major data vendors and some of the world's most important news agencies. New technologies will be used in order to develop these services further.

Outlook
The launch of the new EMDS data feed platform, which will be completed in the second quarter of 2005, is expected to decrease significantly the time-to-market for new value-added services. At the same time, the further rationalization of systems will result in significant savings.

• Euronext Index File Service
The index file service obtains its information straight from the official source, Euronext Indices B.V. Daily files contain information on the exact composition, weighting and divisors of indices as well as precise details of changes in index levels and the market prices of constituent shares for all of Euronext's main blue-chip indices.

There are two products available - a file that provides end-of-day information on the selected index - and a securities file containing data on the index's constituent shares as at the close of trading, including their percentage weightings. This information is available for all of Euronext's indices or selected indices only and covers all of Euronext's main blue-chip indices.

• NextHistory
NextHistory is the name of a range of historical data packages relating to the Euronext cash markets and Euronext.liffe derivative markets. These products will be made available via the internet and on DVD.

GL TRADE's revenues went up 17.5% to €150.1 million thanks to external growth. This included turnover from the newly integrated entities GLESIA in Italy and the Misys subsidiaries in the UK, Japan and Hong Kong, which were all acquired at the end of 2003, as well as €2.7 million generated by Davidge and Ubitrade following their acquisition in the fourth quarter of 2004.

Organic growth was limited in 2004 due to the maturity of certain markets, such as France (down 11%). Nevertheless, satisfactory levels of organic growth were recorded in Asia and the US, despite the weak dollar.

Trading solutions (including back-office tools) generated €95 million (GL stream), GL net generated
€21.1 million, and market data activities accounted for €16.2 million. These are still the three main sources of revenues for GL TRADE. Settlement revenues rose to €7.4 million, boosted by the recent acquisition of Ubitrade.

As a result, EBITA increased to €26.7 million (up 11.8% on 2003), which represents an EBITA margin of 17.7%. Although GL TRADE managed to cut its operating costs, partly by means of a 6% drop in its headcount, its overall results were affected adversely by the cost of integrating MSTS and GLESIA.

GL TRADE is the world's leading provider of software systems for real-time financial data feeds, connectivity, order management, confirmation and clearing.

Introduction
In less than a decade, GL TRADE has come to the forefront of the global financial industry and become the undisputed world leader in solutions for professional traders of almost all capital market instruments (equities, bonds, commodities and derivatives) and links all the participants in the financial community (brokers, banks, institutional investors, hedge funds and exchanges). Its software, in combination with its specialized network, provides real-time access to almost every electronic exchange on five continents. Through its software solutions (GL STREAM™, TRADIX), network (GL NET) and settlement business units (GL SETTLE and UBIX),
GL TRADE provides services covering the entire trading process from front to back office, including order management, trading, market access and post-market processing.
In a highly competitive environment, GL TRADE is alone in being truly global. Not only does it provide access to markets all over the world, it also has a worldwide presence, with 1,074 staff in 23 offices on five continents servicing 3,500 clients, including 550 leading international financial institutions. This global positioning combined with its full straight-through-processing solution makes GL TRADE the unrivalled leader in its field, and the company ranks in the top 3 in all the countries where it operates.
GL TRADE was listed on the Nouveau Marché of Euronext Paris in 1999 and included in the NextEconomy segment in 2002. Euronext is the major shareholder of GL TRADE, in which it holds, directly and indirectly, 40.4%.

Business overview
Despite its highly secure revenue model, with recurring income accounting for 89% of revenues, GL TRADE's business is affected by the following trends in the financial industry:
- the maturity of the equity market, which has led
GL TRADE's customers to optimize revenues and control costs;
- a growing derivatives market;
- the emergence of a number of very promising new markets, such as commodity markets.

In the year under review, GL TRADE's sector saw a trend towards reorganizations and mergers among customers (e.g. Crédit Agricole and Crédit Lyonnais, which merged to form into Calyon) in France, which has historically been its main market. This led to a reduction in GL TRADE's activities, most notably in France. However, GL TRADE's performance on a number of other markets was satisfactory, mainly due to external growth, and as a consequence the UK is now GL TRADE's biggest market.
At the end of 2004, the number of GL Net clients rose by 18% to 594. GL stream solutions combined with GL net (gateways) provided access to 105 exchanges (54 stock markets, 37 derivatives markets and 14 commodity markets), an increase of 26.5% on 2003. These reflect GL TRADE's ability to respond to prevailing market conditions in 2004.

GL TRADE's ambition over the next five years is to become the one and only trading and order management solutions partner for all sell- and buy-side financial investors. This will be supported by a three-pronged strategy that hinges around consolidating GL STREAM™ into the GL STREAM™ WORKSTATION, enhancing its range of its sell-side solutions, and penetrating further the buy-side market.
GL TRADE's approach to complementing its product range and finding new markets into which to expand its geographical presence relies on both innovation (12% of turnover is set aside for R&D) and external growth.

Developments and recent acquisitions
As part of its policy of enhancing its product range,
GL TRADE recently acquired Ubitrade, a market leader in the area of electronic trading and back office solutions and the Iris Group, a Dutch provider of screen-based tracking and decision support software. These acquisitions have provided GL TRADE with the opportunity to expand its derivatives range to include UBIX, a real-time clearing and settlement solution for derivatives markets, and add TRADIX to its range of trading and order management facilities for OTC products.
Furthermore, GL TRADE's other recent acquisition, Davidge, will strengthen GL TRADE's presence in the US, a key strategic market.
Thanks to these acquisitions, GL TRADE now offers comprehensive solutions covering front, middle and back office activities on stock, derivatives and OTC markets, and has a significant presence on five continents, confirming that it truly is the global market leader.

Outlook
It is anticipated that some markets will continue to suffer as customers carry on rationalizing their businesses. This is particularly true in France and Italy, although growing markets such as Asia, Spain and Switzerland are likely to contribute to organic growth.

As a result, it is expected that increases in revenues will be generated by GL TRADE's recent major acquisitions.
Non-European markets - specifically the US (Davidge) and Asia - will become more important and contribute increasingly to GL TRADE's turnover.

There are many new development opportunities open to GL TRADE. Open outcry markets are switching to electronic trading, commodities markets are gaining momentum, and the derivatives markets are experiencing an unprecedented boom.

The new GL STREAM WORKSTATION, which consolidates in a single product the entire range of services, including new risk and back-office management tools, and which is scheduled for release later this year, will undoubtedly bolster GL TRADE's leading position.

In the longer term, GL TRADE may benefit from the anticipated implementation of new ISD rules in 2006 that will allow the internalization of orders.