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Executives

Gary Stein - Head of Investor Relations

Duncan Niederauer - Chief Executive Officer

Joost van der Does de Willebois - Chief Financial Officer

Larry Liebowitz - Head of U.S. Markets and Global Technology

Jean Francois Theodore - Deputy Chief Executive Officer

Analysts

Kenneth Worthington – JP Morgan

Rich Repetto – Sandler O’Neill

Roger Freeman - Lehman Brothers

Don Fandetti – Citigroup

Daniel Harris - Goldman Sachs

Chris Allen - Banc of America Securities

Mamoun Tazi - MS Global

Niamh Alexander - KBW

Josh Elving - Piper Jaffray

Operator

Welcome to the fourth quarter and full year 2007 NYSE Euronext earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Mr. Gary Stein, Head of Investor Relations. Please proceed, sir.

Gary Stein

Welcome to our conference call for NYSE Euronext fourth quarter and year end 2007 results which were outlined in a press release issued earlier this morning. This release, along with slides we intend to review during this call, are available on the Investor Relations section of our website at www.NYSEEuronext.com.

During this call, our comments may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on NYSE Euronext current expectations and involve risks and uncertainties that could cause NYSE Euronext actual results to differ materially from those in the statements. Please refer to our SEC filings for a full discussion of the risk factors that may affect any forward-looking statements.

You should not place undue reliance on forward-looking statements, which speak only as of the date of this conference call. Except for any obligation to disclose material information under the federal securities laws, NYSE Euronext undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after this conference call.

Please note that the results of operations of Euronext NV for the quarter and year ended December 31, 2007 are reported under U.S. GAAP and incorporated in today's earnings press release under the caption European operations in the accompanying table.

With me on today's call are Duncan Niederauer, Chief Executive Officer; Jean Francois Theodore, Deputy Chief Executive Officer; Joost van der Does de Willebois, acting Chief Financial Officer; Larry Liebowitz, Head of U.S. Markets and Global Technology and Stephan Buehler, Chief Accounting Officer.

I'll now turn the call over to Duncan. At the conclusion of our prepared remarks we'll take your questions.

Duncan Niederauer

Good morning, everybody. Thanks for joining us this morning for our fourth quarter and year end results call. I'll make some brief remarks and then I'll turn it over to Joost for a quick review of the financials and then we have a presentation from Larry on the technology side, and then we'll open it up to questions as we always do.

In 2007, NYSE Euronext experienced tremendous growth and unprecedented change. In leading the wave of global exchange consolidation we become global enterprise and we became an innovator with a solid, well diversified foundation to build upon. We succeeded in transforming our company and modernizing our market model with more to come in 2008. Culturally, we're making great progress in thinking and acting like one company and one firm. We're more customer-focused, better competitively positioned and even more determined to create sustainable value for our shareholders.

Our goal is to provide the highest quality, most reliable, most competitive markets for or customers which includes issuers as well as investors and other market participants around the world. Our focus on diversification extends globally and includes multiple listing markets, cash equities and ETF trading, futures options, bonds and advanced market data information products as well as world-class technology and data management solutions.

Here is a glimpse of some of our accomplishments in 2007. Our business in London had a record year with nearly 1 billion contracts traded representing a 30% increase in volume over the prior year. NYSE Arca options continued its rapid growth, trading a record 336 million equity options contracts which represented a 71% increase over 2006. Our European cash markets registered their third consecutive record year with 323 [million] trades which represent a record average daily volume of 1.2 million trades, a 47% increase from 2006; and our U.S. cash markets realized record volumes with an average of 2.6 billion shares traded daily, executing more mass volume than any other U.S. exchange and setting seven all-time daily volume records along the way.

NYSE Euronext was also number one in overall IPO proceeds worldwide in 2007 with a total of $80 billion in proceeds, more than any other exchange group in the world. Of our 428 new listings during the year, 288 were on the U.S. markets and 140 joined our European markets. This list included 20 new companies from Greater China where we were the first international market to gain approval for a representative office and the NYSE $2 trillion market cap of listed Chinese companies is more than the entire non-U.S. listed market cap of all other US exchanges combined.

In addition, something I'm personally very proud of, technology sector IPOs in the U.S. by our listed issuers raised $5.4 billion on NYSE Group markets in 2007, more than NASDAQ for the first time. Our European market for younger companies, Alternex, grew to 119 companies by year end and NYSE Arca 105 new ETFs and 17 new exchange traded notes.

Our market data businesses grew the number of NYSE professional subscribers by 6.5% in '07 and the number of Euronext terminals rose by a similar 6.2%. It's worth noting as well that we did very well in January. As outlined in the press release which we also issued earlier today, NYSE Euronext achieved record transaction volume across nearly all of our marketplaces during the month of January. Cash equities volumes rose 80% in Europe and 40% in the US versus January of last year and derivatives volumes increased 61% in Europe and 98% in the US.

Moving forward, we'll continue to grow organically and from joint ventures, as well as acquisitions that make strategic and financial sense as demonstrated by our innovative joint venture with bids and the recent transactions with AEMS, the American Stock Exchange and Wombat we're going to deliver on the opportunities and synergies promised at the time of the NYSE Euronext merger, including the $275 million in cost savings. Along those lines, we plan to be much more transparent and accountable and establish milestones that will allow you to measure our progress. Later in this presentation, Larry will walk you through some of our plans.

While we've accomplished quite a lot, we have a lot more to do. I'm confident that we have the right strategic plan in place to achieve our goals and with that, I'll turn the discussion over to Joost who will present our financial highlights.

Joost van der Does de Willebois

Thank you, Duncan. NYSE Euronext realized strong performance in the fourth quarter and in '07. This was driven by our increased global presence, our growing customer base, and our diverse products and services base. These positive results reflect our success with controlling expenses and increasing revenue, due in part to record production volume growth at virtually all of our business lines, as already indicated by Duncan.

Today we reported a net income of $643 million or $2.70 per diluted share for the year ended December 31, 2007. This is a $438 million or a 214% increase as compared to the net income of $205 million or $1.36 per diluted share for the year ended December 31, 2006.

For the three months ended December 31, 2007, net income and diluted earnings per share were $156 million and [$0.69] respectively. This compares to a net income and diluted earnings per share of $45 million and $0.29 for the three months ended December 31, 2006.

These results are presented in accordance with US GAAP. The comparative results for ‘06 reflects the operations of NYSE Group only; FX for the Euronext transaction as it occurred at the beginning of the earnings period presented, and excluding merger expenses, exit costs, about other non- recurring items, net income on a non-GAAP basis for the year ended December 31, 2007 would have been $705 million or $2.65 per diluted share. This is a $221 million or 46% increase versus a non-GAAP net income of $484 million or a $1.83 per diluted share for the year ended December 31, 2006.

For the three months ended December 31, 2007, NYSE Euronext net income on a non-GAAP basis would have been $175 million or $0.66 per diluted share. This is a $49 million or a 39% increase as compared to net income on a non-GAAP basis of $126 million or a $0.47 per diluted share for the three months end the December 31, 2006.

NYSE Euronext revenues on a non-GAAP basis net of assessment fees for the year ended December 31, 2007 increased $689 million or 21%. These results are determined on a constant U.S. dollar to euro and U.S. dollar to pound sterling exchange rates, neutralizing the impact of acquisitions and dispositions of businesses and equity investments over the period.

On the same normalized basis, demonstrating our commitment to ongoing cost control and expense management, fixed operating expenses decreased 7% or $135 million compare to the year ended December 31, 2006. On a non-GAAP basis, revenue for the full year '07 net of activity assessment fees, liquidity payments and VAR and clearing fees were $3 billion, up 12% versus the full year ‘06.

Excluding the effect of activity assessment fees and section 31 fees, the pre-tax margin of NYSE Euronext on a non- GAAP basis reach 27.3% of total revenues of the year ended December 31, 2007 as compared from 23.5% of total revenues of the year ended December 31, 2006.

At year end, NYSE Euronext had a strong financial position of $1.5 billion of cash, cash equivalents, investment and other securities and this includes a $169 million related to the section 31 fees and $2.7 billion in debt obligations.

During the fourth quarter of '07 NYSE Euronext became a newcomer to the Standard and Poor’s 500 index and the only exchange group in Standard and Poor’s 100 index.

Lastly, we are committed as already indicated by Duncan to delivering the $100 million in revenue synergies and the $275 million in cost savings identified in connection with the NYSE Euronext merger and we remain confident that we will exceed our $25 million annual run rate non-technology related savings target by the end of the first quarter of ‘08.

Now, consistent with our transparency and accountability objectives, Larry Liebowitz will now offer more detail on the status of our technology-related merger integration road map.

Larry, the floor is yours.

Larry Liebowitz

Thank you, Joost and good morning to everyone -- or as we say here in Mumbai, India good evening. So, just to give people a flavor and to remind you, we talked originally about $275 million of savings of which $250 million were technology-related, and as Joost just said, we expect to exceed the $25 million in non-tech savings which would mean that if we achieve our $250 million in technology savings overall we would have overachieved on our $275 million original target.

Now I am going to be referring to some handouts that you should be able to see on the web. I will try and give you some references in terms of which pages and help you guide through it, but also if you don’t have it in front you should be able to follow me.

As we said, we're focusing on delivering our $250 million run rate savings in technology following our successful savings of $200 million of which $100 million were savings from technology, based on the NYSE Arca integration. The areas that we're really focusing on are system simplification, capacity upgrades and network integration. We’ve updated you with a diagram of that so you can see where they come from.

Compared to our previous estimates, we're saying that by the first quarter of 2010 we'll have a $200 million run rate savings with the full $250 million coming at the end of 2010; that's a slightly smaller rollout in 2010 than we had expected mostly due to the AEMS transaction and some data center construction issues.

On the AEMS transaction side, that helped us in a lot of ways, as we've talked about before, it helps us gain control of our technology and of our synergies, helps us put together a platform in a way that we couldn't otherwise and helps us also bundle together a bunch of different technology businesses on the revenue side.

So turning to page 4. This is a diagram similar to what we've shown you in the past, but now we are going to lay out exactly how each layer occurs and when it will probably occur.

The top line is CCG. That's how our clients reach us. That's also going to be how any client in any geography reaches any of our product, ultimately. What it also does is makes it easier for us to make the technology transitions in the layers beneath because the customers will only be affected by the top layer. As we've talked about in the US, we expect to roll this out in the first quarter and I'm happy to report that our specialists are already converting to the system; that should be done by this week and then we should be able to roll out our first clients by next week, so that's proceeding on path.

In Europe, we hope to be rolling this out to customers by the second half of the year, specifically in the July timeframe we'll start to roll that out. That is absolutely critical to us in terms of not only getting positions for our platform consolidation but in the US, That gets us off our first wave of non-stops which we'll talk about in a minute.

LIFFE will also be moving to CCG, as we talk about and that's similarly in preparation for a universal trading platform. Also some of the LIFFE customers can access the ARC platform for trading derivatives.

In that middle layer there, you see the universal trading platform. That's what we're calling our systems simplification where we take our trading engines and consolidate them into a joint platform and start rolling that out in Europe in the fourth quarter of 2008 and then rolling it out in the U.S. by the end of 2009. That also includes employing our newly acquire Wombat technology upon closure of that deal, assuming that closes on schedule.

As we penetrate down into the layers, consolidating the network layer and safety and then finally at the bottom level consolidating our data centers, as we've discussed, from ten down to four by the end of 2010.

Skipping to page 5, I think we give you the first real breakdown of where these come from. $90 million, that’s the biggest single chunk, that's platform conversions, that's universal trading platforms, CCG, all of those sorts of things; $40 million from data center, corporate systems, that is the global platform for finance and for HR, that's $30 million. The safety network consolidation is $[15] million, and then miscellaneous other things are $75 million.

In 2007, we exceeded what we originally thought we would do. We generated $23 million of net technology-related expense savings. The chief big chunks came from $80 million of headcount reductions, $80 million through simplification of trading systems, largely in the U.S. and $3 million in reduction in professional services. Now remember, a lot of this is timing-related so that if we implemented a system in the fourth quarter, in the fourth quarter run rate you will only see a small amount of savings, but we translate it into a larger run rate savings for the 2008 year.

In addition to the savings -- those are net savings, $23 million -- we spent $13 million more on capacity than we had budgeted on an expense basis due to the unusual market conditions, particularly after the sub-prime stresses hit the markets. If that had not occurred, we would have saved $36 million on our run rate expense for the year 2007.

Skipping to page 7. We set some clear milestones for 2008 savings. First, we are migrating from ten data centers down to four; that includes construction of two data centers, one in the U.S. and possibly a third in the U.S. But in addition, there's $10 million of expense rate reductions going from a mainframe environment to a Linux-based environment in the U.S. That will be completed by the second quarter; that generates $10 million for 2008 and probably more than that in 2009.

Similarly, in the NYSE platform in preparation for the universal trading platform, the consolidated ticker plant has already been rolled out. It is in shadow mode production and full rollout should be completed by 2008 second quarter. CCG, as we just talked about, is already being rolled out to specialists and will be going out to clients within a week or two. What that allows us to do, in addition to preparing for this consolidated platform, is get rid of the expensive [non-stops]. So 15% are eliminated by April, an additional 30% by the end of 2008; that's almost 50% of our non-stops gone by the end of this year. I would expect it to be slightly more than that.

After a $10 million run rate expense reduction in 2008, what that also does is it makes it cheaper if we have a capacity problem, because upgrading capacity on this non-stop platform is the most expensive platform so it will make it much cheaper if we have to increase capacity beyond this.

Now where we are in the universal trading platform, we have formed project teams that have already mapped out consolidated business requirements, developed a unified systems architecture for what the platform will look like. We have formed technology teams which will be based in Paris to do the development to start rolling out by the end of the year on the European platform.

It's common specifications, common architecture with local code bases, based on any particular eccentricities of the local market and employing our Wombat ticker plant and ticker dissemination technology.

On the next page 8, further clear milestones for 2008. The AEMS deal that we signed in 2007 is expected to be a $10 million to $15 million savings right off the bat in 2008 with the elimination of the margin that we're paying AEMS it's an immediate overhead reduction across our corporate services areas that we will require for the AEMS platform. Similarly, we expect the consolidation of corporate administrative systems will drive anticipated savings of $6 million in 2008 and that will continue as we push out a unified financial and HR systems platform going into 2009.

As I mentioned before, we budgeted for $27 million of additional expense for incremental capacity upgrades, some of that is expense carryforward from 2007. Some of that is additional in 2008 of which $66 million of CapEx is budgeted for 2008. So what that tells us is the faster we can move in system simplification and getting off these non-stops, the less likely we are with the less of that $66 million budget number that we'll have to spend in CapEx and similarly that $27 million number could potentially be reduced.

Next page 9. As we said, significant initiatives that will roll into 2009 we will continue to rollout our UTP equities platform and probably start to rollout a UTP platform for derivatives. Completion of client migration onto a global data network, completion of the global corporate and administrative system platforms that we're building out and finally, moving the full data center build outs which should complete by the end of 2010.

If you look at page 10, there's an updated timetable for the technology savings. As you'll see in the first quarter of 2008 we're actually ahead of where we thought we would be in technology savings, spurred mostly by the savings that we talked about in the NYSE platform in preparation for UTP.

By Q1 2009 we also expect to be slightly ahead of where we thought we would be, but by Q1 2010, we're running slightly behind because of the delays in UTP because of AEMS and because of data center construction but by the end of 2010 we expect to be where we said we would be.

So that's a run through of where we expect to get the savings, how we expect to get the savings and when we expect to get the savings. Now I want to turn it back to Gary and maybe we'll open this up for some questions.

Duncan Niederauer

Thanks, Larry. That concludes the formal part of our presentation. We're happy to open it up for questions and hopefully as we had promised in earlier calls, we intended to provide more transparency around what we were doing with the technology and when we were going to do, so view that presentation as a road map that we intend to hold ourselves to and expect you guys to hold us to as well.

So with that, if it's all right with Gary, we'll open it up for questions.

Gary Stein

All right, go.

Question-and-Answer Session

Operator

Your first question comes from Kenneth Worthington – JP Morgan.

Kenneth Worthington – JP Morgan

I would like to flesh out your comments on the expense savings. You gave us the 2007 run rate; about where were you in 3Q? How much of the ’07 run rate came in 4Q, just to help us with our models?

Joost van der Does de Willebois

[Inaudible].

Larry Liebowitz

That saves me through the year, and I would expect that most of that would finally hit in towards the fourth quarter.

Kenneth Worthington – JP Morgan

In terms of the $13 million of capacity, is that $13 million, was that mostly in 4Q as well? Is that recurring or is that one-time in nature?

Larry Liebowitz

What that is, that represents the expense component of the $39 million of [inaudible] so if you look at that, we said $39 million of CapEx of which $13 million got expensed in that year. Most of that occurred in the second half of the year, and this is above what we budgeted, because every budget we expect a certain amount of CapEx and a certain amount of capacity. Remember that if we under estimate on the platform it will cost us much more because the cost of the upgrade is more. So that would occur largely in the second half of the year.

Kenneth Worthington – JP Morgan

As we move from $50 million of technology savings to a run rate of $120 million, maybe break it down a little bit differently for us. What portion of that is personnel related, what portion is systems D&A, that pure technology bucket, and what comes in anything else, call it other?

Larry Liebowitz

I actually don’t have that breakdown with me, but what I can tell you is that hardware is a surprisingly large component, mostly because of these knock-offs, and particularly as we roll into the first year, that’s where a lot of the savings are, as we get out of 2008 and into 2009.

Kenneth Worthington – JP Morgan

More strategic, in terms of ECNs in Europe, we are hearing about a lot of roll outs, we are seeing competitors with ECN technology having some success. What, if anything, is NYSE Euronext thinking about in terms of ECN technology in Europe?

Jean Francois Theodore

What we can say is that the deregulation in Europe on the first of November, when you compare [inaudible] security in Europe, please remember that [inaudible] in Europe are already [inaudible]. We are investing in them, we want to limit technology architecture while improving our network. By Q2 we should be under 10 milliseconds, matching [inaudible] less than 2 milliseconds, so we believe that ECN will be competitive. We welcome competition but we believe that we are well-placed, as shown by the results of the months of January in which our trading volumes increased by [18%].

Kenneth Worthington – JP Morgan

I am sorry, I missed the first part of the comments because of the accent. What is the ECN strategy in Europe?

Duncan Niederauer

We are a global company, Ken, so you are going to have to get used to some of the accents, my friend.

Kenneth Worthington – JP Morgan

I am sorry, I am sorry.

Jean Francois Theodore

The global strategy is to try to benefit from the deregulation, if I may [inaudible]. [inaudible] is the only one being really active, and we believe it is active mostly now because of the [inaudible] on derivatives. [inaudible].

Duncan Niederauer

Ken, to add to that, if you contrast that to how the exchanges responded here when faced with competition from ECNs, I think our reaction in Europe is quite a bit more progressive and quite a bit more aggressive. We are not assuming it is all going to be fine; we are out talking to the customers a lot, we are thinking about creative pricing strategies that might branch across the two continents, and as Jean Francois said, we are making big investments in our technology to be even faster, because if you will remember back in the ECN wars here, I think the exchanges here, the incumbents were slow to do any of those things and that I thought created more of an opportunity for some of these consortia to be created and we are making sure we do everything we can to behave quite differently than the incumbents did back then.

Jean Francois Theodore

At the same time, if I may add, we are not only investing in our [inaudible] but also developing a whole range of services that [inaudible] directive is enabling us to do. So that is a new internal matching facility for our users, customers wanting to [inaudible]. We will also be relaunching the [inaudible].

[inaudible – inability to understand accent]

Kenneth Worthington – JP Morgan

Thank you. Final question, in terms of headcount, what should AEMS do to headcount at NYSE, and then what is the outlook for that headcount at the end of 2008 and 2009?

Jean Francois Theodore

AEMS will mean, at the beginning, that [inaudible] people in London will come under NYSE Euronext umbrella. As Larry already said, we are going to assume [inaudible]. Then the evolution will depend on the development of the common platform, the UTP, and our successes in third party exchanges in which the third party [inaudible] UTP will be a benchmark for this and [inaudible].

Kenneth Worthington – JP Morgan

Thank you. I am going to go work on my French now. I appreciate that.

Jean Francois Theodore

I will work on my English. [inaudible].

Kenneth Worthington – JP Morgan

Thank you.

Operator

Your next question comes from Rich Repetto – Sandler O’Neill.

Rich Repetto – Sandler O’Neill

For a semi-tech novice, I think non-stops, you are talking about the servers?

Larry Liebowitz

For the most part, they are tandems. Tandem computers. You can think of them as mini-computers, the way we used to call them.

Rich Repetto – Sandler O’Neill

And you are replacing them with something that is much more efficient and scalable? I think?

Larry Liebowitz

Yes, typically they are going to be Linux-based, so [Wintel] type platforms. It is typically about 10x cheaper, at least, to do the upgrades. It is a ridiculous cost footprint difference.

Rich Repetto – Sandler O’Neill

Understood. Next, on the actual costs, I applaud again more transparency there. In the text you say that the currency FX that your fixed costs would have gone down 7% or $135 million. Can I actually get the currency impact there?

Joost van der Does de Willebois

Rich, you actually have it if you go to the back of the release there is a table that shows you that impact. The pro forma combined results would then neutralize the impact of M&A which would then neutralize the impact of currency translation to get to the normalized results. It is at the back of the release.

Rich Repetto – Sandler O’Neill

I am not that fast, but is it around $80 million?

Joost van der Does de Willebois

On fixed operating expenses, yes it is.

Rich Repetto – Sandler O’Neill

The currency impact?

Joost van der Does de Willebois

For the year ended 12/31/07 versus ’06.

Rich Repetto – Sandler O’Neill

Okay, and then looking at fixed costs quarter to quarter, I think you have a good point here to take into account the currency impact. Could you just give the currency impact quarter to quarter, because visually fixed looks like they are higher.

Joost van der Does de Willebois

If you look again at the back of the release, if you compare the three months ended 12/31/07 versus the three months ended 12/31/06 the currency impact was $32 million on fixed operating expenses.

Rich Repetto – Sandler O’Neill

Next question, Duncan, with the acquisition of AEMS and pushing out synergies, that is a little bit less intuitive to me because I thought with [SIAC] and the acquisition of AEMS you would gain more control and be able to do the things possibly faster. I am just trying to understand why that acquisition would lead to pushing out $50 million or so?

Larry Liebowitz

It doesn’t push it out compared to what would happen had we not done the acquisition. What the issue is is it will take a little longer to do the things we want to do because we have to deal with the French labor councils, we have to get the team together and we weren’t able to get everyone working together until we really had a deal. There are certain things that we can’t do during that period – and it is a relatively long period before we can actually act as one.

So if you think of this as a deal that has a long time to close, and as a result it delayed this. It is not a lot, it is just a few quarters. A part of it is [inaudible] the savings came in the last year a little later than we had expected.

Rich Repetto – Sandler O’Neill

I understand that with AEMS you own the clearing software technology provided to both ICE, the London Clearinghouse and I guess to Euronext LIFFE. Is that correct that when the deal closed you will own that software license? When the deal closes you will own that software license? I am just trying to see what your outlook is with the London clearinghouse, I guess, Duncan.

Duncan Niederauer

Thanks for your comment on the transparency. We’ll be sure to let Nelson know that later today, your thoughts on that. I think the simple answer to your question is yes, that license that we own, the so called I believe it’s called TRS/CPS or something like that. That is an important asset that we own, that we will now control with the acquisition of AEMS.

I think as you’re correctly pointing to Rich with the second part of your question, I think you hit on this in one of your reports last week. These assets are becoming more and more strategic as the landscape consolidates and that was also one of the drivers in our doing the transaction. So I think you will expect to see that leverage as part of our strategy going forward because we do believe that’s an important asset, not only for the exchanges like LIFFE that we already run our business on, but perhaps as importantly for other people out there, who use the technology.

Operator

Our next question comes from the line of Roger Freeman - Lehman Brothers.

Roger Freeman - Lehman Brothers

With respect to the expense savings coming out of the year, if you look at the $50 million in run rate going into Q1 ‘08, was basically most or all of that already achieved by the end of the fourth quarter or is there a piece from the beginning of the common gateway implementation that factors into that?

Larry Liebowitz

That’s the effect of some of it being achieved in the fourth quarter and then getting the full quarter run rate version in 2008, we got it partway through the quarter. Also some of that is CCG and some of those non-stops going away.

So one of the problems we are tracking the things over time is there are some real effects due to timing as things roll out.

Roger Freeman - Lehman Brothers

Right, but it sounds like most of it is already basically on the back of this quarter?

Larry Liebowitz

We expected that this shouldn’t be a problem, put it that way. Remember some of that comes from the AEMS reduction also, that $10 million to $15 million, that one we got right off the bat as well.

Roger Freeman - Lehman Brothers

On AEMS again, how much of the push out is data center related versus AEMS?

Larry Liebowitz

I don’t have the exact numbers. I would say that it’s probably two-thirds UTP and one-third data center or something like that.

Roger Freeman - Lehman Brothers

Just thinking about AEMS more holistically given the additional control this gives you over expense savings longer term, does that, when you think about your longer term technology expense savings goals which have not changed, I would think that this would allow you to have either more confidence in the number or potentially increase the total.

Larry Liebowitz

I would say that it definitely gives us more confidence and in fact the progress we’ve made on the Universal Trading Platform, particularly in the last couple of months has been extremely good, not just the – remember, we have teams together, teams working together a common culture and things like that, all of that stuff is working reasonably well. Certainly I want to make sure that we focus on getting what we’ve done right now and then working on cleaning up extras as we go along.

Roger Freeman - Lehman Brothers

European expenses, it looks like if you back out the impact of currency it did go up about $29 million sequentially in the fourth quarter. Was any of this related to the capacity spending or is there anything else that’s impacting that?

Joost van der Does de Willebois

Thank you for the question. I think the key issue is there is always a little seasonality as far as the fourth quarter is concerned and indeed if you set aside the forex, there’s also an M&A part which is quite important; the M&A part in Europe is primarily linked to for example, [inaudible] was not accounted for last year, it’s now in our accounts and the GL Trade, which is another company which has made some acquisitions and actually it’s been consolidated and that comes back in our accounts.

So if you take aside those developments, the only thing while we had a marketing campaign running at the end of December, adding some small cost to and that actually explains the cost increase.

Duncan Niederauer

I think a small part of it too, Roger, would be some of the capacity stuff that Larry talked about lately which the good news is the volumes exploded; the other news is you do have to foot the bill for some additional capacity when that happens and we’ve done that.

The other thing I think some of you probably picked up on is remember that particularly in Europe, some of the compensation is formulaic, so you would always see some seasonality in the fourth quarter when the numbers just continue to improve and improve and improve and I think you see a small adjustment in the fourth quarter to reflect the increase in the accrual for the bonus pool in Q4, given the success of the businesses in Europe.

Roger Freeman - Lehman Brothers

Duncan, lastly, can you give me an update on discussions that you’ve been having with the SEC around changes in the specialist market structure? Specifically, as you look at buying the AMEX here, does that give you any additional ability to drive an agenda since effectively you are going to be taking care of all the remaining equity specialist operations, modernizing them?

Duncan Niederauer

The first part of your question, Roger is the dialogue continues very regularly and very actively. I think we’re down to where we really just have two or three rules left. One has to do with their ability to hedge and really run their businesses as an integrated market maker, which is a follow-up meeting on tomorrow and I think we’ll be filing a rule on that front fairly soon. Then the only other two changes that we’re contemplating making that will be concurrent with the next phase of the technology that rolls out that Larry was referencing earlier will be tied to what I would call the elimination of the work that the specialist has had pretty much forever in exchange for probably slightly better treatment on the parity side. I think that’s where we’re going to head with that.

In terms of the AMEX integration, I think that should oversimplify the landscape because it is the only other model that has what I would call close to a high tech, high touch model and I think we intend to bring that over here as soon as possible. The ETF business I don’t think we will reinvent the wheel. I think you’ll see that go to Arca; the listings business, I think you’ll see us create just a slightly different approach on the listings side to account for all of the different companies.

As far as with their model with the specialist is, many of the specialists there are also specialists here. So we imagine that if the initial conversations are any indication, they will just consolidate their businesses and do it in one place instead of two and many of the ETF specialists are also LMNs on the NYSE Arca platform. So we would imagine that they would just move over as well. So I think that’s all kind of to be determined, but that reflects the initial conversations we’ve had with some of the issuers and some of the market participants over at the AMEX.

Roger Freeman - Lehman Brothers

U.S. options rebate expense in the quarter, do you have that?

Gary Stein

Roger for the quarter it was approximately $12 million.

Operator

Your next question comes from Don Fandetti - Citigroup.

Don Fandetti – Citigroup

Duncan or Jean Francois, there’s a lot of talk about the derivatives consortium, Project Rainbow in Europe and it seem to be directly targeting LIFFE. Can you comment on how defensive that business is and the potential risk there?

Jean Francois Theodore

It’s called Project Rainbow or Four Seasons depending on the place, the use of it. We believe that we have a good capital play. We have state-of-the-art technology with LIFFE CONNECT. We have a strong position in Rainbow and also we have some kind of thinking about what our current organization should be. Such a thinking, running the derivatives market, [inaudible]

We are the only leading future [inaudible[ that does not own it’s trading and consolidated open position and it’s among our sub-strategic priorities to address the situation. Too soon to speak very precisely about the way we are doing it, but it’s among our top priority.

Don Fandetti - Citigroup

Duncan, I was just curious to get your thoughts on the futures business and how much of a priority it is to grow that business?

Duncan Niederauer

As I’ve said to many of you before, we certainly think as we expand our business globally and into other products having a bigger presence in futures would be quite strategic and quite important.

I think we have to balance that with what I think are relatively high prices for the assets that are out there for us to do that. I would also encourage all of you in addition to saying that it’s got to make financial and strategic sense, remember that as I’ve said in previous conference calls, there are other ways to be involved in the futures business other than in the traditional ways that it’s been done before. It’s not to represent that it’s easy to grow the business organically but I think there are some creative structures that we would certainly consider and you should safely assume that remains a high priority of ours.

Don Fandetti – Citigroup

Okay, thank you.

Operator

Your next question comes from Daniel Harris - Goldman Sachs.

Daniel Harris - Goldman Sachs

There have been a lot of changes recently at the market centers here in the U.S., including you guys with regard to charges for most of the tapes. Now that you’ve had your changes in place for over a month or so, your market shares is flat to down as much as 40% or so on the floor.

How do you think about share in the U.S.? Is it strictly based on pricing at this point or what else do you think is driving share to different players and new entrants in the market?

Duncan Niederauer

I think a lot of it obviously has to do with price, the more clients we talk to you would think that having the largest liquidity pool would be a factor and I think it helps, but I think a lot of it is driven by price and we recognize that the speed enhancements that we’ll be making this year and some of the functionality enhancements that we’re making this year, as well as some of the changes that I responded to in answering Roger’s question earlier about the market model, I think all of those things have to happen and then we’ll see and we’ll continue to take what the market gives us and see what the market is telling us about whether that’s what they need.

I think our pricing is competitive and what I would say is remember we haven’t change the pricing on the tape A side for quite some time. The only change we really made at the beginning of this year was on tape C where we have gained a 1.5% or 2% of market share on tape C. I think our tape A market share is pretty stable, down slightly in January after stabilizing in November and December.

I’d make the following remark that I want people to start thinking about in terms of this. If you think about tape A specifically, only roughly 75% of the business finds its way to exchanges. The rest is internalized on various broker-specific APS. When you combine what we’re getting on tape A on the NYSE platform or the Arca platform, if that number is around 54%, that’s 54% over 75% that’s a pretty high percentage of the matched volume. It’s more than two-thirds of all of the matched volume in tape A is being done on our channels.

So I think we get a little confused sometimes that 25% is reasonably profitless. I’m as happy to have anyone use our TRF as anyone else’s TRF, but if we’re giving back 100% rebates, I’m really playing for the percentage of matched market share and we’ve still got nearly 70% of the matched market share in tape A. That’s the math. Those are the facts.

Daniel Harris - Goldman Sachs

That’s really interesting, Duncan and just digging down to that a little bit further, especially because the hybrid is such a large source of liquidity, it’s a little unclear exactly how much the high frequency traders out there account for on any given day, but it certainly seems like that’s been a growing percentage of the overall market. How do you think about getting them to transact more on the hybrid where the rebate system really isn’t there and that’s something they really benefit from? I know you have the Arca system, but how do you think about that in terms of high frequency traders on the hybrid?

Duncan Niederauer

I think it’s a great question, Dan and I think you’re right. I mean that’s why we have the two-tiered model in the U.S., where we think that the two models will attract different kinds of people. I’ve got to be a realist. If I were going to war with only the NYSE model with its turnaround times and with its pricing model, I think I’d be hard-pressed to believe that I’m going to get a lot of the high frequency volume here for the exchange. I think we have to be realistic about that and say that’s why we have the two-tiered model.

We believe that the Arca model with its speed and with its pricing focused on the rebates is very conducive to those folks coming here and they end up being some of our largest customers on the Arca platform.

I don’t think it’s realistic to think a lot of them would come here without a pretty substantive pricing change as well as improvements in the turnaround time. As you can tell from my earlier comments, we’re pretty agnostic. The key number for us is 54%, not 40%.

Daniel Harris - Goldman Sachs

I want to take a step back and see maybe if I can simplify this for myself. In terms of the numbers we talked about, in terms of the $250 million in savings by 2010, what’s the best way to think about that in terms of the number that comes off of it? I know that’s a hard question because there’s been a number of acquisitions and you’ve got Arca in there too, but is looking at the first quarter of the combined entity and then annualizing that number the right way to think about by 2010 that sort of $250 million less off that number?

Duncan Niederauer

Good question. I’m actually not sure.

Larry Liebowitz

First of all, the $250 million was the benchmark from the time of the merger at those currency prices. So the further we drift from that time the harder it gets. In addition, as we add more deals on we don’t do acquisitions purposely to confuse you guys but it certainly does have that impact; it becomes harder to pull these pieces apart.

What I would focus on is the overall expense lines and making sure that all else equal, particularly the fixed cost bases are going down. Because really that’s what we’re impacting are people in technology, equipment and things like that. The only way we can do it is we account for them project by project. We can show you that if our expense line doesn’t go up, I mean, if we don’t do a good job of keeping that out and go crazy in spending on other things then our expense line will just stay flat or it’ll go up. Yes, whether we’ve got these savings on the synergies or not, we didn’t do a good job of holding our expenses. So, I think it’s a disciplined way to get our expenses down.

Operator

Your next question comes from Chris Allen - Banc of America Securities.

Chris Allen - Banc of America Securities

Thanks for the additional color on the expense guidance. It’s a very helpful. Just on that topic, just adding up the expense savings in the slide for ‘08 I’m coming up with roughly $36 million to $41 million for the global data UTP, AEMS, and you have $70 million in incremental over the course of ‘08. I’m just wondering what’s the missing piece? Is it other stuff or any color on that would be helpful.

Larry Liebowitz

Are you saying how do we get from 50 to 120 in ‘08?

Chris Allen - Banc of America Securities

Exactly, and I can kind of look at 35 of that based on the slide deck. I’m just trying to piece together the rest.

Larry Liebowitz

Part of it is the timing differences of one rate that you had at the end of the year, so we may only save $10 million for example in a particular category in 2008, but as we exit the year we should be at a run rate entering the next year of more because we get the full years worth of savings, and my guess is a bunch of it is timing related.

Chris Allen - Banc of America Securities

The run-rate technology savings, that’s gross number, that’s not net of the increased spending for capacity, right?

Larry Liebowitz

That’s correct. We had budgeted a certain capacity amount in here and so that’s off to the side.

Chris Allen - Banc of America Securities

On the FX translation, working through the numbers, I’m coming up with FX added roughly about $0.18 of EPS in ‘07 and obviously the start to this year, the dollar started off a little bit weaker as well.

I’m just wondering if you guys have taken any steps to hedge FX exposure. Are there any plans to depending on where your view of the dollar goes?

Joost van der Does de Willebois

You’re almost right with your calculation. It’s a little lower than $0.18, it’s $0.15 on a normalized basis, so as far as the foreign exchange impact is concerned on our results.

The second part of your question is no, we’re not hedging it because that means we know in which direction it’s going and if you look at also the cost of the hedge is not worth us doing this.

Operator

Your next question comes from Mamoun Tazi - MS Global.

Mamoun Tazi - MS Global

A quick question about the competition. In terms of the Project Rainbow or Four Seasons, however you call it, how would you be able to prevent the full fungability of the derivatives contracts now that you don’t own any clearinghouses and how would you be able to prevent LCS Clearing from making the cross margining possible and the fungability possible?

The second question would be about volumes. I know this is a million-dollar question, but what’s your outlook on volume growth in 2008, considering what’s happening in the market? Thank you.

Jean Francois Theodore

On the first part of the question, I think I’ve already answered. First, we are relatively confident in our competitiveness, especially with our LIFFE Connect system, Second, as I had said, there is in the global data [inaudible] a global change of landscapes in CME and [inaudible] has been cleared unconditionally including related clearings.

The European Commission is not looking at directs very specifically in that instance and then protecting the [inaudible] is a key question and a key priority for LIFFE. There cannot be only one leading [inaudible] with nothing for interest protection and some kind of carrying capacity. We have the carrying technology and we own [inaudible] as Duncan said, so we are working on that and we will elaborate but it’s too soon to be precise.

Duncan Niederauer

As far as the second part of your question, I think, we learned in ‘07 that as much as we might think we’re good predictors of volume, it turns out we’re not very good. I think the volume increases in ‘07 surprised everybody in the industry and I think after the success we had in ‘07, if you had told us that January of ‘08 was going to be as much of an increase over ‘07 as its been, I think we all would have taken the under as they say.

I think we put some what I think are fairly conservative assumptions into our budget for ‘08, but beyond that I don’t have a lot of predictions in terms of where it goes from here.

Mamoun Tazi - MS Global

In terms of qualitative comments on the volumes, do you think that structural shift that we have seen in the recent past will continue to play a parts or are we at the end of those structural shifts and now it’s the cyclical elements that will be taken over or helping as it did in ‘07?

Larry Liebowitz

What I was going to say is in the US equities’ market, I think, the structural shift of [inaudible] has played itself out, but in the US Options business, for example, as penny options continue to work through, I think, that’s probably a multi-year effect, as the market adjusts to that and in Europe, it’s really a matter of whether the structural change admits it and we saw the structural shift in volume changes; so I think in the U.S. equities is largely played out and in the other markets, it’s largely isn’t.

Duncan Niederauer

Let me add to that, because I think the other thing we all have to remember is the demographics of the market participants have changed dramatically because I’ve read a lot of reports that say if the U.S. slips into a recession or if we go into a protracted bear market the volumes are going to go down substantially. I think they’re going to go, if they go down the effect is going to be very muted by the fact that a large part of the participants right now, as all of you know, don’t really care whether the market is going up or down. Their model is different and these guys didn’t exist in the previous markets that are being analyzed very thoughtfully by people trying to draw comparison. I don’t think the comparisons are valid because we have a completely different demographic of players today.

We have time for I think one or two more. We are honored to have at least the owners and hopefully a couple of the players from the New York Giants coming today before they do their parade here to ring the opening bell with us so we want to make sure that we’re not being overrun downstairs, so we’ll take one or two more and then we’ll be done.

Operator

Your next question comes from Niamh Alexander - KBW.

Niamh Alexander - KBW

Just on the revenue synergies, can you give me an update there because there was $100 million of revenue synergies guided and I’m just wondering, can you give us any guidance as to what you’re seeing or how you’re progressing there?

Duncan Niederauer

I think we’re moving along. I think what you’ve seen if you have been watching what we’re doing whether its things like the SmartPool joint venture or the BIDS joint venture which we’re kind of now linking across the ocean, I think is important. We’ve had a lot of good conversations with clients who you may remember from when we announced the deal very few of the Arca derivatives clients run LIFFE and vice versa. We’re making good progress on there

. I think we’re also the work Larry is talking about in terms of the common customer gateway I think its going to play benefits in helping us reap those revenue synergies.

I eluded too earlier what we’re thinking about in terms of pricing across the regions, so that our largest customers can take advantage of not only the business they do in one region or the other but both combined, and we’re also working very hard with the regulators in terms of cross listing not only for issuers but also of various products.

You may have noticed that the first company to take advantage of the new fast track or fast path cross listing an Indian company called [Saytiam] listed in Amsterdam about a week or ten days ago and we think there’s more where that came from. So I think ‘08 will be the year where you start to see some of that more visibility in the P&L.

Niamh Alexander - KBW

I think we talked about it briefly before, but the listings, has the pitch changed now that you are more of a global and you have the cross listings? Do you find that the marketing pitch for the listings business is different now?

Duncan Niederauer

It’s definitely different because remember if you look back at the NYSE company specifically, two years ago it really only had one listing brand and you either qualified or you didn’t and now what we’re trying to do and you can see it in some of the success we had in ‘07 which was very broad in the U.S. and Europe and also in segments that we previously were comparable not as good in, I think we now have really quite a global listings offering for companies of all shapes and sizes and I think if we play our cards right and the AMEX deal gets approved I think we’ll be able to extend that even further where we’ll be able to protect the brand on one hand at the same time extend the brand, so that people have a lot of different choices of where they can list under that umbrella.

As I’ve discussed with a few of you before, I do think that over time, companies will make a global listing decision and I think we’ll see a reversal of this trend where large European multinationals delist for regulatory reasons; I think it will actually start going the other way.

Operator

Your final question comes from Josh Elving - Piper Jaffray.

Josh Elving - Piper Jaffray

When looking at total expenses, obviously revenues have grown very rapidly and you had some currency issues here and there and a lot of acquisitions and what not. When you think about the operating margin as we head into ‘08, do you have any kind of guidance for us and how to think about are we going to see a significant improvement in that operating margin heading into ‘08?

Joost van der Does de Willebois

It’s very difficult to predict any let’s say forward-looking statement as far as the operating margin is concerned because of two elements that play a role there. It’s a revenue element of course and it’s a cost element. As you’ll see, what we managed to do is on a normalized basis we managed to reduce our costs substantially and if you take out all the M&A activities and the forex activities from there with a forward-looking statement as to where our margin might be, it’s difficult.

Duncan Niederauer

We’ve given a lot of transparency and some other stuff, but I think in honor of Nelson, we’ll continue to make no forward-looking statement.

Thank you guys. Have a good day. Enjoy your day, thanks.

Gary Stein

Thanks very much everybody for participating. If you have any other questions feel free to get in touch with me and we’ll certainly answer your questions, Thank you.

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