Financial Services Coverage Capital Markets Report

Financial Services Coverage Capital Markets Sector Update

2019 YEAR IN REVIEW

A P R I L 2020 Leading Independent, Global Advisory Firm

Houlihan Lokey is the trusted advisor to more top decision-makers than any other independent global investment bank

Corporate Finance Financial Restructuring Financial and Valuation Advisory

2019 M&A Advisory Rankings 2019 Global Distressed Debt & Bankruptcy 2000 to 2019 Global M&A Fairness All U.S. Transactions Restructuring Rankings Advisory Rankings Adv isor Deals Adv isor Deals Adv isor Deals 1,300+ 1 Houlihan Lokey 184 1 Houlihan Lokey 76 1 Houlihan Lokey 1,057 JP Morgan Employees 2 Goldman Sachs & Co 167 2 PJT Partners Inc 43 2 929 3 JP Morgan 141 3 Moelis & Co 36 3 Duff & Phelps 734 4 Morgan Stanley 122 4 Lazard 29 4 Morgan Stanley 621 Bank of America Merrill Lynch 23 5 Evercore Partners 112 5 AlixPartners 19 5 612 Refinitiv (formerly known as Thomson Reuters). Announced Offices Source: Refinitiv (formerly known as Thomson Reuters) Source: Refinitiv (formerly known as Thomson Reuters) or completed transactions.

No. 1 U.S. M&A Advisor No. 1 Global Restructuring Advisor No. 1 Global M&A Fairness Opinion Advisor Over the Past 20 Years ~45% Top 10 Global M&A Advisor 1,000+ Transactions Completed Valued Employee-Owned at More Than $2.5 Trillion Collectively 1,000+ Annual Valuation Engagements Leading Capital Markets Advisor

~$3 billion Market Cap North America Europe and Middle East Asia-Pacific

Atlanta Miami Amsterdam Madrid Beijing Sydney ~$1 billion Chicago Minneapolis Dubai Milan Hong Kong Tokyo Annual Revenue Dallas New York Frankfurt Paris Singapore Houston San Francisco London No Los Angeles Washington, D.C. Debt

2 A Leading Advisor to the Capital Markets Sector

Houlihan Lokey is the undisputed industry leader in broker-dealer and capital markets technology advisory with deep domain knowledge and entrenched relationships with marquee clients

No. 1 Advisor to the capital markets …with extremely strong current momentum and an extensive track record sector cumulatively over the last advising on industry-transforming deals that spans more than two decades… 1-, 3-, 5-, 7-, and 10-year period…

Select Transaction Experience 2010-2019 M&A Advisor Rankings All Capital Markets(1) M&A Globally

Rank Advisor Deals

a portfolio company of has been acquired by has sold a 20% non-voting has received strategic investment and its wholly-owned subsidiary has been acquired by ownership interest to from 1 Houlihan Lokey, Inc. 38 has acquired and minority-owned by

the parent company of have been acquired by 2 Bank of America Securities 30 a subsidiary of

has been acquired by 3 J.P. Morgan Securities LLC 28 Sellside Advisor* Sellside Advisor* Buyside Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor* 4 Piper Sandler & Co. 27

4 Berkshire Global Advisors LP 27

6 Barclays Capital Inc. 25 has been acquired by

has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by 7 Morgan Stanley 24 has been acquired by a subsidiary of 7 Goldman Sachs & Co. LLC 24 IntercontinentalExchange, Inc.

9 Credit Suisse (USA) Inc. 23 Sellside Advisor Sellside Advisor Sellside Advisor* Sellside Advisor Sellside Advisor* Sellside Advisor* Sellside Advisor

10 Raymond James & Associates, Inc. 22

Source: SNL Financial has acquired the Calgary-based a portfolio company of has acquired has been acquired by unit of (1) Includes transactions classified by SNL as “Investment Banks, a portfolio company of has been recapitalized and received a growth equity investment ITG has been acquired by Brokers and Capital Markets”, “Financial Exchanges” or “Investment NEXT Investors from now operating under the new name and Capital Markets Technology” has been acquired by a portfolio company of RS Energy Group has been acquired by Refer to Pages 8–9 for Houlihan Lokey’s additional transaction Sellside Advisor Buyside Advisor* Sellside Advisor* Financial Advisor* Sellside Advisor* Buyside Advisor* Sellside Advisor* experience in the capital markets sector Tombstones included herein represent transactions closed from 2012 forward. * Selected transactions were executed by Houlihan Lokey professionals while at other firms acquired by Houlihan Lokey or by professionals from a Houlihan Lokey joint venture company. 3 Capital Markets Sector Coverage Overview

 Houlihan Lokey is the undisputed market leader in capital markets sector advisory to Industry-Leading Capital Markets Sector Coverage both the traditional and technological Integrated global team built to advise all platforms and clients, internationally segments of the market

 75+ dedicated FIG and fintech bankers representing one of the industry’s largest and most active coverage groups

 150+ broker-dealer and fintech transactions Broker-Dealers Capital Markets Tech across both M&A and capital raising Core Capital completed since 2010 (1) Markets Led by Houlihan Lokey’s Led by FinTech team across Coverage Financial Institutions Houlihan Lokey’s Financial  Diversified and highly complementary Group Institutions and Data & industry expertise with a unified and Analytics Groups collaborative approach

 Specialized market knowledge and well- versed in nuances across various subsectors and business models  Global Technology and Software Team Complementary  ln December 2019, Houlihan Lokey Industry  Global Data and Analytics Team announced the acquisition of Freeman & Co. Coverage to significantly enhance its financial  Global Business Services Team services industry coverage

 Combined platform provides for a dedicated coverage team in every vertical of the financial services industry  M&A  Financial Sponsors Coverage  Follows the 2018 acquisition of Quayle Munro Full Suite of and its European financial institutions team,  Debt and Equity Capital  GP and LP Fund Advisory Products and Markets further scaling the value proposition and Services  Valuation and Fairness depth of talent we offer to our clients globally  Financial Restructuring Opinions

(1) Includes transactions executed by firms acquired by Houlihan Lokey, a Houlihan Lokey joint venture company, or by Houlihan Lokey professionals while at other firms 4 Financial Services Expertise and Capabilities

Dedicated Financial  Among the most active M&A advisor to the broker-dealer, insurance, mortgage, and Institutions Group specialty finance industries  Extensive experience in the asset management, commercial finance, consumer finance,  and depository industries Based out of New York and London M&A with additional offices in Los Angeles  No. 1 M&A advisor across all industries for deals under $1.0 billion for the last eight and Miami years  Broadest financial sponsors coverage platform, with active coverage of more than 900  Long-term, relationship-driven private equity firms and 250 hedge funds approach toward clients; senior participation on all engagements  Experienced and sophisticated capital markets team provides independent advice Capital  Provides access to senior debt, private mezzanine capital, high yield, public and private  65+ dedicated FIG professionals Markets equity, hedge funds, and other institutional investors by leveraging broad relationships

Extensive Industry and  Dedicated team serving illiquid secondary markets for portfolios of financial assets Transaction Experience  Experience with a variety of clients, assets, and capital sources resulting in a Secondary comprehensive transaction platform  Asset Management Markets  Loan portfolio analysis and valuation for banks, as well as sales of loan portfolios, MSRs  Close working relationships with regulatory agencies and regulatory counsel via loan  Broker-Dealers valuation and asset sale assignments

 Commercial Finance  Leading restructuring advisor with a dominant position for the last decade  Consumer Finance Restructuring  Advised on the largest FIG restructurings (Lehman Brothers, CIT Group, ResCap, Thornburg Mortgage, Refco, and Taylor Bean)  Depositories

 Financial Technology  No. 1 Global M&A Fairness Opinion Advisor Over the Past 20 Years  Extensive experience with bank asset valuations and special situation advisory for  Insurance distressed bank transactions Valuation  Mortgage and Real Estate  Structured products team specializes in valuing complex structured investments  Cutting-edge proprietary modeling and information-gathering technologies combined with  Specialty Finance access to real-time trading activity across the full spectrum of credit asset classes

Source: Refinitiv (formerly Thomas Reuters) 5 Experienced Capital Markets Sector Coverage Team

Significant senior coverage expertise with relationships spanning the capital markets sector

Reinhard Koester Gagan Sawhney Chris Pedone Matt Capozzi Group Co-Head Managing Director Director Vice President New York New York New York New York

Jeff Levine Mark Fisher Tim Shortland David Sola Group Co-Head Managing Director Managing Director Managing Director Miami London London London

6 Global FIG and Fintech Coverage Team

One of the industry’s deepest senior teams

North American Coverage Jeff Bollerman Pat Collins* Mike McMahon Craig Muir Jimmy Page Arik Rashkes Craig Tessimond Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director Managing Director Officers

Eric Weber Brent Ferrin Rob Freiman Kegan Greene Juan Guzman Sam Kramer Rob Losquadro Managing Director Director Director Director Director Senior VP Senior VP

Rich Saltzman Faiz Vahidy Matt Cornish Chuck Hibbs Justin Resnick Aaron Solomon Jim Freeman Senior VP Senior VP Vice President Vice President Vice President Vice President Senior Advisor

European

Coverage Johnny Colville* Christian Kent Lawrence Guthrie Zam Khan Paul Tracey Yashin Mody Officers Managing Director Managing Director Managing Director Managing Director Director Senior VP

* Financial Sponsors Group (FSG) liaison to FIG Group 7 Transaction Experience Traditional Investment Banks, Broker Dealers, and Advisory Firms

Houlihan Lokey is the undisputed industry leader in broker-dealer advisory with more than 10 deals closed since 2019 alone

Project Grail-UK has been acquired by Undisclosed and its wholly-owned subsidiary has been acquired by has been acquired by has been acquired by has acquired has been acquired by

Generalist UK M&A have been acquired by

Sellside Advisor Sellside Advisor* Sellside Advisor* Sellside Advisor* Buyside Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor*

has sold a 20% non-voting has been acquired by ownership interest to has been acquired by has received an investment from has been acquired by has acquired has been acquired by has been acquired by IK Investment Partners

a subsidiary of

Sellside Advisor* Sellside Advisor Sellside Advisor* Sellside Advisor* Sellside Advisor* Buyside Advisor Sellside Advisor* Sellside Advisor*

The Institutional Sales & Trading Business of

has acquired the Calgary-based has obtained a term loan and a portfolio company of unit of has sold revolver from has acquired has been acquired by ITG has received a minority investment has been acquired by from now operating under the new name has been acquired by to RS Energy Group LDC a portfolio company of

Buyside Advisor* Sellside Advisor Financial Advisor* Placement Agent* Sellside Advisor* Sellside Advisor* Sellside Advisor* Financial Opinion

has sold a minority interest to has been acquired by has been merged with has been acquired by has acquired has merged with has acquired has been acquired by

Fairness Opinion Sellside Advisor* Financial Advisor Buyside Advisor* Sellside Advisor* Buyside Advisor* Sellside Advisor* Sellside Advisor*

Tombstones included herein represent transactions closed from 2009 forward. * Selected transactions were executed by Houlihan Lokey professionals while at other firms acquired by Houlihan Lokey or by professionals from a Houlihan Lokey joint venture company. 8 Transaction Experience Capital Markets Technology

Houlihan Lokey has a long history advising investment and capital markets technology companies with exceptionally strong momentum

Transaction Pending

a portfolio company of a portfolio company of has been acquired by a portfolio company of

has agreed to invest in has been acquired by has been acquired by has been acquired by has received a minority investment the parent company of from has been acquired by has been acquired by

Undisclosed Investor Group

Financial Advisor Sellside Advisor* Sellside Advisor Sellside Advisor Sellside Advisor Sellside Advisor* Sellside Advisor Sellside Advisor*

a portfolio company of a portfolio company of has closed a funding round led by has received strategic investment a portfolio company of has been acquired by from has received an investment from has been acquired by

has merged with EQT Vermeg Group N.G. has been acquired by Francisco Partners has been acquired by

a portfolio company of Moody’s Corporation

Sellside Advisor* Sellside Advisor Financial Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor

The In-House Fund Administration Business of

a portfolio company of a portfolio company of Rydex Fund Services has sold

has acquired has been acquired by has been acquired by a wholly-owned subsidiary of DailyFX and minority-owned by has been acquired by has acquired Broadridge to BISAM Euromoney Institutional Investor has been acquired by Trucost PLC PLC a portfolio company of has been acquired by IG Group

Sellside Advisor* Buyside Advisor* Sellside Advisor* Sellside Advisor* Sellside Advisor* Buyside Advisor* Sellside Advisor* Sellside Advisor*

have acquired a portfolio company of has sold has acquired has been acquired by has been acquired by has acquired an interest in has been acquired by NEXT Investors a portfolio company of Misys Broadridge has been acquired by to Pirum Systems Limited

IntercontinentalExchange, Inc.

€303 million

Sellside Advisor* Sellside Advisor Sellside Advisor* Buyside Advisor* Sellside Advisor* Buyside Advisor* Sellside Advisor Financing Advisor*

Tombstones included herein represent transactions closed from 2015 forward. * Selected transactions were executed by Houlihan Lokey professionals while at other firms acquired by Houlihan Lokey or by professionals from a Houlihan Lokey joint venture company. 9 Deal Activity Update Sector Landscape

Fintech Subsector Description Four-Year Deal Count (2016 to 2019)

Diversified and Full-Service Firms with services across investment banking, 60 Broker-Dealers capital markets, securities/brokerage, and more

Institutional Research, Research, sales, and trading firms with limited 93 Sales, and Trading advisory and other financial services

Boutique Investment Independent financial advisory firms without 163 Banks and Advisory Firms capital markets/research, sales, and trading

Electronic Trading/Risk Online trading platforms and electronic trade 400 Systems and Software risk analytics/services

Exchanges and Securities and other asset class trading venues 140 Other Trading Venues and liquidity platforms

Capital Markets Workflow Diversified trading infrastructure and financial 250 and Infrastructure data delivery services

Post-Trade, Processing, Settlement, clearing, custody, and other post- 93 and Clearing trade functionality

Asset and Fund Diversified back-office support services for 205 Servicing investment managers

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 11 Deal Activity Trends

The Allure of Technology Pressures on Legacy Models Strategics and sponsors alike continue to Regulatory change, shrinking eagerly acquire and invest in fast- commission pools, and a refined focus growing disruptors across the capital on execution quality have constrained markets space more traditional business models

Capital Markets Deal Activity Global M&A and Capital-Raising Activity

460 409 381 368

2016 2017 2018 2019

Competitive Tensions The Bull Market Arms Race Strong valuations, heightened Commercial banks and others who shed investment, and pressure to match peer capabilities during the financial crisis are offerings have led to increased tensions rapidly expanding back into new tech and among both the industry’s firms and investment banking offerings investors

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 12 Deal Activity Summary

Quarterly Deal Activity (Announced Deal Count)

125 118 121 110 112 110 105 102 101 98 100 88 84 86 79 79

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019

2019 Deal Activity by Target Subsector (Announced Deal Count)

106

62 55 45 41

26 20 23

Diversified/Full-Service Institutional Research, Boutique Electronic Trading/Risk Exchanges and Capital Markets Post-Trade, Asset and Fund Broker-Dealers Sales, and Trading Investment Banks Systems Other Trading Workflow and Processing, Servicing and Advisory Firms and Software Venues Infrastructure and Clearing

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 13 Diversified and Full-Service Broker-Dealers

Market Commentary Select 2019 Transactions

 With demand for new issues strong across equity, FI, and muni Acquirer/ Deal Percent Month Target Target Focus markets, acquirers have prioritized origination capabilities Investor Value Acquired  Public finance consolidation was a particular bright spot, with Mar. --- 100% Financial Institutions muni issuance surging through 2019 in a regionally fragmented and very competitive landscape U.K. Small- and Mid- Mar. $12M 100%  Industry specialization has also been a key priority for Cap Full-Service acquirers—many 2019 deals involved single-sector targets, including FIG specialists Sandler O’Neill and FIG Partners Apr. --- 100% Public Finance  As bulge brackets either lose relevance or focus upmarket, the Canadian Investment timing remains favorable for middle-market IBs and commercial June $52M 100% Banking and Markets banks to gain share in banking and markets through acquisitions Capital Markets

(1) Announced Deal Count July $600M 100% Financial Institutions

20 Sep. --- 100% Public Finance

17 Public Finance/ Oct. --- Merger 15 Investment Banking

Irish Full-Service Nov. $166M 100% Capital Markets 8

Full-Service Retail and Nov. $1.3B 100% Institutional

Municipal and Dec. --- 100% Mortgage Bonds 2016 2017 2018 2019 Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases (1) Includes transactions with North American and Western Europe-based targets only 14 Institutional Research, Sales, and Trading

Market Commentary Select 2019 Transactions

 Trading-oriented broker-dealers have been under pressure: Acquirer/ Deal Percent Month Target Target Focus commission wallets and research budgets are declining, while Investor Value Acquired expectations for execution quality and proprietary insight rise Jan./ Commodities/ --- 100%  Consolidation has generally served as a tool for reducing costs Dec. Emg. Mkt. Equities to adapt to the new lower-margin world Commodities/ Jan. --- 100% Energy  Acquisitions of Green Street, G.Research, and Redburn Institutional demonstrate the lasting value of niche, differentiated research Feb. $74M 100% Equities in a post-MiFID II environment REIT  June --- Maj. Turmoil also breeds opportunity, with a few forward-thinking Research brokers vacuuming up S&T talent and doubling down on Foreign Exchange execution capabilities June $110M 100% Hedging (1) Announced Deal Count July/ $28M/ 85%/ Retail Brokerage/ Oct. $7M 100% Prime Broker

U.K. Equity 30 July --- Min. Research

25 Equities/Options Aug. --- 100% 23 Market-Making Eq./Op. Mkt Making

Equities Prime Sep. --- 100% 15 Prime Services Brokerage

Small- and Mid-Cap Nov. $19M 100% Equity Research

U.K. Derivative and Nov. --- 100% Debt Hedging

Institutional Dec. $44M 100% 2016 2017 2018 2019 Multiasset Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases (1) Includes transactions with North American and Western Europe-based targets only 15 Boutique Investment Banks and Advisory Firms

Market Commentary Select 2019 Transactions

 As M&A fee pools experience continued growth, buyers have Acquirer/ Deal Percent Month Target Target Focus rushed to add highly profitable advisory capabilities Investor Value Acquired Technology, Media,  Mid-market investment banks are making acquisitions to fill Feb. $85M 100% and Marketing industry coverage gaps, while universal banks are seeking to Healthcare and diversify away from interest-based business lines Feb. --- 100% Business Services  A massive cohort of M&A boutiques formed in the wake of the financial crisis are now reaching critical mass and becoming Feb. --- 100% Financial Institutions ideal acquisition targets  Interest has centered on boutiques with true sector expertise, Apr. --- 100% Technology upmarket client focus, institutionalized management, and diversified productivity May --- Min. M&A Support Services Announced Deal Count (1) May --- 100% Fund Placement

55 Consulting and June $350M 50% Strategy

July --- 100% Generalist 38 36 34 Restructuring and July --- 100% Turnaround

Aerospace/Defense Aug. --- 100% and Gov’t Services

Sustainable Dec. $92M 100% Infrastructure

Technology, Media, Dec. $42M Min. 2016 2017 2018 2019 and Telecom Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases (1) Includes transactions with North American and Western Europe-based targets only 16 Electronic Trading/Risk Systems and Software

Market Commentary Select 2019 Transactions

 Most active subsector in 2019, accounting for more than one- Acquirer/ Deal Percent Month Target Target Focus third of all capital markets technology activity Investor Value Acquired

 Following a historic year in 2018 in terms of extremely large Jan. --- 100% Credit transactions, 2019 activity remained robust despite the lack of mega-deals aside from Refinitiv’s $27 billion acquisition by the Mar. $25M 20% FX London Stock Exchange Group Apr. $435M 100% Commodities  Deal activity was driven by systems and software focused on non-equities asset classes, as these markets experience Apr. --- 100% FX increased electronification

May >$500M 100% Credit

Announced Deal Count May $45M 100% FX M&A Financing/Minority 68 May --- 100% Commodities 64 / 62 62 60 55 May --- 100% Diversified

43 June --- Min. FX 34

Aug. $27.0B 100% Diversified

Nov. $10M 100% Commodities

Nov. --- 100% FX 2016 2017 2018 2019

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 17 Exchanges and Other Trading Venues

Market Commentary Select 2019 Transactions

 Larger exchanges maintain inorganic expansion strategies Acquirer/ Deal Percent Month Target Target Focus while looking to add multijurisdictional scale as well as add Investor Value Acquired new asset classes to a growing list of core competencies Jan. Consortium $70M Maj. Equities  Several startup trading systems emerged with the backing of consortiums of leading firms seeking to disrupt traditional Feb. $85M 23% Private Equities market structure May $60M Min. Credit  Crypto-focused venues saw robust activity in 2019, accounting for nearly 50% of transactions in the subsector, as the asset May $10M 25% Futures class gradually institutionalized

May $9M 29% Equities

Announced Deal Count May Consortium --- Min. Options M&A Financing/Minority 30 30 May --- Min. Residential Mortgages

23 June $863M 100% Regional 22 21 19 18 Aug. $150M 100% Treasuries

11 Nov. --- 100% Commodities Futures Futures Deutsche Borse

Nov. --- 100% Regional

Dec. $61M 66% Commodities 2016 2017 2018 2019

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 18 Capital Markets Workflow and Infrastructure

Market Commentary Select 2019 Transactions

 Subsector has remained highly active, with firms seeing Acquirer/ Deal Percent Month Target Target Focus increased demand from the continued electronification of Investor Value Acquired trading across asset classes Trading Apr. --- 100% Infrastructure  Firms such as Bloomberg, Citi, and Moody’s continue to invest Capital Markets May $165M 12% in firms that provide more granular trade lifecycle data and Communications analytics to the investment management community Capital Markets May $17M 20% Operating System  Demand for cost-effective solutions for asset managers continues to be at the forefront of thought for strategic Data Processing May $15M Min. investors as they attempt to gain scale and appeal to and Visualization larger blue-chip client bases Research May --- 100% Management

Announced Deal Count Research June --- Min. Management M&A Financing/Minority Trading 39 July --- 100% 36 37 36 Analytics 34 Trading July --- 100% Infrastructure 26 23 Trade Reporting Aug. --- 100% 19 and Compliance Unstructured Data Sep. --- 100% Processing

Structured Product Oct. --- 100% ABS Suite Issuance Software

Capital Markets Dec. $40M 100% 2016 2017 2018 2019 Consultancy

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 19 Post-Trade, Processing, and Clearing

Market Commentary Select 2019 Transactions

 Financial market infrastructure participants continue their Acquirer/ Deal Percent Month Target Target Focus desire to enhance service capabilities, expand asset class Investor Value Acquired coverage, and position themselves throughout the transaction Traditional Clearing Jan. $318M 5% lifecycle, specifically in the post-trade sector and Settlement

Equities Clearing Feb. --- Min.  The rise of AI-enabled risk reporting and collateral and Custody management has caused disruption among traditional players, Post-Trade leading to a desire to bring independent technology providers Mar. --- Maj. Reconciliation in-house Post-Trade Mar. --- 100%  Majority transactions remain on an upward trend, while VC/ Reconciliation minority investments have slowed from a record-setting 2018 Collateral May --- 100% Management

Announced Deal Count Diversified Post- July $225M 100% Trade Processing M&A Financing/Minority Equities Clearing Sep. --- 100% 23 and Custody

Diversified Post- Oct. $39M 100% Trade Processing

Prime Brokerage 14 Oct. --- 100% 12 12 Portfolio Analytics

9 9 Treasury Management Oct. --- Min. 8 Software 6 Trade Compression Nov. $41M 20% Software

Traditional Clearing Dec. $40M 80% 2016 2017 2018 2019 and Settlement

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 20 Asset and Fund Servicing

Market Commentary Select 2019 Transactions

 Activity has been amplified by the trend toward outsourcing, Acquirer/ Deal Percent Month Target Target Focus primarily driven by increasing regulatory costs and Investor Value Acquired

complexities within the investment management space Trust Administration Jan. $1.8B Maj. and Custody  A vast majority of transactions have been majority acquisitions Bankruptcy Jan. --- 100% by strategic buyers, primarily non-bank strategics and PE- Administration backed players, seeking to consolidate smaller players and Cap Table provide complementary services on a single platform Feb. $900M 100% Management

 Firms focused on servicing the private markets have attracted Bankruptcy Mar. $215M 100% the most interest from acquirers and premium valuations Administration

Trust Administration Mar. $55M 100% and Custody

Announced Deal Count Cap Table May $318M 20% Management M&A Financing/Minority Tech-Enabled 50 June $330M 100% Fund Servicing

41 Offshore Fund 39 July $692M 100% Administration 34 Private Fund Aug. --- 100% Administration

Credit Fund Oct. $575M 100% 16 Administration 11 9 Fund 5 Oct. --- 22% Distribution

ETF and Mutual Nov. --- 100% 2016 2017 2018 2019 Fund Distribution

Source: Cap IQ, S&P, Pitchbook.com, Public Information, Press Releases 21 Focus Area: Middle-Market Investment Banking U.S. Investment Banking Market Dynamics and Opportunity

U.S. Investment Banking Fee Pool by Product (1) ECM and M&A Fee Pool Volatility vs. Overall IB Fee Pool (2)

$ in billions 100% $52.1 $52.9 $49.8 5% 6% $47.1 90% $45.2 5% 4% 15% 14% 4% $42.3 17% 14% 4% 80% 17% 19% 28% 31% 25% 70% 30% 28% 27% 60%

35% 29% 33% 37% 33% 50% 36%

40% 22% 18% 16% 16% 15% 14% 30% 2014 2015 2016 2017 2018 LTM 2015 2016 2017 2018 2019

ECM M&A Leveraged Finance Inv. Grade Debt Structured Credit ECM M&A Overall IB

 U.S. IB fee pool reached record levels in 2018 and has since  Compared to other IB lines, ECM tends to be a volatile, open- pulled back slightly as leveraged finance fees decelerated and-shut market, requiring long-term institutional commitment

 ECM typically comprises 15–25% of the fee pool and currently  By contrast, M&A fee pools have been relatively stable through sits at the low end despite 2019’s buoyant stock markets business cycles, particularly in the middle market

Source: All IB fee analysis based on estimates from Freeman Consulting Services and transaction information from Refinitiv (1) LTM as of 9/30/19 (2) Calculated on a TTM basis and indexed to peak level 23 M&A Fee Pool Drivers

Long-Term Historical M&A Fee Pool Trend Role of Private Equity (1)

$ in billions; rolling TTM basis Middle-Market (≤$500M) Fee Pool $25 70%

$20 60%

41% $15 50%

59% $10 40%

$5 30%

Large Transaction (>$500M) Fee Pool $0 20% 2004 2007 2010 2013 2016 2019

Total M&A Fee Pool % from Deals ≤$500mm≤$500M 29%  Strong macroeconomic conditions, record stock markets, inexpensive debt financing, and shareholder support have supported M&A growth

 Inverse relationship between the overall fee pool (now at a record high) 71% and the role of the middle market (now at a record low)

 Recent growth has come almost entirely from large-scale deals, but the middle market is more stable and historically outperforms during bear Corporate Private Equity Involvement markets

 The middle market currently represents approximately 30% of LTM PE will remain a key middle-market fee driver, with ample fees but 95% of deal count—and middle-market fees are likely dry powder and less competition from strategics for understated significantly due to data coverage limitations smaller assets

Source: All IB fee analysis based on estimates from Freeman Consulting Services and transaction information from Refinitiv (1) LTM as of 9/30/19 24 M&A Segment Comparisons

LTM Fee Pools by Sector (1) YoY Fee Pool Growth by Sector (2)

$ in billions $5.5 60% Energy 50%

$4.1 HC Top Sector: 40% FIG 68% 30% RE, G&L C&R $2.6 20% 69% $2.0 $1.7 Overall Market: 10% 71% $1.1 $0.9 0% 83% 67% 32% 61% HC FIG 31% 81% -10% 29% FIG 17% 33% 39% RE, G&L Bottom Sector: C&R -20% TMT Ind HC Energy C&R FIG RE, G&L Deals ≤$500M Deals >$500M -30%

Industry 2015 2016 2017 2018 LTM  With sanguine market conditions, overall U.S. M&A fees have TMT +15% +19% +1% +15% +12% grown at a 5–10% YoY pace for the last several years Industrials +5% -9% +17% +19% -3%

Healthcare +38% -16% -14% +13% +6%  Each sector has undergone periods of outperformance and Energy -2% -8% +52% -17% +8% underperformance over just the last three years Con. and Retail -3% +5% +14% -23% +19%

 Advisory franchises need diverse coverage to avoid being Financials -18% +27% -1% +4% -12% subject to market-driven volatility RE, G&L +22% -21% 0% +20% -10% Total Market +10% -1% +8% +6% +5%

Source: All IB fee analysis based on estimates from Freeman Consulting Services and transaction information from Refinitiv (1) LTM as of 9/30/19 (2) Calculated on a rolling TTM basis 25 ECM Fee Pool Drivers

U.S. ECM Fee Pool by Segment Short- and Long-Term ECM Growth by Segment

Based on LTM Total Fees Short-Term Growth Long-Term Growth Segment (YoY)(1) (vs. 5-Year Average)(2)

Life Sciences 26% 28% Software and Internet Life Sciences -19% -20%

REIT/BDC/CE Fund $7.8B in Energy Software and -7% +140% Total Fees Internet 4% SPAC

8% 20% Sponsor Exit REIT/BDC/CE +52% -24% 3% Other Funds 11% 7% including overlap with other segments Energy -45% -80%

 Unlike M&A, ECM fee pools are consistently driven by a relatively concentrated set of market drivers SPACs +28% +227%  Life sciences and software/internet comprise approximately 45% of the fee pool and an even larger share of IPO fees (50%) Sponsor Exits -20% -73%  For competitors in the ECM market, there are fewer viable avenues of attack than in the more-diverse M&A market  Overall ECM “Other” ECM activity above primarily includes M&A financings, -17% -20% corporate asset spinoffs, and foreign company listings Market

Source: All IB fee analysis based on estimates from Freeman Consulting Services and transaction information from Refinitiv (1) Year-over-year growth calculated as change between 12 months ending 9/30/19 and 12 months ending 9/30/2018 (2) 5Y Averages calculated over the period of 2015-2019 using a 9/30 year end 26 Focus Area: Research, Sales, and Trading Challenging Conditions for the Buyside

Market Commentary Biggest Challenges Facing the Buyside

Based on a survey of buyside professionals  Asset and wealth managers are facing fee and revenue

pressures due to these factors: Passive Investing 13.6%  Investor preference for passive strategies shifting assets into funds with lower fee structures Unbundling 11.1%

 Within passive funds, management fees are also trending Algos/Electronification 9.9% downward Volatility 9.9%  Passive investing is seen as the greatest challenge to buyside, with passive AUM matching active AUM for the first time ever Reduced Liquidity 8.6%  Fee compression eventually hits the intermediary portions of the chain, creating reluctance to pay for sellside services like Personnel Changes 8.6% research

Active vs. Passive U.S. Equity Fund AUM Asset-Weighted Average Fees

$ in billions 1.25% $5

1.00% $4

0.75% $3

$2 0.50%

$1 0.25%

$0 0.00% 1998 2001 2004 2007 2010 2013 2016 2019 2000 2003 2006 2009 2012 2015 2018

Active Passive Active Passive Total

Source: (1) TABB Group 28 Impact on the Sellside

Market Commentary Total U.S. Equity Commission Pool (1)

 Equity commission pool in long-term decline, down to $6.3 billion in 2019 versus approximately $11 billion in 2015 $10.4 $10.8  Global sellside equity analyst headcount down 14% over the $10.2 $10.2 $10.1 last four years $8.6 4.9 4.0 4.2 4.9 4.6 $6.7  Top talent leaving for the buyside or exiting research space $6.3 $6.0 altogether 4.2 3.2 3.0  Equities headcount down 7% between 2014 and 2018 across 2.9 6.2 6.0 5.5 5.9 5.5 top 12 global banks 4.4 3.5 3.3 3.1  Additional exits in 2019 include Deutsche Bank (cutting half its 1,000 non-research equities employees) and 2012 2013 2014 2015 2016 2017 2018 2019 2020 Macquarie (exiting equities in the U.S. and Europe) Long Only Hedge Funds

Research Sourcing Before and After MiFID II Global Cash Equities Research Analyst Count

Based on a survey of European buyside professionals 4,400 Investment Banks 5% 38% 57% 4,300 4,200 Independent 17% 56% 27% Research Providers 4,000 4,000

In-House Research 3,900 34% 61% 5% (Buyside) 3,700 Source Relatively More Research

Source Relatively the Same Amount of Research/Not Sure 2013 2014 2015 2016 2017 2018 2019

Source: (1) Greenwich Associates, Coalition Development, CFA Institute, TABB Group (2) Based on TTM statistics as of 3/31/19 29 Disaggregation of the Sellside Research Function

Brokerage Firm as a “One-Stop Shop” encompassing the following:

Traditional Model Prime Sales and Investment Corporate Other Related Brokerage/ Trading Research Access Services Capital Intro

Significant disruption in the places the buyside gets its investment process inputs from is well underway, being driven by the following factors: Changing Landscape Emergence of MiFID II Shifting Data Needs New Data Providers

Continued Disaggregation:

Less reliance by The Future Research Data and Continued the buyside on viewed as a Slimmer trading research will be loosening of brokers for cost center by commissions further links between research and the sellside commoditized RS&T and IB other services

30 Evolving Competitive Landscape

Traditional Sellside Winners and Losers Emerging Niche Tech-Based Solutions

 Renewed buyside focus on measuring the value of research  Alternative data: AI/ML/NLP technologies continue expanding into investment research space  Winners are providing differentiated content and/or insight into an under-covered investment niche  Buyside views predictive analytics as a complement to traditional stock picking (which is moving in-house)  Traditional mid-tier sellside providers losing ground  Private markets: As the line between public and private  Market for traditional research content has evaporated for companies blurs, there is increasing demand for transparency analysts ranked outside the top into private companies, transactions, and funds  Non-brokerage, subscription-based business models winning out  Regulation: Growing opportunity to use quantitative screening  Have been able to operate as-is post-MiFID II and make for and surveillance to navigate the ever-increasing compliance uncomplicated acquisition targets burden (KYC, AML, ESG, etc.)

Portfolio Decision Order Risk Post-Trade/ CRM Research Compliance Management Support Management Management Reporting

High-Performance Computing and Advanced Analytics

31 Adding Value in the New Environment

 Differentiated research content more critical than ever Content  Buyside is measuring and scrutinizing the value of research, while bulge bracket’s pullback creates coverage opportunities in niche verticals

 Despite weak commissions, race continues in delivering best execution as TCA and measurement tools proliferate Execution  Continued innovations in algos/algo wheels, routing, connectivity/colocation

Capital  Buyside will always value a counterparty that is willing and able to commit capital for liquidity in large trades

 With commissions and research budgets down, IB origination becomes a critical avenue for leveraging RS&T IB Synergies  Full-service players must ensure tight integration between primary and secondary markets

Consolidation  M&A wave likely to remove excess capacity from the market and recalibrate cost structures for new environment

 Sellside needs to become a service partner to the buyside rather than a trading counterparty Relationships  Trend toward holistic outsourced trading solutions and low-touch offerings like TCA becoming consultative

 Given proliferation of new information vendors, buyside will need assistance in selecting and evaluating streams Product  Similarly, given the shift away from the one-stop-shop model, buyside will need assistance consolidating and integrating disparate data sources into their workstreams

32 Focus Area: Fixed Income Fixed Income: Bond Market

 Treasury, corporate bond, Treasury Issuance Corp. Bond Issuance MBS Issuance and MBS issuance $ trillions $ trillions $ trillions $12.2 rebounded from 2018 levels $1.6 $2.0 $2.1 $10.6 $1.5 $1.5 $1.9 $1.9 as interest rates declined $1.4 $1.8 $8.9 $1.3 through 2019, with further $8.4 refinancing-driven upside $7.1 potential in 2020 as rates plunge to historic lows

 Bonds have been further buoyed by strong growth among foreign investors as 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 European and Asian funds 2015 2016 2017 2018 2019 Investment Grade High-Yield seek positive interest rates in Bills Notes Bonds TIPS Agency Non-Agency the U.S. Treasury ADTV Corp. Bond ADTV Agency MBS ADTV  Agency issuance has been $ billions $ billions $ billions  supportedClick by toelevated edit text $613 $598 $609 $78 $78 $4.8 $561 mortgage origination levels $531 $69 $4.3 $4.2 $3.9 across the purchase and refi $63 $62 $3.8 segments, driven by rising employment levels and falling mortgage rates

 Uptick in Q1 corporate bond and MBS trading primarily due to increased market

volatility weighing on equity 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 investor portfolios Investment Grade High-Yield Fannie Mae Freddie Mac Bills Notes Bonds TIPS FHLB Other

Source: SIFMA ADTV: Average Daily Trading Volume Note: 1Q20 ADTV calculated as of 1/31/20 34 Fixed Income: Municipal Market

Market Commentary Municipal Bond Issuance $ billions $452 $449 $423  Municipal bond issuance rebounded from a quiet 2018 to $405 $383 $423 billion in 2019, representing a steep 22% YoY increase $335 $339 $346  Refundings remained near all-time lows since the Tax Cuts $295 and Jobs Act of 2017 ended the tax break for tax-exempt advance refunding bonds  However, new-money and taxable muni offerings surged during 2019, with a strong macroeconomy improving muni credit quality, an influx of international capital, and investors bracing for potential change in tax law post-elections 2011 2012 2013 2014 2015 2016 2017 2018 2019  ADTV has been very consistent over the last nine quarters Revenue G.O. Private Placement

Refundings as a Percentage of Long-Term Issuance Quarterly Average Daily Trading Volume $ billions $ in billions $12.5 $12.0 $11.9 $12.0 62.5% 64.4% 63.8% $11.3 $11.4 $11.7 $10.9 $10.8 58.5% 56.5% 51.1% 52.4%

29.9% 34.2%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2011 2012 2013 2014 2015 2016 2017 2018 2019 Customer Sold Customer Bought Interdealer Trades

Sources: SIFMA 35 Fixed Income: Structured Finance Market

Market Commentary U.S. ABS Issuance $ billions  Non-agency MBS markets reached a post-crisis high as $582 $540 investors search for yield in the late stages of the credit cycle $505 $430  ABS issuance climbed with a strong macro environment $366 supporting consumer credit expansion and the rise of structures like whole-business securitizations  With a volatile start to 2019, CLO spreads widened, resulting in a sharp decline in resets/refinancings, even as new issues remained close to the record levels of 2018

 Recent increases in non-agency RMBS issuance and the 2015 2016 2017 2018 2019 creation of TBA UMBS have helped to drive higher ADTV ABS CMBS CLO RMBS

U.S. Agency and Non-Agency ADTV U.S. Agency Specific ADTV U.S. Non-Agency Specific ADTV $ billions $ billions $ billions $306 $301 $5.3 $4.8 $255 $255 $257 $250 $250 $254 $4.5 $241 $237 $4.1 $3.7

1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 Agency Non-Agency TBA Specified Pool CMO ABS CDO CMBS CMO

Source: SIFMA, S&P 36 Fixed Income Trading: Electronification and Shifts in Liquidity

Changes in Market Structure Shifting Landscape of Market Participants

 Higher demand for liquidity from market participants has led to an  Stark blurring of the lines between providers and takers due to the increased focus on electronification within fixed-income markets increased number of venues allowing for A2A trading

 Electronic trading platforms have allowed for granular-level  Sellside banks are under increased competitive pressure from insights into transactional data, allowing for robust analytics non-bank liquidity providers, some of which are able to provide compared to that of the legacy request-for-quote (RFQ) model streaming prices directly to their clients

 The buyside is increasingly looking for new ways to generate  The market has 30+ operationally active electronic execution alpha, in doing so, seeking greater access to liquidity, improved platforms providing greater liquidity for both the buyside and price discovery, and subsequently more automation and more low- sellside touch electronic trading, to streamline their workflow

Percentage of Liquid Fixed-Income Percentage of Platforms Offering Securities Electronically Traded Electronic Trading Volume Breakdown A2A Trading

D2C A2A 25% A2A 30% Offerings 90% 42% Traditional 70% 60% Offerings 50% 58% 40% 25% D2D

FI Futures Treasuries European Agency Inv-Grade HY Cash 45% Gov't Bonds Cash Bonds Bonds Bonds

Source: Institute of Financial Services Zug (IFZ) 37 Disclaimer

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