Man Group plc - Annual Report 2007

Exchange-traded derivatives
MF Global executes client trades in exchange-traded derivatives, both on an agency and, in some markets outside the United States, on a matched-principal basis, and then, if acting as a clearing broker, clears the orders for our clients and their counterparties. The principal trading markets for which it executes and clears exchange-traded derivatives include interest rate products, equities and commodities. The products that generate the largest trading volumes for the business include futures and options linked to interest rates, equities, energy and metals.

	Ranking for the three months ended 31 March 20071
Europe
Eurex2	First3
Euronext.Liffe4	First3
ICE Futures	First3,5/Third5,6
North America:
Chicago Board of Trade7	First
Chicago Mercantile Exchange7	First
Commodity Exchange Inc.6	First
New York Mercantile Exchange6	First
Asia Pacific3:
Singapore Exchange Ltd	Third
Sydney Futures Exchange	Fourth
1 Based upon simple average of monthly rankings for the three months ended 31 March 2007, where quarterly rankings are not provided by the exchange. 2 Based upon interest rate derivatives only. 3 Based upon executed business, including executed and cleared business and executed-only business. 4 Based upon Euronext London, excluding Bclear (OTC equity derivative transactions). 5 Estimated based upon rankings for ICE Brent Crude Futures, ICE Gasoil Futures, ICE WTI Crude Futures products, which an aggregate represented 98% of all volume on ICE over the same period. 6 Based upon cleared business, including executed and cleared business and cleared-only business. 7 Non-member business only. Based upon executed business, including executed and cleared business and executed-only business.

The table above sets forth several of the major derivatives exchanges in North America and Europe and two exchanges in the Asia/Pacific region and, for each exchange, provides MF Global’s rankings for the three months ended 31 March 2007, based on information provided by the respective exchanges on a monthly basis.

OTC derivatives
MF Global provides execution services on both an agency and a matched-principal basis for a wide array of OTC derivatives, including forwards, options, swaps and other derivative products, subject to applicable laws and regulations. It also has the capability to design OTC derivative products that can be tailored to meet its clients’ individual investment needs subject to applicable laws and regulations.

Cash products
MF Global executes and clears trades for a broad array of cash products, including listed equity securities, debt securities – i.e. non-derivative securities – and foreign exchange products on both an agency and a matched principal basis. The cash product trades it executes involve (1) listed equities, (2) US Treasury securities and corporate bonds traded in the OTC markets, and (3) OTC foreign exchange contracts and spot transactions.

Primary trading markets
MF Global executes and clears its products in a number of markets. Its primary trading markets include interest rate products, equities, foreign exchange, energy, metals and agricultural or other commodities.

For the year ended 31 March 2007, we estimate that almost 30% of our revenues is attributable to interest rate products, approximately 30% is attributable to equity-related products, approximately 10% is attributable to foreign exchange, with the remainder attributable to a mix of commodities, including metals, energy and agricultural and other. These allocations are based to a substantial extent on management estimates and may not be indicative of the future mix of business.

Primary geographic regions
MF Global executes trades for clients located in three principal geographic regions: Europe, North America and the Asia/Pacific region. Its operations in each region are organised to service the institutions, hedge funds and other asset managers, professional traders and private clients located in that region. In most regions in which it operates, it executes trades involving a wide range of products on a number of trading markets. The acquisition of the Refco assets enhanced its presence in North America by strengthening its US operations and establishing a presence in Canada. In addition, the acquisition established its presence in India and enhanced its presence in Singapore and Taiwan. There are a number of countries in which it does not currently maintain offices but conducts a significant amount of business. For example, based on information gathered by MF Global Management with respect to participants in that industry, MF Global believes that, despite the fact that it does not have an office in China, it is a leading provider of financial risk management products to the Chinese metals industry. It services these clients through its offices in London, Hong Kong and Sydney.

Because the central aim of MF Global’s integrated business model is to provide each of its clients with brokerage services that encompass any and all combinations of its products and trading markets, it seeks to develop its business in each geographic region by providing local clients access to global markets and providing global clients access to the local markets. For example, it is focused on increasing the number of clients in the Asia/ Pacific region – for whom it can execute and clear trades in Europe or North America as well as the Asia/Pacific region – and providing its clients in Europe and North America with increased access to the exchanges in the Asia/Pacific region.

Shown in Figure 33 is the percentage of its revenues derived from each of these geographic regions for the year ended 31 March 2007.

Primary clients
As MF Global’s business has expanded into new trading markets, it has broadened its client base both through internal development of execution and clearing services targeted at different clients and through acquisitions. It does not manage its business according to specific types of clients, but rather regards its client base as a whole, thus enables it to provide access to derivatives and cash products for all types of clients and potential clients. We believe that receiving order flow from a diverse client base helps it provide efficient execution across a broad range of products, trading markets and regions. It currently provides service to over 130,000 client accounts that have been active in the last 12 months, including a diverse group of institutions, hedge funds and other asset managers, professional traders and private clients worldwide.

For the year ended 31 March 2007, we estimate that approximately 40% of our revenues is attributable to institutions, approximately 20% is attributable to hedge funds and other asset managers, approximately 20% is attributable to private clients, with the remainder attributable to a mix of professional traders and other clients.

Analysis of financial results in the year
A commentary on the income statement and balance sheet of our Brokerage business is given in the Financial and Risk Management Review, which follows this Review.

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