FX TEACH-IN

1. FX TEACH-IN Mark Redwood and Jas Singh 10 May 2006

2. Agenda FX markets today Reuters current role Market evolution FX MarketSpace

3. FX markets today • c.$2 trillion average daily turnover • Market growing at 16% a year • Dealer-to-customer segment growing fastest • 95% of market is “trading for profit” • c. 85% of transactions involve the “major” currency pairs: • US Dollar; Yen; Euro; Sterling; Swiss Franc; Canadian Dollar; Australian Dollar

4. FX: an over-the-counter market Inter-dealer market Dealer to customer market Bank Conversational dealing – ReutersFX electronic matching – Reuters; EBS Bank Conversational dealing – ReutersFX electronic matching – Reuters; EBS Inter-dealer broker FX tradingportals FX tradingportals • FX trading portals • Single bank portals: e.g. Deutsche; UBS; Citigroup; HSBC; Barclays • Multi-bank portals: e.g. FXAll; Currenex; Hotspot • Portal aggregator: Reuters Bank branch / regional bank Prime brokerage products: EBS; Reuters FX tradingportals Corporate Hedge fund / other financial

5. Service providers • Inter-dealer brokers e.g ICAP; Tullett etc • Conversational dealing – Reuters • FX electronic matching – Reuters; EBS • FX trading portals • Single bank portals: e.g. Deutsche; UBS; Citigroup; HSBC; Barclays • Multi-bank portals: e.g. FXAll; Currenex; Hotspot etc • Portal aggregator: Reuters • Prime brokerage products – EBS; Reuters

6. FX workflow Price discovery Counter-party credit check Trade Createdeal ticket Update counter- party credit limits Settlement

7. Reuters: a differentiated offer for the FX market • Global, neutral distribution • Proven ability to build liquidity • 25 years of expertise in FX Dealing services • Post-trade integration capability • Revenues of c. £1 billion in 2005 from Reuters Dealing and Treasury information services • c. 112,000 users in Reuters Treasury community • 18,000 Conversational Dealing users • 7,000 Dealing Matching users

8. Reuters: a comprehensive offer for the FX market • Reuters Conversational Dealing and Matching • Reuters Prime Brokerage • Reuters Electronic Trading • Reuters Trading for FX

9. Market Evolution The market is driving towards a more open trading alternative *NEW*OPEN Buy & Sell-side Platform with CCP IDB with Prime Brokerage and limited CCP Single - Bank Platforms Multi – Bank Platforms IDB with Prime Brokerage • Bilateral customer relationships • Client relationship / cross-market capability • Attract additional order flow • Effective liquidity management • Manages market growth • Consolidated market efficiencies • Service hedge fund flows • Support for algorithmic models • Attract additional order flow • Provide credit intermediation for the credit-challenged inter-bank market

10. Global FX market trends Dealer-to-Customer FX Traded Electronically % Share of Spot FX by Segment 1995-2007 Source: BIS, December 2004 (adjusted for local and cross-border double-counting) Source: BIS, December 2004 and Reuters Hedge Fund Growth (AUM; # of Funds) FX Assets Under Management in Parker FX Index Source: The Barclay Group; The Hennessee Group Source: Parker FX Index (efers to AUM in 60 or so FX only funds measured by the Parker Index.)

11. Forces at work – Global FX market Growth in inter-dealer and customer electronic trading: • Creation of new business models • Resurgence in growth • Emergence of FX as an asset class • New market entrants • Growth of high frequency trading • High volume, low margin • Growth of Prime Brokerage (PB) • Loosening of credit terms to attract PB flows • Market share shift to buy-side Volume growth due to: • Cross border capital flows • Globalisation • Algorithmic trading • Emergence of prime brokerage Ongoing margin pressure due to: • Customer demand • Competitive landscape Search for investment returns via new, FX-based trading models

12. Market impact • Prime brokerage allowed entry to inter-bank market platforms • Distorted traditional inter-bank market • Existing venues exposed to predatory program trading practices • Latency arbitrage • Credit maintenance consuming excessive capital • G7 volume increased while margins collapsed

13. Meeting emerging FX customer needs FXMarketSpace* Centralised OTC FX execution, clearing and linked settlement VALUE PROPOSITION KEY FEATURES • Reduced cost of trading • Reduced risk • Centralised pool of deep liquidity • Anonymous, multi-lateral matching • STP and operational efficiency • Strongly funded • Accessed through prime brokers and clearing members • High performance matching CME cleared, CLS settled • Full FX suite (spot, forwards, options) • Reuters and industry STP formats • FSA regulated * Subject to regulatory clearance

14. FX MarketSpace value chain Access via Reuters GUI or CME GLOBEX API Clearing Prime Brokers Banks Clearing Prime Brokers CLS bank Continuous Linked Settlement Clearing house Prop traders CCP-based matching - Clearing Prime Brokers Leveraged Funds • Buyside / End User • GUI - Reuters integrated • API trading – support for • algorithmic trading • CCP – no bi-lateral credit • required • Aggregated liquidity • Comprehensive STP • Prime Broker/Clearing Member • Fiduciary responsibility • Authorise access • Enforce access rules • Post collateral with CCP • Limit & trade admin • STP – allocations, etc. • Liquidity Providers • Access to best pricing & • aggregated liquidity • Anonymous trading • Access to flow • No credit risk • Operational cost savings • Reduce e.trading costs • Clearing House • Multilateral netting • Collateralised margining • Net settlement • Improvement of funds flow • Facilitates increased trading • Real-time deal confirmation • CLS • Settlement risk • elimination • Operational • efficiencies

15. Centralised Matching and Clearing • High performance trading • CME matching engine • Leading credit & risk management • Choice of access • CME GLOBEX API • Reuters global desktop footprint • Reuters standard transactions API • 24 x 5.5 market access • Industry leading Straight Through Processing • Reuters ticket output feed • CME GLOBEX API FIX support

16. Buy-side Central limit order book with full depth of market Pre and post trade anonymity Diversified order flow Credit and capital efficient trading Cost and operational efficiencies Sell-side Deep liquidity Grow volumes beyond bilateral credit relationships New fee opportunities Reduced cost of trading Greater capital efficiency Better risk management Operational efficiencies / STP Benefits

17. Financials • Reuters and CME each to invest up to $45 million (in two roughly equal parts in 2006 and 2007) to fund venture to profitability • Reuters share of losses expected to be $20­$25 million, mainly in 2007 • Around $5 million of this expected in 2006 • Highly scalable business model, principally fixed cost base • Needs c.$ 40 million revenue (c. two percentage points of revenue share) to break even

18. Forward-looking statements • This presentation includes certain forward-looking statements relating to Reuters within the meaning of the United States Private Securities Litigation Reform Act of 1995. Certain important factors that could cause actual results to differ materially from those disclosed in such forward-looking statements are described in Reuters Annual Report and Form 20-F 2005 under the heading ‘Risk Factors’ and include the risks that necessary regulatory approvals are not received and that the joint venture is not as successful as or by the times anticipated. • Copies of the Annual Report and Form 20-F 2005 are available on request from Reuters Group PLC, South Colonnade, Canary Wharf, London E14 5EP. • Any forward-looking statements made by or on behalf of Reuters speak only as of the date they are made, and Reuters does not undertake to update any forward-looking statements.