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= How to do M&A right: When describing acquisitions that most impressed the panelists, a key reason for success was the acquirer keeping the target management in place as well as giving the target management independence. The scope and planning of the integration was also critical for success. Chart 88: Do you think M&A activity in financial services will pick Chart 89: If you voted yes, what statement closely matches your up in 2017? rationale? 70% 60% 60% 50% 50% 40% 30% 40% 20% 30% ° 10% 20% 0% 10% Lower anticipated © Modesteconomic Shareholder activism regulatory burden, _tailwinds and/or sub- should pick up and 0% particularly on buyers scale businesses will help drive activity Yes, meaningfully Yes, modestly No, | don’t think deal behoove more activity will increase institutions to sell Source: BofA Merrill Lynch Global Research Source: BofA Merrill Lynch Global Research Understanding the Changing Fixed Income Markets We hosted a panel to discuss the evolution of the fixed income market structure given the advent of electronic trading and regulatory construct. Our panelists included Lee Olesky (co-founder and CEO of Tradeweb), Adam Brown (Head of US Rates Electronic Trading at BofAML) and Brian Callahan (Head of US Par Loan Trading and the head of Electronic Initiatives for Global Credit and Special Situations at BofAML). = Electronification of fixed income markets steadily growing; however, lag European market. Electronic trading came to fixed income trading in the late 1990’s as a way of automating transactions (i.e. create a more efficient process between parties). Today in the US, the investment grade market is 16-20% electronic, the high yield market is 8% (has doubled over the last few of years), the treasury market (which has been growing steadily over last 10-15yrs) is 80-90% of the actual trade count is electronic. While the electronification of the derivative market was slower to evolve, recent regulatory reform has accelerated the electronification process (50% today}. That said, while the evolution towards electronification in the US continues to grow, the European bond market is actually more advanced with nearly 50% of the bond market automated (vs. 20% for the US). = Regardless of possible regulatory relief, electronification may slow but won’t end entirely. While a partial repeal or lightening of Dodd-Frank would be a net positive for the financial markets, and possibly lower the costs to banks and end- users, Mr. Brown doesn’t see a dramatic effect on the market structure. In other words, regulatory relief may only slow down the electronification progress. = Electronification within the fixed income market is a modest priority among asset managers. Fifty-two percent (52%) of the audience polled believe it to be a modest priority in their own corporate strategy to embrace new technologies/electronification in fixed income. Mr. Brown was not surprised by the results as many of the asset managers have their own constraints from technology funding to regulatory issues to running the day-to-day business. While 60 2016 Future of Financials Conference | 17 November 2016 Bankof America a Merrill Lynch HOUSE_OVERSIGHT_014374