Good morning, ladies and gentlemen, and welcome to the TMX Group Limited Q4 2022 financial results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, February 7, 2023. I would now like to turn the conference over to Paul Malcolmson, Vice President, Enterprise Sustainability and Investor Relations at TMX Group. Please go ahead, sir.
Well, thank you, Michelle, and good morning, everyone. I hope that you and all of your families are staying well and safe. Thank you for joining us this morning for the full year and fourth quarter 2022 conference call for TMX Group. As you know, we announced our results late yesterday, and a copy of our press release is available on tmx.com under Investor Relations. This morning, we have with us John McKenzie.
Ladies and gentl emen, please stand by. We are experiencing technical difficulties. Please do not disconnect your lines. Ladies and gentlemen, thank you for your patience. Please stand by. Do not disconnect your lines.
Good morning, everyone. We understand that there was perhaps a technical issue, we're just going to repeat. Apologize if there's a little bit of repetition, we do appreciate you joining us this morning. As usual, we have with us John McKenzie, our Chief Executive Officer, and David Arnold, our Chief Financial Officer. We will have a question and answer session following their opening remarks. Just a reminder that certain statements that we make today might be considered forward-looking, and we refer you to the risk factors that are in our press release and also reports that we filed with regulatory authorities. With that, I will once again turn it over to John.
Thank you, Paul. Again, our apologies for the technical challenge to start off the day. I'm gonna wish everyone a Happy New Year for a second time. If it wasn't a good one to start already this morning, we hope it's better now and wishing you the best to you and your families in 2023. My comments this morning, we're gonna focus on TMX Group's performance in 2022 and some of the key strides we made during the year to accelerate our strategy and advance the evolution of our company to meet the needs of stakeholders throughout the capital markets ecosystem here in Canada and around the world. David will join us to discuss our fourth quarter performance in detail in just a few moments.
It's no secret 2022 was a tumultuous and difficult year for a broad spectrum of our client base and stakeholders across the markets that we serve. Geopolitical events and macroeconomic conditions, including soaring interest rates, escalating inflationary pressures, negatively impacted a wide range of industries and people across our communities. These factors also had an adverse effect on capital markets activity and stifled economic growth. While some of these challenges persist into the early weeks of 2023, we do have good reason to be optimistic. Over time, our ecosystem has proven resilient through all conditions in terms of the market cycle and world events, and the fact that Canada's markets are the best in the world, deep and diverse, fair and transparent, and innovative and responsive.
I want to take a moment to extend my sincere gratitude to all of our clients and stakeholders across the globe for your crucial contributions to this track record of success. Your partnership is the key enabler, pushing the growth and continued evolution of TMX's exchanges and venues and the broad ranges of services we provide. Now, turning to our performance. TMX delivered positive results in 2022. Overall revenue grew year-over-year despite decreased capital markets activity compared to a record-setting 2021. TMX reported revenue of over CAD 1.1 billion, a 14% increase from 2021 due to higher revenue from derivatives trading and clearing, global solutions and insights, including Trayport and TMX Datalinx, and capital formation.
The increased revenue included CAD 118.5 million in revenue from BOX, consolidated in January 2022, of which 52.1% relates to a non-controlling interest, and reflected contributions from recent acquisitions including CAD 33.6 million in revenue from AST Canada acquired in August 2021, CAD 3.4 million from Tradesignal acquired in June 2022, and CAD 1 million from Wall Street Horizon acquired in November 2022. Increased revenue was also partially offset by lower equities and fixed income trading and clearing revenue due to lower trading volumes on Toronto Stock Exchange, TSX Venture Exchange, and Alpha. Excluding revenues from the consolidation of BOX and recent acquisitions, revenue was down slightly 2% from 2021.
On an adjusted basis, 2022 diluted EPS was $7.13 in 2022, a slight increase from 2021. Total operating expenses increased 21% compared to 2021, or a 4% increase, excluding expenses related to BOX, AST Canada, Tradesignal, and Wall Street Horizon. In addition to environmental factors and economic conditions, historical context is important discussing TMX's 2022 results. 2021 was a record setter in some of our key performance measures, including capital raising activity among our listed issuer client base on Toronto Stock Exchange and TSX Venture Exchange. In 2022, under extremely difficult circumstances, TMX's deep and diverse business model performed extremely well. We made significant progress in executing our long-term strategy to achieve sustainable growth and build stronger for the future. Moving to the individual business areas.
Revenue from capital formation in 2022 was CAD 261.2 million, a 1% increase from last year, reflecting the inclusion of revenue from AST Canada and higher revenue from sustaining fees. The year-over-year increase was largely offset by lower revenue from additional listing fees due into a lower number of financing transactions and decrease in dollars raised on TSX and TSX Venture. Higher interest rates and inflationary pressures and increased volatility weakened those capital raising conditions in 2022. Despite these challenges, though, our public market ecosystem has again proven resilient, and the entrepreneurial spirit of our issuers endures.
While the number of new listings was down from near all-time highs in 2021, we continue to add new companies to our ecosystem. The number of listings has grown for a seventh consecutive year. Although IPOs garner all the headlines, they are not the only way to join our markets. In fact, most companies choose a different vehicle to go public in Canada. In 2022, we welcomed 257 new listings to our market via other means, including 71 additions to TSX Venture Exchange's signature Capital Pool Company program. This past year still ranks among the strongest on record since the program's inception in 1986. It stands as powerful evidence of the appeal of the program in all market conditions. Overall, CPCs accounted for 32% of new TSX Venture listings in the past 10 years.
While these constitute smaller sized entry-level transactions, small companies grow into big companies. This is what sets Canada's markets apart. We do better than anyone, anywhere else in the world. TSX Venture Exchange is the foundation of our powerful two-tiered marketplace and a proven growth accelerator. In fact, 22% of the S&P/TSX Composite Index are TSX Venture graduates. We have embarked on a collaborative, stakeholder-driven initiative to ensure the public venture market remains a key differentiator and a competitive advantage. Venture Forward kicked off in the summer of 2022, canvassing the interconnected community of entrepreneurs, investors, financiers, lawyers, and advisors to identify priority near and longer-term marketplace challenges. We plan to announce next steps in the first half of this year, including identifying priority areas where we could work together with our stakeholders to effect positive change and potential tactics.
Now in all conditions, we continue our efforts to expand our global listing franchise with business development campaigns targeting growth companies that fit the profile of our markets and regions throughout the world, including the U.S., Europe, and South America. Canada's markets are the 10th largest in the world by market capitalization, but TSX and TSX Venture combined ranked number two in new listings and number two in new international listings amongst global exchanges through September 30th, according to data from the World Federation of Exchanges. In addition to this solid performance relative to our peers in a tough year, our TSX and TSX Venture teams remain closely engaged with the deal-making community. We have a number of go public prospects, companies across a range of sectors in our near-term pipeline, poised to join our markets when conditions normalize.
With that, our long-term pipeline for new issuers remains extremely robust. Now, I'd like to turn to derivatives. Excluding BOX, revenue from derivatives trading and clearing was CAD 142.8 million in 2022, up slightly from 2021, driven by a 10% increase in revenue from CDCC due to higher repo dealer activity and fee changes. You know, the increase was partially offset by a 4% decrease in revenues from Montréal Exchange, reflecting termination fees related to a market-making program and retroactive client billing credit, as well as a slightly unfavorable product and client mix. Total volume of contracts traded on MX was up slightly compared with 2021, and overall open interest grew substantially in 2022, up 18% at December 31st compared to the end of 2021.
Investors continue to seek out derivative instruments to manage exposure in their portfolio through the turbulence of 2022. While sustained volatility across equities and fixed income markets had a negative impact on volumes traded in some of MX's core products, including the BAX contract, we saw strong year-over-year growth in equity futures and options. Some of those key highlights included 18% growth in volumes traded in equity options, reflecting increased activity from institutional and retail investors in the energy and financial sectors, 43% growth in volumes traded on ETF options, highlighted by record activity from institutional investors across broader index, financials, and energy sectors, and 14% growth in volumes traded in index futures. We also saw significant growth momentum in MX's Government of Canada bond future contracts during 2022 as they continue to gain in profile among global investors.
Volume increased 126% in the CGZ, or the two-year contract, and 28% in the CGF or five-year bond contract when compared to 2021. Moving to Global Solutions, Insights, and Analytics, or GSIA, revenue was $360.1 million, a 4% increase from 2021, reflecting higher revenues from Trayport and TMX Datalinx. Trayport revenue grew 5% or 12% in common currency, pound sterling, when compared to 2021, driven by a 16% increase in trader subscribers and annual price adjustments. Continued efforts to expand the depth of trading tools, insights, and solutions across the core Joule network has enabled Trayport to provide essential support for energy market participants in navigating severe volatility.
Trayport added to its dynamic set of features and functionality in 2022 with the signing of a partnership agreement and acquisition of a minority interest in Ventriks LTD, a cloud a data technology company that offers a platform for data acquisition, integration, and business intelligence. The Ventriks solution has augmented the trading experience for its growing client base. Trayport has added more than 30 new clients in 2022 in core and new growth areas as new market entrants seek to connect to execution venues and clearing houses across world power and natural gas markets. Trayport's global diversification strategy also made continued progress in 2022, pursuing opportunities to move into new asset classes and geographies. One example, the Voluntary Climate Market, a collaboration with IncubEx launched last year to facilitate trading in the physical voluntary carbon market.
The TVCM platforms offers carbon offset projects from five of the leading offset registries, which are tradable with live bid and offer through Trayport's Joule platform. While still in the early stages of building this new market, we added several new build clients during the second half of the year, and we are working alongside IncubEx to bring additional liquidity to platform in the future. Same with GSIA, revenue from TMX Datalinx was CAD 202.7 million, an increase of 4% from 2021 due to revenue from data feeds, co-location, analytics, and price adjustments. These increases were partially offset by lower revenue from usage-based quotes, benchmarks, and indices. As reported, TMX Datalinx revenue included CAD 1 million in revenue from Wall Street Horizon, a Boston-based company we acquired in November 2022.
This acquisition represents another step forward for the TMX Datalinx team as we expand to enhance the content we provide to clients around the world. Wall Street Horizon is a leading provider of global corporate event data sets to traders, portfolio managers, and academics. The company covers 9,000 publicly traded companies worldwide, offering information on more than 40 event types, including earnings dates, dividend dates, option expiration dates, and more. TMX continues to pursue new ways to expand our information services business and to connect our global client base to the information they need to make a competitive advantage. We kicked off 2023 with a strategic investment in VettaFi Holdings, which includes a new commercial agreement. VettaFi is a U.S.-based, privately-owned data and analytics indexing, digital distribution, and thought leadership company.
TMX acquired approximately 21% of the common equity of VettaFi for $175 million U.S. dollars. Our investment in and partnership with VettaFi enables us to increase the depth and value of data-driven insights we provide to clients, enhance our digital capabilities, and enrich our leading support for the ETF issuer community. These recent initiatives and investments build on TMX's information assets and expertise. They increase our global footprint, they accelerate our enterprise growth strategy. It is no surprise, TMX is an innovation story with a proven track record and proud 170-year history at the forefront of industry progress. The expansion of our information business is the next step in the evolution of TMX and in executing our long-term sustainable growth strategy. Now, in addition to all that, we have a strong balance sheet.
We have smart, dedicated people working together with a purpose to make markets better and empower bold ideas, we are committed to executing and seeing it through. In closing today, I want to sincerely thank our people for bringing TMX's corporate purpose to life in a way they do every day. One person in particular that I'd like to thank today and take a moment of acknowledgment for the contributions of an important member of our team and a familiar voice on these quarterly calls since TMX became a public company in 2002. As many of you already know, Paul Malcolmson, TMX's Vice President, Enterprise Sustainability and Investor Relations, is retiring on March 1st. It's hard to believe, but this is Paul's 81st and final quarter leading our IR function.
This is a record only rivaled by the number of times he's run at Disney World over those same years. Now, at various times during his career at TMX, he's also had a hand in overseeing other corporate functions, including public relations, government relations, and sustainability. On behalf of the entire senior team and employees across the organization, I want to thank you, Paul, for your dedication to TMX, your steadfast professionalism and sound judgment over the years, and for your friendship. For years, Paul and I sat side by side in the organization, plotting the future of where this company can be, only to sit here today to see it come to fruition.
Paul leaves behind a very impressive 20-year legacy as a trusted and expert source of insight for many of you listening today, as well as investors around the world, also leaves our team well-positioned with a legacy of the future and a strong IR team in place. Paul, thank you very much. With that, I will turn the call over to David.
Thank you, John, good morning, everyone. Our results for the fourth quarter reflect our commitment to continue investing for long-term growth and our ability to effectively manage our business in challenging economic conditions. Revenue grew by 9%, driven by the inclusion of revenue from BOX Options Market, or BOX for short, which we consolidated on January 3rd of 2022, and Wall Street Horizon, which we acquired on November 9th of 2022. Revenue excluding BOX and Wall Street Horizon was down 3% in the quarter compared with an exceptional fourth quarter last year when we had our highest Q4 revenue on record. There were revenue increases from derivatives, trading and clearing, Global Solutions Insights and Analytics, or GSIA, offset by decreases in capital formation and equities and fixed income trading and clearing.
Excluding the aggregate amounts of expenses associated with BOX and Wall Street Horizon, our operating expenses increased by 3% compared with Q4 of 2021. We reported an increase of 17% in our diluted earnings per share this past quarter, benefiting from a decrease in income tax expense compared to Q4 of 2021 from the reversal of a prior year tax provision, as well as an increase in income from operations of CAD 3.1 million compared with Q4 of 2021. The CAD 3.1 million increase includes 100% of income from operations of BOX, of which 52.1% relates to non-controlling interests. After deducting the 52.1% portion of BOX, the non-controlling interest in BOX, our income from operations was down compared to last year, and our adjusted diluted earnings per share decreased slightly by 2%.
Turning now to our businesses. I'll start with those that we experienced revenue increases in the quarter. Revenue and derivatives trading and clearing grew by 67% this quarter compared to Q4 of 2021, driven by the consolidation of BOX's revenue of $27.7 million included in the segment starting in Q1 of this year. Volumes on BOX increased by 17% compared to Q4 of last year, and BOX's market share and equity options grew to 7%, which is up 1% from Q4 of 2021.
Derivatives trading and clearing revenue, excluding BOX, was down 6% in the quarter, primarily driven by 8% decrease in the Montréal Exchange volumes this quarter, partially offset by positive impact on trading fees on the heels of pricing changes for our S&P/TSX 60 Index Standard Futures or SXF, which came into effect on January of last year. A 2% increase in revenue from CDCC due to an increased repo dealer activity and interest rate derivatives clearing fee changes, which also came to effect in January of 2022. Turning to our Global Solutions Insights and Analytics segment, or GSA for short, revenue was up 5% this quarter, with increases from both Trayport and TMX Datalinx. Revenue from Trayport was up 5% in Canadian dollars or 11% in pound sterling.
The increase in pound sterling was primarily driven by 11% increase in trader subscribers and annual price adjustments, partially offset by an unfavorable FX impact of GBP 1.9 million. Revenue in our TMX Datalinx business, including colocation, grew 5%, driven by increases in data feeds, colocation, and the impact of 2022's price adjustments and CAD 1 million related to Wall Street Horizon. We also benefited from a favorable FX impact of approximately $1.7 million due to a stronger US dollar this quarter compared with Q4 of 2021, partially offset by decreases in revenue from benchmark and indices and usage-based quotes.
In capital formation, revenue in the quarter declined 8%, primarily driven by lower additional listings fees, reflecting a decrease in both the total number of financings and total financing dollars raised on TSX and TSX Venture, as well as the decrease in initial listings fees. The decrease in additional listing fees were driven by a decrease of 21% in the number of transactions billed below the maximum fee and a decrease of 58% in the number of transactions billed at the maximum listing fee of CAD 250,000 this quarter versus Q4 of 2021.
This decrease was partially offset by higher sustaining fees of 4%, reflecting an increase in the market capitalization of issuers at December 31, 2021 over the prior year, along with a 40% increase in TSX trust revenue in the fourth quarter, driven by higher net interest income and partially offset by lower transfer agent fees and corporate trust revenue. Revenue from our equities and fixed income trading and clearing segment decreased 2% in the quarter compared with Q4 of 2021. This decrease was driven by a 16% decline in the overall volumes of securities traded on our equities marketplaces. Trading volumes of TSX decreased by 5%, TSX Venture Exchange by 34%, and Alpha by 31%.
However, we saw gains in our combined market share this quarter, which was up 1% for TSX and TSX Venture listed issues and up 4% in all listed issues in Canada compared to last year. The decrease in revenue was somewhat offset by a favorable mix amongst our trading venues and a favorable product mix within TSX. The impact of April's price change on continuous trading for securities with the price per share below CAD 1 and higher fixed income trading revenue reflecting higher activity in swaps and repos in the quarter. Revenue from our CDS business was up 1%, reflecting higher interest income on clearing funds and pass-through liquidity fees, partially offset by lower special handling fees, international revenue, clearing fees on exchange traded volumes, and lower depository revenue. Turning to our expenses.
Operating expenses in the fourth quarter increased by 14% compared to Q4 of last year. Included in this increase is approximately CAD 13.9 million associated with BOX, which we now consolidate, as well as Wall Street Horizon, which we acquired in November of 2022. These costs include the amortization of acquired intangibles, acquisition-related costs, and integration costs. Excluding the aggregate amount of expenses associated with BOX and Wall Street Horizon, year-over-year operating expenses increased 3% compared with Q4 of last year. The higher expenses reflected higher headcount and payroll costs, increased long-term employee incentive plan costs, increased IT operating costs, and higher travel and entertainment expenses. These increases in costs were partially offset by lower short-term employee incentive plan costs of CAD 6.4 million and lower legal and severance costs.
Our 16 months integration of AST Canada was completed in December last year. Total integration costs were CAD 17 million, down CAD 1 million from last quarter's estimate of CAD 18 million, which was down from our original estimate of CAD 20 million. We realized synergies of approximately CAD 3.9 million in 2022, which were up from our estimate of CAD 3.5 million last quarter and our original estimate of CAD 2 million. We continue to expect total synergies of approximately CAD 10 million to be substantially achieved by the end of 2024, and expect approximately CAD 6 million to be achieved by the end of 2023. The transaction had a positive impact on TMX Group's adjusted earnings per share. Looking at our results sequentially, revenue decreased CAD 4.8 million from the third quarter to fourth quarter of this year.
This was driven by higher revenue in GSIA, CDS, derivatives trading and clearing, partially offset by lower revenue and capital formation. Operating expenses increased CAD 10.6 million or 7% from Q3, including an increase related to the acquisition of Wall Street Horizon on November 9, 2022. There were also increases in technology operating expenses, commodity taxes, severance, long-term incentive performance plan costs, and consulting and travel costs. These were partially offset by lower short-term incentive performance plan costs of CAD 2.1 million and lower legal and charitable donations. Turning to our balance sheet, in the full year of 2022, we spent CAD 74.3 million repurchasing 560,000 of our common shares under our normal course issuer bid program.
Our debt to adjusted EBITDA ratio was 1.6x at the end of the quarter, and we also held over CAD 493 million in cash and marketable securities at the end of the quarter, which was about CAD 318 million in excess of CAD 175 million we target to retain for regulatory and credit facility purposes. Our board approved a quarterly dividend of CAD 0.87 per common share, payable on March 10th to shareholders of record as of February 24th. This is a 5% increase from Q3. As John mentioned, this marks Paul's 81st quarter with the company. As many of you know, Paul will be retiring at the end of the month. While I've only had 20 months to get to know and work with Paul, I echo John's sentiments.
I wish Paul nothing but the best in his retirement and look forward to hosting Paul and his family, as well as our TMX colleagues as they close the market later this afternoon, which is a fitting way to celebrate both his career and contribution to TMX. That concludes my formal remarks. Now for the last time, I'd like to hand the call back to Paul for Q&A.
Well, thank you, David, and thank you both John and David for your very kind words. Michelle, we'll turn it over to you just to outline the process for the question and answer session.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by the number two. If you are using a speakerphone, we ask that you lift the headset before entering any keys. Please stand by for your first question. Your first question will come from Nik Priebe of CIBC Capital Markets. Please go ahead.
Okay, thanks. Morning, everyone. Just now that you've presumably completed the year-end budgeting process, just wondering if you can update us on how you're thinking about managing expense growth in the year ahead. Like is flat to low single-digit growth still kind of a reasonable expectation, enterprise-wide?
Nik, it's David. That would be correct. We normally target flat to below the rate of inflation. That's the wild card, is the rate of inflation.
Okay, very good. Is there anything incremental that you might be able to share on the VettaFi investment, just with respect to the expected earnings impact when you fold it in, or how the valuation may have compared to, say, the previous fundraising round?
Yeah, happy to. You'll understand, Nik, that I'm going to have to be a bit circumspect in my comments because this is a private company and we're a 21% shareholder. In order to kind of give you a bit more sense of some of the guidance around it, you know, the size of the company is not dissimilar to the size of Trayport when we acquired it, in terms of kind of both, you know, revenue size, growth rates, profitability. It kind of gives you a sense of the size of the business. Very strong performer in terms of index, analytics, ETF solutions. It's one of the things that we were attracted to it, and we've been in discussions with them for a while actually, to find that right path forward.
The importance in our program that we're doing with VettaFi, it's a combination of the capital that we're putting in that's going to help accelerate some of the things that VettaFi is doing to accelerate its growth. Also we noted the commercial partnership, the long-term agreement we put together to really create net new index and benchmarking products for our broad client base. The exciting piece here is it's both driving the growth of that investment but also driving the growth of new products and revenues that we will share between us. We do expect this to be accretive even in the minority investment phase, and with the ability to build revenue both in VettaFi and within our joint revenue offering, which will impact our TMX Datalinx business going forward.
I hope that gives you a bit more guidance in terms of how we think about it, but I hope you get from my tone it's something that we're extremely excited about.
Understood. Okay. No, that helps clarify. One just final question from me. In the long-term objectives that you outlined, I noticed that the target leverage ratio has just been taken down maybe half a turn. I think that's a bit lower than the range you've talked about previously. Is the upper bound of that range, I think it was 2.5 x, how you would define capacity to relever the balance sheet to pursue further M&A if anything kind of transformational presented itself, or would there be appetite to exceed the high end of that range if necessary?
Nik, it's David. Yeah. The 1.5x-2.5x is something that we have spoken about, you know, over the last several quarters. We put it into our investor brochure, but we've updated it in the annual disclosures, right? It appears new, but it's not that new. On your question about, you know, if the right acquisition were to present itself
There are many things that we look at all the time. Our comfort level would absolutely be to exceed the upper end of that range. That range is really about through the normal course. Right? If there's a transformational opportunity, we're very comfortable, like we did with Trayport, going well north of 3x , and we have a proven track record of deleveraging very well over time. Hopefully that gives you what you're looking for.
Yep. No, that's helpful. Thanks very much. I'll pass the line.
Your next question will come from Geoff Kwan of RBC Capital Markets. Please go ahead.
Hi. Good morning. Just following up on the VettaFi. Just was wondering your comments around accretion. Are you able to give any more insight in terms of is it, low, mid, high single digit, even double-digit accretion that you're kind of maybe expecting over the next year?
Yeah, I mean, I can't give you much more guidance. I'm really talking about EPS accretion because, again, this is a 21% investment, so we won't be bringing the EBITDA into the organization, into our statements. As we go forward, with VettaFi, and we do more with them, we'll look to see what we can provide in terms of additional disclosures. Geoff, that's the limit I'm going to be able to show you today.
Okay. Just my other question was, you know, we've seen a number of other exchanges moving the business to the cloud. Just wondering if this is something TMX is looking into, and if you were to go down that route, any sense of what this could do for margins?
Geoff, that's it's a great question. One of the things I like about that question is I actually found that I'm going to be a bit pedantic for a second. I think TMX has done more to move into the cloud than make cloud announcements like some others have done. We've actually been very active in terms of putting more core systems into the cloud over the number of years than a lot of our competitors. For those that don't know, we are actually fully cloud enabled in everything we do around productivity, workflow, accounting systems, HR systems, productivity systems. Actually, one of the reasons we were able to move so effective remote is because we'd actually done that work in advance. We have a full cloud-enabled solution on the front end for issuers, called TMX Linx.
All of our issuers actually connect to us through a cloud solution for all their filing activity, application activity, and the workflow that surrounds it. It's made the business substantially more scalable. Particularly when you think about the activity we had in 2021, which was record activity, we did that with existing resources 'cause we were just able to scale the business in a way we weren't in the past. In addition, we've got a cloud solution for historical market data delivery and deep data analytics, both within TMX Datalinx and also recently what we're deploying in Trayport. What we've been doing is actually just going about a cloud strategy is as we actually modernize and bring new initiatives online, we do it with a philosophy we call cloud first.
What we haven't done is gone into a big bang announcement with a single vendor for a long-term commitment because we are still in the stage of looking at kind of who's the best of breed for each of these things that we're gonna bring to bear. Actually, to your point, as we look forward, we are looking at how do you think about those bigger systems like trading and clearing and data center management. As those technologies evolve, are we able to move those to cloud-based solutions as well? It's something we're gonna continue to explore in the future, but that kind of gives you a lens as to where we are in thinking. It's cloud first in delivery, and we've got multiple partners to do that.
No, that's helpful. Maybe if I can just add one extra question just based on your response there is, like, for what you have kind of moved to the cloud, have you done an analysis in terms of how much that's helped margins? If you're able to move to your point, trading, clearing, data center, all that other stuff, potential for the financial impact.
Yeah. What I would say to you, in each of those programs, you know, the business cases supported the investments in terms of the run- rate. In addition, the real piece is the, is the scalability that it gave us. In each of those cases, like the ability to do a deep data lake program, without the cloud solution, you really can't do it in a way that's scalable for clients. Same thing with the work we're doing on issuers. It's made the business more scalable, so it reduces the amount of really variable cost in the organization as we grow. That is the better way to think about it in terms of providing that long-term scale and growth potential.
Okay, great. Thank you.
Your next question comes from Étienne Ricard of BMO Capital Markets. Please go ahead.
Good morning and congrats, Paul.
Thank you, Étienne.
On the transformational objectives, how will TMX bridge the gap between the business today and your long-term objectives from organic and acquisition perspectives?
Yeah. One of the I wanna be clear in terms of when we put out these objectives. These are not new objectives. We've actually been talking to the street about the transformational objectives in terms of where we're trying to grow the business over the long term. That's why they are long-term objectives. Don't I wouldn't look to where are we at any point in time, but are we making progress against those components in terms of progressing into more data revenues, more global revenues, more subscription-based services.
Even in 2022, if you normalized and looked at the business in terms of taking out the impacts of kind of BOX Options Market or the acquisitions and what the organic business did, you'll see that all those numbers expanded and grew in terms of along that glide path anywhere from 1 to 3 percentage points. Our organic strategy, as we set with the organization and the board at the end of last year, builds in the types of investments and growth initiatives to continue to drive more global revenue, more data revenues, more sustaining recurring revenues. Very much like the partnership we just talked about with VettaFi, which index and benchmarking is exactly in that sweet spot of delivering both global solutions and subscription and recurring and data revenues.
We do believe that we've got an organic strategy to build there through the long term, but certainly inorganic moves, even small ones like Wall Street Horizon that we did in Q4, are ways for us to accelerate and get there faster. That's what we're trying to give more guidance in a more consistent way, in terms of what that long-term future looks like, so that when you see the strategic moves that we make, you can understand them in that context.
Understood. your long-term objective for Datalinx is now 5% plus annual revenue growth. This is an improvement from your prior objective for low single-digit growth. I guess what is giving you improved confidence Datalinx can achieve stronger growth potential?
We've got a plan to deliver it. It's not just confidence. We wouldn't put out that direction without knowing that we had a plan to deliver it. Under the leadership of, you know, Michelle Tran and Jay Rajarathinam, we've been building a growth plan around TMX Datalinx. You see the results in the last couple of years that we've had track record already in 4%-7% growth over that period, even in a very tough market in 2022, I might add. It's a combination of factors that help give us the confidence that we can grow this business faster. We do have some potential for pricing in there that we've actually been executing, getting approved, and bringing to market.
We've been bringing new products to the table, new bundled solutions, new analytics solutions on top. The pieces that we're doing around expansion with, again, things like Wall Street Horizon. When I talked to my comments, this is an organization that does corporate action and event data for 9,000 companies. Most of them are not Canadian. We actually have all those datasets on 3,000+ Canadian issuers that we can build in their product, and also a substantially larger global sales base to sell that product towards. In all these pieces, we are looking at how we actually add more product and sell them globally to accelerate that. We've got a plan for that business that gives us confidence that we can give you that direction.
Lastly, on VettaFi, I understand one of the benefits of the partnership is to launch new index products. Could you please share the next steps in this regard, and how would that be complementary to your current partnership with S&P?
That's a really good question. S&P is a fantastic partner on broad big name index and benchmarks. We've got a long-term relationship with S&P for the S&P/TSX 60, those types of products. Where we're really focusing here is in what I'll call even more special products, special indices, thematics. You know, if we're trying to do something special around a sector or creating a custom index for an ETF provider, this is the capabilities that VettaFi brings to the table with us. Our teams together are already working on, you know, what I'll call the pipeline of the products that we're potentially going to bring to market. That started immediately, and we immediately put it into the objectives of our key people in terms of things that they're looking to deliver with that partnership.
It's really that ability to go into the middle market of more custom product, sector indices, thematics, those types of things that this allows us to do, and it's complementary to the relationship we have with S&P. Similar, the, you know, the partnership we're putting together is also a long-term relationship with VettaFi similar to our S&P relationship.
Thank you very much.
Your next question comes from Graham Ryding of TD Securities. Please go ahead. Mr. Ryding, your line is open for questions.
Sorry, I was on mute. Thank you. Just to follow up on the VettaFi theme, just to be clear, you have a commercial agreement here, so anything incremental around, you know, new products or indices, how does that flow through? Will that come through in your GSI data line, or will that still come through as a sort of equity ownership in another entity?
Yeah. Graham, it's David. Primarily the piece related to the commercial agreement that is for our account will flow through our TMX Datalinx business, so the GSIA segment. Because we also own a 21% stake in VettaFi, we'll also on the income from associates, pick up our 21% share after tax of any of those benefits that they would record.
Got it. Okay. That helps. Maybe I could start with Trayport then. Just, you know, could you just sort of give us some context here with the volumes down 25% year-over-year, you're still seeing good growth in your subscribers. Just where is this trading moving to that's not going through Trayport right now? Is it going to other markets, you know, around U.S. or Asian LNG products that are not on the trading platform? Is that how the market is adjusting here?
I mean, if you look at our kind of our market share of the trade flows going through, it's just not materially changed. This is more of a pullback in the overall market activity in those products. Remember that the prior year was substantially more volatile and had higher levels of trade activity. That's why you're seeing it as a reflector of overall market activity. What you're seeing with Trayport in terms of the subscriber growth and the new clients, is that the solution's just becoming even more valuable to the users throughout that network.
Is there any concern on your part here that, you know, if this volume decline persists, that subscribers growth may start to wane somewhat if, you know, energy trading is shifting to non-European markets?
No, it's not a market shift. It's just like markets move in cycles in terms of activity, but there's not a concern there. Our bigger concern was more around health of clients within the Trayport community. When you had that level of volatility, pricing impacts, margin and balance sheet impacts. We did see, you know, one client loss through 2022 on that basis, but nothing material. That would be our bigger concern that we watch about is around client health, but our clients continue to be in good shape.
Okay. I think you're rolling through a 7%-8% price increase on Trayport for 2023. How does that compare to your CPI increase that was baked into 2022?
The increase in 2022 would have been in line with what the Bank of England Consumer Price Index movements, which was, you know, in the 4-ish range. That kind of gives you the delta year-over-year.
Okay. Jumping to BOX, I noticed there was a decline in your revenue yield from BOX. It just seemed to drop down again quarter-over-quarter relative to the volumes. Maybe just some commentary on what that's reflecting?
Yeah, Graham, it's David. It's the mix between, you know, electronic trading and/or traded on the floor. As you know, BOX has one of the few trading floors, pit style. The revenue per contract is subject to fluctuations between the two. Excuse me.
Got it. One last, if I could. Just it looks like the CSA is reviewing some market data cost, just both around the methodology used to gauge pricing for real-time market data, but also just, I think, possibly broadening its regulatory scope to other areas of market data. Can you provide some sort of initial commentary on your position here and the potential implications of how this could impact your business?
Yeah. I mean, this is something that the CSA and the commissions within it have been looking at for years and years and years. I'll remind people that we actually operate the information processor on behalf of the industry that pulls all the different markets together for the, for the use of the clients. One of the things that actually we'll be putting our submissions in there and providing substantial information and data with respect to market data structure and pricing in Canada and how it compares to the world. The initial report that we put out really only compared Canada to the U.S., which is not a fair comparison given the size of the U.S. market to Canada.
If you take Canadian data rates and compare them to anywhere else in the world beyond the U.S., we are extremely competitive, and we're going to be providing that information. The other piece that's in there is they do actually now show what is the potential total cost to a user of combining all the different Canadian markets. What you'll find interesting in that is that the TMX piece is less than half of that total, despite the fact that we are, you know, 65%-67% of all the trade activity in our listed names, plus 94%, 95% top of book in terms of data quality for anything that trades on our markets. There's a lot of cost in the industry, and it doesn't come from us, it comes from other venues.
When you look to the recommendations that we've made in the past around what markets should actually be protected and required to be purchased from, that threshold is likely too low. We're going to be making some market structure recommendations around that. Also when venues were able to price and include the value of crosses in there, that was probably a mistake because it allowed markets to actually pump pricing up beyond the value they were providing to the industry. We're going to be providing a very fulsome solution and recommendation this in terms of how to prove it from a marketplace. I don't believe that it's a challenge for TMX in terms of the market data we provide because it's high value, we continue to add more content and we are globally competitive.
Just the, you know, the response to that I would also give you is that we've had multiple price changes over the past year approved, so it doesn't show an indication of a concern around TMX particularly. There are opportunities to make the market structure and the cost for the industry more competitive, we would welcome some of those changes we think would be very good for our clients.
Okay, that's it for me. Thank you.
Ladies and gentlemen, once again, if you would like to ask a question, please press star one at this time. Your next question will come from Jaeme Gloyn of National Bank Financial. Please go ahead.
Yeah, thanks. I wanted to first just start on the cost side. Looking at the Q4 results on the IT and the SG&A line specifically. Was there anything from like a true up nature in Q4? Should we look at that quarter as being consistent for a run- rate in 2023?
Hi, Jaeme, it's David. Yeah. When you look at Q3, you're right, on the IT line. As with many businesses, you know, Q4 for us is the end of the fiscal year, so a lot more project wrap up activity. A little bit of that in there. Obviously, you've noted it on SG&A. A material item between Q3 and Q4 is also the impact of the pound and the US dollar strengthening. That was about a million and a half because as you know, we bring in boxes operating expenses, which are primarily US dollar and obviously Trayport's, which are primarily pound sterling.
Okay. A little bit of a step down into Q1 should be expected, but maybe not maybe not that material back to let's say like the mid-twenties range.
That's fair, Jaeme. I would say because, you know, in Q1 you're going to have, you know, base salary increases and things like that, compensation and benefit resets in terms of, you know, payroll source reduction. Yes, net-net you're probably gonna see consistency between the two quarters, maybe a slight step up.
Okay, great. Shifting to capital formation and sustaining listing fees. Forgive me if this is guidance you've already provided, but as we think about, you know, the market cap of issuers at the end of the year and some of the changes on pricing, where do you see that shaking out in terms of the growth rate for sustaining listing fees in 2023 versus 2022?
Sorry. I think, Jaeme, we've indicated in the documents there that impact, I think, is around CAD 600,000 when you take into account the change in the market cap of our listed issuers, plus the increased pricing for the sustaining fee, the maximum fee.
Okay. Sorry, that was up CAD 600? It just broke-
Down. Down CAD 600,000.
Okay, great. Thank you. Shifting to the derivatives business. This has been a business that's targeting double-digit revenue growth, you know, I guess since back in 2018 for the targets. It's been a bit challenging to achieve that. You know, I guess both from a contracts traded point of view, and then also from a capture rate point of view, driving the revenues higher. What, I guess, you know, what's gonna give, what are the catalysts here that we should be thinking about that's going to get that business back up into the double-digit growth range?
Is it, is it simply like this is a muted environment for derivatives trading generally from a contracts perspective and that'll normalize or, you know, are there some other factors here?
There's a number of factors there, and I will, you know, I'll take the liberty of correcting you on one piece, Jaeme. That, you know, that was a, you know, 2021 was soft in terms of that derivative activity, but the number of years before that was sustained at that growth rate that we've been talking to. The biggest challenge in 2021 was the impact of market interest rates and central bank rate changes that were Hello?
Ladies and gentlemen, please stand by. Do not disconnect your lines.
Hi, Michelle.
We need to move this thing to the cloud.
Yeah, I can hear you.
Gentlemen, this line is now open.
Sir, can you hear us through there?
Yes, sir. This line is open now.
Jaeme, are you there? Can you still hear me?
I can hear you. Thank you.
All right. I'm gonna first indicate that nowhere are these teleconference systems connected to trading systems. Let's just put that right on the table right now. I don't know how far I got into the derivative piece, let me talk about the, you know, the pros going forward into 2023. Number one, stable interest rate environment, that means much more strength in the short-term rate products like the BAX, which were down kind of 30%-40% last year. You've got market impacts there that are very good. We've got growth in the new products we've added, which are not mature yet. More growth in the two-year, in the five-year, in the long government bond, that's a deliberate piece in terms of the pieces we've talked in the past about rounding out the yield curve.
Also, when you get stability in the central bank market, it's going to be easier for us to build in the international markets as we've been doing over the last couple of years. You know, the long-term expectation of building our international trade and our core products, you know, 5%-6% this year, but looking to more long-term objectives and being more 15%, those are pieces that we're gonna continue to build out. Now, when you take all those components, they give us a lot of confidence that we're gonna be able to grow the contract volume, you know, double digit plus and allow the support for you know, high single, low double-digit growth rate in the revenue.
The other pieces in there that you're starting to see more of is things like strength in the CDCC repo product, which we do provide some statistics for. That's sustainable growth in that product, which actually rolls through the revenue. There are more things that we're gonna be doing in the future in terms of adding net new product to both trading and clearing, to continue to provide products that support the client needs. Those are all the pieces that give us confidence in terms of that continued strong growth rate.
Okay, thank you.
No problem.
At this time, there are no other questions. I will turn the conference back to Paul Malcolmson for any closing remarks.
Well, great. Thank you, Michelle. Back in January, I told many of you that I would be retiring from TMX at the end of this month. The details on succession plans would be shared on today's calls.
Today I'm very pleased to announce that Amin Mousavian will be succeeding me as Head of Investor Relations. Amin has been with TMX for 12 years, having worked both in parts of our business as well as on our finance team. Last year, he joined the Investor Relations team and is well-positioned to succeed me. As you know, Amanda Tang has been on a maternity leave and will be returning to TMX towards the end of this coming summer. Julie Park will now be dedicating 100% of her time to ESG and sustainability initiatives and reporting. Finally, I wanna welcome Nina Bai to the IR team. Nina joined IR in December and previously supported both CDS and CDCC on the finance side.
In closing, I do want to thank the countless investors and analysts that I've met and for making the last 20 years such a real pleasure for me. To TMX employees that might be listening in, thank you so much for always being there to get us the timely information that we needed for the stream. To John, now as CEO, and before that as CFO, you could not have been more supportive of me as a colleague and a friend, and certainly to our IR program. Now David is following exactly that same vein as CFO. Thank you both for that. Finally, I wanna thank the IR team, past and present. Many on this call have been around a while, like me, I wanna mention the names that most of you will recognize.
Joanne, Shane, Christine, Amanda, Julie, Amin, Nina, as well as some great interns over the years, and our Securities lawyer, Catherine, who's always been there, giving us wise counsel for the entire run. Thank you, Catherine. These amazing and talented people have made our IR program what it is today. Now I know you will all really, truly enjoy working with the IR team that Amin will be leading. With that, I wish you every success and all the very, very best. Let's stay in touch and have a great day, everyone.
Ladies and gentlemen, this does conclude the conference call for this morning. We would like to thank everybody for their patience and participation. We ask that you please disconnect your lines.