Ladies and gentlemen, thank you for standing by, and welcome to the TMX Group Limited Q4 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Paul Malcolmson. Thank you. Please go ahead, sir.
Thank you, operator, and good morning, everyone. I hope that you and all your families continue to be staying safe and well. Thank you for joining us this morning for the fourth quarter 2020 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 are once again joining virtually and have with us John McKenzie, our Chief Executive Officer, and Frank Di Liso, our Interim Chief Financial Officer. Following opening remarks, we will have a question-and-answer session. Before we begin, I want to remind you that certain statements made on today's call may be considered forward-looking. I refer you to the risk factors contained in our press release and reports that we file with regulatory authorities. With that, I'll turn the call over to John.
Thank you, Paul, and good morning, everyone. Thanks for dialing into the call today to discuss TMX Group's financial performance for the fourth quarter and the full year 2020, a year largely marked by the COVID-19 pandemic and the disruption it has wrought on all business as usual and, indeed, everyday life as usual for people all over the world. On behalf of all of us at TMX, I want to send sincere thanks to all the brave people who have been working on the front lines throughout this crisis, including healthcare workers, first responders, and others providing essential services and crucial support to people in our communities. During the course of this call, we will discuss how our company and our industry have worked to adapt to the virtual environment and persevere to overcome challenges brought on by the pandemic conditions.
To be clear, our number one priority remains the health and well-being of our people and their families. We wish the best to everyone listening in this morning as we all navigate through the weeks and months ahead and work towards a safe return to a more familiar way of life. As Paul mentioned, we have Frank Di Liso, TMX interim Chief Financial Officer, joining us on the call to walk us through the fourth quarter results in detail. My comments today will focus on TMX's results for the full year, the progress we have made in our ongoing initiatives to innovate for clients across our markets. I will close with an update on TMX's corporate strategy and our enterprise-wide priorities going forward as we execute the next important phase of our long-term growth plan. Now, turning to TMX's operating results and business performance.
As much as any period in our history, 2020 served as compelling evidence of the benefits of our diversified and stress-tested business model.
Revenue for the full year was CAD 865.1 million, an increase of 7% from 2019. Earnings per share was up 12% or 11% on an adjusted basis. The year-over-year growth was driven by increased revenue from equities and fixed income trading and clearing, Trayport, and capital formation, slightly offset by lower revenue from our derivatives business. Operating expenses were up 6% from 2019, largely due to net litigation settlement costs of CAD 12.4 million incurred in Q2 of 2020, and also higher costs related to our short-term employee performance incentive plan, given the strength of TMX's performance in 2020.
Now, taking a closer look now at the performance of our business areas, revenue from equities and fixed income trading was CAD 127 million in 2020, up CAD 29 million or 30% compared to 2019, driven by significantly higher activity. Equity markets took off in the turbulent early months of 2020 and remained robust throughout the year. In fact, 2020 marked the second highest trading volume on Toronto Stock Exchange history, with over 115 billion securities traded, trailing only in 2019. On a combined basis, volumes on our equity markets, including Toronto Stock Exchange, TSX Venture Exchange, and Alpha, were up 42% compared to the previous year, with dramatic spikes in messaging activity, particularly during the first half. Canada's market-wide circuit breakers were triggered four times in 2020, a milestone we hadn't seen since 1997.
We are grateful to our stakeholders, including marketplaces, regulators, and participants, for their partnership in ensuring our markets remain resilient and functioning well to meet elevated investor and industry demand. The ability of TMX's equity exchanges to perform our critical four core functions, providing issuers and investors access to capital, proved a vital stabilizing force in the nation's economy during a supremely challenging year. Further to that end, we have undertaken a program of technology and process improvements and investments to support the continued resilience and stability of the exchange's operating and supporting systems. Now, within the volumes, the proportion of retail trading in Canada increased in 2020, reaching peak levels as high as 43% of total TMX volume traded in July and December 2020, compared with an average of only 35% in 2019. The pace of retail trading shows few signs of letting up anytime soon.
In fact, January saw 45%, as discount brokerages offered low-cost trading, enhanced choice, and improved technology platforms to a growing work-from-home retail client base. While 2020 proved a demanding year, our equities team advanced on key initiatives designed to enhance the trading experience for our broad client base, including our DARK trading solution and our facility designed to enhance liquidity at the close of the lit market. TSX DARK, Canada's fastest-growing DARK pool, continues to expand its offering with new features designed to increase market share, including a new liquidity program launched in July of 2020. TSX DARK's share of Canadian DARK trading was approximately 27% in Q4 2020, up from 22% in the fourth quarter of 2019.
Most recently, the modernization of our Market on Close, or MOC facility, a call market used to set the closing price for eligible Toronto Stock Exchange and select TSX Venture Exchange-listed issues. The revamped MOC facility better aligns with the models of our global peers and is designed to provide clients with increased transparency and consistency of execution. In January, the proposal was approved by the OSC and has been backed by broad industry support. Now, turning to derivatives. While market conditions boosted activity in equity markets, overall revenue in our derivatives trading, including business, was CAD 126.2 million in 2020, down CAD 7 million or 5% from 2019, driven by a 3% decrease in the revenue from MX and CDCC and reduced revenue from BOX, as our agreement to provide transitional services ended last June.
While overall MX volumes in 2020 were flat year-over-year, revenue was down slightly due to an unfavorable product mix. The historically low interest rate environment had a negative impact on volumes in some of Montréal Exchange's key products, particularly short-term interest rate products, during the second and third quarter of 2020. We have seen encouraging signs recently as MX volumes grew 30% sequentially from Q3 to Q4 2020. Frank will go into this a bit more in detail later as he looks at the results of the first quarter in a few minutes. Now, as we look further into 2021, MX's plans to roll out our extended hours initiative into Asia remain on track. Last week, we announced the launch date of May 30, 2021, subject to completion of the self-certification process and final regulatory approvals.
We have seen strong engagement from investors and participants in the region to date, as investors in Asia see the benefits of having direct access to trading MX's products in their own time zone for managing both exposure against the flows they are seeing and handling already. Additionally, the availability of products during Asia's business hours will enable investors and risk managers to trade Canada, such as the Canadian yield curve, on a relative value basis against other markets like Australia and Japan. Recently, many Asian pension funds, such as the Japan GPIF, the Australian Superannuation Fund Industry, and the Korean NPS, have significantly increased their international exposures, and Canada offers them a compelling value proposition. Now, I may be somewhat biased, but I'm a strong believer in Canada's markets.
What appeals to investors in Asia is what an investment in Canada means to investors all over the world: access to a highly liquid, world-class market, and a leading global economy. Now, turning to our European markets and Trayport, we saw continued strong revenue growth in 2020. Revenue, including VizzoTech, was CAD 136.7 million in 2020, an increase of CAD 17.1 million or 14% from 2019, with a 6% increase in average trader subscribers and a 7% increase in average total subscribers. Volumes in the European power and gas markets were up 10% and 14% respectively over 2019. In addition to strong performance in Trayport's core business, we continue to see positive results from expansion initiatives, including liquid natural gas and algorithmic power trading.
Trading on each of the European and Asian LNG benchmarks was up significantly from 2019, and volumes in the intraday EPEX Spot grew at 14% when compared with 2019. Demand for algorithmic trading solutions across European energy markets also continues to grow. Tradeport has recently launched a data analytics tool that has met with positive client feedback and expanded the functionality of its auto trader algo product to cover other markets and products as they continue to emerge. In our capital formation business, revenue was CAD 189 million, up CAD 8.3 million or 5% from 2019, primarily driven by increased revenue from additional listing fees on both TSX and TSX Venture. Companies of all sizes and in all sectors benefit from access to public markets to grow, from early-stage companies on TSX Venture Exchange to large-cap companies in the S&P/TSX Composite Index.
The 2020 performance of our capital formation business is strong proof of the efficacy of our ecosystem and illustrates the fundamental role healthy public markets play in maintaining the viability and vitality of the Canadian economy. Companies continue to turn to our markets to access the capital they need to keep their businesses running, their growth objectives on track and in reach, and their people employed. Financing activity on TSX Venture Exchange was particularly strong in 2020, with a 25% increase in the total number of financings and a 57% increase in total dollars raised from 2019. Canada's tech sector continued to thrive in 2020.
In 2020, technology companies listed on our exchanges raised a record CAD 8.1 billion, and the year was marked by some landmark IPOs, a trend that has continued into 2021, as last week we celebrated another major milestone as TELUS International began trading on Toronto Stock Exchange, representing the largest technology IPO in TSX history and one of the largest IPOs in our collective history. TELUS International is a leading digital customer experience innovator and yet another great Canadian technology company with global aspirations to come to market. TSX Venture, it recently welcomed Topicus.com, a spinout of Constellation Software, which completed the largest IPO in TSX Venture Exchange history. Topicus.com is a leading pan-European provider of vertical market software and vertical market platforms to clients, public and private sector markets.
While building on our strong stock list of high-profile companies, our markets have played a leading role in establishing new categories for entrepreneurs and investors across the innovation sector, including emerging technologies. We recently welcomed new Bitcoin funds from CI Financial and Ninepoint Partners that each raised over CAD 100 million, with Ninepoint Partners' CAD 230 million IPO representing the largest public cryptocurrency fund ever raised. In addition to these and many other high-profile IPOs, our capital formation team has recently taken important steps to adapt our services and solutions to further expand opportunities for companies to efficiently and cost-effectively raise capital. In December, we announced important changes to TSX Venture's Signature Capital Pool Company, or CPC, program.
The CPC program is a unique listing vehicle exclusively offered by TSX Venture and the most popular go-public vehicle for growth-stage companies, accounting for almost 50% of new TSX Venture listings over the past 10 years. The changes to the program, which are designed to increase flexibility, reduce regulatory burden, and improve the economics and overall value proposition, came into effect on January 1, 2021. Overall, increased demand for quick access to capital, coupled with a healthy investor appetite for growth stories, led to a substantial increase in private placement activity in 2020. TSX and TSX Venture companies raised a combined CAD 14.5 billion in private placements in 2020, a 57% increase from 2019. For clients, the process is manually intensive and can consume a tremendous amount of administrative resources. Last month, we launched TMX Deal Links, a client-focused solution to address these concerns.
TMX Deal Links is an automated private placement platform designed to provide public and private companies with an efficient process and powerful tools to manage key processes, from distribution and collaboration to compliance to deal completion. TMX is committed to the long-term viability of our capital markets ecosystem. As an industry, we need to work to identify and solve inefficiencies and help free up resources for companies to focus on business ambitions rather than administrative tasks. Now, I'd like to close my comments today with a brief update on our growth strategy. We remain firmly committed to executing our long-term strategy and advancing our roadmap for growth, the plan we rolled out in 2018 to generate revenue growth centered around three key priority growth areas.
While the strategy has not changed in the past two years, so very much has changed in our operating environment and the world around us, reminding us that sustainable long-term growth must be supported by an engaged team and a commitment to the broader stakeholder community, and recognizing the central role TMX plays in the capital markets industry. In December 2020, we presented an update to the TMX Group corporate strategy to the board of directors, identifying four priority areas of focus. The first is growth acceleration. Consistent with our proven strategy, we continue to pursue opportunities positioned TMX competitively in chosen areas of high growth potential, including our global unique TSX Venture model, derivatives, Trayport, and data analytics. Our second priority area is talent and culture. So much of our success has been and is driven by the exemplary efforts and unwavering commitment of our people.
We have undertaken vital work to bolster employee engagement and purpose and ensure a respectful and inclusive workplace and amplify our employer brand to continue to attract and retain talent and foster our employee development. Our third priority area is advocacy for better markets. As the global capital markets industry continues to rapidly evolve, TMX has an important role to play in advocating for measures to ensure that not only does Canada remain competitive on the world stage, but we elevate the status of our markets to a global leadership position. We support initiatives such as the Capital Markets Modernization Task Force and its efforts to identify and address key structural issues within Canada's capital markets, including corporate performance on equity, diversity, and inclusion.
We are encouraged by the overall direction expressed in the report released last month, particularly the consideration paid to creating the necessary conditions for companies to more efficiently access the capital they need to grow. TMX has also taken on an active role in the important work to update corporate governance guidance for companies in Canada. We are co-chairing a committee on the future of corporate governance in Canada, a diverse group of 12 experienced public company directors from across Canada working together to develop an inclusive and flexible guidance designed to help boards and directors navigate relevant risks and opportunities in the modern business landscape. The committee's preliminary report will be released later this year. The fourth key priority area is focusing on advancing sustainability and ESG.
We have set about the work of integrating ESG objectives and initiatives into TMX's core objectives and positioning TMX as a world-leading marketplace for sustainable investment and finance with our products and services. Sustainable investment touches virtually every facet of our business, and today we have a number of key initiatives already underway, including ESG 101, a portal of issuer support services and resources to help listed companies navigate the fundamentals of ESG reporting. Trading the sustainable bonds issued by governments and quasi-governmental entities is set to launch later this year, enabling retail investors to gain access to an otherwise opaque OTC bond market. TMX Data Links launched a set of ESG indices in 2020, including the S&P/TSX 60 ESG Index, which measures the performance of constituents in the S&P/TSX 60 Index that meet sustainability criteria.
Lastly, MX launched the trading of S&P/TSX 60 ESG Index futures in December 2020 as well. With that, I want to thank you for your time today and turn the call back over to Frank. Thank you.
Thank you, John. Turning to our Q4 results, the resiliency of our business model was reflected in our strong results with reported revenues up 8% from Q4 of 2019. Excluding the impacts of the reclassified CDS recurable costs in the prior year, the increase in revenue was over 10% in the quarter. This was driven by increases in revenue from our capital formation, Global Insights analytics, and equity and fixed income trading businesses, partially offset by decreases in derivatives trading and clearing. Operating expenses were up 7% over Q4 2019, reflecting higher employee performance incentive costs. Our adjusted EBITDA margin was 58%.
Diluted earnings per share increased 50%, which included a non-cash impairment charge of CAD 18 million in Q4 2019. Adjusted diluted earnings per share was up 9%. There was a decrease in our share of net income from BOX Exchange in Q4 2020, driven by an increase of approximately CAD 5 million or $0.07 per basic and diluted share in our share of long-term employee performance incentive costs for the full year 2020. This was mainly driven by increased volumes in 2020 versus the prior year. Now, taking a closer look at revenues, the increase in capital formation segment was mostly driven by an increase in additional listings fee revenues compared with Q4 2019, reflecting higher revenues on TSX Venture Exchange due to an increase in both the number of financings and the total financing dollars raised.
There was also an increase in additional listings finance revenues on the Toronto Stock Exchange, reflecting a 56% increase in the number of transactions billed at the maximum listing fee of CAD 250,000 and an increase of 15% in the number of transactions billed below the maximum fee. Going into 2021, the market capitalization of issuers listed on TSX Venture Exchange increased from CAD 45 billion at the end of 2019 to CAD 78 billion at the end of 2020. The total market cap of all issuers on TSX increased from CAD 3.2 trillion to CAD 3.4 trillion over the same period. We estimate these increases in market capitalization should result in a lift in sustainability revenues of approximately CAD 3 million to TSX fee and approximately CAD 2 million on TSX. Now, turning to equities trading and clearing, high market volatility during the quarter continued to drive significant higher volumes.
The average VIX was over 26 in Q4 2020 compared with about 14 in Q4 2019. In equities and fixed income trading, there was a 35% increase in revenues in Q4 2020 compared with the last year, driven by a 51% increase in overall volumes traded across all of our exchanges. The impact from the higher volumes was somewhat offset by a less favorable product mix in Q4 2020 compared with the prior year. There was significantly higher trading volume in TSX Venture Exchange securities, up 96% in the quarter, which has a lower capture rate as compared with a 29% increase in volumes on the Toronto Stock Exchange securities. There was also an increase in fixed income trading revenue, reflecting an increased activity in swap. CDS revenue decreased from Q4 2019 to Q4 2020.
In Q4 2019, recoverable costs of CAD 5.3 million related to CDS clearing operations that were previously netted and operating expenses were reclassified and included in both CDS revenue and SG&A expenses. There were CAD 1.3 million of these recoverable costs in Q4 2020. Excluding the impacts of recoverable costs, CDS revenue was up 6% in Q4 2020. In addition, there was higher international depository clearing and settlement revenue due to higher volumes in Q4 2020 compared to the prior year. Revenue in our GSIA segment was up 9% over 2019, with increases from both Trayport and our traditional data business. Revenue from Trayport was up 14% in CAD and up 13% in GBP. The increase in revenue was also driven by a 5% increase in total subscribers, sales of additional products, and enterprise license renewals.
Revenues from our traditional data business increased by 5% from Q4 2019 to Q4 2020, with higher revenues from subscriptions, usage-based quotes, feeds, benchmarks, and indices. The average number of professional market data subscriptions for TSX and TSX Venture products was up 1% in Q4 2020 compared with the last year. For MX, subs were up 3%. Trading stream and clearing revenue declined by 8% from Q4 2019 to Q4 2020, reflecting a 3% decrease in revenue from MX and CDCC. This decrease in revenue was primarily due to a decline in overall volumes, particularly in the three-month Canadian bankers' acceptance futures, or BACs, contracts. In addition, there was a decrease of approximately CAD 1.4 million in revenue related to our agreement to provide transitional services to BOX Exchange, which ended in the second quarter of 2020. As I mentioned, operating expenses increased 7% from Q4 2019.
The increase in costs was primarily attributable to higher short-term and long-term employee performance incentive costs, increased severance costs, higher headcount, higher IT costs, the write-off of costs related to discontinued initiatives, as well as increased costs related to managing our business during the COVID-19 pandemic. The increases were somewhat offset by recoverable costs of CAD 5.3 million related to CDS in Q4 2019 compared with CAD 1.3 million in Q4 2020. There was also a decline in recruitment costs, travel and meal expenses, consulting fees, and occupancy costs. Looking at our results on a sequential basis, revenue was up CAD 11.9 million, or 6%, from Q3 2020, largely attributable to increases in revenue from equity fixed income trading, CDS, derivatives trading and clearing, and GSIA. Operating expenses in Q4 2020 were up CAD 6.2 million, or 6%, from Q3 2020.
The increase reflected higher severance costs, increased short-term employee performance incentive costs, higher IT costs, the write-off of costs related to discontinued initiatives, and increased marketing costs. These increases were somewhat offset by lower long-term employee performance incentive costs and reduced COVID-19 pandemic-related expenses. Looking at our balance sheet, we reduced our debt by over CAD 79 million from the end of 2019 to the end of 2020. We also spent CAD 56.8 million in the repurchase of 473,400 of our common shares under our NCIB program through to the end of 2020. With the continued strength of our adjusted EBITDA in 2020, our debt-to-adjusted EBITDA ratio was 1.8 times at December 31st, down from 2.1 times at the end of 2019.
We also held about CAD 278 million in cash and marketable securities at the end of the year, which was almost CAD 115 million in excess of the CAD 165 million we target to retain for regulatory and credit facility purposes. Yesterday evening, our board declared dividends of $0.70 per common share payable on March 12th to shareholders of record as of February 26th. At 49% of our adjusted EPS, this is at the high end of our target payout ratio of 40-50%. I would like to turn the call back over to Paul.
Thanks, Frank. Operator, could you please outline the process for the question and answer session? Thank you.
At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from Nik Priebe of CIBC Capital Markets.
Your line is open.
Okay, thanks. First question just relates to CDS. Looking back at 2020, equity trading volumes were up over 40%, but I noticed CDS revenue increased only 4% for the year. That would imply relatively low sensitivity to equity turnover levels. On the other hand, CDS revenue has grown over time. I'm wondering if I can just ask you to refresh us on the revenue model at CDS and maybe some of the key sensitivities there. If not, equity trading volumes, please.
Yeah, I'm happy to start that. Frank, feel free to jump in here. There's a couple of components. One thing within the CDS model is that the clearing fees, the clearing fees related to equity trading, are actually one of the smallest components of the model.
The larger components of CDS's model are around custody and activity around entitlement processing and those types of things. In addition, things like equity clearing is one of the pieces that's subject to the historical 50/50 rebates, where 50% of that growth is rebated back to the participants in those. You will see in the details that those rebates have grown over the period as well. Those are the real drivers why you do not see that direct translation of that equity volume into the overall CDS revenue, because it is a smaller component of the total CDS revenue mix.
Okay. Okay, makes sense. One other question on the expense side. I noticed information and trading system costs stepped up slightly in the quarter. Sounds like some of that related to the write-off of expenses related to discontinued initiatives.
I do not think that was adjusted out of earnings. Can you just provide a bit of color maybe on what that related to and just the size of the write-offs that we should not expect to reoccur there ?
Yes. Yes, certainly. Nick, this is Frank here. It was a relatively small amount, roughly CAD 1 million for the quarter related to the write-off. It relates to our charter bond initiative in our CDS clearing portfolio. Given the small size, it was a part of our ongoing investment in internal initiatives. Given the size of that, you are right, we did not adjust for that.
Okay, got it. That is very helpful. That is it for me. Thanks very much.
Your next question comes from Jeff Hann of RBC Capital Markets. Your line is open.
Hi, good morning.
I know you talked a little bit about some of the deals that have been happening, and I'm just trying to get into the deal pipeline. I know in the past, at different points of time, there's been comments that the pipeline seems pretty good based on what you're seeing. I'm just curious, based on what we're seeing today or what you're seeing today, how does this feel versus other times? Does this feel materially stronger or in line with other points in time that you think the pipeline's been pretty good?
Yeah, thanks, Jeff. Thanks for how you asked that question without asking me to predict the longer-term future. I appreciate that. I can give you this quite candidly because the team, particularly the team that is working on processing and managing listing files with clients, is extremely busy.
That trend and that strength that you saw through Q4 has very much continued into the start of 2021. We talked about a couple of them on the call, like TELUS and Topicus. And there are a number of additional tech IPOs that are in the pipeline. That continues to be one of the largest drivers of the IPO strength is tech sector, but also resources and others, but tech is the real leader there. We are continuing to see depth in that pipeline for the foreseeable future.
Okay. I am just wondering, is there some sensitivity you can provide in terms of thinking like operating leverage to stronger listings activity specifically?
For example, if we saw overall revenues increase, say, 5%, and it was driven, call it solely by higher listings activity, what type of increase in EBITDA or maybe looking at it from an EBITDA margin perspective, ballpark, would you think you would see in that scenario?
Yeah. In this part of the business, we do have a lot of operating leverage here. A lot of the work, so there's not a lot of variable costs in terms of managing this, but we do have a lot of file support work. We are adding resources to help the team, but it's not what you would call material in terms of looking at the expense base. The really important piece here, Jeff, is that we did a lot of work over the last couple of years to digitize and automate the relationship with issuers for processing these files.
is timely that this went live for us before COVID hit, it allows us to take the files from new IPO or issuer clients that are raising money electronically and process that workflow electronically. It has given us a lot more scale and leverage in the model than we would have had in terms of previous spikes in activity like we are having today. Yeah, we are adding some resources to help with that file load, but it is not material.
Okay. My last question would be just the BOX long-term comp, I guess, nuance in Q4.
I could appreciate 2020 was an extraordinary year in many ways, but is there a way to reduce the volatility in the BOX compensation expense, whether or not it's accruing the LTIP and then doing a true-up in Q4, or is this an issue that would likely happen if you have another year where BOX's financial results are either, say, up or down a lot relative to the prior year?
Yeah, that's a good question. Let me give you a start on that, and Frank is going to jump in as well. As you said, it did reflect a compensation cost for the whole year. In theory, we would have liked to have seen that accrued all through the year.
But it is based on the valuation of BOX Exchange as an entity, which candidly, we are a large investor in it, but we're not a control investor, so we don't have control over how those compensation agreements are arranged. Frank, let me turn it to you to add into that.
Yeah, just adding the point that you need to look at that as a 2020 full-year charge. Given, as John mentioned, the sharp increase in volumes, especially in the last six months, this is where the valuation ended and resulted in the appropriate accrual. On a go-forward basis, you think of this more of an annual type of charge if we see those volumes continue, obviously. It's hardly dependent upon the evaluation of BOX Exchange going forward.
Okay. All right. Thank you.
Your next question comes from Jeremy Campbell of Barclays Capital. Your line is open.
Hey, thanks, guys.
Just similar to the moves in the Canadian and U.S. rate curves, it looks like the Montréal Exchange is seeing some similar impacts to the U.S. market with longer-term futures contracts picking up quite a bit while the short end remains pretty muted. John, and maybe Frank too, just one, kind of wondering if you can characterize the year-to-date rates activity in the futures complex as it's been dramatically higher down here in the U.S. year-to-date. Two, maybe how you think about the complex revving up into 2021 as the year-over-year comps on the short duration side get much easier after March. On top of that, you have the two and the five-year continue to spin up organically toward a more normalized level.
Yeah. Frank, do you want to start with that, and then I'll jump in?
Yeah.
As you mentioned, we are seeing a really strong start to the year with our derivatives volumes up, I believe, around 13% month of January so far. You've seen these stats come out last week relative to our Q4 levels. We're optimistic. We've just launched the CGZ product in Q4. That's already roughly around 5,000 contracts per day. We are noticing, to your point, some of the curve strategies involved in that product with the two and five-year. I believe we've already seen contracts over 7,000 so far. That is some positive news to start for the year. John, I'm not sure if there's anything else you want to add to that.
Yeah. The piece I'm going to add in is a reminder, as we spoke earlier, that we've announced the launch date for our Asian time zone trading as well in terms of May 30.
Second quarter, expect to see those large benchmark products like the fixed income product trading on that time zone again. If we see the kind of lifts that we've seen out of the U.K., that could add substantial volume as well.
Yeah. Thanks. John, I was actually going to ask you that as well here, just maybe even more broadly on the whole futures complex around the Asian time zones. You've laid out the great reasons why they should be interested in the derivatives complex and the Montréal Exchange. Just kind of wondering what your sales team on the ground has been hearing from clients around the demand and maybe how quickly activity might ramp off of that late May launch.
Yeah, that's a great question.
It was a while before we could get folks back in the region, but we did get people back into the region in the fall. The anecdotal pieces that we've been given in terms of why is based on that client feedback. Tony Si, who's our lead in the region, working both out of Canada and both out of Hong Kong, has been doing direct sales work with those large asset managers in Australia, in Japan, in Hong Kong, and Singapore. They are looking for international exposure. The challenge always around international exposure is if you don't make it easy to come to Canada, Canada is easy to bypass for just using the US. The evidence from that client engagement is that the demand is there once we make it easy for them to access. I know how fast that ramps up.
I can't give you guidance on that, but I would look to the experience that we had in the U.K. as a proxy.
Great. Thanks a lot, guys.
Your next question comes from Graham Ryding of TD Securities. Your line is open.
Morning, Graham.
Hi, thank you. Good morning. Maybe I'll say at Trayport, just strong growth year over year. But it was your trader numbers, I think, were up 5% or 6% year over year, but your revenue growth was materially higher than that. If you can just provide some context on what's driving the higher revenue per subscriber.
Yeah, Graham, I'm happy to take that question. You have to remember, only a part of our revenue is directly impacted by what's called the short-term subscriber movement from quarter to quarter.
You rightfully pointed out the growth in revenue is exceeding the growth in subscriptions both year over year and sequentially. We did see a larger tranche of enterprise license renewed in the quarter, and that came at higher rates. In addition to that, we mentioned an additional amount of additional product sales tied with those subscribers through our EMA platform, customer portal, and some of our data analytics products as well through the quarter. That is what you are seeing specifically in Q4.
Okay. Got it. On the expense side, on the IT expense line, I think there was some sort of arguably one-time items in there, but it was a pretty noticeable uptick from the run rate. Can you give us some context? Maybe is this a reasonable run rate next year? Is there a need for higher spending on the IT side?
Then also on the CapEx side, it was elevated. Can you give us some context on what you're expecting for CapEx next year or this year, sorry, 2021?
Yeah. I'll start with the operating expenses. Obviously, we expect to maintain a consistent level of expenses going forward. You did have notice of some uptick in IT, but we also saw some downticks in G&A. I think you need to look at those together. In terms of we'll always continue to invest in growth. We'll have small pockets of new spend, and then obviously, cost efficiencies to offset. We still exercise, obviously, our expense discipline. In terms of CapEx, Graham, typically, I'm going to sort of speak toward the ongoing CapEx, where we're typically around CAD 25 million-CAD 35 million a year of ongoing CapEx.
You'll see higher levels this year related to our post-trade modernization initiative, similar levels to what you saw in 2020. Great.
My last question, Jeff, the sustainable bonds initiative that you mentioned in your MD&A, it looks like it targets those retail investors. Is there something that you think could be material in other areas in the traditional over-the-counter bond market that could be applicable here if this resonates?
I think in this one, this is going to be time will tell. We're looking at an area being both sustainable finance, ESG, sustainable bonds, that there's a tremendous level of interest right now in terms of people that want to try issuing, people that want to try investing.
We do not have a good sense yet what the real demand is going to be, but we are trying to take advantage of the capabilities of the market to very quickly bring a product to market so that retailers can trade. It is a low-cost initiative to test out market appetite for this type of product on a retail trading basis, and we will see how it goes and build from it.
Okay. Understood. Thank you.
Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from Brian Bedell of Deutsche Bank. Your line is open.
Great. Thanks. Good morning, folks.
Morning, Brian.
Good morning. I may just start out, John, you mentioned some of the initiatives that you discussed with the board about, for example, the growth acceleration for revenue growth priority.
Can you talk a little bit more about the plans to expand within data analytics to help accelerate the Trayport revenue growth? Is that more on trying to get new subscribers in, or is it more on a sort of a cross-sell basis in terms of revenue capture?
Both within Trayport and within the rest of the franchise. Within Trayport, two of those key products, and Frank talked to them a little bit just a second ago, the data analytics solution is a deep analytic database that allows traders to retest their strategies, things like that. It really is a premium add-on product for traders in the Trayport universe. It is one of those things that over time contributes to a higher rate per user in terms of those added subscriptions, similar to with the algorithmic trading solution.
If you recall, this is the business we acquired with VizzoTech and then worked to integrate it into the Trayport solution so that we can provide it out as an entitlement across that platform for Trayport customers. We are also doing other additional things, both with our own products we build, but also with partner products. We have a partner product on Trayport called Trade Signal that we do deploy as well as an advanced charging solution, and that's then a premium that we applied across that solution. Similarly, within the rest of the TMX franchise, we are aiming to look at other applications for advanced data usage and analytics on top of that.
Our product, which we call Grapevine, is a deep data analytics database that allows users to retest equity strategies, so total cost of an execution, those types of things, algo testing, those types of things. We are continuing to build that out. The applications are really targeted to some of the large users today, but this is an area where we think there are more things that we can provide some useful solutions, and we are looking at applications around potentially supporting ETFs and other areas in that marketplace. Expect this to be a continuing area that we are going to be developing in 2021.
Okay. Great. Thank you. Then just on retail trading, as you mentioned, it is extremely strong, 45% contribution in January. Obviously, there is a huge debate in the U.S. as to the sustainability of retail trading. We are seeing similar stats here, of course.
Maybe if you can talk about your confidence level of retail engagement for 2021 in terms of trying to size out the portion that you think is sustainable and growing versus maybe with some more episodic early in the year and late in 2020 as well.
Yeah. I'm going to do my best to answer that question in terms of my level of confidence without predicting the future at the same time if I can. The things that are underlying the strength in retail trading are drivers that are going to continue for some time. If you look at the drivers in terms of the low-rate environment, how that supports market valuations, a largely work-from-home culture right now, and the continuing growth in retail trading applications that are provided through the brokers, all those are supporting this elevated level of retail trading activity.
Now, we haven't seen the same degree in Canada that the U.S. has seen in terms of really heavy trading around specific names. That hasn't been the same degree of what's been driving ours, as you've seen in the U.S. market, and that may not be the same level of sustainability. Those underlying factors, we don't see those trends abating in the near term.
Okay. That's helpful. Thank you.
Your next question comes from Jaeme Gloyn of National Bank Financial. Your line is open.
Yeah. Thanks. Good morning. I wanted to dig in on a couple of revenue opportunities, but first, just with respect to a comment on Trayport and a larger tranche of enterprise clients. I believe you said renewing at higher rates. What is driving the higher rates?
Is that a decision on the part of Trayport to increase or to inflate pricing, or what is driving that?
Part of that, Jaeme, is there's built-in CPI increases with our contracts. More than that would be heavily influenced by usage. As these deals that are in the one to three-year timeframe renew, we will look at the usage, the number of site licenses that are being used. Obviously, more users means more revenues and more renewals at higher rates. That's the main driver of that. Okay. It's user utilization, not trade volume utilization? Correct. Users. Okay.
Okay. Great. On some revenue opportunities, a little bit of print used on the TSX DARK pools, and we've seen some rapid growth in market share there.
Can you talk about the revenue intensity of the dark pool relative to more traditional trading, and where do you see dark pool growing to as a share of overall volumes, and how do you see TSX share within the dark pool growing?
Yeah. John, I could start off, and please jump in. So Jaeme, that's been a significant increase for us this year, right, in 2020. One of the main drivers why our overall share in equity tradings have increased. So our dark pool share believes it's gone from 23% to 27% during the year. That was largely one of the major factors of why we ended up at roughly 67% market share for the year. We're continuing to work on these sort of dark initiatives that are going through.
We gave some color in John's opening remarks about some of the more opportunities that we see in terms of more liquidity and making it easier to trade through that. I'm not sure, John, if you wanted to add anything to that as well.
Yeah. Thanks, Frank. We don't really have guidance in terms of what the share of the trading market will be driven by dark solutions. Historically, it's been around 10%. I don't think we updated that with the level of retail activity we've had in the recent terms. I wouldn't want to guide you on where that can go. Our focus with Frank, that is, is to continue to have a growing share of that.
Competitive pricing that we put in place continues to drive the expanded dark solutions that we've grown to, as you saw, 27% of that component, and we are looking to continue to expand that.
Okay. Maybe if I can ask a little bit differently then, I believe dark pool trading in the U.S. is significantly higher than the 10% it is in Canada. Can you talk about some of the differentiating factors as to why we would see that delta and whether that delta can persist?
Yeah. One of the reasons that you see that delta in the Canadian market is because we've actually got more of the functionality that dark split trading provides in the U.S. actually built right into the order structures. As a market that gives, we have broker preferencing built into our structure already that allows brokers to trade against their own components.
There's price improvement components that are built into our market structure already. A lot of that feature is we've built into the active market, so you don't need to go to a dark pool to get them the way you did in the U.S. market.
Okay. Great. Thanks. Shifting to the market on call is quite an initiative to change the setup there. Can you talk about are there enhanced revenue opportunities here for TMX with the new market on call structure, or is that indeterminate at this time?
I'd suggest it's indeterminate at this time. Certainly, improving the market on close solution will allow and we anticipate more liquidity into the close of that, which should add to more trading activity. We do have today trading caps in terms of participant-level caps in terms of that.
As we bring the solution out to market, we will relook the pricing structure for it in general, but I think it's early to say at this point.
Okay. Great. A broader question then around ESG and some of the initiatives that you've launched so far with indices and futures. I'm just wondering, can you perhaps frame the ESG opportunity for TMX? What type of revenues can you see generated that would be associated to the ESG team?
Yeah. The way we are thinking about ESG, and we're going to be actually bringing more information out of this in the first and second quarter around our vision and mission in terms of how we support the industry this way.
First of all, TMX as a company ourselves, as a public company, we expect to be a leader in terms of good ESG disclosure, low footprint, those types of things, and we're going to be bringing out more measures of that in the future. The second component, and really turning toward the nature of your question, is as a marketplace operator and also thought leader, we are looking for ways that we help companies navigate ESG effectively and provide opportunities for issuers and investors. Some of the early things that we're doing around the issuer community is really to bolster the strength of the issuer base, period. It is not a discreet revenue opportunity itself. It makes those issuer relationships stickier. It makes it easier to be a public company so that ESG reporting isn't another barrier for someone to use the public market to access capital.
That's where we'll see it on that component. That's through things like ESG 101. We are also looking at reporting solutions to help issuers navigate in terms of what they report out. On the product side, and again, as we said, these are early stage. The new trading of sustainable finance products like tradable bonds, that is a net new revenue opportunity that we'll see what the market uptake is in terms of how it drives. Same thing with the index futures and the indices themselves. If you remember, in our market data revenues, we have revenues that come from our index relationships. These net new index relationships and the assets under management with them will contribute to growth in the index revenues. The futures that we are driving through the MX will grow in terms of those future trading pieces.
I'm not going to be able to guide you today in terms of what the revenue opportunities are for each of those, but we are pushing on a number of different areas, and it'll be about what investor demand is going to pick up in these products. Okay. Thanks. That's it for me today. There are no further questions at this time. I will now return the call to our presenters for closing remarks. Thanks, Chris, and thanks everyone for listening today. If you have any further questions, the contact information for media as well as for investor relations is in our press release, and we'd be happy to get back to you. Stay well and stay safe, everyone.
This concludes today's conference call. Thank you for your participation. You may now disconnect.