Good morning and welcome to the TMX Group Limited Q3 2020 financial results. I will now turn the call over to Mr. Paul Malcolmson, Managing Director, Investor Relations.
Thank you, Operator, and good morning, everyone. I hope that you and all your families are staying well and safe. Thank you for joining us this morning for the third 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 we make on today's call might be considered forward-looking. I refer you to the risk factors contained in today's press release and reports that we have filed with regulatory authorities. Now, I'd like to turn the call over to John.
Thank you, Paul, and good morning, everyone. Thanks for dialing into the call today to join our discussion of TMX Group's financial performance for the third quarter and for the first nine months of 2020. As we kick off the call today, let me start by wishing everyone continued good health, and on behalf of TMX, to thank all of those on the front lines working diligently to protect and support our communities throughout the ongoing COVID-19 pandemic. Today, as Paul mentioned, we have Frank Di Liso, TMX Interim CFO, with us on the call. Frank will take us through the Q3 numbers in a few minutes, and will join us for the Q&A following his remarks.
To begin today, as I have shared with many of you in various investor events and in conversations over the last few weeks, I want to reiterate how honored I am to be entrusted to lead this great organization. During my time here, I have been fortunate enough to work closely with our tremendous people across our various business areas and corporate functions to shape and advance the evolution of TMX. Five years ago, we undertook a major initiative to transform TMX, streamlining our business model and prioritizing our growth opportunities. Accelerated by important steps we have taken in executing our long-term strategy, including the acquisition of Trayport, each phase of this transformation has been met with success. In my view, our track record of execution has helped to set the stage for a promising future for TMX. I am most excited about the job ahead.
Now, turning to our performance, we are pleased to report positive results for Q3, with 6% growth in revenue and 13% growth in earnings per share compared with Q3 2019. Frank will take you through these details in the year-over-year comparatives and the analysis for the quarter in a few minutes. This morning, I want to take a look deeper into the first nine months of 2020 for TMX to highlight some important trends and achievements, and also to add context around how the industry challenges this tumultuous year have informed our thinking as we embark on the next steps forward in our strategy. Overall, TMX's results through the first three quarters reflect the resiliency of our business model during a period of sustained market uncertainty and demonstrate the value of our consistent strategic focus on diversifying revenue streams.
Revenue for the first nine months was CAD 645.6 million, up 7% compared to the same period last year, and earnings per share was up 3%, or 11% on an adjusted basis. Higher revenue was driven largely by increases from our equities and fixed income trading and clearing businesses, and from GSIA, including Trayport. These increases were slightly offset by lower revenue from our derivatives business and what has been a prolonged, historically low interest rate environment. Revenue from equities and fixed income trading was CAD 96.4 million, up CAD 21 million, or 28% compared with the first nine months of 2019. Even as we move beyond the period of unprecedented volatility in the first quarter, equity trading volumes remained robust throughout the first nine months of this year.
Combined volumes on our equity markets, including Toronto Stock Exchange, TSX Venture Exchange, and Alpha, were up 39% compared to the first nine months of 2019. Inside the trading data, we are also seeing important signs of progress in some of our recent initiatives, including increased adoption of TSX DARK, our DARK trading solution. TSX DARK's share of DARK trading in TSX-listed securities has grown to almost 28%, an increase of 6% year-to-date, and we have seen a positive uptick in trading since the launch of a new liquidity program in July. Turning now to Trayport, activity and results remained strong through the first three quarters. Revenue, including Vizotech, was CAD 101.4 million for the first nine months ended September 30, 2020, an increase of CAD 12.7 million, or 14% from the same period in 2019, with a 6% increase in average trader subscribers and an 8% increase in average total subscribers.
Higher global energy markets activity and increased volatility in the first nine months of the year drove record volumes in both the European power and gas markets. We also see continued positive results from recent Trayport initiatives to capitalize on secular trends in the marketplace, specifically in the burgeoning liquefied natural gas market and algorithmic power trading. Volumes in benchmark European and Asian LNG contracts were up substantially from 2019, and algorithmic power trading in European intraday markets and global energy markets continued to gain momentum. Volumes in the EPEX SPOT grew 22% compared with the first nine months of 2019. Commodities markets are globalizing, and the Trayport team is exploring opportunities in disaggregated asset classes where we can add value by consolidating pricing data on a single platform, as well as new ways to address client needs for data and analytical applications.
Now, turning to our capital formation business, we have seen an encouraging positive shift in momentum over the last few months, highlighting both the increasingly global appeal of Canada's capital markets ecosystem and the long-term value of listing on TMX's exchanges. High-profile IPOs and new listings have garnered recent headlines in sectors TSX and TSX Venture are traditionally known for, such as mining and resources, and also in the innovation sector, where we are building an international reputation as a leading marketplace among established and starter-stage companies, as well as investors. The TSX TSX Venture ecosystem, which includes our vast and varied group of stakeholders, is a global differentiator and a competitive advantage. In October, Newcrest Mining, Australia's largest gold producer, began trading on TSX.
The company's CEO was quoted in the media saying that listing on the Toronto Stock Exchange would improve the global visibility of the company and broaden access to North American capital pools. A strong testimonial and proof of the high regard for Canada's markets throughout the world. That global visibility is no accident. Canada is the number one marketplace to raise capital for mining. It is a fact and a well-earned reputation. Through September 30, listed TSX and TSX Venture mining companies raised a total of CAD 5.5 billion, an increase of 56% compared with the same period in 2019. In parallel with the resurgence in mining, our markets continued to build on a newly established international reputation as a center of innovation through the first nine months of 2020. Investor response has been loud and clear.
Through the end of September, the S&P TSX Tech Index was up 41% year-to-date and has consistently outperformed Canadian and U.S. benchmark indices over the last few years. September marked the largest tech IPO by amount raised in Toronto Stock Exchange history, with the addition of Nuvei, a Montreal-based payments company added to our stock list. Nuvei joins a list of recent tech IPO success stories, including Lightspeed, Docebo, and D2L Corporation. Tech companies have raised CAD 6.2 billion in total financing through the first nine months of 2020, and that's more than any other full year in the last decade.
In our derivatives business now, overall revenue was CAD 95.4 million in the first nine months of the year, down CAD 4.5 million, or 5% from 2019, driven by a 2% decrease in revenue from MX and CDS as reduced revenue from TMX Atrium, as our agreement to provide transitional services ended on June 30th, 2020. While the extreme volatility of early 2020 drove higher derivatives volumes in the first quarter, the historically low interest rate environment had a negative impact on volumes in MX's key products and revenue in the second and third quarter. Importantly, though, we remain on track in terms of enhancing our existing derivatives product suite and expanding our global reach. Later this month, we will relaunch trading in the two-year Government of Canada Bond Futures contract, or CGZ. We tweaked the contract structure in response to client demand and to stimulate additional activity on the contract.
Trading on London time zone has also been a success. The overall proportion of volume traded in our leading products during the extended hours sessions was approximately 6% for the first nine months this year, and we hit peaks of 10% at the height of volatility in Q1. The preliminary groundwork is also underway for the next phase of MX Extended Hours Initiative expansion into Asia. We have laid the foundation on a clearing solution and are working with industry stakeholders to pave the way for adoption. We have also initiated digital and virtual engagements with clients in the region. Extending hours to sync with an Asian market will align us with global peers. It will increase international visibility for Canadian markets and ultimately enable us to connect to more clients.
Turning now to another important development and a little closer to home, but also in pursuit of expanding our business and client base, in September, TMX announced the agreement to acquire AST Trust Company (Canada). From a strategic standpoint, this acquisition fits squarely within our broader capital formation growth plans and will strengthen TSX Trust's competitive position and value proposition in the transfer agency and corporate trust service business. The addition of AST Canada will bring dynamic new capabilities to our business, and most important of all, add a team of professionals with proven expertise to our own exceptional talent base. The transaction is expected to close within 6-12 months from signing at the end of September, subject to receipt of the regulatory approvals.
I want to take this opportunity to thank all of TMX's employees across Canada and our virtual offices around the world for their exemplary and unwavering dedication and performance this year. Now, eight months of operating in a remote working environment, our people have worked hard to ensure that we maintain close connection to our clients and that we deliver the excellent standards of service our markets require. This effort is crucial. Ultimately, our success is rooted in our client success, and we continue to look for meaningful and informed ways to improve the client experience for issuers, investors, and traders. I open my remarks with how much TMX has changed over the last few years. In particular, in 2020, months can seem like years, and years can seem like decades.
I want to emphasize something that has not changed about the way we think about TMX's role in the marketplace, something that, if anything, has become more pronounced. TMX is directly and deeply connected to the markets we serve. We've learned a lot about ourselves in times of crisis, and COVID-19 has taught us many lessons and shone a bright line for TMX on the near-term priority areas where we can have a positive and lasting impact. As we are acutely aware, vibrant public markets are crucial to the access of the economy. Access to capital throughout the markets during this most challenging year has helped many companies adapt and persevere and provided them with opportunities to build stronger for the futures, and we pledge to continue that support.
As we move forward, TMX will be stepping up our advocacy efforts, leveraging our position at the center of Canada's markets to pursue meaningful ways to help our clients succeed and to make our markets the markets of choice for connecting companies, investors, and traders to growth opportunities. We have made our position clear at the federal and provincial levels of government, including equal treatment and burden reduction for small public companies. Advocating for fair treatment for public companies is a perpetual campaign for TMX. There are other forums and topics where we can work closely together with our capital market stakeholders to effect meaningful change. I strongly believe TMX has a key role to play in leading the way, helping to strengthen Canada's competitive standing on the world stage and a part to play in shaping the economy of the future. Our purpose is simply to make markets better.
It's in our core values. It's intrinsic to what we do. With that, I will turn the call over to Frank, who will provide additional details on our third quarter results. Thank you.
Thank you, John, and good morning. Looking at our Q3 results, as John mentioned, revenues were up 6% from Q3 of 2019. This was driven by a significant increase in revenue from both equities fixed income trading and clearing and capital formation, as well as from global solutions insights and analytics, or GSIA, offset by a decrease in derivatives trading and clearing revenue. The results once again demonstrate the benefits of our diversification over the past few years and the resiliency of our business model. Operating expenses were up 2% over Q3 of 2019, and our EBITDA margin was at 58%.
With our operating leverage, we were able to deliver an increase of 13% in diluted earnings per share and a 12% increase in adjusted diluted earnings per share. Looking at revenue, high market volatility during the quarter continued to drive significantly higher equities trading and clearing volumes. The average VIX was almost 26 in Q3 2020, compared with about 16 in Q3 2019. In equities and fixed income trading, there was a 21% increase in revenue in Q3 2020, compared with last year, driven by a 39% increase in volumes across all of our exchanges. The impact on the higher volumes was somewhat offset by a less favorable product mix in Q3 2020, compared with Q3 2019.
There was a significantly higher trading volume in TSX Venture Securities, up 81% in the quarter, which has a lower capture rate as compared with a 20% increase in volumes on Toronto Stock Exchange Securities. In addition, in the Market on Close facility, or MOC, where we have fee caps on our total capture rate on MOC trades was less as compared with Q3 2019. There was also an increase in fixed income trading revenue, reflecting increased activity in swaps. CDS revenues increased by 9% from Q3 2019. Recoverable costs of CAD 1.2 million related to CDS's clearing operation netted in Q3 2019 were included in both CDS revenues and SG&A expenses in Q3 2020. In addition, there was higher international depository clearing and settlement revenues due to higher volumes in Q3 2020 compared with Q3 2019. The increases in revenue were partially offset by higher rebates.
Now, turning to capital formation, the significant increase in revenue was almost entirely driven by an increase in additional listings fee revenue compared with Q3 2019, reflecting higher revenue on TSX Venture due to an increase in both the number of financings and total financing dollars raised. There was also an increase in additional listing fee revenue on Toronto Stock Exchange, reflecting a 41% increase in the number of transactions billed at the maximum listing fee of CAD 250,000, and an increase of 9% in the number of transactions billed below the maximum fee. Now, 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 17% in CAD and up 8% in GBP, as we benefited from the favorable impact from a weaker Canadian dollar relative to sterling in Q3 2020 compared with Q3 2019.
The overall increase in revenue was also driven by a 5% increase in trader subscribers and a 6% increase in total subscribers. Revenues from our traditional data business increased by 4% from Q3 2019 to Q3 2020, with higher revenues from subscriptions, usage-based quotes, colocation, benchmarks, and indices, as well as revenues related to underreported usage of real-time quotes in the prior periods. The average number of professional market data subscriptions for TSX and TSX Venture Exchange products was up 1% in Q3 2020 compared with last year. For Montréal Exchange, subs were down 6%. With respect to derivatives, derivatives trading and clearing revenue declined from Q3 2019 to Q3 2020 by 26%, largely driven by a 22% decrease in revenue from Montréal Exchange and Canadian Derivatives Clearing Corporation. This decrease in revenue was primarily due to a decline in overall volumes, particularly in the three-month Canadian Bankers' Acceptance futures, or BAX contracts.
While open interest only decreased by 2% from September 30, 2019, there was a 26% decrease in volumes on MX. In addition, there was a decrease of approximately CAD 1.6 million in revenue from Q3 2019 to Q3 2020 relating to our agreement to provide transitional services to TMX Atrium, which ended in the prior quarter. As I mentioned, operating expenses were up 2% from Q3 2019. The increase in costs was primarily attributed to higher short-term employee performance incentive costs, increased headcount, higher consulting fees, a write-off of leasehold improvement costs, as well as increased costs related to managing our business during the COVID-19 pandemic. In addition, we incurred CAD 1.4 million, or $0.02 per basic and diluted share, in transaction-related costs related to the proposed AST Trust Company (Canada) transaction.
As I mentioned, there was also an increase in recoverable costs related to CDS, which were included in both CDS revenue and SG&A expenses in Q3 2020. The increases were somewhat offset by a decline in long-term employee performance incentive plan costs, as well as travel and entertainment expenses. In addition, there was a reduction of CAD 1.3 million in a commodity tax provision, or $0.02 per basic and diluted share, which reduced SG&A expenses. Now, looking at our results on a sequential basis, revenue was down 5% from Q2 2020, largely attributable to decreases in revenue from equities and fixed income trading clearing, derivatives trading and clearing, largely offset by increases in revenue from both capital formation and Trayport. Operating expenses in Q3 2020 were down CAD 12.1 million, or 10% from Q2 2020.
The decrease was largely attributable to a decline in SG&A expenses, which included CAD 12.4 million of net litigation settlement costs in Q2. Income from operations increased from Q2 to Q3 by $2 million, largely due to the lower operating expenses offset by lower revenue. Now, looking at our balance sheet, we reduced our debt by over CAD 70 million from the end of 2019 to September 30th. We also spent CAD 15 million to repurchase 140,000 of our common shares under our NCIB program through to the end of September. With a continued strong adjusted EBITDA in the nine months of the year, our debt-to-adjusted EBITDA ratio was at 1.8 times at September 30th, down from 2.1 times at the end of 2019.
We also held over CAD 320 million in cash and marketable securities at the end of the quarter, which was CAD 135 million in excess of the CAD 185 million we target to retain for regulatory and credit facility purposes. Last evening, our board declared a dividend of $0.70 per common share payable on December 4th to shareholders of record as of November 20th. At 50% of our adjusted EPS, this is at the high-end range of our target payout ratio currently at 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?
At this time, if you would like to ask a question, simply press star, then the number one on your telephone keypad now. We will pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Melinda Roy of Deutsche Bank.
Hi, good morning, everyone. Thanks for taking my question. Maybe just to start out with a question on the derivatives business. Can you maybe talk about the revenue capture dynamic going on in the business? It looks like it improved nicely from the second quarter level. Is that capture rate sustainable into the fourth quarter based on the volume product mix we've seen so far quarter- to- date?
Yeah, I can take that question. Yeah, as you know, as you pointed out, the derivatives volumes were down 26% in the quarter, and our revenues were down 22%. There was an offset in the average revenue per unit or capture rate. We did have some accrued regulatory revenues in the quarter that were unique to the quarter and about CAD 600,000 worth.
On a go-forward basis, excluding that, we expect the capture rate to be constant.
Okay, thank you.
Your next question comes from the line of Jeremy Campbell of Barclays.
Hey, thanks, everybody. So John, it was great to see cap formation improve this quarter. I know these can be a little bit chunky quarter to quarter around what's listing and what's financing, stuff like that. Just kind of wondering if you see the robust quarter as a little bit more one-timey, idiosyncratic, or if the pipeline is robust enough to kind of keep the momentum going from here.
Yeah, Jeremy, thanks. That's a great question. Let me start with the end piece, which is the pipeline we see continues to be robust. The activity levels of our team are continuing to work on a lot of new file activity into the future.
It's a strength that's going to continue this year. I think the piece that you take some comfort in is it is actually fairly broad-based. It's not exactly that it's just one sector is driving this. We talked in the call so far about the strength in mining, the strength in tech, but we're also seeing some industrial. We are seeing actually a we had an IPO of a natural gas company in this last month, which is the first major energy IPO we've had in two years. It is a very strong, robust market, and I see that activity continuing.
Maybe just kind of pivoting to derivatives a little bit. Obviously, a bit of a tough macro headwind. You guys mentione d you had a lot of irons on the fire with the pending relaunch of the two-year, moving into the Asian time zone trading.
I guess, can you just give us, on a qualitative basis, a little more color around kind of client engagement and expected traction for either the new rates products, whether it's the ongoing five-year traction or the new two-year, and then what your interactions with these Asian clientele are as you kind of shift over to the new time zone?
Yeah, if I start with the actual product piece, both in not just the two-year that we're working on today, but the core future that we relaunched in the summertime, which is getting more traction, both those were done with direct interaction with the client base in terms of how to structure, adjust, tweak those contracts. When we bring the two-year to market, it's based on the ongoing engagement with the client community in terms of what they need to see in that contract.
That's, despite the fact that we're not doing a lot of face-to-face meetings, using the virtual tools, we're actually getting a lot of client engagement, and it's been much more active than it was in the early part of the pandemic where people were just trying to keep their shops open. On the Asian market development side, a lot of the work we do here in terms of the clearing work, what we do around market structure, regulatory, but on the business development side, we have been doing some of that remote. More recently, our head of the Asian market development, Tony Si, we have actually got him now back in region.
He was back in Hong Kong about a month or so, has done his quarantine, and is up and running on those client engagements to build the demand and the connectivity for when we're able to launch this next year.
Great, thanks a lot.
Your next question comes from the line of Graham Ryding of TD Securities.
Morning, Graham.
Hi, good morning. Let me just start with equity trading volumes. They've been obviously very strong this year. Can you just provide some context around some of the reasons that are driving the stronger volumes and then how much of it is driven by higher retail participation this year?
I mean, we're certainly seeing the lift across the board, and Paul, feel free to chime in here as well so that that participation continues to be strong.
I think one of the underlying factors is you've got continuing volatility drivers in the marketplace. We are anticipating there's potential for volatility this week and beyond, depending on what happens south of the border. In the longer term, when we're in this kind of sustained low-interest rate environment, that's generally a positive factor for equity trading. While it's been challenging for our derivatives franchise in terms of fixed income futures, it is a lift for valuations and equity trading activity. We ha
ve seen that sustained that way. Okay, understood. Trayport delivered again this quarter, a solid quarter, but there was also, I thought, decent 4% growth from your market insights business, excluding Trayport. Just some color there on maybe are there any sort of key pieces that have had a lift this year, or is it fairly broad-based?
You seem to mention a few things with the MD&A.
Yeah, it's fair to say it's fairly broad-based. You're seeing the lift in terms of the demand for some of the subscriptions, particularly around as it ties into use of those equity products for continued strength in colo. I think we talked last time about the effectiveness of our price change around colocation that we put through in the quarter. On the forward-looking piece, I think we've talked in the past as well that we are actually working on expanding that facility going into 2021. The ability for us to actually take on additional rack space for clients supports not just a lift in colo revenues as we go into next year, but how it supports trading revenues because we can have more clients colocated with our systems.
Paul, anything you want to add that I missed in there?
No, I think that covered it, John.
No. But the increase in your rack expansion, that's not in your numbers yet. That's something coming through next year, correct?
That's correct. Correct. Q2 of next year.
Okay, that's it for me. The price increase of the colo actually increased on September the 1st. We are seeing those pricing coming through immediately.
Okay, understood.
Y our next question comes from the line of Nick Freeby of CIBC Capital Markets.
Good morning.
Morning, Nick.
John, now that you've been appointed permanent CEO, I was wondering if you could just give us a bit of a general sense of what priorities might be at the top of your agenda for the next two years, whether that's advancing the M&A strategy or otherwise. Just some insight on that front would be appreciated.
Yeah, I'm happy to. It's actually good timing because we're right in the middle of the work we're doing on updating and refreshing strategic thinking, strategic planning, long-term planning going forward. We'll be talking to the board this afternoon about some of those growth focuses going forward, also then coming back later in the year with how we support it. We've been really talking, Nick, in three themes, and the overall components of our plan are around growth, talent, and advocacy. Growth are the pieces that we have talked to you about before in terms of focusing on those businesses that have room for us to expand, addressable markets, expand products to clients.
It very much continues to be focused around continuing to build out Trayport, really expanding on capital formation and building derivatives and global markets and recognizing there are more things that we can trade both in the derivatives space, but even on our equity platform. We've talked in the past about we're testing some new product out on the equity platform like green bonds. We are going to continue to look to do those types of things. Everything in our strategic focus is how do we continue to accelerate that strategy for growth, both organically, where we can add product and service and new regional development like we're doing in the Asian time zone, but also continuing to look inorganically for things that will accelerate.
That is very much where the AST acquisition that we announced just two months ago comes in, in terms of giving us a real step up in the ability to serve more issuers on more products and services. Getting a talent base that helps us with all that support for larger issuer clients gives us new capabilities in terms of employee plan management. We can deploy that to, again, a larger issuer base. We are also looking at that issuer community kind of outside of the traditional public company. A lot of these things you see us do give us the ability also to support private companies as well, which is a large growing space and very much the feeder system for the public market.
You'll continue to see us driving those types of growth agendas and looking for vehicles that we can use to accelerate them. The other two pieces I mentioned in terms of kind of on talent and advocacy are the two other pillars of how you make it all work. We've focused a lot this year on culture in the organization, on employee engagement, all the more important when people are working remotely, and it's been extremely effective. Actually, we just won a workplace benefit award for being a top company for communication with our employees during COVID. We are doubling down on those kind of efforts around ensuring we've got good engagement from the employees.
That third leg of the stool in advocacy is recognizing that the important place we play in the marketplace is that we can advocate for change to make the markets we operate more competitive. We have been very strong on recommendations for burden reduction in Canada. We have been pushing hard on the federal level on fairness for public companies. You will continue to see those themes because when we can make positive change on making the markets more competitive, more companies can list, more investors can participate, and it raises the entire franchise. Those are the core themes in terms of as we drive our strategy going forward.
Got it. That was very thorough. Thank you.
Your next question comes from the line of James Gloon. Hey, John
How are you? Good morning.
Good morning.
I just wanted to clarify that first question.
Did I hear correctly that there was in the derivatives business about $600,000 of "one-time revenues" that we shouldn't factor into our capture rate calculations?
Yeah. Sorry. James, that's Frank here. Yeah, in the quarter, there was roughly that amount of accrued revenues from the regulatory division, and that was fairly unique in the quarter. Going forward, obviously, the capture is going to be dependent on the mix between the interest rate products and the share futures and some of the other products. That was the unique part of the quarter in Q3.
Okay. That isn't expected to recur at all in any future quarters? That was really just this quarter. It's not a seasonal thing.
Correct.
It was unique in the quarter. Okay. Similar type question on the equity side, equities and fixed income trading revenues.
Obviously, some capture rate issues there given the mix with venture. Are you able to break down the impacts of the product mix with venture and maybe with fixed income trading volumes? What's driving that lower revenue growth relative to the volumes growth with a little bit more detail?
Yeah. In my remarks, I alluded to the growth in the venture volumes were about 80% in the quarter, and the growth in the TSX side was about 20%. The average capture rate with venture is essentially about half of that of the TSX securities. Also in the quarter, and we see this as well, is the higher volumes that we're seeing on MOC. Those have fee caps as well.
We are seeing roughly a lower capture rate year over year based on those volumes and capping out earlier as compared to the prior quarters.
Okay. Great. Then shifting to expenses, quite a few puts and takes here with some increased COVID-related expenses, some decreased COVID-related expenses, some other headcount, severance, professional fees, etc. I was just hoping you could give us an indication as to, I guess, the sustainability of this level of spend across the OpEx lines.
Yeah. We do not provide future guidance on expenses. However, we know our intention is to maintain consistent expenses going forward. We do exercise expense discipline. As you noted, there are some items in Q3 related to COVID that were largely offset by some of the savings we saw in our discretionary spend items like travel, entertainment, and conferences and things of that nature.
We do continue to invest in growth, as you know. We will spend small pockets of spend into new growth items, largely offset by continued cost efficiencies. Now, Jimmy, one point to note in last year's Q4 results was the one-time nature of some of the cost and comp benefits. We had a CAD 4 million reversal of the LTIP grant that was given related to the CEO retirement, and as well as a lower performance incentive cost of CAD 4.5 million. That happened in Q4 of last year. I just want to remind you of that as you start to model out your Q4 this year.
Great. Thank you.
Yeah, I'm going to build in one more piece there, if I may. Again, it's that kind of comparison to what's going on in 2020 versus what went on in 2019.
We've given that kind of long-term guidance in terms of where we track and where we target in terms of both top line and bottom line growth. If you remember last year, we weren't performing at that level, and that was an impact on our short-term incentive plan. You saw savings in the short-term incentive plan cost last year. It is the opposite scenario this year. Baked into those expense run rate on the first nine months, and you'd expect into the fourth quarter as well, as we are outperforming those long-term targets. You should expect to see that reflected in the cost base of our short-term incentive plan as you have throughout the entire year so far. That is a delta on a yea- over- year.
Okay. I appreciate that extra color, John. Last one for me then is just on Trayport.
Still pretty robust organic revenue growth, but a little bit of a step down this quarter. If I'm looking at subscriber growth, traders, and total subscribers, a little bit slower in Q2 and Q3 2020 relative to, let's say, the previous five quarters before that. Can you offer us a little bit more color around what we're seeing in terms of subscriber demand for Trayport and the persistence of, let's say, maybe a step down in growth there?
Yeah. What you're seeing with Trayport is you're seeing continued strong demand and usage. Even though the subscriber numbers were not up to the same degree in the quarter, we actually had very strong uptick in terms of new client add-ons. I'm going to get the number wrong, and Paul will correct it, but I believe we had six or seven new clients sign on in the quarter.
In this market environment, they're tending to sign on with a couple of traders, and then we'll see how their experience goes in terms of building into the product later on. In the environment we've been in this year, I'm actually pleased that we're getting new clients signing on. It is the challenge in terms of people taking on more traders because, remember, these clients are also under different stresses as well, given that volatility of the energy market. All in all, and given the environment, I think we think those positive results are pretty positive. The fact that we've got new clients adds is a really good sign in terms of potential going forward.
Just to add, John, too, we've had renewals on the site licenses as well. We saw that in Q3.
Some of the delta you're seeing, James, between Q2 and Q3 is just that we had some one-off development fees that a client had paid us in Q2 that were not recurring in Q3. That was part of it. Sorry. Those were development fees that were earned in Q2 2020 that were not earned in Q3 2020? Correct.
Correct. Did those occur in 2019 as well, or was that just really a Q2 phenomenon?
I do not believe so with that client. It was just one thing that we had in Q2 of 2020 .
Yeah. Those pieces tend to be the one piece that can be lumpy when you're bringing on new clients and doing installs with them where we're helping out.
Okay. That's great. Thanks very much .
Again, if you would like to ask a question, simply press star, then the number one on your telephone keypad now.
Your next question comes from the line of Jeff Kwan of RBC Capital Markets.
Hi. Good morning. Just had one question. Just wondering, I know that you don't give guidance, but just directionally on the expense base, given the pandemic has maybe had you behave a little bit differently, how you have had your expenses this year. When things return to normal, are there certain aspects of your expense base that you think would potentially be higher or lower in terms of things like travel, entertainment, conferences, real estate, that sort of stuff?
Oh, Jeff, that's a fantastic question, and it's a piece that we're thinking about all the time. I'm a believer, and this is not a projection, but this is more of an expectation that travel and conferencing, those types of spend are not going to go back to the levels they were beforehand.
Through all of this, we're learning as everyone else is how to do things differently. In the future, you're not going to send 10 people to a conference when you can send 10 to and do things virtually or hybrid, those types of things. I expect in some of these areas, we're going to see some permanent save. In some areas, we are spending more. We've been spending more this year in terms of system capacity, remote working capacity, cyber resiliency, those types of things. That's a spend that's going to continue to be extremely important. I do expect more resiliency spend as we go into 2021 that offsets those types of savings. The long-term piece is the picture around the real estate footprint.
There's nothing to really project at this point because we are still working at what is the build-back strategy in terms of how we do work of the future. We actually have a team that is working on that now. We are in the middle of a renovation in our London office where we actually can pilot some of the design ideas around hybrid working, more teaming, those types of things. In our London office, it's actually been an opportunity to avoid a cost increase because, as you know, with Trayport, we've been growing so fast and adding development capacity that we had run out of room this year, and we're going to need to take on more. We don't need to do that now. We'll work within the footprint we've got.
That is the same kind of thing as we think about our bigger premises in Toronto, Montreal, those regions as well. In both those cases, we actually are in long-term leases. There is no decision point coming up that would generate material change on either cost up or down in the near term.
I mean, just the way you are thinking about it right now, like net, net, net, do you think expenses would be higher or lower versus what it would be if we never had this pandemic?
I mean, given that, I mean, you have se en it for this year. Kind of the puts and calls we have had have been on the margin in terms of our total expenses. I do not think those pluses and minuses are long-term material for us.
Okay. Thank you.
I am sure there are no other questions at this time.
I will turn the call back over to Paul Malcolmson.
Thank you. Before we close, just a brief update from the IR team. I'm very pleased to announce that Julie Park has taken on the new role of Senior Manager, ESG Reporting, and Investor Relations. Over the past year, Julie has been filling in for Amanda, as you know. Amanda Tang will be back with us from maternity leave in January. Thank you, everyone, for joining today. If you have any further questions, the contact information for media as well as for investor relations is in our press release. We would be happy to get back to you on your questions. Stay well and safe, everyone.
Thank you. This concludes today's conference call. You may now disconnect.