Earnings Call: Q2 2020

Jul 31, 2020

Hello, and welcome to the Cboe Global Markets 2020 Second Quarter Financial Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded. I'd now like to turn the conference over to Debbie Koopman. Ms. Koopman, please go ahead. Thank you. Good morning and thank you for joining us for our Q2 earnings conference call. On the call today, Ed Tilly, our Chairman, President and CEO will discuss the quarter and provide an update on our strategic initiatives. Then Brian Shale, our Executive Vice President and CFO will provide an overview of our financial results and provide updated 2020 guidance for certain financial metrics. Following their comments, we will open the call to Q and A. Also joining us for Q and A will be Chief Operating Officer, Chris Isaacson and our Chief Strategy Officer, John Deters. In addition, I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. During our remarks, we will make some forward looking statements, which represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these forward looking statements are not guarantees of future performance and involve certain assumptions, risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward looking statements. We undertake no obligation to publicly update any forward looking statements whether as a result of new information, future events or otherwise after this conference call. During the course of the call this morning, we will be referring to non GAAP measures as defined and reconciled in our earnings materials. Now I'd like to turn the call over to Ed. Thank you, Debbie. Good morning, and thank you for joining us this morning. Before I begin, I would like to extend my sincere best wishes the ongoing health and well-being of each of you and your loved ones as we continue to navigate these challenging times. I'm pleased to report solid financial results for the Q2 of 2020 at Cboe Global Market, clearly highlighting the strength of the diversification of our revenues. Our strong results were driven by record trading volumes in U. S. Cash equities and multi listed options, fueled by growth in retail trading activity and by continued growth in market data revenues. You'll note I did not mention our proprietary products. I will cover those in a moment, but I want to pause here to quote a 2016 press release entitled Cboe Holdings Agrees TO Acquire BATTS Global Markets to strengthen the company's global position and innovative tradable products and services and achieve meaningful cost and operational efficiencies. We went on to say in that release that the BATS transaction will significantly expand Cboe Holdings product line across asset classes, broaden its geographic reach with BATS' strong Pan European Equities and Global FX positions and diversify its business mix with significant non transactional revenue. And that Cboe expects to utilize Bats' leading proprietary trading technology by migrating trading in all of the combined company's markets onto a single proven platform. This brief trip down memory lane will frame today's remarks because no quarter more emphatically illustrates the fruits of a strategy that began 4 years ago than the Q2 2020, both in terms of our near term financial results and in enhancing our long term franchise value. Our proprietary products are key to that strategy, but we have built upon them and created new revenue streams to grow in tandem with them. Our growth strategy has not changed since the close of our transformational deal. Expand our product line across asset classes, broaden our geographic reach, diversify our business mix with recurring revenue and leverage our technology advantage. Let's take a look at the quarter through the lens of those growth drivers. The Bats acquisition enabled us to strengthen our product set with new asset classes for Cboe, including U. S. And European Equities and Global FX and to expand our market for multi listed options. Our expanded product line left us well positioned to offset unique challenges to trading in our proprietary products in a truly unprecedented environment with record activity in U. S. Cash equities and equity options. Furthermore, these products provided the foundation to invest in scaling our proprietary market data to drive recurring revenue streams, extend our presence further across the value chain into equities clearing and broaden the reach of our core services into a new adjacent geography, examples of investments made just this year to date. As discussed on previous calls, we've continued to methodically strengthen equities trading at Cboe through the implementation of new trading mechanisms and market enhancements and by leveraging the ability to cross sell and competitively price our expanded offering. We saw those efforts pay off in the Q2 when U. S. Equities trading at Cboe increased 82% over the previous year for an all time quarterly average daily volume high of 2,000,000,000 shares traded. Continued uptake in our retail priority program helped drive the record results. You'll recall we created retail priority to help improve execution quality and trading outcomes for individual investors and firms that facilitate their orders. Retail priority orders have increased each month since their launch on Cboe Edgex in November of 2019 and represented 12% of shares executed on Cboegex in the last 2 months. In another example of our focus on equity product innovation, we recently filed a proposal with the SEC to launch periodic auctions on our BYX exchange similar to our Cboe Europe offering. Cboe Europe periodic auctions, a lit order book that runs auctions throughout the day is designed to enable investors to quickly find liquidity and trade large quantities of stock with low market impact. It has proved popular among market participants after launching in 2015 and remains the leading European periodic auction accounting for around 2% of daily order book trading in European equities. We believe the U. S. Market will also value executing trades in a venue designed to provide minimal market impact. Turning now to record trading and equity options. As you know, multi listed options trading became highly competitive over the past decade in a market that became increasingly crowded with new entrants. We remained committed to being a leader in this space through the operating leverage inherent in our business model as equity options trading represented both incremental volume and revenue complementing our proprietary product line. With that backdrop, it was something of a revelation when we were kicking the tires at Bats and saw the enviable profitability they achieved in equity options by leveraging the efficiencies of their superior technology. The addition of EDGX and VZX options to Cboe MC2 that we could not only compete with a broader array of market models, but that we could offer all 4 markets on the same advanced technology further expanding our profit margin. This operating leverage provides differentiated investment capacity and the flexibility to further capitalize on the opportunities inherent in each of our strategic growth drivers. In addition to expanding our product line by asset class, we continue to expand and leverage our global footprint. As you know, we closed our acquisition of EuroCCP on July 1, which enhances our European equities offering and enables us to extend our business into trading and clearing European derivatives. We plan to launch Cboe Europe Derivatives in the first half of twenty twenty one with futures and options on 6 key European equity indices. The development of derivatives products and markets is a sweet spot for us and we see a significant opportunity to expand the market for European equities derivatives through the introduction of a transparent, efficient, lit Pan European market. Our entire team is excited to bring our derivatives expertise to the European marketplace. We also announced our plans in Q2 to acquire MatchNow, Canada's largest alternative trading system, which will enable us to broaden our North American equities business and expand our geographic reach. MatchNow offers a profitable, innovative equities platform in a key capital market and a strategic pathway to build a more comprehensive equities platform in Canada. As I discussed earlier, the step into Canada demonstrates our commitment to profitable global expansion, thereby strengthening our combined offering, contributing to incremental scale and allowing us to reach important new participants. We expect to close the deal this quarter. Another promise we made to the marketplace through our acquisition of BATS was to optimize and diversify our business mix with recurring revenue through trading tools and market data services that help attract repeat users to our markets. We've worked to steadily increase the market data revenues afforded us by the Bats deal, while successfully building solutions, our comprehensive suite of data solutions, analytics and indices. So much so that non transactional related services were key driver of our 2nd quarter revenue growth. Understanding risk has never been more important and the groundwork we laid over the past few years enabled us to effectively respond to the heightened demand for historical data sets and sophisticated analytics. And we continue to expand our toolbox. Last quarter, we discussed our recent acquisitions of Hanwick and Feet Options, which similar to our previous Silex investment, highlight our commitment to investing in tools to grow the utility of our product suite and markets. In June, we acquired TradeAlert, a real time alerts and order flow analysis service provider, which allows us to deliver real time trade data, market information and Cboe content directly to customers. Importantly, our integration of TradeAlert along with Hamlik and Feet options now allows us to interact with the client throughout the lifecycle of a transaction, pre trade, at trade, post trade with insights, alpha opportunities, portfolio optimizations and seamless workflows. Each of these investments complements and strengthens our comprehensive suite of data and analytics solutions and we've made great strides on their integration and optimization. We have enhanced LiveVal and Silex with handwick volatility and Greek data and have demand and have seen increased demand for Trade Alert, especially since our acquisition. We're also incorporating handwork data within our growing indices offering and plan to use handwork to drive real time data in Silex beginning this quarter. Turning now to our proprietary products. As noted, we grew our quarterly revenues and earnings despite an unprecedented environment that offered institutions limited opportunity to trade volatility or broad based indexes. The COVID-nineteen pandemic continues to severely impact the global marketplace. The failure thus far to contain the virus in the U. S, recent increases in unemployment and historic declines in GDP among other key events continue to drive elevated levels of market uncertainty. The average daily closing price of the VIX index in 2Q 2020 was 34.5, a higher quarterly value than any quarter over the past 5 years and levels not observed since the 2008 financial crisis. We are finding that the increased levels of uncertainty that drove institutional investors to derisk and resulted in record volumes in the Q1 are now keeping institutional investors on the sidelines waiting for more clarity around the longer term impacts of the COVID-nineteen virus. This resulted in lower second quarter volumes for most of our proprietary products compared to the Q1 numbers. As we've said before, when these participants have clear views on where the market is headed, we expect once again to see elevated volumes. We continue to see uptake however in our Cboe iBox iShares high yield corporate bond index futures where we've seen gradual but steady market adoption since their launch in 2018. In response to investor demand, we recently announced our planned launch of mini VIX futures on August 10 subject to regulatory review. The smaller VIX futures contract is designed to provide additional flexibility and volatility risk management and greater precision when allocating among smaller managed accounts. Ibox and MiniVix futures exemplify our ability to continue to expand our proprietary product offering. In other proprietary product news, Cboe further strengthened strategic relationship with FTSE Russell by extending its 2015 exclusive licensing agreement through 2,030. We are excited to continue to work side by side with FTSE Russell in providing exclusive access to a suite of Russell derived products. The extension of our agreement further solidifies Cboe's vantage point as the home for every major index provider. Turning now to the trading floor. On June 15, we successfully and safely reopened the C1 trading floor and resumed hybrid trading. The return to Cboe's best in class hybrid trading once again provides investors unparalleled access to liquidity across the wide range of Cboe products. Our ability to quickly transition to an all electronic trading environment then to reconfigure our floor for a safe and orderly reopening is a credit to the ongoing collaboration with our trading floor community. I would like to thank them for their efforts and willingness to work with us through these two historic firsts. I would also like to thank the entire team, Cboe team for a great quarter, despite a backdrop of global pandemic that continued to proliferate along side a historic uprising against racial injustice. The spotlight on racial inequity past and present has prompted us as a team to listen, reflect and define how Cboe can play a greater role in the solution by supporting organizations that fight for social justice and by redoubling our efforts internally to strengthen our culture of diversity and inclusivity. Our continued ability to generate positive financial results, reward shareholders, create new products and services, close highly strategic deals and integrate new teams and services all with an environment that we can never have imagined is a testimony to the expertise, discipline and competitive spirit of the Cboe team. Our disciplined approach and technology advantage have enabled us to expand and enhance our products and services, which include additional streams of complementary recurring revenue, reinforce our leading industry operating efficiency and provide the flexibility to invest organically and inorganically in new growth factors to sustain underlying momentum in the business. Thank you. And with that, I will turn it over to Brian. Thanks, Ed, and good morning, everyone. I hope everyone and their families are remaining safe and healthy. And I'd also like to thank all of the Cboe associates for their hard work and dedication helping make these results possible. Let me remind everyone that unless specifically noted, my comments relate to 2Q 'twenty as compared to 2Q 'nineteen and are based on our non GAAP adjusted results. As Ed noted, we reported strong financial results for the quarter, highlighting diversification of our revenue streams and the contributions from our investments, delivering on our strategic initiatives. Our net revenue grew 5% with net transaction fees up 2 percent and non transaction revenue up 7%. Adjusted operating expenses decreased 7%, which combined with our revenue growth resulted in adjusted EBITDA growth of 9%, resulting in an expanded margin of over 71%. The adjusted EBITDA margin on the incremental net revenue was 127%. And finally, our adjusted diluted earnings per share increased 16% to $1.31 We grew our quarterly recurring revenue stream of proprietary market data and access capacity fees by 8% compared to Q2 2019, slightly above our prior year guidance. This increase includes over $3,000,000 in market data revenue attributed to our Q1 acquisitions of Hanwick and Feet Option. Organic growth was 10%, which excludes the acquisitions and the shift of approximately $1,000,000 in revenue reported in access capacity fees in 2Q 2019, which is now reported in transaction fee, as well as the temporary realignment of fees associated with a trading floor closure of over $3,000,000 The growth in proprietary market data and access capacity fees continue to be driven by incremental subscriptions and units accounting for 83% 69% of the growth this quarter, respectively. In our last call, we noted that certain floor broker access capacity fees were suspended due to the temporary floor closure and that we implemented comparable transaction related fees targeted to achieve a neutral net revenue impact, all else remaining equal. This action shifted revenue in the second quarter, resulting in incremental transaction fee revenue associated with higher revenue per contract or RPC for our index options and lower access and capacity fees. In conjunction with the floor reopening, certain floor broker fees were reinstated. Looking ahead, we now expect the underlying organic growth for the proprietary market data and access capacity fee category to be mid single digit. However, we now expect the reported growth rate for these non transaction fees to be in the mid to high single digits versus our previous guidance of low to mid single digits, reflecting the reinstatement of certain fees as well as the acquisition of Trade Alert. Now, a review of our segments. In our Options segment, the 7% or $10,000,000 increase in net revenue reflects growth in net transaction fees, driven by our multi listed options as well as higher market data revenue. Cboe's expanded suite of information solution services accounted for the growth in options, market data revenue benefiting from our recent acquisition. The average daily volume or ADV for multi listed options rose 57%, hitting a new quarterly high, while RPC fell 12%. The RPC decline primarily reflects higher volume rebates and a shift in volume mix compared to the Q2 of 2019. ADV for index options declined 18%, while RPC increased by 18%, resulting in a 3% decline in index options net transaction fee. The index RPC increase was mainly due to 1, a shift in volume mix as well as 2, the impact of temporary fee alignment I referenced earlier and then finally, the SPX fee increase implemented earlier this year. Assuming all else remains equal, we would expect index RPC to decline slightly in the 3rd quarter, reflecting the reversal of certain second quarter fee changes post the floor reopening. Turning to futures, the 36% or $12,000,000 decrease in net revenue primarily reflects a 44% decline in ADV and relatively stable RPC, offset somewhat by lower royalty fees. In U. S. Equities, net revenue increased 22% or $17,000,000 primarily due to higher transaction fees with equities volume benefiting from the surge in retail trading activity. Our market share also increased year over year, reflecting our focus on innovative products with particularly strong response to retail priority as well as enhanced direct marketing programs and greater dialogue with clients. The increase in market data revenue was driven by our higher market share as well as an increase in the total SIP revenue pool. Net revenue for European equities decreased 6% on a U. S. Dollar basis and 2% on a local currency basis, reflecting lower market volumes and lower market share, offset somewhat by higher net capture. The higher capture resulted from continued strong periodic auction and LIS volume. The net revenue decrease reflects a 13% decrease in transaction fees and a 14% increase in non transaction revenue. The growth in non transaction revenue reflects increases in access capacity fees, primarily reflecting incremental connections with the opening of our Amsterdam office in October 2019. Decline in market share was primarily a result of significant market profile shifts and short sale bans, which reduced order flow to Cboe. Net revenue for Global FX increased 5% this quarter, reflecting higher market share and a 5% increase in net capture, offsetting a 2% decrease in average daily notional value. The increase in market share primarily results from positive response to functionality enhancements and the increase in net capture reflects a mix shift in volume by customer type. We set a new market share high and continue to reach new ADNV highs in our full amount offering as well as Cboe Ceph for NDS. Turning to expenses. Total adjusted operating expenses were about $96,000,000 for the quarter, down 7% against last year's Q2. The key expense variances include 1, a $7,000,000 decrease in professional fees and outside services, primarily a result of lower legal fees 2, a $2,000,000 decrease in travel and promotional expenses, reflecting the COVID-nineteen impact on travel and event sponsorships. All this offset these declines somewhat with compensation and benefits increased by $3,000,000 resulting from the net impact of a $4,000,000 increase in bonus expense this quarter, a $3,000,000 increase results from lower capitalized wages relating to software development and a $4,000,000 decline in benefits expense due in part to a decrease in the adjustment of deferred compensation plan assets compared to the Q2 of 2019. Note that there is an offsetting charge in other income resulting in no impact to earnings. Looking ahead to the second half of twenty twenty, We have updated our guidance to include Euro CCP and expenses related to our European derivatives growth initiative. We increased our guidance for 20 adjusted operating expenses to a range of $436,000,000 to $444,000,000 up $17,000,000 from our previous range of $419,000,000 to $427,000,000 reflecting expenses of $24,000,000 predominantly relating to our new initiatives in Europe, offset somewhat by expense reductions of $7,000,000 in our existing operations, primarily in compensation and benefits and travel and entertainment. I will also note that the 2020 expense guidance related to Euro CCP and the derivatives build out includes one time operating expenses of about 3,000,000 dollars that will not recur next year. We still expect total expenses to ramp up in the second half of the year as we redeploy some of the cost savings in the marketing and promotional programs and we complete our Chicago headquarters build out. As a result, we now expect our core expense growth to be down 1% to 2% versus our previous guidance of flat to up 1%. We included in the appendix an updated detailed 2019 to 2020 expense bridge similar to what we provided in our last earnings call. A portion of the decline in the core expense growth is definitely attributable to the COVID-nineteen environment and its impact on travel and promotional, professional fees and to a certain extent compensation expenses, but it was truly enabled by our migration of the C1 platform in 2019. Turning to income taxes. Our effective tax rate on adjusted earnings for the quarter was 26.7 percent at the lower end of our guidance range and below last year's 2nd quarter rate of 27.7%. The year over year tax rate decrease was primarily due to higher tax benefits recognized related to foreign derived intangible income in the Q2 of 2020 versus 2019. We are reaffirming our 2020 full year tax rate on adjusted earnings, which is expected to be in the range of 26.5% to 28.5%. However, we expect 3rd quarter to be the higher end of that range. We are also reaffirming our capital spending guidance for 2020 of $65,000,000 to $70,000,000 While our move into the new Chicago headquarters has been delayed due to COVID-nineteen, capital spending for this project is expected to be completed this year. Furthermore, we still expect depreciation and amortization to be $34,000,000 to $38,000,000 for 2020, which excludes amortization of intangibles of approximately $120,000,000 in 2020. Turning to capital allocation. Let me underscore we remain focused on investing in the growth of our business to build upon our diversified business model, while returning excess cash to shareholders through dividends and share repurchases. Our financial position remains strong. We had excellent cash flow generation capabilities and a solid balance sheet. During the quarter, we returned $100,000,000 to shareholders through share repurchases and $39,000,000 through dividend. And at June 30, our share repurchase authorization available was nearly $330,000,000 reflecting an additional $250,000,000 authorized in June. At quarter end, our debt remained at $875,000,000 and we had $250,000,000 in availability under our revolver if a short term funding need arises. Our leverage ratio remained at 1x at quarter end and we ended the quarter with adjusted cash of $176,000,000 Summarizing the quarter, we reported very strong quarterly results, including double digit EPS growth despite muted volumes in our proprietary products. We continue to deploy capital into strategic investments, which Ed previously highlighted. We successfully reopened our trading floor with a modified floor layout. Anscebo's team of associates have shown perseverance and a keen ability to adapt in this extended work from home environment, all while continuing to deliver on our long term growth initiative. The entire leadership team and I couldn't be prouder of what we've accomplished thus far this year. In closing, Cboe's financial strength and cash flow generating capabilities have positioned us well. Intend to remain opportunistic as we execute on our growth initiatives and focus on serving the needs of our customers and delivering sustainable returns to our shareholders, while guarding the health and welfare of our associates. With that, I will turn it over to Debbie for instructions on the Q and A portion of the call. Thanks, Brian. At this point, we'd be happy to take questions. We ask that you please limit your questions to 1 per person to allow time to get to everyone. Feel free to get back in the queue and if time permits, we'll take a second question. Keith? Yes, very good. Thank you. And the first question comes from Rich Repetto with Piper Sandler. Good morning, Ed. Good morning, Brian and Chris. First, Ed, I agree Cboe is much more diverse platform than it was 5 years ago for sure. So, but the question still with investors still gravitates back to the proprietary products and the VIX products, etcetera. So I guess, the question open interest is low. You talked about a little bit the uncertainty, but what do you think will actually get we're starting to see a little build in the VIX futures open interest, but what will get investors back because we prior we thought the uncertainty is that's when you use the products, I guess. And now we're saying the uncertainty is uncertain and we're in sort of a stalemate position. Rich, good morning and thanks. It is a great question and it's one that we continue to ask vol surface is really the most We look at a relatively flat vol surface is really the most uncertain of times. There is no conviction either way. And as we said actually last quarter, you need to see the end of the event that's causing the uncertainty. And there's no end in sight, quite honestly. We don't know how this pandemic ends. We don't know when it's going to end. We don't know when institutions who have gone to the sidelines more aggressively actually 2 times more institutional perspective. So I don't know. None of us know when the event is going to end. Okay. And then, I think So I don't know. None of us know when the event is going to end, but it is at that point that we think we'll see institutions reengage. It's when an uncorrelated market finds institutions back and hedging goes back to macro hedging as opposed to micro single name hedging. So I don't have a clear answer for you, but it's the same answer I gave you last quarter. When the event when we can see the end of the event. Now to be clear, the event doesn't have to end. We have to be able to see through the event and that's when I think we get institutions to reengage off the sidelines out of cash and reengaging in the unique products that we have at Cboe. Ed, would you say would you agree that we are starting to see some steepness at least between the front month and the VIX curve, the front and the We see an ebb and flow there, Rich. What I think is really interesting and I'm anticipating a pickup more on the interest in around the October November. Still we have the bump in October November. That's going to be interesting too. I think we do turn our attention as most are reading to the election cycle beginning in mid August. So I think we'll see trade around there and just positioning for the long term. That's an institutional play. A little bit more color on engagement. We see retail really trading very, very short dated options. In SPY, for example, 20% of the trades in SPY are opened the day the contract expires, 40% of the volumes within 2 days of expiry. That's not an institutional trading pattern. I think more likely we will see some positioning around the election and positioning for the longer term regardless of whether or not COVID is behind us or there's an end in sight. You need to position for this election. Got it. Thanks, Ed. Thank you. And the next question comes from Michael Carrier with Bank of America. Good morning and thanks for taking the question. Brian, thanks for the updated expense guidance. Just two clarifications there. Can you maybe help us out? And I know it's tough to do, but as we think about 'twenty one, you've got some of the depressed COVID costs, then you have a lot of the acquisition related costs, but just some expectation kind of heading there. And then I think on one of the slides you mentioned some of the revenues associated with the deals, but any context around that because obviously we'll price in the expenses, but you can give us some color on any related revenues that would be helpful. Thanks a lot. So thanks Michael. Good questions. And I think that you're right, the crystal ball for 'twenty one is a bit of a challenge and we're going through that process now. I think that we've tried to give pretty good color on the acquisition related. So when you get to I think it will be a little cleaner in the 3rd quarter. We will highlight that. So when we get to the Q3, we will see that. But I think you should get a pretty good sense of the acquisition run rate. You should get a pretty good picture now when you look at the quarter and what the incrementality of, I would say, the largest piece of that, kind of on a go forward right now is the Euro TCP and the European derivatives build out costs with what I mentioned that kind of that, I'll call it that one time kind of startup fees with getting that going that I don't expect to be part of the 2021 run rate. The COVID-nineteen cost, that's also I think is a really good question that a lot of firms are going to look at. There may be a we're going to balance the going back to normal, which again, what is the new normal? And are there things we can actually do as an organization and all organizations can do that actually are probably at a lower cost and get the job done than maybe what we were doing in the past. And so it probably it does not look like what the structure looked like previously before the pandemic. So we're going to work our way through this. We'll give you more guidance on what does that look like as we get in closer to the 4th quarter and what does that run rate look like. On the revenue associated, we tried to give some visibility to that with the EuroCCP when we provided the full year financials. And then with the acquisitions within the group, within the Information Services group, with HandWick and Feet and Trade Alert, I think you're seeing that run rate effectively now when you look along there. So when you add all those components, that should give you a pretty good sense of that at least base without any incremental growth going into 2021. Got it. Thanks a lot. Thank you. And the next question comes from Ken Worthington with JPMorgan. Hi, good morning. I wanted to follow-up on Rich's question. You mentioned how well the multi listed options and cash equity volumes are doing, but how poor the environment is for index. And to Rich, you mentioned the micro versus the macro hedging. But we do continue to see high volumes for SPY, which you say is retail. But we also are seeing high volumes for the E minis, which is definitely more institutional. And you have weekly options that I believe are designed for short term hedging. So could there be other explanations here beyond just the uncertainty because it seems like things still aren't quite lining up given what we're seeing at competing products? No, I thought I I'm sorry, I thought I explained the SPY. So the SPY in the very short term, those are day trades. If of the 20% of the contracts that are traded with one day expiry, meaning expiration day, 50% of those are opening, 50% are closing. So I'd make the leap that those are a day trade in SPY, not an institutional action. The statistics for SPX are a bit different. 20% of those trades are in within a few days and that's just different. And the notional size of the contract for SPX has really been pure institutional and the bite size really retail and SPY. So a little different on the observations of what SPY is being used for. It doesn't appear to be a macro hedge, it appears to be a day trade. And SPYX has not really been a day trade. There has been premium strategies used in the weeklies, but those tend to be days and not hours. And that's a difference in the trading pattern that we've observed in this cycle. So I don't know what other insight to give you. Just that notional size being so different in SPX is just not gaining the day trade attraction that small notional SPY And Ken, this is not I mean, it's somewhat obvious, but this is not a Cboe specific issue. When it comes to SPX and retail, we're actually seeing increased activity, but it is a more institutional product than others. And when you look across institutional products, I mean, I'd look to Europe, for example, great, great example because those exchanges tend to trade and be more levered to institutional market participants. You've seen the results there. In the U. S, look, I mean, there are not a lot of index options products out there outside of Cboe. There is at least one example you can look to that's not a Cboe product and you'll see that the results there are quite similar, if not more dramatic. So the evidence is out there everywhere in terms of institutional participants on the sideline and that's impacting our numbers in terms of SPX and VIX. Yes. I guess my point was the e mini is more institutional and that's seeing very high volume. So that's why I thought that maybe the institutional was doing well in the U. S. In macro hedging. I was trying to compare with that. I think your observation in the June contract might be right, but as of late it looks like the same pattern we see in SPX. So love to see maybe that's your internal data but that's now I'm looking at E mini volume now and I don't have the same observation you do Ken but we'll certainly dig into it for you. Thank you. And the next question comes from Dan Fannon with Jefferies. So just on retail order priority, I'm just curious what was the genesis of this offering and kind of how should we think about the market opportunity and where can this take share on EDGX? Let me talk more broadly. Thank you for the question. Let me to our customers who are looking for differences in to our customers who are looking for differences in trading U. S. Equities. We look at the opportunities out there and just launching another exchange that doesn't have any new value add is interesting. But we think more interesting is offering more order types and solutions for our customers. So with your specific question, let me turn to Chris. But think of our longer term view as more broadly offering solutions to our customers, S. Equities, the U. S. Derivatives, European equities, building European derivatives, that's really what we're about. So Chris can go more specific into customer priority and then perhaps a word or 2 on periodic auctions in the U. S. Yes. Thanks, Ed. So James, as Ed mentioned, this is really focusing on the diversity of our business. So if you think about retail priority in U. S. Equities, we all know that with 0 commissions, there's been a large retail push in our work from home environment. Retail trading has really picked up. You've seen reports where retail trading or retail percentage of the market has gone up to maybe 25% of the market. So where retail priority has been above 100,000,000 shares a day for us in ADV, We continue to see growth as more and more retail brokers as well as wholesalers sign on to this because of the execution quality that's getting that is noticeably better. It's all data driven based on BestEx. So we still we see further growth here for Retail Priority as obviously a bunch of this volume that remains elevated despite the high volatility is coming from retail. I'd also mention periodic auctions as we said in the script. That's something we created basically out of nothing in Europe in 2015. Dave Howson and team built periodic auctions and now it's 2 percentage about 2 percentage points of the entire European market. We like to bring something very similar here in the U. S. The market structure is a bit different, but we think the opportunity is similar to provide a higher trading size, lower impact innovation in our equities markets. These two things are really highlighting the fact that we plan to bring innovation in every market in which we operate and we operate a lot of markets across 5 business lines in 15 markets every day and we plan to compete and innovate in each one of them, and these are just two examples of that. Understood. Thank you. Thank you. And the next question comes from Chris Allen with Compass Point. Good morning, guys. I was just wondering if you could give us some color in terms of what the revenues for Euro CCP were running in the first half of this year? How the outlook there is for the second? And maybe give us some incremental color just in terms of what you're doing to support the index launches in the first half of next year, be signed up market makers, what are the kind of the plans there? Brian, why don't you start off with the model and Chris and I can talk about the indices? Yes. Chris, I am looking to kind of pull the first half numbers and we can certainly update that later. But I would say that the first quarter number excuse me, the first half numbers looked, there was growth versus kind of when because I think we had published the 2019 numbers, but they saw a nice increase in the Q1 as overall volumes increase. So they are running ahead of last year, at least the 1st 6 months to date. But let me we'll have to get back to we can publish that number for you to get that to you. I don't have that right at hand. I don't know, Debbie, if you have it or not, but it's certainly running ahead on a year to date basis relative to the prior year. And so let me begin. So the indices and Chris can talk a bit about the model, but we'll start with 6 European indices, the Cboe Eurozone 50, Cboe UK 100, Cboe Netherlands 25, Cboe Switzerland 20, Cboe Germany 30 and the Cboe France 40. And it will be calculated using Cboe market data with the exception of Cboe Switzerland 20. But the goal is really to light up these markets similar to U. S. Market where there's continuous quoting from the open to the close. That is unique in the European model and it's something we're really good at. We've got interest from our market makers, liquidity providers who are eager to post markets from the open to the close and most importantly the demand for access to Europe in a unified way is coming pretty broadly. So there's been incredible buzz around our efforts since we announced the plan to offer derivatives. Chris, do you want to add anything? I'll just add, as Ed said, we're very excited about European derivatives because we've learned a lot of lessons over many decades in the U. S, especially recently, including during while the trading floor was closed and then reopened. We plan to apply in the European derivatives to bring that liquidity to the screen with better tight quotes than they are today where the market's frankly a call around market with wide quotes. So a lot of demand here from market makers and we think the end users will be there as well as they see the quote quality. So very excited about launching European Derivatives in the first half next year as we're integrating EuroCCP and then building upon our technology advantage with utilizing the Cboe technology as we have in the U. S. And Europe to really catapult us into launching that market. Thanks, Us. Thank you. And the next question comes from Alex Kramm with UBS. Hey, good morning. I guess you addressed some of this already a couple of questions ago when you talked about equities, but and how you differentiate yourself. But considering that MeMex is starting up here and a couple of other exchanges in the next couple of months before we talk next, Any other color you could provide how you prepare yourself for that to be able to compete aggressively day 1 when these others are going to compete aggressively on day 1? Well, I think it's you're right, Alex, and good morning. We did try to differentiate. We're going to differentiate by uniqueness in handling customer orders with our customer priority or a periodic auction. Those are differences. I think you point out with the MEMEK launch, it's not a new story. MEMEX, our guests will be aggressive bordering on irrational pricing in the beginning to earn share. That's not surprising. We tend not to chase irrational pricing in any of our models, but we anticipate that's how they'll begin. We will continue to offer solutions to customers and Chris spent a little bit of time on that, so nothing new to add there. Sorry if that doesn't answer your question. We think this is an exchange that's just coming in on price and really not anything unique on order handling at this point. Now we could be surprised in the future but right now that's the way we look at MeMex. Chris? And Alex I just mentioned, MeMex obviously been a long time in the making. We have respect for their ownership base and then as competitors, we welcome the competition. But we feel like we're well prepared to And as I mentioned previously, we have a lot of innovations we're bringing to the equities market. It's going has been very competitive and will remain very competitive and we think we're well positioned into the future even as MeMex and others join. All right, cool. I'll jump back in the queue. Thanks. Thanks, Alex. And the next question comes from Ari Ghosh with Credit Suisse. So just circling back to the recent deals that you talked about, you know, HandWick, F. C. Auctions, Trade Alert, they fit really nicely into your broader Infoservices business. Can you maybe talk about the strategic vision for Match Now? Areas you see ripe for disruption outside of the acquired dark market in Canada? And then Brian, any higher level color around the magnitude of investment need around this initiative in 2021? And again, appreciate the fact that you might be limited in what you can say, but looking for more just a high level commentary on this. Brian, do you want to start? Yes. I mean, as far as the magnitude of the need, I will say that I'll try to frame that in the context of what we've done. I'm not 100% sure what that question involves, but I'll take a shot at the hypothesis of what you're asking for. The business that we have invested in that are now part of Cboe, the good news is that they are already profitable. They're already contributing. They're already integrated as far as what we have closed. Obviously, Euro CCP is a little bit further down the path there, but the ones you mentioned on the Information Services Group, I will mention that. And so there's not a lot of necessarily incremental investment or CapEx or things along those lines, if that was, call it, a tangent of one of your questions. From a broader capital allocation perspective, it's really a very similar story as continuing to look at those things that again continue to help drive the growth of proprietary products. They continue to help our expansion into the new jurisdictions. They continue to leverage the existing asset classes. So with our balance sheet, we have a lot of flexibility. If we have to access the capital markets from a debt perspective, that's easy to do from where we are. It's a terrific interest rate environment to be able to do that. So that's a very broad question, but I'll just say I'll leave you with of what we've acquired, it's fairly well integrated and I think we've laid out kind of what is required in the overall investment needs. So I'm not as concerned that that is going to be a big cash draw and should something that come to fruition that requires more balance sheet leverage, we think we have the capacity to do that. And then specific to MatchNow, Chris and John? Yes, I'd just say, Ari, that one of our strategic growth drivers, as I'd mentioned in the script, is obviously geographic expansion as well as asset class diversification. So MatchNow fits very nicely into our North American equities business, lets us get into a new geography. If you look in the way in which we expand it in new geographies, given the bats heritage in Europe, starting with a relatively small footprint and then over time growing to great scale, we look forward to integrating MatchNow and TECO using our technology, world class technology and then over time growing our footprint there potentially beyond where we're starting. So quite excited about this and as Brian mentioned, it's a profitable business which fits very nicely. Yes, Ari, this is John. I'd really emphasize all those points. This is a strategic priority for us. You see it on the very first page of our deck. It's one of the top, call it, 7 global equity markets adjacent to us, very sophisticated market participants. We will continue to look at markets like this and pick our sweet spot for entry. We like this spot for entry because it's a unique platform in Canada, very, very strong position in the new and growing dark segment of the market. It was a very different market structure in Canada and this is a new offering to the market. So we like that start point. We like it profitable. And from there, we are creating a map to grow our presence in Canada. Got it. Thanks, guys. Thank you. And the next question comes from Ken Hill with Rosenblatt. Hi, good morning everyone. I had a question on closing auction. I know that kind of got started here in the U. S. At the height of the pandemic beginning of March. I was hoping you could provide an update on what you're seeing from a volume perspective. And then maybe more broadly, how you would expect that to trend here going forward and maybe what might help bring volumes up a little bit higher? Is it more interaction with customers? And are you still able to do that in this COVID environment? Yes, Ken, good question. Thanks for asking. So we did see our first trades on Cboe Closing Cross or Cboe market closure in the U. S. Here this summer. So we're excited about that. We have seen a lot of our large customers who would use this product kind of come out of change freezes as they've adapted to this COVID-nineteen work from home environment. So those change freezes have thawed. I'd also mention the 3C, the Cboe Closing Cross in Europe has started to see some nice volumes. We've seen actually in June almost €20,000,000 a day across Cboe Closing Cross. So we're still very excited about both products, both in Europe and the U. S. We think there's demand for this given the relatively very high margins that the primary listing exchanges have during the closing costs and that's still a large percentage of the market. If you look in Q1 and Q2, it's still between 6% 5% 6% of overall volume was happening at the close. So it's a part of the market that we are competing in and plan to compete in even more aggressively. Great. Thank you. Thank you. And the next question comes from Brian Bedell with Deutsche Bank. Great. Thanks. Good morning, folks. Thanks for taking my question. Just want to come back to the proprietary trading, a different angle on that, what you can organically do to improve that trading in the near to intermediate term? And the 2 things I'd like to ask about on that is the trading floor, how is that going? Do you see that actually helping volumes or is that getting overwhelmed by the environment and the complex order technology, the order type functionality that you were building out for the index options, maybe an update on that and whether you think that will contribute? And then of course on the mini VIX that you talked about today, if you think retail will play in that and that could stimulate VIX volumes? Great questions, Brian. Let me start with the trading floor. No, I don't think I know the trading floor is not overwhelmed by any circumstances. As a matter of fact, we think the reopening of the floor and the reconfiguration is highly effective. The feedback from brokers and market makers is they are ready. They're ready for today's volume and more. So we think we're well positioned for the eventual return of those most complex orders in a hybrid environment. As to preparing for and what we hinted to last time was we need to be ready. Should we need to close the floor if the state or the country changes its phasing during this pandemic. Chris will give you an update on that readiness. You may know that publicly we filed rule filings for a virtual approach to trading. A lot of the gaps we noticed in able to access the supply of deep liquidity of SPX market makers was a bit at times encumbered by an all electronic environment and we struck out and needed to solve for that. So Chris can give you an update on that progress. And then for Mini VIX, yes, we do think this will be retail engagement here. That is exactly why we're launching Mini VIX at this time. There's been great interest in smaller size contracts, smaller notional contracts that is really retail friendly. It goes back to a lot of the observations that Ken had earlier in the Q and A. And we look forward to that launch again pending regulatory review in August. And then most importantly, education remains the key driver in organic growth. It's those touch points and engagement with the massive amounts of interest in the broad U. S. Market who are still not engaged in derivative speculation or derivatives hedging. That's always going to be the target and finding new ways in this environment to reach out, touch, engage and to teach is what we've been doing over the past months. And I think we're making great progress given the current environment. But I don't want to leave without Chris' answer as to how we've done in our readiness pending regulatory approval of our solution for a virtual trading floor. Yes, absolutely, Brian. So we have been working on behind the scenes on this virtual trading floor concept should we need to close the trading floor again because of COVID-nineteen and if there are any further outbreaks in the Chicago area. So we've been working very closely. We filed with the SEC June 12. So you can look at that filing and it just gives us another option, another choice if we would have to close. I'd also mention, we learned a lot through going all electronic, while the floor is closed for about 3 months And we accelerated some of the functionality we had with our Silex platform in order to effectuate a lot of trading during that time. So it's not just the virtual trading floor efforts we're making, but also the efforts on our OEMs with Silex also. And then just one last thing on Mini VIX, I'd mentioned that the market maker engagement has been tremendous. The commitment there to this product on retail again, I mean, while we see cyclical trough in institutional retail, we believe here is a secular catalyst and we're leaning into it. MiniVix is a great example. I think target outcome products are another great example, just an amazing performance over the past 12 months because of retail's attention to this product. And we've done a lot of engineering around that. And then our internal data project that helps us understand what retail is doing and educate, as Ed and Chris mentioned, quite a bit. Do you have the quite a bit. Do you have the online broker signed up yet or are they just waiting to see the product get launched first before they put that on their platforms? The mini VIX is the question. On the mini VIX, yes. Yes, the online brokers are very supportive of this. They see quite a bit of demand behind the product. Okay. It's typical of a product launch. We've started with the target that we believe and of course the conversations and the design then we bring in exactly the retail online brokers to your point. So yes, there's been great dialogue and interest expressed in that size contract for VIX. Great. Thanks very much for all the detail. Thank you. Sure. Thank you. And the next question comes from Chris Harris with Wells Fargo. Great, thanks. So we've already talked about the COVID related overhang affecting the VIX. But how are you guys thinking about how the Fed might impact the franchise? And I guess what I'm wondering is, is quantitative easing in 0 rates good or bad for the VIX franchise, do you think? I think it's a broader question than the VIX franchise. I think that in low interest rate environments the search for return really lends basic override strategies, long positions in equities, but the override strategy or premium harvesting that we've seen in past environments in low interest rates really lends well for derivatives trading overall. The constant role in harvesting premium has been a pattern we've seen in very low interest rates environments where there's a search for yield. It's just that simple. So we think the continuation of a low environment will be very positive for those that will learn how to harvest premium and or simple override strategy of long equity positions after what has been a bull run-in a handful of stocks. We think maintaining those positions with derivatives and low interest rate environment will continue. And the next question comes from Alex Blostein with Goldman Sachs. Great. Good morning. Thanks, everyone. So question for you guys around European Equities, European cash equities. This is a business that doesn't get a ton of focus, but curious what's been behind recent acceleration in market share losses there and whether or not there are any efforts in place, whether it's pricing or market structure related to claw some of that back? And I guess, part of that, I'm curious whether the efforts you guys are doing on the European derivative side could benefit the European cash business as well. Thanks. It's a great question. And yes, there's been incentives in place and of late we've had some great success in share. So I'll turn it over to Chris to describe a little bit of the new program that we put in place to better incent BBO pricing. It's really an added maker incentive in our lit book. And we've seen early wins as we've begun to roll this out across geographies. But Chris, a little bit more color? Yes, absolutely. So Alex, we did see a dip in market share in Europe, but we've seen actually a return, a growth here. Actually in July, we're above 18%, which is actually above where the Q1 market share was. And that is a result of what Ed said, the additional liquidity provider scheme we put in place, it's really focused on the CXE lit book there. We've rolled that out across most of the European markets and we'll do it on the remainder very soon. So Dave Howes and team have done a great job of engaging with our clients, putting in a liquidity provider scheme that will helps improve market quality and therefore the volume is following. I'd also mention on that that one of the things that was a drag on market share was short sale bans that have since fallen off, that it's been helpful for our market share and overall volumes. Thank you. And the next question comes from Kyle Vogt with KBW. Hi, thanks for taking my question. Maybe just a question regarding the Credit Suisse delisting of a number of their volatility exchange traded products that happened earlier this month. I think they also noted that they were delisting those to better align their product suite with their strategic growth plan. So just wondering, could you provide some more color there? I mean, obviously, they're a partner of yours. Just wondering if you think them deemphasizing these products and delisting them on the exchange traded product side could have broader implications for the franchise? Actually, what we've maintained all along, whether it's an issuer of an ETP or an ETF or a liquidity provider who pivots and changes their focus, There's always someone and some institution willing to fill the gap if there's customer demand. So as we anticipated, we're already seeing inflows from other ETPs and new funds are being created to fill the void created by TVIX. So not surprising we saw in June 'twenty two, I think the TVIX delist announcement with their AUM declined to about $600,000,000 from $1,500,000 But at the same time, we saw UVXY, which is a 1.5 levered ETP, increased to $1,200,000,000 in AUM from $700,000,000 and FUBAN increased to nearly $700,000,000 from $500,000,000 So net net, if you look at the complex of TVIX, UVXY and FUBON, if I add those together, before launch and today, we're down about $200,000,000 out of $2,500,000,000 So and that's all before the new there's a new 2 times long ETF filed at the SEC from volatility shares that still has not launched. So we always see someone willing to fill the gap if there's customer demand for products. So I don't think there's I don't at this point see any long term effect of 1 group exiting and others we see willing to step up and take the place because there's customer demand for this kind of exposure. So at the end of the day, I think this you'll see nothing to up to growth because there's demand for the products. Thank you. And the next question comes from Owen Lau with Oppenheimer. Good morning. Thank you for taking my questions. Going back to MatchNow and I want to ask the question slightly differently. Do you think you have the critical mass in calendar right now and or maybe after the acquisition? And what kind of metrics and timeline you're looking at to gauge whether you want to expand further in calendar? Thank you. It's a great question. I would say since we haven't closed yet, it will learn a lot on integration. As you may or may not recall from our announcement, we're able to keep the team that's built MatchNow, which is an incredible addition to us and the entire MatchNow team will be joining our North American Equities division. And it's with that insight and learning from one another that we'll be assessing whether or not and how to expand in Canada, whether it's with Match Now growing or if we have to look at other alternatives for growth in Canada. So we're not done. We haven't closed and nor have we been able to really seek the incredible insight into the Canadian equities market from the MatchNow team. So please give us a little patience until we close so we can share with you our vision for Canada. We love the market, a lot of the same customers, but we're going to be introduced to new customers as well. So let us assess that a little bit more after we close and I think we could be a whole lot more transparent once we get closing and able to share with you some more vision. Thank you. And the next question comes from Jeremy Campbell with Barclays. Hey, guys. Thanks. Ed, on a prior call, I think you guys had discussed like CME's launch of Micro E Mini features was kind of oddly correlated with the rise of your XSP options. I'm kind of wondering a couple of things. One, how do you see the pending launch of the CMEs options on those micro contracts? With the lateral to your options complex? And then maybe just a bigger picture one, now that basically the notional sizes have gotten cut down dramatically in all equity derivatives over this past year, if there's any kind of net kind of industry wide equity derivative participation? Yes. I think kind of industry wide equity derivative participation? Yes, it's great. I love the way you frame the question because we do look at the opportunity as really an ecosystem and the most successful ecosystems and trading environment is one where there is deep liquidity for institutions, there is small bite sized liquidity for customers. That interaction is incredibly powerful because you can actually satisfy the demand from any size user. And then from our perspective, we're able to take further advantage by having volatility products linked to both. So it's that ecosystem that's the most powerful and we do grow the pie in its entirety, including futures at CME. The big difference really from a retail size micro option is the difference, the huge difference between retail investors who have securities accounts and the very few retail investors that have futures accounts. There just are not that many. They tend to be the most sophisticated that go and continue to click through online retail brokers for futures accounts. What we've learned also and it goes back to Ken's question, the beauty of having a research department here at Cboe is I've had people digging for the growth that Ken sees in E Mini, E Mini's and compared to SPX and options on E Mini's, I haven't seen it. We can't find it. It looks pretty flat line to us, but it's a comparison that we'd like to take up with Ken later. But more to your question, yes, we see the entire pie growing when we can attract more customers into the complex and we think we both will benefit if the pie grows. Love to see futures grow at CME by the way. It means that there's institutions being satisfied and their derivatives tend to trade with us where prices are set. Great. Thanks a lot. Thank you. And the next question is a follow-up from Richard Repetto with Piper Sandler. Yes. Hi, I know this the call has been on pretty long. But I did have a just quickly if you could go through the periodic auction, because like in Europe, there's no reg NMS, solid update. So just quickly some of the details on why how it will work here. Will you still get SIP market data revenue from if you do pick up share? And is it lit or dark? And I apologize, I haven't read the filing. These details may be there, but anyway. Rich, look, as for time, this is our time with you. So please don't apologize for that. We definitely appreciate the follow-up question. What we do in the U. S. Currently in the U. S. Market is lit, but I'll have Chris give you a little bit more color on the importing the expertise and what we've learned in Europe to our markets here in the US, but yes, currently we play in the lit market in the US. Yes. So on periodic options, Rich, so obviously there's no trade through rule in Europe, but there is in the U. S. We'll be abiding by that. This is all in the rule filing, but the details are there'll be a certain amount of transparency around periodic auctions, but not too much as to create market impact. We'll be abiding by the trade through rule. And there'll be but there will be periodic and kind of unknown randomized auction periods, so as to minimize that market impact. So we've taken what we've learned in the market construct in Europe and we're applying to U. S. Market structure under Reg NMS. We especially think this might be useful for some securities where some more illiquid securities, frankly, that are harder to trade in a purely continuous market where there's been a lot of market structure discussion about the best way to facilitate trading in those securities. So this is just one of many things we're doing across the globe and applying lessons learned in one geography or asset class to another. And on the SIP question, Chris? Yes, on the SIP question, so obviously we will get trade revenue from that for reporting trades that happen through periodic auctions. I don't believe there isn't going to be any quote revenue. Understood. And one last quick comment. I said you brought up the history Rich, you're breaking up on us. Okay. I'll pass. Thank you, Ed. Put more quarters in that machine, Rich. We can't hear you. Thanks so much. And the next question is also a follow-up from Kyle Voigt with KBW. Hey, thanks for taking the follow-up. Just for Brian on expenses. So last quarter you mentioned that we should annualize the 4Q expenses as a good jumping off point to model 2021 operating expenses. With the updated guidance today, you noted that you have some extra costs, I think $3,000,000 in the back half of the year that are kind of non recurring. But if we back those out, is that annualized 4Q expense run rate still the best way to model 2021 or model as the jumping off point for 2021 expenses? I think that's still going to be the primary base for being able to model 'twenty one because it's going to have all of the our information services group in there. We'll have hopefully MatchNow in there. We'll have EuroCCP in there. We'll have a better baseline of, I'll call it, core or existing in there. So I still think that's going to be the best jumping off point. The percentage changes, the way people have traditionally modeled expenses and say, what was this and then you have X amount of growth over the prior year, that will the percentages may look a little tricky just because of the environment that we're in and depending on where we are in Q4 relative to where we are at the pandemic and when what the world looks like from that perspective. So I still think that that's going to be our best starting point because it will have everything integrated in there. So hopefully that answers your call again, a good question. So but if there's not a follow-up, please ask. But there was a question earlier on the EuroCCP first half performance. I did have a chance to people have fed a little bit information back. It looks like the first half performance on revenues, again, these are all unaudited and everything else, but it looks like the top line revenue was about a 60 percent increase over the prior year in the first half for Euro CCP. So I wanted to mention that to folks. And obviously, that will fall to the operating leverage to the bottom line impact as well. But again, as I mentioned, they had a very strong first quarter with the activity and that had definitely showed up in their results in the first half of the year. Sorry, Brian, did you say 60%, six-zero? Yes. Thank you. And that does conclude the question and answer session. I would like to return the floor to management for any closing comments. Thanks, Keith. Thanks, everybody, for calling in this morning. We appreciate your time and continued interest in Cboe. Bye. Thank you. That concludes today's teleconference. Thank you for attending the presentation. You may now disconnect your lines.