Hello, and welcome to the Cboe Global Markets Q3 2021 Financial Results. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the call over to your host today, Kenneth Hill. Mr. Hill, please go ahead.
Good morning, and thank you for joining us for our Q3 Earnings Conference Call. On the call today, Ed Tilly, our Chairman, President, and CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Then Brian Schell, Executive Vice President, CFO, and Treasurer, will provide an overview of the financial results for the quarter as well as an update on our 2021 financial outlook. Following their comments, we'll open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer, and John Deters, our Chief Strategy Officer. 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 each slide is available on our Investor Relations portion of our website.
During our remarks, we'll make some forward-looking statements which represent our current judgment on what the future may hold. 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 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 call this morning, we'll 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, Ken. We're happy to have you on board as Debbie Koopman prepares for retirement next month. Good morning, and thank you for joining us today. As we head into year-end, I hope that you're doing well and remaining safe and healthy. I'm pleased to report on solid financial results for the Q3 of 2021 at Cboe Global Markets. For the quarter, we reported revenue growth across each of our business segments, reflecting strong year-over-year increases in both transaction and recurring non-transaction revenues, with net revenue up 27% and adjusted EPS up 31%. Our solid Q3 results were driven by higher volumes in our index options and volatility products, increased demand for our suite of Data and Access Solutions, and growth in trading volumes across nearly all our segments.
In our proprietary products, ADV increased 29% in VIX futures, 32% in VIX options, and 39% in SPX options. We also continue to see strong growth in multi-listed options trading, with ADV up 20% year-over-year in the Q3. During the quarter, we also delivered on several strategic milestones to expand our global network, including the successful launch of our European derivatives platform, as well as the closing of our acquisition of Chi-X Asia Pacific. I'll touch on both in a moment, but first, I want to discuss our plans to enter the digital asset market through the planned acquisition of ErisX, which we announced last week. ErisX will provide Cboe with spot trading, data, derivatives, and clearing capabilities for digital assets through its regulated futures exchange and clearinghouse.
The past two weeks have been a watershed moment for the digital asset industry with the launch of trading in the first Bitcoin ETF in the U.S. equities market. As the appetite for ownership in digital assets continues to grow, we believe Cboe can play a guiding role in shaping the trajectory of this revolutionary market. Today, we are at a critical inflection point. We're seeing strong retail demand, institutional interest, market growth streaming of digital assets, even with traditional financial firms. As a leading provider of global market infrastructure and tradable products, we can bring the knowledge, structure, and transparency of our trusted markets to the digital asset space. The demand and excitement for digital assets is driven by the unique market structure and freedom it affords, and we want to maintain that innovative spirit while providing the regulatory framework and structure that many market participants desire.
We have secured support from a tremendous group of industry leaders who are aligned with our vision and want to shape and define this asset class now and for the future. These industry leaders bring different perspectives and expertise from retail brokers, crypto leading firms, global liquidity providers, and sell side banks. They are expected to form a digital advisory committee tasked with advising us on the ongoing development of our digital asset business, Cboe Digital. These industry leaders include DRW, Fidelity Digital Assets, Galaxy Digital, Interactive Brokers, Nascent, Paxos, Robinhood, Virtu Financial, and Webull. Additionally, certain members of the digital advisory committee intend to acquire minority ownership interests in Cboe Digital.
I'm confident that together with ErisX CEO, Tom Chippas and his team and our incredible partner group, we can not only meet the growing demand for institutional and retail trading solutions, but also push the boundaries of digital asset innovation and unlock its next phase of growth. I'm extremely pleased with the progress we made during the Q3, executing on the four key incremental growth drivers I outlined at the beginning of this year, the opportunity to grow recurring non-transaction revenue, the launch of Cboe Europe Derivatives, our expansion plans for BIDS Trading, and extending access to our products and services across geographies and market participants. We saw positive momentum in our data and access solutions again this quarter, fueling a 21% increase in our recurring non-transaction revenue.
This growth was driven by continued demand for access to our exchanges, proprietary market data, and new subscribers to Cboe's front-end platforms, including Silexx and Trade Alert. We continue to optimize the efficiency and delivery of our data and access solutions to market participants, and are excited to launch Cboe Global Cloud, a new real-time cloud-based market data streaming service in collaboration with Amazon Web Services on November first. Cboe Global Cloud is expected to help further extend Cboe's data to new users and geographies, an important step towards broadening investor access to our proprietary content and market data globally. Turning now to Europe, where we successfully launched Cboe Europe Derivatives on September 6th. We are very pleased with the initial progress with trading and clearing running smoothly as we slowly build volume. Over the coming months, we plan to introduce additional products and onboard new participants.
Bringing the first truly Pan-European, transparent, and lit derivatives market to Europe is a remarkable achievement, and we are enthusiastic about the opportunities ahead. Additionally, our European equities business delivered strong results in the Q3, with average daily notional value traded up 29%. Cboe LIS, powered by BIDS, continued to see positive momentum, and for the first time in its history, became the largest block trading platform in Europe for the month of August. BIDS has established itself as the premier block trading destination in the U.S. and Europe, and we are excited about our plans to expand the BIDS network to Canada early next year, and then to Asia Pacific region to serve an even broader base of customers. Turning to Asia Pacific, we made good progress integrating the Chi-X team since we closed the acquisition at the beginning of July.
We plan to migrate Chi-X to Cboe technology and are busy working through the integration plan and timeline. With our expanded footprint in the Asia Pacific region, we see significant opportunity to further develop our ecosystem of market infrastructure and tradable products into one of the world's largest derivatives and securities networks. Beginning November 21st, we plan to take an important step towards broadening our network and access to our proprietary products through the launch of extended global trading hours for VIX and SPX options as part of our 24x5 initiative. The lengthened global trading hours complement our entry into Asia Pacific, and are designed to help meet growing investor demand for the ability to manage risk more efficiently and adjust SPX and VIX options positions around the clock.
We are also pleased to announce that Webull, a leading retail broker platform with a growing global presence, began offering our proprietary products, VIX and SPX options, on their platform this month. We've continued to see strong demand for SPX options from both institutional and retail broker platforms, and are eager to expand access to this product suite. Similar to last quarter, we saw solid growth in SPX options trading on retail broker platforms, with ADV on those platforms up 24% from the Q2, hitting a new all-time high. Key to our global network expansion are strong partnerships. To that end, we were thrilled to expand our relationship with MSCI and extend the licensing agreement that allows Cboe to offer options trading on MSCI global indices through 2031.
We have valued our strong relationship with MSCI for many years and look forward to further collaboration in the years ahead, particularly in the important area of ESG investing. As the retail market continues to grow, we remain committed to investing in education and product development to meet their unique needs. To that end, earlier this week, we announced plans to launch Nanos, a first-of-its-kind options contract designed to make trading more accessible for the retail trader. Increased retail participation has fueled record trading across the industry. Between the top four retail broker platforms, there are now more than 150 million retail brokerage accounts, and many of these accounts are too small to take advantage of the potential benefits certain options contracts can offer. We plan to launch our first Nanos product on the S&P 500 index Q1 2022.
At a fraction of the size of a standard options contract, the 1-multiplier cash-settled Nanos S&P 500 answers the growing demand for a simpler, more cost-effective way to gain broad exposure to the U.S. equity market. The S&P 500 option market is one of the most highly traded and liquid option markets across the globe. Through our Nanos S&P 500 product, we are broadening access to a greater universe of traders who can enjoy the potential benefits options provide, including hedging, asset allocation, and income generation strategies. To complement the launch of Nanos, the Cboe Options Institute plans to offer a new options introductory curriculum tailored to retail traders.
Through our long-standing commitment to education, we are continuously evolving our programs to offer more retail-centric content through the Options Institute, and we look forward to welcoming a new generation of traders to options trading with the launch of Nanos. As we broaden our global footprint by entering new markets and launching new products and services, we further our goal of expanding access to a broader base of customers, both institutional and retail. By leveraging our technological expertise, customer relationships, and capital markets capabilities, we plan to continue to unlock additional revenue opportunities across our businesses. We head into the final months of the year on a stronger footing than ever, and we look forward to continuing to execute on our growth opportunities ahead. With that, I'll turn it over to Brian.
Thanks, Ed, and good morning, everyone. Let me remind everyone that unless specifically noted, my comments relate to Q3 2021 as compared to Q3 2020 and are based on our non-GAAP adjusted results. As Ed just indicated, the Q3 was incredibly strong for Cboe, with robust results from both a transaction and non-transaction basis. Overall adjusted earnings increased 31% versus the Q3 of 2020 and improved off solid Q2 of 2021 metrics. As we move forward, we look for the cash, derivatives, and data portions of our business to work in unison to enhance revenue opportunities and shareholder value. Now, a quick look at the Q3. Our net revenue increased 27%, setting a new quarterly record. Net transaction fees were up 39%, and recurring non-transaction revenue was up 21%. Adjusted operating expenses increased 29%.
Adjusted EBITDA of $240 million was up 25%. Finally, our adjusted diluted earnings per share was $1.45, up 31% compared to last year's quarterly results. Turning to the key drivers by segment. Our press release and the appendix of our slide deck includes information detailing the key metrics for each of our business segments, so I'll just provide summary thoughts. While we saw year-over-year growth in all of our segments, our options segment produced above average growth for the quarter of 30%, driven by higher trading volumes and revenue per contract in both our proprietary and multi-listed options. Total options ADV was up 23% as we saw double-digit increases in both index and multi-listed options.
Revenue per contract also moved higher by 16%, given positive mix shift to index products and a strong increase in our multi-listed options RPC up 23%. We continue to benefit from double-digit growth in recurring non-transaction revenue, particularly access and capacity fees. North American equities revenue increased 13% year-over-year as acquisition-related net transaction and clearing fees were further helped by strong proprietary market data fees and access and capacity fees. This was offset somewhat by a 1% year-over-year decline in U.S. equity ADV and a 1% year-over-year decline in market share for the quarter. While market share trends have been impacted by aggressive pricing trends from some competitors, we remain focused on optimizing long-term profit in the business through the many initiatives we have introduced or plan to introduce to the market.
For the quarter, MATCHNow and BIDS contributed $8.5 million in net revenue. Lastly, recurring non-transaction revenue increased by more than $5 million or 17%, with organic growth of 14%. Q3 revenue increased in futures by 24% on the back of a 30% increase in ADV and a 6% increase in capture. Looking forward, we were pleased to see the SEC recently approved filings to list and trade shares of two new Volatility Shares products, an inverse and long VIX futures ETF. These new listings are likely to increase the VIX trading ecosystem as the AUM builds on those products. The revenue increase in Europe and APAC primarily reflects the addition of Chi-X Asia Pacific in July 2021, an $8.2 million contribution, as well as growth in European equities and clearing.
Underlying trends remained strong in the Q3 as industry average daily notional value traded, market share on Cboe European equities, and net capture all moved higher on a year-over-year basis. Finally, revenues in the FX segment increased 8% as compared to the Q3 of 2020 as trading volumes and net capture moved higher. During the quarter, global FX market share hit an all-time high of 17%. Cboe's recurring non-transaction revenue growth remained elevated in the Q3, with year-over-year organic growth reaching 14%. Again, this strong growth was largely a product of additional subscriptions and units as opposed to price increases. More specifically, we saw both physical and logical port usage remain robust in our equities and options businesses, driven by increased demand for trading capacity.
On the market data side, the equities top of book and depth of book products continued to perform well. We are increasing our organic outlook by 1 to 2 percentage points to approximately 14%. Our total recurring non-transaction revenue growth is now expected to reach approximately 18% for 2021, up 2 to 3 percentage points versus our prior expectation. Overall, we are very pleased with the continued traction in this business as it's an important element of Cboe's ecosystem of products and services. Turning to expenses. Total adjusted operating expenses were approximately $140 million for the quarter, up 29% compared to last year. Excluding the impact of acquisitions owned less than a year, adjusted operating expenses were up 17% or $19 million for the quarter. Most of the expense variance related to the acquisitions was compensation and benefits.
Moving to our expense guidance. We are tightening and raising our expense guidance range for the full year to $536 million to $541 million from $531 million to $539 million. The $4 million increase in the midpoint reflects higher incentive compensation costs, reflecting the strong year-to-date operating results we have posted, as well as our plans for increased hiring during the Q4 and a slight uptick in our depreciation amortization forecast. As a firm, we believe in a pay-for-performance culture, and not only has our year-to-date financial performance been strong, we have made significant progress against our longer-term growth priorities, especially towards increasing access to Cboe products and services, as Ed noted previously.
As you recall from our February earnings meeting, we laid out a path for revenue growth that would be preceded by higher than normal expense growth that would slightly compress margins in the short term to enable longer-term growth. We remain focused on investing in key initiatives with attractive returns, and we look forward to meeting the current and future market demand by prudently investing organically and inorganically to meet those needs, even if it requires upfront spend. Now turning to a summary of full-year guidance on the next slide. We are raising our guidance for depreciation and amortization to $38 million to $42 million from $34 million to $38 million due to the earlier timing of various products.
Our CapEx guidance range moves $8 million lower to $47 million to $52 million, and we are reaffirming the higher end of our guided tax range of 27.5% to 29.5% for the full year under the current tax laws. Our interest expense for the Q3 of 2021 was $11.7 million. We expect our Q4 interest expense to hold steady in the $11.5 million to $12 million range. In addition to the investment priorities we outlined earlier in the call, we remain committed to returning excess cash to shareholders through dividends and share repurchases. From a capital return perspective, our strong cash flow generation enabled us to raise our quarterly dividend for the 11th straight year, growing 14% on a year-over-year basis.
In total, we returned $52 million to shareholders through dividends in the Q3. Our leverage ratio decreased slightly versus the prior quarter to 1.4x at September 30th as our debt levels remained steady on a sequential basis. Overall, our balance sheet remains unencumbered as we look to put incremental capital to use in value-enhancing ways for shareholders. Our adjusted cash and financial investments balance is elevated, reflecting the planned use of cash to fund a portion of the planned transactions we recently announced, as well as a slightly higher requirement for regulatory capital purposes. In summary, Cboe delivered a very strong Q3, and we're even more enthusiastic about the number of high-quality growth initiatives we are bringing into our ecosystem, solutions that extend access to global markets for our customers, grow our geographic footprint and breadth of asset classes, and diversify our revenue base.
We look for these planned additions to fuel continued growth across the Cboe ecosystem. Now, I'd like to turn it back over to Ed for some closing comments before we open it up to Q&A.
Thanks, Brian. Before we move to Q&A, I want to provide a further update on our ESG initiatives during the quarter. Earlier this month, Cboe was proud to be named a founding member of the Derivatives Partner Exchanges Network of the United Nations Sustainable Stock Exchanges Initiative. We look forward to sharing ideas and engaging this network on important dialogue on how derivatives exchanges can support greater sustainability, in addition to advancing partnerships with index leaders in this important space. As you can see, we have been extremely busy, and I thank the entire Cboe team for their hard work delivering outstanding results. We look forward to hosting our Investor Day on November 16th, where we will dive further into our business, providing more color on these initiatives and how they are helping drive our strategy. We hope you can join us.
Details for accessing the event are on our IR website. Finally, I'd once again like to thank Debbie Koopman for her service and wish her all the best as she heads into retirement next month. She'll be with us through Investor Day, so it's not quite farewell yet, but this is her finale for quarterly earnings. She will be dearly missed by me and the entire Cboe team. I'll now pass it back to Ken for instructions on the Q&A portion of the call.
Thanks, Ed. At this point, we would be happy to take questions. We ask that you limit yourselves to one question 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.
Yes. Yes, and thank you. We will begin the Q&A session, and just press star then one if you would like to ask a question. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble the roster. The first question comes from Rich Repetto with Piper Sandler Corporation.
Good morning, Ed. Good morning, Brian and team. I guess, Ed, you know, we take your acquisition very seriously now. The ErisX, you know, positions and you talked about it in the prepared remarks. I guess I wanted to get you know, what does Eris, you know, what are they trading right now? I know they trade some over-the-counter products. When do you actually expect them to trade any digital assets? Do you need regulatory sort of clarity to do that? Did it prevent you from buying back shares in the quarter?
Let's take the first part first on shares, Brian, and the view of just the buyback on shares.
Yeah. Rich, just as a pipeline, as we look at things, we are being more conservative than not as we look to kind of overall leverage, deployment of cash. It was, you know, like I said, it's always a balance, quarter-over-quarter of, you know, do you sit on a little bit more cash in anticipation of a transaction, you know, closing in the pipeline? That was more of a reflection of that than anything else.
Thanks, Brian. All right, Rich, let me take a half a step back on ErisX because I think it's important to recognize that we didn't just wake up a couple months ago and think, "Gosh, crypto, look what's happening. It might be neat to get into this space." When we launched, if you recall, the first futures contract in 2017, and even before that, we had applications to the SEC for ETNs and ETPs. It's a space we've had our eye on. We thought the ecosystem in this space would have evolved a bit quicker. We've always had an eye on getting back into the space. The last couple of calls, I've been mentioning that.
Importantly, also, we were early investors in ErisX in 2018 when Don Wilson and Tom Chippas saw the opportunity to build out a regulated fair market in spot derivatives, clearing and margining. You know, long answer to your question, framed that way, we've constantly and since the launch of those futures contracts, been looking for an opportunity that gets us back into the market. John, I think importantly, the rollout, what ErisX is trading today and what we have in front of us between now and close.
Yeah, thanks, Dave. Morning, Rich. This is John. So, the mention that you just gave of OTC products, Rich, I think that relates to a separate business. It's a little confusing. It's also called Eris, but that business offers swap futures that are traded on a competing exchange. We're talking about here ErisX, which is purely a crypto platform. The businesses are completely separate. What ErisX offers, as Ed mentioned, is really a start-to-finish integrated platform for crypto trading, spot clearing, and derivatives. The platform is live today, so there are significant users on the platform, depending on the day. Some days it can be really one of the top three, four in the market.
The partners that we're bringing to the table here, and you see us mention in the press release, these partners is forming our digital advisory committee. Many of those partners are live today on the platform. We believe as we kind of look at the evolution of the space, the partners we're bringing to the table and the readiness of the platform, that our timing really is pretty much spot on here because the technology platform is built, the regulatory approvals are in place. One thing that we're really looking forward to as we move towards close and towards evolving the business is the expansion of the derivatives franchise. Again, the regulatory approvals for that platform are all in place. The technology is in place.
what we intend to do is work with the CFTC in gaining a approval for margin futures and then other derivatives products, which we think are can be game changing for the industry. There really is nothing like it, settling into the physical coin in an integrated spot clearing and futures and derivatives platform. We look forward to that build, but really, that's the only piece that is yet to come. The rest is live and poised for growth today.
Got it. Very helpful. We'll see you at the Analyst Day, Deb.
Thanks, Rich.
Thank you. The next question comes from Daniel Fannon with Jefferies.
Thanks. Good morning. I wanted to ask about the European derivative opportunity. You talked about some of the product launches and more in the pipeline. Are you incenting, you know, volume with pricing or how, what is the pricing strategy? How should we think about kind of growth or some of the milestones for success in the kind of coming months and quarters for that business?
Yeah, let me, before I turn it over to Brian for the incentive program, I think very, very important, the way we look at success starts with operations. Chris, your observations in the days and since September 6th, actually, we could not be happier, with not only the execution on our platform, but clearing. EuroCCP keeping up with the demands to offer clearing and that flowing seamlessly through. Couple words there, Chris, and then Brian on incentives and the stipends for market makers.
Yeah. Good morning. Thanks, Dan, for the question. We're very pleased with, you know, launching this on time on September sixth, on the leadership of Dave Howson and Nati and Cecile in Europe. Our exchange worked just as designed so that the clearing system, you know, we bought EuroCCP about a year ago, and they've added clearing to their portfolio as we built the derivatives exchange. Operationally, things are going just as we planned. We've communicated that we had modest expectations this year as we build the base. Brian can talk about, you know, incentives we have in place for market making and liquidity.
Yeah. Thanks, Chris. I think it's to frame that is you have to look at the entire ecosystem of who's involved and what makes a product successful relative to the clearing members. Obviously, we're bringing the infrastructure itself called the exchange and clearing, which was mentioned. But if you think about the clearing members, the market makers, the customers that are gonna be trading and putting the right incentives in place. What we've done is we've obviously tried to remove those frictional elements
To facilitate liquidity and volume. There are stipends in place, there is tiering in place, with respect to those elements, so again, to incent those participants. We'll see that continue to build as we add more and more clearing members, as we add more market makers to both the futures and the options side. So stay tuned for that progress. We'll put out some targets at our Investor Day as far as where we think this business can go, call it in a more of a three to five year timeframe. I would say right now, as the team has already mentioned, the key success here was the operational element of getting people on the platform, getting it traded. Products are successful from that standpoint.
We're achieving the onscreen transparency and liquidity of what we set out to do, and then with the expectation of growing that over time.
Thank you.
Thank you. The next question comes from Kenneth Worthington with JP Morgan Chase.
Hi, thank you for taking my question. I wanted to follow up on Rich's comments on ErisX. How big. You indicated that ErisX might be like a top platform periodically. How big have they been over the last six months? Like, what sort of volume have they done, and what tokens are offered? Cboe was, I'd say, first, or at the very least early, in building crypto futures in December 2017. You guys had the right call, you were taking a chance. It seems like CME, I don't know, somehow outmaneuvered you. They were second, but they somehow won. Give us a little context of what happened there.
Then maybe lastly, Cboe launched Bitcoin futures at a peak price and then seemed to, you know, change its mind 15 months later at sort of a Bitcoin price trough. Is this, you know, is this flip-flopping gonna make it harder for you to be successful in building a futures platform at Eris, given that venue commitment is so important in sort of longer-dated products?
Well, there's a lot there.
Yes.
You're right, we were first to the market. As I said, we really anticipated a little quicker action on approval in the ETN and ET-ETF space. We appreciate incenting market makers to post quotes and to trade, but with no end in sight to the regulatory uncertainty, we decided to step back. I wish we were smart enough to know that the price of Bitcoin was at its top. Probably would've made a trade there instead of pivoting it away and waiting for a regulation and a design to be more obvious for us with the ecosystem as we find it today, primed and ready for an exchange like ErisX. Significantly, you didn't mention the partners that we're entering this with. Super important.
They too see the opportunity to offer their customers access and an experience that they're used to in other asset classes. This is very important. This is not a disintermediated market where we think we should be offering direct to customer. Customers are used to the platform that they trade on. Those partners that we list, we are not getting in between them and their experience. If they'd like to pivot from their exposure in options, Cboe's proprietary products, and on the same platform be able to trade crypto in a safe, regulated, fair way, that's the experience we're looking for. I don't think we're chasing anyone here, Ken. It's an interesting observation. John, back to the coins that are on the platform today.
Yeah, Ken. There are five coins on the platform today, and the platform is highly extensible, so currently under review additional coins and all coins. We believe that it has all the underpinnings to recognize pretty substantial growth. It's important to recognize that this, our involvement in this space is, and the entire space itself is an evolution. Ed really kind of described nicely our initial foray into it. We call that product version 1.0, cash settled, pretty simple kind of construct. We quickly learned and evolved from those learnings that the industry was demanding something different. They were demanding physical settlement.
They were demanding robust clearing platform that dealt with the underlying spot in conjunction with a derivatives product. When we decided to take our original V 1.0 product down, it was really with a mind towards doing something much more comprehensive to meet the demands of the digital asset space as market participants were telling us they wanted. That process of kind of getting back into it with the right platform, it took some time. We were waiting for the perfect opportunity. I would say that, you know, we were attracted to ErisX really because of the comprehensive sort of from spot through clearing and data to derivatives. It conforms very nicely with our strategy across asset classes and geographies.
As we kind of to the evolution theme, as we started down the path of evaluating the deal with Eris, and we sampled the market, to ensure that we were thinking about things in a way that really resonated with market participants, this is where another step of the evolution came into play, where there was really this obvious demand for participation from market participants. To be part of this initiative, to be on the cap table, to be aligned with value creation. We met that demand with the structure that you saw us announce last week. Really evolution, and it's a rapid evolution because the market, the digital asset space is evolving so rapidly.
I don't think we could have really nearly come close to meeting the demand that the market is telling us they have for the particular type of products and services with our prior product in any sense. This platform does it for us.
Great. Thanks. You gave me a lot to consider there. I appreciate it.
Thank you. The next question comes from Brian Bedell with Deutsche Bank.
Great. Thanks. Good morning, folks. Maybe just continuing on ErisX. I mean, maybe just to sort of characterize it broadly, I know you'll cover this much more on Investor Day, but maybe just to sort of characterize it broadly, if I'm thinking of it right, is the longer-term aim here, and I appreciate it's probably still under development, but to become, you know, say like a competitor to Coinbase, and or is it more to really stay in the sort of regulated exchange space, with you know more listed types of contracts, be they spot or futures? And I don't know if you can talk about the investment required in the 2022 outlook.
Maybe that's Investor Day coming up, but you know, should we consider this as I think you said two to three years for EBITDA profitability. You know, should we consider this as sort of a drag on earnings initially before it really gets going? Maybe just comment around that.
Yeah. I'll kick off, Brian. It's a great question. The ambition and the vision here is that we really do offer a regulatorily compliant product set from spot through clearing and derivatives. That's a little bit clear what that means when you talk about derivatives, it's a CFTC-regulated platform, both clearinghouse and futures market. On the spot side of things, the industry is really hungering for this part of the demand we're talking about, hungering for a framework.
With these partners that we have on board with us as part of our digital asset advisory committee, we intend to go to the regulators, work together collaboratively with the regulators in an industry to help define what that means product by product, token by token, coin by coin. We think that initiative and the clarity that that will potentially bring can unleash the next wave of growth in this space. That's the opportunity. It's very much a regulated together with our market participants.
The liquidity out in the market today is really, you know, it's despite some of the regulatory overhang here, the liquidity is impressive, but the growth in the space is so rapid that, you know, soon enough, the platforms and the OTC trading that's occurring out there is going to, you know, potentially exceed its capacity. We're creating really a regulated liquidity catch basin for the entire industry, bringing the right partners to the table to be able to establish that kind of platform. Brian Schell on the financial implications.
Yeah, I'll go and I think, Chris, I think we'll maybe kind of end it all. As far as the financial element, as we look at that and it's the platform's built, so it's not so much a CapEx as far as that investment goes. It's gonna be really more around an OpEx. Yes, and we'll give this further guidance as we get closer to close and where we are in the platform because we've already seen, you know, increasing activity and things of that. It would be premature to give us kind of a run rate versus historical versus where we are.
When we get close to the close date, particularly as we mentioned in our announcement that, you know, we're gonna have our digital advisory committee, those various partners likely taking, you know, the various equity positions in that. Those numbers could move a little bit. We don't wanna be premature in that overall number. Yes, it's a slight drag on OpEx as we continue to build and as we continue to scale. Again, more details on that as we get closer. Chris Isaacson, I think.
Yeah.
is going to round it out.
Yeah. Thanks, Brian. I mean, these are all great questions about ErisX, and it just speaks to how excited we are about it and how much interest there is in this space, and we think the timing is right. As John's mentioned, you know, this in one step, we get spot data derivatives and clearing in a single step, and that's so consistent with our strategy and what we've done in other asset classes. I'd also say, as we looked at this asset, we see that there's been a ton of innovation in the digital asset space, but there still remains a trust, transparency and data gap.
We think with ErisX, we can fill that gap with Tom Chippas and team and the platform they've built and expand on the vision that ErisX has started with because of the partners we're bringing to the table. Regarding competition, you know, we won't just have a spot market. We're having a derivatives market that will allow for physically settled futures, margin futures as John talked about. There's a big and broad vision here that we think we can fulfill with these partners, not disintermediating, but embracing them so they can access all the customers, both traditional and non-traditional customers that want to trade digital assets. We'll be able to get to them through these intermediaries in this platform that's gonna embrace transparency and regulation as it gets formed and clarified.
I think Tom and team have built this right. They've got the regulatory approvals that are needed. They've got the money transfer licenses in 50+ states, CFTC approval for a futures exchange and a designated clearing organization. They've got a great chassis, great foundation to build upon.
That's great color, and I really appreciate all the detail.
Thank you. The next question comes from Alexander Blostein with Goldman Sachs.
Hey, guys. Good morning. Thanks for taking the question. I was hoping you could expand a little bit around your plans for Cboe Global Cloud in early November here. What's the vision ultimately? How do you think it expands the addressable market and sort of consumption of your data across different participants? And maybe I can sneak in one more, just since we're talking about recurring data streams. The guidance for the Q4 seems to apply a little bit of a decline versus Q3 run rates. Maybe you can expand on that a little bit as well. Thanks.
Great. I'll start with the Cboe Global Cloud, which we're very excited about, going live here actually next week, next Monday. This just furthers the theme that we wanna provide better access and more ubiquitous access to our data and our products all around the world. We'll start with U.S. equities, futures, and indices data, under the leadership of Catherine Clay and this new Data and Access Solutions group that we formed earlier this year. This is just the first. We have datasets, soon to be across 22 countries in equities, plus futures, options data, indices data. We'll just keep adding on to the datasets that we'll offer. We're starting this with AWS, a great strategic global partner for us.
We wanna access not just existing customers, but a lot of customers who may not have a cross-connect in a data center today, but would have an internet connection to a global cloud provider like AWS. We view this as new customer acquisition and also getting them access to datasets that they don't currently have today. Maybe I'll let Brian answer the second question.
Yeah, thanks. Just to put a fine point on that, you know, Alex, is that broader, I would say, kinda story and strategy, and are really our investment thesis on this whole area has been, you know, the increasing need for data analytics, therefore increasing the access, the increasing geography to leverage the global presence, and then increasing the methods and which is that last point you just hit on that Chris helped fill in the gap for. You know, and then the overall opportunity as we continue to pursue more and more, and we can talk about that later. As far as the growth rate, we continue to see growth. What you're seeing is you're still gonna see growth over. That's projecting growth into the Q4 over the Q3.
The rate itself may not be as great. What we saw also, this is a little bit just kind of more of a math issue, is that the Q4 in last year started to pick up where we started to see some of this momentum. You just have a slightly higher comparison base that it's just gonna move the numbers down, so the rate's gonna appear to be a little bit lower. The trajectory is still, I'd say, still the same. It's just it's gonna look a little different just because we are starting off a slightly higher base last year.
Great. Thanks.
Thank you. The next question comes from Owen Lau with Oppenheimer.
Good morning, and thank you for taking my question. Could you please talk about if there's any synergy between the extended trading hours of SPX and VIX options as well as Chi-X? I'm just wondering whether you would list some of your proprietary products to exchange to the exchanges in Asia to increase your distribution channel. How should investors think about potential incremental opportunity for Cboe when it's becoming more like a global company? Thank you.
Let me start because we are so excited to extend access to VIX and SPX options to global trading hours. You know, everything's always subject to regulatory approval. We think we're in pretty good spot here, but that's the plan. That's answering a demand issue. If you think about it, you've got a position on now and as the world becomes smaller and information flow is free, the ability to adjust open positions or to open positions around the clock is very important. You know, we trade the country's benchmark here and need to be accessible 24 hours a day for sure. That's answering the demand. We think there's great interest.
Our presence in the APAC region because of our acquisition of Chi-X really allows us boots on the ground to tell this story, and the access kind of completes the demand that we see more globally. Chris, over to you on the current update on integration and migration of Chi-X APAC.
Yeah. Thanks, Ed. Great question, Owen. We're super excited about our entry into Asia with Chi-X Asia Pacific. Integration planning is going very well. We plan to bring BIDS to the region within Australia in the second half of 2022. The first half of 2022, we'd migrate to Cboe technology in Australia. Thereafter, we would do Japan also. As Ed mentioned, now we have a bona fide presence in that region, and we are able to sell the full suite of our products, including SPX and VIX options and our growing set of data. Let's maybe, Brian, if you can, you wanna chime in at the end here as well.
I just, again, to continue to hit that is that the boots on the ground is a key element there as we continue to, you know, extend that global network. I think it's important to remember and what that enables us to do across, I'll call it our network and the proprietary products and everything that we have, and then leveraging those learnings and basically what does it mean to be an exchange operator and the consistency and reliability of what that brings to the various market participants. Because our client base largely is a very global client base. The other is that, you know, to mention explicitly is BIDS as far as bringing that to market in those geographies, which we talked about. That's on the timeline in conjunction with Chris mentioned, the platform migration.
Then I'll wrap it back up, you know, the broader. I'm gonna keep coming back to the broader data opportunity here. We've talked about how, you know, we're not only continuing to go after more share of wallet to meet that increasing demand for data analytics, but, you know, a big part of that theme also is international expansion, the incremental analytics, you know, solving for, you know, customer capital/margin needs. The crypto, which has been brought up a couple of times, is that entire ecosystem of that data need, and it just continues to feed off itself and expand from a data perspective.
Again, leveraging off the call it the cash slash you know equity side of that spot, as well as the derivatives, and then completing it with the data opportunity.
Got it. Thank you very much.
Thank you. The next question comes from Kyle Voigt with KBW.
Hi, good morning. Maybe just a question on retail. Obviously, you've had some success with Mini VIX and XSP products, but it seems like uptake has been a bit more muted relative to some other retail-oriented index products, product launches we've seen over the past couple of years. Maybe you can expand upon the Nanos a bit and whether you think this very small contract size will kind of enable you to unlock more growth in that retail segment. And then also from a fee standpoint, is it fair to think about the fee rate being much higher than SPX or even the XSP relative to the notional contract size?
Great question. It's one I was hoping you'd ask, because we have been talking to you about the exchanges not keeping up with retail demand in our product creation. This has been in the works for a while. We think simple, accessible, and designed for all is the theme behind Nanos. It's really a simple concept. You take the retail size version of the S&P 500, Spiders, for example, which is what retail is most familiar with, it's still very expensive. It's a $460 underlying. What we've done is a one-tenth version and made it super simple if you're looking at a derivative screen.
If you see the market at the money, let's say one week out is $2, you know, $2.50 for a call, your retail investor, you're like, "Well, that seems pretty reasonable, except I have to multiply that by 100." What we do on Nanos is no, it's actually $2.50. What you see on the screen is what you'd be paying for that exposure to the S&P 500. That's really simple. The other confusion we've noticed in retail and talking to retail is, gosh, there's 30 different expiration cycles in SPX, which is awesome for institutional and more sophisticated retail. There's 10,000 different strikes or series. That in itself is confusing.
With Nanos, we're still finalizing what we're gonna offer day one, but think four different expiration cycles, seven days or less, less to expiry, and maybe 40 or 50 different series. Again, really simple. That's the goal with Nano. It is answering the demand from new retail, and we can't wait to launch this.
A couple
Right.
Yeah, a couple of follow-ups then on the pricing and how we think about it. Again, it'll be a little bit of a repeat story as we kind of framed up when we talked about the European derivatives and pricing there is that you think that it will be obviously notionally adjusted, obviously from the pricing standpoint. But again, we look at it from the perspective of all the participants engaged, again, to facilitate with all the partners to be able to incent that trading, making it easier, reducing friction, making it affordable. The next question is, well, okay, if you really wanna put it in that perspective, if your entire SPX volume was completely replaced by Nanos, would you be better off?
The answer is yes, we'd be even better off because as you know, there's usually a slight premium as you continue to break contracts down by size. As it gets smaller and smaller, there tend to be a little bit more premium versus the, call it, the larger size. It's on a notional value adjusted basis, it's slightly higher. Again, it's the pricing is still TBD. Look for progress as we move forward into that launch.
Importantly, this is accompanying an education program. You think of Cboe, you think of derivatives. We believe in recurring trading and an educated investor. We've talked now the last few quarters about retooling our Options Institute specifically for this new retail investor and bring them along, so that derivatives that are designed to reduce risk in a really measured way is for all investors. Our Options Institute is keen on making sure that our new partners who are looking at us and our proprietary products with education in mind.
Yeah, this is John. Just following up on that. Ed said the word partner. This is, we're not creating these products in a vacuum. The theme here that crosses over to crypto too. You saw some names there that are really kind of the retail vanguard right now. We're creating these products and the educational programs around them in partnership with these really important retail partners of ours.
That's great. Thanks for all the color.
Thank you. The next question comes from Michael Cyprys with Morgan Stanley.
Hey, good morning. Thanks for taking the question. Maybe just continuing with the retail theme here just on Webull. It looks like your proprietary products began trading on the Webull platform this month. Just curious what the early feedback has been. Maybe you could talk a little bit about some of the initiatives in place to drive a broader engagement on the Webull platform. Then just more broadly, how penetrated do you think you are at this point in terms of getting your products on retail platforms? If you could just maybe talk a little bit about the initiatives there to get on more platforms.
Again, I think we referred to it in the past. Chris, I'm gonna ask you to jump in in a second. We, you know, when we look at retail that's been around for a bit, more established broker-dealers, you know, the ones I would be trading on over the last years, they have access to our proprietary products. From those platforms, there's been incredible growth into our proprietary product set. We've got months over the past couple quarters of record penetration in our proprietary complex. That has been pretty terrific, and we've been watching that, as I say, over quarters. New retail, the one that I'm probably making headlines the most, and Webull in that group had not offered access to our proprietary products or cash-settled indices in general.
Webull, as a first mover here, we're not penetrated at all. Other new retail does not offer access to our products either. All greenfield for us. We look at another measure that's super important to us is the penetration and the use case for one-lot trading. One-lot trading for us makes us think that with the very high notional value of contracts in the S&P 500, even super short-dated, really is a restriction for some retail accounts who are not capitalized similarly to maybe more traditional retail. That's the birth of Nano. I think we've got a pretty good runway over the next months and watching for the uptake in not only direct access into the products you know, like SPX, but in Nano as we launch Nano. Chris, over to you.
Yeah, just as Ed mentioned, you know, we think we're just at the starting line for a lot of the new retail. The traditional retail has had access to our products and offered great access for quite a while. The new retail is just starting, and we're excited with that Webull's offered access to SPX and VIX. We still have a lot of room to grow there. I'd also mention that, you know, they're adding new assets to their platforms, and there is an intersection we think here over the long term with digital assets as well. Customers, retail customers are going to want to trade multi-asset, not just a single asset on a platform.
Many of them are offering that, and we want to provide the ultimate retail investor access to all of our products, but through these great intermediaries, these great partners. We're trying to solve the problem with the intermediaries. We're just going with the trend here and wanting to provide the access and the products that customers really want.
Great. Thank you.
Thank you. As that concludes the Q&A session, I would like to return the floor to management for any closing comments.
That completes our call for this morning. We appreciate your time and continued interest in the company. If you have any further questions, feel free to reach out. Thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.