Earnings Call: Q1 2010

May 5, 2010

Good day, everyone, and welcome to the First Quarter 2010 InterContinental Exchange Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the presentation over to your host for today's call, Kelly Lassler, Vice President of Investor Relations and Corporate Communications. Please proceed. Good morning. To obtain a copy of the company's Q1 earnings release and presentation, please visit the Investors section of our website at theice.com. These items will be archived and our call will be available for replay. Before we begin, please be aware that our comments may contain forward looking statements that represent our current judgment and are subject to various risks, assumptions and uncertainties as outlined in the company's filings with the SEC, including on our Form 10 Q, which was published this morning. For a description of the risks that could cause our results to differ materially from those described in forward looking statements, please refer to these filings. Actual results may differ materially from those that are expressed or anticipated in these forward looking statements. We will discuss adjusted net income, operating income, operating expenses, margin, EPS and EBITDA. These are non GAAP measures that exclude certain non operating charges that we believe are not reflective of our normal operating performance. While our results this quarter did not include non GAAP adjustments, our results for the quarter of 2,009 included certain non recurring charges. This morning, we will refer to adjusted Q1 2019 results a basis of comparison to the recent quarterly performance. The reconciliation of these non GAAP financial measures to equivalent GAAP results and explanation of why we deem these non GAAP measures meaningful appear in our earnings press release. With us today are Jeff Brecher, Chairman and CEO Scott Hill, Officer Chuck Veiss, our President and COO is in Chicago meeting with the Climate Exchange team this morning. At the conclusion of the prepared remarks, we'll take your questions until 9:30 am. I'll now turn the call over to Scott. Thank you, Kelly. Good morning and thank you all for joining us today. The Q1 of 2010 was ICE's best quarter ever in terms of revenue, volume, operating income and net income. Due to our global positioning and unique business mix, we continue to benefit from a number of long term secular trends. And last Friday, we announced the acquisition of the Climate Exchange, further diversifying our business on a product, geographic and customer basis, while ensuring that the leading emissions market will now be a permanent part of Isis growth story. I'd like to begin our discussion on slide 4, which shows our track record of earnings growth consistency. The revenue and operating income growth we've delivered in each year since 2,005 was enabled by our strategic vision and global business model. We've grown revenue by nearly 60% and operating cash by over 7% annually since 2,005. And in the Q1 this year, we grew revenues 22%, delivered the highest net margins in our industry and achieved 50% growth in operating cash flow. Our performance continues to distinguish ICE from our peers and demonstrates the value we are creating for shareholders. Not only have we positioned ourselves to benefit from a number of near and long term opportunities, but we've also built a business that has proven able to withstand changes in the business cycle. The result has been industry leading financial returns even as we invest to expand our diverse portfolio of assets. Now let's turn to our Q1 2010 results on Slide 5. The Q1 of 2010 represented our 6th consecutive quarter of record quarterly revenues. Our consolidated revenues grew 22% to $282,000,000 over Q1 of 2009. Net income grew 26% to a record $101,000,000 and our tax rate for the Q1 was 34%. Diluted earnings per share rose 25% to 1 $0.36 Moving to slide 6, I'll detail the components of our revenues and expenses. Starting on the left side of the chart, 1st quarter transaction and clearing revenues rose 23 percent to $251,000,000 This includes $123,000,000 from our Future segment, dollars 86,000,000 from our OTC Energy business and $43,000,000 from OTC credit execution and clearing. Markets aid and other revenues totaled $31,000,000 Shifting to the right side of slide 6. 1st quarter operating expenses increased 12% year to year compared to adjusted 1Q 'nine expenses. Disciplined investment and healthy revenue growth has produced steady increases in our operating margin. Our first quarter operating margin improved to 58% compared to an adjusted 55% in the Q1 of 2,009. And our non brokerage operating margins improved to 67%. We are driving operating efficiency as revenues grow, which translates into improved margins and solid cash generation even as we invest in new businesses. Let's now turn to slide 7, where I'll detail the Q1 performance of our Global Futures business. Total futures revenues were 100 and $23,000,000 up 25 percent over 1Q 'nine. Average daily volume was 1,300,000 contracts, which was up 28% over last year's Q1. This record performance was enabled by the continued expansion of our European energy market as well as the recovery of our agricultural commodity market. As a reminder, last year's Q1 was a record quarter for ICE. Our objective is not to grow every other year, but to consistently deliver growth on top of growth every year. Continuing that trend, yesterday we reported a 41% increase in April 20 10 average daily volume for ICE's futures market, including record volumes for ICE Futures Europe. Year to date through April, our aggregate futures average daily volume is up 32%. Next on slide 8, I'll walk through the performance of our OTC business for the Q1. Total OTC transaction revenues rose 22 percent to $128,000,000 our 7th consecutive record quarter. This was largely driven by our OTC Energy market with average daily commissions of $1,400,000 up 27% from 1Q 'nine. Our OTC oil and power revenues continue to come in at record levels due to strong demand for clearing. This demand for cleared products coupled with the growing contribution of new products introduced over the past 5 quarters has helped us establish an increasingly diverse platform. The Q1 was our strongest quarter in natural gas since 2,008. Lower volatility during the quarter was overridden by improved credit conditions and the steady return of hedgers to the market. Natural gas is a key product for us and we expect that it will grow over the long term as that market continues to globalize and the number of uses for natural gas increase. That being said, in 2,007, 73 percent of our OTC Energy transaction revenues were driven by natural gas. In the Q1 this year, it comprised 60% of those revenues. So you can see that the new product rollout over the past 18 months has increased our product diversification. Each of our major OTC Energy markets, gas, power and oil is turning in consistent growth. And in April, our OTC Energy business extended its solid performance with average daily commissions of $1,400,000 Turning to our CDS business. Revenues totaled $43,000,000 during the Q1, up 13% compared to revenues of $38,000,000 in 1Q 'nine. This includes $31,000,000 from Creditex and $12,000,000 from ICE's global CVS clearing business. Creditex's electronic transaction services accounted for 43% of our Q1 Creditex revenues, where electronic trade processing continues to yield attractive margins. While growth in the brokered CDS markets we serve remains muted, we continue to invest in innovative electronic capabilities and drive improved efficiencies, both of which contribute to relatively operating margins even in periods of lower revenues. These investments coupled with our leadership position in U. S. And European index and single name products position us well for the eventual improvement of CDS markets. With regards to CDS clearing activity, recent volume has been driven by the launch of single name CDS contracts, where our customers are moving their existing open interest into our clearinghouses. Our 2010 guidance anticipated that dynamic noting the expectation for a gradual ramp in revenues throughout the year as we expand our product offering, add new customers and work our way through the backloading of existing trades. While banks, which have a natural exposure to CDS, have led the way with clearing, we've also worked closely with our advisory committee made up of representatives from buy side firms to develop the leading buy side solution. We expect to launch our European buy side offering as well as clearing a sovereign CDS in the near term subject to regulatory approval. The CDS market continued to face structural reform, similar to what we saw in the energy markets in 2,002. Again though, despite being in the early stages of this investment and a challenging market environment, our CDS clearing business is already contributing to the bottom line. Importantly, this investment positions us not only as the leader in the CDS market, but also strengthens our ability to serve the much broader OTC market as it continues to evolve. I'm going to wrap up my comments on slide 9 with an overview of our acquisition of the Climate Exchange, which we announced last week. Due to U. K. Takeover rules, we're precluded from saying much more than what we announced previously. We believe this combination is attractive both financially and operationally. We offered £7.50 per share or roughly £395,000,000 in total. The transaction will be all cash, including $220,000,000 drawn from our lines of credit and the rest from available cash. Notably, even after this transaction, our cash balance will remain above $200,000,000 We will have over $200,000,000 of available capacity in our lines of credit and our leverage will remain low. Our valuation focus on the Climate Exchange is well established market leading European emissions business and the synergies that we believe exist with the combination of our 2 firms. We took into account the uncertainty regarding the implementation of the U. S. Cap and trade program in making the acquisition and consider growth in global emission markets as upside opportunity. We are confident that the deal will have a negligible impact to earnings for the remainder of this year, a modestly positive impact to 2011 and most importantly provide another attractive long term source of growth with attractive financial returns for our shareholders. We look forward to being able to provide more information once the transaction closes this summer. I encourage you to refer to this morning's press release for further details on our quarterly performance as well as a couple of updated guidance points for the balance of 20.10. We filed our 10 Q this morning as well as Thank you, Scott, and good morning to you all. I'd like to Thank you, Scott, and good morning to you all. I'd like to first complete our discussion of the Climate Exchange acquisition and then I'll update you on our global business by providing some context for the tremendous results that Scott just presented to you. As many of you know, ICE and the Climate Exchange have long been partners. The successful business that Richard Sandor and his team built is the result of a decade of dedicated research, investment and execution on a global scale. This intensive effort has resulted in there being a leader in what is a very competitive space. We began working with the Climate Exchange in 2003 and supported the emergence of this nascent market. We're pleased that we'll be able to continue working with Doctor. Sandor following the close of the transaction. Over the past several years, emissions markets have proven to be among the fastest growing, and we believe they continue to hold significant potential over the longer term. For those not familiar with the Climate Exchanges business, it's a leader in the operation of traded emissions These markets include the European Climate Exchange, the Chicago Climate Exchange and the Chicago Climate Futures Exchange. So the team has established a broad geographic reach and deep market penetration. As Scott mentioned and it's worth highlighting, our acquisition does not represent commentary on climate change policy or the probability of legislation surrounding climate issues. But I'd like to recognize that because of the European Union's emission schemes, which has been implemented in a thoughtful, phased and market based manner, Europe has established a healthy environment in which these markets have grown and thrived. As a result, European customers, including carbon intensive industrials, can put a price on carbon relative to other choices as they seek alternative energy solutions in a market based environment. The addition of emissions markets further diversifies our product set and adds both an important industrial commercial base in Europe and longer term exposure to Asia, while it offers us optionality around U. S. Market developments. This transaction is representative of the deals on which we like to focus, those that provide exposure to global markets with growth potential and those that offer attractive returns on investment. We're committed to executing on opportunities to integrate our companies while we continue to grow the market and we look forward to reporting back to you on our progress in this regard as soon as possible. I'd now like to turn back to the discussion of the business that's delivered the results that we presented here today. I'll begin by repeating a question that we've been asked every quarter since our initial public offering in 2,005 and that question is can ICE continue to grow? We've shown that the answer to be a consistent yes and we've taken a deliberate strategic approach to ensure that we deliver. This morning, I'll briefly review a few of our growth drivers and our strategy. If you'll follow me by turning to slide 10, we've listed some of the basic drivers that we believe define the broad opportunities in the derivative space. These drivers are long term and secular in nature and they are the building blocks of an evolving market structure, shaping everything from an addressable market size to the regulatory framework in which markets operate. First is the sustained role that commodities and derivatives play in global markets. This trend has continued for over a decade and it's based on 2 key factors. 1 is the rising demand for commodities by a steadily growing middle class and the other is rising demand for tools to hedge or gain exposure to this very phenomenon. Emerging economies cover about half the world's population where living standard and the resultant demand for goods are steadily rising. We're seeing this in our commodity markets, but this trend is manifesting itself in a number of ways. Anecdotally in a recent Economist article on sugar, it was noted that the increasing wealth in developing countries has raised demand for small luxuries such as processed foods. As a result, the USDA estimates that worldwide sugar consumption is rising, including a £3,000,000,000 increase in sugar demand this year alone. Higher living standards translate into greater demand for commodities. As we've seen, cyclical disruptions in any economy can occur. However, ICE's consistent performance and resiliency through the business cycle resulted from our positioning at the intersection of larger secular trends. The recovery of Western economy should further this upward momentum and provide a tailwind to capital market activities including our derivatives markets. This year to date, a modest increase in confidence in economic recovery has improved market liquidity and driven gains in our commodity volumes. I want to move on to another multiyear trend that we've spoken about many times, which is the shift towards greater price transparency and clearing. This move shows few signs of abating. Most obvious near term example is that global financial reform is calling for an increase in market transparency and an increase for the use of clearing. In addition to providing opportunities for our business, we believe the adoption of financial reform will bring important certainty to our markets and to our customers. I'd like to point out that we've demonstrated that this transition towards clearing and automation can and has taken place well in advance of legislation. However, we're well positioned to support an expedited market transition due to the technology and clearing assets we own. This leads to a discussion of the tools that we've developed to position ICE at the intersection of secular trends and within this dynamic policy environment. We believe that these assets are unique to ICE and a few of these are listed on Slide 10. To our knowledge, no other exchange possesses such a broad range of market infrastructure assets. These include the automation of key over the counter processes for both the buy side and the sell side, front and back office connectivity, trade automation and clearing and trade repository capabilities. Most of the new legislative proposals require some or all of these tools to reduce systemic risk. Moreover, the development of these tools provides us with a unique set of assets to leverage as we address new markets. The most recent example of our success is in clearing CDS, an initiative of which we are all extremely proud. We continue to invest in building out our OTC clearing platform and we have related initiatives underway. We're continuously adding new products, adding new buy side customers and enhancing our model. As a result, ICE leads the industry on virtually every metric. We've cleared $8,000,000,000,000 across more than 200 index and single name contracts that we list in the U. S. And Europe. ICE is supporting evolution in these markets by bringing our solution to existing market structures and then working with market participants to ensure the overall industry benefits from change. Turning now to slide 11. I'll touch on our success as an industry consolidator and as an innovator. We employ a rigorous framework for evaluating transactions and delivering on their potential. If you think about the transactions we've developed in the past several years, it's difficult for us to identify any one asset that hasn't contributed to the strategic position that ICE has achieved by investing ahead of the curve. Over a decade ago and before the recognition of clearing and electronic trading, we saw an opportunity to transform the energy swaps markets. ICE continues to invest the necessary resources to build our infrastructure to serve these and other swaps markets, which are several times the size of the exchange traded markets. Our track record in the over the counter markets has continued now with our 7th consecutive record revenue quarter. Turning to Slide 12. You can see our solid diversification across customers, products and geographies as a result of our investments in markets globally. This diversification shows how we position ICE at the center of long term trends that we've been discussing today. With clearinghouses in multiple jurisdictions, serving futures and over the counter asset classes, ICE has quickly become one of the new leaders in the provision of risk management and market structure services through innovation, technology and an understanding of our customer requirements. I'll wrap up on Slide 13 by highlighting how we position the company to capture positive secular trends. The first of these is to ensure that we maintain healthy exposure to areas of market expansion to drive earnings growth. In some cases, this may be geography or product exposure. As we discussed on last quarter's earnings call with, for example, our oil products being driven by strong demand for energy commodities in Asia. ICE has also demonstrated that its strategy of extending our leadership in helping to organize and standardize global over the counter markets. We're leveraging our decade of experience in building out infrastructure to serve OTC markets and we've demonstrated the growth potential where clearing, transparency, automation and increased regulation has been added. Over the past 8 years, we took the over the counter energy markets from being 2% of contracts cleared to 97% cleared. At the same time, revenues grew 6 fold, markets recovered and many new products were introduced. The payoff has been larger, safer markets where more trading and more risk management opportunities exist today than many thought possible just a decade ago. Technology has been a core asset of ours since our inception. We began with the concept that modern technology coupled to the Internet could transform system performance, efficiency and distribution and today that's playing out. ICE maintains its multiyear lead in being one of the fastest, most reliable and feature platforms. Its flexibility in being delivered over the web enables our markets to be distributed to customers in new geographies quickly and cost efficiently without the expense that hardline networks require of our customers. Conversely for algorithmic customers who co locate, we've established one of the leading co location programs and our technology team works closely with them to ensure that our services are responsive. At less than 3 milliseconds, our round trip futures execution times are now twice as fast as our major competitor. This leadership has been driven by our work in translating customer requirements into technology requirements. And finally, our intense focus on technology has enabled us to deliver risk management solutions quickly and effectively. In the space of just 2 years, ICE has leveraged this capability by building 2 clearinghouses, 1 in the U. S. And 1 in Europe, both of which have become leaders in their respective markets despite the existence of older and larger competitors. ICE is a growth and results focused company. We have a commitment to delivering the products and services that our customers require to manage their businesses. And we have a commitment to shareholders to grow our returns. We aim to generate double digit top and bottom line growth over the long run by executing on the items that I've discussed here today. 1st, growing and developing our existing business while we address new market opportunities. 2nd, we focus on generating operating and capital efficiencies by maintaining expense discipline and generating investment returns that are above our cost of capital. And third, we focus on a culture of integrity, customer service and innovation. If we do these things well, we believe we will continue to outperform. Let me say that on behalf of all of my colleagues, I'd like to thank our customers for trusting us with their business last quarter. And again, I want to thank the entire ICE team for their hard work in meeting the objectives that we laid out this quarter. I'll turn it now back to April, our operator, to moderate the Q and A session. Thank you. We'll first hear from Howard Chen of Credit Suisse. Good morning. Good morning. Jeff, on Financial Services Reform, you noted broader reform could certainly help expedite a push to solve problems, I guess, you and I already serve. I guess, with that as a backdrop, I mean, how could you just walk through some of the puts and takes as you look at legislative proposals that sit on the floor today and the floor Sure. I'd preface that comment. I'm Sure. To preface that comment, I'm not sure I know a lot more than most of you on the call because it's an incredibly dynamic environment. And in that regard, I think we're viewing the process in the United States right now for U. S. Financial reform to be very dynamic and we would expect that there will be a lot of amendments that will be dealt with on the floor over the next few weeks and a lot of changes made to the legislation. So we're not necessarily looking at the current drafts in the Senate or the bill that came out of the House as really being the final say on what will happen. That's why I think Howard we made more higher level statements in our prepared remarks that broadly speaking the trend is to use more clearing to provide more transparency potentially pre trade and then post trade through trade repositories. And as you know, we have trading platforms in both futures and over the counter markets. We have clearing houses in various jurisdictions that serve both futures and over the counter markets. And we have the leading energy trade repository in the form of our Econfirm system. So all of that I think broadly bodes well. Let me just shift a little bit to Europe. The process of adopting financial reform is slightly different. The European Union has been circulating concepts and drafts to build the consensus between the member states with an expectation of trying to pass something by the end of the year. There we're quite pleased with what we've seen so far. They've started by a look at clearing infrastructure and they've concluded broadly the same thing that we've concluded, which is that it would be a mistake to interlink derivatives clearinghouses. That will be not much different than interlinking a bunch of banks with derivatives on their balance sheet. So those of us that are in the clearing and market structure business have been successful at educating people to make that point. Measured approach than in the U. S. And part of that is just because the process is one of consensus building behind the scenes. So I do expect that the European legislation that's ultimately passed and U. S. Legislation may look slightly different and that may affect business and where it resides. So we obviously are in a good position since we have a global footprint. Thanks. That's a helpful update. And I guess as a follow-up to that, Jeff, anything that you and the team are more concerned about as you look at the proposals ahead of us? Not really. I think most of the kind of technical issues that we had concerns about got fixed in the House bill and translated into the Senate bill. So we feel like at least the drafts that are floating around today are net positive for us. Okay. Thanks. And then just a quick follow-up on the core OTC Energy business. As you grow and diversify that franchise, just curious to get your thoughts on how penetrated you think we are amongst the universe of commercial players that are out there. Thanks. Sure. I think it runs a range. And starting with natural gas that where ICE has been very involved in now about 10 years in the United States, I think we've gotten pretty heavily penetrated. Remember that these are over the counter products and they're governed by the CFTC through a regulation of our platform that requires you have at least 100,000,000 dollars in assets or $10,000,000 in net worth to participate. So there is almost no penetration in any kind of retail or even small business desktop and that's by regulation. These contracts may evolve more into futures like contracts in which case there would be a tremendous amount of additional penetration possibility in terms of sheer numbers as we moved into smaller entities. In electric power, in the U. S, that is really a merchant's market. It's a utility market. We don't really have algorithmic traders in there yet. We certainly don't have retail or even small business. It's a young market because the U. S. Power markets are just deregulating and still in a multi decade process of that. In the oil markets, there's the penetration is very, very small. The oil markets have not in the past really focused much on credit because they involve large sovereign countries and large global energy firms and global banks. And so credit up until this recent crisis had not been an issue. You're seeing that the techniques of using clearing as credit amelioration is now coming into vogue in that market and we're very, very early. So and then if I look at Europe and Asia on the regional products there, gas and power and coal and other related things, it's very, very young. So long winded way of saying we tried to say in our prepared remarks that we positioned ourselves at what we believe is the early stage of a very long term and very global trend for growth in using energy commodities as hedging tools. Thanks and congrats on strong results. Thank you. Next, we'll hear from Michael Carrier of Deutsche Bank. Thanks. Good morning. Good morning. Jeff, you gave the big picture overview. And I think it's one of the things that everyone struggles with you guys because it seems each year you're establishing new records. But I think when you look at the core business and focusing more on the future side, when you look at the growth in the volumes, whether it's over the past couple of years, but particularly recently, like is there any way to quantify or give any granularity on how much of that is being driven by new users, particularly when you look outside the U. S? I guess it's hard to get too granular other than we do monitor because we're have access to our own screen and we monitor that and we have access to our own screen. And we monitor that and we continue to see strong demand as we have now for many, many years in requesting new user IDs and passwords. And but that's about the best we can do. I think really it is the stepping back and looking at the less granular aspects of where we position the company that I think is hard for people to understand sometimes. And that is that unlike a lot of other exchanges around the world that are centered around equities or interest rates or financial products that tend to be local to that country or region. We've built a business that's tried to pick the products that we think are the most global. Energy is an obvious one. It's traded in dollars. In every country, it's denominated in dollars primarily for oil, traded 24 hours a day. So it has become a truly global franchise. And I believe that agriculture, particularly the kind of ags that we have, which are coffee, cocoa, cotton, the things that are not necessarily U. S. Centric were growth drivers. And I believe that some of the over the counter markets, particularly credit, I think there will be because of the interconnectivity of the world, people are going to have credit exposure to corporations that are outside of their region. And I think the asset class, I think credit is an asset class that is a nascent asset class that will grow. And while the form of credit default swap that we're trading today may be materially different in the future, I do think that there's a fundamental reason for global credit to be traded. And that's really why we've outperformed. We're not as levered to the regional products as many of our peers. And Mike just a couple of data points. When I started 3 years ago, we looked at logins and user IDs. It was around 6000. A couple of years ago, it was at 9,000. Last year, we passed 10. This year we're Simultaneous log. Right, exactly right. So it's how many people are coming into the screen. And this year, we're approaching 11,000. So that's one indicator. And then the other thing you can't take for granted is the continued introduction of new products. We're getting good growth from coal and emissions in Europe. I'm sure you saw in the press release, but we did 24,000 contracts a day in currency futures in our ICE Futures U. S. Business in the month of April. So we are seeing a growth in users, but we also continue to add products that are in key growth spaces, which helps contribute to the ability to grow quarter after quarter and year after year. Okay. That's helpful. And then just on the Scott, just on the expenses, it seems like there's a lot going on whether it's on the CDS side now with the Climate Exchange and then just some of the new opportunities, particularly with the regulation or the discussions. So just from an expense standpoint, you ticked down sequentially. Looking forward for this year, any update on that in terms of any noise this quarter? Is this a good run rate versus what to expect going out? Yes. Look, I mean, we consistently work on trying to drive our expenses down. The tick down 4th quarter to 1Q really has more to do with the 4th quarter than anything else. As you guys know, we did our bonus true up at the end of last year and had a few other anomalies. From a Q1 standpoint, I think expense came in at levels that if you look at it as a run rate, that's probably not a bad way to look at it. I think there's an efficiency opportunity around the CVS Clearing initiative. We had about $10,000,000 in expense in the 4th quarter at around $9,000,000 in the Q1. That still has a fairly heavy professional services component to it as we continue through the startup phase and the negotiation finalizing the negotiation around some of our agreements. So I think there's opportunity for improvement there. As I mentioned in my prepared remarks, we clearly think there are opportunities for synergies in the Climate Exchange and we'll give you much more guidance and more detailed guidance on that once we get that deal closed. But look, I think the thing that's impressive about the quarter is our margins at 58% are now back to virtually in line with the other big competitor we've got in this space. And that's an all in margin. Our margin excluding that brokerage business is at 67 percent. So we continue to focus very much on our expense and our margin even as we do make some substantial investments in building businesses. Okay. Thanks, guys. Mike DeCicquera of BMO Capital Markets. Thank you. Scott, just a follow-up on that last question. The compensation given the revenue performance and given some of the seasonal effects we have in Q1, very low comp. I mean, is there anything you can point to there in terms of bonus accruals? Because obviously it's a strong quarter for you on the top line. Well, I mean, I'm glad you look at it positively, but the $46,000,000 that we had in cash comp, the $12,000,000 in non cash, so about $58,000,000 in total. Not that far above where we were a year ago and not really that different than the run rate if you average out the anomaly in the Q4. So look, we as I think we mentioned in our Q, we accrued on target for the year in terms of our bonus. So there are no unusual items up or down in that number in the Q1. Okay. Thank you. And then just shifting to CDS, again, pleasantly surprised there at the ability to return to profit. I'm just kind of looking at your minority interest being a positive or I guess a negative from your perspective this quarter, which means you were profitable in CDS despite only a small increase in revenue. Can you touch on what the dynamic was there in terms of getting into the black? And then also, are you seeing much participation yet in the U. S. Market from the buy side which I think you guys have had buy side participation now for several months at least? Yes. No, it's a good question. We did make money in the quarter. That line reflects an inception to date reflection of the profit that we've made. If you kind of look back over the past year or so, we have made a few $1,000,000 the business. I think the improvement you saw in the Q1 is similar to what I had projected coming out of the Q4, which is we were very much in investment phase in that business. We're still in the investment phase, but we're now starting to be able to shed some of the legal expenses, to shed some of the consulting expenses, etcetera that were in place as we built the business. So we did see a tick up in revenue from Q4 to Q1, which was good and helped the profit. But I think more importantly, we're starting to be able to shed some of those start up expenses. And I think you should expect that trend to continue as we move into the Q2 and certainly into the back half of the year. Great. Thanks and congratulations. Next we'll hear from Alex Kramm of UBS. Hey, good morning. Good morning. Good morning. I just want to come back to Howard's question at the beginning here on FinRac. I certainly appreciate that it's still fluid discussions and you don't know the exact outcome, but I want to touch a little bit on trading versus clearing because that's one thing that seems to be sticking here in some of the bills we've seen that there's actually a mandate for transparency in trading. So interested to hear how you would approach that and in particular how discussions are with the dealers and maybe the buy side because from the discussions we're having, it sounds like some dealers are certainly more willing to say like, hey, these markets are changing. We maybe trading is the way this is going and others are certainly more resistant. So how are you navigating that in your discussions? Yes. Let me tackle that by talking. I want to be clear that we really view the over the counter markets sort of as 2 markets. The commodity markets, which include our energy markets and other similar markets like metals and physically delivered commodities, The marketplace 10 years ago recognized that there was no true buy side or sell side. It was a many to many market even when it was on the telephone. And as a result, our energy markets in the over the counter space look a lot like futures markets in that and you can see when we publish the breakdown of those markets of who's actually pushing the button and accessing the screen and it's heavy, heavy concentration by the commercial users that are executing on their own behalf. That's different than financial over the counter markets where there's a true buy side and sell side. And it's partly why when we decided to go into CDS and try to tackle clearing for over the counter financial products, we decided to do that in a separate clearinghouse because I really believe that the infrastructure around that clearinghouse is going to evolve. It may ultimately look like futures, but right now it doesn't. And so one of the things that's going on and the reason that Scott alluded to the fact there's heavy professional service fees right now is there's a transition from the sell side, which acted as a prime broker to some model where they're going to be providing clearing services. And the question is, is it going to be a future style clearing service where basically customers post collateral in the form of cash and our mark to market in cash every day? Or is there going to be some hybrid where customers post other kinds of assets to their prime broker who then will basically lend against those and convert those to cash so that the clearinghouse can always be holding cash. And what you're seeing right now is that transition. And I think the premise of your question alluded to you're picking up on some of that. There are some broker dealers that would prefer to move quickly to a future style model. There are some broker dealers that would prefer to stay a more prime brokerage model. And I think if you were to really penetrate that, it depends on what assets and client bases and history those individual companies have. So as a result of that, I think we're going to end up with a hybrid. And that's partly why we've been doing well in CDS clearing is that we've respected that model and we've been evolving around it and having to work with regulators to do a lot of messaging on how we transition from what is currently on the books to where we think ultimately regulators want to take this. And just to add to that, I mean, it's specific to I Trust governance structure. We have both buy side and sell side committees that report and recommend out to our Board of Directors. We established an advisory committee over the last quarter, which includes the buy side firms. And so we have representatives from each of those groups who are helping us to build ICE trust, and helping determine the right solution to serve that market. And then just to go back to Mike's question, I didn't answer earlier in terms of buy side take up, we have seen nearly every week this year additional activity in our buy side solution in the U. S. And we've now cleared upwards of $700,000,000 of notional. So we are seeing progress. And as we've said all along, we expected that to be an evolution not a revolution. But we are seeing week to week progress and we expect to continue to see progress as we get launched in Europe in the coming months. Great. And then just a very quick one for you Scott. I think in the past and I might have missed this in your prepared remarks, but in the past you gave kind of like the percentage growth from some of the new initiatives like the product that you've introduced over the last year? Can you give us an update on what they contributed in this quarter? Thank you. Yes. The new products that we had in this quarter, you may recall for the year of 2,009 contributed a little over $7,000,000 If I recall correctly in the Q4 it was about 3 point 5. So it was a good run rate. In the Q1, they contributed over $5,000,000 so nearly 0 point the additional diversification we're getting in our OTC business. The fact that natural gas while still growing has become a smaller part of that portfolio That's largely due to the many new products we've launched in oil and in power. And those products continue to contribute not only to the top line, but importantly to the bottom line in a very solid manner. Excellent. Thank you. Chris Brendler of Stifel Nicolaus. Hi. Thanks. Good morning. Good morning. Follow-up on earlier question. You're talking about the growth opportunities outside the more developed markets in the U. S. And Europe. Any sense of much of your growth is coming from areas like Asia? I think the discussion on unique logins and usernames and passwords, do you have any idea how those break out or if you can actually track where those users are coming from just to give us a sense of how much of your growth is coming from nontraditional markets? I wish I could. It's hard. I know some of our competitors have tried to break out the hours that they receive volume as maybe a proxy for where volume is coming from. We don't necessarily look at the markets that way because what we've seen is that the people that are sort of the merchants that are penetrating, particularly, let's say, Asia as an emerging market, tend to be westernized companies that have operations where they are going global and the hedging that they do may come from any one of their offices around the world. So we strongly believe that our outperformance is coming to a large degree from these emerging economies as they demand the products that we have on our platform. But the actual trades and where they're entered and where we recognize the revenue comes from all around the world. So it's very, very difficult And Yes. And I will tell you we continue to invest in obviously our Asian footprint and products for Asia and connectivity for Asia but and our office in Asia, obviously. But very, very hard to say beyond that. Okay. A follow-up question on the regulatory front. It seems like you mentioned the net positive of a degree, but is there any areas that you think you could expand into that would better position ICE to take advantage of the environment? It seems like your company from a management standpoint and from a product standpoint, you had some of the pieces in place. But is there anything else you think you can do just to take advantage of that and something you could possibly add? No. Amazingly, we sit here today feeling like when we go through every part of the supply chain from a technology and risk management provision and then look at the various asset classes that may be most affected. We feel like we have a solution for almost everything. I think it's underappreciated that, for example, we have a product called IceLink, which we acquired in the Creditex acquisition, which is a network that is hooked to the buy side and sell side, hundreds and hundreds of desks that give us straight through processing to put transactions through whether they're electronically or on the telephone, whether it's pre trade or post trade. I think people don't really focus much on our e confirm platform, which is the trade repository for most of the energy market around the world And increasingly regulators have recognized that we have a database here has most of the energy business that's done around the world including done by our competitors in one database. So the combination of the obvious things we have, which are OTC trading platforms, futures trading platforms, OTC clearing houses, futures clearing houses and you couple that with connectivity and trade repository, we really are well positioned, I believe. How much of a risk do you think the open access to OTC and the current regulatory reform is likely to get is that likely to be part of the final bill in your opinion? In the United States, I suspect it will be. Less sure about that outside the United States. I think that it's why we designed our ICE trust the way we designed it. We designed it specifically to be an OTC platform that's open. Most of the transactions that are coming into ICE Trust right now are not done on our own platforms. They're done on other platforms. It really does have connectivity to multiple platforms right now as because of the way we've hooked the trade workflows together. So we think that while regulators may put that into the statute, it's already happened in that regard. In energy, we take trades from brokers and other people as does our competitor. Many, many people have tried to launch electronic platforms including our main competitor and some of those large brokers because the over the counter energy markets and commodity markets are so broad and so interrelated and so diverse with no one group of customers that dominate the business, no one has been able to do that just because of the network effect. So unlike equities, which a lot of people think about when we talk about open clearing, which where most order flow goes through a handful of brokers and a small number then of algorithmic traders that are playing in that market. You don't have that phenomenon in energy. So we really have an open clearinghouse right now again and we've been growing. I think the main thrust is that it's been important for us to get into the clearing business and control the technology, the risk management and the processes in there. I think we will strongly benefit by more trades coming into clearing. Great. Thanks, Jeff. Roger Freeman of Barclays. Hi, good morning. So just I guess coming back to trading OTC, I guess specifically CDS. So I guess Jeff can you with your knowledge of this market now just sort of map out what if any changes would ultimately need to take place for CDS to trade in a sort of electronic exchange model? Because just thinking about the average number of that get done daily and the average size of those trades from a notional perspective, it just feels like it's not going to exist outside of a block trading platform. Can you just shrink the size of the contracts down? I mean what is or what are the challenges there? Well, interestingly, we disclosed in our prepared remarks now that 43 percent of the business revenues in Creditex is now coming from electronic trading. So we are moving our business from analog to digital and doing it in a hybrid manner with our broker team, dramatically raising the operating margins. We are not focused on parts of the markets where the other brokers are focused. We do not have a big presence in trading sovereign CDS, which drove some of the results that you're seeing in other people. We do not have a big presence in the structuring business where right now many people that own structured CDS, which in other words CDS that have been put into various launches are being unwound. Those are interesting markets, I suppose, from a one time perspective. You're dealing with a bubble right now and people making money in that regard. We're playing for the long term, which is index and corporate credit. Corporate credit and the indices that are made up of corporate credit becoming an asset class and going electronic. And it is amazing how quickly in my mind that is transitioning and it's amazing how well the CreditX Brokerage team has evolved around that hybrid structure and allowed their own pocketbooks to benefit as well as the company's pocketbooks in raising the margins. So I don't necessarily and we're not advocating in the U. S. That things should be forced onto electronic platforms. We don't we and we've been very open in Congress and with our main regulators, the CFTC and the SEC that we think it's a natural outcome anyway and we think that ICE can benefit regardless of such regulation and our customers don't really want it. So we're supporting the status quo because we'll benefit from it. But there are a lot of fundamental reasons to be positive about where this market is headed. I mean, as I meet with the various commercial banks from time to time, there is a lot of credit that's going to come to the market in 2011 2012. And CDS facilitates that credit coming to market because it allows the people providing the credit to hedge the risk exposure they've got. And that's going to be as Jeff said in the index in the single name where we continue to be positioned as the number 1 or number 2 player in the U. S. And European markets. So we've got not only the hybrid platform, but we're well positioned in markets where there are clear indications there is growth in front of us. Okay. That's helpful. Okay. And then separate sort of changing gears, the iron ore contract that you guys launched, what do you does that have some reasonable potential to it? Because I guess our mining analysts are talking about some changes going on in that market moving to a more sort of indexed spot or near sort of near front month pricing versus longer term supply contracts? I mean and a lot of this is being driven by the emerging markets. It seems like there's going to be some real growth there. That's why we launched that contract when we did is and for those that aren't as familiar, there's a lot of that iron ore was sold under very long term bilaterally negotiated agreements and now there's a trend because there was market volatility somebody was a winner and loser under a long term agreement. So there's a trend towards moving to shorter term agreements with more market based pricing structures. And that's why we've launched the contract. It's still a heavily brokered kind of contract. It's not a two way bid offer market yet and I suspect it will be that for a while, while the market itself changes. But we want that market to grow up immediately using clearing. That would be in our best interest. So it's why we've launched it when we did. Okay. Thanks. Chris Donat of Sandler O'Neill. Hi. Good morning, everyone. Good morning. Good morning. Just on the first on the OTC side, Jeff, you made the comment that the CDS market, your experience there has positioned ICE for the broader OTC market. I'm wondering if you can flesh out that comment a little bit because clearly already in on the credit side and on the energy side, where else might you be going if you care to comment? Well, I actually don't care to comment. I think where you're wanting me to comment, but I'll say to you that when we started clearing CDS and when we started thinking about the CreditX platform, we were very CDS as you can imagine to net down those positions and show the true exposure to regulators. And so even in CDS, the market keeps taking us into new areas where we really didn't continues to broaden continues to broaden. And you can even take my earlier comments, which is the clearinghouse itself is being involved in a market structure on how the prime brokerage business will work, how collateral will be held, where how money will be earned on collateral and other things. So there's an extension of banking functionality and other parts around the clearinghouse. That's the great thing about getting into these emerging markets. They take you somewhere. I use the analogy all the time that you kind of jump into a stream and the current will take you somewhere. But it's important to get into the stream and that's where we are. Beyond that asset class, I'd rather not speculate. Yes. The point of the remarks, if you look at what you need to serve the OTC market, trade repositories, data, clearing, processing, execution and we've built those assets now. And so we as opposed to we are building them or this is what we're going to bring to market, we've got those assets existing today. We've got connectivity just as one example through IceLink and over 300 of the buy side firms and all of the major sell side firms. And that's an asset that can be useful and leveraged in any market. Okay. I figured at least I would try asking. And then on Climate Exchange, just want to make sure we understand the comment about well, about the accretion in 2011. Is that basically assuming the European business continues as is, because it doesn't look if we look at the Chicago Climate Exchange volumes, they dropped off tremendously in 20 10 from 2,009. So, and I know that recognizes the reality of Copenhagen in U. S. Politics, but anyway just what's embedded in the accretion assumption? Yes. Just I have to be very careful in how I answer these questions because there are very strict rules related to U. K. Takeover. So I'm going to kind of revert back to what we've said in the prepared remarks and our announcement. Our valuation focused on the European business and the synergies that we expect to be able to deliver related to the deal. Anything outside of that, we would view as outside opportunity and an opportunity to deliver even more value to our shareholders. What I can tell you because it's publicly available is OI and volumes in the Q1 of this year grew well in the European business. And then April volumes were actually about 60% to 70% higher than the run rate of volumes in the first quarter. And all of this is in advance of emission credits, which today are freely provided going out to a bid process in the future. So again, the valuation focused on the European business, it focused on the synergies that we can deliver. Current indications on actual results as announced by the Climate Exchange for the European business have been solid and in April improved significantly. Okay. Thanks. That helps. John Fandetti of Citigroup. Hi, good morning. Jeff, as you look at the regulatory landscape and uncertainty and what's going on with Goldman? And do you think there's any risk in the overall swaps market of a structural slowdown or just a decline in volumes? Or do you think the business just gets done somewhere no matter what? Yes. I don't want to comment on Goldman or any other one of our customers specifically. But broadly speaking, there's clearly been a strong growth in demand by people to buy swaps and derivatives to hedge their business or participate in the market pricing in commodities. And a lot of money has been paid by people wanting that exposure. So I think at 50,000 feet, you would say that that business is there and regardless of what in the U. S. Our Congress may do to restructure where that business goes, it does seem like it's a fundamental need that will be met. And it's amazing even got people like Warren Buffett, who talks about derivatives as being potentially dangerous with quite a portfolio of derivatives. I mean they've really extended through Corporate America. ICE itself uses derivatives to hedge our foreign currency risk now routinely. So I just think that the demand for derivatives is bigger than the market participants right now. Okay. Thank you. Mark Lane, William Blair and Company. Okay. Thanks. Just two quick ones. First, Scott, on the expenses, I guess I don't really understand the comp expense. I mean, if you take out the $4,000,000 of severance in the 4th quarter, the run rate for the Q1 is up 1% versus last year. Your revenue growth is over 20% and you're saying that your headcount is going to be up 5% to 7% this year. So, how are you able to keep comp expense that low? So, you got to remember last in the Q1 last year we had and I think we I'm going to pull the chart out in front of me. I think we had this on the chart that we showed. Yes, if you adjust the comp and benefits is actually up 12 percent year to year if you adjust for the severance payments that we made in Q1 of last year. So comp was up in line with our total expense growth at 12 percent. And that is reflective of us growing some headcount as we continue to invest in our initiatives and our technology. The reason it's growing slower than revenue is because that's how we manage the business. We've committed to growing and expanding our margins. And so we literally Jeff and Chuck and I spend time every quarter going through every single hire that we're going to do in the business and looking at where that hire is going and whether or not it's a hire we need to make. And so I think the comp expense if you back out the $3,000,000 from last year, a 12% growth is right in line with what you'd expect from a company growing over 20% and committed to expanding margin. Okay. 2nd quick one is, Jeff. So on the credit brokerage business, you mentioned that you're not in all the different areas, sovereign debt, Structured Credit. There's been some rumblings whether when you did the Creditex acquisition, what was the motivation for it? Was it just to get into CDS clearing and its entrance in that business? Some of your competitors question your commitment to that business. Are you really committed to the credit brokerage business long term and making the necessary investments in that business to expand it? We are making those investments. And again just to peel back the covers a little bit further, the decline you saw year over year in the credit tax revenues was 100% related to fewer credit events, less compression and less of the D and A offerings that we had last year. And again, if you go back to a year ago, we're coming out of the credit crisis. We're having defaults. We get paid to do that. The compression is largely now irrelevant because of clearing. So that decline is solely due to that. If you then peel back another step further, our U. S. Index and single name businesses combined were up about 25% year over year. Our index and single name in Europe was down a little bit. But overall index and single name which is the area where we're focused was up 8% on a year basis. So we are investing. What we're not doing is we're not going out and just hiring bodies to deliver revenue. We're focused on generating revenue at expense ratios that are closer to 60%, not the 70% you see at some of our competitors. We're focused on revenues that deliver double digit operating margins as opposed to single digit margins. So we are making the investment that we need to grow, as Jeff alluded to earlier, in the more liquid products where we see the opportunity for more future growth in demand. But we're doing that investment in what I would characterize as a different manner in the broker business. Okay. Thank you. Celeste Brown of Morgan Stanley. Hi, good morning. Good morning. Good morning. So you talked a little bit about the sort of lack of visibility into what's going to happen in Congress, which based on the event seems to be the case. But on top of that, it seems like a lot is going to be left in the hands of the regulators. And given your platforms and everything else, how long do you think it will take you and your customers to react once the rules are sort of in place, and implemented before we start to see the market evolve in the way that the regulation today is contemplating? Well, I mean my understanding is that the way the bill is being crafted right now, which I would expect will probably not change is that it would go into effect 180 days after passage. So obviously, we have to get something through the U. S. Senate and then the House there would have to be a conference and make the House and Senate bill similar, which I believe the leadership is committed to do quickly. And so it would be 180 days before it would go into effect. All of the kinds of things you're alluding to would have to then be taken up by regulators as to figure out some kind of rulemaking or policies on how these things would be implemented. So after the 180 day period, I would expect that there will be a lot of rulemaking, a lot of hearings, a lot of process in which then parts and pieces would be implemented. So I do believe it's going to be a phased in approach and it's going to play out over a number of years. And then in terms of the readiness, not your own readiness, but in terms of the readiness of your potential customers, are they nowhere near where they need to be given how this bill is evolving or are there some much further along than others? Yes. You know Celeste, what's amazing is that I don't believe that markets wait for the ultimate result. I think markets are anticipating the results and that's why you're seeing $8,000,000,000,000 worth of CDFs already being cleared. The major dealers have made a commitment that over 90% of new trades they put on they're going to put into the clearinghouse and CDF. You see huge initiatives going on to get interest rates swaps into clearing. And so the neat thing about markets and particularly where we're positioned being relatively small and flexible and dynamic is these things are going to be in place I think before regulators really do. I mean there was an earlier question about the Chicago Climate Exchange, which is a voluntary carbon market, which has unbelievable pedigree in terms of the companies that are participating in that. They're doing that voluntarily because they want to build domain knowledge, they want to build infrastructure, they want to price carbon before Congress does so that they can get a sense on what we'll do to their businesses. So it's amazing to watch markets. And so I think it's why we're building things now and there's a lot going on to position ourselves because I do believe that this can happen quite quickly. Okay. Thank you. Patrick O'Shaughnessy of Raymond James. Hey, good morning. I was wondering if you could speak for a minute about the competitive environment you see with carbon and emissions trading. I know that the CME Group and the Green Exchange is trying to reload and step up their activities in the space. So if you can kind of talk about what you see as far as competition and how the Climate Exchange is going to fare in that environment? Sure. I mean the client first of all, the Climate Exchange has been in very, very competitive space right now. There are in Europe, there are many competitors and climate exchange has emerged as the clear leader. To give you a sense, I think their complex has about in total has about 850,000 contracts in open interest. That's about the same amount of Brent oil that we have. So it has grown quickly in Europe and has a very large footprint. And we've been a partner with them and one of the reasons that we've made a good partner is that ICE is really one of the dominant venues for trading electric power And some of the industries most affected by carbon climate trading is the electric power industry. We have those people already in our clearinghouse. We have money on deposit by these people and we're in a good position now that we control clearing to use technology to give offsets the carbon versus electric energy, coal and other related materials. In the U. S, we are the dominant player in electric power. We probably have at least a 90% market share, I would think, in electric power trading. Recall that's where I came out of the electric power industry and as did Chuck Weiss and we started the company to really focus on that. So it's long been at our core. And so I would anticipate that we haven't we already have the major industrials trading voluntary relationships with those people. We are the dominant place for clearing the regional greenhouse gas initiatives that go on in various parts of the U. S. So we're very well positioned if there is U. S. Regulation for some kind of cap and trade. But beyond that, it's a natural fit for the current product suite that we have. Understood. Thanks. Thank you. Jonathan Castellan of Susquehanna. Is there any way to flesh out any further details of the better credit conditions you're seeing from some of your users? And do you think there's further benefits coming? Or do you think we've fully corrected the former macro weakness? Credit markets generally Jonathan I think are significantly better than where they were a year ago and frankly even better than they were 6 months ago. Just in terms of as I've gone through and thought about the refinancing of our lines of credit, which we did earlier this year. And as we've talked about the CLE transaction, I don't think there's any question that credit markets have improved and you're starting to see some of the certainly the larger banks more willing to provide their balance sheet to customers and presumably also to trading. I will say, you saw recent news of the IDC transaction purchased by private equity that's got a lot of leverage in it. Our understanding is there are some legacy funds that are out there that have lending capacity, funds that were raised before the credit crisis. I don't think yet we've seen the kind of money flowing into the banking system that's really looking to provide a lot of lending and leverage in the corporate markets. But we've seen the early stages of a lending recovery. That's why Scott mentioned that we're bullish on 201112 in terms of our forward outlook in the credit default swap business. Makes sense. And then just on the Yellow Jacket announcement last week, you talked about our new messaging product and equity Is there any way we can get more details on exactly what the product is and any kind of, I guess, guidance or impact on results for this year or next? We haven't specifically broken that out, but let me just give you a high level. What we've seen is that, that product has been in high demand and customers have asked us to move it into various asset classes outside of where we started. We really thought this would be a great product for trading energy options and now here we are already trading cash equity and equity options products on it. So it's a very, very neat tool. And I think again, depending upon how legislation gets impacted, it could become an incredibly useful tool for doing more complicated deals in a transparent electronic environment, which is not something frankly that we had thought about when we acquired the product, but it definitely gives us another tool to use depending upon how regulation unfolds. Thank you. And our final question for today will come from Rob Ruxow with CLSA. Hey, good morning. Thanks for taking my questions. First, I wanted to delve into the power market a little bit more. You've touched on touched on it, Tom. Can you give us an idea of what your market penetration is in U. S. Power trading? And how many customers you have there and then what would be the drivers whether it's macro or company specific among the customers that would drive additional growth? Well, let me just again, I'll give you a higher level than I think what you're asking, but hopefully be responsive to you. First of all, the power industry is in a long term deregulation phase. And what is helping drive the growth of trading is public utility commissions that hold their local utilities accountable for increase in fuels and other expenses and don't let them pass 100% through to the ratepayers. That one fact then causes utilities and others to need to hedge, drives them into the gas and coal markets, but also into the power markets. And broadly speaking, we're seeing a movement that we were somewhat involved with of moving away from trading physical power to trading financially settled power, and that trend has happened over the last decade. Again, by trading financially settled with power, it allows market participants outside of a NERC region to take economic exposure to the price of power. It's still a nascent market in the sense that it is very, very volatile. It's kind of a big boys market. We have specifically not allowed a lot of algorithmic traders in there. We have specifically not allowed smaller entities in there out of concern that you really need to understand the dynamics of power markets because they're so volatile. And at the core is this fact that if there is a localized brownout or blackout, the local utility will pay almost any amount of money or short term power to cover that consequence because it is not acceptable in our society to go without power even for a minute. So it becomes incredibly volatile to the upside. And as such, we sort of bring people in and with a lot of education in a bit of a metered way. That being said, it's one of our fastest growing products and it's still quite nascent and we haven't really seen Europe and Asia adapt to trading power. It's still quite localized, quite physical and quite dominated by regional utilities outside the U. S. So I think there's potential globally for the growth of power that will happen over the next decade or more. Okay. That's helpful. And if I could follow-up, I'll take one more run at the OTC question. In terms of looking outside of CDS, are you actually having conversations with potential clients for other asset classes? And then secondly, would you use the existing ICE Trust clearinghouse if you were to clear other asset classes? Or would you create a separate legal entity for risk purposes? I don't think we want to answer any of those questions. Well formulated different way to ask. Although it's fair to say, we're always talking to people about ideas. It's kind of what we do here. It's actually become part of my job. It's almost and we've institutionalized within the company a group of entrepreneurs if you can do that as such where we meet every week and lay out game boards and other things and discuss conversations that we've been having and take information back to the market. So we're active in all kinds of conversations that are going on, but we're trying to pick the areas where we think we can build a long term sustainable business model that meets the criteria that we've had. And partly why I think you see that our return on invested capital is so high because we do have some discipline around where we go. Jeff told me 3 years ago when I joined that he doesn't like to talk about what we're going to do in the future. He'd like to talk about the execution plans that we're working on right now. And I'm sure as we get down that path that's when we'll come back to you with what our specific objectives are. Okay. Thanks guys. And I'll the conference back over to the speakers for additional or closing comments. Well, thank you for your patience with us. We ran a bit long, but we wanted to make sure we got to everybody. And let me just say, we'll talk to you next quarter and I hope you have a very nice and happy Cinco de Mayo. And that does conclude today's teleconference. Thank you all for your participation.