Good day, ladies and gentlemen, and welcome to the ISE Acquisition Strategy Update Call. And answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to Ed Dittmeier, Vice President of Investor Relations. Sir, you may begin.
Good morning, everyone. And on behalf of everyone at Nasdaq, thank you for joining us today to discuss the company's acquisition of the International Securities Exchange or IFC. On the line are Bob Greifeld, our CEO Tom Whitman, EVP of Equity and Equity Derivatives Trading CFO, Ron Hasson Ed Knight, our General Counsel. After prepared remarks, we'll open up to Q and A. The press release and presentation are on our website.
We intend to use the website as a means of disclosing material, nonpublic information and complying with disclosure obligations under SEC Regulation Update. I'd like to remind you certain statements in this presentation and during Q and A may relate to future events and expectations and as such constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning factors that could cause actual results to differ from forward looking statements is contained in our press release and periodic reports filed with the SEC. I now will turn the call over to Bob.
Thank you, Ed, and good morning, everyone, and thank you for joining us today on short notice. We're here to discuss the acquisition of ISC, a milestone development for our market services and options businesses and for Nasdaq more broadly. I'm going to first speak about our strategic rationale for acquiring ISC, why it meets our acquisition requirements and how it furthers our capital deployment discipline. Then I'll turn the call over to Tom Whitman to go into more detail about the ISG business, how a combination with Nasdaq Options businesses create a more compelling franchise for customers and how we will be unlocking very significant synergies and customer benefits as we integrate the 2 businesses. Finally, Ron Hasson will review the financial terms and funding of the deal as well as the income statement, balance sheet and capital deployment implications of the transaction.
When we're finished, we hope you'll agree the transaction improves our position strategically and will deliver real benefits to our customers, meaningful accretion to our shareholders and will be executed with a high degree of certainty towards achievement and over achievement of our objectives. It's difficult for me to believe, but it's been this long, but NASDAQ's story in equity options goes back over 8 years. In beginning of 2,007, we first conceived of entering the options marketplace. Then in November 2007, while we're developing NAM, we announced the acquisition of the Philadelphia Exchange, a leading options exchange with a hybrid electronic floor model utilizing the more traditional specialist market structure. In March of 2,008, we launched the NASDAQ Options Market as one of the first price time priority U.
S. Options market, quickly gaining meaningful market share and putting Nasdaq on the options exchange map. This was an organic initiative leveraging our strong foundation as the U. S. Equity exchange and extending our capabilities to serve our customers in new ways.
But July 2008, we closed the Philadelphia Exchange transaction. Together, Nasdaq made the most of these complementary markets and one market share of U. S. Multi listed option share, the ranking Nasdaq has earned for each of the last 6 years. When the opportunity came up to combine ISC with Nasdaq's options business, we're put in a fortunate position to continue executing on a proven strategy to lever our world class technology to enhance performance, extract efficiencies and extend our offerings with the complementary capabilities and customer focus that ISC brings.
The value creation opportunity of this transaction is twofold. First and critically important, it provides meaningful benefits and savings for customers in the form of greater capability to the that the options trading is right down the center of our bowling alley as well as increasing our position in the OCC, a critical central counterparty to the industry. Excluding transaction and integration costs, IAC will provide immediate material and growing accretion to shareholders as we execute on our integration plans and synergy realization. We estimate that together with ChiX Canada, we with a deal we recently closed, we can generate $0.28 or 8% accretion pro form a for full synergy realization in these market services acquisitions, the vast majority of that coming from ISC. Lastly, the transaction provides very attractive returns on invested capital, exceeding our cost of capital and other deployment opportunities.
At this point, I'll turn the call over to Tom
Whitman. Thanks, Bob. ISC is a premier incredibly well positioned options franchise. They have 3 distinct license options exchanges and a well regarded order entry system Precise Trade. Just as exciting to me though is its strong history and disrupting the state of affairs, including its legacy as the first fully electronic U.
S. Options exchange. When it launched using a trading system provided by OMX. The culture and innovation will help make for a great fit with NASDAQ, which brings in its history several of its own fully electronic first to the U. S.
And Nordic markets. As a career technologist and options market operator, I'm very aware of the subtle nuances in the way various exchanges succeed in serving the investment community. And I'm excited that ISC brings strengths and opportunities that are very complementary to the NASDAQ franchise. For example, ISE's leading order entry system Precise Trade has helped customers trading complex order strategies and contributed to its overall success in such strategies. It also owns some interesting and innovative products like ETF Ventures and Longitude, serving customers outside the options industry.
We are certain it will even bring more appealing to customers after we link it into our enlarged liquidity pools and broader venue choices of the combined organizations. We envision a broader use of this precise trade across not only options, potentially equities and our fixed income platforms. We work to close the transaction. I'll be working for I'll be looking forward to drawing from the talented employees and great technology from our 2 organizations in ways that we can create unique efficiencies and opportunities for our customers. I will now turn the call over to Ron Hasson, our CFO.
Thanks, Tom. First, to review the particulars of the transaction. Nasdaq will pay $1,100,000,000 in cash consideration for ISE, as well as receive certain associated tax assets expected to yield $100,000,000 in cash over the 2016 to 2017 reporting periods. The purchase price at approximately 12.8 times gross 2015 EBITDA and 8.7% post synergies is in our opinion is an extremely attractive in the context of the high quality of ISC's franchise. We have high confidence that we will realize $40,000,000 in cost synergies.
If we exclude the tax benefits of $100,000,000 from the purchase price, the multiple will decrease by one full turn. As Bob mentioned, looking at our recent market service acquisitions, both ISC and Chai X Canada, but which closed in this quarter, pro form a after full synergy realization on 2015 actuals, we will have an accretion of $0.28 or 8% on non GAAP earnings per share. In terms of closing requirements and timing, the acquisition needs approval from the SEC and will be subject to HSR review. And subject to these being met, we expect the transaction to close in the second half of twenty sixteen. To help with analyst and investor modeling, ISC had 2015 revenues of 162,000,000 dollars which we break out in terms of NASDAQ reported categories on Page 7 of the presentation.
75% of ISC's revenue represent transactional revenues and 25% represent non transactional revenues. On Page 10 of the presentation, we show a pro form a 2015 revenue mix for NASDAQ, including the acquisition of not only ISE, but also ChaliX Canada and Marketwire, which both closed in the current quarter. As you can see, the mix of our 4 segments changes only modestly and our contribution from the large recurring and subscription revenues remain at a very high level of 72%, in part because both ISC and Chai X Canada Market Services acquisitions have significant non transactional revenue contributions. We expect the $40,000,000 of cost synergies to be realized within 18 months of closing. Now, to turn to the balance sheet.
To fund the acquisition, we have committed financing in the form of a bridge loan, both for permanent financing but for permanent financing, we expect to use a mix of cash on hand, bank debt and bond issuance. The additional borrowing associated with ISE along with Chai X Canada and Marketwire acquisitions will bring our December 31, 2015 gross debt to EBITDA leverage ratio from 2.2 percent 2.2 times to 3.1 times and we expect to reduce our leverage back to the mid-2s target within a reasonable time frame. In terms of our free cash flow priorities sorry, in terms of our free cash flows priorities over the near term, we will prioritize deleveraging, but continue to fund our growth initiatives at current levels and will be selective when considering other uses of capital. Aside from a high priority of deleveraging in the near term, we expect to continue our capital deployment discipline, considering capital deployment through internal investments, share repurchases and disciplined M and A with the objective of maximizing shareholder returns. I will now turn the call back over to Bob.
Thanks, Ron. I want to close by first talking for a moment on how ISC, ChaiX Canada and Marketwire materially improve our strategic position. It's important to recognize that before these transactions, NASDAQ was obviously in the U. S. Options business, the North American Equity Business and the Newswire Distribution Business.
These three acquisitions allow us to increase our scale and how competitive we are in the markets we serve. And these scales serve to benefit both our customers and our investors. And certainly is they both are and all are right down our strategic bowling alley. In the periods to come, we will update you not only on the integrations and the synergy realizations we're pursuing, but just as importantly on the new efficiencies and opportunities we're delivering to customers as a result of these. It's a very busy time here at Nasdaq.
I have the utmost confidence in the great quality of our team and their capabilities. I do want to thank them for all their energy, creativity and focus on not only executing on these recent acquisitions, but the diligence across our entire franchise as we set records in the performance of our overall portfolio companies. I thank you for taking the time for this update today. I'll turn the call back to the operator to open up for Q and A.
Thank Our first question is from Rich Repetto with Sandler O'Neill. You may begin.
Yes. Good morning, Bob and Tom and Ron. Good morning. Good. The first question has to do with market share.
So if you look over the last couple of years, Bob and Tom, the big exchanges yourself, ICE and CBOE have lost share and you have the couple upstarts that have doubled share. So I guess the question is, you'll have a command 40%, 41% market share. And even if you look at the equities industry, it's sort of leveled out among the top 3 players within a few percent. So how do you feel about market share attrition risk, I guess, having such a command at 17%, 18% market share lead over the number 2 player?
So, let me start by saying that ISC's market share back in 2012 was 16% and in 2015, it was 15%. So it's been more stable than I think I thought from the outside looking in. But what I want to get to is the important point in this market, and that is our ability now to lever scale to benefit our customers. When you look at a marketplace like this, scale matters. We have the ability now to bring 1 different market models to bring to bear with the number of license we have.
And the fact is that this is all going to be run on the INET platform and we certainly expect to deliver to our customers enhanced experience. So this is a transaction where our customers will benefit and we will benefit. And you saw in our press release and our comments, we certainly expect to have some of these pricing actions as Tom and team figure out that our customers will appreciate. And so we go into this thing as an aggressive competitor and try to lever the advantages we have to bring a better customer experience. Tom, why don't you add to that?
Okay. Yes. So thanks, Rich. Yes, as Bob said, it's about scale and for our end customers delivering 6 different platforms with different functionality and different pricing will enable us to allow those customers to take advantage of any model that they would like to have. And it is, as Bob said, it's a scale business, largely driven by technology where we'll pass savings back to our customers.
Their ability to come into these 6 different venues with one technology platform should greatly help them continue to do their business the way they're doing it today.
Okay. And I'll take just one follow-up and there's a lot I'm sure there's a lot of questions here. But I guess, Bob, I guess this is more for you. But when you look at other sources of value that you've mentioned in the release and in the prepared remarks about the ownership of the OCC and then I think you've also talked about the 3 exchange licenses that come with the IAC. So I guess the question is, when you look at that 40% and I know the dividend that you'll be $7,000,000 to $8,000,000 now double what you had.
But how do you value that, the 40% of the OCC or any hints on how to put value on? And then the second is, I see the press is already reporting about what you can do with the other exchange licenses and even mentioned the speed bump. I guess the question is, how do you would you even consider that type of model with an additional exchange license? And how does that foot with, I guess, the position that you have on IEX?
So let's start by talking about the substance. So, at this transaction, as Ron referenced, after synergies, it's 8. Something percent multiple. So that's a good return to our investors. And that's also taking into account that we will have some ability to provide additional benefits to our customers.
So that's the core part of this and certainly we hope that you and the investors focus on this. But this deal has a lot of other goodies associated with it. So that $100,000,000 comes in, in the 1st 2 years, as Ron mentioned. So that's a real cash savings to us, great value. It reduces the acquisition by one full turn if you want to look at it that way on a cash basis, that's there.
OCC is certainly, I think, an incredibly valuable asset. We are incredibly pleased to go to 40% ownership in it. And I think it has a great future. Obviously, Craig has done a phenomenal job leading that organization. And when you look around the world with respect to clearinghouses, they are the most efficient in terms of what they're doing.
They're also open access. So I think that organization has a great future and for us to have a 40 pick up another 20% ownership stake in that, I think will prove over the years to be of fundamentally great value to us. So, we're ecstatic about that part of it. And let's not also forget as NFX does more contracts, we clear through OCC. So we have a double lever now in terms of rooting for NFX because it supports the OCC mission also.
So, we're excited about that. Now you get into the fact that we also have 3 equity licenses that we can use. ISC chose not to utilize that asset. I think you'll see us in the fullness of time and the Hamzahler and Tom's great leadership figure out what to do with that. So latent assets not in the model, we certainly expect to monetize it in time.
So when we look at this, we certainly expect to monetize OCC. It will be an asset that will get monetized over time. We certainly see the equity licenses will get monetized over time, and we'll take that $100,000,000 in the next 2 years with great relish. The other assets that are in the space, we've learned a little about. And I have to say so far, we're encouraged.
We have to learn a lot more about them. But to give credit to ISC Management, they had a entrepreneurial spirit and some of the startup ventures, Longitude and ETF Venture seems to have some real merit to it. So we've got a core acquisition that is at a relatively low multiple. And with our ability to integrate to realize synergies in a fairly rapid period of time will present a very good return both for customers and investors. And then we've got these other things around it, which I think will over the fullness of time could turn out to be more important than the Axlecore Options franchise.
Okay. Thank you very much for the answer. Yes.
Thank you. Our next question is from Ashley Sarrail with Credit Suisse.
So I'll keep it in one question. So how are you thinking about the pacing of synergies and the debt pay down? Is the 18 month synergy timeline conservative or fair in your opinion? And what are the sort of the key integration challenges or milestones here?
I would say it's conservative. We expect to overachieve on those synergies. I'm glad the rest of the team is listening in as I make these statements. But let's get into it in more detail. At this stage of diligence, you have to be more conservative because there are details you don't know.
But it's our standard MO. Once we get in there, we see opportunities to overachieve on this. And then you had a question on the debt pay down?
Yes. How are you thinking about timing there?
Go ahead, Bob. Yes.
So Bob Ashley, I'm sorry. We're out of the box, we'll be at 3.1 times leverage. We believe within a very short period of time, quarters, we will be well below that 3.1 times.
Okay. Thank you.
Thank you. Our next question is from Mike Carrier with Bank of America Merrill Lynch. You may begin. Hi, Mike. Hi, Mike.
Hi.
Just on the $0.28 on the accretion, I just want to make sure we understand some of the inputs. So there's kind of 3 components. I just want to make sure that we have straight. So first, on the synergies of 40,000,000 dollars I understand that the timing of that. If you beat that, because it sounds like that's a minimum, where would the areas be that you potentially could go above that $40,000,000 And then second on the market share and pricing and $0.28
And
then given that most into that $0.28 And then given that most analysts, I think, we factor in some level of buybacks, Should we be just thinking in 2016, the focus will be on delevering over buybacks? And then maybe by 2017, you can resume, assuming that you don't see more attractive growth opportunities. So I know that's a lot, but just want to try to get to what goes into that. Thanks. All right.
So that's a multipart question. So let me see if I get the first part right. That was concerning the timing of the synergies. And we have put 18 months out there. I'll definitely lead the group here to know that that's conservative.
But we would not be it would not be proper for us to comment beyond that. We have some work to do. I would definitely pass point to our past track record of achieving synergy sooner. But there's things we have to learn before we can say with great confidence that we can beat that date. So that's a conservative date.
We know we'll hit that. And certainly, I think in short order, we'll be able to give a further more informed update. So is the first part. The second part, if you can help me out again.
Yes, that was just on the pricing and the market share, like what was assumed, because it sounds like you're going to be giving some to the customers, meaning being pretty competitive in the market. So just is that being factored into that $0.28
Yes. I'll let Tommy handle part of this, but let's understand. So what we want to do here is to obviously share benefits with customers and then have some degree of expectation that that will help us from a share point of view. So we have been very successful in balancing capture versus share and we with that dynamic in both the equity world and the options world and we'll continue to do that here. But what we're saying is in the beginning days after we close this, there's going to be more of a focus on share than capture is the way I would say.
Tom, what do you want to add to that?
Yes. So I think, obviously, it gets back to, I think, to your earlier comments about scale and our ability to deliver a technology platform between the 2 combined entities at a smaller incremental expense value. And another area, and this may be a little bit too detailed, but back to our end to end customers, the online retail broker dealers. When you combine 2 companies and 2 businesses like this, there's areas like regulation that has an option regulatory fee that goes back to the end customers. And so obviously, we're you don't have 2 organizations with 2 full blown regulatory programs.
So we believe that we can pass savings back to the end to end customer, the online retail broker dealer. So it's a combination of process and technology.
Okay. And then the last one is just on the buyback. I mean, it sounds like the focus will be on debt pay down, but when you're coming up with that $0.28 accretion, again, just trying to figure out what you guys are factoring in there because some of us out there are assuming some pace, you're already in the estimate expectations.
Yes. So I would say this, that this acquisition allows us to take a balanced approach to both buybacks and debt pay down. I think your assessment that the primary focus in 2016 will be the debt pay down, but it won't it will not be the exclusive. So we have the ability to maintain the buyback program in a manner similar to what we've been doing in the past. And as we've said before, we certainly look to be opportunistic with the buyback program and they're watching the market and responding accordingly.
So that will not change.
Our next question is from Chris Harris with Wells Fargo. You may begin.
Thanks. Hi, guys. Just want to follow-up a little bit on that last line of questioning. Any thought as to how much of the synergies you guys might be sharing with customers? I know it probably depends on the market share dynamics and how those unfold, but any initial guidance you guys might be able to provide there would be helpful.
Yes. I would say and again, Tom knows a lot more than I do, but the auctions pricing world is more complex than the equity world. So we certainly will be getting direct customer feedback on what's meaningful for them responding to that, putting that into our market and see what the response is. And it's going to definitely be a period of refinements, okay, what pricing matters to the customer? Where can we adjust pricing and have a positive benefit on our market share and keeping our revenue somewhat I might have missed something.
So Tom, do you have anything else?
No, that's on the pricing forefront, you're right there, Bob. We've got to take a look at it. But when I think about cost saves to our customers, I take a look the ones that are providing liquidity to our platforms and delivering order flow. And the way that we'll save them money is, obviously, these big firms aren't going to have to have 2 big technology organizations writing to different exchanges. So if we normalize how they send orders, how they send quotes, how they manage risk, they're not developing software 2 to 4 times greater levels.
They should be able to save money there. And then when it comes to other savings around technology, I think that's where their big stays back to our customers who provide markets liquidity in order to flow to the platforms.
Okay. And then on the EPS impact, the $0.28 on a non GAAP basis, can you guys share with us what the GAAP earnings contribution looks like, again, once all synergies are realized?
Yes. Ron, you want to leave with that?
This is Ed Dittmeier, Chris. How about we follow-up after the call and see if we can get you a quality answer on that? Sounds good. Thanks, guys.
Thank you. Our next question is from Ken Worthington with JPMorgan. You may begin.
Hi, good morning. This is Amanda stepping in for Ken. Are there any antitrust risks in trying to put the 2 exchanges together? So as NASDAQ continues to gain share with the combination, could that potentially trigger an antitrust issue further down the road?
Well, one is I wouldn't I want to comment on what the regulators would think, but I would definitely highlight the fact that this is a dynamic and competitive marketplace and
you see that
with new entrants that come into it. And availability of licenses seems to be quite easy these days in the options world and probably in the equity world if you try to stay within the bounds of Reg NMS. And also it's important to recognize in the options world, the customer base is a lot more concentrated than in the equity world and those customers have power. And we have to please them every month, really every day. We don't have any long term contracts and they have routers that can move their flow effectively between venues.
So it's a dynamic competitive world, one we're entirely comfortable with and we think that plays to our strengths certainly on a relative basis. So I think to us, the dominant factors are that the ease of entry is there. New entrants have come in, have succeeded and customers have power.
Thank you.
Thank you. Our next question is from Brian Bedell with Deutsche Bank. You may begin.
Hi, good morning folks. How
are you doing Brian?
Good. How are you? The just the revenue assumption in the $0.28 for the ISE business, considering you're going to be passing on some of the savings to the customers. Is that as we move out through 2017, is that essentially flat on the trading side? So the 75% of the $162,000,000 I guess it's $122,000,000 First of all, if you can comment on the $122,000,000 and the $0.28 And then secondly, Tom, if you can talk a little bit about how you view competition in the options business?
Of course, we've seen a lot of pricing pressure more recently. And how do you think you're positioned with this acquisition in terms of how that might change the dynamic, the competitive dynamic in the business?
Okay. So let me just start with the general answer. So our philosophy is that more competitive than the market is, and the options marketplace has been competitive for a number of years now. The structural scale that you can bring to the market allows you to meet that competition, right. So when the customers are demanding a competitive environment, are looking for efficiencies on a regular basis, the scale player, if he's so motivated and we certainly are, has an ability to meet these customer needs.
And that's what this attract this transaction allows us to do. We have a competitive world. We want to be responsive to customers. We're going to be very intelligent about how we deploy our pricing. Tom and his brain trust will be working on that.
We certainly see there's going to be reductions in capture rate. We're going to do it in an intelligent way based upon our big data analysis. And then it's certainly our hope and belief that as a result of doing that in an intelligent way, we'll be a beneficiary from a share point of view. And we will always balance share versus capture. But certainly post this acquisition, we're going to be focused less on capture and more on share in the early days.
And would that equate to giving up some of the capture and getting more share? Would that leave you with a flattish revenue dynamic for that $0.28 accretion?
That would be the desire. I think certainly in that $0.28 there is some expectation that there will be some revenue dis synergies. But this is a game that plays out every month. And so every month is all pricing scheme out there. So it's impossible for us to know how it's going to play out 3 months from now.
It's impossible for us to know here in the context of the acquisition, but we certainly have a general strategic direction we're going to follow.
Okay. And then if you could talk a little
bit about a little bit
more about the precise trade technology, you mentioned you can leverage that You think you can leverage that within the equities business. What kind of potential should we be thinking about that? And is that over and above the $0.28 guidance?
Go ahead, Tom.
Yes. So it's the piece of technology and functionality that is there in that precise, one is leverage for the current options exchanges that the ISE runs. So you can kind of envision with the 3 platforms that test X runs and the functionality that we have there, which are broadly different on all three venues, we can expand the use of that platform there. I think my desire longer term is we could also do stock tied and leverage that because we are the NASDAQ stock market and we also have 3 venues for equities. So how do we leverage that and give our customers more what they want there?
But we also have a fixed income e speed business. We've got other businesses that we like futures that we could leverage that point of presence on the desk of the banks and the IDBs to help them find ways to our platforms. So as I said before, I'm excited about that opportunity and expansion.
Okay. I'm sorry.
There's no baked into this, we don't have any future revenues baked into this, what Ron talked about.
Right. That was my question. Okay, great. Thanks so much.
Thank you. Our next question is from Kyle Voigt with KBW. You may begin.
Hi, good morning.
How are we doing?
Good. Maybe a couple of questions for Ron. Just the leverage target of mid-2s versus low-2s target previously. Any expectation for this to affect credit rating in any way? And then could you give us some any guidance as to what percentage of the $1,100,000,000 purchase price you expect to finance with long term debt?
Thanks.
Great questions. In terms of the $1,100,000,000 right now, when we close, we'll take a look at what the markets look like. Our intent if we were to do it today, it would probably be all long term bonds, either in the 5 to 10 year timeframe. I'm sorry, what was the other question you had asked?
Just the leverage target of mid
Yes. It's not going to be any change to where we were before. I mean, we're looking at mid-two, somewhere between 2.4 to 2.6 range. And as I mentioned earlier, we think that we could get there within the next 12 to 18 months. And we don't expect any that's what the rating agencies have found in the past to be acceptable.
And we believe they'll be in that same position.
Okay. Thanks.
Thank you. Our next question is from Dan Fannon with Jefferies. You may begin.
Thanks. Good morning. I guess, first, just on revenue dis synergies. Bob, you just kind of mentioned that briefly. Can you talk about what we can think about for maybe customer overlap or things like access fees that maybe aren't going to be just straight add 1 +1 equals 2?
Well, I think the customer overlap is essentially 100%. As I said, it's a concentrated customer base in the marketplace. But it's important to understand that the venues that IFC operates today in this competitive marketplace has to carry the weight, has to provide value to the customers, otherwise the customers would leave and go somewhere else. So independent of who is the corporate owner of it, each individual exchange competes every day and really every month for that volume. So that doesn't change there.
What Tom referenced from an access services point of view, we're certainly going to make it easier for the customers to have a standardized approach and that will cut down, I think some of their infrastructure costs. And when we talk to our customers today, they have certainly realized that transaction rates are low and they continue to come down, which is good for them, but their infrastructure cost continues to increase. And that's a larger and larger portion of their budget. So we have the ability now to do this transaction to help address some of their expense concerns in that regard.
Thank you. Our next question is from Tom,
you want to add anything to that?
No, I think that's I
think you got it, Bob.
Thank you. Our next question is from Alex Kramm with UBS. You may begin.
Hey, good morning.
Probably not much left here, but just for Ron, just to follow-up on the financing costs. First of all, can you what financing are you assuming in terms of the interest rate? If you look at today's market, I don't think you've covered that. And then maybe related to that, you said you might use some cash on hand. I think you've been hovering around that $300,000,000 in cash on your balance sheet.
Is what's the kind of like the minimum or that you're comfortable with running at? Can you just remind us on that one?
Yes. I mean, I would be comfortable around the $300,000,000 in terms of cash on hand. In terms of rates, if I look at today's rate environment for a 10 year, you're looking at roughly like 5 If you're looking at a 5 year debt, you're looking at 4%. But so that you know, the way we modeled it, we modeled this at 5% in terms of the $0.28 accretion that we're speaking about earlier.
Thank you. Our next question is from Alex Blostein with Goldman Sachs. You may begin. How are
you doing, Alex?
Hey, guys. Good morning.
A couple of specifics, I guess, just zoning and on the ISG's offering today. You help us break down, I guess, just the mix between different types of orders they have, so kind of complex pro rata versus price time. And it totally get the scale benefits of the combined platform, but maybe you could help us understand a little more, which part which one of these buckets would you try to get more aggressive on pricing, try to, I guess, defend market share? Thanks.
Okay. Go ahead, Tom.
We didn't we weren't able to get into a certain level of detail there. So it's going to be, once we close a transaction, to actually look at the segments a little closer and then compare that to what we run on. NASDAQ can come up with a good strategic and tactical plan. So I really can't share any numbers there with you right now.
Yes. I would say we had great visibility into the expense part of the operation, but some of the pricing plans, obviously, we're sensitive since we are competitive, so we have to learn there. And I do want to repeat that the options pricing world is infinitely more complex than the equity world and Tom and the team do a great job of using data to understand exactly what the customers need and want and then reflecting that pricing plans. And that's what we're going to spend a lot of time doing.
Thank you. Our next question is from Rob Rothschild with CLSA. You may begin. Rob Rothschild, your line is open. Please check your mute button.
Thanks. Good morning. Good morning. I was wondering if you could Good, thanks. I was wondering if you could tell us how much of the $0.28 in synergies is related to Chi X Canada and Marketwired And presumably, the synergies that would be associated with those 2 deals will be achieved this year, considering they just closed last month?
Yes. Bob, I'll take that. The $0.28 does not include Marketwire. The $0.28 actually just includes both JYX and ISC. In terms of the net income for JYX, it's roughly around 9,000,000
dollars Thank you. And this concludes the Q and A session. I'd like to turn the call back over to Bob Greifeld for closing remarks.
Great. Thoughtful, informed, and hopefully, we communicated effectively to you. As I said during the call, this acquisition, Marketwired and Chi Ax is straight down the bowling alley of what we do. We've executed in each of these three businesses. And certainly, the expense synergies associated with these acquisitions are deterministic.
And we always think it's a great thing to be in a better position to serve your customers and we're happy to complete this. And with respect to ISC, in particular, I'll repeat what I said during the call that is the acquisition by itself when you look at the core options franchise is incredibly attractive to us, but we'd be remiss in not also focusing on the fact that OCC is a wonderful asset for us to gain 20% share in, to have equity, 3 more equity licenses is a wonderful asset for us. The tax benefit next year is obviously wonderful. And our new initiatives have some promise. So core thing, core acquisition justifies itself and I think in the course of time you'll see the other attributes will just further contribute to the return.
So we're happy and proud to be associated good members of the ISE team and look forward to working together. And obviously, we'll be available to answer your questions. And again, we appreciate your time today. Thank you.
Ladies and gentlemen, this concludes today's conference. Thanks for your participation, and have a wonderful day.