Brian Bedell

Brian Bedell requested an update on eToro's U.S. customer traction, specifically regarding the approximately 300,000 customers and the reception of CopyTrader. He also inquired about the timeline for obtaining a fiduciary license in the U.S. and the rollout of prediction markets for U.S. customers.

Answer

Yoni Assia, CEO of eToro, noted active expansion of the U.S. product roadmap, including the launch of CopyTrader and planned Smart Portfolios in H1 2026, contingent on an in-process RIA license. He mentioned a significant uptick in marketing activities from Q4 2025 to Q1 2026, aiming for an improved CAC to LTV ratio. He expects Smart Portfolios to launch in H1 2026 and prediction markets (requiring NFA regulation) to roll out later in the year, towards Q3 or Q4.

Brian Bedell sought an update on U.S. customer traction, particularly for CopyTrader and pro investors, and any numbers on reception. He also asked about the timing for obtaining a U.S. fiduciary license and the rollout of prediction markets for U.S. customers.

Answer

CEO Yoni Assia noted significant uptake in the U.S. business due to scaled marketing activities from Q4 to Q1, with plans to launch Smart Portfolios based on an RIA license in H1 2026. He expects prediction markets, requiring NFA regulation, to roll out later in the year, towards Q3 or Q4.

Brian Bedell asked about AQR's EBITDA contribution in 2025 and the expected increase for 2026, including considerations for wealth channel changes and competition. He also inquired about the longer-term trajectory of performance fees, particularly from private markets and liquid alternatives, given the growth in carry-eligible AUM.

Answer

CFO Dava Ritchea confirmed AQR was a double-digit EBITDA contributor in 2025, projected to exceed 20% in 2026 due to strong organic growth and investment performance, including substantial performance fee contributions. She explained that the $170 million performance fee guidance for 2026 is based on a five-year average, with a diverse mix of strategies leading to a more stable stream. As performance fee/carry-eligible AUM increases, the trend will be positively impacted, with private market carry being more back-ended. CEO Jay Horgen detailed AMG's wealth strategy, which involves investing in product creation, seeding new products, and expanding distribution resources across RIA, regional, and wirehouse channels to magnify affiliate success and create value.

Brian Bedell inquired about AQR's EBITDA contribution in 2025 versus the projected 'over 20%' in 2026, potential changes in wealth channel distribution, and the longer-term trajectory of performance fees, considering the growth of private markets and liquid alternatives and future fund carry.

Answer

CFO Dava Ritchea stated AQR was a double-digit EBITDA contributor in 2025, expected to grow to over 20% in 2026 due to strong organic growth and investment performance. She explained that the $170 million performance fee guidance for 2026 reflects a five-year through-the-cycle average, with future growth expected from increasing carry-eligible AUM in private markets and liquid alternatives, which are back-ended opportunities. CEO Jay Horgen detailed AMG's strategy for wealth growth, including product creation, seeding, and expanding distribution resources across RIA and wirehouse channels.

Brian Bedell inquired about the sustainability and consistency of private market fundraising and requested color on the composition of recent inflows, such as the conversion to fee-paying AUM.

Answer

President & COO Thomas Wojcik detailed the strategic shift that has increased alternatives AUM from 30% to 45% of the total, improving the baseline for growth. He noted the $8 billion in Q2 private markets fundraising was diverse, led by Pantheon with contributions from Comvest, Ara, and EIG. CFO Dava Ritchea added that this growth in higher-fee, longer-duration alternatives is increasingly flowing through to EBITDA, as reflected in the Q3 guidance.

Brian Bedell asked for clarification on the 8% accretion from recent transactions, questioning if it was an annualized 2026 figure for economic EPS, and also asked if the quarter's net flows resulted in positive or negative base fee organic growth.

Answer

Dava Ritchea, CFO, confirmed the 8% accretion is an annualized run-rate impact on economic earnings per share, expected to be fully realized starting in 2026. Thomas Wojcik, COO, added that the fee impact from flows was 'pretty positive' on a long-term basis, as high-fee, long-duration alternative inflows outweighed lower-fee equity outflows.

Brian Bedell from Deutsche Bank asked about the scalability of AMG's U.S. wealth platform, which has reached $5 billion in AUM, and the potential for new perpetual products to contribute meaningfully to performance fees.

Answer

COO Tom Wojcik detailed the platform's rapid growth from ~$1 billion to over $5 billion in AUM in just a few years, driven by products like the AMG Pantheon fund. He highlighted new launches with Comvest and Pantheon as examples of future growth and confirmed that certain perpetual products are eligible to generate performance fees, which will further diversify that earnings stream over time.

Brian Bedell from Deutsche Bank asked about Robinhood's interest in launching prediction markets for fundamental equities (KPIs, earnings metrics) and the more precise timing for the Roth IRA launch.

Answer

Vlad Tenev, CEO, expressed strong interest in company KPI and fundamental prediction markets to enhance the stock investing ecosystem but noted regulatory relief is needed due to potential classification as securities-based swaps. Shiv Verma, CFO, stated that the Roth IRA JV, which recently closed, is targeted to be operational by mid-2026.

Brian Bedell asked about Robinhood's appetite for launching prediction markets in fundamental equities (e.g., KPIs, earnings metrics) and the precise timing for the launch of the Roth IRA joint venture.

Answer

CEO Vlad Tenev expressed interest in listing prediction markets around company KPIs and fundamentals to create an ecosystem around stocks, but noted regulatory relief is needed due to potential securities-based swap classification. CFO Shiv Verma stated that Roth IRA (JV) just closed last week and is targeting launch by mid-2026.

Brian Bedell from Deutsche Bank Securities asked for elaboration on the businesses in the $50 million revenue range that are approaching the $100 million mark, and the potential timeline for staking and tokenized stocks to reach that scale.

Answer

CFO Jason Warnick identified several businesses with strong momentum, including TradePMR, Bitstamp, and prediction markets. He also mentioned others coming up behind them, such as index options, the Robinhood Gold Card, and the Legend trading platform, as vectors gaining significant steam.

Brian Bedell of Deutsche Bank asked about the active trader mix within recent net deposits and sought an update on the usage and revenue run rate of the Robinhood Legend platform.

Answer

CFO Jason Warnick confirmed strong sequential growth in volumes through Legend but did not provide an updated ARR, stating it would be updated periodically. He emphasized that the vast majority of Legend volume is incremental, which is very encouraging. CEO Vladimir Tenev added that the roadmap for Legend includes adding futures and continuing to improve the active trader and live streamer experience.

Brian Bedell inquired about the growth trajectory for new initiatives like the Legend platform, Index Options, and futures, asking whether their growth is accelerating or has slowed since launch.

Answer

CFO Jason Warnick confirmed strong week-over-week growth rates for both Legend (now at a $50M annual revenue run rate) and Index Options ($15M run rate). CEO Vladimir Tenev added that the products have compounding effects, with Index Options on Legend accelerating growth, and that the company sees continued opportunities to enhance the platform, particularly for options traders.

Brian Bedell asked about the rollout timeline for futures and index options in Q4 and whether the company has observed increased trading velocity from users of the new Robinhood Legend desktop platform.

Answer

CEO Vlad Tenev confirmed that Legend users are among the most active, showing high velocity, but noted the user base is still small and curated. Regarding timelines, he stated that outright futures and index options are planned for rollout in the 'coming months,' as the immediate focus for the derivatives team was ensuring a smooth launch of the presidential election market.

Brian Bedell asked about progress in the 401(k) market, specifically regarding DOL and plan sponsor appetite for alternative products, and Apollo's strategy for collaboration with other managers like Schroders, Lord Abbett, and State Street, inquiring if more such partnerships are expected.

Answer

CEO Marc Rowan stated that Apollo is open architecture and a product supplier, with collaborations evolving into joint product creation. He emphasized the industry's need to adapt to traditional asset managers' requirements, including daily NAV and liquidity, which Apollo is actively pursuing for its high-grade credit business. For 401(k)s, he believes significant volumes await rulemaking/guidance, but noted increasing activity in D.C. and the potential for private assets to significantly improve outcomes for employees, envisioning a hybrid world with market-provided guaranteed lifetime income.

Brian Bedell inquired about any near-term traction from plan sponsors regarding the inclusion of private assets in 401(k) portfolios and the potential for Athene to generate upside from de-accumulation strategies for retirement plans, beyond its current $85 billion run rate for retirement service inflows.

Answer

CEO Marc Rowan stated that while there's progress in 401(k)s (crossing a couple of billion in managed accounts), it's not a groundswell, with most in the information-gathering phase. He emphasized the 'holy grail' of guaranteed lifetime income as a de-accumulation strategy, which is a key focus for Athene and represents potential upside not yet in the five-year plan, but requires further guidance or rulings for massive take-up.

Brian Bedell of Deutsche Bank asked about the roadmap for Capital Solutions, particularly the trading of private credit, and its potential to accelerate fee targets. He also inquired about rate cut assumptions in the SRE guidance.

Answer

President Jim Zelter addressed the Capital Solutions question, explaining that increased transparency from trading private credit will expand the entire market. He sees this creating new revenue opportunities from bid/offer spreads, liquidity provision, and indexing, with a broader impact expected in 12-24 months. CEO Marc Rowan deferred the question on SRE rate assumptions to an offline follow-up.

Brian Bedell asked about origination capacity, questioning if there are constraints that would prevent Apollo from materially exceeding its $275 billion annual goal and how the allocation of originations might shift if they do.

Answer

Co-President James Zelter stated it was too early to adjust the 5-year target but highlighted the strength and consistency of their strategy. He noted that origination spreads have remained robust despite public market compression and that the 'flywheel' effect from syndication, global wealth, and third-party insurance provides a scalable system to absorb higher volumes.

Brian Bedell sought clarification on the Q2 launch for binary options, the timeline for more traditional prediction market contracts, and the revenue/expense assumptions for these initiatives embedded in the 2026 guidance. He also asked for reconfirmation of the strategic realignment's financial impacts.

Answer

Rob Hocking, Global Head of Derivatives, clarified the Q2 launch for all-or-none style contracts combined with spread trading, starting with index securities. Jill Griebenow, CFO, stated a small revenue contribution is contemplated for 2026, expected to ramp over time. She confirmed known realignment impacts (Japan equities, corporate listings, risk/market analytics optimization, CEDEX wind-down) are in the 2026 guidance, while Cboe Canada and Australia contributions remain until sales progress.

Brian Bedell from Deutsche Bank sought clarification on the Q2 launch for binary options, the timeline for more traditional prediction market contracts, and whether revenue assumptions for these are embedded in the 2026 guidance. He also asked CFO Jill Griebenow to reconfirm the impact of divestitures on the 2026 revenue and expense guidance, specifically regarding Canada and Australia.

Answer

Global Head of Derivatives Rob Hocking confirmed the Q2 launch targets all-or-none style contracts intertwined with SPX spread trading, focusing on index securities initially, with expansion into other securities and more traditional event-style contracts as market adoption grows. CFO Jill Griebenow stated a small contribution from new prediction markets is contemplated in the 2026 revenue guide, expected to ramp over time. She clarified that known realignment impacts (Japan equities, corporate listings, Risk and Market Analytics, CEDX wind-down) are built into the 2026 guidance, while Cboe Canada and Cboe Australia contributions remain in the guidance until sales progress dictates an update.

Brian Bedell asked if the revised organic growth guidance for Data Vantage was conservative, given strong non-U.S. sales and other positive leading indicators.

Answer

Global President David Howson acknowledged the strong Q1 results, including over 8% growth and 47% ACV growth. However, he noted that given the uncertain macro environment, the company has taken a prudent view for the remainder of the year and will update guidance quarterly as appropriate.

Brian Bedell asked about the drivers behind the sequential decline in the index options revenue capture rate in the second quarter and its potential trajectory going forward.

Answer

Global President Dave Howson clarified that the change in revenue per contract (RPC) was driven entirely by a product mix shift, not by any pricing changes. He explained that as clients rotate between products with different fee structures, such as SPX and RUT options, the overall blended capture rate fluctuates. He indicated that this ebb and flow is based on customer activity and did not signal a specific forward trend.

Brian Bedell asked about the connection between deployment and transaction fees, whether there were structural improvements in TPG's capital markets teams from Q3 to Q4 2025, and the potential upside to the FRE margin if Q4's transaction fee level were annualized.

Answer

CEO Jon Winkelried clarified that there were no structural changes from Q3 to Q4, but rather a consistent build-out of embedded capital markets capabilities across businesses, which correlates transaction revenue to deployment. He noted the structural opportunity continues to grow, especially with the expansion of the credit platform. CFO Jack Weingart added that Q4 saw a number of larger transactions funded with private capital structures, where TPG's team designed the entire capital structure, contributing to lumpiness. He stated that capital markets revenue has a high contribution margin (85-90%), which drove the FRE margin up in Q4.

Brian Bedell asked about the connection between deployment and transaction fees, whether there were structural improvements from Q3 to Q4 2025, and the potential upside to the FRE margin if Q4's high transaction fee levels were to be annualized in 2026.

Answer

Jon Winkelried, CEO and Director at TPG, clarified that there were no structural differences beyond the consistent build-out of embedded capital markets capabilities across businesses, which correlates transaction revenue to deployment. Jack Weingart, CFO at TPG, added that the revenue opportunity depends on the capital structure (private vs. broadly syndicated) and that capital markets revenue has a very high contribution margin (85-90%), which significantly boosted the Q4 FRE margin.

Brian Bedell asked a multi-part question on the Impact platform's fundraising pipeline, covering the next vintage for RISE, the timing for Rise Climate II's final close, and expectations for related strategies like climate infrastructure.

Answer

Executive Chairman Jim Coulter stated that a first close for Rise 4 is expected in Q4. He noted that policy clarity is helping the climate strategy and that TPG is now in the back half of the fundraising campaigns for TRC2 and initiating its climate infrastructure fund (TCI), with a robust pipeline.

Brian Bedell questioned the Impact platform, asking about the difference in perception of policy uncertainty between the U.S. and international markets for both deployment and fundraising, and if opportunities are greater outside the U.S.

Answer

Executive Chairman and Co-Founder Jim Coulter explained that while U.S. policy discussions create noise, the underlying fundamentals for climate investing are strong globally. He noted that over 90% of new energy addition worldwide is clean energy and that international markets are largely unbothered by U.S. policy debates. In the U.S., an energy shortage is driving demand, creating unique opportunities. He concluded that fundraising timelines may elongate slightly, but the opportunity set remains robust.

Brian Bedell questioned the financial impact of the Intersect Power and Google partnership on TPG and the potential for similar deals to accelerate growth in the Impact platform, asking if it could rival the Capital platform in size within five years.

Answer

Executive Chairman Jim Coulter explained that the Intersect deal is indicative of a broader trend of explosive spending on the U.S. grid, driven by data centers and electrification. He noted that market disruption is creating significant opportunities and that the climate investor base remains strong, particularly internationally. He expressed confidence in the platform's long-term growth trend and its ability to expand into related infrastructure and credit products.

Brian Bedell asked about KKR's confidence in achieving its $7+ operating earnings goal, the implied FRE of less than $5.50 per share, Q4 catch-up fees, and the timing for the Arctos acquisition close.

Answer

CFO Rob Lewin confirmed the Arctos close is expected in Q2 and stated Q4 catch-up fees were $26 million, with management fee growth still strong at 22% ex-catch-up. He reiterated strong momentum in asset management and FRE, and that Strategic Holdings is expected to beat its $350 million 2026 guide. For Insurance, the $1 billion operating earnings target for 2026 excludes approximately $350 million of accrued returns due to cash accounting, making the total operating earnings metric less relevant than initially discussed.

Brian Bedell followed up on KKR's $7+ operating earnings goal, seeking confidence in its components (FRE, Strategic Holdings, Insurance), and asked for cleanups on Q4 catch-up fees and the timing of the Arctos close.

Answer

CFO Rob Lewin confirmed the Arctos close is expected in Q2 and that Q4 catch-up fees were $26 million, with management fee growth still at 22% excluding these. Regarding the $7+ operating earnings goal, he expressed confidence in asset management FRE and Strategic Holdings (expecting to beat the $350 million 2026 guide). He noted that the initial $7 target for insurance was set before KKR's pivot to alternatives and cash accounting, making the total operating earnings metric less relevant, with insurance operating earnings targeted at $1 billion ± for 2026, excluding approximately $350 million of accrued returns not recognized under cash accounting.

Brian Bedell asked about the capital markets business, specifically the contribution from Global Atlantic (GA) as detailed in slide 20, and whether its expansion represents a faster opportunity than other fee-related businesses from the GA angle.

Answer

Rob Lewin, Chief Financial Officer, confirmed that all asset management-related figures on slide 20, including capital markets fees, are net of a 17.5% compensation load. He stated that the capital markets business, in tandem with Global Atlantic, has the potential to generate hundreds of millions of dollars in annual opportunity over the next couple of years. Lewin highlighted the roadmap provided by peers and KKR's differentiated approach to third-party capital markets.

Brian Bedell asked for confirmation that the capital markets contribution from GA on slide 20 is net of FRE compensation, and inquired about the expansion of the capital markets business from the GA side, specifically its growth in 2025, 2026, and 2027, and if it represents a faster opportunity than other GA fee-related businesses.

Answer

CFO Rob Lewin confirmed that all asset management-related economics on slide 20 (IMA fees, IV sidecar fees, and KCM) are net of a 17.5% comp load. He reiterated the substantial opportunity for the capital markets business in tandem with Global Atlantic, projecting hundreds of millions of dollars in annual opportunity over the next couple of years, driven by GA's origination and KKR's capital markets distribution capabilities.

Brian Bedell from Deutsche Bank asked a two-part question regarding drivers for the strong investment management fees and the outlook for Capital Markets fees in the second half of the year.

Answer

CFO Robert Lewin explained that management fees were driven by solid organic growth and the turn-on of large funds like Americas XIV, which contributed about $30 million, with no other unusual items. For Capital Markets, which had a solid $200 million quarter, he expects Q3 to be 'plus or minus in line' with Q2, with potential upside if markets remain healthy. He expressed confidence in the franchise's growth heading into 2026.

Brian Bedell of Deutsche Bank asked if there is a ceiling on KKR's fee-related earnings (FRE) margin and whether higher distribution costs from new partnerships could create a headwind.

Answer

CFO Rob Lewin stated there is no cap on the FRE margin. While the firm can operate sustainably in the mid-60% range, he expects revenue to grow faster than headcount and complexity as they scale existing platforms, making margin expansion a natural output of the strategy. He views placement and distribution fees as a positive investment with a clear ROI, not a headwind.

Brian Bedell of Deutsche Bank asked about the monetization pipeline heading into 2025, focusing on the outlook for the IPO market versus strategic M&A for portfolio company exits.

Answer

Chief Financial Officer Rob Lewin expressed optimism, noting that while the IPO market has been sluggish, he expects it to change, citing the strong performance of KKR's four recent IPOs. Co-CEO Scott Nuttall added that deal momentum is continuing across both strategic M&A and IPOs, and that a pent-up supply of exits exists across the industry after a slower period.

Brian Bedell inquired about the expected contribution of Consensus conferences to SS&O revenue in 2026, the anticipated progression of tokenization and real-world asset (RWA) initiatives, and specific use cases for USD.AI's development and contribution to SS&O.

Answer

David Bonanno, CFO, stated that Consensus events are expected to be larger in 2026 and will continue to fuel business growth, though their growth rate within SS&O is at the lower end. He added that the Clarity Act and infrastructure bill could unlock new tokenization customers, with regulatory approvals for listing tokenized securities expected internationally and potentially in the U.S. by year-end. Tom Farley, Chairman and CEO, emphasized that Bullish is already a market leader in tokenization services, providing listing, liquidity, marketing, and research, and expects this business to grow hugely as global markets move on-chain.

Brian Bedell inquired about the expected contribution of Consensus conferences to SS&O revenue, the progression of real-world asset (RWA) tokenization throughout the year, and specific use cases and SS&O contributions from the USDAI partnership.

Answer

CFO David Bonanno stated that Consensus events are expected to be larger than in 2025 and will continue to fuel business growth, though their growth rate within SS&O is at the lower end. Chairman and CEO Tom Farley elaborated that tokenization is already a significant driver of liquidity services, which includes listing, liquidity, marketing, and research. He emphasized that the tokenization business is already rolling out and is a market leader, with future growth expected from the on-chain movement of major asset classes like U.S. equities and global fixed income, supported by regulatory clarity.

Brian Bedell inquired about the contribution of new U.S. customer momentum to Q4 trading volumes and the potential for this to grow faster than SS&O, and asked about the incremental margins, specifically if they are higher on the trading side versus SS&O.

Answer

CFO Dave Bonanno noted that user counts are hitting new all-time highs, benefiting trading volumes, and expressed confidence in the U.S. becoming a major contributor in 2026, along with options. CEO Tom Farley highlighted the organic growth and new customer acquisition driven by the options launch, emphasizing the need for a compliant options exchange with portfolio margining. Dave Bonanno confirmed that incremental margins are likely higher on the trading side, demonstrating strong operating leverage.

Brian Bedell with Deutsche Bank asked about how new customer momentum is contributing to the trading volume outlook, questioning if it could grow faster than SS&O, and inquired whether incremental margins are higher on the trading side compared to the SS&O business.

Answer

CFO Dave Bonanno confirmed user counts are hitting new all-time highs, benefiting trading volumes, and expects the US to be a major contributor in 2026. CEO Tom Farley highlighted the options launch as a "revelation," attracting new customers and enabling portfolio margining across multiple asset classes. Bonanno also stated that incremental margins are likely higher on the trading side, noting SS&O's variable event costs and projecting Q4 incremental operating margins well north of 80%.

Brian Bedell questioned the growth trajectory potential for liquidity services beyond Q3, seeking clarification on the breakdown of SS&O revenue growth and the expected uplift in Q4, particularly from stablecoin-related services.

Answer

CFO David Bonanno confirmed that all segments within SS&O revenue are growing, but the primary driver for Q3's projected growth is liquidity services, predominantly weighted towards stablecoins, including the Solana Foundation collaboration. He indicated that while they expect continued growth in Q4 for this line, the Q3 guidance should not be interpreted as a sustained pace of growth far into the future.

Brian Bedell sought clarity on the growth trajectory of Bullish's liquidity services, particularly the stablecoin segment, beyond Q3, and the primary drivers of growth within the broader Subscription Service and Other (SS&O) revenue line.

Answer

David Bonanno, CFO, explained that while all SS&O segments are growing organically and feeding off each other, the primary driver of Q3 revenue growth is liquidity services, predominantly weighted towards stablecoins, including the Solana Network collaboration. He indicated continued strength and expected growth in Q4 for this line, but cautioned against extrapolating the Q3 pace indefinitely.

Brian Bedell asked about the growth trajectory potential for liquidity services, particularly the stablecoin side, beyond Q3, and sought clarification on how much of the Q3 SS&O growth is directly attributable to stablecoin liquidity services.

Answer

David Bonanno, CFO, clarified that while all segments within SS&O are growing, the primary driver for Q3 revenue growth is liquidity services, predominantly weighted towards stablecoins, including the Solana Foundation collaboration. He noted that liquidity services serve as the bedrock for selling other recurring revenue streams. Bonanno also indicated that while they expect growth in Q4 for this line, the Q3 pace of growth should not be interpreted as a sustained future rate.

Brian Bedell of Deutsche Bank asked about CME Group's prediction markets, specifically regarding conversations with other distribution partners beyond FanDuel and DraftKings, and the pipeline for future product rollout, including broadening contract types to potentially include political, cultural, or company-specific KPIs.

Answer

Chairman and CEO Terry Duffy clarified that CME Group is open to listing larger-scale political contracts (e.g., presidential elections) but not smaller, localized races, and is cautious about cultural/entertainment contracts. Tim McCourt, Global Head of Financial and OTC Products, confirmed active engagement with 120-130 retail distribution partners for onboarding event contracts. He emphasized a focus on attracting new users to both event contracts and traditional benchmark products, while continuously evaluating future product pipelines based on market feedback and CFTC regulatory framework.

Brian Bedell asked about CME Group's prediction markets, specifically regarding conversations with other distribution partners, interest from additional retail partners, and the potential for future product rollouts, including financial and company-specific KPIs, as well as political contracts.

Answer

Chairman and CEO Terry Duffy clarified CME Group's stance on political contracts, distinguishing between large-scale and smaller races. Global Head of Financial and OTC Products Tim McCourt discussed the robust pipeline of distribution partners and the ongoing process of onboarding them, while also addressing the approach to future product development based on market feedback and regulatory standards.

Brian Bedell asked for clarification on the structure of financial prediction contracts at CME, specifically regarding clearing, access for other retail platforms, listing on CME, and the financial arrangement with the FanDuel joint venture.

Answer

Terry Duffy, Chairman and CEO, confirmed that all participants would have access to CME's contracts, regardless of the FanDuel relationship. Lynne Fitzpatrick, CFO, explained that CME's FCM would be one of many potential participants, and clearing and trading fees would be consistent for all, with FCMs charging their own commissions.

Brian Bedell inquired about the structure of CME Group's financial prediction contracts, specifically regarding clearing, access for other retail platforms, listing on CME for all 130 partners, and the financial arrangement with FanDuel.

Answer

Terry Duffy, Chairman and CEO, CME Group, confirmed that all partners will have access to CME Group's contracts. Lynne Fitzpatrick, CFO, CME Group, clarified that CME Group's FCM is one of many potential participants and not exclusive. She stated that DCM and DCO fees are consistent across all products, and FCMs will charge their own commissions. Terry Duffy added that the economics for new markets are still a work in progress, and pricing models may vary.

Brian Bedell from Deutsche Bank Securities asked a multi-part question about the growth in retail traders, how they are measured, and their trading behavior, as well as CME's strategy for the crypto ecosystem, including perpetual futures and potential acquisitions.

Answer

Chairman & CEO Terrence Duffy highlighted the unprecedented 56% YoY growth in new retail traders, noting they are active across asset classes with high media attention. He positioned CME as a regulated "fast follower" in crypto and stated perpetuals are currently illegal in the U.S. Chief Commercial Officer Julie Winkler added that this was the fifth consecutive quarter of double-digit retail client acquisition growth. Senior Managing Director Tim McCourt provided details on the strong momentum in crypto futures volume, which continued into July.

Brian Bedell from Deutsche Bank Securities inquired about the growth in retail trading, how CME measures new participants, and the company's strategic role in the broader crypto ecosystem, including perpetual futures and tokenization.

Answer

Terrence Duffy (Chairman & CEO), Julie Winkler (Chief Commercial Officer), and Tim McCourt (Senior Managing Director) provided a comprehensive answer. Duffy highlighted the unprecedented 90,000 new retail traders in Q2 and positioned CME as a regulated "fast follower" in crypto, noting U.S. legal restrictions on perpetuals. Winkler detailed the fifth consecutive quarter of double-digit retail client growth, driven by broker partnerships and education. McCourt added that crypto complex ADV was up over 130% year-over-year with strong momentum continuing.

Brian Bedell of Deutsche Bank asked to what extent retail users trade contracts other than micros and whether volume-based pricing tiers are concentrated in interest rates or diversified across products.

Answer

Lynne Fitzpatrick, CFO, explained that volume tiers are product-specific, not based on total volume, and are designed to encourage trading during high-volume periods. Julie Winkler, Chief Commercial Officer, stated that while micros are a good proxy, retail traders also trade full-size contracts in products like gold and crypto. Terrence Duffy, Chairman and CEO, added that institutions also use micro contracts.

Sought clarification on the 'blurring' of retail users, their interaction with CME's data products, the revenue contribution from retail, and an update on cash collateral balances.

Answer

The 'blurring' refers to the narrowing gap between professional retail and institutional traders due to technology access. Retail users are sophisticated consumers of data, driving growth in non-professional device usage. While a specific revenue percentage was not disclosed, retail drove two-thirds of the $1 billion in new client revenue over the last five years. Cash collateral balances ticked up slightly in Q1, but the new fee structure doesn't begin until April.

Brian Bedell asked if CME could use tiered pricing on SOFR contracts as a competitive tool in the future. He also requested a review of the collateral balances and the rates earned on them during the quarter and exiting September.

Answer

CEO Terrence Duffy declined to comment on future competitive pricing actions, stating they have many levers and will not predetermine their strategy. CFO Lynne Fitzpatrick provided collateral details: Q3 average cash balances were $72 billion earning 36 bps, and non-cash was $165 billion earning 10 bps. She noted the rate paid to clients on cash is 25 bps, with the extra earnings coming from optimization strategies that could be pressured if market rates continue to fall.

Brian Bedell asked about the expected seasonality of money market fund flows in the first half of 2026, including January outflows and tax season impacts. He also inquired about the BNY Mellon and Goldman Sachs collaboration on tokenized money funds, the firm's role as a stablecoin reserve manager versus a tokenized money fund manager, and whether tokenization will be incrementally additive or cannibalistic to the money fund franchise.

Answer

Debbie Cunningham, CIO, outlined typical seasonality: January and Q1 generally see outflows due to corporate and individual tax dates, with growth picking up in H2, while separate accounts often offset fund trends. Chris Donahue, President and CEO, described the BNY/Goldman collaboration as tokenizing the process around a traditional money fund, with BNY Mellon dual-processing on both traditional and digital ledgers for client comfort. Debbie Cunningham clarified that stablecoins, backed 100% by collateral, cannot pay interest, making Genius Act-compliant tokenized money funds suitable collateral for stablecoins, thus representing an additional client base. Chris Donahue affirmed that tokenization, like past industry changes, is expected to be additive, contributing to continued higher highs and lows for the money fund business.

Brian Bedell asked about the expected seasonality trends for money market fund flows in the first half of the year, considering typical January outflows and tax season. He also inquired about the BNY/Goldman tokenization collaboration, the opportunity for Federated Hermes as a stablecoin reserve manager versus a tokenized money fund manager, and the long-term impact of tokenization on the money fund franchise.

Answer

Debbie Cunningham, Chief Investment Officer for Money Markets, explained that January and Q1 are typically weak for money market fund flows due to tax dates, with growth picking up in the second half, though separate accounts often offset this seasonality. Chris Donahue, President and CEO, and Debbie Cunningham detailed the BNY/Goldman collaboration as a dual-ledger process for comfort, treating the underlying money fund as traditional. Debbie Cunningham clarified that stablecoins must be 100% backed by defined collateral (like Genius Act funds) and cannot pay interest, making Genius Act funds suitable collateral. Chris Donahue affirmed that tokenization is expected to be incrementally additive, contributing to continued higher highs and higher lows for the money market business.

Brian Bedell from Deutsche Bank asked to what extent the tokenization of money market funds could expand the total size of the industry. He also inquired if Federated Hermes expects to gain market share from this trend, given its scale, reputation, and low-cost structure.

Answer

CEO J. Christopher Donahue and CIO of Global Liquidity Markets Deborah Cunningham both stated that while they believe tokenization will be an incremental positive for the industry, it is too early to quantify the potential size of the growth. Regarding market share, Mr. Donahue explained that regulation creates high barriers to entry, which benefits large, established players. However, he emphasized that the business is intensely competitive, and while they will strive to increase their share from the current 7.11%, it is not a guaranteed outcome.

Brian Bedell of Deutsche Bank questioned the extent to which tokenization could expand the total size of the money market fund industry and whether Federated Hermes could gain market share from this trend due to its scale and reputation.

Answer

J. Christopher Donahue, Chairman, President, & CEO, and Deborah Cunningham, EVP & CIO of Global Liquidity Markets, stated it is 'too early to tell' how much tokenization might grow the industry but believe the impact will be incremental. Regarding market share, Mr. Donahue explained that regulation has created a competitive oligopoly, making significant share shifts challenging for any single player. While Federated Hermes aims to grow its share, he did not commit to the idea that tokenization would be a definitive catalyst for share gains.

Brian Bedell asked about the institutional cash management business, seeking to quantify the addressable market of client assets currently in overnight agreements that could shift to money funds. He also asked if the improved performance of the Strategic Value Dividend fund is expected to lead to positive flows soon.

Answer

CIO for Money Markets, Deborah Cunningham, estimated that an additional 10% to 20% of asset flows could potentially move from direct overnight cash into money funds if yield advantages are maintained. CEO John Donahue emphatically added that the potential market was in the 'trillions.' Regarding the Strategic Value Dividend fund, Donahue noted the positive performance trend is improving client sentiment and expects the flow trend to continue improving, though he did not provide a specific timeline for a return to inflows.

Brian Bedell extended the discussion to 2027, asking if the base management fee growth rates would inflect upward, returning to 2020-2022 levels, and if FRE margin improvement could continue, considering any potential ceiling.

Answer

Michael Chae, Vice Chairman and CFO, expressed confidence in both 2026 and 2027 for fee-related earnings. He highlighted the full-year contribution of new fundraisers in 2027, the timing of the infrastructure incentive fee, and the potential for transaction fees to grow with market cycles. He affirmed strong expectations for operating leverage and continued margin improvement without specifying a ceiling.

Brian Bedell extended the discussion to 2027, asking if the anticipated ramp-up in base management fees, driven by new private equity funds and expiring fee holidays, would lead to an inflection point back to the higher growth rates seen in the 2020-2022 cycle. He also inquired about the potential for continued FRE margin improvement in 2027 and any perceived ceiling for these margins.

Answer

Chairman and CEO Steve Schwarzman expressed strong confidence in both 2026 and 2027 for fee-related earnings, including fee-related performance revenues (noting a large Infrastructure incentive fee late in 2027) and transaction fees, assuming the current market cycle continues. He affirmed that the full-year fee contributions from new fundraisers in 2027, combined with operating leverage, support a positive outlook for margins.

Brian Bedell asked about competition from banks in direct lending and its impact on spreads, the continued growth dynamic of credit insurance fundraising, and the outlook for base fee growth in Q4 on a year-over-year basis.

Answer

Jon Gray, President and Chief Operating Officer, noted that banks are healthy and competitive, but this dynamic is constant, and increased deal volume will create a healthier supply-demand balance. He highlighted the exceptional momentum in insurance due to Blackstone's open architecture model and scale. Michael Chae, Vice Chairman and Chief Financial Officer, projected continued top-line momentum for management fees but slower year-over-year growth in Q4 due to prior-year flagship step-ups and real estate slowing, with a positive outlook for 2026.

Brian Bedell inquired about competition with banks in direct lending, its impact on spreads, the continuation of credit insurance as a growth driver, and the outlook for base fee growth for Q4 year-over-year.

Answer

President and COO Jon Gray noted that bank competition is a constant dynamic, but improving markets increase deal volume, benefiting both private credit and banks. He highlighted the exceptional momentum in the insurance business due to its open architecture model and scale. Vice Chairman and CFO Michael Chae expected continued top-line momentum for management fees in Q4, but slower year-over-year growth compared to Q3 due to prior year flagship step-ups and sequential slowing in real estate.

Brian Bedell inquired about the international backdrop, including the impact of tariff negotiations on corporate decision-making and capital deployment in Europe and Asia, as well as retail demand in Japan and Europe.

Answer

President and COO Jonathan Gray observed that while global investors have questions about U.S. policy, there has been no material pullback in capital allocation from international clients, including private wealth in Japan. He noted that a stronger dollar has been a benefit and that there is some increased investor interest in diversifying into European and Asian assets. He concluded that it is still early and a resolution to tariff uncertainty would be helpful.

Brian Bedell inquired about the fee-related earnings (FRE) margin outlook for 2025, considering base fee growth, the impact of fee-related performance revenues (FRPR), and the fungibility of compensation.

Answer

Michael Chae, CFO, suggested a starting point of "margin stability" for 2025. He highlighted positive drivers, including a higher baseline for management fee growth (Q4's 10% YoY is a "reasonable starting point") and a stable OpEx growth rate. He also noted the higher incremental margin on certain FRPRs and the firm's ongoing investment in new initiatives, while emphasizing a high degree of control over the overall cost structure.

Brian Bedell asked about the connection between massive AI and data center deployment opportunities and the firm's fundraising capacity, questioning if it could accelerate fund cycles.

Answer

President & COO Jonathan Gray explained that Blackstone's ability to deploy large-scale, cross-platform capital is a significant competitive advantage in the data center space. He noted that while it's too early to predict an acceleration of specific fund cycles, the theme is a major driver of performance and deployment, which should lead to faster deployment and higher returns overall.

Brian Bedell asked about the FinTech division's medium-term growth targets, noting the acceleration in upsells and new clients in Q4. He inquired if, despite implementation lags and headwinds in early 2026, this momentum suggests a potential acceleration of RegTech and Capital Markets revenue growth towards the higher end of their ranges for the full year 2026.

Answer

Adena Friedman, Chair and CEO, reminded that Q4 is typically the largest sales quarter for FinTech. She expressed satisfaction with the strong momentum across all FinTech subdivisions, including remarkable upsells and new sales, and highlighted strong client engagement and innovation. Friedman did not provide specific 2026 outlook but affirmed confidence in the business's ongoing performance and opportunities.

Brian Bedell asked about the FinTech division's medium-term growth targets, noting the significant acceleration in upsells and new clients in Q4 2025, despite anticipated implementation lags and headwinds in early 2026. He questioned whether this momentum suggested a potential acceleration of RegTech and Capital Markets Technology revenue growth towards the higher end of their guidance ranges, or at least an overall acceleration on a full-year basis in 2026 compared to 2025.

Answer

Adena Friedman, Chair and Chief Executive Officer of Nasdaq, clarified that Q4 is typically the largest sales quarter for FinTech, reflecting a cyclical pattern. She affirmed strong momentum, client engagements, and robust sales performance across all FinTech subdivisions, including remarkable upsells and new sales. While not providing specific 2026 guidance, Friedman expressed satisfaction with the ongoing business performance, customer engagement, and the significant opportunity set, emphasizing the critical role of innovation at scale.

Brian Bedell asked if the emergence of Nasdaq's AI solutions is helping to accelerate the achievement of the revenue synergy target of exceeding $100 million by the end of 2027, and requested an update on the current status of this target.

Answer

Adena Friedman, Chair and CEO of Nasdaq, confirmed that AI solutions are indeed a catalyst, giving increased confidence in achieving revenue synergy targets. She noted 30 cross-sells since the Adenza acquisition and a consistent 15% of the Financial Technology sales pipeline underpinned by cross-sells. She highlighted that upsells are often driven by Gen AI capabilities, supporting cross-sell efforts and overall growth.

Brian Bedell of Deutsche Bank Securities asked if the strong Q2 in Capital Markets Tech implies full-year growth will be at the higher end of guidance, and if the maturing crypto ecosystem improves the long-term outlook for the Adenza business.

Answer

Chair & CEO Adena Friedman maintained a consistent full-year outlook for Capital Markets Tech, citing some elongated sales cycles. Regarding crypto, she stated that while its institutional adoption was not a core assumption in the Adenza acquisition, if crypto becomes 'bankable,' it would create a significant opportunity across the entire FinTech division for infrastructure, risk, and compliance solutions.

Brian Bedell asked if AxiomSL's global business is offsetting U.S. regulatory headwinds and inquired about the potential for crypto market growth to drive demand for RegTech, Calypso, and Verafin.

Answer

CEO Adena Friedman confirmed that AxiomSL is a highly diversified global business that processes thousands of regulatory changes annually, providing a buffer against timing shifts in any single jurisdiction like the U.S. Basel III endgame. On crypto, she stated that a more regulated environment presents a significant opportunity across multiple platforms, including Market Tech, Surveillance, Verafin, and AxiomSL, as banks would require solutions for trading, compliance, and reporting of the new asset class.

Brian Bedell noted the strong Q4 sales metrics in FinTech and asked if this was purely seasonal or if it indicated improving momentum that could drive stronger ARR growth into 2026.

Answer

Adena Friedman, Chair and CEO, confirmed that Q4 is consistently a seasonally high sales quarter for the company. However, she also emphasized that Nasdaq is seeing strong underlying client engagement trends that are providing positive momentum heading into 2025.

Brian Bedell asked about the index options business, specifically its expected revenue contribution in 2025 and the extent to which it is being marketed to retail investors and platforms.

Answer

CEO Adena Friedman characterized the index options business as a 'nice grower' with good momentum, but noted it is still a small contributor to overall options revenue. She confirmed they are actively marketing to retail platforms and also pursuing opportunities with international investors and for inclusion as overlays in ETFs.

Brian Bedell asked about the traction Invesco is seeing in the Defined Contribution channel, specifically regarding plan sponsors' willingness to add private markets to 401(k)s and whether actual traction is building this year.

Answer

CEO Andrew Schlossberg noted ongoing discussions and some traction in the United States, but observed more significant traction in the United Kingdom and across Europe due to retirement reform. He views the integration of private markets into DC plans as a long-term, multi-layered trend, not solely US-centric, and highlighted Invesco's product offerings and the LGT partnership for institutional markets.

Brian Bedell (Deutsche Bank) asked about the traction Invesco is seeing in the Defined Contribution (DC) channel for private markets, specifically regarding plan sponsors' willingness to add private markets to 401(k)s, and the company's positioning.

Answer

Andrew Schlossberg (CEO) noted significant discussions and some traction in the US DC market, but observed more substantial traction in the UK and other parts of Europe due to retirement reforms. He emphasized that this is a long-term, multi-layered trend, and Invesco has the product offerings and partnerships (like LGT) to address both institutional and plan sponsor needs, leveraging LGT's strong institutional reputation.

Brian Bedell asked how the expansion of active ETFs impacts growth in the ETF and index bucket versus fundamental equities, for segmentation of the $15 billion India AUM, and the expected timing for the QQQ ETF conversion to the P&L if approved on December 5th.

Answer

President and CEO Andrew Schlossberg explained that active ETF growth is currently early, seen across various vehicle types (ETFs, SMAs, model portfolios) and capabilities (fixed income, equity), with fixed income leading flows. CFO Allison Dukes clarified that the $15 billion India AUM is entirely within the 'China JV and India AUM' category and that the QQQ ETF conversion would happen immediately following shareholder approval at the December 5th meeting.

Brian Bedell asked if the expansion of active ETF strategies is primarily driving growth in the ETF and index bucket or impacting fundamental equities. He also asked for housekeeping details on India sale AUM segmentation and QQQ ETF conversion timing.

Answer

President and CEO Andrew Schlossberg expects growth across ETF, SMA, and model portfolios, encompassing various asset classes, with fixed income leading active ETF flows. CFO Allison Dukes confirmed India's $15B AUM is from the China JV and India category, and QQQ conversion would be immediate post-shareholder meeting approval.

Brian Bedell from Deutsche Bank asked for clarification on the accounting for QQQ expenses and inquired about Invesco's long-term strategy and positioning for the potential adoption of private market products in the 401(k) market.

Answer

CFO L. Allison Dukes confirmed that the approximate 14 basis points of licensing, custody, and discretionary marketing fees would be recognized in the 'third party distribution, service and advisory expense' line. President & CEO Andrew Schlossberg addressed the 401(k) topic, acknowledging regulatory hurdles but stating Invesco is well-positioned with its trust company, collective trust capabilities, and ability to create multi-asset solutions combining public and private assets.

Brian Bedell inquired about the economic structure of the Barings partnership and whether Invesco is seeing regional differences in investment sentiment due to global trade tensions.

Answer

CEO Andrew Schlossberg described the partnership as Invesco-led products where Invesco acts as distributor and operator, sharing management fees with Barings on an undisclosed basis. He also stated that Invesco has not seen anti-U.S. sentiment, but rather a broadening of allocations, where the firm's strong local presence in EMEA and Asia is an advantage.

Brian Bedell inquired about the compensation-to-revenue ratio outlook, both under the current flat-market guidance and in a scenario with 10% market growth. He also asked for more specifics on the active equity ETF strategy, particularly regarding the cloning of existing mutual funds and potential pushback from distribution channels.

Answer

Chief Financial Officer Allison Dukes stated that the comp-to-revenue ratio was just over 43% in 2024 and a similar level is a reasonable expectation for 2025, with a longer-term goal of returning to the 38-42% range. President and CEO Andrew Schlossberg discussed multiple paths for active ETFs, including conversions and potential ETF share classes, noting that while cloning is an option, it is not the core path. He emphasized that distribution platforms primarily want high-quality products in multiple wrappers.

Brian Bedell inquired if the fee rate at the Great Wall JV in China could rebound due to a mix shift towards equities. He also asked about the outlook for global liquidity flows, including seasonality and the impact of a rate-cutting cycle.

Answer

President and CEO Andrew Schlossberg acknowledged that a shift to equities in China would be positive for the fee rate but cautioned that equities are only 30% of the JV's business and the market is volatile. On liquidity, he explained that the business is 85% institutional, and these clients have other options in a changing rate environment, making the outlook different from retail-focused money market funds.

Brian Bedell of Deutsche Bank sought clarification on the accounting for QQQ expenses and asked about Invesco's strategic positioning for the potential adoption of private market products within the 401(k) market.

Answer

Senior MD & CFO L. Allison Dukes confirmed the expense accounting. President, CEO & Director Andrew Schlossberg addressed the 401(k) market, noting that regulatory and litigation relief is needed for acceleration. He stated Invesco is well-positioned with its trust company, collective trust wrappers, and multi-asset capabilities to meet demand as the market evolves, though he expects it will take time.

Brian Bedell asked for Rick Wurster's views on prediction markets, specifically whether Schwab would be interested in launching contracts related to fundamental investing or economic types on its platform, how it would evaluate such opportunities, and what feedback is being received from trading clients.

Answer

President and CEO Rick Wurster stated that Schwab's mission to champion clients' financial goals guides its approach. He indicated openness to prediction markets related to financial aspects (employment, inflation, stock positions) if client demand emerges, but noted it's not currently a high priority for active traders, with most observed volume being sports gambling. He firmly distinguished this from sports gambling, which Schwab avoids as it contradicts its mission of wealth building, leaving that to firms like DraftKings and FanDuel.

Brian Bedell asked for Rick Wurster's views on prediction markets, specifically whether Schwab would be interested in launching contracts related to fundamental investing or economic types, how they would evaluate it, and client feedback.

Answer

President and CEO Rick Wurster stated that Schwab's mission guides their approach: championing clients' financial goals. He indicated that if prediction markets related to financial aspects (employment, inflation, stock positions) develop client demand, Schwab would make them available. However, he noted that client interest from active traders is currently low, with most observed volume in sports gambling, which Schwab avoids as it contradicts their mission of helping clients grow wealth.

Brian Bedell asked about the recent idiosyncratic instances of fraud in the credit industry, questioning if there are structural issues beyond a credit cycle, potential concerns for retail investors, and the nature of questions from financial advisor partners.

Answer

Mike Arougheti, Co-Founder, CEO, and Director, noted that bank earnings and card company data show no meaningful increase in loan loss reserves or delinquencies, suggesting the events are idiosyncratic. He speculated that growth in private credit might lead smaller or new players to take undue risks. He emphasized that the industry is concentrated among large platforms like Ares, which focus on appropriate risks and structures, and that Ares categorically avoids areas like trade finance due to fraud opportunities. He concluded that these events are coincidental and not indicative of a broader industry issue.

Brian Bedell asked if recent high-profile fraud events in the industry indicate any structural issues beyond a credit cycle, if this is a concern for retail investors, and what questions Ares is receiving from financial advisor partners.

Answer

Mike Arougheti, Co-Founder, CEO, and Director of Ares Management Corporation, described the fraud events as idiosyncratic and coincidental, noting that broader data from major banks and card companies shows no meaningful increase in loan loss reserves or delinquencies. He suggested that growth in the private credit sector might lead smaller or new players to take risks they don't understand, but emphasized that the industry is concentrated among large incumbents focused on appropriate risks and structures. He stated that Ares categorically avoids certain asset types like trade finance due to fraud opportunities.

Brian Bedell asked about the deployment timeline for the $105 billion of AUM not yet paying fees, and whether an improving deployment environment could accelerate this from the typical 18-24 month window.

Answer

CEO Michael Arougheti stated that historically, the relationship between dry powder and deployment has been nearly one-to-one. Given the current deployment pace and historical trends, he suggested the timeline to deploy this capital is likely closer to one year rather than the more conservative 18-24 month guidance often cited.

Brian Bedell asked about the deployment timeline for the $105 billion of AUM not yet paying fees, questioning if the typical 18-24 month window could accelerate with improving deployment activity.

Answer

Michael Arougheti, Co-Founder, CEO & Director, noted that historically, the relationship between dry powder and deployment has been nearly one-to-one. He stated that while the official guidance has been 18-24 months, the actual deployment pace has been closer to one year, and he expects that strong correlation to continue given the current environment.

Brian Bedell asked about growth in the retail segment, focusing on penetrating the addressable market through more advisors, especially in channels with lower fees. He also questioned if the product pipeline could exceed the 8-10 semi-liquid product target by 2028, given new opportunities in sports and from the GCP acquisition.

Answer

CEO Michael Arougheti confirmed it is possible to exceed the 8-10 product target, particularly with the new capabilities from the GCP acquisition. He stated that growth in the retail channel is proceeding as planned, requiring a dual focus on the large wirehouse platforms for scale and the fast-growing RIA channel for rapid growth.

Brian Bedell sought clarification on ICE's Q4 Mortgage outlook, specifically whether the flat revenue guidance applied to the entire segment or just recurring revenue, and asked about the longer-term revenue synergy build, integration timeline, and potential competition from blockchain in the mortgage space.

Answer

Warren Gardiner, CFO of Intercontinental Exchange, clarified that the Q4 flat revenue guidance was for recurring revenue, acknowledging typical seasonal impacts on transaction fees. He referenced MBA forecasts for high single-digit loan growth next year and ICE's prior guidance of lower-mid single-digit growth in such an environment. Ben Jackson, President of Intercontinental Exchange, addressed competition, emphasizing ICE's position as an independent, well-capitalized, and neutral technology provider, and discussed PennyMac's situation as a long-standing dispute leading to a move to a proprietary system.

Brian Bedell from Deutsche Bank requested clarification on the Q4 mortgage revenue outlook, specifically whether the flat revenue guidance applied to the entire segment or just recurring revenue, and asked for an update on the longer-term revenue synergy build, integration timeline, and competitive landscape from blockchain in the mortgage space.

Answer

Warren Gardiner, CFO, clarified that the flat revenue comment referred to recurring revenue, with transaction revenue subject to seasonal purchase volume impacts. He pointed to MBA forecasts for high single-digit loan growth next year, suggesting lower-mid single-digit growth for ICE Mortgage Technology in that environment. Ben Jackson, President, emphasized ICE's position as an independent, well-capitalized, neutral technology provider, highlighting sales success and addressing competitive dynamics with PennyMac and Rocket.

Brian Bedell of Deutsche Bank asked about Circle's appetite for partnerships that might involve higher distribution costs and lower reserve margins in order to achieve "winner-take-most" scale for USDC.

Answer

Chairman, CEO & Co-Founder Jeremy Allaire stated a strong appetite for win-win, growth-oriented partnerships, noting that deals are unique and not all involve sharing reserve income. CFO Jeremy Fox-Geen added that the RLDC margin is supported by three long-term tailwinds: strengthening network effects, growth of USDC held on Circle's own platform infrastructure, and the growth of high-margin 'Other Revenues' from value-added services.

Brian Bedell of Deutsche Bank Securities asked about the expense outlook, the potential path to a 60% FRE margin, and progress on the $250 million FRE upside from acquiring stakes in partner managers, clarifying if the Angel Oak deal was incremental.

Answer

CFO Hadley Peer Marshall stated that the ~10% expense growth reflects strategic investments and should remain steady. She noted margins are impacted by business mix, such as partner manager acquisitions. She confirmed they are in the early stages of realizing the $250 million FRE opportunity and that the Angel Oak acquisition is incremental to that figure.

Brian Bedell asked about the expected deployment cycle times for new large funds compared to prior vintages, especially in a distressed environment. He also sought clarification on whether the projected $250 million FRE uplift from increasing partner stakes includes Oaktree.

Answer

President Connor Teskey stated that while flagships typically deploy over 3 to 3.5 years, that timeline would shorten in a distressed market to capitalize on opportunities. In the current environment, he expects deployment to be at or inside the traditional run rate. CFO Hadley Peer Marshall confirmed that the $250 million FRE growth estimate over five years from increasing ownership does include all partner managers, including Oaktree.

Brian Bedell of Deutsche Bank inquired about the outlook for capital markets fees in the second half of 2025 and the key long-term organic growth drivers for the business beyond the macro environment.

Answer

CEO Harvey Schwartz outlined a strategy focused on high-quality fees without balance sheet risk. He identified three organic drivers: new fund vintages adopting the fee structure, increased operating leverage as the practice becomes standard, and the overall growth of the platform. CFO John Redett added that significant growth has already been achieved in a benign market, suggesting future upside.

Brian Bedell of Deutsche Bank Securities asked about the outlook for capital markets fees, questioning if the second half of the year could exceed the first and what the key long-term organic growth drivers are.

Answer

CEO Harvey Schwartz explained that the capital markets strategy is now ingrained in the business and has significant operating leverage to market activity. He identified three organic growth drivers: new fund vintages adopting the fee structure, the natural muscle memory and flywheel effect of the business, and the overall scale and growth of the platform. He suggested that in the right environment, the business should meaningfully exceed its prior peak of $300 million. CFO John Redett added that the revenue is high quality as it does not involve balance sheet risk.

In a follow-up, Brian Bedell asked about the timing for launching the next flagship buyout fund, CP IX, given that its predecessor is 70% committed, and whether any of its fundraising is included in the current year's targets.

Answer

CEO Harvey Schwartz and CFO John Redett clarified that no fundraising for CP IX is included in the current year's financial targets. Harvey Schwartz stated the plan remains a Q4 kickoff, but the timing is flexible and depends on the deployment pace of the current fund, CP VIII. John Redett added that strong performance in predecessor funds supports the timeline.

Brian Bedell asked about G&A expenses, including the Q4 increase and the 2025 outlook amid investments in retail and asset-backed finance. He also inquired if the capital markets platform investment is now complete, suggesting higher incremental margins ahead.

Answer

CFO John Redett explained that the elevated Q4 G&A was due to seasonality and one-off fundraising expenses. He noted G&A grew only 4% in 2024 and expects Q1 2025 to be similar to Q4. He confirmed ongoing investments in Wealth (headcount up >50%), Credit, and Solutions, indicating the investment phase is not complete.

Brian Bedell followed up on the topic of tariffs, asking how Carlyle views the potential impact on global trade and its capital deployment strategy outside the U.S., particularly in Europe and Japan.

Answer

CEO Harvey Schwartz reiterated that it would be a mistake to alter strategy based on anticipating government policy. He stressed that Carlyle's structure as a global firm with strong local capabilities, such as its leading franchise in Japan, is a key advantage in any environment. He suggested the firm is better served by focusing on more certain factors like regulatory policy while preparing for various peripheral scenarios.

Brian Bedell inquired about the firm's strategy for bringing private market investments into the 401(k) and defined contribution (DC) channel, asking about their plans for product integration and partnerships.

Answer

President and CEO Jennifer Johnson stated they are pursuing both partnerships, like one with Apollo, and developing their own products. She acknowledged that the litigious nature of the DC space might slow adoption but confirmed they are building private market allocations into their target-date funds for a potential 2026 launch. EVP & Head of Global Distribution Adam Spector added that the Putnam acquisition provided significant scale in the target-date space, which is key to their strategy.

Brian Bedell of Deutsche Bank asked for clarification on the $470 billion international AUM and how Franklin Templeton is positioned for a potential client rotation from U.S. to non-U.S. investment strategies.

Answer

Head of Global Distribution Adam Spector clarified that the $470 billion figure represents AUM sourced from clients outside the United States. He stated that the firm is well-positioned for such a shift, as international and global equity are hallmark strategies for the company outside the U.S. He also noted that the firm has relative strength in value strategies, which are benefiting from a separate allocation shift away from growth.

Brian Bedell from Deutsche Bank Securities inquired about T. Rowe Price's strategy for integrating private market assets into its 401(k) and target-date fund offerings, asking about the potential timing, key considerations for plan sponsors, and whether the firm would use OHA exclusively or seek other partners.

Answer

President, CEO & Chair Robert Sharps responded that the firm is encouraged by the long-term potential to improve participant outcomes with private assets. He noted that while the investment case is sound, concerns about fees and fiduciary risks remain. Sharps mentioned that potential regulatory guidance could provide clarity, but legislation would be preferable for long-term stability. He confirmed T. Rowe Price would consider OHA's capabilities and is also in discussions with other best-in-class partners.

Brian Bedell of Deutsche Bank Securities inquired about the potential to accelerate the entry into the 401(k) market via the Voya partnership, possibly by targeting the small plan market through financial advisors.

Answer

Co-CEO Marc Lipschultz agreed with the premise, noting that Blue Owl's existing retail vehicles like BDCs are already eligible for 401(k) plans. He acknowledged that while the bulk of the market is in target-date funds (a medium-term effort), Blue Owl is already positioned on the 'front edge' to serve the portion of the market where advisors or individuals make direct allocation decisions, stating the opportunity 'matches hand in glove' with their platform.

Brian Bedell asked about the timing for deploying capital to activate the $260 million in fees from AUM not yet paying fees, and whether deployment might be soft in the near term.

Answer

Co-Chief Executive Officer Marc Lipschultz countered the idea of softness, highlighting that deployment has been at 'exceptionally healthy' levels despite a tepid M&A market. He expressed bullishness on future deployment opportunities, stating that when PE activity inevitably picks up, it will drive 'pretty meaningful upticks' in volume, though he could not predict the exact timing.

Brian Bedell asked how digital and AI initiatives in wealth management enhance the client relationship and whether the firm would move down-market. He also inquired about alternatives penetration and product availability for wealth clients.

Answer

Chairman and CEO Michael O'Grady explained that technology enhances the client experience by improving processes and empowering employees with better tools, and that the strategy is to refine the value proposition for all client tiers. Regarding alternatives, he and EVP & CFO David Fox noted that the platform provides access to both large and bespoke managers, with a focus on highly curated, differentiated opportunities and advisory services.

Brian Bedell asked whether the company targets total operating leverage, including volatile NII, or if the primary focus remains on the expense-to-trust fee ratio. He also inquired about the strategy to increase the penetration of Northern Trust Asset Management (NTAM) products within its Wealth Management channel, and if the mix could return to historical highs.

Answer

Chief Financial Officer David Fox emphasized that the goal is a sustainable model, meaning the expense curve must decline regardless of market-driven NII performance. Chairman and CEO Michael O'Grady stated they see a positive opportunity to increase NTAM penetration by better aligning the businesses, segmenting solutions for different wealth tiers (GFO, ultra-high net worth), and expanding offerings like ETFs and alternatives.

Brian Bedell inquired about the organic revenue growth target for the Wealth segment and whether growth would come from new or existing clients. He also asked if strong revenue could justify expense growth of 6% or more.

Answer

Then-CFO Jason Tyler stated the goal is for Wealth Management to achieve a 2.5% to 3% organic growth rate, balanced between new client acquisition and increasing wallet share with existing clients. He and CEO Mike O'Grady reiterated a commitment to decouple expense growth from revenue fluctuations, aiming for absolute expense control below 5% next year.

Brian Bedell of Deutsche Bank asked for the market return assumptions behind the updated fee guidance and for a longer-term perspective on the tokenization of assets and State Street's role in this trend.

Answer

Interim CFO Mark Keating noted that their market assumptions are now more constructive than at the start of the year. CEO Ronald O'Hanley shared his view that asset tokenization will accelerate as regulatory frameworks solidify, creating broad opportunities. He affirmed that State Street intends to be a key participant, primarily as a major servicer for these emerging digital asset markets.

Asked about the potential for more aggressive deposit gathering, sought clarification on the Q4 asset management fee rate as a baseline for future growth, and inquired about the long-term prospect of alternative products being adopted in 401(k) plans.

Answer

Executives confirmed that some deposit expansion initiatives are built into the outlook and that Q4 was a good jumping-off point for SSGA's growth. Regarding alternatives in 401(k)s, Ron O'Hanley explained that significant litigation risk has been a major roadblock, and a regulatory 'safe harbor' rule would likely be necessary for widespread adoption.

Brian Bedell of Deutsche Bank AG inquired about the potential for more aggressive deposit-raising strategies and asked about SSGA's Q4 fee rate sustainability and the long-term prospect of alternative products in 401(k) plans.

Answer

Incoming Interim CFO Mark Keating stated that ongoing client engagement on deposits is already factored into the company's outlook. CEO Ron O'Hanley confirmed Q4 was a solid jumping-off point for SSGA's growth. Regarding 401(k)s, O'Hanley noted that while State Street has innovated with annuities in target-date funds, widespread adoption of illiquid alternatives is unlikely without a regulatory safe harbor due to significant litigation risks for fund trustees.

Brian Bedell of Deutsche Bank asked about the Platforms Operating Model, seeking to frame the cost reduction benefits over the next year as the remaining half of the company migrates. He also questioned how this model informs M&A strategy and whether it could facilitate a large-scale integration.

Answer

CFO Dermot McDonough emphasized that the model is about 'running the company better' and creating capacity, not just cost reduction, with benefits expected to mature over the next few years. CEO & Director Robin Vince added that the model is a 'two-sided thing' that also drives revenue. He explained that the model creates a clear, well-organized 'chassis,' which would allow for higher-quality integrations of future acquisitions, of any size, by enabling them to be bolted on more efficiently.

Brian Bedell of Deutsche Bank inquired about the progress of BNY Mellon's platform operating model, asking if the resulting efficiencies and cross-selling are exceeding expectations. He also asked whether these gains would lead to lower expense growth or be reinvested, and confirmed the timeline for full company adoption.

Answer

CEO Robin Vince explained that the platform model is a long-term investment, with significant benefits expected in 2026 and beyond, layered with AI benefits later in the decade. He noted the firm is simultaneously realizing savings from past initiatives like Project Catalyst. CFO Dermot McDonogh confirmed the firm is on track to fully operate in the new model by this time next year and highlighted the consistent reduction in expense growth over the past few years, reinforcing the firm's confidence in its guidance.

Brian Bedell of Deutsche Bank asked for the key assumptions in the 2025 outlook, specifically regarding deposit growth for NII and market appreciation for fee revenue. He later asked for clarification on the revenue guide for the Wove platform.

Answer

CFO Dermot McDonogh stated the NII guide assumes roughly flat balances, with proactive asset-side management being a key driver. He noted the fee guide assumes a neutral market appreciation environment and that a 5% market move equates to about $70 million in fees. For Wove, he guided to $60-$70 million in incremental revenue for 2025.

Brian Bedell asked about the revenue impact from the 'commercial lift off' initiative and requested confirmation of revenue sensitivity to market movements. He later inquired about the firm's view on investing future revenue gains versus allowing margins to expand beyond the 33% target.

Answer

CFO Dermot McDonogh confirmed the market sensitivity figures ($60M in fees for a 5% equity change, $40M for fixed income) and described the commercial initiatives as a strategic way to deliver holistic solutions. Regarding margins, Dermot stated the goal is to prove they can consistently deliver 33% through the cycle while balancing investment and positive operating leverage. CEO Robin Vince added that they are pursuing operating leverage differently by segment, growing the business in some areas and the margin in others.

Brian Bedell of Deutsche Bank asked about the growth trajectory for iShares, focusing on the European market and the long-term potential for fixed income ETFs to substitute for individual bond holdings.

Answer

President Robert S. Capito noted industry-leading flows, with bond ETFs attracting $44 billion in Q2 and Europe seeing $29 billion in inflows. CEO Laurence D. Fink added that Europe is 5-6 years behind the U.S. in ETF adoption and is just beginning a major growth phase, driven by regulatory changes. He believes BlackRock's dominant European presence and innovation in areas like digital asset ETFs position it perfectly to capture this growth.

Brian Bedell of Deutsche Bank asked about the growth drivers for the iShares franchise, focusing on the substitution of fixed income securities for ETFs and the growth potential in Europe's democratizing retail investor base.

Answer

President Robert S. Capito highlighted industry-leading global ETF flows driven by diversified offerings, with particular strength in fixed income, active, and digital asset ETFs. He noted Europe saw $29 billion of net inflows. CEO Laurence D. Fink added that Europe's ETF market is 5-6 years behind the U.S. and is just beginning a significant growth phase, driven by regulatory changes and new investor access. He also mentioned that digital asset ETFs like iBit are bringing new clients to the iShares platform.

Brian Bedell inquired about BlackRock's confidence in growing its retail alternatives business, the likelihood of regulatory changes like safe harbor provisions for 401(k)s, and demand from plan sponsors.

Answer

Martin Small, an executive, detailed a multi-pronged strategy to grow retail alternatives, where allocations remain in the low single digits. Key initiatives include simplifying access through managed model solutions (like with Partners Group), launching evergreen funds in Europe under the ELTIF 2.0 structure, and leveraging the HPS acquisition for its BDC. He identified the biggest opportunity as integrating semi-liquid products into BlackRock's extensive managed models and SMA franchise.

Brian Bedell asked about the outlook for BlackRock's effective fee rate, questioning if the mix shift toward private markets could lead to stabilization or an increase, and also inquired about the growth potential from the model portfolios partnership.

Answer

Executive Martin Small explained that while the fee rate can be impacted by 'divergent beta' (outperformance of lower-fee assets), the strategic shift towards private markets is expected to have a positive long-term impact. He noted the GIP acquisition alone is expected to lift the overall fee rate by 0.5 to 1 basis point.

Brian Bedell asked about the upcoming rollout of the X-Pro platform in Europe, its potential to accelerate portfolio trading (PT) share there, and for a long-term prediction on where PT's overall market penetration could go.

Answer

CEO Christopher Concannon described X-Pro as a critical part of their technology migration that enables faster innovation and delivery of data and analytics. He is excited for the European launch to build on existing momentum in Eurobonds and EM. While not giving a specific number, he predicted PT will continue to grow as a key liquidity tool, supported by more dealers entering the space and the growth of related hedging instruments like credit futures and ETFs.

Brian Bedell asked if the pace of market electronification, which has slowed, could inflect higher with the new block trading strategy or if it will remain a gradual process.

Answer

CEO Chris Concannon expressed optimism for an accelerated pace, citing a market-wide 'electronic capitulation.' He pointed to the rapid adoption of portfolio trading by high-touch traders as proof that they are ready to convert from chat to more efficient electronic solutions for block trades. He believes the new offering's data and efficiency benefits will be key to capturing this next wave of electronification.

Brian Bedell of Deutsche Bank asked for Tim Hockey's view on consolidation versus organic growth and inquired about the achievability of new revenue initiatives like stock lending and enhanced banking products.

Answer

President & CEO Tim Hockey reiterated that while industry consolidation is logical, Ameritrade is comfortable with its current scale. CFO Steve Boyle affirmed that new revenue goals are achievable through numerous smaller initiatives, highlighting fully paved stock lending as a key opportunity for both the company and its clients. He also confirmed they will continue to explore additional banking products with TD Bank.

Brian Bedell of Deutsche Bank asked for CEO Tim Hockey's personal view on the future of the online brokerage industry and whether consolidation is necessary for success.

Answer

President, CEO & Director Timothy Hockey expressed a highly optimistic view, citing strong secular tailwinds like the shift to RIAs and DIY investing. Regarding consolidation, he noted much has already occurred and that TD Ameritrade is very happy with its current scale.

Brian Bedell from Deutsche Bank asked for a characterization of client behavior into April, focusing on ETF marketplace growth, net buying, and cash deployment. He also followed up on the BDA strategy, the 19% floating rate portion of the portfolio, and what spread would be needed to resume seven-year extensions.

Answer

President and CEO Tim Hockey described the client tone as cautiously optimistic, with strong net buying but muted absolute trading levels. EVP and CFO Steve Boyle addressed the BDA strategy, stating the 19% floating balance is consistent with their desired profile to guard against falling rates. He added that they would need to see a normalization of the historic five-to-seven-year spread before extending duration again.

Brian Bedell asked about client buying activity and its potential impact on BDA balances, the cash component of NNA, and the drivers behind growth in fee-based balances.

Answer

President and CEO Tim Hockey confirmed that clients were net buyers quarter-to-date. Later in the call, CFO Steve Boyle specified that 84% of retail inflows arrive as cash before being deployed. Hockey attributed growth in fee-based balances to the market channel and asset-based pricing but did not provide a period-end balance.