Chris Allen

Chris Allen inquired about the pipeline for adding dealers to the newly launched MIDEX U.S. platform and its interaction with portfolio trading. He also asked for elaboration on MarketAxess's actions to deliver faster technology enhancements and address competition, particularly given the elusive overall market share gains despite uptake in new offerings.

Answer

CEO Chris Concannon detailed the early success of MIDEX U.S., its daily operation, and plans to increase sessions, noting its role in helping dealers efficiently exit portfolio positions. He addressed overall growth challenges in U.S. credit market share, explaining a portfolio approach to technology investment across tech transformation, portfolio trading, dealer-to-dealer, Algo Suite, block trading, and closing auctions. He acknowledged the impact of low volatility and tight spreads on the core RFQ business but expressed confidence in future market share growth from ongoing investments.

Chris Allen inquired about the pipeline for adding dealers to the Mid-X U.S. launch, its interaction with portfolio trading, and the benefits observed. He also asked for elaboration on actions to deliver faster technology enhancements and address competition, particularly in legacy areas where share gains have been elusive.

Answer

CEO Chris Concannon discussed the early success of Mid-X, its daily operation, and plans to increase sessions, noting its connection to portfolio trading for efficient dealer inventory exit. He then addressed overall growth challenges in U.S. credit, explaining the company's 'portfolio approach' to technology investment across tech transformation (X-Pro), portfolio trading, dealer-to-dealer business, automation, block trading, and closing auctions, leveraging the Pragma acquisition. He acknowledged that while new initiatives yield volume, their lower fee per million impacts overall revenue, and the core RFQ business faces challenges from low volatility and tight spreads.

Chris Allen inquired about the factors contributing to Virtu Financial's Q3 results exceeding expectations despite realized volatility, specifically asking about the impact of new capital deployed during the quarter and the best tailwinds for sequential improvement in organic growth initiatives. He also asked if future capital deployment would focus on new strategies or existing ones.

Answer

Co-President and Co-COO Joseph Molluso stated that any incremental capital deployed earned a 95% return, highlighting crypto, options, and ETF block as standout performers and growth initiatives. He also praised Virtu Execution Services (VES) for consistent growth. He clarified that increased capital deployment would mainly leverage existing infrastructure and connectivity, with incremental talent developing strategies, all within historical risk parameters.

Chris Allen asked about the after-tax proceeds from the Oyster sale and CME Group's plans for capital deployment, considering buyback flexibility, current stock price, and the potential for a special dividend.

Answer

Lynne Fitzpatrick, CFO, CME Group, stated that the proceeds from the sale were approximately $1.55 billion, with net proceeds being similar. She mentioned that a recommendation for capital deployment would be brought to the board in the coming weeks. Terry Duffy, Chairman and CEO, CME Group, emphasized CME Group's low debt dividend and disciplined organic growth, noting that the company does not need to sit on large amounts of cash and will present a proposal for capital return soon.

Chris Allen inquired about the after-tax proceeds from the oyster sale and CME Group's capital deployment strategy, balancing buyback flexibility, current stock price, and the fifth dividend.

Answer

Lynne Fitzpatrick, CFO, stated that the proceeds from the sale were approximately $1.55 billion, with net proceeds being very similar. Terry Duffy, Chairman and CEO, added that the company's debt dividend is low, and they have grown organically without multi-billion dollar investments. He indicated that a proposal for returning capital would be brought to the board soon.