Craig Siegenthaler

Craig Siegenthaler asked about eToro's M&A strategy, questioning the desire to expand to new geographies versus deepening market share in Europe. He also requested a summary of current promotional offers, specifically mentioning a debit card 4% back option and crypto deposit incentives.

Answer

CEO Yoni Assia clarified that M&As for regional expansion are selective and not expected to significantly impact EBITDA margins, with a primary focus on deepening existing products in mature markets like Europe, U.K., Australia, and new markets like Asia and the U.S. He explained that promotional incentives vary by region and product, are calculated based on CAC to LTV, and aim to increase product engagement and customer lifetime value, but are currently an insignificant part of the total marketing budget.

Craig Siegenthaler questioned eToro's M&A strategy, specifically its desire to expand into new geographies versus deepening its market share in Europe. He asked for the rationale behind expanding into new markets where eToro might be subscale, rather than focusing on existing strengths.

Answer

Yoni Assia, CEO of eToro, clarified that M&A for regional expansion is selective and not expected to significantly impact EBITDA margins. He emphasized that the primary focus remains on deepening existing products in mature markets (Europe, UK, Australia) and already unlocked new markets (Asia, U.S.). He explained that M&A targets are for creating local moats and regulated activities where eToro's products can scale easily without increasing the cost base, leveraging AI to widen the gap with traditional financial institutions. Meron Shani, CFO, added that promotional numbers are currently insignificant but are part of a broader strategy to increase customer acquisition and reduce churn.

Craig Siegenthaler of Bank of America asked if the 1.4% quarterly funded account growth is a sustainable organic rate and later followed up on the revenue mix from CFDs within the equities, commodities, and currencies segment.

Answer

CFO Meron Shani addressed account growth by noting a focus on higher-quality customers, evidenced by a 34% YoY increase in average account size, and reiterated confidence in achieving double-digit annual growth. Regarding CFDs, he stated that eToro does not break down income by transaction type but did reiterate a previously stated target related to its product mix.

Craig Siegenthaler of Bank of America questioned the 1.4% quarter-over-quarter funded account growth, asking if this is a sustainable organic run rate and whether any unusual factors, like the April market correction, influenced it.

Answer

CFO Meron Shani acknowledged the slower quarterly growth but emphasized a focus on attracting higher-quality customers, evidenced by a 34% year-over-year increase in average account size. He stated that the company's flexible marketing model allows for dynamic investment to drive growth and that new product rollouts are expected to boost funded account growth in the future.

Craig Siegenthaler asked about the specific qualities of TPG's software equity buyout and growth portfolios that provide comfort against AI disruption, the types of companies TPG generally avoids, and those believed to be unaffected by AI.

Answer

Nehal Raj, Co-Managing Partner of TPG Capital, explained TPG's informed perspective from over 20 years in software and a decade in AI. He highlighted opportunities in vertical market software with proprietary data (e.g., Lyric) and cybersecurity firms (e.g., Delinea) as net beneficiaries. TPG generally avoids horizontal applications not serving as systems of record and infrastructure software not supporting new AI architectures.

Craig Siegenthaler asked about the specific qualities of TPG's software equity portfolio (buyout and growth) that provide comfort against AI disruption, the types of companies TPG has generally avoided, and those they own that are resilient to AI.

Answer

Co-Managing Partner of TPG Capital, Nehal Raj, explained that TPG's 20+ years in software and decade in AI investing provide an informed perspective. He highlighted opportunities in vertical market software with proprietary data (e.g., Lyric, which processes medical claims) and cybersecurity firms (e.g., Delinea, an identity-based cybersecurity provider) as net beneficiaries of AI. TPG generally avoids horizontal applications not acting as systems of record and infrastructure software not supporting new AI architectures, areas where their exposure is minimal.

Craig Siegenthaler asked about the expected fundraising trajectory for TPG's private wealth products, T-POP and TCAP, and inquired about the firm's strategy for the RIA channel, including potential partnerships.

Answer

CFO Jack Weingart stated that private wealth is a top strategic priority, with fundraising pace increasing in Q1. He confirmed the T-POP launch is on track for June with two major wirehouses, but it's too early to quantify inflows. He also noted that T-POP's launch has increased visibility for other products like TCAP and that the firm is actively developing new products and pursuing partnerships to access the RIA channel.

Craig Siegenthaler asked for a reconciliation of the credit segment's AUM, pointing out the discrepancy between strong gross AUM inflows ($2.9B) and minimal fee-earning AUM (FAUM) inflows despite robust deployment.

Answer

CFO Jack Weingart explained that the FAUM roll-forward is complex, with a net invested capital increase of about $2 billion being offset by non-fee-earning co-investments and leverage dynamics. CEO Jon Winkelried added that raising this non-fee-earning capital is strategically vital to build dry powder for large transactions, which ultimately drives future fee-paying deployment and satisfies LP demand.

Craig Siegenthaler inquired about the impact of software and AI disruption on Ares Management's overall deployment efforts, particularly considering a potential shift from software to data centers and power as AI fuels growth.

Answer

CEO Michael Arougheti explained that Ares has a long history of underwriting software investments with obsolescence risk in mind, focusing on foundational infrastructure, complex workflows, proprietary data, and regulated industries. He emphasized that the disruption is unlikely to significantly impact aggregate origination volumes, as the firm's pipeline across all activities is at record levels, adapting to new growth areas like infrastructure and energy.

Craig Siegenthaler asked about the potential impact of lower base rates on private credit yields, investor reactions, and whether softer private credit fundraising could occur if investors pivot to other asset classes.

Answer

Mike Arougheti, Co-Founder, CEO, and Director, stated that investor appetite for private credit is driven by relative, not absolute, returns, with private credit spreads still offering significant excess return over traded alternatives. He noted that Ares' business model is not highly sensitive to declining rates, as historical experience shows credit spreads typically widen and transaction activity picks up, leading to increased deployment and fees, making it a net tailwind.

Craig Siegenthaler asked how investors might react to lower yields in private credit if the Fed continues to cut rates, questioning if this could lead to softer private credit fundraising or if record cash in money market funds would provide new flows.

Answer

Mike Arougheti, Co-Founder, CEO, and Director of Ares Management Corporation, stated that investor appetite for private credit is driven by relative, not absolute, returns, with private credit spreads still offering significant excess return over traded alternatives. He noted no negative investor reaction to base rate shifts in real-time wealth data and explained that lower rates typically lead to wider credit spreads and increased transaction activity, acting as a net tailwind for the business.

Craig Siegenthaler asked about the outlook for private credit quality, including defaults, non-accruals, and realized losses for the remainder of 2025, particularly in a potential negative GDP growth environment.

Answer

CEO Michael Arougheti explained that the portfolio is defensively positioned with low loan-to-value ratios (42-48%) and significant equity subordination from sponsors, creating a strong incentive for them to support their companies. He noted that non-accruals are currently at half the historical average since the GFC and that the firm is not seeing irregular borrowings on credit facilities, a key real-time indicator of portfolio health. He concluded that he does not anticipate a spike in defaults or non-accruals despite economic uncertainty.

Craig Siegenthaler inquired about the long-term growth drivers for G&A expenses, including the impact of supplemental distribution fees and the GCP acquisition, and asked about CEO Michael Arougheti's strategic focus following recent executive promotions.

Answer

CFO Jarrod Phillips explained that G&A growth is driven by wealth channel distribution fees and occupancy costs, with the GCP deal adding expenses but at similar margins. CEO Michael Arougheti clarified his role is not changing but expanding management capacity, focusing on GCP integration, real assets lending, insurance partnerships, and leadership development.

Craig Siegenthaler inquired about potential deployment challenges for private credit given large industry fundraises, like Ares's record $34 billion fund, and the reopening of the BSL market. He also asked if a rebound in public BDC fundraising could reverse the manager consolidation trend.

Answer

CEO Michael Arougheti explained that private credit fundraising has actually declined industry-wide for three years, concentrating capital with larger, scaled managers. He noted Ares's new fund was already 30% invested at its final close, and the 'debanking' trend provides a larger opportunity than any competition from the BSL market. He stated that the consolidation trend will continue because scale drives performance, a dynamic already visible in the public BDC market.

Craig Siegenthaler asked about Blue Owl's exposure to software and AI disruption across debt and equity, inquiring about credit quality trends, potential red flags, and specific concerns within the software portfolio given recent market themes.

Answer

Co-CEO Marc Lipschultz stated that tech lending remains strong with no red or yellow flags, noting the tech portfolio's pristine performance. He highlighted 40% revenue growth and 50% EBITDA growth in the tech portfolio since ChatGPT's launch in November 2022, with Q4 2025 showing 10% revenue growth and mid-teens EBITDA growth. He emphasized Blue Owl's position as a first lien lender with an average 30% loan-to-value and a net realized loss rate of 8 basis points. CFO Alan Kirshenbaum added that their publicly traded BDC, OTF, has an 11.4% inception-to-date return, 18% NAV growth, and 0.1% non-accruals.

Craig Siegenthaler asked about Blue Owl's exposure to software and AI disruption across debt and equity, inquiring about credit quality trends, potential red flags, and overall portfolio health given recent market themes.

Answer

Co-CEO Marc Lipschultz stated there are no red flags, largely green flags, and the tech portfolio remains pristine with an average 30% loan-to-value. He highlighted 40% revenue growth and 50% EBITDA growth for tech portfolio borrowers since ChatGPT's launch in November 2022, with Q4 2025 showing 10% revenue growth and mid-teens EBITDA growth. Marc emphasized strong product performance and an 8 basis point net loss rate. CFO Alan Kirshenbaum added that their publicly traded BDC, OTF, has an 11.4% inception-to-date return and 0.1% non-accruals.

Craig Siegenthaler from Bank of America asked about Blue Owl's new partnership with Voya for the 401(k) channel, focusing on the development of target-date funds and the potential for single versus multi-manager models.

Answer

Co-CEO Marc Lipschultz described the Voya partnership as a pivotal and prudent step to bring Blue Owl's income-oriented, downside-protected products to the $12 trillion 401(k) market. He stated the initial approach involves collective investment trusts for target-date funds, emphasizing a methodical rollout to ensure positive outcomes for plan participants. While acknowledging multi-manager structures may evolve, the immediate focus is on delivering safe, proven solutions with a premier partner like Voya.

Craig Siegenthaler noted that GP Stakes management fees appeared light relative to fee-paying AUM growth and asked for an explanation for the decline and guidance on the Q2 run rate.

Answer

Chief Financial Officer Alan Kirshenbaum attributed the sequential change to two factors: minor catch-up fees in Q4 2024 that were not recurring, and the full quarterly impact of a fee step-down for GP Stakes Fund IV that began in late Q4. He stated that Q1 2025 was a 'very clean quarter' for management fees, making it a reliable run rate.

Craig Siegenthaler from Bank of America asked for an outlook on organic growth and fundraising for 2025, considering recent strategic acquisitions and a strengthening macroeconomic backdrop.

Answer

Co-Chief Executive Officer Marc S. Lipschultz expressed a bullish outlook, citing strong flagship funds, accelerating success in the wealth channel, and new products. Chief Financial Officer Alan Kirshenbaum added that the company expects a meaningful increase in equity fundraising in 2025 compared to 2024.

Craig Siegenthaler inquired about Blue Owl's strategy for product innovation, particularly its ability to launch new semi-liquid products for the private wealth channel using capabilities from recent M&A.

Answer

Co-Chief Executive Officer Marc Lipschultz described the firm's strategy as a hybrid 'buy and build' model, integrating best-in-class teams like Atalaya and IPI with Blue Owl's platform. He identified alternative credit and digital infrastructure as 'perfect matches' for the wealth channel due to their income generation and durability, signaling significant growth potential and the opportunity to replicate the success seen with the Oak Street acquisition.

Craig Siegenthaler from Bank of America asked about Tradeweb's comprehensive utilization of AI across its platform, specifically differentiating between generative AI and predictive AI models.

Answer

CEO Billy Hult emphasized Tradeweb's pragmatic, commercially focused approach to AI, linking it to effectiveness gains and client impact. He highlighted the strength of Tradeweb's proprietary, real-time market data (executable pricing, RFQ response, execution outcomes) as foundational. Predictive AI is being used to unlock electronification in less liquid markets and for larger notional trades, with a focus on continuous learning and strong collaboration between data scientists and product teams.

Craig Siegenthaler inquired about Tradeweb's broader utilization of AI across its platform, specifically asking for differentiation between generative AI and predictive AI models.

Answer

CEO Billy Hult emphasized Tradeweb's pragmatic and commercially focused approach to AI, linking it to effectiveness gains and client impact. He highlighted the strength of Tradeweb's proprietary, real-time market data and its use in predictive AI to unlock electronification in less liquid markets and for larger trades. He also noted the deep collaboration between data scientists and product teams.

Craig Siegenthaler of Bank of America asked about the initial client reaction to the new buy-side fees in high-yield credit and whether Tradeweb is considering a similar pricing strategy for investment-grade credit.

Answer

CEO Billy Hult described the high-yield fee introduction as successful, noting that institutional high-yield share increased following the change, which he interpreted as the market affirming the platform's value. He reminded that buy-side fees have existed in investment grade since 2016 and this move was anticipated as Tradeweb built scale. Hult pointed to record block share and strong volume growth in RFQ and portfolio trading as evidence of the platform's strength, justifying the pricing structure.

Craig Siegenthaler of Bank of America Corporation asked about the accelerating adoption of streaming and session trading protocols in U.S. Treasuries and Tradeweb's observations on this shift.

Answer

CEO William Hult confirmed a structural shift is occurring in the wholesale D2D marketplace, with streaming and session protocols gaining share from the traditional CLOB, particularly in lower volatility environments. He detailed Tradeweb's strategy to offer a comprehensive suite, noting that wholesale streaming and sessions ADV were up 35% and over 25% YoY, respectively. While leading in these emerging protocols, Hult stressed the continued focus on gaining share in the important CLOB protocol as well.

Craig Siegenthaler inquired about KKR's record investment results in 2025, asking if this level of deployment is sustainable given their linear model, and what key themes drove this record activity despite higher public equities and tighter credit spreads.

Answer

Partner and Head of Investor Relations Craig Larson highlighted broad-based deployment across strategies and geographies, including significant take-private activity globally and strong momentum in Asia. He noted that while absolute deployment was up, it represented 12% of private markets AUM in 2025, indicating a scaling footprint. Co-CEO Scott Nuttall confirmed expectations for increased deployment in the current year, emphasizing KKR's global reach and opportunities in areas like intra-Asia trade, digitalization, and asset-based finance.

Craig Siegenthaler inquired about KKR's record investment results in 2025, whether this level is expected to build with their linear deployment model, and the key themes driving record deployment despite higher public equities and tighter credit spreads.

Answer

Partner and Head of Investor Relations Craig Larson detailed broad-based deployment across strategies and geographies, highlighting global take-private activity, Asia growth, and Global Atlantic alts transactions. He noted that deployment as a percentage of private markets AUM was 12% in 2025, indicating a scaling footprint. Co-CEO Scott Nuttall expects deployment to increase in 2026, driven by global opportunities and market volatility creating more interesting investment prospects.

Craig Siegenthaler of Bank of America inquired about KKR's K-Series credit product, KFIT, asking for an update on its fundraising, platform additions, and how it differentiates itself in the crowded private wealth market.

Answer

Craig Larson, Partner & Head of IR, and Scott Nuttall, Co-CEO, responded. They highlighted the overall growth in K-Series AUM to $25 billion from $11 billion a year ago. For KFIT specifically, they noted its differentiating allocation to asset-based finance (ABF), strong recent investment returns, and growing distribution. They also mentioned the upcoming conversion of another vehicle into a dedicated evergreen ABF product, KABF, and the incremental distribution channel provided by the Capital Group partnership.

Craig Siegenthaler of Bank of America asked about the impact of the emerging trade war on KKR's Asia strategy, fundraising, and investment efforts, and followed up on the resilience and potential acceleration of private wealth flows.

Answer

Co-CEO Scott Nuttall stated there is no change to their Asia strategy, viewing intra-Asia trade as a growing opportunity. Executive Craig Larson provided metrics on Asia AUM growth from $21 billion in 2019 to $70 billion in Q1 2025. On private wealth, Nuttall suggested that outperformance during market pullbacks could accelerate adoption over time. Larson added that K-Series fundraising was healthy, raising $4 billion in Q1 and about $1 billion in April.

Craig Siegenthaler asked about KKR's investment outlook for 2025, considering the more challenging macroeconomic environment compared to 90 days prior.

Answer

Co-Chief Executive Officer Scott Nuttall responded that KKR's optimistic view has not changed. He stated that the firm still expects an improved M&A market in 2025 and that market volatility creates investment opportunities for a global firm like KKR. The core expectation for increased investing, monetization, and fundraising remains firm.

Craig Siegenthaler of Bank of America inquired about the drivers behind the infrastructure business's strong outperformance and its significant contribution to record Capital Markets fees, questioning if this performance is sustainable.

Answer

Executive Craig Larson attributed the success to the infrastructure business's massive organic growth, with AUM scaling from $15 billion to $77 billion in five years, leading to consistent, strong performance. Chief Financial Officer Rob Lewin added that while the quarter included large transactions, the record Capital Markets revenue was broad-based, with over 100 different deals contributing, demonstrating the platform's diversification.

Craig Siegenthaler asked about the health of the mortgage industry, the influence of recent refinance activity on demand trends beyond 2026, and opportunities to modernize ICE's mortgage technology stack through blockchain-enabled capabilities at MERS or AI tools for Encompass and MSP.

Answer

Ben Jackson, President of Intercontinental Exchange, discussed the improving mortgage market, noting 4 million loans 'in the money' for refinancing and better purchase market affordability. He detailed technology advancements, including opening Encompass and MSP to AI, automating data capture, document processing, and underwriting. He also highlighted new pilot initiatives for consumer chatbots, an 'Ask Encompass' chatbot, compliance chatbots, and intelligent virtual agents to enhance efficiency and customer service.

Craig Siegenthaler asked about the health and demand trends in the mortgage industry beyond 2026, particularly regarding refinance activity, and opportunities to modernize ICE's mortgage technology stack with blockchain and AI tools for Encompass and MSP.

Answer

Ben Jackson, President of Intercontinental Exchange, discussed the improving mortgage market health, noting 4 million loans in the money to refi at current rates, potentially rising to 7.5-8 million with a 50 basis point rate drop. He highlighted improved purchase market affordability and the acceleration of AI-driven solutions for Encompass and MSP, including automating data capture, underwriting, and customer service functions like call prediction, summarization, and consumer chatbots for HELOC/refinance applications.

Craig Siegenthaler of Bank of America inquired about Intercontinental Exchange's strategy for upgrading its mortgage technology products, specifically focusing on the use of new technologies like AI and blockchain to improve competitive positioning and client efficiency.

Answer

President Benjamin Jackson detailed that the primary innovation is creating an integrated, front-to-back platform for the life of a loan. He highlighted current AI applications in data and document automation for underwriting, enhancing customer experience in call centers, and providing compliance answers via the 'Ask Reggie' platform. He also noted future plans to connect mortgage data to capital markets for MBS and whole loan trading.

Craig Siegenthaler of Bank of America inquired about Intercontinental Exchange's strategy for upgrading its mortgage technology products, specifically focusing on the potential use of AI and blockchain to enhance efficiency and the client experience.

Answer

President Benjamin Jackson detailed that the primary innovation is creating an integrated, front-to-back platform for the life of a loan. He highlighted current AI applications in data automation for underwriting (credit, income, collateral verification), call center optimization, and compliance through the 'AskRegs' platform. Jackson also noted future plans to connect mortgage data to capital markets with MBS RFQ and secondary whole loan trading.

Craig Siegenthaler asked for a reconciliation of the 5% growth in Mortgage Tech transaction revenue despite a drop in industry originations and inquired if prior bookings are converting to revenue.

Answer

President Benjamin Jackson confirmed that 2025 is a key year for large clients signed previously to go live. CFO Warren Gardiner explained the revenue outperformance was driven by pricing structure changes in Encompass renewals. These renewals featured lower volume minimums but higher per-closed-loan fees, so as clients surpassed the lower minimums, ICE benefited from the higher transaction fees.

Craig Siegenthaler inquired about the new partnership between ICE Bonds and MarketAxess, asking how it will enhance liquidity and client value, impact market share, and whether it could lead to a deeper strategic relationship or acquisition.

Answer

Chris Edmonds, President of Fixed Income and Data Services, stated the partnership combines unique client bases and liquidity pools, ensuring clients have better access. He described the early stages as positive and mentioned plans to add more instruments. Edmonds explicitly declined to comment on the possibility of a future acquisition or closer strategic investment.

Craig Siegenthaler with Bank of America questioned Brookfield Asset Management's leading AI industry servicing business, focusing on the mix of capital deployed (equity vs. debt), the nature of equity tenants in data centers (investment-grade hyperscalers), and the terms of 15-year plus leases, including scenarios for early breakage.

Answer

Conor Teskey, Chief Executive Officer of Brookfield Asset Management, explained that the AI infrastructure opportunity is robust, driven by increased data center builds, larger facilities, and the ability to fund the entire system (rack, shell, chips, power supply). He confirmed that investments are backstopped by long-term take-or-pay contracts with high-quality hyperscaler or sovereign credits, similar to other infrastructure asset classes, with strong long-term offtakes.

Craig Siegenthaler asked about Brookfield Asset Management's leading business servicing the AI industry, specifically the mix of capital deployed between equity and debt, whether data center equity tenants are mostly investment-grade hyperscalers, and if 15-year plus leases have scenarios for early breakage.

Answer

Conor Teskey, CEO, highlighted AI infrastructure as a top theme, encompassing digital infrastructure and energy generation. He explained that the market opportunity is robust due to more and larger data centers, and the ability to fund the entire system (rack, shell, chips, power supply). He noted that the pipeline is large, with growth driven by hyperscalers and sovereign AI, backed by high-quality credit offtakes. He confirmed that the leases are strong, long-term take-or-pay agreements, similar to other infrastructure assets, with no early breakage scenarios if Brookfield continues to provide the asset.

Craig Siegenthaler questioned Brookfield's less constructive stance on corporate direct lending (IG and non-IG) compared to peers, despite seemingly attractive LTVs and spreads. He also followed up on the outsized growth in credit managing fees, asking about any lumpy revenue or expense items impacting the P&L run rate.

Answer

Connor Teskey, President, clarified that private credit is a growing and enduring part of global finance. He stated that Brookfield avoids the most commoditized direct and corporate lending segments where spreads are compressed and covenants are degrading, instead focusing on real asset, infrastructure, real estate, and asset-backed finance credit for attractive risk-adjusted returns. For the credit business's outsized growth, he attributed about half to organic growth and half to a full quarter of a Castle Lake acquisition, with some one-time transaction fees in Castle Lake enhancing the fee rate.

Craig Siegenthaler questioned Brookfield's less constructive view on corporate direct lending compared to peers, despite low LTVs and rich spreads, and asked for clarification on what might be overlooked. He also followed up on the credit business's managing fees, which grew faster than fee-bearing AUM, inquiring about lumpy revenue or expense items.

Answer

Connor Teskey, President, affirmed private credit's enduring importance but noted that Brookfield focuses on real asset, infrastructure, real estate, and asset-backed finance credit for attractive risk-adjusted returns, avoiding commoditized direct and corporate lending segments where spreads are compressed and covenants may degrade. Regarding credit business growth, he explained that roughly half was organic run-rate growth and half was due to a full quarter of a Castle Lake acquisition, with outsized transaction fees in Castle Lake enhancing the fee rate this quarter.

Craig Siegenthaler inquired about the drivers behind the successful $16 billion fundraising for the flagship real estate strategy and asked for an update on the distribution channels and growth of the BII private wealth infrastructure fund.

Answer

An Unknown Executive detailed that the real estate fund's success stems from strong fundamentals, a lack of new supply, and opportunities to acquire quality assets with imperfect capital structures, noting strong demand from the U.S. market. Regarding BII, the executive highlighted its strong growth trajectory, emphasizing a globally diversified approach to provide stability for its semi-liquid structure and leveraging the firm's premier infrastructure platform.

Craig Siegenthaler sought confirmation on whether the corporate restructure would have tax or voting right implications and asked for an update on the public-to-private asset migration within the insurance portfolio and its potential fee lift.

Answer

CFO Hadley Peer Marshall confirmed the restructuring is designed to have no tax or voting impact on shareholders. CEO James Flatt explained that the migration of the AEL portfolio is in its early stages and will take at least 24 months, meaning the corresponding uplift in fee-related earnings has not yet materialized in a significant way but will accelerate over the coming years.

Craig Siegenthaler from Bank of America followed up on CME Group's pricing strategy, questioning the shift from the traditional Q4 announcement pattern, and asked what drove this change and if it implies smaller future increases, given the previous method provided transparency.

Answer

Chairman and CEO Terry Duffy stated that CME Group will implement pricing changes as value is delivered, not necessarily adhering to a December annual pattern. He emphasized running the business in real-time to grow it in the best interest of clients and shareholders, indicating that future increases could vary in size or frequency based on market conditions and value added.

Craig Siegenthaler followed up on CME Group's pricing strategy, questioning the change from a predictable annual announcement to a more flexible approach and whether this implies smaller future increases, impacting transparency into long-term revenue growth.

Answer

Chairman and CEO Terry Duffy stated that CME Group will make pricing changes as value is delivered, not necessarily on an annual December schedule. He emphasized running the business in real-time to grow it, without a fixed pattern for pricing moves.

Craig Siegenthaler asked about the strong 14% growth in market data revenues, the context behind this result, and opportunities to raise pricing in the upcoming year. He also followed up on the expected volume mix normalization between BrokerTec Chicago and BrokerTec Secaucus, and the percentage of volumes from new clients.

Answer

Julie Winkler, Chief Commercial Officer, CME Group, attributed the 30th consecutive quarter of market data growth to increased demand across professional and non-professional subscribers, particularly from international clients in APAC and EMEA. She confirmed a 3.5% price increase for 2026, announced in August. Terry Duffy, Chairman and CEO, CME Group, highlighted the value of market data for risk management. Regarding BrokerTec, Mike Dennis, Global Head of Fixed Income, CME Group, stated it's too early to forecast the volume mix but noted that 66% of BrokerTec Chicago's volume traded at unique price points, attracting new clients.

Craig Siegenthaler asked about the strong market data revenue growth in Q3, its underlying context, and opportunities for pricing increases next year. He also followed up on BrokerTec Chicago, asking about the expected volume mix between Chicago and Secaucus and the percentage of volumes from new clients.

Answer

Julie Winkler, Chief Commercial Officer, attributed the 14% market data revenue growth to increased professional and non-professional subscribers across segments, particularly internationally, and announced a 3.5% price increase for January 1, 2026. Terry Duffy, Chairman and CEO, highlighted the prudent strategy of growing market data. Mike Dennis, Global Head of Fixed Income, stated it's too early to forecast the volume split between BrokerTec Chicago and New York, but noted new client acquisition and excitement from dealers.

In a follow-up, Craig Siegenthaler of Bank of America asked if the economics of the Nasdaq licensing agreement had changed with the recent ten-year renewal.

Answer

Lynne Fitzpatrick, President & CFO, provided a direct answer, confirming that there was no change to the economic structure of the agreement; the renewal was purely an extension of the term to 2039.

Craig Siegenthaler of Bank of America asked a follow-up question about the renewed Nasdaq licensing agreement, inquiring if the economics of the deal had changed.

Answer

President & CFO Lynne Fitzpatrick provided a direct answer, stating that there was no change to the economic structure of the agreement. The renewal was simply an extension of the term out to 2039 with the same economics.

Craig Siegenthaler from Bank of America asked a high-level question about how CME's international business, which constitutes 30% of ADV, competes with non-U.S. futures exchanges, particularly in light of emerging trade conflicts.

Answer

Lynne Fitzpatrick, CFO, highlighted CME's unique product offering, IP protection, and deep liquidity. Julie Winkler, Chief Commercial Officer, provided data on outsized international growth in equities (up 33% YoY) and reiterated that clients value the trusted partnership. Terrence Duffy, Chairman and CEO, pointed to the record international ADV of 8.8 million contracts as the key measure of competitive success.

Craig Siegenthaler asked which products might see the largest uptick from Robinhood's launch and how CME's index products compete with SPX on tax efficiency. He also inquired about the opportunity for CME in event contracts, given a competitor's recent launch of political and weather contracts.

Answer

Chief Commercial Officer Julie Winkler identified the micro equity suite as the typical entry point for new retail clients. Global Head of Financial & OTC Products Tim McCourt clarified that CME's index futures are Section 1256 contracts with the same tax advantages as SPX. On event contracts, CEO Terrence Duffy stated CME has no plans to list political contracts at this time, preferring to wait for markets to mature. McCourt added that CME's event contract strategy is to leverage its existing, underlying futures markets.

Craig Siegenthaler asked for an update on the potential migration of private investments into the 401(k) channel, including the expected DOL guidance, industry adoption models, and the product launch timeline for the new Goldman Sachs partnership, which will include OHA and credit offerings.

Answer

CEO Robert Sharps confirmed that T. Rowe Price's multi-asset team sees a strong investment case for private market alternatives in defined contribution solutions, despite mixed views among plan sponsors regarding fiduciary risk, fees, and liquidity. He noted that DOL clarity is still several months away. Mr. Sharps added that the Goldman Sachs T. Rowe Price retirement date offering is in product design and is planned for a mid-year launch, targeting early adopters, though overall market penetration is expected to be slow.

Craig Siegenthaler inquired about the potential migration of private market alternatives into 401(k) plans, the expected DOL update, industry dynamics (single vs. multi-partner models), and the product launch status of the Goldman Sachs partnership, including OHA and credit offerings.

Answer

CEO Rob Sharps noted the strong investment case for private market alternatives in DC solutions but acknowledged mixed views among plan sponsors due to fiduciary risk and liquidity concerns. He stated that the Goldman Sachs T. Rowe Price retirement date offering is planned for mid-year, targeting early adopters, with broader penetration expected to be slow.

Craig Siegenthaler asked about the potential for alternative investments in the U.S. retirement channel, whether T. Rowe Price needs a private markets partnership, and the outlook for gaining market share in 401(k) plans.

Answer

CEO Robert Sharps stated that private market access for defined contribution (DC) and wealth channels is inevitable, though timing is uncertain. He confirmed the firm is open to partnerships for certain asset classes like infrastructure and real estate but emphasized T. Rowe's extensive internal credit capabilities via OHA. Sharps noted that plan sponsors are currently taking a 'go-slow' approach due to fiduciary, liquidity, and fee concerns. He is confident these issues can be solved and believes it's likely the firm will use partners if and when it incorporates a broader range of private alternatives into its retirement solutions.

Craig Siegenthaler followed up on the potential for private assets in the 401(k) channel, asking if T. Rowe Price plans to source these allocations exclusively from internal capabilities or if it will partner with third parties.

Answer

CEO Robert Sharps stated the primary goal is to offer best-in-class solutions and that the firm is open to partnering with other managers in areas where it doesn't have a demonstrated capability. Head of Global Investments Eric Veiel and Sharps both emphasized that introducing private assets into standard retirement offerings is still in the very early stages, with significant liquidity and regulatory hurdles to overcome.

Craig Siegenthaler followed up on the Managed Lifetime Income product, asking about the impact of the insurance guarantee on long-term returns, the annual cost of the rider, and how the product's fee structure overcomes the fee sensitivity of 401(k) plan sponsors.

Answer

CEO Rob Sharps described the product as well-designed, using a QLAC (qualifying longevity annuity contract) on a deferred basis to create an optimal outcome. He noted QLACs are affordable relative to other annuities but deferred to his IR team for specific economic details. CFO Jen Dardis added that the product is designed for only a portion of a client's assets, which helps balance the risk and cost trade-off for the participant.

Craig Siegenthaler asked about Patria's private equity valuation process for Funds 4 and 5, including internal methodologies and third-party validation. He also inquired about the prospects for IPOs and strategic exits in private equity for 2026, considering the strong performance of the MSCI Brazil index and expected interest rate declines.

Answer

Alexandre Saigh (CEO, Patria) explained that Patria uses industry-standard valuation practices for private assets, including annual independent appraisals based on discounted cash flow models and comparisons with market multiples. He clarified that management fees are charged on cost, not NAV, and performance fees are recognized only upon cash payment, not on unrealized gains. Saigh acknowledged the underperformance of PE Funds 4 and 5 and discussed the positive macro trends in Brazil, anticipating increased exits from Infrastructure Funds II, III, IV, and various Private Equity funds (buyout, growth, venture), reiterating the $60 million performance fee target for the next two years, with a caveat on unpredictability.

Craig Siegenthaler followed up on the prospects for IPOs and strategic exits in private equity for 2026, considering the strong performance of the MSCI Brazil Index and anticipated interest rate declines, and the current limitations of exits to other private equity firms in Brazil.

Answer

Alexandre Saigh, CEO of Patria, explained that strong public market trends typically translate to private assets over time, leading to upcoming realizations from Infrastructure Funds II and III, and various private equity strategies including growth and venture funds. He highlighted successful realizations like Avenue's acquisition by Itaú and reiterated the $60 million performance fee target for the next two years, emphasizing the higher predictability of management fees over performance fees due to market volatility.

Craig Siegenthaler inquired about the macroeconomic impact of global trade conflicts on Latin America and how Patria's portfolios are positioned, and followed up on whether Chinese institutions divesting from U.S. private markets could accelerate fundraising for Patria.

Answer

CEO Alexandre Saigh explained that Patria's portfolio has minimal exposure to tariffs, as investments are primarily focused on local consumption in resilient sectors within South America. He asserted that the region stands to benefit from trade shifts, citing its growing share of FDI. Saigh confirmed that interest from Asian investors was already increasing prior to recent escalations, evidenced by the $1 billion in SMAs closed in Q1, and that Patria's non-U.S. structure is a significant advantage in the current geopolitical climate.

Craig Siegenthaler asked about the impact of the GPMS platform on Patria's organic growth and its expected future contribution to fundraising. He also inquired about the timing for final closes of Private Equity Fund VII and Infrastructure Fund V, including a specific $500 million SMA with an Asian sovereign wealth fund.

Answer

CEO Alex Saigh confirmed that the GPMS platform is a significant driver of organic growth, putting the firm on track to exceed its $5 billion fundraising target for 2024. He noted the strong momentum is expected to continue into 2025. Regarding the funds, he clarified that the $500 million SMA is not yet included in reported figures and that fundraising for PE Fund VII (in LatAm) and Infrastructure Fund V will continue until mid-2025.

Craig Siegenthaler asked for an update on potential contingent consideration liabilities from recent M&A activity and the firm's current M&A priorities and product gaps.

Answer

Matthew Nicholls, Co-President and CFO, clarified that contingent consideration liabilities are very low, around $20 million, and probability-weighted. Jennifer Johnson, President and CEO, outlined M&A priorities: bolt-on acquisitions for alternatives (e.g., European direct lending), deals that enhance distribution, and growth in the high net worth segment (Fiduciary). Matthew Nicholls added that M&A has significantly transformed the business, contributing almost 60% of operating income, and the bar for new M&A is high, considering alternatives like share buybacks.

Craig Siegenthaler inquired about the update on potential contingent consideration liabilities from recent M&A activity and Franklin's M&A priorities and product gaps.

Answer

Matthew Nicholls, Co-President and CFO, clarified that contingent consideration for specific transactions is minimal. Jennifer Johnson, President and CEO, outlined M&A priorities: bolt-on acquisitions for alternatives (e.g., European direct lending), furthering distribution capabilities, and growing the high net worth fiduciary business.

Craig Siegenthaler of Bank of America inquired about the positive long-term net flow trend excluding Western Asset and asked for an estimate of the base fee organic growth rate when including Western Asset's lower-fee business.

Answer

CEO Jennifer Johnson highlighted $7.4 billion in positive long-term net flows excluding Western, with notable strength in Franklin fixed income, ETFs, and SMAs. CFO Matthew Nicholls specified that Western Asset's effective fee rate is in the high 15 basis point range and noted that April flows ex-Western were approximately flat. Head of Global Distribution Adam Spector added that gross sales were up in every asset class and region, reflecting a more diversified business mix.

Craig Siegenthaler inquired about the trend in purchase money market funds (footnote 15), asking if they are at a ceiling, if liquidity will run off with Fed cuts, and if there's an opportunity for increased ROA in alternatives, insurance, or cash sweep.

Answer

President and CFO Matt Audette acknowledged the build-up of cash equivalents, including purchase money market funds, short-term bond funds, and treasuries, throughout the rate cycle. He expects these funds to move back into the marketplace as interest rates decline, with advisors seeking opportunities in equities, annuities, and other areas.

Craig Siegenthaler referenced footnote 15 regarding purchased money market funds, asking if liquidity is expected to run off with further Fed cuts and if there are opportunities to generate more return on assets (ROA) in alternatives, insurance, or cash sweep.

Answer

President and CFO Matt Audette acknowledged the detailed observation, explaining that as the rate environment declines, advisors typically move clients from cash equivalents like money market funds and short-term bond funds back into the marketplace, including equities, annuities, and other opportunistic investments.

Craig Siegenthaler of Bank of America questioned the drivers behind the modest net new asset outflows in the independent RIA channel during the quarter and asked for an update on the channel's long-term growth trajectory.

Answer

President & CFO Matt Audette noted no single significant driver for the quarterly result, highlighting that the corporate RIA channel is the primary engine of growth. CEO Rich Steinmeier added that ambiguity in the regulatory environment, specifically a potential increase in the SEC registration threshold, is causing some advisors to pause and favor LPL's corporate shared ADV model, impacting flows into the independent RIA channel.

Craig Siegenthaler asked about LPL's free cash flow conversion and liquidity objectives with the return of buybacks, and also inquired about the current state and future expansion plans for the alternative investment offering.

Answer

President and CFO Matthew Audette stated the primary focus is maintaining the target leverage ratio of 1.5-2.5x, with corporate cash expected to normalize around $200 million in Q4 after the Atria closing. CEO Rich Steinmeier confirmed a significant, multiyear effort to expand the alternative investments platform, including a new order entry system, to better serve and attract high-net-worth and wirehouse advisors.

Craig Siegenthaler asked about Blackstone's record IPO pipeline, including target sectors, potential spillover into real estate, and the impact of LP liquidity rebound on future fundraising.

Answer

Steve Schwarzman, Chairman and CEO, noted the IPO pipeline is mostly corporate-focused with broad-based strength, particularly in energy, electricity, and AI-related picks and shovels. He highlighted strong performance in the U.S. and India. Jon Gray, President and COO, added that returning capital to LPs through successful IPOs creates a virtuous cycle for future fundraising, signaling a return to more historic levels of M&A and IPO activity.

Craig Siegenthaler asked about Blackstone's record IPO pipeline, inquiring about the specific sectors and industries the firm plans to prioritize, whether real estate will see spillover activity, and the anticipated 'second order effect' on fundraising as limited partners' liquidity profiles rebound from cash distributions at a blended MOIC of 2x.

Answer

Chairman and CEO Steve Schwarzman explained that the IPO pipeline is primarily concentrated in the corporate space, with a focus on energy, electricity, and related infrastructure, particularly in the U.S., India, and Japan. He noted that high-quality companies are receiving good reception. President and COO Jon Gray added that returning capital and gains to limited partners creates a virtuous cycle, making it easier for them to reallocate capital, and highlighted the return to more historic levels of M&A and IPO activity after an abnormal four-year period.

Craig Siegenthaler inquired about Blackstone's strategy and plans for its newly launched defined contribution business, following President Trump's executive order, and potential collaborations with partners like Vanguard and Wellington.

Answer

President and COO Jon Gray confirmed the firm is building capabilities and a dedicated team for the defined contribution market. He stated Blackstone intends to work with existing partners and large financial institutions, emphasizing the long-term opportunity for alternatives in retirement plans once the legal framework is established.

Craig Siegenthaler inquired about Blackstone's plans for its newly launched defined contribution business, particularly regarding partnerships and leveraging existing alliances with Vanguard and Wellington, following President Trump's executive order.

Answer

Jon Gray, President and Chief Operating Officer, stated that Blackstone is building capabilities with a dedicated senior team and intends to work with various partners, including large corporate plan sponsors and financial institutions. He confirmed leveraging existing partners like Vanguard and Wellington, highlighting the long-term potential for holistic solutions once rulemaking is complete.

Craig Siegenthaler asked for an update on the investment return and fundraising outlook for Blackstone's secondaries business, Strategic Partners, noting its recent performance acceleration.

Answer

Vice Chairman & CFO Michael Chae attributed the robust Q2 returns to purchase gains from a significant new deal, strong underlying fund appreciation, and minor currency benefits. President & COO Jonathan Gray added that the secondaries segment is in a 'sweet spot,' with deal volume up substantially. He noted strong investor interest driven by performance, which bodes well for the new flagship private equity secondaries fund launching soon.

Craig Siegenthaler questioned the fundraising outlook for the mature North American institutional channel, which has faced headwinds from low distributions (DPI) for several years, and asked for a distinction between private equity and other segments like infrastructure and private credit.

Answer

President and COO Jonathan Gray acknowledged the DPI headwinds but emphasized that North American institutions remain committed to private assets long-term. He noted that certain segments are currently favored for new allocations, including secondaries, infrastructure (where clients are under-allocated), and private credit. He believes strong performance will ultimately continue to drive fundraising momentum in the channel.

Craig Siegenthaler asked about the expected ramp-up in monetization activity and when Blackstone anticipates becoming a net seller in corporate private equity, as well as how the real estate cycle lags behind private equity.

Answer

Jonathan Gray, President & COO, confirmed a more constructive environment for realizations is emerging. He pointed to a strong economy, healthy equity markets, a doubling of the IPO pipeline, and a better M&A climate as key drivers. Gray specified that private equity realizations are expected to be stronger in the first half of 2025, while the real estate recovery will take more time, with monetization activity likely weighted towards the second half of the year.

Craig Siegenthaler questioned how the upcoming U.S. election might be affecting the investment pipeline and which sector, real estate or private equity, has a more favorable backdrop.

Answer

President & COO Jonathan Gray stated that the election has not slowed investment decisions but may have delayed some sales processes. He sees a pickup in activity for both private equity and real estate, with real estate likely to experience a larger percentage increase from its low base. Gray noted that lower rates, tighter spreads, and improving sentiment are creating ideal conditions for more transaction activity.

Craig Siegenthaler followed up on the strong net new assets in wealth management for Q4 2025, asking if elevated financial advisor movement in the industry due to a peer integration should be factored into future expectations. He also questioned the mix of client cash in Advice & Wealth Management, particularly regarding off-balance sheet balances, and sought insights into the future mix and cash sweep growth for the first half of 2026, considering typical Q1 seasonality.

Answer

Chairman and CEO Jim Cracchiolo affirmed Ameriprise's strong recruiting pipeline and focus on organic growth and advisor retention, declining to comment on specific competitor situations. CFO Walter Berman acknowledged Q4 seasonality in cash balances and expressed comfort with managing sweep components. He noted expected Q1 utilization for tax reasons but highlighted positive underlying cash generation and a strategy to minimize floating rates by investing longer to mitigate potential rate impacts.

Craig Siegenthaler followed up on Ameriprise's strong net new assets in wealth management, asking if the elevated financial advisor movement in the quarter due to a peer integration should be adjusted for in future outlooks, beyond seasonal factors. Craig Siegenthaler also asked about client cash trends in Advice & Wealth Management, specifically the mix of underlying balances (on-balance vs. off-balance sheet), future mix expectations, and cash sweep growth outlook for the first half of 2026, considering seasonality.

Answer

Chairman and CEO Jim Cracchiolo acknowledged industry consolidation but emphasized Ameriprise's strong recruiting pipeline and focus on organic growth through advisor resources and technology. He noted strong advisor retention in Q4 and refrained from commenting on competitors. CFO Walter Berman confirmed Q4 seasonality in cash balances and expressed comfort with the management of sweep components. He noted that while Q1 typically sees utilization for tax reasons, Ameriprise has positive cash generation and is implementing a strategy to invest longer to minimize the impact of potential rate reductions.

Craig Siegenthaler referenced a news report about aggressive recruiting offers for Commonwealth advisors, asking if Ameriprise can capitalize on M&A disruption. He also requested an update on the bank and credit union channel pipeline.

Answer

Chairman & CEO James Cracchiolo declined to comment on market rumors, reiterating that Ameriprise recruits based on its entire value proposition, which leads to significant productivity gains for advisors who join. Regarding the institutional channel, he confirmed the pipeline looks good and they are actively working to finalize new deals.

Craig Siegenthaler from Bank of America asked for comments on a news report about aggressive recruiting offers and inquired about the pipeline for new partnerships with banks and credit unions.

Answer

James Cracchiolo, Chairman & CEO, declined to comment on specific market rumors regarding recruiting packages, reiterating that Ameriprise focuses on its complete value proposition to attract advisors. Regarding institutional partnerships, he confirmed that the pipeline for the bank and credit union channel 'looks good' and the firm is actively working to secure new deals.

Craig Siegenthaler followed up on the topic of Advice & Wealth Management organic growth, asking for specific data on Q1 2025 recruiting, headcount, and retention, and how those metrics were tracking into Q2.

Answer

Chairman and CEO Jim Cracchiolo did not provide specific numbers but stated that Q1 recruiting was consistent with prior quarters and that the pipeline remains strong. He emphasized that Ameriprise's growth is primarily driven by the increased productivity of its existing adviser base, not just new recruits. He characterized the trends heading into the second quarter as a 'continuation' of the first quarter's performance.

Craig Siegenthaler asked about the drivers of the sequential decline in financial advisor count and whether growth would reaccelerate. He also inquired about the types of entities bidding on the long-term care (LTC) block and the overall robustness of the risk transfer market.

Answer

CEO Jim Cracchiolo attributed the advisor count dip to normal productivity-related turnover and adjustments within advisor teams, expecting growth to get back on track. Regarding LTC, CFO Walter Berman described the risk transfer market as 'not mature,' with bids from well-known reinsurers. Jim Cracchiolo added that some private equity firms partner with reinsurers, but the market is not large and applies heavy discounts, making a deal unattractive.

Craig Siegenthaler congratulated the firm on 8% net new asset growth but questioned its sustainability given past volatility, asking if a 5-6% run rate might be more appropriate for modeling.

Answer

CEO Paul Shoukry explained that the 8% NNA growth benefited from strong retention, recruiting, and calendar year-end dynamics. He expressed confidence in Raymond James' ability to remain a leading wealth management grower by focusing on quality over quantity, attracting higher net worth clients, and maintaining a high-touch service model. In a follow-up, Siegenthaler asked if the PCG compensation ratio could increase in 2026 due to elevated recruiting and competition. Shoukry clarified that significant investment goes into recruiting, noting that $460 million in prior firm production was recruited in the last 12 months, which is treated as a capital deployment priority for organic growth and long-term shareholder returns.

Craig Siegenthaler asked about the sustainability of the 8% net new asset (NNA) growth, given its volatility in recent quarters, and whether a 5-6% run rate is more appropriate for modeling. He also questioned if the Private Client Group (PCG) compensation ratio could increase in 2026 due to strong recruiting and competition, or if smoothing mechanisms would protect operating margins.

Answer

Paul Shoukry, CEO of Raymond James Financial, noted that the 8% NNA growth benefited from strong retention, recruiting, and year-end dynamics, expressing confidence in continued leading growth by focusing on quality and higher net worth clients. Regarding the PCG comp ratio, Mr. Shoukry explained that recruiting-related compensation is a significant investment for organic growth, which is the firm's top capital priority, and these costs are now transparently broken out.

Craig Siegenthaler asked how Raymond James' strong recruiting pipeline has been impacted by bank M&A and IBD mergers, which can create both outflows and elevated inflows. He also inquired about the financial impact and accretion numbers for the recently announced GreensLedge acquisition.

Answer

CEO Paul Shoukry explained that M&A activity in the industry consistently creates opportunities for Raymond James, as advisors seek stable platforms amidst disruption. He noted that such events act as catalysts for advisors to evaluate new affiliations, benefiting Raymond James' one-by-one recruiting approach. Regarding GreensLedge, Shoukry stated that due to its size and long-term strategic nature, the firm has not provided accretion numbers. He highlighted its strategic importance in providing securitization capabilities to existing institutional clients and M&A/Capital Markets capabilities to GreensLedge's clients, anticipating it to be very meaningful over the long term.

Craig Siegenthaler asked about BlackRock's net flow pipeline for 2026 and the future of the money market business, specifically if flows will reverse with anticipated Fed rate cuts and where that liquidity might be reallocated.

Answer

CFO Martin Small highlighted BlackRock's outperforming organic base fee growth, the strength of its structural growth strategy, and the expectation for bond returns to be income-driven in 2026. He noted strong fixed income flows in Q4 and a generational opportunity in intermediate-term bonds. Chairman and CEO Larry Fink added that global capital markets growth and potential tokenization could sustain elevated cash holdings, even as investors move out the yield curve.

Craig Siegenthaler asked about BlackRock's net flow pipeline for 2026 and the future of its money market business, particularly in light of anticipated Fed rate cuts and potential flow reversals.

Answer

CFO Martin Small highlighted accelerating organic base fee growth, a diversified fundraising plan for 2026, and expected shifts from money markets to intermediate-term bonds due to rate cuts, noting strong fixed income flows. Chairman and CEO Laurence Fink added that global capital market growth and potential tokenization would continue to support elevated cash holdings, even as investors move out the yield curve.

Craig Siegenthaler from Bank of America asked about the potential migration of private assets into target-date funds and the US 401(k) market, seeking an update on BlackRock's strategy, timeline, and regulatory dependencies.

Answer

CFO Martin S. Small stated that while litigation reform is likely needed for broad adoption, BlackRock is encouraged by recent policy dialogue. He highlighted the new partnership with GreatGray and confirmed plans to launch a proprietary LifePath fund with private allocations in 2026. CEO Laurence D. Fink added that the potential for higher returns makes this imperative for retirees, underscoring the need for advanced analytics to manage the transition.

Craig Siegenthaler from Bank of America asked for an update on the strategy and timeline for migrating private assets into target-date funds and the U.S. 401(k) channel, and what regulatory developments BlackRock is awaiting.

Answer

CFO Martin S. Small explained that while BlackRock has ambitions to bring public-private blended portfolios to defined contribution (DC) plans, significant adoption in the U.S. likely requires litigation or advice reform, though he noted positive momentum in policy dialogues. He highlighted the recent GreatGray partnership and stated that BlackRock expects to launch its own proprietary LifePath target-date fund with private assets in 2026. CEO Laurence D. Fink added that the potential for improved returns is compelling but litigation risk makes advanced analytics and data crucial for this market's development.

Craig Siegenthaler inquired about BlackRock's progress in adding private market assets to target-date funds for the retail 401(k) channel and whether the firm is waiting for new DOL rules.

Answer

Chairman and CEO Laurence Fink highlighted the Preqin acquisition as a key enabler for providing the necessary data and transparency. Executive Martin Small added that BlackRock has developed the 'glide path' technology for such products and plans to launch a target-date offering with private markets in mid-2025. Small noted that while they are moving forward, broad, scalable adoption would likely require litigation or advice reform from regulators, which BlackRock is actively advocating for.

Craig Siegenthaler asked for an updated perspective on the potential for alternative investments to penetrate the U.S. retirement channel, such as 401(k) plans, given BlackRock's recent acquisitions.

Answer

Martin Small, an executive, affirmed that BlackRock sees significant potential in blending public and private markets for better retirement outcomes but noted that regulatory reforms, like safe harbors, are necessary for broad adoption in DC plans. Laurence Fink, an executive, emphasized that the acquisition of Preqin is crucial, as providing superior data and analytics is essential to support the regulatory changes needed to expand these offerings in the highly regulated retirement space.

Craig Siegenthaler asked about the net flow trajectory, inquiring if the acceleration in re-risking activity will continue into next year and how that might affect BlackRock's money market business.

Answer

Martin Small, an executive, confirmed strong, broad-based flows and noted BlackRock's history of outperforming during re-risking periods. He described the institutional money market business as durable. CEO Laurence Fink added that the expanding role of capital markets globally provides a positive backdrop for future flows.

Craig Siegenthaler asked for clarification on Figure Technology Solutions' first-lien growth (whether it's HELOC or primary) and the company's appetite to expand beyond HELOCs into other segments like DSCR, residential transition, auto, and primary first-liens. He also inquired about Figure's value proposition for large banks, especially those holding HELOCs on their balance sheet, and if focusing on one lending segment is a headwind.

Answer

CEO Michael Tannenbaum clarified that first-lien growth is from first-lien HELOCs, which replace cash-out or rate-in-term refinances, or serve homeowners without existing liens, particularly for small balances due to Figure's lower origination costs. He corrected the perception of DSCR's TAM, noting it's a large non-QM component. Michael Tannenbaum and Executive Chairman and Co-founder Mike Cagney explained that Figure's value proposition for large banks stems from the macro thesis of liabilities moving to stablecoin, requiring banks to tokenize assets to access these tokenized liabilities via Democratized Prime. Mike Cagney added that Figure offers defensive capabilities with YLDS, allowing banks to offer a yielding alternative to non-yielding stablecoins and retain deposits on their balance sheets.

Craig Siegenthaler sought clarification on FirstLean growth (HELOC vs. primary) and Figure's appetite to expand outside HELOCs into other segments like DSCR, residential transition, auto, and primary first liens. He also asked about Figure's value proposition for large banks, especially those holding HELOCs on balance sheets, and if offering capabilities in only one lending segment is a headwind.

Answer

Michael Tannenbaum (CEO) clarified that FirstLean is a HELOC used to pay off existing loans or for homeowners without existing liens, serving as a replacement for cash-out or rate-in-term refinances, especially for small balance first liens due to Figure's significantly lower origination costs. He corrected the perception of DSCR TAM, stating it's a large component of non-QM with over $20 billion in annual securitization, and reiterated Figure's ambition to transcend specific asset classes. Michael Tannenbaum and Mike Cagney (Executive Chairman and Co-founder) explained that large banks will increasingly want to tokenize assets to access tokenized liabilities (stablecoins). Democratized Prime offers a way to do this, and Yields provides defensive capabilities, allowing banks to offer a yielding alternative to demand deposits and potentially hold deposits back at the bank.

Craig Siegenthaler asked about Victory Capital's M&A strategy, specifically regarding the focus on $50 billion-$200 billion AUM targets and the balance between cheap consolidation versus strategic and organic growth synergistic deals, noting a potential lean towards larger transactions.

Answer

David Brown, Chairman, CEO, and Director, articulated Victory Capital's aspiration to become a trillion-dollar firm, emphasizing that all acquisitions must have a strategic foundation to enhance the company's competitive position. Michael Policarpo, President, CFO, and Chief Administrative Officer, further explained that the company's expertise in acquisitions, beyond just investment management, allows for accelerated synergy realization and investment in growth areas.

Craig Siegenthaler asked about Victory Capital's M&A strategy, specifically regarding the focus on larger targets ($50B-$200B AUM) and the balance between cheap consolidation versus strategic and organic growth synergistic deals. He also inquired about the drivers behind exceeding the Pioneer acquisition synergy target, such as conservatism, use of AI, or finding more redundancies.

Answer

David Brown, Chairman, CEO, and Director, articulated Victory Capital's aspiration to become a $1 trillion firm, emphasizing that all acquisitions must be strategic to enhance the company and leverage its platform for shareholder value creation. He highlighted the intensifying industry consolidation and Victory Capital's strong position as a partner. Michael Policarpo, President, CFO, and Chief Administrative Officer, attributed the accelerated and higher synergy realization for the Pioneer acquisition to conservative planning, strong execution, and identifying additional opportunities in technology and investment operations, all while making strategic investments in other business areas. David Brown added that their developed expertise in the acquisition business contributes significantly to this success.

Craig Siegenthaler asked about the potential market share for alternative investments within traditional asset management and 401(k) channels, and what investments Apollo and the broader industry need to make in origination platforms to capitalize on this expanded total addressable market (TAM).

Answer

CEO Marc Rowan estimated a potential 10% share in traditional asset managers, emphasizing partnerships and the need for infrastructure, business processes, transparency, and daily NAV capabilities. President Jim Zelter added that the focus is on open architecture solutions and problem-solving with partners, with origination being the scarce attribute.

Craig Siegenthaler asked about the rising cost of funding at Athene, competitive trends in the U.S. annuity market, and the potential impact on net spread over the next few years.

Answer

CEO Marc Rowan explained that few competitors possess the four necessary components for success: capital, efficient origination, a source of assets with spread, and low-cost liabilities. He noted that while some competitors are paying up for liabilities in certain channels, Apollo pivots away from those areas. CFO Martin Kelly added that the increase in cost of funds was matched by a comparable increase in gross income, with the net spread being more impacted by prior rate actions.

Craig Siegenthaler inquired about the outlook for retirement services outflows, asking how liability outflows are expected to trend in 2025 after showing improvement in the current quarter.

Answer

CEO Marc Rowan stated that insurance liability runoff is highly predictable and that the company plans to update its 2025 forecast soon. CFO Martin Kelly affirmed that trends are tracking exactly as expected and that he does not anticipate any deviation from the predictable patterns they have been observing and disclosing.

Craig Siegenthaler inquired about investor reactions and demand rotations in AllianceBernstein's Asia business following Liberation Day and trade conflicts, specifically asking if there was a shift from U.S. to Asia or global products. He also sought clarification on the capital investment, funding sources, asset classes, and AUM potential for the strategic partnership with Fortitude, Carlyle, and FCA REIT.

Answer

Onur Erzan, Global Head of Private Wealth, Alternatives and Distribution, reported improved Asia business in Q3, particularly in taxable fixed income, with no major impact from tariffs. He noted client interest in diversifying into global and international equities, emphasizing AB's global equity platform. Seth Bernstein, President and CEO, added that they see growing inquiries for China and broader Asia strategies. For FCA REIT, Onur detailed an expected $1.5 billion AUM predominantly in private credit, similar to Ruby Re. Tom Simeone, CFO, stated a $100 million commitment to FCA REIT, planned for funding in 2026 or 2027, with various funding levers available. Onur further explained the deal's economics from equity investment and long-term management fees.

Craig Siegenthaler sought clarification on the strategic partnership with Fortitude, Carlyle, and FCA REIT, including AB's capital investment, funding sources, and the AUM potential for managing private and liquid credit.

Answer

Onur Erzan (Global Head of Private Wealth, Alternatives and Distribution) stated the partnership involves managing predominantly private credit assets for the sidecar, with an expected AUM of around $1.5 billion. Tom Simeone (CFO) detailed a $100 million commitment to FCA REIT, to be funded in 2026 or 2027, using credit lines or units with Equitable, emphasizing the mid-teens IRR and sticky, high-fee private credit management fees.

Craig Siegenthaler of Bank of America inquired about the strategy for scaling the retirement income business with new partners like Pacific Life and the associated economics. He also asked about the potential for further unit exchanges with Equitable.

Answer

Onur Erzan, Head of Global Client Group, explained that lifetime income is a key growth area, and while mandates are sizable, they are lower-fee. He noted they are exploring more accretive fee structures. CEO Seth Bernstein and CFO Tom Simeone clarified that the Equitable unit exchange is a tax-driven technical adjustment, returning Equitable's holdings to pre-2022 levels, and is not unusual.

Craig Siegenthaler inquired if Equitable is taking a more active management role at AllianceBernstein and if there are limits on future stock purchases. He also asked about the potential impact of proposed changes to muni bond tax exemptions on AB's strong retail muni SMA flows.

Answer

President and CEO Seth Bernstein stated there has been 'absolutely no change' in Equitable's engagement and that AB operates autonomously. He confirmed there are no technical restrictions on Equitable buying more units. On the muni question, Mr. Bernstein said a full repeal of the tax exemption is unlikely but would cause a short-term shock if it occurred. He believes the asset class's fundamental appeal for income and credit quality would persist. Onur Erzan, Head of Global Client Group, added that if no changes occur, demand could increase due to the attractive yield outlook.

Craig Siegenthaler inquired about the pros and cons of converting to a C-Corp structure and asked for an update on the pace of bond reallocations.

Answer

CFO Jacqueline Marks explained that the tax hurdle for a C-Corp conversion is significant for AB and that an UP-C structure would make the firm ineligible for major indices. CEO Seth Bernstein added that AB's partnership structure differs from peers who converted, making the math unfavorable for current unitholders. Regarding bond reallocations, Mr. Bernstein and Onur Erzan, Head of Global Client Group, noted continued strong fixed income interest, particularly in munis, and stated AB is well-positioned with its flagship and short-duration products to capture flows as investors extend duration.

Craig Siegenthaler asked if a further step-up in fixed income reallocations could occur after the election and with more Fed cuts. He also inquired how much of the $50 million in run-rate savings from the NYC headquarters lease expiration would benefit the bottom line.

Answer

Onur Erzan, Head of Global Client Group and Private Wealth, confirmed that a steepening yield curve would boost fixed income momentum. CEO Seth Bernstein added that demand is strong in U.S. muni SMAs and Asia. Regarding the lease, CFO Jacqueline Marks stated their intention is for most, if not all, of the savings to flow through to the bottom line.

Craig Siegenthaler questioned the continued strong total account growth, contrasting it with Thomas Peterffy's previous comments about potential deceleration, and asked for specific timing on when clients can transfer tokens in and out of IBKR accounts, geographic rollout plans, and the offering of a non-custodial wallet.

Answer

Thomas Peterffy, Founder and Chairman, confirmed that they have not seen any deceleration in account growth and expect it to continue. Milan Galik, President and CEO, outlined the crypto rollout schedule: stablecoin funding by end of October, crypto asset transfers by end of year, and staking by early next year, initially for U.S., Hong Kong, and soon European clients via Zero Hash.

Craig Siegenthaler inquired about Chairman Thomas Peterffy's prior comments on decelerating account growth given the strong results, and asked about the potential impact of new digital asset legislation on IBKR's cryptocurrency strategy.

Answer

Founder & Chairman Thomas Peterffy explained his tendency to under-promise on growth forecasts to ensure the company can over-deliver. CEO Milan Galik then detailed IBKR's crypto expansion plans, including an investment in Zero Hash, adding more coins, enabling stablecoin funding, supporting asset transfers, and introducing staking, with a geographic focus on Europe.

Craig Siegenthaler of Bank of America questioned the strong account growth in light of previous management commentary suggesting a deceleration. He also inquired about how potential digital asset legislation might influence Interactive Brokers' crypto strategy, particularly its partnership with Paxos and its stance on non-custodial wallets.

Answer

Founder & Chairman Thomas Peterffy stated he prefers to under-promise and over-deliver on account growth forecasts. CEO Milan Galik addressed the crypto question, highlighting IBKR's investment in Zero Hash and plans to expand crypto services, including stablecoin funding, asset transfers, staking, and geographic expansion into Europe.

Craig Siegenthaler asked how an emerging trade conflict could impact Interactive Brokers' global model, which relies on providing global asset access to international investors. He also requested insight on month-to-date client activity trends in April for account growth, customer credit balances, and margin loans.

Answer

CEO Milan Galik expressed confidence that the company's model would not be negatively impacted, as it offers both local and U.S. markets on a single platform, positioning it well for volatility. He noted that in April, there was a significant influx of new account applications, a greater-than-expected inflow of cash, and a 12% drop in margin loans, with trading activity returning to the previous quarter's average levels.

Craig Siegenthaler inquired about modeling execution and clearing fees, which grew slower than commissions, and asked about the deployment of the firm's growing equity balance, its impact on prime brokerage, and any updates on share repurchases.

Answer

CFO Paul Brody explained that execution costs are influenced by order routing that maximizes rebates, which in turn reduces commission revenue, making a paired analysis necessary. CEO Milan Galik added that there are no plans for share repurchases but dividends could increase. He emphasized the large capital base is a strategic tool for attracting institutional clients and funding international margin loans.

Craig Siegenthaler of Bank of America asked about the advantages of Robinhood's tokenized stock model (SPV contract) versus competitors' ERC-20 models, and its end goal of running on Bitstamp rails.

Answer

CEO Vlad Tenev explained that their model's key advantage is minimizing de-pegging risk by tying every mint and burn to a transaction in the traditional market, ensuring a good price for customers. He outlined a three-phase plan: phase two involves 24/7 trading on Bitstamp, and phase three will unlock the full power of DeFi with non-custodial holdings, which he described as the optimal path for customer adoption.

Craig Siegenthaler of Bank of America asked about the upcoming Robinhood Cortex product, specifically whether it will be a paid feature or free for Gold subscribers, and its expected launch timeline.

Answer

CEO Vladimir Tenev confirmed that Cortex will be included for Gold subscribers with no additional fee. He indicated a launch before the end of the year, noting that the initial features for stock digests and trade building are just the beginning. He added that the AI technology will permeate the entire Robinhood experience, including improving company operations and customer service.

Craig Siegenthaler inquired about the Robinhood Legend desktop platform, asking for the current number of sign-ups and how many of those are new accounts for the company.

Answer

CEO Vlad Tenev explained that the product rollout is still controlled and not yet fully open to the public. He noted that while sign-ups are multiples of the initial 1,000, the focus is on gathering feedback from highly engaged early adopters. Tenev emphasized the extremely positive feedback and the team's motivation to continue enhancing the platform for active traders.

Craig Siegenthaler from Bank of America inquired about the potential impact of repealing the order protection rule on the market ecosystem and Virtu specifically. He also asked why Virtu does not operate a hedge fund, unlike some competitors.

Answer

CEO Douglas Cifu stated that regarding the order protection rule, the firm is agnostic but anticipates a potential outcome similar to Canada's model, where a venue needs a minimum market share for a protected quote. He views this as neutral to slightly positive for Virtu. On the hedge fund topic, Cifu and Co-President Joseph Molluso explained that while they have considered it, the firm has prioritized its capital-light market-making model and shareholder returns, though they do not rule it out for the future.

Speaking on behalf of Craig Siegenthaler, an analyst asked for an update on the product roadmap for Virtu's crypto business and inquired about the competitive positioning of Virtu Technology Services (VTS) against new offerings from Citadel Securities and Jane Street.

Answer

CEO Douglas Cifu described a multi-pronged crypto strategy, including expanding coin coverage on platforms like EDX, operating 24/7, launching a direct institutional streaming service (VF Crypto), and supporting related ETF and futures products. Regarding competition, he differentiated VTS as a scalable, commoditized agency aggregation tool for smaller broker-dealers, contrasting it with what he described as more intensive, single-partner white-label RFQ offerings from competitors, stating they are very different approaches.

Craig Siegenthaler of Bank of America Corporation inquired about market share trends in cash equities amidst new competition and asked for an update on the progress of the fixed income market-making business.

Answer

CEO Douglas Cifu explained that Virtu optimizes for P&L over raw market share, noting they have maintained their relative share and remain the #2 provider in marketable orders. Regarding fixed income, he reported being happy with the progress, particularly in rates, with the business now profitable. He noted the focus is now on incrementally moving "upstream" to take on larger positions and more risk.

Craig Siegenthaler from Bank of America inquired about the reasons for the sequential decline in organic growth ANTI despite positive market drivers, and also asked for Virtu's updated view on the final SEC equity market structure proposal and its potential impact.

Answer

CEO Douglas Cifu attributed the organic growth decline primarily to a significant drop in Bitcoin ETF ADV and narrower spreads in index options. On the SEC rule, he described it as a 'bad result for the market,' predicting it would lead to increased transaction costs for large institutional orders and fail to drive more liquidity to exchanges. He reiterated that Virtu is a net payer of exchange fees, so the rebate reduction itself won't directly harm its ANTI.

Craig Siegenthaler of Bank of America followed up on the Guardian partnership, asking about the expected organic growth trajectory for the $45 billion AUM mandate and the broader market opportunity for winning more assets from insurance companies.

Answer

CEO Ali Dibadj stated that Guardian has a strong history of growth, and the partnership is aligned to continue growing the $45 billion AUM base. He emphasized that there is 'plenty of room out there' for more insurance partnerships, noting the Guardian deal establishes Janus Henderson as a 'true global contender' for sophisticated insurance assets. Dibadj sees enormous opportunity to grow this business line further, both in the U.S. and globally.

Craig Siegenthaler asked about the key factors driving the strong performance in Janus Henderson's fixed income business beyond security selection. He also inquired about the flow outlook for fixed income in 2025, given the favorable industry backdrop and strong momentum.

Answer

CEO Ali Dibadj attributed the strong, broad-based fixed income performance to both security selection and strategic allocation across asset classes and regions. He highlighted top-quartile results in strategies like multi-asset credit, a suite of fixed income ETFs, and regional offerings in Australia. Regarding the 2025 flow outlook, Ali Dibadj expressed cautious optimism, stating the firm hopes to continue its momentum and grow the fixed income business across U.S. ETFs, Europe, and institutional channels.

Craig Siegenthaler inquired about the firm's strategy for the insurance channel and asked for an update on the Privacore platform, including new manager additions.

Answer

Executive Ali Dibadj confirmed a strong focus on the insurance channel, noting the Victory Park Capital acquisition was critical for adding the asset-backed private credit products insurance clients demand. Regarding Privacore, he reported significant progress, with new high-profile managers in technology, real estate, and private equity joining the platform, validating its open-architecture model for democratizing alternatives.

Craig Siegenthaler inquired about Nasdaq's new regional headquarters in Dallas, its strategic purpose relative to the new Texas Stock Exchange, and its integration with existing Nasdaq exchanges.

Answer

CEO Adena Friedman clarified that the Dallas office is a response to Nasdaq's large and growing client base in Texas, which includes 700 clients across all divisions. She stated the goal is to provide a strong local presence for clients who also want access to Nasdaq's global capital markets. Friedman expressed confidence in Nasdaq's value proposition, which has driven an 82% win rate and continued success with its listings switch program, against any new competitors.

Craig Siegenthaler inquired about the potential impact of financial services deregulation on client demand for the AxiomSL offering and the broader RegTech growth trajectory, given its core bank clientele.

Answer

Adena Friedman, Chair and CEO, emphasized that the AxiomSL business is global, with 69% of Adenza's revenue coming from non-U.S. clients, mitigating U.S.-specific regulatory shifts. She expressed high confidence in demand, noting the Regulatory Technology subdivision is expected to perform at the high end of its range in 2025. Friedman added that a pro-growth environment could increase liquidity and demand for other Nasdaq technology solutions.

Craig Siegenthaler followed up on Verafin, asking if a recently signed Tier 1 client was new or previously announced, what services they would start with, and if existing Tier 1 clients have been successfully upsold.

Answer

CEO Adena Friedman confirmed it was the same client announced previously, starting with payment fraud. She noted that while it's early, they are actively working on upsell opportunities with several Tier 1 and Tier 2 clients, and have already upsold one Tier 2 client, citing positive feedback from initial implementations.

Craig Siegenthaler inquired if the Barings partnership could be a precursor to a merger and asked about any limitations on MassMutual increasing its common equity stake.

Answer

CEO Andrew Schlossberg clarified that the company's focus is exclusively on the product partnership with Barings. CFO Allison Dukes noted that the 2019 shareholder agreement limits MassMutual's stake to 22.5% and characterized the preferred stock repurchase as a sign of a strong, ongoing partnership.

Craig Siegenthaler asked for the timeline on the 'Alpha' platform integration, specifically when expenses would peak and net benefits would be realized. He also asked about the drivers behind strong flows into BulletShares ETFs.

Answer

CFO Allison Dukes projected that Alpha implementation costs will peak in 2025 as systems run in parallel, with net financial benefits expected to begin in 2026. President and CEO Andrew Schlossberg attributed the success of BulletShares to strong investor demand for fixed income duration, a trend he expects to continue.

Craig Siegenthaler's team at Bank of America inquired about the rebranding of Cboe's technology platform to 'Titanium,' its significance, and whether it signals an intent to white-label the technology to third parties.

Answer

Chief Operating Officer Christopher Isaacson clarified that the 'Cboe Titanium' brand is meant to highlight technology as a core strength of the company. He stated there are no current plans to commercialize or sell the platform as a service, as the primary focus is on investing in it to power Cboe's own global businesses.

Craig Siegenthaler of Bank of America asked about the Board's perspective on potential divestments following the completion of the strategic review, noting the recent closure of the spot crypto exchange.

Answer

CEO Frederic Tomczyk stated that the Board's current focus is firmly on driving growth in areas where Cboe has core strengths aligned with long-term secular trends. He characterized the strategy as a 'journey, not an event,' implying that while divestments are not a current priority, the portfolio is always under review. The primary focus for now is on growth rather than divestiture.

Craig Siegenthaler asked about the upcoming launch of index options on Robinhood's platform and whether crypto ETF options could be included in the initial launch, potentially increasing its impact.

Answer

Global President Dave Howson stated that crypto ETF options should be thought of as a 'phase 2' initiative due to regulatory and infrastructure hurdles. He confirmed the initial Robinhood launch will focus on cash-settled index options, which he believes are an excellent fit for Robinhood's active retail customer base. Cboe plans to support the launch with joint marketing and educational efforts.

Craig Siegenthaler asked for guidance on forecasting stock-based compensation for 2025, noting the current high run-rate and previous commentary about a potential step-down, while also considering the impact of a higher stock price.

Answer

CFO John Redett explained that the current elevated stock-based comp is due to the accounting treatment of performance stock units, which requires heavy upfront expensing. He confirmed that after remaining at Q3 levels in Q4, the expense is expected to "trend down to more normalized levels" in 2025. CEO Harvey Schwartz added that the firm's share buyback program was strategically timed to offset this dilution, resulting in a declining overall share count.

Craig Siegenthaler of Crédit Suisse asked if the Board's search for a new CEO would include evaluating candidates from TD Bank.

Answer

President, CEO & Director Timothy Hockey replied that the search for 'internal and external' candidates covers the entire universe, and the Board will focus on finding the best possible candidate without precluding any options.

Craig Siegenthaler from Credit Suisse asked for an update on the spread between client asset and revenue growth, noting the long-term decline in Return on Client Assets (ROCA) excluding spread revenues. He also inquired about the downward trend in investment product fees.

Answer

EVP and CFO Steve Boyle acknowledged that growth in the lower-revenue institutional business affects the overall rate but emphasized that all businesses have great profit margins and the key focus is on growing EPS. Regarding investment product fees, he explained that timing items made the rate seem high last quarter and low this quarter, and he expects it to bounce back and grow with balances moving forward.