Dan Fannon

Dan Fannon inquired about the current crypto market backdrop, how it compares to previous downturns, and eToro's operational adjustments in this cycle. He also asked about the timeline for increasing sales and marketing spend to 25% of net contribution and the broader expense outlook for 2026.

Answer

CEO Yoni Assia stated eToro remains bullish on crypto, shifting marketing focus to equities and commodities during crypto downturns while continuing product development. CFO Meron Shani explained that the marketing spend increase to 25% would be gradual throughout 2026, not necessarily in Q1, and is flexible based on market opportunities, particularly in the U.S. and new regions like Singapore and UAE.

Dan Fannon of Jefferies & Company Inc. asked for more detail on the trading cadence during the second quarter, specifically contrasting the highly active month of April with the rest of the quarter and the trends seen in early Q3.

Answer

CFO Meron Shani explained that April saw elevated capital markets activity due to tariff announcements, with invested amount per trade increasing 54%. This activity normalized through the remainder of Q2. Conversely, crypto activity was lower in Q2 as traders focused on equities but saw a rebound in July driven by an altcoin rally.

Dan Fannon of Jefferies & Company Inc. asked for more detail on the trading cadence during the second quarter, specifically contrasting the highly active April with the rest of the period and the subsequent trends observed in July.

Answer

CFO Meron Shani explained that elevated trading activity in April, driven by tariff announcements, saw a 54% increase in invested amount per trade. This activity normalized through the end of Q2. Conversely, crypto activity was lower in Q2 but saw a rebound in July, driven by the altcoin rally, surpassing Q2 levels.

Dan Fannon asked about the 2026 outlook for AQR, specifically inquiring about the diversity of flows, the success of tax strategies, and the competitive landscape for their newer offerings.

Answer

CEO Jay Horgen highlighted AQR's strong momentum in liquid alternatives, driven by innovation, tax-aware solutions, and global growth across institutional and wealth channels. CFO Dava Ritchea added that AQR's decades-long track record of innovation and product differentiation attracts both institutional and wealth clients, with a first-mover advantage despite expected competition. AQR was a double-digit EBITDA contributor in 2025 and is expected to exceed 20% in 2026 due to strong organic growth and investment performance.

Dan Fannon asked about the 2026 outlook for AQR, specifically inquiring about the diversity of flows, the success of tax strategies, competitive landscape, and the growth trajectory of newer strategies.

Answer

CEO Jay Horgen highlighted AQR's strong momentum in liquid alternatives and private markets, noting higher average fee rates and significant growth in the U.S. wealth channel. CFO Dava Ritchea emphasized AQR's decades-long track record of innovation, product differentiation, and strong performance, noting their first-mover advantage in unique offerings despite expected competition.

Dan Fannon inquired about the expected double-digit EBITDA contributions from AQR and Pantheon, seeking historical context on their contribution levels and the breakdown between management and performance fees.

Answer

CEO Jay Horgen confirmed that both Pantheon and AQR are expected to be double-digit contributors to earnings in the current year, driven by strong organic growth and secular tailwinds. He noted Pantheon's consistent growth and AQR's resurgence, particularly in tax-aware solutions. CFO Dava Ritchea added that AQR's growth is fueled by over $20 billion in year-to-date liquid alt inflows, shifting its profile to be more absolute return-oriented. Both executives highlighted that these firms offer opportunities for higher management fees, performance fees, and operating leverage.

Dan Fannon asked about MarketAxess's addressable market, the slowdown in U.S. credit electronification in 2025, and the confidence in reacceleration for 2026, including any idiosyncratic or competitive factors.

Answer

CEO Chris Concannon emphasized the enormous, early-stage opportunity in global fixed-income electronification. He explained that U.S. credit electronification plateaued around 45-50% due to the remaining phone and chat block market, which represents the next 50% opportunity. He noted that portfolio trading primarily converted existing electronic RFQ rather than expanding the overall electronic footprint. The current focus has shifted to targeting this block market, while emerging markets continue to show dramatic growth in electronic penetration across various protocols.

Dan Fannon followed up on comments regarding the addressable market, asking what gives MarketAxess confidence in reaccelerating electronification in US credit for 2026, particularly after a slowdown in 2025, and if any idiosyncratic market or competitive factors contributed to that deceleration.

Answer

CEO Chris Concannon explained that US credit electronification plateaued around 45%-50% because portfolio trading primarily converted existing electronic RFQ rather than new phone/chat volume. He stated that the current focus for reacceleration is the unpenetrated 50% block market, where MarketAxess is making significant investments. He also noted that emerging markets are still in early stages of electronic penetration, offering substantial growth opportunities across various protocols.

Dan Fannon from Jefferies & Company Inc. followed up on the topic of management changes, asking if the hiring process was now complete and whether the current leadership team is the one management believes can execute on its strategic goals.

Answer

CEO Christopher Concannon expressed strong confidence in the current team, especially with the upcoming arrival of Dean Barry. He emphasized that the new hires bring critical product and practical knowledge, such as Spencer Lee's EMS and buy-side experience, which are vital for tackling the large dealer-to-client block trade market and executing the company's next phase of growth.

Dan Fannon asked for more context on the recent rollout of single-name 0DTE options and Cboe's confidence that it will expand the market rather than cannibalize its existing index options business.

Answer

Craig Donohue, CEO, and Rob Hocking, Global Head of Derivatives, explained that single-name 0DTE and SPX products have fundamental differences in risk, settlement, and style, making them additive rather than cannibalistic. They emphasized the importance of investor education on these distinctions.

Dan Fannon from Jefferies asked for an expansion on Cboe's confidence that the recent single-name 0DTE rollout will not cannibalize its index business but rather expand the overall market pie.

Answer

CEO Craig Donohue and Global Head of Derivatives Rob Hocking explained that single-name 0DTE is viewed as additive, not cannibalistic, due to fundamental differences in customer perspective and risk. Hocking detailed that SPX options are cash-settled and European-style, while single-name options are physically settled and American-style, introducing early exercise and overnight risk. Cboe is focused on investor education to highlight these distinctions.

Dan Fannon asked about the difference in exchange recurring revenue growth, specifically the shift from low double-digit growth in 2025 to mid-single-digit guidance for 2026, and the underlying strengths of the recurring side of the exchange business.

Answer

Warren Gardiner, CFO of Intercontinental Exchange, noted that the mid-single-digit guidance for 2026 reflects difficult comparisons from strong double-digit growth in prior quarters. He anticipates continued growth from new customers in futures and equity, some benefit from SIF data pool size (though unpredictable), minimal erosion, and strategic price capture for value added. He clarified that the guidance was for total recurring revenue, with exchange data potentially performing slightly better.

Dan Fannon asked about the difference in exchange recurring revenue growth guidance for 2026 (mid-single digits) compared to 2025 (11%), seeking insight into the strengths across the recurring side of the exchange business.

Answer

Warren Gardiner, CFO of Intercontinental Exchange, attributed the lower mid-single-digit guidance for exchange recurring revenues in 2026 to difficult comparisons from strong 2025 performance. He expects continued growth from new customers in futures and equities, some benefit from SIPdata pool size (though unpredictable), minimal erosion, and strategic price increases for value-added products, particularly in the exchange data business. He clarified that the guidance was for total recurring revenue, with exchange data potentially performing slightly better.

Dan Fannon inquired about the shorter-term dynamics for ICE's Mortgage segment in Q4, including the impact of Flagstar, and the contribution and timeline of PennyMac's announced departure from the platform.

Answer

Warren Gardiner, CFO of Intercontinental Exchange, clarified that Q3 mortgage revenue was slightly lower due to inactive MSP loans, some renewals at lower minimums, and Q1 2026 implementations. He confirmed Flagstar's roll-off in Q4 and estimated PennyMac's impact as approximately a half-point on recurring revenue, not affecting ICE until 2028.

Dan Fannon from Jefferies asked for more details on the short-term dynamics impacting the Mortgage segment's Q4 performance, including the Flagstar roll-off, and the expected contribution and timeline of PennyMac's departure from the platform.

Answer

Warren Gardiner, CFO of Intercontinental Exchange, clarified that Q3 mortgage revenue was slightly lower due to inactive loan roll-off on MSP, some customer renewals at lower minimums, and Q1 2026 implementations. He noted Flagstar's Q4 roll-off and estimated PennyMac's impact at about half a point of recurring revenue growth, not affecting results until 2028.

Dan Fannon of Jefferies & Company Inc. asked for an expanded view on ICE's appetite for large-scale M&A, considering its current business mix, stock valuation, and deleveraged balance sheet.

Answer

Founder, Chairman & CEO Jeffrey Sprecher stated that the company's core DNA and disciplined approach to capital deployment have not changed. He emphasized the goal of being an 'all-weather' company and that reaching leverage targets provides maximum flexibility to execute their long-term strategy, which always weighs M&A against organic investment and capital returns.

Dan Fannon from Jefferies & Company Inc. asked CEO Jeff Sprecher to elaborate on the company's appetite for large-scale M&A, considering its current business mix, stock valuation, and recently achieved leverage target.

Answer

CEO Jeffrey Sprecher stated that the company's core strategy to be an 'all-weather' business has not changed. He emphasized a disciplined approach to capital deployment, constantly evaluating whether to build organically or acquire assets to accelerate strategy, always weighing these options against shareholder returns like buybacks. He noted that achieving their leverage target early provides 'maximum flexibility' but does not change their fundamental discipline.

Dan Fannon of Jefferies inquired about the current market environment, the overall health of CME Group's customer base amidst elevated volatility, and the impact of recent margin requirement increases, particularly in the metals complex.

Answer

Chairman and CEO Terry Duffy highlighted robust open positions and specifically addressed the silver market, noting that margin changes did not deter activity, with the market reaching new historic highs. Derek Sammann, Global Head of Commodities, Options, and International Markets, added that all client segments, including retail and institutional, are growing, indicating a healthy, risk-on ecosystem where risk management is a key differentiator for CME Group.

Dan Fannon asked about the current market environment, the overall health of CME Group's customer base, and the impact of elevated volatility and recent margin requirement increases, particularly in the metals complex.

Answer

Chairman and CEO Terry Duffy highlighted the customer base's health, citing stable open positions and the market's reaction to silver margin changes. Global Head of Commodities, Options, and International Markets Derek Sammann added that all client segments, including institutional, are growing, indicating a healthy ecosystem.

Dan Fannon asked about CME Group's long-term retail strategy, including the FanDuel partnership and micro complex, and whether future growth would be organic or involve potential M&A.

Answer

Terry Duffy, Chairman and CEO, CME Group, explained that the retail strategy is evolving, highlighting the FanDuel partnership's potential to reach 13 million accounts and the overall growth in the retail business. He emphasized CME Group's credibility in new asset classes like Bitcoin and stated that the company is in a strong position to grow its retail business organically, currently preferring this approach over M&A.

Dan Fannon inquired about CME Group's long-term retail strategy, including the FanDuel partnership and micro complex, and whether future growth would be organic or involve potential M&A.

Answer

Terry Duffy, Chairman and CEO of CME Group, explained that the retail strategy is evolving, focusing on distribution and efficiencies, citing the FanDuel partnership's potential to access 13 million accounts. He emphasized the company's strong position to grow organically, leveraging its credibility in new asset classes like crypto, and suggested M&A is not currently the preferred path.

Dan Fannon from Jefferies & Company Inc. asked for the rationale behind lowering the full-year expense guidance, especially in light of the record performance in the first half of the year.

Answer

President & CFO Lynne Fitzpatrick attributed the $15 million reduction in adjusted operating expense guidance to two main factors. First, the company has refined and optimized its spending on the Google Cloud migration. Second, the use of professional services and consulting across the firm has been lower than initially anticipated.

Dan Fannon of Jefferies & Company Inc. asked for the rationale behind lowering the full-year expense guidance, especially given the record-breaking performance in the first half of the year.

Answer

Lynne Fitzpatrick, President & CFO, attributed the $15 million reduction in expense guidance to two main factors: first, the successful optimization and refinement of spending related to the Google Cloud migration, and second, lower-than-anticipated use of professional services and consulting across the firm.

Dan Fannon asked for context on the target date business, specifically the Q4 outflows, the momentum and outlook for 2026, including new win opportunities, potential losses, and the broader flow outlook.

Answer

CEO Rob Sharps attributed Q4 outflows to softer flows, especially in December, driven by equity pressure from institutional losses and rebalancing, and target date fund outflows from M&A activity and lost mandates. He noted the shift from fully active to blend/hybrid target date funds, where T. Rowe Price is gaining market share, and shared January target date inflows of $1.7 billion, with a base case for 2026 of continued equity pressure offset by target date, fixed income, and alternatives growth.

Dan Fannon of Jefferies & Company Inc. asked about the long-term impact on the firm's effective fee rate, considering the growth in lower-fee products like ETFs and model delivery accounts versus the traditional mutual fund back book.

Answer

President, CEO & Chair Robert Sharps stated the firm assumes fees will trend down, driven by mix shift. He noted the biggest impact is the shift from mutual funds to lower-cost trusts in the DC channel as plans scale. While alternatives are fee-enhancing, growth in fixed income and ETFs pressures the overall rate. CFO Jennifer Dardis added that the cost-to-serve for institutional and model delivery clients is lower, partially offsetting the lower revenue rate.

Dan Fannon asked about the product development strategy for MDT, specifically regarding new products, wrappers, and market expansion for the current year and beyond. He also followed up on the Q1 outlook, asking if the $10.2 million lower revenue from fewer days and the Q4 real estate fees should be considered non-recurring.

Answer

Chris Donahue, President and CEO of Federated Hermes, outlined the MDT strategy to expand into new wrappers (SMAs, funds, ETFs, CIT, UCITS) and new markets, citing the successful launch of the MDT U.S. Equity UCITS Fund overseas. Tom Donahue, CFO, confirmed the $10.2 million lower revenue from fewer days. Regarding real estate fees, he indicated they were unusual items, with a potential for a smaller amount in Q1 but not at the Q4 level, implying they are largely non-recurring.

Dan Fannon asked about the growth outlook, specifically how LPL plans to 'reignite the growth engine,' inquiring about industry dynamics, 'Advisors in Motion' trends, the recruiting backlog, and the expected timing of acceleration.

Answer

CEO Rich Steinmeier noted that advisor movement remains tempered relative to historic levels, but the Commonwealth acquisition has been a significant recruiting event. He explained that recruiters are now pivoting back to organic efforts, with pipelines building in early and mid-stages, which will take time to convert. He also highlighted the competitive environment with elevated TA levels but emphasized LPL's disciplined approach and focus on capabilities, ongoing economics, and upfront economics.

Dan Fannon questioned the timing for LPL Financial to reignite its growth engine and return to regular recruiting levels, asking about current industry dynamics, advisor movement, and the recruiting backlog.

Answer

CEO Rich Steinmeier noted that advisor movement remains tempered relative to historic levels, but LPL's pipelines are near record levels, albeit loaded towards early and mid-stages, which will take time to convert. He highlighted the competitive environment with elevated transition assistance (TA) levels but emphasized LPL's disciplined approach focused on capabilities, technology, service, and ongoing economics.

Dan Fannon of Jefferies & Company Inc. inquired about the current recruiting backdrop, the outlook for net new assets (NNA) for the rest of the year, and the broader trend of advisor movement across the industry.

Answer

CEO Rich Steinmeier noted that overall industry advisor movement has been truncated, dropping from a historical 5.5-6% to around 5% due to macroeconomic uncertainty. Despite this, he stated that LPL is maintaining its industry-leading win rates. He acknowledged a more competitive transition assistance (TA) environment but reiterated that LPL's capabilities, technology, and economics are the primary drivers for advisors choosing the firm, not just the TA package.

Dan Fannon followed up on the discussion of growth, asking about Blackstone's outlook for FRE margin and the potential for expansion in 2026.

Answer

Michael Chae, Vice Chairman and CFO, stated that Blackstone's margin position is fundamentally strong, having expanded over 100 basis points to a fiscal year record in 2025. He pointed to strong setups for performance revenues and transaction fees entering 2026, along with a decelerating rate of operating expense growth. He concluded that the starting point for 2026 is margin stability with potential for upside.

Dan Fannon followed up on the growth outlook, asking about Blackstone's expectations for Fee-Related Earnings (FRE) margin and its potential for expansion in 2026.

Answer

Vice Chairman and CFO Michael Chae stated that FRE margins expanded over 100 basis points to a fiscal year record in 2025, indicating fundamental strength. For 2026, he pointed to strong setups for fee-related performance revenues and transaction fees as key drivers. He also noted a decelerating rate of operating expense growth in 2025, which is expected to continue. With healthy top-line revenue, he anticipates margin stability with potential for upside in 2026.

Dan Fannon asked about the private credit market, inquiring about any changes in credit quality across Blackstone's portfolio and adjustments made in response to recent headlines and bankruptcies.

Answer

Jon Gray, President and Chief Operating Officer, clarified that recent defaults were bank-led and idiosyncratic, not reflective of traditional private credit. He emphasized Blackstone's consistent underwriting model, deep due diligence, and long-term hold strategy, noting minimal defaults and realized losses, and no significant changes to their approach.

Dan Fannon asked about the credit quality and strategic adjustments in Blackstone's private credit portfolio amidst recent market headlines and bankruptcies.

Answer

President and COO Jon Gray clarified that recent defaults were bank-led, not private credit, and involved fraud, not reflecting broader credit issues. He emphasized Blackstone's deep due diligence and long-term hold strategy, noting minimal realized losses and strong aggregate performance, with no significant changes to their model.

Dan Fannon sought more color on management's confidence that the 'deal-making pause is behind us,' given previous expectations for a recovery.

Answer

President & COO Jonathan Gray acknowledged past slowdowns but explained that this time, multiple 'tumblers are falling into place.' He cited record-high equity markets, debt spreads returning to pre-hike levels, improved business confidence, and a more favorable regulatory environment. Gray also pointed to significant pent-up demand, with M&A and IPO volumes running far below historic norms. Proprietary data, like the busiest IPO pipeline since 2021 and a 50% increase in credit deal screenings, reinforces this confidence.

Dan Fannon followed up on the financial crime management outlook, specifically the 24% growth in Q4, the impact of professional fees, and the momentum into next year, asking if it's tracking towards the mid-20s growth guide.

Answer

Adena Friedman, Chair and CEO, explained that enterprise deals have back-weighted Annual Contract Value (ACV) and longer implementation times, affecting ARR until fully live. She noted that professional services revenues would see more quarter-to-quarter variability due to implementations for both SMB and enterprise clients, expressing excitement for 2025 achievements and the 2026 pipeline.

Dan Fannon followed up on the financial crime management outlook, noting the 24% growth in the fourth quarter and the mention of professional fees. He sought a clearer understanding of the momentum heading into 2026 and whether the business is on track to meet its medium-term guide of mid-20s growth.

Answer

Adena Friedman, Chair and Chief Executive Officer of Nasdaq, explained that the back-weighted ACV (Annual Contract Value) from enterprise deals in 2025 means longer implementation times, with revenue not recognized in ARR until fully live. She also noted that professional services fees, driven by both SMB and enterprise client implementations, will introduce some quarter-to-quarter variability in revenues. Friedman expressed strong satisfaction with the 2025 performance, including 9 new deals (3 upsells) and the growing modular capabilities for enterprise clients, and remains excited about the 2026 pipeline.

Dan Fannon inquired about the momentum in Capital Markets Technology, specifically regarding trade management services and data center growth, and the outlook for Q4 and next year.

Answer

Adena Friedman, Chair and CEO, detailed that Capital Markets Technology comprises Market Tech, Calypso, and Trade Management Services (connectivity). She noted strong demand for connectivity services driven by robust market volumes and increased data center capacity. Friedman highlighted robust demand for Calypso across collateral, treasury, trading, and risk management, with significant growth in Latin America. Market Tech also showed expansion in Latin America, good upsells, and strong new sales, indicating a healthy environment for the remainder of the year and into next year.

Dan Fannon asked for more details on the momentum in Capital Markets Technology, specifically regarding trade management services and data center growth, looking ahead to Q4 and next year.

Answer

Adena Friedman, Chair and CEO of Nasdaq, highlighted strong demand for connectivity services in their markets, supported by robust market volumes and increased data center capacity. She noted robust demand for Calypso across collateral, treasury, trading, and risk management, with strong growth in Latin America. The Market Tech business also saw expansion in Latin America and good upsells, indicating a healthy environment.

Dan Fannon from Jefferies & Company Inc. inquired about ancillary revenues tied to listings, such as Corporate Solutions, asking about the current environment and the lag effect on these revenues as the IPO market recovers.

Answer

Chair & CEO Adena Friedman characterized the Corporate Solutions environment as one of 'modest growth.' She explained there is a lag effect for new listings, as they receive a three-year 'starter kit' of IR services, which delays subscription revenue. However, an improving IPO market increases the overall pipeline and opens up opportunities for upsells.

Dan Fannon asked for context on the industry and Raymond James' outlook for advisor movement in 2026 compared to the previous year.

Answer

CEO Paul Shoukry expressed optimism about advisor movement to Raymond James in 2026, based on strong pipelines and the firm's reputation as a destination of choice and leading wealth management grower. He emphasized Raymond James' long-term approach, focusing on reinforcing its unique 'Power of Personal' culture, client-first values, and continuous investment in its platform (technology, product, support) to ensure high advisor and client satisfaction. Shoukry highlighted the firm's J.D. Power Award for trust and reiterated that sustainable, quality recruiting is a marathon, not a sprint, avoiding short-term incentives.

Dan Fannon asked for context on industry advisor movement in 2026 compared to the previous year, seeking insights into potential trends and catalysts.

Answer

Paul Shoukry, CEO of Raymond James Financial, expressed optimism for advisor movement to Raymond James based on current pipelines, viewing the firm as a destination of choice and a leading grower. He mentioned potential catalysts from private equity roll-ups but emphasized Raymond James' long-term, sustainable recruiting approach focused on its unique culture, personal relationships, client-first values, and platform investments, rather than short-term incentives.

Dan Fannon questioned whether the recent acceleration in net new asset growth represents a 'new normal' for fiscal 2026, considering timing and competitive factors. He also asked about spending priorities for fiscal 2026 compared to 2025, focusing on areas of increased or decreased investment, non-compensation expenses, and targeted pre-tax margins.

Answer

CEO Paul Shoukry confirmed that net new asset numbers have increased, reflecting record recruiting results and a lag in asset onboarding. He acknowledged the competitive environment and M&A activity but emphasized strong retention and robust recruiting momentum. CFO Butch Oorlog stated that spending will continue to prioritize growth, with incremental costs in recruiting and investment sub-advisory fees, alongside ongoing significant investment in technology, including AI. Paul Shoukry reiterated the target of generating over 20% adjusted pre-tax margins, noting that specific non-comp expense guidance for 2026 would be provided on the next call.

Dan Fannon from Jefferies & Company Inc. asked about the apparent disconnect between bullish commentary on organic growth and the actual Net New Asset (NNA) results, and also questioned the outlook for the fixed income brokerage business.

Answer

CEO Paul Shoukry clarified that the optimistic commentary reflects an accelerating pipeline, noting there is a 3-to-9-month lag before new advisors' assets are reflected in NNA. He also explained that the fixed income business, which primarily serves depositories, performs best in an environment of high deposits and low loan demand, which is not the current state.

Dan Fannon from Jefferies & Company Inc. asked about the apparent disconnect between bullish commentary on recruiting and the recent net new asset (NNA) results, and also questioned the outlook for the fixed income brokerage business.

Answer

CEO Paul Shoukry explained there is a lag of three to nine months before recruited advisors' assets are reflected in NNA figures. He also noted ongoing competitive pressure from private equity-backed roll-ups. Regarding fixed income, he stated the business primarily serves depositories, and a favorable environment involves deposit-rich banks seeking to invest in securities.

Dan Fannon asked about the reasonable penetration level for Schwab's lending offerings among existing clients over the next couple of years, given their current growth focus.

Answer

President and CEO Rick Wurster sees tremendous upside in the lending business, noting only 9% penetration of the Pledged Asset Line (PAL) among ultra-high net worth retail clients and 23% in Advisor Services. He believes these numbers can go significantly higher due to the convenience and competitive rates. Wurster also highlighted strong demand from RIAs for more banking and lending solutions to match wirehouse capabilities, indicating Schwab is just beginning its banking journey.

Dan Fannon asked about the penetration levels of Schwab's lending offerings, particularly the Pledged Asset Line (PAL), and what the company views as a reasonable penetration target for existing clients in the coming years.

Answer

President and CEO Rick Wurster expressed confidence in significant upside for the lending business, noting only 9% PAL penetration among ultra-high net worth retail clients and 23% in Advisor Services. He believes these numbers can be much higher due to the convenience and competitive rates of PAL, and anticipates further expansion in banking and lending services for RIA clients to help them compete with wirehouses.

Dan Fannon asked about the outlook for non-compensation expense growth in 2026 compared to 2025, and what differences exist in budgeting or metrics. He also requested an updated outlook for Private Banking and Lending in 2026, considering a backdrop of falling rates and the offsets from demand and deposits.

Answer

CFO Denis Coleman stated a rigorous focus on managing non-compensation expenses, noting that many are linked to overall firm activity (e.g., transaction-based, market development). He mentioned the importance of feeding T&E capacity for client engagement in the current cycle, while also constraining controllable expenses. For Private Banking and Lending, Mr. Coleman expects continued growth in lending activities and penetration within the wealth channel, as well as overall deposit activity. However, he flagged potential NIM compression due to anticipated rate cycle changes in 2026.

Dan Fannon asked about the outlook for non-compensation expense growth in 2026 compared to 2025, considering the One Goldman Sachs 3.0 initiatives, and sought an updated outlook for private banking and lending revenues in a declining rate environment.

Answer

Chairman and CEO David Solomon stated that the firm maintains a rigorous focus on managing non-compensation expenses. He noted that some expenses, like transaction-based and market development, are linked to activity levels, while others are actively constrained. For private banking and lending, Solomon expects continued growth in lending activities and deposit levels, but flagged potential NIM compression due to anticipated rate cycle changes in 2026.

Dan Fannon asked whether the robust trading business could be sustained if investment banking activity accelerates and inquired about the firm's strategy for alternative fundraising in the retail wealth channel.

Answer

Chairman & CEO David Solomon stated that a strong investment banking environment is 'quite constructive' for their large and diverse markets business. Regarding alternatives, he confirmed that Goldman Sachs is 'very strategically focused' on the opportunity, actively building third-party wealth distribution partnerships, and is positioned to benefit from potential rule changes allowing alternatives in retirement accounts.

Dan Fannon asked about the key drivers for future wealth management margin expansion, specifically whether it would be primarily from scaling and growth, cost/efficiency improvements, or a shift in business mix.

Answer

Chairman and CEO Ted Pick and Sharon (CFO) clarified that margin expansion would be driven by both factors. They highlighted the growth of fee-based revenues through the advice-based model and increased transactional revenues from E*TRADE, alongside efficiency gains from technology, including AI tools like LeadIQ for revenue generation and expense reduction. Workplace was also noted as a significant driver.

Dan Fannon inquired about the key drivers for future Wealth Management margin expansion, specifically asking if it's primarily due to scaling and business growth, cost efficiencies, or a favorable business mix.

Answer

Sharon (CFO, Morgan Stanley) stated that margin expansion is driven by both scaling fee-based revenues through client advice and self-directed activity (E*TRADE), and efficiency gains from technology, including AI tools like LeadIQ. Ted Pick, Chairman and CEO, added that the Workplace channel is particularly effective for driving clients into the broader Morgan Stanley funnel.

Dan Fannon inquired about the net new asset (NNA) growth within the wealth channel, specifically the contribution from workplace and the IPO market, and momentum in other channels.

Answer

CFO Sharon Yeshaya highlighted strong performance across self-directed and advisory channels, with new and existing clients attracting assets. She emphasized the workplace channel's exciting momentum, exceeding the historical $60 billion annual migration, contributing significantly to NNA, fee-based flows, and channel migration.

Dan Fannon of Jefferies & Company Inc. inquired about the specific financial or strategic factors that would prompt Morgan Stanley to complete an inorganic acquisition. He also asked for more detail on the drivers of Net New Assets (NNA) and the current advisor recruiting environment.

Answer

Chairman & CEO Ted Pick responded that the bar for acquisitions is very high, as the firm's organic opportunities are 'extraordinary' and any deal must directly enhance the core strategy. EVP & CFO Sharon Yeshaya added that NNA strength is broad-based across all three channels, with the workplace channel being a significant source of new assets for the advisor-led business.

Dan Fannon requested disclosure of HPS flows in the quarter and BlackRock's broader outlook for private credit growth, considering recent headlines and news flow surrounding the asset class for 2026 and beyond.

Answer

CFO Martin Small reported $7 billion in private credit net inflows for Q4, driven by deployment, and noted stable credit conditions across HPS strategies. He explained that rising direct lending defaults are a 'catch-up' to historical norms, with non-accruals and PIK in line with historical averages. He highlighted HPS's focus on larger companies and noted that Preqin data indicates over 80% of investors plan to maintain or increase private credit allocations.

Dan Fannon requested disclosure of HPS flows for the quarter and a broader outlook on private credit growth, questioning if recent headlines have altered BlackRock's expectations for 2026 and beyond.

Answer

CFO Martin Small reported $7 billion in private credit net inflows for the quarter, part of $25 billion deployed across private markets in 2025. He noted stable credit conditions across HPS strategies, emphasizing that rising default rates are a return to historical norms after an abnormally low period. Martin highlighted HLEND's strong gross subscriptions of $1.1 billion in Q4, with redemptions in line with the broader industry, and cited Preqin data indicating an intact structural pipeline for private credit fundraising.

Dan Fannon with Jefferies inquired about the sustainability of the significant quarter-over-quarter increase in the institutional business's securities rate per million. He also sought clarification on the StoneX Group's integration roadmap, specifically regarding the realized and projected expense synergies from the RJO acquisition, questioning if the initial $50 million target would be raised. Furthermore, Fannon asked about the company's hedging strategy for interest rate sensitivity given higher balances and anticipated rate cuts, and finally, he questioned factors beyond volatility impacting the self-directed retail segment's rate per million.

Answer

CFO Bill Dunaway explained that the increase in securities rate per million was due to improved equity market conditions, increased volatility in the fixed income space, and strong contributions from the prime brokerage business. CEO Sean O'Connor added that the business mix, which previously saw erosion due to expansion into lower-margin, higher-volume products, has now troughed, and the current rate reflects underlying market conditions. Regarding synergies, CIO Abby Perkins confirmed $20 million in annualized run-rate cost savings have been realized, with the next uptick expected in Q2 FY2026 from UK combinations, and the majority from US FCM integrations in Q4 FY2026, reiterating comfort with the $50 million target. For interest rate sensitivity, CFO Bill Dunaway stated StoneX will continue to actively monitor the market, potentially using swaps to lock in rates for a portion of the client float, aiming to exceed the one-month treasury rate benchmark. CEO Sean O'Connor elaborated on actively managing money to earn a spread and strategically hedging 30-40% of the float against short-term rate downsides, highlighting the growing client asset pool as a stable revenue underpinning. For the retail business, CEO Sean O'Connor noted that the current rate per million, while lower than recent highs, is closer to the long-term average for the self-directed retail business, suggesting previous quarters were outperforming.

Dan Fannon with Jefferies inquired about the sustainability of the significant quarter-over-quarter increase in the institutional business's securities rate per million, the progress and specific amounts of expense synergies from the RJO acquisition, the company's hedging strategy for interest rate sensitivity given higher balances and potential rate cuts, and any factors beyond subdued volatility impacting the self-directed retail segment's rate per million.

Answer

CFO Bill Dunaway and CEO Sean O'Connor explained that the improved securities rate per million was driven by better market conditions, increased fixed income volatility, and strong prime brokerage contributions, noting that the business mix has likely troughed. CIO Abby Perkins confirmed $20 million in annualized expense synergies realized, with further upticks expected from UK integrations in Q2 2026 and US FCM mergers in Q4 2026, reiterating confidence in the $50 million target. Bill Dunaway detailed plans for active hedging using swaps in the two-to-three-year window to protect against downside rate movements, while Sean O'Connor added that RJO's active portfolio management aims to earn a spread over T-bill rates and that StoneX is growing as a custodian of client assets. Regarding retail, Sean O'Connor clarified that the current rate per million is closer to the long-term average (mid-80s), following periods of unsustainable outperformance.

Dan Fannon of Jefferies & Company Inc. asked for details on the integration priorities and timeline for the R.J. O'Brien acquisition, the current client behavior in the Commercial segment amid tariff uncertainty, potential changes in the competitive FCM landscape from banks, and modeling guidance for the Benchmark acquisition.

Answer

Executive Vice Chairman Sean O'Connor outlined a phased integration for R.J. O'Brien, targeting international synergies in 3-6 months and the larger US integration over 9-12 months. He and Group President Charles Lyon noted that while market uncertainty persists, they have not seen any change in competitive behavior from banks in the FCM space. CFO William Dunaway clarified that the Benchmark acquisition will be reported within the Institutional segment and, while smaller, is expected to be accretive and a key growth driver.

Dan Fannon with Jefferies asked about the Q4 SS&O revenue guidance, which was flat at the midpoint despite strong momentum, and sought more commentary on the momentum post-BIT License approval, including the pipeline and expected ramp-up of the US customer base into next year.

Answer

CFO Dave Bonanno attributed the Q4 SS&O guidance to seasonality (no events revenue), minor impact from digital asset price movements, and timing of new contract signings, while reiterating confidence in long-term growth. CEO Tom Farley noted more early US customer wins than anticipated post-BIT License, with a rapidly filling pipeline of institutional clients, acknowledging robust diligence processes but expressing optimism about the size of the pipeline and early adopters.

Dan Fannon inquired about the Q4 guidance for Subscription Services & Other (SS&O) revenue, which appeared flat despite strong Q3 momentum, and sought further commentary on the post-BIT License approval momentum and U.S. customer pipeline.

Answer

CEO Tom Farley expressed confidence in the long-term growth of SS&O, while CFO Dave Bonanno attributed the Q4 flat guidance to seasonality (zero events revenue), impact from digital asset price movements, and timing of new contract signings. Tom Farley detailed the positive early wins and rapid pipeline filling post-BIT License, acknowledging the robust diligence process for institutional clients.

Dan Fannon inquired about Bullish's customer concentration, how pricing adjustments have evolved to address it, and whether the company anticipates further tweaking of its pricing strategy going forward.

Answer

Tom Farley, CEO and Chairman, acknowledged that customer concentration is common in markets and that the company continuously optimizes pricing. David Bonanno, CFO, added that recent pricing changes have diversified the customer base and spread fees across activity levels, making them comfortable with the current framework, even if some customers remain high-volume. He noted that while tweaking never ends, they are pleased with the current outcome.

Dan Fannon asked about Bullish's customer concentration, how pricing adjustments have evolved, the progress in Q3, and whether further pricing tweaks are anticipated.

Answer

Tom Farley, CEO and Chairman, noted that customer concentration is common in markets and that the team has worked to bring it down to a reasonable level. David Bonanno, CFO, expressed satisfaction with the current pricing framework, which has diversified the customer base and spread fees across activity levels and customer types, despite some customers still having higher volume concentration. He indicated that while they are comfortable with the current framework, tweaking never ends.

Dan Fannon asked about the outlook for non-HELOC loan growth, which was roughly $80 million this quarter, how it is expected to progress as products expand, and which products were the primary drivers. He also followed up on the outlook for new origination partners, considering the strength in Q3 additions and the government shutdown's impact on SMBs.

Answer

CEO Michael Tannenbaum highlighted significant 3x year-over-year growth in First-Lien HELOCs as a primary focus due to market size and partner opportunity. SMB and crypto-backed loans also showed strong growth (crypto-backed also 3x YoY), with SMB expected to grow significantly as Figure builds out its B2B2C approach. He clarified that the opportunity for new origination partners is broader than the government shutdown, positioning Figure as an alternative blockchain-based capital market to traditional entities like Fannie Mae and the SBA, relevant across many asset classes.

Dan Fannon discussed the outlook for non-HELOC loan growth, specifically the $80 million in Q3, and asked which products were outsized drivers. He also inquired about the outlook for new origination partners, given Q3 strength, conversations, and potential additions over the next several quarters, mentioning the government shutdown as a catalyst for SMBs.

Answer

Michael Tannenbaum (CEO) highlighted significant growth in FirstLean (3x year-over-year) as the primary focus due to market size and partner opportunity. He also noted strong growth in crypto-backed loans (around 3x year-over-year) and expected significant growth in SMB as more partners are added. He clarified that the SMB opportunity is broader than the government shutdown, positioning Figure as an alternative blockchain-based capital market for both mortgage and SMB, relevant across many asset classes.

Dan Fannon inquired about Brookfield's optimistic outlook for raising its largest private equity fund ever, noting this contrasts with broader market sentiment for the asset class, and asked what factors inform this confidence.

Answer

Connor Teskey, President, explained that Brookfield's private equity business is unique, focusing on essential assets and services, which yields consistent results across market cycles. He highlighted that their strategy, which has delivered over 25% IRRs for two decades with over half the value creation from operational improvement, is differentiated. This approach allows them to return significant capital, avoiding the DPI issues faced by others, and is well-suited for the current environment where value creation comes from operational improvement rather than financial engineering.

Dan Fannon inquired about Brookfield's optimistic outlook for raising its largest-ever private equity fund, asking what differentiates their approach and informs this confidence, especially given a market backdrop where others in the asset class face slower fundraising cycles.

Answer

Connor Teskey, President, explained that Brookfield's private equity business is unique, focusing on essential assets and services that produce consistent results. He highlighted that their focus on high-quality, cash-generating assets has allowed them to return significant capital, avoiding the DPI issues affecting others. He emphasized that future value creation will come from operational improvement, an area where Brookfield has a 20-year track record of over 25% IRRs with more than half from operational enhancements, making their approach well-suited for the current economic environment and driving strong market demand.

Dan Fannon sought clarification on whether Virtu Financial's new capital deployment strategy would lead to more variability in quarter-to-quarter revenue/ANTI or drive more consistent results, and what the ultimate goal is. He also asked about the timing of new investments (people, strategies) relative to revenue opportunities.

Answer

Co-President and Co-COO Joseph Molluso stated the goal is to trend towards the higher end of their previously published adjusted net trading income range as a base case. He acknowledged potential variability but emphasized that Virtu Financial remains a volatile business. He also noted that new investments and revenue opportunities should largely be in line, without a significant long-term lag, though environmental noise will still impact performance.

Dan Fannon of Jefferies & Company Inc. asked for context on the overnight trading opportunity, including its current contribution and future potential. As a follow-up, he asked which of Virtu's organic growth initiatives is expected to be the biggest contributor in three years.

Answer

CEO Douglas Cifu described overnight trading as being in "very early days" and currently 99% retail-driven, but sees it as an inevitable growth area and a strong tailwind for the firm. For the biggest long-term growth driver, Co-President Joseph Molluso identified crypto and options as having enormous potential, while also highlighting the record performance of the ETF block franchise.

Dan Fannon asked about the expected pace of Alpha platform implementation costs for next year, following the $10-15 million range for Q4, and the ultimate long-term impact of this integration on expense growth.

Answer

CFO Allison Dukes stated that implementation costs are expected to remain high through 2026, potentially modestly increasing, as the company aims for completion by year-end 2026. She explained that significant decommissioning and streamlining opportunities, leading to reduced fixed expenses, are anticipated in 2027. President and CEO Andrew Schlossberg expressed satisfaction with the implementation progress.

Dan Fannon inquired about the expected pace of Alpha platform implementation costs for next year, following the $10M-$15M range for Q4, and the long-term impact of this integration on expense growth.

Answer

CFO Allison Dukes expects implementation costs to remain high through 2026, potentially modestly increasing, with streamlining benefits realized in 2027. President and CEO Andrew Schlossberg noted significant progress on the equity business transition.

Dan Fannon asked for elaboration on the ongoing bond reallocation theme, questioning if AllianceBernstein is well-positioned to materially benefit from it, considering its performance and product offerings. He also asked about the biggest variance between the initial non-compensation expense guidance for the year and the current year-to-date performance.

Answer

Seth Bernstein, President and CEO, noted recovering taxable fixed income appetite in Asia and strong performance in the tax-exempt SMA space in the U.S., where AB is the largest player. Onur Erzan, Global Head of Private Wealth, Alternatives and Distribution, added that their annualized organic growth rate for municipal SMAs was 26% in Q3, and they secured a $500 million global credit win, with their ETF platform exceeding $10 billion. Seth emphasized strong long-term performance for these services. Tom Simeone, CFO, attributed the variance in non-compensation expenses to cost containment initiatives implemented in Q2 following April events.

Dan Fannon questioned the biggest variance in non-compensation expenses between the initial guidance for the year and the current tracking.

Answer

Tom Simeone (CFO) attributed the variance primarily to cost containment initiatives implemented in Q2, which have delivered savings since.

Dan Fannon of Jefferies asked about gross sales trends, questioning whether the Q2 slowdown was temporary and what the forward-looking momentum appeared to be.

Answer

Onur Erzan, Head of Global Client Group, stated he was not overly concerned, noting that year-to-date sales were up slightly and that redemption rates had improved. He characterized the Q2 slowdown as a 'six to eight week air pocket' and reported seeing momentum return in June and July. He expressed optimism, citing opportunities in insurance, the scaling ETF platform, and new geographic expansions.

Dan Fannon inquired about any changes in the mix of strong account growth, specifically regarding customer profiles or geographic sourcing, and asked for preliminary thoughts on 2026 expense growth and areas of investment.

Answer

Milan Galik, President and CEO, stated that the account growth mix remains consistent with previous quarters, with equal representation across geographies and client types, including direct clients, introducing brokers, prop trading firms, financial advisors, and hedge funds. Paul Brody, CFO, declined to provide forward-looking statements on expenses but noted the current quarter's run rate is typical. Milan Galik added that the company operates without fixed budgets, adjusting staffing based on opportunities and needs while maintaining expense discipline.

Dan Fannon asked for more detail on the improved securities lending results, including the diversity of hard-to-borrow names, and sought an update on the introducing broker pipeline.

Answer

CFO Paul Brody noted that securities lending strength came from both general account growth and a few 'high-flyer' special names, and that a pickup in IPOs would likely boost this segment. CEO Milan Galik described the introducing broker pipeline as 'very strong,' highlighting that firms who previously chose competitors are now returning to IBKR due to its superior offering and cost.

Dan Fannon from Jefferies & Company Inc. asked for more details on the improved securities lending revenue, including the diversity of hard-to-borrow names and the potential for an upward trend with more IPOs. He also requested an update on the introducing broker business, specifically the size of new partners and the strength of the pipeline.

Answer

CFO Paul Brody stated that securities lending strength came from both a general rise in activity and a few 'high flyer' hard-to-borrow names, noting that a pickup in corporate activity like IPOs would likely boost results further. CEO Milan Galik described the introducing broker pipeline as very strong, with a notable trend of firms returning to IBKR after initially choosing competitors.

On behalf of Dan Fannon, an analyst asked for an update on the company's excess capital available for M&A as of March 31 and inquired about any changes or progress in inorganic growth priorities and deal sourcing.

Answer

CFO Paul Brody stated that excess capital remains in the $6 billion to $7 billion range. CEO Milan Galik added that the company continues to evaluate opportunities but has not found a suitable deal, noting a recent potential acquisition failed because the seller was unwilling to part with 100% ownership, which was a deal-breaker for Interactive Brokers.

Dan Fannon from Jefferies & Company Inc. inquired about Marex's free cash flow for the quarter and the last twelve months, and also asked about the status of expense synergies from recent acquisitions.

Answer

Group CEO Ian Lowitt provided a detailed breakdown of cash flow for H1 2025, noting a net cash increase of $779 million and explaining the adjustments from reported PBT to cash PBT. He also stated that most cost synergies from past deals are realized, with future benefits from acquisitions like Winterflood expected to be a mix of revenue and cost improvements. Group CFO Rob Irvin added that Deloitte had reviewed the interim financial statements.

On behalf of Dan Fannon, an analyst asked for an update on Marex's M&A strategy, including any focus on specific product capabilities or geographic regions.

Answer

CEO Ian Lowitt described the M&A environment as favorable, with many sellers and few buyers, leading to an 'extremely active pipeline' for Marex. He confirmed the company is evaluating opportunities across all business segments (Clearing, Agency and Execution, Market Making) and in multiple geographies, without highlighting any specific area of focus. Management added that while the timing of deals is unpredictable, there has been no slowdown in M&A activity.

Dan Fannon asked for more details on the private wealth opportunity, including plans to broaden distribution for the TPOP product and the future product roadmap for the retail channel.

Answer

CFO Jack Weingart detailed plans to expand beyond the two initial wirehouse partners to include international banks and the RIA channel via a partnership with iCapital. He also mentioned that new products are being designed for broader credit (a multi-asset interval fund) and real assets.

Dan Fannon sought clarification on the fiscal 2026 expense guidance and questioned why the effective fee rate has remained flat year-over-year despite a positive AUM mix shift towards higher-fee equities.

Answer

CFO & COO Matthew Nicholls clarified the fiscal 2026 expense outlook is based on fiscal 2025 guidance less $200 million in savings, excluding performance fees. On the fee rate, he explained that its stability is a net result of offsetting factors: positive mix from alternatives is counteracted by fee pressure on large institutional mandates and growth in lower-fee vehicles like ETFs and Canvas. He noted a stable rate is a decent outcome in the current environment.

Dan Fannon questioned the disconnect between strong multi-asset performance and its inconsistent net flows, and also asked for clarity on the full-year compensation ratio guidance given the unpredictability of performance fees.

Answer

CEO Ali Dibadj stated that 'the time for balanced has come,' citing strong performance and a favorable market environment, and noted growing interest in Europe and Asia, alongside growth in the broader solutions business. CFO Roger Thompson added that while it is too early to predict second-half performance fees, the firm's guidance for a 43% to 44% compensation ratio for the full year remains unchanged and already assumes some level of performance fees.

Dan Fannon of Jefferies & Company, Inc. inquired about the potential impact of regulatory reforms, such as capital relief from the Supplementary Leverage Ratio (SLR), on the largest dealers and trading velocity in the rates market.

Answer

CFO Sara Furber and CEO Billy Hult view potential SLR relief as a significant positive for the rates market. They explained it would increase the resilience and liquidity of the Treasury market by allowing banks to hold more Treasuries, which in turn facilitates more trading and could boost swaps activity. They concluded that the current constructive environment, with strong banks and advancing technology, creates a great recipe for the next leg of electronification.

Dan Fannon of Jefferies asked for an expansion on trends in interest-earning assets, specifically margin balances, segregated cash, and other buckets. He also inquired about the share buyback activity during the quarter and the outlook for the remainder of the year.

Answer

EVP and CFO Steve Boyle noted a nice bump in margin balances as markets recovered and expects that to continue if the environment holds. He explained the segregated cash movement was a year-end anomaly and current levels are more indicative of the future. Regarding the buyback, Boyle stated they are trending toward the high end of the annual guidance range and expect to be consistent buyers over time, despite potential quarter-to-quarter fluctuations.

Dan Fannon questioned the slow start to advertising spend and its implications for full-year guidance, and asked for the rationale behind co-founding the Members Exchange.

Answer

CFO Steve Boyle explained the lower ad spend was a flexible response to the market environment and that it would increase in Q2, cautioning against cutting marketing too deeply. President and CEO Tim Hockey justified the Members Exchange as a pro-competitive move, noting that despite many venues, ownership is concentrated, and this new, retail-focused exchange will enhance competition.