Rit Roy

Rit Roy asked for an updated outlook on duration and yield to maturity, its impact on fee per million, and the drivers behind the implied sequential increase in Q4 expenses, also seeking insight into 2026 expenses.

Answer

CFO Ilene Fiszel Bieler discussed current weighted average years to maturity at around 10 years and reiterated sensitivities: a 100 basis point yield increase could add $3-$5 to high-grade fee per million, and a one-year increase in duration could be worth about $15. She reconfirmed full-year expense guidance, implying a Q4 increase of $10-$12 million driven by depreciation, technology, new hires, and timing-related expenses. She also highlighted management actions taken earlier in the year to self-fund strategic investments through productivity gains.

Rit Roy asked for an updated outlook on the bond curve's duration and yield to maturity, its impact on fee per million, and a quantification of line items driving the implied sequential expense increase in Q4 2025, with potential insight into 2026 expenses.

Answer

CFO Ilene Fiszel Bieler discussed the current (early November) weighted average years to maturity at around 10 years and reiterated sensitivities: 100 basis points in yield could add $3-$5 to high-grade fee per million, and a one-year increase in weighted average years to maturity could be worth about $15 more or less. Regarding expenses, she confirmed guidance at the low end of $505-$525 million GAAP, implying a Q4 expense of around $134 million (an incremental $10-$12 million increase from Q3). This increase is driven by depreciation, technology, new hires, and timing-related expenses. She also noted management actions earlier in the year reduced full-year expenses by $17 million, self-funding $16 million of technology and product investments.