Cboe Global Markets, Inc. (CBOE) Earnings Call Transcript & Summary

Yes. Hello, everyone. And welcome to the conference presentation. This is Alex Kramm. I cover the exchanges, business services companies and [ various stakeholders ] here at UBS. This is the first virtual meeting I'm hosting here with Cboe. And we are very happy to have Chris Isaacson and Brian Schell here with us. And to get started...

Alex, you're breaking up a little bit.

Yes, pretty scratchy.

That's a first. So that -- I'm sorry?

You sound better now, Alex.

Okay. Yes, I don't know why this is happening. It was fine all morning. But any ways, so just to get started here, we only have 40 minutes. So since there's no presentation, why don't we actually start very big picture. Forget COVID for a minute, when we look medium and long term, what gets you excited about Cboe's position in the industry? And why do you think this it's normal structure of growth ahead?

Yes. Sorry, Alex. So we're very excited about the growth prospects for Cboe. If you think about even our most recent quarter, where although relatively muted product volumes, we still had record results, results that were kind of unexpectedly good because we really highlighted the diversity of our business across asset class and geography. We're running 16 markets around the world. This year alone, we've acquired 5 firms. And that's -- those are really all been about growing acquisitions to accelerate organic growth. So if you think about Cboe from 4 years ago with the Bats acquisition, it was very, very concentrated in really 3 products and then multi-listed options. And now we're across the globe and are a much more diversified business. So we -- one, we are still very, very excited about our product growth and prospects. We think that they will pick up quite nicely and continue to grow year-over-year as institutional investors reengage once they see though this pandemic. Also as we engage with retail investors with products like Mini VIX, which we launched just yesterday and traded 25,000 contracts on the first day. And as we also reignite and reengage with customers on XSP, which is a product that's 1/10th the size of SPX that we think will appeal very nicely to retail investors and is a nice alternative to SPY options and multi-list. I say in Europe, we're very excited about our European derivatives efforts. So in the first half of 2021, we plan to launch European derivatives. We just closed the acquisition of EuroCCP, which allows us to continue to grow our strong position in European equities as well as expand into European derivatives. We think that's a multiyear growth effort, so we're investing for the future. And then the 3 acquisitions to start the year, Hanweck, FT Options and Trade Alert, all fit quite nicely into our Information Solutions suite, which complement our assets we already had with LiveVol, Silexx and our growing indices platform. So those 6 platforms together form what is a cohesive Information Solutions unit now, which is growing organically as well as now through acquisition. That unit offers us really I think data that's not easily accessible or accessible at all from any other source. And it's for highly complex traders, for professional traders where they need to come and they need to get data in order to inform their trading decision. So we're very excited about the growth for our products, Information Solutions and then expanding into further asset classes and geographies. Just last week, we closed the acquisition of MATCHNow, the largest dark pool in Canada. That's our first foray into Canada, one of the largest capital markets in the world. We believe that's the first step of, hopefully, many to gain a large foothold in the Canadian market. So all of these are underpinned by, what we think is, a technology advantage, not just that we have a great platform, but that we can run it at with extreme efficiency, which allows us to generate a lot of return and therefore, invest into the future.

Great. Well, thank you. I think we'll unpack a lot of these things that you just talked about. But maybe just to start with the core. Obviously, everybody is asking about the proprietary products all the time. But the one thing that I always wonder about is that how about the structural growth? It's always very difficult to see, but where is there still growth in the user base when it comes to SPX, for VIX? What about growth of use cases? Forget the near term, but like how can we see that there's still actually underlying growth in those businesses?

Yes. It's a fair question. So we -- certainly there is structural growth in these products because if you think across the different types of institutional investors, especially, say, pension funds or insurance, or asset managers. There still are some of them not even trading derivatives or certainly not trading our product. So let's take an example. Insurance, they need to offset the exposure that they've just underwritten. We've developed a product called FLEX, which is basically bespoke tenors or options products based on SPX that allows them to underwrite the risk or hedge the risk they've just underwritten. We've seen a lot of growth in FLEX products. That's also what's being used for target income investing. There's a large -- target outcome investing, where there's a large influx of capital and AUM going into funds that are -- have target outcomes, that are being effectively effectuated through the use of FLEX products in our products. I'd also say with pensions, we've hired a subject matter expert for each of these different customer segments, including -- with pensions, to do the research, to do the education and then to get them access to our products. So while there are going to be ebbs and flows in volume, and we're currently in an ebb, it's not terribly surprising right now given what has been elevated volatility for quite some time. And as people need to see through this pandemic and institutions have a lot of cash on the sidelines, and we do believe they'll reengage as we get closer to the election. They can see through the pandemic, and they're going to need to get exposure to the S&P 500, which either -- through 1 of our 3 products, which they have done historically.

Yes. I think that kind of got me to my next question already, but maybe you can elaborate a little bit. I mean -- because again, everyone is focused on the softness right now. So what I just asked about the long-term kind of structural growth, like, can you just -- I mean I talked -- you talked about on the earnings call a little bit, but what really in your opinion is driving the softness? And what are the signposts for acceleration? Some people like to look at open interest, but -- yes. What do you look at to kind of get more excited again that things are picking up or should pick up?

Yes. The softness, as I just mentioned, Alex, I think, is some of this is late summer, lower volumes across the industry. And some of it's just preparing for an election where people maybe are ready to engage. The VIX has been -- through the second quarter, the VIX, I think, was at -- the average level of VIX was 34.5, the highest it's been since the financial crisis. So when you're kind of stuck in that level, nobody is really willing to short volatility and people aren't necessarily willing to build a higher volatility either. It's a bit of a no man's land. Now people -- the VIX is coming out in lower 20s, the term structure of VIX futures has -- is as steep as it's been since March. And so we expect to see some reengagement. And open interest in VIX futures has continued to grow even though volumes have been muted from lows in March and April. So I think the signposts we're looking at, because there's no definitive sign, one signpost that rules them all. We do look at open interest. We do look at customer engagement, number of customers that are trading each product, which hasn't really gone down. We also see different number of customers by segment. And we've been looking internally at the number of customer accounts that are trading each of our products and frankly, getting a lot more intelligent about what strategies they are using to trade our products. Certain strategies in this highly elevated environment don't work as well. But as the VIX comes down, they will work much better. So we're actually encouraged to where we're at right now because, let's say, we have this diversified business or even though our product volumes might be muted right now, we believe they're going to come back because people need S&P 500 exposure in one way, shape or form. I'd also say something that's unique about this rally, since March, is that it's been driven by, obviously, tech stocks, Tesla, a very few names. It's a very narrow rally that has left behind many and capturing S&P exposure hasn't -- we've kind of missed some of the rally, frankly. So I would say, in this case, it's not the desire for S&P exposure for this specific rally has not been as strong as in previous years, our previous big core actions. We think that's rotational. That won't always be the case. Things will -- things go in narrow and then things broaden out. It's just the uniqueness of this pandemic time.

Okay. I think you touched upon a little bit in a couple of questions ago, but getting more in the weeds. Can you talk about more in terms of where your -- what customer types you're seeing strength or weakness in? And I think you touched on retail a little bit. But is that a vertical you look -- are trying to look more in particular on the proprietary side. So again, you touched upon it a little bit, but maybe just flush it out a little bit more in particular on retail and other customer types that we should be thinking about.

Yes. I'll start with retail. Certainly, it's been well documented and reported that the retail trading has seen a dramatic increase this year across retail brokerages, both in U.S. equities as well is in options. We do think we have benefited from that in U.S. equities with retail priority. And then in options, we're getting our fair share of multi-listed adoptions or more than our fair share, given our market position there. But if you look at our prop products, something we learned through the foreclosure between March and the middle of June is that there is pretty dramatic demand for SPX from retail customers. Retail customers liked the electronic format. They liked AIM, which is an auction mechanism and the price improvement they got from that. So we plan to bring back AIM, even though the floor is reopened, as soon as the SEC approves that for smaller-sized orders that appeals to retail. I'd also say, I might have mentioned XSP, XPS is 1/10 the size of SPX. We frankly think that we're underpenetrated there. If you look at the trading that's going on in SPY options, 20% of that volume, that's happening on SPY, is those positions are being open and closed or opened the day of expiration. Well, that is largely day trading. And therefore, if they're closing their positions that day as well, they're creating gains that are fully taxable in a full income tax rate versus the 60-40 tax treatment they would enjoy for trading XSP. So why aren't they trading XSP today? Wasn't purely an access, distribution and education effort on our part, working with the retail brokers to educate those, frankly, new investors that may have never traded options before that XSP is a better product for your purpose. And so that's really a real focus of ours heading into the second half, in addition to the Mini VIX launch that I mentioned previously that we just launched yesterday.

Cool. Anything in the other businesses? I know the focus is always on the proprietary side. But just coming back to -- like anything on the other businesses that we should be aware of? I know retail volumes and options and equities have been very strong. But I feel like some of the other businesses like Europe and FX don't really get a lot of attention. So maybe in terms of what you're seeing right now and where you're excited in those other businesses?

Yes. Let me start in Europe. We're quite excited about -- we've had some questions about some softness in our market share in Europe. Dave Howson and team in Europe have instituted an enhanced liquidity provider scheme there that has now rolled out as of August 1 across all of the European markets in which we operate. Our market share has improved quite materially. So we're very excited in the equities space there. And our periodic options and LIS business, our large scale business, continues to do well in Europe. Reminder, those are less high-frequency or so lower frequency and lower impact trades that, frankly, we have a higher capture on also. Then in FX, FX doesn't get talked about much, but we're quite excited about the many growth efforts we have in FX. While the overall FX volumes, say, 5 trillion or 6 trillion, the spot volumes in the market have gone down, our market share has continued to hit new records. We're having a very good year in FX. In July, we just launched FX Central, which is a central limit order book that is a firm ultimum book that competes directly with EBS and Reuters. And the customer uptake on that book has been very good. We're also seeing good uptake in nondeliverable forwards as well as our format platform. So in FX, there's a lot of growth efforts we're investing in and they're paying off. And then in U.S. equity, I'll just say, we -- in addition to retail priority, we just announced periodic auctions. So periodic auctions is about 2% of the overall European market. We've learned lessons there and how we're going to apply them in the U.S., and we think that can help us compete against the a 43% of the U.S. equities market that is off exchange.

Okay. I think you went into some of the new initiatives already with that answer, but any -- when you think about all your new initiatives, and I'll talk to -- I'll ask you about it in a little bit more detail, but what -- which ones are you the most excited about and are focused on right now, maybe force ranking a little bit.

Yes. Actually, we don't necessarily think of it that way because we have a diverse team, and we can do more than 1 or 2 things at a time. I think that was highlighted in our earnings call as well. Each of these teams that is running these businesses are highly focused on their business unit. So FX, for instance, I just mentioned all those growth efforts. Those in no way are detracting from our efforts across our other asset classes or businesses nor are the efforts in U.S. equity. So I would -- I'm not going to force rank them other than to say, the efforts around our products remain of our highest priority and will remain our highest priority going forward because it is central to our growth. It's just we are excited about our other businesses as well. I think the Mini VIX launch of yesterday, it's recent. There's a recency effect there. But 25,000 contracts traded on the first day, that's a pretty great first day and probably exceed our expectations. It feeds into the smaller contract size that has seen a lot of growth. And so we're pretty excited about that along with XSP in our prop products.

Okay. Can you talk about EuroCCP a little bit? I mean, that's obviously -- well, not the newest thing because I think you've done something else after that, already, another deal. But what -- talk about the long-term potential what you're trying to do in Europe? And how do you define success, how attainable are those goals? Give us a little bit more insight there because that seems like something where you think market structure can really change?

Yes. We are quite excited about it because if you look at just what is the total addressable market, the GDP of the U.S. and the Eurozone are roughly equal. But the amount of notional traded and listed options and derivatives is about 1/7 in Europe versus the U.S. So we think a large portion of that is because of the market structure difference. And the lack of display of liquidity or liquidity on the screens that customers -- the customers can go and interact with. So we think we're going to learn -- take the lessons we've learned in the U.S. over decades and apply them of how to incent display liquidity in Europe. The timing is first half of next year, we plan to launch. We need to add derivatives to EuroCCP. We need to build a derivatives platform. But it is a long-term play. And we expect to get everyone connected next year, start to build the network. But it's a multiyear effort that we think pretty -- returns for a long time in the future. A reminder on our efforts here, these -- the products were going to the trading options and futures on are index options on 6 indices that are our own indices that are similar to benchmarks, but our own indices across the different countries in Europe. So in that way, there'll be proprietary products for us, but at a competitive price to the industry. And this is -- our efforts here are largely customer-driven. We've had, I think a global liquidity provider firms who we know very, very well. They say, we really want a better European derivatives market than we see today, please help us drive that change. And we think there's demand from customers that will prolong with these better quotes. So Brian and team were deeply involved with the transaction with EuroCCP. Us purchasing a CCP is a first for us also. So Brian, maybe if you want to chime in there with why we're excited about Europe.

Yes. I mean it's -- Alex, it's everything that what Cboe does, honestly and why we are excited about it. And it's -- again, we've said this before, but -- and it's about broadening the pie. It's not about trying to steal someone else's market share. With everything that we're doing, is basically trying to bring that requested market structure to Europe. And I think we want to make sure people understand that this is not us trying to force our way in for a commercial reason. Obviously, we believe we're going to have a positive outcome on that. So I guess, we're very excited on multiple fronts. I don't think anybody ever regrets the [ kind of the ] whole clearing thing. But we're excited about the effort that they're doing there and leveraging that. The strength that provides, obviously, in the equities business in and of itself, the derivatives capabilities that it gives us and then obviously, as we build that out, that derivatives functionality at the exchange level, which, again, is going to add a little bit to our cost structure, shorter term, both facility cost, both those builds in the shorter term. But again, we view it as an investment. That just, we think, is going to pay -- is going to have just a tremendous ROI in the long run. And like I said, we're just very excited about it. There's just nothing more strategic we can do than add that entity in the Cboe family. And to one of Chris' points to the strength of the market, the strength of support that the credit community also has behind this transaction, we were able to get a EUR 1.5 billion line of credit put in place in the midst of the pandemic, to a new client in a multicurrency facility, that was, I would say, wasn't necessarily the biggest name in Europe with respect to Cboe, with respect to EuroCCP. It was obviously a little bit more expensive than we expect to kind of going into it. But again, I think there's strong support for this effort longer term. I think there's a lot of confidence like I said and behind it, a lot of interest.

Well, thanks. And good to hear from you too, Brian. Sorry, I've been all over Chris for now. I want to go back to just one thing. And maybe you can give us a little bit more detail on -- you said you have some market makers connect excited about it, people are ready to provide liquidity. But the one thing that I actually wanted to ask us on the earnings call already, but that you haven't talked about is really the fundamental user of these products. And I'm asking in particular because you're launching in your own indices here, right? They are not -- I mean, they're not -- it's not tax [ 30 ]. It's Cboe -- Germany 30, or -- as an example, I believe, right? And some of the other ones. And I know that they may very much look the same and certain of the users may very much say, okay, if I just want to trade this stuff, it's going to be the similar exposure. But when I think about the fundamental guys, who're saying that, okay, you got to get this through committee, I got -- I have this exact disclosure and the exact index that I'm replicating the hedge. Like why would those guys all of a sudden think this market makes sense. Because in the U.S., you argue the exact opposite when that you're saying the S&P 500 Index options are better than the lookalike product. So your VIX is better than lookalike products from other [ outstar ]. So kid of why are you talking out of both sides of your mouth, I guess is the question.

Alex, I don't expect anything else from you as far as your questions. But I mean, in Europe, we -- I'll mention to the other side, beyond the market maker commitment to these indices and new products, we do have sell-side anchor tenants that are fully committed to this. And if you remember -- I mean, if you think about the ecosystem in the U.S., if those sell side anchor tenants that are really the gatekeepers or the agents that are bringing the natural order flow from the buy side, as they need to get exposure to whatever indicing they might happen. So we're deploying that playbook that we've used in the U.S. there. And they frankly are fine with the indices that we've come up with, that we're already calculating and sending out. So it's a different market there in that way in the U.S. I think comparing them apples-to-apples, in some ways, they can be compared, in some ways, they are different. So we have to honor the differences and innovate within them. But the subside of anchor tenants that are fully committed to this gives us confidence we're going to have both sides of the trade when we open up next year.

Okay. I'm now going to shift gears a little bit and go back to Brian, and it's because I'm actually getting a couple of questions here related to M&A from the audience. [Operator Instructions] And obviously I had M&A on my question list, too. But yes, can you talk a little bit more about M&A? In this current environment, you've been pretty active. And so the question from my end is, of course, like what you see out there, what else are you interested in. But specifically, from the audience, I've got 2 things around participating in future M&A in Europe and Asia. And what those opportunities are in those regions? And so to remind us what your kind of like financial hurdles are when you approach M&A? So sorry, that's a long winded question, but I wanted to get everything in here that I've gotten from the audience.

Yes. That's fair enough. And it's a good question that we should always make sure we address and investors understand how we're trying to build value for shareholders. I will link it back to our strategy that really has been unwavering for a while now as we think about M&A and its role that it plays. We've never believed that we've had to do M&A, but we do believe that M&A can support us in our growth efforts if we're looking to expand into new geographies, which we have evidence of that. If we can enhance an existing asset class that we're already in, or add scale to an existing business that we already have. And so everything that we've done. And the more that, that supports our proprietary products, the closer linked and very strongly we believe in the higher ROI, we believe it has in the long term. So if you continue to use that strategic framework for how the lens we put our M&A filter through, you can see what we've done, what we've done. If you look back at the Information Solutions group that recall with the -- which we've done earlier in the year with respect to Hanweck, FT Options and Trade Alert and building that incredibly powerful suite of, I'll call it, enhanced market data and what that does and how that is a unique offering, which were profitable in and of itself going forward. And we expect to see that continue to grow in and of itself on top of the organic growth initiatives that we already had in place with our market data and access and service fees that we had going on. So those are things that, like I said, that are just examples of the lens we do the M&A through. And again, M&A in and of itself is a better to buy versus build, that's another lens that we make sure that look through. Again, how does it help support that proprietary product growth. So those are, like I said -- and you can see the EuroCCP fits in that lens, you can see what MATCHNow does with respect to the -- within a core competency of matching buyers and sellers, new geography. So like I said, so that's part of it. As far as specific geographies and looking at Asia, looking at different places, don't want to get too specific. I will say that we will always be looking for opportunities that fit within that strategic context. And if it makes sense, if we think that it plays to our strengths, if we think we can continue to add value and build upon what is there, we will definitely want to look at it. As far as establishing the threshold of what's our investment parameters or valuation parameters that we look at, I don't think we're necessarily any different signs than anyone else is going to be. We're obviously going to look at what we believe the inherent discounted cash flow perspective looks like. We're going to look at it, what does it look like on the value of the enterprise value, the EBITDA or enterprise value on a PE basis. We're going to look at the short-term and long-term accretion to the earnings. So all those factor in into the overall valuation dynamics to purchase price and how we look at it. And finally, we'll then -- from a financing standpoint, does it make sense to deploy the cash that we have on balance sheet? You've seen us just use cash on balance sheet to be able to do these. They've been relatively smaller. That was one of the core reasons why we wanted to delever from the Bats acquisition was to make sure our balance sheet was in a great position so that if we wanted flexibility, should an M&A opportunity present itself, we want to be able to make sure we can take advantage of it in, call it, a shareholder accretive way. But going back to a kind of an ROI threshold, obviously, with our own weighted average cost of capital approach, take a look what that is. Obviously, the academic calculation would suggest that across the board most firms have gone down just with the cost of debt being so low, historically low. But we're obviously looking to always surpass that as far as our own return expectations are well above that return, that I'll call it that calculated formula.

And, Alex, I might just add that as we think about M&A, it's always buy versus build. Can we do this based on our capabilities internally faster. But really, it's just about strategic fit. Does the asset and the team fit well? And does it help us get closer to our end customer in whatever asset class or geography that we're looking at. An organic growth story that you mentioned a couple of geographies there with Europe, especially Asia. As we think about our raw market data coming off of our markets there -- we're seeing great demand outside of the U.S. That's causing nice organic growth for our data because it's price right. It's not organic growth. It's based on price increases. It's just -- we have great market data coming off of our U.S. equities markets, with multi-listed options, European equity. So we think we've a long runway there for organic growth. But as we think about inorganic growth, can we get closer to our customers, can we expand asset classes or geographies?

Yes. Maybe just staying on capital since we're now on it, and I'll jump back to other things if we have time. But buybacks at these levels, Brian, I mean, obviously, the stock has not been great, if I may say so. So how are you thinking -- I mean, you've done some things this year already. How do you think about it? How do you think about buybacks and capital returns in general?

I would agree, Alex, you may say so. It's not great. The -- I would say that it's consistent with the same response on the strategic framework. I think we've been very consistent with that strategic framework and the lens we apply from the M&A activity. Our capital allocation approach is we're applying the same lens, the same framework. And you can see evidence of that in 1Q. You can see evidence of that in 2Q. We're obviously now in 3Q. But we've always said, "Hey, we're always -- we want to grow that dividend rate annually," which, obviously, historically have demonstrated, and that's been in the, call it the, 14%, 15% growth rate in the last couple of years. We've deployed cash opportunistically to fund some of the M&A activity that we've talked about that we think is very important. And we talked about what we think all the benefits are and why we did that. But again, you've also seen us simultaneously from our cash flow strength is buy back shares opportunistically in both first quarter and second quarter. So we never commit to we're going to buy x amount of share at this price. We'll just say, I think it's important for our investors to have consistency in our method, our approach and our framework to returning capital to shareholders because we think that is important. It really doesn't do anybody any good to have cash sitting on the balance sheet for any matter of time. It may be a quarterly issue of being able to deploy it within a certain time frame. But like I said, I think my overall response is, is that we just want to continue to be consistent in our approach and it just hasn't changed. And we want to make sure that we're deploying that capital in the long term, that's really going to benefit shareholders.

Okay. One more for you. On the cost side, I said in a couple of meetings with you guys this morning, and there still continue to be questions that have come up about the cost guidance. So I'll ask it here as well, but can you just bridge the back half in terms of what we've seen so far, what was COVID-related, where there may still be some opportunities depending on the volume environment and depending on how quickly this pandemic kind of gets better, how we -- and of course, how we should be thinking about '21, considering that there's a lot of new things coming in, et cetera, and also the pandemic. So I know that was a mouthful, but you know where the question is going. I think people are still a little bit confused about the cost outlook.

And I think that's fair because if you look at the first half, the numbers are substantially lower than where we guided the second half to be in that run rate. And obviously, a big chunk of the incremental cost, I think people can clearly see the EuroCCP incremental expenses that are coming on the income statement. The incremental build out of not just their core expenses, of the derivatives effort at the CCP itself as well as at the exchange level, incremental to support that. So you have 2 incremental derivatives, build out of costs. And then you say, okay, well, let's talk about the rest of the core, so to speak, or non-acquisition-related expenses. And why is that growing? And how can you have a higher growth rate there. And what I would suggest is that some of those assumptions built in is that we'll have some continued -- some revenue growth because some of that is incentive comp-based. And if revenues don't grow, we will certainly be at the lower end of expense guidance. As we've always done, there's a discipline built in mechanism, that if we don't hit our revenue and earnings targets, our incentive comp will go down. And so in that case, let's hope that the adjusted expenses go up for all the right reasons for everyone. I think there's also built in assumptions that there will be some incremental, call it, some of that travel activity and some of the things that people have been in an isolation mode haven't spent some of those dollars on, we are definitely planning on ramping up some of our marketing spend in Q3 and Q4 that we did not have at a high level in Q1 and Q2. We've laid that out. We have some of our hiring plans that we have to build out some of these initiatives are kind of more shifted from the first and second quarter into the third and fourth quarter. And it's not that we stopped them. I think in the second quarter, I think a lot of the market just kind of came to a halt with people necessarily wanting to onboard or switch organizations. We're starting to see that go away. We're starting to see that hesitancy go away. So we're able to onboard people. Anyways, I think that's when you're seeing some of that ramp up happen in the third and fourth quarters.

Yes. And I'll just pile on there, Alex. I just -- we are quite excited about -- you asked me about excitement, Mini VIX and XSP, and Brian mentioned marketing efforts. We're investing to grow. We're excited about these products and other initiatives. And so the second half, some of that is just a recognition that we are investing to grow for the future, where the first half was we're very, very disciplined. We remain disciplined, but there are certain areas where we see opportunity, and we need to invest to grow.

Good. We're running out of time. And so actually, there's one more question from the audience. So I'm going to deviate here a little bit again, but it's about members exchange, which I know I asked about on the earnings call already. But the question is MEMEX impact and what product launches from them could be disruptive, if at all. And I don't know if product launches is a question for you, like what you can do to fight back? Or it's MEMEX, what they're doing, I think they're keeping it pretty simple. So I don't know what they could do to you. But it's different than what we've seen. But any quick commentary in the last minute that we have here would be great.

Yes. From MEMEX, I mean, we respect them as a competitor in U.S. equities. I don't think they're bringing much news to the market from a product perspective. They've made it clear they're going to compete on price. Some of their pricing may be irrational for a time. You should expect us to remain rational but also be very competitive. I think on the product front in U.S. equities, we have retail priority, Cboe Market Close, periodic options, we're going to continue to compete and innovate there. It will be interesting to see. A lot of the consortium around MEMEX is some of the same firms that are driving a lot of off exchange trading. I guess, we view one of the biggest headwinds in U.S. equities is frankly the off exchange trading percentage. And so how much of the volume, if MEMEX grows actually comes from off exchange versus exchange is yet to be seen. But we'll remain competitive but rational, not irrational on pricing.

Yes. I think that's all the time we had for this. So thanks for the concise answer. With that, we should wrap it up. Again, Chris, Brian, thank very much for doing it. I think, hopefully, the connectivity got better at the end here. So you were my guinea pig for the day as this was my first one. So all the best. Hopefully, you get to enjoy your summer, and thanks again for participating in the conference. Take care. Thanks.

Thank you, Alex.

Thanks, Alex. Thanks, everyone.