Figure Technology Solutions, Inc. (FIGR) Earnings Call Transcript & Summary

Welcome to the Figure Technology Solutions Special Event Conference Call. [Operator Instructions] Lastly, today's call is being recorded. I would now like to turn the call over to [ Craig Streem ] with Investor Relations.

Thank you, [ Cloe ], and hi, everybody. Glad you're with us today. This is [ Craig Streem ], Investor Relations at Figure. Joining me on today's call are Mike Cagney, Executive Chairman and Co-Founder of Figure; Michael Tannenbaum, our Chief Executive Officer; Macrina Kgil, our Chief Financial Officer; and Clare Hove, our Chief Operating Officer. Certain statements made during today's call may represent forward-looking statements, which may vary materially from actual results. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our Form S-1 registration statement and set forth on Slide 3 of today's presentation, which we have posted in the IR section of our website. We are not undertaking any commitment to update these statements if conditions change, except as required by law. A recording of the conversation today will be made available on our website following the conclusion of today's call. Following the conclusion of the prepared remarks, we will open the line for questions, and I encourage you to follow along in the posted presentation as we go through our remarks. I also want to point out that any listener may submit a question during the webcast using the link at the Events tab on our website where they've connected to the presentation. And with that, I will turn the call over to Mike Cagney. Mike, please go ahead.

Thanks, [ Craig ]. Good afternoon, everyone. We're excited to share details on the landmark development Figure's launch for the first ever issue of a blockchain native public equity security. This offering builds on the success of our traditional IPO earlier this year and marks a fundamental advance in how public securities can be issued, traded and financed. Our blockchain native equity allows investors to hold, transfer and collateralize Figure stock directly in the Provenance blockchain with 4 key advantages: faster bilateral settlement, 24/7 trading, cross collateralization of the security to other assets and the ability to lend or borrow the stock transparently. It represents the true power of a decentralized approach to the equity capital markets, employing the best of blockchain technology to remove certain intermediaries and creating an infrastructure that's more efficient, transparent and aligned with investor interests. Before I continue, it's important to clarify that this will be a nondilutive offering only to existing shareholders and the transaction certain existing shareholders who choose to participate will be selling their shares and, in turn, Figure will mint new blockchain stock, meaning that the total figure share count will not be affected by the transaction. On Slide 5, you'll see the contrast between the traditional NMS equity infrastructure and the blockchain native equity approach for planning on pioneering with this transaction. In the status quo national market security system, equities move through a complex stack of intermediaries from custodians and clearing firms to prime brokers and introducing brokers. There's a large amount of reliance on third parties in a trust-based paradigm where each party extracts rents at the expense of the equity holders. Our blockchain native structure eliminates this complexity and reduces intermediary economics. Trades occur directly between self and our alternative trading system in ATS. Settlement occurs instantly and counterparties maintain direct control of their assets throughout the process. We believe this model delivers material cost savings, better stock loan economics, increased borrower capability and a significantly improved user experience. It's a new capital markets infrastructure, one that no longer relies on legacy systems like DTCC, the centralized exchanges and the prime brokers. On Slide 6, you'll see the benefits of Figure's approach outlined in more detail, in particular, when juxtaposed against some recent efforts by other tokenization efforts in the marketplace today. The proposed transaction, which we expect as a blueprint for other issues to offer or follow is a blockchain native approach that has some very clear advantages. In terms of equity as collateral, shares of Figure's native equity can be pledged, borrowed against or let within the decentralized finance protocol democratize Prime on the Provenance blockchain. In our blockchain native model, investors hold Figure shares directly in their own self-custody wallets. The same shares can then be used immediately as collateral to borrow YLDS stable coins participate in liquidity pools or support margin exposure, all on change within Provenance's blockchain ecosystem. In terms of U.S. retail availability, the reason we're able to offer this comes down to regulatory structure and registration. Our blockchain native equity will be a fully registered share class common stock. We filed a Form S-1 registration statement with the SEC, meaning it's subject to the same investor protections disclosure standards and government's framework as our NASDAQ listed shares. 24/7 trading is commonly mentioned as an advantage in tokenized markets. And while we do not view this to be significant, it has some advantages, and we're excited to offer it. Token another example of removing third parties and enabling a ecosystem replace trust-based status quo. It allows investors to directly hold and control their shares without intermediaries, reducing counterparty risk, lowering cost and enabling instant settlement on chain. It also supports a direct, transparent stock loan marketplace for the prime broker locate services replaced by peer-to-peer borrow through DeFi effectively a limit order book for stock borrow. Stablecoins settlement needles instant 24/7 clearing reduces transaction and funding friction will also allow a nonchain liquidity to remain on chain. Importantly, this equity security provides the same voting rights and economic terms as our existing NASDAQ listed equity, including dividend participation, ensuring that the blockchain native stock is fully with our existing NMS shares is essential. Our goal is to deliver a structure that is strictly better than the current system, not innovation at the expense of investor rights. We built a model where investors can hold Figure stock in their wallets, earn YLDS through stock loan, borrow against their stock and other digital assets and participate directly in governance all on public blockchain. It's a structural leap beyond any product currently available in the market. Now I'll now turn it over to Michael Tannenbaum, our CEO, to highlight on the next slide how this offering and approach ties into our broader Figure ecosystem.

Thanks, Mike. As shown on Slide 7, this offering isn't just a blockchain native equity becomes a pioneering building block for Democratized Prime, our DeFi platform on the Provenance blockchain. As I have said before, we specifically named it Democratized Prime to reflect its disruptive nature with respect to prime brokerage. Just as we created a flywheel effect with our tokenized loans and real-world assets, by now adding equity to service collateral, we create a similar flywheel effect, driving liquidity, enabling another vertical and encouraging market participants to embrace efficiency of true blockchain native behavior. This expansion integrates seamlessly into figures ecosystem, connecting our origination platform, alternative trading system and YLDS Stablecoin to create a comprehensive self-reinforcing marketplace for real-world asset finance. Furthermore, we hope other issuers adopt this model and also issue blockchain native share classes into our and the provenance blockchain market infrastructure through which we will earn volume-based fees on both the infrastructure itself and on the financing. These conversations we are having with future issuers today are primarily with companies that are blockchain native or adjacent such as custodians, miners, digital asset treasuries and exchanges, but we also expect this infrastructure to be appealing to a broader set of companies. Slide 8 shows the flow of transactions through our alternative trading system, or ATS, which integrates into the Provenance blockchain. First, through the ATS, shareholders can engage in bilateral self settling trades that eliminate counterparty and settlement risk. Unlike traditional markets that require clearing intermediaries, all trades settled directly between self-custody wallets in real-time, 24/7. Second, through Democratized Prime, those same shareholders can lend shares of blockchain stock or excess Stablecoin liquidity back into the system, earning YLDS at a market clearing rate. What's unique here is that liquidity, settlement and collateralization are unified within a single blockchain environment powered by YLDS, our SEC-registered Stablecoin. This is what we mean when we talk about bringing capital markets on chain, not tokenizing existing securities for symbolic value but actually enabling native issuance, trading and financing. On Slide 9, you can see what this experience looks like from an investor's perspective across a variety of personas and use cases. The blockchain equity will be fully tradable through Figure's platform across multiple interfaces from mobile quick buy screens for retail investors to professional trading tools with limit orders and portfolio-level margin management. Investors can log into Figure's marketplace directly or through integrated third-party wallets that have been KYC'd. Beyond simple trading, the blockchain equity can also be used as collateral within Democratized Prime. That means holders can borrow against their equity, lend it out for YLDS all on chain, all governed by transparent smart contracts and earning-enhanced economics versus the current intermediated status quo. As shown in the demo screens, investors can see real-time lending pools on the Provenance blockchain with available supply, demand and algorithmically determined APRs creating a true market for equity financing without intermediaries. This is an entirely new level of functionality for a public equity, a programmable security that participates directly in a digital financial ecosystem not just in the brokerage account. So I'll turn it back to Mike now to close this out before we open it up for questions.

Thanks, Michael. So I want to take a step back and highlight the significance of this transaction. What we're doing isn't just issuing a new share of stock, we're actually creating an entirely new equity capital markets. There's no DTCC is a common registry, it's happening on public blockchain. There's no centralized exchange like the NASDAQ or the it's trading on our alternative trading system, which is self-custody and self-settled. So effectively functions like a decentralized exchange. There is no prime broker, you're using DeFi. There's no need for an introducing broker, you can effectively attach for the KYC'd wallet to be able to trade. So you're really disrupting the entire vertical stack, and we believe this is massively disruptive. When we started to Figure back in 2018, our goal is to use blockchain to transform how capital markets work. We've certainly done that in the credit space, over $20 billion of loan origination on blockchain at this point, growing rapidly. This is our opportunity to do that in the equity space, and we ultimately see this extensible into every asset, whether it's commodities or currencies or crypto. And so we're excited to be at the forefront of this and excited to be driving this transaction. So with that, we'll open it up for questions.

[Operator Instructions] Our first question is coming from James Yaro with Goldman Sachs.

So I'd just like to take a big picture lens here on what this means for the equity market. So we'll now have the, as you described it, the DTC driven equity market and now your equity market. So maybe you can just talk about fragmentation of the equity market as you see it or not? And how do you drive liquidity towards the Provenance blockchain?

Sure. Michael, do you want me to start?

Yes, I do.

Right. So one of the things that we did when we were out on the IPO roadshow is we talked to what must have been something like 150 buy-side accounts and what we said uniformly to all of them is they want to own the blockchain version of the equity, they want to own it because of the ability to cross collateralize it, which extends the ability to borrow beyond traditional prime brokerage and they want to own it because of the ability to control stock where today, the prime broker through the process, securities go special tends to take that economic out. And universally, everyone was like, "This is great, we'd love to own the blockchain security, how you ensure liquidity, how you ensure it ties into the NASDAQ security?" And so what we've done and what we've identified and articulated in the S-1 is a mechanism in which we can swap the blockchain security for the NMS security and vice versa, the NMS security for the blockchain security. So what that does is on day 1, it brings whatever liquidity exists in the NASDAQ into the blockchain side of the equation. And so we expect that liquidity will be consistent across both platforms. if anything, liquidity will be enhanced because of the ability to move across both platforms. But what we would hope is over time, companies will move from a dual listing construct to just listing on blockchain. And we'd expect, even in a circumstance where there is a dual listing that we can reduce that tether, eliminate it entirely, and that the blockchain security would actually trade at a premium to the NMS security because it has greater utility value. So we're very focused day 1 to ensure that there isn't a sacrifice of utility of liquidity and trading on the blockchain. But over time, we actually believe this will be the preferred route because of the higher utility value of the security itself.

And Mike, one thing I think is probably helpful for the call -- sorry, James, if I cut you off. But I think it's helpful to acknowledge not only the interest that we have from other issuers, but also the interest we have from a broad number of market participants including asset managers and broker-dealers who see this opportunity as well. And so it's definitely something that -- to the way that you opened the question, it is a new paradigm in a new ecosystem and 1 that is going to bring not only other issuers into this blockchain-based approach, but also those asset managers and broker-dealers that are excited about it as well.

Excellent. That's super helpful. And just a quick -- sorry, go ahead.

I was just going to say, just to reinforce, this isn't a construct where we believe these 2 systems coexist over the long term. This is a direct competitive attack to the current equity stack.

Okay. Maybe you can just talk about interoperability across blockchain. So obviously, this is on the Provenance blockchain, but you could also build tokens on other blockchains. How do you facilitate that interoperability across blockchains using the same mechanism that you have between the existing equity market and Provenance blockchain or some other mechanism?

You can take...

Yes, I'll start on that. So we do this today with YLDS. So with YLDS, we have an SEC registered public fixed income security that's effectively a yielding Stablecoin. And we recently announced that while YLDS was initially minted exclusively on Provenance supply chain, we now minted on SWE. We're now minting it on -- or planning on minting it on Solana, we'll be mining it on Stellar and other networks as well. And the security has a unique construct because you have a transfer agent and the transfer agent can effectively burn token on one L1 network and mint on another L1 network without the need for a bridge. So rather than having to use warm hole or IBC to effectively work the token over from Level 1 network to Level 1 network, the transfer agent can simply burn on one and mint on the other. And so it provides effectively a real-time, very low cost other than gas fees to the network mechanism to move the security across chains, and we think this provides a foundation for ultimately extensible application into broader DeFi products.

We'll take our next question from Rob Wildhack with Autonomous Research.

Looking through the slides and hearing your comments, a lot of incentives for the investors here. 24-hour trading, ability to lend, et cetera, et cetera. But could you unpack in a little more detail the incentive from a corporate or maybe an issuer to like list their stock through this venue, just exactly what the benefits they would get versus the traditional process might be?

Yes, I can start with just the opportunity to access retail. And then Mike, I think you should build off that. When you're going through an issuance process, and we've seen this increasingly, there's a lot of benefit in kind of the way the equity markets are moving, people want to engage more with individual investors. And I think that from the issuers perspective, especially folks that are blockchain adjacent, but also people that aren't there is this opportunity to use a listing to kind of market your company, and there is a lot of excitement and interest in this approach. And so it's very much aligned with the way the equity markets are moving in that regard, and it is something that we experience while we didn't do a blockchain native issuance for our first offering, although we wanted to, but it's a matter of timing and getting the attention. We see that as a really big motivating factor for folks. I know Mike, that's something that's very important to us. So I'll let you elaborate.

Yes. I mean I think there's a couple of dynamics. I'd say 3 key points here. One is the blockchain nature of the security allows for a much broader access in terms of folks that might have difficulty with the traditional U.S. brokerage account being able to come onto chain and transact. And so that's going to drive up demand for the security. You also have the benefits we talked about earlier in the security, intrinsic to it, the cross-collateralization capability and the stock loan capability that once untethered to the NMS security, we would expect the security to trade at a premium. So as an issuer, you would much rather issue the higher-yielding security than the lower-yielding security in terms of just net proceeds and economics. But I also think that you don't want to discount the buy-side's ability to push this. And if you look at [ Larry Fink ], for example, he talked repeatedly about the tokenization of everything. And BlackRock really wants the tokenization of everything. This is a great way to start. BlackRock goes to all its portfolio of companies that holds and says, "Get your stock on blockchain." And we expect the buy-side is going to play an important role here in driving this because of how much utility it accrues back to the investors.

Okay. Interesting. And then just on something you said there might see. Could you compare and contrast like the KYC AML general start-up processes for investors on Figure ATS versus more traditional brokerages or channels?

Yes, you're going to have the same KYC to trade on Figure's ATS because it's administered by Figure broker dealer, Figure securities. And as a broker dealer has the same standard KYC requirements, I think that what becomes interesting and certainly is a discussion path with both the Clarity Act, the Ad Committee Act and the SEC is the extensibility of taking securities onto DeFi 5 protocols and whether or not such actions require KYC when the mover is not a registered entity. A lot of people confuse the KYC requirement for the instrument and being a security doesn't imply KYC. What implies KYC is being a regulated entity moving that security. And so I think there's a lot of potential downstream applications in DeFi that should be clarified no pun intended with Clarity Act, as we get legislation guidance in terms of how blotching assets are traded and financed.

[Operator Instructions] We'll move next to Ryan Tomasello with KBW.

If you could just elaborate generally on the efforts you do have underway to educate other issuers and really sell them on these new capital markets rails if there's a formal sales effort underway. And then on the economics, if you can put a finer point just on how we should think about what that could look like to Figure to the extent other issues do follow suit over time if it's reliable to compare just to traditional broker-dealer economics and how we should be thinking about sizing this opportunity?

Yes. We can -- I'll start on the first part, and then I think Macrina is good to cover the economics portion. I think as we outlined in the prepared remarks, Figure has a history of building out marketplaces. We were the first to put consumer loans on blockchain, we were the first to securitize blockchain loans, as examples. And so we see this current transaction as very much a reference for what can be. And we do -- we have had a bunch of dialogue with other issuers but this is going to be operationally and one of the reasons why we have Claire, our COO on the call, is to acknowledge the large amount of effort that we are undertaking to build this marketplace out. And so while we do have lots of conversations and we expect this to be a reference point and those conversations are accelerating, it will be some time. And so for example, when we report earnings next quarter, we don't necessarily expect that we're going to have material contribution from this. But this is our reference that we are building, it's a primitive for how the equity capital markets ultimately will work. And so you should expect that those issuer conversations that we're having today will translate into economic activity later into 2026.

And really, just to add to that in terms of economics, I would say the most important view that we have is this can be used as collateral as part of our overall Democratized Prime ecosystem. And as a reminder, that is about 50 basis points of the balance that is on the overall Democratized Prime marketplace. So that is one key part. In the future, we can also think through how we can be charging folks for onboarding onto our overall ATS. But that will be a very nominal fee is how we are thinking about it. And then lastly, as the market becomes more active and there are more equity tokens on our exchange and we also have a lot more market makers, we can think about how we charge for the market makers as well.

Great. And then post this offering, you'll have equities in addition to consumer credit. So I guess from here, how would you rank order, where you're most optimistic about expanding into new verticals? I mean, you've alluded to FX, commodities, but in general, how you're thinking about the opportunity set from here post equities?

I'll start by saying that in the debt and equity space, those are both enormous markets. So if you look at consumer credit and that really being extensible into other forms of credit and now equity. I think what -- the primitives that we've established are those that can expand into trillions of dollars of not of market activity and valuation. And so we do see a lot of opportunity in these markets. However, I know, Mike, we've talked as a company, and you've talked as well about kind of the broader capital market. And we do see ultimately that this is going to be the future of how all capital markets work, not limited to just those asset classes, so I'll let you elaborate.

Yes. I mean I think you hit the key point, which is these 2 markets are enormous, and we continue to build into credit; we continue to build in the first lien mortgage, for example, which is the largest private credit capital market in existence, largest credit marketplace behind U.S. treasuries; and the opportunity to build into equity where it's not just new issuance, it's the ability to convert existing equity, NMS listed equity on to blockchain introduces a significant opportunity and one that, that we'll lean in on. So while we're optimistic about the extension of this across all asset classes, I think these 2 are big ones and ones that will be very focused on certainly over the next year or next 12 months to continue to expand our vertical on the credit side and really build a real competitive position on the public equity side.

We have one question from the web. This new capital market system is taking on Wall Street in virtually every way. investment banks, trading desks, prime brokerage, et cetera. What sort of response are you anticipating from The Street?

I -- Mike, that's -- there's nothing I can say that will be as eloquent as you will on this topic.

I appreciate you handing that off to me. Look, I think that there's 2 camps in terms of how this impacts the Street. I think that the sell-side firms should recognize an enormous opportunity here. Certainly, they're losing some economic in the capacity of stock locate, for example, and what they do on stock loan. But that's more than offset, I believe, by the ability to cross collateralize assets and significantly extend what they can lend credit against and eliminate the need of single name credit where they're doing asset-based lending as opposed to underwriting the borrower. And imagine a blockchain construct where rather than Goldman is my prime broker, Goldman just lends $0.80 on the dollar to Figure stock and come one, come all. I think that introduces a significant opportunity. And I think that the sell-side is going to lean in. I certainly think the buy-side is a huge beneficiary of this. I don't see them pushing back on it. The ones who pushed back on this will be the intermediaries. As we talked about the origin of Figure, intermediaries exist because we don't have truth in markets. We have the need for trust, and we can't trust anyone. So we have registries and we have 7 parties that's sitting between a buyer and seller and a stock transaction, and we have collateral agents and custodians and all these things that really go away in a true bilateral blockchain-based world. And certainly, they're going to fight, but I think the benefit is that if this was a wholesale replacement of everyone, we were trying to get rid of Goldman Sachs and Morgan Stanley and others as part of this transaction, there'd be one heck of a fight, but they're benefiting from the disintermediation we're doing. And I think as such, they should be very aligned with this change so that when the intermediary incumbents fight against this, they're not just fighting figure, they're fighting the broader street. And that's why we have a lot of confidence in our ability to not just execute in the year, but to drive real adoption.

For our next question, when you have shares trading on your ATS and NASDAQ, how should we think about the potential of inconsistent share prices between these 2 venues?

I think that's a good one for Clare.

Thanks, Michael. So as Mike alluded to earlier, we believe there is reason that the blockchain shares given the ability for cost collateralization and stock loan to trade at a premium to the NMS. Aside from that potential premium, we believe the shares will likely trade largely in line mechanically, we will support that by having market makers on the platform, and we also support the ability to convert from blockchain shares to NMS and NMS to blockchain to support a minimal price discrepancy between the 2 share classes.

Our next question, how do you plan to attract and retain market makers and institutional participants for the blockchain native equity? And can you walk us through the conversion process between tokened shares and Class A shares? And are there any operational or regulatory constraints.

Clare, why don't you start with that one and we can add?

Sure. I'll take the second half of that question first. The mechanics conversion for tokenized to NMS is traders of the blockchain shares on our platform will be able to submit a request to convert the shares at which point the blockchain shares will be encumbered and our FinOps team, our financial operations team, will work to send the shares to either a name TA or share broker dealer with a box at DTC to transmit from blockchain to NMS. Once that NMS transfer has occurred, the blockchain shares will be burned to ensure that it is not dilutive. And then going the inverse from NMS to blockchain shares, individuals will be able to request from their broker-dealer or again from their TA to send shares, NMS shares, to Figure's treasury account, at which point in time, we will mint blockchain shares into our ecosystem. We will also have the ability to support that process when someone wants to convert from NMS to blockchain, they will alert our ecosystem as well so that we can ensure a one-for-one match between NMS and blockchain shares. And [ Jay ], could you remind me -- the sorry, go ahead.

No, I was going to say on the beginning of the question was how do we attract institutional participants and therefore, retain market makers or at least I'm drawing that relationship, which is I think institutional participants in particular, are going to be attracted by the ability to control stock loan, for example, and also by the enhanced liquidity they'll get from cross collateralization. And both of those concepts are applicable to retail and institutional. But as was mentioned in the prepared remarks and in some of this Q&A, we have seen a lot of interest from institutional participants and being able to control the equity and not necessarily be intermediated by the prime broker and have more control of those economics and also the collateral. And so that activity will then naturally attract market makers. But I'll let you add anything else, Clare or Mike, to that point before we move on.

I think, certainly, the market makers are going to arbitrage any difference across NMS security and the blockchain security. So there's certainly a profit incentive for them to lean in early on as part of this.

For our next question, if you're in the blockchain security, how does your vote get logged, what system are you using? Are the votes logged on chain and visible publicly?

So yes, we're going to -- we'll -- those votes will be visibly publicly and logged on chain. And I think that -- we spent a lot of time talking about prime brokers as intermediaries, but equally relevant and where you do see a lot of constraints in the status quo equity market is around the voting and the proxy process and the confusion that, that can entail and you even see some litigation around the control that the proxy firms yield. And so we do think this is a place -- a way in which we're going to add value for equity holders and restore more control over that process. And this is also to remind the audience, one of the ways in which we believe that our approach is better than other tokenized equity options because the stock, the security is pari-passu with the traditional equity in that you do have both the voting rights, as we're talking about today, as well as the dividend rights.

We'll take a question from Rob Wildhack with Autonomous Research.

Just sort of related to what you were just talking about, Mike. It sounds -- is Figure acting as the transfer agent and providing the proxy service for the blockchain shares? Or maybe to ask the question directly, are there any differences between who is the transfer agent and the proxy service provider under the blockchain shares compared to the current structure?

Yes, we are doing that. And Clare, feel free to elaborate, if you want, but we do have our own transfer Figure Equity Solutions.

Yes, that's right. So Figure Equity Solutions is TA for the digital native securities and can support all the standard TA functions.

Our next question, if we lend using figure stock through Democratized Prime, is there any scenario we could lose to Figure stock as collateral?

No, there is no scenario where you would lose the Figure stock as collateral. I think that we do support a cross-collateralization, which is one of the powerful value propositions of democratize prime because historically, you don't have cross asset and often not even cross equity collateralization and margin. And so that is something that blockchain, in particular, enables because of that lean perfection, which kind of going back to last week's call is one of the main aspects -- is one of the main value propositions of blockchain and why we use it and that underpins the Democratized Prime ecosystem.

Yes. Just to add to that, any stock loan is going to be collateralized by yields or by other assets and it would be consistent in how we risk manage across all demo prime lending pools where we haven't incurred any losses and nor do we expect to take any credit losses as it relates to that. So you'd have the same type of protection that you have in any demo prime pool.

Our next web question, when do you expect this offering to go live?

So Clare, I think you are closest to the timing.

So I think -- we are working through all the operational and logistics aspects of this. And as soon as we -- as soon as the markets open, we will move forward likely in the new year with this offering.

And just to add to what Clare mentioned, this is a public document that has been filed with the SEC yesterday. And so we do need to wait for the SEC to go through its process. The key part is though we recently just completed an IPO in September, so we will be actively working with the SEC to move this forward as fast as we can.

Our next web question, for governance, how do you handle proxy fights activism for an equity on chain?

I think that just given the rights are going to be consistent across both, we will -- at least for now, as we're operating both ecosystems, the votes will be collected through -- from the blockchain equity that we have as well as through the traditional process and then be aggregated accordingly.

For next web question, to the extent the ATF takes share from the market -- from the exchanges, wouldn't Figure be able to earn market data fees from the trading? Would the buy-side be interested in this?

Macrina, do you want to take this?

Figure's should be able -- sorry, I was on mute. Figure should be able to earn the market data fees from the trading side and be able to share with that. It is an infrastructure that we would build as more of a Phase II after we add on different types of equity onto our platform, but it is in our future in '26 or '27.

Our next web question, is Figure a qualified custodian that will satisfy the custody rule for registered investment advisers who have private funds that would like to participate in this proposed offering?

That may be a question we need to come back on. I don't know, Clare, if you know that one. If not, we can follow up directly with the...

We're working with qualified custodians in partnerships to ensure that RIAs and RECs are able to support this offering.

And for our last question, are you planning to also bring private shares to the chain and not only public shares, would regulators approve the approach?

Mike, I'll let you comment on that as you've focused a lot on what the uniqueness of our offering here.

Sure. I mean, look, a lot of early Figure investors remember that we actually have run secondary transactions for Figure equity on the ATS, on blockchain, but when the stock was private. So still when it was a security, had a restricted budget on it. Our view is that this had extensibility into the broader private equity or private company stock ecosystem. But the challenge that we find there is that that stock tends to trade much less frequently. It's hard to get market maker support. And so we're not sure how valuable the extensibility is into private shares. Certainly, some of the largest companies, like a Strike, for example, there's going to be interest in potentially the ability to have markets there. But still, I doubt you're going to get consistent market making from it because of lack of borrow and other limitations. So we certainly have the ability to extend this out into private company stock, and we have done it already. So there isn't any regulatory approval we need to be able to lean in and use the ATS for that purpose. I'm just not sure how address -- or how large that market is. I know a lot of our peers talk about it and reference it as a huge opportunity, but I'm not sure running a limit order book for private company stock is actually that valuable.

Thanks, Mike, and thanks, everyone, for both the questions on today's call live as well as the ones submitted over the web. As you see from today's call, it is a very ambitious undertaking. It's something that -- it goes back to one of the slides we talked about last week in terms of -- this has been something we've talked about with a lot of the investment community and in our prepared remarks and materials. And it's something that is hard to do, it's hard to do new things, but there's valor and economics in doing so. And we're really excited about the ability to introduce a new asset class into our ecosystem and also to continue to lead the market forward in terms of how the capital markets can be and to restore the economics ultimately to the asset holders, whether they be equity or loan and fulfill that promise of blockchain that disrupts not only incumbents, but the intermediation that we've so often talked about. And so it's a really big opportunity. We're really grateful to the team internally that's building this out and grateful for all of you for your interest and enthusiasm, and we look forward to more.

Thank you. This concludes today's Figure Technology Solutions Special Event Conference Call. Please disconnect your lines at this time, and have a wonderful day.