Virtu Financial, Inc. (VIRT) Earnings Call Transcript & Summary

So we're going to get started with our next session. I'd like to welcome Doug Cifu, CEO of Virtu Financial. Virtu is one of the largest electronic market makers and execution services firm in the world with a broad presence in both institutional and retail channels. Over the course of 2022, Virtu benefited from a cyclical upturn in volatility while also executing on a number of strategic growth priorities. In addition, the firm's robust operating margins and high return on investment capital, leaves lots of room for share repurchases, which I know you guys have been much more active in recently as well. So that's becoming a bigger part of the story for the company. So with that, Doug, welcome. Great to see you.

Good to be here.

Always good to catch up.

So why don't we start with the first question, really around market quality. We've seen a considerable amount of volatility across asset class this year resulting in higher margin requirements and really concerns around liquidity in various parts of the market. I guess, as one of the largest security providers in the world, I'm kind of curious what parts of the market performed well? And where did you find any sort of structural stress? And what are the implications from that for Virtu in the way you manage risk but also in the way that you see maybe some opportunities.

Yes, it's a great question. Thank you very much for having me. I appreciate it. I think the good news is a lot of lessons came out of 2020 in terms of like resiliency and depth of participants and more importantly, firms like ourselves, like really investing in the technology and the capabilities around these new markets and the new volumes in these markets. I mean, you saw unprecedented volumes in the U.S. equities market and the options market. And so the good news was, if you think about 2022, with exceptions, certainly around crypto, which I'm sure we'll talk about a little bit, but the markets just from a structural and a technological standpoint, performed exceptionally well. And so I would give a lot of credit to regulators and market participants around the world for investing in order to do that. You've seen significant growth, and I know you've talked to some other companies about this around electronification of the fixed income markets, which has been a whole new challenge for us and -- but help -- and facilitated by great companies like MarketAxess and Tradeweb and Bloomberg. But certainly the first 2, we're seeing like full electonification and distribution of our prices to end users. And so you see added investment and resiliency there. We've gotten into options in a big way, which was a significant investment and that marketplace is incredibly complicated, fragmented where you've got 17 different options markets and literally like almost like innumerable amounts of like contracts and strikes and expirations, right, which just leads to an algorithmic nightmare when it comes to quoting and all that kind of stuff. So you see a lot of investment and resiliency there. I mean, really, a couple of -- obviously, the crypto meltdown more recently has post some operational challenges. I'm very pleased with the way we handled it, like we got out without any losses from the FTX to [indiscernible] because we manage risk really well. We don't keep excess cash at platforms anywhere, we keep them at our prime brokers or in our own bank accounts. So it wasn't like we had tens and tens of millions of dollars sitting at FTX and all these other institutions. So -- and I know there's -- we'll ultimately see the list of creditors, and I think there'll be some familiar names on there, unfortunately. So with those exceptions, a little bit like we were a market maker in Russia, right, in [ ruble and whatnot ], so that post some interesting operational challenges in the early part of the year, right? It was sort of an unprecedented situation where they became effectively like a rogue state, and we exited those positions really well very expeditiously as well. But other than that, from a resiliency and an operational standpoint, the market has worked exceptionally well.

Great. Let's talk about you guys more specifically just the model and the environment. I feel like over the last couple of years, Virtu has done a really nice job sort of framing the bookends of what the revenue backdrop could be for you guys, right? I mean the sentiment from the investment community has always been -- it's a little bit of a top or business to predict quarter basis. But over time, you kind of put a framework around the range of different outcomes with kind of $5 million to $6 million of daily NTI being toward the low end of recent history. If volatility dynamic sort of becomes a little bit more "normal" whatever that means, but let's say, subside relative to what we've seen over the last sort of 12 to 18 months, how do you feel about holding on to the low end of that range or that kind of 12-month basis?

I mean I think the way we've described the business, and we have a great slide in this in some of our investor materials is like if you look over like a longer time period, right, like be it like 8, 12, 16 quarters, we've been public since 2015, but the firm amalgamated with Knight and ITG is really since 2019, Knight was 2017. So right, if you go back and look at that, I think over the longer term, and there's going to be peaks and troughs, you're going to have quarters, like the first quarter of 2020 where we made $2.05 a share, which like seems like how could that ever possibly happen. It did, right? But if you look over the longer time period, you're going to see a base case that normalizes out into the area that you mentioned, right? And we've been very upfront about that. And so we tried to refocus people on saying, okay, and everybody says this, if you want to be a long-term investor in Virtu, here are the things you're investing, you're investing long term in volatility. You're investing more in electronification of asset classes as we move into asset classes around the world. And you're investing in a firm that will be a really good steward of capital. In the long term, as we continue through these cycles, we're going to have outsized quarters where we're going to generate excess cash and we'll just buy back more stock, and we'll have more normalized quarters. But over the long period, that's what you're going to see. We've been very good at managing our expenses and been pretty upfront about predicting or projecting what our expenses are going to be. We don't run it like a traditional trading firm, right? So our comp ratios aren't going to go crazy. So if you look at that as a base case and say, okay, this is what we're going to do. Here's what our expense base is going to be and over some reasonably longer period of time, here's the cash we're going to generate, and we're going to use that excess cash to retire stock. Since we announced our buyback program, I'm pretty confident in looking at my colleagues in the front row. We've retired around 12% of our outstanding float, I'm getting a yes. So I'm right about that. And so you guys can make your own assumptions quarter-by-quarter. But if you extrapolate that out, the next 8, 12, 16 quarters, you could make a reasonable determination of what our share count is going to be and then put in any number you want for quarter-by-quarter for adjusted net trading income, and you'll spit out an EPS number that hopefully is attractive to people. So that's what we've tried to do. The challenge with our business, as you articulate is, if you think about it, we really have kind of -- we have 2 reporting segments, we have kind of 3 businesses, if you will. We have an execution services business. That has some recurring revenue, but otherwise charges a commission. We have a market-making business where it's not engaging directly with the customer, right? So a noncustomer market making business. And that's going to be much more driven that middle business, where there's not a customer interaction is going to be much more driven by volumes and realized volatility of the overall market, right? Obviously, there'll be volatility with them. And then on the customer side, it's really going to be what is -- what are they sending us? How attractive is the flow that we're seeing largely -- this is -- I'm honestly talking about our U.S. retail equities business. And that's like a significant subsegment of the market. And that's where you're going to see variations in volatility, if you will, that's different than the overall market, right? So when you have quarters where -- that market is kind of going gangbusters and glad, I just talked about it. Robinhood, you're going to have that outsized performance. And that's going to be a little more challenging for an outsider to sort of model, right, because there's not like some -- obviously, we have all the internal metrics as do all of our competitors. We know what our 605 shares are. We know what the bid offer spread is on all of those orders when they're coming into us, right? So we know what's the base case of how much we can make, right? And we track that religiously. But it's going to be hard as an out to do that. That's why it's more of a challenge, clearly, and you struggle with it quarter-by-quarter to predict how we're going to end up.

Right. Right. That makes sense. So why we kind of spend a couple of minutes on the different businesses and kind of the different pillars, maybe starting with retail. Look, in retail has been a lot more resilient since COVID than I think many of us had expected. A little bit slower recently, but still, I mean, we're running well above pre-Covid levels. How are you thinking about the stickiness of retail trading from here? What are you hearing from your larger customers, the online brokers? And also just curious whether or not there's any evidence that the FTX blow up impacted any the retail flow that you'd normally interact with as almost kind of like as a victim of that...

Yes, I'm going to answer the last question. We've seen no change in our retail flows because of the FTX contagion, if you want to call. I mean, obviously, I'm sure there's overlap between accounts, and I'm sure there's a lot of people that are sadly very much hurting because of one -- a price decline and two, like having assets trapped on now bankrupt platform. So that's incredibly unfortunate. But in terms of like the resiliency, this is the point we made we've been making for the last 3, 4 years, which is this like systemic shift in retail was not a result of the contagion of the pandemic. In October of 2019, largely driven by what Robin Hood was doing, Schwab. And then the other large brokers matched this 0 commission model, and that really accelerated participation into the marketplace. And what we have always said, and I think it's been proven out over the last couple of quarters is that you're not going to put that genie back into the bottle, that an entire new generation and new demographic people are now exposed to investing and trading, if you will, through the 0 commission brokers, which have proliferated and you're now seeing it globally. And so that is a systemic shift that's very, very positive from our perspective. Public data, we're around 30% of marketable orders, which is great. We've maintained our competitiveness there despite new entrants coming into the market. We welcome that competition. It's made us better. And so we're very, very -- we continue to invest in all of those models and those algorithms and that customer service. I think the thing that we have that I think people under value and the reason, frankly, we were really motivated to buy Knight Capital is just the goodwill and the reach of 20 to 30 years of being a really good market center for the big 4 or 5 get all the headlines in the news, but there's 250 retail brokerage, bundlers, platforms, wealth managers that we take front door flow from, right? So that's a significant really sticky client business that was, frankly, we made the determination in a Virtu that we couldn't replicate and which is the main motivation why we bought Knight Capital. So that continues to be a very robust, sticky business. Unfortunately, and you've experienced this as a public company, it's hard to prognosticate quarter-by-quarter what that's going to look like. But I love the business.

Yes, and we'll get to more to that in a bit -- Yes. Yes. we should think about at what point on the clock, I'll start talking about regulation...

Save at least 10 minutes for my Christmas Carol to Gary...

There you go. I wrote it last night might have to go into overtime for that. So..

I won't say it, I promise.

Let's talk a little bit about the institutional business. So away from retail. You mentioned, again, that's one of the components of the Market Making business. Again, it's a little bit harder for us to see from the outside looking in, but how is the institutional market making business performing this year? What are you most focused on to sort of drive organic growth that part of the model. I know there are some products that we'll get to. But in the core kind of legacy Virtu, like circa 2015, '16 business that we've kind of just gotten to know back in the day. How is that business doing? And what do you guys focus on -- the answer is very, very, very good.

I mean it is normalizing and we look at every input, and we obviously look at markets and then geographies, and we have our own internal metric as to what's the market volume and what's our capture rate, if you will, what's our per unit capture rate, what it should be historically? And then do we underperform or outperform that? Pretty basic. And so we're looking at energy products, we get commodity products. We're looking at equities, which is not customer-related. And within each of those, we've had wins and losses, right? It's a little bit like a water balloon. We push on one side because it's not doing as well than a problem on the other side. But overall, that business is on a comparative basis, if you look at 2019 as kind of a pre-COVID normalized year as compared to 2020, it has improved significantly, okay? Part and parcel of that, and you can't ignore it, is some of the new initiatives that we have undertaken. So I know we're going to talk about it, but like we had effectively 0 adjusted net trading income in options Market Making in 2019, and it's a meaningful contributor in 2022. We had 0 revenue in legacy Virtu and really legacy Knight from noncustomer quantitative-style strategies. And that's a meaningful contributor in 2022, right? So we don't separately break that out as a growth initiative. But one of the ideas of merging with Knight Capital was to make a firm that was really good and smart about order entry, the old Virtu firm had really great low-latency technology but frankly didn't have the smarts around being more predictive that Knight had by combining the 2, and that has worked out incredibly well. The last growth initiative/noncustomer business was corporate credit and like kind of more block ETF style. Some of that is customer driven, but a lot of that now is in RFQ or kind of -- or RFQ style marketplaces. Again, that was a business that historically Knight had. It was much more of a relationship business. It didn't have the technology. And so we have invested tens and tens of millions of dollars and hired a bunch of people to make that a competitive business, and it's a meaningful contributor. And as we have publicly said, for the first time because of that, we are a market maker, like we're a disclosed dealer on market access for the first time. And so we're using market access to introduce us to significant buy-side players on the corporate credit side. That was something I frankly never thought we would get into when we started the firm. And even as recently as 2019, I was like, a, if not really us, it's the dealers, it's Jane Street, it's flow traders. But because of this ETF business and where the world is going, we now have that offering. And it's a very, very young business, right? We're barely in the first inning and what we're capable of doing. But if something -- because of the good work that firms like MarketAxess and Tradeweb and others are doing it, they made it available to us, right? It's become more democratized to use an overused phrase.

Yes. Well, let's talk about some of these new initiatives. So if you think it was actually first on my list. You started talking a little bit about what you're doing with respect to the credit block ETF business, your own market access where are you in the process of onboarding to maybe other platforms? If you can help us size how big fixed income market thing for you guys is today? And more importantly, outside of credit, right, like you guys are not in rates. What's the impediment? Is that next, especially...

Tell Yes, that's a great question. So the impediments for us have always been capital and distribution, right? So if something is not centrally cleared, right? It becomes more challenging right? We have to go to a prime broker, and we've got to pay up for that. We have to use our capital. And the second is distribution, right? Like how do you distribute your product and rates and in credit. So go back 10 years ago, it was obviously dominated by the large dealer, enter -- the dealers enter large firms like MarketAxess and Tradeweb and Bloomberg and some others, that have distribution, right? Layer on top of that, we do have some distribution capabilities through our ITG acquisition. So that has enabled us to reach the end users, right, i.e., the pension plan in Germany. The example I always use that doesn't who the hell Virtu is. Well, market access has a relationship with them, right? And we're now paying MarketAxess effectively to make that introduction for us so that we can be in an RFQ environment for their business. We don't have to have our own organic distribution capabilities. So that's a huge change and opportunity for us. In terms of rates, I will actually -- God help me say something positive about the chair of the SEC, right? So he has a proposal out there for centralized clearing of treasuries, which I'm sure some friends may be in the building across the street and others at some of the big banks are not necessarily in favor of, that would be a really nice tailwind for a firm like Virtu because, again, centralized clearing provides for more efficiency around capital, enables us to be more competitive with larger participants that otherwise I'm not worried about having to post a couple of billion dollars here or there and everywhere, depending upon movements. So centralized clearing in the rates market would be a very, very strong positive. So one positive thing I've said about the chair today.

I guess we'll get to the rest multi-listed options. That's probably been one of the more tangible growth areas for the firmware in terms of just the revenue contribution we've seen from that initiative. What's the addressable market if you think about forward 2 to 3 years from now, what percentage of NTI comes from options in kind of best case scenario?

Yes. Yes. That's a great question. And obviously, it's a difficult 1 to answer in the abstract. Here's what I will say is, Again, it was legacy Virtu, we were nowhere, right? We were built as an order-based firm, equities, two tiers, I've talked about that. We didn't have the infrastructure really to be competitive in options. Unlike a lot of other firms that grew up in the options world. So obviously, people know Citadel, Susquehanna, but there's great firms in the Netherlands, IMC and Optiver and in Chicago, you got Wolverine and CTC. So the world was not lacking for options market making firms, right? So you would think, okay, that's a really, really competitive marketplace to get into. When we started Virtu, we used to count things in milliseconds, I barely knew what a microsecond was, forget about a nanosecond. In the options world, it's microsecond resolution and execution capability there, right? So it's a really competitive crowded field. So the fact that we were able to get into this -- it's not even like a knife fight, it's like a machete fight, right? Like with a lot of really well-capitalized competitive firms and have meaningful market share, and it's a it's meaningful contributor to our noncustomer market making business today, okay? And so we started in the most competitive. I said this publicly, the big index family, which is the most competitive Michetti fight out there. And so we are there every day, we've got meaningful market share on some of the options exchanges, right? The more price time ones as opposed to the -- some of the more legacy ones, which are more attuned to our style of trading. We're really, really good at order entry, right? We're being a market maker. We're not just -- being an HFT, we're moving and picking off, which a lot of firms do. There's nothing wrong with that, but to be an order entry firm is a lot more, lot more challenging, right, because you're kind of putting yourself out there. So all of those things are incredibly positive and it's meaningful P&L it shows up, and we disclose separately what those growth initiatives mean. So we're in the second or third inning. The good news is in that marketplace, ironically, they have this auction model, which a lot of people complain about now against that is going to be proposing it for equities. We'll talk about that in a second. And so we have now the capability to be in options, and there are aggregators of flow, right, that will send you retail like flow. So we're doing all of those things today. So we're not just making markets an index families. We are making markets in some of the single names. It's a very fractured marketplace. I think there are 17 options exchanges. We're connected to all of them now. So there's a lot of runway there. Will it end up being X, Y or Z % of our overall noncustomer marketing. It's hard for me to sit here today and say that. But I think the addressable market, you can look at what some of the competitors do in terms of some of the public metrics around what they pay in terms of rebates, right? And just size the market and say, well, if they're paying that much in rebates, presumably, they're making a good amount more than that. And look at like what the [ SPX ] volumes are and things like that and kind of figure out what our market share might be. That's the addressable market. So -- and as well, we're now in Asia. So we're looking at the Niki and then like the Nifty 50 options in India. And so there's a whole world of options market making that is open for us.

Great. One of the other initiatives you talked about as script out on kind of the newer list of initiatives. Let's talk a little bit about FDX online and obviously the impact that could have certainly in the retail, but also the institutional crypto marketplace. And ultimately, what role do you really see Virtu playing in that role?

Yes. Look, I mean, obviously, Jamie Dimon had his view yes to, which I found a musing about what digital assets are where crypto is right, call it, I guess, the pet rock, which is probably not -- I didn't have a pet rock as a kid, and I like my pet rock, but I think that's probably a majority of -- look, obviously, it has a significant cooling effect on the marketplace, right? When people see what's going on and people lose a lot of money and people are going to pull back. I think the positives are -- because I'm going to have a full guy is I think it will finally be the catalyst for sensible, I hope, bipartisan regulation in Washington. That's really what we've needed. The fact that FTX is in the Bahamas is a failure of leadership. I'm not going to just point against it, but a failure of leadership in Washington, because there was no regulatory regime where someone could plant the flag here and say, "Okay, I want to do this. This is what I want to do. I'm highly regulated and I'm going to make an attractive offering. And so we had a bunch of people doing really bad things offshore, and there's going to be all kinds of blowback because of that and figure pointing and whatnot. I don't want to get into that because it's kind of a waste of time. So I think that's a positive. I do think there will continue to be a desire for people to engage with this, I think a lot of the large retail firms will slow down, but we'll ultimately still want to engage in the marketplace. We, together with Citadel Fidelity and 2 other firms have started hopefully, an ecosystem that we'll learn a lot from what happened with FDX called EDX markets. I do think that, that's going to be the right solution. We've said all along that there would be separate custody of assets, right, that they wouldn't be on the platform, we were right. That's obviously one of the lessons in terms of co-miggling from FDX. So from the ashes of this complete fraudulent tobacco and there's no doubt in my mind that the kids are criminal and he should be in jail, that there will be a sensible regulatory regime that will result from this. And I do think that you'll have an asset class that people will engage with. And so there needs to be price formation firms, and that's what we do, right? So we are very well equipped to do that. We were making markets in all these different venues. We've obviously pulled back, and we're very good at risk control. We didn't lose any money in this thing, which is great. But assuming all these X Y and Z firms are here in 3, 6, 9, 12 months, will be a market maker on it.

Yes. All right. Well, 10 minutes on the clock. So obviously, I want to get to regulation kind of figured you did in this long story within Virtu and the industry and the SEC, the next -- the new development, obviously, is Virtu and SEC as we learned, I guess, a week ago sales. So what's next in this equity market reform path?

Yes. So I mean, the lawsuit has nothing to do with the substance. It was really just like every American, we have rights under the Freedom Information Act, you all have them. A lot of people have made full year request to the SEC. We being one of them. The history is in our complaint. We gave them plenty of time. It was very clear that for whatever reason, Gensler was just not cooperating and not providing the relevant documents that they should be providing. I mean, the Freedom Information Act that used to be a lawyer, right, was literally put in place for exactly this, show us how you're going through your rule-making process that we, as interested parties could participate. I'm very interested to see like who are they talking to and what data are they getting that will support the propositions, obviously, that they are going to be putting out a week from today because it's on the agenda. And so they gave us literally nothing in 6 months, right? So he's violating the Freedom of Information Act, right? So we decided to sue because I'm not a guy that just going to beat my head against the wall, we have rights. We decided to take that extraordinary step, not something I relish, but I think they're acting inappropriately. So we're going to -- so that's a bit of a side show. That's really -- it's important to us, but at the end of the day, the substance of what's going to come out on Wednesday. I think like we've said, a couple, 2, 3 of the proposals, we've been advocating for 605 reform, being able to quote at price increments less than $0.01. All those kinds of things -- as long as they're data-driven and reasonable, we're going to be supportive of them right? The notion that all retail orders, I don't know if there's going to be -- I don't know exactly what the proposal is going to say, it needs to be sent to a national securities exchange, right, for an auction. And if nobody shows up the auction, then they get routed back to the wholesaler, just demonstrates a complete lack of understanding of like how trading and how markets work, in my opinion. I've been very clear about that. That opinion is shared by all of our retail partners, every broker that has spoken about it publicly, and Schwab put out a white paper that very much laid out in a data-driven fashion, the benefits of the current ecosystem and why sending orders to wholesalers makes perfect sense. So my view, and I said it publicly is that this is a politically driven regulation by hypothesis or regulation by innuendo is kind of how we described it, which is not the way that a railroad should be run and certainly not the way the U.S. equity market should be run. You don't just say, that, it seems like a good idea. Let's give it a shot. That's just not how regulation should be [indiscernible] in this country. And unfortunately, for the Chair, we have something called the Administrative Procedures Act, which codifies that, that's not how you produce rules. So depending upon where this whole thing comes out, I've said publicly, I think my quote was there will be a conga line of litigants, so it wouldn't only be Virtu, that would say this is stupid. What are you doing right? And so the exchanges and the Chamber of Commerce and [ Sysma ] have all sued successfully with the SEC in the past. Again, I'm a glass is half full guy. Do I think this thing ultimately will see the light of day? No, I don't. Because I think there are so many different participants in the marketplace. And then politically, as I said, this is really [indiscernible]. What are you doing?

Do you think there's going to be a way to maybe untangled components of that performance you talked about 605, you talked about quote...

It's not going to be one -- what they're doing is they're going to have like 3 or 4 or 5 different releases that are going to come out. So people will comment on each of them so that I am hopeful that he and the folks in Washington will be sensible enough to say, at some point, let's we can do this, this and this, let's declare victory and take our chips off the table and go home and stop wasting everybody's time and money. But in the interim, I have a job to do, right, which is to represent my firm, represent my clients and try to do what I think is right for the market. And obviously, we've been very vocal on that. It's a little bit my style, but I do think it is ultimately a good thing for Virtu and for our brand. I mean, I would say not that this matters. But when we filed that lawsuit, the number of inbounds I got from really important people at really important clients went up significantly, and they were all very positive because I think people are frustrated and annoyed that an industry is being disparaged, right, for political reasons. That's plain and simple.

Let's talk a little bit about some of the strategic things. You guys have been acquisitive in the past as we talked about and as folks in this room know well. It seems like you have a couple of pillars, as we talked about earlier, which you're kind of basing growth on. How do you -- is there a further room to consolidate the space? I know you've been buying back stock and the reference of your capital return strategy. But is there more to do on the M&A side? Or do you feel like you're larger?

It's a great question. I mean, obviously, we're a large-scale firm with like a multitude of products, some are more mature than others, obviously, as we've described. I think the bar for doing M&A has been significantly heightened really for 2 reasons. One is -- for a couple of reasons. One is we have a strategic imperative that a hell of a lot broader than it was in 2015 because we made 2 really great acquisitions that were incredibly accretive to our shareholders. And the second thing is, I think, the delta between value expectations and the kind of where we trade and the realities of like the world are so significant that, like, am I better off and is in the best interest of my shareholders and the firm ultimately to buy back my stock or go to stretch and make an acquisition where if I hit all my synergy targets, maybe it's accretive as opposed to going back buying back a couple of hundred million dollars more of my stock. And I know that, that's accretive. So it's a -- from a fiduciary perspective, it's definitely a challenge I would say, if there was an opportunity, a kin to like Knight Capital, which was a firm that was really, really well positioned, but frankly, like, I'll say, in artfully run, where there was significant synergy opportunities, yes, I'm -- we'll take a look at the things that have kind of passed through my desk over the last 3, 4 years, some of which have already traded, I thought traded at values that were just didn't reflect the intrinsic value of the institution. And you probably can figure out who those names were.

Got you. Understood. Before we wrap up, I want to go back to one of the things we sort of started with like the earnings growth algorithm that you laid out there. I guess, one, any updates on the environment as we kind of think about closing in the fourth quarter? And two, if we enter a world where volatility is not as helpful like it's been to your business in the last couple of years, how much wiggle room do you guys have in expenses to still maintain your growth outgoing kind of range that you outlined in the past?

Yes. I'm not really going to comment on the environment, it is what it is, right? I don't like to talk about core...

Yes, it was a good try, good try. You got to give it a shot.

Yes. I mean from an expense base, I mean, we're very clear as to like the various components, right? I mean I a pretty frugal guy when it comes to like overhead and that kind of stuff. You've been to our offices, right? So that's kind of fixed...

We know that you have offices.

Yes, we do have offices. They're very nice, don't come -- they're just we're not Goldman, right? So we saved a bunch of money during the pandemic. If we did all that, we downsized. We shrunk office size. We did all those kinds of things. The biggest lever is obviously just compensation and headcount. But even there, we've been very consistent about what our comp ratios are like in the -- even in 2020, we didn't go crazy our comp ratio was something in the ZIP code of 16%, 17%. And this year, I think we're accruing to 21%, right? So we try to like run our firm Morris that's [indiscernible] our Deputy CFO. She makes sure I don't mess up, thank you. Sean, our CFO. Thank you Joe's in Europe, so I'm like an Andrews on engine reserve -- everyone's panicked, Andrew towards Achilles nothing to do with Virtu is out, don't play Thanksgiving football with your kids. Actually, if you're an old man like me stay on the sidelines. So yes, so we've been very consistent. We don't run this as like a trading firm or big brokerage firm that has like 40%, 50% comp ratio. That's frankly what Knight and ITG did. And so we can manage that a little bit. But we're very, very comfortable that like we're the kind of low-cost provider that the firm when Vinnie and I constructed this firm, remember what he said, he was like, we're going to build this firm for a famine, and we'll do really well in times of feast. We're just going to hit singles and occasionally, like if we can spec to single into a double, we'll be really happy with that. That's Virtu. We're not going to have gigantic like swings. We don't have big wins and big losing days. It's just not the way that we run the firm. There are other firms that we compete with that do that are more kind of like a bank prop desk style, right? It's just a different kind of risk parameter and different way of looking at the firm. So again, our plan going forward is manage our costs the way that we always have, try to expand the repertoire of asset classes in geographies where we're excellent in and where we're the market leader, do that on the institutional agency side and do that as a market maker, right? And every penny that is available that we don't otherwise need for something else, which we don't, we're going to use that to buy back our stock. That's the plan going forward. And we're not going to change.

All right. Nice and simple. All right, Doug, we're on time. Thanks so much.

Thank you, guys. Great to see you. Thank you very much.