Q2 2020 Cboe Global Markets Inc Earnings Call
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No so called <unk>, Debbie Koopman <unk> company. Please go ahead.
Thank you good morning, and they keep the joining us for second quarter earnings conference call on the call today until our chairman President and CEO will discuss the corridor and provide an update on our strategic initiative that Brian shale, our executive Vice President CFO will provide an overview our financial results and provide updated 2020 guide.
As for certain financial metric following their comments, we will open the call to Q1 day also joining us for Q1, I will be our chief operating officer precisely.
And our Chief strategy Officer, John beat or in addition, I would like to point out. This presentation liquid the supply we will be showing the flight and providing commentary on each downloadable copy of the slide presentation is available on the Investor relations portion of our website.
During our remarks, we will make some forward looking statements, which represent our current judgment on what the future may hope and while we believe these judgment a reasonable. These forward looking statements are not guarantees of future performance and about <unk> assumptions risks and uncertainties actual outcomes and results may differ materially promoters expressed or implied.
Any forward looking statements.
Please refer to our filings with the FCC Burp. Your full discussion of the factor that may affect any forward looking statements. We undertake no obligation to publicly update any forward looking statements whether as a result of new information future a bad or otherwise. After this conference call. During the course of the call. This morning would we'll be referring to non-GAAP measures of.
Fine and reconciled in our earnings material.
Now I'd like to turn the call over the Ed.
Thank you Debbie good morning, and thank you for joining us. This morning before I begin I would like to extend my sincere best wishes for the ongoing health and wellbeing of each of you and your loved ones as we continued to navigate these challenging times.
I'm pleased to report solid financial results for the second quarter 2020, it seems like global markets.
Clearly highlighting the strength of the diversification of our revenues.
Our strong results were driven by record trading volumes in U.S. cats, gosh equities and multi listed options.
By growth in retail trading activity and by continued growth in market data revenue.
You'll note I did not mention our proprietary products I will cover those in a moment.
But I want to pause here to quote a 2016 press release.
Entitled Cibolo Holdings agreed to acquire bats, global markets to strengthen the company's global position and innovative tradable products and services and achieve meaningful cost an operational efficiencies.
We went on to stay in that release that the bats transaction will significantly expand see both holdings product line across asset classes.
The one its geographic reach with batches strong Pan European equities, and global FX positions and diversify its business mix with significant non transaction revenue.
And that's siebel expects to utilize bats is leading proprietary trading technology by migrating trading and all of the combined companies markets onto a single proven platform and cool.
This brief trip down memory label frame today's remarks, because no quarter more emphatically illustrates the fruits of a strategy that begin four years ago and the second quarter 2020, both in terms of our near term financial results.
And in enhancing our long term franchise value.
Our proprietary products, our Q2 that strategy, but we have built upon them and created new revenue streams to grow in tandem with them.
Our growth strategy has not changed since the close or Brett transformational deal.
Expand our product line across asset classes broaden our geographic reach diversify our business mix with recurring revenue and leverage our technology advantage.
Let's take a look at the quarter through the lens of those growth drivers.
The bats acquisition enable us to strengthen our product set with new asset classes, placebo, including U.S. and European equities and global FX.
And to expand our market for multi listed options.
Our expanded product, where I left us well position to offset unique challenges to trading and our proprietary products in a truly unprecedented environment with record activity in U.S. cash equities and equity options.
Furthermore, these products provided the foundation to invest in scaling our proprietary market data to drive recurring revenue streams extend our presence further across the value chain into equities clearing and broaden the reach of our core services into a new adjacent geography. Examples of investments made just this year to date.
[music].
As discussed on previous calls.
We've continued to methodically strengthened equities trading it seem to see both through the implementation of new trading mechanisms and market enhancements.
And by leveraging the ability to cross sell and competitively price or expanded offerings.
We saw those efforts pay off in the second quarter, when U.S. equities trading at Seattle increased 82% over the previous year for an all time quarterly average daily volume high of 2 billion shares traded.
Continued uptake in our retail priority program helped drive the record results, you'll recall, we created retail 40 to help improve execution execution quality and trading outcomes for individual investors and firms that facilitate their orders.
Retail priority orders have increased each month since their launch on Siebel edge acts in November of 2019 and represented 12% of shares executed once she bought objects in the last two months.
In another example of our focus on equity product innovation, we recently filed a proposal what the FCC to launch periodic auctions and I'd be why ex exchange similar to our Siebel Europe offering.
People Europe periodic auctions lit order book that runs auctions throughout the day is designed to enable investors to quickly find liquidity and trade large quantities of stock with low market impact.
It has proved popular among market participants after launching in 2015 and remains the leading European periodic auction accounting for around 2% the daily order book trading in the European equities.
We believe the U.S. market will also value executing trades in a value designed to provide minimal market impact.
Turning now to record trading in equity options as you know multi listed options trading became highly competitive over the past decade in a market that became increasingly crowded with new entrants.
We remained committed to being a leader in this space the operating leverage inherent in our business model as equity options trading represented both incremental volume and revenue complementing our proprietary product line.
With that backdrop, it was something over revelation, when we're kicking the tires at bats, and saw the enviable profitability. They achieved in equity option by leveraging the efficiencies up their superior technology.
The addition of objects and PCX options to see both MC too, but we could not only compete with a broader array of market models that we could offer all four markets on a same advanced technology further expanding our profit margin.
This operating leverage provides a differentiated investment capacity and the flexibility to further capitalize on opportunities inherent in each of our strategic growth drivers.
In addition to expanding our product line by asset class, we continued to expand and leverage our global footprint. As you know we closed our acquisition of Euro CCP on July Onest, which enhances our European equities offering enables us to extend our business into trading and clearing European derivatives.
We plan to launch Siebel Europe derivatives in the first half of 2021, what futures and options on six key European equity indices.
The development of derivatives products and markets as a sweet spot for us and we see a significant opportunity to expand the market for European equities derivatives, the introduction of a transparent efficient lit pan European market.
Our entire team is excited to bring our derivatives expertise to European marketplace.
We also announced our plans in Q2, two choir match no canadas largest alternative trading system, which will enabled us to broaden our north American equity's business and expand our geographic reach match now offers a profitable innovative equities platform and a key capital market and a strategic pathway to build a more copper.
Hence of equities platform in Canada.
As I discussed earlier this step into Canada demonstrates our commitment to profitable global expense expansion, thereby strengthening a combined offering contributing to incremental scale and allowing us to reach important new participants we expect to close the deal this quarter.
Another promise, we made to the marketplace through our acquisition of that was to optimize and diversify our business mix with recurring revenue through training tools and market data services that help attract repeat users to our markets.
We've worked to steadily increased the market data revenues afforded us by the best deal while successfully building El Ceibillo information solutions, our comprehensive suite of data solutions analytics and indices. So much though that non transactional related services were a key driver of our second quarter revenue growth.
Understanding risk has never been more important and the groundwork we laid over the past few years enabled us to effectively respond to the heightened demand for historical data sets and sophisticated analytics.
We continue to expand our tool box last quarter, we discussed our recent acquisitions of and Wick and ft options, which similar to our previous sightless Silex investment highlight our commitment to investing and tools to grow the utility of our products we end markets.
In June we acquired trade alert, a real time alerts and order flow analysis service provider, which allows us to do deliver real time trade data market information and Siegel content directly to customers importantly, our integration of trade alert along with him with an update options now allows us to interact with us.
Client throughout the lifecycle of a transaction pre trade at trade post trade with insights alpha opportunities portfolio optimizations and seamless workflows.
Each of these investments complements and strengthens our comprehensive suite of data analytic solutions and we've made great strides on the integration and optimization.
We have enhanced libel and silex with end with volatility in Greek data and have demand and see increased demand for trade alert, especially since our acquisition.
We're also incorporating had looked data within our growing in this indices offering and plan to use hand look to drive real time data and silex beginning this quarter.
Turning now to our proprietary products as noted we grew our quarterly revenues and earnings despite an unprecedented environment that offered institutions limited opportunity trade volatility or broad based indexes.
The cobot 19 pandemic continues to severely impacted global marketplace.
The failure, thus far to contain the virus in the U.S. recent increases in unemployment at historic declines in GDP. Among other key events continued to drive elevated levels of market uncertainty.
The average daily closing price of the VIX index into Q2 thousand 20 was 34.5.
A higher quarterly value than any quarter over the past five years and levels not observed since the 2000 made financial crisis.
We are finding that the increased levels of uncertainty that drove institutional investors to de risk and resulted in record volumes in the first quarter are now keeping institutional investors on the sidelines waiting for more clarity around the longer term impacts of the cobot 19 virus.
This resulted in lower second quarter volumes for most of our proprietary products compared to the first quarter numbers.
As we've said before when these participants have clear views on where the market is headed we expect once again to see elevated volumes.
We continue to see uptick however, in our Siebel Iboxx ice years high yield corporate bond index futures, where we've seen gradual but steady market adoption since their launch in 2018.
In response to Investor demand, we recently announced our planned launch of many VIX futures on August 10th subject to regulatory review.
The smaller VIX futures contract is designed to provide additional flexibility volatility risk management and greater precision allocating among smaller managed accounts iboxx and many VIX futures exemplify exemplify our ability to continue to expand our proprietary product offering.
In other proprietary product news siebel further strengthened its strategic relationship with whats the Russell by extending its 2015 exclusive licensing agreement through 2030, we're excited to continue to work side by side with whats the Russell and providing exclusive access to a suite of Russell derived products.
The extension of our agreement further solidifies Cboes vantage point as the home for every major index provider.
Turning now to the trading floor.
On June 15th we successfully and safely reopened the C. One trading floor and resumed hybrid trading.
The return to Cboes best in class hybrid trading once again provides investors unparalleled access to liquidity across a wide range of siebel products.
Our ability to quickly transition to an all electronic trading environment.
And to reconfigure our for for a safe and orderly reopening is a credit to the ongoing collaboration with our trading for community I.
I would like to thank them for their efforts and willingness to work with us through these two historic first.
I would also like to thank the entire team siebel team for a great quarter. Despite a backdrop of global pandemic continued to proliferate alongside historic uprising against racial adjusted.
The spotlight on racial and equity past and present.
Prompted us as a team to listen reflect and define how siebel can play a greater role that solution by supporting organizations that fight for social Justice and by Redoubling, our efforts internally to strengthen our culture of diversity and inclusivity.
Our continued ability to generate positive financial results reward shareholders create new products and services close highly strategic deals.
And integrate new teams and services all with an environment that we could never have imagined is a testament to the expertise discipline and competitive spirit of the Sidoti.
Our disciplined approach and technology advantage have enabled us to expand and enhance our products and services, which include additional strips of complementary recurring revenue reinforce our leading industry operating efficiency and provide the flexibility ability to invest organically and inorganically and new growth vectors.
To sustain underlying momentum in the business.
Thank you and with that I will turn it over to Brian.
Thanks, Ed and good morning, everyone I hope everyone and their families are remaining safe and healthy and I'd also like to thank all of the Cboes associates for their hard work and dedication helping make these results possible.
Let me remind everyone that unless specifically noted my comments relates to Q 20, as compared to two Q nine chain and are based on our non-GAAP adjusted results.
As Ed noted, we reported strong financial results for the quarter, highlighting the diversification of our revenue streams and the contributions from our investments delivering on our strategic initiatives.
Our net revenue grew 5% with that transaction fees up 2% and non transaction revenue up 7%.
Adjusted operating expenses decreased 7%.
Which combined with our revenue growth resulted in adjusted EBITDA growth of 9%.
Resulting in an expanded margin of over 71%.
The adjusted EBITDA margin on the incremental net revenue was 127% and finally.
Our adjusted diluted earnings per share increased 16% to $1.31.
We grew our quarterly recurring revenue stream of proprietary market data and access capacity fees by 8% compared to second quarter 2019.
Slightly above our prior guidance.
This increase includes over $3 million end market data revenue attributed to our first quarter acquisitions of handling NFC option.
Organic growth was 10%, which excludes the acquisitions and the shift of approximately $1 million in revenue reported an access capacity fees into Q 19, which is now reported and transaction fee.
As well as the temporary realignment of fees associated with the trading foreclosure of over $3 million.
The growth of proprietary marketed and access capacity face continued to be driven by incremental subscriptions in units accounting for 83% and 69% of the growth this quarter respectively.
And our last call, we noted that certain for broker access capacity fees or suspended due to the temporary foreclosure and that we implemented comparable transaction related fees targeted to achieve a neutral net revenue impact all else remaining.
This action shifted revenue in the second quarter, resulting in incremental transaction fee revenue associated with higher revenue per contract to RPC for index options and lower access capacity fees.
In conjunction with a four reopening certain for broker fees were reinstated.
Looking ahead, we now expect the underlying organic growth for the proprietary market did an access capacity fee category to be mid single digit.
However, we now expect the reported growth rate for these non transaction fees to be in the mid to high single digits versus our previous guidance of low to mid single digits, reflecting the reinstatement of certain fees as well as the acquisition of trailer.
Now a review of our segments.
And our option segment, 7% or 10 million dollar.
Increase in net revenue reflects growth in net transaction fees driven by our multi listed options as well as higher market data revenue.
Both expanded suite of information solution services accounted for the growth and options market data revenue benefiting from our recent acquisition.
The average daily volume radio TV for multi listed options rose, 57% hitting a new quarterly high while RPC fell 12%.
The RPC declined primarily reflects higher volume rebates and a shift in volume mix compared to the second quarter of 2018.
Eightv for index options declined 18%.
RPC increased by 18%.
Resulting in a 3% decline and index options and that transaction fee.
The index RPC increase was mainly due to.
I want to shift in volume mix as well as to the impact of temporary free feel line I referenced earlier and then finally.
The SPX fee increase implemented earlier this year.
Assuming also remains equal we would expect index RPC declined slightly in the third quarter, reflecting the reversal of certain second quarter fee changes post the floor reopening.
Turning to futures, 36% or $12 million.
Decrease in net revenue primarily reflects a 44% decline in HBV.
And relatively stable RPC offset somewhat by lower royalty fees.
And you asked equities net revenue increased 22% or $17 million, primarily due to higher transaction fees with equity is volume benefiting from the surge and retail trading activity.
Our market share also increased year over year, reflecting our focus on innovative products with particularly strong response to reach out priority as well as enhance direct marketing programs and greater dialogue with clients.
The increase in market data revenue was driven by our higher market share as well as an increase in the total Sip revenue pool.
Net revenue for European equities decreased 6% on U.S. dollar basis, and 2% on a local currency basis, reflecting lower market volumes and lower market share offset somewhat by higher net capture.
Higher capture resulted from continued strong periodic auction last volume.
Net revenue decrease reflects a 13% decrease in transaction fees.
And a 14% increase and non transaction revenue.
The growth in non transaction revenue reflects increases in excess capacity fees, primarily reflecting incremental connections with the opening of our Amsterdam office in October 2019.
Decline in market share was primarily a result, a significant market profile shifts and short sale bands, which reduced order flow to see about.
Net revenue for global FX increased 5% this quarter, reflecting.
Higher market share and a 5% increase in that capture offsetting a 2% decrease in average daily notional value.
The increase in market share primarily results from positive response to functionality enhancements and the increase in net capture reflects a mix shifting volume by customer type.
We set a new market share high continued to reach new 80 NV.
Hi, and our full amount offering as well as Cboes SEF for NDS.
Turning to expenses.
Total adjusted operating expenses were about $96 million for the quarter down 7% against last year's second quarter.
The key expense variances include one.
$7 million decrease in professional fees and outside services, primarily a result of lower legal fees to a $2 million decrease and travel and promotional expenses reflected reflecting the covered 19 impact on travel and events sponsorships.
All this offset these declined somewhat.
Compensation and benefits increased by $3 million, resulting.
From the net impact of a $4 million increase in bonus expense. This quarter, a 3 million dollar increase results from lower capitalized wages relating to software development.
And a $4 million decline and benefits expense due in part to a decrease in the adjustment to deferred compensation plan assets compared to the second quarter 2019.
Note that there is an offsetting charge and other income resulting in no impact earnings.
Looking ahead in the second half of 20 Tony.
We have updated our guidance to include Euro CCP.
And expenses related to our European derivatives growth initiative, we increased our guidance for 2020 adjusted operating expenses to a range of 436 to 444 million up $17 million from our previous range of $419 million to $427 million, reflecting expenses of $24 million predominant relating to.
Our new initiatives in Europe, offset somewhat by expense reductions up $7 million and our existing operations, primarily in compensation and benefits and travel and entertainment.
I will also note that the 2020 expense guidance related to your CCP.
And the derivatives Buildout includes onetime operating expenses of about $3 million that will not recur next year.
We still expect total expenses to ramp up in the second half of the year as reader redeploy some of the cost savings and the marketing and promotional programs and we complete our Chicago headquarters Buildout.
As a result, we now expect our core expense growth to be down 1% to 2% versus our previous guidance a flat to up 1%.
Included in the appendix an updated detailed 2019 to 2020 expense bridge similar to what we provided in our last earnings call.
A portion of the decline in the core expense growth is definitely attributable to the covert 19 environment and its impact on travel and promotional.
Professional fees and to a certain extent compensation expenses, but it was truly enabled by our migration of the C. One platform in 2018.
Turning to income taxes, our effective tax rate on adjusted earnings for the quarter was 26.7% at that lower end of our guidance range and below last year's second quarter rate of 27.7%.
The year over year tax rate decrease was primarily due to higher tax benefits recognized related to foreign derived intangible income in the second quarter of 2020 versus 2019.
We are reaffirming our 2020 full year tax rate on adjusted earnings which is expected to be in the range of 26 and have to 28 half percent. However, we expect third quarter to be at the higher end of that range.
We're also reaffirming our capital spending guidance for 2020 of $65 million to $70 million.
While our move into the new Chicago headquarters has been delayed due to cover the 19th capital spending for this project is expected to be completed this year. Furthermore, we still expect depreciation and amortization to be $34 million to $38 million for 2020, which excludes amortization of intangibles of approximately $120 million and 2020.
Turning to capital allocation.
Let me underscore we remain focused on investing and the growth of our business to build upon our diversified business model, while returning excess cash to shareholders through dividends and share repurchases are.
Our financial position remains strong we had excellent cash flow generation capabilities and a solid balance sheet.
During the quarter returned $100 million to shareholders through share repurchases and $39 million through dividends.
And at June 30.
Our share repurchase authorization available was nearly $330 million, reflecting an additional $250 million authorized in June.
At quarter end, our debt remained at $875 million, and we had $250 million and availability under our revolver. If a short term funding need arises.
Our leverage ratio remained at one times at quarter end, and we ended the quarter with adjusted cash of $176 million.
Summarizing the quarter, we reported very strong quarterly results, including double digit EPS growth, despite muted volumes and our proprietary products.
We continue to deploy capital into strategic investments, which had previously highlighted.
We successfully reopened our trading floor with a modified for layout.
And Cboes team of associates have shown perseverance and a keen ability to adapt and this extended work from home environment, all while continuing to deliver on our long term growth initiatives.
The entire leadership team and I couldn't be prouder of what we've accomplished thus far this year.
In closing Cboes financial strength and cash flow generation capabilities have positioned us well, we intend to remain opportunistic as we execute on our growth initiatives and focused on serving the needs of our customers and delivering sustainable returns to our shareholders well garden to health and welfare of our associates with that I will turn it over to Debbie for instructions.
On the Q and a portion of the call.
Thanks, Brian.
Point, we'd be happy to take question. We ask that you. Please limit your questions to one for participants will allow time to get to everyone feel free to get back in the queue and applying permit will take the second.
Justin.
Keith is very good. Thank you I'd like you well now begin the question answer session to ask a question on January Press Star then one you touched on fall.
Speakerphone, please pick up perhaps up before pricing the keys to try your question. Please press Star then to sound way, a pause momentarily to assemble the roster.
And the first question comes from Robert Trapelo with Piper Sandler.
Good morning, Ed Good morning, Brian and Chris.
First I agree zibo is much more diverse platform the AWS.
Five years ago for sure. So the question still.
With investors still.
Gravitate back to the proprietary products.
And the VIX products et cetera. So I guess you know the question open interest is low you talked about a little bit the uncertainty, but what do you think will actually get you know, we're starting to see a little build in the VIX futures open interest, but you know what we'll get you know in.
This is back because.
We prior we thought the uncertainty is that's when you use the products I guess and notwithstanding the uncertainty is uncertain and you know we're in sort of a still make position.
Very rich good morning, and thanks. It is a great question and it's it's though it's one that we continue to ask institutional investors Youre right. The stalemate is probably the best description.
I would use I'm with you we look at a relatively flat flat vol. Surface is really the most uncertain of times there is no conviction either way.
And as we said actually last quarter.
Yeah, you need to see the end of the event, that's causing the uncertainty and there is no end in sight quite honestly, we don't know how this pandemic ends we don't know when it's going to end, we don't know one institutions, who have gone to the sidelines more aggressively actually two times more greater the move to cash.
Than we saw at the end of the financial crisis, that's incredible from an institutional perspective, so I don't know none of US know when the event is going to end, but it is at that point that we think we'll see institutions reengage. It's when an uncorrelated market finds institutions back and hedging goes by.
That too much macro hedging as opposed to micro single name hedging.
So I don't have a clear answer for you, but it's the same answer I gave you last quarter when the event, where we can see the end of the that now to be clear. The advent doesn't have to end, we have to be able to see through the event and that's when I think we get institutions to reengage off the sidelines other cash and reengaging in the unique products that we habits.
Hello.
Ed would you say would you agree that we are starting to see some steepness at least between the front.
On the VIX Kirk front.
We see an ebb and flow there rich what I think is really interesting I and I'm anticipating a pick up more on the interest in around the October and November.
Still we have the bump in October November that's going to be interesting too I think we do turn our attention as most are reading to the election cycle beginning in mid August. So I think we'll see trade around there and just positioning for the long term thats, an institutional play a little bit more color on engagement and we see.
Retail really on the trading very very short dated options. In spite of for example, a 20% of the trades and spy are open the day that contract expires, 40% of the volumes within two days of expiring that's not an into institutional trading pattern I think more.
Likely we will see some positioning around the election and positioning for the longer term.
Regardless of whether or not cobot is behind us mothers and end in sight you need to position for this election.
Got it thanks, thanks at.
Thank you and the next question comes from Michael Carrier with Bank of America.
Hi, good morning, Thanks for taking the question.
Thanks for the update expense guidance just to clarification there.
Can you maybe help us out and I know, it's stuff to do but as we think about 21, you've got some of the Presley coded costs than you have a lot of the.
The acquisition related costs, but just some expectation kind of heading there and then I think on one of the slide you mentioned some of the revenues associated with the deals, but any context around that because you obviously will price in the extent, but if you can give us some color on any related revenues would be helpful. Thanks a lot.
So thanks, Michael good questions.
I think that.
You're right the Crystal ball for 21 is a bit of a challenge.
And we're going through that process now I think that we've tried to give pretty good color on the acquisition related so when you get too.
I think it'll be a little cleaner in the third quarter.
I will highlight that so when we get to the third quarter, we'll see that but I think you should get a pretty good sense of the acquisition.
Run rate.
You should get a pretty good click picture now when you look at that the quarter and what the Incrementality of I would say the largest.
Piece of that.
Kind of on a go forward right now is the euros TCP and the European derivatives buildout costs with with I mentioned that kind of that.
All that onetime kind of start up.
These with getting that going that I don't expect to be part of the 2021 run rate.
The cover 19 costs.
That's also I think is a really good question that a lot of firms are going to look at.
There may be a we're going to balance the going back to normal which again what is the new normal and are there things we can actually do as an organization and all organizations can do that.
Actually are probably at a lower cost.
And get the job done than maybe what we're doing in the past and so it probably does not look like what the structure look like previously before the pandemic. So we're going to work our way through that will give you more guidance on what does that look like as we're getting closer to the fourth quarter.
And what does that run rate look like on the revenue associated we tried to give some visibility to that with the euro CCP. When we provided the full year financials.
And then with the acquisitions within the.
The group within information services group.
With hand, Wick and Ftn trade alert I think you're seeing that run rate effectively now when you look along there. So when you add all those components that should give you a pretty good sense of that at least base without any incremental growth going into 2021.
Got it thanks a lot.
Thank you and then next question comes on Ken Worthington with JP Morgan.
Hi, good morning.
I wanted to follow up on Rich's question, you mentioned, how well the multi listed options and cash equity volumes are doing but how poured the environment is for index into rich you mentioned, the micro versus the macro hedging, but we do continue to see high volumes for SP, why which you say is right.
Retail, but we also are seeing high volumes for the minis, which is definitely more institutional.
And you have weekly options that I believe our design for short term hedging so could there be other explanations here.
Beyond just the uncertainty because it seems like things still aren't quite lining up given what we're seeing a competing products.
I thought I am sorry, I thought I explain the spy so the supply in very short term. Those are day trades is of the 20% of the contracts that are treated with one Dave expiry of meeting expiration day, 50% of those are opening so 50% or closing so I'd make the lead that those are a day trade and spy not an.
Institutional action the statistics for SPX.
Our a bit different of.
40% of those trades.
Im sorry, 20% those trades are in within a few days and that's just different.
And the notional size of the contract for SPX has really been pure institutional and the bite size really retail in spite.
So a little different on on the observations of what spies being used for it doesn't appear to be a macro hedge it appears to be a day trade.
And SPX has not really been a day trade there has been premium strategies using the weeklys, but those tend to be days and not ours.
And that's that's a different in the difference in the trading pattern that we've observed in this cycle. So I don't know what other insight to give you.
Does that notional size being so different and SPX.
It is just not gaining the day trade attraction that small notionals buyers.
And Ken this is not that I mean, it's somewhat obvious but this is not a cboes specific issue.
When it comes to.
SPX and retail we're actually seeing increased activity, but it is a more institutional.
Product than others, and when you look across institutional products.
I'd look to Europe for example, great. Great example, because those exchanges tend to trade.
And be more levered to institutional market participants you've seen the results there.
In the US look I mean, there are not a lot of index options products out there outside of see though there is.
At least one example, you can look to that saw the siebel product and you'll see that the results. There are quite similar if not more dramatic.
So the evidence is out there everywhere in terms of institutional participants on the side line and and that's that's impacting our numbers.
In terms of SPX and VIX.
Yes, I guess my point was the many it's more institutional and that seeing very high volume. So thats why I thought that maybe the institutional was doing well in the us in macro hedging that's trying to.
Thank you Rob.
Your observation in the June contract might be right, but as of late it looks like the same pattern. We've seen SPX. So love to see maybe thats your internal data, but that that's no im looking at.
Many of high him now I don't have the same observation you do Ken, but we'll certainly dig into it for you.
Thank you.
Thank you and the next question comes on Dan Fannon with Jefferies.
Good morning, this is actually James steel plants and Dan Thanks for taking your question.
So just on retail order priority I'm just curious what was the Genesis of this offering and how should we think about the market opportunity and working to state share on objects.
Let me talk more broadly. Thank you for the question, let me speak more broadly and Chris will dive down into retail property and then periodic auction. This is a continuation to offer a more services in order types to our customers who are looking for differences in trading us equities, we look at the opportunities out there.
And just launching another exchange that doesn't have any new value add is interesting, but we think more interesting is offering more order types and solutions for our customers. So with your specific question, let me turn to Chris but think of our longer term view is more broadly offering solutions to our costs.
Customers, whether it's us equities use derivatives European equities building European derivatives, that's really what we're about so Chris can you go more specific into customer priority and then perhaps a word or two on periodic auctions in the us.
Yes, thanks, So James.
Mentioned that this is really focusing the diversity of our business. So if you think about retail priority in us equities.
We all know that Neil has zero commissions, there's been a large retail push and I'll work from home environment retail trading has really picked up you've seen reports where retail trading our retail percentage of the market's going up and maybe 25% market. So.
Where retail priority has been above 100 million shares a day for us and HBV.
We continue to see growth as more and more retail brokers as well as wholesalers sign on to this because of the execution quality thats getting that is noticeably better. It's all data driven based on best sex. So we still see further growth here.
For retail priority as obviously, a bunch of this volume that remains elevated despite the high volatility.
Coming from retail.
I'd also mention periodic auctions as we said in the script.
Thats something we created basically out of nothing in Europe in 2015, Dave housing and team built apparel like auctions and now it's two percentish about two percentage points of of the entire European market, we'd like to bring something very similar here in the us the market structures a bit different but we think the op.
For today's similar.
To provide a higher trading side lower impact.
Innovation and our equities markets. These two things are really highlighting the fact that we plan to bring innovation in every market in which we operate and we operate a lot of markets across five business lines, and 15 markets everyday and we plan to compete and innovate in each one of them an answer is two examples of that.
Understood. Thank you.
Thank you and the next question comes from Chris Allen with Compass point.
Morning, guys I'll, just wondered if you give us some color in terms of what the revenues for Euro CCP will running in the first half of this year on the how the out there for the second.
And maybe give us some incremental color just in terms of what you're doing to support the index launches in the first the first half. The next year, we signed up market makers, what are the kind of plaza.
Brian let you start off with the model and because I can talk about the indices yes.
Christie.
Looking to trying to pull the first half numbers and we can certainly update that.
Later, but I would say that the.
The first quarter numbers gives me the first half numbers looked.
There was growth versus.
Kind of one because I think we had published a 2019 numbers, but they saw.
A nice increase in the first quarter as overall volumes increased so they are running ahead of last year at least.
The first six months to date.
But let me well have to get back we're going to publish that number.
For you to get that I'd say I don't have that right at hand, Debbie if you have it or not but.
But it certainly running ahead on a year to date basis relative to the prior year.
And so let me begin so the indices and Chris can talk a bit about the model.
But we'll start with six European indices, the zibo Eurs on 50, Zibo, UK 100, Tsubo, Netherlands, 25, Cboes, Switzerland, 20, Siebel, Germany 30 in the CMO, France, 40, and will be calculated using zibo market data with the exception of Cboes, Switzerland, 20, but the keep the goal is really to light up these markets.
Similar to us market, where there is continuous quoting from the open to the clothes that is unique in the European model.
And it's something we're really good that we've got interest from our market makers liquidity providers, who are eager to pose markets from the open to the clothes and most importantly, the demand for access to Europe and the unified way is coming up pretty broadly. So there has been incredible buzz around our efforts since we announce.
The plan to offer derivatives, Chris I want to add anything.
I just had does that said we were very excited about European derivatives, because we've learned a lot of lessons over many decades in the us, especially recently, including during one of trading for was close and then reopened.
We plan to apply and European derivatives.
Fourth to bring that liquidity to the screen with better tight quotes and there are today, where the markets frankly.
Colorado market with wide quote so.
A lot of demand here from market makers, and we think the end users will be there as well as they see the quote quality.
So very excited about launching European derivatives. The first half next year as we're integrating your CCP and the building upon our technology advantage with utilizing the sample technologies, we have in the us in Europe.
Really catapults us into launching that market.
Thanks.
Thank you and the next question comes from out Scram with Qbs.
Hey, good morning.
I guess you address some of this already a couple of questions ago. When you when you talked about equities, but and how you differentiate yourself, but considering that memex is starting up here in a couple other exchanges in the next.
Couple of months before we talk next any any other color you could provide how you prepare yourself for that's too to be able to compete aggressively they won when when when these others are going to compete aggressively on day one.
Well I think it's you're right docs and good morning, we did try to differentiate we can differentiate bye.
Uniqueness in.
Handling customer orders with a customer priority or a periodic auction. Those are differences I think you point out with a mimic launch.
It's it's not a new story.
Memex, our gas will be.
Aggressive.
Bordering on irrational pricing in the beginning to earn share that's not surprising.
We tend not to chase irrational pricing in any of our models, but we anticipate that's how they'll begin.
We will continue to offer solutions to customers and Chris spend a little bit of time on that so nothing new to add there.
Sorry, if that doesn't answer your question. We think this is.
An exchange.
That's just coming in on price and really not anything unique an order handling at this point now we could be surprised in the future, but right now that's the way we look at mimics Chris.
Alex I just mentioned.
Memex, obviously in a long time of the making we have respect for their ownership basin and them as competitors. We welcome the competition, but we feel like we're well prepared to compete.
As I mentioned previously we have a lot of innovations are bringing to the equities market. It's going has been very competitive I will remain very competitive and we think we're well positioned.
End of the future, even as Memex others joined.
All right I'll jump back into queue. Thanks, Thanks, Alex.
Thank you add the next question comes from Argos with Credit Suisse.
Hey, good morning, everyone. So just thinking back to move the recent deals that you talked about how to make f. kiosks industry look if it really nicely into a broader in facilities since business, but can you maybe talk about the strategic vision well matched now areas you see ripe for disruption.
Outside of the acquired Mark in guidance, and then Brian any high level color around the magnitude of investment need.
Around this initiative and thank everyone again appreciate the fact that you might be limited what you say, but looking for more just high level commentary on this.
I wanted to start.
Yeah, I mean as far as the.
The magnitude of the need I will say that I'll try to frame that in the context of what we've done.
I'll I'm not 100% Cheryl what that question evolves, but I'll I'll take a shot at the hypothesis. So what you're asking for the business that we have invested in that are now part of see though.
The good news is that they are.
Already profitable there already contributing there already integrated.
As far as what we have closed obviously euro CCP is.
It's a little bit further down the path there, but the ones you mentioned on the information services group.
I will mention that and so theres not a lot of necessarily incremental investment or capex or things along those lines.
If that was call it a tangent of one of your questions.
From a broader capital allocation perspective, it's really a very similar story as continued to look at those things that again continued to help drive.
The growth of proprietary products. They continue to help our expansion into the new jurisdictions, they continue to leverage existing asset classes. So.
So with our balance sheet.
We have a lot of flexibility.
If we have to have accessed the capital markets from a debt perspective, that's easy to do from where we are it's a terrific interest rate environment to be able to do that.
So that's a very broad question, but I'll, just say I'll leave you with of what we've acquired it's fairly well integrated and I think we've laid out.
Kind of.
What is required and the overall investment needs are not as concerned that that being is going to be a big cash draw and should something.
That come to fruition that requires more balance sheet leverage we think we got the capacity to do that.
And then specific to match now Chris and John.
Yes, I'd just say are either.
One of our strategic growth drivers as I'd mentioned in the scripts, obviously geographic expansion as well as asset class diversification. So.
Rationale fits very nicely into our north American Equity's business lets us get into new geography.
If you look in the way in which we expanded 10 new geographies.
Given the bats heritage in Europe, starting with a relatively small footprint and then overtime growing to great scale, we look forward.
Integrating rationale and to see will.
Using our our technology or class technology, and then over time growing our footprint there.
Essentially.
Beyond where or restarting so quite excited about this and as Brian mentioned, that's that's a profitable business, which fits very nicely.
Yeah. This is John.
Really emphasize all those points.
This is a strategic priority for US you see it on the very first page of our deck.
It's one of the.
Top call it seven global equity markets adjacent to us very sophisticated market participants.
We will continue to look at markets like this and pick our sweet spot for entry we like this spot for entry because it's a unique platform in Canada.
Very very strong position in the new and growing.
Dark segment of the market is very different market structure in Canada and this is this is a new offering to the market. So we like that start point, we like it profitable and from there.
Well, we're creating a map to grow our presence in Canada.
Got it thanks guys.
Thank you and the next question comes from kind of Hell with Rosenblatt.
Hi, good morning, everyone.
Had a question on closing auction I know that kind of got started here in the us.
The height of the pandemic beginning on March was hoping to provide an update on what you're seeing from a volume perspective, and then maybe more broadly how you would expect that to trend here going forward and maybe what might help bring volumes up a little bit higher is it more interaction with customers and are you still have we'll do that Miss cobot environment.
Yes, Ken good question. Thanks for asking so we didn't see your first trades.
On.
Okay closing cross or supermarket closer in the U.S. here. This summer. So we're excited about that we have seen a lot of our large customers who would use this product kind of come out of change freezes as they've adapted to this covert 19 work from home.
Environment, So those of those change phrases of thawed.
It also mentioned the Threec the civil closing cross in Europe has started to see some nice volumes, we've seen actually in June and almost 20 million euros today.
Yes.
Closing cross so we're still very excited about.
Both products, both in Europe, and the U.S., we think theres demand for this given the.
Relatively.
Very high margins.
Probably a listing exchanges have a ring the closing cross and Thats still a large percentage of the market. If you look in.
First quarter in second quarter still between six and five and 6% of overall volume was happening at the close so it's a it's a part of the market that we.
We are.
Competing and plan to compete and even more aggressively.
Great. Thank you.
Thank you and the next question comes from Brian Modalities Your bank great. Thanks, Good morning folks. Thanks for taking my question.
Just want to come back to the proprietary trading at different angle on that what you can organically due to improve that trading in the in the near to intermediate term and the two.
Things like asset on that is the trading for how is that going do you see that actually.
Hoping volumes or is that getting overwhelmed by the environment.
And the the complex order technology, a that the functionality order type functionality that you were building out for the index options, maybe an update on that and and and whether you think that will contribute and then of course on on the mini VIX.
That you talked about today, if you think.
Retail will will play in that and that could stimulate declines.
Great Great questions, Brian Let me, let me start with the trading for no I don't think I know the trading floor is not overwhelmed by any circumstances matter of fact, we.
We think the reopening of the four in the reconfiguration is highly effective the feedback from brokers and market makers is they are ready they are ready for today's volume and more so we think we're well positioned for the eventual return of those most complex orders.
Hybrid environment as to preparing for it and what we ended two last time was we need to be ready.
Should we need to close the floor.
If the state or the country changes.
It's phasing it during this pandemic.
Chris will give you an update on that readiness you may know that publicly we filed rule filings for a.
A virtual approach to trading a lot of the gaps we noticed.
In able to access the supply of deep liquidity of SPX market makers was a bit.
At times encumbered by an electronic environment, and we struck out and needed to solve for that so Chris can give you an update on that progress.
And then for many of its yes, we do think this will be retail engagement here.
That is exactly why we're launching many VIX at this time there has been great interest.
In smaller sized contracts smaller notional contracts that is really weve dealt friendly that goes back to a lot of the observations that Ken had earlier in the queue anyway.
And.
We look forward to that launched again pending regulatory review.
August and then most important.
As you occasion remains the key driver inorganic growth, it's those touch points and engagement.
With the massive amounts of interest in the broad use market, who are still not engaged in derivatives speculation or derivatives hedging that's always going to be the target.
And finding new ways in this environment to reach out touch engage.
And to teach is what we've been doing over the past months and I think we're making great progress on given the current environment, but I don't want to leave without Chris is answer as to how we've done.
In our readiness pending regulatory approval.
Of our solution.
For virtual trading floor.
Yes, absolutely Brian So we have been working on behind the scenes on this virtual trading for concept should we need to close the trading for again.
Because of Coven 19.
For any further outbreaks.
Chicago area. So we're working very closely we filed with the FCC June 12.
So you can look at that filing and.
Just gives us another option.
Another choice if we would have to close I'd also mention we learned a lot through going all electronic how on floors close for about three months.
And we accelerated some of the functionality, we had with our silex platform in order to effectuate a lot of trading during that time. So it's not just the virtual training for efforts were making but also the.
The efforts on our OEM asked with Silex also and then just one last thing on many VIX I'd mentioned that the market maker engagement has been tremendous the commitment there to this product as we believe retail participation will be high and retail interest is high. So we're very excited about that.
Brian This is John when it just on on retail again I mean.
While we see.
Cyclical trough in institutional retail we believe here is a secular.
Catalyst.
And we're leaning into it many VIX is a great example.
I think target outcome products are another Great example, just an amazing performance over the past 12 months because of retails tension to this product.
And we've done a lot of engineering around that and then you know our internal data project that helps us understand what retail is doing and educate is then Chris mentioned.
We are leaning into the secular.
Growth story on retail.
Right that quite a bit do you have the online broker signed up did or they just waiting to see the product get launched first before they put that on their platforms.
You mean fixture in the margin on the many VIX Yep Yep.
The online brokers very supportive of this they see quite a bit of demand behind the product. Okay. It's typical of a product launch we've started with the target that we believe and of course the conversations in the design then we bring in exactly the retail online brokers to your point, so yes theres been.
Great dialogue.
And the interest expressed in that size contract for VIX.
Great. Thanks, very much for all the detail. Thank you.
Thank you and the next question comes from Chris Harris with Wells Fargo.
Great. Thanks, So we've already talked about the cobot related overhang affecting the decks.
Hi, guys thinking about how the fed might impact the franchise and I guess, what I'm wondering is.
His quantitative easing and zero rates good.
Or bad Synodex franchise do you think.
I think it's a broader question than the VIX franchise, I think that in low interest rate environments. The search for a return.
Really lens.
Basic overwrite strategies long positions in equities, but the over at strategy or.
A premium harvesting that we've seen in past environments in low interest rates.
Really lends well for derivatives trading overall the constant role.
And harvesting premium is there's been a pattern we've seen in very low.
Interest rates environments, where there's a search for yield it's just that simple.
So we think the continuation of a low environment, we will be.
Very positive for those that we'll learn how to harvest premium and or simple over at strategy of long equity positions. After what has been a bull run in a handful of stocks.
We think.
Maintaining those positions with derivatives and low interest rate environment will will continue.
Okay.
Okay. Thank you and the next question comes from Alex Blostein with Goldman Sachs.
Greg Good morning, Thanks, everyone. So it's a question for you guys around European equities.
Being cash equities business that doesn't get a ton of focus but curious what's been behind recent acceleration in market share losses, there and whether or not there any efforts and plays whether its pricing or market structure related.
To close some of the Bakken is part of that I'm curious whether the efforts you guys are doing on the European derivative side could benefit the European cash business small thanks.
It's a great question and yes, there has been incentives in place and of late we've had some great success.
In share so I'll turn it over.
Chris.
Describe a little bit of the new program that we put in place.
To better and said VBL pricing, it's really an added.
Maker incentive in our let book and we've seen early wins as.
As we've begun to roll this out across geographies, but Chris little bit more color.
Absolutely so Alex we did see a dip in market share in Europe, but we've seen actually return growth here actually in July were above 18%, which is actually above where the Q1 market share was.
On that as a result, as well that said the additional liquidity providers can we put in place that's really focused on the CXC.
Book, There, we've rolled that out across most of the European markets and we'll we'll do it or on the remainder.
Very soon.
So Dave housing teams done a great job of engaging with our clients putting in a liquidity prior scheme that will help to improve market quality and therefore the volume is following.
I'd also mention on that that one of the things that was a drag on market share was short tail bands that has since fallen off.
That it's been helpful for our market share and overall volumes.
Thank you and the next question comes Kyle vote with KBW.
Hi, Thanks for taking my question.
Maybe just a question.
Regarding the credit Suisse de listing.
The number of their volatility exchange traded products that happened earlier this month.
I think they also noted that they were delisting those to better align their product suite with their strategic growth plan. So I'm just wondering.
Do you provide some more color there I mean, obviously their partner of yours, just wondering if you take them deemphasizing is products.
And the listing on.
On exchange and product side could have broader.
Implications for that franchise.
Actually what we've maintained all along whether it's.
And issuer of any TPR needs yes.
Or liquidity provider, who pivots in changes their focus there's always someone and some institution willing to fill the gap if theres custard the demand. So as we anticipated we're already seeing inflows from other EG fees, a new funds being created to fill the void created by T. VIX.
So not surprising we saw on June 22, I think the T. VIX delist announcement.
Whether eight you have declined to about 600 million from 1.5 million, but at the same time, we saw Yuvvexy, which is a 1.5 levered.
GP increased to 1.2 billion, they went from 700 million and Fubon.
Increased to nearly 700 million from 500, so net net if you look at.
The complex of Teabags, Yuvvexy and Fubon, if I add those together.
Before launch and today, we're about down about 200 million.
Out of 2.5 billion, so and Thats all before.
The new.
Theres, an there's a new two times long MTF filed at the FCC from volatility shares that still has not launched so we always see someone willing to fill the gap if theres customer demand for products. So I don't think Theres I don't at this point see any long term effective.
One group exiting and others, we see willing to step up and take the place because there's customer demand for this kind of exposure. So at the end of the day I think this this you'll see.
Nothing too to up to growth.
Because there is demand for the products.
Hello. Thanks.
Thanks.
Thank you and the next question comes from a lot with Oppenheimer.
Good morning, Thank you for taking my question.
Going back to match now and I want to asked a question slightly differently do you think you'll have to critical mass in calendar right now and all maybe after the acquisition and what kind of mattress and timeline, you're looking at to gauge where you want to expand Florida in calendar. Thank you.
It's a great question I would say since we haven't closed yet.
It will learn a lot.
On integration.
As you may or may not know recall from our announcement, we're able to keep the team Thats built that's now which is an incremental addition to us and.
And the entire match now team will be joining our North American Equity's Division.
And it's with that insight and learning from one another that will be assessing whether or not and how to expand in Canada, whether it's with match now growing or if we have to look at other alternatives for growth in Canada. So we're not done we havent closed.
Nor have we been able to really see the incredible insight into the Canadian equities market from the match now team so.
Please give us a little patients until we close so we can share with you our vision for Canada, We love the market a lot of the same customers, but we're going to be introduced a new customers as well so let us assess that a little bit more after we close and I think we can be a whole lot more transparent once we get closing and able to share with you some more vision.
Okay. Thanks, a lot of color.
Thank you next question comes on Jeremy Campbell with Barclays.
Hey, guys. Thanks.
You know at on a prior call I think you guys had discussed lexia means launch of micro Ie, many futures what kind of highly correlated with the rise of your excess p. options I'm kind of wondering a couple of things one how do you see the pending launch of the seen these options on those micro contracts.
With the lateral to your offerings complex and then maybe just the bigger picture one now that basically the notional sizes have gotten cut down dramatically in all equity derivatives over this past year, if there's any kinda network extra analogies. If you will from from you guys go into a mini VIX on kind of industry wide you know equity derivative participation.
Yes, great I love the way you frame the question because we do look at.
The opportunity as really an ecosystem and the the most successful ecosystems and.
Trading environment is one where there is deep liquidity for institutions. There are small bite size liquidity for customers.
That interaction is incredibly powerful because you can actually satisfied the demand from any size user and then from our perspective, we're able to take it further advantage by having volatility products linked to both so it's that ecosystem. That's the most powerful and we do grow the pie and its into.
Coyote, including futures ITSI to meet the big difference really from a retail size micro option.
The difference the huge difference between retail investors, who have securities accounts and the very few retail investors that have futures accounts. There just are not that many there they tend to be the most sophisticated that goal and continue to click through online retail brokers for futures accounts.
What we've learned.
Also in it and it goes really it goes back to Ken's question.
The beauty of having a research department here at CBOE as I've had people digging for the the growth that can season. He many.
Minis and compared to SPX and email options on the minutes I haven't seen it.
We can't find it looks pretty flat line to us, but it's a comparison that we'd like to pick up with can later, but more to your question. Yes, we see the entire pie growing when we can attract more customers into the complex and we think we both will benefit the pie gross love to see futures grow at Simi by the way it means that the.
There's institutions being satisfied.
And they're derivatives tend to trade with us where prices are side.
Great. Thanks, a lot.
Thank you and then ask questions a fall from rich Repetto with Piper Sandler.
Yes, hi, I noticed the cost going on pretty long, but I did have just quickly if you go through.
Periodic auction.
Because like in Europe, there is no Reg NMS solid eight so just quickly some of the details on why you know how it'll work here.
Well, you still get CIPP market data revenue from the if you do pick up share and is it later dark and I apologize I haven't read the filing.
And.
These details maybe are there.
Anyway, well that rich and look at as for time. This is our time with you. So so please don't apologize for that we've definitely appreciate the follow up question, what we do in the U.S. currently in the U.S. market is lit, but I'll I'll have Chris give you a little bit more color on the.
Importing the expertise and what we've learned in Europe to our markets here in the U.S., but yes. Currently we play in the lift market in the U.S, yes, so I'm, sorry, I toxins rich. So obviously there is no trade to rule in Europe, but there isn't the U.S. will be abiding by that this is all in the rule filing but that the details our there'll be a certain amount of transportation transparency around period.
Nick auctions, but not not too much has to create market impact Colby abiding by by the traitor rule.
And there will be but there will be periodic and kind of unknown randomized option periods. So as to minimize that market impact. So we've taken what we've learned in the market construct in Europe, and we're applying to us market structure underwriting NMS.
Especially think this might be useful for some securities where some more illiquid securities frankly, there are harder to trade in a purely continuous.
Market, where there's been a lot of market structure discussion about the best way to facilitate trading in those security so.
This just one of many things we're doing across the globe and applying lessons learned in one geography or asset class to another.
And on the Sip question, Chris on the Sip question. So obviously, we will get well get trade revenue from that for reporting traits that happened through periodic auctions I don't believe there because I'm going to be any call revenue.
I understood and one last quick continent, I see you brought it to stream.
Thanks.
No.
Yes.
John.
Rich you you're breaking up on us.
Okay I'll pass. Thank you Ed looked more quarters in that machinery as we can hear you.
Thanks.
And the that's question was off hall from convoy with KBW.
Hey, Thanks for taking the follow up.
Just a for Brian on expenses, So last quarter, you mentioned that we should annualize the for Q expenses.
As a good jumping off point to model 2021 operating expenses.
Well you update updated guidance today, you noted that you have some extra costs I think 3 million in the back half the year.
Nonrecurring, but if we back those out is that annualize for Q expense run rate still the best way to model 2021.
Model the jumping off point for our 2021 expenses.
I think thats still going to be the primary base for being able to model 21 because.
It's going to have all of the.
You know our information services group in there will have hopefully match now in there will have euro CCP in there will have a better baseline of I'll call. It.
Core or existing in there so I still think thats going to be the best jumping off point.
The percentage changes.
The way people traditionally model expenses and say what was this and then you have X amount of growth over the prior year.
That will the percentages may look a little tricky just because of the environment that we're in and depending on where we are in fourth quarter relative to where we are they may pandemic and when what the world looks like from that perspective, So I still think that that's going to be.
Going to be our best starting point.
Because it will have everything integrated in there.
So hopefully that answers are collagen a good question.
So.
But if there is not it's not a follow up please ask but but there was a question earlier.
On the.
The Euro CCP first half performance.
I did have a chance to people of fed little bit information back it looks like the first half performance on revenues.
Again, these are all unaudited and everything else.
But it looks like the topline revenue.
Well, it's about a 60% increase over the prior year in the first half or Euro CCP. So I wanted to mentioned that.
To to folks and obviously that will fall to the operating leverage to the bottom line impact as well, but again as I mentioned they had a very strong first quarter.
The activity and that has definitely showed up in their results in the first half of the year.
Sorry, Brian did you say, 60% six hearing.
Yes.
Okay. Thank you.
Thank you.
That's the question as such I would like to return the Florida management for closing comments.
Thanks, Keith Thank everybody for your <unk>, calling in this morning. We appreciate your time to continue to keep up.
[music].
Thank you that crosses teleconference. Thank you for Tony their presentation and May now disconnect your lines.