Q3 2023 TMX Group Ltd Earnings Call

Following the opening remarks, we will have a question and answer session.

Before we begin I would like to remind you that certain statements made during this call may relate to future events and expectations and constitute forward looking information within the meanings of Canadian Securities laws actual results may differ materially from these expectations.

Formation concerning factors that could cause actual results to differ from forward looking information is contained in our press release and I'm proud to report that we have filed with the regulatory authorities and with that I'll turn the call over to John.

Well, thank you Amanda and good morning, everyone.

Thank you for dialing into the call. This morning to discuss <unk> financial results for the third quarter and the first nine months of 2023.

My comments. This morning will really focus on T. M. Xs performance year to date through September 30th and the important progress we have made in executing the enterprise growth strategy and advancing our key initiatives.

David is here as well with me in Montreal. This morning, and he will take us through the third quarter results in detail in a few minutes.

Now before I turn to business I do want to address something that has been on all of our minds for the last few weeks and that is the middle East.

T M X is actually part of the business community in Israel, We have one of the largest presences of any international market with 16 listed companies raising capital via our public market ecosystem.

Team members clients and people we work with closely are going through a profoundly difficult time in our hearts are with them.

And so we are so grateful for the humanitarian efforts of groups working to treat and protect the lives of people in affected communities and providing essential relief services and resources and we collectively pray for peace and our brighter tomorrow.

Now turning to <unk> performance.

We reported continued positive results for the first nine months of 2023 with solid year over year revenue growth for three consecutive quarters admits prevailing challenges across much of our operating environment.

Our 2023 results through September reflect the depth of value in our business. The execution of <unk> long term strategy has strengthened our ability to deliver positive results even in difficult macroeconomic conditions.

This has been a deliberate deliberate effort to build the amount of business, that's driven through our data services and in run rate revenues. So the business is more resilient in times of economic strife.

More importantly, today's T. M X is better positioned to serve clients across our markets and increasingly around the world and better positioned for growth.

<unk> reported revenue of $892 6, Million% to 6% increase from the first nine months of last year, driven by double digit growth in revenue from our information services business or GSI, a which includes trade port and T. M X data links as well as increased revenue from capital formation derivatives trading and clearing excluding box.

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These overall gains were partially offset by decreased revenue from equities and fixed income trading due to lower trading volumes on Toronto stock Exchange T. S X ventures change and alpha and lower capital raising activities. Clearly this has been a challenging capital markets period, and we want to just have a quick shadow to our clients as well we're suffering through some of those same challenges.

On adjusted basis diluted earnings per share for the first nine months of the year was $1 10 Center, a two 2% increase from the same period in 2022.

Total reported operating expenses increased 10% compared to the first nine months of last year and David will take a closer look at these expenses in his remarks to follow.

Now moving now to each of our business areas GSI a remained our fastest growing business area through three quarters of the year revenue from GSI, a was $311 6 million through the first three quarters of the year, which is a 17% increase from 2022, reflecting higher revenue from trade Port and T. M X data links including co location.

Trey parts revenue grew 22% or 17% in common currency pound sterling year over year, driven by a 9% increase in trader subscribers annual price adjustments and the impact of a favorable FX rate.

Trey ports core dual network plays a key role in serving world power and natural gas markets linking participants to execution venues and clearinghouses and delivering innovative products and services to a growing client base.

And September marked the 13th anniversary for trade Port.

The number of game changing achievements over the years as the company has expanded its network into new asset classes and geographies and added new cutting edge capabilities is impressive.

Among other successes since trade port joined T. M X in 2017 includes enhancing the client offering with the acquisition of leading solution providers, such as trade signal and visit Tech.

Launching an initiative to aggregate the global environmental markets and adding over 400 net new clients.

And World Energy markets are rapidly evolving demand for data and analytics to support new quantitative and automated approaches continues to grow.

And a proven ability to meet the needs of the marketplace and a committed strategic focus on seeking out new opportunities has positioned <unk> well for continued success.

CMS data links grew 13% in the first nine months due to higher revenue from data feeds co location benchmark indices and enterprise agreement renewals as well as the favorable FX impact from a stronger U S dollar.

Revenue for the first three quarters of the year also included $5 3 million from Boston based Wall Street Horizon acquired in November of last year.

2023 has been a landmark year for our information services business marked by high for poor performance and definitive steps forward in our strategy to boost our capabilities expand our datasets and deliver modern solutions to clients.

Progress. This year also includes our participation in the creation of the new term core of benchmark and our investment and verify a global provider of indices and ETF services.

Importantly, information and more specifically, what we can do with it is not the focus of just this one division, but it is a crucial in common elements and enterprise <unk> enterprise global growth strategy.

Across the organization, we are focused on new ways to leverage our robust proprietary datasets to solve client challenges today and into the future.

Earlier this month, we announced the launch of the New T. M X ESG data hub working with leader, leading global ESG data and analytics provider the new hubs hub expands T. M X data links as offering in support of client demand for integrating ESG measures into the investment decision making process. This.

This includes tracking company climate action plants, quantifying impact screening and peer analysis.

Now turning to derivatives.

Excluding box revenue from derivatives trading and clearing was 121.1 million in the first nine months of 2023 of.

13% increase from last year, driven by higher revenue from <unk> and <unk> due to increased volumes traded and cleared.

Amex total volume grew 12% compared to the first nine months of 2022.

And the level of Oprah over overall open interest at September 32023 was 16% higher than the same date last year, which is an important key measure of liquidity growth and some of Amex's key products.

Fixed income and equity derivative markets grew sequentially from Q2 to Q3 as higher volatility and an active central bank policy environment drew increased activity from institutional investors and amex as short term interest rate products.

Highlights from the first nine months of the year featured year over year growth in key product areas, including 10% higher volumes from equity options, 20% higher volumes from ETF options heavy trading in the backs Cora and the C. G. Z Amex is two year government of Canada bond future contract up 26% and 80.

8% respectively.

And overall the interest rate product line also performed extremely well with volumes up 19% compared to the first nine months of 2022.

Yeah.

Now moving to capital formation revenue for the first nine months of 2023 was 205 million% to 3% increase from 2022, reflecting higher travel revenue from T. S X Trust and partially offset by lower revenue from additional listing fees due to a decrease in the number of financing transactions and dollars raised on <unk>.

Oh stock exchange and a decrease in the total financing dollars raised on T. S X venture exchange, though we are encouraged by the year over year increase in the number of junior firing to financing transactions being completed.

Revenue from other issuers are is it services, which is largely consists of our TSS trust business, including a S. T was $83 9, million% to 37% increase compared to the first nine months of last year, driven by higher net interest income slightly offset by lower transfer agent fees.

The stark realities of prevailing high interest rate environment and inflationary pressure through the first nine months of 2023 continued to weigh on equity markets and capital raising activity here in Canada and economies around the world.

And while the overall number of new listings on T. S X and T. S adventure is down from the same period last year and the record highs of as recent as 2021. The pipeline of go public prospects. We are connected to remain strong.

Within the numbers, we're also seeing positive signs in traditional and non traditional sectors along with some recent competitive wins among our new listings as companies continue to choose the T. S X and the TSA venture ecosystem to gain access to the capital they need to grow.

In September we wrap we welcomed allied gold a Canadian based gold producer with operations in Africa to Toronto Stock Exchange the company raised approximately $364 million and a reverse takeover transaction, representing our largest go public offering in the mining sector since 2017.

This listing was a significant win for the T S X and the entire ecosystem that surrounds the Canadian mining sector and speaks to the strength of our global value proposition.

Also in September T. S X listed D. Our eye Health Care Trust, a global leader in financing life Sciences innovation completed two bought deal financing of around $100 million.

And earlier this month stress Kona resources, one of North America's fastest growing energy companies began trading on T. S X following an acquisition at a $6 billion valuation.

And so we continue our business development efforts and targeted regions around the world in September we added a full time presence in Australia focused on the mining sector and the innovation sector.

And 2021, we also undertook an important initiative to improve indigenous relationships at the organization.

Over the past two and a half years, we have made some important progress on our company's reconciliation journey always stressing the need to prioritize actions over words.

And last week, we were proud to host the inaugural T S X and that the indigenous Investor day at our market centre in Toronto.

For T M X connecting entrepreneurs and growing businesses to potential investors as a fundamental core function of our marketplaces.

And so this event marked an especially important milestone as we were able to bring a representative range of decision makers together to discuss strategies for growing indigenous led businesses to the benefit of these businesses and the investors as well as the broader community and ultimately all Canadians.

Canada's markets Havent outstanding long term track record of helping visionary entrepreneurs and early stage businesses raise growth capital and enabling investors to participate in that growth and <unk> is committed to building on that track record, enabling more efficient access to underrepresented groups in emerging industries long into the future.

Now I'd like to finish up my comments this morning by emphasizing our commitment to our growth strategy and our stakeholders.

While our 'twenty two 'twenty three results today show impressive resilience Tms is not sitting idly by waiting for things to swing our way.

We are ever focused on the future on ways to adapt and accelerate our growth plans by invigorating, our purpose to make markets better and empower bold ideas.

We also have a strong balance sheet and flexibility to make future investments to continue to accelerate this growth, which David will take us through in more detail a little later on.

And in closing I would like to thank all of our employees across the organization for their exemplary efforts this year in a very challenging market.

All of our business strategies are rooted in our responsibility we have to serve stakeholders across our markets with excellence and integrity vision and purpose.

<unk> people here in Montreal across Canada, and around the world sharing unshakable commitment to fulfilling that responsibility.

And together, we look forward to the challenges ahead.

With that let me pass the call over to David Thank you.

Thank you John and good morning, everyone.

Our third quarter results continued to demonstrate the resiliency of our diversified business model.

Overall revenue grew by 8% compared to the third quarter of last year, driven by double digit revenue growth across a number of our business segments.

We reported an increase of 7% and our diluted earnings per share and 3% and our adjusted diluted earnings per share driven by higher revenue from our businesses and finance income on cash balances par.

Partially offsetting these increases were higher operating expenses year over year and higher income tax expenses and an increase in the U K corporate income tax rate from 19% to 25% which came into effect earlier this year.

A little later I will speak to our successful efforts to contain expense growth in the second half of the year, whereby we are holding ourselves to a first half of the year expense run rate.

Turning now to our businesses I'll start with the segments that saw the largest year over year revenue increase.

Revenue in our global solutions insights and analytics segment grew by 19% this quarter.

With double digit growth from both trade port and TMA data links.

Revenue from our trade Port segment was up 19% in pound Sterling driven by a 7% increase in trader subscribers. In addition to our annual price adjustments and incremental revenue from our premium product offerings, most notably data analytics and algorithmic <unk>.

<unk>.

On the heels of a strong pound Sterling this quarter <unk> was up 31% in Canadian dollars.

Revenue in our Tms data links business grew by 10% driven by increases in first subscription based services.

Revenue from Wall Street of Ryzen, which we acquired in November of last year.

And finally, the impact of 2022, and 2023 price adjustments, we've spoken of in prior quarters.

In addition, T M X data links as revenue was up approximately 0.4 million due to a stronger U S dollar, which accounts were approximately 1% of the 10% revenue increase this quarter.

Derivatives trading and clearing revenue excluding box was up 7% this quarter on a comparable basis.

This was driven by a 12% increase in the Montreal exchange and CDC volumes and positive impact from pricing changes, which came into effect in January of this year.

David Arnold: Arnold, Archie Financial Officer. Following the opening remarks, we will have a question-and-answer session. Before we begin, I would like to remind you that certain statements made during this call may relate to future events and expectations and constitute forward-looking information within the meetings of Canadian Securities Law.

Somewhat offset by an unfavorable product and client mix.

Now as you'll recall in the third quarter of last year, we had a one time reduction in revenue related to the termination fees on a five year government of Canada bond futures market, making agreement.

David Arnold: Actual results made defer materially from these expectations. Information concerning factors that could cause actual results that defer from forward-looking information is containing our press release and in periodic reports that we have filed with the regulatory authorities.

And a retroactive client billing credits.

As a result.

This quarter's reported revenue in derivatives trading and clearing excluding box rose by 23% compared to last year.

John Mckenzie: And with that, I'll turn the car over to John.

John Mckenzie: Well, thank you and me and good morning, everyone. Thank you for dialing into the call this morning to discuss TMX's financial results for the third quarter in the first nine months of 2023. My comments this morning will really focus on TMX's performance year and date through September 30th and the important progress we have made in executing the enterprise growth strategy and advancing our key initiatives. David is here as well with me and Montreal this morning and he will take us through the third quarter results in detail in a few minutes.

[noise] attributed to a 28% increase in revenue from the Montreal exchange and a 15% increase in C. D C C.

Revenue from box decreased 9% in U S dollars, reflecting a lower rate per contract due to an unfavorable product mix, partially offset by a 5% increase in volumes. In addition box.

<unk> revenue was up 0.8 million due to a stronger U S dollar, which accounts for approximately a 3% increase reducing the overall overall revenue declined two 6% in Canadian dollars for box in our results.

John Mckenzie: Now, before I turn to business, I do want to address something that has been on all of our minds with the last few weeks. And that is the Middle East. TMX is actually part of the business community in Israel. We have one of the largest presences of any international market with 16 listed companies raising capital via our public market ecosystem. Team members, clients, and people we work with closely are going through a profoundly difficult time and our hearts are with them. And so we are so grateful for the humanitarian efforts of groups working to treat and protect the lives of people in affected communities and providing essential relief services and resources.

Equities and fixed income trading and clearing segment revenue was up 1% in the quarter driven by 13% increase in revenue from our Cts business.

Offset by a 9% decrease from equities and fixed income trading.

The Cts revenue increase reflected higher interest income on clearing funds and higher fees due to increased activity across the event management custodial and eligibility services and standby liquidity facilities. This was somewhat offset by lower exchange trading volumes.

John Mckenzie: And we collectively pray for peace and a brighter tomorrow. Now, turning to TMX's performance, we reported continued positive results for the first nine months of 2023 with solid year-over-year revenue growth for three consecutive quarters amidst prevailing challenges across much of our operating environment. Our 2023 results through September reflect the depth of value in our business. The execution of TMX's long-term strategy has strengthened our ability to deliver positive results even in difficult macro economic conditions.

The revenue decline in our equities and fixed income trading business was due to a 14% decrease in the overall volume of securities traded on our equities marketplaces as well as lower activity in government of Canada bonds and swaps Trey.

Trading volumes were down across all of our marketplaces 90, 17% on T. S X, 4% on TSA expenditure exchange and 15% on Alpha exchange.

John Mckenzie: This has been a deliberate effort to build the amount of business that's driven through our data services and in run rate revenues so the business is more resilient in times of economic strife. More importantly, today's TMX is better positioned to serve clients across our markets, increasingly around the world and better positioned for growth. TMX reported revenue of 892.6 million, a 6% increase from the first nine months of last year. Durant by double-digit growth in revenue from our information services business or GSIA, which includes trade port and TMX data links, as well as increased revenue from capital formation, derivatives trading and clearing, excluding box. These overall gains were partially offset by decreased revenue from equities and fixed income trading due to lower trading volumes on Toronto Stock Exchange, TFX Venture Change, and Alpha, and lower capital raising activities.

Now despite the decline in volumes and market share held strong at 66%.

Turning to capital formation revenue in this segment declined 4% in the quarter, primarily driven by lower initial and sustaining listing fees on the T. S X T. S X venture exchange and a 22% decrease in the number of T. S X additional listing transactions billed at the maximum fee of $250000.

This was partially offset by a 10% increase in the number of transactions billed below the maximum.

Now despite the microeconomic factors challenging the capital raising activities there were increases in the total financing dollars raised on T. S X and total number of financings both on T S X and TSA ex venture exchange.

John Mckenzie: Clearly, this has been a challenging capital markets period, and we want to just have a quick shadow to our clients as well who are suffering through some of those same challenges. On a justice basis, diluted earnings per share for the first nine months of the year was $1.10, a 2% increase from the same period in 2022. Total reported operating expenses increased 10% compared to the first nine months of last year, and David will take a closer look at these expenses in his remarks to follow.

Lastly, TSH trucks trust revenue increased by 12% in the third quarter driven by higher net interest income, partially offset by lower transfer agent fees.

Turning now to our expenses for this quarter there was a 12% increase in operating costs on a reported basis compared to last year, but more notably a 9% increase on a comparable basis and a 3% sequential decrease on a comparable basis.

John Mckenzie: Now, moving now to each of our business areas, GSIA remained our fastest growing business area through three quarters of the year. Revenue from GSIA was 311.6 million through the first three quarters of the year, which was a 17% increase from 2022. Reflecting higher revenue from Trayport and TMX data links, including co-location. Trayports revenue grew 22% or 17% in common currency pound sterling year over year. Durant by a 9% increase in trader subscribers, annual price adjustments, and the impact of a favorable FX rate.

So to enable the meaningful comparison of expenses on a year over year basis I call out. The following items of note first box markets estimates of $6 7 million daughters, and increased expenses for services provided by box exchange, which is the national Securities exchange responsible for regulating and monitor.

Activities of box market for.

So additional visibility the $6 $7 million increase can be further broken down to $4 6 million related to the first half of 2023 with the remaining $2 1 million related to the third quarter.

John Mckenzie: Trayport's core jewel network plays a key role in serving world power and natural gas markets, linking participants to execution venues and clearing houses and delivering innovative products and services to a growing client base, and September marked the 30th anniversary for Trayport. The number of game changing achievements over the years as the company has expanded its network into new asset classes and geographies and added new cutting edge capabilities is impressive. Among other successes since Trayport joined TMX in 2017 includes enhancing the client offering with the acquisition of leading solution providers such as Trade Signal and Visitec, launching an initiative to aggregate the global environmental markets and adding over 400 net new clients.

Second we incurred $2 1 million in operating expenses this quarter related to running and operating Wall Street Horizon, which you recall, we acquired in November of last year.

So the comparable in Q3 of 2022 would have been zero.

Finally, the comparable quarter last year included $3 5 million related to the a S. T integration, which was successfully completed by the end of last year.

Now in addition, when we analyze the expenses further by normalizing for inflationary increases and high ethics conversion rates third quarter operating expenses are notably lower with only a 3% growth rate compared to last year.

Consistent with the past quarters approximately half of our expense increase is driven by inflationary increases coupled with higher FX rates.

John Mckenzie: And world energy markets are rapidly evolving, demand for data and analytics to support new quantitative and automated approaches continues to grow, and a proven ability to meet the needs of the marketplace and a committed strategic focus on seeking out new opportunities as position Trayport well for continued success. TMX data links grew 13% in the first nine months due to higher revenue from data feeds, co-location, benchmarking indices, and enterprise agreement renewals, as well as the favorable FX impact from a stronger US dollar.

Turning now to a comparison of our results sequentially.

Operating expenses in Q3 were up $2 6 million or 2% from the second quarter, primarily due to a higher box to primarily due to the higher box expenses, which I discussed in detail earlier.

Excluding the true up for box operating expenses decreased 3% sequentially, reflecting lower revenue related expenses director's fees employee performance incentive plan costs and marketing as well as sponsorship costs, partially offset by higher consulting and legal fees.

John Mckenzie: Revenue for the first three quarters of the year also included 5.3 million from Boston-based Wall Street horizon acquired in November of last year. 2023 has been a landmark year for our information services business marked by high performance and definitive steps forward in our strategy to boost our capabilities, expand our data sets, and deliver modern solutions to clients. Progress this year also includes our participation in the creation of the new term core benchmark and our investment in vetify a global provider of indices and ETF services.

We maintain our view that our second half expenses will be in line with our first half of the year's expense run rate.

After one adjust for the higher estimated regulatory expenses at box that I spoke of earlier that is to say on a comparable basis rare.

Revenue decreased by $18 9 million sequentially from the second to the third quarter and this was due to three factors.

First a decrease in TSS trust revenue, reflecting lower balances compared to the second quarter of this year, which included above average corporate actions activity.

John Mckenzie: Importantly, information, and more specifically what we can do with it is not the focus of just this one division, but it is a crucial and common element and enter in TMX's enterprise global core strategy. Across the organization, we are focused on new ways to leverage our robust proprietary data sets to solve client challenges today and into the future. Earlier this month, we announced the launch of the new TMX ESG data hub. Working with leader leading global ESG data and analytics provider, the new hubs, hub expands TMX data links is offering in support of client demand for integrating ESG measures into the investment decision making process.

Second lower listings fees, primarily driven by lower number of additional listings transactions billed at the maximum fee on T. S X and finally, a decrease in equities and fixed income trading driven by a 3% decline in the overall volumes of securities traded on our equities marketplaces.

And turning now to our balance sheet and the nine months, leading up to September 2023, we spent $45 million repurchasing just over 1.44 million of our common shares under our normal course issuer bid program.

John Mckenzie: This includes tracking company climate action plans, quantifying impact screening and peer analysis. Now, turning to derivatives, excluding box revenue from derivatives trading clearing was 121.1 million in the first nine months of 2023. A 13% increase from last year, driven by higher revenue from MX and CDCC due to increased volumes traded and clear. MX Total Volume, Group 12%, compared to the first nine months of 2022, and the level of overall open interest at September 30th, 2023, was 16% higher than the same date last year, which is an important key measure of liquidity growth in some of MX's key products.

Debt to adjusted EBITDA ratio was in the middle of our targeted range at two one times and we also held close to $654 million in cash and marketable securities, which was $479 million in excess of $175 million, we target to retain for regulatory and credit facility purposes.

On October 3rd subsequent to the third quarter reporting period, we repaid our $250 million series B debenture with a with a combination of commercial paper and cash.

Our last night, our board approved a quarterly dividend of <unk> 18 cents per common share payable on December 1st to shareholders of record as of November 17th.

John Mckenzie: Sixth income and equity derivative markets grew sequentially from Q2 to Q3 as higher volatility and an active central bank policy environment drew increased activity from institutional investors in MX's short-term interest rate products. Highlights from the first nine months of the year featured year-over-year growth in key product areas, including 10% higher volumes from equity options, 20% higher volumes from ETF options, heavy trading in the Baxcora and the CGZ MX's two-year government-accounted bond-feature contract, up 26% and 88% respectively.

In the third quarter in the third quarter, we will pay out 51% of adjusted earnings per share while our last 12 month payout ratio at 49% remains well within our target range of 40% to 50%.

So that concludes my formal remarks, I'd now like to turn the call back to the mean for our Q&A period.

Thank you David Laura would you please outline the process for the Q&A session.

Thank you Sir.

Ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press star followed by the number one on your Touchstone song.

John Mckenzie: And overall, the interest rate product line also performed extremely well, with volumes up 19% compared to the first nine months of 2022. Now, moving to capital formation. Revenue for the first nine months of 2023 was 205 million, a 3% increase from 2022, reflecting higher revenue from TSX trust, and partially offset by lower revenue from additional listing fees due to a decrease in the number of financing transactions and dollars raised on Toronto Stock Exchange and a decrease in the total financing dollars raised on TSX venture exchange, though we are encouraged by the year-over-year increase in the number of junior financing transactions being completed.

Thank you Tom Tom acknowledging your request and your questions there'll be polled and received should you wish to declines on the polling process. Please press star followed by the number two if you like.

Using a speaker phone please lift your handset before passing on a pool.

Your first question comes from the line of Dan from.

From Barclays. Please go ahead.

Hi, good morning, and thanks for taking the question.

Two upfront here on the GSI a business first on trade port It looks like this is the fourth or fifth quarter in a row of accelerating growth I'm. Just curious what are your thoughts on sort of the sustainability of that trend.

John Mckenzie: Revenue from other issuers services, which is largely consists of our TSX trust business, including AST, was 83.9 million, a 37% increase compared to the first nine months of last year, driven by higher net interest income, slightly offset by lower transfer agent fees. The stark realities of prevailing high interest rate environment and inflationary pressures through the first nine months of 2023 continued to weigh on equity markets and capital at raising activity here in Canada and economies around the world.

And then at the same time on the non Shreveport side.

We saw the professional and.

Market subscribers for both T S X and X I think for <unk>.

The number of decline quarter over quarter for <unk>, It was a bit more flat.

And so it looks like the revenue you're still delivering positive revenue growth there, but if you could provide some color on this.

The drivers of kind of a decline in number of subscribers and similarly, your kind of outlook there. Thank you.

No problem good morning.

John Mckenzie: And while the overall number of new listings on TSX and TSX venture is down from the same period last year and the record highs of the recent as 2021, the pipeline of public prospects we are connected to remain strong. Within the numbers we're also seeing positive signs in traditional and non-traditional sectors along with some recent competitive wins among our new listings. As companies continue to choose the TSX and the TSX venture ecosystem to gain access to the capital they need to grow.

So let me start with trade Port first so I'm going to anchor you into first of all the long term guidance in terms of kind of high single low double digit growth rate over the long term and and certainly we are continuing to outperform that.

Candidly outperformed it every year since we acquired the business.

The the piece of growth, that's our first I'll call coloring, but sustained growth going forward the 9% that we've talked about in the comments in terms of actual subscriber growth this year.

If you look back over a number of years that's been a continued performance trend for the business in terms of adding trader subscribers. We expect that to continue going forward. There is certainly is a higher lift in 2023 with respect to CPI increases in our contracts.

John Mckenzie: In September we welcomed Allied Gold, a Canadian-based gold producer with operations in Africa to Toronto Stock Exchange. The company raised approximately 364 million in a reverse takeover transaction representing our largest gold public offering in the mining sector since 2017. This listing was a significant win for the TSX and the entire ecosystem that surrounds the Canadian mining sector and speaks to the strength of our global value proposition. Also in September, TSX listed DRI health care trust, a global leader in financing life sciences innovation and completed two-bought deal financing of around 100 million.

Given the higher CPI rate in the U K market.

Now that's not going not going to be the same for 2024, but it's still going to be elevated from prior periods. So youre still going to see strength related to that and we are continuing on the initiatives to expand the franchise. So the build out in the U S market the build out in terms of refined oil, adding to data and analytics products across the board. So all of those factors that have.

Led into that accelerated growth rate are continuing going forward.

John Mckenzie: And earlier this month, Strathcona Resources, one of North America's fastest growing energy companies, began trading on TSX following an acquisition at a $6 billion valuation. And so we continue our business development efforts in targeted regions around the world. In September, we added a full-time presence in Australia focused on the mining sector and the innovation sector.

But I know over the long term I still have to anchor you to the kind of the long term guidance that we've given now why switch that to the data links business and.

You can ask again, if I don't get to all these because I am impressed by in terms of how much you packed into that question the the subscriber counsel Jonathan.

Yeah, the the subscriber counts in general and this is this was fairly normal to see this kind of kind of flat or a slight pull backs when we've been kind of in a in a prolonged period of softness in the capital markets and when you've got clients that are curtailing some of their staff. Some of their work force. So its not surprising to see that it typically is.

John Mckenzie: In 2021, we also undertook an important initiative to improve Indigenous relationships at our organization. And over the past two and a half years, we have made some important progress on our company's reconciliation journey, always stressing the need to prioritize actions over words. And last week, we were proud to host the inaugural PSX Indigenous Investor Day at our market center in Toronto. For TMX, connecting entrepreneurs and growing businesses to potential investors is a fundamental core function of our marketplaces.

John Mckenzie: And so this event marked an especially important milestone as we were able to bring a representative range of decision makers together to discuss strategies for growing Indigenous lead businesses, to the benefit of these businesses and the investors as well as the broader community and ultimately all Canadians. Canada's markets have an outstanding long-term track record of helping visionary entrepreneurs and early-stage businesses raise growth capital and enabling investors participate in that growth. And TMX is committed to building on that track record, enabling more efficient access to underrepresented groups and emerging industries long into the future.

That lags market activity and when you see the markets return and restore it is often a lag on the other side in terms of seeing them step back up again.

So it's not surprising to us but at the same time in the parts that are not subscriber base we have.

Enterprise relationships with the majority of the large clients for the Nonpro. So these would be your retail advisors individuals' retail users things like that.

We've actually been renewing this year all of those agreements.

And are largely renewing those at an uptick and so that's both a combination of some flow through of pricing over time, because they are multi year agreements, but also expanding the usage of that dataset in their firms and so that's that's one of the strategic values. So we went into in terms of why we went into enterprise agreements and the data links business is it actually creates a long term relationship with the.

And as they use it and they start to use it throughout their firm in more ways. We can provide more value to both our clients and to us in terms of growing revenue. So I hope that helps with some of the color there.

John Mckenzie: Now, I'd like to finish up my comments this morning by emphasizing our commitment to our growth strategy and our stakeholders. While our 2023 results today show impressive resilience, TMX is not sitting idly by waiting for things to swing our way. We are ever focused on the future on ways to adapt and accelerate our growth plans by invigorating our purpose to make markets better and empower bold ideas. We also have a strong balance sheet and flexibility to make future investments to continue to accelerate this growth, which David will take us through in more detail a little later on.

It doesn't sometimes squeezed somebody in there I'll jump back in the queue. Thanks, so much John.

Thanks.

Your next.

Next question comes from the line of Nik Priebe from CIBC. Please go ahead.

Okay. Thanks for the question.

I was wondering if you could just remind us how that CPI contract price escalator works at Shreveport like does that reprice for all subscribers on January one irrespective of the timing of their annual renewal period I just wanted to understand that dynamic a little bit better.

John Mckenzie: And then closing, I would like to thank all of our employees across the organization for their exemplary efforts this year in a very challenging market. All of our business strategies are rooted in the responsibility we have to serve stakeholders across our markets with excellence in integrity, vision and purpose. TMX is people here in Montreal, across Canada and around the world, sharing unshakable commitment to fulfilling that responsibility.

And Nick It's David Yes, you've got it correct. So.

Clients might have a anniversary of the agreement of March 31st or June 30th and that's built into all of those multi year agreements is the fact that we would price based on the bank of England's cost of living adjustment.

John Mckenzie: And together we look forward to the challenges ahead.

Really as the benchmark and in and around November of each year. Our trade 14, we'll we'll do the math and then reach out to all of our clients because they're all anticipating a notification of.

David Arnold: With that, let me pass the call over to David.

David Arnold: Thank you.

David Arnold: Thank you, John.

David Arnold: And good morning, everyone. Our third quarter results continue to demonstrate the resiliency of our diversified business model. Overall, revenue grew by 8% compared to the third quarter of last year. Driven by double digit revenue growth across a number of our business segments. We reported an increase of 7% in our diluted earnings per share and 3% in our adjusted diluted earnings per share. Driven by higher revenue from our businesses and finance income on cash balances.

What the annual price increase would be and we tend to try and get those out and then the kind of November December timeframe. So yes. They will kick in on January 1st regardless of the anniversary of the agreement John Hunter and yes, I'm just going to build on.

The other piece, that's the real driver there and it builds on the earlier discussion as well while those pieces kick in Jan one as you indicated all of those quiet of agreements do actually renew at different times as the client agreements renew throughout the year. Those client agreements are often renewed for multi year periods and they're often also step ups in terms of the number of users and the overall.

David Arnold: Partially offsetting these increases were higher operating expenses year over year. And higher income tax expenses are an increase in the UK corporate income tax rate from 19% to 25%, which came into effect earlier this year. A little later, I will speak to our successful efforts to contain expense growth in the second half of the year.

These generated and so that's actually part of what drives the long term step up in in the trader subscribers and the revenue beyond just the CPI piece. So we had actually and just this month as well another large scale clients do a new site license with us they renewed a five year extension on it and a substantial uplift so that's.

David Arnold: Whereby, we are holding ourselves to our first half of the year expense run rate.

David Arnold: Turning now to our businesses, I will start with the segments that saw the largest year-of-year revenue increase. Revenue, in our global solutions, insights and analytics segment, grew by 19% this quarter, with double-digit growth from both Trayport and TMX data links. Revenue from our Trayport segment was up 19% in pound sterling, driven by a 7% increase in trader subscribers in addition to our annual price adjustments and incremental revenue from our premium product offerings, most notably data analytics and algorithmic trading.

It goes to the nature of the strength of the business. It's not just the CPI piece its windows client agreements come up they are expanding the usage and expanding the investment with trade port at the same time.

Yeah. Okay. That's good that's very helpful.

And then just shifting over to Opex at the enterprise wide level.

How do you think about the budgeting process there with respect to <unk>.

Straining expense growth in an environment with continued wage pressure and just balancing that against the need to invest for growth I guess as we look out into 2024 is low single digit expense growth kind of a reasonable reasonable baseline expectation there.

David Arnold: On the heels of a strong pound sterling this quarter, Crayport was up 31% in Canadian dollars. Revenue in our TMX data links business grew by 10%, driven by increases in first subscription-based services, second revenue from Wall Street Horizon, which we acquired in November of last year, and finally the impact of 2022 and 2023 price adjustments we have spoken of in prior quarters. In addition, TMX data links revenue was up approximately 0.4 million due to a stronger US dollar, which accounts for approximately 1% of the 10% revenue increases quarter.

So Nick I'll start and maybe John can add a little bit of strategic color right. So.

You know the first and foremost priority for us is really investing for growth and so yeah. There are obviously inflationary pressures on cost of living for wage increases.

Supplier cost increases that obviously get passed on to us, but underlying all of this our incremental investments that we're making and modernizing our platform and growing right. So.

You would have seen that we've obviously recruited individually in the U S and to help us with some of our growth plans in the U S trade port as we've mentioned on numerous occasions are expanding into North America. So both the U S and Canada.

David Arnold: Derivatives trading and clearing revenue, excluding box, was up to 7% this quarter on a comparable basis. This was driven by 12% increase in the Montreal exchange and CDCC volumes and positive impact from pricing changes, which came into effect in January of this year, somewhat offset by an unfavorable product and client mix. Now, as you'll recall, in the third quarter of last year, we had a one-time reduction in revenue related to the termination fees on our five-year government of Canada bond futures market making agreement and a retroactive client billing credit.

And these are you know.

On the margin incremental increases so when we look at the budgeting process, which is really your question.

And I can't give you too much information, Nick but I'll give you what I can and.

It starts primarily with okay rolling forward on the annualized <unk> of what we had in 2023.

Really that's just to get us at the starting blocks. So people hired midway through the year, we need to account for the balance of the year and then the next thing is obviously the inflationary pressures and then it's a targeted and strategic discussion, which is where our kind of introduce John now and where we focus on those growth factors of the franchise that really accelerate our strategy and so all of those going.

David Arnold: As a result, this quarter's reported revenue in derivatives trading and clearing, excluding box, rose by 23% compared to last year. Attributed to a 28% increase in revenue from the Montreal exchange and a 15% increase in CDCC. Revenue from box decreased 9% in US dollars, affecting a lower rate per contract due to an unfavorable product mix, partially offset by a 5% increase in volumes. In addition, box's revenue was up 0.8 million due to a stronger US dollar, which accounts for approximately a 3% increase, reducing the overall revenue decline to 6% in Canadian dollars for box in our results.

The hopper, culminating in us ending up with whatever the expense growth rate will be so and absent any growth investments you've got the first two buckets anyone could look up what those inflationary increases might be but it's the wildcard is investments for growth.

Yeah, So I'll build on David's comments, as well and right into the the lens of how you asked it when we think about it we're actually thinking of other lens of what I'll call kind of run the business and build the business.

So run the business the the business. We've got today the continued reinvestment in that business things like even post rate modernization the reinvestment in the dual direct platform for trade port those are all part of running our business for today in the future and certainly our objective is to to try to bring that into the low singles. It. It's a very difficult environment to do that right now thats that is absolutely.

David Arnold: In our equities and fixed income trading and clearing segment, revenue was up 1% in the quarter, driven by 13% increase in revenue from our CDS business, offset by a 9% decrease from equities and fixed income trading. The CDS revenue increase reflected higher interest income on clearing funds and higher fees due to increased activity across event management, custodial and eligibility services and standby liquidity facilities. The revenue decline in our equities and fixed income trading business was due to a 14% decrease in the overall volume of securities traded on our equity's marketplaces, as well as low activity in government of Canada bonds and swaps. Trading volumes were down across all of our marketplaces, namely 17% on TSX, 4% on TSX venture exchange, and 15% on alpha exchange. Now, despite the decline in volumes, our market share held strong at 66%.

Objective, but it is a difficult environment to do that because it's not just the challenges around.

Expectations for staff, but the second largest piece of our expense base is our technology costs and the inflationary pressures on technology spend are substantial in terms of technology renewals licensees hardware software. They are all facing the same pressures. So that's the objective we're working with where we're challenging our work.

<unk> is where can you look for additional opportunities to save.

So that we actually can deliver additional savings to than we used to reinvest in the future. There are areas that we know theyre going to generate savings from some of the larger investments, we're making but things like post trade modernization or or the joule platform, our multi year initiatives so to get to the endpoint, where you get to see the savings come off.

Some time and so that's less of a 2020 for impact in more of a 25 and beyond the last piece that we're thinking about it in terms of kind of how do we give you kind of better guidance and better disclosure are for those larger kind of build the business initiatives and David Deno rightly mentioned are our efforts to start building out into the U S with our.

David Arnold: Turning to capital formation, revenue in the segment declined 4% in the quarter, primarily driven by lower initial and sustaining listing fees on the TSX, TSX venture exchange, and a 22% decrease in the number of TSX additional listing transactions billed at the maximum fee of 250,000 dollars. This was partially set by a 10% increase in the number of transactions billed below the maximum. Now, despite the microeconomic factors challenging the capital raising activities, there were increases in the total financing dollars raised on TSX and total number of financing, both on TSX and TSX venture exchange.

With our new U S team we're building.

That's not part of our current operations and not part of our current revenue, but it's part of our long term growth. So we're going to think about how do you give better guidance to you. So you can understand whats the real cost for running the business and where are we making some strategic investments beyond that that are quite discrete and transparent. So look for us to do more for that in the new year on the back of this budget process as we get it done.

Yeah.

Okay. That's great color, thanks, very much I'll pass the line.

Your next question comes from the line of <unk> <unk> from BMO capital markets. Please go ahead.

David Arnold: Lastly, TSX trucks trust revenue increased by 12% in the third quarter, driven by higher net interest income, partially offset by lower transfer agent fees. Turning now to expenses for this quarter, there was a 12% increase in operating costs on a reported basis, compared to last year, but more notably, a 9% increase on a comparable basis, and a 3% sequential decrease on a comparable basis.

Thank you and good morning.

The launch of the two new order books at the Opex change how do you expect this initiatives to result in increased trading volumes, specifically for dark trading given.

Given the market share gains.

Spirits in recent years.

Yeah, Great question, So I mean, our market share gains we are still in dark trading though.

David Arnold: So to enable the meaningful comparison of expenses on a Eurovere basis, I call out the following items of notes. First, box markets estimates of 6.7 million dollars in increased expenses for services provided by box exchange, which is the national securities exchange responsible for regulating and monitoring activities of box market. For additional visibility, the 6.7 million dollar increase can be further broken down to 4.6 million related to the first half of 2023, with the remaining 2.1 million related to the third quarter.

But underweight compared to the rest of our franchise. So if you look at our market share of all of our listed trading activity were more like two thirds of the marketplace. We're in the dark world. We're more in the 30, 31% range. So we do see that there's room for us to globe to grow.

Well, we can go to but mostly we want to grow our market share within that dark trading space and we thought there was unique features and functions that we could add in to meet client needs to build that and then the same thing with the actual execution venue. The nice thing with both these things or in addition to the opportunity to build incremental volume. These are also primo.

David Arnold: Second, we incurred 2.1 million in operating expenses this quarter related to running and operating Wall Street Horizon, which you recall we acquired in November of last year. So the comparable in Q3 of 2022 would have been zero. Finally, the comparable quarter last year included 3.5 million related to the AST integration, which is successfully completed by the end of last year. Now in addition, when we analyze the expenses further by normalizing for inflationary increases and higher FX conversion rates, the third quarter operating expenses are notably lower with only a 3% growth rate compared to last year.

Some services in terms of premium revenue so as volume builds in them. They have the ability to increase that kind of revenue per trade in the trading space. So those are the two key components to them and both of them are driven specifically from unmet client needs that we've identified through our interactions with the street.

Okay.

Okay.

And on the acquisition of EQM by verify last months, what do you see as the potential to introduce new index solutions to your base of feature ETF issuers.

Canada following this acquisition.

I'm impressed with how much you're paying attention to pick up on on that one so.

David Arnold: Consistent with the past quarters, approximately half of our expense increase is driven by inflationary increases coupled with higher FX rates. Turning now to a comparison of our results sequentially, operating expenses in Q3 were up 2.6 million or 2% from the second quarter, primarily due to the higher box expenses, which I discussed in detail earlier. Excluding the true up for box, operating expenses decreased 3% sequentially, reflecting lower revenue related expenses, direct fees, employee performance incentive plan costs, and marketing as well as sponsorship costs, partially offset by higher consulting and legal fees.

That was an interesting because this is actually it goes right into the kind of the Genesis of why we like a bit of verify why we made the investment into it.

Platform that the team at <unk> built the index factory.

<unk> got the ability to add new indices to it so indices like EQM.

Can be acquired and integrated into that factory and run very efficiently and then expanded out to a broader network. So what youre seeing is an indication of the forward strategy of what we expect to do with that going forward. Now. In addition to that that's what you know Beth if I can actually do on their own with their own capabilities. The partnership where we are.

We are working on together, how do we use that factory to create net new indices using datasets that we have client relationships that we have and so that's still early stage in terms of developing those but if you think about some of the unique Canadian datasets. We've got in terms of both equities junior equities fixed income energy data through trade port clearing data that Cvs theres lots of.

David Arnold: We maintain our view that our second half expenses will be in line with our first half of the year's expense run rate, after one adjusts for the higher estimated regulatory expenses at box that I spoke of earlier, that is to say on a comparable basis.

David Arnold: Revenue decreased by 18.9 million sequentially from the second to the third quarter, and this was due to three factors. First, a decrease in TSX Trust revenue reflecting lower balances compared to the second quarter of this year, which included above average corporate action activity. Second, lower listings fees, primary driven by lower number of additional listings transactions, pulled at the maximum fee on TSX, and finally, a decrease in equities and fixed income trading driven by a 3% decline in the overall volumes of securities traded on our equities marketplaces.

They are in there that we can build into future indices and even the piece that we talked about earlier in the call. The ESG hub that we've launched as you build up more ESG data. There's other types of indices you could build from that in terms of reference data <unk> those types of things. So that's that's what our joint team is working on and I'm glad you picked up on <unk>.

Because it's actually a really good case study on what those capabilities allow you to do.

Great. Thank you very much.

Your next question comes from the line of.

David Arnold: Turning now to our balance sheet, in the nine months leading up to September 2023, we spent 40.5 million repurchasing just over 1.44 million of our common shares under our normal course issuer bid program. A debt to adjusted EBITDA ratio was in the middle of our targeted range at 2.1 times, and we also held close to 654 million in cash and marketable securities, which was 479 million in excess of 179 million. We target to retain for regulatory and credit facility purposes.

Brian Bedell from Deutsche Bank. Please go ahead.

Oh, great. Thanks, good morning folks.

Maybe just switch script really quick on expenses on the the.

Second half getting to the first half so just on a reported basis I guess would that imply about $153 million of expense in the fourth quarter. If you were to.

Match that perfectly in and does that include the <unk>.

As you mentioned from box or I guess, how would the box expense influence that.

So Brian let me handle the second part of your question first yeah.

David Arnold: On October 3, subsequent to the third quarter reporting period, we repaid our 250 million Series B debenture with a combination of commercial paper and cash. Now last night, I bought approved a quarterly dividend of 18 cents per common share, table on December 1 to shareholders of record as of November 17. In the third quarter, we will pay out 51% of our adjusted earnings per share, while our last 12 months powered ratio at 49% remains well within our target range of 40 to 50%.

I mean, you know we don't have the visibility because of the shareholder structure that we have with box.

So as a result, we.

The wildcard for me is as will the box exchange expense pick up in box market be the same in Q4 is as it is in Q3 right that's to be determined. So so when I mentioned that it's actually looking through that.

So excluding anything that might be passed through from the exchange to the market. So that's the first one right off the bat is is we'd be we don't have the visibility into that so I.

David Arnold: So that concludes my formal remarks.

David Arnold: I'd now like to turn the call back to the mean for our Q&A period. Thank you, David.

When I say the second half will be comparable to the first half that's excluding that.

And then on the ability to look at the numbers yet you could just pick up the two reported numbers for Q1 and Q2.

Unknown Executive: Laura, would you please outline the process for the Q&A session? Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question please press star followed by the number one on your touchstone phone. You will hear three tone prompt acknowledging your request and your questions will be pulled in the order they received. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please lift your hands up before pressing any keys.

Times it by two deduct Q3, and you'll get it.

A good indication as to kind of where the guardrails might be for Q4, yes, perfect. Okay. Great. Thanks, and then just on on the mine on Amex.

Just in terms of the to market share shifts or the shift the product mix shift to core maybe if you could just comment on.

You know to what extent you would expect that to continue to be influenced our rate per contract yields I think it's come down a little bit and then I guess, what youre seeing from the trading community I know there's always.

Ben Priebe: Your first question comes from the line of Ben, British from Barclays. We still had.

John Mckenzie: Hi, good morning, and thanks for taking the question. Maybe two up front here on the GSI business. First on trade port, it looks like this is the fourth or fifth quarter in a row of accelerating growth. I'm just curious, what are your thoughts on sort of the sustainability of that trend? And then at the same time on the non trade port side, we saw the professional and market subscribers for both TSX and NX.

I think John you had mentioned.

In a prior call that when volatility settles down it's actually good.

For more certainty of trading and that actually improves volumes and maybe if you can just contrast.

That scenario versus I guess, the volatility that we've seen in October so far.

John Mckenzie: I think for TSX, they kind of the number decline quarter of a quarter for NX. It was a bit more flat. And so it looked like the revenue, you still delivering positive revenue growth there, but if you could provide some color on the drivers of the decline and number of subscribers and similarly you're kind of outlook there. Thank you. No problem.

Well, sometimes I like to split hairs and talk about good volatility and bad volatility.

And thats, sometimes a challenge, particularly around the fixed income piece so having.

Unpredictable bank of Canada rate moves.

It's challenging.

Because that's challenging on short term product and so since we've had some stability in the central Bank regime, that's actually been helpful. But you still want to see volatility around trading activity around it because that drives more usage of those products.

John Mckenzie: Good morning. So let me start with Trayport first. So I'm going to anchor you into first of all the long-term guidance in terms of kind of high single low double digit growth rate over the long term. And certainly we are continuing to perform that candidly outperformed it every year since we acquired the business. The piece of growth that I'll first look all coming with sustained growth going forward the 9% that we talked about in the comments in terms of actual subscriber growth this year.

And we have seen that improvement in strength and so like.

When you when you translate that into kind of that transition from Baxter Cora.

We're pretty happy with the uptake in Cora already given that it's actually not the mandated contract yet still bags until that transition next year. So seen the lift in both those contract volumes and the recovery in the box volumes at the same time has been really positive and strong for liquidity and those those products now as we go into the actual transition peer.

John Mckenzie: If you look back over a number of years, that's been a continued performance trend for the business in terms of adding trader subscribers. We expect that to continue going forward. There certainly is a higher lift in 2023 with respect to CPI increases in our contracts given the higher CPI rate in the UK market. Now that's not going to be the same for 2024, but it's still going to be elevated from prior periods.

<unk>.

Certainly there is theres market, making built into supporting the Cora agreement that isn't there in a very well established Baxter contract.

So there will be a short term RPC issue channel or step down when we have that transition, but like other new contracts that will be time limited and we'll work our way out of that.

John Mckenzie: So you're still going to see strength related to that. And we are continuing on the initiatives to expand the franchise. So the build out in the US market, the build out in terms of refined oil, adding to data analytics products across the board. So all those factors that have led into that accelerated growth rate are continuing going forward. But over the long term, I still have to anchor you to the kind of long-term guidance that we've given.

Now that being said our expectation is that in both in combination the Cora in the box and then actually in the Cora itself has the potential for higher run rate volumes than what the backs did beforehand.

John Mckenzie: Now when I switched that to the data links business and you can ask again if I don't get to all these because I'm impressed then in terms of how much you packed into that question. The the subscriber count. This is fairly normal to see this kind of kind of flat or slight pullbacks when we've been kind of in a prolonged period of softness in the capital markets. And when you've got clients that are curtailing some of their staff, some of their workforce.

Because actually it's a better product it adds for more terms and more ways for the clients to use it and so that's part of the analysis as well so we need to look to a short term revenue per contract impact for the really the the launch and initiation of it but with the potential for higher long term revenues and then that rebate piece over.

<unk> winds off I can't give you guidance as to when because those are again commercial agreements with the liquidity providers, but but similar to what we've seen in other contracts.

John Mckenzie: So it's not surprising to see that it typically is something that lags market activity. And when you see the markets return and restore it is often a lag on the other side in terms of seeing them step back up again. So it's not surprising to us, but at the same time in the parts that are not subscriber base, we have enterprise relationships with the majority of the large clients for the non pro.

Okay that makes sense, that's great color. Thank you.

Your next question comes from the line of Geoff Kwan from RBC capital markets. Please go ahead.

Hi, good morning.

I just want to expand on I guess some of the topics that you've announced so far. This morning first one just going back to the market data subscribers and <unk>.

Quarter over quarter changes, we've seen over the past couple of quarters.

John Mckenzie: So these would be, you know, your retail advisors, individual retail users, things like that. We've actually been renewing this year all those agreements and on largely renewing those at an uptick. And so that's both a combination of some flow through pricing over time because there are multi-year agreements, but also expanding the usage of that data set in their firms. And so that's that's one of the strategic values. So we went into in terms of why we went into enterprise agreements in the data links business is it actually creates a long term relationship with the clients.

Can you get much insight.

In the short term, whether or not maybe on a one quarter basis may be able to of Hal.

How that may trend and just wondering what youre seeing on that front and then also is it still that same dynamic because I thought from previous say for example, if he had someone.

John Mckenzie: And as they use it, and they start to use it throughout their firm in more ways, we can provide more value to both the client and to us in terms of growing revenue. So I hope that helps with some of the color there.

Someone that may have lost.

Their job.

Don't see that step down in the market data subs or the revenue impact for maybe a quarter, maybe two and also that debt.

What's happened on the opposite side when somebody.

At the market data subscription.

Yeah and then he also the challenge of that Jeff is also we also can't just take job reductions in different clients or dealers are holistically because it also 10 spends on what the rules are where they are using it or how they're using data in their shop. So it's it's it's if we don't get great forward looking information with respect to our.

Ben Priebe: It does, and since I squeezed so many in there, I'll jump back in the queue. Thanks so much, John. No problem. Thanks.

Nick Priebe: Your next question comes from the line of Nick Preeb from CIBC. Please go ahead. Okay, thanks for the question. I just wanted to just remind us how that CPI contract price escalator works at trade port. Like, does that reprised or all subscribers on January 1 irrespective of the timing of their annual renewal period? I just wanted to understand that dynamic a little bit better. And it could be, David. Yes, you've got to correct.

<unk> to predict it other than that general market piece that when you've got industry stepped down in employment and to your point, we will often see that impact on a bit of a lag if they actually reset annual kind of recount their seats and.

And make adjustments going forward and the same thing coming back, but unfortunately, no. We don't we don't get a lot of insights to it until it's actually happening.

Nick Priebe: So, you know, clients might have a anniversary of the agreement of March 31st or June 30th, but built into all of those multi-year agreements is the fact that we would price based on the Bank of England's cost of living adjustment really as the benchmark. And in and around November of each year, our Crayport team will do the math and then reach out to all of the clients, give their all anticipating notification of what the annual price increase would be, and we tend to try and get those out in the kind of November, December, time frame.

Okay.

And then just my other question was on trade Port.

How much of the revenue today is coming from call. It outside the core European customer base and can kind of talk about I know you talked about a little bit some of the stuff because you know the outlook and.

The expectations in terms of.

How quickly you can drive that revenue outside of the kind of the core franchise space.

Yeah, well I mean, we've given guidance before that the pieces coming directly out of the kind of the north American market is kind of 5 million pound ish in terms of run rate now.

Nick Priebe: So, yes, they all kick in on January 1st, regardless of the anniversary of the agreement. John, John, yeah. I'm just going to build on the other piece of the real driver there, and it builds on the other discussion as well. While those pieces kick in Jan 1, as you indicated, all those client agreements do actually renew at different times. As the client agreements reduce throughout the year, both client agreements are often renewed for multi-year periods, and they're often also step-ups in terms of the number of users and the overall fees generated.

Out of the overall mix, but it's actually difficult for us to delineate the way you've asked in terms of kind of outside of the European client base, because a lot of those clients are global and they are doing global business on trade Port and if you think about some of the exchanges I participate as well as paying clients like.

Ice CME those are global franchise, as well and while they might be participating in the European market to participate and also with North American data, so it's a bit more nuanced than that.

Nick Priebe: And so, that's actually part of what drives the long-term step-up in the Trader Subscribers and the revenue beyond just the CPIP. So, we had actually in just this month as well. Another large-scale client do a new site license with us. They renewed a five-year extension on it, and a substantial uplift. So, it goes to the nature of the strength of the business. It's not just the CPIPs. It's when those client agreements come up. They're expanding the usage and expanding the investment with Trader Port at the same time. Yeah, okay, that's good. Very helpful.

The pizza I can give you is actually the direct piece of firm wide and we've actually been building out in the U S. What it's contributing so far.

Okay. Thank you.

Your next question comes from the line of Graham Ryding from TD. Please go ahead.

Hi, good morning.

There was a couple of comments.

Around building into the U S. I, just wonder if I could maybe.

Dig into that a little bit can you remind us.

What you are looking to do there is it initially around and equity trading initiative and then beyond that is it is just sort of a phased project or I guess exploratory process R&D.

David Arnold: And then just shifting over to OPEX at the enterprise wide level, how do you think about the budgeting process there with respect to constraining expense growth in an environment with continued wage pressure and just balancing that against the need to invest for growth? Like, as we look out in the 2024, is low single-digit expense growth kind of a reasonable baseline expectation there? So, Nick, I'll start, and maybe John can add a little bit of strategic color, right?

Can you define what you exactly what to do and what you want to spend.

Over the near term.

Okay, So theres going to be a different JM today in terms of what our what we're doing and how much I'm going to tell you. Today. So you have to bear with me on that.

We actually do have a well defined strategy of in terms of what we're trying to do in the U S. We haven't had broad discussion that in the public market, yet so I'm going to be a little bit more limited in terms of what we share today.

David Arnold: So, you know, the first and foremost priority for us is really investing for growth. And so, yeah, there are obviously inflation repressures on, you know, cost of living for wage increases, supply of cost increases that, you know, obviously get passed on to us. But, you know, underlying all of this are incremental investments that we're making in modernizing our platform and growing, right? So, you would have seen that we've, you know, obviously recruited individual in the U.S, to help us with some of our growth plans in the U.S.

But essentially when you look to what we've built out in Canada in terms of the Alf X the alpha dark initiatives and really look into.

Provide better execution quality for clients, we see that similar opportunity in the U S. As.

As a way to start building our equity platform directly in the U S. As opposed to just on a cross border basis, we've got substantial client bases with cross border activity and when you think about particularly even the Canadian banks and their presence within the U S market.

David Arnold: Trader Port, as we mentioned on numerous occasions, are expanding into North America, so both the U.S, and Canada. And these are, you know, on the margin incremental increases. So, when we look at the budgeting process, which is really a question, and I can't give you too much information, Nick, but I'll give you what I can. It starts primarily with okay rolling forward on the annualization of what we had in 2023. So, really, that's just to get us at the starting blocks, so people hired midway through the year, we need to account for the balance of the year.

And we do believe the long term that the quality of our offerings.

Can can compete with any of the North American players in the home market just the same way they compete in the Canadian market.

That being said the initial strategy in terms of building is to look through what that unique opportunity is around execution quality and the hiring of our new head of U S. Equities is working on building out the team to do that so it is definitely more than what I would call experimentation. We do have she have a strategy to build.

David Arnold: Then the next thing is obviously the inflation repressures, and then it's a targeted and strategic discussion, which is where I kind of introduced John now, where we focus on those growth sectors of the franchise that really accelerate our strategy. And so, all of those go into the hopper, culminating in us ending up with whatever the expense growth rate will be. So, absent any growth investments, you got the first two buckets, anyone could look up what those inflationary increases might be, but it's the wild card as investments for growth.

And in the new year, we will look to see how we can provide more guidance to you. Both in line with the investment community, but also in line with the client community that we've been engaged with over the past year in terms of their interest level and supporting new marketplace.

Okay perfect that was good color.

A sort of a two pronged question, but really on the on the interest income side of your business. So <unk> Trust.

David Arnold: Yeah, so I'll build on David's comments as well, and you know, right into the lens of how you asked it, when we think about it, we're actually thinking about the lens of what I'll kind of run the business and build the business. And so run the business, the business we've got today, the continued reinvestment in that business, things like even post trade modernization, the reinvestment in the Jewel Direct Platform for Trayport.

It was a little bit lighter than last quarter for sure, but also I think it was below <unk>.

Q1 and Q4.

Uh huh.

Levels.

I guess earlier in the year and late last year. So can you just expand on what's that all about lower transfer agency activity or.

David Arnold: Those are all part of rein our business for today in the future, and certainly our objective is to try to bring that into the low singles. It's a very difficult environment to do. That right now, that's that is absolutely objective, but it's a difficult environment to do that because it's not just the challenges around expectations for staff, but the, you know, the second largest piece of our expense basis, our technology costs, and the inflationary pressures on technology spend are substantial in terms of, you know, technology D renewals licenses hardware software.

How should we think about this quarter compared to you.

Previous quarters.

Yeah. So Graham it's David So I would say Q1 is a better indicator of kind of a normal run rate.

But obviously as you know that one of the triggers there on the net interest income side is a rates, but b also balances right and so to the extent that we see the capital markets environment like it is right now with some of the listings activity ipos not being as robust and there's a direct correlation obviously.

David Arnold: They are all facing the same pressures. So that's the objective we're working with where we're challenging our organization is where can you look for additional operations? There are opportunities to save so that we actually can deliver additional savings to then use to reinvest in the future. There are areas that we know they're going to generate savings from some of the larger investments we're making, but things like post trade modernization or the Jewel Platform are multi-year initiatives.

To our trust business, because we participate in a lot of those corporate actions.

And obviously that see that's a little bit more of a of a dampener on Q3, but.

As we go into Q4 and as we look into Q1 of next year, we were we're anticipating hopefully.

David Arnold: So to get to the end point where you get to see the savings come off, you know, take some time. And so, you know, that's less of a 2024 impact and more of a 25 and beyond. The last piece of what we're thinking about is in terms of kind of how do we give you, you know, kind of better guidance and better disclosure are for those larger kind of build the business initiatives and, and David, you know, rightly mentioned our, our efforts to start building out into the US with our, with our new US team, we're building, you know, that's not part of our current operations and not part of our current revenue, but it's part of our long term growth.

Some early signs of a little bit of a rebound. So that's that's the first first piece.

Yes, I mean, obviously the on the transfer agency. It was it was softer than we had hoped for in this quarter and.

Once again hope that it kind of rebounds more in the kind of Q1 kind of run.

Run rate if you will.

Okay. That's helpful. If I could just on a similar theme.

Throw in another question on that but with this move to T plus one.

Next year will that have any impact on the interest income that you would capture through CBS.

David Arnold: So we're going to think about how do you give better guidance to you so you can understand what's the real cost for running the business and where are we making some strategic investments beyond that that are quite discrete and transparent. So look for us to do more for that in the new year on the back of this budget process as we get it done. Okay, that's great color. Thanks very much.

No because we really don't capture much net interest income in Cds.

It will have a meaningful impact on our clients.

Does the move for two <unk>, we expect to be a 40% to 50% savings.

In the collateral that they post with us but unlike L.

David Arnold: I'll pass the line.

Most of the European.

Clearinghouses would have substantial net interest income associated with that we largely pass it all back so there's no material change there.

John Mckenzie: Your next question comes from the line of at the end record from BMO capital markets. Please go ahead. Thank you and good morning on the launch of the two new order books at the alpha exchange. How do you expect this initiative to result in increased trading volumes specifically for dark trading. Given the market share gains to experience in recent years. Yeah, great question. So I mean, our market share gains are we are still in dark trading though.

Yes.

Okay. That's it for me thank you.

Yeah.

Yeah.

Your next question comes from the line of John <unk> from National Bank Financial. Please go ahead.

Yeah. Thanks.

First just wanted to get some clarity on the capture rates of the derivatives business, both IMAX and box.

Would you be able to give us a little bit of color on it.

This was a clean quarter free of rebates.

John Mckenzie: Underweight compared to the rest of our franchise. If you look at our market share of all of our listed trading activity, we're more like, you know, two thirds of the marketplace were in the dark world. We're more in the 30 31% range. So we do see that there's room for us to glow to grow. Well, we can glow too, but you know, mostly want to grow our market share within that dark trading space.

You know, maybe you know from our client and product perspective is it roughly average like maybe a little bit of color in terms of the capture rates on both of those businesses the IMAX in box.

Jamie they're all clean quarters.

Yeah, So I mean, the amex one this year.

John Mckenzie: And we saw there was unique features and functions that we could add in to meet unique client needs to build that. And then the same thing with the actual the execution venue. The nice thing with both these things are in addition to the opportunity to build incremental volume. These are also premium services in terms of premium revenue. So as volume builds in them, they have the ability to increase that kind of revenue portrayed in the trading space. So those are the two key components to them and both of them are driven specifically from unmet client needs that we've identified through our interactions with the street.

You can look to the product mix is it a clean quarter in the sense that there is no client adjustments or anything like that its just the actual impacts on our revenues of the products that are traded the piece that we talked earlier.

As you shift some volume from Baxter Cora that will have an RPC impact in the short term because it has a rebate regime helped to build it.

I want to remind people that was a deliberate choice we made to ensure that liquidity got built up in that new product and didn't end up missing the public market and ended up in the over the counter market.

So no. It is a clean quarter. There is no special one offs that are in there that is impacting it its just the mix of that business.

John Mckenzie: Okay. And on the acquisition of EQM by Fedaf by last month, what do you see as the potential to introduce new index solutions to your base of ETF issuers in Canada following this acquisition? I'm impressed with how much you're paying attention to pick up on that one. So that was an interesting acquisition. This is actually goes right into the kind of the genesis of why we like trade, a bit of vetify why we made the investment into it.

And the same thing with box box has been very steady and when you look sequentially I think actually box is up actually substantially and sequentially. Both in terms of volume and share, but the actual RPC has been largely stable. So again, that's going to depend on the mix of what the clients are using box for in terms of whether or not you have kind of more floor trading more high volume.

Trading large contracts or more kind of open market trading.

John Mckenzie: The platform that the team at vetify is built the, you know, the index factory has got the ability to add new indices to it. So indices like EQM can be acquired and integrated into that factory and run very efficiently and then expanded out to a broader network. So what you're seeing is an indication of the forward strategy of what we expect to do with that going forward. Now, in addition to that, that's what, you know, vetify can actually do on their own with their own capabilities.

But again, it's a as you as you asked us a clean quarter, there's nothing special going on there that's impacting things.

Okay.

What I was getting at thank you.

If I think about <unk>.

Recent acquisitions.

One data point you'd put in them in the MD&A was $19 billion in Etfs or I guess it underpins the $19 billion does that is that the key.

Total addressable market a figure we should be thinking about for that business and if you can kind of go back to a tree the robo and EQM transactions like what was that.

John Mckenzie: The partnership we're working on together is how do we use that factory to create net new indices using data sets that we have, client relationships that we have. And so that's still early stage in terms of developing those. But if you think about some of the unique Canadian data sets we've got in terms of, you know, both equities, junior equities, fixed income, energy data through trade port clearing data to the CDS, there's lots that are in there that we can build into future indices.

Value and maybe even like let's talk about three years ago, five years ago or whatever.

Time frame you want to pick like how is that 19 billing in what has been the growth rate on that.

Yeah, I'd have to I wouldn't be able to help you with the growth rate over time, because I don't have that.

Handy, we can make sure we do that as a follow up.

John Mckenzie: And even the piece that we talked about earlier in the call, you know, the ESG hub that we've launched, as you build up more ESG data, there's other types of indices you could build from that in terms of reference data, thematics, those types of things. So that's, that's what our joint team is working on and I'm glad you picked up on EQB because it's actually a really good case study on what those capabilities allow you to do.

Pre the ruble global that was about I think $2 billion in terms of additional AUM, so kind of 17 before that.

And some of the other ones that we've brought on have been fairly small because they've been kind of niche where the idea as you bring them in small bring them on the platform. Then we can scale them up and what verified does thats unique in this space as it has a a burgeoning what I'll call digital distribution business that actually helps the ETF issuers that are using the index reached a lot.

John Mckenzie: Great.

John Mckenzie: Thank you very much.

Brian Bedell: Your next question comes from the line of Brian the Dell from Deutsche Bank. We still have to Oh great, thanks.

Roger addressable audience of retail investors wealth advisers things like that.

John Mckenzie: Good morning folks. Let me just quick just quick, really quick on expenses on the, the second half getting to the first half. So just on a reported basis, I guess with that imply about 153 million of expense in the fourth quarter if you were to match that perfectly and does that include the expenses you mentioned from box, or I guess how would the box expense influence that? So Brian, let me handle the second part of your question first.

So it is intentional in terms of kind of bringing on smaller new stage or early stage ones and having it grow versus time now we will have to get back to you on kind of what the growth rate has been with respect to the AUM.

But this is exactly the driver that we're looking to grow long term.

In the index based revenues that are in better Fi. They are driven off of AUM and so it is a key indicator going forward it'll be something that we can think about how we give you more guidance on as we go.

Yeah, and then just.

John Mckenzie: Yeah, I mean, you know, we don't have the visibility because of the shareholder structure that we have with box. So as a result, you know, we, the wild card for me is is will the box exchange, you know, expense pick up in box market be the same in Q4 as it is in Q3, right? That's to be determined. So, so when I mention that, it's actually looking through that. So excluding anything that might be passed through from the exchange to the market.

Follow up on that as they think about like the opportunity for ratify is.

Is this is this more about creating your own market and growing that $19 billion or is where it is about if I sit with that 19 billion within the broader ETF ecosystem that would be like competitors or other players offering similar services.

Yes. So it's varies I mean, when you think of the overall ETF assets under management. This is a very small piece, it's there's a substantial growth opportunity and it comes from adding new indices, but also doing switches where with their capabilities. We can switch out another provider or a legacy one to something that's created by verify.

John Mckenzie: So that's the first one out of the bad is, is you know, we don't have the visibility into that. So, you know, when I say the second half will be comparable to the first half, that's excluding that. And then, you know, on the ability to look at the numbers, yeah, you could just pick up the two reported numbers for Q1 and Q2 times that by two, duct Q3, and you get a good indication as to kind of where the guard rails might be for Q4.

On behalf of the ETF clients.

So this is where you know kind of when you think about the addressable market the opportunity for upside is substantial.

And even to think about the way, we think about Etfs for our market in general.

Ill remind folks that we have almost 1000 Etfs listed on <unk> today.

John Mckenzie: Yep, perfect, great, thanks. And then just on the MX, just in terms of the market share shift or the shift, the product and the shift to Cora, maybe if you could just comment on, you know, to what extent you would expect that to continue to influence the rate per contract, you'll think it's come down a little bit. And then I guess what you're seeing from the trading community, I know there's always I think John, you had mentioned in a prior call that when volatility settled down, it's actually good, if there's for more certainty of trading and that actually improves volume to maybe if you can just contrast that scenario versus, I guess, the volatility that we've seen in October so far.

They are faster growing in terms of assets under management and the underlying mutual fund market.

But still only represent about 15% of those total assets even in the Canadian market, but growing at double digits versus what the mutual fund market is which I believe is actually declined this year.

There are multiple thousands of mutual funds. So the opportunity for continued AD and creation of new Etfs is.

It's still strong the growth rates are strong the additional AAM coming into them has high potential.

I think this year alone we've talked to the fact that we've actually added I think over 75, new Etfs to T. S X this year.

So all of those gives you some of the indications is why we see the addressable market for what bad if I can do to not only be large, but expanding and growing rapidly.

John Mckenzie: Well, sometimes I like to split hairs and talk about good volatility and bad volatility, and that's sometimes the challenge, particularly around the fixing compete. So, you know, having unpredictable bank of Canada rate moves is challenging because that's challenging the short term product. And so since we've had some stability in the central bank regime, that's actually been helpful, but you still want to see volatility around trading activity around it because that drives more usage of those products.

Okay great.

Last one on Nevada fly if you can.

Thinking about their M&A opportunity.

Set in front of that like what is their balance sheet look like today are they well capitalized to execute more M&A or is there a.

Is this something where you put your 22% in and maybe they will come in back to back that see IMAX for some more capital to go out and further consolidate that market.

It would very much depend on the size of the acquisition opportunity.

John Mckenzie: And we have seen that improvement in strength. And so we're like, when you translate that into kind of that transition from back to Cora, we're pretty happy with the uptake in Cora already given that it's actually not the mandated contract yet. We're still back until that transition next year. So seeing the lift in both those contract volumes and the recovery in the backs volumes at the same time has been really positive and strong for liquidity in those those products.

But you can you can understand our enthusiasm in the business and our willingness to support its growth.

Okay got it thanks guys.

I had a follow up question coming from the line of.

The dose from Barclays. Please go ahead.

Hi, Thanks for taking the follow up I wanted to ask about the build out of the U S business, but it sounded like.

You kind of gave your thoughts on that for now John So maybe just one other follow up just on the trust business, where are you in terms of the sort of cross selling opportunity between the legacy business and a S T.

John Mckenzie: Now, as we go into the actual transition period, you know, certainly there's there's market making built into supporting the Cora agreement that isn't, you know, there in a very well established backs of contract. And so there will be a short term RPC issue or step down when we have that transition, but like other new contracts that will be time limited and we'll work our way out of that. Now, that being said, our expectation is that in both in combination the Cora and the backs and then actually in the Cora itself has the potential for higher run rate volumes than what the backs did beforehand, because it actually is it's a better product.

Just think about how this should evolve over the next year or so just in terms of the you know within.

Within the context of your your longer term growth objectives with the trust business expect it to be a high growth segment.

Yes that cross selling pieces still early stage.

So the a S T brought us new tools like employee plan management, we've actually just hired an industry expert to help actually take that to the next level in terms of where does that product need to evolve to and then to be able to sell it across our broader client base. So it's a product that has only lightly penetrated both in the AFC client base, but also in our R. T S X Trust.

John Mckenzie: It adds for more terms and more ways for the clients to use it. And so that's part of the analysis, well, so we need to look to, you know, a short term revenue for contract impact for the really the launch and initiation of it. But with the potential for higher long term revenues and then that rebate piece over time went winds off. I can't give you guidance up to when because those are again commercial agreements with the liquidity providers, but but similar to what we've seen in other contracts. Yep, okay, that makes sense. That's great color. Thank you.

Base that we've merged it into so that's just one example of where we see those additional upside opportunities. We're also selling into clients with things like the registered plan management services, we can sell into some of our private company leads that are in our pipeline for things like planned management Trust services et cetera et cetera.

We are winning more trust mandates.

These year or beyond the transfer agency mandates with the addition of the ability to do the actual trust mandate on top of that and that's actually both with clients that we already had as transfer agent clients, but also clients that our transfer agent clients of someone else.

Geoffrey Kwan: Your next question comes from the line of Jeff Kwan from RBC. Have a little market. Please go ahead.

Geoffrey Kwan: Hi, good morning. I just want to expand on against some of the topics that you've been asked so far this morning. The first one is going back to the market data subscribers and the quarter recorded changes we've seen over the past couple of quarters. Do you get much insight in the short term, whether or not it's maybe on a one quarter basis, maybe even two. Of, you know, how that meet trends and just wondering what you're seeing on that front.

So in some cases, we're winning trust mandates of other People's clients.

So that ability to keep driving that that higher order growth rate. We've indicated is absolutely continuing we expect that for the long term and the other piece with that is.

This has not been a strong IPO market in the past year, but as we see that recovery in the IPO market given the ability to interact and introduce <unk> Trust early in the stage of relationship with an issuer client. We also expect to continue to win well above our share of new mandates coming to the marketplace. Both for transfer agency.

Geoffrey Kwan: And then also it's still the same dynamic because I thought from previously, for example, if you had someone that may have lost their job, you don't see that step down in the market data subs or the revenue impact for maybe a quarter, maybe two. And also that that you want to happen on the opposite side, and someone at a market data subscription. Yeah, and the also the challenge of that, Jeff, is also, we also can't just take job reductions in different clients or dealers holistically because it also tends to spend on what the rules are, where they're using it or how they're using data and their shop.

Trust.

Great very helpful. Thanks, so much.

Thank you.

There are no further questions at this time I'd now like to turn the call back over to Mr. Amin Ms. Allison for any closing remarks.

Thank you everyone for listening in today, if you have any further questions contact information for Investor Relations as well as media is in our press release and we'd be happy to get back to you until next time Goodbye.

Geoffrey Kwan: So it's, it's, it's, we don't get great forward looking information with respect to our ability to predict it other than that general market piece that when you've got industry stepped down in employment, to your point, we will often see that impact on a bit of a lag if they actually reset, you know, kind of recount their seats and make adjustments going forward and the same thing coming back. But unfortunately, no, we don't, we don't get a lot of insights to it until it's actually happening.

Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a lovely day.

Okay.

[music].

John Mckenzie: Okay, and then just my other question was on trade port, how much of the revenue today is coming from, call it outside the core European customer base and can kind of talk about, I know you talked about a little bit some of the stuff, but just, you know, the outlook and expectations in terms of how quickly you can drive that revenue outside of the kind of the core franchise base. Yeah, well, I mean, we've given guides before that the piece is coming directly out of the kind of the North American market is kind of 5 million foundation in terms of run rate now out of the overall mix.

Okay.

Sure.

[music].

John Mckenzie: But it's actually difficult for us to delineate the way you've asked in terms of kind of outside the European client base because a lot of those clients are global and they're doing global business on trade port. And if you think about some of the exchanges that participate as well as playing clients like ICME, those are global franchise as well. And while they might be participating in the European market, they're participating also with North American data, so it's a bit more nuanced than that. The piece I can give you is actually the direct piece and from what we've actually been building out in the US, what it's contributing so far. Okay, thank you.

Graham Lighting: Your next question comes from the line of Graham lighting from PD please go ahead. Good morning, there was a couple of comments around building into the US and just wondering if I could maybe dig into that a little bit. What's your mind is what you're looking to do there is it initially around an equity trading initiative.

Hum.

Yeah.

Hum.

[music].

John Mckenzie: And then, you know, beyond that is it is a sort of a phased project or I guess, you know, exploratory process or do you have to define what you exactly want to do and what you want to spend on a near term. Okay, so there's going to be a different game today in terms of what what we're doing and how much I'm going to tell you today. So, as I get to bear with me on that, we actually do have a well-defined strategy of terms of what we're trying to do in the US.

John Mckenzie: We haven't had broad discussion in the public market yet, so I'm going to be a little bit more limited in terms of what we share today. But essentially, when you look to what we've built out in Canada in terms of the alpha X, the alpha dark initiatives and really looking to provide better execution quality for clients, we see that similar opportunity in the US as a way to start building our equity platform directly in the US as opposed to just on a cross border basis.

John Mckenzie: We've got substantial client bases with cross border activity, and when you think about particularly even the Canadian banks and their presence within the US market. And we do believe the long term that the quality of our offerings can compete with any of the North American players in the home market, just the same way they compete in the Canadian market. So, that being said, the initial strategy in terms of building is to look to what that unique opportunity is around execution quality and the hiring of our new head of US equities is working on building that the team to do that.

John Mckenzie: So, it is definitely more than what I would call experimentation. We do have, she have a strategy to build. And in the new year, we'll look to see how we can provide more guidance to you, both in line with the, you know, the investing community, but also in line with the client community that we've engaged with over the past year in terms of their interest level in supporting new marketplace. We're good, perfect, that was good color.

John Mckenzie: A sort of a two-pronged question, but really on the interest income side of your business. So, TSX Trust, it was a little bit lighter than last quarter for sure, but also I think it was below Q1 and Q4 levels, I guess earlier in the year and late last year. So, can you just expand on, was that all about lower transfer agency activity? Or, you know, how should we think about this quarter compared to previous quarters?

John Mckenzie: Yeah, so Graham, it's David. So, I would say Q1 is a better indicator of kind of a normal run rate, but obviously as you know that, you know, one of the triggers there on the net interest income side is A rates, but B also balances, right? And so, to the extent that we see the capital markets environment like it is right now, with some of the listings activity, IPOs, not being as robust, there's a direct correlation obviously to our trust business because we participate in a lot of those corporate actions.

John Mckenzie: And obviously that's a little bit more of a dampener on Q3, but, you know, as we go into Q4 and as we look into Q1 of next year, we're anticipating hopefully some early signs of a little bit of a rebound. So, that's the first piece. And then, yes, I mean, obviously on the transfer agency, it was softer than we had hoped for in this quarter. Once again, hope that it kind of rebounds more in the kind of Q1 kind of run rate, if you will.

John Mckenzie: Okay, that's helpful. If I could just kind of similar thing to just doing another question or not, but with this move to T plus one in mid next year, will that have any impact on the interest income that you would capture through CDS? No, because we really don't capture much of that interest income in CDS. It will have a meaningful impact on our clients, because the move for it to T2 to Q1 will, we expect to be a 40 to 50% savings in the collateral that they post with us, but unlike most of the European clearing houses would have substantial net interest income associated with that. And we largely pass it all back, so there's no material change there. Okay, that's it for me. Thank you.

Dame Gluin: Your next question comes from the line of Dame Gluin from National Bank Financial. Please go ahead. Yeah, thanks. First, just wanted to get some clarity on the capture rates in the derivatives business, both MX and Box. Would you be able to give us a little bit of color on it? Like is this a clean quarter free of rebate? You know, maybe, you know, from a client and product perspective, is it roughly average? Like maybe a little bit of color in terms of the capture rates on both of those businesses, the MX and Box.

John Mckenzie: James, they're all clean quarters. Yeah, so in the MX one, you can look to the product mix. It is a clean quarter in the sense that there's no, you know, client adjustments or anything like that. It's just the actual impacts on the revenues of the products that are traded. The piece that we talked earlier, you know, as you shift some volume from back to Cora, that will have an RPC impact in the short term because it has a rebate regime helped to build it.

John Mckenzie: And you know, I want to remind people that was a deliberate choice we made to ensure that liquidity got built up in that new product and didn't end up missing the public market and ended up in the over the counter market. So no, it is a clean quarter. There's no special one offset or in there that is impacting it's just the mix of the business.

John Mckenzie: And the same thing with Box. Box has been very steady and when you look sequentially, I think actually boxes up actually substantially and sequentially, both in terms of volume and share, but the actual RPC has been largely stable. So again, that's going to depend on the mix of what the clients are using box for in terms of whether or not you have kind of more floor trading more high volume trading large contracts or more kind of open market trading.

John Mckenzie: But again, it's a as you as yes, it's a clean quarter. There's nothing special going on there that's impacting things. Yeah, that's what I was getting at. Thank you. If I think about Betify and the recent acquisitions, one data point you put in the, in the MDNA was 19 billion in ETF. Sorry, I guess it underpinned 19 billion. Is that, is that the key, you know, total addressable market figure we should be thinking about for that business?

John Mckenzie: And if you kind of go back to pre the Robo and EQM transactions, like what was that value? And maybe even like, let's talk like three years ago, five years ago, whatever time for him, you want to pick, like, how is that 19 billion? What has been the growth rate on that? Yeah, I'd have to, I wouldn't be able to help you with the growth rate over time, because I don't have that on handy and we can make sure we do that as a follow up.

John Mckenzie: You know, pre the Robo Global, that was about, I think, two billion in terms of additional AUM, so kind of 17 before that. And some of the other ones that we've, we've brought on have been fairly small, because they've been kind of niche, but the idea is you bring them in small, bring them on the platform, then we can scale them up. And what vetify does that's unique in the space is it has a, a burgeoning what I'll call digital distribution business that actually helps the ETF issuers that are using the index reach a larger addressable audience of retail investors, wealth advisors, things like that.

John Mckenzie: So it is intentional in terms of, you know, kind of bringing on smaller new stage or early stage ones and having it grow versus time. Now we'll have to get back to you on kind of what the growth rate has been with respect to the AUM. But this isn't exactly the driver that we're looking to grow long term in the index base revenues that are in vetify, they are driven off of AUM.

John Mckenzie: And so it is a key indicator going forward. It'll be something that we can think about how we give you more guidance on as we go. Yeah, and then just to follow up on that as I think about the opportunity for vetify is this, is this more about creating your own market and growing that 19 billion or is, you know, where does vetify sit with that 19 billion within the broader ETF ecosystem that would be like competitors or other players offering similar services?

John Mckenzie: Yeah, so it's very, I mean, when you think of the overall ETF as a Thunder Management, this is a very small piece. There's a substantial growth opportunity. And it comes from adding new indices, but also doing switches where with their capabilities, we can switch out another provider or a legacy one to something that's created by vetify on behalf of the ETF client. So this is where, you know, kind of when you think about the addressable market, the opportunity for upside is substantial.

John Mckenzie: And even to think about the way we think about ETFs for our market in general. There are our mind folks that we have almost 1000 ETFs listed on TSX today. They are faster growing in terms of assets under management and the underlying mutual fund market. But still only represent about 15% of those total assets, even in the Canadian market, but growing at double digits versus what the mutual fund market is, which I believe is actually declined this year.

John Mckenzie: There are multiple thousands of mutual funds, so the opportunity for continued adding creation of new ETFs is still strong. The growth rates are strong, the additional AUM coming into them has high potential. I think this year alone, we've talked to the fact that we've actually added I think over 75 new ETFs to TSX this year. So all those gives you some of the indications, those why we see the addressable market for what vetify can do to not only be large, but expanding and growing rapidly.

John Mckenzie: Okay, great.

John Mckenzie: And last one on the butterfly, if you can, thinking about their M&A opportunity set in front of them. Like, what does their balance sheet look like today? Are they well capitalized, execute more M&A, or is there, is this something where you put your 22% in and maybe they'll come back to TMX for some more capital to go out and further consolidate that market? It would very much depend on the size of the acquisition. But you can, you can understand our enthusiasm in the business and our willingness to support its growth. Okay, got it. Thanks, guys.

Ben Priebe: We have a follow up question coming from the line of Ben the dish from Berkeley. You go ahead. Hi, thanks for taking the follow up. I wanted to ask about the build out of the US business, but it sounded like you kind of gave your thoughts on that for now, John. So maybe just one other follow up just on the trust business. Where are you in terms of the sort of cross selling opportunity between the legacy business and AST?

Ben Priebe: Just think about how this kind of should evolve over the next year or so just in terms of the context of your longer term growth objectives with the trust business expected to be a high growth segment. Thanks. Yeah, that cross selling piece is still early stage. So the AST brought us new tools like employee plan management. We've actually just hired an industry expert to help actually take that to the next level in terms of where does that product need to evolve to and then to be able to sell it across a broader client base.

Ben Priebe: So with the product that is only lightly penetrated, both in the AST client base, but also in our our TFX trust client base that we've merged every into. So that's just one example of where we see those additional upside opportunities. We're also selling into clients with things like the, you know, registered plan management services. We can sell into some of our private company leads that are in our pipeline for things like plan management, trust services, et cetera, et cetera.

Ben Priebe: We are winning winning more trust mandates. So these are beyond the transfer agency mandates, the ability to do the actual trust mandate on top of that. And that's actually both with clients that we already had as transfer agent clients, but also clients that are transfer agent clients of someone else. And so in some case, we're winning trust mandates of other people's clients. For that ability to keep driving that that higher to growth rate, we've indicated is absolutely continuing.

Ben Priebe: We expect that for the long term and the other piece with that is, you know, this has not been a strong IPO market in the past year. But as we see that recovery in the IPO market, given the ability to interact and introduce TFX trust early in the stage of relationship with initial client, we also expect to continue to win well above our share of new mandates coming to the marketplace, both for transfer agency and trust.

David Arnold: Great, very helpful. Thanks so much. Thank you. There are no further questions at this time.

David Arnold: I'd now like to turn the call back over to Mr. Amin-Massoskin for any closing remarks. Thank you, everyone, for listening in today. If you have any further questions, contact information for investor relations as well as media is in our press release and we'd be happy to get back to you. Until next time, goodbye. Thank you.

Unknown Executive: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely.

Unknown Executive: [inaudible]