Q4 2023 TMX Group Ltd Earnings Call

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Operator: Good morning, ladies and gentlemen, and welcome to the TMX Group Ltd Q4 2023 Financial Results Conference call. At this time, all lines are in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the Cemex Group Limited Q4, 'twenty, Tennessee Nashville results Conference call.

At this time all lines are in a listen only mode.

Operator: Following the presentation, we will conduct the question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator... This call is being recorded on Tuesday, February 6, 2024. I would now like to turn the conference over to Mr. Amin Massavian, VP, Investor Relations and Treasury.

Following the presentation, we will conduct a question and answer session. If at any time. During this call you are quite in need of assistance. Please press Star Zero 40 off later in this.

This call is being recorded on Tuesday February six 2024.

I would now like to turn the conference over to Mr. I mean, Massawa VP Investor Relations and Treasury. Please go ahead Sir.

Amin Massavian: Good morning, everyone. Thanks for joining us today to discuss the 2023 4th quarter results for TMX Group. As you know, we announced our results late yesterday, and copies of our press release and MD&A are available on tmx.com under investor relations. This morning, we have with us John McKenzie, our Chief Executive Officer, and David Arnold, our Chief Financial Officer. Following the opening remarks, we'll 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 meaning of the Canadian Securities Act. Actual results may differ materially from these expectations, and additional information is contained in our press release and in periodic reports that we have filed with the regulators. Now, I will turn the call over to John. Well, thanks Amin, and good morning.

Thank you Laura and good morning, everyone.

Thanks for joining us today to discuss the 2023 fourth quarter results for <unk> group as you know, we announced our results late yesterday and copies of our press release and MD&A are available on <unk> Dot com under Investor Relations.

This morning, we have John Mckenzie, our Chief Executive Officer, and David Arnold, Our Chief 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 meaning of the Canadian Securities laws actual results may differ materially from these expectations and additional information is contained in our press release and in preoptic workforce that we have filed with the regulators.

Now I will turn the call over to John.

Well, thanks, Amit and good morning. Thank you all for dialing in today to discuss <unk> group's financial results for the fourth quarter of 2023 and the full year.

John Mckenzie: Thank you all for dialing in today to discuss TMX Group's financial results for the fourth quarter of 2023 and the full year. Now our record 2023 results included important contributions from all across our business. And while our primary focus is always on the long term, our quarterly discussions serve as an important progress report, and David will talk about the quarter shortly. In my comments this morning, I want to highlight the key drivers of our success in 2023, including significant accomplishments across our business areas, as well as the outstanding progress we made during the year to advance TMX's long-term growth strategy, capped off by a game-changing acquisition closed on the first business day Now turning now to TMX's performance.

Now our record 2023 results included important contributions from all across our business.

And while our primary focus is always on the long term our quarterly discussion and serve as an important progress report and David will talk about the quarter shortly.

In my comments this morning, I want to highlight the key drivers of our success in 2023, including significant accomplishments across our business areas as well as the outstanding progress we made during the year to advance <unk> as long term growth strategy capped off by a game changing acquisition closed on the first business day of 2024.

Now turning now to <unk> performance.

John Mckenzie: TMX's positive results are no accident. Sustained growth during 2023 reflects the power of the enterprise we have built over the last 20 plus years—a deep, diverse, and resilient business model.

<unk> positive results are no accidents sustained growth during 2023 reflects the power of the enterprise we have built over the last 20 plus years of deep diverse and resilient business model.

John Mckenzie: Importantly, over that time, we have implemented an organizational mindset and a commitment to seeking out strategic opportunities to ensure our continued long-term success. As we reflect back on a year of significant milestones and business achievements, 2023 already appears far off in the rearview mirror, and our eyes are firmly fixed on the road ahead. And we're most enthusiastic about TMX's future and how the strategic steps we took during 2023 to accelerate the evolution of TMX and the investments we have made in our burgeoning global information business will enable us to better serve our growing client base and range of stakeholders around the world. Now, TMX reported full-year revenue of $1.19 billion, a 7% increase from 2022, driven by double-digit growth from GSIA, which includes TMX Tradeport and TMX DataLinks, as well as higher revenue from derivatives trading and clearing, excluding BOX.

Importantly over that time, we have implemented an organizational mindset and a commitment to seeking out strategic opportunities to ensure our continued long term success.

As we reflect back on a year of significant milestones and business achievements 2023 already appears far off in the rearview mirror and our eyes are for are firmly fixed on the road ahead.

And we're most enthusiastic about <unk> future and how the strategic steps. We took during 2023 to accelerate the evolution of <unk> and the investments we have made in our burgeoning global information business will enable us to better serve our growing client base and range of stakeholders around the world.

Now <unk> reported full year revenue of 1.1 dollars 9, Billion% to 7% increase from 2022, driven by double digit growth from GSI, a which includes <unk> Shreveport and Tms data links as well as higher revenue from derivatives trading and clearing excluding box.

John Mckenzie: In the face of persistent challenges across much of our operating environment, we reported four consecutive quarters of year-over-year revenue growth. However, increased revenue was partially offset by the impact of lower capital raising activity on our listings business as well as decreased revenue from equities and fixed income trading as a result of lower trading volumes on the Toronto Stock Exchange, TSX Venture Exchange, and Alpha. Adjusted diluting earnings per share was $1.46 in 2023, a 2% increase from 2022.

And in the face of persistent challenges across much of our operating environment, we reported four consecutive quarters of year over year revenue growth.

Increased revenue was partially offset by the impact of lower capital raising activity on our listings business as well as decreased revenue from equities and fixed income trading as a result of lower trading volumes on the Toronto stock exchange <unk> venture exchange and Alpha.

Adjusted Diluting earnings per share was $1 46 for 2023% to 2% increase from 2022.

John Mckenzie: Our total operating expenses increased 10% when compared to 2022, reflecting costs related to investments we have made in the business, including TMX Vetify, Sigma Logic, and Wall Street Horizon, as well as expenses related to Box. We also expect strategic realignment costs in 2023, as well as higher headcount and payroll costs, including merit increases, and higher costs related to our short-term Employee Performance Incentive Plan. And David will take a closer look at these expenses and his remarks will follow.

Our total operating expenses increased 10% when compared to 2022, reflecting costs related to investments. We have made in the business, including <unk> identify Sigma logic Wall Street horizon, as well as expenses related to box.

We also incurred strategic realignment costs in 2023, as well as higher head count and payroll costs, including merit increases and higher costs related to our short term employee performance incentive plan.

And David will take a closer look at these expenses in his remarks to follow.

John Mckenzie: Now, moving on now to our business area. Revenue from GSIA was $419 million in 2023, a 16% increase from 2022, reflecting higher revenue from TMX Trayport and TMX Datalinks, including co-location. 2023 was an outstanding year for GSIA.

Now moving on now to our business areas.

Revenue from GSI, a was $419 million in 2023% to 16% increase from 2022, reflecting higher revenue from Tms Shreveport, and Tms data links including co location.

2023 was an outstanding year for GSI, a it's our fastest growing segment and a driving force of <unk> overall success. Both T M X trade port and Tms data links delivered double digit revenue gains year over year.

John Mckenzie: It's our fastest-growing segment and a driving force of TMX's overall success. Both TMX Tradeport and TMX DataLinks deliver double-digit revenue gains year over year. TMX Tradeport's revenue grew 23% compared to 2022, or 17% in pounds sterling, driven by a 9% increase in trader subscribers, annual price adjustments, and the impact of a fair rule FX rate. And we continue to build on TMX Tradeport's success in connecting energy traders to premier execution venues and clearinghouses across world power and natural gas markets. We added 28 new clients to our core jewel network in 2023.

<unk> revenue grew 23% compared to 2022 or 17% in pound Sterling driven by a 9% increase in trader subscribers annual price adjustments and the impact of a favorable FX rate.

And we continue to build on <unk> success in connecting energy traders to premier execution venues and clearinghouses across power across world power and natural gas markets.

We added 28, new clients to our core Joule network in 2023.

John Mckenzie: Looking ahead, TMX Tradeport's growth strategy is focused on opportunities to support growth and demand for quantitative and automated trading approaches in existing as well as new markets. Global climate markets are rapidly evolving, and we are working to strengthen our aggregation solution with a newly launched web screen and the onboarding of new brokers, exchanges, and data providers to our platform. TMX Data Links revenue grew 11% year-over-year due to higher revenue from data feeds, co-location, benchmarks, and indices, and enterprise agreement renewals, as well as a favorable FX impact from a stronger U.S. dollar. Revenue for the year included $7.3 million from Wall Street Horizon, which was acquired in November of 2022. And last month, we completed the acquisition of Vetify, a U.S.-based indexing, digital distribution, analytics, and thought leadership company. As we articulated back in December when we announced the deal, this acquisition fits squarely with TMX's disclosed strategic, financial, and transformational objectives. And TMX Vetify adds a leading platform in a large and growing market to TMX's information business and a team of proven, talented individuals with an innovative and entrepreneurial spirit.

And looking ahead team extra reports growth strategy is focused on opportunities to support growth and demand for quantitative and automated trading approaches in existing as well as new markets.

Global climate markets are rapidly evolving and we are working to strengthen our aggregation solution with a newly launched web screen and the onboarding of new brokers exchanges and data providers to our platform.

Tms data links revenue grew 11% year over year due to higher revenue from data feeds co location benchmark and indices and enterprise agreement renewals as well as a favorable FX impact from a stronger U S dollar.

Revenue for the year included $7 3 million from Wall Street Horizon, which was acquired in November of 2022.

And last month, we completed the acquisition of verify a U S based indexing digital distribution analytics and thought leadership company.

As we articulated back in December when we announced the deal this acquisition fits squarely with <unk> disclosed strategic financial and transformational objectives and.

<unk> identify adds a leading platform in a large and growing market. The <unk> information business and a team of proven talented individuals with the innovative and entrepreneurial spirit.

John Mckenzie: The newly combined TMX VETIFY team is working to assess the scale and scope of our joint capabilities and to make clients aware of the opportunities ahead. And while it is early days, our people have had the benefit of 12 months of experience working together since we made our initial and more controversial investment in the company in January 2023. TMX Verify's key attributes include an index calculation engine that provides data on more than 300 indices.

The newly combined <unk> identified team is working to assess the scale and scope of our joint capabilities and to make clients aware of the opportunities ahead.

And while it is early days are people who've had the benefit of 12 months of experience working together since we made our initial and minority investment in the company in January 2023.

Tms identify key attributes include and index calculation that provides data on more than 300 indices, a large number of international clients, who stand to benefit from access to <unk> content and.

John Mckenzie: A large number of international clients who stand to benefit from access to TMX content and advanced digital distribution capabilities to effectively amplify an ETF issuer's distribution to a network of advisors. In addition to the acquisition of Vetify, TMX Data Links continues to build on its broad suite of multi-asset class data and analytics solutions and to look for ways to address challenges across its global client base. And further to our Global Benchmarking and Indices Strategy, TMX played a very important role in Canada's transition to a new commercial interest rate, participating in the creation and delivery of the new term CORA benchmark. The new transaction-based and risk-free benchmark gives industry participants complete transparency on both the data sources and Core Futures traded on the Montreal Exchange and the methodology used to arrive at its rate. In December, we launched the TMX ESG Data Hub, which delivers data and analytics from premier providers to investors to help inform ESG-based investment decisions.

And advanced digital distribution capabilities to effectively amplify an ETF issuers distribution to a network of advisors.

In addition to the acquisition of verify Tms data links continues to build on its broad suite of multi asset class data and analytics solutions and to look for ways to address challenges across our global client base.

And further to our global benchmarking indices strategy Tms played a very important role in Canada has transitioned to a new commercial interest rate participating in the creation and delivery of the new term core a benchmark.

The new transaction based and risk free benchmark is industry participants complete transparency on both the data sources.

And core futures traded on the Montreal exchange and the methodology used to arrive at its rates.

And in December we launched the TNX ESG data hub, which delivers data and analytics from premier providers to investors to help inform Ian as ESG based investment decisions.

John Mckenzie: The new hub is designed to help solve data quality, consistency, and accessibility challenges that are inhibiting investors from adopting and incorporating ESG factors into the investment process. Now, I'd like to turn to derivatives, another significant contributor to TMX's success in 2023. Derivatives trading and clearing revenue, excluding box, increased 13% year-over-year, driven by higher volumes traded and cleared on MX and CDCC. The positive impact of the pricing changes which came into effect in January 2023 and a one-time reduction in 2022 related to the termination of a market-making program. AmEx's total volume grew 15% compared to 2022 in a complex macro environment with continued inflationary pressure and central bank activity.

The new hub is designed to help solve data quality consistency and accessibility challenges that are inhibiting investors from adopting and incorporating ESG factors into the investment process.

Now I'd like to turn to derivatives another significant contributor to <unk> success in 2023.

Derivatives trading and clearing revenue, excluding box increased 13% year over year, driven by higher volumes traded and cleared on amex and CDC.

The positive impact of the pricing changes, which came into effect in January 'twenty, two a three and a one time reduction in 2022 related to the termination of a market making program.

Amex total volume grew 15% compared to 2022 in a complex macro environment with continued inflationary pressure in central bank activity.

John Mckenzie: Overall, MX Performance highlights included 22% higher volumes in interest-related products, 14% higher volumes in ETF options, and an 11% increase in equity options traded when compared to 2022, driven by record volumes in the fourth quarter. Liquidity in key products also grew substantially, as year-over-year overall open interest at December 31, 2023 was 17% higher than at the end of 2022.

Overall Amex performance highlights included 22% higher volumes in interest related products, 14% higher volumes in ETF options and an 11% increase in equity options traded when compared to 2022 driven by record volumes in the fourth quarter.

Look at liquidity and key products also grew substantially as year over year overall open interest at December 31, 2023 was 17% higher than at the end of 2022.

John Mckenzie: In terms of our recent product development initiatives, we have seen exceptional growth in our CORA Futures product, or CRA, as the market enters the final stages of the transition from CDOR to the Canadian Overnight Repo Rate Average, or CORA, planned for June 2024. Our three-month CRA contract surpassed the backs and volumes traded at open interest during the fourth quarter for the first time. And investor interest continues to grow in MX's two-year and five-year Government of Canada bond futures contracts. Volumes increased 83% in the CGZ, or 2-year contract, and 21% in the CGF, or 5-year contract, year over year. And lastly, last week we celebrated 150 years of the Montreal Exchange. I'd like to take a moment to thank everyone throughout our history who has contributed to the success of the MX.

And in terms of our recent product development initiatives, we have seen exceptional growth in our core futures project product or CRA as the market enters the final stages of the transition from SEDAR does the Canadian overnight repo rate average or Cora planned for June 2024.

Our three month CRA contract surpass the backs in volumes traded in open interest during the first corporate at FERC for during the fourth quarter for the first time.

And Investor interest continues to grow and Amex is two year and five year government of Canada bond futures contracts volumes.

Volumes increased 83% and the C G Z or two year contract and 21% in the CG F or five year contract year over year.

And lastly last week, we celebrated 150 years of the Montreal exchange I'd like to take a moment to thanks to everyone throughout our history, who have contributed to the SaaS of the amex.

John Mckenzie: Now moving on to capital formation, revenue was $268.2 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 the Toronto Stock Exchange and a decrease in total financing dollars raised on the TSX Venture Exchange. Revenue from TSX Trust, which is shown as other issuer services, increased by 26% when compared to 2022, driven by higher net interest income due to higher rates of activity. 2023 proved to be a challenging year for many of our listed issuer clients and prospects here in Canada and around the world. Macroeconomic factors, including a high interest rate environment and inflationary pressure, both had a negative impact on capital raising conditions.

Now moving on to capital formation revenue was $268 2, million% to 3% increase from 2022, reflecting higher revenue from <unk> 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.

Change and a decrease and total financing dollars raised on <unk> venture exchange.

Revenue from <unk> Trust, which is shown as other issuer services increased by 26% when compared to 2022, driven by higher net interest income due to higher rates and activity.

2023 provided to be a challenging year for many of our listed issuer clients and prospects here in Canada and around the world.

Macroeconomic factors, including a high interest rate environment inflationary pressure, both had a negative impact on capital raising conditions.

But despite these conditions 2023 features some important success stories and competitive wins for our unique two tiered ecosystem, which continues to build on his track record of facilitating growth.

John Mckenzie: But despite these conditions, 2023 features some important success stories and competitive wins for our unique two-tiered ecosystem, which continues to build on its track record of facilitating growth. Twelve companies graduated from TSX Venture to TSX during 2023, adding $4.3 billion in new market capitalization to our senior market. And we also welcomed more than a dozen uplistings.

12 companies graduated from TSA venture to TSS during the 2023, adding $4 3 billion in new market capitalization to our senior market.

And we also welcomed more than a dozen uplift things. These are companies that are already public coming from competing markets to our market in 2023, and additional and $5 6 billion in market cap, including two leading companies in the North American cannabis space per cent and cure leaf.

John Mckenzie: These are companies that are already public, coming from competing markets, to our market in 2023, an additional $5.6 billion in market cap, including two leading companies in the North American cannabis space, Terrascend and Curely. We remain a formidable competitor for listings among our exchange peers, outside of Canada and inside. TSX and TSX Venture ranked third amongst our global exchange peers by the number of new international listings for 2023. And since Toronto Stock Exchange created the ETF prototype in 1990, we have worked in close partnership with providers to bring unique investment opportunities to a broad retail audience in support of the growth of the industry. Today, we have nearly 1,000 ETFs listed on TSX from 40 providers, including 114 new ETF listings in 2023, representing more than $380 billion in assets under management.

We remain a formidable competitor for listings among our exchange peers outside of Canada, and inside <unk> and T. S X venture ranked third amongst our global exchange peers by the number of new listings international listings for 2023.

And since Toronto stock exchange created the ETF prototype and 1990, we've worked in close partnership with providers to bring unique investment opportunities to a broad retail audience in support of the growth of the industry.

Today, we have near 1000 Etfs listed on T. S X from 40 providers, including 114, new ETF listings in 2023, representing more than 380 billion and assets under management.

And the industry continues to expand offering investors access to new asset classes, including high interest savings accounts.

Net net new flows into the Canadian Etfs totaled $38 4 billion in 2023 compared to outflows of 57 billion from the Canadian Mutual fund industry.

Our deep commitment and long standing connection to the ETF community is yet. Another reason we are so excited about our recent addition.

Ci funds recently announced the launch of two new Etfs tracking customized underlying indices created by <unk> identify.

John Mckenzie: And the industry continues to expand, offering investors access to new asset classes, including high-interest savings accounts. Net new flows into Canadian ETFs totaled $38.4 billion in 2023, compared to outflows of $57 billion from Canadian mutual funds. Our deep commitment and long-standing connection to the ETF community is yet another reason we are so excited about our recent addition. CI Funds recently announced the launch of two new ETFs tracking customized underlying indices created by TMXVetify.

This is an early indication of the power of the combined enterprise capital formation Tms data links <unk> identify working together delivered a unique tailored solutions to meet the needs of our clients and expand the marketplace.

Now throw all terms of the market and keeping with our purpose Tms is focused on building stronger more adaptive more responsive and more competitive and it starts from the foundation up.

In keeping with the commitments, we made to our stakeholders under our venture forward initiative. In 2023, we began the rollout of our new T. S X venture passport listing process and initiatives designed to accelerate the listing and capital raising timeline for qualified new listing applicants, creating a path for entrepreneurs to go public raised capital and achieve.

John Mckenzie: This is an early indication of the power of the combined enterprise. Capital Formation, TMX Datalinks, and TMX Vetify, working together to deliver unique, tailored solutions to meet the needs of our clients and expand the marketplace. Now, through all turns of the market, in keeping with our purpose... TMX is focused on building stronger, more adaptive, more responsive, and more competitive enterprises. And it starts from the foundation up.

Liquidity, while upholding T S X venture listing standards.

John Mckenzie: In keeping with the commitments we made to our stakeholders under our Venture Forward Initiative in 2023, we began the rollout of a new TSX Venture Passport listing process. An initiative designed to accelerate the listing and capital raising timeline for qualified new listing applicants, creating a path for entrepreneurs to go public, raise capital, and achieve liquidity while upholding TSX Venture listing standards. We continue to look for ways to innovate across our market. In 2023, we took important steps forward in our equities trading strategy with the launch of AlphaX and AlphaDark, our new lit and dark order book. The initial features of the new platforms are designed to improve execution quality and provide trading clients with new cutting-edge functionality. Longer term, AlphaX and AlphaDark will enable our markets team to deploy adaptive strategies to further enhance the overall trading experience.

And we continue to look for ways to innovate across our markets.

In 2023, we took important steps forward in our equities trading strategy with the launch of Alpha X and alpha dark or new lit and dark order books.

The initial features of the new platforms are designed to improve execution quality and provide trading clients with new cutting edge functionality.

Longer term alpha exon Alpha dark will enable our markets team to deploy adaptive strategies to further enhance the overall trading experience.

And we've also advanced plans and the development of a U S equities trading initiative aimed at improving execution quality for buy side clients south of the border as well.

The development of this technology is well underway and while we are looking to potentially launch by the end of 2024. Obviously these are pending regulatory approval and as progress on our initiative.

Now in closing I want to recognize the extraordinary efforts of our people.

<unk> is an innovation story with a proud 170, plus year history at the forefront of industry progress.

It's a story of leadership and strategic vision rooted in purpose to make markets better and empower bold ideas.

TMS story is written by the tremendous people past and present, who have held tightly to the primary commitment to serve our clients and stakeholders across our markets with excellence and integrity.

John Mckenzie: And we've also advanced plans for the development of a U.S. equities trading initiative, aimed at improving execution quality for buy-side clients south of the border as well. The development of this technology is well underway, and while we are looking to potentially launch by the end of 2024, obviously, this is pending regulatory approval, and that's progress on our initiative. Now, in closing, I want to recognize the extraordinary efforts of our people.

And together, we look forward to the work ahead as we write the next chapter for the 170 years to come and with that I'll pass it over to David.

Thank you John and good morning, everyone.

Our results for the fourth quarter continued to reflect our commitment to invest in long term growth and the strength of our diversified business model.

It was another excellent quarter with revenue of $301 5 million, representing a 9% growth compared with Q4 of last year.

Now as you will recall our income tax expense decreased in Q4 of 2022 due to the reversal of a prior year tax provision with a seven cent impact on earnings per share.

David Arnold: TMX is an innovation story, with a proud 170+ year history at the forefront of industry progress. It's a story of leadership and strategic vision, rooted in purpose, to make markets better and empower bold ideas. TMX stories written by tremendous people past and present who have held tightly to the primary commitment to serve our clients and stakeholders across our markets with excellence and integrity. And together, we look forward to the work ahead as we write the next chapter for the 170 years to come. And with that, I'll pass it over to David.

This is why we are reporting a 16% decrease in our reported diluted EPS. This quarter of 31 cents compared to 37 cents in Q4 of last year.

Now our adjusted diluted earnings per share increased 6%, reflecting high income from operations of $7 $3 million driven by higher revenue across all of our key operating segments.

David Arnold: Thank you, John, and good morning, everyone. Our results for the fourth quarter continue to reflect our commitment to investing in long-term growth and the strength of our diversified business model. It was another excellent quarter with revenue of $301.5 million, representing 9% growth compared with Q4 of last year. Now, as you will recall, our income tax expense decreased in Q4 of 2022 due to the reversal of a prior year tax provision with a 7 cent impact on earnings per share.

Little later in my remarks, I will speak to our successful efforts to contain expense growth and how we maintained our expense discipline in the second half of 2023.

By keeping our second half expenses in line with the first half while continuing to invest in growth.

Turning now to our businesses, which saw year over year revenue increases across all key segments and I'll start with those that experienced the largest increases.

It was another record revenue quarter in our global solutions insights and analytics segment.

Which grew by 15% this quarter driven by contributions from both <unk> and Tms data links.

David Arnold: This is why we are reporting a 16% decrease in our reported diluted EPS this quarter of $0.31 compared to $0.37 in Q4 of last year. However, our adjusted diluted earnings per share increased 6%, reflecting higher income from operations of $7.3 million, driven by higher revenue across all of our key operating segments. A little later in my remarks, I will speak to our successful efforts to contain expense growth and how we maintained our expense discipline in the second half of 2023 by keeping our second half expenses in line with the first half while continuing to invest in growth. Turning now to our businesses, which saw year-over-year revenue increases across all key segments. And I will start with those that experienced the largest increases.

Revenue from <unk> was up $4 4 million in pound sterling or 17% driven by a 9% increase in trader subscribers and it just in addition to our annual price adjustments and growth from our data analytics and algorithmic trading platforms.

On the heels of a strong pound Sterling this quarter <unk> was up 24% in Canadian dollars.

Revenue in our <unk> data links business grew by 8% driven by increases in subscription based services revenue contribution from Wall Street Horizon, which we acquired in November of 2022, the term Cora benchmark, which was <unk>, which was launched in September 2023, and the impact.

David Arnold: It was another record revenue quarter in our Global Solutions, Insights, and Analytics segment, which grew by 15% this quarter, driven by contributions from both TMX Trayports and TMX DataLinks. Revenue from TMX Trayport was up 4.4 million pounds sterling, or 17%, driven by a 9% increase in trader subscribers in addition to our annual price adjustments and growth from our data analytics and algorithmic trading platforms. On the heels of a strong pound sterling this quarter, TMX Trayport was up 24% in Canadian dollars.

Price adjustments, we have spoken off in prior quarters.

In the derivatives trading and clearing segment revenue grew by 12% this quarter with double digit growth from both <unk> and <unk> businesses as well as box.

Derivatives trading and clearing revenue excluding box was up 11% in the quarter driven by 20% increase in Montreal exchange and CDC volumes and the positive impact from pricing changes, which came into effect in January of 2023.

Somewhat offset by net favorable product and client mix.

David Arnold: Revenue in our TMX Data Links business grew by 8%, driven by increases in subscription-based services, revenue contribution from Wall Street Horizon, which we acquired in November of 2022, the term CORA benchmark, which was launched in September 2023, and the impact from price adjustments we have spoken of in prior quarters. In the derivatives trading and clearing segment, revenue grew by 12% this quarter, with double-digit growth from both our MX and CDCC businesses as well as Box. Derivatives Trading and Clearing revenue, excluding BOXX, was up 11% in the quarter, driven by a 20% increase in Montreal Exchange and CDCC volumes and the positive impact from pricing changes which came into effect in January of 2023. Somewhat offset by an unfavorable product and client mix. Revenue from BOXX increased 15% this quarter, driven by record volumes which increased 21% from Q4 of last year, and was somewhat offset by a lower rate per contract due to the implementation of a new pricing structure in Q3 of 2023, which increased volumes and market share, but these came at lower yields.

Revenue from box increased 15% this quarter driven by record volumes, which increased 21% from Q4 of last year.

And was somewhat offset by lower rate per contract due to the implementation of a new pricing structure in Q3 of 'twenty three.

Which increased volumes and market share. However, these came at lower yields.

In addition boxes equity options market share was 8% this quarter, which is notably a record high and a 1% increase both year over year and sequentially.

Equities and fixed income trading and clearing revenue was up 5% compared with the fourth quarter of last year, reflecting an increase of 7% from our CD Cts business and a modest 2% from our equities and fixed income trading business.

The Cts revenue increase was driven by higher interest income on clearing funds held for short short durations and higher fees due to increased activity across event management custodial and eligibility services.

This was somewhat offset by lower exchange trading volumes, which has been the theme throughout 2023.

David Arnold: In addition, Box's equity options market share was 8% this quarter, which is a record high and a 1% increase both year-over-year and sequentially. Equities and Fixed Income Trading and Clearing revenue was up 5% compared with the fourth quarter of last year, reflecting an increase of 7% from our CDS business and a modest 2% from our Equities and Fixed Income Trading business. The CDS revenue increase was driven by higher interest income on clearing funds held for short durations and higher fees due to increased activity across event management, custodial, and eligibility services.

The revenue increase in our equities and fixed income trading business reflected higher fixed income trading revenue from higher activity in government of Canada bonds and swaps.

The increase was somewhat offset by a 13% decrease in the overall volumes of securities traded on our equities marketplaces.

Trading volumes were down across all of our marketplaces, namely, 14% on TSA X, 13% on TSA expenditure exchange and 9% on Alpha exchange.

It was also a decline in our combined equity combined equities trading market share for <unk> and PSX venture listed issuers, which was approximately 63% this quarter down 3% from Q4 of 2022.

David Arnold: This was somewhat offset by lower exchange trading volumes, which has been the theme throughout 2023. The revenue increase in our equities and fixed income trading business reflected higher fixed income trading revenue from higher activity in Government of Canada bonds and swaps. However, the increase was somewhat offset by a 13% decrease in the overall volumes of securities traded on our equities marketplaces.

The decline was primarily due to two factors as many of you know we operate the only market on close or most of the facility in Canada in.

In Q4, we saw lower volumes not only in Canada, but in the U S and European markets on closed facilities as well.

David Arnold: Trading volumes were down across all of our marketplaces, namely 14% on TSX, 13% on TSX Venture Exchange, and 9% on Alpha Exchange. There was also a decline in our combined equities trading market share for TSX and TSX Venture Exchange listed issuers, which was approximately 63% this quarter, down 3% from Q4 of 2022. The decline was primarily due to two factors.

While these declines do cause a decrease in reported market share they have not materially impacted our revenue due to the pricing structure in place of note volume since December have normalized to a similar level compared to the same period in 2022 and.

And secondly, a recent shift in the Canadian marketplace with volume increase and under one dollar securities for which we have a lower market share compared to a $1 securities.

David Arnold: As many of you know, we operate the only market-on-close, or MOC, facility in Canada. In Q4, we saw lower volumes not only in Canada but in the US and European markets on closed facilities as well. While these declines do cause a decrease in reported market share, they have not materially impacted our revenue due to the pricing structure in place. Of note, volumes since December have normalized to a similar level compared to the same period in 2022. And secondly, a recent shift in the Canadian marketplace with a volume increase in under $1 securities, for which we have a lower market share compared to over $1 securities. And this too should have a minimal impact on our revenue, given the lower amount of revenue earned on the volume of trades in under $1 securities.

And this too should have a minimal impact on our revenue given the lower amount of revenue earned on our volume of trades and under one dollar securities.

In capital formation revenue in this segment was up 3% this quarter, primarily driven by an increase in both the number of additional listing transactions and an increase in the total number of financings on TSA ex this.

This was partially offset by lower initial and sustaining listing fees on the <unk> and TSH major exchange.

Turning now to expenses.

Operating costs in the fourth quarter increased by 12% compared to last year on a reported basis and 5% when excluding the following items.

David Arnold: In capital formation, revenue in the segment was up 3% this quarter, primarily driven by an increase in both the number of additional listing transactions and the total number of financings on TSX. This was partially offset by lower initial and sustaining listing fees on the TSX and TSX Venture Exchange. Turning not to expenses, operating costs in the fourth quarter increased by 12% compared to last year on a reported basis and 5% when excluding the following items.

First we incurred a $5 7 million in compensation and benefits expense this quarter related to a strategic realignment changes and <unk>.

Related to strategic realignment changes to streamline our organization and create capacity for further investment in growth. These.

These changes are expected to generate annual savings of approximately $4 2 million starting in Q3 of this year.

David Arnold: First, we incurred $5.7 million in compensation and benefits expense this quarter related to strategic realignment changes to streamline our organization and create capacity for further investment and growth. These changes are expected to generate annual savings of approximately $4.2 million starting in Q3 of this year. Second, there was an increase in expenses of $5.5 million in the fourth quarter related to Vetify and Wall Street Horizon, of which $5.1 million related to the acquisition-related costs of Vetify. As you may recall, Wall Street Horizon expenses were only partially included in Q4 of 2022 as we had made the acquisition in November of 2022. So the balance of the variance is simply the delta in OPEX given the stub period in Q4 of 2022. Third, Q4 last year included $4 million related to AST integration, which has since been completed. And finally, there was a $3.4 million expense accrual in BoxMarket's results for services provided by BoxExchange. As a reminder, BoxExchange is the national securities exchange responsible for regulating and monitoring the activities of BoxMarket.

Second there was an increase in expenses of $5 5 million in the fourth quarter related to verify and wall Street horizon of which $5 1 million related to the acquisition related costs of edify as.

As you May recall Wall Street Horizon expenses were only partially included in Q4 of 2022 as we had made the acquisition in November of 2022.

So the balance of the variance is simply the delta in Opex, given the stub period in Q4 of 2022.

Third Q4 last year included $4 million related to ESG integration, which has since been completed and finally, there was a $3 4 million expense accrual in box markets results for services provided by box exchange as a reminder, box exchanges the national the National Securities Exchange responsible for <unk>.

<unk> and monitoring the activities of box market.

Normalizing for inflation and foreign exchange impacts fourth quarter expense growth reduced further to a nominal 1% increase compared to last year and is primarily due to high employee performance incentive plan costs and targeted growth investments.

Now looking at our results sequentially.

Revenue increased $14 2 million from the third to fourth quarter, reflecting higher revenue across all of our key operating segments.

David Arnold: Normalizing for inflation and foreign exchange impacts, fourth quarter expense growth was further reduced to a nominal 1% increase compared to last year and was primarily due to high employee performance incentive plan costs and targeted growth investment. Now looking at our results sequentially, revenue increased $14.2 million from the third to the fourth quarter, reflecting higher revenue across all of our key operating segments. Operating expenses in Q4 were up $11.3 million, or 7% from the third quarter, primarily due to $5.7 million related to the strategic realignment costs I mentioned earlier that we incurred in Q4, as well as increased acquisition and related costs of $5.1 million related to VETIFY, partially offset by lower estimated regulatory expenses for BOXX due to the catch-up recorded in Q3. Adjusting for these items, operating expenses increased 2% sequentially, mainly reflecting high employee performance incentive plan costs.

<unk> expenses in Q4 were up $11 3 million or 7% from the third quarter, primarily due to $5 7 million related to the strategic realignment costs I mentioned earlier that we incurred in Q4 as well as increased acquisition and related costs of $5 1 million related to verify partially offset by lower estimated rig.

<unk> expenses for box due to the catch up recorded in Q3.

Adjusting for these items operating expenses increased 2% sequentially, mainly reflecting higher employee performance incentive plan costs.

Some of you may recall from previous quarters, we had indicated that second half expenses would be in line with our first half of the year's expense run rate with 2023 now behind US I'm pleased to report that our second half of the year expenses, 1% lower than the first half after removing the impact from strategic realignment costs.

Verify acquisition costs and regulatory expenses from box we.

We have made positive progress on three key transformational measures in 2023.

First our revenue outside of Canada was 41% up 1% from a year ago.

David Arnold: Some of you may recall from previous quarters that we had indicated that second half expenses would be in line with our first half of the year's expense run rate. With 2023 now behind us, I'm pleased to report that our second half of the year expenses were 1% lower than the first half after removing the impact of strategic realignment costs, VEDIFY acquisition costs, and regulatory expenses from BOCS. We have made positive progress on three key transformational measures in 2023. First, our revenue outside of Canada was 41%, up 1% from a year ago. Second, global solutions, insights, and analytics revenue as a percentage of total revenue was 35%, which is up 3%. And finally, recurring revenue as a percentage of total revenue was 53%, up 4% as we have, for the first time, crossed over the 50% threshold as we march on towards our two-thirds goal.

Second global solutions insights and analytics revenue as a percentage of total revenue was 35%, which is up 3% and finally recurring revenue as a percentage of total revenue was 53% at 4% as we have for the first time crossed over the 50% threshold is a.

March on towards our two thirds goal.

Looking ahead to 2020 for the addition of verify will further accelerate the progress on our key transformational measures and I'm very much looking forward to reviewing those results with you in Q1 of this year.

With the inclusion of verify and our 2024 results. We expect our effective tax rate for 2024 to be approximately 26, 5%, which is roughly half a percent lower than our current rate.

Turning to our balance sheet and the full year of 2023, we spent $79 9 million repurchasing approximately $2 8 million of our common shares under our normal course issuer bid program.

On December 31 of this last year, our debt to adjusted EBITDA ratio was within the target range at one seven times.

David Arnold: Looking ahead to 2024, the addition of VETIFY will further accelerate the progress on our key transformational measures, and I'm very much looking forward to reviewing those results with you in Q1 of this year. With the inclusion of VETIFY in our 2024 results, we expect our effective tax rate in 2024 to be approximately 26.5%, which is roughly 0.5% lower than our current rate.

And we also held close to $420 million in cash and marketable securities, which was $245 million in excess of 175 million, we target to retain for regulatory and credit facility purposes.

In the fourth quarter, we redeemed our 250 million series B debenture with a combination of cash and commercial paper.

David Arnold: Turning to our balance sheet, in the full year of 2023, we spent $79.9 million repurchasing approximately $2.8 million of our common shares under our normal course issuer bid program. On December 31st of this last year, our debt to adjusted EBITDA ratio was within the target range at 1.7 times, and we also held close to $420 million in cash and marketable securities, which was $245 million in excess of the $175 million we targeted to retain for regulatory and credit facility purposes. In the fourth quarter, we redeemed our $250 million Series B debenture with a combination of cash and commercial paper.

Now on January <unk> of this year subsequent to the reporting period, we completed the acquisition of the remaining approximately 78% common units and verify.

The transaction was financed with $963 million in U S.

963 million U S. In term loans maturing approximately 12, 18 and 24 months from closing.

Following the transaction our pro forma debt to adjusted EBITDA ratio increased to three four times and we have a deleveraging plan to return to our targeted range of one 5% to two five times within two years based on our proven track record and our diversified business models ability to generate free cash flow.

David Arnold: Now, on January 2nd of this year, subsequent to the reporting period, we completed the acquisition of the remaining approximately 78% common units in Vetify. The transaction was financed with $963 million in U.S. $963 million in term loans maturing approximately 12, 18, and 24 months from closing. Following the transaction, our pro-forma debt-to-adjusted EBITDA ratio increased to 3.4 times, and we have a deleveraging plan to return to our targeted range of 1.5 to 2.5 times within two years, based on our proven track record and our diversified business model's ability to generate free cash flow. Last night, our board approved a quarterly dividend of $0.18 per common share, payable on March 8th to shareholders of record as of February 23rd.

Last night, our board approved a quarterly dividend of <unk> 18 cents per common share payable on March eight to shareholders of record as of February 23rd.

In the fourth quarter and for the full year of 2023, we would have paid out 49% of our adjusted earnings per share, which remains at the very top end of our target payout ratio of 40% to 50%.

That now concludes my formal remarks, and I'd like to turn the call back to <unk> to moderate our Q&A period.

Thanks, David would you please outline the process for the Q&A session.

Okay.

Thank you 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 Touchtone phone you will USB, Tom Tom acknowledging your request <unk> to decline from the polling process. Please press star followed by the number Q.

If you are using a speaker phone please lift your handset before pressing EDA tools.

Amin Massavian: In the fourth quarter and for the full year of 2023, we will have paid out 49% of our adjusted earnings per share, which remains at the very top end of our target payout ratio of 40 to 50%. That now concludes my formal remarks, and I would like to turn the call back to Amin to moderate our Q&A period. Thanks, David.

We have our first question coming from the line of Nik Priebe from CIBC capital markets. Please go ahead.

Okay. Thanks for the question so you've communicated the anticipated spend towards the Buildout of a U S cash equities trading venue I think I might've caught this in your prepared remarks, but I just wanted to confirm did you indicate an expectation that the platform would be operational and revenue generating towards the end of the year I was just thinking about this as more of a.

Operator: Laura, would you please outline the process for the Q&A session? Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number. If you are using a speakerphone, please lift your handset before pressing the power button.

Multi year initiative, but you can let me know if I'm wrong there.

No we didn't indicate that I mean, we would expect to be operational and revenue generating in the new year. The next year, we are working towards being ready at the end of this year, but all of that takes into account also the ability to deliver the platform, but also regulatory approvals, which you know are not inside our control completely so at this point we're not.

John Mckenzie: We have our first question coming from the line of Nick Preeb from CIBC Capital Markets. You've communicated the anticipated spend towards the build-out of a U.S. cash equities trading venue. I think I might have caught this in your prepared remarks, but I just wanted to confirm: did you indicate an expectation that the platform would be operational and revenue-generating by the end of the year? I was just thinking about this as more of a multi-year initiative, but you can let me know if I'm wrong there. No, we didn't indicate that.

The guidance in terms of what we would be go live and revenue producing but wanted to give you. The sense in terms of this kind of reflects what we think is the best case of the buildout cost related for us to get there.

Understood. Okay. No. That's helpful. And then I was wondering if you could just elaborate a little bit on the value proposition to Canadian institutions participating in the U S cash equities marketplace like.

What features of this new platform would incentivize them to post liquidity on this new trading venue as opposed to a competing alternative trading system.

John Mckenzie: I mean, we would expect to be operational and revenue-generating in the new year, the next year. We are working towards being ready at the end of this year, but that takes into account not only the ability to deliver the platform but also regulatory approvals, which you know are not completely under our control. So at this point, we're not giving guidance in terms of what we would be going live and revenue producing, but wanted to give you the sense in terms of this kind of reflects what we think is the best case of the build out cost related for us to get there. I was wondering if you could just elaborate a little bit on the value proposition for Canadian institutions participating in the U.S. cash equities marketplace.

Yes, I mean, one of the ways to think about it is actually in context with the launches that we've done this year on Alf X and dark and so in each of those cases, what we are building is is higher quality order execution capability and so very much for both buy side and the sell side support them dealing with larger block, where you're looking to minimize execution in.

Pak maximize execution quality. So some of this is capability that we've been building in Canada already.

That we see the opportunity in the U S to provide similar services there to both the U S based sell side and buy side and candidly the cross border activity from the Canadian buy side and sell side that have operations. Both in Canada in the U S and so in working this out our team has been very actively dialogue with clients on both side of the border to understand their needs and it is.

John Mckenzie: What features of this new platform would incentivize them to post liquidity on this new trading venue as opposed to a competing alternative trading system? Yeah, I mean, one of the ways to think about it is actually in context with the launches that we did this year on AlphaX and DARK. And so in each of those cases, what we are building is higher-quality order execution capability. And so, very much for both the buy side and the sell side, supporting them, dealing with larger blocks where you're looking to minimize execution impact and maximize execution quality. So some of this is capability that we've been building in Canada already, and we see the opportunity in the U.S. to provide similar services there to both the U.S.-based sell side and the buy side.

A client driven solution. So that's the way you should think about it it's building off capabilities, we've been building and dialogue, we've already been having with clients on both sides of the border.

Understood. Okay, that's great I'll requeue for now thank you. Thank.

Thank you.

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

Thank you and good morning, with improving optimism on capital formation.

What appetite that you're seeing from potential new issuers to come to market as.

As well as the timeline on the return of the IPO market and.

John Mckenzie: And candidly, the cross-border activity from the Canadian buy side and sell side that have operations both in Canada and the U.S. And so in working this out, our team has been very actively dialoguing with clients on both sides of the border to understand their needs. And it is a client-driven solution. So that's the way you should think about it.

If I can add just one more question.

Specifically on the innovation sector.

What's your pipeline and.

In this sector comparing.

Allative to let's say a year ago.

Yes, that's a great question and it's one of the ones that makes me regret that we report every quarter and we can't have this conversation just every six or 12 months.

The I'm going to start at the back end and work my way back towards the front of the question.

John Mckenzie: Building off capabilities we've been building and dialogue we've already been having with clients on both sides of the border. Okay. Okay, that's great. I'll requeue for now.

And I might have been dialogue in this with our team the pipeline for new issues remains really strong in multi sectors, including the technology sector. So the technology sector pipeline and our long term pipeline remains very robust and our team in terms of kind of what I'll call. The short term when youre talking to companies that are working on an IPO or a capital raising.

Operator: Thank you. Thank you. Our next question comes from the line of Etienne Ricard from BMO Capital Markets. Thank you and good morning. What appetite are you seeing from potential new issuers to come to market, as well as the timeline for the return of the IPO market? Specifically, in the innovation sector, how is your pipeline? in the U.S. Yeah, that's a great question and it's one of the ones that makes me regret that we report every quarter and we can't have this conversation just every six or twelve months.

Initiative, there are substantial depth of conversations that are coming.

But theres not visibility as to when and that's one of the pieces I have got to be candid on it's very difficult for us to as visibility as to when those transactions can come to market and win the confidence in the market is going to be there to support them and that's not a candidate issue that you've seen that in the U S as well youre seeing that around the world. So it's not a unique piece to candidates. So unfortunately, that's going to be the best guidance I can give.

John Mckenzie: I'm going to start at the back end and work my way back towards the front of the question. And I might have been discussing this with our team, the pipeline for new issues remains really strong in many sectors, including the technology sector. So the technology sector pipeline in our long-term pipeline remains very robust. On our team, in terms of what I'll call the short-term, when you're talking to companies that are working on an IPO or a capital-raising initiative, there is a substantial depth of conversations that are coming, but there's not visibility as to when. And that's one of the pieces I've got to be candid about.

You, we do have a very deep and robust pipeline.

But in terms of the timeframe of when that can come to market is your guess is almost as good as mine on that and that's why you've actually seen the efforts that we've been making throughout the last year or so to really identify where are there actual public companies either on venture are there markets that could be well served by moving up to the <unk> and we've been actively where.

And on helping those companies make that transition. So if you go back to my comments for today Youll see the kind of the stats on that between both graduates and bringing listings on from other marketplaces. We brought over 25 companies that T. S X and last year, you don't see those as ipos, but they built into the base of public companies that can trade and raise capital whether it's in the future.

John Mckenzie: It's very difficult for us to have visibility as to when those transactions can come to market and when the confidence in the market is going to be there to support them. And that's not a Canadian issue; you've seen that in the US as well, you're seeing that around the world, so it's not a unique piece to Canada. Unfortunately, that's the best guidance I can give you.

So it's still a really important feeder system, even if a traditional IPO is still not ready yet to come to market.

John Mckenzie: We do have a very deep and robust pipeline, but in terms of the timeframe of when any of these can come to market, your guess is almost as good as mine on that. And that's why you've actually seen the efforts that we've been making throughout the last year or so to really identify where there are actual public companies, either on venture or other markets, that could be well-served by moving up to the TSX, and we've been actively working on helping those companies make that transition. If you go back to my comments for today, you'll see the stats on that, between both graduates and bringing listings on from other marketplaces, we've brought over 25 companies to TSX in the last year. You don't see those as IPOs, but they build into the base of public companies that can trade and raise capital with us in the future. So it's still a really important feeder system, even if a traditional IPO is still not ready to come to market. understood.

Okay understood.

And just to circle back on the expansion in the U S.

Do you think about the capital intensity looking beyond 2024.

And what sort of returns on investment.

Investment are you targeting for this initiative.

Yes, I mean, we're gonna be able to be fairly limited in terms of where we can share with you. There is also this is commercially sensitive in terms of what were actually producing.

But you can take to note that we would've done a full business case on that with risk adjusted returns that we thought were compelling to do the investment and when we get closer to go live will be able to give more guidance in terms of what does that actually economics look like in terms of kind of run rate impact and where we see the market opportunity when we get there, but it is premature to do that today.

Thank you very much.

Okay.

John Mckenzie: Just to circle back on the expansion in the U.S., how do you think about the capital, looking beyond 2024? And what sort of returns on investment are you targeting for this? We're going to be able to be fairly limited in terms of what we can share with you there because this is also commercially sensitive in terms of what we're actually producing.

Thank you.

Our next question coming from the line of Geoff Kwan from RBC capital markets. Please go ahead.

Hi, good morning.

Question on on Cvs I mean, since you had acquired it I think you've been trying to.

I guess in more recent years trying to.

Be able to adjust prices up and I think probably also get rid of that debate.

John Mckenzie: But you can take to note that we would have done a full business case on that with risk-adjusted returns that we thought were compelling to do the investment. And when we get closer to go live, we'll be able to give more guidance in terms of what that actual economics looks like in terms of kind of run rate impact and where we see the market opportunity when we get there. But it would be premature to do that today. Thank you very much.

Not as much success as you would've liked I am just wondering how realistic is it that you might be able to make some progress on this front over the next year.

I think it's actually very realistic maybe one of the reasons that we haven't moved as quickly on the on the pricing reforms in those actually were filed a year or so ago, but the partially the reason that hasnt moved forward is because we're actually not at end of job in terms of delivering the technology and so you know I'll remind folks that.

Operator: We have our next question coming from the line of Jeff Kwon from RBC Capital Market. Go ahead. The opinions rendered herein are those of the guests, and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions. Oregon. I'm just wondering how. I think it's actually very realistic.

Our technology program and reinvest in and all the capabilities. It was deferred as we gave way for the market to move towards T plus one settlement.

Now that program is underway its on track. It is still expected that North America will do that transition in may.

John Mckenzie: One of the reasons that we haven't moved as quickly on the pricing reforms, and those actually were filed a year or so ago, but part of the reason that it hasn't moved forward is that we're actually not at the end of the job in terms of delivering the technology. And so I'll remind folks that our technology program and reinvesting in all the capabilities were deferred as we gave way for the market to move towards T plus one settlement. Now that program is underway. It's on track. It is still expected that North America will make that transition in May.

And then shortly after we will restart with the industry the testing towards kind of a final runway to go and live on the post trade modernization products. So in parallel with that we are in discussions with the industry and the regulators currently about revising that the proposal to remove the rebates and I expect you'll see that come to market in 2024.

Okay, and when that does happen.

Are you able to describe.

The magnitude of the pricing changes that is it a matter of kind of <unk>.

John Mckenzie: And then shortly after, we will restart with the industry the testing towards kind of the final runway to going live on the post trade modernization project. So in parallel with that, we're in discussions with the industry and the regulators currently about revising the proposal to remove the rebates. And I expect you'll see it come to market in 2024. Thanks for joining us. Thanks for having me. Are you able to get that return on? Yeah, when we're at a point of publicly filing it, we'll be able to do exactly that. I'm just me.

Getting that return on investment that you've had and then a big component.

Not having been able to move as much on price over the past 510 years.

Yes, what when we're at a point of publicly filing that we'll be able to do exactly that.

Okay, just maybe if I can ask one last question is sure the equity market data subscribers I'm just wondering if there's any line of sight.

Whether or not that.

The declines you've seen in recent quarters, we have dropped in Q Q4, whether or not theres still might be some.

The pressure in upcoming quarters.

Can you just repeat that Jeff because we cut out in the first part of that sentence. So we didn't we heard equity markets, but we werent sure. So do you mind repeating.

Operator: Sure, the equity market. Whether or not, for the Webinar. Can you just repeat that, Jeff, because we were cut out in the first part of that sentence.

Yes, sorry, it was just on the equity market data subscriber counts, it's been coming down the past couple of quarters. Just wondering if Q4 might be the trough for whether or not you.

You have any line of sight to whether or not there's still might be a little bit of pressure there in the near term.

Operator: So we didn't We heard about equity markets, but we weren't sure. So do you mind repeating that? Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of Transcription by https://otter.ai. I mean, as always, that's really driven by, you know, industry seats, employment in the industry, things like that, and it tends to lag the market. So we don't get visibility in terms of forward-looking ability in terms of what the clients are doing. But this is certainly a piece where, you know, should we start to see some turn in terms of market volumes, activity, intensity, IPO activity, and interest, that would be tailwinds behind equity subscribers going forward. So that's the best guidance I can give you because we similarly don't have any visibility going forward. We have our next question coming from the line of Ben Budish from Barclays. Go ahead. Hi, good morning. John or maybe David, I was wondering, just kind of following up on your last answer there in terms of guidance.

I mean, that's as always that's really driven by industry seats employment in the industry things like that.

And it tends to lag the market. So we don't get visibility in terms of forward looking ability in terms of what the clients are doing but this is certainly a piece where should we start to see some turn in terms of market volumes activity intensity IPO activity and interest that would be tail winds behind equity subscribers going forward. So that's that's the best guidance I can give you because we.

We similarly don't have the visibility going forward.

Okay. Thank you.

Okay.

We have our next question coming from the line of Ben <unk> from Barclays. Please go ahead.

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

John or maybe David I was wondering just kind of following up on your last answer there in terms of guidance is there anything you can share with us in terms of modeling out the next year, whether it's price adjustments of trade port your expectations for sort of expense growth. Excluding I think you've given us some help with verify in terms of the revenue contribution in the margin, but otherwise sort of the normalized pace of expense growth.

David Arnold: Is there anything you can share with us in terms of modeling out the next year, whether it's price adjustments, a trade port, your expectations for sort of expense growth, excluding, you know, I think you've given us some help with VETIFY. Margin, Hey Ben, it's David. So what I'd guide you to, and I appreciate we just released the information late last night, but throughout our reports, you'll see both pricing changes summarized in various different places. So I'll guide you to have a look at that. And if it doesn't quite address, you know, what you look after, you can reach out to Investor Relations after the fact. What I can tell you is relating to expenses. We've tried to isolate the items that are most notable.

Else that you can share just in terms of kind of fine tuning how the next year should shake out.

Hey, Ben it's David So what I'd guide you to is and I. Appreciate we just released the information late last night.

But throughout our reports you'll see both pricing changes summarized in various different places.

I'll I'll guide you to to have a look at that and if it doesn't quite address.

After you can reach out to Investor relations. After the fact, what I can tell you is relating to expenses right. As we've tried to isolate the items that are most notable.

David Arnold: In addition, you know, as John touched on with the earlier question, we provided some guidance as to how much we intend to spend on increased operating expenses as we expand into the U.S. But what we've always said, and we don't provide de facto expense guidance, is that we try and maintain the increases to either limit them to the rate of inflation or slightly below. And so given where inflation is headed in 2024, it's kind of in that low single to mid single digit range.

In addition, as John touched on with the earlier question. We've provided some guidance as to how much we intend to spend an increased operating expenses as we expand into the U S.

But what we've always said is and we don't provide the fact of the expense guidance is that we try and maintain the the increases to either limit them to the rate of inflation or slightly below and so given where inflation is headed in 2024, it's kind of in that low single to mid single digit kind of range.

David Arnold: And then if you had to layer on kind of the roughly one and a half percent expense growth on a reported basis, and if you were to factor in what we've disclosed for the U.S. expansion, that kind of puts you in a ballpark in terms of the expense increase. What I will leave you with, though, Ben, which is very important, is that both our budgets and our forecasts for 2024 have positive operating leverage in them. When you look through them, obviously, some of these are, you know, one-time-in-nature items.

And then if you had to layer on kind of the roughly one 5% expense growth on a reported basis. If you were to factor in what we've disclosed for the U S expansion that kind of puts you in a in a ballpark in terms of the expense increase what I will leave you with the bandwidth is very important is that in both our budgets and our forecast for 2024.

Positive operating leverage and then when you look through obviously some of these onetime in nature items.

And the piece of our allowed to it more on the top line is.

John Mckenzie: The piece I'll add to it, more on the top line, is our budgeting, our planning, our long-term strategic growth. They're all in line with the long-term guidance we've given around the strong growth, and the market growth areas of our businesses. There's no visibility in terms of deviating from that, and particularly now that the business, as David said, is now more than half in our recurring revenue streams, which are also strong growing streams, they should become easier for you to model and predict. And then I'll give you just a couple of highlights as we start the year off, kind of interesting pieces.

Our budgeting or planning our long term strategic growth, they're all in line with the long term guidance, we've given around the.

The strong growth the market growth areas of our businesses.

There is no visibility in terms of deviating from that and particularly now that the business as David said is now more than half in our recurring revenue streams, which are also strong growing streams. They should become easier for you to model and predict and then I'll give you just a couple of highlights as we start the year off kind of interesting piece.

John Mckenzie: You'll see in the MD&A Disclosure that we've given some guidance around sustaining fees, that's a big part of capital formation in terms of the impact of both some pricing changes and market values and market caps, kind of in line with previous years and the previous year in all respects. But then I'll flip on the trade port side as well, you've got continued flow through of CPI changes, and anecdotally, I'll share with you that, just from the team this week, I've had updates on four clients that have all renewed with us at trade port, multi-year, three to five year agreements, all with material uplift in terms of their revenue and investment commitment to trade port, so really positive indicators early Okay, that's all.

As you'll see in the MD&A disclosure, we've given some guidance around sustaining fees Thats, a big part of capital formation in terms of the impact of both some pricing changes in market values and market caps.

In line with previous years in previous year, and all of the respects.

But then noting I'll flip on the trade port side as well you've got continued flow through of CPI changes in.

Anecdotally I'll share with you that just from the team this week I've had updates.

<unk> on for clients that have all renewed with us at Shreveport multi year three to five year agreements all with material uplift lift in terms of their revenue and investment commitment to trade port So really positive indicators early in the year.

Okay. That's all very helpful. Thank you maybe one follow up.

Just a high level of U S broker recently announced their plans to enter Canada, just curious like what's your sort of your take on the current state of retail.

John Mckenzie: Maybe one follow-up, just at a high level, a U.S. broker recently announced their plans to enter Canada. Just curious, what's your take on the current state of retail participation in the market in Canada? Perhaps cultural that's kept it at lower levels than, say, the U.S. And what are your thoughts on how that could evolve?

Participation in the market in Canada, do you think theres anything perhaps cultural.

At lower levels than say the U S and what are your sort of thoughts on how that could evolve over the next few years.

I think it's less cultural and it's actually more about the kind of the advance of the services and the tools, so actually having more competition and more innovation and providing solutions to retail investors could be a positive for more retail participation in the Canadian marketplace, and I think we would tend to be lower than where the U S has developed.

John Mckenzie: I think it's less cultural and it's actually more about the kind of advance of the services and the tools. So, you know, actually having more competition and more innovation in providing solutions to retail investors could be a positive for more retail participation in the Canadian marketplace. I think we would tend to be lower than where the US has developed. And there are some products in Canada that are not as well penetrated as the US, so things like, you know, option trading is largely institutional in Canada, where it's very active in terms of the retail market in the US. So as you have more brokers and platforms bringing more innovation, you'll start to see more distribution of both option trading, and more distribution of more ETF products, all things that can drive more retail participation because products that are more designed for So I only see it as a positive for the Canadian market because we are underdeveloped compared to the US market. So seeing that kind of innovation come north is going to be good for us. Got it. We have our next question coming from the line of Graham Riding from DDSecurities. Hi, good morning.

And there are some products in Canada that are not as well penetrated as the U S. So things like option trading is largely institutional in Canada, where it's very active in terms of the retail market in the U S. So as you have more brokers and platforms bring more innovation, you'll start to see more distribution of both option trading.

More distribution of more ETF products, all things that can drive more retail participation because products that are more designed for retailers and provided that extra distribution. So I only see it as a positive for the Canadian market, because we are underdeveloped versus the U S market. So <unk> seen that kind of innovation come north there's going to be good for us.

Got it thank you very much.

Okay.

We have our next question coming from the line of Graham Ryding from TD Securities. Please go ahead.

Hi, good morning.

Just wanted to maybe dig in a little bit on trade port we're seeing.

Outside of that I guess the.

Annual contractual CPI increases.

<unk> seen some solid trader growth and then maybe just can you flagged some of the key factors that are still supporting pretty strong momentum there.

Operator: I just wanted to maybe dig in a little bit on tradeport. We're seeing, you know, outside of, I guess, the annual contractual CPI increases, but you're seeing some solid trader growth. And then, you know, maybe just can you flag some of the key factors that are still supporting pretty strong momentum there in that overall business? What would you attribute the big growth, big growth? Yeah, thanks Graham.

And that overall business what would you attribute the.

The growth the growth too.

Yes, Thanks Graham in this multi factor so even picking up on my comment just a minute ago. When we talk about client renewals and uplift all those client renewals are taking additional seats. So they were actually expanding their usage of trade port throughout their shopping and every case is different it may be that they are expanding into different asset classes with different geographic points, but they are expanding their usage.

John Mckenzie: And it's multi-factor. So even picking up on my comment just a minute ago, when we talk about client renewals and uplift, all those client renewals are taking additional seats, so they're actually expanding their usage of TrayPort throughout their shop. And every case is different.

You'll also note from our comments the number of new clients. We added just in 2023, almost 30, new clients and so that was driving subscriber growth as well and we continue to see that demand into 2024.

John Mckenzie: It may be that they are expanding to different asset classes, different geographic points, but they're expanding usage. You'll also note from our comments the number of new clients we added just in 2023, almost 30 new clients. And so that was driving subscriber growth as well. And the reason is multi-factor.

And the reason being is multi factor so you're continuing to add new product on Shreveport, and these could be things like.

Electricity distribution point or a gas distribution point or further use and development of things like the Japan Korea market is more of that comes online.

But also as we add more asset classes and more geographic distribution. So we're continuing to work in building out as I said more in terms of renewables more in terms of climate more in terms of getting more oil brokers involved in the platform and continuing to build out in the U S market as well so that's what I mean by its multi factor and it gives us the <unk>.

John Mckenzie: So you're continuing to add new products on TrayPort, and these could be things like an electricity distribution point or a gas distribution point or further use and development of things like the Japan and Korea market as more of that comes online. But also as we add more asset classes and more geographic distribution. So we're continuing to work on building out, as I said, more in terms of renewables, more in terms of climate, more in terms of getting more oil brokers involved in the platform, and continuing to build out in the U.S. market as well. So that's what I mean by it's multi-factor, and it gives us confidence that we're going to continue to have that kind of strong, high single-digit, low double-digit growth rate for the foreseeable future. Okay, great. Was your expansion in the U.S. a material factor this year in driving growth? It was an important factor, but it actually wasn't material in terms of overall growth because the growth was so strong across all those factors.

Confidence that we're going to continue to have that kind of strong high single low double digit growth rate for the foreseeable future.

Okay, great with your expansion in the U S material factor this year in driving growth.

It was an important factor, but it actually wasn't material in terms of the overall growth because of the growth was so strong across all of those factors.

Okay understood.

And the other one I just wanted to dig into a little bit was.

The growth that youre seeing in options both on Etfs in the equity.

I think it was up 10% in 2023.

Yes, we're seeing equity trading volumes that I think were down double digits. So theres a bit of a divergence. There. So maybe you could just sort of flush out what is driving that sort of option activity.

That's benefiting your overall derivative volumes.

John Mckenzie: And the other one I just wanted to dig into a little bit was the growth that you're seeing in options both on the ETF and the equity side. I think it was up 10% in 2023. Yet, we're seeing equity trading volumes, and I think we're down double digits. So there's a bit of a divergence there.

Yes that goes more to the adoption curve. So when you look at the Canadian market in terms of option penetration in terms of kind of the auction trade relative to the underlying equity trade. We are still well under developed as you compare that to the U S to the European to the Australia market. This comparison, so there's a lot of runway for continued to option.

John Mckenzie: So maybe you could just sort of flush out what is driving this sort of option activity that's benefiting your overall derivative volume. Yeah, that goes more to the adoption curve, so when you look at the Canadian market in terms of option penetration, in terms of the kind of the option trade relative to the underlying equity trade, we are still well underdeveloped as you compare that to the U.S., to the European, to the Australian market for comparison, so there's a lot of runway for continued option development and adoption regardless of what the underlying equity market is doing. And a lot of that pickup, as I mentioned earlier, continues to be more institutional engagement, and as liquidity gets better in those products, it's easier for more institutions to engage with them. So it's still early days in terms of what we think the potential is for the option market, both for single name options and for ETF options, and we would expect that to be a strong contributor to long-term growth. Okay, I understand.

<unk> development and adoption, regardless of what the underlying equity market is doing and a lot of that pickup as I mentioned earlier continues to be more institutional engagement and has liquidity gets better in those products, it's easier for more institutions to engage with them.

So it's still early days in terms of what we think the potential is for the option market. Both on the the single name options in the ETF options and we would expect that to be a strong contributor to long term growth.

Okay understood. So it's more institutional adoption at this stage still not it's still not at retail.

Yes, primarily the primary support is coming from institutional.

Okay, great and if I can be greedy and just throw one more in just overall.

David we're estimating maybe the price increases are going to add about 2% to your overall top line growth in 2024 does that sound does that sound fair.

One 5% to 2% is what's in the disclosure so.

David Arnold: So it's more institutional adoption at this stage; it's still not retail. Yeah, primarily, the primary support is coming from institutions. Okay, great. And if I could be greedy and just throw one more in, just overall, David, we're estimating maybe the price increases are going to add about 2% to your overall top line growth in 2024. Does that sound fair? Yeah, 1.5% to 2% is what's in the disclosure. You can anywhere in that range is fine, Graham.

You can somewhere in that range is fine Graham.

Okay. That's it for me thank you.

We have our next question coming from the line of Brian <unk> from Deutsche Bank. Please go ahead.

Great. Thanks, Good morning folks thanks for taking my questions maybe.

Maybe just back to the positive operating leverage calibration for 2024.

I believe that.

If I add or contributes to that positive operating leverage dynamic but.

Would you be able to comment on.

Is that.

Plan, excluding that by is that still.

Operator: Okay, that's it for me, thank you. We have our next question coming from the line of Brian Biddell from Deutsche Bank. Please go ahead.

And within your plan in terms of the price decreases versus the expense growth.

David Arnold: Good morning folks. Thanks for taking my questions. Maybe just back to the positive operating leverage calibration for 2024. I believe that Vetify adds to or contributes to that positive operating leverage dynamic, but would you be able to comment on that budget plan excluding Vetify? Is that still within your plan in terms of the price increases versus the expense growth, the positive operating leverage dynamic? And then, in conjunction with that, if we do have a more difficult volume environment for whatever reason, is there flexibility, or I guess how much flexibility is there to keep expenses in check? Thanks Brian, it's David.

Rig beverage dynamic and then I guess.

In conjunction with that if we do have more difficult volume environment for whatever reason is there flexibility.

Mark I guess, how much how much flexibility is there.

Keep expenses in check.

Leverage.

Thanks, Brian its David So I'll handle the first part of your question and then John and I will tag team on the second part so.

Yes.

Obviously verify helps and but it just makes the operating leverage greater than what we can tell you is that absent verify.

So if you want to call it the organic forecast for US also has positive operating leverage obviously not as much when you add.

David Arnold: So I'll handle the first part of your question and then John and I will tag team on the second part. So, obviously, VETIFY helps, but it just makes the operating leverage greater. What we can tell you is that, absent VETIFY, so if you want to call it the organic forecast for us, also has positive operating leverage, obviously not as much when you exclude VETIFY than you have when you include VETIFY. So yes, the short answer to your question is that our operating leverage is positive, excluding VETIFY for 2024. And then, in terms of the levers and things that we can pull, I'll hand it to John, and then we'll close.

Excluding verify that that you have when you include verify so yes. The short answer to your question is our operating leverage is positive and excluding verify for 2024.

And then in terms of the levers and things that we can pull I'll hand, it to John and nimble.

I mean so.

Take this for what it is but I do think that we are starting 2024 with the basis of 2023 being a fairly.

Weak baseline for trading activity listing activity and so it's a good baseline to build from and we don't really foresee much additional pullback even in a sustained down market from from what we saw in 2023. So I think we're starting from a positive spot the <unk>.

John Mckenzie: I mean, take this for what it is, but I do think that we are starting 2024 with the basis of 2023 being a fairly weak baseline for trading activity, listing activity, and so it's a good baseline to build from, and we don't really foresee much additional pullback even in a sustained down market from what we saw in 2023. So I think we're starting from a positive spot. The second piece is, you will note in some of our commentary, we actually did make some structural changes at the end of 2023. So that's why we actually recorded some realignment costs for that in terms of identifying where we could actually build additional capacity for 2024. And so, you know, actually taking out kind of 30 to 40 redundant positions in the organization, some of that will flow through later in the year, was designed around creating exactly some of that efficiency you talked about, but also being able to then deploy that capital, that capacity in funding the things that we're trying to do to grow so that we can grow the organization; we can invest in where we're trying to build while maintaining the positive leverage that David talked about. And And that's the challenge we give to every one of our team leaders.

Second piece is you will note that some of our commentary we actually did make some structural changes at the end of 2023.

So that's why we actually recorded some realignment costs and that in terms of identifying where we could actually build additional capacity for 2024, and so actually taken out kind of 30 to 40 redundant positions in the organization some of that will flow through into later into the year was designed around creating exactly some of that efficiency you talked to but also being able to.

Then deploy that capital of that capacity and funding of the things that we're trying to do to grow so that we can grow the organization. We can invest in where we were trying to build wall, maintaining the positive levers or David talk about and so they are integrated strategies that way to ensure that we can continue to build but be efficient at the same time and that's the challenge we give to ever.

One of our team leaders, it's all about when Youre looking to how you're going to invest more is what can you identify where we can create efficiencies or there's redundancies or things that we're investing in that don't create the same value that they used to and that's the first question that David I'll ask on any new spend is how do we actually find that internally.

That's really helpful. And then maybe just on the second question with respect to identify I think John you started off talking about.

John Mckenzie: It's all about when you're looking at how you're going to invest more, identifying where we can create efficiencies or there are redundancies or things that we're investing in that don't create the same value that they used to. And that's the first question that David and I will ask on any new spend is, "How do we actually fund that internally?" That's really helpful.

Four different colors.

Joint capability.

<unk> International client base.

Distribution.

If we do get any type of pullback in Etfs.

Market pricing that might impact the ETF.

The index calculation.

Can you talk about your comprehensive.

Double digit revenue growth in 2024, and then you also talked about the joint capabilities that you are.

John Mckenzie: And then maybe just on the second question, just back to Vetify, I think John, you started off talking about the four different colors of that joint capability. If we do get any type of pullback in ETF market pricing, that might impact the ETF and the index. Can you talk about your confidence in the low double-digit revenue growth profile in 2024? And then you also talked about the joint capabilities that you're talking to clients about in terms of the capabilities with TMX. Is that something that you think can accelerate that low double-digit revenue growth rate from the baseline? So it's a yes and a yes, to be really quite clear.

That you are talking with talking to clients about.

In terms of capabilities with <unk> that something that you think can accelerate.

That low double digit growth revenue growth rate from.

Frankly, it's a 2020.

So it's a yes and a yes to be really quite clear I see and the team sees a lot of upside in the index suite in 'twenty, four and beyond and for a number of reasons. The the capabilities I've talked to in terms of the index factory.

Is a very efficient platform not just for adding new indices, but actually potentially bidding for ETF to switch their underwriting needed to see to a more efficient one produced by <unk> and so in the pipeline and outlook for that business, we see.

John Mckenzie: I see, and the team sees, a lot of upside in the index suite in 24 and beyond, and for a number of reasons. The capabilities I've talked about in terms of the index factory are a very efficient platform, not just for adding new indices but actually potentially bidding for ETFs to switch their underlying indices to a more efficient one produced by Vetify. And so in the pipeline and outlook for that business, we see more ads than potential for deletions. And then also, the ETFs that are in there already, I think actually some of the larger ones that are contributing to revenue are ones that actually have positive upside when we're in a market that, likely, we'll start to see rates come down at some point because there's yield opportunities in some of those.

More adds than potential for deletes and then also the the Etfs that are in there already.

I think actually some of the larger ones that are contributing revenue I.

I think are ones that actually have positive upside when were in a market that likely will start to see rates come down at some point.

Because theres yield opportunities in some of the vessels, there's really good products. There that are going to have tail winds behind them and the ability to launch new products directly and to switch ETF providers from other providers for the underlying indices to verify one so there's there's a lot of growth room, there and we don't have a lot of concerned about underlying conditions getting the way of <unk>.

John Mckenzie: So there are really good products there that are going to have tailwinds behind them, and the ability to launch new products directly and to switch ETF providers from other providers for the underlying indices to Vetify ones. So there's a lot of growth room there, and we don't have a lot of concern about underlying conditions getting in the way of actually doing that expansion. And then to your second piece around the TMX and the integration, I'll call them the revenue synergies, the integration opportunities. That's exactly why we did this investment. This is an interesting one where we see opportunities for interaction all throughout the franchise. And so the relationships that we have both with domestic ETF providers and global ETF providers allow us to cross-sell services both in terms of index provision but also the digital distribution tools. We're actually going to be down in Miami for Vetify's exchange conference next week.

Actually doing that expansion and then to your second piece around the <unk>.

The integration of I'll call them, the kind of the revenue synergies the integration opportunities that mean, that's exactly why we did this this investment. This is an interesting one where we see opportunities for interaction all throughout the franchise and so the relationships that we have both with domestic ETF providers global ETF providers allows us to cross sell service.

Is that both in terms of index provision, but also the digital distributions tools, we're actually going to be down in Miami for.

<unk> Exchange Conference next week. This is the largest ETF conference in North America, and all of the major players are there and we're going to be using that as an opportunity to see where we can actually provide more solutions solve problems for these clients and then the piece that we're really excited about down the road in terms of that interaction between the rest of the TNX franchise and <unk>.

John Mckenzie: This is the largest ETF conference in North America, and all the major players are there, and we're going to be using that as an opportunity to see where we can actually provide more solutions and solve problems for these clients. And then the piece that we're really excited about down the road in terms of that interaction between the rest of the TMX franchise and TMX Vetify is the underlying data sets that are all through this organization that could potentially be used to create new products. So be it other equity data, other fixed income data, data we have in the clearinghouse, energy data we have in Trayport, all of them are potentially source data opportunities for creating new products.

<unk> is the underlying datasets are all through this organization that could potentially be used to create new products so be it.

Other equity data other fixed income data data, we have in the clearinghouse energy data we have in Shreveport, all of them are potentially source data opportunities to create new products and when you create new products. We can create new etfs that can be lifted they can be traded we can build options on them. So it really is a full enterprise opportunity with things.

We can build.

That's great color. Thank you.

Okay.

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

John Mckenzie: And when you create new products, we can create new ETFs that can be listed, they can be traded, we can build options on them. So it really is a full enterprise opportunity with the things we can build. That's great.

Yeah. Thanks, good morning.

First question just on the on the Shreveport.

Noticed that North America contributed about 4% to 5% of the revenues in 2023 would you be able to break out what.

Operator: Thank you. Our next question comes from the line of Jayme Glewin from National Bank Financial. Please go ahead.

What strategies in North America are driving that is that the nodal is it just waiting some clients.

John Mckenzie: Yeah, thanks. Good morning. Next question, just on the trade port, I noticed that North America contributed about 4-5% of their revenues. Would you be able to break out what strategies in North America are driving that? Is it the nodal?

Like Ontario, Alberta clients.

What's driving that North American lift where most of it.

You got it in the back half of your question. There. It is adding clients as business development. So we've got an active business development team that's been about building relationships, adding new clients. Both on the broker side the trader side, the hedge fund side and.

John Mckenzie: Ontario and Alberta clients. What's driving that North American? You got it in the back half of your question there, it's adding clients, it's business development. So we've got an active business development team that's been building relationships, adding new clients both on the broker side, the trader side, the hedge fund side, and as we're getting to spring training baseball time, as we said, it's single after single after single to push those runs around. So building the network, building the underlying liquidity takes time, and that's what the business development team there is doing, and they have a great track record through 2023 of adding new clients. Good to hear.

Counting our as we're getting to spring training baseball time is as we said it's a you know it's single after single after single to push those runs around so.

Building the network building the underlying liquidity takes time and that's what the business development team there is doing and great track record through 2023 of adding new clients.

Okay. Good good to hear.

Terms of the pricing actions several.

This.

This quarter is there is this kind of it.

How it works with pricing actions.

Implement and get approvals in the back half of the year for implementation in early 'twenty four or are there. Other are there actions you can take.

David Arnold: In terms of the price in action, several, This quarter is about this kind of how it works with pricing actions you implement and get approval in the back half of the year for implementation in 2024 to further enhance that revenue profile. No, it's a great question, James. So it isn't a programmatic thing that we do just at the end of the year, right?

Some time in 2024 to further enhance that that revenue profile.

No. It's a great question James So it isn't a programmatic thing that we do just at the end of the year right. It's it's really driven by where we position ourselves in the marketplace. We're also very sensitive to what is occurring in some of our clients organizations. So and there are some challenging times that folks have had an and.

David Arnold: It's really driven by where we position ourselves in the marketplace. We're also very sensitive to what is occurring in some of our clients' organizations. So there are some challenging times that folks have had, and we're very thoughtful and deliberate in where we implement pricing changes. And as you did mention, many of them do require some form of regulatory approval, unlike, let's say, Trayport, which isn't regulated.

We're very thoughtful and deliberate in where we implement pricing changes and as you did mention and many of them do require some form of regulatory approval.

Unlikely, it's a trade port, which is which is isn't regulated and so we factor all of that in but the most important thing is competitive positioning and what is actually occurring in the client franchise so and.

John Mckenzie: And so we factor all of that in, but the most important thing is competitive positioning and what is actually occurring in the client franchise. So if folks are struggling, now is not the time to raise prices. I'm going to layer on David's point on competitive positioning and the really value proposition. Just taking pricing is not a sustainable revenue growth strategy. You've got to provide value to the clients. And one of the pieces I thought was the most compelling story in 2023 from Trayport, we talked about the fact that Trayport has CPI built into the agreements; it was essentially 78% that was built into 2023. We also had the highest customer satisfaction recorded for that team through our annual customer satisfaction survey at Trayport than any previous year.

If if if if folks are struggling now is not the time to take price.

I'm going to lay around David's point on competitive positioning and really value proposition.

Just taking pricing is not a sustainable revenue growth strategy, you've got to provide value to the clients and one of the pieces I thought was the most compelling story in 2023 from trade Board as we've talked about the fact that Freeport has CPI built in the agreements. It was essentially a 7% to 8% that was built into 2023.

We also had the highest customer satisfaction recorded for that team through our annual customer satisfaction survey to report of any previous year and so they vary.

John Mckenzie: And so the very direct and deliberate work of the team of engaging with the clients, understanding the value proposition, understanding their needs, and not just passing prices through without that discussion around value and what we can continue to do for the clients, that's what's got to go together. So it's always going to be, to David's point, competitive positioning and value proposition, so that's something that's supportable and sustainable. And just a quick comment on price increases remaining in the near future. Yes, so to the extent we make any other changes later in the year, we will communicate those. But the current pricing changes are what's kind of reflected in the reports we published today. Okay, last one for me, just obviously about. Transcription by https://otter.ai. A lot of leverage to get that done. How does this impact your view of the M&A market outside of Betafi? Does this limit your ability to seek other targets?

Direct and deliberate work of the team of engaging with our clients understanding the value proposition understanding their needs and not just passing pricing through without that discussion around value and what we can continue to do for the clients. That's what's got to go together. So it's always going to be to David's point competitive positioning value proposition. So that's something that support.

<unk> and sustainable.

Okay, and just a quick comment on.

Potential price increases remaining.

In the near term.

Yes, so to the extent, we make any other changes later in the year, we will communicate those but the the current pricing changes is what's kind of reflected in the reported published today.

Okay.

Last one for me just.

Obviously ratified really nice transaction.

Using a lot of leverage to get that done.

How does this impact your view on the M&A market outside of that <unk> does this.

Does this limit your ability to seek other targets are you seeking other potential targets I guess is the first question before that and.

John Mckenzie: Are you seeking other potential targets? I guess, was the first question before that, the leverage level where you are today, probably issue some equity for you to do something larger in size, but how does that really impact the outlook on future M&A here in the US? Yeah, it really doesn't. The M&A in the near-term and the long-term continues to be built on our strategy, as Vetify was, so things that we identify that are going to accelerate our long-term strategy, we're going to continue to do that. And as you said, we've got a lot of flexibility in our ability to fund things because we actually haven't tapped our equity capacity at this point. And as David said in his remark, we already have an aggressive return to our target leverage approach, even with the leverage we've taken on, so there will be no impact in terms of our ambition going forward.

Does the leverage level, where you are today.

You ought to probably issue some equity egregious on the larger size.

How does that really impact the.

The outlook on future M&A here in the near term.

Yes, it really doesn't the M&A in the near term and the long term is continues to be built on our strategy.

As verify was so things that we identify that are going to accelerate our long term strategy. We're going to continue to do that and as you said, we've got a lot of flexibility and our ability to fund things that because we actually haven't tapped our equity capacity at this point.

As David said in the remarks, we already have an aggressive return to our target leverage approach even with the leverage we've taken on so no impact in terms of our ambition going forward.

John Mckenzie: Okay, great. Thank you. There are no further questions at this time. I'd now like to turn the call back over to Mr. Massavian for his final closing comments. Thank you everyone for listening in today. Before we close the call, I'm thrilled to announce that we will be hosting our 2024 TMX Investor Day on June 20th in a hybrid format with the in-person event in Toronto at our market center. We hope many of you will be able to attend this event, which will feature a series of presentations, panel discussions, and product demonstrations as John, David, and members of the senior leadership team will provide key updates on our global growth strategy and operations. Further details are posted at investors.tmx.com under our shareholders' event section. If you have any further questions, contact information for investor relations as well as the media is in our press release, and we'll be happy to get back to you.

Okay, great. Thank you.

Thank you.

No further questions at this time I'd now like to turn the call back over to Mr. Massaging The final closing comments.

Thank you everyone for listening in today before we close the call I am thrilled to announce that we will be hosting our 2024 T. M Axe Investor day on June 20th in a hybrid format with the in person event in Toronto at our market Center.

Many of you will be able to attend this event, which will feature a series of presentations panel discussions and product demonstrations as John David and members of our senior leadership team will provide key updates on our global growth strategy and operations.

The details are posted at investors <unk> dot com under our shareholders event section. 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.

Amin Massavian: Until next time, goodbye. Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line. Have a lovely day.

Thank you, Sir 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].