Q4 2023 Virtu Financial Inc Earnings Call
It's a good question at the end of the presentation you can press star one on your telephone keypad.
If you'd like to remove your question you May press star two.
And I'll hand, it over to your host Andrew Smith of Investor Relations. Please go ahead.
Thank you Bob and good morning, everyone. Thank you for joining.
Our fourth quarter results were released this morning and are available on our website.
With us today on this morning's call we have Mr. Douglas, our Chief Executive Officer, Mr. Joseph <unk>, our co President and co Chief operating officer, and <unk>, Our Deputy Chief Financial Officer.
We will begin with prepared remarks, and then take your questions.
First a few reminders today's call may include forward looking statements, which represent virtues current belief regarding future events and are therefore subject to risks assumptions and uncertainties, which may be outside the company's control.
Please note that our actual results and financial condition may differ materially from what is indicated in these forward looking statements.
It is important to note that any forward looking statements made on this call are based on information presently available to the company and we do not undertake to update or revise any forward looking statements as information becomes available.
We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report Form 10-K, and agriculture filings.
During today's call. In addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income adjusted net income adjusted EBITDA and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP.
Direct listeners to consult the industrial portion of our website, where you'll find the additional supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures.
And with that I'd like to turn the call over to Doug.
Thank you Andrew and good morning, everyone. Thank you for joining US this morning, and my remarks today I will focus on virtual <unk> fourth quarter, 2023 financial and business performance and strategic initiatives.
Following my remarks, Joe will provide additional details on our results.
Looking at our full year and fourth quarter 2023 results, which are summarized on slide two supplemental material, we generated $4 8 million and $4.
One 4 million of adjusted net trading income per day for the full year 2023 in the fourth quarter of 2023, respectively.
We reported normalized adjusted EPS of 27% for the fourth quarter and a $1 84 for the full year of 2023.
<unk> three highlights that our market, making segment earned an average of $2 7 million per day of adjusted net trading income in the quarter, while our execution services business delivered $1 $5 million per day, an increase of 4% per day over the prior quarter.
This quarters performance reflects the significant reduction in an opportunity, particularly for our customer market, making business compared to the prior quarter driven by a combination of reduced addressable volumes and spreads.
Especially weak two months stretch of volatility to the end of the year.
We have seen episodic periods of soft softer volumes and volatility in the past most recently in the fourth quarter of 2022 and today, we are better positioned than ever from an expense capital structure trading capabilities perspective to convert opportunity into anti in any environment.
As we have said before our disciplined focus on expense management and building operating leverage being virtue remains uniquely ready to deliver results in any environment.
While it remains very early in 2024, we have seen improvement in the overall market conditions and market, making opportunities. So far in January particularly around crypto products as I will address later in my remarks as.
As we've said previously while while market share alone. It limited as a gauge of performance we would like to note that our market share in the wholesale market, making business remains within historic ranges.
We are confident that our growth initiatives combined with our efforts to enhance our spread capture rate through greater internalization, thanks to our global scale and diversity will yield benefits in any environment.
Our non customer market, making business, which provides liquidity across asset classes globally performed well in the quarter relative to the opportunity.
Our organic growth initiatives, including our expansion into options market, making continue to expand and perform well, making meaningful progress every quarter in the fourth quarter, we generated $423000 per day from organic growth, which represents 10% of A&P in the period.
We remain very optimistic about the opportunities across all of our growth initiatives and we are excited for these initiatives to reach new heights in 2024 on the execution services side, our adjusted net trading income average $1 $5 billion per day in the fourth quarter, which was up by about 4% from the third quarter. We continue to see incremental an impressive result.
But the general softening in the market opportunity for Ges.
In addition to general wallet compression institutional activity remained slow as investors reacted and adjusted to the sustained higher rate environment. Despite these challenges.
In line with this opportunity quarter over quarter as well for full year 2023.
We have incremental growth plan outside the United States, which are materializing as we transitioned resources from our multi year integration of technology across our long tail of clients towards expanding our footprint.
To this end from 2023 Bcf, leveraging our investments and enhancements to accomplish key growth milestones, including winning the rebates to be the fixed income Dms for a world class asset manager in Europe, as well as successfully deploying virtues Triton valor execution management system trading analytics posit alert and global equity.
Execution out there that was one of the largest asset managers in Asia.
Most importantly, overall productivity and profitability within the VTS segment has grown significantly since we began the technology rebuild and modernization and streamlining the business. We are very excited about the growth opportunities in 2024 for the Es.
Taking a step back and look at our 2023 results and despite the recent softness.
We believe our strategic focus in areas of growth a lineup for long term success.
We expand our addressable market by adding more asset classes and offerings to our suite of products.
Our focus on enhancing our core businesses and the continued success of our growth initiatives.
<unk> done well for any macro environment, including significant spikes in volatility in volume that typically accompany increasing global tension and economic uncertainty change change in monetary policy and.
Elections.
We continue to hire and make investments in our business. It is worth noting that of our current employees only 36% of them were at virtue. Prior to 2019. This means that we have made a significant multi year investment in new traders developers in costs, which we expect to continue to bear fruit in the near to medium term.
And as you would expect we remain discipline as ever around cost throughout the year, which enabled us to realize a 47% adjusted EBITDA margins touching briefly on our growth initiatives and options in 'twenty three with another impressive year for us as we continued to expand our capabilities. Despite the declining opportunity set in general in 2000.
Three of the occupancy team exceeded expectations as of the capability and capacity to address opportunities increased globally.
As I mentioned in our last call, we saw a meaningful uptick in our crypto market, making business at the end of the third quarter, which persisted into the fourth quarter, It's probably no surprise that our crypto market, making is off to a record store in 2024 as a result of the elevated interest in new opportunities related to the recently approved.
Good point Etfs in the United States as I'm sure you well know a January 10th the SEC approved 11 spot pinpoint ETF trading and as the global 24 by seven market maker Virtu was among the first trades in these products when they began trading at four am on the first that we proudly act as an authorized participant.
For all of 11 issuers.
While it's only been a few weeks since the spot pinpoint ETF for group Etfs that presented significant market, making opportunities it's worth noting that these initial 11 adjusted.
Just the first wave of crypto ECS, that's a market expected to be approved so we expect there will be many more coming issuers have already filed applications with the SEC lists spot that theory, and Etfs as well as a number of novel Crypto related Etfs.
Additionally, crypto ETF may not interest all investors. We're also seeing uptake in general retail trading activity across all NMS securities coincide with the launch of spot Bridgepoint, Etfs, which should which suggests that retail investors are curious.
To bring it full circle and highlight how these etfs benefit several of our organic growth initiatives, we've already seen significant opportunities for our ETF block business as new and existing clients approach us to transact in bitcoin Etfs and we are optimistic about the options market market, making opportunities that await what options are listed.
These etfs.
Our ETF block business had a respectable year as well and we continue to expand our offerings to cover more products and more reasons, including crypto ETF as I just mentioned in fixed income Etfs, which is especially helpful for our rates trading where we continue to make key hires as well as well as a corporate credits.
And last but certainly not least our virtu capital markets business saw increased activity in the fourth quarter financing activity began to return to the market and a number of issuers use our at the money service to raise primary capital.
Now I'll turn it over to Joe <unk>, who will provide additional details about the quarter Joe.
Thank you Doug just briefly turning to capital on expenses on expenses, we ended the year with cash operating expenses of $643 million.
Slide 4% ahead of last year. We think this is a solid performance in this environment and given the investments, we're making to grow the business.
Our cash compensation ratio is 26% for 2023. This is at the upper end of our historical range.
Consistent with virtuous history, we will manage discretionary compensation and headcount to drive profitability, while retaining and recruiting world class talent.
We believe we have achieved this outcome.
Unexpected, particularly on compensation by being prudently aggressive in hiring and maintaining compensation at levels that are best in class, while keeping overall head count relatively flat.
Other non compensation expenses were up slightly in line with our expectations. So on communications and data processing, we were up 5% in 2023, owing to investment in building, new businesses and price increases for infrastructure and market data.
Our other expenses in 2023 were up a bit.
Due to favorable FX adjustments in the prior year and a little bit of increase in professional fees.
On the capital management slide in the supplemental on Slide 12, you can see that our trading capital has remained within a range of $1 72 billion for this year, we remain very well capitalized from a trading capital and long term debt standpoint, as well as from a liquidity standpoint.
Meaning we possess adequate resources necessary to capitalize on upside revenue opportunities from increased volumes and volatility as and when they appear.
In fact, we were able to enter the crypto ETF market in early 2024 without a material increase to our overall capital base.
Some of our operational efficiency and available liquidity.
We maintain our public 96 annual dividend, which we get paid steadily now for eight years. Despite variable results over the long term we.
We believe overall that our dividend is quite sustainable over the long term as it has been for the past eight years and we do not anticipate changes to the status quo.
<unk> our continued buyback program.
In addition, we repurchased two 4 million shares in the fourth quarter.
For approximately $44 million.
Our period end share count is now down to 162 7 million shares and at this point, we have repurchased net of new issuances 17, 7% of our company in the three plus years since beginning our program.
That I will turn it over to Cindy to review the financial details briefly before we open up the call to your questions.
Thank you Kevin Good morning, everyone I'm fine to me.
My commentary on the combined company.
I think for funding.
For the fourth quarter are plentiful.
Adjusted net trading income ANP lease represents our trading gains net of.
And that training.
260 libraries knowledge.
One $4 1 million.
Market, making adjusted net trading income was $168 million was $2 7 million per day.
Kitchen, seven adjusted net trading income with $93 million.
$1 9 million per day.
Fourth quarter 2022, a normalized adjusted EPS was <unk> 27.
Adjusted EBITDA was 99 million sprint Flex point I had plenty of money to me and our adjusted EBITDA margin was 8%.
Slide eight we provided a summary operating expenses results.
Fourth quarter 2023, Cleveland play at $178 million.
Adjusted operating expenses.
We need to maintain an efficient cost structure and disciplined expense management, which has helped us to control our operating expenses.
<unk> environment.
Remain committed to our 24 cents a quarter dividend and combined with our share repurchase program demonstrates our continued commitment to return capital to our channel.
Now I would like to turn the call over to the operator for the kidney.
As a reminder, your lines.
Question, Ethan Presto slipped by one on the telephone keypad.
Maybe a question you may proceed so I'd like to say thanks.
Please limit yourself to one question. Thank you.
Our first question for today comes from Ken Worthington of Jpmorgan.
Your line is now open. Please go ahead.
Hi, good morning, Thanks for taking the question I guess I wanted to kick off the call with.
More questions around the crypto currency opportunity so first.
The currency market has rebounded rebounded significantly.
Significantly.
A bit more one Q.
At the same time role has expanded with the AP on the.
The Queen Etfs.
How did the economics change preferred to asked a number of activities from participating in expense. So you started with like being a market maker in crypto spot in a market maker.
Crypto companies miners and now you are both a market maker in bitcoin Etfs as well as the AP on the same crypto Etfs. So does your position in one area makes the other areas more profitable.
And I guess the ultimate Punch line here is how much bigger is the crypto revenue opportunity for Virtu.
Today versus other initiatives like options ETF block in fixed income in the near term growth and crypto probably.
Yeah. Thank you. Good morning, that's a great question and to give you credit you've been asking about crypto for two years so on volume.
A great answer for you.
Thanks in large mentioned if somebody does force regulatory changes in the United States. I mean, this has become I don't want to be too dramatic, but a bit of a transformational moment for virtue with regard to this asset class certainly and we've seen the results already in the first quarter, where we have Janet we're generating meaningful.
Six figure.
Daily P&L from from this from this asset class and I think you kind of really hits an element. It really is the perfect type of asset class and the perfect storm. If you will for virtually sticking it combines a lot of our skills around being a multi asset class.
Regardless of the form of a product and a multi geographic market maker. So what I mean by that is you know.
We have been as you noted historically and market maker at spot Bitcoin.
And futures bitcoins, but throwing in Etfs and creating all of the volume in all the.
Transactions and transformation, if you will that people are making moving from the great scale ETF over the.
The other 10 products et cetera means that somebody needs to price and take the risk with regard to that transfer. So thats provided a significant market, making opportunity for us, but as we noted because we are a spot based calling market maker not only all reacting as an AP with regard to the cash creation and redemption.
The ETF, but we can also act as a dealer if you will to one of our affiliates in Singapore, where we can provide the points directly to the issuers to the extent they need to.
Satisfy their obligations to half points and their trust.
We're also excited because there's going to be as I mentioned in my prepared remarks, there's going to be a CRM etfs, there's going to be short and long and leveraged in other products and there's going to be all kinds of.
Different manifestations around People's interest and we're really in the early innings here because you have a marketplace, where you have some of our large clients, whose names you know very well who are saying, we're not going to actually allow clients to trade. These <unk> securities.
And then we have other of our clients that are at the forefront of it and I'm not going to name names, but you can kind of figure out who they are and then we have other institutions like the one you work for where the CEO, saying very negative things, but then on the other hand, you are acting as an authorized participant right. So there's all kinds of.
Confusion in the marketplace as to what this asset class.
To bring it full circle I think what we really need is a coherence regulatory framework in the United States, we have not had that because of this current SEC.
And the legislative bodies have not been able to get their act together once that happens.
We will have a regularized system, where you have.
<unk> platforms that provide access to the spot youll have etfs around the world in the futures exchanges, you'll have custody clearing youll have analytics and it will look and feel.
That's awful lot like a Greg Youll have prime brokers.
The point baked into the world and hidden road and others and then you'll have great platforms like E X. The one that we started with citadel.
And fidelity and Schwab, which is now recently announced that it's going to go international and whatnot and so you'll have this large regularized asset class that fit very very well into our model of being a cross border and multi asset class. If you will market, making firm. So we're very very excited about where we are.
In terms of the scope of the opportunity and the addressable market I think we will just continue to grow in that asset class becomes more regularized and more institutionalized and you see more institutional money flow into it and again I'm very very excited that we are making investments we did a couple of years ago.
Be prepared for this moment in time so.
I hope that answers your question, but.
The first couple of weeks have been very exciting within the firm.
Excellent. Thank you so much.
Thank you Kevin.
Thank you.
Next question comes from Patrick Lee of Piper Sandler your.
Your line is now open. Please go ahead.
Yes. Good morning, Thanks for taking the question.
I think this quarter there was obviously a disconnect between what the industry volume volatility metric showed.
In your results, but I think at least in the fourth quarter. We looked at the 605 reports it did show that the opportunity.
In the fourth quarter was the lowest it's been in a while.
So.
I appreciate the comments on the crypto opportunity.
But I guess just as we sit here today.
I guess my question is how do you think you analysts and investors.
Can do a better job of tracking your overall.
<unk> quarter to quarter.
Okay, Yeah, no. It's a great question and obviously, we have continued to frustrate.
You all and investors over the last eight years, and it's really a challenge to try to.
Explain the various parts of our business I mean really the best way to do is to look at the 605 reports in the six or five metrics as a footnote we have been on the forefront of asking for we actually submitted a request I think it was four years ago for the SEC to update and modernize the 605 reporting to.
Permit exactly this type of granular review and granular understanding of what it exactly we see within the sub sector segment. If you will of the U S equities market, but if you track our 605 reports and look at like what quoted spread was during the periods, you'll see that there was meaningful.
Contraction in quoted spreads quoted spread and effectively that's the theoretical if you will maximum opportunity we have to collect bid offer spread and that border four six to five orders that come through to Virtu financial and you can look at it by brokerage if you look at it by by wholesalers. So during the quarter.
It was meaningful contraction. So this quarter's results as I made it very clear in my remarks are really attributable to.
That performance by our customer market, making business during the quarter, the non customer market, making business.
Virtu execution services outperformed metrics and certainly.
Performed in line with your overall expectation that is digging in the Yang of that business. It tends to be less predictable and certainly not always correlated with marketplace volumes and volatility. The other comment I will make is that you did see within this quarter if you.
On a more granular level at the marketplace <unk> there was a significant increase in sub dollar.
Stock trading in the quarter I think it was roughly about 18%.
Yes in December for example.
It was.
Sub dollar name they don't want a particular date traded over 1 billion shares just anecdotally.
That tends to distort overall market volumes clearly those stocks tend to be less opportunity for spreads dramatically smaller and they tend to be a lot more toxic than the way that they are trained as a footnote a lot of those companies in our view shouldnt be listed public companies, we've talked to FINRA and the SEC.
About it.
Frankly, I think NASDAQ could do a better job in.
Policing some of those companies that shouldnt be listed public companies and frankly should be trading OTC. So I do think that that distorts. Some of them are quite fun I'm not using that as an excuse to try to provide a little more granularity, but it really does come back down to within our 605 business what would be opportunity expressed as.
As COVID-19 spread at the moment in time, when we receive those orders and so that's probably a good way for you guys to kind of slice and dice. It I think it will get better when the 605 reform happens, which should be the first proposal that comes out of the FCC.
And for what it's worth quoted spread is up.
10% in January thus far from the 605 blocks and some of that I think it's correlated to as I mentioned in my prepared remarks, some of the excitement and enthusiasm around the bitcoin Etfs. So rambling answer I Hope I gave you enough clarity around.
You all can look at in the future.
Yeah that was great. Thank you.
Thanks Pat.
Thank you.
Our next question for today comes from Chris Allen of Sydney.
Your line is now open. Please go ahead.
Hey, good morning, guys. Thanks for taking the question.
Digging a little bit on the organic growth initiatives.
Little surprised to see a sequential decline in the fourth quarter crypto activity was much better than <unk>.
<unk> relative to <unk>.
Index options activity was up sequentially and you noted the capital market's activity was stronger.
<unk> as well so maybe you can just give us some color just in terms of the different moving parts.
Are you seeing.
Obviously, you've seen until the crypto maybe the outlook for options.
Mortgage activity from here.
Yes, yes, very fair question and obviously.
Yes.
We track the internal metrics with regard to options and ETF block, which was a major and which are and where during the fourth quarter certainly the major components components of our growth initiative.
Crypto.
Contributed but we havent seen explosion, which obviously, we've seen as I mentioned with the launch of the Bitcoin Etfs as of January 11, and I think it was in this quarter.
The short answer is that with regard, particularly to options market, making the opportunity in terms of like.
Right.
Right well excuse me, putting the spread was per contract declined significantly in the fourth quarter and so that really explains a lot of what youre seeing in terms of the sequential decline.
Internally, we track all these metrics and as I said in my prepared remarks, we were very very happy with the performance of.
The options desk, and a block ETF desk during the quarter.
One of the highlights of the year.
Year was our expansion into Asia, where we are now actively and profitable.
As an options market maker in both the Japanese and the Indian market and we think there is only an opportunity to grow there. So I get your frustration, which we share around.
The absolute dollar value, if you will but in terms of what our market share was in the addressable index product.
For the options business. It continues to grow and continue to be competitive. It's just again those organic growth initiatives are subject to the same market forces. If you will around volumes, but much more importantly volatility and effectively colgate spread with regard to the options contracts as all of our other asset classes.
Thanks, guys.
Thank you.
Our next question today comes from Dan.
<unk> of Jefferies.
Your line is now open. Please go ahead.
Okay.
Thanks. Good morning. My question is on kind of expenses and leverage in the model I think Joe you've talked about managing to a comp ratio and then to the dollar amount as the year progressed, starting out with the ratio and then to a dollar amount for the full year and if I look at the full year.
Pump is modestly up with revenues were down.
And so just want to understand but think.
Going forward in an environment is this kind of a floor if revenues don't get better we can see this as kind of a floor for cash compensation.
And.
Just also just any outlook for expenses as we think about next year more broadly.
Yeah sure Dan It's Joe.
I don't know if I'd call it for I would say.
I kind of go back to Doug's remarks around the overhaul of our.
Employee base in terms of upgrading the talent in terms of.
It's something like 60% of the people who are here today, we're not here when we acquired it.
G.
So we've been upgrading and investing in we're always asked what are you investing in in terms of the growth initiatives.
Our investment and I think if you look at.
Comp going from $3 15 to $3 20.
In a year like 2023 overall with us is going to be up.
Upgrades and talent.
We're happy with that outcome, we don't worry about the ratio of being 26% on a cash basis.
No religion around that.
I wouldn't expect it to get.
Too high.
Too much higher than that over the long term, but I think we are.
Happy where it came out in terms of.
What it means about talent that's available.
We've hired some much better recruiting environment.
The past six months to a year than it has been in the past few years.
Thank you Andrew.
Just thinking about the other expenses.
Yes, sure on other expenses immediate on communications and data processing.
Ken.
We had some build out so we've had to do.
We have.
Experienced price increases on market data and infrastructure.
And it's up.
I've always guided.
Low to mid single digit.
Fixed cost decreases.
We're right there so in communications and data processing again, when you think about the interest the global infrastructure that we manage and the market data plant that we are subject to.
Again, I think we're really pleased with this outcome we actively.
We realize there's going to be price increases and investments we need to make so we actively manage.
Market data, especially to you too.
Make sure we prune where we can.
And then operations and administrative stuff I think 2022 was was low because we had some favorable foreign foreign exchange adjustments.
Of your own in terms of a pounds sterling in terms of the expenses in.
In our non U S subsidiaries so.
I think that kind of reverse on us in 2023 but I would expect that number to be the run rate going forward.
Sure.
<unk>.
Alright, thank you.
Thank you.
Our next question comes from Alex Blaustein of Goldman Sachs.
Your line is Natalie Please go ahead.
Yes.
Hey, guys. Good morning. Thank you for the question I wanted to just dig into the capital structure, a little bit and similar to the question I have for you last quarter thing, but the.
The debt to EBITDA continues to creep up a little bit and then its a function obviously some challenges on the EBITDA front, but it also looks like the debt cost increase this quarter I guess with the new swap.
So I guess, maybe just confirm that and kind of talk through the impact on the P&L from that but also as you think about the uses of cash flow.
If interest expenses higher going forward, what are the thoughts about deleveraging and paying down debt versus buybacks.
Yeah.
Just to take those in order.
The.
The new swap that we put on.
We'll be providing from a P&L standpoint.
Creative Alright, so we did not do that from.
From a GAAP P&L standpoint, it will be accretive.
All we did was was kind of a pull forward some of the built in gain.
That we had in a very attractive swap instrument that was put on several years ago.
It was an enormous benefit to virtu and that was.
Going to unwind in a few months. So what we did is we just pull that forward.
And use that to reduce debt.
And the cash interest expense run rate was going to go up anyway, right. So we kind of were able to.
You have to do an accretive deal you reduce that by a little bit.
And then and then also kind of cap.
Interest expense going forward.
The instrument the underlying instrument that we have is our is our outstanding loan as sofa was 300.
We expect in a.
Fed easing environment and we expect.
With the low market coming back and we will have opportunity to reduce cost on that.
Over the next couple of years. So we're really happy with that we priced this in a way that we anticipate some fed easing.
And we anticipate being able to type of spread as well. So yes. The run rate looks like it's a little bit higher that was going to happen anyway, we're going to be able to reduce it.
And we were able to kind of monetize the swap to distribute that so we're very comfortable with the one.
750.
And we're happy with the with the deal we did.
Got you.
No change in terms of the pay down of the loan versus buybacks kind of the same trajectory.
That's right that's right we use we trimmed it a little bit here.
Observation with swaps we feel.
Felt that was appropriate.
But in terms of.
The cash flow, we generate at different levels of net trading income we've got that chart in here because we do almost every quarter.
So you should expect that to continue.
Gotcha alright, thank you.
Sure.
Thank you.
Question comes from Michael <unk> of Morgan Stanley Your.
Your line is now open. Please go ahead.
Okay.
Great. Thank you. Good morning, Thanks for taking the question I was hoping you could maybe update us on your fixed income market, making initiatives maybe elaborate how much that's contributing today, how would you sort of size your participation and presence in fixed income markets. Today, maybe you could talk about some of the steps that you're taking in corporate credit and treasuries for that to become more meaningful over time.
Versus say fixed income Etfs.
Yes, great question.
The analogy I would make is it is.
Is the trajectory I hope is going to be similar to what we experienced in options. So as I've said on prior calls.
Done a lot of loosely just call it groundwork around technology and integration.
With the various <unk>.
Vendors trade market access Bloomberg et cetera.
We've developed.
The internal ability to quote extensively and we have the.
And ongoing sales flat distribution.
Efforts in order to give us a break as Counterparties I think the thing.
In terms of like priorities and kind of where I see it.
To be able to add value and where I'd be able to see growth in the same way. We did in options, where we spent a year or two developing infrastructure and technology. We use internal people, we hired folks from the outside we're in the process of doing that and options. We went to the Big Index family, if I looked at the marketplace.
And I can say to myself, where convert to add value in what looks and feels more like what we do.
Obviously answer as rates, particularly with what the FCC has done with regard to centralized clearing of treasuries, which is going to come online in 2025, and you're already seeing significant interest around cross margining between.
Treasury futures and et cetera, and so that will look more like a virtu style businesses, plus CUSIP and certainly be further electrification of fixed income in general So I think we're gonna.
<unk> focused more on rates initially while at the same time continuing to put emphasis into our onto our credit business, where we have.
Counterparties and we have we're actively quoting.
Mostly investment grade products and whatnot that tie very nicely into our fixed income ETF desk.
And cut some creation redemptions that when they are doing that debt. So very very early stage in terms of contribution.
The minimus at this point.
But in the same way that it was sort of 2019, an option, where we started to develop the wherewithal hired folks built the technology infrastructure that was kind of where we're at right now.
Yeah.
Optimistic as I always am.
That we'll see that business take off.
Typically enthused about some of the market structure issues.
<unk> considerations.
That we've seen in rates again with regard to centralized clearing the prime brokers being.
More.
Willing to deal with firms of our tightened to provide us leverage and allow us access. So I think that's just going to become a much more competitive marketplace.
Where the domination if you will by the big dealers will continue to wane non traditional liquidity providers like the Jane streets in the citadel and hopefully in the flow traders than us.
Can can garner a significant market share. So again, it's a growth initiative for us.
De Minimis contribution in 2023 will it be meaningful in 2024, probably not real meaningful given kind of the competitive nature of the market and the size of the rest of the firm, but it's certainly an investment that we're very focused on Michael So thank you for the question.
Great. Thanks, so much.
Yeah.
Thank you.
We have a question from Craig Siegenthaler with Bank of America.
Your line is now open. Please go ahead.
Great.
Okay.
So it looks like you might be Amit your line is now open.
Yeah.
Don't you think operators maybe.
Maybe he dropped off.
My apologies as a reminder, if you'd like.
Asked a question.
Slide by one on your telephone keypad.
Okay, well it sounds like we have no further questions. Obviously, Craig if you do have a question you can follow up with me Joe ran through after the call I want to thank everybody for joining us today and we look forward to speaking with you in some point in mid April. Thank you everybody have a great day.
Thank you for joining today's call you may now disconnect your lines.