Q2 2026 Virtu Financial Inc Earnings Call
Speaker #1: Thick earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand.
Speaker #1: To withdraw your question, please press *1 again. I will now hand the conference over to Matthew Sandberg, Head of IR. Matthew, please go ahead.
Speaker #2: Thank you. Good morning. Our second quarter of 2026 results will release this morning and are available on our website. With us today on this morning's call we have Aaron Simons, our Chief Executive Officer; Cindy Lee, our Chief Financial Officer; and Joe Molluso, our Co-President and Co-Chief Operating Officer.
Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the Virtu Financial second quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.
Speaker #2: We will begin with brief prepared remarks and then take your questions. First, a few reminders: today's call may include forward-looking statements. We represent Virtu's current belief regarding future events and are therefore subject to risks, assumptions, and uncertainties which may be outside the company's control.
Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, please press *1 again.
Speaker #1: I will now hand the conference over to Matthew Sandberg, Head of IR. Matthew, please go ahead.
Speaker #2: Please note that our actual results and financial conditions 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 new information becomes available.
Speaker #2: Thank you. Good morning. Our second quarter 2026 results will be released this morning and are available on our website. With us today on this morning's call, we have Aaron Simons, our Chief Executive Officer; Cindy Lee, our Chief Financial Officer; and Joe Molluso, our Co-President and Co-Chief Operating Officer.
Speaker #2: We will begin with brief prepared remarks and then take your questions. First, a few reminders: Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are therefore subject to risks, assumptions, and uncertainties which may be outside the company's control.
Speaker #2: 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 other public filings.
Speaker #2: During today's call, in addition to gap measures, we may refer to certain non-gap measures, including adjusted net trading income, adjusted net income, adjusted EBITDA, and adjusted EBITDA margin.
Speaker #2: 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 new information becomes available.
Speaker #2: These non-gap measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP. We direct listeners to consult the investor portion of our website where you'll find additional supplemental information referred to on this call, as well as a reconciliation to non-GAAP measure of non-GAAP measures to the equivalent GAAP terms in the earnings materials with an explanation of why we deem this information to be meaningful, as well as how management uses these measures.
Speaker #2: We refer you to the disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K, and other public filings.
Speaker #2: 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.
Speaker #2: With that, I'd like to turn the call over to Aaron.
Speaker #3: Thank you, and good morning. A year ago, we announced our plan to pivot toward growth, including investing in infrastructure, acquiring talent, and growing our capital base.
Speaker #2: These non-gap measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP. We direct listeners to consult the investor portion of our website where you'll find additional supplemental information referred to on this call, as well as a reconciliation to non-GAAP measure of non-GAAP measures to the equivalent GAAP terms in the earnings materials with an explanation of why we deem this information to be meaningful, as well as how management uses these measures.
Speaker #3: I'm happy to report substantial progress in that direction. We have made investments in power and compute and have begun to establish select partnerships via investment.
Speaker #3: Our talent acquisition efforts are proceeding as planned. We are reestablishing our reputation as a firm run by technologists and traders and, as a result, attrition rates are at multi-year lows.
Speaker #3: Following our recent opportunistic term loan increase, as well as 12 months of retained earnings, our total trading capital stands at $3.4 billion up from $2 billion a year ago.
Speaker #2: With that, I'd like to turn the call over to Aaron.
Speaker #3: Thank you, and good morning. A year ago, we announced our plan to pivot towards growth, including investing in infrastructure, acquiring talent, and growing our capital base.
Speaker #3: We continue to find new ways to leverage our technology to productively deploy our growing pool of capital across all markets, and will continue accumulating trading capital for future growth through free cash flow.
Speaker #3: I'm happy to report substantial progress in that direction. We have made investments in power and compute, and have begun to establish select partnerships via investment.
Speaker #3: We have provided additional prospective on the quarter in our detailed financial supplement and will be answering your questions shortly. First, Cindy Lee, our Chief Financial Officer, will review the financial results for the quarter.
Speaker #3: Our talent acquisition efforts are proceeding as planned. We are reestablishing our reputation as a firm run by technologists and traders, and as a result, attrition rates are at multi-year lows.
Speaker #4: Thanks, Aaron. And good morning, everyone. For the second quarter of 2026, we generated adjusted net trading income, or ANTI, of $11.6 million, per day or a total of $718 million, per day.
Speaker #3: Following our recent opportunistic term loan increase, as well as 12 months of retained earnings, our total trading capital stands at $3.4 billion, up from $2 billion a year ago.
Speaker #3: We continue to find new ways to leverage our technology to productively deploy our growing pool of capital across all markets, and we'll continue accumulating trading capital for future growth through free cash flow.
Speaker #4: Market-making reported ANTI of $9.4 million, per day, while execution services reported an ANTI of $2.2 million, per day. Both of our operating segments continue to benefit from favorable market conditions and strong execution by our teams.
Speaker #3: We have provided additional perspective on the quarter in our detailed financial supplement and will be answering your questions shortly. First, Cindy Lee, our Chief Financial Officer, will review the financial results for the quarter.
Speaker #4: Our profitability this quarter was robust. We generated a $437 million in adjusted EBITDA, representing a 61% margin. Adjusted EPS was $1.82. Over the last 12 months, we have recorded ANTI per day of $10.4 million, adjusted EBITDA of $1.7 billion, and adjusted EPS of $6.96.
Speaker #4: Thanks, Aaron. And good morning, everyone. For the second quarter of 2026, we generated adjusted net trading income, or ANTI, of $11.6 million per day, or a total of $718 million for the quarter.
Speaker #4: Market making reported ANTI of $9.4 million per day, while execution services reported an ANTI of $2.2 million per day. Both of our operating segments continue to benefit from favorable market conditions and strong execution by our teams.
Speaker #4: All of these numbers represent all-time highs for Virtu, from a trailing 12-month perspective. On slide 6 of our supplemental materials, we provided a summary of our operating expenses.
Speaker #4: Our profitability this quarter was robust. We generated $437 million in adjusted EBITDA, representing a 61% margin. Adjusted EPS was $1.82. Over the last 12 months, we have recorded NTI per day of $10.4 million.
Speaker #4: Through June 30, our cash compensation ratio is 23% of our total compensation ratio is 28%. Again, these are the levels that we have stated would be appropriate in the near term.
Speaker #4: Turning to capital, our invested capital stands at $2.9 billion as of June 30, while generating an average return of $106% over the past year.
Speaker #4: Adjusted EBITDA of $1.7 billion and adjusted EPS of $6.96. All of these numbers represent all-time highs for Virtu, from a trailing 12-month perspective. On slide 6 of our supplemental materials, we provided a summary of our operating expenses.
Speaker #4: As Aaron mentioned, we ask that its term loan in early July raising an incremental of $500 million in debt. Our trailing debt to EBITDA ratio is 1.5 times.
Speaker #4: Through June 30th, our cash compensation ratio is 23%, and our total compensation ratio is 28%. Again, these are the levels that we have stated would be appropriate in the near term.
Speaker #4: So we remain modestly leveraged. We will continue to grow our capital base, organically, and deploy capital where we see the greatest opportunities. All while maintaining our quarterly dividend of 24 cents per share.
Speaker #4: Turning to capital, our invested capital stands at $2.9 billion as of June 30th, while generating an average return of 106% over the past year.
Speaker #4: We will now take your questions. Thank you.
Speaker #1: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.
Speaker #4: As Aaron mentioned, we upsized the term loan in early July, raising an incremental $500 million in debt. Our trailing debt-to-EBITDA ratio is 1.5 times.
Speaker #1: To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.
Speaker #4: So, we remain modestly leveraged. We will continue to grow our capital base organically and deploy capital where we see the greatest opportunities, all while maintaining our quarterly dividend of $0.24 per share.
Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Moley with Piper Sandler.
Speaker #4: We will now take your questions. Thank you.
Speaker #1: Your line is now open. Please go ahead.
Speaker #1: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.
Speaker #5: Yes, good morning. Thanks for taking the question. So I just had one on the trading capital bill, you know, invested capital up $270 million this quarter.
Speaker #5: You added the $500 million term loan. Just curious, how aggressive could you be from here with the trading capital bill? You know, is this a one-time step up, or should we expect the growth to kind of continue at this pace?
Speaker #1: To withdraw your question, please press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.
Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Mooley with Piper Sandler.
Speaker #5: And then if you could just maybe speak to how quickly you could look to deploy the proceeds from the term loan and when we should expect that to show up in the financials.
Speaker #5: Thanks.
Speaker #1: Your line is now open. Please go ahead.
Speaker #3: Sure. Hey, Patrick, it's Joe. I'll take that question and then Aaron and Cindy will add anything I leave out. But I think the answer is we've guided previously that, you know, we've got a long-term goal of net trading income and, you know, we need to sort of fit capital within that.
Speaker #5: Yes, good morning. Thanks for taking the question. I just had one on trading capital—invested capital was up $270 million this quarter.
Speaker #5: You added the $500 million term loan. Just curious, how aggressive could you be from here with the trading capital build? Is this a one-time step up, or should we expect the growth to kind of continue at this pace?
Speaker #3: And that'll come from two sources. And the long-term one is the appropriate amount of leverage, and the other is organically through free cash flow generation.
Speaker #5: And then if you could just maybe speak to how quickly you could look to deploy that, and when you expect that to show up in the financials.
Speaker #3: And in the, you know, debt markets and the leveraged loan markets and the high-yield markets, you raise money when you can, right? Not when you have to.
Speaker #5: Thanks.
Speaker #3: Sure. Hey Patrick, it's Joe. I'll take that question, and then Aaron and Cindy will add anything I leave out. But I think the answer is we've guided previously that we've got a long-term goal of net trading income, and we need to sort of fit capital within that.
Speaker #3: And we did that. We had a terrific opportunity to add on to our term loan, add a, you know, at the current spread levels, the pricing was very tight.
Speaker #3: It was a great execution. We were able to do it with a minimum of effort and, you know, at a, you know, attractive price.
Speaker #3: And that'll come from two sources. The long-term one is the appropriate amount of leverage, and the other is organically through free cash flow generation.
Speaker #3: And our deal was very oversubscribed. So we're happy with it. But the overall leverage level, I think, in the near term here, maybe near to mid-term, we're set.
Speaker #3: And in the debt markets and the leveraged loan markets and the high-yield markets, you raise money when you can, right? Not when you have to. We had a terrific opportunity to add on to our term loan at the current spread levels. The pricing was very tight.
Speaker #3: And I think, you know, further accumulation will come from free cash flow generation, as Aaron mentioned, and his opening remarks, right? And that'll be the primary means.
Speaker #3: In terms of deploying the capital, I think the returns speak for themselves. There's active deployment and active opportunities. Given the markets, and the continued levels of volumes of volatility and just opportunity, that we're seeing, and in fact, you know, we have been making use of our, you know, some of our short-term liquidity to capture these opportunities.
Speaker #3: It was a great execution. We were able to do it with a minimum of effort and at an attractive price. And our deal was very oversubscribed.
Speaker #3: So we're happy with it. But the overall leverage level, I think, in the near term here—maybe near to mid-term—we're set. And I think further accumulation will come from free cash flow generation, as Aaron mentioned in his opening remarks, right?
Speaker #3: And now we sort of go back to normal with this level of capital. So it is deployed. We do have opportunities. And long-term, and sorry, near to medium-term, this level of debt is sustainable.
Speaker #3: And that'll be the primary means. In terms of deploying the capital, I think the returns speak for themselves. There's active deployment and active opportunities given the markets and the continued levels of volumes, volatility, and just opportunity that we're seeing.
Speaker #3: And we're happy where we are.
Speaker #5: Okay, great. Thanks for that, Joe. And then, as a follow-up, just on the cash compensation ratio, came in around 25%. It's up a little bit on a year-over-year basis.
Speaker #3: And, in fact, we had been making use of some of our short-term liquidity to capture these opportunities. And now we sort of go back to normal with this level of capital.
Speaker #5: From closer to the 20% level. I know Cindy said that that 25%, I think, was, you know, what we should expect. In the near term, but just as we think longer term and as we model the business out over the next couple of years, is there anything more episodic in the near term that's going to keep it around that 25% level?
Speaker #3: So, it is deployed. We do have opportunities. And, long-term—sorry, near to medium-term—this level of debt is sustainable. We're happy where we are.
Speaker #5: Or is that just sort of the new norm and that's how we should think about the level of comp going forward? And then, maybe as a second part to that, just if we do get a down quarter, can you give us any sense of how much we should think about that comp ratio kind of flexing in a weaker environment?
Speaker #5: Okay, great. Thanks for that, Joe. And then as a follow-up, just on the cash compensation ratio—it came in around 25%. It's up a little bit on a year-over-year basis.
Speaker #5: Thanks.
Speaker #3: Well, I think we've hired lots of real talent. Again, as Aaron mentioned, we're a little more tolerant of an investment period. Saying all that, we've guided to low to mid-20s compensation ratio on a cash basis, which I think for a business like ours is market and very reasonable.
Speaker #5: From closer to the 20% level. I know Cindy said that 25%, I think, was what we should expect in the near term. But just as we think longer term and as we model the business out over the next couple of years, is there anything more episodic in the near term that's going to keep it around that 25% level?
Speaker #5: Or is that just sort of the new norm, and that's how we should think about the level of comp going forward? And then, maybe as a second part to that, just if we do get a down quarter, can you give us any sense of how much we should think about that comp ratio kind of flexing in a weaker environment?
Speaker #3: And sure, you know, notionally, given the size of the P&L this year, you know, the notional numbers look big. And it's always been our practice to take a top-down approach early in the year and then sharpen our pencil later in the year.
Speaker #5: Thanks.
Speaker #3: Well, I think we've hired lots of real talent. Again, as Aaron mentioned, we're a little more tolerant of an investment period. Saying all that, we've guided to a low to mid-20s compensation ratio on a cash basis, which I think for a business like ours is market and very reasonable.
Speaker #3: But I think that guidance remains, around. And I'm looking more at the year-to-date ratios and the second quarter ratio because we do try to true up our accruals and get them right heading towards year-end.
Speaker #3: So I look at the 23%. We've guided mid you know, low to mid-20s and 23% is pretty low to mid-20s. So.
Speaker #3: And sure, notionally, given the size of the P&L this year, the notional numbers look big. And it's always been our practice to take a top-down approach early in the year and then sharpen our pencil later in the year.
Speaker #5: All right. Thanks for that, Joe.
Speaker #1: Your next question comes from the line of Dan Fannon with Jefferies, your line is now open. Please go ahead.
Speaker #3: But I think that guidance remains around, and I'm looking more at the year-to-date ratios and the second quarter ratio because we do try to true up our accruals and get them right heading towards year-end.
Speaker #5: Thanks. So I was hoping to just expand a bit upon just kind of the current environment. Obviously, you've talked about the capital that's being deployed in the business.
Speaker #5: But maybe discuss the opportunity set as Q2 kind of progressed. And as you sit here in July, maybe some of the, you know, asset classes or markets that are generating higher levels of return or more interest or attractive in this current environment.
Speaker #3: So, I look at the 23%. We've guided to low to mid-20s, and 23% is pretty much low to mid-20s. So,
Speaker #5: All right. Thanks for that, Joe.
Speaker #1: Your next question comes from the line of Dan Fannon with Jefferies. Your line is now open. Please go ahead.
Speaker #3: Okay. Sure. Thanks, Dan. It's Joe again. I think the, you know, the growth markets that we used to refer to and call out have continued to grow.
Speaker #5: Thanks. I was hoping to expand a bit more on the current environment. Obviously, you've talked about the capital that's being deployed.
Speaker #3: So crypto and options and block ETFs. But I think the emphasis again, through hiring, through accessing markets, through the growth of capital, has been pretty global and pretty widespread.
Speaker #5: In the business, but maybe discuss the opportunity set as two key kinds of progress. And as you sit here in July, maybe some of the asset classes or markets that are generating higher levels of return or more interest, or are more attractive in this current environment.
Speaker #3: And that is what we wanted. You know, and what Aaron's referred to. You know, for the past year. So global equities, you know, retail and prop were standouts this quarter, right?
Speaker #3: Okay, sure. Thanks, Dan. It's Joe again. I think the growth markets that we used to refer to and call out have continued to grow—so crypto, options, and block ETF.
Speaker #3: Of course, the operating environment is one of the primary determinants of how we do, but it's also notable. I think that we've improved qualitatively.
Speaker #3: I think if you repeated this environment, you know, two years ago or more, then we wouldn't have done as well. So and I'd mentioned VES as well.
Speaker #3: But I think the emphasis, again—through hiring, through accessing markets, through the growth of capital—has been pretty global and pretty widespread. And that is what we wanted.
Speaker #3: I mean, VES kind of reaching you know, a level that's been consistently above $2 million a day for three quarters in a row. It's something we don't talk about a lot, but that consistency has been a contributing factor.
Speaker #3: And what Aaron's referred to for the past year—so global equities, retail, and prop were a standout this quarter, right? Of course, the operating environment is one of the primary determinants of how we do, but it's also notable.
Speaker #3: And, you know, that's a very good business that's coming into its own.
Speaker #5: Okay. Thank you. And then just as a follow-up, you mentioned, you know, the hiring and can you just talk to where you think you are in that process?
Speaker #3: I think that we've improved qualitatively. I think if you repeated this environment two years ago or more, then we wouldn't have done as well.
Speaker #5: Is that, you know, is there a timeframe to think about in terms of getting to where you want to be in terms of the talent?
Speaker #3: And I'd mentioned VES as well. I mean, VES has kind of reached a level that's been consistently above $2 million a day for three quarters in a row.
Speaker #5: And then you also mentioned low attrition. I don't remember you guys ever referring to attrition. So is there any numbers or things you could put around maybe what's happening today versus a year ago or, you know, in context would be helpful.
Speaker #3: It's something we don't talk about a lot, but that consistency has been a contributing factor. And that's a very good business that's coming into its own.
Speaker #3: Hey, this is Aaron. I'll answer that. We, you know, we don't have like a headcount target in mind. And at this point, it's really more just, you know, we're kind of hiring as fast as we can.
Speaker #5: Okay, thank you. And then just as a follow-up, you mentioned the hiring, and can you just talk to where you think you are in that process?
Speaker #3: And I'll, you know, key areas like you know, quants for searchers, traders, and especially engineers, developers. And I think we're just going to kind of continue on that pace until we feel like we don't have too much work for the number of people that we have.
Speaker #5: Is there a timeframe to think about in terms of getting to where you want to be in terms of the talent? And then you also mentioned low attrition.
Speaker #5: I don't remember you guys ever referring to attrition. So, any numbers or things you could put around maybe what's happening today versus a year ago, or in context, would be helpful.
Speaker #3: And I mean, it's very hard for me to say because we always discover new things that we want to do. But I would say at least for the next couple of years, you can expect us to be hiring pretty aggressively.
Speaker #3: Hey, this is Aaron. I'll answer that. We don't have a headcount target in mind, and at this point, it's really more just that we're kind of hiring as fast as we can.
Speaker #3: I think in terms of the attrition, it's not that we were like targeting again a certain number, but it's more just kind of trying to highlight that there's been an overall culture shift and I think it's been recognized by the employee base and also just by the available talent seeing.
Speaker #3: And I'll key areas like quants for searchers, traders, and especially engineers, developers. And I think we're just going to kind of continue on that pace until we feel like we don't have too much work for the number of people that we have.
Speaker #5: Understood. Thank you.
Speaker #1: Your next question comes from the line of Ken Worthington with JP Morgan, your line is now open. Please go ahead.
Speaker #3: And I mean, it's very hard for me to say, because we always discover new things that we want to do. But I would say, at least for the next couple of years, you can expect us to be hiring pretty aggressively.
Speaker #6: Hi. Good morning. Thanks for taking the questions. So you're building capital you're hiring more trading talent. Can you maybe help us understand which of the asset classes and the products that you're focusing these incremental resources towards?
Speaker #3: I think, in terms of the attrition, it's not that we were targeting, again, a certain number, but it's more just trying to highlight that there's been an overall culture shift. I think it's been recognized by the employee base and also by the available talent pool, and that's reflected in the interest that we're seeing.
Speaker #6: Is it completely broad-based or are you really focusing it on some particular areas geographies or products or asset classes?
Speaker #5: Understood. Thank you.
Speaker #1: Your next question comes from the line of Ken Worthington with J.P. Morgan. Your line is now open. Please go ahead.
Speaker #3: Sure. I'll answer. I mean, I think Joe sort of said this on the previous question, but it's really broad-based. I mean, of course, it's not going to be dollar for dollar equal everywhere.
Speaker #5: Hi, good morning. Thanks for taking the questions. So, you're building capital, you're hiring more trading talent. Can you maybe help us understand which of the asset classes and products you're focusing these incremental resources towards?
Speaker #3: There are some that, you know, in any given quarter, take more capital or less capital. And as we've kind of highlighted on other calls, you know, the structure of the company, the, you know, the flat structure, the way we make decisions, capital can move around opportunistically extremely quickly.
Speaker #5: Is it completely broad-based, or are you really focusing it on some particular areas, geographies, products, or asset classes?
Speaker #3: So you know, even if I had a plan, it would change tomorrow. But you know, there's really a number of areas across the firm over the last year have seen sustained increases in, you know, deployable trading capital.
Speaker #3: Sure, I'll answer. I mean, I think Joe sort of said this on the previous question, but it's really broad-based. I mean, of course it's not going to be dollar for dollar equal everywhere.
Speaker #6: Okay. And then can you talk about the jump in the brokerage and transaction costs? Maybe how did the mix change versus the last maybe two quarters to drive the, you know, the bigger jump in the brokerage and transaction costs this quarter?
Speaker #3: There are some that, in any given quarter, take more capital or less capital. And as we've kind of highlighted on other calls, the structure of the company—the flat structure, the way we make decisions—means capital can move around opportunistically extremely quickly.
Speaker #3: You know, that's going to really depend on business mix. It could depend on geographic mix. It could depend on timing of expenses. So I wouldn't really read too much into what I'd look long-term.
Speaker #3: So even if I had a plan, it would change tomorrow. But there are really a number of areas across the firm that, over the last year, have seen sustained increases in deployable trading capital.
Speaker #3: I don't know, Cindy, is there anything to add?
Speaker #2: Yeah. No. I mean, it's just as Joe was saying, right? It kind of really depends on the type of instrument. So that's why, you know, you kind of are a disclosure.
Speaker #5: Okay. And then, can you talk about the jump in the brokerage and transaction costs? Maybe, how did the mix change versus the last, maybe two quarters, to drive the bigger jump in the brokerage and transaction costs this quarter?
Speaker #2: We try to guide people to not focus on just one line item of our income stream.
Speaker #6: you.
Speaker #1: Your next question comes from the line of Michael Cypress with Morgan Stanley, your line is now open. Please go ahead.
Speaker #3: That's really going to depend on business mix. It could depend on geographic mix. It could depend on timing of expenses. So I wouldn't really read too much into it when looking long-term.
Speaker #7: Hey, good morning. Thanks for taking the question. Just wanted to ask on perpetual features. There's obviously been a lot of discussion around scope for regulated perpetual futures of late just curious as you think about that market potentially developing in the US.
Speaker #3: I don't know, Cindy. Is there anything to add?
Speaker #2: Yeah, no, I mean, it's just as Joe was saying, right? It really depends on the type of instrument. So that's why, in our disclosure, we try to guide people not to focus on just one line item of any concern.
Speaker #7: Is that ultimately a new revenue opportunity for firms like Virtu or is it simply shifting volume from existing products? Just curious how you think about that.
Speaker #5: Okay. Great. Thank you.
Speaker #1: Your next question comes from the line of Michael Cypress with Morgan Stanley. Your line is now open. Please go ahead.
Speaker #3: Sure. Thanks for the question. So I mean, I don't think we think we can predict where volumes are going to go. It does seem historically that, you know, when there's been new ways to trade things and new, you know, sources of fragmentation that generally volumes go up.
Speaker #5: Hey, good morning. Thanks for taking the question. I just wanted to ask about perpetual futures. There's obviously been a lot of discussion around the scope for regulated perpetual futures of late. Just curious—do you think about that market potentially developing in the US?
Speaker #3: And certainly in the short term, it seems like that has happened. And, you know, exactly where it shakes out, we don't know. But our attitude has always just be connected to everything that trades electronically everywhere we can and stand ready to be able to price and shift liquidity around in the market.
Speaker #5: Is that ultimately a new revenue opportunity for firms like Virtu, or is it simply shifting volume from existing products? Just curious how you think about that.
Speaker #3: And, you know, it's been great for us so far. And we're going to continue to be there as a growth.
Speaker #3: Sure. Thanks for the question. I don't think we believe we can predict where volumes are going to go. It does seem, historically, that when there have been new ways to trade things and new sources of fragmentation, generally volumes go up.
Speaker #7: And also just curious to, you know, get your perspective on the appeal that you see for customers with perpetual futures. Just, you know, curious how much interest appetite you see from customers for that sort of product.
Speaker #3: And certainly, in the short term, it seems like that has happened. Exactly where it shakes out, we don't know. But our attitude is always just be connected to everything that trades electronically, everywhere we can, and stand ready to be able to price and shift liquidity around in the market.
Speaker #7: What is it that appeals in your view that you think is most compelling? I mean, overseas, it seems like it's the high leverage and the 24/7 access.
Speaker #7: You know, as that comes to the US, curious what you think might appeal. What might be the appetite from institutions? And what might be the scope for the perpetual product to evolve over time?
Speaker #3: And it's been great for us so far, and we're going to continue to be there as we grow.
Speaker #7: Maybe to address some of the perceived shortcomings and some pockets. Thank you.
Speaker #5: And also, just curious to get your perspective on the appeal that you see for customers with perpetual futures. Just curious how much interest or appetite you see from customers for that sort of product?
Speaker #3: Okay. When you say a customer appeal, are you talking retail? I wasn't following. All the above. Look.
Speaker #5: What is it that appeals, in your view, that you think is most compelling? I mean, overseas, it seems like it's the high leverage and the 24/7 access.
Speaker #7: Market perpetual.
Speaker #3: The US has directed sure. Virtu execution services has institutional customers. There's not a big demand right now. And I think as you know, we don't have direct retail customers.
Speaker #5: As that comes to the U.S., curious what you think might appeal. What might be the appetite from institutions? And what might be the scope for the perpetual product to evolve over time?
Speaker #3: We're a wholesaler. For a number of hundreds of retail brokers. And, you know, Mike, I think I'd prefer to Aaron's previous answer, right? We will be there to trade these products as they evolve.
Speaker #5: Maybe to address some of the perceived shortcomings and some pockets. Thank you.
Speaker #3: Okay. When you say customer appeal, are you talking retail? I wasn't following.
Speaker #3: I don't actually recognize them. We don't think of them as a new asset class. It is the evolution of lots of existing asset classes.
Speaker #5: All the above.
Speaker #3: All of the above. Look, sure. Virtu Execution Services has institutional customers. There's not a big demand right now, and I think, as you know, we don't have direct retail customers.
Speaker #3: So if there are, you know, novel ways that customers want to trade and hedge and use these products, we will be there. As Aaron said, to price them and to trade them, right?
Speaker #3: We're a wholesaler for a number of hundreds of retail brokers. And, Mike, I think I'd refer to Aaron's previous answer, right? We will be there to trade these products as they evolve.
Speaker #3: So and we generally don't pick a view as to, you know, if something is a better product or a worse product or something that we'd like to see more or less of.
Speaker #3: We try to be agnostic and just trade it as it becomes tradable and liquid and, you know, something that we can offer our services around.
Speaker #3: I don't actually recognize them. We don't think of them as a new asset class; it is the evolution of lots of existing asset classes.
Speaker #3: So if there are novel ways that customers want to trade and hedge and use these products, we will be there, as Aaron said, to price them and to trade them, right?
Speaker #7: Okay. Thanks.
Speaker #3: And we generally don't take a view as to whether something is a better product or a worse product, or something that we'd like to see more or less of.
Speaker #3: We try to be agnostic and just trade it as it becomes tradable and liquid, and something that we can offer our services around.
Speaker #5: Okay. Thanks.
