Cboe Global Markets (CBOE) Q2 2026 earnings call transcript

I'd now like to turn the call over to Ken Hill, Head of Investor Relations. You may begin.

Good morning, and thank you for joining us for our second quarter earnings conference call. On the call today, Craig Donahue, our CEO, will discuss our performance for the quarter and provide an update on our strategic outlook. Jill Griebeneau, our Chief Financial Officer, will provide an overview of our financial results for the quarter, as well as discuss updates to our 2026 financial guidance. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Prashant Bhatia, our Head of Enterprise Strategy and Corporate Development, Heidi Fisher, our Global Head of Equities and Spot Markets, Rob Hawking, our Global Head of Derivatives, and Scott Johnston, our Chief Operating Officer. I would like to point out that this presentation will include the use of slides.

We'll be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of the website. During our remarks, we will make certain forward-looking statements which represent our current judgment for what the future may hold. While we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the FCC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise after this conference call.

During the call today, we'll be referring to non-GAAP measures as defined and reconciled in our earnings material. Now, I'd like to turn the call over to Craig. Good morning, and thank you for joining us to review our second quarter results. Cboe delivered another quarter of record net revenue and strong adjusted earnings, with all of our core businesses continuing to deliver exceptional performance. From this position of strength, we're turning our attention to the many opportunities for growth ahead. I'll share some high-level comments before handing the call over to Jill for a financial update. During the second quarter, Cboe grew net revenue 25% year-over-year to a record $732 million, and adjusted diluted EPS increased a robust 45% to $3.56.

The strong execution during the second quarter was again broad-based, driven by double-digit net revenue growth in every major category at Cboe, and year-over-year net revenue growth in all five of our company segments. Beginning with our derivatives business, we delivered another record quarter with net revenue increasing to $413 million, up 30% year-over-year. Index options drove the upside, setting another quarterly record with average daily volume increasing 32% year-over-year to 6.2 million contracts. The quarter marked several product-specific ADV records with 5.1 million SPX options, 3.1 million SPX zero-DTE options, 195,000 mini-SPX options, and 189,000 contracts traded during global trading hours. During the quarter, SPX option volumes increased 40% year-over-year on the back of elevated economic uncertainty and stronger retail engagement.

As geopolitical tensions eased in April and May, investors gravitated to longer-dated options to reposition their portfolios, particularly through the use of upside calls to participate in the market rally. In June, we saw a notable increase in retail volume following the repeal of the Pattern Day Trader Rule, which had limited how often smaller accounts could trade without triggering additional restrictions.

Its removal has eliminated a friction point, making it easier for smaller retail accounts to trade products like Zero DTE more frequently. The impact of the repeal was immediate with SPX 0DTE ADV increasing 11% month over month in June, with the estimated retail share of that volume rising to 57% versus 53% in April and May. Stronger retail engagement is also evident in the outsized growth in our mini-SPX contract, with ADV surging 37% from May to June and more than 80% year-over-year in Q2. We anticipate the continued adoption of the pattern day trader rules across our broker-dealer partners in the months ahead will be a tailwind for volumes and retail investors alike. Options continue to play a critical role in today's markets, offering a distinct risk and return profile compared to linear derivative products like single stock futures and perpetual futures.

Futures give investors direct exposure to the underlying along with leverage, but introduce unbounded downside risk, deferring liquidation mechanics, and funding rate uncertainty depending on the product. We do not view options as a substitute for linear derivatives, but as a different tool entirely. Investors can define their maximum loss up front while still participating in outsized upside. That combination of convexity and defined risk is among the reasons why the vast majority of zero DTE options trading today happens in capped risk structures. Beyond expressing directional views, options can also be used for income generation, portfolio hedging, and volatility management, making them among the most versatile tools available to investors. We believe these distinctions help explain why SPX zero-DTE trading has sustained strong growth across different market cycles and volatility regimes.

As we look to extend our traditional options business, we're building something we believe will define the next chapter of growth at Cboe, a suite of solutions in the event and prediction market space. In June, we launched Cboe Predicts, our binary options on the mini S&P 500 index. The feedback reinforces something we've long believed. There is demand for simple, outcome-based ways to engage with markets that have traditionally felt out of reach for many investors.

To meet that demand, we're drawing on the trusted market infrastructure and deep liquidity that have defined our options franchise for decades to develop simple, intuitive products that appeal to a broader set of investors. Over time, we expect many of these traders to build familiarity and confidence in basic risk management concepts and progress into more sophisticated strategies like options spread trading.

We also see a compelling opportunity in contracts tied to company-specific performance metrics. We've taken the first step by filing with the SEC in July to list these products, with an initial focus on 23 of the most actively traded U. S. companies. That filing remains subject to regulatory approval, but we see a variety of use cases that span both our institutional and retail customer bases for these products. What sets this product apart from competitors is the structure. We firmly believe these are securities products that should be overseen by the SEC and built within a framework of transparency and investor protection, one that Cboe has helped shape for more than 50 years. That regulatory foundation is exactly why we believe we're the right operator to bring this to market.

A key enabler for the expansion of our global derivatives franchise, including our event and prediction market buildout, is our continued investment in global clearing. We filed an application for temporary registration with the SEC as a covered clearing agency, with full registration targeted at the end of an 18-month period, subject to regulatory approval. On the CFTC side, we became subject to Subpart C of CFTC regulations effective June 16th, which means we will be held to the same enhanced prudential standards consistent with global regulatory standards that apply to systemically important clearinghouses. Together, our SEC Temporary Registration Application and Subpart C Compliance support our treatment as a qualifying central counterparty under the U. S. Bank Capital Rules, which reduces capital requirements for clearing members.

Our SEC filing, if approved, will help us better innovate in options and expand our futures offering, backed by a vertically integrated stack of trading and clearing. Our clearing efforts are designed to be complementary to our long-standing partnership with OCC. We remain fully committed to the existing market structure and the OCC clearing model for existing equity options.

Moving to cash and spot markets, net revenue grew 22% year-over-year with steady growth across Europe and Asia Pacific and Global FX and record revenues in our North American equity segment. Global FX net revenue increased 17% year-over-year in the second quarter, driven by continued gains in average daily notional value and net capture. In Europe and Asia Pacific, net revenues increased 20% year-over-year, or 18% on a constant currency basis. This was driven by 31% year-over-year growth in net transaction and clearing fees, reflecting stronger industry volumes and improved net capture, even as market share eased slightly versus the prior year quarter. Cboe's North American equities business made a strong contribution as well, delivering record net revenue for the segment with net transaction and clearing fees up 37% on the back of stronger industry volumes and improved net capture rates.

As we look ahead, the cash equities business is one of the most dynamic asset classes in the world today, and Cboe is at the forefront as the industry embraces innovations that are reshaping how and when markets operate. We're excited to expand cash equities trading to a 23-by-5 basis planned for this December, pending industry readiness, with an eye toward 24-7 over time. That shift will give investors greater flexibility to manage risk and access liquidity whenever they need it. Against that backdrop, we're supportive of the Commission taking a fresh look at market structure that has evolved significantly over the past two decades through its proposed rescission of Rule 611. Cboe is the only exchange group that operates both registered lit exchanges and an ATS.

We believe this uniquely positioned Cboe to be a leader in combining the best elements of the various market models that equity market participants demand. Turning now to DataVantage, net revenue increased 15% year-over-year. Growth was again broad-based with market data and access services, Cboe global indices, and risk and market analytics, all posting double-digit gains on strong new unit and new subscription trends. Over the past year, we've repositioned Cboe to better allocate our time, effort, and resources toward our core businesses and the areas with the greatest potential for growth. That repositioning has aligned us more directly with the most powerful secular trends in our industry. The continued dominance of the U. S. equity marketplace, the growing role of retail investors globally, and the secular rise in options trading.

The U. S. equity market remains the bedrock of global capital, with market cap surging past $75 trillion in June of this year, roughly half of all global equity value, up from just 27% two decades ago. The S&P 500 sits at the heart of that dominance. The latest figures show more than $20 trillion indexed or benchmarked to it globally, more than the equity market cap of any country outside the U. S. Our proprietary index business has captured that momentum directly with Cboe's SPX Options ADV growing roughly 30% annually since 2021. With U. S. household financial assets growing by 6% annually for more than the last three decades, retail is playing a bigger role than ever in the markets.

At Cboe, we remain focused on giving investors the access, tools, and educational resources they need to participate confidently. Cboe pioneered options education, and our Options Institute continues to see strong demand with class registrations up 173 percent quarter over quarter in Q2. We believe that demand for education, greater access, and the utility options provide has fueled robust growth. That growth shows up clearly in the numbers. U. S. options stand out as one of the fastest growing asset classes on pace for a seventh straight record year in 2026. Daily volume through the second quarter averaged nearly 71 million contracts with a single high above 110 million contracts recorded in the past year Overall options growth has accelerated to over 20 annually since 2019 more than tripling volumes in seven years These trends aren independent tailwinds They compound and we believe Cboe is well positioned at the center of all three positioned to turn them into long shareholder growth With that I turn the call over to Jill to walk through our financial highlights for the second quarter and updates to our 2026 guidance Thanks, Craig.

Cboe delivered record net revenue in the second quarter, while adjusted diluted earnings per share rose 45% year-over-year to $3.56. Before turning to the segment results, I'll walk through a few high-level takeaways from the quarter. Net revenue increased 25% versus the second quarter of 2025, finishing at a record $732 million. We again saw strong double-digit growth in all categories, led by our derivatives business. Specifically, derivatives net revenue increased 30%, with strength across our proprietary index options and multi-list products powering the category's performance. Cash and spot markets net revenue rose 22%, fueled by strong industry volumes, and data-managed net revenue was up 15% on a year-over-year basis. Adjusted operating expenses came in at $217 million, up 2% year-over-year, while adjusted operating EBITDA grew 37% to $528 million.

Adjusted operating EBITDA margin expanded 6.4 percentage points to 72.2% in the second quarter, reflecting both our strong revenue performance and continued expense discipline. Turning to the key drivers of the quarter by segment, our press release and the appendix of our slide deck include information detailing the key metrics for our business segment. So I'll provide some highlights for each.

Options delivered yet another record quarter, with net revenue of 30% year-over-year, driven by a 33% increase in net transaction and clearing fees. Total options ADV climbed 26%, including a 32% increase in index options volume and a 24% increase in multi-list options volume. The revenue per contract for our options business rose 6% year-over-year, a result of continued mix shifts towards index options, coupled with a 3% increase in the index options rate per contract. North American equities net revenue was up 17% versus the second quarter of 2025, as strong industry volumes drove a 37% increase in net transaction and clearing fees, with market data fees and access and capacity fees also contributing to the gain. I will now turn the call over to management for the Cboe Global Markets earnings conference call.

Driven by an 8% increase in average daily notional value and a 6% increase in net capture. Looking at our Cboe Data Vantage business, net revenues increased by 15% compared to the second quarter of 2025. New subscription and unit sales continued to drive revenue growth, representing approximately 84% of the quarter's growth, with the remainder coming from pricing changes. Sales trends also reflected strong international demand, with 50% of the quarter's sales coming I will now turn the call over to management for the Cboe Global Markets earnings conference call. As we discussed on our first quarter call, in April we signed a definitive agreement to sell CBOe Canada and CBOe Australia. We'll continue operating both entities until close, each subject to its own closing conditions and regulatory approval.

Today we're updating our assumptions to reflect an expected third quarter close for the sale of CBOe Australia. For consistency, we'll provide organic net revenue growth metrics that exclude the impact of the Cboe Australia sale, and we'll also break out the absolute dollar impact separately for modeling purposes. Cboe Canada will remain part of our ongoing 2026 guidance until we have more clarity as to the exact timing for closing. We now expect Cboe total organic net revenue growth in 2026 to be in the mid to high teens range, up from last quarter's low double digit to mid teens guidance. We estimate Cboe Australia contributed approximately $20 million in net revenue through July. Factoring in the loss of future revenue assuming a third quarter sale, we still expect total net revenue growth to finish in the mid to high teens range for 2026.

On DataVantage, we now expect 2026 organic net revenue growth in the low teens range, up from last quarter's low double-digit guidance. We estimate Cboe Australia contributed approximately $17 million in DataVantage net revenue through July. Factoring in the loss of future revenue, assuming a third-quarter sale, we expect DataVantage net revenue growth to finish in the low double-digit range for 2026.

Turning to expenses, our adjusted operating expense guidance holds at $838 to $853 million for 2026, despite several moving pieces. Our estimate reflects higher incentive compensation expenses given our strong year-to-date operating performance, increased return to office costs, and incremental investment in high-growth potential areas, as outlined in Craig's prepared remarks. Offsetting the higher expense piece is an $11 million reduction in our expectations for 2026, tied to the expected third quarter close of the CBO Australia sale. I would note that while a majority of expenses associated with CBO Australia will end at the time of the sale, we will continue providing transition support and incurring some related expense for up to 12 months following the close of the transaction, subject to operational readiness.

These incremental costs are reflected in our updated guidance. Lastly, we continue to expect $40 to $50 million in annualized expense savings from the strategic realignment actions outlined last quarter, with $20 to $25 million still expected to hit in 2026. Rounding out our 2026 guidance, our CapEx guidance increases to $98 to $108 million, from $73 to $83 million, as we made incremental investment in our clearing infrastructure and opportunistically pulled forward hardware purchases for future service to lock in lower costs ahead of rising inflationary pressure in the space. Depreciation and amortization expenses decreased to $54 to $58 million from $56 to $60 million, reflecting the later in-service timing of certain accelerated purchases.

We continue to expect a full-year effective tax rate on adjusted earnings of $27.5 to $29.5 under current tax laws. While we don't formally guide to interest income or expense, we expect net interest income, income net of expense, to contribute $8 to $9 million positively in the third quarter, given higher cash balances.

Turning to capital allocation, we continued our opportunistic share repurchase activity during the quarter, buying back $33 million of Cboe shares. Combined with a $76 million dividend payment of $0.72 per share, we returned a total of $108 million to shareholders in the second quarter. While we recognized that there was meaningful volatility in our share price during the second quarter, the most notable declines occurred in the final weeks of June, a period during which, consistent with standard practice around quarter-end reporting, our ability to transact in the open market is more limited outside of our 10B-5-1. Had we had greater flexibility in the open market, we would have welcomed the opportunity to be more aggressive, particularly given what we viewed as a notable discount in the stock, supported by our strong cash position, and continued confidence in the long-term value of the business.

Thinking about capital allocation more holistically, we are mindful of upcoming capital needs, including the $650 million debt tranche maturing in the first quarter of 2027, which we currently expect to repay with cash on hand. We will continue to evaluate opportunities to repurchase shares pursuant to our share repurchase program based on our share price, our trading window, and other capital deployment priorities, including this upcoming debt repayment. We continue to maintain significant balance sheet flexibility with adjusted cash of $2.3 billion and a leverage ratio of 0.7 times. That strong financial position gives us the capacity to pursue organic or inorganic growth opportunities while continuing to return capital to shareholders through dividends and opportunistic share repurchases.

With that, I'd like to hand it back to Craig for closing comments.

Thank you, Jill. Last quarter, I laid out the decisive steps we were taking to reposition Cboe for greater success. More recently, we rounded out our executive leadership team, adding Heidi Fisher as Global Head of Equities and Spot Markets. She joined us in June and is with us today on the call. The 2Q results show that we're delivering on that strategy, continuing to sharpen our portfolio, simplify our structure, and build a stronger foundation for our core businesses. As an organization, we must now take the next step and shift our focus to the growth opportunities ahead. With some of the most powerful secular trends in the industry at our back, my comments today give you a preview of some of the tangible initiatives we have underway to help drive new potential sources of revenue growth at Cboe.

Our derivatives franchise remains incredibly strong, setting multiple records to start 2026. A foundation will leverage as we push into the related category of event contracts. With the launch of Cboe Predicts and our filing to bring company KPI products to market, backed by clearing capabilities we're building out at Cboe Clear US, we believe Cboe is best positioned to capture this opportunity set. In cash equities, we're moving toward 23.5 pending industry readiness and eventually 24.7 as market structure evolves. And in DataVantage, we look to keep bringing new products to market to meet our customers' data and access needs. We're moving into this next phase with speed, conviction, and a clear sense of where we can win. I remain genuinely excited about Cboe's future, and I look forward to delivering on that opportunity in the quarters ahead.

How would you sum up maybe I'll probably let Rob get into more detail of that, but I think it's really important to focus on And, you know, because you referenced perpetuals, you know, we have a much broader ecosystem, a much broader distribution base, and a much broader, ultimately, customer base that I think we can tap into in the equity markets and in the equity derivative markets, just in terms of the sheer number of accounts and market participants in the retail segment than exists on the future side. So I think that's a key differentiator. I'll let Rob talk about a lot of the more sort of technical distinctions that exist between the products.

Yeah, thanks, Craig. You know, and thanks for the question, Ben. I think Perpetual Futures are really arguably, you know, one of the more successful products that's come out of the crypto markets. But I think it's important to really look at their history to kind of better understand the use case. And so PERPS emerged because traders wanted really the simplicity of trading underlying digital assets, but with leverage, and the ability to easily go short. And so traditional futures accomplished this, but they added friction, they added cost from having to continually roll the positions, and PERPS effectively bridged that gap between spot trading and that leveraged futures exposure. But I think it's important to recognize that perpetuals and SPX options really, and Craig mentioned it in the prepared remarks, fundamentally different investor needs.

PERPs offer no expiration date, so you can hold an underlying position indefinitely. This really is contrary to zero DTE contracts that expire the day you trade them. You know, PERPs do provide leverage, but it's in the form of linear exposure so that, you know, the market moves, whether it's for or, more importantly, against your position, gains and losses move proportionally. And the amount of leverage offered really just dictates how quickly your gains and losses move. And so options, as we've mentioned, offer that complexity and really that defined risk exposure. You know, investors, as we've said, tailor views around direction, but really volatility market events, income generations, really in ways that simply are not able to be replicated in the futures market.

And then even on the zero DTE front, you know, over 95% of the trades we see are defined risk strategies. So with 55 of those being spreads So whether the strategy itself is the same customer the end result and the use case is really very different because you don have that defined risk aspect in the futures market And let's not forget, this dynamic has really worked well for decades. Investors have had access to futures on the S&P 500, yet demand for SBX options really continue to grow because of that different risk-return profile. So, you know, while you point out, you know, there could be some overlap in the active trading communities, we really view PERPS as a complementary product to the options ecosystem rather than a direct substitute.

And quite frankly, you know, where it's appropriate, we may look to expand our continuous futures offering, you know, where there's demand to do so.

Yeah, thank you. I can kick that one off and then hand it over to Jill. You know, we continue to view the event prediction markets really as an exciting area and a natural extension of our derivatives business. You know, at a high level, the risks that are traded through things like our XSB binaries and our proposed company-specific KPI contracts really are very consistent with the kinds of products we've been bringing to the market for more than, call it, 50 years. You know, they provide investors, really, and it's important, ways to express their expectations in tradable exposures. And so we were excited to get XSP, the yes-no contract, out the door on June 15th. You know, we're in the early days of the launch, but encouraged with the level of engagement by the market.

We currently have three different market makers providing liquidity in the product, and spreads continue to narrow as really the liquidity grows. We've also been working very closely with Schwab as an anchor tenant and are extremely excited that they just reported they'll begin offering these contracts on their platform to clients very soon. And so looking forward, you heard in Craig's prepared remarks, you know, we filed for both the company-specific KPI event contracts as well as the ability to clear those on Cboe Clear US. Thus far, you know, Cboe's product franchise has really been good at providing tools to manage risk and trade at the index level, the sector level, and even the individual company stock level.

What the company-specific KPI contracts provide is really the ability to go even more granular to trade and manage the individual components that drive the company's stock value. So, for example, think in, you know, NVIDIA's data center revenue, think Microsoft's cloud-based revenue. You know, today's markets consistently reference predictions, and we think having liquid markets around investors' expectations for these metrics will further drive better insights into, call it, company performance, better ability to manage risk at that component level. So, you know, we anticipate adoption of these contracts to follow a similar path to how Zero DTE developed, with the market starting heavily weighted towards retail investors. As the historical data sets grow and more analysis becomes available, we believe institutions will get more involved, given the correlation between these metrics and their impact on stock valuation.

We believe, you know, that'll help institutions better manage risk really across single name portfolios. So we continue to work really closely with the whole industry, both retail and institutional, and of course, the SEC to ensure if approved, these products are brought to market really with the same rigor, investor protections afforded to investors today, which we think is very, very important. So on the company-specific side, we're targeting a second half of September, early October launch pending regulatory approval, of course. But really big picture, the demand is there, the idea of getting more granular and how you can trade the individual components that drive valuation is there. And we're kind of excited about both the practical application for retail to trade these as they're trading, you know, in that event prediction space today, as well as institutions getting involved that can really drive, you know, a healthy market quality.

Thanks, Ben. Just picking up on the guidance piece, we haven't incorporated anything notable into the forward-looking guidance for 2026 related to this. I mean, to Rob's comments, still early days. We will definitely, you know, keep our eyes on this, come back to you in late October with our final quarter update for the year. Just, you know, want to note the dialogue that we've done on the total net revenue growth rate for the mid to high teens this time around, that's more reflective of, let's call it, our existing product base set there. It doesn't incorporate anything incremental from this.

And does the CFTC need to be involved at all, or is it just SEC? And then, have you thought about pricing on these types of contracts in terms of, you know, will they be priced more like your proprietary options or closer to the multi-listed options?

Thanks, Brian. Appreciate your question. So on the first part of your question, I mean, we have been working obviously closely with the SEC Commission staff on this filing well prior to actually making the filing. I can't really kind of comment on how, you know, sort of the timing will turn out. That's within more of their control, but we would say that we think the process is going very well and smoothly. You know, in terms of the other aspect of your question, it is open for comment. I believe that comment period will end next Wednesday, and so we'll continue to look at sort of industry commentary. And, you know, I would think that, you know, there's a close level of cooperation between the FCC and the CFTC.

So I'm sure that that's something that is an ongoing discussion with them. But, you know, we've obviously done a tremendous amount of work and have a strong point of view that these are securities that are subject to the jurisdiction of the SEC. So from our perspective, it's going well, but, you know, we can never be, you know, definitive about what the actual timing of the regulatory approval would be, but we think it's gone very smoothly so far.

Yeah, and I would add, you know, as of right now, we haven't seen any comments submitted yet, but we're obviously watching closely. On the pricing front, we are still in that exercise right now, but I think you can think of these more closely aligned to other event prediction market contracts on the market. We think we can be very competitive. The reason I say that is the notional value of an XPX contract is so big with the 100 multiplier and the index size compared to these event contracts, and specifically the KPI ones, where you're looking at effectively a dollar yes or no contract. So to equate that, we're looking at what are the alternatives, what are the other products on the market, and how can we price these to remain competitive, and we think we have the dials to do so.

They're kind of a different animal, obviously, and demand in prediction markets is still sort of dominated by sports contracts today. So what will you do to drive adoption there?

Yeah, thanks, Jeff. That's a great question. You know, in some regards, this is where our intermediated model, I think, is very strong. You know, we're relying on the various retail broker platforms. Think Robin Hood, Schwab, Webull, the likes, Tasty Trade, and really having them, you know, they're seeing the demand come in very strong from their customer base. And so we want to deliver the product. We want to deliver a seamless user experience, much like trading multilist options today, almost adding this as just another skew to our shelves. and allow them to position it, allow them with their GUIs and user interfaces how to position the yes-no event-style contracts within their platform. The nice thing is, and the encouraging thing is, the demand is coming from those platforms.

I would say historically in product development at the exchange, a lot of times we develop the product and then are trying to get the platforms to launch them, then trying to market those products to the customers. This is actually happening more in reverse. We are getting the inbound saying, we have massive demand from our retail client base for these. We need a solution, and we need a solution specifically on the security side, which we view as really, you know, kind of our competitive advantage to the other existing event contracts and prediction markets that are out there today.

Yeah, that's a great question. You know, I think it's hard to really speculate exactly how that will play out. You know, arguably, options and zero DTE are being used daily to trade around different movements in the market. So even though event regularity or the known events on the landscape would change in frequency, I still think there's enough dynamics of day-to-day movements, day-to-day announcements, day-to-day evolutions of the market space where you'll still see people positioning using options around those. And so, you know, we'll have to react to it. I think even on the event and prediction space, this is a nice hedge for if something like that were to go in that direction because, yes, you have your revenue or your earnings metrics that will become less frequent, but there are plenty of other metrics and plenty of other, I would say, uncertainty in how those metrics are moving throughout the quarter that, you know, people will still have interest in trading.

Yeah, and we're, you know, obviously keeping a close eye on this, and just there's a lot of surveys and data out there. I think our initial kind of issuer sentiment is that it's highly likely that we'd expect to see, you know, much in the way of quarterly reporting. So again, continuing to monitor this.

So I'll start with that. I mean, part of the goal that we have with clearing, and remember that we have both a significant clearing presence in the European marketplace as well as Cboe Clear U. S. here. And so what we are thinking about mostly in terms of expansion is in Europe we're focused on clearing of securities finance transactions. We see a lot of future growth potential there in the U. S. segment. We're really looking at clearing as an enabler for product innovation, market innovation, and the ability to bring products to market at a time when there's a lot of change in the industry and a lot of opportunity, we think. And so we have, I think, an advantage, which is that, you know, we're a relatively small presence in the U. S. in terms of clearing, but this gives us the ability to sort of innovate.

So, as an example, and one of the reasons why we're pursuing the things that we discussed during the call, like the subpart C election, as well as the temporary and ultimately, hopefully, fully registered securities clearing agency with the SEC, is that we want to be able to move quickly to introduce KPIs. Those are different instruments that are customarily cleared at OCC. And then as well, as we think about moving toward 23.5, moving toward 24.7 ultimately, and as we further the work that we're doing internally right now on thinking about tokenization and on-chain transactions and financial instruments, Those are all things that we can do to help bring things to market. I think I made the comment earlier that this is designed to be kind of complementary to our longstanding and very valuable partnership with OCC.

I mean, this is not in any way, shape, or form a departure from that. It really just that it allows us to move more quickly and to do things that either may be different in terms of the risk profile or risk appetite or operational capabilities of OCC at the present time But we always going to focus on ultimately as we evolve how we continue continue to work closely with OCC and find ways to benefit market participants in doing so I think you had a second part of your question that related to investments. And, you know, Scott probably could comment briefly on that, but we're clearly thinking about how to invest in not only our technology capabilities supporting clearing and settlement, but a lot of the new things that we're trying to do.

So I don't know if you want to add anything to Scott.

Sure. Thanks, Greg. Yes, Asis, as we think about how to expand clearing capabilities and really support innovation, we are definitely looking across the spectrum. of potential opportunities, notwithstanding things like tokenization or rails infrastructure. We're looking across the crypto markets. We're actually also looking at how to improve the innovation speed of CCUS to support the business. So we're open to a lot of things. I would say we're not specifically able to talk about anything right now, but that's definitely on our minds.

What gives Cboe ultimately the right to win? And how do you think that impacts pricing for event contracts over time? I'll start with that, Alex, and maybe Prashant or Rob might like to add something. But I'm a huge believer in the value of the huge network effects that you see in all-to-all exchange and centrally cleared markets. You know, certainly at low scale, I think that some of these sort of vertically integrated stacks where you have, you know, direct customer connectivity, you know, broker-dealer FCM exchange, and then post-trade capabilities, you know, those can be interesting. I suppose they're particularly valuable and interesting in the gaming and gambling area, but I think when you think about the scale of how those markets might develop over time, by those markets I really mean the event predictions, markets that are more focused on financial and economic events and underlying financial instruments.

I don't believe that those will do well ultimately as, let's call them, closed silo systems because they just don't provide the interactive capability across the entire marketplace. So we'll always remain very committed to that type of structure. We think it's really important to have broad-based partnerships, not only with market makers and liquidity providers, but with distribution channel partners like broker-dealer FCMs. We think that's the long-term formula success. That's not to say that those other approaches aren't valuable or can't be successful to some degree, but as we think forward in terms of if those markets are really going to grow and expand and achieve the kind of critical mass that we have in our traditional financial markets, I just think those sort of open all-to-all market structure is going to be much more valuable.

The only thing I might add is the idea of risk offsets and capital efficiency. When you have those individual silos, it's hard to get or impossible to really get risk offsets across the larger ecosystem. That's something that I think our market does incredibly well, and it's proven to do incredibly well. So, you know, you can hold risk, trade it at one location, it's fungible, and get offset for risk that's traded at another location. That ability to free up capital to provide liquidity to transact in is just, there's a huge multiplier effect to that. So, I think that's, especially on the institutional side, you'll still see benefits to that model going forward.

Yeah, and I'd also add, you know, we still continue to see a tremendous amount of demand. Just think about the retail brokers that Rob mentioned that are accessing or interested in accessing some of the new product launches. The number of retail clients on their platforms, you know, number over 50 million. So there's massive demand, and those firms do an incredibly good job at the education of new products that they put on that platform. So I think we will continue to see pretty robust demand for our intermediated model.

And maybe you could expand on that and sort of relate that to the actual retail and the type of customers that are trading. Thank you. Yeah, thanks, Simon. Thanks for the question. I think it's really a combination of both. Like, we've talked about on previous earning calls the idea of the Cboe product toolkit and how the toolkit is used together and the strength is in the interconnectedness of these products when you think of SPX and VIX. This is an expansion of that. As I talked about the value chain for company-specific KPIs, you can see how NVIDIA's data center sales will feed EPS and how EPS will feed their stock price, how the stock price will feed the sector price, and so forth.

And so when you think of that big picture, yes, we'll have retail that want to take individual positions or have, you know, individual expectations on each piece of those, you know, each component or each piece of that valuation chain. But then you go back to the institutional side, and they're looking at the complete value chain and how do each one of these companies fit in? How do I spread risk across a single-name option portfolio? And so we view them collectively, you know, holistically. And I think as we start to introduce more and more products down the road, as we look to expand that KPI product set, you can think of things like economic indicators. You know, I hear people talk about CPI a lot.

Like, you start to bring all of those in, and it's CPI is going to drive stock movement, stock movement is going to drive sector movement, sector movement is going to drive index movement, and so forth. So it's all very interconnected and allows people, especially as a former liquidity provider, I'll tell you, providing liquidity tends to be a reactionary thing. So you're reacting to the order flow coming in, but once you react and once you make that trade, you then have inventory that you need to spread out and manage your risk. So the more products that are interconnected, the more easily I can start to spread out that risk, and the more liquidity I can provide.

So it kind of tails into the previous question with the kind of idea of offsets and managing risk at the centralized clearing level, all the way into being able to provide liquidity on the exchange platform and do so in a manner that allows each individual component to get the liquidity they want, While you're looking kind of at the complete picture. So I hope that helps.

I want to come back to a couple of those things, but actually bigger picture on the proprietary products. Can you just give us an update on where we are with, you know, expansion of the customer base? And what I'm trying to ask is, you know, a couple of years ago, people were very excited when Robinhood finally came on. Where do we stand with kind of like the global expansion with other brokers around the world that want to trade particular SPX and zero DTE? And then maybe related to that, how have those conversations maybe changed over the last few quarters? Because we spent all this call talking about new innovation, new products. So as the menu of opportunities changes for those intermediaries and investors, I'm just wondering, are you still getting the same attention as you try to broaden your customer base, or everybody's just trying to figure out, what do I do next because there's so much demand?

Thank you. Yeah, thanks, Alex. I'll try to take this in two different directions. First, as far as the demand, and even tapping into, I'll start with international demand. You know, we still see very strong demand coming from the APAC and EMEA region, and the biggest reason being is the liquidity of our core products. When you think of SPX, when you think of VIX, and they want access to that liquidity and want to be able to trade and transact in that liquidity, and we've been slowly adding more and more brokers. Korea has been a great success story that we've talked about in the past, where, you know, as of Q1 of 2024, we had really zero brokers online, and now we continue to expand and have, you know, I would call the vast majority of retail brokers in Korea online.

So we're going to continue to, I would say, expand in those channels because the demand's coming in for our core product set. But on a different front and going in a slightly different direction, I just want to use kind of the pattern day trader rule removal as an example of just how we're seeing, you know, things like that affect the demand in our products. So across the top nine retail brokers, average daily volume increased following that rule change with SPX up almost 3.5%, XSP ADV was up over 36%, and multi-list options ADV was up almost 4%. And now that's on a month-over-month basis because the data set's small. The rule was just repealed, you know, call it a little over a month ago.

But an important signal of this is it's not just higher volume, but it's broader engagement. So simple order counts. So simple goes back to those single option trades, not spreads, not complex orders. Those rose meaningfully across the retail channel. So in SPX, simple orders increased over 40%. XSP was almost 75%. And multilist was just under 20%, signaling that kind of higher churn rate in retail participation and the demand to trade more frequently. And so at the same time, average order sizes generally declined. So that suggested growth is really being driven by a large number of smaller customer orders, rather than this narrow set of just large trades. And so the largest changes were concentrated at the zero-to-low-cost retail broker platforms, especially platforms like you had mentioned, you know, Robinhood, Weeble's another one.

So using their publicly available data, Robinhood's June Options ADB increased over 30% from May and almost 80% year-over-year, while Weeble's increased 36% month-over-month and 100% year-over-year. So this is encouraging data. We're seeing people that want to interact with the products, want to interact with the platform much more frequently. And we've talked about it before. Liquidity grows liquidity. Demand grows demand. You see that as people rush into the products and want to transact. It only gets stronger. The spreads only tighten. And we're very, very encouraged by how the market is evolving. All of these data points and kind of a continued growth on the horizon.

Yeah, so just in terms of data vantage, if you look at our growth, we had revenue of about $178 million this quarter, and that was up 15% year over year. About two-thirds of that growth was driven by higher access-related revenue, and the majority of that access-related revenue really came from increased connectivity and demand for increased connectivity to our options exchanges. So when you look at our multi-list options volume, we were up 24% year over year, and our SDX options volume was up 40% year over year. So that drove that demand. The other third came from continued growth in our market data. So when you look at it, we're seeing strong demand for both our U. S. and European proprietary data sets, and about 50% of data sales came from clients outside of the U. S. You heard Rob talk about the growth we're seeing in Asia, and that, again, we're seeing that across all of our data sets, more demand for Asian investors that want to invest in the U. S. , and their brokerage firms are looking at our market data across the board.

And that goes across equities, options, and our index market data. We're seeing broad-based support there. So we've got good momentum on the data vantage side. When it comes to 2027, we'll address that towards the end of the year when we give you guidance for 2027.

I will now turn the call back over to the management team for some final closing remarks. Great. Thank you very much. We appreciate you joining us today, and we look forward to seeing you next quarter.