Virtu Financial Inc . (NASDAQ:VIRT), a leading provider of financial services and trading technology, reported a steady performance in the third quarter of 2024, despite mixed market conditions. The company announced an adjusted EPS of $0.82 and an adjusted net trading income of $388 million. The firm's EBITDA stood at $215 million with a margin of 55%, reflecting robust market-making activities, particularly in Asia and U.S. equities. Virtu Financial also emphasized its strategic initiatives, including the launch of Virtu Technology Solutions and a focus on crypto options and ETF block trading.
Key Takeaways
- Adjusted EPS for Virtu Financial in Q3 was $0.82, with adjusted net trading income at $388 million.
- Market-making contributed $288 million, and execution services accounted for $100 million of the total trading income.
- The company's EBITDA reached $215 million, resulting in a 55% margin.
- Operating expenses were reported at $190 million, with a cash compensation ratio of 23%.
- Virtu repurchased 1.7 million shares at an average price of $20.80 and reaffirmed a quarterly dividend of $0.24.
- The company remains committed to strategic growth and efficient capital management, with a focus on options trading in the Asia-Pacific region.
Company Outlook
- Virtu Financial expects operating expenses to remain stable with low single-digit increases in non-compensation expenses.
- The firm is optimistic about growth in options trading, especially in the Asia-Pacific region.
- Regulatory changes, including SEC proposals, could impact market rebates and liquidity, but the company is adapting its strategies accordingly.
Bearish Highlights
- U.S. equity volumes were down 4%, indicating a challenging environment.
- Regulatory changes on payment for order flow and liquidity access may have a net negative effect on institutional clients.
Bullish Highlights
- Options volumes saw an increase of nearly 7%.
- The company is expanding its presence in futures trading and is investing in U.S. and international options markets.
- Virtu Financial is positioning itself to become a retail options wholesaler.
Misses
- There were no specific financial misses reported during the call.
Q&A Highlights
- CEO Douglas Cifu discussed investments in options markets and the minimal impact of the OCC's intraday margin rule on Virtu.
- CFO Joseph Molluso elaborated on the company's stock buyback strategy and compensation management, indicating a focus on dollar-cost averaging and maintaining appropriate compensation ratios.
Virtu Financial Inc. (VIRT) showcased its resilience in the face of mixed market conditions with its third-quarter earnings report. The company's adjusted earnings per share of $0.82 and net trading income of $388 million underscored the strength of its market-making business, which performed well despite low global trading volumes. Growth in crypto options and ETF block trading, along with the launch of Virtu Technology Solutions, were highlighted as key strategic initiatives.
The company's market outlook remains positive, with expectations of stable operating expenses and optimism for options trading growth, particularly in Asia. However, the company is also mindful of the potential challenges posed by regulatory changes. With a strong focus on efficient capital management, including a share repurchase program and a steady quarterly dividend, Virtu Financial continues to navigate the complexities of the global markets while prioritizing shareholder value. The management concluded the call with a note of holiday cheer and a forward look into the coming year.
InvestingPro Insights
Virtu Financial's (VIRT) recent performance aligns with several key metrics and insights from InvestingPro. The company's adjusted EPS of $0.82 and strong EBITDA margin of 55% in Q3 2024 reflect its profitability, which is further supported by InvestingPro data showing a P/E ratio of 14.67 for the last twelve months as of Q3 2024. This relatively low P/E ratio, especially when compared to the company's growth prospects, suggests that Virtu may be undervalued.
InvestingPro Tips highlight that Virtu Financial is expected to see net income growth this year, which corroborates the company's positive outlook and strategic initiatives mentioned in the earnings report. The tip noting that Virtu has maintained dividend payments for 10 consecutive years aligns with the company's reaffirmation of its quarterly dividend of $0.24, demonstrating a commitment to returning value to shareholders.
The article's mention of Virtu's share repurchase program is complemented by the InvestingPro data showing a significant price uptick over the last six months, with a 43.91% total return. This performance, coupled with the company's strategic focus on growth areas like options trading and technology solutions, supports the InvestingPro Tip indicating a strong return over the last five years.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Virtu Financial's market position and future prospects.
Full transcript - Virtu Financial Inc (VIRT) Q3 2024:
Operator: Good day, and thank you for standing by. Welcome to the Virtu Financial 2024 Third Quarter Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Andrew Smith, Head of Investor Relations. Please go ahead.
Andrew Smith: Thank you, Anton, and good morning, everyone. Thank you for joining us. Our third quarter results were released this morning and are available on our website. With us on this morning's call, we have Mr. Douglas Cifu, our Chief Executive Officer; Mr. Joseph Molluso, our Co-President and Co-Chief Operating Officer; and Ms. Cindy Lee, our 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 Virtu's 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 the 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. 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. 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. 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 reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials and 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.
Douglas Cifu: Good morning, and thank you, Andrew. This morning, we reported our third quarter results. For the quarter ended September 30, Virtu earned $0.82 of adjusted EPS on $6.1 million per day of adjusted net trading income. We generated a 55% EBITDA margin and $215 million of EBITDA both on an adjusted basis. We delivered strong performance this quarter in both our customer and noncustomer market making businesses. We continue to progress our growth initiatives with strong performance in crypto options and ETF block. Our businesses performed well against headline volatility and volume metrics across the globe. Our Virtu Execution Services business was flat quarter-over-quarter, which we count as a solid performance given the muted environment for institutional volumes. We will talk more about VES in a minute. Overall, these results are especially impressive considering that global volumes remain quite low. U.S. equity share volume and notional turnover were down 4% and 1%, respectively, versus the second quarter. Volumes in notional in Europe were down 20% and 9% versus the second quarter, while volumes in Asia Pacific were up about 4%. Beginning this quarter, again, with Virtu Execution Services, our business performed very well. Adjusted net trading income was essentially flat from the second quarter, delivering $100 million of ANTI or $1.6 million per day. This performance, combined with a similar result in the second quarter represents the highest levels of daily adjusted net trading income since the second quarter of 2022 when volumes were 10% higher and volatility was 61% higher. I spoke last quarter about how Virtu's scaled operations afford us the unique ability to continually invest in our global multi-asset class platform to meet clients' needs. We have evidence that our multiyear investments are yielding positive results as demonstrated through third-party validation and recent client successes. A major contributor to this is what we are calling Virtu Technology Solutions, a trading and a data analytics infrastructure offering for growing midsized and/or major regional broker-dealers. VTS allows us to distribute our scale technology efficiently and strategically to other brokers, empowering them with leading technology to better serve their clients in a cost-effective manner. Along with our global suite of multi-asset class enabled products and solutions, we expect to continue growing our VES business long term. In addition to our VTS offering, we expect to our growth to be fueled by our flagship products and solutions, including industry standard datalytics, data analytics platform, global workflow and execution management systems or Triton, and our world class of trading algos. Our multi-asset class EMS platform, Triton covers equities, fixed income, FX and derivatives and our next-generation algos integrate machine learning techniques to further align our clients' investment decisions with their implementation results. Additionally, we are focused on increasing our reach in regions and markets previously underpenetrated by Virtu, such as the Middle East India and Japan as well as expanding into new client segments in existing markets to efficiently address opportunities to offer technology solutions. In the past few months, we've seen several client wins in VES as we increase and expand our client relations. These wins include adoption of our new switcher algo developed with machine learning and allows Virtu to increase its position on broker trade rankings across global clients. We've seen increasing adoption VTS, as I mentioned earlier. And while it is still early days, our new agency fixed income, RFQ offering is in production and growing. The senior hires were made to help us address this important opportunity have been in place for most of 2024 now and are leading key efforts to broaden the distribution of our offerings. I have mentioned before, we are as excited about the future of this business as ever. As always, our VES business has anchored in long-term partnerships, and our revolving offerings are driven by client demand and built on our global multi-asset class scalable technology. Turning to Market Making. Our business performed very well in the third quarter with our customer and noncustomer market making businesses both delivering a solid quarter. We continue to improve our team's cross desk internalization enhancements to help us manage risk and to explore ways to reduce our trading costs and address more of the opportunities we see in the market. Our Asia and U.S. equity segments showed particularly strong performance this quarter. For our customer Market Making business, the market opportunities, as measured through July and August, 605 reports, suggests an elevated opportunity of about 9% compared to the second quarter. However, based on preliminary 605 reports for September, the opportunity to decline significantly in September, reducing the quarter-over-quarter increase in quoted spread to a low single-digit percentage. As we expand the products and markets we trade, we remain very well positioned to capitalize on future volatility and opportunities. We continue to deliver success in new areas where we had no presence only a short few years ago. Our organic growth initiatives generated $632,000 per day in adjusted net trading income this quarter contributing about 10% of our ANTI. I will highlight results from the standout performance this quarter. Building our global options capabilities continues to be a top priority. Our growing options business delivered a strong performance in the quarter. In addition to our U.S. cash equity options, we are leveraging our growing capabilities and options to target global opportunities by optimizing the brokers we're using, increasing our local data center footprint and streamlining our technical integrations within local markets. We continue to grow in ETF block by onboarding new clients and broadening our distribution. In addition, our growing symbol and underlier coverage capabilities have opened the door for broader relationships with ETF issuers and fund managers, enabling us to service their regular trading and rebalance execution needs. Our crypto market making business continue to pace. Spot Bitcoin ETF volumes were up about 2% compared to Q2. And the new spot Ethereum ETFs are trading about 50% to 60% as many shares as the spot at Bitcoin ETFs. U.S. options on crypto ETFs are getting closer to launching and it is a natural extension of our crypto and options market making abilities to support these exciting products. We continue to expand our crypto market-making efforts by supporting new listed products and thoughtfully adding new exchanges and token. As we grow, we continue to build out our cross-product internalization capabilities which allow us to be more competitive, keep more of the spread and reduce trading fees. With that, I will turn it over to Jeff.
Joseph Molluso: Thank you, Doug. I'll just pick up on the market environment this quarter, which was mixed and very similar to the prior quarter. Compared to the lows of the second quarter, realized volatility of the S&P 500 was up about 52%. However, it's important to note, it's only up about half as much if you exclude the significant volatility in the first week of August. U.S. equity volumes were down 4%, and U.S. option volumes were up almost 7%. Retail activity indicators in the U.S. were also mixed. The IBKR equity share volume was down 6% versus the second quarter and the 605 spread opportunity through August was up 9%. But as Doug noted, the preliminary 605 report for September suggests that the full quarter-over-quarter change will be in the low single digits. Global equity volume was also mixed with the realized volatility of EURO STOXX Index up 28%; and then Nikkei up 168% in FIC markets, FX volumes were mixed. Energy volumes were up 5%, while high-yield credit volumes were down 3% versus second quarter. At September 30, 2024, our total trading capital, which is on Slide 14 and the supplement stood at $1.8 billion. Our incremental returns on capital, as you can see, remain excellent over a long-term basis. demonstrating our service-oriented and our ability to use our capital through. To that end, in the third quarter, we used a portion of our free cash flow to repurchase 1.7 million shares at an average price of $20.80 per share. To date, we have repurchased 49 million shares at an average price of $25.24 per share. The quarter end share count was 161 million shares outstanding bringing our buybacks on target to fit within the range as we have set forth publicly. Since we initiated our share repurchase program, we have repurchased 18.8% of the fully diluted shares of Virtu is net after new issuances. Our share repurchase program year-to-date is within the guidelines we've published. Results from the market-related businesses like ours will always vary with volumes and volatility, but Slides 8 and 9 illustrate the sustained earnings power of our business and the positive operating leverage we enjoy from prudent capital management as well as our growth initiatives and the cumulative impact of the share repurchases. On the expense side, our adjusted cash operating expenses were $173 million in the third quarter. Our run rate cash OpEx is up about 5% year-over-year, consistent with the prior guidance. Our cash compensation ratio was 23%, and our total compensation ratio was 28% for the quarter compared to 26% and 32%, respectively, for the full year of 2023. We expect cash operating expenses to remain within the recent historical range, and we expect the cash compensation ratio to also remain within historical marks. Regarding our total cash operating expenses going forward, we continue to assume low single-digit overall increases in non-compensation expense. And with that, to conclude the prepared remarks, I will turn it over to our Chief Financial Officer, Cindy Lee. Cindy?
Cindy Lee: Thank you, Joe. Good morning, everyone. On Slide 3 of our supplemental materials, we provided a summary of our quarterly performance. For the third quarter of 2024, our adjusted net trading income or ANTI, which represents our trading gains, net of direct trading expenses, totaled $388 million or $6.1 million today. Market Making adjusted net trading income was $288 million, or $4.5 million per day. Execution Services adjusted net trading income was $100 million or $1.6 million per day. Our third quarter 2024 normalized adjusted EPS was $0.82. Adjusted EBITDA was $215 million for the third quarter of 2024, and our adjusted EBITDA margin was 55.4%. On Slide 11, we provided a summary of our operating expense results. For the third quarter of 2024, we recorded $190 million of adjusted operating expenses. We continue to maintain an efficient cost structure and disciplined expense management, which has helped us to control our operating expenses during the inflationary environment. Financing interest expense was $24 million per day for the third quarter 2024. With the benefit of our recent refinance and the interest rate swap contracts that we entered in the prior years, our blended interest rate was approximately 7.3% for our long-term debt in aggregate. We remain committed to our $0.24 per quarter dividend. And combined with our share repurchase program, demonstrates our continued commitment to return capital to our shareholders. And now I would like to turn the call over to the operator for Q&A.
Operator: [Operator Instructions] Our first question comes from Patrick Moley from Piper Sandler. We'll move to our next question. Our question comes from Ken Worthington from JPMorgan.
Ken Worthington: Maybe first, we're seeing a proliferation of brokers offering retail investors access to options and now futures. This seems to play directly into the business model of Virtu are futures products developing the same payment for order process that we see in equities? And how is the attractiveness of futures trading for Virtu versus, say, options and equities just based on a profitability basis?
Douglas Cifu: Yes. Thanks, Ken. It's a keen observation. Obviously, we've been following that closely. And I think as you suggest that it's an exciting opportunity for us. I mean I think it's very complementary to what we do in our existing cash equities wholesale business in that we have connectivity and relationships with all of the aforementioned retail broker dealers. We've been in the prior night and now Virtu have been doing business with these firms for, in some cases, 20, 30 years, and they're very, very confident in our ability to provide efficient 2-sided liquidity to these clients' needs. I think, certainly, if you have active day traders that are looking for more intraday leverage perhaps the future products and derivative products are more attractive. We see that with our retail offerings and our retail clients in Asia, in particular, I would say, in Japan, in particular, where there's a very active CFD market. So we think it's complementary. We're excited about it. We don't think it's going to cannibalize the cash equities business it's probably a different sleeve, if you will, of retail investor that's more of an active day trader as opposed to a more casual retail trader for lack of a better description. So it's an exciting opportunity for us to continue to partner with these great retail firms that we've had great long-term relationships with. And I think it's under appreciated that, that really is a customer service business in part. Obviously, price matters a lot. But we get scored by all of our retail brokers on uptime and customer service and all of those things. And so it is very much a white glove business for us, and that goes back the 20, 30 years, the folks that we inherited the wonderful folks that we inherited from Knight Capital that continue to provide that service to these customers. So as they expand offerings, that's great for Virtu.
Ken Worthington: Just modeling question, brokerage costs were at the highest level since COVID. We've definitely seen some bigger activity quarters since then with low brokerage costs. So, was there anything about the mix of business that through brokerage costs higher this quarter? And how do we think about the go forward?
Douglas Cifu: Yes. No, it's a great observation. It's a great question. It's one of the unfortunately, of the Section 31 fees, you probably know how they work. Actually, they are a transaction tax. They shouldn't call them Section 31 fees, they are transaction tax and they're sort of measured -- they're very lumpy as measured in arrears by statute, and the theory is they're supposed to fund the FCC. So yes, we are funding the agency that then goes in tries to do bad things to the market ironically. But that rate changes twice a year. And so it's not as smooth as it otherwise would be. So if you can kind of go back in history and smooth it out and see what a normalized Section 31 fee would be, and I suppose in a perfect world, that if they had like a more normalized one, you wouldn't see the ups and downs within our adjusted net trading P&L. I think on top of that, we started to pay some cash fees, unfortunately as well. which were not hugely significant in the quarter, but that kind of was started up in earnest in September. So those are the 2 items.
Operator: [Operator Instructions] Our next question comes from Craig Siegenthaler from Bank of America.
Craig Siegenthaler: Hope everyone is doing well. Our question is on your organic growth businesses. So in the quarter, we monitored 3 big positive drivers. The Ethereum ETF launches, strong ETF volumes and also record index option activity. So we were a little surprised to see a sequential decline in ANTI, so I was wondering if you could talk about what drove this?
Douglas Cifu: Yes. It's a good question. Thank you, Craig. I think the biggest driver was probably within crypto, where we saw a pretty significant drop off in Bitcoin ETF, ADV. Andrew is telling me it was down about 11% quarter-over-quarter. So there's that. And I think within the index options family, Obviously, volume is important, but we obviously internally measure spread of those products and spread was down quarter-over-quarter as well. So that's the opportunity set for a market maker, as you know. So it's not just FX times wide, and in this instance, the wide decrease. So those are the 2 big drivers of it. Again, nothing alarming from our perspective. We continue to perform and continue to grow. And certainly, we're optimistic as we continue to expand those businesses, particularly in options where we now have a meaningful Asian options business, which is now contributing daily adjusted net trading income. And we're guardedly optimistic as we continue to grow that business, particularly in Japan, in India and the investments that we've made in those areas will pay off in future quarters.
Craig Siegenthaler: And just for my follow-up, we now have a final SEC equity market structure proposal, so I wanted to see if you could give us your updated view on the Reg NMS amendments on the market at large and how it will impact Virtu? And then can you give us a sense of how big your on-exchange market making business is to help us size up the risk? Specifically, we're roughly looking for how much income you're receiving from on-exchange rebates.
Douglas Cifu: Yes. It's a great question. Obviously, we followed closely filed comment letters. And our overall view is that the final rule, if you will, which I don't think -- but there's been one litigation file. So I don't know if everyone is going to be final filed. We'll see how it works out in the courts. But we think it's a bad result for the market. I have said many times, we are not a rebate trading firm. We are a net payer of exchange holding fees. So the reduction of the rebate won't impact us from an adjusted net trading income perspective, I always kind of scratch my head at people suggesting, "Hey, we just collect rebates, nothing wrong with that. We just never figured out the way to become a net rebate trading firm as a market maker. There's a suggestion because obviously, the quoted spread is going to be reduced in a significant and not a lot of names. I think -- but paired with the liquidity incentives, i.e., the rebates being significantly reduced down to $10 million, we think that maybe some spreads will narrow, but a lot of them will actually widen because people underestimate the value, if you will, that those rebates provide to the marketplace. And so you may have nominally tighter spreads in some names. But to the extent institutional investors want to access any meaningful liquidity, they're going to have to -- they'll be forced to go out a number of ticks. And so the net effect is -- and this is why a lot of our institutional clients are very, very happy that you'll see more trades going through multiple price levels, which creates more volatility, and we think larger orders will actually have increased transaction costs. So whatever compromise our friends at the SEC thought that they were crafting. We don't think that they got right, and we think there's going to be a lot of unintended consequences. I mean, net-net to the firm, there are some positives in terms of our ability because we -- on the retail wholesale side, as I've said many times, we don't internalize 100% of the orders we received. We still are obligated to price improve and pay payment for order flow on some of those orders. So our ability to access liquidity at a cheaper price because spread have been [narrowed] is a strong net positive to the firm. But again, overall, for our institutional clients, we think this -- the proposal is going to ultimately end up being a net negative. And if the intent was, which I think it was to drive more liquidity to exchanges and away from dark markets, I think, against her fail, I think the result of this will be that there will be less liquidity driven to exchanges. And it's yet another example just like MiFID II, of regulators trying to pick winners and losers and wiping and actually having the opposite result.
Operator: Our next question comes from Chris Allen from Citi.
Chris Allen: I wanted to dig in a little bit on options. Just wondering, obviously, you talked about the APAC opportunity. Just wondering, a, how is the progress going in the U.S. options market specifically, which is obviously a competitive marketplace. And then how would you frame the opportunity set moving forward in terms of international versus U.S.? Is it a great opportunity set in international?
Douglas Cifu: Yes. Thanks, Chris. It's a really good question. I mean the 800 pounds real obviously, elephant in the room, what other bad analogy can I use is becoming a retail options wholesaler. It remains in our medium- to long-term plans. We've made investments, and we've ramped up on exchange trading in a number of symbols. As you're aware, all of those transactions, unlike in cash equities happen on options exchanges. There's been a further proliferation at -- was [Kenneth] having the options exchange there, I think we're up to ‘18 or maybe '19. I can't quite remember. So that's an opportunity. So that's certainly in the medium to long-term plans, and we've expanded our symbol range I think there are parts of the world, particularly in Asia. I mentioned India, Korea, Japan, some of the smaller countries like Malaysia, et cetera, at small options, businesses as well. But we think that's an opportunity. So we've built capability out there. Again, it's Virtu 101 blocking and tackling. It's understanding the market. It's finding the right local broker partner. It's setting up a data center, it's tuning our connectivity to the exchange. Every marketplace is different. Every marketplace has a nuance. It's getting people on the ground in Mumbai that understand the ins and outs of how the technology of the various exchanges work there. It's stuff we've been doing for the last 16 years, exceptionally well. Here with Virtu, it's kind of the last inch of the market and that's what we're really, really good at. And so quarters will fluctuate up and down. But long term, we've made the investments we're committed to it, we've been successful. It's a margin that's typical to the rest of our proprietary noncustomer trading businesses. So we're very, very pleased with the results. And it's just another example of what global scale and having a large global firm with great trading infrastructure provides to you. So medium to long term, continue to be optimistic about it.
Chris Allen: And just want to revisit Ken's question earlier. Just on retail Futures activity, is there a wholesale market-making opportunity? Was that more of an on-exchange opportunity? And then how are you thinking about the incremental opportunity from players such as Robinhood (NASDAQ:HOOD) adding index options moving forward?
Douglas Cifu: Yes. I mean the index offerings is obviously really, really exciting to us because that's kind of right now wheelhouse. And Robinhood is a terrific -- I mean it's a terrific firm and a great partner of ours, and we do a lot of really great interesting things with them. Future is a little more different because those need to be executed. It's a different marketplace to be executed on the CME or one of the futures exchanges. We not have any concern that really competes. As I said, earlier in an answer to the question that Ken asked, we think this is a different subgroup, if you will, within their client base. It's more of an active trader that wants to get a little more leverage. Again, anything that kind of expands the pie and expands interest and get more eyeballs, if you will, at our retail broker partners ultimately is a good thing for the firm.
Operator: Our next question comes from Patrick Moley from Piper Sandler.
Patrick Moley: Sorry about the disconnect earlier. I just had one on a regulatory question. The latest implementation or phase of the OCC intraday margin rule, that they proposed the same at addressing some of the perceived risks around zero DTE. Just wondering if this is something that's on your radar at all and what impact you expected to have on trading volumes, not only zero DTE, but possibly across other asset classes as well if margin goes up across the industry?
Douglas Cifu: Wow, Patrick, you're really trying to dive deep here and get me on one. I love it. Good thing, the guys prepare me for all this stuff. Look, we've looked at it. We think it's very unlikely to have any direct impact to Virtu or the FINRA capital rules already stipulate that members maintain capital adequacy to settle all positions and based on our understanding. The new margin changes for the zero dated options are effectively just moving up delivery times. It's really just a timing difference. We don't think it's an overall capital difference. I mean, Joe, you've looked at this more closely. Would you agree with that?
Joseph Molluso: Yes. I mean we obviously have a -- we're not direct members we clear through a third party. So I think -- we think it's manageable.
Operator: Our next question comes from Dan Fannon from Jefferies.
Dan Fannon: Question on just Slide 8. I know this is you guys have had this framework for some time. But given you've strung together 3 quarters in a row that are pretty strong results, how -- when you think about the buyback, do you become valuation sensitive at all? Or is it just more of an output based upon what ANTI is doing?
Joseph Molluso: I think it's just an incremental investment question. I appreciate that our stock has gone up. And so it's -- we're buying back less shares at every target amount here. We made a strategic decision when we embarked on this journey, I think, in the fourth quarter of 2020, that we were going to set these targets and that we were going to just dollar cost average our stock, given how volatile it's been and we look at this as an investment, right? So our stock is in the low 30s now. We've bought back almost 20% of the company at $25. We compare -- we're shareholders and we want to create value, right? So we look at this as a value creation exercise. And if there was an incremental opportunity that's in front of us, whether organic or inorganic, where we thought the value exceeded the buying back our shares at $30, we would pivot. But for the near term and the midterm, this is what we see in front of us, and we're going to continue to execute on it. It doesn't mean that we're not excited about the growth opportunities, but we're adequately capitalized, we're adequately resourced. And we're going to -- so we're going to continue at these levels to meet these targets. I expect in 2024, when it's all said and done, we'll be -- obviously, it depends on where we come out in net trading income. But at these run rate levels of net trading income, I expect that we're going to be at the high end of the guidance.
Dan Fannon: Great. That's helpful. And then just also on expenses. You guys have been pretty consistent in your messaging there, just thinking given, again, a good backdrop for you year-to-date. As we think about the fourth quarter, the cash comp versus comp ratio dynamic? Just a little bit of color there and any other seasonal expenses that we should be thinking of?
Joseph Molluso: Yes. No, I mean, comp isn't seasonal, where we try to accrue because we try to accrue appropriately. I mean, we have to improve appropriately. And getting compensation right is a huge priority for us. We want -- we've always been within this comp ratio. And I think when we are in an environment that's not as robust or even sort of middle of the road, like we've been in, we try to take care of people and compensate them well. Even in the down years, and I think that's allowed us to kind of maintain where we are. We've hired an enormous amount of people in the past 3 years. We've significantly upgraded our talent and we will continue to do that. And there's pressure on cost all the time. We manage our market data plant, we manage our infrastructure we manage our overhead actively. And I think the guidance has been pretty consistent for a long time. And I think we stayed within it, and we expect to stay within it.
Operator: Thank you. The question-and-answer session is now closed. I will now turn it over to Doug Cifu for closing remarks.
Douglas Cifu: Thank you, Anton, and thank you, everybody, for joining us today. We look forward -- everybody enjoy the holidays and the end of the year. We look forward to speaking with you early in 2025. Have a great day.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
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