CBOE Stock

There we go. Great. All right, everyone. Thanks for bearing with us. If any of you don't know me, I'm Ben Budish. I cover the U.S. brokers, asset managers, and exchanges here at Barclays. For one of our last fireside of the day, really delighted to have from Cboe, we've got Craig Donohue, CEO; Rob Hocking, Head of Derivatives; Jill Griebenow, CFO; and Prashant Bhatia, EVP, Head of Enterprise Strategy. So everyone, thanks so much for being here.

Thank you.

All right. Let's jump into it. So Craig, you're almost 18 months into the seat as CEO. Cboe's strategy has shifted a bit over the past few years coming out of a period of heavy acquisitions to a more recent sharper focus on things like index options and data. So for you with some time in the seat now, can you talk a little bit about your assessment of Cboe? How do you think about the growth strategy? Where do you see the biggest opportunities?

Okay. Yes. Thank you. It's great to be here, and thank you for having us. I'm really pleased with how things have gone. I decided to come back to the industry and come to Cboe because I thought that to some degree, it was a transformational type opportunity, which I really love. And that has proven itself to be the case, not only internally within Cboe, which is what I'll talk about, but then also just the external environment and the way that it's evolved very rapidly over the last 12 to 18 months. There's a lot going on. So I'm loving being here.

We spent quite a bit of time early on in my tenure really sorting through the whole portfolio of businesses at Cboe. Cboe had been, as you mentioned, very acquisitive, had been trying to do a lot of things. And they had a certain strategy, and the strategy was really built around expanding their equities capabilities globally. And then the idea was that they would layer on to that data and information analytics and then derivative products. But I think a lot of the entry points and a lot of things they tried to do were just too small scale to really contribute to growth and lots of obstacles to the achievement of that strategy.

So we basically got a strategic realignment done. We exited a lot of the cash equities businesses that were quite marginal. We rationalized a bunch of other things, and that really allowed us to focus on the core. And I think doing that to me was obvious because we have great growth opportunities in the core. We've been achieving tremendous growth, but the organization was very fractured in its attention and its allocation of resources trying to do a lot of other things versus really paying attention to the core business and making sure that we're doing as well as we can in terms of both growth and profitability. So that went really, really well. We're well through that process.

The other thing is that in the 5 years before I got there, Cboe had also grown dramatically in terms of the size of the organization, both through acquisition and through hiring. We'd added like 900 people to the organization. So in tandem with the strategic realignment, we also went through an organizational rationalization, and that's been very positive for us as an organization because it really has caused us to be very focused on the core and then identifying new growth opportunities.

So we're actually very excited about the shift in focus back to derivatives. I mean, obviously, we've got a great FX business. We've got a great data business. We've got a growing and very successful European equities business, stable but not growing U.S. equities business. But there's a lot more we can do in derivatives and including outside of equity derivatives per se, and that's within Rob's remit.

For the moment, what we're really focused on are event and prediction markets that are oriented toward financial instruments, economic indicators, commodity prices and then much more so in our wheelhouse where we're starting is in securities-based event contracts. And Rob can talk about that, but we're bringing to market. We've already brought to market a binary yes, no contract based on the S&P 500, and now we'll be bringing to market soon after regulatory approval, KPI contracts. And that's a huge market opportunity for us, we think, in terms of the total addressable market.

And then in tandem with that, as we're thinking about product innovation, especially in the derivatives markets, is expanding our clearing capabilities. We have a clearing house in Europe, a clearing house in the U.S. And that's a great way for us to be able to control our ability to innovate and our ability to bring products to market and also the ability to provide value to clients in terms of cross-margining benefits and reducing capital and margin requirements in new products that we develop. So very excited about that.

Great. A lot to dig in there. But maybe just one other sort of high-level question, maybe with one specific one in there. Just thinking about the macro environment, give us a bit of your assessment of how customers are behaving, thinking about retail, institutional, how they're using the Cboe product suite. I'm particularly curious on the retail side, given the lifting of the Pattern Day trading restrictions a few months ago, it looks like there's some early signs that we're seeing a pickup in activity. So curious if you could weave that in as well in terms of what you're seeing on the ground.

Sure. So I think Cboe exists kind of on what I would call the higher end of retail, and I'd like to sort of describe it that way because I think there's a lot that's happening in retail right now, and then there's sort of the gaming platforms and there's the sports betting and all that kind of stuff. I think where we are is -- and I just want to take a second to step back and remind everybody that we've been capitalizing on this trend toward retail for 6 or 7 years, wholly unrelated to event and prediction markets and all the things that we see happening today with offshore perpetuals and all that kind of stuff. And that was really with the advent of 0DTE trading.

And so when we look at -- and this is another distinction that I just want to highlight is we have lots of people taking ownership of their own financial future. We have lots of people who are increasingly sophisticated and actually do understand options, including a lot of the retail broker-dealers have done a great job, not only with education as do we, but in the development of tools that make it much more intuitive and easy for them to learn how to trade options, having shorter duration, 1-day expiring contracts, I think, also is very additive to that.

So we see really strong long-term secular growth trends that we're capitalizing on the increasing importance of the U.S. equity market and the S&P 500, the shift from mutual funds to defined outcome ETFs, which has been extraordinary. And embedded in all those are options that come into our market. So a secondary effect there. And then just this overall trend toward increased sophistication, it's still at a very nascent level, we think, in terms of where it can go over time, and Rob can talk a bit about that.

But the Pattern Day Trader rule has had a positive effect as well. It had a fairly arbitrary limitation on the amount of trading that you could do on options depending on your net account value, that's been lifted. And as Rob can describe, there's been a step function increase in volume that we're seeing coming out of the retail -- the larger retail broker-dealers that have already implemented that. So -- but overall, I would say incredibly positive.

And I think the last thing that I'll just say, so I'll keep talking is that when we look at the use cases, we see people doing fairly sophisticated trading activity in our products. So -- and I just want to highlight that because I think people worry about the sustainability of it, especially when they're thinking about sports betting and gaming and event and prediction contracts that are oriented toward other things, that may not be sustainable. In our case, when we're looking at what they're doing, a lot of what they're doing is what larger institutional users in our markets are doing. So...

Got it. You got to answer my question was...

I'm sorry.

It's a bit along those lines. There's definitely a perception that retail is more at the lower end. But -- are there any -- I'm curious if there are any specific KPIs or stats you have, the percentage of trades that are single leg call, single leg put versus more sophisticated strategies. Any way to sort of measure that?

I think the great thing is, overall, I would actually take a step back, it's the balance we're seeing overall across the platform. If you look at 0DTE, it ranges around, call it, 60%, just high -- or low 60s as a percentage of SPX trading. When you look at the breakdown between retail and institutional, once again, it hovers between, call it, 55% to 60% retail, the balance institutional. Obviously, that led to in the Q2 record SPX volumes around 5 million contracts, 3.1 million of that was 0DTE.

But I think it's also important to then show is options expiries in the 30- to 60-day bucket were up, call it, 14%, 15%. If you were to look at options and expiries of 90-plus days, those were up 28%. If you look at electronic access, up 163%. If you look at open outcry access, up over 20%. So you look at short term, long term, both up, retail, institutional, both up, electronic open outcry, both up. It just speaks to the stability of the platform and it speaks to the kind of the diversity of how all the market participants are coming in and using the product, and it's leading to just a massive liquidity pool that then builds on that.

Now we have international demand wanting to come in, people in regions like Korea, Thailand, all wanting access to that liquidity. And I think as that comes in, you all heard the statement, liquidity begets liquidity, we just can continue to grow. And then we use that as a foundation to now lean into things like we've already talked about KPI contracts, things that now are kind of offshoots of that liquidity valuation components of single name companies that lead to stock price valuation, stock price leads to the sectors, option-based ETFs, those lead to the indices and you kind of wrap it all together into a very long-term sustainable business.

I think following up there because you mentioned, I think, some of the international interest. And I know on earnings calls for some time, you called out APAC, and I think more recently, Europe is being mentioned. Just maybe if you can give us an update what you're seeing there. What sort of inning are we in terms of adoption of the suite, retail engagement? And to what degree is demand overseas coming from retail brokers versus institutions?

I think we've had a heavy focus in the APAC region on the retail side, on the retail broker side. I still think demand continues to grow for the liquidity pools, like I mentioned. Some of the barriers to entry are just from a regulatory standpoint. In some of those regions, some of the cultures, options are still viewed as a risky tool. So we're kind of working through that. So I think early days, I would say, of penetration and options usage there.

But I think more on the institutional side, I think more of, call it, the Middle East region. You look at a lot of the sovereign wealth funds in the Middle East, the ADIAs, the ADICs, they all have 30%, 35% exposure to the S&P 500 in their portfolios, but yet are very underpenetrated in the options market. And we see that as a huge kind of growth area. On the institutional side, once again, as we build off of those, we just kind of continue to expand where we see that demand.

Great. You mentioned also a little bit the short-dated SPX complex. So maybe a question there. I think most recently, it's around 63% of total SPX trading volume, and it's, I think, up pretty meaningfully over the last several years. So I guess for these shorter-dated contracts, maybe how would you describe the use cases? And sort of given 0DTE's importance in driving growth over the last 4 to 5 years, how high do you think this can go? And what does this sort of mean like the longer-term growth algo?

Yes, great question. Once again, I'll come back to the balance. So what I like to see in the 0DTE case is the balance of risk. 95% roughly of the contracts traded are defined risk. So either buying an outright option, call or put, buying a spread, selling a spread, everything where you know your risk going in, which is great for us to see. It means that sustainability is there because you're never going to have that blowup moment where somebody just has unexposed risk.

So I think you'll continue to see the percentages fluctuate over time based on the environment. Retail tends to be much more active in calm environments, as you would expect. Volatility upticks, you get more market uncertainty, that's when the institutions start to trade a little bit more and you see that percentage of maybe retail dip, institutions increase. But once again, it's still very balanced where you're seeing a lot of the strategies come in, once again, I think yield generation has been a very common one, whether you're overwriting calls on a long-only portfolio or you're using call spread, put spread overlays and writing those on the sell side to capture that option premium. I think those have been very, very common and continue to grow.

And then also, to be honest with you, and this is kind of a side shoot to the answer, we've seen options grow from more professional institutional side that are now using them to embed into ETFs that are offering option-based ETFs to the retail side. So if you're a retail client that don't trust yourself in trading the options directly, but want the performance of options in your portfolio, these ETF products have been great. We've gone from probably about 2019 around $5 billion in AUM tied to these option-based ETFs to about $300 billion currently. And I know BlackRock just came out with a research report saying they anticipate that to be around $650 billion as early as 2030. So you see options usage continue to grow on multiple, I would say, avenues, which is just super encouraging.

Great. Well, maybe we'll dig into one of your other newer areas of potential growth, the short -- the prediction markets event contract. So you're live, I think, on Interactive Brokers and Charles Schwab with your kind of binary, yes no S&P contract. So maybe just starting there, talk a bit about the strategy, what type of traders these contracts meant to appeal to? And what does the initial uptake look like?

Yes. I think who we're trying to appeal to are non-option traders today. We launched binary contracts back in 2008, and they weren't successful. We ended up delisting them mainly because we were offering a binary product to an existing options trader. Once you're trading a pure option, the binary yes, no 0 to 1 element isn't really what you're looking for. You're looking for a more sophisticated trading tool.

So now with the advent of the prediction market and all of the, I would say, attention on the event contract space and that binary contract, we relaunched contracts on the S&P 500. They are yes, no format. So it's -- where will the S&P close today? Will it be above 7,500? -- yes or no, that style. Like you said, we launched them. They're live now on IBKR and Schwab. Schwab just recently went live about 1.5 weeks ago.

The difference in those platforms now, though, is like that was kind of a gateway product to us getting out KPI contracts, which will be structured very similarly in that yes, no format. With the IBKRs and the Schwab platform currently, they're not in that -- they're not being offered in the graphical user interface version of the yes, no kind of gamification platform view that you see something like on Kalshi or Polymarket. That is something they're still developing and will roll out later this year. So early uptake of this contract, I would say, is there, but it's slow because you're still kind of, in my opinion, working with that same user base that knows options today.

What we're really excited about is the rollout of the KPI contract, mainly because now you're going to use this yes, no vehicle to give a valuation component that doesn't exist today. We do broad-based very well with SPX. I've talked about the defined outcome in the ETF space that's kind of that sector level or slightly smaller than broad-based. We do single stocks well with our multi-list contracts. Now we're going to take that a step lower, and we're going to start to get into the individual metrics that drive the valuation of those stocks themselves, which is super exciting because I think it will entice retail to start.

And I think you'll see the rollout work very similar to 0DTE, where kind of that 80%, 85% of retail to start. But then I think you'll see institutions come in when the data sets become available when they can go to their risk managers and get approval to introduce some of these new products to their portfolios. But you're going to be able to trade these individual metrics that impact individual stock performance.

And I'll close with, I've been using this example a lot, but I think it's a great example. Home Depot last quarter. They beat on every KPI metric and yet on future guidance, their stock price was down immediately after. So if you were trying to have a trade on that was to represent the beat on all these individual performance metrics and you own the stock thinking that was going to show up in that performance, you would have been dead wrong and it actually would have worked against you. Now having these components, you can have backward-looking metrics where I can look at Tesla car deliveries, I can look at NVIDIA data revenue sales, and I can actually have components in the valuation chain able to trade that. And then I can also look at future guidance and maybe use the stock price or something along those lines to make those trades, which I think is a super interesting kind of forward-looking way to evolve this industry.

Maybe just on the regulatory side. So you're in a -- you have an application with the SEC. Can you talk a bit about that process, what the conversations have been like I think there was a bit of confusion because the SEC extended the potential deadline. Maybe help us understand what all that means.

Yes, I can take that. I mean, I think, first of all, we think the SEC has been great to deal with all this stuff. They're very interested in these products. And we've had, I think, a really good back and forth with them. So right now, while they've extended the time frame, we have 2 things that are predicates for us to go to market. One is the approval of the contracts themselves. And the second is the approval of our application to be a temporarily registered securities clearing agency. That one had a slightly longer time frame anyway.

So the extension of the comment period doesn't really affect us in that way because we need them both. But our expectation based on our interactions with the commission and the commission staff is that we would hope to see regulatory approval well within that extended time line. So -- but it's been very, very positive. The commission has been moving very quickly on both in terms of our interactions, raising questions. We've been able to answer them. And so we're very positive on that.

Great. Maybe just one last question on the single stock KPIs. So any color on the early reads with buy-side firms, market makers? You mentioned, I think you expect a lot of like retail uptake, but from our conversations, there seems to be a lot of interest, especially if like the liquidity is there and you can get good execution. So what's the appetite from those types of customers for products structured this way? And maybe as you think about like early liquidity, how do you ensure market maker participation and get liquidity off the ground?

Yes, it's a great question. Market makers right now are very interested from, I would say, all the usual suspects that you know that represent liquidity in SPX are all signing up. They're testing. Susquehanna has probably been the most vocal as of late. They've committed to being there day 1 to offer liquidity in these products. And I think it's shaping up well for the reason that I talked about, which is these are a different valuation component, and they're directly tied to portfolios and books of work that they have today as opposed to things like sports, prediction markets, pop culture, those things don't really naturally fit into the portfolio that they have. Maybe they're building other portfolios to trade those things, but this is directly involved.

If you have stock positions today, having access to these types of components will be valuable to managing that risk. And I think also even on the regulatory front and to kind of back up my comments, you've seen Citadel come out and they just wrote a comment letter recently about how these contracts belong on the SEC side that belong with the same customer protections that we're seeing individual stocks trade and how this whole market has formed. MFA just came out recently supporting the Citadel paper on how these needs to trade on the SEC side. They need to trade with the same customer protections. And so as you see this market form, the portfolios that exist today trading these single names, trading these exposures, this is just a natural extension of that.

Got it. Very helpful. Maybe switching gears a little bit, thinking about the competitive environment. So I think last year, we were talking about a competitor applying to list more expiries of a bunch of Mag 7 and some other single stocks. This year, it's shifted to new products, prediction markets, which we talked about, which we've all been debating ad nauseam. Maybe just your overall thoughts on product level competition. How do you see the defensibility of Cboe's core product suite? I'll leave it there at high level.

Yes. I think -- well, one, Cboe has an amazing platform to compete with. We have the CFE. We can launch futures products. We can launch security option products. We have multi-list. We have our prop universe. So really, that's where the strength of the platform comes from, and that's where I always enjoy competition. I think it pushes us to introduce new products. I think it pushes us to get better and think of things in different ways. And so I would argue, as competition increases, it's only going to fuel us to design new products and be able to compete in these different sandboxes.

Where we're seeing the threats, like you said, perps, whether it's some of the event contracts. I think ultimately, it's not the competition piece that worries me. It's the level playing ground that worries me. And so when I look at some of these other platforms that are using the innovation badge to say, we need to move products into different regulatory regimes, that is the part that concerns me, because we already have these sandboxes to play in. It's like come on in, let's play in these sandboxes. Let's design KPIs that are securities-based or let's design perpetual futures that are futures based, but let's make sure we're doing it where those rules are well established and where we can compete as we've competed for the last 50-plus years.

I think, Rob, you should comment on the perps versus options issue. I think that's helpful.

Well, I think the history of perps, and I don't want to go into too long of an explanation, but the history of perps were a crypto-based innovation, and it was very useful. You didn't have the ability to short any sort of crypto future, you had a rolling cost. You didn't have that Delta 1 constant maturity underlying. Perps kind of filled that void. And for crypto, it was very necessary because you needed a vehicle that you could short pricing to keep pricing in line. That's a very useful and needed vehicle. And you couldn't do that. The only way you could sell a cryptocurrency in the early days was if you owned it, which caused pricing anomalies.

Now fast forward and perps are now this vehicle that people are looking at like this new invention. One, it's not new. We tried to launch a perp about 18 months ago and the CFTC actually shut us down in a different regulatory regime. We then came out with continuous digital futures that had like a long-term expiry date to kind of satisfy that need. But I keep coming back to what are perps doing today. They're offering leverage. You're actually hearing people trade perps in short-dated windows where they get in and out in the same day. Well, if you get in and out on the same day, you don't need a perpetual future. A regular future trades the same exact way.

So it really comes down to isolating what people want. They want leverage. If you're trading offshore 10, 50, 100x leverage products, one, we have to determine onshore if we want to actually offer that much leverage. But if we do, let's make sure that we understand the leverage. And if you're trading leverage 100x to the upside, you're getting 100x to the downside, too. Whereas options can offer very similar leverage to the upside, but you get capped risk downside with the way convexity works. Your gains accelerate, your losses decelerate until you get to the options purchase price of where you traded. Those things, I think it's great to have the debate because I think it's really important and it's drawing visibility into the differences in these products. But when one is looked at as a substitute for the other, I think that's where the whole argument really breaks down.

Great. Maybe switching gears a little bit, maybe spend a moment on DataVantage. The growth there has been quite healthy. You're trending well ahead of your medium-term guide. What are the key drivers of the recent acceleration? How is the back half of the year shaking up? And what does that mean as we think about '27?

Yes. We continue to experience strong growth in DataVantage. So let's just go through some of the components. About 2/3 of DataVantage is connectivity and access to our core exchanges. So you're seeing the growth in that area as you're seeing the growth Rob talked about on the SPX side, you're seeing the growth in our multi-list business. You're seeing share growth there. So there's more demand for connectivity and access along with that volume growth. There's also more demand for connectivity and access as more players come into the market and want access to the products that we offer. So you can see that in more trading desks at some of the core trading firms come in as well, and we're seeing connectivity and access and demand for data come from overseas as well when you look at access to our products and markets. So that's the connectivity piece of it. We have nice stable growth there.

When you look at the market data component to it, the real driver of growth there, and I'll split market data into a couple of pieces. The driver of growth for our market data, our proprietary exchange-driven market data is coming not only from the U.S., but we're driving about half of our new sales there overseas as well. So that's overseas clients wanting access through their institutional broker-dealers or otherwise onto our market. So that's driving a fair bit of growth on the DataVantage side, and it's more international oriented there as well where we've seen the growth accelerate. We think there's a lot of opportunity there. We're underpenetrated from our perspective overseas around data sales. So we'll continue to drive on that growth there.

When you look at -- the other component of market data, we also create data packets and data sales that we drive off of our proprietary data, but we put those through our analytics engines to create data sets that are valuable to institutional clients, and we sell those data sets as well. So some of the acceleration that you've seen in growth over the first couple of quarters was driven by launching new data sets that required -- that were so interesting from a client perspective, we get the sales going forward and the subscriptions going forward, but they like the data set so much. They want all the historical background -- all the historical data that went with it. That's what drove some of the onetime sales and the acceleration of growth off a trend that you saw in the first couple of quarters. So that's the driver of growth.

And then the final piece, I'll highlight the index part of the business where we generate and create indices that utilizing our data and analytics that we then use on our offering up trading products to clients, The Mag 10 would be an example of that, where it's based off an index that we've created. It's a tradable derivatives product on our exchanges. It's a proprietary product. And now you're seeing some underlying interest where we're launching an ETF. Clients are launching ETFs off of the Mag 10. So that's a little bit of what's driven the growth in DataVantage.

Great. Maybe a couple of questions on M&A and capital allocation. So at the beginning, you sort of talked about a bit of the deconsolidation strategy that you've been undergoing. When you were the CEO of CME, you oversaw a period of pretty significant consolidation. So maybe talk a bit about how that experience informs how you think about M&A opportunities at Cboe. And on top of this, Jill, I love to pepper you with this one all the time. Cboe's cash balance has been growing pretty meaningfully over the years. So how are you thinking about best use of this capital?

Yes. Just on the first part, I would say that, that was a unique time and a unique place. And I think the synergies that we had at CME with the Board of Trade and with NYMEX and COMEX were kind of extraordinary in the sense that we were the exact same types of businesses, same regulatory frameworks -- we had, at that point in time, I think, superior capabilities, both in terms of global electronic trading capabilities as well as clearing capabilities.

And so we knew we had massive cost synergies and cost takeout opportunities. And then we also had really interesting revenue and growth opportunities because of the intersection of short-term interest rates at CME, long-term treasury notes and bonds at the Board of Trade and I could go on and on. So it was -- they were kind of no-brainers in a way. They were hard to do in many other respects. But in terms of the logic of it, the strategic rationale and the financial rationale, I think that part was pretty easy.

When I look at the landscape today, I think it's a much more mature environment. I think there are fewer consolidation opportunities. And so that raises the bar for doing things that would actually make sense both strategically and in terms of the financial attributes for shareholders in terms of being compelling. So it's a pretty high bar. I think the way I approach it is I think we've got great growth opportunities in our core business. We've got great growth opportunities around our core and some of the things that we're talking about. And so I don't feel like there's a need to necessarily focus too much on inorganic growth.

So we'll be opportunistic about it. We obviously generate a tremendous amount of free cash flow. But I want to make sure that we continue to focus on the organic side of things. We will always evaluate opportunities to do things inorganically. And if we come up with something that makes sense, we'll do it. I'd like to say that I think the bar is a little bit higher in the sense that I think the investor community has gone through this cycle with Cboe, where we've done a lot of small-scale acquisitions, many of which we've now sort of backed out of and exited. So that informs how I think about it.

And just to Craig's point, we do generate a healthy amount of free cash flow, which is a wonderful thing. I actually quite like the balance sheet flexibility we have. I think it's just consistent with prior messaging in that we look to deploy capital in multiple ways. First is via quarterly dividend. So we do have a history of increasing that quarterly dividend. We just did so this past August, took it up 19%. We also are opportunistic as it relates to share repurchases. And then you heard a lot today about, especially from Rob, these growth areas that we're leaning into. It's great to have that flexibility for organic investments that we're making.

Got it. And maybe just one further question. Your margins are, I think, already among the highest of most publicly traded companies. So how do you think about margin expansion, margin maintenance? How do you -- what are the sort of targets that you think about internally versus sort of your key like kind of OpEx investment priorities?

Yes, good question. So I would say if you look at our 2Q financial results, our margin -- our adjusted operating EBITDA margin was about 72%. So that was up, I think, 6 percentage points from second quarter of 2025. What I'll say, though, is we are not targeting a specific adjusted operating EBITDA margin. What you're seeing on -- I think that as a result of is very disciplined expense management, coupled with really solid revenue trends. So the way I would frame it is expect periods where we are leaning in from an investment perspective because we truly want to generate long-term growth. So planting those seeds today. And then you'll see other periods where we're harvesting those investments.

Great. With a little bit of time we have left, maybe one last very high-level topic to touch on. Some of the technological and market structure changes in the cash equities business. So the industry has had a large focus on crypto and tokenization. So I'm curious if you have a view on how those fit in Cboe's business. Maybe talk about the degree to which you're participating in any pilot programs. And then alongside that, there's talk about a move to always on markets. I think you had previously filed this year to operate near 24/5 equities trading. And so what does that sort of mean for your equities volumes, your index option suite? I know there's a lot in there, but...

I'll just hit a couple of highlights because we don't have time. But I think of first of all, we're all moving toward always on, and we're all iterating toward expanding trading hours, both in cash equities and in equity options. Tokenization is something that we will definitely participate in. I don't think the tokenization of cash equities or tokenization of equity options, for example, I don't think that those are inherently interesting in and unto themselves. I think if it expands the universe of participants because people want to transact that way, they want to use alternative forms of collateral or they want to work around the limitations of traditional market infrastructure, whether that's at the exchange or the clearinghouse level. I think there's some peripheral additional business that we can probably achieve through that. But I don't think a tokenized version of an equity security or an option is actually more interesting than the deeply liquid ubiquitous products that we already offer.

All right. I think we're out of time. So we'll need to leave it there. But everyone, thank you so much for being here. Really appreciate your time.

Thank you.

Thank you.

Thank you.

I appreciate it.

Thank you for standing by, and welcome to the Cboe Global Markets Second Quarter Earnings Call. [Operator Instructions]

Thank you. 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 Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic outlook; Jill Griebenow, 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 Fischer, our Global Head of Equities and spot markets; Rob Hocking, 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 SEC 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% and 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 5 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 0DTE 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 has limited how often smaller accounts could trade without triggering additional restrictions. Its removal has eliminated the friction point, making it easier for smaller retail accounts to trade products like 0DTE 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 upfront while still participating in outsized upside. That combination of convexity and defined risk is among the reasons why the vast majority of 0DTE 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 0DTE 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 build-out 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 16, which means we will be held to the same enhanced credential standards consistent with global regulatory standards that apply to systemically important clearing houses.

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 23x5 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 2 decades through its proposed recision of Rule 611. Cboe is the only exchange group that operates both registered lit exchanges and an ATS. We believe this uniquely positions Cboe to be a leader in combining the best elements of the various market models that equity market participants demand.

Turning now to Data Vantage. 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 3 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% 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 day 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 7 years. These trends aren't independent tailwinds and they compound and we believe Cboe is well positioned at the center of all three, positioned to turn them into long-term shareholder growth.

With that, I'll 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 out 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 in the appendix of our slide deck include information detailing the key metrics for our business segments, so I'll provide some highlights for each. Options delivered yet another record quarter, with net revenue up 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 shift 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.

Europe and APAC net revenue was up 20% year-over-year or 18% on a constant currency basis, with the net transaction and clearing fees up 31% and nontransaction revenues up a combined 9%. Futures net revenue was up 2% from the second quarter of 2025, primarily on higher market data fees while transaction clearing fees held steady.

Global FX rounded out the segment results with net revenue up 17% year-over-year, 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 sales coming from customers outside the U.S. Overall, we're very pleased with the composition of growth and trends within our Data Vantage business.

On the expense side, total adjusted operating expenses came in at $217 million, up 2% year-over-year, primarily reflecting disciplined expense management against a higher bonus accrual as a result of our strong operating performance, along with increased travel and promotional expenditures.

Turning now to our 2026 guidance. 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 will 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 sales, we still expect total net revenue growth to finish in the mid- to high teens range for 2026.

On Data Vantage, 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 data Vantage net revenue through July. Factoring in the loss of future revenue, assuming a third quarter sale, we expect data managed net revenue growth to finish in the low double-digit range for 2026.

Turning to expenses. Our adjusted operating expense guidance holds at $838 million 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 Cboe Australia sale.

I would note that while a majority of expenses associated with Cboe 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 million to $50 million in annualized expense savings from the strategic realignment actions outlined last quarter with $20 million to $25 million still expected to hit in 2026.

Rounding out our 2026 guidance. Our CapEx guidance increases to $98 million to $108 million from $73 million 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 this

space. Depreciation and amortization expenses decreased to $54 million to $58 million from $56 million 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 million 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 recognize that there was meaningful volatility in our share price during the second quarter, the most notable decline 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 10b5-1. 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 0.7x. 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 Fischer 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 U.S., we believe Cboe is best positioned to capture this opportunity set. In cash equities, we're moving toward 23x5 pending industry readiness and eventually 24/7 as market structure evolves. And in Data Vantage, 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.

At this point, we'll open the line for questions. To allow time for everyone, please limit yourself to one question per person. Feel free to reenter the queue, and if time permits, we'll take a second question.

[Operator Instructions] Your first question comes from the line of Ben Budish from Barclays.

Maybe just on the kind of high-level retail commentary, Craig, you talked a lot about the retail strength you've seen a lot about why options are different from perps. If you were to sort of sum it up, there's a lot of instances where perps or inappropriate replacement or can't at all do what options to? How would you sum up maybe the bits of volume where there is potential overlap, maybe like single leg calls and puts versus the more sophisticated strategies? And then how would you describe the sort of retail -- I know there's a lot of talk about retail, protel, -- as the retail trend has continued to be quite strong, how would you describe that current mix between sort of more sophisticated, less sophisticated? And any color there would be helpful.

Yes, sure. Let me -- I'll probably let Rob get into more of the detail of that, but I think it's really important to focus on because you referenced perpetual. 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 market and in the equity derivative markets just in terms of the sheer number of accounts and market participants in the retail segment that exists on the futures side. So I think that's a key differentiator, but I'll let Rob talk about a lot of more sort of technical distinction that exist between the products.

Yes. Thanks, Craig. And thanks for the question, Ben. I think Perpetual Futures really arguably 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 emerge 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 physicians. And Perps effectively bridge 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 0DTE contracts that expire the day you trade them. Perps do provide leverage, but it's in the form of linear exposure so that the market moves, whether it's for or more importantly, against your position gains and losses move proportionally and the amount of leverage offer 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. Investors, as we've said, tailored views around direction, but really volatility market events, income generation is really in ways that simply are not able to be replicated in the futures market.

And then even on the 0DTE front, 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't have that defined risk aspect in the futures market. So -- and let's not forget, this dynamic has really worked well for decades. Investors have had access to futures on the S&P 500. Get demand for SPX options really continue to grow because of that different risk return profile. So while you point out, 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, where it's appropriate, we may look to expand our continuous futures offering where there's demand to do so.

Your next question comes from the line of Patrick Moley from Piper Sandler.

So I wanted to ask on the company KPI event contracts that were filed with the SEC in July 23 names September launch. Could you update us on how your conversations with market participants have gone around those products? What does demand look like? Who are the end users? And then is there any revenue from those new products that you're baking into your second half guidance?

Yes. Thank you. I can kick that one off and then hand it over to Jill. We continue to view the event prediction market really is an exciting area and a natural extension of our derivatives business. At a high level, the risks that are traded through things like our excess 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. They provide investors really, and it's important ways to express their expectations in tradable exposures. And so we were excited to get XSP has no contract out the door on June 15. 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 be in offering these contracts on their platform to clients very soon. And so looking forward, you heard in Craig prepared remarks, we filed for both the company-specific KPI event contracts as well as the ability to clear those on Cboe Clear U.S. Thus far, 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, I think in NVEDIA's data center revenue, I think Microsoft cloud-based revenue, today's markets consistently referenced 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 we anticipate adoption of these contracts to follow a similar path to how 0DTE 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 that will 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 in 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 in that event prediction space today as well as institutions getting involved that can really drive a healthy market quality.

And 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 comment still early days. We will definitely keep our eyes on this, come back to you in late October with our final quarter update for the year. Just want to note the dials that we've done on the total net revenue growth rate to 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.

Your next question comes from the line of Brian Bedell from Deutsche Bank.

Actually, I just wanted to follow up on the company KPI question. The -- just on the SEC approval process, just your level of confidence in getting that approved by the end of the third quarter. Is there -- are they going to put any comments out for like a proposal that would be commented on in the industry? Or do you anticipate it would be directly approved? 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 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 sort of the timing will turn out, that's within or their control, but we would say that we think the process is going very well and smoothly. 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 I would think that there's a close level of cooperation between the SEC and the CFTC. So I'm sure that that's something that is an ongoing discussion with them. But -- 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 we can never be definitive about what the actual timing of the regulatory approval would be. But -- we think it's gone very smoothly so far.

Yes. And I would add, 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 SPX contract is so big with the 100 multiplier in the index size compared to these event contracts and specifically the KPI ones where you're looking at effectively $1 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.

Your next question comes from the line of Jeff Schmitt from William Blair.

So as you move from index-based event contracts in the company KPI contracts, what will you need to do to drive adoption there? Kind of a different animal, obviously, and demand and prediction markets is still sort of dominated by sports contracts today. So what will you do to drive adoption there?

Yes. Thanks, Jeff. That's a great question. In some regards, this is where our intermediated model, I think, is very strong. We're relying on the various retail broker platforms, think Robin Hood, Schwab, the likes tasty trade and really having them -- 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 multi-list options today, almost adding this is just another skew to our shelves and allow them to position it, allow them with very guys 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 get 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 kind of our competitive advantage to the other existing event contracts and prediction markets that are out there today.

Your next question comes from the line of Michael Cyprys from Morgan Stanley.

So quarterly earnings have become 1 of the largest recurring catalyst for both equities and options activity across the markets. So if the SEC moves to semiannual reporting, how would that affect options usage and retail engagement? And what might be some second or third order effects from that sort of potential change on liquidity, price discovery and volatility in overall market participation?

Yes, it's a great question. I think it's hard to really speculate exactly how that will play out. Arguably, options and 0DTE are being used daily to trade around different movements in the market. So even though we kind of event regularity or the known events on the landscape with 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 we'll have to react to it. I think even on the event and prediction space, this is a nice hedge for 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 people will still have interest in trading.

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

Your next question comes from the line of Ashish Sabadra from RBC Capital Markets.

A question around your clearing capabilities. So wondering if you could talk about or provide more color on the products that you could innovate once you get that capabilities and approval to launch clearing capabilities? And then on the same topic, you've obviously increased your CapEx that you've invested organically, but is there also opportunity for inorganic investments to build out those tiering capabilities?

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 we're a relatively small presence U.S. in terms of clearing, 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 some election as well as the temporary and ultimately, hopefully, fully registered securities bearing agency with the SEC is that we want to be able to move quickly to introduce KPIs.

Those are different instruments than are customarily clear at And then as well, as we think about moving toward 23x5, moving toward 24/7 ultimately. And as we further the work that we're doing internally right now, I'm thinking about toganization and on-chain transactions in 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 long-standing and very valuable partnership with OCC. I mean this is not in any way, shape or form a departure from that. It's 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're always going to focus on, ultimately, as we evolve 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 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. I don't know if you want to add anything, Scott?

Sure. Thanks, Craig. as we think about how to expand clearing capabilities and really support innovation, we are definitely looking across the spectrum of potential opportunities, not 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.

Your next question comes from the line of Alex Blostein from Goldman Sachs.

I was hoping to broaden out the retail discussion a little bit, and you provided a number of really helpful staff to sort of think about how the end market is growing and using different products today versus prior years. But -- as you think about the competitive landscape with sort of convergence between some of your partners. Some of the retail brokers will effectively have their own contracts and so have more like a vertically integrated structure versus the traditional kind of exchange model. How do you think that will impact competition in the space? 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 would 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, certainly at low scale, I think that some of these sort of vertically integrated stacks, where you have direct customer connectivity, broker-dealer FCM exchange and that post-trade capabilities 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 when those markets I really mean the 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, close 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 only with market makers and liquidity providers, but in 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 take 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 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. And so I think that's -- especially on the institutional side, you'll still see benefits to that model going forward.

Yes. I'd also add, 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, 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'll continue to see pretty robust demand for our intermediated model.

Your next question comes from the line of Simon Clinch from Rothschild & Co Redburn.

I wanted to jump back to some of the new products you're launching, the event contracts and then moving into KPI. I'm more interested in how you're thinking about these market opportunities. Do you consider these to be large separate market -- adjacent market opportunities? Or do you consider them more feeder opportunities into your existing core? And maybe you could expand on that as I relate that to the actual retail and the type of customers that are doing.

Yes. Thanks, Simon. Thanks for the question. I think it's really a combination of both. Like we've talked about on previous earnings calls, the idea of placebo 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 Navidea'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 individual expectations on each piece of those -- each component or at 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, 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. I hear people talk about CPI a lot, like you start to bring all of those in and its CPI is going to drive stock movement, stock movement is going to drive sector movements. 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, but 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.

Your next question comes from the line of Alex Kramm from UBS.

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 expansion of the customer base? And what I'm trying to ask is, 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 0DTE? And then maybe related to that, how have those conversations maybe changed over the last a few quarters because we spent all this call talking about new innovation and new products. So as the menu of kind of opportunities changes for those intermediaries and end investors, I'm just wondering are you still getting the same attention as you try to broaden your customer base? Or are they just really everybody is just trying to figure out what do I do next because there's so much demand?

Yes. 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, 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 having more and more brokers. Korea has been a great success story that we've talked about in the past, where as of Q1 of 2024, we had really 0 brokers online and now we continue to expand and have, 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 is coming in for our core product set.

On the different front and going in a slightly different direction, I just want to use kind of the pattern daytrader rule removal as an example of just how we're seeing things like that affect the demand in our products. So across the top 9 retail brokers, average daily volume increased following that rule change with SPX up almost 3.5%, excess PADV 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 is small, the rule is just repealed, 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 count. 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 multi-list 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 a 0 to low-cost retail broker platforms, especially platforms like you had mentioned, Robinhood, Webull is another one. So using their publicly available data. Robinhood's June options ADV increased over 30% from May and almost 80% year-over-year, while Webull 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 the continued growth on the horizon.

And your final question comes from the line of Dan Fannon from Jefferies.

I wanted to just ask about the Data Advantage growth, which obviously continues to be quite strong. And just how to think about some of the drivers here that have been so prevalent in '26 and thinking about into next year and the sustainability of some of

Yes. So just in terms of data advantage, if you look at our growth, we had revenue of about $178 million this quarter, and that was up 15% year-over-year. About 2/3 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, right? So when you look at our multi-list options volume, we were up 24% year-over-year, and our SPX options volume was up 40% year-over-year. So that drove that demand.

The other 1/3 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 manage side. When it comes to 2027, we'll address that towards the end of the year when we give you guidance for '27.

And that concludes our question-and-answer session. 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.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kevin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets First Quarter Earnings Call. [Operator Instructions] I would now like to turn the call over to Ken Hill, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for our first quarter earnings conference call. On the call today, Craig Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Scott Johnston, our Chief Operating Officer, will provide an update on the additional strategic realignment actions announced today; and Jill Griebenow, our Chief Financial Officer, will provide an overview of our financial results for the quarter as well as discuss our 2026 financial outlook.

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; and Rob Hocking, our Global Head of Derivatives.

I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. During our remarks, we'll make some forward-looking statements, which represent current judgment on what the future may hold. And 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 SEC 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 this morning, we'll be referring to non-GAAP measures as identified and reconciled in our earnings materials.

Now I'd like to turn the call over to Craig.

Good morning, and thank you for joining us to review our first quarter results. Cboe delivered another quarter of record net revenue and adjusted earnings powered by continued strength across all of our core businesses. The results underscore the strong foundation we have in place as we take the next steps in advancing our strategy. I will provide some high-level comments before turning the call over to Scott Johnston, to talk through the additional strategic realignment changes announced this morning and then to Jill for a financial update.

During the first quarter, Cboe grew net revenue 29% year-over-year to a record $729 million, and adjusted diluted EPS increased an exceptional 48% to a record $3.70. The robust results in the first quarter were again broad-based, driven by record net revenue in every major category at Cboe and double-digit net revenue growth in 4 of our 5 company segments. Taking a closer look at the first quarter trends in our derivatives business, we delivered another record quarter with net revenue increasing 32% year-over-year.

Index options net transaction and clearing fees revenue drove the upside, increasing a robust 35% as our proprietary SPX options set another quarterly record with average daily volume increasing 34% year-over-year to 4.9 million contracts. Interestingly, the drivers of that growth evolved as market conditions changed throughout the quarter. When things were steady as they were in January and February, 0 DTE options continue to power the growth of the overall SPX franchise on the back of deeper retail and institutional engagement.

In March, as the macro outlook shifted abruptly with the Iran war, investors turned to non-zero DTE options to help manage their portfolios as longer-term risks over inflation and growth increased. Zero DTE options still grew but at a more steady 6% rate month-over-month in March, while non-zero DTE options jumped over 26%, helping to drive a new monthly ADV record of 5.4 million SPX options contracts.

Outside of SPX, we saw multiple quarterly ADV records across our many SPX options Russell 2000 Index options as well as our VIX options complex speaking to the utility of Cboe's volatility toolkit across market environments. Overall, we see a supportive macro environment for our derivatives business, while we continue to expand global access and retail engagement.

Last quarter, global trading hours volumes rose more than 32% to a record high, driven by strong growth during Asian hours as we continue onboarding local brokers. We are also investing at home -- our trading floor helps traders to efficiently manage complex multi-leg risk capabilities that can't be replicated electronically and supports broader market liquidity through both direct execution and related hedging activity.

On April 6, we were pleased to be joined by our long-term partner, S&P Dow Jones Indices for the inaugural televised bell ringing on the Cboe floor as part of our new multiyear collaboration with CNBC. Through our new partnership with CNBC, we are bringing the power and expertise of Cboe's iconic trading floor to a global audience, leveraging a differentiated asset within our market ecosystem to deliver live market insight and investor education, elevate the Cboe brand and reinforce our leadership in global markets.

Turning to event contracts. Subject to regulatory approval, we plan to bring our securities-based event contracts to market. Based on our Mini SPX contract and leveraging our existing options infrastructure, the product is designed to mirror the risk/reward profile of a widely used option strategy, the vertical cost spread, allowing investors to take a simple yes or no view on an outcome with defined downside risk and a capped payout range.

By incorporating a broader payout zone, the structure enables customers to benefit from being directionally right without requiring a binary, all or nothing result. This unique spread element is also being well received by the retail brokerage community as we educate in an easy-to-understand way one of the primary risk defined strategies and options trading.

This launch is just the first step in our broader event contract strategy. We see significant growth ahead as these products become increasingly integrated into the financial markets, and we intend to expand beyond index-based outcomes by leveraging our capabilities across both securities and futures. Longer term, we see a compelling opportunity to introduce additional contracts around economic and financial indicators.

This is a rapidly growing and compelling area of the market and we believe Cboe is uniquely positioned to succeed as a trusted partner to customers and regulators with deep experience that spans securities, futures and clearing. We have consistently designed products that meet the needs of both institutional and retail participants while creating thoughtful education on ramps that support broader adoption.

Leveraging our market infrastructure expertise, our product design capabilities and regulatory integrity, we believe Cboe is best positioned to bring differentiated event contract solutions to market across both securities and futures.

Our move into event and prediction markets will bring capabilities and enhancements designed to address many of the weaknesses we see in the current event and prediction market space. Moving to cash and spot markets. Net revenue was up a strong 34% as we saw record results in each of our respective segments across the category, Europe and Asia Pacific, North American equities and global FX. Led by another quarter of strength in our European transaction business, the Europe and Asia Pacific segment delivered a 32% year-over-year increase in net revenue. This was driven by 43% year-over-year growth in net transaction and clearing fees given stronger industry volumes, market share and net capture dynamics as we saw the quarter and month of March set new records for average daily value traded. In fact, 5 of the 10 highest trading days in Cboe Europe's history occurred during the quarter with records across key services such as periodic auctions, Cboe Closing Cross and Cboe bids VWAP X. Higher nontransaction revenues in the segment also contributed to the growth with revenue up 21% year-over-year.

North American equities made a solid contribution with net transaction and clearing fees revenues up 40%, given strong industry equity volumes in each of our markets. And rounding out cash and spot markets businesses, Global FX made another record contribution, increasing net revenue 38% year-over-year in Q1. The year-over-year growth displayed by the FX business was the strongest of any of our segments in the first quarter.

Turning now to Data Vantage. Net revenue increased by 19% on a year-over-year basis, reflecting continued momentum across the platform in the first quarter. Roughly 85% of the growth across our market data and access businesses was driven by new units and new sales as opposed to pricing. The first quarter saw a strong contribution from new product sales, complementing continued demand for access to our markets, and a durable and growing international contribution.

Now I'd like to introduce our COO, Scott Johnston. Scott joined us in February. And while this is his first earnings call at Cboe, he has quickly taken on a very active role in shaping our strategic framework and strengthening discipline, efficiency and accountability as we position the company for future success. Scott brings an extensive track record and leadership roles at several key buy-side firms, and I have personally had the opportunity to work closely with Scott during our time together at CME. Scott will now cover additional strategic realignment changes announced today.

Thank you, Craig. Our core business delivered exceptional results, and our leadership team is stronger than ever. And this next evolution in our corporate strategy is designed to ensure we are not only optimizing the business we have today, but also building the capabilities and operating discipline required to capture tomorrow's opportunities. Since beginning our strategic realignment in the second half of 2025, we have taken decisive actions across the firm. These include announcing the sale of our Canada and Australia businesses, exiting or winding down our corporate listings, European derivatives, SEDEX and Japanese equities businesses and reducing costs in our U.S. and European ETP listings businesses as well as several of our smaller risk and market analytics businesses. In parallel, we have significantly strengthened our leadership team, adding experienced proven talent in key roles.

By eliminating some lower return work and complexity, we can invest more deliberately to support our long-term strategy. This includes strengthening our core derivatives and index businesses, exploring opportunities across our spot and off-exchange businesses, enhancing our clearing capabilities, broadening global access to our products and positioning Cboe to succeed in new areas such as prediction markets and tokenization. To support those long-term ambitions, we are realigning our organization from the ground up. Cboe's workforce has doubled in size since the beginning of 2020 as we integrated acquisitions and bolstered our support functions. And while our growth while with enhanced opportunities, relationships and capabilities, it also created mismatches as our strategy has shifted in the opportunity that has evolved.

After a thorough review, today, we announced our decision to realign our organization to build more agile teams, placing the clear ownership of outcomes with those best positioned to operate a fast [indiscernible] environment. Our earlier actions to sell, wind down and optimize certain businesses, combined with today's additional strategic realignment changes are expected to reduce our workforce by approximately 20%.

In addition, we will also be transitioning back to in-person work to support faster decision-making, stronger collaboration and better integration across teams as we execute the next phase of our growth strategy. Today's announcement represents a critical next step in our realignment, directing resources to the work that will drive our future success. When joining Cboe, an important consideration for me was the ability to effectuate change and drive greater levels of efficiency throughout the organization. As a management team, we have made great strides, and Jill has been a key partner in installing discipline throughout the company. I look forward to building on the steps we have taken as a firm.

Now I'd like to turn the call over to Jill to walk through the financial highlights from the first quarter and our 2026 guidance.

Thanks, Scott. CPO posted its fourth record quarter in the last 5 quarters with adjusted diluted earnings per share up 48% on a year-over-year basis to a record $3.70. I will provide some high-level takeaways from this quarter's operating results before going through the segment results. Net revenue increased 29% versus the first quarter of 2025, to finish at a record $729 million. We saw strong double-digit growth in all categories with the strongest growth coming from our cash and spot markets business. Specifically, cash and spot markets grew net revenue 34% as industry volumes fueled revenue generation. In our derivatives category, net revenue grew 32% as strength in our proprietary index options in multi-list products drove robust results for the category. And in Data Vantage, new sales growth drove a 19% year-over-year increase in net revenue.

Adjusted operating expenses of $201 million were up 4% on a year-over-year basis. Adjusted operating EBITDA of $541 million grew 41% and adjusted operating EBITDA margin expanded by 6.1 percentage points to 74.2%, a result of both our exceptional revenue results and disciplined expense management.

Turning to the key drivers of the quarter by segment. Our press release in the appendix of our slide deck include information detailing the key metrics for our business segments, so I'll provide some highlights for each. The Options segment delivered another quarter of record net revenue, increasing 33% year-over-year. The growth was driven by a 34% increase in net transaction and clearing fees in the first quarter. Total options ADV was up 10%, with a 29% increase in index options volume and a 4% increase in multi-listed options volume. The rate per contract for our options business also increased 19% on a year-over-year basis given positive contributions from our multi-list products and index complex. North American Equities net revenue rose 18% versus the first quarter of 2025 with strong industry volumes driving a 40% increase in net transaction and clearing fees.

On the nontransaction side, market data fees grew 5% and access and capacity fees increased 12%. Europe and APAC produced 32% year-over-year net revenue growth. Net transaction and clearing fees were up 43%, while non-transaction revenues were up a combined 21%. Futures net revenue increased 9% from the first quarter of 2025. The increase was primarily due to a 14% uptick in total ADV given stronger VIX activity during the quarter. And finally, global FX produced the strongest net revenue growth of our segment, up 38% on a year-over-year basis, driven by a 36% increase in average daily notional value and a 4% increase in net capture.

Looking at our Cboe Data Vantage business, net revenues increased by 19% compared to the first quarter of 2025 Revenue growth was again underpinned by healthy new subscription and unit sales, representing approximately 85% of this quarter's growth. with the remainder coming from pricing changes. Exploring the growth drivers further, we saw increases in each major area of Data Vantage with market data and access services, [indiscernible] global indices and risk and market analytics, all up double digits on a year-over-year basis. The most pronounced growth occurred as a result of onetime data sales associated with some of our newly launched products.

Turning to expenses. Total adjusted operating expenses were $201 million for the quarter, up 4% on a year-over-year basis. This increase is largely driven by higher compensation and benefits expense given the strong first quarter revenue trends, which resulted in an increase to our short-term incentive compensation.

Before outlining updates to our 2026 guidance, I'd like to walk through how the planned sales of our Cboe Canada and Cboe Australia businesses as well as the additional actions related to our strategic realignment announced today are impacting our 2026 outlook. As you will recall, during the second half of 2025, we began to explore the potential sale of our Cboe Australia and Cboe Canada businesses, announced the wind down of certain businesses and committed to reducing costs in specific listings and analytics businesses. Once complete, we continue to anticipate that these actions will lead to an approximate 3% annualized reduction in net revenue compared to 2025, primarily driven by our strategic decision to exit or scale back noncore and lower-return businesses.

On the expense side, we previously indicated that the strategic realignment was expected to yield an estimated 8% to 10% annualized reduction in adjusted operating expenses versus 2025. In light of the incremental strategic realignment changes announced today, we now expect our strategic realignment to deliver an even greater reduction, approximately 12% to 14% on an annualized basis compared to 2025, translating to savings in the range of $100 million to $120 million. The incremental strategic realignment actions are expected to contribute $40 million to $50 million in annualized expense savings. As it relates to our 2026 guidance, we anticipate realizing $20 million to $25 million of the additional strategic realignment savings in 2026.

Before touching on the remainder of the 2026 guidance changes, I want to make clear that although we have an agreed upon sale in place for Cboe Canada and Cboe Australia, we continue to operate the businesses until the transactions close with each entity being subject to separate closing and regulatory approval processes. Until the sales are complete, the revenue and expense contribution of each will remain part of our 2026 guidance. On an annualized basis, we estimate the 2026 total net revenue contribution from Cboe Canada and Cboe Australia will be in the $60 million to $70 million range. and we estimate adjusted operating expenses that would no longer remain in Cboe's cost base following a sale to be in the $40 million to $50 million range. We will update our guidance as regulatory approvals progress and transaction timing becomes more certain.

Looking at our overall 2026 guidance, we are providing the following update. On a full year basis, we anticipate our Data Vantage organic net revenue growth to be in the low double-digit range. We expect our total organic net revenue growth to be in the low double-digit to mid-teens range. We are lowering our 2026 adjusted operating expense guidance range from $864 million to $879 million to $838 million to $853 million. Compared to 2025, this represents no increase at the low end and a 2% increase at the high end. Our full year guidance range for CapEx remains $73 million to $83 million, and depreciation and amortization remains in the $56 million to $60 million range. We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 27.5% to 29.5% for the full year. And while we don't provide formal guidance on interest income or interest expense, we expect that interest income, net of interest expense, will be a $3.5 million to $4.5 million positive contributor for the second quarter of 2026.

On the capital front, following our fourth quarter earnings call on February 6, we resumed opportunistic share repurchases, buying back a total of $45 million in Cboe shares through the first quarter. Last quarter, we also returned $76 million to shareholders in the form of a $0.72 per share dividend, putting total capital returned to shareholders in the first quarter at $121 million. We retain a great deal of balance sheet flexibility as evidenced by our adjusted cash position of $2.1 billion and a leverage ratio of 0.8x, positioning us well to invest in organic or inorganic opportunities. as well as redeploy capital to shareholders in the form of dividends or opportunistic share repurchases.

Now I'd like to turn it back over to Craig for some closing comments.

Thank you, Jill. The first quarter results were truly exceptional, but the market continues to evolve at an unprecedented pace. To continue to lead, we must move faster, sharpen our focus and deploy our resources with even greater discipline. As I reflect on my first 12 months here at Cboe, it is clear that the decisive steps we have taken are moving the company closer to realizing its full potential. In October, following a thorough strategic review and adopting a more rigorous financial and strategic framework, we announced a strategic realignment designed to increase focus and investment in our core businesses that drive our earnings, index options, multi-list options, futures, U.S. equities, European equities and FX. We took quick and decisive action to reorient the business, including winding down Japanese equities, exiting corporate listings, winding down our European derivatives business, optimizing our resource allocation and our risk and market analytics businesses and initiating the sale of our Canadian and Australian businesses.

Last week, we achieved a significant milestone by reaching a definitive agreement to sell Cboe Canada and Cboe Australia. These actions have not only improved performance in our core businesses, they have allowed us to focus on new areas of growth amid a rapidly transforming industry. Going forward, we are positioned to allocate resources more effectively, including adding talent in emerging areas as we make greater investments in financial and economic event markets, tokenizing products and further expanding our clearing services in Europe and the U.S. As a result, we will strengthen our regional sales, marketing and investor education to bring our most in-demand products, emerging innovations and deep market expertise closer to our customers, all driving long-term value for shareholders.

I've been in this industry for many years, and I have never been as excited about the road ahead as I am now. We have everything to play for, but is going to require us to work smarter and be incredibly focused with our decision-making and use of capital.

I will now turn the call back over to Ken for questions and answers.

At this point, we'd be happy to take questions. We ask that you please limit your questions to one per person to allow time to get to everyone. Feel free to get back in the queue, and as time permits, we'll take a second question.

[Operator Instructions] The first question comes from the line of Patrick Moley, Piper Sandler.

So I had one on Data Vantage revenues, very strong growth this quarter, up 19%. And you mentioned the 85% coming from new unit sales. It's obviously, I think, been elevated for the last couple of quarters, how much of it is coming from the unit sales. I just wanted to get an update on how sustainable you think the growth here is, especially given some of your comments on reinvesting in the sales force. And then as we look forward, given the guidance update an increase this quarter for the full year? Should investors look at low single -- or low double digits is kind of the new baseline in terms of growth and Data Vantage?

Yes. Patrick. So in terms of Data Vantage, you're right, we had a very strong quarter here, and the growth was pretty broad-based across all of our businesses. About half of the growth year-over-year was driven by higher access-related revenue, and the driver of that was really client demand for increased connectivity to our options exchanges. You saw our options volumes grew double digits, and our index options volume grew about 30%. So that was a pretty strong backdrop there. About 40% of the growth came from increased market data sales. And we continue to see very robust demand for both our European and U.S. prop data, and we also continue to see strong demand from local brokers in Asia. And again, those brokers want the data to provide U.S. access to their clients. So we're seeing some pretty strong sales there.

As we've said in the past, some of these sales can be unevenly spread throughout the year. we launched 2 new products related to options data sets this quarter. And while we started off strong on subscription sales, those 2 new launches also triggered quite a bit of onetime revenue related to historic data sets to combine with those new products. So that's where you see some of the relative outperformance in that 19% year-over-year growth rate. The rest of the growth was driven by both our index business and some of our risk and market analytics businesses. So as you heard Jill say, we are taking our guidance up this quarter to low double digits for the year. I wouldn't say that's a new baseline, but we continue to see some pretty strong growth. So we'll continue to update as the quarters go on.

Your next question comes from the line of Brian Bedell of Deutsche Bank.

Maybe just a zone in on the prediction markets. Craig, I think you talked about that earlier in terms of the strategy there. What is the -- it's clear what you're launching in the near term here on the vertical binary options. But how do you envision this industry playing out over the long term and how Cboe would participate in that? And what I particularly like to focus on is the potential to launch company-specific financial KPI contracts, realizing they most likely have to be regulated by the SEC. But what is your view on the potential demand for those types of contracts? And would those be need to be done in an option structure? Or could you create a different platform, say, like how [indiscernible] runs their platform now and in terms of that type of market structure to do those or maybe both, Anyway, it's a long-winded question, but if you could comment on that.

Yes. Thank you, Brian. I'm happy to do that, and I'm sure Rob is going to want to get into that as well. But I mean, I view this as like a really significant new market segment that is likely to continue to develop I think that despite the explosive growth that we've seen in event and prediction markets, this is still extremely early stages. What we've said is we're focused on taking advantage of that opportunity and what we view as the long-term growth potential in the market. But with a focus on contracts that are well designed, they are really oriented toward financial instruments and economic indicators and things like that. So you mentioned company-specific things. That's one of the things that makes us so well positioned to take advantage of the long-term growth trend in event and prediction markets. We've said before that in many respects, having really led the market in terms of developing the 0 DTE ecosystem. We've got effectively event contracts that are happening, many millions of contracts being traded each day. being in both the securities and the future space, but being particularly strong in the equity and equity derivatives space, we're super keen on coming to market with company-specific contracts, we see lots of opportunities for doing that. Rob and his team and [indiscernible] are working really closely with all of our partners, our liquidity providers or market makers or retail brokers to try to kind of move us to that next phase growth.

And then long term, we certainly see the opportunity also to expand into CFTC regulated futures or swaps that are also event contracts. So at a high level, I see it as a really large market opportunity, one that's going to continue to develop over the next decade. I think there's lots of opportunity for us, specifically given we've got a really strong reputation for market integrity, market supervision and oversight contract design, distribution and a proven ability to marry retail and institutional together. But let me turn it to Rob because Rob is really leading that.

Yes. It's a great things, Craig. And I agree, it's a great opportunity. I think starting with securities isn't philosophical. It's a practical reason. It's where our customers are, it's where the infrastructure exists. It's where investor protections are the strongest. Retail broker platforms are already built for OCC-cleared index-based products. That means when we lead with our XSP binary options, we have the potential for broader day 1 distribution with stronger customer protections and really more of a reputational alignment with Cboe's brand. And it avoids forcing securities like risks into futures wrappers that customers don't naturally use today. And so Phase 1, as we've talked about, we lead with the binary options, defined spreads in XSP. We want to expand that to other core proprietary products.

As I mentioned, this approach aligns well with existing workflows for our clients. But as you asked, really fast second phase, exploring what KPI-based contracts would look like. I would argue in securities and futures because some will, I would say, fall into more of a futures category, but really leading more on the securities side as we feel A lot of these outcome-based contracts tied to things like earnings and corporate KPIs are directly tied to the financial performance of the individual company and therefore, land in that securities bucket. And by moving forward and developing these, we're really focused on designing these products with -- and I think this is super important for the integrity is with clear resolution kind of disclosure-based settlement that people can count on, that they understand exactly what that settlement number is, and there's very low likelihood of revisions and restatements.

And then obviously, within the securities framework, taking advantage of decades of surveillance controls that will just add, call it, extra certainty and extra trust into the system for these users as more and more people look to get involved.

Your next question comes from the line of Elias Abboud of Bank of America.

Given the discussion lately about other exchanges looking to compete for the SPX contract in 2032, can you talk about what capability Cboe brings to the SPX complex that you feel other options exchanges cannot replicate? And in particular, can you share any data points to help us better appreciate the depth of the network you've built out in SPX? How many introducing brokers offer SPX today, and does the vast majority of volume come from just a few brokers? Or is participation broad-based?

Yes. Yes. Happy to go through all of that. Why don't I just outline kind of the breadth of what makes up the proprietary product ecosystem. And hopefully, that might give you an idea of why we feel it's so powerful and call it hard to replicate. First, it starts with foundational product in the SPX and then yet in a generational relationship with a great partner in S&P. And then that allows us to be able to deliver, call it, all of this record growth quarter after quarter after quarter. And so the SPX averaged just under 5 million contracts per day for the first quarter and then almost 5.4 million contracts per day for March, both were all-time record highs.

And what I'd like to point out is this is more than a 300% increase in the past 5 years for a product that is approaching its 43rd anniversary. And so you think of the established base and yet these returns and how we're growing the product is phenomenal. And so volume in the first quarter was made up of, call it, about 84% electronic, 16% open [indiscernible]. And what's important to note on this is that 58% of the notional value traded in SPX options is trading on the floor, and really only 40% -- or call it, 42% is being traded electronically. And that just goes to show that while the number of contracts traded on the floor is a smaller absolute number, it still represents the majority of notional dollars at risk, which is just important to understand.

And so on the trading floor, we have, call it, roughly 11 different floor broker groups with the largest representing only around 23% of the volume. I have to mention the 20 market making group servicing the flow of those 11 floor broker groups that they bring to the platform. Now on the electronics side, we have 34 different retail broker platforms connected in trading, but with the largest representing only about 30% of the volume. So you can see that volume is spread across many of those platforms. Of that volume, 50% is complex or multi-leg spreads and 50% is simple or single option trades. As we've talked about, roughly 60% of the volume is showing up in 0 DTE and if I break down how that flow is showing up each week and kind of looking at how it hits the contracts, Fridays tend to be the biggest volume day at around 28%, with the other days of the week averaging between 14% to 23%. But overall, this trading is very balanced each day.

So why do I go into that part? Really, what I think these numbers show as an entire ecosystem with balanced flow, balanced risk, balanced participation on the broker side, the market maker side and the customer side. And now I want to point out that this was intentional. This is what we set out to build when we went to build the ecosystem and the product tool kits and how they're all intertwined. And I think given our success, we really see little reason to upset it.

Your next question comes from the line of Dan Fannon of Jefferies.

Jill, just wanted to follow up on all the guidance you gave. I appreciate the additional details, but just a few clarifications. So the $100 million to $120 million is the total expense saves, I guess, across everything that you've announced, including today. So I just want to confirm what's in the guidance for this year? And then what's remaining to still kind of be in guidance and/or be realized as we think about 2026, into next year. Just want to clarify a few of the timing and also what's in guidance and what's not?

You bet. So happy to walk through that. As mentioned, once all of the strategic realignment actions are fully implemented and realized, we expect the aggregate annualized benefit from an expense perspective to be in that $100 million to $120 million range. But as you rightly alluded to, there is going to be a timing component to this. So the way I would break it down is taking some of the midpoints of the figures that we shared today. So we did share that we expect to save approximately $40 million to $50 million in expenses once both the Canada and Australia transactions are fully complete and transitioned.

So taking that on an annualized basis, I would say, given that those haven't occurred and in my remarks earlier, none of that has been baked into our 2026 guidance -- or none of that has been -- savings has been built into the 2026 guidance. All of that expense remains to be realized at a later date.

Then if you take a look at the additional actions related to the strategic realignment that we did later on today, that piece is also expected to be $40 million to $50 million in annualized savings once everything is fully recognized. We do expect the majority of that to hit in 2026, but there will be a component that does extend into 2027. So as shared earlier, we expect the 2026 savings, from that, the additional strategic realignment efforts to be in that $20 million to $25 million range.

So then backing out the other, I would say, we do have about $20 million then of the previously actioned strategic realignment pieces that have already been reflected in our 2026 guidance. So you're seeing that fully encompassed package reflected in the numbers that we came out with today in our revision.

Your next question comes from the line of Ben Budish of Barclays.

Maybe one for Jill, just on capital priorities. It looks like there's -- you should have some proceeds coming in from the Australian and Canadian properties. Your net debt position is quite strong. I think your cash levels are maybe up double year-over-year. And there seems to be no limits to your ability to invest, I would think, at least organically in the business. So how should we think about use of cash, OpEx versus M&A versus CapEx? Just any color there as you're thinking through the impacts coming out of this realignment and anything else would be helpful.

You bet. So again, we do generate a lot of free cash flow, especially given the record results that we continue to put up quarter-after-quarter balance sheet is in a phenomenal position. What I will say is we continue to be focused on organic investments. We've obviously taken quite a few actions and even announced more today on the strategic realignment front. But really, what that's doing is better positioning us for future focus areas. So I'll just hit on a couple of those that Craig mentioned earlier that we're really looking to lean into, whether they be financial and economic in that market, tokenizing products, further extending our clearing services in the Europe and the U.S., those are potential uses of the nice capital that we have available to us.

We're taking a look at everything opportunistically. You can expect share repurchases again, opportunistically as I hit on. The quarterly dividend, we do have a history of increasing that during the third quarter. So we'll take another look at that. But effectively, really feel we're well positioned right now to be able to lean into some of these areas as the opportunities are emerging.

Your next question comes from the line of Ashish Sabadra of RBC Capital Markets.

I just wanted to follow up on Brian's question. So the production markets have also launched these binary options on S&P 500. How does that change the competitive dynamic, particularly given you have the exclusive -- exclusivity for the SPX option? And then how are you thinking about pricing those even contracts going forward?

I'll just comment briefly and then let Rob answer your question on pricing. We're certainly cognizant of some of the products that are being traded. And that's a topic that we are always in active discussions with our regulators on. It is clear that binary options that are based on a broad-based stock index are a securities-based products. And -- so that's an ongoing conversation that we're having. And I think we're very hopeful and optimistic that regulatory clarity ultimately will result in no impact to our licensed products.

Yes. And on the pricing front, I think we're working very closely with the various retail broker platforms. We obviously have to look at what the clearing fee will be, the exchange fee, there's things like or regulatory fees that fall on to security options today that we'll have to take into account. And I think we're working through those now. The good news is we have a fair amount of flexibility and being competitive with pricing to various, I would say, event contracts that are out there today on other platforms. And even as I mentioned, [indiscernible], I know it's a fun topic for the industry. But even as we now look to potential [indiscernible] reforms coming in, in this summer, it now gives us the flexibility to I would say, by exchange, be very targeted in how we charge some of these fees and how we try to deliver as much end value as we can to the customers.

So we haven't finalized the fee structure yet. We obviously will be very public with that when we do. The fees on the existing contracts, so [indiscernible] those will be very much in line with the way fees are charged today. So we don't see a big change. We just see launching the binary vehicle has just an add-on to the existing XSP, Mini-SPX franchise. But when I'm more referring to the KPI style of contracts, those will be very new, how the risk transfer happens and how the pricing works on that. we'll be back with more details, but are working very close with all the industry participants to ensure the best chance and the best value add for the end user.

That's very helpful color and congrats on such a strong result.

Your next question comes from the line of Michael Cyprys of Morgan Stanley.

One of the areas of focus you mentioned is enhancing clearing capabilities. So I was hoping you could elaborate on how you might go about that and the opportunity set that you see there with clearing. And then more broadly, as the industry may shift over time toward more tokenized rail. So just curious how you see the economics evolving for clearing but also settlement and execution in the tokenized world? Where is there scope for compression versus opportunities for new revenue pools and adjacencies?

Yes, I'll take that. We see tremendous benefits in expanding our clearing capabilities. We've got a very strong position with our European clearing house. We're expanding that to include securities finance transactions. That's been a new area of emerging growth for us that we're really excited about. But I think your question really touches on the heart of what I think is very interesting for us, which is that, at least in the U.S., we're still a very nascent and small-scale player in clearing and settlement. I think as we look at tokenization and blockchain applications and atomic settlement. We view that as kind of where we're going in terms of opportunities for us to deploy those kinds of capabilities, especially in areas of emerging markets like cryptocurrency and other things. So that is sort of the thrust of what we're focused on in terms of growth from here and taking advantage of what we think is this melding that is going to keep happening between the traditional market infrastructure part of the market and the D5 sort of emerging area.

And just to that point around economics evolving, just any views on how you see economics evolving for clearing settlement execution and tokenized landscape?

I think that's something that has to wait until we get closer to developing those capabilities. But I think that it's clear that there is demand for that. We clearly see people using on-chain tokenization as a way to overcome the inherent limitations of traditional market infrastructure, particularly in the post-trade area. So there's value there to be created, but I can't comment on pricing and economics at the moment.

Your next question comes from the line of Simon Clinch of Rothschild & Co.

I was wondering if we could jump back to the event contract strategy you have. And I was wondering if you could talk to us about how you see the size of the relative opportunities for just the prediction market opportunity on its own -- and then sizing that against the opportunity of treating it as a funnel to fuel activity and growth within your traditional futures and options franchise.

Yes. Thank you very much. I really appreciate that question. And I think that you're right to think of that as a dual function of future growth for Cboe. And we've said that all along, which is as we've been moving from quarterly contracts and monthly contracts and weekly contracts and biweekly contracts to 0 DTE contracts. We see the fed contracts at this point is actually really a stepping stone to basic options trading strategies, and Rob's talked about that. Rob and J.J., I think, have been super innovative in developing the sort of payout zone concept or the vertical spread concept.

I think it's really difficult to answer your question at this juncture, but it's really clear that there's a lot of emerging interest in decomposing equity securities and looking at different ways to offer investment ideas to people. So when you start to think about contracts that would effectively allow people to express an opinion about what the delta might be between actual earnings and expected earnings or people who are focused on how different sort of KPIs might drive earnings outcomes for companies, whether that's looking at Netflix subscriptions or Tesla car production or meta ad revenues I think these markets can be huge. And I think it's hard to give you sort of an aggregate sort of exactly how we're sizing the market right now. But if you just look at the size of the equity market, and then you start to contemplate breaking down more granularly, as I said, decomposing equity securities into all these different kind of event contracts, you can see that there can be an enormous multiplier effect well beyond what the equity market today would be.

So that's more conceptual than it is like an actual market sizing. But that goes back to my earlier comments on the call, which is, I think this is a huge new market segment. I think it's going to develop over the next decade. There's tremendous opportunity there. We're super excited about it. I think we're probably best positioned to actually be the leader in those markets.

There are no further questions at this time. And with that, I will now turn the call over to the management team for closing remarks. Please go ahead.

I just want to say thank you for joining us. We are very excited here. This has been a tremendous amount of work to do over the course of the last year. Some of the things that we've had to do, of course, are quite difficult decisions to implement, but we are very focused on making Cboe incredibly strong and positioning us to take advantage of all these growth opportunities in the market, making today's changes that we've announced really further us in that regard. So thank you very much. We look forward to being with you next quarter.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

All right. Good morning, everybody. I am Patrick O'Shaughnessy, Capital Markets Technology analyst here at Raymond James. Thanks, everybody, for joining us here this morning.

Up next, we have Cboe Global Markets. And on their behalf, we have CEO, Craig Donohue; CFO, Jill Griebenow; and Rob Hocking, Head of Derivatives. Format of this, they're going to go through some slides for 10 or 15 minutes, and then we'll open up to Q&A.

So with that, I'll turn it over to you guys for the slides.

Good morning, and thank you very much for joining us this morning. I'm Craig Donohue. I thought I would just start because I know some of you may not be as familiar with Cboe with just a little bit of history, but we actually invented equity options in 1973 and gained regulatory permission to first offer those for trading. And we've had a great history of innovation over our more than 5 decades of history. A little over 10 years after starting trading of equity options, we started to trade cash index options based on the S&P 500, had a very long-term growth trajectory in index options.

And today, that's our flagship product. Another decade later, we launched Volatility indexes, the so-called VIX. And since that time, we trade options futures, and we licensed that together with S&P internationally. In 2017, the company transformed beyond derivatives. And so today, we have fairly large equity and FX businesses. For us, FX is a global business. Equities is concentrated primarily in U.S. and European equities. And then more recently, in the last several years, we've been the first exchange to really create the ecosystem that has supported tremendous growth in 0DTE options, which are options that expire on the same day that they are traded.

Rob will talk about that a little bit more in just a few minutes. But we've continued to set just records in volume growth as well as in our financial performance. Our derivatives business in the aggregate produces $1.3 billion of net revenues, up 22% year-over-year. We also see continued growth data and then also our risk management analytics businesses and then our Cboe Global Indices business. So there's an aggregate there. We continue to see tremendous, consistent growth there. It's a $623 million net revenue business with 10% year-over-year growth, much of that coming from new subscriptions. And then we continue to see just extraordinary growth in cash and spot markets. That's a $465 million net revenue business, up 15% year-over-year as well.

And then just to give you an overall picture of our growth and performance. On the right side, you can see that net revenue has grown at a 12% compounded annual growth rate over the last 3 to 4 years, $2.4 billion in net revenue, up 17% year-over-year. Similarly, a 13% compounded annual growth rate in adjusted operating EBITDA, up 25% year-over-year and then a 15% growth in adjusted diluted EPS, which I think shows you the power of the platform and the power of the growth that we're achieving on top of effectively a relatively fixed cost base.

So with that, I think I'll turn it over to my colleague, Rob.

Thanks, Craig. Good morning, everyone. I think 2025 was a strong year across the portfolio and particularly strong performance in the derivatives franchise. Derivatives generated approximately $1.5 billion in net revenue. That was up 22% year-over-year, really driven by continued strength in our proprietary index products. SPX, VIX and Mini-SPX continue to scale exceptionally well, really benefiting from higher volatility, growth in 0DTE and strong global demand.

In the cash equities, we saw continued momentum, particularly in Europe, where our market share gains translated into double-digit net revenue growth. And clearing remains a big focus of ours as we look to extend into adjacent products like securities financing transactions this year. Futures on the other side, growth has been a little more challenging as customers move really to shorter-dated risk management tools. That said, volumes in VIX futures are trending higher with January ADV up 28% over a slow December and February up 16% over January. So we're building momentum again.

Lastly, I'll say that Global FX has delivered steady performance, supported really by ongoing customer activity in our spot FX and nondeliverable forwards. So overall, 2025 results highlight the strength of our diversified business model, and we're quite excited to carry this momentum into 2026. So far, 2026, I would say, is picking up really right where 2025 left off with a combination of secular trends and cyclical tailwinds. Macro uncertainty, shifting policy expectations and more dynamic investor positioning continue to drive demand for hedging, liquidity and really access to our portfolio.

These, along with strong, I would say, long-term secular trends continue to work in our favor. Things like globalization of markets and data, more sophisticated retail participation has been a big contributor and just a sustained shift towards shorter-dated options trading in our 0DTE complex. And while at the same time, these cyclical factors such as higher volatility, an active rate and equity market and geopolitical uncertainty continue to amplify across our platforms, we're really kind of excited about how all of this is coming together and translating in trading activity.

If I were to dive into kind of more product specifics, options activity reached historic extremes in 2025, including 41 days above 70 million contracts traded and the first ever $100 million-plus contract day. We believe these numbers to be a point of a structural shift, which is super exciting for us. Investors are increasingly using options as kind of a core portfolio tool rather than viewing them as a niche product, really only understood by a small subset of the market.

And so looking at 2026, year-to-date performance, total index options are on pace for a quarterly record in Q1, averaging approximately 5.7 million contracts per day, and that's up over 3.5% from an already record fourth quarter. SPX continues to lead the way with ADV on pace for 4.6 million contracts in Q1. That's up 25% year-over-year and approximately 6% from Q4.

And then Mini-SPX is also scaling rapidly with ADV to start the year up almost 31% from Q4, and that's really reflecting growing demand from -- for smaller notional size contracts. And we think we can grow that even further by introducing a more retail-focused Mini-SPX event-based contract later this year. So within SPX, 0DTE options continue to be a major growth driver. In 2025, ADV was up 51% to 2.3 million contracts, and that was representing nearly 60% of all SPX activity. That usage really is highlighting how customers are increasingly using SPX for really precise risk management and intraday risk management. I've used the example a few times in meetings where I was a former portfolio manager.

And when you had to manage risk, you used to have to use longer-dated options to do so. And in doing that, you ended up buying effectively an insurance policy and you received more insurance than you needed. Now with shorter-dated options, it's really benefiting the market because you can be very precise. And if you need to buy downside protection for a day or 2, those options exist. You don't have to spend a ton of premium to do it, and it really helps you manage your portfolio. And so we're excited to see how that market is evolving.

On the multi-listed options front, those continue to deliver strong growth. ADVs in 2025 were up 24% to a record 13.5 million contracts. And so as we look ahead, our focus areas are really directly tied to sustaining this momentum. That includes pursuing things like extended trading hours to meet more global demand as it comes in, expanding usage of the Monday, Wednesday option expiries that you just saw launched in single stock options and then continuing industry engagement around potential ORF reform.

I won't go into it in detail, but ORF stands for the options regulatory fee, and it's a fee charged on every customer transaction in our space by all exchanges. So as more exchanges come into the mix, I think we're up to 20 to start 2026. That fee is taking on, I guess, more attention from the industry.

And so jumping into Slide 8 here, I want to talk more about how we're capitalizing on the trends we discussed earlier and kind of extending our growth runway away from the core business. These initiatives really start to continue to build on our existing strengths, which, as I mentioned, are index options, clearing, global distribution and education, which we're heavily invested in.

So in Europe, we're expanding Cboe clear functionality to include securities financing transactions for cash equities and ETFs. In this model, CCE becomes a central counterparty to both lenders and borrowers, and this significantly reduces bilateral risk. So for banks and clearing firms, this can materially lower their risk-weighted asset requirements and really improve netting efficiency while reducing operational complexity.

And so this is really a natural extension of our clearing franchise into a large under really penetrated market that has a strong need for balance sheet efficiency. And so we kind of view this, provide more capital, get more trading and return. On the event and prediction side, we're pursuing event-based products through a combination of binary options, which you heard us talk about and structured vertical spreads. Now this is designed to create a new user experience, introducing a yes, no option and then a maybe choice into investors' trading of event outcomes.

This plan takes really advantage of our existing industry-leading liquidity in the S&P 500 complex while allowing investors to express views on discrete outcomes using a standardized and familiar options approach. So by combining the 2, we're excited that we can effectively bring an investor along in an education journey where they're comfortable with a yes, no contract today, but can ultimately come down that journey and start to learn more traditional options and more traditional use of spreading of options.

And we also feel there's a huge benefit of this because we're focused on the security side of the business, where we can access a lot more end users. So if you were to look at the number of retail accounts that are in the security side versus the futures side, the security side represents multiples of what the future side does. So by going down the security side path, we're excited about just reaching more people and really kind of capitalizing on that momentum that 0DTE has had in SPX.

And so in addition to that, we're also focused on increasing access and education. One thing I'll talk about kind of on the globalization side is we continue to advance broker onboarding in EMEA and APAC. This is exciting for us. We -- I'll use a good example. In Korea, where 2 years ago, we did not have a single broker onboarded. Of the 10 that we've identified targets, we now have 7 of them onboarded and offering SPX to their clients.

So we're excited about kind of what growth that can come from doing more of that, and we see other opportunities across kind of the APAC and Middle East region. And then lastly, as we onboard more users and focus on kind of expanding trading hours, as I mentioned, in other products like single stock options, we announced recently that we're going to expand trading hours and offer a premarket session and a post-close session, just once again trying to improve access and bring more users onto the platform.

So I guess in closing, before I hand it over to Jim -- I'm sorry, Jill, key takeaway is like our innovation is highly intentional, and we're really extending our growth runway by building adjacencies around product infrastructure, which we think is important and really capabilities that we do extraordinarily well. So our focus, index options, data and access to these products. So with that, I'll hand it over to Jill.

So just a couple of comments here from a financial perspective. As Craig and Rob have alluded to, we have had some fantastic momentum. As you'll see, our 2025 results, we did generate about 17% net revenue growth compared to 2024. But I think the important thing to note here is we did that on a 5% expense growth perspective. So what you've seen is we have very healthy margins. But when we do have those periods of outperformance from a net revenue perspective, we do have a relatively fixed cost base in that when we have the revenue outperformance, you see much of that drop to the bottom line. So for 2025, our adjusted operating EBITDA margin did stretch to about 68%, again, on the heels of the fantastic secular moves and some of the volumes momentum that we did see.

So then taking us to 2026, as Rob shared on some of the growth momentum, the areas where we're making targeted investments, we did share our 2026 full year guidance with The Street right about a year ago. So from a net revenue perspective, again, targeting that mid-single-digit growth range. We will, as actual results come in, continue to formulate and update that guidance as we've done in the past. Also important to note that we really are focused on what I'll call disciplined expense management. And again, you're seeing that come through our 2026 guidance.

I do want to be mindful that we do want to make sure that we strike the right balance between investment in the business, especially to generate that future year net revenue growth while also maintaining that discipline. Going back to that adjusted operating EBITDA margin I mentioned, we did see that deteriorate years back in 2021, 2022. So again, really looking to strike the right balance between making that future outer year investment, but not overburdening the operating expense cost base to ensure that we can at least stabilize that margin. Then again, our depreciation and amortization, capital expenditures, et cetera, very much in line with prior years, being very thoughtful about the targeted investments and making sure that we do have the framework in place that we need to position us for future years.

With that, I will turn it over to Craig to just provide a few concluding remarks, and then we'll open it up for Q&A.

Thank you, Jill. So maybe just to wrap up, I mean, one of the things that I've tried to do in my time now at Cboe is just to sort of sharpen our focus. We, very early in my time there, undertook a strategic rationalization of our different businesses. We were, for a while, trying to create exchanges in Australia, Japan and Canada. We determined that those didn't really fit our growth profile in terms of what we were trying to achieve for shareholders. So we've been undertaking a strategic sale and rationalization process, shutting down some of those businesses and selling others. And that's really to drive much more intense focus on growth in our core businesses, which as you can see from what Rob and Jill have shared with you, we have great growth dynamics. We've got great opportunities. We also exist in a very competitive environment.

And so this is really an opportunity for us to reallocate our human capital and our investments into our core businesses and make sure we're capturing all the growth possible and also that we're continuing to focus on what we historically for decades have been great at, which is innovation, innovation of products, innovation of solutions and working with our clients around the world. So that's a big area of focus.

Our core businesses, as Rob really indicated, are really our index options, our multi-list options, our futures segment and then U.S. and European equities and FX, all of which we see great growth trajectory on and great growth opportunities for. And then because of the changing environment within the industry, we've got tremendous growth occurring in event and prediction markets generally, in crypto markets for the most part.

And then lots of changes as the industry tries to focus on not just what we call traditional market infrastructure, but the evolution of so-called DeFi, which is the migration toward other solutions that allow expanded access, people able to transact on blockchain through private networks, exchanging their own collateral and basically moving toward atomic settlement. We don't see that as replacing our business system. We see that as an adjunct. And so those are things that we want to be focused on. So that's sort of the shift in the strategic focus.

We have lots of opportunity, in my opinion, for continued growth. One of the things that we'll be focusing on is globalization through regional leadership of sales, marketing and customer education into our existing products and new products that we will offer rather than trying to create market infrastructure in different countries. We've got lots of opportunities, we think, also to better capitalize on what has been really strong and consistent growth in our data businesses. And then as Rob talked about, doing new things, particularly in the fast-growing event and prediction market.

So with that, I think I'll thank you for your time and turn it over for questions.

That was perfect. Thank you very much. Really good intro to the company and still some time left over for questions. So maybe to start off the Q&A, how has your thinking changed over time in terms of the use cases for the SPX contracts and the zero data expiration in particular, both on the retail use case as well as the institutional side?

Do you want me to jump in. I think they haven't changed a ton. I think there's still a great risk management tool. I think the speed at which people are managing risk has changed. And you still look at $20 trillion benchmarked to the S&P 500 in some form or another. I think it's $13 trillion that's passively marked that has to track exactly. And we just want to keep providing the products and the tools that people need that allow them to hedge and kind of define their outcome in their portfolio. And I think that's now becoming -- that used to be more of an institutional design answer and now it's becoming retail as well.

I think as more and more people are understanding the power of options and removing volatility from their portfolio by structuring option trades around either a long-only kind of equity exposure. People are seeing the benefits, and I think we're excited about the growth that, that represents.

And how are you thinking about the competitive dynamics in that short-dated risk exposure world? Nasdaq had their Investor Day last week, and they're talking about Nasdaq 100 Index options. You have zero-date expiration on individual equity options that you guys are working with and other exchanges as well. So how do you see the SPX kind of competing in this world where there's more options to hedge short-dated risk exposures?

Yes, I think it's a great question. I actually see it growing the overall pie as opposed to stealing one from the other. I think if you have a broad-based market exposure and S&P is your best hedge, that's where you live today. I think by introducing Monday, Wednesday expiries and single names, you're not replacing single name trading with the SPX and you're not replacing SPX trading with single names. I think they actually feed each other.

And so by having more like-for-like, I would argue, tools. So Monday, Wednesday, Friday options and single names, the same obviously, every day of the week in SPX, you can start to build strategies that you can apply to multiple different product sets. And I think ultimately, that grows the industry as a whole. So I think a lot of these -- it's easy to say that they're competing, but I would actually argue they're not. They're just more holistic to growing the entire usage of options in the industry.

I don't know if it's -- I think it is you should talk a little bit about the differences between cash settled in European-American and...

Yes, yes. So a good point. It's something that we're focused on heavily from an education standpoint. That's the other thing. And with SPX, you're looking at a broad-based cash settled index option that when you're doing risk management, that end-of-day expiry goes right into your account in the form of a cash settlement, and you have that cash available next day to reposition. In single name equities, while we're excited about the introduction and expansion of the product set, single names are physically delivered in American-style exercise. And so what that means is you have early exercise risk.

So in SPX, approximately 50% of the 0DTE trades that happen today are spread-based. In single names, if you were to see a similar mix, early exercise exposure allows you to get potentially assigned on the short end of your spread. So there's an early exercise risk for the options that investors need to understand and actually manage around. And then additionally, as I mentioned, they deliver into the stock itself.

So if you have a high churn strategy that is using 0DTE options, you have to take into account that at the end of that day, they're going to settle into the underpinning stock and that stock you will then have to trade out of. So you have things like overnight risk until you can get out of that stock position. And then you just also have delay in that it's just an extra step that you have to add to the trading.

So all of this goes kind of to my point that one doesn't replace the other, but yet I think the 2 kind of augment each other and help build options usage.

Rob, you used an interesting phrase when you were talking about your slides. You said that trading volumes are at historic extremes right now. But I would infer that your commentary about there's a structural shift means -- it doesn't mean that this is the maximum that we're going to see that we still have a lot of structural volume upside relative to current levels. Is that the right way to think about it?

I think it is. The best way that I can sum this up is if I look at -- and I'll use retail as an example. If I look at retail broker platforms in the U.S., Robinhood is very public with a lot of their numbers. They've said 4% of their 27 million users are options enabled. You go to some of the other platforms, and I would argue it's anywhere from 4% to 8% is what people come back with and say, that's how many users on their platform can trade options today. It's hard to believe a 52-plus year-old industry only has mid- to high single-digit penetration and access from an options perspective. So now while I don't think those numbers will ever get to 100, I do think that you could realistically see a 50% to 60% type of saturation in those markets.

So we have a lot of upside, I think, room to grow. And it makes sense, right? Like as people get more and more comfortable, nobody likes volatility, right? Nobody likes uncertainty. So the more people get comfortable with using an option to say cap upside and downside at the same time, now they know their outcomes. They know at a certain point, their band that the market can move and impact their portfolio is now smaller. They get more comfortable. They'll put more money at risk, they'll grow their portfolio. Like all these tools, I think, are really leading towards taking that 4% to 8% and growing it.

So you talked some about some of the new opportunities ahead of Cboe and binary contracts and prediction markets were on that list. How do you carve out a competitive moat in that space when other exchanges are also trying to roll out new products along those lines?

I'll start with that and then let Rob continue. But I think, first of all, we're really focused on developing event and prediction products that are really based on financial instruments and financial and economic events and forecast. We're not really interested in the broader landscape.

If you look at what's happening in poly market [indiscernible] for example, not a lot of that activity is actually in areas that we're focused on. And yet, I think we see extraordinary untapped potential in the way that Rob was describing if we just focus on that, starting with security-based products and there's a whole product plan behind what Rob is talking about in terms of the SPX yes, no contracts and the yes, no maybe so contract.

But the other thing that, I guess, I would say is that I think we have a distinctive advantage, which is that we have the reputation, the infrastructure, the reliability and the distribution network. And so when we talk to our partners at Schwab and Robinhood and places like that, they prefer to do business with us because they're doing large-scale business with us already.

And we just have that sort of reputation in the market for market integrity, market quality, quality of product design, market supervision, market oversight, technology and operational resilience. So I think it's a fertile area. It's very early stages, but who we are makes a huge difference in our ability to compete even if we're getting beyond proprietary product or products that may have intellectual property associated with them. I just think our identity makes us much more attractive and much more competitive over the long run as the industry matures and grows.

All right. Maybe time for one last question. So Craig, you talked about the portfolio rationalization efforts. Do you feel like you're pretty much done with those at this point? And then maybe the other side of the coin, you guys have a lot of cash on your balance sheet. How are you thinking about deploying that going forward?

Yes, I'll take the first part and then let Jill address the second part. On the first part, I think we are very, very largely done. We've done a lot. We've gotten through it very quickly in my tenure. I would say the only thing that remains is we're continuing to just think about within Data Vantage, as I said, we have real-time data, historical reference data, but then we have a portfolio of small businesses in the risk management analytics area. We just have to think about where we're going with that and what we think makes sense and what should be an area of focus for us.

And then we have, obviously, our global indexes business. So we're just going to continue to look at those things, but there's not really any kind of major additional changes that will be happening. We're focused now and what the strategic realignment has really afforded us the opportunity to do is to shift the focus to the core business and to new growth opportunities like what Rob was talking about.

I'm conscious of our time, so I'll try to be rather quick in my response here. But as you alluded to, we do have an extremely healthy balance sheet at the moment. So you look, we have very low leverage. What I will say is we generate a lot of free cash flow, and it's a good position to be in. We do have a history of paying quarterly dividends, and we have increased that dividend payout rate historically during the third quarter. So if you look back August, we announced a 14% increase to the dividend rate. We will continue to be opportunistic with the share repurchases.

And then finally, as it relates to the new growth initiatives that Rob has mentioned, it's great to have that flexibility to be able to lean into organic investments as and when they make sense. But again, coming back, especially the position we're in, it's really nice to have the flexibility and just dry powder that we have available to us.

Terrific. Well, I think we'll wrap it up there, but we have a breakout session downstairs, and thank you, everybody, for joining us.

Thank you.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cboe Global Markets Fourth Quarter Earnings Call. [Operator Instructions] I would now like to turn the call over to Ken Hill, Head of Investor Relations.

Good morning, and thank you for joining us for our fourth quarter earnings conference call. On the call today, Craig Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Jill Griebenow, our Chief Financial Officer, will then provide an overview of our financial results for the quarter as well as discuss our 2026 financial outlook. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer; Prashant Bhatia, our Head of Enterprise Strategy and Corporate Development; and Rob Hocking, our Global Head of Derivatives.

I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. During our remarks, we'll make some forward-looking statements, which represent our current judgment on what the future may hold. And 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 SEC 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 this morning, we will 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 fourth quarter and full year results. Cboe delivered record net revenue and adjusted earnings for the quarter and year powered by continued strength across our core businesses. These results demonstrate how our products continue to resonate with a diverse group of users across regions and asset classes. We remain focused on extending this momentum as we execute on our strategic direction we laid out on our last earnings call, reducing our focus in certain areas while we redirect our time, talent and capital to our core businesses and emerging opportunities.

During the fourth quarter, Cboe grew net revenue 28% year-over-year to a record $671 million and adjusted diluted EPS increased a robust 46% to a record $3.06. For the full year, Cboe delivered record net revenue of $2.4 billion, up 17% year-over-year, generating adjusted diluted EPS growth of 24% to $10.67 per share. The exceptional results in the fourth quarter were underpinned by double-digit net revenue growth in every segment and record results in each category at Cboe. Specifically, strong volumes in both our multi-list and proprietary index option products drove the strength in the derivatives category.

Solid new sales growth led to gains on our Cboe Data Vantage business, and robust industry volumes propelled our cash and spot markets higher. While 2025 was an impressive year, we remain focused on sustaining and amplifying our momentum by leveraging the strong secular trends across our core businesses.

Taking a closer look at the fourth quarter trends by category, our derivatives franchise delivered a record fourth quarter with net revenue increasing 38% year-over-year to cap a record year in which revenue grew 22%. In our multi-list options business, net transaction and clearing fees revenue was up a strong 41% given higher industry volumes and positive pricing trends. The multi-list option space remains an area where we believe Cboe has a right to win and will continue to enhance our position within the industry to drive greater results over time.

We're encouraged by the recent innovation in the space, underscored by the launch of Monday and Wednesday expirations for select multi-list names. While we are focused on educating market participants on the unique risks associated with single stock 0DTE trading, we believe these additions ultimately expand the toolkit available to investors. This development complements our index options franchise by elevating awareness of the utility 0DTE strategies provide while allowing us to reinforce the advantages of index options namely the larger notional size, diversified risk profile and daily cash settled structure as compared to single stock options.

More broadly on the index options side, net transaction and clearing fees revenue was up a strong 40% as our proprietary SPX options complex set new records, powered by robust growth in 0DTE options trading. SPX 0DTE ADV was up an impressive 66% year-over-year, while overall SPX ADV increased 39% and to a record 4.3 million contracts. 0DTE options made up over 61% of SPX volumes, up from 51% share a year ago.

We saw a similar dynamic in Mini-SPX options where 0DTE ADV was up 135% as compared to the fourth quarter of 2024, making up just over half of the Mini-SPX volume to end the year. In our Proprietary Options business, it's worth noting that the 10 highest average daily volume months occurred in 2025 and 2026. In fact, 9 of the 10 highest SPX days on record occurred in the fourth quarter of 2025 or first quarter of 2026, pointing to the healthy momentum in the franchise today.

We also saw growth in our VIX products. Volume in both VIX futures and VIX options gained 15% last quarter amidst increased market uncertainty with 2 notable spikes in volatility, generating robust trading opportunities. For the third year in a row, VIX options set a new record in trading volume averaging 862,000 contracts a day in 2025. As concerns rise over the concentration risk in U.S. equity markets, we're seeing renewed interest in small cap stocks for those looking to diversify their equity exposure away from large cap tech.

Volume in our Russell 2000 Index options jumped 20% last quarter to reach their highest level in almost 10 years. We're excited to add Russell 2000 Index options to our global trading hour session starting this month, giving investors the opportunity to trade small-cap stocks around the clock. This will capitalize on the strong demand we have seen from international investors to access U.S. markets with total volume in our GTH session up 34% last quarter.

Looking ahead, we remain bullish on the outlook for our core derivatives franchise anchored around strong retail demand, continued international growth and further product innovation. Beyond these secular drivers, rising geopolitical tensions and increasing economic uncertainty should remain a tailwind for our products as investors turn to options to help better manage risk and generate income.

Moving to cash and spot markets. Net revenue was up a strong 27% as we saw solid growth in our cash equities business in Europe and North America as well as in our global FX business. Led by another quarter of strength in our European transaction businesses, the Europe and Asia Pacific segment delivered a 24% year-over-year increase in net revenue. This was driven by a 33% year-over-year growth in net transaction and clearing fees, given strong industry volumes, stable market share trends and improved net capture dynamics.

Higher non-transaction revenues in the segment also contributed to the growth with revenue up 15% year-over-year. North American equities made a solid contribution with net transaction and clearing fees revenues up 18%, given strong equity volumes in each of our markets. Nontransaction fees were also up double digits as our entire cash equity ecosystem benefited from the more active trading environment. Rounding out cash and spot markets.

Global FX made another notable contribution increasing net revenue 22% year-over-year in Q4. The fourth quarter results continue FX's long track record of revenue growth and caps an impressive 17% net revenue growth rate for 2025. Beyond the macro backdrop lifting activity across our cash and spot markets businesses, we are unlocking incremental revenue opportunities through our securities financing transactions, clearing service in Europe. Launched in response to strong client demand, this service has leveraged [ Zibo Clear ] Europe's pan-European footprint to introduce central clearing to a securities lending market that has traditionally operated on a bilateral basis. This market plays a key role in enabling asset owners to earn additional income by lending out their portfolios, enhancing returns for beneficial owners.

By bringing clearing to this market, our service can provide participants with meaningful capital and risk efficiencies. The first trades were executed in March 2025, and we have seen hundreds of new contracts across 15 active European settlement locations cleared every day between borrowers and lenders with notional outstanding loan values exceeding EUR 1 billion in January 2026.

Turning now to Data Vantage. Net revenue increased by 9% on a year-over-year basis, reflecting continued momentum across our platform in the fourth quarter. Notably, roughly 90% of the growth across our market data and access businesses was again driven by new unit and new sales as opposed to pricing. This growth was underpinned by strong demand for access to our markets, a durable and growing international contribution and favorable trends in our newer product offerings.

If we look more broadly at the full year results, net revenues increased 10% across the Data Vantage platform. Importantly, we saw each component of our data advantage business, market data and access, indices and risk market analytics all trend higher on a year-over-year basis.

Now I'll turn the call over to Jill to walk through the details of our financials and 2026 guidance.

Thanks, Craig. Cboe posted another record quarter with adjusted diluted earnings per share up 46% on a year-over-year basis to a record $3.06. I will provide some high-level takeaways from this quarter's operating results before going through the segment results. Net revenue increased 28% versus the fourth quarter of 2024 to finish at a record $671 million. We saw healthy growth in all categories with the strongest growth coming from our derivatives business.

Specifically, derivatives markets net revenues grew 38%. Cash and spot markets net revenues grew 27% and Data Vantage net revenue grew 9%. Adjusted operating expenses of $221 million were up 8% on a year-over-year basis. Adjusted operating EBITDA of $465 million grew 40% and adjusted operating EBITDA margin expanded by 6.1 percentage points to 69.2%, a result of both our robust revenue results and disciplined expense management.

The fourth quarter results capped a remarkable year at Cboe, where annual net revenue grew 17% to $2.4 billion and adjusted earnings per share of $10.67 was up 24%, both setting new annual records.

Turning to the key drivers of the quarter by segment. Our press release in the appendix of our slide deck include information detailing the key metrics for our business segments. So I'll provide some highlights for each. The Options segment delivered another quarter of record net revenue, increasing 34% year-over-year. The growth was driven by a 40% increase in net transaction and clearing fees in the fourth quarter. Total options ADV was up 24%, with a 35% increase in total index options volume and a 20% increase in multi-listed options volume.

The rate per contract for our Options business also increased 13% on a year-over-year basis, given a positive contribution from both our index and multi-list products. North American Equities net revenue rose 17% versus the fourth quarter of 2024, with strong industry volumes driving an 18% increase in net transaction and clearing fees.

On the nontransaction side, market data fees grew 12% and access and capacity fees increased 10%. Europe and APAC produced 24% year-over-year net revenue growth. Net transaction and clearing fees were up 33%, while nontransaction revenues were up a combined 15%. Futures net revenue increased 12% from the fourth quarter of 2024. The increase was primarily due to a 16% uptick in total ADD, given a resurgence of [ VIX ] activity during the quarter.

And finally, global FX net revenue was up 22% on a year-over-year basis, driven by a 17% increase in average daily notional value and an 8% increase in net capture. Looking at our Cboe Data Vantage business, net revenues were up 9% year-over-year in the fourth quarter. Revenue growth was again underpinned by healthy new subscription and unit sales, representing approximately 90% of this quarter's growth, with the remainder coming from pricing changes.

We remain encouraged by the success of our newer product offerings are having, including dedicated cores, time stamping services and 1 minute open close data. Regionally, we saw incremental growth in index and market data sales, fueled by new brokers coming online in the Asia Pacific region. Overall, we remain pleased with the multiple avenues of durable growth in our Data Vantage business.

Turning to expenses. Total adjusted operating expenses were $221 million for the quarter, up 8% on a year-over-year basis. This increase is reflective of higher compensation and benefits expense which primarily resulted from our strong 2025 revenue growth, increasing our short-term incentive compensation.

Before detailing our 2026 guidance, I would like to provide a brief progress update on our strategic realignment over the past quarter and explain how these actions are reflected in our 2026 expectations. During the fourth quarter, we commenced the sales process for our Cboe Australia and Cboe Canada businesses. We have seen strong initial interest from potential buyers, and we will continue working towards an outcome that delivers a positive solution for all parties.

Although we have initiated sales processes for Cboe Canada and CBO Australia, we continue to operate both units as business as usual, and the revenue and expense contribution of each is included in our 2026 guidance. We plan to provide updates as milestones are met in the sales process and detail any subsequent financial impact. We have also ceased operations on our corporate listings businesses while driving efficiency in our growing U.S. ETP listings business and European ETP listings business as well as several of our smaller risk and market analytics businesses.

Our 2026 guidance fully incorporates the anticipated revenue and expense impacts from these actions. And finally, last year, we made the decision to explore ways to reduce our cost footprint for Cboe Europe Derivatives Exchange referred to as FedEx. As we further assess the business, it became clear that FedEx was unlikely to meet targeted revenue and profitability metrics given the retail investing landscape and market structure in Europe. And in January 2026, we made the decision to close FedEx.

Our 2026 guidance includes the impact of our decision to wind down FedEx. The financial impact of the FedEx wind-down is expected to be largely realized in 2026 and does not change the overall estimated revenue and expense impact ranges communicated on our October 31 earnings call related to our strategic realignment decision.

For full year 2026, we are introducing the following guidance. We anticipate our data manage organic net revenue growth to be in the mid- to high single-digit range, and we expect our total organic net revenue growth to be in the mid-single-digit range. We are also introducing our 2026 adjusted operating expense guidance range of $864 million to $879 million, representing 3.3% growth on the low end and 5.1% growth on the high end.

Our guidance accounts for some modest inflation in our core expenses, along with the expected financial implications associated with the recently announced leadership transition and provides room for incremental investment in emerging opportunities. A few areas where we are excited to make some near-term incremental investments include expanding our securities financing transaction capabilities as well as new product development around emerging event prediction market.

Our full year guidance range for CapEx is $73 million to $83 million, and our depreciation and amortization is expected to be in the $56 million to $60 million range. We expect the effective tax rate on adjusted earnings under the current tax laws to come in at 27.5% to 29.5% for the full year, with the midpoint of the range, 80 basis points below the 2025 rate as a result of an expected decrease in tax expense associated with uncertain tax positions. And while we don't provide formal guidance on interest income or interest expense, we expect that interest income, net of interest expense will be a $3 million to $4 million positive contributor for the first quarter of 2026.

On the capital front, we continue to look for ways to effectively allocate capital and drive long-term durable shareholder return. In the fourth quarter, we returned $76 million to shareholders in the form of a $0.72 per share dividend, bringing the total amount of dividends paid in 2025 to $284 million. Factoring in both share repurchases and dividends, Cboe returned a total of $350 million to shareholders in 2025.

We entered 2026 with a great deal of balance sheet flexibility as evidenced by our adjusted cash position of $2.2 billion and a leverage ratio of 0.9x. We are well positioned to invest in organic or inorganic opportunities as well as redeploy capital to shareholders as dividends or opportunistic share repurchases. Moving forward, we remain focused on optimizing our capital deployment and look forward to delivering on long-term shareholder value objectives.

Now I'd like to turn it back over to Craig for some closing comments.

Thank you, Jill. As we move forward as an organization, we are focusing more attention on driving results in our core businesses and preparing for emerging opportunities across our industry. We believe that capitalizing on those opportunities starts with having the right group of leaders in place. As we announced last week, we are thrilled to welcome [ Heidi Fisher ] to head our Cash and Spot Markets businesses and Scott Johnston as our new COO. Both bring a wealth of industry experience in their respective fields and strengthen our management capabilities across our core businesses at Cboe.

I want to take a moment to express my sincere gratitude for the many contributions that Chris Isaacson has made throughout his tenure at Cboe. From his early days as a founding [indiscernible] employee in 2005 to his meaningful contributions as a key member of our executive team and our COO, Chris has been an integral part of Cboe's growth and identity. Chris has embodied a Cboe first mentality and we are fortunate that he will continue to serve as an adviser through 2026.

Now I'd like to turn the call to Chris to say a few words.

Thank you, Craig. First, I'd like to thank my Cboe colleagues for everything we've accomplished together and your trust over the past 20-plus years. It's been an incredible run together. To the investor community, I'm grateful for your engagement and thoughtful interest through the years. It's been a privilege to build so many meaningful relationships with you during my time at Bats and Cboe. While leaving Cboe is certainly a bitter sweet for me, I'm excited for the opportunity to spend more time and be more fully present with my family.

I feel there is no better time to pass the baton given the excellent momentum of the business under Craig's leadership. The recent strategic decisions we've made as an organization and the support of a capable leadership team with long tenured leaders as well as talented new ones coming into the organization. Thank you again.

And with that, I'll hand it back to Craig.

We have been incredibly deliberate in our efforts to strengthen leadership across our core businesses. This transition with Chris has been thoughtfully planned and we are excited to bring in leaders of [ Heidi ] and Scott caliber. With the addition of [ Heidi, ] Scott and recent key hires and strategy and corporate development, global derivatives, clearing and Data Vantage, our management team has added an average of over 25 years of industry experience per hire.

Importantly, these new hires are complemented by our efforts to elevate talent from within Cboe. Given the depth of talent now in place across each of our core businesses, along with a robust regional leadership team of proven executives, I believe we are better positioned than ever to capitalize on the numerous opportunities ahead. 2025 was a remarkable year on many fronts, and we begin 2026 with a position of real strength supported by healthy secular tailwinds of fortified and aligned leadership team and a sharpened focus on each of our core businesses.

With this foundation in place, we are well prepared to build on our momentum and unlock even greater value for our shareholders in the years ahead.

I'll now turn the call back over to Ken for questions and answers.

At this point, we'd be happy to take questions. [Operator Instructions].

[Operator Instructions]

Your first question comes from the line of Patrick Moley with Piper Sandler.

So you guided to mid- to high single-digit Data Vantage revenue growth in 2026, which is consistent with what you've introduced guidance at the last few years. But more recently, you've been trending closer to high singles to low doubles. And it seems like a lot of that has been driven by momentum internationally and the new unit sales. So could you just elaborate on the decision to maintain the mid- to high single-digit revenue growth target? Should we interpret that as just general conservatism? Or are you expecting growth to slow over the next few quarters?

Patrick, thanks for the question. So really, when we look to set the annual guidance, we look at it on a full year basis as opposed to just the quarter-to-quarter piece. We continue to see the durability in the Data Vantage business. But yes, we set the guidance still very comfortable with that mid- to high single-digit range. But again, some good momentum coming from new usage to sales was about 10% coming from the pricing.

Yes. And I think I'd add to that, to Jill's point, just the timing of sales may vary quarter-to-quarter, but on an annual basis, we're pretty comfortable where we are. Just for some color around what's happening within Data Vantage from a market data perspective, we see a lot of momentum in sales overseas, about 45% of our new data sales this quarter were from overseas clients, and that compares to about 35% a year ago.

So we're seeing good momentum there. If you look at recurring sales during the quarter, 3 out of our top 5 recurring sales came from clients in the Asia Pacific region. So we're seeing good momentum there. Similarly, across our CGI businesses and analytics businesses, the utilization of our product in option embedded ETFs continues to be strong, and there's a lot of client demand for that. So we're really positive on the continued growth in that mid- to single-digit range.

Your next question comes from the line of Dan Fannon with Jefferies.

Craig, I was hoping you could expand upon your comments around the single name 0DTE recent rollout? And why you -- I guess, what gives you confidence around that not cannibalizing potentially your index business and ultimately expanding the pie. I think is how you described it because I was hoping to get a little bit more context around that.

Yes, sure. Thanks, Dan. I'll start, so I'll turn it over really to Rob. I mean, I think we view it as additive to the market. But I mean, fundamentally, there's a lot of differences between from the customer perspective, including from the risk aspect, there's a lot of differences between our SPX products and single 0DTE. So we actually don't think that they will be cannibalistic. We think they'll just be additive to the market. But Rob, why don't you comment?

Yes. And maybe I'll even -- thanks, Craig. Maybe I'll even take a step back and just -- this is obviously a popular question we're getting. So maybe just give an overview of what we've seen early days in the Monday, Wednesday, trading as well as kind of to your cannibalization question. So far, I think early uptake on the Monday, Wednesday, options have been good. They're largely concentrated really in 2 names, Navidea and Tesla. At this point, we have a very small data set, obviously, but Monday, Wednesday options are ranging between 10% to 30% of the total number of options that are trading in the 9 names that were launched.

And so -- of these options, a lot of them have been picked -- they've all been picked up by all the different exchanges. We're pretty sure all the different retail broker platforms are offering them. So from an access standpoint, we think there. On the cannibalization question with regards to SPX, really that one, I think it helps to take a step back. And as Craig alluded to, why are people trading each of these products and how differently they actually work. SPX tends to be more smooth because it's a diversified basket.

Price moves tend to be more macro-driven. They're well telegraphed. Single names are different. They're driven by more company-specific news, which really means more gaps, call it sharper jumps, fatter tails. And so the strategies we see today in 0DTE really better align with that smoother kind of intraday SPX price action. The retail activity we're seeing is around the open and then again in, call it, the final hour of the close, where people are trading that momentum, they're trying to collect premium decade throughout the day.

And so those strategies are really less suited to underliers whose prices, we'll call it, are more unpredictable with kind of those higher probabilities of GAP moves. Now, do I think that, that will keep people from trading single name 0DTE, we'll know. Investors will continue to develop new strategies and they'll introduce kind of the shorter tenors into their portfolios, but I think that will actually have a positive effect on industry volumes overall.

I don't think they'll cannibalize for the reasons that trading both are differentiated enough that one is not a good replacement for the other. But I do think it's really important to note right now for investors that they'll have to deal with some really large fundamental differences in product design between trading single names in 0DTE and trading single name SPX. And so -- for example, SPX options are cash settled and European style while single name options are physically settled in American style. So that difference brings early exercise into play with single names.

And so on an expiration date, SPX 0DTE positions settle into cash based on the index print. There's no overnight exposure, your account gets debited or credited the next day. And really with single name options instead you end up with actual shares of stock. So I think it's really important for investors to understand. That means there's overnight risk. It also means you have to unwind those stock positions the next day to get your capital freed up to put in 2 new option strategies.

And so if you're trying to run some of those higher turnover 0DTE strategies in single names that we've seen, those differences kind of really matter. And so kind of these fundamental contract differences are also why Cboe is really hyper focused on investor education. We think that's super important at this stage of the game to really ensure that investors understand the differences between these 2 products and they're not caught off guard with cash and/or stock moving through their accounts unexpectedly expiration.

So I know that's a long-winded answer. I think it's important to get all of those details out there because I like the introduction of Monday, Wednesday, single names. I think it's good for industry volumes. But really, we don't see them replacing SPX. We rather see them additive to the system.

Your next question comes from the line of Eli Abboud with Bank of America.

You completed the number of introducing broker onboardings in 2024 and 2025, Robinhood, of course, but then also several APAC brokers. I was hoping you could give us any sense of the contribution of these new brokers to the strong SPX volumes in 2025? And then what does the pipeline look like for further broker adds in 2026?

Yes, this is Rob. Thanks, Eli. Maybe I'll take that question. We don't get down to specific SPX attribution, but I can take it up one notch for you. As you mentioned, we continue to expand access to our core products. Robinhood was a great add. We continue to see their options volume grow, which is super exciting. And I think they've been very public that they see good options growth in kind of the midterm, I think I saw somewhere in an article. They're estimating 40% to 45% kind of growth of options penetration.

So we're excited about that. As you mentioned on the Apex side, we continue to see strong demand from international retail brokers and institutional clients wanting to connect to our exchanges, especially for SPX options. The tech mega tech names are also in demand and our VIX. They've voiced that they're very anxious to really tap the large U.S. pools of liquidity that we have. Korea has been a success story for SPX options with 10 -- I'm sorry, 7 of the 10 identified local brokers that we've seen all offering now SPX options at this point.

To put that in perspective, that's compared to 0 online 2 years ago. So that's expanding. We see that as a really good opportunity for growth. To give another region, Taiwan saw the first local retail broker launch of SPX and VIX options in Q4, and we're expecting others to follow this year. So more growth there. The continued demand keeps coming in. We see this volume not only showing up in some of our GTH sessions, I think you heard in Craig's remarks how that is growing at a very fast pace, but we're also seeing it actually show up in our regular trading hours sessions.

And we're just really encouraged by kind of that international demand coming into the U.S., and we see it as a large area of growth in the years to come.

Your next question comes from the line of Ben Budish with Barclays.

I don't think you've talked about prediction markets yet on the call. I know there's been some press indicating that you are either thinking about or having early discussions with brokers regarding sort of yes, no options. So could you maybe give us an update of where you are in the thinking in terms of product design conversations with distribution partners, market makers, anything else that you could share?

Yes, absolutely. We're excited about the continued growth in the event prediction markets. We really view this as a logical extension of Cboe's existing strengths and they provide a clear entry point for new customers and really a pathway to broader Cboe product adoption. As you've heard us mention, our current focus is on the financial and economic style contracts. That's where we think we have the deepest expertise where our core products already sit and where we believe we can deliver value immediately to our end users.

By staying, I would say, close to our core, we can leverage really our technology, the existing product liquidity, which I think is important and our market structure experience while offering customers the regulatory certainty and reliability that comes with trading on our established regulated exchange, I think that's important. A few important points, I think that's worth highlighting. Our first initial offerings will be securities products. We think that's the best way to reach the broadest set of end users, and it clearly differentiates what we're doing from a lot of the nonsecurity-based platforms already in the market.

Second, these products will closely align with our SPX options ecosystem. We already see more than 200,000 SPX 0DTE contracts trade every day that many of which -- those trades have the same kind of defined risk or, as you mentioned, all or nothing payout profiles that this newer investor is looking for. And so this provides a very natural connection and something we feel we can leverage into being successful in that prediction market space.

And so from a regulatory standpoint, I think it's also important to mention, we're encouraged by the recent comments from both Chair Atkins and Chair Selig, especially around drawing clear lines between what's considered as security versus a CFD regulated swap. Their remarks reinforced the idea that securities products belong on a registered securities exchange, which really puts Cboe in a very strong position in the driver seat, so to speak, with expanding into this space and continuing the development.

Now the positive thing behind this regulatory clarity is giving people increased confidence as they -- as certainty improves participation broadens, not just among individual investors, but also among retail brokerage platforms, which is important. They've been previously cautious about entering the space. And so we think the timing is good with the added regulatory clarity, kind of how this product set intertwines with our existing SPX product set. And so as far as when, I think that's always the last question we get, which is, when do you think we'll launch.

Right now, we're targeting a second quarter launch, assuming regulatory approval and really most importantly, partner readiness as we need to launch these with the various partners we have in the industry, such as OCC and a lot of the retail broker platforms. But as we get closer, we'll continue to provide more updates, but big picture, we're super excited about the space.

Your next question comes from the line of Brian Bedell with Deutsche Bank.

Great. Maybe just a follow-on from that. And then maybe just add a question for Jill on the revenue guidance with that. So the second quarter launch for the -- just to clarify, that's for the binary options, I believe. And then I guess the follow-on question is, when do you -- would you expect to be launching the actual more traditional prediction market contracts? Is that just coming in future the next quarter or 2? Or is that a longer-term development?

And then I know the expenses for developing these are in the guidance. Is there any revenue assumption from these in the embedded in the revenue guide as well? And then, Jill, if you could just on that revenue expense guide, can you just reconfirm the part that you are including in that versus the commentary in the third quarter call? I think the divestitures worth 3% net revenue drop on an annualized basis with 8% to 10% expense drop. It sounds like most of that is still in there because of the Canada and Australia commentary but just wanted to confirm.

So yes, thanks, Brian. I can start with your questions around the event contracts. So second quarter is for -- I'm not going to give you too much detail because we're going to make a bigger splash on this, I think, in a little while here. But it will be the all-or-none style combined with what we feel is a way to intertwine some of the spread trading that we see going on today in SPX. So that is what we're targeting for that second quarter. Once again, I think our core products think yes or no, but even a little bit of a different twist of a differentiator on that.

And then once again, in the security space, we think that's super important. On the other contracts, as we gain traction and as we get our initial contracts up on retail broker platforms, as they build, let's call it, the guys that are able to support those contracts and really give the user experience what thereafter -- we'll look to expand that into what you referenced is the more, call it, traditional contracts, more yes, no around an event style contract. But think of that as market adoption happens, that will be a steady rollout into the future.

[indiscernible] might comment. I mean what Rob is describing will still be focused on financial and economic events. But I like this strategy. I like the emphasis on securities products. It capitalizes on hundreds of thousands of spread contracts that are trading every day in the market and leverages our strength in that way.

Yes. [indiscernible] securities, do you mean single name company securities or index securities or both?

We'll be starting with index. That's just a natural fit at the moment, but that will potentially expand into other securities as well. And then to Craig's point, real quick. I mentioned the 200,000 SPX contracts we see each day trade. Those are in very, very tight minimum increment vertical spreads. And those minimum increment vertical spreads on expiration day have effectively a binary payout, a yes, no payout. So we believe we're seeing eventstyle contracts existing in SPX today. And so as I talk about this all or none new contract, combined with the spreads that we're seeing, as I mentioned, the 200,000 contract, 200,000-plus contracts we see, that's where we think we can offer a very positive securities-based in the indices to start product offering to the market.

And then just to pick up on the second half of your question as it relates to the guidance impact. So a couple of different components to your question. Let me know if I miss anything here. If the first one that I'll address is just on your question as to what we're including from the 2026 revenue guide as it relates to the new prediction and the vet contract opportunity that Rob has spoken to.

I'll just say that there's a small contribution contemplated in the 2026 revenue guide, but we really do expect that to ramp more over time, and we'll continue to update our model as that becomes more clear. As it relates though to the strategic realignment pieces and how those factor into the guidance, again, there are a few different tranches there that I tried to address in the prepared remarks, but we'll just take a couple of minutes here to further articulate and clarify those. So to your earlier point, we did community effect in October that we expect the net impact of all of the realignment to result in about a 3% net revenue loss.

So there are pieces of that, that are already contemplated in the 2026 revenue guide. So those would relate to the decision to wind down the Japan equities business corporate listings and then some of the optimizations we've made within the risk and market analytics business as well as any revenue contemplated from the FedEx initiative. So again, those knowns are built into the 2026 guide.

The piece that still lives within the 2026 revenue guidance, though, is the contribution that's contemplated from Cboe Canada and Cboe Australia given that those businesses are still actively owned and operated by Cboe. As the sales progress progresses there and if and when there's an impact on either 2026 revenue or expense contributions from those businesses, we'll recast our guidance and communicate those impacts that to -- the Street.

That's great. And the expenses -- the related expenses to what you just described is also in and out expenses and for Canada Australia expenses out for the other things that you've closed.

So the 2026 expense guidance does include what we expect the expenses to relate to Canada and Australia, correct? And then there will be somewhat of a timing lag on some of the optimizations we're doing. But for the most part, we do see a bit of savings and in 2026 from the Japanese corporate listings, the risk and market analytics optimization as well as the FedEx wind down. So those loans are embedded within the 2026 expense guidance.

Your next question comes from the line of Alex Blostein with Goldman Sachs.

Thank you for the question. So a lot of the strategic initiatives that you talked about are meant to be organic build-outs that feels consistent. The balance sheet obviously continues to be in a really good place. So I was hoping you could refresh us on your latest thoughts around share repurchases or any other use of capital over the next kind of 12 to 18 months?

You bet. So I mean, if you look back historically, our return on capital is actually -- we get some of the highest returns on organic investments. So on the heels of the strategic realignment, obviously, we are pivoting away from certain areas of the business. But what that is allowing is full time and balance sheet flexibility to really invest in areas where we do see some promise. So really looking to optimize around the core, a couple of the opportunities that we've mentioned today from an organic standpoint are the focused investments that we're making to further build out our securities financing transaction line of business as well as some of the product development and opportunities around the event prediction markets.

So we really are laser-focused on continuously looking at all of our 4 business lines to see with further enhancements or optimizations we can make to generate that long-term revenue flow. That isn't to say though, that share repurchases don't remain a priority. We absolutely still -- we'll look to do those again on an opportunistic basis. We do also have a history of paying a quarterly dividend and also have increased that annually. If you look back to August of 2025, we did announce a 14% increase to the dividend. Really, we like the flexibility that we have at the moment. We like the dry powder and we'll just continue to look to optimize the capital return based upon the opportunities that are ahead of us.

Your next question comes from the line of Alex Kramm with UBS Financial.

At the risk of asking Brian's question a little bit more specific on the expense side, Jill. Of the 8% to 10% that you talked about on the last call, can you maybe just give us the number of how much of that is now basically out of the 2026 cost guide?

No, we're not breaking it out on that discrete of a level. What I'll say though is there are quite a few tranches of things that are coming off some organic investments that we're making, coupled with what I will say is -- the majority of the savings would come later on from some of the Canada, Australia pieces. But like I said, we already are starting to see the full year benefit of the Japanese equities piece as well as looking for a good portion of the FedEx component to come out.

So it really is a a balance there. You do see it reflected, though, in the guidance that we came out with. So you look at the lower end of the range, the $864 million, higher end of the range, that $879 million that suggests somewhere of a 3.3% to a 5.1% expense guide. Again, we will keep you updated over the course of the year as mortgage comes known with the timing of the Cboe Australia and Cboe Canada pieces. But for now, again, feel good with that range that we've communicated given some of the pieces that are in ocean.

Understood. Figured I needed to ask. I'll be back with a follow-up.

Your next question comes from the line of Ashish Sabadra with RBC Capital Markets.

I was wondering if you could provide more color on the rollout of dedicated cores as well as talk about the new growth initiatives and new product road map within the Data Vantage?

Yes. So in general, some of the products we've rolled out over the last year or so include dedicated cores. Again, that's reducing latency in terms of accessing our equity markets. We've also rolled out time stamping and 1 minute open and close data set. And those are more focused, the data sets around our options exchanges. We've rolled those out. We started in the U.S. and then we took them across to markets in Europe.

So those are some of the initiatives we had in place. As we look to 2026, we've got some new launches planned as well there's an option like data set that we've just launched early this year. We're already seeing some strong interest in the Asia Pac region around that data set. And there's something that we'll put in around the middle of the year around Cboe clock service that has good potential as well as we work with clients to really understand some demand around that. So we continue to innovate around new products and services that clients are really asking for. So we'll continue that rollout into '26 as well.

Your next question comes from the line of Jeffrey Schmitt with William Blair.

You discussed on the last call that you're working on pricing improvements for your exchanges, whether it's market maker incentives, more attractive rebate programs, things like that. could you provide us with an update on what you're doing there? Is that really for the multi-listed options?

This is Rob. I'll take that one. And yes, it's for the multi-list space. We're still -- it's an exciting space for us and really core to Cboe. As all the reports show, industry volumes continue to grow at a staggering pace. And so this is an area we're heavily focused on. But we'll say, as you point out, it's highly competitive. By early '26 here, we'll reach 20 exchanges in the space. But that said, Cboe still controls, call it, around 22% market share in multi-list and around -- and we're #1 in overall market share.

So without getting into, as you mentioned, we're constantly evolving the different functionality in the different pricing schemes, and we're always actively evaluating and working through all of those pricing enhancements across our different -- medallions. But it's -- I think it's important to point out that we're always very intentional about how we manage the dynamic between market share and revenue capture.

So we don't see that as a static kind of trade-off. As market conditions change, we'll continuously adjust pricing and incentives to make sure we're maximizing that overall opportunity set for Cboe rather than optimizing for a single metric in a given quarter. So that's kind of an ongoing thing, and it will continue to be an ongoing thing.

On the more specific things we're doing on the market structure side, we're preparing to launch multi-list trading during our limited GTH session. You've seen reports of that, that will be pending regulatory approval later this year. And then another one that I think is important to mention that I'm not sure we've mentioned before, we're engaging with industry participants on the potential for options, the options regulatory fee or [indiscernible] reform, as you hear it referenced.

Now [indiscernible] is a per contract fee charged on option trades to help pay for market regulation and [indiscernible] assessed on customer trades regardless of which exchange the trade is actually executed on. So the fee is used by options exchanges to fund their regulatory responsibilities, but because -- there are many options exchanges, as I mentioned, 20 here in the first part of 2026, [indiscernible] can be charged by multiple venues on the same clear trade which is why it's become really a point of focus and discussion across the industry because as the number of exchanges grow, a cumulative burden on customer trade increases, which is why the industry -- the derivatives industry has been actively discussing this [indiscernible] reform and aligning fees more closely with where trades actually occur to reduce friction cost, improve overall market efficiency.

And so this initiative is important to us. It's one Cboe firmly believes and is supportive of aligning fees with where the actual trades are done. And we feel, overall, if you look at our approach towards pricing, extending GTH, [indiscernible] perform, we still feel we're positioned well to remain an industry leader in multi-list.

Your next question comes from the line of Ken Worthington with JPMorgan.

This is Natalie on for Ken. I appreciate your earlier comments on single name cannibalization risk. But maybe provide some more context or help us size the capital efficiencies customers could realize when trading across the new shorter-duration equity risk management tools, whether it be single name 0DTE, the MAG 10 Index launched binary options when trading in conjunction with the legacy S&P Index.

Sure. Do you want me. Yes. All these products are cleared through OCC. And so as a result, there's substantial capital and margin efficiencies because of the portfolio margining that's happening within OCC. So I think, again, that's kind of another sort of complementarity to the launch of these products, which is they're all held in the same pool, and therefore, they get the multilateral benefits of centralized clearing. I think that's your question. But Rob, is there something you want to add to that?

And maybe to expand on that, it's just if you think events, make 0DTE, whether single name or index, think, MAG 10, all of these as crack points out, are cleared at OCC. So all of them as we expand the product set, whether it's introducing new tenors, even introducing new products that are made up of existing products. I think MAGs top 10 names relative to the single names that already trade, all of those, and that's kind of our strategy. All of those are going into the same bucket of risk at the OCC for offset and risk offset capital efficiency.

So as we expand the toolkit, that's the beauty of it is people's portfolios, as you add these names, you're not introducing a completely new asset class that you have to fund as a completely new vertical. You're introducing new, call it, risk characteristics, new access points, all within the existing verticals they have, which is a much more efficient way to trade.

Your next question comes from the line of Michael Cyprys with Morgan Stanley.

I was just hoping you could share your updated thoughts on plans around extending trading hours to 24/7 across your markets, what that path and some of the hurdles look like? I know for multi-list, you've announced to have extended sessions, I think for certain options contracts. Just curious how you think about overcoming any sort of hurdles around fragmenting liquidity and maturing real price discovery, particularly in some of those overnight hours.

Michael, I just want to remind you, so we are traded 23 or 23.5 futures index options and FX have for many years. And as we mentioned on this call already through the prepared remarks and Q&A, GTH volume or global trading hours really grown tremendously, 34% year-over-year. So we're seeing great growth in those markets where we already trade. In U.S. equities, we trade from 4 a.m. Eastern to 8:00 p.m. Eastern today, that's kind of the broadest hours of all the U.S. segment markets.

Coming in late November, assuming the market infrastructure, the consolidated tapes and DTCC already, the industry, including our EGX market would be going to 23/5 in late November, but you'll see a room filing for that in the first half. And then to your specific question about 24/7, we're already making plans. There's been a lot of talk here about prediction markets and some of our crypto as well.

So we certainly have capability to trade 23/5. We're taking a look at what would it mean for us to extend our clearing abilities to 24/7 as well as our trading abilities to do that. And just, I'd say, just watch this space for when we see the appropriate market demand to justify those projects. But we're -- those are definitely in the planning phase, and we look forward to bringing those to market when the customer demand is there to meet it.

And then, Michael, real quick, if you're asking specifically about multi-list we're working to launch extended hours trading or that extended GTH session for -- we call it Q3 pending regulatory approval. And in our filing, we would add a morning session from 7:30 to 9.25 Eastern Time and then a post-close session from 4 to 5:15 to supplement the existing U.S. equity options, hours that Creg -- sorry that Chris mentioned from 9:30 to 4.

Our plan would be to start with 25 names only. That represent kind of the highest market cap, most liquid names across options and underlying equities. And as you highlighted, this is really in response to the surge we've seen in the equity options volumes and just the general industry push towards 24/5. But those are kind of the specifics around how we're expanding that for multi-list.

So just on the multi-list. So that goes to 4:15, just curious why not extend a bit longer? How do you think about that? What are some of the hurdles? When do you think we can get to 24/5, 24/7 within multi-list?

No, I think it's a great question. Really, we're trying to expand the functionality slowly and deliberately to make sure market participants are prepared and it's a smooth transition process. Right now, this accounts like these windows where we're expanding account for where we see the majority of volume in our current GTH session with SPX. So we don't want to burden liquidity providers right out of the gate, having to staff and provide liquidity all night over some of the lower traded hours or lower volume hours. So we feel like if we use SPX as an SSP kind of as a guide, this is where we're seeing the majority of the volumes. So let's expand 25 names there. Let's see how that works. Let's not burden liquidity providers and then hopefully expand as it makes sense.

That concludes our question-and-answer session. I will now turn the call back over to Cboe management for closing remarks.

Thank you very much. Thank you for joining us today. I just want to take a last opportunity to thank Chris Isaacs and purpose and your experience this last earnings call with us, but he'll be with us for a while as an adviser and Chris, we thank you, and thank you for joining us.

Thanks, Craig. Thank you all.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Great. Well, good morning, everyone. We'll get started with our next session. Next up, I would love to welcome Cboe, a leading derivatives and cash exchange.

With us today are Craig Donohue, the firm's CEO; Jill Griebenow, Cboe's CFO; John Hocking (sic) [ Robert Hocking ]; Cboe's Global Head of Derivatives. 2025 was another really strong year for growth at Cboe underscored by the firm's proprietary SPX options complex, which grew over 20% again this year. The firm also recently announced several strategic pivots, including plans to divest, if you non-U.S. businesses and really push further into retail as well as some of the exciting new markets. So we'll talk to the team about all of that, lots to discuss.

Thank you all for being here. And obviously, Craig, thank you for joining us for the first time as Cboe's CEO, so welcome. Welcome back maybe. I don't know the last time you did it maybe at CME, but that was certainly quite a long time ago. But looking forward to the conversation.

So let's start with 2026 and maybe key sort of areas of focus for you. As a new CEO, you recently unveiled a pretty comprehensive strategic plan which included sort of parting ways with several subscale businesses. You announced Cboe Australia, Canada and obviously a few smaller products you have. while also kind of reemphasizing your core areas of growth and leading into some of the newer things. We talked about prediction markets and crypto and retail. So lots to cover all these topics, but key action items that you're trying to achieve in 2026 as you sort of embark on this plan? And what are the main targets we should all be looking at and kind of evaluating your progress on this path?

So coming into Cboe, I think the most palpable thing that I experienced was the duality of on the one hand, we have incredible growth dynamics in a lot of our core businesses and yet at the same time, there are also areas where I think we could be achieving greater growth and greater profitability. And so looking at all the things that over the last 4 to 5 years, my colleagues here at Cboe have been trying to do. A lot of our human capital was focused on growth in our secondary securities trading businesses in places like Canada and Australia and Japan, facilitating technology integrations onto our titanium platform.

And so my view of that was looking at it fresh was the growth there is not really the growth profile that we need, given the significant growth that we're achieving and heightened expectations for our performance. And so what I've tried to do is help the team refocus on driving even greater growth and profitability in all of our core businesses. So obviously, we've had extraordinary growth in SPX and 0DTE. We can do, I think, an even better job of being a better competitor, driving more growth and profitability and capture in multi-list. I think we can do the same in European and U.S. equities. I think we've had extraordinary growth I think 17 out of 18 quarters in FX.

But prior to me being here, I don't think we really paid a lot of attention to it. So a lot of this is about being objective and honest about like where is growth, where can we be that is going to meet the growth profile and expectations that we have as a company. And then how do we actually take our most valuable resource, which is our human capital and make sure that it is intently focused on what I just described. So the strategic realignment is really kind of designed to pivot away from things that -- look, our colleagues did a great job there.

But even if we're really, really successful, it's not going to really move the dial in the way that I would like to see us do. So the biggest thing I can communicate is really an intense laser-like focus and making sure we have all the right people in the core businesses to drive that growth and success. And then the second thing is that while we've been focused on sort of continuing to expand in the traditional finance segment of the market, we're living in a time where there's hyperbolic change. And so I want to also make sure that we're thinking about not just like event and prediction contracts, digital and crypto, tokenization, atomized settlement, how do we need to change and how do we begin to experiment in those things, so that we develop core capabilities I don't think any of us has a crystal ball for exactly how and when those different things that I just described are going to actually evolve, but we need to be present in that, and we need to be doing those things. So the strategic realignment is really kind of oriented towards achieving that.

Great. All right. We'll dive into really all 3 or 4 of those things. But the first maybe we can start with some of the tangible things you announced, which is some of divestures. You named the businesses. There is some press around it, obviously, in the last couple of weeks as well. And this is probably for both really for anybody who wants to jump in on this question. But as you think about the time line and execution of what you guys are trying to achieve with these divestitures is the hope to get most of it done in 2026? Or do you think that's going to trickle out further? And when you think about the benefits, you talked about the 5% to 7% in terms of net savings off of 2025 base. How much of that do you think ultimately is going to get reinvested to sort of support some of the growth initiatives that Craig talked about?

Well, let me let Jill take that question, but I'll just preface it by saying I would hope that much of this can be accomplished in 2026, subject to the caveat that we obviously have -- I mean we place a really high priority on customer relationships, making sure that everything we do is orderly and seamless in terms of transition for them. And then obviously, we also take really seriously our relationship with our regulators in those jurisdictions. So whatever we do is going to be with a view towards making sure we take care of our customers and also meeting regulators' expectations. But I would hope that we can get most of this done by then.

Yes. So as it relates to the, let's call it, the financial side of it, I'll go back to our messaging and what we shared in our October 31 earnings call and earnings release in that from a net revenue perspective, we expect the consolidated impact of Japan, Australia and Canada, that aggregate amount to impact about 3% of our overall net revenue. And then when you look at the collective action of all of the items mentioned as part of the strategic realignment the expense savings should be somewhere in the 8% to 10% range. So I think it is important to delineate the 2 as opposed to looking at them net because from a timing perspective, the net revenue impact will be fairly solid and known at the time that those transactions and the sales complete.

The expense side of it will take a bit of time. That will be more of a phased approach. Then to your question as to the reinvestment of proceeds and then where do we expect those expense savings to go. What I'll say is if you look at our expense profile, we did have really heightened expense growth. If you look at 2021, 2022, we had 20% expense growth. '23 was about 15%. Last year in '24, contained it to 6% expense growth. Here in 2025, our latest guidance indicates a range of, let's call it, 3.5% to 5.4%. So we've really implemented disciplined expense growth.

That said, it's -- I wouldn't say that striking expenses even further, that's not the objective here. It's really a -- it's a balance between maintaining that disciplined expense management with continuing to find those growth areas to invest in. Craig talked about optimizing the core. You look at our core, you look at the opportunities in and around the core. That's where we'll refocus our people. That's where we'll refocus the investment.

Great. Okay. That's really helpful. Let's spend a couple of minutes on some of the new areas. Prediction markets have been kind of the buzzword for, I feel like the last couple of months. We've seen a bunch of announcements in that space from yourself as well as the industry broadly. So maybe help us sort of level set kind of what does the product road map looks like here? I know you -- it also sounds like you're planning on going at it more organically versus acquiring anything. So maybe walk us through the decision-making process there as well. And do you still see this largely, I guess, as a retail play? Or what are your expectations for some of this opportunity to become more institutionalized, especially in the way you design the products you're planning to come to market with?

I'll start, and I'm sure Rob will probably handle the bulk of the question. But in the way that we are looking at it, maybe it's a case of the tortoise and the hare, I know there's a lot that's happening. There's a lot that's being announced. But we're taking, I think, a very methodical and longer-term approach, and it's based on kind of sustainability of what we're trying to create. And so at the outset, I'm just going to say because everybody asked us about it, we're not focused on sports. We're really focused on event and prediction contracts that relate to economic indicators, economic events, securities and financial instruments.

Why? Because we believe that, that's consistent with the core capabilities that we have. It's consistent with our brand. It's consistent with what we're good at. And Rob likes to point out that in a way we kind of -- we invented event and prediction contracts when we started to develop 0DTE. And you can talk about some of the actual kind of trading dynamics and decompose that for you so that you can actually see that people are trading event prediction type strategies in our SPX and 0DTE contracts today.

So what we want to do is stay true to who we are, continue to innovate products that are interesting for people that are giving people the ability to either create wealth or hedge risks using shorter-dated capped risk type of contracts. So we see a lot of opportunity. And in that, we see the opportunity for our existing customers to move into those contracts, but we also see the opportunity for new customers as they become comfortable to -- as they always have, to kind of migrate up the maturity curve into our more sophisticated and complex contracts, and Rob can talk about how 0DTE has evolved in terms of retail and institutional.

But I think -- the other thing that I would stress is that while there's a lot that's happening and a lot that people are trying to do, our core capabilities of product quality, product clarity, helping people understand the risks in those instruments, how we oversee participation in the market, how we surveil, how we make sure there's market integrity. That, for me, is the key to the long-term success. I think that these markets will be successful over the long run. But I also think that in the way that other platforms are addressing it, there'll be a lot of kind of ups and downs and fits and starts.

And there's going to be, unfortunately, some bad experiences that are going to evolve over time just because they're not approaching it in the way that we have as a reference to our long-term history of what can go wrong in financial markets.

Yes. I think it's a super exciting time like you think of how the sophistication of the individual investor is growing. That plays into Cboe's hands very, very well, and that's something we're excited about. If you think of 0DTE and as Craig was mentioning, like how are retail maybe trading events today in 0DTE. Just over [ 200,000 5 ] delta, so 5-point call spreads and put spreads, trade every day in 0DTE. Those 5 spreads are roughly, call it, binary events when you look at them when you deconstruct how a payout would be in those spreads. And so if I were to compare that to the bigger market from a volume perspective and kind of lay the landscape. On the event and prediction side, some of the financial contracts that are trading, I think right now, they're predicting, call it, just around 100 million contracts for the year.

If I were to deconstruct the year-to-date total using the 5 delta spreads, we're at about $11.5 billion. So when you think of the size and where we're at, we're really a leader in this space now, how do we evolve that and bring the investor along in the journey, I think, is the interesting thing. So you have options, you have an index options, spreads, complicated vehicles that people are trading today. And then you have investors that are nervous about getting into that space and like to focus in maybe long-only stock picking portfolios. Well, event contracts can be a way to bring that investor along in the journey.

You start with a binary contract, you start with a 0 or 1 type of payout. You introduce them to kind of derivatives in a way, something that is dictated by a different underlying. And you can bring them along the journey and I think it's a really interesting time to do that. Where are we going to focus on in the product space when you mentioned that, I think it's in that, as Craig mentioned, risk hedging. And it's helping investors in their current portfolios today and probably less focused, like you said, on sports and things that are just kind of one-off events that are yes, no type of questions.

So how do we build binary contracts around financial derivatives, how do we introduce them to SPX? How do we introduce them to single name equities, events around earnings plays, maybe FDA approvals, any number of different company-specific events. How do we pull that event contract space more into the traditional finance way instead of running and taking our event trading into, what I would argue is more of the gambling sports that's sort of, what is Taylor Swift is going to wear when she goes out with Travis Kelce next week.

It's like that kind of space. is not risk management, as Craig mentioned. It's more just one-off event based. I think these events can also have a big role in kind of the overall risk management of the market.

Yes. How do you think the competitive landscape in that will evolve though, right? Because on the one hand, there's going to be a lot of product design, but that could be done by multiple different platforms, including some of the vertical integration we're starting to see between kind of the brokerage -- traditional brokerage models and the exchange models and [indiscernible] clearing models, right? So how do you make sure that if you guys do come up with something interesting the likes of the Robinhoods of the world, et cetera, don't just copy it over because there's no real IP presumably that will be attached to that? Kind of how do you think that will evolve? And how do you sustain that advantage?

Yes, it's a great question. I'm not sure I have the complete answer, but I will say, I think Cboe will take the traditional approach that we have with all of our products, which is create a toolkit, create interdependency of those products. And then with the intermediated model and the centralized clearing, create the capital efficiency around them that make them valuable to trade as a complete portfolio.

And so you see that today with SPX options, you see that with VIX futures and options. VIX future is just a deconstructed portfolio of SPX options. And so having a VIX future and SPX options in the same portfolio offer capital benefits. Now bringing in your single name multi-list portfolio event contracts on some of these single names and indices, like you just start to continue to expand the toolkit where coming to our platform and trading that toolkit is just advantageous. And so ultimately, if Robinhood verticalizes, that's their business model. I'm still of the mind that we can create products that Robinhood is going to want all of their customers to have access to even if it's not within their vertical just as they're going to today. Maybe they'll move into that event space and they'll use the newly acquired DCM, DCO and that kind of event space category. But I don't see them leaving multi-list options trading and things like that.

So if we continue to build our product set to serve in that type of intermediated model, I think we will continue to have the buy-in from all of the platforms because the kind of the some of the whole -- some of all the parts will be advantageous for each customer to trade.

Right. Okay. That makes sense.

I want to add to that real quick because I agree with everything Rob said. But I think the other thing to keep in mind is that this is super early stages. And so there's a lot that's happening, but most of the entrants, most of the partnerships, a lot of the verticalization is really kind of oriented towards CFTC designated contract market type products. A lot of what we're focused on is event and prediction in securities instruments. And so it's a lot easier -- I can speak from experience, it's a lot easier to be a futures exchange and a futures clearing house than it is to be a registered securities exchange, a registered securities clearing agency and to be able to do the kinds of things that are expected when you're facilitating trading in securities-based event and prediction contracts.

So that's an area where I think we have a real natural advantage, not just by virtue of our leading kind of franchise in options, but because of the superior kind of reach and distribution that we have with retail customers.

Sorry, I would add. It's important to note that if you look at a lot of these retail broker platforms and you look at their estimates of kind of option saturation with their client base, Robinhood is very public about their stats, I think 4% of their 27 million users are options enabled today. If you were to talk to some of the other platforms, whether you're IB or Schwab, you're in that 4% to 8% range. So when I think of growth, one, that customer base, like we are in very early stages of that. And then to Craig's point, if we were to talk to these same platforms and you ask, okay, of those accounts, how many are futures enabled? That drops significantly from there. So it's, call it, 4% are options enabled. Now you're talking sub probably, I think 10% of that number is futures enabled. We have a long runway of growth, I think, for the whole industry, but even more so, to Craig's point, in that security side where it's kind of our bread and butter, we see better access and distribution to the existing clients.

Yes. Okay. Let's double-click into some of the kind of existing businesses and places where you guys are trying to go deeper, so to speak, given the strategy. Starting obviously with the SPX, really unbelievable growth over the last several years that's continued. 0DTE option is obviously a big part of that. I think ADV is up 30% plus year-to-date. So maybe try to unpack sources of that recent reacceleration because we've seen that and then things have sort of plateaued a little bit, and you've seen a massive step up yet again over the course of this year.

Any way you can delineate that between retail and institutional, U.S., non-U.S., what are you seeing underneath the surface? And I guess more importantly, what do you think the next leg of growth is going to be? And maybe just as simple as like what to your point earlier, 4% of retail trades options. So it's just more of the same.

Yes. As a former portfolio manager and even in the exchange space, I hate the volume begets volume, like it's just one of those things to throw away. But in this situation, it is true. Like people are -- more and more people are starting to use options. As the retail market grows and hence, the 4% as that continues to grow it adds more liquidity into a network into a system that now institutions are able to take advantage of.

And so you saw on the 0DTE in the early days, it was predominantly retail, I think from a data standpoint. Retail doesn't heavily depend on data, like they are just looking at the individual trades, the individual investments. When you move into the institutional side, you now have back tests you need to run. You have strategies that you need to justify to a risk management committee. And as the data grew in 0DTE, you could now back test over different market events, longer periods of time. And then you saw the institutional community grow behind it.

And so now we started off, call it, 60%, 70% retail, 30%, 40% institutions. Now we're pivoting right around 50-50, which I think is very healthy for the market. You have very different investors doing different things, which builds a healthy market. Where does that go from here? Well, one, just options penetration will continue to grow those numbers.

I think also you create a little bit of fomo in the market. So now you're even seeing other jurisdictions and some of the kind of the international play coming in, you're seeing demand from APAC and retail brokers in APAC wanting to bring customers into U.S. products and specifically SPX I think the Middle East is very interesting. You have very, very large asset managers and sovereign wealth funds that have 20%, 30% exposure to the S&P 500, but very, very little options trading and I would say, risk management hedging that's being involved in those portfolios.

I think you're going to start to see and we're actively working on access pathways there, bringing in and giving people outside the U.S. that kind of access point to 0DTE. And I think you'll continue to see the whole complex grow. Last thing I'll end on and one thing that I like everybody to keep focus on is as volumes have grown, you see the percentage makeup. I think, 60% -- just over 60% of 0DTE today. So I think a lot of people immediately think, well, if that's 60%, then the other SPX flows have decreased, which really isn't the case.

If I look at -- since 0DTE was introduced in April of '22, and I look kind of at '22, '23, '24, '25, roughly about 1.6 million contracts today are non-zero DTE, and they've stayed consistent. It's just the growth we've seen has been the 0DTE and how people, I would say, have changed kind of their investment profiles and how they want more immediate results, and they want to see outcomes more immediate. And I think that's why you've seen 0DTE grow. But overall, the complex is very healthy. And I think as we bring in international players as retail grows, as options, adoption grows, you'll see the liquidity keep building, and it will just make more and more volume available.

Great. No, that makes a lot of sense. I did want to ask a question around the licensing with S&P Global as well. And recognizing it's still quite some ways away. This is not a [ tomorrow's ] question, but we do get asked questions so I figure I'd ask you as well. How are you thinking about just the contract renegotiation process with them? And also when you think about what CME's aspirations here might be, and obviously, you can't speak with them directly, but they did get approval to clear U.S. treasury. So now there will be an SEC register clearinghouse, which gives them an opportunity to maybe compete a little more effectively for something like that. So how do you expect this to play out, recognizing that this has been a really successful venture for S&P Global, so they're not complaining about it?

Yes, I'll start and Rob will add. I mean, I think, first of all, we've had a 40-year tremendously successful partnership with S&P. I think that partnership is as strong today as it has ever been. I would say that if you look at the last 5 to 6 years in particular, I mean, the kind of growth that we've had with SPX and 0DTE and when we look at the total pie, all of the different exchange-traded instruments and exposures based on the S&P 500 I mean, we have increased our market share dramatically.

I think we've gone from the mid-50s to kind of the low to mid-70s in terms of aggregate market share when you look at E-mini S&P 500 futures and micro futures when you look at the SPX and 0DTE complex. So we've been delivering outsized growth, especially relative to all of our competitors. And I think that puts us in a really strong position. Secondly, we've created this whole ecosystem over multiple decades. Our technology is hugely scalable and specifically designed to help facilitate trading in SPX and 0DTE.

Don't forget also a pretty significant amount of activity that happens in those products is actually in more complex options, strategies and trades that are happening on our trading floor, where we have decades of human capital and trading capital that are facilitating more complex and sophisticated transactions in SPX and 0DTE. And so we have a lot of kind of natural advantages that are not, I think, easily kind of extensible. And while you point out the clearing angle with CME, I'll say a couple of things on that. One is, is that these are obviously securities-based instruments that have to be traded on a registered securities exchange and cleared through a registered securities clearing agency, again, a natural advantage for us and one that isn't a natural advantage for CME. But I'll also just say going back to it that I've been around a long time. And as you recall, during my time at CME, I oversaw the mergers and acquisitions with the Chicago Board of Trade and the NYMEX went through incredibly intensive antitrust reviews.

And I'll tell you that in the course of -- and I was the CEO at the time, I mean, interfacing with the Department of Justice on those reviews, in the way that they look at and in the way that they define the market, they're looking at who are your competitors? Well, our chief competitor when I was at CME in terms of the stock index futures franchise was the Cboe. It's the Cboe. It's those products because I can synthetically replicate the same exposure trading stock index futures as I can, trading cash index options. So there's a whole body of knowledge, analysis and determination that's been made by the Justice Department with respect to what are these -- who are the natural competitors in these markets.

So I'd just say I think we're in a really strong position just in terms of not just the natural advantages that I've described. But it's not the case that somebody else can just step in and say, okay, like, we'll dominate the market for all exposures based on SPX.

Great. All right. Maybe pivoting away from the trading businesses for a minute. Let's spend a couple of minutes here on the clock on Data Vantage. It's been a really good story for you guys also. Again, this year, the growth really accelerated, I think, on track at about 10-ish percent year-to-date relative to your 7% to 10% target, so squarely in the upper end of that. What maybe has led to this sort of acceleration we've seen over the course of 2025? And I guess, more importantly, any early thoughts on how you're thinking about that for 2026?

Yes. So just looking back on 2025, our initial year guidance was mid- to high single digits. And as you alluded to, trending very well on a year-to-date basis. We have recently taken that guidance up to high single to low double digits for 2025. We'll come back to you in February with the guidance for 2026. But what I will say is -- we really are focused on new unit growth to drive that performance.

So I think if you look at our third quarter results, 90% of the Data Vantage net revenue growth was driven by new units. So we're very committed to deploying great products at a great value for our customers. For 2025, if you look at what's driven some of that success, it has been some of the newer product offerings think the dedicated cores, the time stamping, et cetera. We do remain very, very committed to investments in technology, especially around data and access. And I think it ties right back to some of the trading and volume commentary too, that Rob was alluding to earlier.

Yes. Great. Maybe to wrap up the conversation. I'd love to get your perspectives on capital management, capital return, and I'll kind of include the M&A point in here as well because it does sound like large deals or really any really material deal is kind of off the table. And your last comment sounded a lot more focused on the organic growth. The balance sheet is in a great shape. You guys are generating a ton of free cash flow. There's going to be probably some proceeds from the divestitures that you've announced earlier. How are you thinking about the capital return evolving over the next, call it, 12 to 18 months?

I'd say our share repurchase framework remains consistent. We'll continue to be opportunistic in that regard. To your point, we do generate a lot of free cash flow. As of September 30, we had about $1.5 billion on the balance sheet. We like the flexibility it affords us. We're not afraid to build the cash to Craig's earlier point, we do see opportunities. And again, refocusing our time and attention around the core and the areas around the core, it's great to have that dry powder.

Yes. Great. Okay. We'll leave it there. Thank you all so much. I appreciate you spending the time with us this morning.

Great. Thank you.

Hello, everyone. Thank you for joining us, and welcome to the Cboe Global Markets Third Quarter Earnings Call. [Operator Instructions]

I will now hand the call over to Ken Hill, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for our third quarter earnings conference call.

On the call today, Craig Donohue, our CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Jill Griebenow, our Chief Financial Officer, will then provide an overview of our financial results for the quarter as well as discuss our 2025 financial outlook.

Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer; Prashant Bhatia, our Head of Enterprise Strategy and Corporate Development; and Rob Hocking, our Global Head of Derivatives.

I would like to point out this presentation will include the use of slides. We will 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 some forward-looking statements. which represent our current judgment on what the future may hold. And 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 SEC 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 this morning, we will be referring to non-GAAP measures as defined and reconciled in our earnings materials.

Now I'd like to turn the call over to Craig.

Good morning. Thank you for joining us today to discuss our third quarter results.

Our performance this quarter underscores how Cboe is operating from a position of strength a result of our world-class products, platforms and people. We're building on that momentum and sharpening our strategic focus designed to unlock even greater value and opportunities for growth. Following the conclusion of a rigorous review of our businesses, we will initiate a sales process for our Cboe Australia and Cboe Canada businesses. We will discontinue our U.S. and European corporate listings efforts, and we will reduce our costs related to our U.S. and European ETP listings businesses, Cboe Europe Derivatives Exchange and several of our smaller risk and market analytics businesses. This strategic realignment ensures Cboe is well positioned in a dynamic and evolving market and strengthens our long-term vision to be a global derivatives leader. These changes will be accretive to earnings and Jill will discuss in her prepared remarks how these actions strengthen our financial position and unlock new growth opportunities.

I'd like to express our deep appreciation to all our team members for their dedication and hard work and supporting each of these businesses.

While our Australian and Canadian equities businesses are performing well, we've determined that they fall outside of our core focus and strategy. We are grateful to our regulators in Australia and Canada for the support and collaboration they have shown us, and we will work closely with them to ensure a smooth transition for all of our key stakeholders.

With this renewed focus, we are directing greater attention to our core businesses, which are operating from a position of strength. We see tremendous opportunities across index and multi-list options, Futures, U.S. and European equities and FX inclusive of Data Vantage. Leveraging these core areas of strength for Cboe and the strong secular growth trends supporting them, we believe we are well positioned to fully capture their growth and earnings potential as we strengthen our competitive positioning.

Turning now to the third quarter. Cboe grew net revenue 14% year-over-year to a record $605.5 million and adjusted diluted EPS increased a robust 20% to a record $2.67. These results were again driven by strong volumes in both our multi-list and proprietary index option products solid new sales growth in our Cboe Data Vantage business, robust industry volumes in our Cash and Spot Markets and continued strong expense discipline. Most importantly, our performance once again underscore the durability of our net revenue generation with strength evident across nearly every segment of our business. In fact, in the third quarter, all 3 of our revenue categories, Derivatives Markets, Cash and Spot Markets and Data Vantage posted double-digit net revenue growth.

As we head into the final months of the year, we look forward to building on those broad-based trends. Taking a closer look at the third quarter trends by category, our derivatives franchise delivered another record quarter with net revenue increasing 15% year-over-year. In our multi-list options business, net transaction and clearing fees revenue was up a solid 14% and given higher industry volumes and positive market share trends. While the multi-list option space remains highly competitive, Cboe is well positioned to benefit from strong secular trends, having taken meaningful steps to deepen our talent pool in the options space, while actively pursuing thoughtful regulatory reforms that support both the industry and investors.

On the index options side, net transaction and clearing fees revenue was up a strong 19% as our proprietary SPX options complex set new records powered by robust growth in 0DTE options trading. SPX 0DTE average daily volume surged 62% year-over-year while overall SPX ADV increased 26% to a record 3.9 million contracts. 0DTE options made up over 61% of SPX volumes, up from a 48% share a year ago. We saw a similar dynamic in many SPX options where 0DTE ADV more than doubled over the past year and drove an impressive 66% increase in total ADV during the quarter. 0DTE options now make up roughly half of many SPX volume, up from 35% a year ago.

In our Proprietary Options business, it's noteworthy that 9 of the 10 highest average daily volume months occurred in 2025, with September ranking as the third highest month on record only behind March and October month-to-date activity. In fact, our largest SPX day on record occurred on October 10 with 6.4 million SPX contracts traded and a record 33.2 million total options contracts traded across our index and multi-list products. It's also worth noting that growth in our 0DTE options franchise reflects not only wider adoption and broader access, but it's also a result of Cboe's distinct advantages in product innovation contract design and market structure. We look forward to leaning into these advantages with our new MAG 10 Index options and futures launch subject to regulatory approval, giving investors a simpler way to gain exposure to the AI and tech being and a more precise way to manage risk using cash-settled European style options.

While SPX volumes in the third quarter were robust, our VIX products face a more stable macro backdrop and lower realized volatility. The continued growth in our index options despite the lower activity in our VIX complex highlights the strength and versatility of Cboe's comprehensive volatility toolkit.

Looking ahead, we remain positive on the outlook for our core derivatives business. With trade tensions, a government shutdown and more uncertain economic outlook, we see investors continuing to utilize options to manage risk. Secular trends of increasing retail participation and international expansion should provide further tailwinds. We continue to onboard more international brokers as global customers seek exposure to U.S. financial markets.

Moving to Cash and Spot Markets. Net revenue was up a strong 14% as our European cash equities business continued to drive robust performance for the category, led by another quarter of strength in our European transaction businesses, the Europe and Asia Pacific segment delivered the strongest year-over-year net revenue percentage growth of any Cboe segment for the fifth quarter in a row, achieving an impressive 24% increase. This was driven by a 35% year-over-year growth in net transaction and clearing fees resulting from strong industry volumes, solid market share gains and a higher net capture. Global FX also made another solid contribution, growing net revenue 13% year-over-year in Q3. Over a longer time horizon, FX delivered quarterly year-over-year net revenue growth in 17 of the last 18 quarters, speaking to the durability of this segment's revenue generation.

Turning to Data Vantage. Net revenue increased by 12% on a year-over-year basis, reflecting continued momentum across our platform. Notably, nearly 90% of the growth across our market data and access businesses was driven by new unit and new sales as opposed to pricing. This growth speaks to the sizable demand for Cboe's data and access products, including our newer offerings, decaded cores and time damping.

Now I'll turn the call over to Jill to walk through the details of our financials and guidance for the quarter.

Thanks, Craig.

Cboe posted another strong quarter with adjusted diluted earnings per share of 20% on a year-over-year basis to $2.67. I will provide some high-level takeaways from this quarter's operating results before going through segment results.

Net revenue increased 14% versus the third quarter of 2024 to finish at a record $605.5 million with each of our categories producing healthy year-over-year growth. Specifically, Derivatives Markets net revenues grew 15%. Data Vantage net revenues grew 12% and cash and spot markets net revenues grew 14%. Adjusted operating expenses of $210 million were up 3% on a year-over-year basis. Adjusted operating EBITDA of $409 million grew 21% and adjusted operating EBITDA margin expanded by 3.8 percentage points to 67.5% versus the third quarter of 2024, demonstrating both our strong business performance and disciplined expense management.

Turning to the key drivers by segment. Our press release in the appendix of our slide deck include information detailing the key metrics for our business segments, so I'll provide some highlights for each.

The Options segment delivered its fifth consecutive quarter of record net revenue with 19% year-over-year growth. Cboe total options ADV was up 26% with a 15% increase in index options volume and a 31% increase in multi-listed options volume. North American Equities net revenue increased 6% on a year-over-year basis. Access and capacity fees increased 10% as compared to the third quarter of 2024. And stronger industry volumes helped temper softer net capture and market share in our transaction net revenues. Europe and APAC produced 24% year-over-year net revenue growth, reflecting another quarter of strong growth in Europe. Net transaction and clearing fees for the segment were up 35%, while non-transaction revenues were up a combined 14%. Futures net revenue decreased 22% from the third quarter of 2024, primarily due to lower volume. And finally, Global FX net revenue was up 13% on a year-over-year basis, driven by a 3% increase in average daily notional value and a 9% increase in net capture.

Looking at our CBO Data Vantage business, net revenues were up 12% on an organic basis in the third quarter. Building on the solid year-to-date trends, revenue growth was again driven by strong new subscription and unit sales. New sales represented nearly 90% of Market Data and Access Solutions revenue growth in the quarter, with the remainder coming from pricing changes. As Craig discussed, we are encouraged by the sales momentum occurring across our new product offerings.

Turning to expenses. Total adjusted operating expenses were $210 million for the quarter and up 3% on a year-over-year basis. The increase was primarily driven by higher compensation and benefits expense as a result of our strong revenue trends, which have increased our bonus incentive accrual.

Before moving to our 2025 guidance update, I would like to discuss the anticipated financial impact of the business decisions announced earlier this morning. While we are still working through these changes with our key stakeholders, we do not anticipate that these actions will have a material impact on our 2025 total organic net revenue growth or our 2025 adjusted operating expenses, and they are fully captured in our updated guidance. On a go-forward basis, we expect the annualized run rate impact of both today's announcements and the completed wind down of our Japanese equities business to be accretive to our earnings, resulting in roughly a 3% reduction in net revenue and an 8% to 10% erection in adjusted operating expenses using the 2025 guided ranges of the baseline. That being said, realizing the full impact of the actions will take time as we work through the various realignment actions and sales processes. We will look to provide a more fulsome progress update to help calibrate the timing of various impacts when we announced our 2026 guidance during fourth quarter earnings in February.

Moving to our full year 2025 guidance. We are increasing our full year total organic net revenue growth guidance range to low double-digit to mid-teens from high single digit given our strong year-to-date results and fourth quarter trends. We are increasing our Data Vantage organic net revenue growth range to high single digit to low double digit from mid- to high single digit, following stronger-than-expected year-to-date growth. We are lowering our full year adjusted operating expense guidance range to $827 million to $842 million from $832 million to $847 million. This decrease reflects our year-to-date operating discipline as well as reduced expectations for depreciation and amortization expenses, partially offset by higher incentive compensation given our healthy revenue generation. We are lowering our full year guidance range for CapEx to $73 million to $83 million from $75 million to $85 million, and we are also lowering our expectation for depreciation and amortization to $50 million to $54 million from $53 million to $57 million. We continue to expect the effective tax rate on adjusted earnings under the current tax laws to come in at 28.5% to 30.5% for the full year. And while we don't provide formal guidance on interest income or interest expense, we expect that interest expense, net of interest income, will be approximately $3 million in the fourth quarter.

On the capital front, our adjusted cash position of $1.5 billion and leverage ratio of 1.0x demonstrate our healthy balance sheet. In addition, Moody's recently upgraded our credit rating by 1 notch to A2, reflecting the strength of our financial profile.

In the third quarter, we returned $76 million to shareholders in the form of a $0.72 dividend, representing a 14% year-over-year increase in our quarterly dividend.

Turning to our investment in the Seven Ridge Fund holding trading technologies. The transaction detailed in last quarter's earnings call is expected to close in the fourth quarter of 2025 and subject to regulatory approval. As of September 30, 2025, the carrying value of the investment reflects assumptions, including the agreed sales price related to the estimated fair value of trading technologies. A gain of $45.6 million is included in our earnings on investments for the third quarter, but the impact has been adjusted out of our non-GAAP income statement.

In the fourth quarter, we anticipate recognizing an incremental gain upon the final closure of the transaction. Similar to the third quarter, we will adjust the gain out of our non-GAAP income statement.

As an organization, we are focused on optimizing capital deployment to strike the right balance between margin efficiency and investment in emerging growth trends following our review. And while the decision process to strategically realign our business portfolio is complete, our commitment to continuously assessing new opportunities and optimizing our businesses will be unwavering. We will maintain a disciplined approach to assessing all aspects of our business with a clear emphasis on driving revenue growth and enhancing profitability to maximize shareholder returns.

Now I'd like to turn it back over to Craig for some closing comments before we open it up to Q&A.

Thank you, Jill.

As Jill highlighted, our business is operating from a position of exceptional strength, and we now have a clear path to unlock even greater value. The strategic realignment of our business portfolio and human capital allows us to focus on optimizing our core businesses for further growth and profitability and pursue opportunities in emerging growth areas. While we continue to undergo change, our continued success makes us a destination for talent. The realignment and focus on growth allows us to continue to build senior leadership talent across the organization. In the past 6 months, we have made key hires in Strategy and Corporate Development, Global Derivatives, Clearing and Data Vantage. And yesterday, we announced another key hire as we welcome JJ Kinahan as Head of Retail Expansion and alternative investment products. JJ is a well-regarded industry veteran and the retail brokerage space with deep expertise in equity derivatives markets. He brings a wealth of experience to the Cboe management team, and I look forward to working closely with him and Rob as we pursue new growth opportunities in the retail-oriented digital crypto and event contract space.

We have made meaningful progress over the last 6 months, and we have a great deal more to do. I am energized by the momentum of the organization and excited to channel what we've learned into driving transformative change.

I'll now turn the call over to Ken for Q&A.

[Operator Instructions]

[Operator Instructions] Your first question comes from the line of Patrick Moley with Piper Sandler.

I thought maybe we'd start off, Craig, if you wouldn't mind just maybe just talk about some of the decisions made today as a result of the comprehensive review process, why were Cboe Australia and Canada, why did you decide to initiate a sales process there? And then as we think about the proceeds that you'll receive from those transactions and some of the expenses that will be freed up? What specific areas of the business are you looking to kind of deploy that capital into?

Thank you, Patrick. Yes, happy to address that. I mean, obviously, as you've heard us comment before, the review process is something that began under my predecessor, Fred Tomczyk. That process continued but my goal since joining Cboe has been to try to accelerate that process and reach a conclusion. And essentially, what I've been focused on, and the team has been focused on is trying to pivot people toward the largest growth opportunities that we have among all the available choices Obviously, we feel like we've done a very good job in Australia and Canada, but at the same time, our best opportunities for growth are in our current large core businesses that are hugely successful where we've got a critical mass of successful markets, products, liquidity and customers. Some of our core businesses are ones that are performing extraordinarily well and others are such that we know that we've got further growth opportunities within those core businesses, and we also have further opportunities to optimize for greater profitability in each of those businesses. And so from a human capital perspective, I want to make sure that we're all focused on really the largest growth opportunities that we have in our current core business. And that's what you'll hear us talking about in terms of optimizing the core. At the same time, there's a lot of emerging growth trends in the industry that I feel align really well with our core capabilities. And so we're really starting to shift as we've described during the call, and as Jill commented on toward those new emerging growth opportunities. And so I want to make sure that we're focused on event prediction markets, digital and crypto markets. There's extraordinary growth there. I think they align well with our core capabilities in terms of what we've been able to achieve with the retail segment. Those are largely, at this point, retail-oriented product opportunities. I'd like to think that we've been an innovator in shorter-dated contracts through 0DTE and event and prediction is really just sort of coming at it from a different way. But that's something that we have demonstrable expertise and success in. And then as you'll recall, I mean, we were also an early participant in digital markets. We still have a lot of our core capabilities in that area. So those are things that I want to make sure that we are focused on. I'll let Jill comment on reinvestment of capital. But most of what we are focused on is going to be kind of low capital intensity in terms of further investment in the business. So what I'm primarily focused on is the reallocation and reinvestment of our human capital but it does free up opportunities for us to make sure that where we do need to invest capital in those new growth opportunities that we have the agility and the ability to move quickly and do that.

Yes. So just to give a couple of words on the reinvestment or the proceeds, the investment. I will say from an organic growth perspective, we have the flexibility to make investments into some of the areas that Craig mentioned. As it stands now, we wouldn't expect those to be material. We will come back in February with our 2026 guidance. But really what this affords us is just incremental flexibility, the ability to invest where it makes sense and then to Craig's point, on the strategic allocation of human capital as well to these higher growth areas.

Your next question comes from the line of Elias Abboud with Bank of America.

Can you help us understand the drivers behind the stronger outlook for your Data Vantage business? The past couple of years, it's been a high single-digit grower. What has changed that's going to allow you to get north of that? And then do you expect you can hit that target even in years when volumes and capacity fees are down?

Good morning, Elias. Thanks for the question. This is Chris Isaacson. So we've seen above expectations, uptake in some new products we rolled out in the last 1.5 years, the dedicated corporate time standing service, customers continue to demand that. They have -- each of them has their own adoption curve, and we've seen really strong growth throughout 2025 as well as data products outside the U.S. For instance, 85% of Cboe global cloud growth is coming from outside the U.S. So that's what's contributed this year, and I can hand it to Jill about what we see to look forward.

Yes. So really, I mean, we've seen some outperformance in 2025, really pleased with the results there. As I commented in my prepared remarks, about 90% of that incremental revenue has come from new units, new sales and about 10% of that then from pricing. So we're again pleased with the 2025 results that we've had to date, the outlook for Q4. But what I will say is different products have different adoption curves. This has been a good grower for us. What we will do is, again, take a look and reassess our guidance, we'll come back in February with our update on the '26 outlook.

Your next question comes from the line of Brian Bedell with Deutsche Bank.

Can you hear me okay?

Yes.

Maybe just to focus in on the retail strategy and JJ's game plan for maybe just sort of expand more on how you might be doing this differently, the connection with other brokers, online brokers, the potential white space that you have there? Because I know you are connected with a lot of retail purchase cents. And then if you can talk a little bit more about the prediction markets, how that weaves into the retail strategy. What's the timing of when you think you might start to launch event contracts, and I don't know if there's any view on pricing of those, yes.

Hi, Brian, Prashant here. Just real quick on prediction markets. We see broad-based interest in predictions we think it aligns well with the cross-section of secular trends, increased retail participation, the appetite for short-dated options. And again, smaller contract sizes, dollar-sized contracts really the ultimate mini contract. So we want to leverage our strengths and provide industry participants there with a neutral infrastructure platform. And we're thinking both on the exchange side and on the clearing side. So we think there's an opportunity there. And you can expect our focus will be on financial and economic-related contracts when it comes to those products. And we're crafting a go-to-market plan, and we'll provide these updates there as we make progress. So yes, even prediction markets clearly an area of interest for us. And I think we've got an offering that could benefit the marketplace.

Yes. And I would add, I'll just jump in, maybe giving a little more background on why we think we have the right to win in that space. Options have always been centered around forecasting future market volatility, weather direction, timing of events. So you could actually say we've been in the prediction business since we started in 1973. Further, A lot of this was the basis for creating products like the VIX Index. The VIX is a real-time measure of the market's expectation of a trading range of the S&P 500 over the next 30 days. And it's its predictive nature is really what's driven it to become one of the most watched equity market benchmarks in the world. And so with options every strike expiration embeds the market consensus on where that underlying could be at any specific point in time. That's why we're so excited about the space and believe with the decades of experience, we have investments in infrastructure, along with really most importantly, the community of market participants already active in doing business on Cboe that this is a tremendous opportunity. Now specifically, when I think of the liquidity providing community and really the tangential nature of the event prediction market, we're excited to work with those core partners and tap into the vast amount of liquidity that they provide even every day. And to put that in perspective, the average of -- an average of about $18 billion in premium trades each day in SPX options. And that event and prediction market year-to-date in similar products is less than $50 million in premium. So if we do this correctly, we're really bringing these liquidity pools to that event and prediction space, which gives us a real unique opportunity to enter it and to grow. And so on the retail side, you mentioned that we've led that charge. You've heard it already about the ultra short dated options, the growth of that retail participation. In many ways, we view the event and prediction market as kind of an introductory product to help those investors in that journey to understanding more complex and more complex products. So you start with stocks. You move to kind of binary yes, node products and then ultimately bring them into options and kind of the continuous spectrum of probabilities that they can work with. And so this is a process and really a formula we pioneered, and by offering the right products, education, that's another real important one. You may have heard, we just launched our OI learning management portal which allows individual retail investors to expand and better understand these products. And then through all of these efforts, Obviously, hiring JJ was a big one with regards to 4-plus decades of retail experience and how to reach that market and understand that market and what that user and investor wants to see on our platform is crucial, and we really think we can build that long-term user base for Cboe.

Your next question comes from the line of Chris Allen with Citi.

I would love to hear your thoughts on strategic realignment, particularly the sales of overseas the international business. How that fits with the international strategy for the data business where clearly you're seeing good progress. Just love to hear, if I remember correctly, some of the deals that were done, are they going to expand global footprint to drive data sales, so now you're pulling back just help us think about that strategy moving forward.

Yes. Thanks, Chris. So when we went through the process to evaluate our portfolio of businesses. We looked at each of these businesses from a strategic lens from a financial lens and from a growth potential lens. And -- but it came down to our Australia and Canadian businesses, they both performed quite well, but we simply determined that we have better opportunities to drive meaningful growth for Cboe in other areas. And that's why we decided to pursue a sale there. And when you talk about some of the linkages to data. These are core local market platforms in the Canadian market and the Australian market. In terms of our data, a lot of our data sales aren't really driven by having a local exchange presence. So we see an enormous amount of demand for our data throughout APAC. We've added salespeople. We've been marketing resources in those regions. And it really drives a lot of access from clients overseas. When you look at the connectivity we have with APAC brokers, and how we continue to grow that. There's an enormous demand around the secular trend of flows with the U.S. being a destination. So we don't think it's going to have an impact from that perspective at all. These were more local market exchanges they're performing well. So we made the decision really driven by where we find the biggest growth opportunities going forward, so we can drive focus there.

[Operator Instructions] Your next question comes from the line of Anthony Corbin with Goldman Sachs.

This is Anthony on for Alex. Maybe just on prediction markets. How are you thinking about M&A versus a less capital-intensive partnership? And do you see any risk of cannibalization to your existing short-dated product suite?

I'll start with that. I mean I think we're looking at this as an organic opportunity, leveraging a lot of the key strengths that both Rob and Prashant have commented on. I mean, obviously, we'll always look at inorganic opportunities if they make sense, but the primary focus that we have right now is a launch plan that's focused on organic efforts.

Your next question comes from the line of Ashish Sabadra with RBC. [Operator Instructions]

I just wanted to follow up on the earlier question. And as you think, completed your strategic review how are you thinking about organic investments going forward, but also like inorganic investment broadly outside across all the spaces, including the Data Vantage space.

Yes, I'll start. Joe and others may want to comment, too. But I mean, we do see opportunities for continued investment in our core businesses. I mean, obviously, with the focus on adding scale in derivatives generally event prediction markets, retail-oriented, digital and crypto products. There are opportunities for us to invest further in our clearing capabilities, both in Europe and also in the U.S., there are also investment opportunities for us in terms of developing on chain capabilities as well as migrating increasingly toward atomized settlement capabilities that will further extend our products and reach beyond our traditional trading hours. So those are some of the kinds of things that we would be looking at. I mean, obviously, we also have a very successful and growing business in both index options and multi-list. And so there are also investment opportunities there, especially in multi-list in terms of how we can better facilitate more liquidity and more trading volume. So there's a range of things that we will be focused on in terms of investment. And that's a big part, as I said, of this whole strategic pivot is really making sure that we're extracting as much growth and profitability as we can, not only from our current core businesses but from these other areas that we'd like to pivot shift to.

We have a follow-up question from Elias Abboud of Bank of America.

You highlighted how Data Vantage revenue growth is being disproportionately driven by international unit sales in past calls, I think you've said about 50% of the incremental growth comes from international. I was hoping you could break that down a little bit further. Our international users consuming your data is the growth concentrated in one particular channel? And then how do we square your outsized international data growth with the fact that global trading hours are still a relatively small part of your total volumes?

Yes. So I'd say a couple of things on Data Vantage. In terms of the growth we're seeing overseas, it's absolutely driven by a lot of our -- an appetite through data or U.S. proprietary market data, and we're seeing high demand for that. In terms of global trading hours, it's not as correlated to data sales there as to GTH volume. So we're not seeing a high correlation there. The demand is coming and they are trading within to 24x5, 24-hour, 5-day videos that we have. So we're seeing good demand and appetite there. And when you look across the Data Vantage platform, we're not only seeing growth on the data side. We're seeing growth on the index side. We're seeing growth in our risk and market analytics platforms as well. So it's pretty broad-based growth again, with any kind of sales-oriented business, you end up with some variability quarter-to-quarter depending on when sales hit. This was just a particularly strong quarter for us. We continue to think we're well positioned going forward. So good story there, and all that growth is really organically driven.

And to put a finer point on the GTH hours point and how that doesn't tell the full story. Given the larger liquidity pools in our regular trading hours session, a lot of international participants that are still buying the data and need the data for trading are trading during those regular trading hour sessions as well. And so I think we're using that from the from the stance of you continue to build the liquidity pools. We have them in the regular hours. We continue to build them in the global trading hour session and you start to see some of that flow migrate to more, I would say, call it, on hours trading for for the international clients, but I just want to be clear, like a lot of those trading are in the international space are doing it during the regular trading hours.

And Elias, I might just finish here with, our goal here is to get our data as close to customers in whatever format or mechanism that works best for them. So we've had a cloud will enter partnerships where we need to. But as Prashant mentioned, the real demand is coming for event data from around the world wherever we interact with customers, they want access to the U.S. markets and bill other products. So our goal is to get to that data whatever format work with them, that's where we're seeing the growth.

Your next question comes from the line of Ben Budish with Barclays. [Operator Instructions]

Wanted to ask a higher-level question about AI. It's something we've heard a lot about from some of your exchange peers this earnings cycle. Just wondering if you could share any high-level thoughts? How might that help you in terms of new data and analytics products how do you think about potential to increase efficiency in your operations? I think your margins already quite high, but how are you thinking about opportunities either on the product side or internally to employ more or deploy more AI capabilities?

Yes. I'm glad to take that one. Sorry, someone -- good morning, thanks for the question. Yes, obviously, AI is all over the news and outside of our industry, but also the industry. AI has been a journey for us, and we've made significant investments in AI. It's primarily been a productivity multiplier across all of our functions, from sales, legal and HR finance infrastructure to software engineering, security, business intelligence, it's basically touching a report of our business internally. And it's embedded in our data platform so we can surface insights for both for us and our customers. That's really underpinned by our data strategy where we've heard about us talk about the public about having our data platform running in Snowflake on AWS, and that underpins our AI strategy. So we're finding use in it for the product development cycle especially with the unique data sets that we have to new products. We stood up a center of excellence in mid-2024. And that's not just a hub for software engineering, but it's for company-related resources to make sure we're getting adoption across the enterprise. Now we have 900 active associates working in that. So we're also -- we're in the age of agentic AI, deploy multiple agents across our enterprise, including in areas such as infrastructure and information security, and really focused on building infrastructure with an AI platform internally, but also in educating all of our associates. So it's been primarily internally focused, but now we're turning to what products and to commercialize based on the insights that AI gives us. So we also have a fun program internally, called Olympics and AI Champions. And the winners of the Olympics will then go and implement those projects because the are delivering great value for us. So we are, frankly, all in on because we think it has tremendous power to unlock greater productivity. You heard a lot of this call about human capital, and we have great people here want to make sure that we fully leverage those great people.

[Operator Instructions] We will now move to Kyle Voigt of KBW. [Operator Instructions]

You noted opportunities in the multi-list options market multiple times today on the call. I don't want to say that multi-list hasn't been a priority for Cboe, but maybe it seems like it's going to be more of a focus of investment for Cboe moving forward. As you noted, it's a very competitive space. So I'm just wondering what you think you could do differently in that market versus the way Cboe has looked at and addressed that market over the past several years.

Yes. Thanks, Kyle. I appreciate the question. We're really excited about the multi-list space and the revenue opportunities we see going forward. As you mentioned, multi-list is core to Cboe, and it's an area we're going to be heavily focused on competing in. Industry volumes are up 20% year-over-year. Retail is driving much of that growth. Options adoption amongst retail is still in the early innings. So we really see plenty of runway ahead. As far as the multi-list landscape, yes, you touched on it. It's highly competitive. In early 2026, I think we'll be up to 20 exchanges in the space. That said, Cboe still commands over 24% of the multi-list market share and is #1 in overall industry market share with just under 31%. So we feel we're playing from a position of strength. Earlier this year, we made several additions to our U.S. team. Megan Dugan joined us from NYSE in February. We also added Gary Hunt, longtime industry veteran from Bank of America. And between both of them, they have over 50 years of industry experience and multi-list options. I know I look forward to working with them, and we're going to be focused on increasing our competitiveness. On the functionality side, we're really working on a host of, I would say, market structure and pricing improvements across our different exchange medallions, things like liquidity adding incentives for market makers, competitive rebate program for customers bringing flow to Cboe. But ultimately, we feel we're well positioned to continue to be an industry leader, and we will remain focused on really striking that right balance between maximizing market share and revenue capture.

Kyle, I just might mention you've heard a lot in the previous calls when we were deep in the heart of integrations and we had a lot of, frankly, tech resources focused on integrations. This year, we've really been able to fully focus on our core business as outlined in this call. And it's really encouraging to see we have a bigger and fuller derivatives road map. A lot of that is around oldest options that I've seen in years. So we're, again, using that human capital, focusing the highest growth opportunities.

Your next question comes from the line of Michael Cyprus with Morgan Stanley. [Operator Instructions]

Hopefully, you can hear me okay. I wanted to ask about AI to your earlier point. I was hoping you could elaborate a little bit on products might make sense as you look out over the next 12 to 24 months and then also more longer term, how you might see AI helping contribute to revenues at Cboe over time?

Yes, it's a good question. We're going to have a clean answer here with the exact products that will come from that. As I said, our data strategy underpins our AI strategy. I'd say the insights and the products are still yet to come. But we do have unique data sets because of the unique products we have, especially our proprietary products. we think new products can to that. I think one product I'll point out, it's not really AI-related, but [indiscernible] for those products, for instance, regarding SPX has had great uptake. It's not really an AI product, but it's something -- it's surprisingly simple, but very, very high demand. So we think we can service more product ideas from AI were outside EMEA. We just use it as one of...

Yes. And I would add, as Chris said, we're in the early days. But from a product development standpoint, I think where we've seen the most progress is hose in research analysis and being able to go through these data sets faster, quicker, be able to pinpoint things where we see opportunities and need to explore them further. We can then get those opportunities, and we're quicker to then go get in front of clients and float them and see if they're beneficial to their portfolios. That process is starting to speed up for us. And I think we're in early days, but but it will continue to build momentum as we go.

Your next question is a follow-up from Brian Bedell from Deutsche Bank.

Maybe just in back out on the global strategic pivot. So as we think of what you plan to divest of. Should we be thinking of the future global footprint for Cboe as largely being U.S. and European centric? Maybe just comment on your commitment to continuing to have a leading market share in European equities trading. And then -- and I would have presumed the global strategy is then more coming from the U.S., as you kind of talked about in this call. And then just to confirm, Jill, I think you mentioned that the early view of the impact of this financially would be a 3% reduction in revenue, 8% to 10% reduction in OpEx. So that would indicate that the businesses you're divesting from where breakeven or losing money? I just want to confirm that.

Brian, I'll start and just say that I think what you said is right. I mean, obviously, we have very large and successful businesses that we're operating in certainly both the U.S. and Europe. You mentioned European cash equities. I mean, we've been really pleased with the growth and the results that we're seeing there. We see between European equities and European clearing a lot of future growth potential and some new ideas that we're working on there. I think the takeaway is that we don't feel that our presence in Australia, Japan or Canada are really vital to the continued globalization strategy that we have for the firm. It's really more along the lines of the things that you've heard us been commenting on during the call, which is investor education, sales and marketing in those regions working with retail brokers throughout Asia Pacific to give them access to our markets. There's obviously given the significance of the U.S. market relative to the global market, tremendous demand from institutional as well as retail customers. So our globalization path is going to be along those lines where we see continued growth, continued opportunity. And I'll let Jill take the rest of it.

And Chris, you might want to add something before Jill. So...

I just want to mention our FX business as well, which has been a nice steady grower in this quarter, 13%, very consistent. And that's -- if there's any global business, so that would be in it, too many incredible business for us over the years and fairly global, the way we touch customers Craig mentioned our super strong position in European equities. I think it's a fit rate quarter were the highest grower for us. That's a great market volumes, great market share, great capture, just great competitive positioning there by Europe. So we remain very, very global. And I also say we are deploying infrastructure where necessary, globally to touch those customers so they can come back to the U.S. or other markets. So yes, it is a strategic pivot, but we will remain very global and [indiscernible]

Yes. So as it relates to the financial piece, I just want to clarify that the percentage amount that we included in today's call, they relate to the aggregate portfolio or collection of actions. Those figures are not specific to just Canada and Australia together and then also further clarification is that those ranges also include the previously disclosed action that we're taking to wind down the Cboe business. So when you look at the collection of actions, as mentioned, we expect the impact on overall net revenue from all of these actions taken together to be, let's say, roughly 3% of what our guided 2025 ranges would be. But then from an operating expense savings, we expect to save somewhere in amount of 8% to 10%. So as we did refer to in our prepared remarks, we do expect the collective action of these items to result in accretion to overall earnings. Again, it will take time for a very early stages of the sales processes of these also looking, obviously, some of the enhancements we're looking to make. But again, overall, we do expect this to be accretive to earnings.

Your next question is a follow-up from Anthony Corbin with Goldman Sachs.

I wanted to know how you're thinking about the net impact to expense growth over time from the cost savings from today's announcement and Japan wind down versus incremental spend needed to support retail expansion and the build-out of prediction markets?

You bet. So obviously, I'm not ready this year in 2026 guidance just yet. But I think if you look at the results that we've communicated here, 2025 year-to-date, where we're looking to land from an updated guidance perspective. What I will say is disciplined expense management is it continues to be top of mind, but we're also very committed to investing in long-term growth. So again, just on a go forwarded basis, we'll share our guidance for 2026 in early February, but we will be committed to striking the right balance between the disciplined expense management and the generation of future revenue. Obviously, that takes dollars to invest organically to stem that. But we will be very, very disciplined in again, just maintaining disciplined expense growth rates going forward.

Your next question is a follow-up from Ben Budish of Barclays.

I was wondering if you could talk a little bit about your expectations for expanding trading hours. I think there was a press release from maybe a week or 2 ago about looking to -- at a morning session, I think starting at 7:30 and expanding the afternoon to 4:15. Just curious, I think the release that you expect this would be a meaningful step on the way towards 24/5, but those hours in particular, would capture a lot of other sort of economic data releases. So just curious, like with that in mind, based on what you see historically, how do you think about capturing that time might impact your SPX volumes in particular?

Yes. Thanks, Ben. I'll start and maybe Chris can add something if he'd like. Yes, as you referenced, October 20, Bloomberg reported on our filing with the SEC to add additional hours or U.S. equity options outside normal 9:30 to 4:00 Eastern Time regular trading session. If approved, we would be adding a morning session from 7:30 to 9:25 Eastern Time and a post-close session from 4:00 to 4:15. Additionally, our plan is to start with, call it, roughly 25 names that represent the highest market cap, the most liquid names across the underlying options and equities. As you mentioned, this is in response to the surge that we've seen in equity option volumes and just the generalized industry push towards 24/5 trading. We feel it's a good first step, and it really begins to acclimate investors to that off-hours trading session. It also accounts for where we see the majority of volume in our current GTH session without stressing the liquidity providers, having the staff and provide liquidity in kind of a less active overnight hours, we see the majority of our volume trading call it, about 2 hours before the regular market opens. Lastly, this is just an evolution. It's a good next step in single name option trading. As the industry continues to assess the risks associated with introducing even daily expiries and single names and so forth. We think it's generally just a good practice to introduce new functionality in stages, and this just seemed like a really good first stage.

I just -- a follow-up there, but it's just one of many products that will be trading with more expanded trading hours. As Rob has mentioned, we already trade SPX or VIX 23/5, almost 24/5, VIX Futures, our FX products, trade U.S. equities for 4:00 AM to 8:00 PM and the theme of 24/5, eventually 24/7 is going to be a multiyear theme. Well, we'll have products, again, the industry is ready in the case of single stock options in the U.S. as soon as the industry is ready, we want to be there leading as an innovator as we have all along assumptions.

Your next question comes from the line of Michael Cyprus from Morgan Stanley with a follow-up. [Operator Instructions]

Just wanted to ask about prediction markets on crypto. I was hoping you could elaborate on your aspirations there. What steps might you be taking over the next 12 to 24 months? And how do you see this contributing to Cboe over the next couple of years to what extent my inorganic steps might help accelerate the time frame to scale? How are you thinking about that?

Yes. I think in terms of production markets, we're going to start with what we would call financial and economic contracts. Digital is definitely something we'll explore. There's a lot of demand and activity there as well, so we will look at that. As Craig said earlier, our view is we've got the capability, we've got the exchange platform. You've got the clearing platforms, a lot of this build out and they believe the people are getting. So we're not focused as much on acquiring things like that. Obviously, the open partnerships involved think about the retail client base and the demand we're seeing there. We'll look to establish partnerships with retail platforms that want an industry utility type platform. And when we think broadly around things like M&A not relatively related to the prediction markets, but we're always interested in looking for businesses that have compelling strategic and financial rationale. There's nothing we need to do there today, but we're always open to that. You've heard Jill talk about how strong our balance sheet is. So we'll just keep our options open.

Yes, and even more specific Crypto Derivatives and Perpetual Futures front. Obviously, the market is growing rapidly. We've seen nice growth in our new Bitcoin Index options since we've launched them in December of last year. ETF issuers in particular, have gravitated towards using these products to introduce many of their options-based strategies. And so we already have -- I think it's, at this point, 20 ETFs that are using CBTX and MBTX in their strategies, and we really expect more to come. And then we're also preparing to launch Bitcoin and eat there continuous futures. Now these are long-dated futures, cash settle designed to provide access to that Perpetual style Future in a U.S. regulated environment. The launch obviously has been slowed down a little bit by the government shutdown, but we're hopeful to get them out into the market soon. But we really see this even crypto events in the U.S. as a greenfield space to leverage our of derivatives experience. As I mentioned, a lot of this isn't happening on U.S. soil. And so that's where we see we can really step in and have advantage. And I'll just reiterate, like I said yesterday, not yesterday, but like we announced yesterday. We're really excited to have JJ coming in. I don't think you can underpin the 4 decades of experience serving this client base. And so as he stands up this new vertical, I think be excited about what's more to come.

There are no further questions at this time. I will now hand it back to the management team for closing remarks.

Well, thank you very much for joining us. I just want to say on behalf of all of us that this is a really exciting time for us. We are happy to be completing the business reviews, making the strategic realignment of the business. I want to thank all the people that have worked so hard to make us successful in these different areas that we've tried to work on, and we look forward to talking with you again next quarter.

This concludes today's call. Thank you for....

[Audio Gap]

All right. Good morning, everyone. Welcome to our next session. I'm Ben Budish. I cover the U.S. brokers, asset managers and exchanges. With us for our next chat is Craig Donohue, the new CEO at Cboe.

Craig, welcome. Thanks so much for joining us.

Thank you. Good to be here.

Just getting started, you're new to the CEO seat, I think starting this past spring. Cboe's strategy has shifted a bit over the past few years. You've come out of a period of heavy acquisitions to recently a sharper focus on things like index options, data. So for you coming into this role, can you talk about your assessment of Cboe thus far? How do you think about the growth strategy? Where do you see the biggest opportunities?

Yes. No, happy to. So coming into the role, I had the opportunity to talk a lot with Fred, who was my immediate predecessor, and Fred and the management team had already undertaken and done a lot of work to really kind of start to look at the business, as you pointed out in your question. Cboe had gone through a phase of doing a lot of very small acquisitions, expanding the footprint globally, in Japan and Australia, Canada and elsewhere. And so I was certainly -- benefited from kind of coming into the organization well prepared for how the Board and the management team was beginning to look at things.

Obviously, from my perspective, I want to make sure that the organization is very focused on the right growth opportunities. Everybody's had a very open mind looking at all of the things that we've tried to do over the last 6 or 7 years. So we're continuing to go through that process right now. We made the decision, as you're aware, to exit our Japanese Equities business. And we're continuing to look at all the other different facets of the business.

But I would say the most important thing is that we're looking at it with a lot of financial rigor, trying to make sure that it can deliver the kind of growth that our shareholders expect. So there's not a lot more that I can say about it other than it's a bias toward decision-making, a bias toward action.

And part of that is that I want to make sure that -- we have a lot of talented people in our company, I want to make sure that they're focused on the things that will drive growth and financial performance in the next 5 to 10 years. And so if we have people that are working on things that are not really delivering the results and the growth that we had hoped for, then we want to pivot and move toward new things.

So that's a big focus. We're working very hard on that as a team. Everybody is approaching it with a real open mind. But we want to make sure that we stay focused on optimizing our core business, looking at ways that we can grow around the core that leverage what we're great at, what our human capital knows, where our infrastructure and technology and product development capabilities are. And so that's what our focus is.

Just kind of a more near-term macro question. It's been a very volatile year. I think the VIX had its third highest level in the last 20 years, the only other exceptions being peak COVID and the peak of GFC. What are you seeing from customers? How are they behaving on the retail institutional side? How are they using the Cboe product suite to the evolving market?

Well, I mean, the macro environment obviously is great for our company. There's tremendous global uncertainty on almost every level, not just fiscally, but monetary policy, interest rates, geopolitical landscape. So all of those things are helpful because we are where people come to manage their risk.

We continue to see really strong outperformance across all of our customer segments, both institutional and retail. But retail has been especially resilient. And I think the way we think about it is it's really structural. It's secular, it's not cyclical. The only time it's cyclical is when we had, as you pointed out, sort of like a spike in volatility, you may see some retail pullback. But as soon as the VIX has dissipated, you see retail coming back in. And so we're focused on what we believe is the long-term sort of secular trend.

We have $130 trillion in personal financial wealth, half of which is invested in Equities. And we just continue to see more and more retail traders migrating towards Options products, Options strategies. We see tremendous continued growth retail brokerage platforms, new accounts, average daily volume.

That's a good segue into the next couple of questions on the retail segment. So there's been a number of retail brokerage firms bringing index options to their platforms, Robinhood more recently, more mature platforms like interactive brokers seeing a lot of healthy ongoing adoption, Charles Schwab as well. And all of these have pretty fairly active trader bases.

So how big of a TAM would you say there is for retail trading index options in particular? How much growth is there to come from new-to-platform brokers versus existing retail clients kind of doing more with what they're already doing?

I think it's pretty substantial. I mean, I think Robinhood has said that, of their 27 million accounts, like 4% are actually authorized and enabled to trade options. And so I look at that as creating a lot of opportunity and upside for us. And so we partner with our retail brokerage platforms to help expand access.

One of the things we're really good at is investor education, creating awareness, helping people understand the range of strategies and ways in which they can use Options for a variety of different purposes that are beneficial to them. So I think there's plenty of room for increased adoption, increased opportunity.

And we also see opportunity for continued growth internationally. One of the ways that we're focused on growing is through education, sales, marketing, in Asia Pacific in particular, and also partnering with the Robinhoods in the 6 countries that we're focused on, which are Japan, Australia, South Korea, Taiwan, Hong Kong. So those are all places that we're looking to establish the same kind of partnerships and then layer in the same kinds of things that I was talking about.

Well, you answered half of my next question, which was your international expansion on APAC in particular. But maybe digging a little bit deeper, talk about where you are in that journey. There's countries where you're focused, you have some partnerships. What does retail engagement with Options look like in those geographies relative to the U.S., and maybe what other regions could at some point be attractive for deeper retail penetration?

Yes, I'm actually very excited about that. I'm still acclimating to Cboe and getting my feet on the ground. But I would say we're in, for us, very early stages versus what I remember doing when I was at CME when we were really trying to focus on expanding kind of our brand, our products, our distribution, sales and marketing, people on the ground, people who are helping bring people into our markets. And I would say we're still in sort of the very early stages of doing that.

But in Asia in particular, that's a very sophisticated client base. And it's a somewhat different culture that I think lends itself naturally to Options products and certainly some of the more recent innovations in terms of 0DTE and many XPS options. So the way that we're looking at that is we're going slow, but we're putting people on the ground. We're starting to partner with retail brokers in those areas. And I think that will provide a lot of continued growth to us.

All right. Maybe digging a little bit more into index options in particular. XSP has seen some really strong growth over the past several months. Can you talk about the drivers of growth for that product in particular? And how do you think about the growth in the Mini suite more broadly versus your kind of flagship FX product?

Yes. No, we're super happy with the growth there. I think year-over-year in July, it was like up 40-something percent; and in August, it was double that. And so it's doing very well.

And part of what we think is going on there is we see people adopting and moving away from SPY into many options. And I think part of that is the fact that it's a cash settle product, part of that is European exercise, and I think also there's a tax driver because it's eligible for 60-40 tax treatment. And so we see a migration happening there. And then, of course, our retail brokers are also helping us propel growth in that product.

Great. In terms of shorter-dated options, I mean, that's also been very popular with the retail cohort. We've seen over the last several years 0DTE really expanding as an overall percent of SPX in particular. How much further growth do you think there is for short-dated options? How do you think about 0DTE relative to total SPX, or are there kind of products where you're offering that sort of short-dated exposure?

Right. Well, I mean, 0DTE has become a huge part of overall SPX volumes and continues to grow. It's hard for me to know exactly how much more growth there is in that. But I look at even what's happening in sort of event and prediction markets and looking at the growth that we see there, different type of product configuration, but it would tend to suggest that there's a lot more room for opportunity in these kinds of contracts where the risk is really effectively capped and yet you can gain tremendous exposure on a very economic basis.

Maybe kind of high level, we talked about XSP specifically, but SPX is your biggest contract and the most lucrative for Cboe. That has also continued to grow year-over-year even against some pretty tough comps. What do you think are the key drivers, maybe more broadly, of SPX index options going forward? I felt like in August in particular, looking across some of the other exchanges, commodities, we saw a bit of a slowdown that did not happen for Options. So is it just ongoing retail adoption? Is it ongoing volatility? How do we think more kind of high level about these longer-term drivers?

Right. Well, I mean, we've had, as I said, just episodic levels of volatility. And for the most part, we're not in a high volatility environment. But I think a lot of the macroeconomic things that are happening in the world are continued drivers for growth in that. But again, retail is a huge part of that. I mean, we've had 5 straight years of increased growth. I think there's a lot more opportunity for the reasons that we talked about earlier. But we see continued growth, as I said, in private wealth assets benchmarked to indexes, people using these products.

Maybe one last question on the short-dated side. So earlier this year, competitor applied to list Mondays, Wednesdays for a number of single stocks, which would make them available for expiry every day, mag-7, a couple of other names. How do you think short-dated single-stock equities would affect the overall market? Are these competitive threats to Cboe's index options franchise? Or is there an eventual opportunity for Cboe? Is it all kind of symbiotic? And how do you think about that?

I think it's most likely the latter. I think there are some challenges with bringing those products to market. That's not to say that we're opposed to it. It's just that they present slightly different risks in terms of physical settlement and regulatory compliance risks. But I think the industry will work through that I think they will be additive. But I think if there is any kind of substitutability, I think it's more likely to be in the single stock options arena, more than it would be in the index area.

All right. Maybe switching gears to the data side. So Data Vantage has been -- I think the growth has been accelerating over the past couple of quarters. It was over 10% in Q2, which is ahead of your medium-term guide. I guess maybe thinking more tactically short term, what's been driving that acceleration? And what prevented you from increasing the guide for the rest of the year? It looks like things are set up pretty nicely for you to beat your expectations.

Yes. Well, I think we're comfortable with our guidance on that. But yes, we've had great performance there, 45% growth internationally. Something like 85% to 90% of our incremental revenues are from international. So that's a huge focus for us. And continuing to focus on access, distribution, data is a huge part of what we're trying to do, and trying to leverage that. And again, that sort of focus on sales and marketing and boots on the ground in Asia Pacific is a really important part of furthering that growth.

And what are the key like growth drivers more particularly? Does it simply grow with users, the number of individuals trading that need to consume Options data? Is it the number of retail brokerage partners? Are there pricing opportunities? I think Cboe's line has always been growth first, maybe pricing later. Are there new product opportunities there? How do you think about all those pieces?

We're working on that right now. We're looking at that. I think it's a lot of the things that were embedded in your question, obviously. So it's developing new and even better data products. It is retail brokers in Asia Pacific. It's education, sales, marketing. So it is all of those things. But we're looking at ways that we can continue to innovate data products that people can use as an adjunct to their trading activity.

Maybe switching gears a little bit, thinking about newer opportunities. The industry has a large focus on crypto, digital assets, tokenization. Do you have a view on where tokenization or blockchain technology more broadly could fit into Cboe's business? Where are the opportunities as you see them?

Yes. That's an interesting question, and it sort of makes me laugh a little bit because when I retired from CME, of course, everybody was focused on blockchain and by now it was going to totally change financial markets, and it hasn't yet. But actually, I was just reading this weekend, the White House has put out a report on all things crypto, digital, blockchain, tokenization. It's actually a good read if you can find it.

And what it really shows is the push that this administration has toward, let's call it, legitimizing, creating a safe haven for innovation in all of those areas, providing brighter lines of clarity around regulation versus kind of coming after the fact, and trying to apply enforcement to determine what's permissible, what's not permissible.

So we're looking at that. We're paying attention to those things. I would say that I think wide-scale implementation of blockchain concepts in our business are probably not in the near term. I think it definitely has a significant application. But I think for the most part, in central party clearing, there's still a lot of advantages to having all of the positions in a single pool where you can offset the risk characteristics and basically bring down capital and margin requirements and drive capital margin and payments efficiencies.

So it's a pretty efficient system. It works, it's safe, it's secure, it's heavily regulated. So it's not an argument against that. It's just a recognition that I think it may have less near-term application on what we do.

What about other newer types of technologies, new types of trading? We see a lot of interest in like prediction markets from the other retail brokers, that I'm sure you're partnering with on the Options side. Is there a role for Cboe to play on that side of things?

I think so. We're looking at that. We haven't made any decisions on that yet, but we're certainly very cognizant of it. There's been exponential growth in that area. Some of that is driven by sports. But putting sports aside and looking at the growth, there's a lot of people who are interested in trading event and prediction contracts that are based on daily settlement index values or corporate KPIs, leading economic indicators, a broad range of things that have economic and financial consequences.

And so I think those are legitimate. I think that those are interesting areas of growth for us. And so we're looking at ways in which we can do that. And we're open-minded. We're looking at that in ways in which we can both list and clear contracts, where we can just list but clear elsewhere certain contracts, and also ways that we may be able to leverage our own clearing capabilities to provide horizontal clearing services to other market participants, particularly in areas where we may be less likely to be successful or where the focus may be different than what our focus would be.

Got it. Another kind of new product question. I think on your last earnings call, you talked a little bit about derivatives-based ETFs. Can you maybe talk a little bit about what you're currently doing there? How do you think about that opportunity?

Yes, we're excited about that. I mean we think of that as basically an entry portal into derivatives markets and gaining derivatives exposures. And so we're working with a variety of different partners in that area. We think FLEX Options, in particular, is a great way for us to address that market. We see a significant amount of growth there. And so more to come, but that's something that we're quite interested in.

Great. A regulatory question. Given the changing regulatory environment, new leadership at the SEC, how do you think about either opportunities, crypto is kind of an obvious one that you talked about, or potential threats, things like potential Rule 611 repeal, changes to the OCC margin model? What's your kind of take on the landscape there?

I think in general, the landscape is favorable. We have regulators now who are focused on enhancing innovation, competition, streamlining regulation, making it easier for us to bring products to market more successfully. And that's all to the positive.

On the other hand, anytime you have an approach of let a thousand flowers bloom, there's going to be a lot of new entrants coming into the market, people doing disruptive things. So we have to pay attention to that also and make sure that new people coming into the market are being held to the same standards as we are.

But in general, I would say it's actually very favorable. And I think all of the stuff I commented on earlier of providing more legal certainty, eliminating sort of ambiguity, is really helpful, not just for us but for all market participants.

On Rule 611, Chris Isaacson, who's here with us, will participate in the roundtable there. I'm sure that will be an interesting discussion. We're very supportive of looking at that and looking for ways to sort of improve the market. But the focus is always going to be on market integrity and making sure that the market is efficient for the end-user customer.

Makes sense. Maybe switching gears a little bit to M&A and capital allocation. So earlier this year, after you had started, Cboe announced the wind-down of your Japanese Equities business. It seemed to have happened pretty quickly after you moved into the seat. Can you talk about that decision in particular, what sort of drove that?

Well, as I said, I mean, we're looking at all of our different businesses, trying to take a fresh look and say, are they producing the growth and what we had hoped to accomplish when we did it? We have a higher bar, I would say, for -- in terms of financial discipline and financial rigor for what we expect in terms of return on invested capital and contribution to earnings. So those are tough analyses and, ultimately, they're tough decisions and tough actions. But I think that's what we're there to do.

I'm mostly focused on human capital, and so I want to make sure that -- there's only so many hours in a day, and so I want to make sure that our -- we have a lot of talented people at Cboe, I want to make sure that they're focused on the best growth opportunities for the next 5 to 10 years. And so if we tried to do something 5, 6, 7 years ago and it's just not working, but it's taking a lot of our time and it's distracting us from optimizing our core business, expanding around the core in the ways that we've been talking about, then I want to shift people to the new things and the things that will actually generate better returns.

Got it. You kind of answered my next question too, which was we talked about Japan, how do you think about the strategic importance of Australia, Canada, Europe? But maybe if you could unpack that a little bit, are there sort of other -- some of the investors' kind of questions too, I mean Cboe is very much an exciting and rapidly growing index options story, retail trading story. How do you think about the strategic importance of those other geographies where maybe in Europe, there's much lower levels of penetration of retail and options activity and things like that?

Yes. Well, it's a great question. And without getting ahead of ourselves in terms of what we will decide to do or not do in terms of some of our existing businesses in those places, I just want to be clear that we're still committed to growth internationally, but our tactics may change. It may be that trying to establish a foothold in an alternative trading system, in particular foreign location, that's subscale may not really be what will drive growth. It may be that it's partnering with retail brokers, it's derivatives-based education, sales, marketing and orienting people to our higher-growth products.

So I think there's a lot that we can do to further globalize our business. That's going to continue to be a huge focus. But I think that's separate and apart from whether some of the businesses that we're in are really performing at the level that they're going to contribute to growth.

Understood. Maybe on the flip side, when you were at the CME, you oversaw a period of pretty meaningful consolidation. How does that experience inform how you think about M&A opportunities at Cboe? Are there any obvious sort of capabilities that would make sense to bolster inorganically? And how else are you thinking about capital allocation in that vein?

Yes. I would say, in general, for the near term, mergers and acquisitions activity is not at the forefront of what we're thinking about. I'm, as I said, focused on optimizing the core, focused on growing around the core and ways that leverage our human capital, our infrastructure, our technology, our capabilities.

But to answer your M&A question, while I've led really significant M&A, I've also done a lot of small things like Cboe has tried to do. And so the learning experience that my Cboe colleagues have had is not dissimilar to my own when we were trying to do some smaller things. The smaller things tend to be just as difficult and occupy as much of your time as the big things. And so I guess what I would say is you won't really find us doing small M&A like you did for a period of years between 2020 and 2022 or 2023.

In terms of large-scale M&A, I mean, it's a really different marketplace today. It's far more mature. And as you can see, we're able to develop -- deliver tremendous growth just from our core business. And I think there's lots of opportunities to do more there. I do think there's a lot of exciting new opportunities that we can take advantage of. So the bar is high. Anything that we do has to be strategically and financially valuable to our shareholders. And for the long run, it may be that we'll identify things that make sense. But for the near term, I think the focus is on what I said.

Maybe just one more question on M&A. We've seen a number of exchange peers move much more in the direction of recurring revenue, software-like businesses. How do you think about what may make sense for Cboe? It feels like, obviously, on the Options side, the transaction-based business has been growing very nicely. At the same time, are there things you can do on the data side, things that maybe get you closer to retail, things that, I don't know, give you more analytics capabilities, things like that? How do you think about -- or is that part of your consideration, the mix? Or is it more, does it meet ROIC hurdles, does it fit strategically, that sort of thing?

Yes. Well, your question almost answers itself. But I think, certainly, we're aware of that. I mean different exchange companies have taken, I think, different strategies to how they're approaching their whole business as well as how they're driving their business composition through mergers and acquisitions activity. And so we're looking at that.

I don't have any sort of preconceived ideas about that. Obviously, if there's something that we can do that is adjacent to what we're great at and it makes sense, and there's actual demonstrable synergies from it, would I like to have some better blend of recurring versus transaction-based revenues? Probably. But it has to make sense and it has to have synergies that are actually realizable.

Got it. Maybe before my last kind of question on the P&L profile of the company, one more question on the transaction-based side. We didn't talk about this earlier, but outside of the index options business, on the multiply-listed side, on the cash equity side in the U.S., it feels like there's been pickup in competition more recently. Investors are really scrutinizing fee rates versus market share. How do you think about the importance of volume, revenue growth, kind of prioritize -- and how would you describe the current state of competition in the sort of more competitive exchange businesses that you have?

Well, it's intense, I mean, there's no question about it. Although I should point out that, in European Equities, we've had tremendous growth. And so we're seeing really great results there. It's a different and, we think, better market environment. Here in the U.S. in terms of Equities, we have the challenges of so much of the market has moved away from traditional lit exchange markets into so-called dark markets and private rooms.

We're hoping that we can find a way to be more competitive and participative in that sort of non-lit segment of the market. And we've got some thoughts that we're working on with our regulators that will hopefully allow us to do that and bring more competition to the equities market.

In multi-list and options, we're still the leader, we still have the dominant position there. But when I talk about optimizing the business, that's an example of what I'm talking about. And so we're looking at ways that we can drive more market share and drive revenue growth and maintain margin.

Got it. Maybe one final question on the P&L profile. So your -- Cboe's...

I'm going to drink that water but somebody else drank it. Thanks.

So your margins are among the highest of any publicly-traded company, and you run a very high incremental margin business that's growing. So how do you think about balancing margin expansion, if any, with sort of investing for growth? It always surprised me even a couple of years ago, investors would complain about the very high rapid rate of operating cost growth despite having 60%-plus margins. But how do you think about that trade-off?

Yes. Well, I hear them on that, and I understand it. I mean what we're trying to do is we're trying to create and run a great business. And so I don't think about like margin expansion as sort of the goal. But I think there are further opportunities for us to be more efficient as an organization. And so it's possible that by getting through our business review process and taking a hard look at whether we have the right size organization, that we could see operating margin expansion.

But I'm not doing that to expand the margin. If I'm doing that, I'm doing that because I want to make sure that we're as efficient as we can be and we're as effective as we can be. And I also want to make sure that, as I said, we pivot and we focus people's attention on high-growth opportunities. But I think Jill has done a great job of already, before I got there, of starting to really kind of reduce that expense profile for the organization. I think there's more opportunity there.

Great. We're nearly out of time, so we can leave it there. But Craig...

Thank you. That was like speed dating.

Yes. What a pleasure to have you. And hopefully, we have you back here next year. We'll see...

Thank you. My pleasure. It's great to be here. Thank you.

Thank you so much.