Cboe Global Markets Inc at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ben Budish - Barclays - Analyst : Maybe just starting out with the macro environment, how are customers behaving as the VIX has risen over the last few months? And how do you think about the recent pickup in SPX ADV in particular? What are your expectations coming into the election 2025, what are you seeing? What are your thoughts?

Question: Ben Budish - Barclays - Analyst : Great. Maybe before we jump into some more of the product spread just to pick on you for a second. You've been in the CEO seat almost a year. When you reflect back on that time, what do you feel good about where you feel like there's more room to be done?

Question: Ben Budish - Barclays - Analyst : Maybe that's a good pivot into this first question here. Index options growth has been very robust over the last several years, flowed in the first half of the year, pick back up more recently in response to [botto] macro volatility. Is the first half of the year. Is this a pause from rapid growth? Is it a sign that index options have reached some level of maturity? Sounds like the answer is perhaps no. And maybe talk a little bit more about your confidence in the longer term growth. How do you think about the TAM for index options in particular?

Question: Ben Budish - Barclays - Analyst : And then just following up on your comments on especially institutional users. It sounds like maybe you have answered the question I want to ask, but what are the narratives we've been hearing from you is that with two full years of data, you're seeing increased consumption of that data, which is being used to train trading strategies. To what extent is that like coming to [fruition] is from where we sit, it's hard to know is this a reaction to the environment? Volatility is picking up? Are new users, new hedge funds, new trading firms joined the platform. So what are you seeing in that regard? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 2:30PM, CBOE.Z - Cboe Global Markets Inc at Barclays Global Financial Services Conference

Question: Ben Budish - Barclays - Analyst : What about on the retail side. So we -- [Robinhood] has talk for some time about adding index options at some point in the future. And clearly, they made quite a splash and options in general. How do you think about the rebate revenue opportunity, maybe specifically from that platform adding an XSP and SPX? And how long do you see the tail of additional retail platforms, not yet offering those sorts of products in the US and elsewhere.

Question: Ben Budish - Barclays - Analyst : Great. Maybe one more question on the index options complex. So a few months ago, the OCC proposed an updated intraday margin rule in response to the right, zero DT margin trading. So based on your read of the proposal, and it feels like investors are split some feel like this is nothing something like this could be a headwind to index options growth. What do you think the impact could be to options trading activity?

Question: Ben Budish - Barclays - Analyst : Appreciate that. Maybe pivoting to your international business. We talked about the international adoption of the US options complex, but you've also done a lot of M&A. And over the last few years, you've focused on bringing those international pieces under one roof, Australia, Japan, and those integrations are now complete. You've been clearly growing market share in those regions. You've talked about the flywheel effect between cash derivatives data, very high level next several years as all those platforms come under one roof with one to come in the beginning of next year. How do you see that opportunity unfolding? What does the opportunity for Cboe in the next several years?

Question: Ben Budish - Barclays - Analyst : Great. So maybe just the same topic us the last technology migration, which will happen next year. But maybe unlike in Australia and Japan, you've got a very strong incumbent in the Canadian market. So how do you see the opportunity for Cboe there? This competition look different? Is the market share opportunity more limited? Or what are your ambitions?

Question: Ben Budish - Barclays - Analyst : Maybe your last major geography, Europe you recently added single-stock options with CEDX. And you saw the first equity options trade, I think, earlier this year. So maybe talk about how activity has trended there? How big you think the total opportunity could be for that product specifically?

Question: Ben Budish - Barclays - Analyst : Great. So maybe thinking back to Canada, Australia, Japan. So when these integrations are done. What comes next? Is there more international expansion in your sites? Or is it more to do in these current geographies?

Question: Ben Budish - Barclays - Analyst : Well, you answered my next question, not just now, but in the last many, many earnings calls, but just in terms of incremental M&A how do you feel about build versus buy? It sounds like you're pretty happy with the solution set and the plan is to lean in, but you did a small acquisition in Japan or took a stake in Japan next. So how do you think about M&A going forward from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 2:30PM, CBOE.Z - Cboe Global Markets Inc at Barclays Global Financial Services Conference

Question: Ben Budish - Barclays - Analyst : So I want to maybe asking about some of the new products and features, but maybe just in terms of pivoting from M&A to more organic growth. Maybe for Jill, how should investors think about margin expansion with these integrations largely complete? How do you think about the use of OpEx in terms of fueling again explore geographic expansion product, new product rollout things like that. How should we think about that trajectory?

Question: Ben Budish - Barclays - Analyst : And as you complete these integrations. How do you think about again like the use of OpEx? Like does it free up more internal capital for new product? Is that the right way to think about it REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 2:30PM, CBOE.Z - Cboe Global Markets Inc at Barclays Global Financial Services Conference

Question: Ben Budish - Barclays - Analyst : And then from a capital perspective, M&A, lower on the list, how do we think about capital return on [EBITDA]? I think you did a $180 million of repurchases in the first half of the year. I assume you want to be opportunistic to some extent, but how do we think about use of capital in that light craft.

Question: Ben Budish - Barclays - Analyst : Maybe pivoting to some new products. And I think on the Q2 call, you highlighted plans to launch options on fixed futures, variance futures and maybe talk about these two products in particular, how do they add to the current product suite?

Question: Ben Budish - Barclays - Analyst : Maybe just in general to how do you think about products and how additive or important they are to growth relative to geographic expansion, education, other initiatives, I feel like it's something investors always struggle with, especially because you have such successful products. It's hard to see how much is this one going to be additive, but how do you think about the importance to your growth from product innovation?

Question: Ben Budish - Barclays - Analyst : Maybe move to the D&A business for a minute. So on the last earnings call, you noted that after first half performance, we now expect growth to be at the low end of the 7% to 10% range for 2024. What gives you confidence you can still hit the low end of the range for this year?

Question: Ben Budish - Barclays - Analyst : We talked earlier about the international flywheel with Canada set to be completed early next year. Do you see that also as a driver for DNA acceleration in 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2024 / 2:30PM, CBOE.Z - Cboe Global Markets Inc at Barclays Global Financial Services Conference

Question: Ben Budish - Barclays - Analyst : And then what about longer term? We talked in the beginning of our chat about the longer term you've TAM for index options. So how do we think about that for the DNA business? Does it simply follow the growth in options, trading activity, people want to consume more data to fight, you don't have near the trading. And to what extent is this within your control to come up with new data sets, new analytics tools, how important is access relative to the analytics and what other factors should we be aware of as we're thinking through this?

Question: Ben Budish - Barclays - Analyst : With a couple of minutes left, maybe I'll wrap two questions into one. So some of your peers are quite vocal about their cloud transformations. So curious where Cboe is in this process or how you think about it? And then at the same time, how do you think about the use of generative AI in the business, either in terms of cost savings or revenue generating initiatives, do you think will [robust 24].

Question: Ben Budish - Barclays - Analyst : Another big cost save opportunities. And it seems like you guys have really turned to focus on agility come back in four or five years and pick on you for the margins, not being 75% or how should we think about the top line versus OpEx save potential.

Question: Ben Budish - Barclays - Analyst : We're just about out of time here. So we'll leave it there. But Fed, Dave, Jill, thank you so much. It was a pleasure to have you.