Thank you for standing by and welcome to the CBOE Global Markets second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. 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 Fisher, our Global Head of Equities and Spot Markets, Rob Hawking, our Global Head of Derivatives, and Scott Johnston, our Chief Operating Officer. I would like to point out that this presentation will include the use of slides. We'll be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of the website. During our remarks, we will make certain forward-looking statements which represent our current judgment for what the future may hold. While we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the FCC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, after this conference call. During the call today, we'll be referring to non-GAAP measures as defined and reconciled in our earnings material. Now, I'd like to turn the call over to Craig.

Good morning, and thank you for joining us to review our second quarter results. SIBO 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, SIBO grew net revenue 25% year-over-year to a record $732 million, and adjusted diluted EPS increased a robust 45% to $3.56. The strong execution during the second quarter was again broad-based, driven by double-digit net revenue growth in every major category at CBOE and year-over-year net revenue growth in all five of our company segments. Beginning with our derivatives business, we delivered another record quarter with net revenue increasing to $413 million, up 30% year-over-year. Index options drove the upside, setting another quarterly record with average daily volume increasing 32% year-over-year to 6.2 million contracts. The quarter marked several product-specific ADV records with 5.1 million SPX options, 3.1 million SPX zero DTE options, 195,000 mini SPX options, and 189,000 contracts traded during global trading hours. During the quarter, SPX option volumes increased 40% year over year on the back of elevated economic uncertainty and stronger retail engagement. As geopolitical tensions eased in April and May, investors gravitated to longer dated options to reposition their portfolios, particularly through the use of upside calls to participate in the market rally. In June, we saw a notable increase in retail volume following the repeal of the Pattern Day Trader Rule, which had limited how often smaller accounts could trade without triggering additional restrictions. Its removal has eliminated a friction point, making it easier for smaller retail accounts to trade products like Zero DTE more frequently. The impact of the repeal was immediate with SPX zero DTE 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 zero DTE options trading today happens in capped risk structures. Beyond expressing directional views, options can also be used for income generation, portfolio hedging, and volatility management, making them among the most versatile tools available to investors. We believe these distinctions help explain why SPX zero DTE trading has sustained strong growth across different market cycles and volatility regimes. As we look to extend our traditional options business, we're building something we believe will define the next chapter of growth at CBOE, a suite of solutions in the event and prediction market space. In June, we launched SIBO 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 SIBO 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 16th, which means we will be held to the same enhanced credential standards consistent with global regulatory standards that apply to systemically important clearinghouses. Together, our SEC temporary registration application and Subpart C compliance support our treatment as a qualifying central counterparty under the U.S. bank capital rules, which reduces capital requirements for clearing members. Our SEC filing, if approved, will help us better innovate in options, and expand our futures offering backed by a vertically integrated stack of trading and clearing. Our clearing efforts are designed to be complementary to our longstanding 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 equities 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. SIBO'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 SIBO is at the forefront as the industry embraces innovations that are reshaping how and when markets operate. We're excited to expand cash equities trading to a 23 by 5 basis planned for this December pending industry readiness with an eye toward 24-7 over time. That shift will give investors greater flexibility to manage risk and access liquidity whenever they need it. Against that backdrop, we're supportive of the Commission taking a fresh look at market structure that has evolved significantly over the past two decades through its proposed rescission of Rule 611. CBOE is the only exchange group that operates both registered lit exchanges and an ATS. We believe this uniquely positioned CBOE to be a leader in combining the best elements of the various market models that equity market participants demand. Turning now to DataVantage, Net revenue increased 15% year-over-year. Growth was again broad-based with market data and access services, SIBO 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 SIBO 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 growing roughly 30% annually since 2021. With U.S. household financial assets growing by 6% annually for more than the last three decades, retail is playing a bigger role than ever in the markets. At CBOE, we remain focused on giving investors the access, tools, and educational resources they need to participate confidently. SIBO 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 seven years. These trends aren't independent tailwinds. 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. People delivered record net revenue in the second quarter, while adjusted diluted earnings per share rose 45% year-over-year to $3.56. Before turning to the segment results, I'll walk through a few high-level takeaways from the quarter. Net revenue increased 25% versus the second quarter of 2025, finishing at a record $732 million. We again saw strong double-digit growth in all categories, led by our derivatives business. Specifically, derivatives net revenue increased 30%, with strength across our proprietary index options and multi-list products powering the category's performance. Cash and spot markets net revenue rose 22%, fueled by strong industry volumes, and data-managed net revenue was up 15% on a year-over-year basis. Adjusted operating expenses came in at $217 million, up 2% year-over-year, while adjusted operating EBITDA grew 37% to $528 million. Adjusted operating EBITDA margin expanded 6.4 percentage points to 72.2% in the second quarter, reflecting both our strong revenue performance and continued expense discipline. Turning to the key drivers of the quarter by segment, Our press release and the appendix of our slide deck include information detailing the key metrics for our business segments, so I'll provide some highlights for each. Options delivered yet another record quarter, with net revenue of 30% year-over-year, driven by a 33% increase in net transaction and clearing fees. Total options ADD 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 net transaction and clearing fees up 31% and non-transaction revenues up a combined 9%. Futures net revenue was up 2% in the second quarter of 2025, primarily on higher market data fees, while transaction and 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 SIBO DataVantage 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 US. Overall, we're very pleased with the composition of growth and trends within our data-advantaged 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 expenditure. Turning now to our 2026 guidance, as we discussed on our first quarter call, in April we signed a definitive agreement to sell SIBO Canada and SIBO 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 SIBO Australia. For consistency, we'll provide organic net revenue growth metrics that exclude the impact of the SIBO Australia sale, and we'll also break out the absolute dollar impact separately for modeling purposes. SIBO Canada will remain part of our ongoing 2026 guidance until we have more clarity as to the exact timing for closing. We now expect SIBO 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 SIBO Australia contributed approximately $20 million in net revenue through July. Factoring in the loss of future revenue assuming a third quarter sale, we still expect total net revenue growth to finish in the mid to high teens range for 2026. On DataVantage, we now expect 2026 organic net revenue growth in the low teens range up from last quarter's low double digit guidance. We estimate SIBO 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 Vantage net revenue growth to finish in the low double-digit range for 2026. Turning to expenses, our adjusted operating expense guidance holds at $838 to $853 million for 2026, despite several moving pieces. Our estimate reflects higher incentive compensation expenses given our strong year-to-date operating performance, increased return to office costs, and incremental investment in high-growth potential areas, as outlined in Craig's prepared remarks. Offsetting the higher expense piece is an $11 million reduction in our expectations for 2026, tied to the expected third quarter close of the SIBO Australia sale. I would note that while a majority of expenses associated with SIBO Australia will end at the time of the sale, we will continue providing transition support and incurring some related expense for up to 12 months following the close of the transaction, subject to operational readiness. These incremental costs are reflected in our updated guidance. Lastly, we continue to expect $40 to $50 million in annualized expense savings from the strategic realignment actions outlined last quarter. with 20 to 25 million still expected to hit in 2026. Rounding out our 2026 guidance, our CapEx guidance increases to 98 to 108 million from 73 to 83 million as we made incremental investment in our clearing infrastructure and opportunistically pulled forward hardware purchases for future service to lock in lower costs ahead of rising inflationary pressure in the space. Depreciation and amortization expenses decreased to $54 to $58 million from $56 to $60 million, reflecting the later in-service timing of certain accelerated purchases. We continue to expect a full year effective tax rate on adjusted earnings of $27.5 to $29.5 under current tax laws. While we don't formally guide to interest income or expense, we expect net interest income, income net of expense, to contribute $8 to $9 million positively in the third quarter, given higher cash balances. Turning to capital allocation, we continued our opportunistic share repurchase activity during the quarter, buying back $33 million of CBOE shares. Combined with a $76 million dividend payment of 72 cents per share, we returned a total of $108 million to shareholders in the second quarter. While we recognized that there was meaningful volatility in our share price during the second quarter, the most notable declines occurred in the final weeks of June, a period during which, consistent with standard practice around quarter-end reporting, our ability to transact in the open market is more limited outside of our 10b-5-1. Had we had greater flexibility in the open market, we would have welcomed the opportunity to be more aggressive, particularly given what we viewed as a notable discount in the stock. supported by our strong cash position and continued confidence in the long-term value of the business. Thinking about capital allocation more holistically, we are mindful of upcoming capital needs, including the $650 million debt tranche maturing in the first quarter of 2027, which we currently expect to repay with cash on hand. We will continue to evaluate opportunities to repurchase shares pursuant to our share repurchase program based on our share price, our trading window, and other capital deployment priorities, including this upcoming debt repayment. We continue to maintain significant balance sheet flexibility with adjusted cash of $2.3 billion and a leverage ratio of 0.7 times. That strong financial position gives us the capacity to pursue organic or inorganic growth opportunities while continuing to return capital to shareholders through dividends and opportunistic share repurchases. With that, I'd like to hand it back to Craig for closing comments.

Thank you, Jill. Last quarter, I laid out the decisive steps we were taking to reposition SIBO for greater success. More recently, we rounded out our executive leadership team, adding Heidi Fisher as global head of equities and spot markets. She joined us in June and is with us today on the call. The two Q 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 SIBO. Our derivatives franchise remains incredibly strong, setting multiple records to start 2026. A foundation we'll leverage as we push into the related category of event contracts. With the launch of SIBO Predicts and our filing to bring company KPI products to market, Backed by clearing capabilities, we're building out at CBOE Clear US. We believe CBOE is best positioned to capture this opportunity set. In cash equities, we're moving toward 23.5 pending industry readiness and eventually 24.7 as market structure evolves. And in 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 SIBO'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 re-enter the queue, and if time permits, we'll take a second question.

Thank you. If you'd like to ask a question, please press star 1 in your telephone keypad. If you'd like to withdraw your question, simply press star 1 again. And as a reminder, we ask that you please limit yourself to one question. You may reach you for additional questions. Your first question comes from a line of Ben Budish from Barclays. Your line is open.

Hey, good morning, and thank you for taking my question. 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, you know, there's a lot of instances where perps are an inappropriate replacement or can't at all do what options do. How would you sum up maybe the bits of volume where there is potential overlap, you know, 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, pro-tail. 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. Thank you.

Yeah, sure. I'll probably let Rob and a much broader ultimately customer base that I think we can tap into in the equity markets and in the equity derivative markets just in terms of the sheer number of accounts and market participants in the retail segment that exists on the futures side. So I think that's a key differentiator. I'll let Rob talk about a lot of more sort of technical distinctions that exist between the products.

Yeah, thanks, Craig. You know, and thanks for the question, Ben. I think Perpetual Future is really arguably, you know, one of the more successful products that's come out of the crypto markets, but I think it's important to really look at their history to kind of better understand the use case. And so, purpose emerged because traders wanted really the simplicity of trading underlying digital assets, but with leverage and the ability to easily go short. All futures accomplished this, but they added friction, they added cost from having to continually roll the positions, and PERPS effectively bridged that gap between spot trading and that leveraged futures exposure. But I think it's important to recognize that perpetuals and SPX options really, and Craig mentioned it in the prepared remarks, fundamentally different investor needs. and many more. and the amount of leverage offered really just dictates how quickly your gains and losses move. And so options, as we've mentioned, offer that complexity and really that defined risk exposure. Investors, as we've said, tailor views around direction, but really volatility, market events, income generations, really in ways that simply are not able to be replicated in the futures market. And then even on the zero DTE front, you know, over 95% of the trades we see are defined risk strategies. So with 50 to 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 markets. and let's not forget, you know, that this dynamic has really worked well for decades. Investors have had access to futures on the S&P 500, yet demand for SPX options really continue to grow because of that different risk return profile. So, you know, while you point out, you know, there could be some overlap in the active trading communities, we really view PERPS as a complementary product to the options ecosystem rather than a direct substitute. And quite frankly, you know, where it's appropriate, we may look to it and to do so.

Okay, great. Thank you so much for all that.

Your next question comes from a line up, Patrick Mully from Piper Sandler. Your line is open.

Yes, good morning. Thanks for taking the question. 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 so 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? Thanks.

Yeah, thank you. I can kick that one off and then hand it over to Jill. We continue to view the event prediction markets really as an exciting area and a natural extension of our derivatives business. At a high level, the risks that are traded through things like our XSP 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, the yes-no contract, out the door on June 15th. We're in the early days of the launch but encouraged with the level of engagement by the market. We currently have three different market makers providing liquidity in the product and spreads continue to narrow as really the liquidity grows. We've also been working very closely with Schwab as an anchor tenant and are extremely excited that they just reported they'll begin offering these contracts on their platform to clients very soon. And so looking forward, you heard in Craig's prepared remarks, you know, we filed for both the company-specific KPI event contracts as well as the ability to clear those on CBOE Clear US. Thus far, you know, CBOE's product franchise has really been good at providing tools to manage risk and trade at the index level, the sector level, and even the individual company stock level. What the company-specific KPI contracts provide is really the ability to go even more granular to trade and manage the individual components that drive the company's stock value. So, for example, think in, you know, Nvidia's data center revenue, think Microsoft's cloud-based revenue. You know, today's markets consistently reference predictions, and we think having liquid markets around investors' expectations for these metrics will further drive better insights into, call it, company performance, better ability to manage risk at that component level. We anticipate adoption of these contracts to follow a similar path to how Zero DTE developed, with the market starting heavily weighted towards retail investors. As the historical data sets grow and more analysis becomes available, we believe institutions will get more involved. Given the correlation between these metrics and their impact on stock valuation, we believe that will help institutions better manage risk. We need to work really closely with the whole industry both retail and institutional and of course the SEC to ensure if approved these products are brought to market really with the same rigor investor protections afforded to investors today which we think is very very important. So on the company specific side we're targeting a second half of September early October launch pending regulatory approval of course. but really big picture, the demand is there, the idea of getting more granular and how you can trade the individual components that drive valuation is there and we're kind of excited about both the practical application for retail to trade these as they're trading in that event prediction space today as well as institutions getting involved that can really drive a healthy market quality.

Thanks. Then just picking up on the guidance piece, We haven't incorporated anything notable into the forward-looking guidance for 2026 related to this. I mean, to Rob's comments, it's still early days. We will definitely, you know, keep our eyes on this, come back to you in late October with our final quarter update for the year. Just, you know, want to note the dial-up 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.

Great. Thank you for that.

Your next question comes from a line of Brian Bedell from Deutsche Bank. Your line is open.

Oh, great. Thanks. Good morning. Thanks for taking my question. I actually just wanted to follow up on the company KPI question. Just on the SEC approval process, just your level of confidence in getting that approved by the end of the third quarter, are they going to put any comments out for 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? 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 prior to actually making the filing.

I can't really comment on how the timing will turn out. That's within more 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 and Terry. And, you know, I would think that, you know, 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, you know, we've obviously done a tremendous amount of work and have a strong point of view that these are securities that are subject to the jurisdiction of the SEC. So from our perspective, it's going well. But, you know, we can never be you know definitive about what the actual timing of the regulatory approval would be but we think it's gone very smoothly so far.

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

Great. Thank you.

Your next question comes from a line of Jeff Schmidt from William Blair. Your line is open.

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

Thank you for joining us. Much like trading multi-list options today, almost adding this as just another SKU to our shelves and allow them to position it, allow them with their GUIs and user interfaces how to position the yes-no event-style contracts within their platform. The nice thing is, and the encouraging thing is, the demand is coming from those platforms. I would say historically in product development at the exchange, a lot of times we develop the product and then are trying to get the platform 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.

Okay, thank you.

Your next question comes from the line of Michael Cypress from Morgan Stanley. Your line is open.

Oh, hey, good morning. Thanks for taking the question. So quarterly earnings have become one of the largest recurring catalysts for both equities and options activity across the markets. So if the SEC moves to semi-annual reporting, how would that affect options usage and retail engagement and what might be some second or third order effects Thank you for joining us.

I still think there's enough dynamics of day-to-day movements, day-to-day announcements, day-to-day evolutions of the market space where you'll still see people positioning using options around those. And so, you know, we'll have to react to it. I think even on the event and prediction space, this is a nice hedge for if something like that were to go in that direction because, yes, you have your revenue or your earnings metrics that will become less frequent, but there are plenty of other metrics and plenty of other, I would say, uncertainty in how those metrics are moving throughout the quarter that people will still have interest in trading.

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

Great, thank you. Our next question comes from a line of Ashish Sabhadra from RBC Capital Markets. Your line is open.

Thanks for taking my question. 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 as you've invested organically, but is there also opportunity for inorganic investments to build out those tiering capabilities? Thanks.

So I'll start with that. I mean, you know, part of the goal that we have with Varian and remember 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. As an example, and one of the reasons why we're pursuing the things that we discussed during the call, like the subpart C election, as well as the temporary and ultimately hopefully fully registered securities clearing agency with the SEC, is that introduced KPIs. Those are different instruments than are customarily cleared at OCC. And then as well, as we think about moving toward 23.5, moving toward 24.7 ultimately, and as we further the work that we're doing internally right now on thinking about tokenization and on-chain transactions in 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 how we continue to work closely with OCC and find ways to benefit market participants in doing so.

I don't know if you want to add anything. Sure, thanks, Craig. Yes, as we think about how to expand clearing capabilities and really support innovation, we are definitely looking across the spectrum of potential opportunities, notwithstanding things like tokenization or rails infrastructure. We're looking across the crypto markets. 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.

Thanks. Our next question comes from a line of Alex Blostein from Goldman Sachs. Your line is open.

Hey, good morning. Thank you for taking the question. 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, so some of the retail brokers will effectively have their own contracts, and so have more bit of a 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 SIBO ultimately the right to win? And how do you think that impacts pricing for event contracts over time?

I'll start with that. Alex and maybe Prashant or Rob might like to add something. But, you know, 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 then post-trade capabilities Those can be interesting. I suppose they're particularly valuable and interesting. and that type of structure. Thank you for joining us.

and so on and so forth.

and also as you know we still continue to see a tremendous amount of demand just think about the retail brokers that Rob mentioned that are accessing or interested in accessing some of the new product launches the number of retail clients on their platforms you know number over 50 million so there's massive demand and those firms do an incredibly good job at the education of new products that they put on that platform so I think we will continue to see pretty robust Thank you very much.

Your next question comes from a line of Simon Clinch from Rothschild and Company Redbird. Your line is open.

Hi, thanks for taking my question. I wanted to jump back to some of the new products you're launching, the event contracts and then moving into KPIs. I'm more interested in how you think 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 and relate that to the actual retail and the type of customers that are trading. Thank you.

Thanks, Simon. Thanks for the question. I think it's really a combination of both. We've talked about on previous earning calls the idea of the SIBO product toolkit and how The toolkit is used together and the strength is in the interconnectedness of these products. When you think of SPX and VIX, this is an expansion of that. As I talked about the value chain for company-specific KPIs, you can see how NVIDIA's data center sales will feed EPS and how EPS will feed their stock price. and so forth. And so when you think of that big picture, yes, we'll have retail that want to take individual positions or have, you know, individual expectations on each piece of those, you know, each component or each piece of that valuation chain. But then you go back to the institutional side and they're looking at the complete value chain. And how do each one of these companies fit in? How do I spread risk across 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. You start to bring all of those in, and CPI is going to drive stock movement, stock movement is going to drive sector movement, sector movement is going to drive index movement, and so forth. So it's all very interconnected and allows people, especially as a former liquidity provider, I'll tell you, providing liquidity tends to be a reactionary thing. So you're reacting to the order flow coming in, but once you react and once you make that trade, you then have inventory that you need to spread out and manage your risk. So the more products that are interconnected, the more easily I can start to spread out that risk and the more liquidity I can provide. So it kind of tails into the previous question with That's really useful. Thank you.

Your next question comes from a line of Alex Cram from UBS. Your line is open.

Yes, hey, good morning, everyone. I want to come back to a couple of those things, but actually a 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 now? with kind of like the global expansion with other brokers around the world that want to trade particular SPX and CODTE. And then maybe related to that, how have those conversations maybe changed over the last few quarters? Because we spent all this call talking about new innovation and new products. So as the menu of kind of opportunities changes for those intermediaries and investors, I'm just wondering, are you still getting the same attention as you try to broaden your customer base or... or are they just really everybody's just trying to figure out what do I do next because there's so much demand? Thank you.

Yeah, thanks, Alex. I'll try to take this in two different directions. First, as far as the demand and even tapping into, I'll start with international demand. You know, we still see very strong demand coming from the APAC and EMEA region. And the biggest reason being is the liquidity of our core products. When you think of SPX, when you think of VIX, and they want access to that liquidity and want to be able to trade and transact in that liquidity and we've been slowly adding more and more brokers. Korea has been a great success story that we've talked about in the past where, you know, as of Q1 of 2024, we had really zero brokers online and now we continue to expand and have, you know, I would call the vast majority of retail brokers in Korea online. So we're going to continue to, I would say, expand in those channels because the demand's coming in for our core product set. On a different front and going in a slightly different direction, I just want to use kind of the pattern day trader rule removal as an example of just how we're seeing, you know, things like that affect the demand in our products. So across the top nine retail brokers, average daily volume increased following that rule change with SPX up almost 3.5%, XSP ADV was up over 36%, and multi-list options ADV and many more. and Multilist was just under 20%, signaling that kind of higher churn rate in retail participation and the demand to trade more frequently. And so at the same time, average order sizes generally declined. So that suggested growth is really being driven by a large number of smaller customer orders rather than this narrow set of just large trades. And so the largest changes were concentrated at zero to low cost retail broker platforms, especially platforms like you had mentioned, you know, Robinhood, Webull's 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's increased 36% month over month and 100% year over year. So this is encouraging data. We're seeing people that want to interact with the products, want to interact with the platform much more frequently. And, you know, we've talked about it before. Liquidity grows liquidity. Demand grows demand. You see that as people rush into the products and want to transact. It only gets stronger. The spreads only tighten. And we're very, very encouraged by how the market is evolving. All of these data points and kind of a continued growth on the horizons.

And your final question comes from a line of Dan Fannin from Jefferies. Your line is open.

Thanks. I wanted to just ask about the data vantage 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 them.

Yeah, 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 two-thirds of that growth was driven by higher access-related revenue, and the majority of that access-related revenue really came from increased connectivity and demand for increased connectivity to our options exchanges, right? So when you look at our multi-list options volume, we were up 24% year over year and our STX options volume was up 40% year over year. So that drove that demand. The other third came from continued growth in our market data. So when you look at it, we're seeing strong demand for both our U.S. and European proprietary data sets and about 50% of data sales came from clients outside of the U.S. You heard Rob talk about the growth we're seeing in Asia and that, again, we're seeing that across all of our data sets. More demand for Asian investors that want to invest in the U.S. and their brokerage firms are looking at our market data across the board. And that goes across equities, options and our index market data. We're seeing broad-based support there. So we've got good momentum on the data management side. When it comes to 2027, we'll address that towards the end of the year when we give you guidance for 2027. Thank you.

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.

Thank you for your participation. You may now disconnect.