Bgc Group Inc (BGC) 2015 Q3 法說會逐字稿

Welcome to the Q3 2015 BGC Partners Inc. earnings conference call. (Operator Instructions). Please note that this conference is being recorded.

I will now turn the call over to Jason McGruder. Mr. McGruder, you may begin.

Good morning. Our third-quarter 2015 financial results press release and presentation summarizing our results were issued this morning. This can be found at IR.BGCPartners.com. The financial results and other metrics for BGC's majority-owned division, GFI Group Inc., are consolidated with those of BGC from March 2, 2015 onward throughout today's call.

Whenever we refer to results for "The Company", we mean consolidated results for BGC Partners Inc. Throughout today's call we will be referring to results on a distributable earnings basis unless otherwise stated. Please see today's press release for GAAP results. Also see the section of today's press release entitled distributable earnings, distributable earnings results compared with GAAP results, reconciliation of revenues under GAAP and distributable earnings, reconciliation of GAAP income to distributable earnings for a definition of these terms and how, when and why management uses them.

Unless otherwise stated, whenever we refer to income statement items, we are doing so only on a distributable earnings basis. Other than balance sheet items, results provided on today's call compare the third quarter of 2015 with the year earlier period. For purposes of today's call, all the Company's fully electronic businesses are referred to as FENICS or e-businesses. These fully electronic offerings include the financial services segment, fully electronic brokerage products as well as offerings market data and software solutions across both BCG and GFI.

FENECS results do not include the results of Trayport, which are broken out separately in today's press release and presentation. Also Newmark Grubb Knight Frank synonymous with NGKF real estate services.

I also remind you that the information on today's call regarding our business that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended.

Such statements involve risks and uncertainties. Except as required by law, BCG undertakes no obligation to release any revisions to forward-looking statements. For a discussion of additional risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see BCG's Securities and Exchange Commission filings including but not limited to the risk factors set forth in our public filings including our most recent Form 10-K and any updates of such risk factors contained in subsequent Form 10-Q or Form 80K filings.

I am now happy to turn the call over to our host, Howard Lutnick, Chairman and CEO of BCG Partners.

Thanks, Jason. Good morning and thank you for joining us on the third-quarter 2015 conference call. With me today are BCG's President, Shaun Lynn; our Chief Operating Officer, Sean Windeatt; and our Chief Financial Officer, Graham Sadler.

I'm happy to report that this was our fifth consecutive quarter of record profits and the fourth quarter in a row of highest ever revenues. BCG's post tax earnings increased by approximately 30% to $72.9 million while our revenues were up by approximately 56% to $700.9 million. Our record results are especially noteworthy as they came despite a strong US dollar which reduced our financial services revenues by more than $24 million during the quarter.

This significant improvement was driven by the addition of GFI, the ongoing success of Newmark Grubb Knight Frank, our real estate services company, and the continued strong double-digit percentage growth of our high-margin FENICS fully electronic businesses. FENICS increased its revenues by over 142% and its pretax distributable earnings by over 82%. This is the second full quarter in which our results include those of GFI. We continue to have very little turnover in GFI's front office and the integration is progressing well. We expect to complete the full merger of BGC and GFI by the end of January 2016 and Shaun and Graham will have more to say about GFI a little later in the call.

We are nearing the conclusion of the sales process for Trayport and anticipate the completion of the transaction before the end of 2015. Numerous serious potential buyers have participated in the process and we expect the final purchase price to reflect Trayport's growth, its high margins, its leading technology and its strategic importance in the global energy and commodities markets. We plan to exclude the sale of Trayport from our calculation of distributable earnings.

Our adjusted EBITDA increased by approximately 56% to $168 million for the quarter. We expect our adjusted EBITDA and distributable earnings to improve further as we increase the profitability of our financial services business, continue to grow revenues from our highly profitable FENICS products and we benefit from the strength of NGKF.

I'm happy to report that our Board declared a $0.14 qualified dividend for the third quarter. This represents an increase of 16.7% compared to last year. At yesterday's closing stock price this translates into a 6.7% annualized yield. The Board has also more than tripled the amount available under our stock repurchase program raising it to $300 million.

We believe that BGC's assets including Trayport and NASDAQ as well as our NGKF and FENICS businesses are independently worth significantly more than what is reflected in our current stock price.

Based on recent equity market and M&A multiples, we think that the market is under valuing both NGKF and FENICS. We also believe that the market is yet to accurately value the more than $700 million in additional NASDAQ stock we anticipate receiving over time and the significant proceeds we expect to receive from the Trayport sale neither of which are reflected currently on our balance sheet.

Although no decisions have been made, we are considering a number of options designed to unlock substantial shareholder value.

With that, I will turn the call over to Shaun.

Thanks, Howard. Good morning everyone. Our financial services revenues were up by 59.9% to $417.7 million. As Howard mentioned, these revenues would have been up $24 million higher had the US dollar not strengthened relative to other major currencies. The increase in revenues were driven by the acquisitions of GFI and R.P. Martin as well as by organic growth from [a desk in] foreign exchange, energy and commodities.

Our financial services business increased its pretax earnings by 32.1% to $72.8 million. Our pretax margin was impacted by the inclusion of GFI which currently has significantly lower margins. As the $90 million in annualized cost synergies are realized, we expect segment margins to expand dramatically from their current levels.

In addition to these cost savings, we anticipate our revenues from FENICS, continuing to grow faster than our overall financial services business. FENICS currently has better than a 40% pretax margin and we expect these margins to expand over time as the business continues to grow.

FENICS revenues rose by 142.2% to $60.7 million while its pretax earnings increased by 82.1% to $25.3 million. The growth of our e-businesses reflected both double-digit organic revenue growth and the addition of GFI. FENICS continued to have impressive performance so far in the fourth quarter as revenues for these high-margin offerings more than doubled year on year for the first 17 trading days of October 2015.

The quarterly pretax earnings for FENICS are now actually larger than the quarterly revenues of eSpeed, which we sold in the second quarter of 2013 for over $1.2 billion. The financial results and strong growth of our e-businesses also compare favorably to other high valuable financial technology platforms that are either publicly traded or have recently been sold by other companies in our sector.

Looking at our overall financial services results by asset class, revenues from our fully electronic rates products were up by approximately 40% while our overall rates revenues increased by 21.1% to $113.3 million. Our e-FX revenues including both spot and derivatives were up by almost 57% while our overall FX business increased by 48.9% to $83.7 million. We more than doubled our revenues from fully electronic credit desks while overall credit revenues grew by 27.1% to $68.1 million.

Our energy and commodities revenues nearly quadrupled to $54.8 million while our revenues from equities and other asset classes decreased by 70.2% to $50.4 million.

Moving on to real estate services, NGKF once again had a very strong quarter with pretax earnings up by 78.2% to $42.5 million while revenues increased by 53.6% to $275.2 million. This impressive outperformance was driven in part by the additions of Cornish & Carey, ARA, Computerized Financial Integration and Excess Space. In addition, our real estate services business generated strong double-digit organic growth as we continued to add talented producers to our new business and were aided by strong commercial real estate market fundamentals.

In terms of specific line items, our revenues from leasing and other services improved by 31.8% to $144.9 million. Real estate capital markets increased by 183.8% to $81.1 million and management services and other revenues were up by 21.2% to $49.2 million. NGKF's distributable earnings revenues have grown at a compound annual rate of approximately 32% over the two years ended September 30, 2015.

Based on our quarter-to-date results and strong pipeline of business, we expect this growth to accelerate from its industry-leading pace for calendar year 2015. We expect NGKF to increase its full-year revenues for distributable earnings by at least 38% to over $1 billion compared with $725 million in 2014. This growth would easily outpace the analyst's projections for the topline growth of our publicly traded peers in commercial real estate services.

Turning to headcount, we had 1,347 real estate brokers and salespeople as of quarter end, up 19% compared with 1,135 a year earlier. Average revenue per real estate broker increased by 20% to $171,000. The increase in productivity was due largely to the strong growth in real estate capital markets which generally has higher revenue per broker. We finished September with 2,498 financial services brokers and salespeople, up by 54% from 1,620 a year earlier.

Excluding Trayport, our average revenue per financial services broker salesperson was $153,000 compared with $160,000 a year earlier due primarily to the acquisition of GFI and the strengthening of the US dollar.

In addition, our revenue per front office employee have generally fallen immediately after a large acquisition as the integration of GFI continues and as more voice and hybrid revenue is converted to more profitable fully electronic trading, we expect financial services broker productivity to grow. Company-wide, our front office headcount was up by 40% to 3,845 brokers and salespeople while revenue per broker salesperson improved by 4% to approximately $159,000.

With that, I would now like to turn the call over to Graham.

Thank you, Shaun, and good morning, everyone. As Howard mentioned, this was the second full quarter in which our results include those of GFI. This had an impact on a number of income statements and balance sheet line items. BGC generated consolidated revenues of $700.9 million, up 55.8% compared with $449.8 million. Our revenues from the Americas were up approximately 51%. Revenues from Europe, Middle East and Africa were up by around 68%, while Asia-Pacific revenues increased by 55%.

As Shaun mentioned, our non-US financial services results were negatively impacted during the quarter by the stronger US dollar mostly in our European offices.

Turning to expenses, our compensation ratio was up by around 200 basis points to 62.5%. While non-compensation expenses increased in absolute terms by 55.9%, they were flat as a percentage of revenues at 24.9%. We still expect to meet our expense reduction run rate target of at least $50 million a year by the first quarter of 2016 and by at least $40 million in further annualized cost savings by the first quarter of 2017 for a total of at least $90 million in annual savings all excluding Trayport.

Also as a reminder, commercial real estate service providers generally have higher compensation ratios but lower non-compensation expenses as a percentage of revenue when compared with financial services brokers especially those with significant fully electronic revenues.

Moving on to earnings, our pretax earnings before noncontrolling interest in subsidiaries and taxes were $88.1 million, up 33.9% when compared with $65.8 million. Our pretax margin this quarter was 12.6% compared with 14.6% which is before we purchased GFI.

BGC's effective tax rate for distributable earnings was unchanged at 15%. Our post-tax earnings were up by 30.2% to $72.9 million compared with $56 million. Our post-tax earnings margin was 10.4% compared with 12.4% while our post-tax earnings per share were up by 11.8% to $0.19.

BGC had a fully diluted weighted average share count of 394 million in the third quarter of 2015 for both distributable earnings and GAAP. A year earlier, our fully diluted share count was 371.4 million for distributable earnings and 331.2 million under GAAP. The GAAP share counts were lower because they excluded certain share equivalents in order to avoid anti-dilution. The share counts increased primarily due to issuances related to the acquisitions of Cornish & Carey, ARA, and Computerized Facility Integration, equity based employee compensation and new front office hires. This was partially offset by the redemption and/or repurchase of 4.9 million shares and units at a cost to BGC of $38.9 million or an average cost of $7.87 per share or unit over the trailing 12 months ended September 30, 2015.

As of the end of the third quarter of 2015, our fully diluted share count was 395 million assuming conversion of the 4.5% convertible senior notes and to 16.3 million shares.

Moving on to the balance sheet. As of September 30, 2015, the Company's liquidity which we define as cash and cash equivalents, marketable securities that have not been financed and securities owned held for liquidity purposes, was $513.9 million. Those payable and collateralized borrowings were $841 million. Book value per common share was $2.10. Total capital which we define as redeemable partnership interest, noncontrolling interest in subsidiaries and total stockholders' equity was $1,040 billion.

In comparison as of yearend 2014, the Company's liquidity was $825.5 million, notes payable and collateralized and notes payable to related parties was $706.7 million. Book value per common share was $1.83 and total capital was $641.4 million.

The changes in BGC's liquidity since year-end 2014 were primarily related to cash used to purchase controlling interest in GFI as well as to acquire ARA, Computerized Facility Integration and Excess Space.

With that I'm happy to turn the call back over to Howard.

Thank you, Graham. Our guidance for the fourth quarter 2015 is as follows. We expect to generate distributable earnings revenues of between $685 million and $725 million, an increase of between 33% and 41% when compared with $515.5 million last year.

Our revenue guidance would be approximately $16 million higher but for the continued strength of the US dollar. We anticipate generating pretax earnings of between $85 million and $100 million. That is an increase of between 17% and 38% and that compares with $72.6 million a year ago.

At the midpoint of our guidance, we would produce our fifth consecutive record quarter of revenues and our sixth quarter in a row of record pretax earnings. We continue to expect our effective tax rate to remain around 15% and we anticipate updating our fourth-quarter guidance toward the end of December.

So with that, operator, we are happy to open the call for questions please.

(Operator Instructions). Rich Repetto, Sandler O'Neill.

Good morning, Howard. So I guess the first question is on just getting a little bit more insight into what you mean about considering a number of options designed to unlock substantial amounts of shareholder value. I mean it appears pretty clear like the real estate is undervalued relative to comps. Would some of the options be a spin out of real estate or maybe I just let you talk about what some of the options might be?

So the bankers, we had a variety of bankers pitching us and we are listening. So what we have done is we have built our real estate business, we sold our eSpeed to NASDAQ, we built FENICS and we have bought GFI. So we have been very active in both building, buying and selling. We are going to sell Trayport and then we are really looking at obviously NGKF have is an incredibly valuable asset that is growing far faster than all the other real estate companies and the other real estate companies are doing very well. We are just growing far faster and our FENICS business is really extraordinary value. As Shaun said, we've got a fully electronic business with current 40% margins which we think will expand from there, whose profits exceed the revenues of eSpeed and that is an enormously valuable asset.

We've got the NASDAQ $700 million and we've got the Trayport asset so those combination of those four things somewhere in there have got to be moves to make to unlock shareholder value for us and we are listening. So we have not sort of made a concrete decision but we are all ears on how to produce value. We are building great businesses but we know the key to our success is augmenting shareholder value.

And, Howard, I understand so you are sort of listening and evaluating. So can you give any sort of timeframe. Is this something that is not likely before year-end but say by spring of next year or is this something that is a year-end thing?

I don't want to put a time on it. I would say it is not an if but a when. So it is important to us to produce strong shareholder value and we are building great businesses and they need to be recognized by the market whether it is as part of BGC or in some other form.

So I don't want to put like a tight timeframe on it like I'm doing something between now and the end of the year because that seems sort of too soon to call. I mean we are going to try to do Trayport by then. That is sort of a different comment.

But I think the idea is we want to be smart about it. We have done each of the transactions we have done so far have been really we thought about them clearly, we thought about them long and I think we did them right. The NASDAQ transaction was right both the sale of eSpeed to NASDAQ and taking 10% of the equity in NASDAQ and then keeping that 10% of the equity has really worked out extraordinarily well for us.

Buying GFI has worked out well. I think selling Trayport entirely derisks the whole business of GFI. We are just trying to be smart and so we just want to make sure we do it the right way for our shareholders and we are going to take our time, we are going to think about it but we will produce the value for our shareholders.

Got it. And then I guess a follow-up would be on the buyback where you tripled the amount available and if the stock stayed -- it seems like you are aggressive below 8. I guess the question is trying to gauge your appetite and aggressiveness at levels sort of around the high 8s, 9 levels where they are trading now.

Well, I guess we think about it in these terms which is we are going to sell Trayport and the balance sheet cash for this Company is going to be much, much larger. As we close the back-end merger of GFI, we have about just over 24 million shares of issuance that are coming that come with that -- that came with the Trayport and with the GFI transaction. They came with it and so we want to constrain our share count and we want to constrain our share count.

So I think you will find us to be over time relentless buyers of our stock because we like our stock here and that is why the Board has authorized the share repurchase.

So I'm not going to put a finer point on price but we really, really like the value of our stock here. We really like it.

Got it. And I guess the very last one, Howard, is something very near and dear to you but the electronic business, the FENICS business I guess is how you are referring to it. But you know high margins at 40% but the BGCP prior was low to mid 50s as well. So I guess how quick can you get that back just to say, what can you do to get it back? I know you have said it in the prepared remarks that you would expect to expand margins but how soon will that get to the 50% level?

I think these kind of businesses so you have infrastructure that came with GFI, and you had BGC's infrastructure and rationalizing those two infrastructures, bringing them together to get the full benefit of the economics of the fully electronic business just takes time. There is no way you can rush it, you can't get off of one network. BGC's network was wildly larger.

So yes, of course we can use BGC's network in lieu of GFI's network but you can't just shut it off on a Tuesday and get those benefits. The math will come, the margins will come but I think if you sort of look at it over the period that we suggested that we would get the synergies over the course of the next year or so through to the first quarter of 2017, you are going to see the margins just march upward by the calendar because we no longer have to pay maintenance on this or we can no longer use the network on that. We're going to move the computer network to system onto this or to or to that. Our business will just growth by math.

The math data centers, they will roll off things like that and that on top of our voice pipeline driving business to electronic and getting us more scale will get us margins. I don't really want to go out and say what the margin is going to get to but there is nothing about our current business that is different than what our business was in the past. It is simply a matter of doing the work to integrate them and drive that forward.

But there is nothing about the core business that somehow is less profitable than the businesses we have had in the past.

Got it. Okay, thanks. Appreciate you taking my questions, Howard.

Patrick O'Shaughnessy

Good morning, guys. So the question on the financial services brokerage business. Obviously the news stories and press releases would indicate that we are still seeing some banks retrench from their brokerage activities and I think in particular the European banks. So given that retrenchment, kind of what is your outlook for the business for the next few quarters?

And I think more broadly when do we hit that inflection point where the new liquidity providers, the non-big banks start to actually make up for the disappearing volume from those big banks and the financial services business can actually start to grow again?

I think Patrick, we have been saying this for the last six months. Obviously in the last few weeks we have seen a lot of news from some of the major sell side banks but we have seen the likes of the new clients come on board within the (inaudible) world for the last 18 months. You are going to see them in Europe now. The time is upon us now.

New clients are coming on every day. It is going to take them time to build inventory and market presence, technology and the markets are just readjusting itself. We are marching towards MiFID and Basel III is upon us which is a constraint for a lot of the major sell side banks and that is pushing toward some of the new clients, new customers that are coming into the marketplace.

You have seen recently that some major new clients to become members of the LCH such as Citadel. I think it's time is upon us now but it takes time. From our perspective, the recent headwind for us as we've said has been the way the currency has moved against us in Europe even though we have seen some good increases in business and new clients, there has been a bit of a headwind against us on that. But from our perspective, we are excited, it is challenging but we are excited because this is the New World.

All right, let me try to pin you down to something and realize I'm not going to be successful with that. But on an organic currency neutral basis, do you think the financial services brokerage business could grow in 2016 or do you think that some of these macro headwinds you are facing are still going to pressure things and maybe that growth is a 2017 or later event?

I think volatility will overwhelm cutbacks in any particular bank. I think the cutbacks on particular banks tend to be newsworthy because it is something to write about to sell newspapers more than it is volume of the world. There is nothing about the world that we live in that has clients trading less over time. Money continues to grow in the world, the scale and scope of assets under management are vast. The need for sell side participation and then eventually additional clients continues to be vast.

So I think if you were going to rank them, I would rank volatility first. I would rank volatility second and I would rank volatility third. I would put quantitative easing fourth and then I would put dislocation amongst some of our clients next. I would think that the dislocation in clients means that those individual traders and those individual market makers are going to speed the breadth and scale by which new participants come into the market because they are all going to get jobs, they are all going to find people to back them with capital and that capital is going to come into the market and all that is going to do is to speed us.

So I think that the market was softer in the first two weeks of October. No doubt about it, more volatile meaning there were plenty of good days, just not as many good days as there were softer quieter days and that is why our guidance was relatively constrained, our real estate business continues to be extraordinary and successful.

The first couple of weeks of October were uneven and volatility was a little light. But I think that will be the driver. So next year is primarily about volatility and I think with a reasonable amount of volatility the Company will do perfectly well. I don't think you could use sort of the headlines of people cutting staff to suggest at all that that will be the driver of our financial service results. Our financial service results are wildly larger than any particular bank or series of head cuts comes in these banks. These people all get jobs and they all become our clients again one quarter later just in another form.

Got it. I appreciate that. Moving to the commercial real estate side of things, obviously pretty strong results in 2015 and I think your outlook is very positive. But as we think about potential risks to commercial real estate, how do you view the potential risk from rising interest rates? How do you view the potential risk from an economic slowdown? My guess is you feel like you can grow regardless of those but I would love to hear your thoughts on how the business is positioned given some potential macro headwinds.

So interest rates, our first driver would be a material and consequential change in interest rates will have an effect on the capital markets businesses across the real estate sector. What I have said, a material and consequential increase in interest rates which does not mean a quarter of a point or half a point. Those are not consequential values.

So what has happened is core or Class A buildings in great markets have been trading at interest rates or cap rates in the 3% to 4% range which has created so much capital value in the markets that there is plenty of room on which transactions will continue to occur really through interest rates going 1% higher. I think once interest rates move more than 100 basis points higher, I think you are going to start seeing a dramatic, not a dramatic but it will have a real impact on the torrid capital market pace that is existing in the world today. But you won't see it impacted until you get 100 basis points. I think that is just well, well off into the future.

You have to remember spreads on real estate right now are really high meaning you can buy great real estate at yields at historically high spreads to treasury. It is still a tremendously attractive asset and you need a real interest rate move. So I don't think you will see touch leasing for quite some time because remember if you get interest rates going up, that means you have a growing economy. If you have a growing economy, you got people growing their business. So I think the natural offsets to a capital market slowdown with a real interest-rate rise would be a continuing and actually picking up the pace of leasing.

So we have grown our capital markets business you saw 184%. We signaled to you guys six months and a year ago that we thought we were undersized in capital markets and we were going to build that business and we are building it and now we are going to participate much better in what I think is going to be an excellent capital market business for the next two, three years before you see interest rates anything remotely like that. And our leasing business you know is world-class in America and we are very well-positioned for that interest-rate rise because that means that comes with economic growth.

So if we were all capital markets, you would have a good couple of years to go and you have got some issues. But since we are undersized in capital markets, I just think we can grow through it, through these things and continue to outpace the market and new markets. We just happened to be sort of in the right places at the right time.

Got it. And the last one for me kind of talking about your excess capital that you have and your desire to continue to build out your scale in commercial real estate, what are some of the areas in commercial real estate that you might look for acquisitions? Is it building out certain capabilities, is it building out certain geographies, all of the above, where are you looking?

So first would be building out our capital markets business. We bought ARA, which is institutional multifamily and that puts us strongly in the mix of doing business with the biggest institutional buyers of real estate which is important.

Now we have been building out our commercial real estate just selling office buildings, selling retail, shopping centers and malls and so we are going to build that business so that is number one.

Number two, property and facilities management. The management of real estate is a business that we are undersized. And you should expect us to grow that business substantially over time and so those two areas. The computer facilities integration company provides the software to large tenants to manage their real estate. That is a first step into a really interesting electronic way into managing real estate and we think we are going to scale that. Our software now manages 3 billion square feet of real estate. So you are going to start to see us coming at the business of property management, facilities management from a different direction but you should expect us to grow that business substantially.

And then with all due respect, you've got the rest of the free world. We are American-based and eventually we are going to start talking about growing in the rest of the world.

Do you have any constraints on your rest of the world growth given the partnership with Knight Frank over in London?

We have an excellent partnership with them which we always talk about. We always talk about how to grow that business and grow it together. So where they are great, we would expect them to stay exactly the way it is and in the places where they are weak or they don't really have a big position, it is a big world out there, I think that is an area of us to come together as partners and grow and build and give us opportunity to invest around the world in interesting locations.

We just have the fiscal capacity and the global knowhow to build businesses like this. We love building brokerage businesses and the world is not something that worries us. We are a global company in financial services and we are excited to do it in others. So I think working together with Knight Frank would be our first choice and I would expect to do that over time but to do it globally.

All right, great. Thank you.

(Operator Instructions). Robert Krayn, MidOcean Partners.

All my questions have been answered. Thank you.

We have no further questions at this time. I will now turn the call back over to Mr. Lutnick for closing remarks.

While we were just talking amongst ourselves, Shaun made a point that said you should not rule out given the scale and scope of our Newmark business, the ability for FENICS to start to take data, knowledge and capacity that we have built in financial services and drive that data kind of business and that electronic business through the real estate markets. That is something we talk about here and it is not something topical for next quarter or the quarter after but these are if you can imagine what we are thinking about and talking about, just look at the resources and the way we built our FENICS business and then start imagining it in real estate and you are going to see some really cool and interesting things over the course of the next couple of years coming out of FENICS with respect to real estate.

We just have exciting raw materials to play with and the world is coming our way. It does not mean the last two or three weeks haven't been a little uneven. But that does not change the fundamentals of this business. Assets under management in the world are growing and the pressure from Basel III and MiFID as Shaun said, continue to put pressure on the banks. That pressure is going to be filled by funds whether it is hedge funds, money managers, buy side, all sorts of ways people are going to drive in that business. We have global connectivity with a really first-class electronic system that connects them all and I think we are in a really good position over time and we expect to execute on that.

And as I said in my answer to Rich earlier, we think we are stewards of our shareholder value and we expect to listen, to talk and ultimately as I said not if but when unlock shareholder value to make sure our shareholders get the value that they deserve from the assets that we have built.

I deeply appreciate you spending this morning with us and I hope you have a great day today. Thanks, everyone.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.