Douglas Cifu

Good morning and thank you, Andrew. You this morning. We reported our third quarter results for the quarter ended September 30 or to earned $0.82 of adjusted EPS or $6.1 million per day of adjusted net trading income. We generated a 55% EBITDA margin and $215 million of EBITDA, both on an adjusted basis. We delivered strong performance this quarter in both our customer and non-customer market making businesses. We continue to progress our growth initiatives with strong performances in crypto options and ETF block. Our businesses performed well against headline volatility and volume metrics across the globe. Our Virtu Execution Services business was flat quarter over quarter, which we count as a solid performance. Given the muted environment for institutional volumes, we will talk more about VES, in a minute. Overall, these results are expressed especially impressive, considering that global volumes remain quite low. Us equity share volume in notional carryover were down 4% at 1% respectively versus the second quarter. Volumes and notional in Europe were down 20% and 9% versus the second quarter, with volumes in Asia Pacific were up about 4%. Beginning this quarter again, with Virtu execution services, our business performed very well. Adjusted net trading income was essentially flat from the second quarter, delivering $100 million of (inaudible) or $1.6 million per day. This performance, combined with a similar with a similar result for the second quarter, represents the highest levels of daily adjusted net trading income since the second quarter 2022, when volumes were 10% higher and volatility with 61% higher. I spoke last quarter about how Virtu scaled operations afford us. The unique ability to continually invest in our global multi-asset class platform to meet clients' needs. We have evidence that our multiyear investments are yielding positive results as demonstrated through third party validation and recent client successes. A major contributor to this is what we are calling Virtu Technology Solutions, a trading and dental, a data analytics infrastructure offering for growing midsize and door major regional broker dealers. VTS. allows us to distribute our scale. Technology is empowering them with leading technology to better serve their clients in a cost-effective manner. Along with our goal global suite of multi-asset class enabled product and solutions. We expect to continue growing our VES business long term. In addition to our [VTS] offering, we expect to see our growth to be fuelled by our flagship products and solutions, including industry standard data analytics, data analytics platform, global workflow and execution management system to our Tritan at our world-class of trading algos, our multi-asset class AMS. platform, Tritan covers equities, fixed income, FX and derivatives, and our next generation algos integrate machine learning techniques to further align our client investment decisions with their implementation results. Additionally, we are focused on increasing our reach in regions and markets previously underpenetrated by Virtu such as the Middle East, India and Japan, as well as expanding into new client segments in existing markets to efficiently address opportunities to offer technology solutions. In the past few months, we've seen several client wins in VES. as we increase and expand our client relations. These wins include adoption of our new switch, our algo developed with machine learning and allows her to increase its position on brokered trade rankings across global clients. We have seen increasing adoption of VTF, as I mentioned earlier, and while it is still early days, our new agency Fixed Income RFQ offering is in production and any growing the senior hires we made to help us address this important opportunity have been in place for most of 2024 and our leading key efforts to broaden the distribution of our offerings I have mentioned before. We are as excited about the future of this business as ever. As always, our VES business has anchored long-term partnerships, and our revolving offerings are driven by client demand and built on our global multi-asset class scalable technology. Turning to Market Making our business performed very well in the third quarter with our customer and non-customer market-making businesses, both delivering a solid quarter. We continue to improve our teams, cross desk internalization enhancements to help us manage risk and to explore ways to reduce our trading costs and address more of the opportunities we see in the market. Our Asia and US equity segments showed particularly strong performance this quarter for our customer market making business the market opportunities as measured through July and August six or five reports suggest an elevated opportunity of about 9% compared to the second quarter. However, based on preliminary six or five reports for September, the opportunity declined significantly in September, reducing the quarter over quarter increase in quoted spread to a low single digit percentage. As we expand the products and markets we trade, we remain very well positioned to capitalize on future volatility and opportunities. We continued to deliver success in new areas where we had no presence. Only a short few years ago, our organic growth initiatives generated $632,000 per day and adjusted net trading income this quarter contributing about 10% of our [anti]. I will highlight results from the standout performance this quarter. Building our Global Options capabilities continues to be a top priority. Our growing options business delivered a strong performance in the quarter. In addition to our US cash cash equity options, we are leveraging our growing capabilities and options to target global opportunities. By optimizing the brokerage. We're using increasing our local data center footprint and streamlining our technical integrations within local markets. We continue to grow in ETF block by onboarding new clients and broadening our distribution. In addition, our growing Symbol and underlie our coverage capabilities have opened the door for broader relationships with ETF issuers and fund managers and enabling us to service their regular trading and rebalanced execution needs. Our crypto market making business continued to pace. Spot Bitcoin ETF volumes were about were up about 2% compared to Q2 and a new spot [Ethereum] ETFs are trading about 50% to 60% as many shares as the spot Bitcoin ETF US options on crypto ETFs are getting closer to launching. It is a natural extension of our crypto and options market, making abilities to support these exciting products we can to expand our crypto market, making efforts by supporting new listed products and thoughtfully adding new exchanges and token as we grow, we continue to build out our cross product internalization capabilities, which allow us to be more competitive, keep more of the spread and reduce training trading fees. With that, I will turn it over to Joe.

Joseph Molluso

Thank you, Doug. I'll just pick up on the market environment this quarter, which was mixed. I'm very similar to the prior quarter compared to the lows of the second quarter. Realized volatility of the S&P 500 was up about 52%. However, it's important to note it's only up about half as much if you exclude the significant volatility in the first week of August. US equity volumes were down 4% in US option volumes were up almost 7%. Retail activity indicators in the U.S., we're also mixed the aggregate our equity share volume was down 6% versus the second quarter, and the six price spread opportunity through August was up 9%. But as Doug noted, the preliminary six or five report for September suggest that the full year over quarter change will be in the low single digits. A global equity volume was also mixed, with the realized volatility of Euro Stocks index up 28% and indicate up 168% in six markets. Fx volumes were mixed. Energy volumes were up 5%, while high-yield credit volumes were down 3% versus second quarter. At September 30, 2024, our total trading capital, which is on slide 14 in the supplement, stood at $1.8 billion. Our incremental returns on capital, as you can see, remain excellent over a long-term basis, demonstrating our service oriented model in our ability to use our capital food. To that end, in the third quarter, we used a portion of our free cash flow to repurchase 1.7 million shares at an average price of [$28.80] per share. To date, we have repurchased 49 million shares at an average price of $25.24 per share. The quarter-end share count was 161 million shares outstanding, bringing our buybacks on target for quick within the ranges we have set forth Public. Since we initiated our share repurchase program, we have repurchased 18.8% from the fully diluted shares of Virtu. Netting out the new issuances. Our share repurchase program year to date, it is within the guidelines we publish results from the market related businesses like ours will always vary with volumes and volatility. But Slide 9 illustrates the sustained earnings power of our business and the positive operating leverage we enjoy from Prudent capital management as well as our growth initiatives and the cumulative the impact of the share repurchases. From the expense side, our adjusted cash operating expenses were $173 million in the third quarter. Our run rate cash OpEx is up about 5% year over year, consistent with prior guidance. Our cash compensation ratio was 23% and our total compensation ratio was 28% for the quarter compared to 26% and 32% respectively for the full year of 2023. We expect cash operating expenses to remain within the recent historical range, and we expect the cash compensation ratio also remained within historical norms. Regarding our total cash operating expenses. Going forward, we continue to assume low single digit overall increases in non-compensation expense. And with that, to conclude the prepared remarks, I will turn it over to our Chief Financial Officer, Cindy.

Cindy Lee

Thank you, Joe. Good morning, everyone. On slide 2, we are supplemental material provided a summary of our quarterly performance for the third quarter of 2024 for our adjusted net trading income or ANTI, which represents our trading gains, net of direct training expenses totalled $388 million or $6.1 million. per day, market-making adjusted net trading income was $288 million was $4.5 million per day. Execution Services adjusted net trading income was $100 million or $1.6 million per day. Our third quarter 2024 full at normalized adjusted EPS was $0.82. Adjusted EBITDA was $215 million for the third quarter 2024, and our adjusted EBITDA margin was 55.4%. On Slide 11, that provided a summary of our operating expense results. For the third quarter 2024, we recorded $190 million of adjusted operating expenses. We continue to maintain an efficient cost structure and disciplined expense management, which has helped us to control our operating expenses during the inflationary environment. Financing interest expense was $24 million per day for the third quarter of 2024. With the benefit of our recent refinancing and the interest rate swap contracts that we entered into prior years. Our blended interest rate was approximately [7.08%] for our long-term debt in aggregate. We remain committed to our 20% per quarter dividend and combined with our share repurchase program demonstrates our continued commitment to return capital to our shareholders. Now I would like to turn the call over to the operator for Q&A.

Question and Answer Session

Operator

Thank you. Time will conduct a question-and-answer session. (Operator Instructions)

Ken Worthington

Ken Worthington JP Morgan.
Hi, good morning. Thanks for taking the question on maybe first, we're seeing a proliferation of brokers offering retail investors access to options and futures. This seems to play directly into the business model over to our futures products, developing the same payment for order process that we see in equities. And how is the attractiveness of futures trading for Virtu versus, say, options and equities? You know, just based on a profitability basis?

Douglas Cifu

Yes. Thanks, Kennen. It's a keen observation. Obviously, we've been following it closely, and I think you look at as you suggested, it's an exciting opportunity for us. I think it's very complementary to what we do in our existing cash equities wholesale business in that we have connectivity and relationships with all of the aforementioned at retail broker dealers. We've been in the prior night and never to have been doing business with these firms for, in some cases, 20, 30 years in a very, very confident in our ability to provide efficient two-sided liquidity to these clients' needs. I think certainly if you have active day traders that are looking for make more intraday leverage and perhaps the futures products and derivative products are more attractive if we see that with our retail offerings in our retail clients in Asia, in particular, I would say in Japan, in particular with is a very active CFD market. So um, yes, we think it's complementary. We're excited about it. We don't think it's going to cannibalize the cash equities business a with it is probably different sleeve, if you will, of retail investor. That's more of an active day trader as opposed to a more casual retail to go to for lack of a better description. So it's an exciting opportunity for us to continue to partner with these great retail firms that we've had. Great long-term relationships with. And I think it's under appreciated is that that really is a customer service business in part. Obviously, price matters a lot, but we get scored by all of our retail brokers on a uptime and cut number Cerberus and all of those things. And so it is very much a white glove business for us, and that goes back to the 2030 years, the folks that we inherited, the wonderful folks that we inherited from Knight Capital that continue to provide that service to these customers. So as soon as they expand offerings. That's great for Virtu.

Ken Worthington

Great. Just a modeling question. Brokerage costs were at the highest level since COVID. We've definitely seen some bigger activity quarter since then with low corporate costs. So was there anything about the mix of business that through brokerage costs higher this quarter? How do we think about the go forward?

Douglas Cifu

Yes, now it's a great it's a great observation is a great question. It's one of the cortex, unfortunately, of the Section 31 fees, you probably know how they work. Actually, there are a transaction tax. I shouldn't call them Section 31 fees. They are transaction tax and the sort of measured very lumpy because I measured in arrears by statute. And the theory is they're supposed to fund the SEC. So yes, we are funding the agency that then goes and tries to do to best thing to the market, ironically, but that rate changes twice a year. And so it's not as smooth as it as it otherwise would be. So if you you can kind of go back in history and smooth it out and see what a normalized Section 31 fee would be. And I suppose a perfect world, some of that I had like a more normalized one. You wouldn't see the ups and downs within our within our adjusted net trading P&L take on top of that, um, we start to pay some cash fees, unfortunately as well, which were not hugely significant in the quarter, but that kind of started up in earnest in September. So those are the two items.

Ken Worthington

Great. Thank you.

Operator

(Operator Instructions)
Craig Siegenthaler, Bank of America.

Craig Siegenthaler

Good morning, Doug. I hope everyone's doing will, the question is (inaudible) businesses. So in the quarter, we monitor to three big positive drivers. The (inaudible) in ETF launches, strong ETFs volumes and also record index option activity. So we are a little surprised to see a sequential decline in ANTI. So I was wondering if you could talk talk about what drove this year?

Douglas Cifu

It's a good question. Thank you, Craig. I think the biggest drivers probably within crypto, where we saw a pretty significant drop-off in Bitcoin ETF 80 view, [ANTI] down about 11% quarter over quarter. So there's that and I think, you know, within the index options family, obviously volumes important, but we obviously internally measure spread of those products and spread was down quarter over quarter as well. So that's the opportunity set for a market maker, as you know. So it's not just x time y is equal to z in this instance, the wide decrease. So those are the two big drivers of it. Again, nothing alarming from our perspective. We continue to perform. We continue to grow. And certainly we're optimistic as we continue to expand those businesses, particularly in options where we now have a meaningful Asian options business, which is now contributing daily adjusted net trading income. And we're guardedly optimistic as we continue to grow that business, particularly in Japan and India. And the investments that we've made in those areas will pay off in future quarters.

Craig Siegenthaler

Thanks, Doug. And just for my follow-up, we now have the final SEC equity market structure proposal. So I wanted to see if you could give us your updated view on the Reg NMS amendments on the market at large and how it impacts were two. And then can you give us some sense of how big your foreign exchange market making business is to help us size of the risks specifically were roughly looking for how much income you're receiving from foreign exchange rebates? Thank you.

Douglas Cifu

Yes. Yes, Craig, it's a great question. And obviously, we followed it closely file comment letters and in our overall view is that the final proposed final rule, if you will, which I don't think there's been one litigation filed. I don't know if it ever was going to be final final. We'll see how it works out on the courts, but we think it's a bad result for the market. I have said many times, we are not a rebate trading firm. We are a net payer of exchange holding fees. So reduction of the rebate won't impact us from adjusted net trading income perspective, I always kind of scratch my head. It people suggesting a we just collect rebate, nothing wrong with that. We just haven't figured out the way to become a net rebate trading from a market maker. You know, there's a suggestion because obviously the quoted spread is going to be reduced in a significant and not a lot of names, I think. But paired with the liquidity incentives are either rebates being significantly reduced down to 10 mills. We think it may be some spreads will now, but a log-in will actually widen because people underestimate the value, if you will, that those rebates provide to the marketplace. And so you may have nominally tighter spreads in some names. But to the extent institutional investors want to access any meaningful liquidity, you're going to have to be forced to go out a number of ticks. And so the net affect business is why a lot of our institutional clients are very, very happy that you'll see more trades going through multiple price levels, which creates more volatility. And we think larger orders will actually have increased transaction action costs. So whatever compromise our friends at the SEC, both that they were crafting, we don't think that they got right. And we think there's going to be a lot of unintended consequences. I mean, net-net for the firm, there are some positives in terms of, you know, our ability because we on the retail home sales side, as I've said many times, we don't internalize 100% of the orders we received. We still are obligated to price improve and pay payment for order flow on some of those orders. So our ability to access liquidity at a cheaper price because spreads have been now is a strong net positive to the firm. But again, overall, it forget for our institutional clients, we think this the proposal is going to have ultimately end up being a net negative. And if the intent was which I think it was to drive more liquidity to exchanges and away from dark markets, I think against their sale, I think the result of this will do that there will be less liquidity driven to exchanges. And it's yet another example, just like MiFID two of regulators trying to pick winners and losers and within and actually having the opposite result.

Craig Siegenthaler

Thank you, Doug.

Operator

(Operator Instructions)
Chris Allen, Citi

Chris Allen

Good morning, everyone. Just to dig in a little bit on options. Just wondering, obviously, you talked about the iPAQ opportunity. I'm just wondering how's the progress going on in the US options more specifically, which is obviously a competitive marketplace? And then how would you frame the opportunity set moving forward in terms of international versus US is a great opportunity to them international?

Douglas Cifu

Yes, thanks. Because it's a really good question. I mean, the 800 pound gorilla, obviously elephant in the room. What other bad analogy can I use is becoming a retail options. Wholesaler remain in our medium to long term plans. We've made investments and we ramped up some on-exchange trading in it, a number of symbols, um, you know, as you're aware of those some transactions, unlike in cash equities, happened on options exchanges and has been a further proliferation. I lost count of having the options exchanges are, I think, (inaudible), 18 number, maybe 19, I can't quite remember. So that's an opportunity. So that's certainly in the medium to long term plans. And we've expanded our symbol range. I think there are parts of the world, particularly in Asia, mentioned India, Korea, Japan, some of the smaller countries like Malaysia, et cetera, a small options businesses as well when we think that's an opportunity and we've built capability out there. You know, again, it's Virtu one on one blocking and tackling understanding the market is finding the right local broker partner, setting up a data centre and of tuning our connectivity to the exchange. Every marketplace is different. Every marketplace has a nuance is getting people on the ground in Mumbai that understand the ins and outs of how the technology of the various exchanges work there. It's stuff we've been doing for the last 16 years exceptionally well. He referred to it's kind of the last inch of the market, and that's what we're really, really good at. And so quarters will fluctuate up and down. But long term, we've made the investments. We're committed to what we've been successful. It's a base margin that's typical for the rest of our proprietary non-customer trading businesses. So we're very, very pleased with the results. And it's just another example of what global scale and having a large label global firm with great trading infrastructure provides you sell them.

Chris Allen

Thanks. And just wanted to revisit Ken's question earlier, just on the retail features activity, is there a wholesale market making opportunities and more than that on exchange opportunity? And then how are you thinking about the incremental opportunity from players such as Robinhood, adding index index options moving forward?

Douglas Cifu

Yes. I mean, the index occupancy is obviously really, really exciting for us because the kind of right now wheelhouse and Robinhood is a terrific, terrific firm and a great partner of ours. And we do a lot of really great interesting things with them, futures a little more different because those need to execute a it's a different marketplaces. We executed on the CME or one futures exchanges, it would have any concern that really competes. As I said earlier in announced in an answer to the question that I think Ken asked, we think this is a different sub group, if you will, within their client base, it's more of an active trader that wants to get a little more leverage. Again, you know, of anything that kind of expand the pie and expands interest and get more eyeballs, if you will, at our retail broker partners ultimately is a good thing for the firm.

Chris Allen

Thanks, guys.

Douglas Cifu

Thanks, Chris.

Operator

(Operator Instructions)
Patrick Moley, Piper Sandle.

Patrick Moley

Yes, good morning. Thanks for taking the question. Sorry, not the disconnect earlier. I just had one on the regulatory question. The latest implementation phase of the OCC intraday module that the proposed the team been addressing some of the perceived risks around your DTE. Just wondering if this is something that's on your radar at all and what impact you expect to have on trading volumes not only DTE, but possibly across other asset classes as well as margin goes up across the industry, thanks.

Douglas Cifu

Patrick, you're really trying to dive deeper and get me online. I love it, but the good thing, the guys preparing for all this stuff, look, we've looked at it. We think it's very unlikely to have any direct impact convert to some of the finger capital rules already stipulate that members maintain capital adequacy to settle all positions and base on our understanding, the new margin changes for the zero dated options are effectively just moving up different delivery times is really just a timing difference. We don't think it's an overall capital deployment. Joe, you looked at this more closely. Would you agree with that?

Joseph Molluso

Yes. I mean, we obviously have a we're not direct members. We clear through a third party. So we had a we think it's manageable.

Patrick Moley

Okay, great thank you.

Joseph Molluso

Thanks, Patrick.

Operator

(Operator Instructions)
Dan Fannon, Jefferies.

Dan Fannon

Thanks. Good morning, guys. On question on slide 8. I know this is you guys have had this framework for some time, but given your strong together three quarters in a row with a pretty strong results, how we think about the buyback you become valuation sensitive at all? Or is it just more of an output based upon what (inaudible)?

Joseph Molluso

As you know, I think assisted in that incremental investment question, I appreciate that or a stock has gone up. And so it's we're buying back shares that every every target amounts for it. But we made a strategic decision when we embarked on this journey, I think in fourth quarter of 2020 that we were going to set these targets and that we were going to just dollar cost average or stock, given how volatile it's been. We look at this as an investment, right? So our stock is in the low 30s. Now we've bought back almost 20% of the Company had $25 on. We compare your we're shareholders and we want to create value for it. So we look at this is a value creation exercise. And if there was an incremental opportunity that's in front of us, whether organic or inorganic, we're we thought the value exceeded the or buying back our shares at a 30 year, we would pivot. But for the near term, in the mid term, this is this is what we see in front of us. We're going to continue executing on. It doesn't mean that we're not excited about the growth opportunities, but we're adequately capitalized. We're adequately resourced and we're going to us. So we're going to continue at these levels to do you have to meet these targets. And I expect in 2024 for what it's all said and done, we'll be obviously, it depends on where we come out in a net trading income. But at these levels run-rate levels of net trading income, I expect that we're going to be at the high end of the guidance.

Dan Fannon

Great. That's helpful. And then just also on expenses, because we've been pretty consistent in your messaging there. Just thinking given again a good backdrop for year to date as we think about the fourth quarter of the cash comp versus comp ratio dynamic, just a little bit of color there and any other seasonal expenses that we might be should be thinking of?

Joseph Molluso

Yes. Non-comp isn't the seasonal where we tried to accrue because we tried to accrue appropriately have been we have to accrue appropriately and comp is getting compensation right is a huge priority for us. We want we've always been within this comp ratio. And I think when we when we are in an environment that's not as robust or even sort of middle of the road like we've been in, we tried to take care of people in compensate them well and even in the down years. And I think that that's allowed us to kind of maintain where we are. And we've hired an enormous amount of people in the past three years. We've significantly upgraded our talent and we will continue to do that. And there's pressure on costs all the time. We manage our market data plan. We manage our infrastructure. We manage our overhead actively. And I think the guidance is it's been pretty consistent for a long time. I think we we stayed with it and we expect to stay with it. Great. Thank you.

Operator

Thank you. The question and answer session is now closed. I will now turn it over to Doug Cifu for closing remarks.

Douglas Cifu

Thank you, everyone, and thank you, everybody, for joining us today. We look forward, everybody enjoy the holidays and the end of the year. We look forward to speaking with you early in 2025. Have a great day.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.