David Howson: We see some rotation there, certainly different strategies deployed. And we see and hear many of our customers talking about actually an interest in single name options capability. We hear on earnings calls like this a variety of liquidity providers and retail brokers really continuing to engage in options in general. The overall adoption for index options and particularly the SPX is really that elevated macro uncertainty that people are dealing with, managing their portfolios on that macro basis as they adjust to news, the uncertainty, the Fed, inflation, growth estimates. And of course, the U.S. election is really contributing to people really telling that index suite to really be able to manage that portfolio risk and actually fine-tune exposures as they look throughout the year there.
Operator: Our next question comes from the line of Alex Kramm from UBS Financial.
Alex Kramm: Sorry if I missed this earlier, but can you talk a little bit more about capital allocation, in particular, as it relates to share buybacks? I think the fourth quarter, I think, roughly $6 million or so, but I know you also paid off some debt. So was that now behind us? Is — can you talk about the pace of buybacks you see and how you think about it from an opportunistic versus consistent kind of framework for this year?
Jill Griebenow: You bet. So as you’ve alluded to, we did have, I mean, just $5.8 million worth of share repurchases in the fourth quarter, so considered relatively light. But if you look back on a historical basis, we do have a history of being heavier on the repurchase front during the first quarter of each year. And then also, as you’ve alluded to, we have paid off all of the floating rate debt, which gives us — just affords us more in the way of capacity and ability to deploy capital. So as we’ve done in the past, we will continue to be opportunistic as it relates to share repurchases. If we see any perceived weakness in the share price, we will absolutely get in back to the — behind it. And then again, just continue with our routine practice as well on top of that.
Operator: Our next question comes from the line of Owen Lau of Oppenheimer.
Owen Lau: Thank you for providing Slide 9 about 2024 catalyst. Could you please add more color on these catalysts of why the adoption and expanded access? It will be great if you can remind us how many existing retail platforms have index options trading, how many more you expect to come online in 2024? And then for global trading hour, how should we think about the incremental volume?
David Howson: Thanks very much, Owen. The expanding access is obviously a big focus for us now with a global footprint that allows us more boots on the ground, more access to local customers who would like to gain an access exposure to the Cboe volatility toolkit, in particular, the SPX and VIX options there. The single-digit percentage of overall volumes that we see in global trading hours really, we think, provides a solid runway when we look at other potential comparables out there. And so our focus is really adding those new retail brokers and brokers internationally that you spoke about there. We’ve got several coming on in 2024, including, obviously, we’ve heard on various earnings calls the addition of Robinhood likely later on this year, which we find very exciting for that complex as a whole from the SPX all the way through to the XSP products.
And that’s really a key focus for us onboarding new participants to the complex. But also, I would note that the expansion of the institutional, the non-retail engagement in the SPX complex has been really compelling and interesting for us as that liquidity has built the quality of the order book, the pricing, the capability to trade as and when investors need to really draw in new strategies as well, for example, from QIS desk and so on. So we’re excited about new strategies and new funds deploying capital into SPX more broadly. So that really speaks to that increased wider adoption not just from retail, but from new institutional strategies that can gain benefit from that solid ecosystem that we’ve been able to build out.
Operator: Our next question comes from the line of Michael Cyprys from Morgan Stanley.
Michael Cyprys: I was hoping you could speak to the new indices that you’ve launched over the past year across asset classes, including the credit volatility indices. And maybe you could talk to some of the opportunities that you see for introducing tradable products, where that stands, what that product road map looks like across asset classes? And as you look out over the next couple of years, where might there be other opportunities for creating other proprietary index-related products?
David Howson: Thanks very much. The focus of product development here at Cboe really is that simplification of potentially OTC and complex strategies, really striving to bring capital efficiencies to our customers across wallet sizes, so bringing investment strategies to all wallet sizes. So just look at the global trading hours we just spoke about, think about the XSP is bringing the SPX exposure, the S&P 500 exposure to a smaller wallet size, the Russell Tuesday, Thursday there, all good organic initiatives. When you think about the indices we launched last year, you’ve got the dispersion index and the credit VIX as you mentioned. The dispersion index there, we aim to have a future available on that indicator later on this year, subject to regulatory approvals and final product design requirements.
And then think about the expansion of the MSCI contract, three new tradable products, two volatility indices there, more exposures you’ve got now at Cboe. With index options, you have global exposures, you’ve got U.S. exposure and you’ve got small cap exposures that you can trade with the potential for further product development from there. And then we mentioned finally, new asset classes. We’ve already got the iBoxx credit futures, that first listed credit future available in the United States, really amenable to funds that cannot trade securities to be able to manage their risk and hedge any portfolio risk there as well. The option on futures that we launched last year will also bring optionality to that new asset class. When you combine them together, you think about credit mix with a credit future as you think about dispersion index next to the VIX Index, you’ve got a variety of indicators from a variety of slices of exposures and asset classes that customers can come to Cboe and in a single place, manage all of those in a single place.
So what you should see — expect to see from Cboe is as we build these liquidity pools and these ecosystems that we will incrementally push these forward. But always, we’re going to be led by customer demand. So we’re going to go wherever our customers ask us to go. So that will be an evolving process as we go through year to year.
Operator: Our next question comes from the line of Brian Bedell of Deutsche Bank.
Brian Bedell: Great. Maybe shifting gears outside the U.S., the Canadian migration onto the Cboe platform, and that’s the combination of NEO and MATCHNow. Can you just talk about whether that’s more of an efficiency initiative? Or is that something that you think can enhance your market share in Canada? And maybe just talk broadly about your strategy. I know you’ve been bringing bids there as well, and if you can touch on your listings game plan with NEO.
Christopher Isaacson: Brian, this is Chris Isaacson. I’ll start with that. So yes, with the NEO migration to Cboe technology planned for Q1 of next year, I’d say it’s all of the above. Yes, we do expect it to be more efficient. It’s part of our platform migration to become more efficient to please our customers. But then on the back of those migrations, we have historically seen market share growth as well as Data and Access Solutions revenue growth or pull-through, which in fact is happening right now, both in Australia and Japan. So we want to bring not just greater efficiency but greater functionality to the Canadian market and the unified platform. We have already launched BIDS there when we migrated MATCHNow back in 2022.
