Richard Repetto: Yes, sorry. First, just a couple of quick accounting follow-ups. Paul, you said that — I thought you said that the market data expense went into execution and clearing. I didn’t get the number. And if they have it right, can you give us the amount that went into the execution and clearing expense?
Paul Brody: Right. So the line item is called execution clearing and distribution, where the distribution is really distribution of market data, what I was pointing out is that when we talk about the expense portion of executing a trade about 21% cost versus the commission that we earned. And in order to get a reasonable number there, an accurate number, you have to pull out from the line item, market data, which doesn’t go into, commission that goes into the other income line. That’s how it’s paired up, right? It’s marginally profitable every year because there’s a little bit of markup and some estimates on how we have to estimate our costs and pass through. But in other words, what I was pointing out is to get rid of the noise when you’re thinking about the marginal gross profit that we get when we execute a trade and earn a commission.
Richard Repetto: Okay. And was there any one-timers this quarter in G&A expenses?
Paul Brody: Not especially other than, as I said, legal fees go up and down. They were up a bit higher this year, but they were especially low last year. So it’s as I said, nothing else of note and it’s better to look at probably the whole year to understand something more about our run rate.
Richard Repetto: Okay. And then the last question is I believe the sensitivity, the interest rate sensitivity for the 25 basis point rate hike is smaller than it was what you said it was last quarter. I believe it was 54%, going down to 49%. If I do have that correct, can — I know margin balances are down, but is that just the prime culprit, because — cash balances are up and — yes, I’m just trying to get — why it went down?
Paul Brody: Right, so there’s a few different scenarios that we talk about. If we assume that all currencies understand it’s a hypothetical case. If all currencies raised rates together, the numbers are actually up from last quarter. The projected numbers are up. When we assume that the USD only the Fed funds will increase and other currencies will not. What happens is that there’s an overlay of currency swaps, because we in order to protect customer money for the U.S. customers when we receive other currencies, we swap them into U.S. dollars and put them into segregation as the cost of that. And that when the USD rates go up, that cost goes up. And so as you project out a higher interest rate increase only in the U.S. dollars, there is some offsetting effect that would tend to dampen the incremental number at any given increase 25 basis points, 100 basis points.
Richard Repetto: Got it. Got it. And thank you. That’s all I had to clarify it. Thank you.
Operator: Thank you. Our next question comes from the line of Macrae Sykes of GAMCO. Your line is open, Macrae.
Macrae Sykes: Congratulations on the quarter and the year, very strong progress. My question is around providing an update on your efforts to attract larger institutional customers to interact with your order flow. And I was wondering if some of the talk about the changes in potential market structure, is that helping to drive some further discussions with other clients as well.
Milan Galik: Yes, we continue to attract institutional traders into our ATS. They had their disposal. They have a number of order types they can trade against the client flow that we have. They can use back to mid orders, they can expect best orders. We will continue the effort to get more onto the platform. We are approaching various algorithmic trading firms and algo providers. We believe that they would enjoy the quality of the flow that they get to interact with. As far as the upcoming changes that the SEC announced. To put them into perspective, the comment time period ends at the end of March. There are going to be a lot of industry participants responding to the proposals, we will submit our own comment letter. After that, it’s going to be decided what we’ll finally get accepted and adopted.
And I think it is going to take approximately two years for any change to take place. Now as to what exactly is going to happen in the area of auctions it somewhat depends, because the details were not really specified. What we do know is that some percentage of the retail flow will have to be exposed into the exchange auctions. This is typically a flow of clients that trade around 240 times in six months, so these are not frequently trading accounts and therefore is going to be subjected to auctions. But there is a way around that. If a broker holding this order does not want the order to go into an auction. He can fill it at the mid-price and the mid-price that he can find somewhere at an open market or at an ATS or in DART pool or he can fill it against his own inventory.
Now exactly what the limitations are going to be is unclear. The SEC may have a preference for a very large portion of these orders to go into the auctions and limit the number of orders that the brokers can fill outside of the auctions. We don’t know the details. And I think all this is going to be cleared up after the industry had time an opportunity to respond and the SEC carefully evaluate the responses.
