I saw some information just in the last day or 2 about the explosion of growth in index volumes. And that’s really been our big focus and single name index options have – volumes have significantly dropped off. Again, we are trading single name options, we will continue to do so. Whether in 2024, we start taking directed flow from retail brokers or not is still an open question in my mind. It’s probably not – given what’s happened with the shift of volumes, it’s probably not a significant priority at this point, but something we will get to.
Ken Worthington: Great. Thank you very much.
Operator: The next question on the line comes from Chris Allen of Citi. Please go ahead. Your line is open.
Chris Allen: Hey, good morning, everyone. I’ve got some follow-ups on Ken question. It’s only going to be a two-quarter. Just on the build-out on the rate side in particular, last quarter, you noted it was very early days. You’re doing a lot of 5% volume for 5% to 10% of clients on the platform. Any update on that front? And then on Options, you talked about a declining opportunity set during the quarter. And while volumes overall were not great, index volumes where your focus were pretty strong. Was that just a function of realized volatility declining and how are you thinking about the options environment specifically right now?
Douglas Cifu: Yes. That’s a great question. We take them again in reverse order. I think you nailed it. Index volumes were up, but in terms of realized volatility, and if you will, like rate per contract to kind of be more specific in what we were expecting in terms of opportunity that did decline during the quarter. That being said, we outperformed and our market share has grown considerably in SPX and the big options family. We are like a meaningful single-digit player in Options, which is a statement that I would have been reluctant to make 2 years ago. So I’m very, very pleased with the growth there. We are now generating decent P&L like not material in the Virtu sense but individually in Asia, both in India and in Japan, which again, things I would not have thought to mention 2 years ago.
So I’m very, very pleased with the progress we have made there. And again, I’m not like the greatest macro predictor, Chris. We just kind of like build it and we hope that it will come. But I do see a continued interest in like single day options and in the index family. So that will continue to be our focus. Again, I think with increased volatility and uncertainty and macro events around the world between global conflict and central banks having to deal with interest rates, I think we will continue to see an increase in options activity. You can kind of see the shift that’s gone from like the VIX family, if you will, to like single day options and other products that enable traders to expose themselves to intraday and over week and month volatilities and things like that.
You had another question? What was the second part? I forgot it ready. Yes. Rates is an interesting market, right. Obviously, it’s the one market that today doesn’t have centralized clearing. There is an SEC proposal that we have been supportive of. One of the few things we think the SEC is actually right about and so we would love to see centralized clearing of treasury products. That is a typical Virtu-style build-out. We have got, obviously, connectivity. We have got strategies going in now. It’s really a question of distribution. So, we have significant – we have established this year significant connectivity or substantial connectivity to top clients, and we have grown reasonable amounts of market share again, doing it methodically.
There is a lot of counterparties we can now go to with a credible product, and that’s kind of the game plan, which is build the technology, have a great team, come up with a product that you feel good about, i.e., prices that are competitive and then figure out what the distribution mechanism is. Obviously, we go to ECN, but also this is a marketplace that we think where clients will take direct feeds or go through large dealers, and that’s – we have made a lot of progress on that in 2023.
Chris Allen: Thanks.
Douglas Cifu: Thank you.
Operator: Thank you. Our next question comes from Dan Fannon of Jefferies. Please go ahead.
Dan Fannon: Thanks. Good morning. My question is on expenses. So, as we think about the environment, which is still somewhat subdued, how should we think about the fourth quarter and the true-up and/or comp allocation associated with cash in this revenue environment. And then also just looking at next year, should we just think about inflation as a reasonable framework for both comp and non-comp expense or any other framework that you could help us with that would be great.
Joseph Molluso: Hey Dan, it’s Joe. Good morning. Look, I think that I will take them in reverse order as well. I mean the non-comp expenses, I think we have always said that they are going to grow at kind of a low-single digit rate. Maybe we were a touch higher than that this year. We do a lot of work every day, especially on our connectivity, our infrastructure plan, our market data. We monitor everything down to everyone’s Bloomberg’s and everything and all the other market data subscriptions. And I think if you look at that line item, up a few million dollars in this kind of environment where there has been price increases I think that’s a pretty good outcome. And I would expect much of the same next year, right, all things equal.
