Good day, ladies and gentlemen, and welcome to the MSCI Third Quarter 2012 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. Now I'd turn the conference over to Edings Thibault, Head of Investor Relations. Please begin.

Thank you, Tyrone. Good morning to everyone, and thank you for joining our third quarter 2012 earnings call. Please note that earlier this morning, we issued a press release describing our results for the third quarter 2012. A copy of that release may be viewed on our website at msci.com under the Investor Relations tab. You will also find on our website a slide presentation that we have prepared for this call. This call may contain forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management's current estimates, projections, expectations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of additional risks and uncertainties that may affect MSCI's future results, please see the description of risk factors and forward-looking statements on our Form 10-K for our fiscal year ending December 31, 2011, and other SEC filings. Today's earnings may -- call may also include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EPS. Adjusted EBITDA and adjusted EPS exclude the following: the lease exit charge, restructuring costs and nonrecurring stock-based expense. Adjusted EPS also excludes the amortization of intangibles resulting from acquisitions and debt repayment and refinancing expenses. Please refer to today's earnings release in Pages 16 to 18 of the investor presentation for the required reconciliation of certain non-GAAP financial measures to the most directly comparable GAAP financial measures and other related disclosures. We will be referring to run rate frequently in our discussion this morning, so let me remind you that our run rate is an approximation at a given point in time of the forward-looking fees for subscriptions and product licenses that we will record over the next 12 months, assuming no cancellations, new sales, changes in the assets and ETFs license to our indices or changes in foreign currency rates. Please refer to Table 10 in our press release for a detailed explanation. Bob Qutub will give you a quick overview of our third quarter results, and then Henry Fernandez will add some additional comments. I will now turn the call over to Bob. Bob?

Thanks, Edings, and good morning. Before we begin our review of the third quarter results, I want to give you a quick overview of the impact of Hurricane Sandy on our operations. First and foremost, all of our employees in New York and Rockville offices are accounted for, and all of our offices are fully operational. In fact, we are hosting this call from our New York office here at 7 World Trade Center in lower Manhattan. We owe a big round of thanks for all the emergency workers and those who are working hard to restore services to this area. I also wanted to point out that at no time were our services to our clients interrupted. Our index data was delivered to clients throughout the storm and aftermath, and our risk systems continue to operate, which is a testament to the dedication of our employees and our global platform. Now to the quarter. Earlier this morning, MSCI reported third quarter 2012 revenues of $235 million, up 5% from third quarter 2011, and adjusted EBITDA of $108 million, up 4% year-over-year. MSCI's 2012 adjusted EPS was flat year-over-year at $0.49 per share. Our revenue growth was led by our Performance and Risk segment, which rose $9 million or 5% on higher index and ESG subscription revenue and risk management analytics revenues. Our governance segment revenues also rose by $1 million or 4%. In the quarter, subscription revenue growth of 8% was partially offset by a decline in the more volatile non-recurring revenues. The non-recurring revenues, which tend to be more volatile, as I mentioned earlier, fell by $3 million or as a result of lower fees for unlicensed derivatives and non-recurring governance revenues. On a run-rate basis, our subscription revenues grew 6% to $800 million. Run rate growth was…

Thank you, Bob. Given the focus on the last few weeks on our index business, I would like to first discuss our index franchise. I will then provide you with an update on broader -- on our broader business before closing with some comments about the acquisition of IPD and how it fits our overall strategy. It has been more than 4 weeks since the announcement by Vanguard of its decision to transition to new index providers for certain of its ETFs. This is an appropriate time to update you on our relationships with other ETF providers more broadly, as well as the overall strength of our index franchise. We are seeing significant segmentation occurring among ETF investors based on their needs for liquidity, benchmark sensitivity and long-term returns. There is also a group of investors who place a premium on low expense ratios. I think it is fair to say that we weren't surprised by the manner and the speed in which the ETF providers served in that last group that is focused on lower expense ratios, how fast they have moved to compete, primarily on the basis of expense ratios and the extent to which they were willing to go to reduce their own costs. As the ETF business evolves, MSCI will continue to be a leading provider of indices to those ETF managers who are actively targeting those ETF investors who value liquidity, derivative capabilities and specialized exposure, as well as those ETF managers who value our expertise in defining and measuring markets. MSCI indices are differentiated by the quality of our data, our high level of service, our broad and frequent consultation with clients and the trillions of dollars of assets benchmarked to them. That value has taken us decades to build, and we will continue…

[Operator Instructions] First question is from George Mihalos of Crédit Suisse. Georgios Mihalos - Crédit Suisse AG, Research Division: Just wanted to touch on the asset-based fees. I think, Bob, you had mentioned that the revenue mix was a bit negative in terms of the price, can skew a little bit more to Vanguard. But the 3.7 bps x-Vanguard, how does that compare to what you've received historically?

We include -- sorry, George, just to make sure I've got your question, when you include -- looking back, with Vanguard, what would that have been? Georgios Mihalos - Crédit Suisse AG, Research Division: No, no. x Vanguard. I think you mentioned that 3.7 is the basis point fee x-Vanguard. Is that kind of steady?

Would be about the same, George. Georgios Mihalos - Crédit Suisse AG, Research Division: Okay, great. And then can you kind of give us a bit of an early read into what you're seeing in terms of sales trends and cancelations in the fourth quarter? Obviously, 4Q is a big quarter in terms of retention, but it also kind of sounded like maybe some sales slipped from the third quarter into the fourth quarter. Is that a fair categorization?

George, that's a carryover from what we said at the end of Q2. We saw an elongation of the sales pipeline that I talked about in my comments. That's carrying over from the sales perspective. We expect to see that into Q4. With respect to cancelations, you can look back over time and you can see an uptick in the fourth quarter. We're seeing some now, but it's too early to tell what the fourth quarter will bring.

Our next question is from David Togut of Evercore Partners.

You walked through some of the reasons for the decline in aggregate retention rates sit in the poor performance of risk businesses in the quarter. Can you give us your perspective on how you expect aggregate retention to trend going forward from here? In other words, are the 3Q retention levels sustainable?

I think we've historically shown strong retention rates, you can look back over time. I think that our issue is really about the elongation of the sales platform. As you can see, 90% right now in the quarter, 91% year-to-date is reflecting what I would say a fairly strong overall retention rate across the business.

And then the last, retention rates were down in all 4 businesses year-over-year. Isn't that a concern for you?

No. David, I think, the -- if you go back and look at the recent quarters on some of the comments that we have made, we mentioned that we have had extremely robust retention rates even in the context of a challenging environment for our clients. And so there is a tad softening of that happening, but it's not a cause to worry at this point and given what we're seeing in the marketplace and what we're seeing in our pipeline.

The other thing I might to add to that, too, David, is remember that the retention rate is a quarter focus, and so anomalies in a quarter can tend to skew it. When I look at the retention rates on a year-to-date basis, you can see in the earnings release, we're effectively flat to where we were year-to-date a year ago.

I see. And then I noticed, Bob, that you didn't disclose core retention rates in the quarter. Is there a reason for that?

We felt that the differences, while it was important on a smaller level, we would have seen some changes, but we felt that with sticking to the aggregate retention rate was fine. There were some product costs, sales. If we were to show it, we'll show it in 10-Q. You'll see a slight uptick on the core retention rate when you see it in the Q when it's filed.

Our next question is from Bill Warmington of Raymond James. William A. Warmington - Raymond James & Associates, Inc., Research Division: So first question I had was I wanted to ask if you could talk a little bit about what changed, if anything, in the pricing with the legacy BlackRock business.

Nothing has changed on the legacy Blackrock ETF. The ETF fee -- the ETF, the legacy ones are exactly the same way they were before the Vanguard announcement. William A. Warmington - Raymond James & Associates, Inc., Research Division: Okay. And then the second question was to ask about the capital allocation policy, to ask if you guys would think about doing a buyback or dividends here. And any restrictions on the use of the cash that you have in terms of foreign versus domestic?

We are -- our strategy is very much focused on growth and how do we go back to a higher growth environment. Clearly, the world is challenging today on a cyclical basis. But on a secular long-term basis, we believe that there are a lot of forces that are propelling strongly what we do. And therefore, we are very much focused on capitalizing on those organic growth opportunities and how do we capitalize on an increased level of M&A opportunities that we see out there. And therefore, for now, we want to make sure that we have enough cash and we have enough capital and we have enough equity base in our balance sheet to be able to move rapidly to take advantage of those opportunities. We also believe that as the -- eventually, the cycle turns, those opportunities may increase, and therefore, it's pretty critical for us to keep our powder dry.

The next question is from Chris Shutler of William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: I guess, could you just give us a quick update, Henry, on the competitive environment for new deals both in RMA and PMA?

I think on PMA, the competitive environment remains the same as the last few quarters, and we believe it's here to stay, not that we're going to go back to the pre-competitive environment. I think it's here to stay. And therefore, the premium to operate in that environment is a great deal of innovation, service to clients, being very close to them and price our products in all areas according to the value proposition that we offer. So we are -- we have taken major steps to increase the level of product development. We're very focused on increasing the levels of client service on this business and so on and so forth, right? So that's not that much of a change over the last few quarters. In the RMA business, the level of competition is a lot less than it is in the PMA business. But I think, over time, we anticipate that more competition will come to the RMA business, and therefore, we have began to take steps to operate on a basis as if it were a wide open competitive environment, even if it's not here today. Christopher Shutler - William Blair & Company L.L.C., Research Division: And does that imply that you have been lowering prices?

No, no. What it implies is that we are stepping up our product development efforts. You mention -- you heard Bob mention a major data center migration that we did in order to significantly upgrade our performance and capabilities for the RMA business and being able to launch products faster, later. So that's another step that we've taken. We are increasing our headcount in emerging market centers to be able to service clients and do more managed services for them. We've began to take quite a lot of steps to operate that business more nimble and obviously more competitively, even if the competition is not here. Christopher Shutler - William Blair & Company L.L.C., Research Division: Okay. And then, Henry, most of the asset owners that we've spoken with in recent weeks have said that they remain committed to using MSCI indices. But FTSE obviously has their own growth plans in the U.S. and appears to be stepping up its investment on the service side of the business. So just curious, anecdotally what kind of questions or comments you've been getting from asset managers and owners in the weeks since the Vanguard announcement.

There's been a flood of the -- of positive comments by asset owners and asset managers worldwide. It's even funny that sometimes we make average calls to clients just to make sure they understood what we were doing and why our approach are differentiated. And some clients have even said, "Don't worry about it. We're a total believer in MSCI. And I don't know why you guys are losing sleep over this." So it's been, to some extent, the opposite. I mean, we've wanted to average -- have an average program to them, so we've gotten quite a lot of comments like that. Secondly, we have seen a meaningful amount of asset switches from the Vanguard funds to the iShares funds. I think more of that will come as we progress in the quarter, will be our guess. And I think we are -- we spend a little bit of time internally here assessing our strategy in the context of all of this. And I think we want to reaffirm that we are not in the business of getting market share at non-revenue or diminished profits. That is not the business we're in. We're not a nonprofit, we're not in the business of market share, we're not -- we're in the business of creating shareholder value for our people and our shareholders, and we're going operate the business that way. And that means, you got to have a higher premium on innovation, on quality, on the network effect between the asset owners and the asset managers and being able to create a better sort of brand on the retail market and the financial advisory market, and you're going to see us do more of that in the next few weeks. So it's a compendium of things. But importantly, we are not in the business of loss leader products and services.

And your next question is from Toni Kaplan of Morgan Stanley.

Since BlackRock's been promoting your indices as the gold standard, have you had any new potential sales from new customers? Like, has that been helping the sales pipeline there?

I think it's too early. This just happened, what, 2, 3 weeks ago, so too early. What I can tell, it's too early to pin any specific sales to the comments by iShares. What I can tell you is that all across the world in terms of our index subscription business and our index licensing business, it's pretty much business as usual. There has been no effect whatsoever on the loss of Vanguard at this point.

Okay, great. And other than FTSE, have you seen any increased competition from other index providers trying to be more aggressive in trying to get some customers to switch to their indices?

Not in the recent past.

[Operator Instructions] Next question is from Ed Demetri of Macquarie.

My question is with regard to BlackRock and their -- their new products in international ETFs. Hypothetically, if this new segmenting strategy isn't successful for BlackRock and it isn't able to stem its share challenges and they decided that the same kind of strategy it employed in its domestic ETFs where it offered the same high quality, top index branded ETFs but temporarily at lower prices were applied to its international prices, i.e., offering the MSCI emerging market and EFA indexes at lower prices, are you confident that something like that could be -- could happen while you'd be able to continue to get the kind of pricing arrangements that's been customary with them?

Okay. I think the -- we are very confident on the iShares strategy of market segmentation. And the reason is because the value proposition of ETFs, the different types of -- different parts of the market is very different. You have institutional asset owners and some asset managers who value enormously the liquidity of the product, the tightness of the bid on our spreads, the tracking of the fund vis-à-vis the benchmark and the like. And when they are in positions of moving large amounts of assets in and out, that liquidity and that tightness and depth of market becomes much more important than the expense ratio of the fund. So we're confident that, that strategy is a good one at this point. And also, I think with respect to what -- how the market evolves, remember -- you've got to remember that the ETF asset class is on a secular growth over time and therefore, you -- on one hand, if there is price erosion you want to put that against the significant increase of the market itself that will benefit us quite substantially over time.

Let me ask one follow-up. BlackRock is very bullish on the possibilities of the fixed income ETF category. Can you talk at all about what kind of opportunities could be there for MSCI if, in fact, that fixed income ETFs become a really exponential growth story over the next 10 years?

We do not, as you know -- well, we do not have fixed income indices at this time. We have them over a decade ago and sold them. We don't have them now, and we're not intending to enter that market at this point. So we don't have a way to benefit directly from that. We are benefiting indirectly though because a number of indices that we have built that have more either value-oriented or fixed-income like characteristics are being embraced by the marketplace. So, for example, our minimum volatility equity indices in which you can invest on the basis of an equity instrument but have a lot lower variability and volatility, which are, therefore, closer to maybe the riskier end of the fixed income market. Those are in significant demand, and we have licensed our indices for investment products and for data quite a lot in the last few months. So there are other ways to play that, the fixed income trend, indirectly. We're also hoping that as we close on the IPD acquisition and play a larger role in REIT ETF and other forms of investment property indices that many of those properties that have high-yielding assets, that we can turn them into indices that have fixed income -- quasi fixed income characteristics.

This ends the Q&A portion of today's conference. I'd like to turn the call over to management for any closing remarks.

Thank you, Tyrone, and thank you, everyone, for joining us on the call. We look forward to addressing you again in a few months.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.