Good day, ladies and gentlemen, and welcome to the Nasdaq Second Quarter 2017 Results Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Ed Ditmire, Vice President, Investor Relations. Sir, you may begin.

Good morning, everyone, and thank you for joining us today to discuss Nasdaq's second quarter 2017 financial results. On the line are Adena Friedman, our CEO; Michael Ptasznik, our CFO; Ed Knight, our General Counsel; and other members of the management team. After prepared remarks, we'll open up to Q&A. The press release and presentation are on our website. We intend to use the website as a means of disclosing material non-public information and complying with disclosure obligations under SEC regulation FD. I'd like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these projections. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our press release and periodic reports filed with the SEC. I now will turn the call over to Adena.

Thank you, Ed. Good morning and thank you for joining us this morning. I am pleased to have the opportunity today to report our strong second quarter 2017 results, update you on our progress regarding our 2017 execution priorities, and discuss our long-term strategic initiatives, and importantly, how we are progressing with them. The company's second quarter results were strong, particularly in our non-GAAP diluted EPS growth of 12% year-over-year. Additionally, we set new quarterly records, including total net revenues of $602 million and non-GAAP operating income of $287 million, up 8% and 11%, respectively, year-over-year. We achieved this despite a lackluster backdrop in terms of the beta for the capital markets industry with respect to volatility and trading volumes. The average daily VIX in the second quarter was near all-time lows and about 25% below the prior year period. That said, when I look closely at the quarter, and more broadly at the company's progression during my first six months as CEO, I continue to be encouraged by the consistently high level of execution I see from our team, as well as the enormous potential and possibilities for this firm. During those first six months of 2017, we achieved record revenues up 8% year-over-year, while our margin expansion drove non-GAAP operating and pre-tax income up 10%, also setting new highs. Organic revenue growth in the first half of the year has been 4% across our non-trading businesses, led by 10% in Market Technology, 4% in Information Services, and 1% in Corporate Services, while our Market Services segment is improving after industry volume headwinds starting the year off with a negative 1Q growth. The balance in our business allows us to grow in a wide variety of underlying macroeconomic and business circumstances. Our results were achieved from a combination of…

Thank you, Adena, and good morning, everyone. My commentary will primarily focus on our non-GAAP results. Reconciliations of U.S. GAAP to non-GAAP results can be found in the attachments to our press release and in the presentation that's available on our website at ir.nasdaq.com. I will start by reviewing second quarter revenue performance relative to the prior year quarter, as shown on page 3 of the presentation, and organic growth on pages 4 and 14. The 8%, or $43 million, increase in reported record net revenue of $602 million consisted of $34 million in net revenues from our 2016 acquisitions of ISE and Boardvantage and organic growth of $15 million, with 3% organic growth in the non-trading segments and 2% growth in Market Services. This is partially offset by a $6 million unfavorable impact from changes in foreign exchange rates. I will now review highlights within each of our reporting segments and all comparisons will be to the prior period, unless otherwise noted. I will start with Information Services, which, as reflected on pages 5 and 14, saw a $10 million, or 7%, increase in revenue, consisting of $9 million, or 7%, organic growth, as well as a $2 million increase related to the ISE acquisition. Market Technology revenue, as shown on pages 6 and 14, increased $3 million, or 4%, with organic growth primarily driving the change. As Adena noted, organic growth totaled 10% for the first half of 2017, as organic growth in Market Technology tends to fluctuate quarter-to-quarter more than other segments. The growth was driven by increased revenues from software, licensing and support, software-as-a-service, particularly SMARTS surveillance subscriptions, as well as higher change request revenues. New order intake was $64 million in the second quarter and the period end backlog finished at $799 million, a record…

Thank you, Michael. We are very pleased that our offerings continue to resonate with our clients and our business continues to perform well for our shareholders. We're very focused on executing on our goals to drive our competitive position, optimize the benefits of our acquisitions, and innovate with new technologies that meet and exceed our clients' expectations. So with that, we're really excited to turn it over to questions.

Thank you. Our first question comes from Richard Repetto with Sandler O'Neill. Sir, you may begin. Richard Henry Repetto - Sandler O'Neill & Partners LP: Yeah. Good morning, Adena. Good morning, Michael. And first, congrats, Adena. You certainly carried on the focus on efficiency from your predecessor.

Thank you. Richard Henry Repetto - Sandler O'Neill & Partners LP: So I guess, the first question is on getting away from the efficiencies, but on the top line and the organic growth of the non-trading segments. Market Technology was huge in the first quarter and you acknowledge it's going to be volatile. But I guess, what's the outlook on the top line? I know you're making margin improvement from Corporate Services, but seems like these other segments are still below that mid-single-digit number that you sort of put out there as guidance prior.

So what I would say with Market Technology, as we've been saying, and I said it in the first quarter even with that strong growth in that one quarter, that we have a long-range outlook of mid-to-high single digits for the Market Technology business, and we continue to support that. So as we look at the first half of the year and because of the volatility, we do tend to look at as the year progresses as opposed to each quarter alone, we have had 10% growth in that business. And we continue to feel that that supports our mid-to-high single-digit overall outlook for the business. I think with regard to our Information Services business, as you've seen that has obviously had a nice growth this quarter with the growth in our AUM, as well as just continued growth in our proprietary products. And overall, we're at 4% so far this year. And we continue to find opportunities to grow and expand that business. So I feel very comfortable with our mid-single-digit outlook for that business as well. And then for Corporate Services, we have said that that's a low single digits grower, as a general matter. And with the 1% so far this year, we continue to see opportunities to expand the bottom line. And we obviously continue to find ways to grow that business, but it's a lower grower in general. And then on Market Services, which we do not give outlook for, because volumes can be so volatile and changing over time, we are starting to see a recovery of volumes in the market, which has definitely helped the Market Services business in the second quarter. But what I focus on as CEO is those areas that we can control, which are market share and capture rates, as well as functional enhancements and things that can drive businesses forward. And I really do feel that everyone on the team has really been focused on that, and we've been executing well against those goals. Richard Henry Repetto - Sandler O'Neill & Partners LP: Okay. Thank you. And then my one follow-up would be, I know this is a small part of your revenue and it's – to your, I guess, return. But the fixed income, you did mention that you had some turnover at the leadership after very short period. And you continue to have to put out 1 million shares to the acquirer. So I guess, what's the outlook for fixed income? Is this – it seems like a weak area, I guess, the shares been lost. But can you turn that around? Is it things that can rebound here on the U.S. fixed income?

Sure. Yeah. So when we look at our fixed income, our fixed business more generally, we have the U.S. fixed income or Treasuries business. We have our U.S. Futures Exchange, which is focused on commodities. And then we have our Nordic fixed income business and clearing house, as well as our Nordic power business. And I would say that the macro backdrop across our fixed platform in terms of volumes in general has been low. I think that's been reflected across the industry, and so that's definitely a challenging backdrop. In terms of our competitive position, specific to our U.S. Treasuries business, we continue to find ways to enhance that platform and try to drive more volume back into the platform. It has been our biggest area of challenge, I would say, within Nasdaq. And I think that as we move all of our trading businesses under Tom's leadership and into a single organization, we feel that we're going to be able to take all of the talent that really, frankly, has been extremely successful across our equities and options businesses, our derivatives businesses in Europe, and apply that to those areas of challenge within the fixed income business. And I think that we will continue to work with our customers. And one of the great things that John did coming in was really bring a client orientation to that business. So we want to continue that and to try to drive progress. We had an enhancement that we brought in in June that basically created new functionality around off-the-runs, as well as creating more functionality in our Elect offering, and we do hope that will drive more volume back onto the platform in the coming quarters. Richard Henry Repetto - Sandler O'Neill & Partners LP: Okay. Thank you very much.

Thank you. Our next question comes from Chris Harris with Wells Fargo. You may begin.

Thanks. Just a clarifying question on the expenses. Does the updated guide for this year incorporate any of the $10 million to $20 million of incremental synergies you guys have identified?

Yes, it does. That $10 million to $20 million won't all necessarily be realized this year. It'll be realized over the following periods as well, but yes, it does include that.

Okay. But we're not quantifying how much potentially this year versus 2018, I guess?

No. Like I said, we're just including it in the overall guidance that we're now providing. And we've hit the $60 million, we think there's additional that we can achieve. But we'll achieve it over future periods instead of continuing to track that separately. It gets harder as we start to integrate these parts of the business and just starting specifically split out the synergies related to different aspects of it. So it's in the plans and we have additional things that we're going to do. But as you start to try and suss it out, it gets a little more difficult. So we're just going to include it in our overall guidance.

Okay, great. Thank you.

Sure.

Thank you. Our next question comes from Vincent Hung with Autonomous. You may begin.

Hi. So what is the driver of the delta in the $10 million to $20 million of additional synergies? So what would lead you to be at $10 million versus $20 million?

Well...

Well, I would just say, I think that when we look at the opportunities for us to continue to drive costs out of – from a technology integration perspective, as well as certain, I would say, agreements that we had with the sellers in terms of transitions, we have the opportunity to find additional efficiencies in the way that we drive the operations forward, but also making sure that we're meeting certain criteria that allow us to roll-off of certain agreements early.

Right. Just a follow-up on SMARTS. What is it as a percentage of revenues and order backlog right now?

So we don't disclose SMARTS separately from the rest of the Market Technology business, but we are very pleased with the general – obviously, we have said that SMARTS is a double-digit grower and it continues to be a very strong part of the overall Market Technology business. And we also would say that it is a subscription business, so it's a nice driver in terms of the margins of that business as well. But it is something that we look at as holistically part of what we offer with our market infrastructure business, and we will continue to look at it that way.

Thanks.

Thank you. Our next question comes from Kyle Voigt with KBW. You may begin. Kyle Voigt - Keefe, Bruyette & Woods, Inc.: Hi. Good morning. First question, I guess, is on market structure. It seems like there's going to be at very least a pilot program that's going to be proposed to help understand the impact of lower access fee caps in the cash equities market. Just wondering if we could get updated thoughts on the potential impact to your business if access fee caps were eventually reduced or eliminated over time.

Well, so I would say that we don't see this as having a material impact on the net capture that Nasdaq or the exchanges in general receive, because the goal of lowering the access fees is to lower the rebates. So I think that that's at the end of the day what the SEC and certain participants are trying to achieve. We've been pretty clear on our position on establishing an access fee pilot. We attempted to do that on our own a couple of years ago, but the rest of the industry didn't follow. So as we look at what the SEC or what the industry is trying to achieve with lower rebates, which would come from a lower access fee, I think that we just want to make sure that we're cautiously going into that and saying, oh, what is the problem that we're really trying to solve for? And are we really going to be able to use this access fee pilot to really study and solve any specific market structure problems that exists? The other area of most concern to us is with small to medium-sized companies and the liquidity in those companies. If we think about what rebates are for, rebates were established after decimalization, because the spreads narrowed so dramatically that market makers were finding that they were not motivated to post liquidity openly and available for everyone to access and to see. So rebates were there to drive -- to motivate market makers to post passive liquidity onto the markets. And I believe that in less liquid stocks, those rebates are an important driver of nice tight spreads in market maker liquidity. So we believe that we have to be very, very mindful and cautious as we walk into any sort of access fee pilot as to what problem we're solving and what potential unintended consequences could result. So we'll see how it progresses, but as I said, we don't see this as having a material impact on exchanges' net capture. The purpose of it is to lower the rebates. Kyle Voigt - Keefe, Bruyette & Woods, Inc.: Okay, thanks. And then just one follow-up on the Sybenetix deal. It really grows the compliance offering that you have, but also seems to expand the offering more into the buy-side. Just wondering if you could help us understand the strategy and whether you think that client base, that buy-side client base is a significant opportunity for Nasdaq going forward and maybe also an area of focus for in organic growth? Thanks.

Sure. So, well, I think it is good to point out when we bought SMARTS back in 2010, that business is really primarily driven by providing surveillance solutions to exchanges and regulators. And we started to realize that, that market participants or the sell-side also have very sophisticated trading that they do and they could leverage the exact same alerting and same capabilities to look at their own internal trading behavior and the trading behavior of their client. And so we started – and we embarked on a program to bring SMARTS into the sell-side, and today we have 140 market participants that use SMARTS surveillance as their core surveillance system. So it's been a very successful strategy over the last seven years. And when we then look at how the buy-side is becoming more and more sophisticated in terms of their interactions with the market, and their own regulatory obligations have been increasing over the last several years, our view is that the same surveillance and, frankly, the behavioral analytics approach to surveillance that Sybenetix brings is also going to have increasing demand within the asset management industry. So it does open up new avenue for us to continue to grow and expand our surveillance offerings. So we actually identified this as a strategy for Nasdaq about year and a half ago. We've been building out the SMARTS surveillance buy-side solution. We have clients in the buy-side already using it, but Sybenetix really helps catalyze that growth and brings an orientation to that surveillance that we think is very relevant to them. So we're very excited about that. I think in general, the asset management industry is clearly an area of focus for us right now with our Analytics Hub and with our SMARTS surveillance offering, as well as other things that we'll continue to look to do and, obviously, our index business and data business to continue to drive demand there. Kyle Voigt - Keefe, Bruyette & Woods, Inc.: Thank you.

Thank you. Our next question comes from Alex Blostein with Goldman Sachs. You may begin. Alexander Blostein - Goldman Sachs & Co. LLC: Hi. Good morning, everybody.

Good morning. Alexander Blostein - Goldman Sachs & Co. LLC: I want to actually pick up on the last point you mentioned around Analytics Hub. Clearly, the growth area within asset management has been around quants recently. I'm assuming, obviously, that's kind of the area where you guys are trying to tap into. So could you spend a couple of minutes just discussing the opportunity you see there for Nasdaq? How are you guys thinking about partnering versus acquiring capabilities in this area? And then, I guess, more importantly, where are the synergies that you guys see between kind of that kind of customer base versus your existing customer base?

Sure. Well, it's been – I would say that we do have a strategy internally to look at how we can expand the value added data that we provide to entire industry, both the sell-side and the buy-side, as well as to brokers that service the retail audience. And what we want to make sure of is we look at leveraging our own data that we have internally and finding signals within that data, using machine intelligence, in addition to bringing in other third party data that provides what I'll call more driver information that would be relevant for a quantamental shop or a pure quant shop that's looking at ways to find – use data to make a fundamental decision or using data to make a technical decision in terms of their investments. We want to make sure we build out this hub. We definitely like the idea of partnering with other exchanges, partnering with our clients to find the signals to bring in the data that they're looking for, and to serve their needs. And one of the things that we're really proud of is how we've architected this solution, because it's completely in the cloud. It allows for us to – allows a client to come in with multiple types of interfaces, it could be fixed or could be APIs or could be – we can multitask the data out. They can provide data into the platform. They can get as much data or as little data as they want out of the platform. They can do it in real-time or at end of day. It's an extremely flexible platform and it allows us to grow and expand what we're doing in multiple ways. So it is meant to be for the entire industry, but certainly the quantitatively-oriented buy-side strategies, we think, are a good starting point for us to focus our energies. Alexander Blostein - Goldman Sachs & Co. LLC: Thank you. And then just a follow-up around, again, some of the newer initiatives around the index business. It seems like competition in this space is definitely heating up and, I guess, not surprising given kind of pricing pressures on ETF managers. Can you guys discuss the pricing in your index business versus some of the larger incumbents and how much of a driver, I guess, has that been in you guys picking up some share recently?

We actually are really good at partnering with ETF sponsors to make sure that we're both happy. And it kind of depends on the type of index that we're creating. So if it's a very advanced, I would say, SMARTS beta index, like we have from our Dorsey Wright business, we actually – we do tend to see that that's got higher value and there's more IP that we're bringing to the table. That tends to have a higher price point versus a benchmark index, where we really do try to partner to be a low cost provider to our ETF sponsors. And so it really just depends on the type of index that we're calculating on behalf of our clients or that we're generating, and then partnering with our clients to bring to market. And we do have a wide range and we're very partnership driven. Alexander Blostein - Goldman Sachs & Co. LLC: Got you, great. Thanks very much.

Thank you. Our next question comes from Alex Kramm with UBS. You may begin.

Hi. Good morning. Just wanted to come back to the beginning. I think it was Richard's question on the organic growth, particularly on the Market Technology side. I appreciate kind of your comfort level with the overall full year outlook of high single digits. Just wondering a little bit more near term in the third quarter, if I look at typical seasonality, I think the growth will be roughly in line with the second quarter again. So just wondering, is there anything else you would point out that may swing this a little bit higher or lower, any new business wins that might come in the third quarter that we should be thinking about as we think about our model. Thanks.

Well, we won't predisclose business wins, but we definitely have – we are working with a lot of clients right now to make sure that they understand the value of our offerings. We have some clients that are, frankly, in what I'll call predevelopment mode. But we – all I can say, Alex, is we do continue to see really high demand for our services across the entire spectrum of what we do, whether it's risk management, trading, clearing, settlement. Those – clearing and settlement continue to be very strong growth drivers for us, in addition to the surveillance offering. So we – I can't give you any sort of specific things, but I could say that we continue to have very high demand across the suite of what we offer. In terms of the third quarter, I mean, you are right that from a, what I would call, change request perspective, that tends to be a lower quarter for us, because not only do – really our clients have more vacation time, so they tend to demand less in terms of enhancements and that the fourth quarter tends to be our strongest quarter in that. So that is some of that seasonality that you do see. But in terms of general, our general view is that we continue to see very high growth drivers overall, but we're not going to speak specifically to the third quarter.

All right. Fair enough. And then just maybe stepping back for just a minute, Last time I spent time with the management team, I kind of sensed that in addition to spending more time on capital allocation, you also thought, I think, a little bit more about resource allocation. I guess, I mean, hey, you have several different businesses here, some may benefit and actually have an opportunity for acceleration and growth. If you throw more resources at them, where some are little bit more in – maximize the returns or the margin mode, any new thoughts you are having as you've now spent a few more quarters here at the helm, where you may want to change a little bit of where you're spending more time or less time in terms of dollars, time, etcetera?

Well, I think our general approach is, for those businesses that are strong incumbent businesses, we try to drive to the greatest efficiency that we can to make sure – but while we're still optimizing the business and its opportunities. But then as we look at really specific growth initiatives and ways for us to invest our resources, as you said, our people resources and our capital resources, we try to make sure that we give you some disclosures around those areas where we're really investing a lot of time and capital. So what we've been discussing with you in terms of – you can kind of see that in terms of which initiatives we've been highlighting to you. So the Nasdaq Financial Framework is clearly an investment area, surveillance is clearly an investment area, the data business is clearly an investment area, Nasdaq Private Market is clearly an investment area, and then NFX is our trading investment area. So I think that those are where we try to make sure you know where we're kind of moving resources into those areas to drive growth. And we're trying to make sure that the rest of the franchise is as efficient as possible.

All right, very helpful. Thank you.

Thanks.

Thank you. Our next question comes from Michael Carrier with Bank of America Merrill Lynch. You may begin.

All right, thanks. Hey, Michael.

Hey, Mike.

First on the technology side of the business, obviously the trends there have been favorable. I think 2016 you had a bit of a tough comp, just given some of the timing of some of the projects that came on, like Istanbul. But, yeah, your pipeline is at a record. So I'm just trying to understand – and this isn't for like a quarter or anything. But if I'm looking over the next, like, four quarters, has anything changed on the timing of sort of the revenue recognition of the current pipeline? Meaning, as things shift to be maybe a little bit more regulatory driven, does the timing shorten versus lengthen? Or should we continue to expect kind of the same pace of revenue recognition on that pipeline?

Yeah. So I think the one thing that you'll start to see is as more of the business moves to more of a SaaS-based model and those contracts are more annual-based contracts or shorter periods as opposed to some of the five- to seven-year type contracts that you would see in the core business, and as we continue to build out the things that Adena's been talking about with respect to the SMARTS surveillance business and the whole SaaS business, that those contracts are – that does change the nature to some degree of that backlog that we're looking at. So we are actually looking at, are there alternative ways of presenting some of that information to you guys going forward? But so some of it is more of on recurring basis. When I say recurring, on a shorter term recurring basis as opposed to longer term contract. And so that will change the nature of that a little bit and how we recognize it. In addition, looking into next year, we are looking at what the implications are of the new GAAP requirements. We don't think that there's going to be a material impact overall in the way that the information is reported, but it will have a bit of an impact. So there will be more information coming out in the next couple quarters as to how you start to recognize that in the back half of the year.

Okay. Thanks. And then, Adena, just a quick follow-up on some of the stuff on strategy, maybe like two areas. Just in terms of the paper that you guys put up in terms of improving the capital markets, just wanted to get a sense on what's the reception been, particularly on the political regulatory side, if some of it's driven on that angle? And then just given your guys' focus on blockchain, artificial intelligence, just wanted to get your sense when you're working with the client, seems like there's a lot of interest. But when do you see that kind of conversion versus interest versus like a more meaningful revenue opportunity?

Okay, great. So on Revitalize, I think that we have had a very, very positive reception across many aspects of our client base, and as well as the lawmakers. What I really like about the fact that we took a leadership position in coming out with our views on the capital markets and what we can do to improve the capital markets is that we've been able to elevate the discussion to the bigger picture issues that are really facing the country and the economy, as it pertains to getting more companies to want to enter the public market. And what are the benefits of the public markets to investors and to companies. So we like this. There is one stat that we have in the Revitalize blueprint that talks about the fact that in the last decade, 76% of all job growth has come in these companies after they've gone public. So going public is a job creator. It is a growth driver for the economy. And so we want to make sure that lawmakers, regulators, issuers, investors, and market participants are all engaged appropriately on those issues that actually matter. And what's been great is it has elevated the discussion, the debate on those topics that are bigger picture topics, like proxy access, disclosure obligation, tax reform, litigation reform, as well as market structure. So market structure isn't the only thing on the agenda any more. It's looking holistically at the system. And we have been heavily engaged with lawmakers and with regulators on the topic. It's gotten a very positive reception. I think that there's also some element of – there are certain areas that not everyone agrees on, but what we've really wanted to do was get an active and open debate on the topics, and…

Okay. Thanks a lot.

Sure.

Thank you. Our next question comes from Brian Bedell with Deutsche Bank. You may begin.

Great. Thanks. Good morning. Adena, if you can just expand a little bit on the revenue opportunities from Nasdaq. I know it's up. I appreciate all the color on this. It does sound like sort of an exciting new area. But if you can talk about – I know it's early, but if you can talk about what you envision as the revenue expectations, and maybe too early for the second half this year, but certainly coming into 2018 and if that alters your long-term mid-single-digit growth outlook in Info Services at all?

Well, I would say, I think we need to have more experience with it and working with the clients very extensively to understand the total breadth of the opportunity. In a way, it's kind of an interesting project for us, because when you're going into a highly competitive space, where you kind of know what the total addressable market is and you're trying to grab at it, it's easier for you to come up with projections as to if I progress this way, I will get this money. In Analytics Hub, it's a whole new thing. It's something – these are products that clients have never had access to before. It's a very – it's a new space. So as a total addressable market, in a way it's kind of unknown. And so what we are looking at is how do we just – obviously, we have our own internal targets, but in terms of our expectations and how quickly these targets will be met, we are not providing those publicly, because we do want to have more experience with the technology and with our customers to know what fits their needs and how they are going to be adopting it, before we give you any sort of true, clear guidance or outlook on that particular part of the business. We are doing this as a subscription, and as they – so the way it's priced is you pay a monthly fee for either a third-party data set or you pay different monthly fee if you want to take analytics on that data set. And so there are – there is established pricing that we're working on and making sure that the clients are seeing it as a subscription service, but we don't yet have targets that we're able to communicate to you.

Great. I'm sorry, you said that you're piloting this right now. Did you say 20 clients or was that something else...

That's right. We have 20 clients who are piloting various aspects of the data, so they may be piloting one data feed. They may be piloting all the data feeds. They may be looking specifically the analytics that we're creating. And what they're doing is back testing it against their models and making sure that those models do, in fact, get a positive impact from the data. That's what they're doing at the moment.

Fair enough. Okay. And then, Michael, just on the M&A strategy broadly and, I guess, Adena as well, obviously, you want to be opportunistic in that and thanks for the priority outline on the capital deployment. But as we think about opportunities going forward, do you look at debt flexibility? In other words, I know you're trying getting to 2.5 times on debt-to-EBITDA next year. Would you be willing to flex that back up to 3 times if you saw more important opportunities? And maybe, Adena, if you just want to highlight again on your M&A priorities in terms of what businesses you'd like to try to look at?

Well, I would say from a financing standpoint, the priority is identifying if we have good opportunities. We'll look at the best ways of financing those opportunities. And if it means that you're increasing the debt for a short period of time, we would look at doing that. But the priority is getting the investment, and we think it's a good strategic and financial return for the company, then we'll look at the best way to finance that. With that, I'll turn it to Adena to...

Sure. I mean, I would say that we are very committed to our investment-grade status. We've been very proactive in working with the rating agencies to make sure that they understand our business well. And we will – I mean, the purpose of having debt capacity is to use it for the right opportunities. But when we look at the opportunities that are before us right now, I think that what Michael discussed in his capital allocation outline is where we're focusing our energies right now, which are on these kind of, I would call them bolt-on-y type of deals, where it adds a capability to – a technology capability to us, it expands our market presence in a certain area, or in the case of the deals we did last year, which – the highly synergistic, basically doubling down in areas we believe in, that we can believe we can grow and expand our franchise. So those are the areas that we're particularly focused on right now, and I think that that will play out, hopefully, as we continue to expand our business.

Okay, great. Thanks for all the color. Thank you.

Thank you. Our next question is from Ben Herbert with Citi. You may begin.

Hi. Good morning. Thanks for taking the question. Just wondering if you could provide some context around MiFID II in Europe and where you see maybe opportunities or risks around that next year.

Well, we have been very focused on making sure that we're compliant with MiFID II, and that's got a fair number of work streams across our technology organization, our business organization in the Nordics, and it's a big project, not only for us. It's a much bigger project even for our clients. But we see the Auction on Demand functionality that we launched in June on our Nordic market is a direct reflection or a direct reaction to MiFID II in terms of allowing people – I think the general goal of MiFID II is to bring more flow into the venues and to the exchanges, which I think that is benefiting us. But the Auction on Demand allows people to execute their strategies as large institutional players and still do it within an exchange environment and make it so that the systematic internalizers don't have as much of a motivation to take that type of activity off exchange. And so we are doing those types of enhancements to our systems. We're also continuing to look at the disclosure obligations, and whether or not there are opportunities there to enhance our disclosures in our data to help people comply with MiFID II. But I would say also, MiFID II and the new M-A-R, or MAR obligations are really, really helpful, have been helpful to our SMARTS business and its demand for surveillance in Europe over the last couple of years. And so we've seen that as a growth driver for us, and that's been benefiting us.

Great. Thank you.

Thank you. Our last question is from Alex Kramm with UBS. You may begin.

Hey. Just again here for a follow-up.

Sure.

NFX, I think, Adena, you mentioned NFX at the beginning as continue to gain open interest – or building open interest, et cetera. When I look at volumes, I feel like the growth over the last three quarters have stalled a little bit. And if you look at your competitors, I mean, I think their comps are looking a lot better. Obviously, different businesses, but just wondering, like, you're very excited about open interest. It's not translating into volume. Like, where's the differential coming from, I guess?

Sure. So I think that when we look at how our clients are using NFX, they're using it for – they're using it definitely to trade on it and they're using it to clear. And they – and sometimes they can do internalized prints that they then just send into the system to clear. And that then drives the open interest, but they may not actually be using the – what we call the CLOB or the Limit Order Book to trade. And so – but both of those things are beneficial to the health of the platform, the fact that they're willing to put their risk into the clearing house on long-duration related contracts we feel is very, very healthy and encouraging. And I think that that helps us to generally drive client demand to get connected and to be a part of NFX. In terms of the volumes on the system, we have seen – we've been introducing fees, and we've introduced fees at the beginning of May. And as the market makers and the other participants have been getting used to these fees, we've seen some moderation of volumes, but honestly, we continue to see new participants joining. We've had a couple of new firms joining as partners in the last couple of weeks and definitely, there still is very strong demand to continue to develop the platform and bring on new products and new activities. So we see this as maybe a little bit of a plateauing just based on them getting used to new fee-based, but we're pretty – we're still very encouraged and optimistic about the business.

Sounds good. Thank you.

Okay.

Thank you. This concludes the Q&A session. I would now like to turn the conference over to Adena Friedman for closing remarks.

Thank you very much. Well, thank you very much for your questions, and we are – as I mentioned before, we are very proud of the business. We're proud of all of the opportunities we have to continue to grow the business and engage with our clients. And we hope that we've been able to convey that today. So thank you very much.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day.