Good day, ladies and gentlemen, and welcome to the INTL FCStone Q3 Fiscal Year 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Bill Dunaway, CFO. Sir, you may begin.

Good morning. My name is Bill Dunaway, CFO of INTL FCStone. Welcome to our earnings conference call for the fiscal third quarter ended June 30, 2016. After the market closed yesterday, we issued a press release reporting our results for the fiscal third quarter. This release is available on our Web-site at www.intlfcstone.com, as well as a slide presentation which we'll refer to on this call in our discussions of our quarterly and year-to-date results. You'll need to sign on to the live Webcast in order to view the presentation. Both the presentation and an archive of the Webcast will also be available on our Web-site after the call's conclusion. Before getting underway, we're required to advise you, and all participants should note, that the following discussion should be taken in conjunction with the most recent financial statements and notes thereto, as well as the Form 10-Q filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the Company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the Company's actual results will not differ materially from any results expressed or implied by the Company's forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I'll now turn the call over to Sean O'Connor, the Company's CEO.

Thanks, Bill. Good morning everyone and welcome to our fiscal 2016 third quarter earnings call. This is one of our strongest sets of results from a core operating point of view, with good growth in almost all areas of our business. This quarter saw some significant market turmoil over Brexit and generally a somewhat elevated level of volatility across most of our products. Once again, our revenue diversity and the fact that our business model is not dependent on taking a directional view continues to serve us well. We recorded net income of $14.6 million or $0.78 a share, up 26% from a year ago. This was boosted slightly due to our recent share buybacks. Net income and EPS was roughly in line with the sequentially prior quarter. This resulted in a return on equity for the quarter of 14.1%, close to our long-term target of 15%. Our core operating results for the third quarter, as represented by aggregate segment income, was up 20% versus the prior quarter, while the year-to-date results were up 13% over the prior year. Overall, net income was positively impacted for the quarter by mark-to-market gains on our portfolio of interest rate instruments held to enhance the return on our exchange-traded client deposits. However, this gain was more than offset by gold inventory held in Singapore and Dubai over the quarter that was not mark-to-market, while the related hedges were. On a year-to-date basis, our earnings were $37.9 million, up 10% from a year ago, and EPS was $2 a share, up 12% from a year ago. Our ROE for the nine months period was 12.4%. On a segment basis, the third quarter performance is summarized as follows. Bill will go into more detail later. Much stronger results from Commercial Hedging, thanks to a nice…

Thank you, Sean. I would like to start my discussion with a review of the quarterly results. I'll be referring the slides and the information we have made available as part of the Webcast, specifically starting with Slide 3 which represents a bridge between operating revenues for the third quarter of last year to the current year fiscal third quarter. As noted on the slide, third quarter revenues were $175 million, which represents a 15% increase as compared to the $151.6 million in the prior year. Looking at the performance within our operating segments, the most notable change was a $9.7 million or 16% increase in Commercial Hedging segment operating revenues. Driving this improved performance was a 17% increase in both exchange-traded volumes and corresponding revenues, primarily in our domestic grain business as well as with agricultural customers in our London operation. In addition, Commercial Hedging OTC revenues recovered, adding 15% over the prior year period to $29.2 million as a result of increased revenues and our interest rate swap in Brazilian grain business. The second largest increase in operating revenues was in our Securities segment, which added $5.1 million or 14% versus the prior year. Within Securities, the highlight was our debt trading business, which had a record quarter, adding $8.7 million in operating revenues. This gain was partially offset by both an $800,000 decrease in equity market making as volumes declined 20% versus the prior year, and a $2.9 million decline in investment banking revenues following management's decision to exit the domestic investment banking business in the fourth quarter of last fiscal year. Next, Clearing and Execution Services operating revenues increased $3.8 million or 13% as a result of a 7% increase in exchange-traded volumes and an increase in interest income. Physical Commodities operating revenues added $3.6 million…

Thanks, Bill. We continue to see that our diversified and customer-centric approach delivers a best-in-class return to our shareholders. We continue to organically grow our client base, drive cross-selling where appropriate, we discussed this in detail on the last call, and add capabilities to strengthen our position in the changing financial services landscape. We are now able to provide execution in clearing services for our customers across asset classes and markets in an environment where customers are looking to reduce the number of counterparties and better manage their collateral and exposure. So with that, I would like to turn back to the operator and open the answer and question session, if there are any. Heather?

[Operator Instructions] I'm showing no questions at this time.

Okay. Thanks, Heather. So, no questions. Thanks everyone and enjoy the rest of the summer. We will speak to you in three months. Hold on. I think we do just have a question that's popped up, so we'll take it quickly, if that's all right, Heather?

Yes, this question is from Will Settle. Your line is now open.

Record quarter, [I thought] [ph] I at least need to get on and congratulate you on that.

You got in just under the bell there, Will, so that was good.

Just real quick on the Sterne Agee, so if I understood you correctly, you basically bought it for tangible book value. I haven't had a change to go through the Q yet. Since the cash goes out, but your equity comes in, so there is no book value impact, is that how you will account for it or just help us out?

The price was, let's say, tangible book value. There were a lot of intangible and arguably somewhat valuable assets that we wrote off in the process. So we think we got kind of a good pricing on the transaction. But effectively, our purchase price was reflected almost entirely with cash on the other side. So, there will be no book value impact at all on this acquisition, and although the purchase price was high in the $50 million range, almost all of that represents cash and a big proportion of that is surplus cash. Unfortunately, that's in a separate broker-dealer, so that cash is trapped. If you remember, we went through a similar situation at G.X. Clarke when we acquired that 18 months ago. So our idea would be to merge that into our big broker-dealer, and once we do that, we can address those kinds of issues, but no impact on book value. We have taken on a small loss, which we hope to write away.

Right. And maybe, obviously there are strategic benefits, you mentioned the desire to add the securities clearing business, was this purely defensive from that standpoint or tell us about maybe the longer term upside as you see it?

Okay. So, I think actually this has come up on a couple of calls previously, where people have asked us, what would we like and what are we missing, and I think we've consistently said that, securities clearing is sort of the last piece of the puzzle. We are probably the only mid-sized financial services company now that can clear every asset class. We're clearing FCM via a swap deal and we can clear you in any swaps, we do FX, we clear our own payments. Securities was the missing piece. So, something we've been looking at. It is a big lift to do this organically, and something we were thinking about is, do we hire all the people that we need to do this, do we buy the systems and do we organically grow it. And that wasn't a very enticing prospect for us, because it is a big lift and this is a long-term business. It's a little bit like the payments business in a sense that to move someone's clearing relationship over to you is a long, long process. So, that wasn't a very interesting option for us. I think at some point, we might have done it. So the last three or four years, we've been looking at opportunities in the marketplace. The reality is, in the midsize securities clearing space, there are a handful of players and some of them have been trying to sell themselves. Some of them are held by private equity firms, some of them are just too small to be successful and want to sell, a whole variety of reasons. We've looked at some of those over the years, but just could never get to terms with price and what we were buying, and then the Sterne Agee deal came across.…

That's helpful. And then just on, you mentioned the ICAP team, anything you can tell us on what that represents?

Unfortunately, it's kind of a very curious process, driven largely by the regulators. At this point, we're not able to give you any insight, but this is a well-known business, I would say a franchise business for ICAP. I mean, it's been around for a long period of time. There are significant participants in their subset of the industry. They have a very good name in the market and they deal with very significant customers and are well known broadly in the energy space. So, this would be a nice add for us. It is a voice broking business, which basically means that there is limited need for capital and system support in this business. So that's the plus. The offset is normally they have higher compensation ratios. But we think it will be an interesting business, if we could do it on terms that are acceptable to us, and we have agreed the terms with ICAP but there are other considerations related to the mandate from the Competitions Authority that we have to fulfill. So, we should know more about that or sort of definitively about that certainly within a month, and so look for – as and when we can give you numbers and details, we'll do so.

Okay, great. Thanks and congrats again.

All right, I don't see any other questions up. So with that, thanks very much, and as I said earlier, enjoy the summer and we'll speak to you in a couple of months. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you all may disconnect. Everyone have a great day.