Ladies and gentlemen, welcome to the Virtu Financial 2022 Fourth Quarter Results Call. My name is Glenn, and I'll be the moderator for today's call. [Operator Instructions] I will now hand you over to your host, Andrew Smith, Head of Investor Relationship. Andrew, please go ahead.

Thank you, Glenn, and good morning, everyone. Thank you for joining us. Our fourth quarter results were released this morning and are available on our website. On this morning's call, we have Mr. Douglas Cifu, our Chief Executive Officer; Mr. Joseph Molluso, our Co-President and Co-Chief Operating Officer; and Ms. Cindy Lee, our Deputy Chief Financial Officer. We will begin with prepared remarks and then take your questions. First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are, therefore, subject to risks, assumptions and uncertainties, which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It is important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available. We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP. We direct listeners to consult the Investor portion of our website, where you'll find additional supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an exhibition of why this information – why management deems this information to be meaningful, as well as how manage – as well as how we use these measures. With that, I'd like to turn the call over to Doug.

Thank you, Andrew, and good morning, everyone. Thank you for joining us today. In my remarks today, I will focus on Virtu's fourth quarter and full year 2022 financial and business performance, 2022 milestones and the progress we've made toward our key strategic initiatives and goals. Following my remarks, Joe and Cindy will provide additional details on our performance. Turning to our full year and fourth quarter results, which are summarized on Slide 2. We generated $5.8 million of adjusted trading net income per day in 2022, including $4.4 million per day in the fourth quarter. Total adjusted EPS was $3 per share for the full year, including $0.37 in the fourth quarter. Our Market Making segment, which earned an average of $4.2 million per day in adjusted net trading income for 2022 comprises our customer wholesale business where we received flow from 250-plus retail platforms, as well as our noncustomer or proprietary market-making business. In the fourth quarter, our customer market-making business witnessed decreased opportunity as the overall spread opportunity and retail participation ebbed and the quality of the flow we receive from our retail customers was significantly less desirable. As we have noted before, parts of our market-making business can be more variable than our other businesses and as a consequence, should be viewed over the long-term in conjunction with the significant cash flow it generates. We remain extremely bullish on the long-term value of our customer business, which has proven to be durable and profitable over the past 20-plus years. Our noncustomer business, which provides liquidity across asset classes globally, experienced a strong quarter, as well as a strong overall year, as our ongoing investments in our growth initiatives, particularly around options market making continued to perform well. While the integration of our businesses and increased internalization…

Thank you. Doug touched on options and ETF Block, in particular, as drivers of our growth initiatives. I'll review some of the growth information we provide, as well as review where we stack up versus the grid of expected outcomes to Virtu and finally, discuss expenses and capital overall. On growth, growth initiatives constituted $602,000 per day on average in the fourth quarter and $665,000 per day overall in 2022. These numbers were 11% and 14% of our global ANTI, respectively. ANTI-from options grew dramatically as well, doubling its contribution. While we maintained our presence in the crypto markets in the fourth quarter, we did, like many others, significantly reduce our activity. We remain bullish on crypto as a growth area in the future and remain - and we remain excited about EDX, our joint venture. I mean view many of the challenges facing the crypto space as validation of EDX's best-in-class custody clearing and settlement model. On expenses, we ended the year with cash operating expenses that were flat year-over-year at $609 million. We consider this a significant accomplishment given the most inflationary environment in decades and the marketplace for talent, especially early in the year, becoming intense. Our cash compensation ratio is at 21.5% for 2022, right in the range of where we would expect it to be in a year such as this. Other expenses remain relatively constant. The outlook on expenses is more of the same. You can expect our compensation ratio to fluctuate within the ranges you see on Slide 8 in the supplemental materials and a continuation of the trend for our other major expense categories. You will note a marked increase in operations and administrative expense in the fourth quarter. This is due to a foreign exchange valuation swing related to our foreign…

Thank you, Joe. Good morning, everyone. On Slide 3 of our supplemental materials, we provided a summary of our quarterly performance. For the fourth quarter 2022, our adjusted net trading income, which represents our trading gains, net of direct trading expenses, totaled $274 million or $4.4 million per day, which is a 43% decrease year-over-year. Market making adjusted net trading income was $185 million or $2.9 million per day. Execution Services adjusted net trading income was $89 million or $1.4 million per day. Our fourth quarter 2022 normalized adjusted EPS was $0.37, and our full year 2022 normalized adjusted EPS was $3. Adjusted EBITDA was $125 million for the fourth quarter 2022 and $859 million for the full year, which was a decrease of 62% and 34% compared to prior year, respectively. Our full year adjusted EBITDA margin was 59%, which is down from 68% in 2021. On Slide 8, we provided a summary of our operating expense results. For the fourth quarter of 2022, we recorded $185 million of adjusted operating - adjusted operating expenses, which was a 6% decrease year-over-year. The full year 2022 operating expenses were $675 million, which was $2 million lower compared to 2021. We continue to maintain an efficient cost structure and disciplined expense management, which has helped us to control our operating expenses during the inflationary environment. Financing interest expense was $25 million for the fourth quarter of 2022 compared to $20 million in the prior year fourth quarter. With the benefit of the interest rate swap contracts we entered in prior years, we were able to keep a blended interest rate around 4.95% for the long-term debt in aggregate. Our capitalization remains accurate. We repurchased 2.1 million shares or $45 million in Q4 2022 and 16.2 million shares or $460 million [ph] in full year 2022. Since the inception of our share repurchase program, we have bought back a total of 32.8 million shares, which is $910 million today. We remain committed to our $0.24 per quarter dividend. The combination of our dividend policy and share repurchase program demonstrate our continued commitment to return capital to our shareholders. Now I would like to turn the call over to the operator for Q&A.

Yes. Good morning, Doug and Joe and Cindy. I guess, first, the question is on the retail flow. I know you do a lot of analytics, Doug, and you mentioned that you performed in line with the opportunity. And I guess just to understand the opportunity a little bit better, if there's any one or two things that you could have changed about the nature of the retail flow, you know, your peers also in channel checks reported much of the same. But if there was this one or two things the change about the order flow that would help - that would improve profitability. What might they be?

Yes. Thank you. It's a great question, Rich, and I appreciate it very much. I think as we've been very upfront about, and obviously, a lot of these metrics are public in terms of the aggregate number of shares that we receive and then obviously, our 605 metric. So what we do here is we measure within that sub-segment of our business, basically the spread of the bid offer in all of the orders that we received at the time that we receive them. And think of that, if you will, is the opportunity – the opportunity set. And historically, and it started to break down over the last couple of quarters, that spreads some or that opportunity correlated very linearly with volatility. So the higher the volatility, higher spread some was in the retail customer flow that you received. For reasons that you know, I would just be speculating that, that correlation has broken down over the last quarter, quarter and half, and it was particularly egregious, if you will, in the fourth quarter. And so the opportunity was vastly different than the volatility would otherwise - the opportunity within customer market making was vastly different than the volatility would otherwise have projected. So we measure that. We obviously measure our market share and how we're being competitive against the other seven or eight wholesalers. And all of those metrics check out. We obviously have invested and continue to invest tens and tens of millions of dollars in technology to improve and to capture more flow and to increase our ability to monetize flow. But at the end of the day, we are somewhat beholden particularly in that business to the orders that we're receiving. And so as we have said - and obviously, there's been quarters where spread sum has widened, significantly we've had outsized quarter. So that business, which is a sub-segment, obviously, of our Market Making segment, by definition, will be much more volatile. This is, unfortunately, a quarter where we see decreased opportunity. And therefore, we're disappointing, if you will, you guys when we get that, but there are other quarters where we've surprised to the upside. So what we have always said and what we will continue to say is we love that business. We think it's a great business. We provide terrific service to 250 retail brokers over the long haul. It's been incredibly profitable when Knight ran it for the last 20 years, and we continue to run it. So we love the business. It's just a business that can be a bit challenging in the context of a public company that needs to report quarter-by-quarter.

Okay. That's very helpful, Doug. I appreciate it. Thank you.

Thank you.

Thank you, Rich. We have our next question comes from Chris Allen from Citi. Chris, your line is now open.

Morning, everyone. Just a kind of follow-up on Rich's question. I know you don't speculate on the reasons, but maybe you could give us some speculation or the reason for the opportunity set diminishing, maybe is increasing sophistication of retail investors? Or is it a flow mix between the retail brokers? And also, you mentioned enhanced opportunity in customer market making in January with efforts to improve the capture rate that's bearing some fruit. Maybe you could give us some color just on what efforts those are?

Yes, sure. Look, I mean, the easiest and most I think on point answer is that, in the retail business, the whole idea behind the retail business, which smarter guys than me created 30-odd years ago was that you're going to have smaller orders, Chris, that are typically not correlated with the wider market. So as a market maker, you can absorb those markets - those orders, excuse me, internalize them, price improve them and give a retail investor as compared to an institutional investor that will have much larger desires and enhanced experience, better service, et cetera, you kind of get that. In the quarter, and it might be the mix of - as you say, the mix of the business, maybe more institutional investors were sliding into “retail brokers”, et cetera. In the quarter, you have more flow that tended to be more correlated with the larger marketplace, and that makes it more of a challenge for a market maker. We don't have some magic Elixir in terms of - if the stock continues to go up during the day, as I've said many times, that is the yin and the yang of being a market maker. Under the current ecosystem construction, we don't have a choice. We need to take all the flow that comes our way, small, medium and large, regardless of what the stock is doing and many times, that results in negative selection and a negative P&L with regard to that stock for a day, a week, a month, whatever it is. And so that's probably the best answer I can give you. What I can tell you, since 2017, when we first acquired the Knight customer business, we've seen quarters like this when we've seen quarters where the opposite is true, where the flow is a lot softer, the spread sum is significantly larger than we've had outsized quarters. So again, I repeat the mantra, which is, we look at this business over an incredibly long period of time, and we contended to be very bullish about it. In terms of enhancements and investments we've made to increase our monetization of the flow, it's what we've talked about historically. Obviously, we've done a lot of the re-platforming and migrating all of this flow to the legacy. Virtu infrastructure, which is lower latent and more performance. But in as well, we've enhanced significantly the internalization opportunities for that flow, right? So internalizing it against both our own non-customer market making flow, but also making it available to our institutional investors who are very, very keen to get access to it. So all of those things, we've made significant progress. And frankly, it has borne considerable fruit in this quarter and prior quarters. But again, we are somewhat beholden to the outside world and the opportunities presented.

Got it. Just a quick one. Just on the FX, the $9 million in the quarter, offset by the $10 million in revenues. The $10 million revenue that spread over the year does that occur this quarter?

No. That - so the way it's working, Chris, is that the ops and admin 29 this quarter was $9 million higher than it would have otherwise been if not for this FX re-val. But that's because the pound and the sterling started the year at - the pound started the year at 135. It ended at 119. And then in the second and third quarter, I think, it went all the way down to like 110 or below, and then - and they came all the way back up. So year the full year, the FX re-val was a $10 million benefit, which was offset by revenue, okay? So it's a wash in terms of impact to earnings.

Got it. Thanks, guys...

And each quarter, obviously, for it to be a benefit for the full year of 10 coming into the fourth quarter, it was a benefit a lot higher than - because than 10 - because a negative 9 brought it down to 10 this quarter. So for the full year, it's a wash and the quarterly ups and downs basically offsetting revenue. So on a full year basis, it's a wash.

Thanks, guys.

Yeah.

Thank you.

Thank you, Chris. Our next question comes from Alex Kramm from UBS. Alex, your line is now open.

Yes, hey. Good morning. Thanks, everyone. I think you made a comment very briefly at the end of your prepared remarks about what you're seeing so far this year. I think I heard that, but maybe you can flesh it out a little bit. It sounds like on the institutional side and also if you look at the public volumes, things have started surprisingly slow. But obviously, that never really speaks to your opportunity set. So maybe you can talk a little bit about what you're seeing and how that compares, obviously, to the fourth quarter? Thanks.

Yes. You'd never cease to miss the little kernel one I give a little update. So thank you, Alex for noticing that. And kudos to you. Yes, obviously, since we had a challenged quarter in the fourth quarter for customer market making, I wanted to give some color. And look, it's obviously - I don't think today is January or whatever. So it's obviously early in the quarter. But we have seen an improvement in the opportunity set within our customer work and Making business. It's not been dramatic, but it certainly is meaningfully better than what we saw in the fourth quarter, which is terrific. As you say, the rest of the business in terms of you can then look at kind of what institutional and overall marketplace volumes are. I'm very happy with the way that we've started the year. I will say, and obviously caution everybody, right? It's early in the quarter, and that's really based on, I guess, 15 or so trading days. But I wanted to give some indication, obviously, that we see some improvement in the customer market-making business. And as well, we're seeing improvements in our Commodities and Energies business and in Asian equities where we've had some nice wins early in the quarter. So again, we've seen some improvements in our internalization opportunities on our execution with regard to internalizing flows. So very, very - continue to be very bullish and excited about 2023. And the early indications are that we're going to see a little - see some improvements so far.

Excellent. Maybe just one very quick one for Joe, if that's okay. On the debt, I think the trailing EBITDA - debt to EBITDA is, I think, 2.1 times. But obviously, if I annualize the fourth quarter, I think you're somewhere in the mid to high 3s. Can you just remind us in terms of any sort of covenants, again, hopefully, things improve here, but I know people are going to ask again if we stay in this environment, if there is any issues we should be aware of?

No, we have no - we are covenant light to the max. We are...

There is zero maintenance covenants in our long-term debt...

And we got rid of the cash sweep as well, right? So when we have an outsized quarter, the next time we have an outsized quarter, we're going to obviously dedicate all of it to compounding value by buying back our stock. The maturities are termed out to 2029 you know, that 3 times plus is not an issue.

All right. Fantastic. Thanks for verifying.

Thank you.

Thank you, Alex. We have our next question comes from Dan Fannon from Jefferies. Dan, your line is now open.

Thanks. Good morning. Doug, I wanted to follow up on the comments about the core or I should say, legacy market-making business. If you could repeat the numbers of what you said, I think, flat year-over-year. But that also includes some of these new initiatives. So I wanted to think about what - how that business has trended maybe over a longer period. And I guess, maybe thinking about it prospectively, what is - how does that - you just gave some context around the start of the year for the customer market-making business, but also maybe talk about that business and how the prospects of that loan from here?

Yes. It's a great question. Obviously, we get that question a lot, given the fact that we only report a single segment. So I thought it was important in the context of this quarter, Dan, to give just a little more of a hint of, if you will, how that business is. So yes, what I said in the script, whether it was flat from '21 to '22 and up 11% in the third to fourth quarter, which I thought was significant, right, because we've been doing a lot of work during the year to improve. Look, that is - the beauty of that business is truly scaled and global, and it's multi-asset class. So it's a little bit - the analogy I always use is it's a little bit of like a water balloon or a waterbed. You sit on - I don't know if you remember the water bed [ph] I don't know if you're old enough, I remember them from the '70s and the '80s, right? You sit on one side of it, and it feels great, and then all of a sudden, there's - especially because some of a heavier guy there's a bull where it were to move to the other side and you push that and it kind of goes back and forth, right? You kind of get it. So there's always going to be ebbs and flows in that business. And we have weeks, months, quarters where our energy business is doing quite well and then natural gas will go through a period like it did over the last couple of years, where there's frankly no volatility and the price is pretty consistent and the opportunity set within natural gas and energy declines significantly. And then it comes back, which it has done…

Understood. That's helpful. And I guess just thinking about the comments around expenses and knowing that comp can fluctuate, but the more fixed costs being flat, is that - what does that say about your - I guess, your prospects or how you're thinking about the revenue environment for 2023? Do we think about it similarly to kind of what it's been in the more recent periods? Is that how we should think about that expense relationship with the revenue backdrop?

No, that's a good question. It doesn't imply that. It does not imply that. It implies that if we had a similar year, I would expect expenses to be flat. I don't - I provide that guidance to just simplify things just because we are in multiple years now where we've kind of met or exceeded expense guidance. So I kind of feel like we can provide that number, if the environment is markedly better, the cash compensation figure is the one that fluctuates a little bit. And there's enough history now you can see the cash compensation ratios for 4 years in a year where we're up in the 2020 and 2021 ranges. I would expect comp ratios at those levels and then this year, the comp ratio, cash comp is 21.5%. So there's flexibility in the compensation ratio. A great portion of our compensation is discretionary. So that's just a guidance based on the current environment, but it does not assume that the environment is going to continue.

Understood. Thank you.

Thanks.

Thank you, Dan. We have our next question comes from Ken Worthington from JPMorgan. Ken, your line is now open.

Hi, good morning. I wanted to flush out crypto and options a bit more. In terms of your build-out road map for those two asset classes, where are you in the build-out? And at what point do you think you'll be fully built out? And then at what point are you going to be in a position, if you're not already, to kind of win the same sort of 606 contracts you have with retail brokers in equities today?

Yes. It's a great question. So we began this journey in options, I'll say 2 years ago. But really 18 months ago, it took a lot of building and the building continues, but we had to basically reconstitute the way we approach the market, as I described before, quote-based market as opposed to an options - and order-based market, excuse me. And as you know, there is a plus or of options venues in the United States. I'm embarrassed to say, I think there's 17 options exchanges, but I'm not sure in every day that seems to be adding one. So just having connectivity to each of those and understanding the market structure of each of those, some are price times, some are pro rata, as you know, is - has been a bit of a challenge. So to use the baseball analogy, everybody seems to use on these calls, we're in the very early innings of that process. We have the infrastructure built. We have hired and moved some legacy Virtu people. And so we have a very, very talented team, both in the United States and around the world. But I think there's a lot of runway left. I think to throw out a number, just kind of looking at where we are and the opportunity, I think we could increase that business Ken by somewhere by 3 to 4 to even 5 times what we did in 2022. I think really what we've done here Q4 in '21 and '22 is, I'll just say, just although it's a significant opportunity, but just the Index family. We are dabbling in single name options and the beauty, if you will, of the options market is that you can participate in "retail auctions” without having to take all the retail…

Thank you for that. And does it look like - is there a possibility or a likelihood that 2023 can be the year that you're ready to kind of roll this out? Or is it much more likely that the options business getting to where you wanted to be in terms of that wholesaling business is more of a 2024, 2025 time line?

Yes. I mean I would never say never. I'm not sure sitting here today where we're going to have our priorities. I will point out that in looking at the opportunity data in 2022, if you look at like the dramatic increase in options, it really wasn't the Index family, not to denigrate the other business or single name, but that's really where the opportunity is. And as you go where the opportunity takes you, and as I said, there's plenty of opportunity there. So it's something that's on the horizon. Is it within our plans in the next couple, three quarters? No. But I would never say definitively one way or the other, which where we're going to head.

And then maybe lastly, is crypto further ahead or further behind the options business, it feels like crypto is a bit more simple. Maybe that's not the least...

No, no, it's a great observation, actually. I mean crypto, I want to say it's simple, right? Because obviously, there's - it's - there's a lot of coins and there's a lot of venues. And obviously, there's a lot of fraud and criminality, right? So there is a lot of complications there that you don't see in a highly regulated environment like options. But yes, it's obviously more order-based. It feels a lot more like the FX world where you have you have spot FX, you have forwards and futures, and then you have ETFs or at least in the United States, you don't have ETFs, thanks to the chair of the SEC, but in other jurisdictions you do. So that infrastructure we have set up, obviously, to state the obvious, the criminality at FTX and the shutdown of that venue means that we're not making markets there. And indeed, we pulled back from most, if not all, of the spot venues. And so we continue to be a market maker in futures and in ETFs. And I'll put a plug-in for Jamil and the guys at EDX because we think that, that is the great - will be a great solution, particularly to the Wild West unregulated marketplace, having execution quality that feels and acts like equities with best execution and then ultimately with disclosed custodial and if you will, centralized clearing, that's really going to be the key to exploding or having investors have real confidence in digital assets. So I think EDX, Jamil and the team there really have the right solution, and we're very proud and honored to be an investor in that platform.

Great. Thank you very much.

Thank you, Ken. We have our next question comes from Michael Cyprys from Morgan Stanley. Michael, your line is now open.

Great, thanks. Good morning. Maybe just sticking with the options topic. If we look across the industry, volumes continue to remain very robust for options. Just curious your views on that. Why has that held up so well, particularly compared to cash equities? And how durable do you think that is? Do you see any prospects for volumes on the option side to compress meaningfully from here? If we look out 3, 5 years from now, do you think - how meaningfully higher or lower do you think options could be across the industry?

Yes. It's actually a great question. It's very perceptive. I think like in a way, actually, you've seen somewhat of a shift of retail or day trading, if you will, from cash equities to options. That's always been the case, but there has been a lot of innovation by my friends at the CBOE, excuse me. There's been good education by brokers. There's now daily contracts, right, as opposed to weekly expirations, and that innovation, I think, has driven some of the volume and you get more leverage and there's more opportunity, if you will, if you're a day trader, a retail investor in options. So again, it's hard to prognosticate. It's more of a macroeconomic question as to where that goes, right? If the economy rebounds, and we don't have record inflation, and there continues to be job growth and people are optimistic, et cetera, then I think you'll see a continued increase in volumes and opportunity there. The thing that was interesting to me, and I said it in response to Ken's last question, was that you saw an explosion of interest in the Index family. And that's really where the opportunity was in 2022. So we kind of got lucky, if you will, Michael, in that we had targeted that as our first place to go as opposed to a single name. And so I think that was up like 40-ish percent in 2022. The volumes there were while single names were actually down pretty dramatically. So I think investors that want to get exposure to broader indices and are making shorter-term investment decisions on those, look at that family of options. Now as I said, that offers even daily exposure weekly or monthly and say, oh, that's a good place to go. And that's kind of really right in our wheelhouse because it's a complicated trading dynamic. Obviously, you have to have a volatility curve that makes sense. You have to have low latency. You have to be - you have to understand the setups in Chicago and New York and all of that, and you have to have the ability to provide a delta hedge that makes sense and it is acute and priced well and whatnot. So that kind of plays very well into the multi-object market making firm that we built at Virtu and our investments in the options infrastructure and our ability to be a participant in a quote environment as opposed to an order-based environment, have really, really bore fruit in 2022. So if you're sensing enthusiasm in my voice, you are very perceptive because I continue to be very enthused about that business longer term.

Great. Well, given that enthusiasm, maybe just a follow-up question on the same topic here of options, maybe a little bit more drilling in on the single name side. How many tickers are you making markets in today on the single name side? How does that compare to a year ago? And what hurdles do you face in expanding that to more tickers? How do you think about overcoming that? And what are some of the actions you guys might be able to take?

Yes, it's a great question. I mean so the answer is dozens today. And so it's - we clearly have the capability to do it. Look, to be blunt, there's a lot more risk in that side of the business as opposed to an Index side. I mean obviously, Index Options is volatility. You could screw up your curve, you could have an operational issue so you can lose money. But corporate actions and things along those lines make it much more challenging to be a single object market maker in options, particularly if you're going to be - it goes back to my much earlier comments on the service nature of the wholesaling business. As an options wholesaler, you don't get to pick and choose. So hats off to the incumbent, Citadel, Susquehanna, and a handful of others that have built the risk infrastructure to be a two-sided market maker in 1,000 different single object names with a multitude of strikes, a lot of which won't trade a lot, but there's still a lot of - you don't have the ability to pick and choose. And so there's still a lot of risk in that business. So we're going to - this is an obvious answer, but we're focused on the most valuable opportunity and the most addressable opportunity first, and that's what we've done. I don't mean to not give an answer, but it's hard for me to sit here today and say, okay, well, we're going to be 98% complete with that, and therefore, we can shift our focus. We're going to do everything at once the way we've always kind of built Virtu. But the opportunities there are so meaningful and so significant as they are overseas in the Asian markets, I mentioned before that we see - and there's a - 3, 4, 5 times the opportunity in the Index family that there is a single name. So while I think that's a business that we will get into, and obviously, our broker partners would like us to be in that business. Right now, we're focused on the blocking and tackling. And thankfully, it was highly profitable for us in 2022.

Great. Thanks for taking my questions.

Thank you very much.

Thank you, Michael. We have a follow-up question from Rich Repetto from Piper Sandler. Rich, your line is now open.

Yes. Thank you. With all this talk on [indiscernible] back and ask a question about. So with the SEC proposal, I took a hard look at the options market structure. And one of the things that sort of popped out was it's different, like these Citadel and the Susquehanna that you mentioned that are big in options also besides getting flow, but also are market makers on the exchanges and then this whole thing about directed order flow. So I guess the question is, do you think that, that is important to progress an options to be a primary market maker, a designated market make whatever each exchange calls it. Certainly the model at Citadel and Susquehanna has and how easy or hard could it be if you went that route, could you get those same sort of designations if you decide to go that route?

Yes. Look, it's a great question. And obviously, we've studied it, and we know we have a lot of friends at the CBOE. We do a lot of business with them and other exchanges where being, as you say, a designated market maker is important. Wholesalers in the options world, will always be the main responders to auctions. Others are invited in. And certainly, if, not if, when we become part of that marketplace, we will need to acquire bins [ph] if you will, become a designated market maker. I have every degree of confidence that we will be able to do that. We've got a pretty good brand name. We've been really good business partners with global exchanges for now for 15 years, and we've always lived up to our obligations. So I don't have a concern that we will be able to do the business development part of this business, and we already have done that, right? And these exchanges and other counterparties want a participant and want a firm like Virtu to be an active participant in it. That being said, you don't wave a magic wand to become a meaningful Market Maker. Citadel and Susquehanna are amazingly competitive, excellent firms that have been doing this for 20 to 30 years. I'm not arrogant enough to suggest that we're going to come in there like guns blazing and take away the market share. We're not going to, right? We're going to be a complement to those firms. We're going to hopefully add value to the ecosystem as we are today in the Index family. And I think that there is room for competition as there is in cash equities wholesaling. I mean one of the complete falsehoods that the chair of the SEC has propagated is that…

Got it, Doug. And thank you for the water bedding [ph] analogy earlier. I get it and left good image in my mind. Thanks.

Yes, Rich, I probably shouldn't comment if this is a public call, but we can talk about that later.

Thanks.

Thank you.

Thank you, Richard. [Operator Instructions]\

Okay. It looks like we have no other questions in the queue, operator. So I appreciate everybody joining us for the fourth quarter call, and we will be back sometime in April, I would imagine with our first quarter results, and I look forward to engaging with everybody then. Thank you very much. Have a great day.

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.