Cboe Global Markets, Inc.

Good morning and welcome to the CBOE Global Markets first quarter 2023 earnings conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ken Hill, Vice President of Investor Relations at SIBO Global Markets. Please go ahead.

Good morning. Thank you for joining us for our first quarter earnings conference call. On the call today, Ed Tilley, our Chairman and CEO, will discuss our performance for the quarter and provide an update on our strategic initiatives. Then, Brian Schell, our Executive Vice President, CFO and Treasurer, results for the quarter, as well as discuss our 2023 financial outlook. Following their comments, we will open the call to Q&A. Also joining us for Q&A will be Chris Isaacson, our Chief Operating Officer, Dave Howson, our President, and our Chief Strategy Officer, John Dieters. I'd like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website. During our remarks, we'll make some forward-looking statements, which represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions, risks, and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise after this conference call. During the call this morning, we'll be referring to non-GAAP measures as defined and outlined in the earnings materials. Now I'd like to turn the call over to Ed.

Thank you, Ken. Good morning, and thanks for joining us today. to continually innovate to meet the evolving needs of the global financial industry. From pioneering options and volatility trading to introducing new technologies and market models, SIBO has transformed the way market participants transfer risk and build capital. Our series of strategic acquisitions in recent years have greatly expanded the breadth and depth of the SIBO network, making us the dynamic company that we are today. Each and every quarter we have built upon our strong foundation, and this quarter is no different. I'm pleased to report on record first quarter earnings for CBOE, reflecting the continued endurance of our business. During the quarter, we grew net revenue by 13% year over year to a record $471 million and adjusted EPS by 10% to a record $1.90. These record-breaking first quarter results We're driven by strong volumes across our derivatives franchise, specifically our proprietary index option products and the continued global expansion of our data and access solutions business. Our derivatives business delivered another outstanding quarter as total net revenue increased 29% driven by the strength of our index options and volatility products and solid volumes in multi-list options trading. During the quarter, Total net revenue in our data and access solutions business increased 9%, while total net revenue in our cash and spot markets business decreased 12%. We continue to make progress, delivering on our top strategic growth priorities, derivatives, data and access solutions, and SIBO Digital. I'll touch on derivatives and data and access solutions in a moment, but first I want to provide an update on SIBO Digital. During the quarter, SIBO Digital continued to onboard new participants as liquidity deepened and our spreads compressed to competitive levels compared to other U.S.-based platforms. February represented our best month to date, with ADV of more than $100 million. We had a record first quarter with $7.4 billion traded. 2023 is not only an anniversary year for SIBO, but it also marks the 40th anniversary of SBX Options and the 30th anniversary of the VIX Index. The success of both our VIX franchise and suite of S&P 500 index option products is a result of years of innovation and perseverance, driven by our unwavering belief in the potential from the beginning. Trading these products was robust during the quarter. The recent enhancements implemented to expand access to SPX and XSP, including expanded trading hours and new expirations, have created new opportunities for customers. During the first quarter, SBX Options ADV increased 59% to a record 2.8 million contracts, including a single-day record of 4.2 million contracts traded on March 10. Building on the strong momentum we saw last quarter, our mini-SBX Options contract, known by the ticker XSP, increased 195% year-over-year. Additionally, ADV for PICS Options increased 18% year-over-year in the first quarter, as they engaged in tactical trading strategies around market events. ADP for SPX options opened on the same day of expiration, otherwise called zero DTE, comprised nearly 43% of overall SPX volumes in the first quarter and nearly 45% of SPX volume in April. We believe there has been a fundamental evolution in how customers are trading their to see increased demand from our non-U.S. customers and liquidity providers for the ability to trade SPX and VIX products across all time zones day and night. As a result, we have seen sizable increase in volume during our global trading hour session with ADV for SPX and VIX options increasing 121% and 118% respectively year over year. Turning to our VIX products, ADV for VIX options increased 18% year over year to over 718,000 contracts traded in the first quarter, while VIX Futures' ADV remained steady at 223,000 contracts. First quarter volume in multi-listed options increased 1% to an ADV of 11 million contracts. In March, SIBO reached a record 337 million total contracts traded across its four options exchanges. Fifty years ago, we founded the listed options industry, and despite its immense growth, We believe that we are still in the early stages of the evolution of this market. We continue to lead the industry forward through continued enhancements to our ecosystem of products to suit the needs of various customers. Most recently, we announced the launch of the Zeebo One Day Volatility Index. The market seeks to measure the expected volatility of the S&P 500 index over the current trading day. Just as the VIX index has grown to become one of the most recognized tools in the marketplace, We believe the one-day VIX index will be a complementary addition for market participants seeking to better understand current equity market volatility. During the quarter, we were also excited to announce our plans to expand the product suite of SIBO Europe derivatives to include single-stock options on leading European companies. These products are expected to be available for trading in November of 2023 and cleared by SIBO Clear Europe, subject to necessary regulatory approvals. With the utility and flexibility that options provide in any market environment, as well as the varied trading strategies utilized by a diverse customer base, we believe we will continue to see demand from new and existing customers as they discover the benefits options can provide to their portfolios. We are pleased with the continued solid growth of our data and access solutions business, which posted another strong quarter, with total net revenue increasing 9%. We continue to enhance our bundled data offerings and cloud strategy, packaging high-quality data from across our markets and delivering it to customers globally in a consistent and cost-effective manner, extending the reach of our content and the opportunity for this business. During the quarter, we were excited to launch the SIBO One Options Feed, a product designed for the retail options trading community. This high-quality data feed provides retail investors with cost-effective, real-time data. SIBO knows it is imperative to help equip the burgeoning retail community with the information they may need to invest responsibly. SIBO's enduring success over the past half century is reflected in the unrivaled position that we hold today across our global derivatives and securities ecosystem. I've covered our derivatives business and will now touch on highlights from our cash and spot market. notional value traded of $45 billion. In Europe, the SIBO Europe equities business increased first quarter market share three percentage points year over year to 24.9%. Additionally, SIBO Bids Europe had another strong quarter with 36.3% market share, extending its run as the largest European block trading venue to 12 consecutive months. SIBO cleared market share to 34.1% in the first quarter, In Japan, we saw our equities market share grow to 4.8% during the first quarter, up from 3.8% a year ago. We also remain on track for the SIBO Japan technology migration, an expected launch of SIBO Bids Japan in the fourth quarter of this year, subject to regulatory approval, further extending our reach of the bids network into another key global equity market. In summary, SIBO delivered an outstanding first quarter to start the year. continuing the momentum of our record 2022. While we have a long-term view of our business, we are committed to investing in the near term to lay a solid foundation for future sustainable growth. With this perspective, we are confident we can build on our success and continue to deliver value to our customers and shareholders for the next 50 years. With that, I'll turn it over to Brian.