Good morning, everyone. Thanks for staying with us. I'm Mike Cyprys, Equity Analyst covering brokers, asset managers, and exchanges for Morgan Stanley Research. For our next session, we have MIAX, and I'm excited to welcome Tom Gallagher, Chairman and CEO of MIAX, and Lance Emmons, the Chief Financial Officer. Good morning, everybody. Morning. Thanks so much for joining us. Thanks. Thank you. MIAX, as many of you know, is a technology-driven exchange operator best known for its U.S. options exchanges. It's since expanded across futures, equities, and international listings, which we'll get into this morning. Let's kick off big picture, particularly for those that are maybe a little bit less familiar. Sure. With your story. MIAX is now approaching its first anniversary as a public company. For those that are still getting familiar with the story, what do you believe is most differentiated about your business model? Maybe give a little bit of context for those that are a bit less familiar. I think that what differentiates us today is our technology. I don't say that lightly, because everyone says they have great technology. I think what differentiates us is the speed, the throughput, and the determinism consistently, day in and day out, Michael. In times of volatility, starting with the president coming out on the White House lawn on March 13th, 2020, then the markets going crazy on March 16th, that following Monday, the comparison of the experience by major market participants on a MIAX exchange and being able to refresh their prices consistently faster than anywhere in the United States really helped propel our market. If you look back from Q1 of 2016 to Q1 of this year, we've grown 1,100 basis points of market share. You have to be doing something right to have that kind of growth. I'm very happy to be here after reporting three quarters since being a public company. It's hard to believe we've had three, but we've had double-digit growth this quarter in first quarter net revenues of 40%. Our Adjusted EBITDA is up 66% over the quarter one, 2025, 66% growth and $66 million of EBITDA. Our margins. For the first time, our margins have exceeded 50%, 800 basis point growth in our margins. When you look at the average daily volumes in Q1, the industry was up by 17%. We grew 60% faster than the industry this quarter with our market share, our ADV rather, going up 27%. I think to keep it simple, the technology is the differentiator, but if it was all about the technology, we'd even have a larger market share. It's more than that. Why don't we dive in a little bit on technology. Sure. Something you have consistently emphasized as a core competitive advantage of yours. Where does that advantage matter most? How difficult is it for others to replicate that? Well, diving into the technology, we're about to start historic IPOs with SpaceX coming out later this week or early next week, which is going to have a tremendous retail component to it. When a liquidity provider wants to provide that liquidity and he's paying to see order flow from a retail firm, he wants to make darn sure that he can put up that flow on a place that's safe, it's got a lot of risk protections, and that he can refresh his prices very quickly if market conditions change. With a guy like Elon Musk at the top of the capsule, you can expect, particularly with a retail component, there's going to be a lot of volatility. That's where our market makers will really gravitate to us and I think we'll get an outsized share of these IPOs, whether it's Anthropic, OpenAI, SpaceX. We have been getting an outsized share, particularly in these tech stocks that are now part of the Monday and Wednesday short-dated expirations that started in January. Lance, what do you think? I think we over-index maybe one to three points in some of these most active names. I expect to see similar type of trends with some of these large IPOs coming, again, given our technology advantage. You've mentioned speed, throughput, and determinism. Can you just maybe help elaborate a bit and maybe more layman's terms. Sure. What exactly that means and how that benefits you guys? Okay. Let's take speed, throughput, and determinism. You're a pilot. I'll use the analogy of flying an airliner. You're a pilot. You're flying into Logan Airport on Thanksgiving Eve, and you're one of 20 planes in the queue. It's foggy out. You're coming over the Atlantic, you're coming into Boston. You're 1,000 ft away from the runway and the tower. You ask for some guidance and coordinates, and you don't hear anything back. Why don't you hear anything back? You don't hear anything back because the tower is overwhelmed. The same thing happens in the U.S. financial markets. At the most critical time, you send a message to an exchange to refresh your price. "I don't want this price anymore. This doesn't make sense. Cancel my quote." Well, it's a really volatile day and you haven't heard back from the tower. You haven't heard back from the exchange that they acknowledge that you're out of the market. That's a terrible feeling to be 1,000 ft away from the runway and you want some critical information and the tower's too busy, while the matching engine is too overwhelmed at our competition, therefore you get ambushed. You get ambushed because someone picks you off because your price is stale. That's what we've invested so much technology, whether it's Thanksgiving Eve coming into Logan or New Year's Day, you're going to get the same reliable ability to cancel your quote and get an acknowledgment back that you're out of the market. If you know that whether you're 600 ft from the tower, a mile from the tower on Thanksgiving Eve or New Year's Day, you're going to get a message back in response to your refreshing the price. You know what? Michael, if you know that in 18 millionths of a second, you're out of the market, well, guess what? You hang in there. It's like a quarterback in a football game. If he can stay around for another second, in the case of that, a lot can happen. The same thing in the exchange space. If a major market maker knows he can get out in 18 millionths of a second. Where it really gets interesting is that the 99.99 percentile, when there's extreme volatility, our latency goes from 18 to maybe a 2x. Okay? Some of our competition goes to a 50x. 50x before you know what the hell happened, whether you're out of the market. That's the secret sauce. That predictable, consistent latency. What would you pay to go from Manhattan to JFK if it was always a 22-minute ride, no matter what time of year? That's what I'm selling. If that makes sense to those that are not deep into market structure. Great. Thank you. Why don't we shift and talk a little bigger picture about the options industry. Volumes have remained exceptionally strong, helped by retail engagement, volatility growth, and short-dated options, which you alluded to, and we'll dig into that in a moment. I guess how much of the strength that we're seeing in options across the industry do you feel is cyclical versus structural, and how do you see the industry evolving over the next couple of years? Go ahead. Yeah, I think there's continued structural tailwinds that we've seen really since the pandemic, haven't really gone away. I think the no commission model from the retail broker certainly helped introduce more retail traders to both equities and options. I think the educational efforts that they've done with their apps or their websites in terms of explaining how options work, introduce them to things like complex orders, then of course the expansion of the short-term expirations, which again, has driven some additional volume as well. There was an interesting stat at the SEC Options Market Structure Roundtable, one of the first ones I think they've had in almost 20 years, and they looked at some data from the CAT and they said there's about 70 million unique customer IDs that trade equities, and there's only about 5 million that trade options and equities. We still think there's actually some room to grow there. I think it kind of gives us that, hey, this is not just a cyclical thing, but there are long-term structural trends. Look, in terms of cyclical, I don't know about anyone else in the room, but we don't necessarily see volatility going away, at least for the next couple of years, maybe past 2028. Not to get political, but we're a tweet or an announcement away from a major move in the market up or down. We see that continuing for sure. Is there a particular long-term structural trend that you think is most durable, most compelling, and maybe the biggest driver as you look ahead? Or how would you sort of rank orders? I think that there's a couple of things here to play on what Lance said. We're in a massive generational wealth transfer, Michael. Yep. I think that's going to be going on with the baby boomers leaving assets to the next generation and the next generation over the next, say, nine to 10 years. That's going to fuel amazing growth in retail futures. Retail futures similar to 20 years ago, that growth in the retail options. The other big thing, coincidental with the pandemic in 2020, was firms like Robinhood going to zero fees and having a strategy of zero or low-cost execution for their customers. That fueled our growth as well from 20 million contracts a day to upwards to 65 million to 70 million. The fact that these firms are becoming very low-cost operators is a tailwind that I think is increasing. The generational wealth transfer that we're seeing before our own eyes, I think you've got some mega IPOs that are going to have a retail component to it. I think the tailwinds that have been blowing favorably for our industry for the last two to three years, I think are actually going to be blowing stronger for the next two years. Yeah, I think we've also seen some structured products, right? That basically have embedded or basically trade options within the funds. There's some leveraged ETFs that provide that. Of course, there's options on those leveraged ETFs that again, continue to drive volume. As Tom mentioned, the upcoming IPOs, again, hard to predict what SpaceX or Anthropic or OpenAI will do, but if you look at things like Nvidia or Tesla, they're currently about 4%-6% of industry volume. Again, we believe, especially things like SpaceX, could have similar types of volumes going forward once options are launched. SpaceX. If the IPO goes across on Friday, those options would be available for trading on Tuesday. Tuesday. Tuesday. Yeah. The following week. Okay. Yep. Let's shift and talk about zero DTEs, short-dated options, which the industry rolled out in January across nine symbols. I guess, what have you learned so far from the rollout across these short-dated options on single names on Monday and Wednesday expiries, which were added to complement the Fridays? What needs to happen before we see this expand to Tuesday, Thursday expiries versus maybe even additional symbols over time? Very good question. I think steady as she goes. I am happy to report that I think we get an outsized market share in those seven or eight symbols. I think the volume has not been cannibalistic. I think it has been additive to the industry. Although, it is early days. It is less than six months, Michael, since these Monday and Wednesday expirations have come on. I think that we need another three to four months to see how things shake out. The options industry has been good about making sure that things like these are rolled out cautiously, and I think another three or four months, I think you will see more symbols being added to this list before you are going to add another day. There was a proposal by another exchange, we will all have a similar proposal filed earlier this week, or I think it was yesterday, not Friday, adding Tuesdays and Thursdays to two different ETFs. ETFs are a little easier because there is no earnings on ETFs, it is a little easier to- Right. to sort of schedule around that and trade them five days a week. The proposal is to add two more ETFs, and then Tuesdays and Thursdays, and then also add two more ETFs as well. That will go through the SEC review process. I think as Tom said, we will probably sort of take incremental expansions like that first. Again, making sure that the customer experience is ultimately what matters, right? The customer protection, making sure that they do not get burned on an auto-exercise or something on an earnings post-close earnings announcement or something. Any sense on the timeframe for that? No. No. Okay. Your sense is maybe three, four months out from now, maybe we get to see- More names. More additional names added. Yeah. Okay. All right. Another topic that's been coming up are perpetual futures or perps, as folks like to refer to them as. Hot topic in recent weeks. Can you talk about how these may or may not impact MIAX? Sure. We are just getting into the futures business. We have one product, hard red spring wheat. It's an agricultural commodity product. It's the flagship of our MIAX Futures, that's an institutional product that is providing hedging to the wheat community, whether it's grain elevator operators, whether it's farmers co-ops. For us, in our main business that we have today, there's no place for a perp in a product that I think is consumed, whether it's energy, whether it's a food product, a commodity like grains. It's not the forum for a perpetual security. Having said that, I think that the CFTC made a decision to allow Kalshi to put up perpetual futures on Bitcoin. I think it stops there for several reasons. Number one, I think the use case for perps was really from Asia and Europe because of the difficulties in settling a crypto futures contract. I think it's going to be a long time away from now when the CFTC is going to allow perpetual futures on retail products outside of crypto. Because when you look at the legislation that governs futures products, and I don't often agree with Terry, but I agree with him wholeheartedly in his approach that this seems to be an illegal act as it relates to allowing something that had been heretofore prohibited in the U.S., perps on crypto products. I think that this was overblown reaction, similar to what happened maybe in February, early March, that the data businesses of CME, ICE, and Nasdaq are going to be threatened by AI. Having said that, if a reputable member firm or a potential partner comes to me, Michael, and says, "Listen, we want to try a perpetual futures contract in this way," I'll look at it, just as any business person would look at it. My focus is on the business we have and the business we're rolling out that started May 17th in futures with the Bloomberg franchise. I don't know. Do you want to add anything? Yeah. I think you've covered it. Yeah. That's my view. Yeah. I think that we just have to take it for what it was. We have only one commissioner at the CFTC. The options industry and the futures industry has grown dramatically from 10 million or 11 million contracts 10, 15 years ago to 65 million because we look out for the retail investor as much as the institutional investor. I hate to think about what would happen if there was some auto liquidation of a whole group of inexperienced people that are entering the market, my son's age, at 30. I think that the reason we've had the growth is we've provided the guardrails. I look at myself as a fiduciary to not only my shareholders but to the marketplace. There's a reason there's only a handful of U.S. exchanges as opposed to 90,000 or 100,000 bank savings and loans and thrift. We have a duty to the industry to make sure that when markets have a lot of volatility, a lot of turmoil, that we're putting some good guardrails. I'd be afraid as a result of allowing this expansion of perpetual futures to create a situation where we have a tremendous shock to the retail community that's just getting into futures. I look at us as being stewards. I covet the licenses that I have. I want to make sure that we don't ruin an industry that's grown dramatically with regulation. That's my answer. I think there's some concern that with the administration being perhaps supportive of innovation and in the name of innovation, that maybe there could be some potential for them to approve it beyond crypto is of view of some investors in the marketplace. If it were to be approved beyond crypto, say, index or single names or others, I guess, to what extent do you think that could be additive to volumes across markets versus cannibalized? How do you think about the appeal of, say, multi-list options on single names in terms of what that offers as the ability for investors to have in the portfolios versus the attributes of these perps? Yeah. I think in terms of the. As Tom mentioned, right? If ultimately that is the way the industry goes on perps and that's the way the regulation goes, we are not cannibalizing anything in futures, right? Futures is our agricultural product, and we're just getting started on the Bloomberg financial indices. If our members think that's something they haven't asked for to this point, if our members think that's something that they would like, certainly we have the technology, we have the licenses to bring that to market. I think, again, we want to tread cautiously and make sure we're building for the long term, not just getting a quick hit. In terms of options versus futures, will this be additive or I don't see it cannibalizing multi-listed options. If you remember, right, if you're buying a call, your risk is limited to the premium you paid, right? If you buy a perp, your risk is essentially unlimited. I think that's certainly a different use case. Are there opportunities obviously across the asset classes for hedging between the two or arbing between the two, I should say? I think that's interesting. That could be added volume to both. I think our view is, we'll see how this goes. It's not something we feel the need to be a leader on. We'll take a step back. If that's the way the market and the regulation moves, we have all the tools we need to be there. Great. Why don't we talk about market share? MIAX has taken meaningful market share over any which time period folks want to look at that in multi-list options. What would you say the biggest drivers of those gains are? How do you think about the durability, the sustainability of that as you look out from here? Recently, we've seen some volatility in the market share. Maybe you can help unpack why that is, why we might see that from time to time. Sure. Great question, Michael. I think our market share ended about 17.25% Q1. I don't look at market share day to day. I look at the market share trends. I look at the market share versus the capture rate that drives our business as a public company. I always want to favor increasing our transaction revenue per contract. For the first 10 years, the rocket fuel for an exchange is market share. If you're not 5%, 6%, 7% in Tesla, no one, but no one is going to connect to your exchange. When you start to become 10%, 12%, 15%, 18% of a symbol, people are calling me up and saying, "Hey, Mr. Gallagher, I know we had a tech freeze, we have a regulatory problem. We have to be exposed to your market." For my first 10 years as an exchange operator, it was all about getting that rocket fuel, that market share. How did I do it? How did we do it? Low fees, no fees, Equity Rights Programs whereby we offered deep equity in our parent company if you did more volume on our exchange. Well, guess what? Now that we got people into the arena, they like the experience, they love the risk protections, the latency I talked about, the throughput, and the determinism. Now, what I want to do as a public company, three quarters, I want to maximize the revenue, and I might not go after someone that calls me up and says, "Tom, I've got this prime auction business. I think I can get you two points of additional market share, but you got to pay me $0.02."I'm not going to chase that. I'm going to tell my sales guys, we don't need that. I'm going to be much more selective. Why am I optimistic? I'm optimistic because we only opened up a trading floor in September in Miami, only the second trading floor to open in the history of our country, in Miami, in Florida, and I'm at about 0.4%-0.5% market share. On any given day, you can do 6%-8% of the multi-listed volume is still done on the floor. I have aspirations to get more than my 1/6 of that floor volume by new functionality, incentive pricing, putting some additional members on the floor. I feel that we can garner potentially much better than our 1/6. The other thing is, areas like complex order functionality, we're number two in the country. That's what I call capture risk. It's good capture business, and we're going to roll out additional functionality to capture more of that complex orders, more floor volume. When you add to it, what we're bringing to the table on the eve of these historic IPOs, that we can provide that safe environment for the liquidity providers. I think our mature options business has more runway to go. Then you put the new foray that only started on May 17th into futures. We're going to take the infrastructure, we're going to take the relationship with these market makers, the licenses that we've gotten from the CFTC in futures, and this powerful new relationship with Bloomberg to put up a host of financial futures products on our futures exchanges. Here's the icing, why I'm so excited about the options business still, is next year we're going to launch options on our SEC-regulated exchanges on the B100, the B500, and these financial futures products. They'll be proprietary, meaning similar to the VIX, the only place you can bet on the B100 option is on a MIAX exchange. I think you're going to get more market share because of the floor, because of new functionality, and I'm going to incentivize people. The other thing is when you start a new business, I don't care if it's a restaurant or it's a stock exchange, you're going to be very careful, a lot of risk protections. There are people that come to us and say, "Tom, we can't put up any big size on your exchange." I'm just using this as a hypothetical. We want to do an order with 100,000 contracts. Your stuff only allows 50,000. I can't send you any business because your risk protection setting is too low. We want to wait. We've waited now nine months. We can change that risk protection if it makes sense, and that's a whole new customer that I wasn't seeing. There's a lot of anecdotal things, Michael, that helps you grow the pie, and I feel good about it. Again, giving them low fees, no fees, and an equity component in these ERPs, Equity Rights Programs, that's what got them here. What's keeping them here is the experience, and I think that experience is what's going to propel us to even more market share growth. Great. Why don't we shift and talk about the futures business? Sure. You've invested heavily in the platform, the technology, the Bloomberg partnership. What's your long-term vision, would you say, for the futures business, and what would success look like, say, three, five years from now? Sure. I think success would look like being the first exchange operator to really make inroads so that the futures industry is not subject to only one dominant market participant as they have been for the last 20 years to 25 years. If we can come in with our suite of agricultural products and our financial futures products and provide meaningful competition in the future space, we would be successful. Why do I think we can do it? Is we're showing up with the chicken and the egg. What do I mean by that? We have brand new platform. We've moved off of the CME Globex platform to the MIAX Onyx platform. We've already been told anecdotally that we're five times faster than our competition in terms of latency. We're going to create disruptive, aggressive pricing mechanisms that our competition never had to use because they were a proprietary, non-fungible exchange with products that only trade on ICE or CME. To bring disruptive competition in the next 36-48 months, I'll say, "Hats off, team. We did it." That's what I think gets me excited about this next journey, and it's leveraging everything we've done to today in options and equities into financial futures and the ags. The agricultural community, that's our legacy. When I bought the exchange, are you just going to get rid of the product because you want the license? I looked these people in the eye that have been holding a seat on the Minneapolis Grain Exchange from their parents and grandparents and said, "No, we're going to respect the heritage. We're going to continue to work on the grains." Boy, am I excited to have this platform as we see historic disruption, particularly with the Strait of Hormuz impacting everything from energy to fertilizer. That's what success looks like to me. Yeah, I think if you look at our options business, right, the margin profile we've been able to obtain in options and it being a very competitive multi-list environment I think the key point to bring across is, look, we've built what we need or substantially built what we need in futures in terms of data center Chicago for the commodities, the data center in Secaucus for the financial products. We've built the system. Again, obviously, a little bit of incremental work to launch each new product. Every dollar of revenue that comes in now that we've built the platform will be very high incremental margin. I think over time, it would be unreasonable to see our futures margins look similar to our options business. Great. Maybe just a question on the product side, the Bloomberg 100, the Bloomberg 500 products features are probably amongst the most anticipated launches in your history. What feedback are you hearing from brokers, market makers, end users? What gives you confidence on these products can sort of carve out a meaningful niche- Yeah. In the broader market backdrop, maybe update us on the launch here. Okay. We've had three launches since May 17th, the markets have been tight. The markets have been liquid. We've had probably about 13,000 contracts a day on average. We started the first product, the B100, with three market makers making great markets. These market makers are displaying what I think is necessary to attract the retail player. It's been really good. I think people have really seen a flawless execution with these three launches. I think that between now and the end of the year, we're going to see some of the big five names in retail become involved with the B100 and the B500. I think it'll take a longer time for adoption on the institutional side, but that's where I'm going to lean into Bloomberg. That's where I'm going to lean into that relationship with Bloomberg on the institutional side. The game plan was start with retail, start with aggressive pricing in the retail sense to get those retail firms that are all about low cost of execution engaged, have tight markets, and we've accomplished that, Michael. So- We feel good about it. The pipeline, you mentioned. The pipeline beyond that. For brokers. We're going to look at a number of grain products. I can't make any news today on what those are, but we are going to be launching the first new grain products in a long time, in Q4. Great. I think that'll be in response to a customer demand. The retail brokerage pipeline, I think you said five by year-end. Yeah. You'd expect to be onboarded? Yes. Engaging in the product. Yeah. There's various levels of engagement with these firms, and I'm pleasantly pleased with where we stand, and I think we've created some good incentives for the retail shops, incentives for the market makers. I'm hopeful that we have five firms fully engaged by the end of the year, which would be really I'd feel good about it. Great. We're just about out of time. Final question, if we revisit this conversation five years from now, what do you think will surprise investors most about how MIAX has evolved? I think what will surprise you all five years from now is we started on this venture in 2012, launching our first options exchange. We will become the first truly global exchange operator that can honestly say that we grew internationally, not to just grow revenues in an uncorrelated way, but we thoughtfully became one of the first truly global exchange operators. It comes down to the teams and the people. It's a lot easier to buy an exchange than to integrate it. We started with Bermuda. We went on to the Channel Islands in Guernsey. You learn a lot from these smaller venues, and it gives us opportunities to try new things. I would never call them the minor leagues or the proving grounds, but I think you can do things in respected jurisdictions like Bermuda that has a great regulatory regime. I think what'll surprise people is what started out as a dream has become a truly global exchange operator that has a culture of commitment to its employees and will continue to grow and to thrive. Great. I'm afraid we're out of time, Tom. Thank you. Thank you so much. Thanks a lot, you guys. Thanks. Thank you.