Virtu Financial, Inc. (NASDAQ:VIRT) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 08:30 am ET

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Virtu Financial, Inc. (NASDAQ:VIRT) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Your first question comes from Rich Repetto from Sandler O'Neill. Your line is open.

Analyst
Rich Repetto

Yeah, good morning. Good morning, Alex.I guess my question is on the global FICC options and other. I mean strong outperformance it was up 39% quarter-over-quarter. And I guess could you go -- give us a little bit more specific details on the outperformance in that segment?

Executive
Douglas Cifu

Yes. Thanks for participating, Rich. Yes a couple of things. One is during the quarter I mentioned in my remarks that there was periods of episodic volatility. So we had during the quarter a spike in energy volumes and energy volatility for example thanks to some upheaval in the Middle East. And so there were events like that. On the organic front I mentioned in my remarks as well that like our options market making business has started to perform. There were some good opportunities in the quarter. And as well on the ETF side there's significant opportunity traditionally in fixed income. And so that gets classified in that area. So we've become as I mentioned on the last call we are now a participant -- excuse me in credit in 2019. So we're seeing opportunities both on the fixed income ETF side but also on the credit side. So it's really a combination of those.

If you look at the volatility on energy for example in the quarter I think it was up something like 280% although the CME volume was down. There was that brief period of time I think it was in September when you really saw WTI and CL spike in terms of volatility. And that's kind of the virtue story right? We're there to capture volatility and provide two-sided prices. During times of stress we continue to trade during that very serious geopolitical event and it resulted in some nice P&L pickup. But also I would stress the organic growth of our options business and our block ETF business as well Rich.

Analyst
Rich Repetto

Got it. So it seems like you're pretty positive on -- I should have -- I'm remiss in not asking a sort of the outlook. But I do want to do my 1 follow-up on a different topic but it's a 0 commissions. And just trying to get a feel for the communications with the ebrokers I know some have expected that did -- the -- some efforts to try to increase payment for order flow -- excuse me versus price improvement etc. And I know your margins are very thin now. And then what you're seeing since these -- the cuts went into effect in the beginning of October?

Executive
Douglas Cifu

Yes. I mean I'll speak very generally. I never talk about a specific customer publicly. And obviously I'm not going to do that here. But I think generally here's what I would say. I view this move towards 0 commissions as just part of a larger mosaic that we're seeing in the financial services market around efficiency and scale. And this