VIRT - NASDAQ

Hello, everybody, and welcome to the Virtu Financial 2025 Second Quarter Results. My name is Elliot, and I'll be your coordinator for today. [Operator Instructions] I would now like to hand over to Andrew Smith, Head of Investor Relations. Please go ahead.

Thank you, Elliot. Good morning, everyone. Thank you for joining us. Our second quarter 2025 results were released this morning and are available on our website. With us today 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 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 explanation of why we deem this information to be meaningful as well as how management uses these measures. And with all that, I'd like to turn the call over to our CEO, Doug Cifu.

Thank you very much, Andrew, and good morning, everyone. Thank you for joining us this morning. In my remarks today, I will focus on Virtu's second quarter 2025 performance and strategic initiatives. Following my remarks, Joe and Cindy will provide additional details on our results. We realized outstanding results across our businesses in the second quarter, fueled by market turmoil around tariffs, economic policy and general volatility we recorded $568 million in adjusted net trading income, which is $9.2 million per day and $1.53 in adjusted EPS, both numbers recent highs and are reflective of our ongoing investments, growth initiatives across the firm and the macro environment. Market Making contributed $451 million and Execution Services contributed $116 million. While we believe significant opportunities remain in both cases, we believe that our core business and growth initiatives performed well against the opportunity set that we addressed. It was our sixth straight quarter of increasing adjusted net trading income overall. Our growth initiatives were particularly strong this quarter, reaching an all-time high of $1.3 million per day or 15% of our total adjusted net trading income per day of $9.2 million. Our growing ETF block franchise and global digital asset desk led the group with strong performances from our options market making as well. In ETF block, the volumes and volatility surrounding Liberation Day and the ongoing tariff news drove elevated client demand for our ETF desk, we continue to grow our market share and client list globally for ETFs, and we remain focused on the build-out of our Europe ETF block offering. In digital assets, our expanding capabilities continue to yield attractive results as we extended our Market Making to additional tokens and asset classes. We remain excited about this space for many reasons, including ones we will discuss further in a moment. Our customer Market Making business was strong given the market conditions, especially at the start of the quarter. Retail engagement remains strong at or above the elevated post-pandemic baseline and our 605 executed shares and dollar value of quoted spreads reflect recent highs. As you know, mean realized volatility was 30 and the VIX average 24. However, median daily realized volatility and intraday volatility were up low single digits quarter-over-quarter illustrating a favorable environment that was closer to the first quarter. Equity TCV was up 17% against the already healthy first quarter levels or about 12% if you exclude sub-dollar share volumes and notional U.S. equity volumes were up 9% quarter-to-quarter. Our noncustomer Market Making business continued to deliver growth and a strong performance against the growing dynamic opportunity in the quarter. Our global equities franchise and noncustomer market making delivered excellent performance as did our ETF block business, which had another record quarter. Crypto and options also performed exceedingly well thanks to both enhancements and extensions of our capabilities and the elevated opportunity set in the quarter. In crypto, in particular, our capabilities have grown to cover more markets and more symbols than ever across futures, spot, perpetual futures and ETFs globally. Our institutional business, Virtu Execution Services or VES, recorded $116 million in adjusted net trading income, a recent high. As we have mentioned on prior calls, we believe that the VES business could grow to a consistent $2 million per day through the cycle, and we are well on our way to achieving this goal. We recorded 2 straight quarters of around $1.9 million per day, and we believe this has room to grow. Since taking on the Execution Services business as a strategic imperative before we made any acquisitions, we have relied on our ability to develop best-in-class technology and products. Today, we are proud to serve approximately 2,000 global buy- side and sell-side clients. A key avenue of growth within VES comes from converting our products like Triton, our market-leading EMS into multi-asset class products to serve our clients' fixed income, FX and option needs. Virtu Capital Markets, which has been a pioneer in implementing at-the-market offerings for corporate issuers, produced an outstanding quarter in the second quarter of 2025, its best on record. We believe more growth will come from cross-selling within our broad network of VES clients and strategic partners, penetrating new and growing client categories, rolling out offerings like VTS, Virtu technology services and continued enhancements to monetizing our flow and technology. Since growing this business substantially by acquiring ITG, Virtu has solidified the revenue base cut costs dramatically and made strategic hires to expand our addressable market across multiple dimensions. We continue to see strong tailwinds for Virtu, sustained retail engagement post-pandemic remains a positive backdrop and several structural trends should help compound our growth in the coming quarters. First, we're encouraged by the emerging interest in overnight equity trading. While still early, we're working with clients, regulators and market participants to help shape a robust framework that gives global investors easier access to U.S. capital markets. Second, digital assets are becoming a meaningful growth opportunity. Institutional demand continues to build, and we're expanding our capabilities, adding more coins, tokens and protocols across a growing network of venues and brokers. We see broader crypto adoption as a significant driver of future volume and activity for Virtu as we scale our capabilities and offerings. Third, the regulatory landscape is moving in a constructive direction. The GENIUS stablecoin legislation and the pending CLARITY crypto market structure act and innovations in tokenization are all positive developments for Virtu. Tokenization, in particular, creates new products that need liquidity and order routing playing directly to our 24/7 market-making strengths. As participation in crypto markets grows, so does the need for liquidity and price discovery. Virtu is well positioned to meet that demand, and we expect to remain a key partner to banks, venues, brokers and institutional clients as this ecosystem develops. I want to end on a personal note and share some news about our leadership transition. After 18 wonderful years I've decided to retire at the end of this year to spend more time with my family. It has been a tremendous privilege to work for so long with an enormously talented group of individuals. This has been the defining chapter of my career and I couldn't be more proud and grateful for what we've accomplished together. When we started Virtu in 2008, we had a bold vision to transform electronic market making by building a technologically enabled scaled global firm that could consistently deliver the best bid and best offering. We set out to revolutionize how markets operate through cutting-edge technology and relentless innovation. We have built one of the industry's leading trading platforms, serving clients across multiple asset classes and geographies. Along the way, we strategically acquired KCG and ITG which strengthened our technology foundation and expanded our market reach and most importantly, created tremendous value for our shareholders and client. What I am the most proud of is the incredible team we've built, the innovation, dedication and client focus I see every day from our employees gives me complete confidence in the future. I can't thank my life partner and friend, Vinnie Viola, enough for allowing me this opportunity. Virtu's businesses are stronger than ever and our scope, reach and scale leaves us poised to continue to thrive and prosper and has been left in extremely competent hands. I am thrilled to announce that my friend and protégé, if you will, Aaron Simons, our Chief Technology Officer, who has been with Virtu basically from the beginning for 2 decades, will be stepping into the CEO role. Aaron has been instrumental in building our technology backbone and has the strategic vision to take us to the next level. This transition represents continuity of our core values and culture, combined with a fresh perspective on our growth opportunities. I'll be staying on as an adviser to ensure a seamless handover and will remain deeply invested in our success. I couldn't be more optimistic about our future, and I'm excited to watch and continue and thrive under Aaron's great leadership. With that, I will turn it over to my friend, Joe Molluso. Joe?

Thank you, Doug. I'll just underline a few points that you went through and add some additional color. Look, our adjusted EBITDA margin of 65% was the highest since the first quarter of '22. We achieved this margin by holding expenses in line as we've done over the long term. Adjusted cash operating expenses were $198 million in the quarter, and our compensation ratio was 19%, including cash and 23%, including stock. Notably, we've grown and built out significant new businesses and continue to attract top-notch talent while holding headcount relatively steady and our compensation ratio within historical norms. And as I mentioned in my remarks last quarter, despite significant volatility in our quarter-to-quarter results, which we expect to continue over time, there is a long term up and to the right skew to our results and our growth. As you can see on Slide 12 in the supplemental materials, we ended the quarter with over $2 billion of trading capital, which is buffered by significant additional liquidity sources. We bought back $66 million of our shares in the quarter and year-to-date have bought back $135 million. And then since the inception of our share repurchase program, we've repurchased $1.4 billion worth of shares at an average cost of a little over $26. We view this deployment of capital as strategic, and we continue to evaluate our repurchase program going forward and expect to be within the ranges that we have published publicly. And with that, I'm going to turn it over to Cindy to complete the prepared remarks.

Thank you, Joe. Good morning, everyone. On Slide 3 of our supplemental materials, we provided a summary of our quarterly performance. Looking at our performance trajectory. Our second quarter 2025 adjusted net trading income of $568 million or $9.2 million per day, a 50% increase from the $6.1 million per day in Q2 2024. Our normalized adjusted EPS of $1.53 for the second quarter 2025 increased 83% compared to Q2 2024. Our adjusted EBITDA margin of 65% demonstrated our disciplined expense management approach and operational efficiency. In Q2 2025, we repurchased 1.7 million shares for a total of $66 million. To date, we have repurchased almost 54 million shares at an average price of $26.35 per share for a total of $1.4 billion, representing close to 20% of our fully diluted shares outstanding, net of issuance. Our balance sheet remains well positioned with the debt to LTM adjusted EBITDA ratio of 1.5x, providing us with financial flexibility while maintaining our commitment to returning capital to our shareholders through our dividend and share repurchase program. Now I would like to turn the call over to the operator for the Q&A.

[Operator Instructions] First question comes from Ken Worthington with JPMorgan.

Doug, congratulations on all you've built and accomplished. It's been a pleasure working with you. Can you give us an introduction to Aaron, give us maybe some more color on his responsibilities and accomplishments at Virtu and what the transition from you to Aaron will look like over the next 6 months or 5 months?

Sure, sure. That's a great question. Thank you very much for your kind words. So just some background on Aaron, which you can read his CV. I mean, he's a very intellectually powerful man. As I have always told people, he is, in my view, the smartest guy at Virtu. I first met Aaron in May of 2008, maybe a month after we had started Virtu when he interviewed. I distinctly remember the interview because I understood very little of what he was trying to describe to, was his dissertation and string theory. But I remember thinking this is maybe the smartest, most articulate decent person I've ever met in my life, and I wouldn't let him leave the office, which was a very small start-up office, until he had agreed to work at Virtu and thankfully, he did. And he began his career at Virtu in August of 2008. And Ken, you may remember the firm back then, it was 10 folks in a temporary office on Park Avenue. So Aaron was a developer and a trader and probably made some coffee, if you will, at the time and put together some furniture. So he knows the spirit, the culture, and if you will, the zeitgeist to Virtu from the beginning. He's always been, I will immodestly say, my friend and my mentee. And through the years, we're not big on titles until more recently, but he's always been in the inner sanctum of Virtu and somebody that I relied on for advice about the firm. And frankly, when I didn't understand something, including my math, my kids geometry homework. Aaron would do that for me, and for the firm, he's well like within the firm. About 5 or 6 years ago, and it really was triggered by the growth of the firm and the pandemic and with the advice and counsel of my Board and Vinnie, we put together a senior leadership team at this firm. Some of it is obviously described in the public filings, but we have Joe and Brett, Steve Cavoli and Aaron Simons, and they were the kind of the 4 horsemen, if you will, that really began to guide and lead the firm. And not that I was actively transitioning, but I definitely took a step back in the micro managing day-to-day of a start-up and gave them significant responsibilities. And with that, they began to interact on a daily basis, on a monthly basis and a quarterly basis with our board and with Vinnie and others and Vinnie obviously has known Aaron for years. And so the transition really began in earnest 5 or 6 years ago with that structure, if you will. And obviously, the Board has gotten to know Aaron over the years. He's presented been at every Board meeting and clearly a generationally talented young man when it comes to technology and building out large technology systems. He's been great with our clients and great with significant investors that have come into the firm and whatnot. And just a real amiable person that is well liked and well regarded around the firm. In terms of how that will work and what he will continue to do, I mean, the culture and the business purpose of Virtu will not be changed. Clearly, he's got a different, thankfully, personality than I do, maybe not as brash and outspoken, but certainly a lot smarter and careful about the word he uses. So I'm extremely excited for him and for the firm and for his family and for my family and for everything that he has meant and will continue to mean to the firm. I'm going to ask Joe to say a few words from his perspective about the transition and whatnot, Joe?

Sure. Thank you. Now look, Ken, of course, Doug and I have worked together for many years, and we're naturally sorry to see him retire, but I've worked with Aaron and know him for many years as well and endorse completely his appointment as CEO. And I know Brett and Steve, I won't speak for them, but I know I think we're all in unison and in sync with this development, and it's the best thing for Virtu at this point and very much look forward to the future.

We now turn to Craig Siegenthaler with Bank of America.

Doug, we wanted to wish you the best in your retirement. And Aaron, we look forward to meeting you soon. Our first question is on the potential repeal of the Order Protection Rule. I'm wondering what do you see as the major impact on the ecosystem if this goes through and more specifically to Virtu and the market makers?

Yes. I mean it's a great question. Obviously, we've been in the public debate, and we knew Atkins position from, frankly, 2005. He's never been a fan of Rule 611. I think as a firm, we're sort of agnostic. I think -- where I think this will probably shake out is similar, and where it probably should shake out is similar to what you see up in Canada, which is in order to have a protected quote, a venue has to have a certain market share, right? So I think in Canada, it's like 2.5%, and I'm not suggesting that number. But I think a reasonable number, a minimum market threshold in order to be viewed as a protected quote. I think that will answer some of the critics that talk about excessive fragmentation and lack of liquidity gathering, if you will, on the displayed markets. I should know, but I think we have 15 medallions these days and going to soon to 20. And that may be a few too many. So from a liquidity gathering efficiency of the market, it probably does make some sense. Obviously, we own an interest in the Members Exchange, which we think is a great exchange and we continue to wish them well, and that's a very significant investment for us. But we do think that, that makes sense. From a market making perspective, the pros are that we spend a lot of time, money and technology, if you will, connecting to venues that frankly don't have significant market share, and that -- there's a cost to that. You will continue to have best execution, right? And we have always been a firm through technology and transparency that has demonstrated best execution to our clients and to the regulators. So we don't need the, if you will, the protections of the Order Protection Rule in order to do the right thing for the market. So I think on balance, it's neutral to slightly positive for Virtu in the sense that it probably will lead to a reduction of like overhead fixed costs, if you will, with regard to connecting to these venues. And to the extent there's inefficiencies and trade-throughs in the market, that's what market makers do. We keep markets in equilibrium and make sure that they are efficient, fair and transparent.

Just for my follow-up, I wanted to see if you had any thoughts on the strategic merits of operating a hedge fund in parallel to the Market Making and Execution businesses. And the reason we're asking is that Tower is launching a hedge fund and then some of your other competitors like Citadel, Susquehanna, Two Sigma, they also run hedge funds side by side. So why doesn't Virtu launch a hedge fund? It could expand your revenue base. It shouldn't be dilutive to your stock valuation and also not require that much capital.

Yes. It's a great question. I mean we have, over the years, considered it. There's obviously a lot of infrastructure and conflict management, if you will, that you have to deal with, with regard to a hedge fund. Certainly, those are all manageable. And you do mention that there are firms like Citadel that have managed them quite well. And I guess they had the hedge fund before they had the market maker. And so it is certainly possible. This firm has always prided itself in being as risk averse, if you will, as possible and capital-light and providing a service to the marketplace. And in terms of like holding positions, we measure things in nano, micro and milliseconds here. Certainly, some of our strategies are longer than that. And so just culturally, it might be a bit of a shift, but it is definitely something that I think Aaron, who's, as I said in response to Ken's question, is a heck of a lot smarter than I am and younger and more vivacious, I would imagine he will consider. Joe, any thoughts?

No. Craig, we've looked at it as we've looked at everything, right? We've looked at what that looks like side by side over the years. It's just been a matter of what do you prioritize. And here we sit today with a couple of thousand like real buy-side clients as well as the Market Making business. So it's something that's out there that we revisit from time to time.

We now turn to Alex Blostein with Goldman Sachs. Your line is open.

Doug, just to again echo everybody else's comments, congrats, definitely a bit of end of an era. We'll miss your passion on these earnings calls, but I'm sure the content will remain quite rich. So it's been great, great working with you. Question maybe strategically, and I'm not sure if that's better for next call when Aaron is on. But just thinking through the M&A opportunities for Virtu. And the reason I ask is because the balance sheet continues to get stronger and stronger. The leverage ratios continue to come down. You guys have done successful deals in the past. With the way the ecosystem evolving, particularly around crypto, are there things that might be interesting that could accelerate you guys' growth? And where does M&A stack up on your priority list right now?

Alex, it's Joe. I'll address that. It's really -- you've got to look at cycles and how cycles develop. And I think there was a time period when if you look at the acquisitions we've done, I think we're very astute in our timing and effectively bought volatility at low points. And in the instances of ITG and Knight Capital, they were different, but there was a common theme around technology, leverage and timing. In the past 5 years, we look and our Board expects us to look and we look at every opportunity that's out there, and we measure it against our internal opportunities, and we measure it against buying back our own stock. I think -- so in the past 5 years, we've effectively bought -- made an acquisition, right? We made a $1.4 billion acquisition of 20-ish percent of our own company at $26 a share. And I think that was probably the most accretive and shareholder value-creating allocation of capital that we could have deployed. And what does that mean for the future? I think maybe there's a premise to your question, which is that things may be changing, and there may be opportunities where the deployment of capital to an acquisition beats buying back our own stock, and we're open to it. We continue to look at everything. And I wouldn't -- we won't rule it out. We've never ruled it out really. It's -- but I get your point, and I think there may very well be opportunities in the future, but we're going to treat it the same way we did in 2017, 2019 and over the past 5 years, we're going to look at what's the best return on our capital.

Our next question comes from Patrick Moley with Piper Sandler.

And Doug, congrats on your retirement and look forward to working with Aaron as well. So first off, Doug, you spoke about it in your prepared remarks, but with the recent passage of the GENIUS Act, what sort of new opportunities do you think a proliferation of stablecoin adoption would open up for Virtu? And then just in terms of the overall crypto opportunity, where do you think you are in your journey? Is there more that you can be doing? Or are you just sort of watching the ecosystem evolve and kind of picking your spots there? Any color would be great.

Yes. Thank you very much for the kind words, and it's a really good question. I mean I couldn't be more excited, if you will, from the tailwinds within the digital asset space. I mean I think stablecoins just provides for more adoption of digital assets and more need, frankly, for providers like Virtu to provide that on off-ramp. I mean the analogy I used yesterday with our Board was think of the ADR market, which we're super good at and where we're providing a service, someone is going to need to harmonize and handle the off-ramp between fiat and stablecoin and stablecoin and fiat. And then there's going to be variants of that. And no firm better than Virtu to handle that type of transaction. So I think there's going to be a lot of opportunities to facilitate those conversions and USD to Ethereum and USD to Solana and back and forth and blah, blah, blah, you kind of get it. I think what we have thought of strategically and are very proud of what we envisioned post FTX, I guess it was 3 years ago, we said, okay, there's a lot of interest in this asset class. Right now, it's a little bit all over the place regulatorily. And obviously, the prior administration had a different view about digital assets than this administration does. But still, let's invest in a Virtu style business where we can be a value- added participant between spot, ETF, future, perpetuals, you name the instrument, CFD, multicurrency, let's be prepared to do that as a first step. And then as a second step, let's do that 24 hours a day, 7 days a week. And now as a third step, let's be prepared to do that bilaterally in the same way that we do with our vEQ Link product and our vFX product and our vFI product. I think we're going to call this VF crypto because we're not great about marketing. But it will be a 24 -- it is a 24/7 global service that's on exchange, if you will, with institutions, directly to institutions and so be agnostic as a liquidity provider and be that one of the folks in the middle of this ecosystem. We've made a strategic hire of a young man that will start on Monday to help facilitate and grow that business. We've got the relationships already. There's nobody better than Joe about managing capital and risk. And so it's -- as you can hopefully tell by my voice, it's a business that we are extremely excited about. Joe, any other color?

No, I think, that's it.

Okay. That's great. And then maybe just as a follow-up on the topic of tokenization. We heard Robinhood earlier this month announced that they were going to launch tokenized equity trading for their customers in Europe. You spoke about it a little in your prepared remarks as well. But could you just elaborate on that opportunity and how you maybe see the tokenization landscape evolving as it relates to equities? Is it going to make more sense in Europe? Do you think it makes sense in the U.S.? How do you think about that kind of evolving from here?

Yes. What I would say is, again, I want to be a little careful what I say because of some of the regulatory implications of tokenization. I mean our great friends at Citadel sent a very, very thoughtful constructive letter to the SEC about let's make sure we understand the rules of the road here because it shouldn't be the Wild West and replace, if you will, regulated environments that function very well. But we do think that there is something to this and probably not for U.S. persons, right? So you're right, it probably is more geared towards folks that exist overseas that want to have access to U.S. markets. And that really then relies on our core skills, much like an ETF issuers, tokenized stocks really are just wrappers, if you will, of existing underlying assets. We're quite good at understanding the mechanics of how that works of providing attractive 2-sided liquidity and then ultimately, being one of the firms that can "create redeem," if you will. And we can do that, as I said before, globally and now 24/7. So if it engenders incremental interest in U.S. assets and in U.S. equity assets in particular, it's a strong tailwind and positive. And so we're going to work hand-in-hand as we always do with our partners at Robinhood and Schwab and Fidelity and Webull and E*TRADE and I don't want to -- and everybody else that we consider good trustworthy counterparties and clients to address this addressable market. I mean, Vinnie taught me a long time ago that marketplaces are like pies. We're both Italian, Americans. So we always talk about Italian-American things. And our job is not necessarily to have a bigger slice of the pie, but to maintain our slice, but to grow the pie, to grow the pie. And this is a pie growing exercise, if you will. So it's a strong positive for the firm.

[Operator Instructions] We now turn to Chris Allen with Citi.

Doug, congrats on the retirement. It's been a fun run with you. I wanted to ask a little bit about Execution Services, up really nice year- over-year, continue to see strong trends there. I was kind of a little bit surprised we didn't see better sequential growth just given the overall volume trends. Maybe give us some color just in terms of what's going on underneath there? And what are the growth drivers, moving forward?

Yes. Again, it's -- I mean, it's been a labor of love. I give all the credit in the world to Steve Cavoli, who is just a fabulous leader person. No one could have cobbled together really 3 franchises, the small legacy Virtu, the very substantial Knight institutional business that has been around for a long time and then this giant global franchise and product company we bought, called ITG. And it was -- I mean, frankly, I think I underestimated how challenging that was going to be with 2,000 clients. And frankly, the analogy I've always used is we're trying to change the tires on the car as it's speeding down the highway at 60 miles an hour. So demanding revenue at the same time, changing the underside, if you will, of what clients were interacting with. So I think we have built a first best-in-class offering that is truly cross-asset, that is cross product. I think it is -- the only advantage we have is excellence transparency and performance. We don't have calendar balance sheet. We don't have prime. We don't have research, right? So we have to -- in the knife fight, if you will, of execution services, we have to be really, really acute. And so that's what we have done. Steve has emphasized cross-product selling. That has worked. Steve and the guys have emphasized cross-asset development. Mike Loggia and the team around Triton have truly developed a cross-asset EMS product that global asset managers are now looking at for credit, rates, options and equities, right? So we're not losing those jump balls to firms that had a cross-asset product. We're winning those jump balls. And the same thing with regard to our analytics business. We used to be more viewed as like, I don't want to say niche because the global equities market is a large niche, but a global equities firm exclusively, and we're not anymore. We're not anymore. We're viewed as a really leading cross-asset firm. So that's the strategy going forward. There obviously are behemoths in the market that you want to sell, you want to be very cross asset to. And then the last thing I would say is the benefits of the market maker and offering that as a product in a very transparent virtuous way, if you will, that liquidity, which is really bespoke and can be measured and is a differentiator from other -- frankly, just about any other offering out there. We've seen that both the impact, if you will, of orders and the size of orders have dramatically improved in the last 4 or 5 years as we have integrated that offering, Chris, with our market maker and clients have been extremely, extremely happy and responded to that.

Just a quick follow-up. I mean how are you thinking about the opportunity set or environment moving forward? Obviously, coming out of somewhat of a unique second quarter?

Yes. I mean I think, obviously, look, I mean, it's all about like wallet market share, cross-selling, creating new products, Virtu technology services, right, broker in a box going to sell-side firms that have real institutional pressures to be excellent and save costs, and it's a balancing act. They have a hard time balancing. But at the end of the day, obviously, you're beholden to what the universe of the marketplace will give you. So you're going to have the ebbs and flows with volumes, in global volumes. But the key is obviously to grow that wallet and grow that market share. Joe, any other thoughts?

No. I think, look, Chris, it was -- just from a more macro standpoint, it was obviously an extraordinary environment. And I think with the underpinnings of some of it continuing are in place. But obviously, the activity around Liberation Day coming out of that time was fairly unique.

We now turn to Dan Fannon with Jefferies.

Congrats, Doug, on your retirement. You will certainly be missed on these calls. I was hoping you could just talk a bit about overnight trading. That's been a growing, I think, part of the market, but really not sure how big of a contributor that is for you and how to think about that opportunity. So hoping you could put a little more context around that.

Yes. It's a great question. Thank you for the kind words. I think it's very early days. We were a pioneer. I distinctly remember, oh gosh, maybe it was 2018. I'm getting old, Dan, so I can't remember exactly when, but when my friend, Steve Quirk, then at TD Ameritrade said, "We want to trade 24 hours, and we want you guys to do it for us." And people in the firm kind of looked around and we were like, okay, because that's what you do when you're in the client business. And so we figured it out in a Virtuian way. We were the first firm to provide that service. I know other firms do now, and we're working with Blue Ocean and blah, blah, blah. So it's been on for a while. And obviously, you look at -- if you watch CNBC, which we all do or Fox Business, you see the All Night Long, whatever it is, commercials with, I guess, Lionel Ritchie, right? Wasn't it the Commodores? Was that Lionel? But anyhow. And so it's something that our clients think is very significant. Obviously, crypto ties into that because it's a global asset class, a little bit futures, right? You're seeing the ES become more of a retail product, and that's kind of 24 hours and maybe it becomes 7 days a week. So I think over the next fill in the blank, 6, 12, 18, 36 months, you're going to continue to see market share and a need for that trading skill and that liquidity provision. And frankly, not every firm can or will be able to do that. It's not that easy. We're truly a global firm. We don't have pockets of traders. We have a global -- thanks to Aaron Simons, a global integrated infrastructure that hands off "the book" very well. And we've been really, really good about managing expenses. So I think it's going to be really hard for investors ultimately to ignore it. Right now, I would say it's probably 99% retail driven, if you will, an individual trading driven. But I could see a moment in time, Dan, where there's more liquidity that institutional investors come into the fray. Again, it's the Virtu model, right? We are the -- as I used to say, we're the Switzerland of liquidity provisioning, and this is where the world is going. We want to be at the center of it. So it is definitely a tailwind. Again, whether it reaches 5% of the market in 2 years or it's going to take longer, I don't know, but it's a great incremental revenue opportunity for the firm.

Got it. And then just as a follow-up, Doug, as you take a step back, I was hoping to get a little perspective on what you think if you look out a couple of years, let's say, 3 years, what do you think of your organic growth initiatives will be the biggest contributor in 3 years' time?

I'm going to ask Joe to answer that one.

It's hard to say. I would -- you look at the end markets that are in those. Obviously, crypto is an enormous opportunity. Our ETF block franchise has been having a stellar year so far. Options is a big opportunity as well, right? So I think some of the things we just talked about on this call kind of overlay those, whether it's tokenization or whether it's stablecoin and crypto. But I think you see kind of a convergence among some of those opportunities as end markets grow, as overnight trading grows, as sort of the scope of what we do expands. And we just talked about overnight trading, that opens up international markets in a way that hadn't existed before. So it's hard to say. I mean if you push me, I'd say crypto and options. But again, the ETF block franchise has been having a record year.

Our final question today comes from Michael Cyprys with Morgan Stanley.

And Doug, congratulations on your retirement. I would like to dig in a little bit further on the overnight trading opportunity. It sounds interesting. I was hoping you could elaborate on your views around the institutional use case, how you see that? What does it take for liquidity to build in that overnight session? How you see that evolving? And then understand retail is driving the meaningful portion of that activity today in the overnight trading. But just curious if you could maybe help quantify the magnitude of what you're seeing in terms of that retail activity in the overnight session.

Yes. Yes, it's a great question. Thank you for the kind words. I mean, as I indicated, it's 99.9 probably percent retail today. I think there's a couple of issues. One is, obviously, institutional investors will trade in significantly more size, right? So it's hard to go to a party and be the only person there. You need a dance partner. And obviously, we would provide the liquidity, but they don't want to just trade with 1 or 2 market makers. So you need some forces to encourage institutions, if you will, to do that. I think it's probably -- the second thing is you need more regularization. In other words, you need demonstrable levels of best execution and frankly, execution that fits within the parameters of the institutions that would be sending orders there. So I could see it first being like a risk mitigant, like there's going to be news. I want to put on a hedge, I want to do this, I want to do that, and it's in the aftermarket because I'm hedging a portfolio or God forbid, I had an outtrade and I want to hedge that risk and et cetera, et cetera. That used to be a call around market, maybe that becomes more of an electronic all-to-all marketplace. But I think more broadly, it's going to be very difficult ultimately as the liquidity builds there for institutions to ignore it as an opportunity for them to put risk on and take risk off. But as with building any marketplace, you need those first people to leap and maybe put a toe in the water and then you get multiple toes in the water, and that's how marketplaces grow. So it seems inevitable it's going to happen. Again, as I said in answer to the prior question, whether that's 6, 12, 18 or 36 months, impossible to know. But I see it as a real use case and a real opportunity for this firm and for firms like us to provide that unique liquidity.

Great. And just as a follow-up question, I wanted to dig in a little further on the tokenized U.S. equity trading for overseas clients that we're seeing some firms already begin to announce and launch. Just curious how you see that ramping? How much in terms of volumes are you seeing so far from these platforms that have brought this to the marketplace? What challenges do you see the development of the sort of market overseas when you think about implications for liquidity back in the U.S. markets, particularly if there's no SIP or market data repository for capturing the sort of data? Just curious how you see all that developing and the risks and opportunities there.

Yes. Great question. I think, look, I mean, the most important thing is like the firms that are doing this, the Robinhood, the Fidelity, the Schwab, et cetera, like they care and we will obviously manage expectations and frankly, best execution for their clients. So they're still going to route this flow tokenized or not to the market makers where they receive the best execution. So you're going to have a competitive ecosystem where non-U.S. persons who want to access the market and the rails and getting on and off and the simplicity, if you will, of the tokenization of that equity security is attractive to those investors. And frankly, it's an important product offering as our friends at Robinhood have been very, very public about. I think, again, to echo what I said earlier, the comments from Citadel around making sure that this isn't a way to do an end run, if you will, around the very trued and tried principles of the U.S. regulated ecosystem is very important. So again, I look at it as an opportunity to expand the pie to non-U.S. persons. I think it fits right into our wheelhouse of instrument A, instrument B, we need someone to provide that liquidity, if you will, to the switch market. We know the marketplace very well. We're a trusted business partner of these firms. We have demonstrable and certifiable and frankly, public best execution statistics with regard to U.S. equities. And so we could promulgate those very easily to a tokenized environment and are doing that. So it's very, very early days. It's something that these firms are excited about. I think it's a way for them to expand their footprint outside the United States and into the United States, which is the largest capital markets by far in the world. And so it's an opportunity for them. And as trusted business partners of all of the aforementioned, it's an opportunity for us to be a good partner and to grow our revenue base. So exciting tailwind.

We have no further questions. So I'll now hand back to the management team for any final remarks.

Well, thank you, everybody, very much for participating today and for the last 10 years in these calls. I greatly appreciate everybody putting a lot of work and effort and answering most and asking -- excuse me, mostly really interesting great questions that have forced me to think and respond. And thank you for being gracious always to the firm that I truly love. And I am excited to listen to Aaron and Joe and Cindy on the next earnings call. I'll probably be on a golf course somewhere, but I will listen very, very acutely. And thank you, everybody, for your interest in Virtu, and have a wonderful day. Thank you.