Operator
Hello, everyone. Thank you for joining us, and welcome to the Merrick's Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Adam Strachan, Head of Investor Relations. Please go ahead.
Good morning, everyone, and thanks for joining us today for Marix's 2Q2026 earnings call. Speaking today are Ian Lowett, Group CEO, and Rob Irvin, Group CFO. After their formal remarks, as usual, we will open the call to questions. Before we begin, I would like to remind everyone that certain matters discussed in today's call are forward-looking statements relating to future events, management's plans, and objectives for the business and the future financial performance of the company that are subject to risk and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in Marex's press release issued today. The forward-looking statements made today are as of the date of this call and Marex does not undertake any obligation to update them. Finally, the speakers may refer to certain adjusted or non-IFRS financial measures on this call. A reconciliation schedule of the non-IFRS financial measures to the most directly comparable IFRS measures is also available in today's earnings release. A copy of the release and investor presentation are available on the Investor Relations page of the Marex website at marex.com.
Good morning, everyone, and thank you for joining us. Q2-2026 was another record profit quarter for Marix, our sixth record quarter since we went public just two years ago in April 2024. Second quarter revenues increased 39% year-on-year to $696 million, and adjusted profit before tax increased 56% to $166 million. Adjusted profit for tax margin expanded to 24%, reflecting the increasing contribution from our higher margin infrastructure intensive businesses. Basics earnings per share increased to $2.09 and return on equity was 37.5%. Excluding non-operating items such as the $35 million gain on the sale of the winter flood custody business, as well as some costs relating to our Bermuda redomicile in the second quarter. Adjusted earnings per share was $1.72. Looking at the first half as a whole, adjusted profit before tax was $319 million, equivalent to the group's total annual profit in 2024. Adjusted EPS for the first half was $3.29, while reported EPS was $3.61. On a trailing 12-month basis, reported EPS was $5.72. We believe these results demonstrate the increased earnings power of Marek's franchise and validate the strategy we've been executing. We've worked hard to build a business that is diversified across products, business lines, and geographies to support sustainable growth. While market conditions remain important to individual businesses, At the group level, our portfolio of businesses has increasing earnings resilience. This is evident in the second quarter. Volumes on our key exchanges reduced meaningfully, down 17% compared with the first quarter, while market volatility also declined and interest rates were flat, although commodity prices remained elevated. Notwithstanding that market backdrop, second quarter adjusted profit before tax increased nine percent versus the first quarter since the ipo we have clearly diversified in ways which make our earnings less dependent on exchange volumes one of the questions we get asked repeatedly is how much of our performance is driven by the operating environment and how much by structural growth when we came to market at ipo we described our objective to invest in sufficient structural growth to offset the inevitable cyclical impact of our markets on our results. As we talked about on the previous slide, that doesn't mean the operating environment no longer matters. Of course it does. But we have now built a platform where the combination of diversified earning streams and structural growth outweighs the cyclical elements over time. The evidence of this is apparent in our track record. We've increased profitability sequentially every year over the past 12 years looking at performance at the quarterly rather than annual level over the past five years we've delivered year-over-year adjusted profit growth in 19 of the past 20 quarters this is a remarkable record of sustainable growth this includes periods of elevated volatility lower volatility increasing and decreasing interest rates and varying levels of exchange activity Since our IPO in the second quarter of 2024, quarterly adjusted PBT has grown at an average rate of 48% year-on-year, with the upper quintile averaging 72% and the lower quintile averaging 21%. While this is obviously a wide range, it gives us a high degree of confidence in our ability to grow at at least in line with the top end of our 10% to 20% growth target range. On the previous slide, we showed how our business has grown on a quarterly basis. On the left of this slide, you can see the steady increase in monthly profitability over time. The lower Sharpe ratio for 2026 reflects the exceptional volatility and unusually strong profit month we experienced in Q1. On the right-hand side, you can see the distribution of daily profitability. Over time, that distribution has continued to shift to the right as profitability has increased. During the first half of 2026, the right-hand tail has materially thicker, reflecting the exceptional market conditions, particularly in March. Importantly, those right-tail returns weren't driven by taking more risk or by a single business. that reflected the breadth of the platform with a growing number of businesses all capable of generating significant returns on any given day when the market opportunity arose. You can see that in the increasing number of $3 million plus profit days, which increased to 58 over the last 12 months, representing 25% of trading days. At the same time, the number of loss making days remained relatively low at just 11, or 4% of trading days, consistent with what we have seen historically. So the left tail is consistent and skinny, and the right tail is now quite thick. I expect that as we move past the exceptional conditions of Q1, the distribution will become more typically bell-shaped, with the center of the distribution further to the right, reflecting our growth. We're already seeing that in June and July. An alternative lens on our growth and the increasing breadth and strength of our platform is the evolution of our client relationships. As the platform has expanded, we've been able to deepen relationships with larger and more sophisticated clients. In 2026, we have 77 clients generating more than $5 million of annual revenue on a run rate basis, up from 49 in 2025 and 36 in 2024. fall. Revenue from this cohort of clients has increased 59% since 2025, reflecting continued expansion of our largest client relationships. This growth isn't being driven by onboarding new $5 million clients. It's being driven by existing clients expanding the breadth of their relationship with Marex and doing more business with the firm as we continue to broaden in our products, capabilities, and geographic reach. And the effect is not just with our largest clients. We are seeing clients expand their relationships with us across the board, with average revenue per client up by 34%, demonstrating that clients are making broader use of the Marex platform. That's exactly the outcome we've been trying to achieve. As clients deepen their relationships with Marex and use more of the platform over time, they become an increasingly important driver of our structural growth. This is a steady, ongoing, and reliable source of growth, which also demonstrates our underlying competitiveness. Disciplined M&A is a core part of our growth strategy, helping us broaden our capabilities, extend our geographic reach, and accelerate growth. That said, most of our growth remains organic. Around 80% of our year-on-year profit growth in the second quarter, for example, was organic. That's because our approach is not about buying earnings. The initial contribution from acquisitions is typically modest. The real value comes from integration, capturing synergies, and leveraging the power of the broader Marix platform for growth. Our recent acquisitions demonstrate this clearly. If we look at our larger 2025 acquisitions, we paid a premium of around $60 million for a combination of Arna, Hamilton Court, and Winterflood. At acquisition, based on their prior year's earnings, they generated around $60 million of profit after tax. In Q2, the three acquisitions generated an annualized run rate of around $60 million of PAT, around three and a half times the pre-acquisition earnings. So the annualized returns from these businesses are already equivalent to the premium we paid to acquire them. That demonstrates our ability to integrate acquisition successfully and deliver revenue and cost synergies and grow earnings materially over time. Importantly, we see further upside, particularly at winter flood, where a number of the integration benefits and synergies had yet to be fully realized. We focus on the premium paid and return of premium because much of the book equity we acquire in the transaction consists of cash or cash equivalents or very liquid assets. So while we're attentive to total consideration, our focus is on the recovery of premium. Turning to 2026, we expect BrightPoint, which we announced last month, to follow a similar pattern. Strategically, it significantly strengthens our global clearing franchise through a larger presence in Asia, adds high-quality infrastructure-intensive earnings, and enhances our access to China through an experienced local management team and long-standing institutional client relationships that would be difficult to replicate organically. Importantly, we also see opportunities to create additional value once the business is integrated into Merix, including internalizing clearing activity, increasing client balances, and cross-selling our broader product offering across the combined client base. We expect the transaction to complete in late 2026 or early next year. While BrightPoint is a somewhat larger acquisition, it remains consistent with our financial discipline at an attractive low single-digit multiple of premium paid, reducing further once identified synergies are taken into account. Levmet and WebTraders are further examples of our approach. Levmet enhances our market-making capabilities while adding physical commodities and a strong experience management team that we know well. WebTraders similarly adds capabilities in equity derivatives market-making and will allow us to internalize hedging activity within our structured products business, which we expect to support further margin expansion. As I said at Invest a Day, we're increasingly the acquirer of choice based on the successful acquisitions we have enjoyed as part of Marex. Our M&A pipeline remains strong, allowing us to be highly selective and to focus on opportunities where we have a high degree of confidence in the outcome. It's a disciplined and repeatable playbook. Acquire strategically relevant businesses at attractive valuations, integrate them onto the Marex platform, and grow their earnings over time. Finally, turning now to the role we are playing in the evolution of financial market infrastructure. These are exciting times with innovation proceeding at pace. This is a great time for us as it plays to our strengths as an adaptable and nimble market participant with ability to get things done effectively for clients. On this slide, there are four examples which demonstrate how clients are increasingly looking to Merix to help them engage with these market changes. We are the first, and thus far only, firm to have solved the operational complexity of offering cross-margining on U.S. Treasury futures cleared on CME and cash U.S. Treasuries clearing via FIC with DTC. This helps clients improve capital efficiency across their cash and futures positions. We are live with three clients and have more than 10 in the pipeline. In the quarter, we enabled clients to use USDC stablecoins as initial margin under a CFTC pilot program. This assists clients with collateral flexibility. We also set up and executed an on-chain repo transaction for a key client, utilizing tokenized U.S. treasuries over the Canton network. This capability facilitates the tokenization of a broad range of securities, not just U.S. treasuries. These are essential building blocks for a robust digital asset prime offering, which we are developing. We are also working to support clients looking for access via NFCM to prediction markets and expect to be clearing on CalSHE in the third quarter. You already have a strong pipeline of clients for this service. These initiatives demonstrate the trust clients place in us and our ability to solve problems to support real-world demand. These investments are also opening doors to new client relationships and ensure Marix remains at the forefront of market structure innovation. I'll now hand over to Rob to go through the financials.
Thanks, Ian. Good morning, everyone. As Ian said, we're very pleased with the strength of our performance in the first half of the year. With $1.39 billion of revenue and $319 million dollars of adjusted profit before tax in the first half these results reflect the strength and scale of the business the second quarter was another record for us with revenues of 696 million dollars up 39 on last year with each of our segments growing year on year total expenses increased by 35 reflecting higher performance related compensation on strong revenues together with continued investment across the platform and the impact of acquisitions. Importantly, we continue to expand margins with adjusted profit before tax margin, increasing to 23.8%. Adjusted profit before tax increased 56% to $166 million and was 9% above Q1 this year, our previous record. Adjusted return on equity remained very strong at 37.8%, while adjusted basic EPS increased 59% to $1.72 per share. Turning to reported results, profit after tax was $155 million, which included $28 million of non-operating items, including a $35 million gain recognised on the sale of the winter flood custody business. As the custody business was classified within discontinued operations, the gain is excluded from our adjusted results. However, it increases our profits after tax and therefore our shareholders equity and is available to be deployed to support future growth. I'll now take you through the performance of each business segment starting with Clearing. Clearing delivered another strong Porter, with revenue increasing 16% year on year to $161 million. Average clearing client balances grew to $19.1 billion in Q2, significantly up from $14 billion in Q4 and the Q1 average of $16 billion. This drove a 31% increase in clearing net interest income as balanced growth more than offset lower rates year on year as we discussed in our last earnings call the first half has been an unusual market environment that included increased activity from some of our larger trading clients as well as higher exchange margin requirements we have seen structural growth in balances from expanding relationships with existing clients and strong balanced growth from new clients the latter added around 1 billion of net new balances through to the start of august and we remain confident in our pipeline for the remainder of the year. Net commission income remains stable despite a reduction in contracts clear compared to the second quarter of 2025 which had elevated volumes as a result of heightened activity following April tariff announcements. While in Q2 2026, as expected, client activity moderated somewhat from the exceptionally strong levels seen in the first quarter. Adjusted profit before tax increased 12% in the quarter with margins at 49% demonstrating the underlying profitability of the clearing franchise. For the first half revenue increased 16% to $299 million and adjusted profit before tax increased 8%. This includes the impact of the isolated client default in January. Turning now to agency and execution. Agency and execution had another outstanding performance with revenue increasing to 351 million dollars up 35 compared to the second quarter last year securities revenue increased 68 to 283 million dollars led by strong growth in prime fx and equities prime revenue increased to a record 120 million dollars driven by strong client demand and deeper institutional relationships fx also delivered an outstanding quarter benefiting from an expanding European client base and the continued success of Hamilton Court, while equities continued its strong momentum, particularly in derivatives. These performance more than offset lower energy revenues, following an exceptionally strong prior year comparator and lower market-wide exchange volumes compared to the highs of the first quarter this year. Overall, these results demonstrate the benefits of the investments we've made over a number of years prime services has become an increasingly important contributor to the group supporting both revenue growth and a higher margin business mix as a result adjusted pbt increased 69 to 117 million dollars in the quarter with margin expanding to 33 percent market making also delivered another excellent quarter with revenue increasing 106 year on year to 118 million dollars performance was once again broad based with particularly strong contribution from metals and securities metal strength reflected continued client activity across both precious and base metals as developments in the middle east created favorable trading opportunities securities also continued to benefit from the successful integration of winter flood which is performing strongly while creating new opportunities across the broader marix platform energy benefited from higher client demand for hedging and favorable trading conditions compared to the prior year albeit down from elevated first quarter levels as a result adjusted profit before tax increased to 45 million dollars in the quarter with the margin expanding to 38 percent finally solutions which delivered another strong quarter revenue increased 74 percent in the quarter reflecting continued growth across hedging solutions and financial products supported by favourable market conditions, while the prior year period was affected by lower client activity following the April 2025 tariff announcements. Hedging solutions continue to benefit from strong client demand across commodities and FX, while financial products reflected continued strong demand from clients in structured products and the investments we've made in our technology platform. As a result, adjusted profit before taxed increased almost fourfold to 25 million dollars in the quarter with margin increasing to 35 percent turning now to net interest income at the group level in the second quarter nii was 30 million dollars compared to 35 million dollars in 2q25 as higher interest expense more than offset the growth in interest income interest income grew by 24 million dollars reflecting 6.8 billion dollars of higher average balances which more than offset a 70 basis point reduction in the average fed funds rate however higher interest expense related to the group's two 500 million dollar senior debt issuances completed in may 2025 and april 2026 and structured note issuance in solutions reduced net interest income overall as we've said previously we continue to hold significant liquidity headroom while this creates a modest near-term headroom to group nii it is a deliberate choice that we view as a sensible insurance cost positioning us to support clients and pursue future growth opportunities nii decreased by 11 million dollars compared with the first quarter primarily reflecting the strategic deployment of excess liquidity into our market related businesses when much of this activity can be self-financing our strong liquidity position enabled us to deploy house cash to support a portion of this growth. Although this can create some quarter to quarter variability in reported group NII, the economics remain highly attractive with the benefits of this liquidity deployment reflected in our strong trading revenues. Importantly, our focus remains on growing sustainable client driven NII as demonstrated by the continued strength and growth of clearing NII. Turning to the balance sheet, approximately 80% of our assets continue to be directly driven by client activity which is highly liquid and largely self-funding in nature total assets increased to 42.1 billion at the 30th of june reflecting continued growth across the franchise particularly within our prime business after netting client assets and liabilities the residual balance sheet is primarily comprised of corporate cash and other assets funded by group liabilities, including our structured notes and senior debt issuances. To support the continued expansion of our client franchise, while maintaining leverage metrics consistent with an investment grade profile, we issued $500 million of hybrid capital during the quarter. The hybrid strengthened our capital base and provided additional balance sheet capacity to support client growth. We continue to take a disciplined and prudent approach to capital and liquidity management. Following our Bermuda re-domicile, while we are no longer subject to consolidated FCA capital and liquidity requirements, our philosophy remains unchanged and we intend to continue to internally manage the business to similarly conservative standards. Turning first to capital, we continue to hold significant excess capital relative to our previous regulatory minimum. However, as you know, our key benchmark for capital allocation remains maintaining sufficient capital to support our investment-grade credit ratings with both S&P and Fitch. On that basis, our RAC ratio or risk-adjusted capital ratio at the end of June was approximately 12%, comfortably above the 10% level S&P defines as strongly capitalised and supportive of our investment-grade credit rating. Given our strong M&A pipeline and organic growth opportunities were comfortable with this headroom. On liquidity we finished the quarter with 8.1 billion of funding sources up from 6.2 billion at year end. Liquidity headroom increased to 1.8 billion dollars providing substantial capacity above our internally assessed liquidity requirements and reinforcing the resilience of our funding profile. We also successfully issued 500 million dollars of senior unsecured notes during the quarter extending the maturity profile of our funding. Both the hybrid and senior debt issuances were significantly oversubscribed attracting new investors to the Marek story and were executed at materially tighter spreads than our previous issuances demonstrating the continued strength of market demand for our credit. Taken together these actions further strengthen our capital liquidity and funding position leaving us exceptionally well positioned to support our clients, capitalise on growth opportunities and continue executing our strategy from the position of financial strength. Finally, closing with risk management. Average daily bar increased to $5.8 million in the first half, reflecting the increased scale of the business and the exceptional market environment and opportunities. Importantly, 87% of trading days were profitable with every week and every month generating positive revenue. On credit risk, we again had no realized credit losses in the quarter. Now I'll hand you back to Ian.
Thanks, Rob. As you've heard, we continue to build a broader and more diversified business with significant structural growth and a growing contribution from higher margin infrastructure intensive activities. This is increasing the earnings power of the firm, supporting margin expansion, and making our profits more resilient. We're deepening relationships with our largest clients, expanding our capabilities through disciplined acquisitions, and investing in technology and market structure innovation. In the second quarter, we have also positioned ourselves to support future growth and client activity with additional equity and more liquidity through the issuance of $500 million of hybrid capital and $500 million of senior unsecured notes. Our track record demonstrates the effectiveness of our strategy with year-on-year profit growth in 19 of the last 20 quarters through a wide range of market environments. We are very pleased with the progress we've made, see considerable opportunities to continue growing from here, and remain very confident about our future prospects. With that, we'd be happy to take your questions.
Operator
We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Bill Katz with T.D. Cohen. Your line is open. Please go ahead.
Great. Thank you very much for taking the question and the expanded disclosure. This quarter are both very helpful. Just maybe a big-picture question for you. When you guided to feel comfortable at the high end of the 10% to 20% range, what kind of M&A contribution are you anticipating? And then secondarily, your margins came in quite strong quarter-on-quarter year-on-year. maybe update us or your thinking on where the long-term trajectory might sit.
Sure. Thanks, Bill. So I think in terms of, you know, sort of the growth, I think that, you know, we're not anticipating, you know, any kind of shift in how relevant that is in the sense that, you know, it's sort of around 20% of our growth, you know, in the second quarter. And I, you know, while there's probably going to be some variability, you know, we wouldn't anticipate any real change there. So, you know, we have a really robust pipeline. We have some really attractive sort of companies that we're looking at. We're actually really excited about, you know, the M&A that we're closing in 2026. So I wouldn't expect anything sort of different. And it's broadly in line. In terms of sort of the margin, you know, I think we're, you know, we're sort of at the sort of 24% range, you know, that's higher than we've been operating at, as you know, you know, the things that are sort of driving that feel like they're still in place. So I think all the things that, you know, we've talked about, you know, in the remarks will play through going forward. So I think that, you know, what we're seeing in terms of, you know, mix in terms of, you know, where the business is operating, you know, the progress we're making with some of our investments, the way in which the investments are, you know, sort of starting to generate returns, none of that I think is changing. So I think that, you know, we're comfortable, you know, with where the margins are now. And over time, you know, I could see those, you know, potentially continuing to increase. But, you know, if it is going to increase from these levels, in all likelihood, it'll be sort of slow and steady rather than something that's dramatic.
This is my follow-up. I have a question. One thing you mentioned that the skew of your adjusted profit before tax continues to move to the right and you expect more of a bell curve, including into July, if I heard you So I was just wondering if you might be able to give us an update of how, excuse me, third quarter trends are unfolding relative to maybe pacing coming out of the second quarter.
I mean, you know, essentially what we're seeing in July and into the short portion of August is just a sort of continuation of what we saw sort of in the first half. So there's, you know, it's just sort of a maintenance of exactly what we've experienced. And, you know, while there's obviously, you know, some potential for things to change, based on what we see at the moment, we see the firm continuing to operate, you know, at the levels we operated in the first half. Thank you.
Operator
Your next question comes from the line of Alex Blostein with Goldman Sachs. Your line is open. Please go ahead.
Hey, good morning, everybody. Thank you for the question. I wanted to go back to slide eight with some of that incremental client level disclosure, which is definitely very helpful. And could you maybe expand on sort of sources of growth in the larger client bucket? So when you talk about 57% growth in those clients that are generating over $5 million in revenues, can you just provide a little more granularity in, like, the types of clients, the category of clients where you're seeing the most traction? That's the question that probably comes up the most with investors.
Yeah. Yeah. Thanks, Alex. Well, look, I mean, I think that the 59% includes the fact that there are more clients that are doing more than $5 million with us. So it's about the cohort that is delivering more revenue for us. So some of it is just the fact that more clients are in that, you know, that that cohort than were there previously. And that's a big part of, you know, what's driving it. You know, the average is actually very consistent. So essentially what's driving it is more more clients operating in that bucket. The range of clients in the bucket, though, is, you know, it's sort of very sort of heartening to see because it, you know, it ranges. and includes, you know, commodity producers, commodity consumers, and then a large number of sort of financial players, you know, whether those be, you know, other banks that are looking for access to market liquidity, whether those are asset managers, you know, whether those are, you know, some of the hedge funds, whether those are some of the real money, you know, only funds. So there's actually a very broad range of clients that are all seeing essentially the same thing, which is an opportunity to engage with the firm, you know, to a greater extent, as we expand out into more products, more geographies, we deepen the relationship, we establish increased sort of credibility. So, you know, what we're seeing is, you know, the The most established clients are actually increasing their business with us, and they're doing that in part because they're seeing, you know, such great service from us. And then there's a new group of people that are coming into the $5 million plus bucket. They're almost naturally at the low end of that because they just come in. And those are ones that, you know, we also look to grow over time.
Got it. Thank you. My second question is around your prime brokerage business. It's been an incredibly, you know, solid environment for PV businesses really across the street. You've seen spreads and funding spreads and equities widen out quite substantially. And there's clearly concerns or questions around perhaps just capacity with, you know, balance sheet capacity with some of the larger banks. Right. So to what extent does that give you guys an opportunity to see a more structural growth in PV as capacities, you know, perhaps becomes more limited with some of the larger players? and then secondly to that, I would love to get just a little more granularity on the composition of the PB revenues and how much is coming from the Lover ETF community.
Sure. So I think that, I mean, you know, what we're seeing in this business is sort of, you know, it's sort of maintenance of what we see in the third quarter as sort of continuation of the second. So we're not seeing sort of drop off in balances. We're seeing sort of maintenance of balances and we're seeing maintenance of sort of the spreads. You know, as a business over that time period, it's probably double where it was a year ago. So we are seeing sort of substantial growth. You know, that growth is coming by broadening the number of players we have participating uh you know in the business as well as sort of increases in balances but it's not just because we're getting sort of bigger with a few players it's actually that there's a broader group of people that now see us as a extremely credible player in the space and uh and are coming on to the platform um you know i i'm not quite sure what are sort of the drivers here whether it's sort of lack of capacity at sort of some of the sort of big banks or whether it's you know the very specific uh sort of capabilities we bring here but i think that sort of to the thrust of your question i don't really see anything you know in the short or medium term that's going to cause us to you know not be able to continue to you know grow this in a sort of sensible and prudent way. So I think that there is, you know, sort of tailwinds rather than headwinds with regard to, you know, this particular business. But obviously, you know, we are, you know, cautious in, you know, how we, or not cautious, you know, we're sort of careful in how we look, you know, to sort of, you know, grow that out. Great. Thank you. I think actually, Alex, you did ask a little about, you know, additional components of it. I think what's really important to understand is it's not just sort of one thing either you know i mean we have an outsourced trading business we have a sort of prime of prime business and then we have an on balance sheet prime business and all three of those uh you know are growing and expanding so it's and that's our intention is to broad out you know is to build a sort of broad capability that can service clients in a lot of different ways your next question comes from the line of Chris Allen with KBW.
Operator
Your line is open. Please go ahead.
Yeah, morning, everyone. Thanks for the question. I wanted to ask a little bit about the clearing balance growth. You noted driven by new client wins, increased client balance, and higher margin requirements. Trying to think about the run rate going forward. I think Rob might have talked about a billion dollars from new client wins. Can you confirm that? And then we think about margin requirements. They've been up, but they tend to normalize over time. So maybe it could help us think about the impact there. and just your pipeline for continued growth from here?
All right. So I think that in terms of sort of decline balances, we would say, you know, what drives sort of the margin requirement is actually more price than sort of volatility. So while volatility might normalize, you know, if prices remain in and around the levels that they are currently, then I think sort of margin balances will sort of stay, you know, margin requirements at the exchanges will stay, you know, broadly where they are at the moment. I mean, what we see at play in terms of these balances is the factors that you described. So, you know, as prices are moving up and margin requirements are going up, that's sort of certainly a driver of what the clients have to post to the exchange to support their existing business clearly business is growing and that's making a big difference for our existing clients and then there are sort of you know new clients i think it's sort of rob said we are adding um we've added about a billion dollars this year and we see a sort of healthy pipeline for the rest of the year i think there probably you know is some unusual levels of sort of trading activity from some of our clients in the first half of the year that, you know, potentially, you know, sort of come off some amount, but we would hope that, you know, the other factors could, you know, sort of offset what will essentially be a more normalizing set of sort of environmental sort of factors. So, you know, we've seen a lot of growth. I think, you know, we've, you know, we think that these are sort of, you know, reasonable levels to maintain and potentially grow.
What would you add to that, Rob?
I'd say, and any other thing I'd add, Ian, is that the majority of the growth in the second quarter came from outside of the U.S., which is very positive to see and sort of underlines the strength of our franchise. Great. Thanks.
And then just as a follow-up, I wanted to ask about Compute Futures, which both CME and I are launching. Wondering if your clients are focused on how you're thinking about the potential opportunity there?
I mean, I'm not that familiar with compute futures, but I mean, as a sort of general matter, I think that what we see is clients having, you know, genuine interest in having access through an FCM to alternative venues. And, you know, whether those are sort prediction markets or uh you know those are sort of you know other venues that they can sort of participate in um there there does seem to be sort of genuine interest um and you know that's partly the market making firms that you know want to have access to those and then there's uh you know a decent amount of sort of hedge fund and other institutional interests and so you know these don't feel like, you know, sort of flash in the pan kinds of things. These feel like, you know, so long as they, you know, have support from the regulators, these will be, you know, real markets that will have a lot of interest in them. Did that address your question?
Yep, all good. Thank you. Thanks, Chris. Thanks, Chris.
Operator
Your next question comes from the line of Ben Budish with Barclays. Your line is open. Please go ahead.
Hi, good morning, and thanks for taking my questions. Maybe first, why don't you talk a little about the metals market-making business? It looks like your revenue is pretty meaningfully outperformed both CME volumes and LME volumes. So I know there's always a function of volumes. It has to do with spreads, but maybe talk about what you saw in the quarter in that line item.
Yeah. No, I mean, we're obviously extremely pleased with metals market-making. and market making sort of more generally, you know, under Simon's leadership, I mean, I think sort of, you know, part of the insight there is, and I realize I'm sort of going into, you know, slightly dangerous territory with this based on sort of how people felt about, you know, these terms when I used them in P1. But I mean, you know, extraordinarily high levels of volatility are not necessarily the best environment to be operating in, particularly in, you know, sort of market making. And so, you know, in many ways, you know, the second quarter, which had high levels of volatility, but didn't have quite the same extremes, you know, may actually be a better environment for market making. And exactly to your point, you know, it's not just about volumes. It's also about, you know, what is the spread and the success that you have supporting your clients around, you know, their, you know, their trading and what it is they're looking to do that sort of determines, you know, where you come out.
Okay, helpful. And then maybe on the solutions business, you called out some pretty robust growth in the first half of the year. I mean, it looks like things have really kind of structurally stepped up. And you alluded to pickup and client activity, but you've also in the past talked about expanding distribution, Latin America and some other geographies. So maybe similarly, if you could unpack what you're seeing there, are we at the right run rate? And how much is maybe new geographies, new distribution partners versus just heightened levels of activity? Thank you.
Yeah, I mean, I think that, you know, what we see in solutions is sort of the output of a variety of sort of factors. And again, I think it all speaks to, you know, our confidence in sort of future growth, you know, for that business. So I think that it's some of the factors that you've asked about, which is we are expanding, we're adding headcount, we're adding capabilities in different geographies, we're adding, you know, some product capabilities. But what you also have over time is just sort of an acceptance of the name. And, you know, the calling efforts often just take a while to, you know, generate, you know, initial interest. And then once you've sort of done the first trade, you really are in a position where, you know, you can establish a relationship and sell additional sort of products to that relationship. So some of this is just sort of, you know, a natural evolution of, you know, a business that has to sort of establish itself, you know, in a geography or in a particular product. I mean, the other thing that I would say about solutions is, you know, we did invest in essentially completely replatforming the business. You know, that was a distraction for a period of time in the sense that, you know, management needed to spend a lot of time making sure that that went well. But what that has done also is created a lot of capacity and capability. And so we're supporting much higher volumes. And when you couple with that capability, the emphasis in the business on, you know, creating straight through processing and, you know, the opportunity for clients to, you know, essentially structure things themselves and then execute, you know, on our platform, you know, that's supporting a lot of additional volume that doesn't doesn't require, you know, a lot of intervention from any of the folks in the solutions business. So the combination of all those things, you know, the investment, the expansion, the, you know, ongoing acceptance of the Merrick's name, the progress that the team have made with with clients, as well as, you know, the investments we've made in sort of technology and making that technology available to our clients. That in combination is what's driven the growth and don't see that stopping. We see that sort of continuing.
Okay, great. Thanks so much, Ian.
Operator
Your next question comes from the line of Alex Cram with UBS. Your line is open. Please go ahead.
Yes. Hey, good morning, everyone. Just wanted to come back to the slide with some of the new initiatives, and I know you just addressed this a little bit when Chris asked this question, a couple of things here. One, on the treasury clearing, good to see that you're kind of front runner there. So any early reads of what is happening there? I mean, are you actually monetizing this? I know it's early days, but are people putting more balances to you? Are they trading more because they're having savings? So just a little bit of more color, what's exactly happening on the treasury clearing side? And then broad on that slide, which one of those do you think can actually scale the most those opportunities from a revenue and earnings perspective? What are you most excited about, I guess, on those four?
Yeah. All right. So, look, I mean, with regard to the cross-margining, I mean, I actually think that the biggest impact of that will be just the credibility that we build in the marketplace with sophisticated players that, you know, I mean, CME and FIC have been trying to, you know, have this cross-margining available to clients. And, you know, we were the ones who sort of figured that out for our clients. And I think that that just positions us differently in the eyes of clients. And that in and of itself is the thing that's going to probably be the most consequential outcome of this. You know, what we are seeing, though, to your specific question is we are seeing larger shares of people's business you know in this particular space and it does monetize effectively um you know it's not going to be you know an enormous mover of uh you know sort of revenue and profitability but it's you know it's uh it's attractive and it's good business and most importantly it sort of establishes us you know with some of those clients um you know i think as i described at invest today you know the the whole set of digital asset prime brokerage capabilities you know is one that you know i believe is important for us to participate in you know it in the sense that there's an ecosystem out there and a set of people who sort of play in this particular space And by providing these set of services to them, you can actually generate a really nice business. And if it turns out that this actually is the beginning of, you know, I don't know, rewiring the financial infrastructure and it's all going to sort of go tokenized, then we'll be extremely well positioned. So we're not doing this because we're evangelists on this and we, you know, have a clear view that that's going to happen. I mean, it might happen. It might not happen. I don't know. So I do have very high degree of confidence that we will make good money for those people who clearly do believe that this is what their business is and what they want to do. And so it makes sense for us to do that. And it'll be profitable business. I think highly profitable business, probably. And that's really the basis under which we are making that investment. you know prediction markets are yet sort of interesting to me in the sense that of all of these things I think that depending on how different parts of this play out this potentially could be very large and I think it could represent sort of a change in where liquidity resides now from our perspective if we're providing the layer that connects people to essentially exchanges you know we're largely indifferent between you know where that volume actually resides i mean i do think that it'll reside on um sort of regulated exchanges rather than sort of the offshore venues um i mean there will be demand for offshore venues in the sense that there will be some retail players for whom you know that will be fine but i think for most institutional players they're looking for you know you know rules around seg and protections and uh visibility and all that kind of stuff so i think the whole institutional market will remain sort of with exchange line venues but whether there's a multiplicity of exchange venues you know over time i can't say but broadly however that evolves i think marix is going to be in a very good place And depending on sort of, you know, how much prediction markets sort of capture the or are responsive to real demand that exists for hedging products and other things, this could actually be quite large. And so, you know, we're excited about being able to, you know, start to clear some of the prediction markets in the third quarter. And we have a lot of interest from clients to gain access to that. They don't want direct access. as they want to go through an FCM. And again, that is sort of helpful from our point of view.
Great. Thanks. Very interesting. Thank you for that. And just a very quick follow-up, maybe a little nitpicky, but obviously good traction on the margins. But I think the one soft spot is in the clearing segment. I think those margins have actually kind of trended lower on a trailing 12-month basis. So just maybe just tell us what's happening there. Is there more investments? Are you bringing on new teams that are maybe not profitable yet? So, yeah, just what's going on, and this is something that could still scale higher.
Yeah, I mean, I think that the real answer to that, Alex, is just, you know, we had an idiosyncratic loss in the first quarter, and that dropped margins in the first quarter. And so if you look at, you know, our margins around, you know, the other quarters, it's actually, you know, 49, 50-ish over the entire period. So, I mean, there's really nothing that I would draw attention to to say, you know, we think that the underlying margin in the business is sort of declining. It feels like, you know, it's 50-ish, and that's a really healthy margin for that business.
Operator
Your next question comes from the line of Dan Fannin with Jeffries. Your line is open. Please go ahead.
Thanks. I was hoping to discuss a little bit more about the prime business, obviously a lot You talked about some of the durability. I was hoping to maybe unpack that a bit in terms of the type of customer and firm that you're having most success and where you have the right to win and ultimately just trying to get a little bit more context around the durability of these balances as you think about the diversity in other areas.
Yeah. Well, I think that in terms of durability, I think that what we're seeing is sort of share gains. And I don't think that, I think that in almost all environments that I can envisage, I see the sort of share gains persisting. I think that there are, you know, we're not competing for the largest prime mandates, which I think, you know, end up with the large banks. But, you know, we are taking share, you know, with sort of funds and with hedge funds that are sort of in that sort of $500 to $2 billion range, where this is sort of the, you know, we're providing them with the products that they're looking for. And we're also providing them with, you know, very high quality service. and i think that you know as more and more people are aware that you know we're you know extremely skilled in the space we know what we're doing we're reliable you know we you know we build more record with more clients i think that that's going to drive you know ongoing um sort of share gains um so you know it's now you know an extremely diversified business i mean that's covering an enormous number of stocks lots of different providers um and so i think that you know it it feels like the durability is uh you know is there i mean obviously you know what we saw in you know the second quarter was you know balances increased and then dropped a bit as a result of you know adjustment in pricing and you know some of the more volatile stocks but you know But on average, you know, this thing is sort of, you know, double where it was and we don't see anything that's going to cause that to really change in any obvious way.
Thanks for that. And then within AGC and execution, you had another really strong quarter. FX was a bit of a standout. Anything in particular that you could point to that drove that in the quarter?
Yeah, I mean, you know, you saw it on that M&A slide. You know, Hamilton Port is really, you know, turned into a, you know, a real gem for the firm. You know, and I think it shows, you know, the power of, you know, taking, you know, what's a good business, but one that's struggling because it's, you know, just not that big. and how effective it can be when you sort of put it inside Marix and it gets, you know, the benefit of, you know, our sort of risk frameworks, our way of operating, the discipline that we have as a firm, the fact that, you know, they don't have to focus as much on those things and, you know, as a business and they can focus more of their attention on, you know, winning clients and doing more business with them. So, you know, what you're seeing in the FX is, you know, is partly, you know, what we're seeing in Hamilton Court, which is, you know, just a great success and a very substantial growth in earnings.
Operator
Your next question comes from the line of Patrick Molley with Piper Sandler. Your line is open. Please go ahead.
Yes. Thanks for taking the question. A lot of great questions asked here. Maybe just one on the M&A pipeline. I'm curious how much of the focus going forward is going to be on adding capabilities to deepen wallet share with existing clients versus kind of expanding the funnel and opening yourselves up to, you know, new client verticals that are somewhat untapped.
And then maybe if you could just also talk about, you know, which new verticals, asset classes you're most focused on today thanks um so look i think that uh i mean sort of hard it's hard to sort of take what's like a whole portfolio of m a opportunities that we're evaluating and sort of say you know how much is in you know sort of increasing the funnel versus positioning ourselves to deepen i think most of what we would be doing though is in the sort of increasing the funnel whether that's sort of a geographic expansion which i think of as predominantly about sort of adding new clients or you know some of the things that we're considering which you know at their heart is about getting us into you know new activity that we're not in or we're in you know in very small scale and what it does is it sort of adds clients so i'd say probably you know some genuine skew towards increasing the funnel rather than putting us in a position to deepen. You know, I think that in terms of, you know, some of the things that we're focused on, I think, you know, as we look across sort of the platform, there are, you know, particularly in, you know, sort of the capital markets area, you know, some asset classes where building it out organically is sort of slow and hard work. And, you know, if we could accelerate some of that with acquisitions, then we would, you know, those are things that if you can sort of get the right, you know, the right firm at the right price and the cultures sort of match in the right way, you know, that's probably where if you could only do one thing, you do that thing rather than something else.
Okay, great. Thanks for that. And then, you know, you made another interesting comment, you know, talking about prediction markets and some of the new market structure initiatives and said that, you know, the new client relationship that it's opening you up to. I'm just curious on maybe prediction markets in general and those clients wanting access to an FCM that can get them access to the liquidity pools. How much of that is coming from customers that might not typically be in your core customer base of, you know, commodity producers and consumers, asset managers, market makers? How much of it is from, you know, a more diversified set of corporates, where this is maybe just a totally new greenfield opportunity.
Yeah, I mean, interestingly, when I was making that comment, I was thinking more about the digital asset stuff. So, you know, when you're thinking about, you know, some of the sort of very sophisticated hedge funds that you don't have a sort of natural in with at this point, the capabilities around digital assets are often the thing that are intriguing to them and the fact that you know we're offering that is often the door opener for us to other broader business um that's probably more true than what i would say around prediction markets and again our you know you know our engagement with prediction markets at the moment is is quite limited so in terms of sort of the pipeline for prediction markets some of it is our existing clients, and in a few cases, it's new clients, but in there, it's, you know, sort of financial players we would have wanted to have as clients more broadly, but the entree for us is, you know, that they're looking for access to a prediction market.
Okay, great. Thanks for that caller.
Operator
There are no further questions at this time. I will now turn the call back to Ian Loweit, CEO, for closing remarks.
Well, thanks, everybody. Thanks for all the questions. I mean, as, you know, I'm sure, you know, you've appreciated, you know, we're very pleased with, you know, how we did in the second quarter. We're obviously very pleased with how we did in the first half. You know, we drew attention to elements in our track record, which, again, we have, you know, a lot of pride in, you know, the 19 out of 20 quarters being, you know, up year on year. uh and you know hopefully you know what you've gathered from the answers to the questions is you know we're uh you know we're excited about you know the second half and then you know where we're able to take the take the firm we see you know a lot of momentum we see a lot of positivity and we're in you know sort of a virtuous circle of uh you know sort of making progress with clients that creates uh you know more opportunity and then that in and of itself sort of creates more growth and creates a basis for additional investment so you know we're we're very uh sort of pleased with where we where we've got to and extremely excited about um sort of our future so thank you all this concludes today's call thank you for attending you may now disconnect
