StoneX Group Inc. Q3 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the StoneX Group Inc. conference call. At this time, all participants' lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, StoneX CFO, Bill Dunaway. Sir, the floor is yours.

Good morning. Welcome to our Earnings Conference Call for our Fiscal Third Quarter Ended June 30, 2020. After the market closed yesterday, we issued a press release reporting our results for our third fiscal quarter of 2020. This release is available on our website at www.stonex.com, as well as the slide presentation, which we will refer to on this call in our discussions of our quarterly results and year-to-date results. You will need to sign up for the live webcast in order to view the presentation. The presentation and an archive of the webcast will also be available on our website after the call’s conclusion. Before getting underway, we are required to advise you and all participants should note the following discussion should be taken in conjunction with the most recent financial statements and notes thereto as well as the most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other reports filed with the SEC by StoneX Group Inc. and GAIN Capital Holdings, Inc. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the company’s actual results will not differ materially from any results expressed or implied by the company’s forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to Sean O’Connor, the company’s CEO.

Thanks, Bill. Good morning, everyone, and thank you for joining our fiscal 2020 third quarter earnings call. I hope you and your families are in good health. We continue to extend our thoughts and sympathies to everyone affected by this pandemic, especially those who have lost loved ones and those who have faced job and business losses. These are unprecedented times that, in my view, will last much longer than many anticipate—likely well into 2021. After that, while the health crisis may ease, we will still need to grapple with the economic aftermath, including the damage to the economy and how we transition after extensive fiscal and monetary stimulus. This is a global event with significant economic and social consequences, some of which are becoming apparent, while others remain uncertain. I foresee a challenging road ahead, with numerous businesses facing liquidity and potentially solvency issues. Many industries are undergoing permanent disruptions and changes. In many respects, the future is arriving more rapidly than expected. Weak businesses that do not provide clear value to clients, lack strong capital support, or fail to adapt will struggle. However, I am confident that we will navigate through these challenges and emerge in a stronger position in the new normal, whatever that might be. To reiterate my previous point, I believe our emphasis on delivering durable and value-added services, our focus on capital and book value, along with our pragmatic and robust risk management strategy, will benefit us significantly. Additionally, I think the recent acquisition of GAIN strengthens our competitive edge in the current market. As mentioned last time, we embarked on a straightforward four-point plan as the COVID crisis unfolded, which we're still implementing. First, we are committed to keeping all our employees and their families safe, with around 90% still working from home. I don’t anticipate a significant change in this arrangement anytime soon. We have managed to operate effectively in this environment, without any apparent decline in our business, whether in client service, operations, or risk management. That said, I believe our business performs better in a collaborative office setting. Second, we continue to support our clients while minimizing risk. I take pride in our ability to assist our clients during turbulent times, which I think has been recognized and will yield long-term benefits. Third, we are reducing our risk and adopting a defensive posture to maintain high liquidity levels and continue serving our clients appropriately. Finally, we are providing risk management support to our clients, helping them understand the risks they face and encouraging prudent decision-making. Turning to our financial results for the quarter, we benefitted from a significant increase in volatility, particularly in securities markets, both equities and fixed income, as well as in precious metals, especially at the beginning of the quarter. In the last two months of the quarter, we observed a gradual return to a more normalized situation. The overall positive impact of volatility was somewhat mitigated by the rapid decline in interest rates affecting our customer float. Net operating revenues reached $227 million, a 38% increase compared to last year, yet a 7% decline from our record quarter in Q2. Our total expenses rose by 24%, primarily due to variable compensation, leading to a 125% increase in net income to $36.6 million, just 7% shy of our Q2 record. Our diluted EPS stood at $1.87, a 67% increase, which translates to an ROE of around 22%. The strong performance of the last two quarters also influenced our year-to-date figures, with net operating revenues up 34% and total expenses up 26%, resulting in a 59% increase in net earnings. Diluted EPS for the nine-month period was $4.71, and the ROE was 19.2%. When considering ROE on tangible equity, which is increasingly the norm for financial services firms, our figure would be higher by several percentage points. Before moving to segment highlights, I’d like to briefly discuss the GAIN results we reported two weeks ago, which were the last quarterly results for GAIN as a standalone entity. As you know, the acquisition closed on July 31, and we have Glenn Stevens, the CEO, with us today to present an overview of their results shortly. The GAIN business has experienced tremendous growth, surpassing all prior records over the last two quarters. In Q2, they generated $101 million in net revenue and $14.3 million in net income. For our share count, that equates to an additional EPS of roughly $0.75. Some highlights from the StoneX business: In Q2, our Securities segments stood out, with revenues increasing by 66% to a record $123 million and segment income skyrocketing by 529% to our largest. This performance was driven by substantial volume increases in both equity and fixed income, although revenue capture in equities declined while it rose in fixed income. Physical commodities revenue rose by 167%, and segment income increased by 625% to $31.6 million, primarily due to precious metals, which saw a 13% volume increase and a whopping 288% jump in revenue capture due to market dislocation. Conversely, Commercial Hedging operating revenues fell by 25%, and segment income dropped by 35%, largely because of last year's strong performance following weather events in the agricultural markets, coupled with low volatility this quarter—one of the few areas where we experienced a decrease in volatility. Clearing and Execution operating revenues decreased by 13%, and segment income fell by 69%, mainly due to declining interest rates and a bad debt charge. Global Payments operating revenues dropped by 5%, and segment income declined by 6% despite an 11% increase in volume, as revenue capture fell by 16%. Bill will offer more details on these segments later. Regarding the GAIN acquisition, we successfully issued a $350 million five-year bond at a 6.625% coupon in the institutional market, a first for us. This was a challenging endeavor given the market dislocation and volatility, as well as our status as a first-time issuer with few direct comparables. The bond attracted a high-quality, oversubscribed order book and has since performed well in trading. This marks a significant milestone in our company’s growth and will provide us with access to institutional capital at potentially better rates moving forward. As I mentioned earlier, we've closed the GAIN transaction and have made progress in integration, which includes combining trading flows for certain products and aligning our governance structure. There is still much to be done, but I am pleased with the progress made so far. The GAIN transaction proves beneficial on every level. We now have a larger, more diversified client base, an expanded product range to better serve our clients, and enhanced earnings capacity and liquidity. The increased scale and resilience from this acquisition position us well to seize opportunities presented by the current market dislocation and emerge even stronger, similar to our recovery after the financial crisis. Now, I will turn the call over to Glenn Stevens, the CEO of GAIN, for a brief overview of their recent financial results.

Thanks, Sean. So there are just two slides here that I’ll use as a reference for some of our updated financials from the most recent quarter, as Sean said, as an independent company. To give you a little bit more information as background, we had another strong quarter for our Q2, even after what was a standout record quarter for us in Q1. Given the prevailing environment of heightened activity and volatility in so many different markets, that translated into our customers being able to trade a lot of different markets and trade at high levels, with overall volume level being higher, activity per customer being higher and, most importantly, being able to attract and onboard new customers as we look towards the future. So on Slide 4, just a summary of the second quarter review: Our net revenue for Q2 was $101 million, compared to a little over $75 million for the prior quarter in 2019. Our net income was $14.3 million compared to net income of $0.9 million for the same period the year before, and adjusted EBITDA of $28.9 million compared to $13 million from Q2 of 2019. An important takeaway there is the operating leverage that’s exhibited in our business; when we scale the business, our fixed costs don’t trail along, and we’re able to illustrate that operating leverage with much higher net income and EBITDA as it goes up. In terms of the overall volatility, again, that’s a big driver for our customers to be more heavily engaged. We did see vol continuing across various product types, whether it be metals, energies, currencies or equity indices. For our average daily volume (ADV), it was $9.1 billion, which was up 28% compared to the year prior. Our revenue per million (RPM) of $150 is on the higher side and represents the opportunity to capture a bigger portion of the bid/offer spread through our market-making activities. Most importantly, as I said, if you look at the three-month active accounts, they increased 34% to 93,000. That’s a quarterly record for us. It’s the ability to attract new customers, onboard them, convert them into trading customers, and retain them. The combination of those three is what sets your business to go forward as markets progress. On the next slide, Slide 5, just four charts that show the new direct accounts on the upper left. You can see the outsized increase there, because even after a record Q1 for us, we rolled into Q2, and you can see that engagement on the retail sector with customers really wanting to trade in various markets globally. Then to the upper right there is direct volume per active. That also maintained its high levels across a broader active account base. Hence, you’re going to have some lower numbers there, because it wasn’t as volatile in Q2 as it was in Q1, but also going across a broader base. The trailing three-month actives also continued to increase on a trailing basis to get to new highs for us, which is great, because it means those customers are staying in the fold. Finally, volume on the right lower chart, you can see volumes holding up really well for Q2, even though we had slightly lower levels of overall volatility again compared to Q1, which isn’t surprising. I think before I hand it back over to Bill, what’s key here is that we’re looking forward to leveraging the vast financial ecosystem that StoneX provides and being able to give more products and services to our customers, which enhances the diversification for customers to be more engaged, to be more active in various markets, and ultimately attract even more new customers. So I think that’s a complementary business that this brings, and it’s a really opportune situation for us. So with that, I’ll turn it over to Bill to continue on. Thanks.

Thank you, Glenn. I’ll be starting with Slide #7, which shows our performance over the last five fiscal quarters. As shown, we are following up the record performance in the immediately preceding quarter with another strong performance in our fiscal third quarter with net income of $36.6 million, a return of equity of 21.9%, and diluted earnings per share of $1.87 for the quarter and $4.71 for the year-to-date period, which exceeded our diluted earnings per share of $4.39 for all of fiscal 2019. Moving on to Slide #8, which represents a bridge between operating revenues for the third quarter of last year to the current period. Operating revenues were $322.6 million in the current period, up $39.2 million, or 14% over the prior year. As Sean noted, the quarterly performance was driven by our Securities and Physical Commodities segment, primarily driven by continued heightened periods of volatility and client activity due to the COVID-19 pandemic. Partially offsetting this were the headwinds of the global economic slowdown and the resulting reduced client hedging activity in our Commercial Hedging segment, as well as the effect of the drop in short-term interest rates, which drove reduced operating revenues in both our Commercial Hedging and, to a larger extent, our Clearing and Execution Services segment. Our Securities segment added $48.8 million, or 66% in operating revenues versus the prior year. Within this segment, Equity Capital Markets more than doubled its revenues, adding $36.9 million on an 83% increase in volumes and a 68% increase in the revenue per $1,000 traded. Debt Capital Markets also had a strong quarter, adding $13 million in operating revenues versus the prior year. Physical Commodities increased operating revenues by $24.5 million, or 167% versus the prior year to a record $39.2 million. This was primarily driven by a $24.1 million increase in precious metals operating revenues as the global precious metals market dislocations drove a widening of spreads and an increase in premiums on physically delivered contracts. It is worth noting the prior-year period included a $2.5 million unrealized loss on derivative positions held against precious metals inventories carried at the lower cost to market in our non-broker dealer subsidiaries. In addition, our Physical Ag and Energy business added $400,000 in operating revenues to $7.6 million in the current period. However, similar to what happens from time to time in our Precious Metals business, the current period operating revenues in Physical Ag and Energy were tempered by a $2.4 million unrealized loss on derivative positions held against energy inventories carried at the lower of cost or net realizable value. Operating revenues in our Commercial Hedging segment declined $21.3 million versus the prior year to $65.1 million. Exchange-traded revenues declined 14% versus the strong prior-year period, which had been aided by weather-related volatility in domestic grain markets. OTC volume revenues decreased 32% versus the prior year as an increase in OTC volumes was more than offset by a 35% decline in the average revenue per contract, primarily in South American grain markets, which had a strong prior-year quarter. Also contributing to the decline in this segment was a $5.2 million decline in interest income, despite a 24% increase in the average client equity to $1.1 billion as a result of the sharp decline in short-term interest rates. Lower short-term interest rates also drove a $10 million decline in our Clearing and Execution Services segment to $68.9 million in the current period. This is our most interest rate-sensitive segment, which saw a $7.6 million decline in interest income to $1.7 million, and fee income related to client suite balances in our correspondent clearing business declined $2.9 million to $800,000. However, on a positive note, average client equity increased 86% to $1.9 billion. FDIC sweep balances increased 64% to $1.3 billion and exchange-traded volumes increased 32% compared to the prior year. Finally, operating revenues in our Global Payments segment declined $1.5 million to $27.4 million in the current period, as an 11% increase in the number of payments made was more than offset by a 16% decline in the average revenue per payment. The increase in the number of payments was driven by the expansion of the payment flow from recently onboarded commercial banking clients. However, a decline in a number of larger merger and acquisition payments from our commercial banking clients due to the global economic slowdown drove the decline in the revenue per payment. The next Slide #9 represents a bridge from 2019 third quarter pre-tax income of $21.6 million to pre-tax income of $49 million in the current period. The significant operating revenue growth in our Securities segment led to a $43.4 million increase in segment income versus the prior year. Non-variable direct expenses in this segment increased $3 million versus the prior year as a result of the continued build-out of several recent initiatives. Variable compensation increased as a percentage of operating revenues compared to the prior year due to strong performance for the quarter and adjustments made to the compensation structure and portions of the segment to increase the variable component of compensation while commensurately reducing the fixed component. Additionally, Physical Commodities added $17.5 million in segment income compared to the prior year, off the back of record levels of operating revenues. Partially offsetting these gains, our Commercial Hedging segment income declined $10.5 million due to the decline in operating revenues, which was partially offset by a $0.5 million decline in non-variable expenses and a $1 million favorable change in bad debt due to net recoveries of $600,000 for the current quarter. Clearing and Execution services segment income declined $8.2 million versus the prior year as a result of the decline in operating revenues, as well as a $2.4 million increase in bad debt in our exchange-traded business. Global Payments segment income declined $1.1 million, primarily due to the decline in operating revenue. Finally, the net costs in unallocated overhead increased $13.7 million versus the prior year. This change is partially due to a $2.4 million variance compared to the prior-year mark-to-market value of exchange stock held for clearing purposes. In addition, variable compensation and benefits increased $2.8 million compared to the prior year as a result of improved overall company performance. Fixed compensation and benefits increased $2 million due to increases in headcount in several administrative departments, including IT, compliance, and accounting. Finally, the remaining variance was related to the increase in professional fees, primarily related to recent acquisitions, including GAIN Capital Holdings; an increase in amortization of purchased intangible assets related to acquisitions closed during the fiscal year; as well as the incremental costs of the acquired businesses. Slide #10 shows the interest and fee income on our investment of client funds in exchange-traded futures and options businesses, as well as client balances held in our correspondent clearing and independent wealth management businesses. As noted on this slide, the effect of the transactions over the last 12 months has caused a significant decline in our earnings on these balances, which have declined by $14.2 million versus the prior year to $2.4 million as our yield on these balances declined 214 basis points to 23 basis points in the current period. Moving on to Slide #11, our quarterly financial dashboard. I’ll just highlight a couple of items of note. Variable expenses represented 61.1% of our total expenses for the quarter, well above our target of keeping more than 50% of our total expenses variable in nature. We reported net income of $36.6 million in the third quarter, which brings our net income for the trailing 12 months to $119.4 million. The quarterly results yielded a 21.9% return on equity well above our stated target of 15%. Our total assets increased 23% versus the prior year, primarily due to strong growth in client balances. Finally, in closing out the review of the quarterly results, our book value per share increased $5.84 to close out the quarter at $35.66. Next, I’ll move on to a discussion of the year-to-date results and refer to Slide #12. Year-to-date, operating revenues were up $147 million, or 18% to $966.2 million in the current fiscal year. All segments of our businesses reported increases in operating revenues compared to the prior year-to-date period, with the exception of Clearing and Execution Services. The largest increase was in our Securities segment, which added $106.2 million, driven by strong growth in both Equity and Debt Capital Markets, particularly during the periods of heightened volatility in our second and third fiscal quarters. Our Physical Commodities segment added $34.5 million compared to the prior year-to-date period, as Precious Metals operating revenues more than doubled due to COVID-19-related market dislocation, as well as the result of the acquisition of CoinInvest in the third quarter of fiscal 2019. Operating revenues in our Commercial Hedging segment increased $9.7 million versus the prior year, primarily driven by a 20% increase in OTC revenues as a result of strong performance in energy markets, as well as modest growth in exchange-traded revenues. These gains were partially offset by a $9.4 million decline in interest income. Our Global Payments segment added $2.2 million in operating revenue, while CES operating revenues declined $6.4 million versus the prior year-to-date period. CES segment operating revenues declined primarily as a result of the $12.5 million decline in interest income to $16.8 million. Moving on to Slide #13. Pre-tax income increased $49.9 million to $126.8 million for the current year-to-date period. All segments increased segment income versus the prior year, except for our Clearing and Execution Services segment, which declined $10.1 million. The largest increase was in our Securities segment, which added $70.7 million in segment income, driven by strong operating revenue growth, noted on the previous slide in operating revenues, particularly offset by an $11.7 million increase in non-variable direct expenses and an increase in variable compensation as a percentage of revenue. Our Physical Commodities segment added $21 million in segment income versus the prior year. It is worth noting that the prior year included a $2.4 million recovery of the bad debt on physical coal. Commercial Hedging added $3.3 million of segment income, and Global Payments added $600,000 versus the prior year. Finally, the net cost in unallocated overhead increased $35.6 million versus the prior year. However, $5.4 million of the variance was related to the GMP bargain purchase realized in the prior year-to-date period. Additionally, this change is partially a result of a $4.4 million variance versus the prior year and the mark-to-market value of the exchange stock held for clearing purposes. Compensation and benefits increased $15.2 million, of which $8.1 million represented an increase in variable compensation due to improved company performance. Professional fees increased $3.1 million compared to the prior year, primarily related to acquisitions made during fiscal 2020. I will finish up with a review of the final year-to-date dashboard. Variable expenses are above our internal target of exceeding 50% of total revenues, coming in at 60.6% of total expenses. Net income was $92.2 million for the current year-to-date period, a 59% increase over the prior year-to-date period. The return on equity for the year-to-date period is 19.2%, which is above our internal target of 15%. With that, I would like to turn it back to Sean to wrap up.

Thanks, Bill. I think our financial results we have produced during this unusual and difficult period validate our business model, our philosophy around adding value to clients, and how we manage risk. The upcoming quarters will not necessarily be easy, and we’ll have to navigate through a variety of risks and market dislocations. We will remain vigilant and cautious, but I’m optimistic we will emerge stronger and bigger than before. While the future environment may be challenging for us with lower volatility and lower interest rates, I’m certain that there will be a reordering of our industry and opportunities to pick up valuable clients, people, and businesses that will allow us to increase market share and also the value of our franchise. We believe that the GAIN acquisition will be strongly accretive in every sense—financially, strategically and with the intellectual assets to enhance our strategy to become the best-in-class financial platform, connecting clients to global markets across asset classes and offering vertically integrated execution and clearing. I’m also very pleased, as you’ve probably noticed, to have rebranded ourselves StoneX. It’s good to finally have a pronounceable name that folks may actually remember. This name carries forward the foundation established by Saul Stone in 1924, where he became one of the founders and exchange member in Chicago to today’s growing financial services firm. This was a big task, but it was very well received by both our clients and colleagues. I’d lastly like to thank the entire StoneX team, which now counts 3,000 people around the world for their amazing commitment to our clients and willingness to embrace the challenges we’re dealing with head-on. Amazing performance. Well done, everyone. Operator, we are ready to take any questions if there are any.

Certainly. Your first question will come from the line of Russell Mollen with Nine Ten Capital. Please go ahead with your question.

Hey, how are you doing?

Good, Russell. How are you?

Good, good. I have a question here for, I guess, you or maybe Glenn here. On the table here, the second table of the GAIN results, the upper-right chart where it says direct volume per active account, can you just kind of help describe? I’m not sure I follow that chart. And maybe just with that, just help me understand, you get a customer retail client, what’s the profile of that client? How much are they putting into their accounts or how active they are? How much dollar amounts they’re trading, that kind of thing?

Well, Glenn, I think that’s for you, definitely.

Yes, absolutely. So, Russell, I’ll try to address what you’re saying, see if I can get an answer for you. The direct volume per active account is, in that respect, just what it says: numerator divided by denominator, putting the number of active accounts. These aren’t just onboarded accounts. These are customers that are active over the previous three months, divided by total volume. What’s going to drive that is a combination of volatility in certain markets. Keep in mind that we service over 140,000 customers in various markets. In some markets like the U.S., we provide Forex trading. In other markets, like the U.K. or in Asia, we provide CFD trading. Depending on which of those markets are moving, that will drive how much volume comes per each client. If we have an environment, for example, where equity indices move, energies move, and currencies move, then you’ll end up with customers trading across many markets. If it’s concentrated on a particular market, then it might show up if currencies are moving in the U.S. It’s an important measure for us to reflect how activity is per customer. In the case of the chart here, you will notice a big spike on the upper left for new direct accounts. We had a lot of onboarding because a lot of customers are engaging. You'll see a jump in Q2 of 2020 versus Q1—with new customers. Part of that would show a slightly lower direct volume per account, because you’re getting bigger customers onboarded. By plugging into all the products and services that StoneX already has, we want to increase those numbers. So when a customer says they have an interest in physical gold, we can meet their needs, rather than simply leave them to their own devices.

Yes. So this is somewhere around, I don’t know, $5 million or $6 million, that’s notional value…

That’s going to be a notional value per customer and, again, it’s an average. If you have a customer with $5,000 or $500,000, their notional value is going to vary. It’s more important to look at the trends and look at kind of the aggregate number, if you will.

And the amount of leverage or margin in currency or commodities that is offered in the industry or that you offer is what type of level? Like you’re trading million dollars of currency, how much capital are they putting in?

That’s right. Yes. It varies from product to product and based on the underlying requirements from exchanges, but also based on the volatility of each product. When you look at volatility, for example, in tech stocks, you might have a move of 2%, 5%, or even 10%, whereas in a major currency pair, you might have a 1% move or a 2% move. Right there, you’re going to have corresponding volatility, which means commensurate leverage provided. We align with StoneX’s approach toward risk management, which is careful and conservative. We’re going to stay well within all regulatory guidelines. A lot of us will depend on product mix. When trading notional amounts of gold versus notional amounts of currency, that will impact leverage. However, generally speaking, currencies will provide more notional leverage than a single stock.

Hey, Russell, maybe if I could chime in, because I think I know where you’re coming from there. When we looked at the GAIN business, they basically look very much like the futures side of our business, which is probably where we provide customers the most leverage. Cash equities have a 50% margin somewhere in the middle; futures generally require about 5% of notional as initial margin. GAIN will provide slightly more aggressive margin for more stable currency pairs, as they don’t move that much. They tend to deleverage clients. However, GAIN does a lot overseas with CFDs. CFDs are just really reconstructing what trades on the futures market. All these guys are trading futures-type products broadly. It’s not general retail customers—it’s really for active and professional investors. Their trading amounts are between $6 million to $8 million, but the higher end of their business trades multiples of that, so it’s really an active traders’ market.

It does. I appreciate that added color. Thank you.

Okay.

We do have a question from the line of Raj Sharma with B. Riley. Please go ahead with your question.

Yes, thank you for taking my question. Congratulations on the great acquisition and the excellent fit to the overall StoneX platform. When we model GAIN into StoneX, I’m just trying to understand how it plays out. This is a question for Glenn.

Hi, Raj. On GAIN’s vision, do you think the new account growth at GAIN is all from COVID? Maybe it’s not all attributable to COVID volatility. When we look at the organic work on onboarding platforms, we try to measure the impact of each initiative over time. We’re clearly seeing heightened engagement and a mental shift with individuals wanting to trade, not just at GAIN, but across others in our sector. However, it’s more challenging to determine how much of the impact comes specifically from the current trading environment versus our initiatives to simplify the onboarding process. We have major enhancements in the onboarding tool that have proved effective, but when you layer them in against market volatility, you see a significant mix of impacts. It’s hard to isolate which improvement contributes most to the overall numbers.

Right. So how should we look at it going forward?

As we continue through this transition, we see that we’ll retain some of the benefits and the operational improvements we made in a more normalized market. But again, comparing like-for-like periods will be key here.

Got it, and just one last question. When we look at the first-half GAIN results, how much of that do you think were internal improvements versus COVID impacts?

It really comes down to isolating periods. I don't want to downplay either impact, both growth in accounts and market volatility are working in tandem. For precise calculations, looking back through adjacent periods will help clarify how our operational efforts stack up against the macro environment. Looking ahead, we can control the operational side.

At a simple level, we can’t control the macro cycle. We can control becoming as operationally efficient as possible, giving us a competitive advantage when paired with a diverse product set relative to our peers. If we succeed in these two areas, we should gain market share in both quiet and busy periods.

Got it. Thank you.

There are no other questions at this time.

Well, once again, we would like to thank everyone; a really exciting time for us. With GAIN now closed, we see this as transformational. In the current market environment, I think this transaction is not only great for us with lots of commercial rationale, but it positions us extremely well to come out of the back-end of this much stronger, much more diversified, with much greater earnings power. So really exciting time for us. Lots of work ahead. Obviously, lots of unforeseen twists and turns ahead, I’m sure, with the markets. But we are very confident and very excited. So thanks all. Stay safe and enjoy the rest of the summer.

Thank you. Thank you again for joining us today. This does conclude the conference. You may now disconnect.