CBOE Holdings Earnings Call Insights: Multi-Listed Option Franchise and Share Buyback
Multi-Listed Option Franchise
Richard Repetto – Sandler O’Neill: My question is, when are you going to change your name from the CBOE to the Chicago Board Volatility Exchange?
Edward T. Tilly – CEO: That’s pretty good Rich. First one to watch.
Richard Repetto – Sandler O’Neill: I guess the question, if we’re not going to go with the CBVE. But anyway, my question would be, the multi-listed options, Alan you addressed the Company’s viewpoint on – that you think is valuable. It is not as clear – in equities, you can see the equity exchanges. They maintain market share because you can see the listings following them or connected to the trading. But here could you elaborate more on the value of maintaining the multi-listed option franchise or market share as you have? Just a little bit more specifics on where you see the other impacts on other parts of your business?
Alan J. Dean – EVP, CFO and Treasurer: I’d be glad to, Rich. But before I get to that, what I said in my prepared remarks, we believe which is that – we believe – if we didn’t match our competitor on that VIP pricing schedule, we saw market share eroding further. We were already – forget what I said, 15% or 16% in January and that was heading down. That’s just not acceptable. Options is in the name of our exchange, so it’s very important to us to remain the leader in all categories. Now the revenue items that are important to us are market data fees, you know that. That’s driven by market share. Although the money is significant, it can’t offset the loss in RPC. But that is an important factor. There is also exchange services and other fees that’s how participants get to CBOE and the other services that they receive from us. So, if we didn’t have the market share to justify those fees, I would expect price pressure or even a decline in the utilization of those services. But most important is the access fees – the number this year is going to be $60 million to $65 million something like that. Now, a big of chunk of that is SPX and VIX. What’s still a significant part of that annual number is from the multi-list category. As soon as we saw market share starting to erode, we saw pressure on those fees. No other exchange has the kind of access fees that we have. We are over market in that category, there is no doubt about it. So that’s the logic behind it, and that’s why we did what we did. We always look for ways to increase RPC, even on a multi-list category, and we’ll continue to do that as the year wears on. Maybe there is opportunities the fee schedule is extremely complex. And all the exchanges look for advantages, and we’ll look for ours in the short-term and long-term. I hope that does it for you, Rich.
Howard Chen – Credit Suisse: Alan, I wanted to follow-up on your comments about the share buyback. You all have done a lot on capital return over the years, but just given the growing cash position, the dividend that you just materially increased, the liquidity of stock. I was hoping you can elaborate on appetite to buy the stock here at current levels?
Alan J. Dean – EVP, CFO and Treasurer: I did address it in my prepared remarks. The points, I wanted to get across is that it continues to be the intention of our Board to first reinvest in our business to ensure our future growth, to pay regular dividends and to see that regular dividend grow as our business grows. Then to use excess cash for stock repurchases, and underlying those three things is – and don’t hold onto cash and earn an extremely low rate of return on that cash because that doesn’t benefit our shareholders. So, the board reviews this policy each quarter and they did so again earlier this week, reaffirmed our strategy, our stock repurchase, funding the unused amount. So, what I can say right now is that we absolutely remain committed to our current capital allocation policy and that includes our stock repurchase program. That’s it.
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