Summary of TMX Group Conference Call Company Overview - **Company**: TMX Group - **Industry**: Canadian capital markets ecosystem, including exchanges, derivatives markets, and data services - **Key Components**: - Blue chip and junior equity exchanges - Montreal Exchange for derivatives - Clearing and settlement infrastructure - International operations including TradePort in the UK and VettaFi in the U.S. [3][4] Core Business Insights - **Recurring Revenue Target**: Long-term target is to achieve two-thirds of revenue from recurring sources, currently at 52% down from 55% due to strong performance in trade business [5][6] - **International Revenue**: 51% of business is now outside Canada, with a target of 50% from Global Insights, currently at 44% [6] - **Trayport Performance**: Trayport, a key growth area, showed 12% growth in constant currency, down from 17% in the previous year, attributed to market maturity and lack of volatility [7][11] - **Growth Opportunities**: Expansion in U.S. gas and power markets, early-stage growth in Japan, and transitioning oil markets to on-screen trading [13][14] VettaFi and Global Insights - **VettaFi Growth**: Achieved 25% year-over-year growth in 2025, with 13% from organic growth and 12% from acquisitions [22] - **Assets Under Management**: Increased from CAD 32 billion to over CAD 80 billion since acquisition [24] - **Product Development**: Focus on expanding indices and asset classes, including fixed-income products and distribution capabilities [23] AI and Technology Integration - **AI as a Beneficiary**: TMX Group views itself as a net beneficiary of AI, leveraging proprietary data platforms to enhance product offerings [28][30] - **Efficiency Gains**: AI tools are being used to improve development speed and product testing, allowing for better market delivery [35][36] - **Revenue Opportunities**: AI is expected to enhance client products and self-service capabilities, with over 90% adoption of AI tools across the company [38][39] Trading Business Insights - **Derivatives Market**: Experienced over 30% growth last year, with open interest up 20% despite a 5-6% decline in total volume year-over-year [42][43] - **Options on ETFs**: Continued adoption is a significant growth driver, with regulatory efforts to expand capacity [44] - **Canadian Equities Landscape**: TMX Group maintains a strong competitive position despite challenges from international players like CBOE [51][52] Capital Formation and IPO Pipeline - **Strong Financing Activity**: 60% year-over-year increase in financing activity, with a deep pipeline of companies ready for IPOs [66][68] - **Market Confidence**: Despite recent market volatility, there is optimism about the ability to execute good deals [68] Expense Management and M&A Strategy - **Expense Growth**: Targeting 5% year-over-year expense growth, with a focus on positive operating leverage [73][74] - **M&A as Strategy Accelerator**: TMX Group actively seeks acquisitions that align with its growth strategy, focusing on enhancing data capabilities and market reach [76][77] Conclusion - **Overall Outlook**: TMX Group is positioned for continued growth through strategic expansion, technology integration, and a robust IPO pipeline, while maintaining a focus on operational efficiency and market leadership in the Canadian capital markets [66][68][76]