Cboe Global Markets Inc
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Cboe Global Markets Inc
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Good morning, everyone and welcome to the Cboe Global Markets First Quarter 2021 Earnings Conference Call. Please note this event is being recorded.
At this time for opening introductions. I would now like to turn the call over to Debbie Koopman, Vice President of Investor Relations. Ms. Koopman, please go ahead.
Good morning and thank you for joining us for our first quarter earnings conference call. On the call today Ed Tilly, our Chairman, President and CEO will discuss our performance for the quarter and provide an update on our strategic initiatives; then Brian Schell, our Executive Vice President, CFO and Treasurer will provide an overview of our financial results for the quarter as well as an update of our 2021 financial outlook. Following their comments, we will open the call to Q&A.
Also joining us for Q&A will be our Chief Operating Officer, Chris Isaacson and our Chief Strategy Officer, John Deters. In addition, I would like to point out that this presentation will include the use of slides. We will be showing the slides and providing commentary on each. A downloadable copy of the slide presentation is available on the Investor Relations portion of our website.
During our remarks, we will make some forward-looking statements, which represent our current judgment on what the future may hold. And while we believe these judgments are reasonable, these forward-looking statements are not guarantees of future performance and involve certain assumptions risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements.
Please refer to our filings with the SEC for a full discussion of the factors that may affect any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise after this conference call. During the course of the call this morning, we'll be referring to non-GAAP measures as defined and reconciled in our earnings materials.
Now, I'd like to turn the call over to Ed.
Thank you, Debbie. Good morning and thank you for joining us today. I hope you're all doing well and staying healthy. We reported solid financial results for the first quarter of 2021 at Cboe Global Markets while continuing to successfully execute on a strategical plan to expand our geographic and asset class footprint. Broaden our customer reach, diversify our business mix with recurring revenue and leverage our superior technology.
As expected, we have more difficult comparisons this quarter against last year's record first quarter earnings. When we saw exceptionally strong trading as the COVID-19 pandemic began sweeping the globe. For the quarter, net revenue was up 2% and adjusted earnings per share was down 7% throughout the year. However, we saw very strong sequential growth across business segments with net revenue up 19% over the fourth quarter of 2020 and adjusted EPS up 26%.
Our solid results were driven by record trading multi-listed options and continued growth and a recurring non-transaction revenues as well as the contribution from the acquisitions we completed in 2020. I want to update you on the progress we made this year on four key incremental growth drivers I highlighted last quarter. Our plans to launch Cboe Europe derivatives the opportunity to grow recurring non-transaction revenue, our plans to expand BIDS trading and efforts to extend across to our products and services including retail.
First, I'd like to take a moment to highlight a few market dynamics we saw during the quarter. With increased certainty around the political landscape, progress around the vaccine rollout. The reopening of businesses and various companies returning to work. We've seen institutional investors reengage with our index options involved 20 [ph] products this year. Quarter-over-quarter volume increased by 63% index futures, 29% index options and 15% NSBX [ph] options.
In Europe, our successful BREXIT transition and reintroduction of our Swiss trading on our UK market helped us institute some notable records across our Cboe European equity products during the first quarter. Cboe Europe period auctions had record average daily notional value traded of €1.3 billion during the first quarter, up 5% year-over-year. Additionally, Cboe LIS, our European block trading platform powered by BIDS had record market share of 24.1% up from 22.7% market share one year ago.
As clients have recalibrated their models and readjusted to the new trading landscape in Europe. We're pleased to see that our overall market share has increased to 17.9% month-to-date in April, our highest since July of 2020. We're maintaining our focus on investing in long-term growth building on a strong foundation last year and are excited about the momentum. We're seeing across our business. Last month, we announced plans to acquire Chi-X Asia Pacific, which will flag Cboe the single point of entry into two of the world's largest securities markets, Australia and Japan.
I'll touch on this exciting deal in a moment. But first let me update you on key incremental growth drivers I noted earlier and how this planned acquisition complements several of these growth initiatives. I'll begin with the progress we've made growing our own transaction revenues. During the first quarter, we achieved 17% growth in recurring non-transaction revenues exceeding our expectations. This increase includes organic growth of 14%. Brian will share additional details later in the call. But we're increasing 2021 growth target for organic recurring non-transactional revenues to a range of 10% to 11% from a range of 6% to 7%.
One of our top priorities remains the continued global expansion of our data analytics offering and last month we announced the creation of Cboe Data and Access Solutions. A new division that will lead our charge to become a global leader and data and analytics. Led by Catherine Clay, this new division combines our information solutions and market data and access services teams into one route that create an optimized offering, our global client base.
This holistic solution is expected to enable customers around the world to seamlessly access all of Cboe's expanded capabilities including global indices, interface solutions, as well as data, market and risk analytics to a unified offering. Additionally, in connection with the planned Chi-X acquisition. Cathy will lead our effort to build the first true and global equities market data platform that has expected to offer data for most major markets around the world.
We recognized that if the trading environment becomes more globalized customers [indiscernible] greater efficiency in the market infrastructure services they require and our goal is to align our business to address these client needs for global data and analytics. We're excited about the continued evolution of this business and believe the new data and access solutions suite will create opportunity to further grow our base of recurring non-transaction revenue. Cathy is a tremendous leader with a track record of delivering results and we're excited for her to lead this team. As we look to expand the business and our market data offering globally.
Turning to Cboe Europe Derivatives. Yesterday we announced plans to go live with this [indiscernible] market on Monday, September 6 subject to regulatory approval. We originally hope to launch this new venue in June and while we expect to be operational and ready, the regulatory approval process has taken longer than expected. Given this initiative expands our existing including capabilities into a new asset class, we're working closely with regulators and continue to have a very constructive engagement with them.
Most importantly, we have a critical mass of key market participants ready to support the exchange from day one including banks, clearing firms, market makers and proprietary trading firms will help contribute to the provision of liquidity and client order flow on the new market. The team has worked incredibly hard to achieve our mission of creating a modern and vibrant Pan-European derivatives market designed to grow the overall derivatives trading landscape while creating new opportunities for customers to express their investment ease and manage their equity exposure.
Our Pan-European model will help provide market participants with the ability to access a modern on-screen derivatives market to on single access point creating efficiencies in trading and clearing. As previously noted, while our 2021 revenue expectations for European derivatives are modest. We're investing for long-term growth and looking for gradual revenue build as we gain traction, expand our product offering and unlike the potential we see for considerable growth in this market.
Moving to BIDS trading. We see significant opportunity to leverage the plan Chi-X Asia Pacific acquisition to bring BIDS industry leading block trading capabilities to this new geography. With BIDS current network covering major North American and European equities markets. The planned addition of Asia Pacific equities is expected to create a global block trading platform to serve a broader base of customers. The expansion of BIDS in Canada is well underway alongside Cboe's technology integration of MATCHNow that can aiding [ph] ATS required last year.
With BIDS extensive global network of more than 460 buy side investment managers and sell side constituents. This innovative platform will play a critical role in achieving Cboe's mission of building one of the world's largest global derivatives and securities trading networks. We also remain committed to extending access to our products and services through product innovation, enhancements of our markets as well as expansion of our customer base both institutional and retail and made solid progress on this initiative in the first quarter.
Last month, we extended equity trading hours on our EDGX Exchange to offer trading beginning at 4 AM Eastern Time and the volume we're handling during this early market session has exceeded our expectations. EDGX is now handling more than 11% of the volume during the early trading session. Earlier this month, we also received approval from the SEC to launch our innovative periodic auctions in the US. Paving the way for us to provide customers with an on-exchange alternative to off exchange electronic block trading by enabling them to trade in size while helping to reduce market impact.
As I mentioned earlier, we continue to see strong customer adoption of related product in Europe and we're excited to build on its success by providing the new version of this product to the US customer base. This long-waited approval in the US was the result of our steadfast commitment to improving markets for our customers and we look forward to launching this offering in the third quarter of this year.
We're also planning to extend global trading hours for VIX and SPX options in the fourth quarter of this year as part of our 24x5 initiative subject to regulatory review. The global trading hours will complement our planned entry into Asia Pacific and are designed to help the growing investor demand for the ability to manage risk more efficiently, react to global macro not economic events as they're happening and adjust SPX index options positions around the clock.
The uptick in market engagement from retail and institutional investors alike reinforces the importance of our ongoing commitment to education, our new core derivatives curriculum from The Options Institute has been met with positive feedback from early participants at experience levels. We've expanded derivatives education webinar series to include foundational knowledge on options, pricing models and strategies and we're on track to launch our first set of online demand courses in June to further build on this - derivatives strategies and applications.
Additionally, to meet customer demand for even more learning opportunities. The Options Institute is expected to be launching the adjunct faculty program in this June. The program features distinguished practitioners specializing in derivative products, mismanagement decision theory and research. Turning now to our plans to acquire Chi-X Asia Pacific. We believe this deal significantly advances our mission to build one of the world's largest global derivatives and securities trading networks enabling the further expansion of product offerings to global network of customers.
We believe this exciting investment will complement our North American and European operations and provide a foothold in a key Asia Pacific region positioning us to become a truly global market place for our customers. Chi - X is one of the most successful alternative market operators in Asia Pacific with core change operations in Australia and Japan and a significant sales presence in the region. Asia - Pacific is an untapped market for Cboe and we're excited about the potential to offer our unique proprietary products and other services to clients in the region.
As I noted earlier, the acquisition provides the opportunity for us to expand our global equities business including bringing BIDS to the region. Dave Howson, President of Cboe's European and Asia Pacific Operations will lead our planned expansion into region working closely with the Cboe team and Chi - X local management team. Chi - X leadership has shown an incredible commitment to innovation across market operations, customer service and technology.
I look forward to leveraging the expertise of the team to expand Cboe's geographic reach enhance existing capabilities and offer new market solutions to investors in the region. The transaction is expected to close in the second or third quarter of 2021 subject to regulatory review and other customary closing conditions. We look forward to welcoming the Chi - X team into the Cboe global markets family.
With that, I'll turn it over to Brian.
Thanks Ed and good morning, everyone. I hope all of you and your families are remaining safe and healthy. Let me remind everyone that unless specifically noted my comments relate to 1Q, 2021 as compared to 1Q, 2020 and are based on our non-GAAP adjusted results. As Ed just indicated we reported strong financial results for the quarter. Our third highest quarter on adjusted EPS basis.
Earnings were down compared to last year's record high. But we continue to build on the positive momentum we ended the last year with. We also continued to execute on our strategic initiatives and remain laser focused on building one of the world's largest global derivatives and securities networks to deliver enhanced value to our customers as well as our shareholders. Now a quick review of the quarter.
Our net revenue increased 2% with net transaction fees down 7% and recurring non-transaction revenue up 17%. Adjusted operating expenses increased 26%. Adjusted EBITDA of $250 million was down 6% and finally, our adjusted diluted earnings per share was $1.53 down 7% compared to last year's record quarterly results. But up 26% quarter-over-quarter. Turning to the key drivers by segment, our press release and the appendix of our slide deck include information detailing the key metrics for each of our business segments. So I'll just provide summary thoughts.
The revenue decline in our option segment was driven by lower trading volumes in our proprietary products offset somewhat by a continuation of strong trading and our multi-listed options. Growth and revenue per contract, RPC and our index and multi-listed option and growth in our recurring non-transaction revenue. The increase in North American equities revenue resulted from the addition of BIDS and MATCHNow, which contributed total revenue of $12.4 million. In addition, recurring non-transaction revenue increased nearly $5 million or 16%, organic growth of 15%.
The revenue declined in futures resulted from lower trading volumes in VIX futures. The revenue increase in Europe primarily reflects the addition of EuroCCP which contributed $12.1 million. As Ed noted, we achieved some notable records in European equities in the first quarter underscoring our successful BREXIT transition and the reintroduction of Swiss trading on our market and continue to make meaningful progress on the planned launch of European derivative.
Overall we're - this quarter given the challenging circumstances and finally in FX. The revenue decline was due to lower ADNV resulting in lower net transaction fees offset slightly by growth in accessing capacity fees. In addition, FX market share grew 80 basis points year-over-year to 16.5%. While not included in our prior year results. I want to point that the businesses we acquired in 2020 achieved double-digit year-over-year revenue growth apart from BIDS which had tougher comparison like our other trading venues. We recently published historical volume and revenue capture metrics for EuroCCP, BIDS trading and MATCHNow, which are available on our website where we post our monthly volume statistics.
Turning to expenses, total adjusted expenses were about $125 million for the quarter up 26% against last year's first quarter. Excluding the impact of acquisitions, adjusted operating expenses were up 8% or $8 million for the quarter. Most of the expense variance related to the acquisitions was compensation and benefits. While first quarter expenses annualize, [indiscernible] below our current expense guidance range of $531 million to $539 million most of the variance is due to timing. So we're reaffirming our previous guidance for 2021 expenses.
As we mentioned on our last earnings call. Our plans for 2021 and beyond call for continued investments to drive long-term sustainable growth in our business. We started the year strong, achieving 14% organic growth in recurring non-transaction revenue well ahead of our targeted growth rate for the year of 6% to 7%. Like prior quarters, most of this growth was driven by additional units or subscriptions versus pricing changes and as Ed mentioned, we now expect the organic annual growth rate and recurring non-transaction revenue to be 10% to 11% for the year.
After incorporating our 2020 acquisition, we similarly now expect the total annual growth rate for this category to be 11% to 12% up from our prior guidance of 7% to 8%. As a reminder, we define recurring, non-transaction revenue as access in capacity fees, plus proprietary market data fees. In the aggregate, we continue to expect the acquisitions closed in 2020 to contribute additional, annual net revenue growth of 4% to 6% in 2021.
Moving to our expense guidance. As I noted earlier, we continue to expect adjusted operating expenses to be in the range of $531 million to $539 million. Furthermore, I want to reemphasize our plan to invest approximately $24 million to $26 million this year to drive incremental and sustainable long-term organic revenue growth and high conviction, high return opportunity. This includes our European derivatives build out as well as investments to increase access to our existing products and services especially growth in our index options and futures by developing, listing and distributing unique products, enhancing our marketing education and context and increasing our efforts to tap into the growing base of retail investments. Keep in mind, our current guidance metrics for 2021 do not include the pending acquisition of Chi - X. we will update our guidance accordingly once that transaction has closed.
Turning now to summary of full year guidance on the next slide. We're reaffirming our guidance for depreciation and amortization, effective tax rate on adjusted earnings and CapEx. A quite note on our effective tax rate which was 27.9% for the quarter slightly above last year's first quarter rate of 27% and at the lower end of our guidance range of 27.5% to 29.5%. We're reaffirming this guidance under the current tax laws. While we're not providing full year guidance on interest expense absent any additional borrowing and significant changes to LIBOR, our interest expense for the second quarter of 2021 is expected to be $12 million to $12.5 million in line with our first quarter expenses $12.3 million.
Moving to capita allocation, our priorities have not changed as we remain committed to investing in our growth strategy while returning excess cash to shareholders through dividends and share repurchases. As you heard from Ed, our recent acquisitions as well as our pending acquisition of Chi - X underscore our conviction and our ability to deploy capital, to help enhance organic growth and strategic value overtime leveraging the robust infrastructure and technology at the core of our strong operating leverage profile.
From a capital return perspective, our strong cash flow generation [indiscernible] to return $93 million to shareholders through dividend and share repurchase in the first quarter. We plan to continue being opportunistic with share repurchases. Our leverage ratio was unchanged at 1.4 times at March 31 versus year end 2020. We ended the year with adjusted cash of $264 million reflecting in part higher balances associated with additional regulatory capital supporting growth in Europe.
Now I'd like to turn it back over to Ed for some closing comments before we open it up to Q&A.
Thank you, Brian. In closing I'm pleased with the progress we've made as we continue to execute against our strategical plan and focus on building one of the largest global derivatives and securities network. Earlier this week, Cboe celebrated its 48th Anniversary, the pioneering spirit that drove the creation of our company now fuels our leadership as a global multi-asset market operator. While every year has been remarkable on its own right. The unprecedented events of this past year have reaffirmed why I already knew, the entrepreneurial and collaborative team spirit has always defined Cboe has never been stronger.
I'm very proud of what we have accomplished as a team as a team and I look forward to delivering on our vision as the year progresses. With that, I'll turn to Debbie for instructions on the Q&A portion of the call.
Thanks Ed. At this point we'll be happy to take questions. We ask that you please limit your questions to one per person to allow time to get to everyone. Feel free to get back in the queue and if time permits, we'll take a second question. Operator?
[Operator Instructions] and the first question comes from Rich Repetto with Piper Sandler.
I'm going to skip the [indiscernible] expense guidance. I like to focus more on and at the organic growth of the non-recurring transaction revenue. So I'm just trying to dig under the covers a little bit more. The guidance increased 50 to almost double and I'm just trying to see what increased the momentum a little bit deeper between when you gave the guidance in February to now. What did you see that was able to align it to increase it so much?
Thanks, Rich. Brian, why don't you jump in?
Yes, I'll take that. Thanks. Rich, we're obviously very excited about this - obviously the incremental guidance reflects are increased confidence in that growth rate, which was already strong obviously going in. As you recall the growth rate in the fourth quarter was also kind of that kind of near double-digit team growth rate. I guess just kind of again lay out our investment thesis that we talked about at the end of the fourth quarter results. Basically that growth is not accidental, it reflects our strategic approach and that longer effort and it's starting to bear fruits.
When you think about the cash flow generation of the organization and where you deploy that capital which again a common theme that we wanted to make sure we laid out. Part of the expense guidance, part of what we were doing with the cash flow. It's not - let's take the extra cash and let's put in a sock drawer, help it grows. What reflects the investment thesis is that, our global client base as an increasing need for data and analytics and better access. So as you look at the details of where do that growth come from and what we're seeing. Its three parts.
It's growth and demand access to our markets, its growth and demand to our data. And it's growth and demand to our analytics and that's suite of products. On the access side and you look across, primarily this is coming from the options North American equities in Europe business is - we're seeing a little bit of the macro effect of that increasing demand, increasing activity. But we're also seeing the feedback that the firms are looking for more and more capacity as they're expanding their trading capacity.
On the data side, we're seeing incremental top of book sales particularly on the equities front and 75% of that growth is actually international. There's some US at top of book sales are coming international and then in the US, we're actually seeing more depth of book. I'll call it more share of wallet demand coming through. On the analytics side, is what we're seeing that whole analytics suite is starting to come together? We're seeing increased client demand for access, for having that same provider.
We're seeing growth on the Silexx platform. We're seeing growth in LIBOR, [indiscernible] and Tradeweb. All of that's coming together from a similar provider again. We talked about this before, pre-trade, at trade, post trade, helping provide that risk, that analytics framework is really starting to bear fruits and why this is coming out. So on a go forward, the increased guidance reflects the strong pipeline and again confidence in our efforts and we're just going to continue to leverage our global network and we're really excited to grow this part of the business.
Thanks very helpful. I was kidding about the expense.
And the next question comes from Dan Fannon with Jefferies.
My question is on M&A and capital allocation. I guess just in general, you've been quite active over the last couple of years. It would help to characterize the current environment and how you're thinking - today and then also do you consider the suite of products within the umbrella, potential divestitures that maybe earned as cord as now as maybe they were when you did or acquired them, just thinking about FX today and kind of way you looked at growth and some of the strategies and outlook that you have, doesn't feel if that's core to some of the things you're focused on today. Growth has been relatively stagnant. So just thinking about holistically parts of the business maybe that aren't strategically important today that maybe later could be sort of funds at some point.
Sure, Dan. Thank you. Let me start with M&A in general. We made comments in the past and yes, you're right. We've been quite active. On the data and analytics solution. We simply kind of like where we are, we're in full integration mode. Brian mentioned that pre, at and post trade solutions for our customers. We like that. That's poised for further movement, growth and globalization. So I kind of like where we are on that respect on M&A.
As for the other M&A you noticed, the core business of us matching trades. If a region is open for competition, that makes us sense for us to take a hard look at. And with the Japan and Australia, new to the region. We like going into those regions who are looking for alternatives to the incumbents in an open way. So we'll keep looking in that regard. Nothing imminent but certainly always on our radar. Chris, you want to jump in on FX? Couple comments on FX. We actually like that trajectory by the way, Dan. Chris, couple comments?
Yes, Dan good question. As I had mentioned, we really like the FX business. We've actually had a really strong growth rate in the last three to four years. While the overall market volumes have not grown that much. Our share of the market has grown, our share of the wallet has grown. We've used data analytics again to grow our share and get closer to our customers. I've also added some non-transactional revenues there. We've launched non-deliverable forward our sets growing nicely and our full amount platform.
So we really like the FX business and even as regarding other M&A that we've announced. If you talk about Chi - X Asia's were looking to close that hopefully soon. It opens up opportunities not just in the equities asset classes of those existing businesses. But there's also, we think more opportunity across our other asset classes including FX as we really move into the Asian region.
Thank you.
And the next question comes from Alex Kramm with UBS.
Just want to come back to the recurring revenue growth outlook. You sound pretty confident. But I think you just acknowledged earlier a couple questions ago that, there are some macro factors at play. So just wanted to flash out, what the risk is that has massively benefited from the activity we've seen in the first quarter and last year? All these retail upsides and what could come off again? And related to that, I know the SIP revenues are not part of that recurring guidance. But I think SIP revenues for I think the pool really went up a lot in the first quarter. I think some of that was driven by retail. So again, curious how if you have any insights that size of the pool is sustainable or where it's sitting right now? Thank you.
Brian, you want to start with recurring? And Chris, can move into the SIP.
Yes, thanks Alex. I would say that, as you think about that retail participation that's not really driving some of the access that we're seeing from the growth. And that's again, that's growing across all the assets classes. It's not just kind of the retail effort, maybe in the equities or the options. So we're seeing again across all again we can't necessarily point. Here's a macro factors, there's the internal kind of the growth driven of the firms themselves. But like I said, as firms have growth this capacity and they continue to execute their trading strategies. They have not indicated any change. Like I said, we still feel confident in sustaining that overall level of participation and access into our market. So like I said, it's hard to predict the growth rates in any one particular quarter. But overtime, we still feel pretty good overall. Again that macro factor we can't ignore it. But we don't think it was the primary driver of our growth.
Alex just quickly on the SIP as well. We haven't really projected overall SIP market data pool growth for a while. Once quarter-to-quarter there will be some market data recoveries to come through. But as Brian mentioned in a quite a bit of detail already. Our growth in non-transaction revenue has primarily come from access. People needing more capacity to our markets as well as data that's unique to us, that we're selling here and around the world. As you said 75% coming from outside the US. So in certain products. So we're excited about that. Our growth plans and non-transaction aren't dependent on the SIP.
Very helpful. Thank you.
Thank you. And the next question comes from Ari Ghosh with Credit Suisse.
It looks like some of your recent transactions like coming together to form more of this cohesive strategy across your business line, like the way you're leveraging BIDS for [indiscernible] for example. So curios, are there other areas where you're seeing similar opportunities with a newly acquired assets? And then Brian, you touched on this a little bit, but curious if you know the higher recurring growth outlets that you now have, that in that potential cross-sell opportunities that could come through some of these assets or is it primarily as a result of a stronger standalone asset run rate since the acquisition. Thanks so much.
Ari, thank you. Let me start - it's great. And I appreciate you pointing that out. Certainly now if we look back over our activity over the last 18 months or so. I hope the story is coming together in your head. So exactly right, we're just so pleased yesterday to announce the launch of European derivatives that was an effort that we began well over a year ago and being able to come to market in September is quite exciting and then taking the incredible leadership that Dave Howson, as he shepherded that effort with Ade Cordell, in Europe being able to take Dave's expertise and have him oversee the integration of Chi - X, makes perfect sense for us on a build out. But importantly, you can see the effect and the vision we had with our purchase of BIDS. Our partner for years in Europe being able to move into Canada with our MATCHNow ATS acquisition and then now moving that network and reach into the APAC region.
So it's just terrific and putting Bryan Harkins in charge of that growth and that rollout. I think we're well positioned to take full advantage of all of the deals that we've expressed to you over the past 18 months. So it's great. It is coming together. I appreciate you pointing that out. And let me turn over to Chris.
Yes, just want to point out again. The demand for BIDS in other regions and other countries is palpable. As we announced our MATCHNow acquisition. Now integration which is coming here February 1 of next year. The demand for BIDS is extremely high there. And we've already seen that and we're not closed yet with Chi - X Asia. But as Ed mentioned, a lot of demand in Asia for BIDS also.
So there's 460 buy side participants on BIDS and we think that we can grow substantially trading existing products that BIDS already trades. But also across new securities in different regions. I'll end with, all of this there's data and access related to each of these markets and each of these different trading networks that we have. So that's underpinning or actually that outcome of all this coming together is that, you see the non-transaction over performance.
Got it. Thanks.
Thank you. And the next question comes from Chris Harris with Wells Fargo.
Ed, you mentioned that customers are beginning to come back to the proprietary product suite in a bigger way. Wondering if you can expand on that a little bit, maybe talk about what you're seeing there. And then related to that, do you think the shape of the VIX curve and other dynamics that were affecting the complex are now healed.
It's a great question and we do I think on the macro level. This is exactly what institutions were telling us in the second half of last year and of course we were passing that information along to you. I think no better place to look is that SPX volume is right around 1.2 million contacts [ph] a day, very consistent for the first four months of the year. What's been interesting is to see the VIX options growth in the first quarter of the year and that's changed a bit in April and really the efficiency of our institutional users who saw an advantage using VIX's option at a time where the difference between realized volatility and applied volatility. Buying VOL [ph] and the exposure of VIX options was relatively cheap and so we saw institutions in a big way move to using VIX's options for hedging purposes that's changed now in April as we're looking at a more normal realized to imply fall [ph] level. So that's exactly the right move from our institution. Really be having at a very logical way and then the overall levels of VIX.
In the fourth quarter really, out 25.5% or so. Second quarter about 23% and then if you take out today, right around 20% or just below 20%. So moving to a more normal contango shape which should keep in the roll bound trade that we've seen in years past. So this is exactly what we expect out of our institutions and no reason to think that won't continue. So I appreciate that question.
Thank you. And the next question comes from Owen Lau with Oppenheimer.
Just a quick one from me. How should we think about the incremental financial and non-financial impact to Cboe, when the hours for SPX and VIX options are expanded potentially in the fourth quarter of this year? Thank you.
Thank you. Chris, you want to back on how we're doing on our year 24x5 effort.
Yes, Owen great question. So really excited about 24x5. This hits on one of the major themes which is greater access to existing customers. But also access to new customers. So as you said, we plan to launch in the fourth quarter pending regulatory approval. Working very hard on that. We already trade VIX futures 24x5 and this will get us to nearly 24x5 for SPX and VIX options. And we call this global trading hours outside of the US hours. We saw actually more than 100% growth in that segment and SPX options last year, year-over-year and so we're excited a bit. As we increase the access so will the volume come?
As a bit of precursor to that, we extended our US equities hours to 4 AM Eastern opening up three hours earlier and we've seen quite an uptick in number of customers in our market share coming there, kind of exceeding our expectation. So the world is 24x7 and in every asset class. We're moving in that direction. We're meeting customer demand as we do. So I'll hand it to Brian for maybe a financial impact here.
Chris, just let me jump in one more time and again I think if you look at the M&A activity and important to note. I think really outperformed particularly on the market data sales in APAC. We were very, very small team. Who works very, very hard? But having a presence with Chi - X now and really sales team on the ground. The timing at 24x5 and the awareness that there is demand for exposure into the US year around the clock, really comes together nicely. If we look at hopefully the approval and closing of Chi - X. so it's coming together for us, pretty nicely. But yes, back to you, Brian.
I wanted to just mention, part of that effort is built into our investments that I mentioned up front as far as the revenue expectations again it's been more muted as we roll that out again later in the year. The annualized impact. So again it's part of a building a very broad access again. As Chris mentioned to the global network and people continuing to take advantage, increase access to the overall product suite. Obviously including the proprietary product suite. So more muted on the revenue side in 2021. But the full burden of the expense is shared.
All right, got it. Thank you very much.
Thank you. And the next question comes from Brian Bedell with Deutsche Bank.
Maybe just go back to the global data platform concept. And if you could just maybe talk about sort of the timing of developing near the more cohesive platform, which just sounds like what you're trying to leaving in all of the market data that you trade both on the proprietary side and also, I can think of both US and even European markets where you have a lot of data for things that you don't trade. But maybe if you can talk about, how you view this proprietary angle and shifting that sale from individual pieces of the data to a more cohesive global product that you can sell into institutions and whether it's you view that as more of a content sale or do you view yourself as getting into really distribution of that content and starting to compete with some of the distributors of data down the road.
Chris, you want to start?
Yes, I'd love to. So obviously Brian, you recognized we put together the data and access solutions group under Cathy Clay, tremendous leader. We've recognized this opportunity that we need a cohesive and well packaged data offering globally. Cathy is leading the charge there. And so I would say, we're maybe early to middle innings on this effort. So we bought Hanweck and FT trade alert last year, nearly fully integrated there. We'll be done by the end of this year. Now putting that together with the real-time data coming off of all of our exchanges as Brian mentioned 75% of certain products remained sold outside the US now.
So it is coming together. But it's still I think middle innings. Technically we're bringing it together. But from a packaging perspective getting the access and the distribution right is, we're excited about doing that. I had also mentioned, the way in which we're getting to customers. We want to make sure we get to not just the existing customers with more well packaged data in a way that they can act upon. But actually new customers so that may not have current access using the normal means, they might have so. Also exploration of efforts to use cloud and whatnot to get to new customers.
So we have an incredible amount of data, a unique position now when we hopefully close the Chi - X Asia acquisition on this global derivatives and securities network with just an unparalleled amount of data coming from the equity platforms, put that together with our deep analytics an we're very excited about this. But early to middle innings as we've just formed this group, all together under Cathy.
This is John also there. You think about the acquisitions we've done over the past 12 to 18 months. Generally, there only the productive of data, producive [ph] of data or their data packaging and distribution platforms. And so, we think about them as a cohesive haul. You've heard a lot of talk about this today. I mean what we're seeing right now in terms of the performance and the raise on the forward guidance and non-transactional revenue, is just. It's increasing return to that scale and scope.
We can give you some direct examples of that. For example, this past quarter we had a win, a sizable consulting agreement with a global top tier buy side firm to look at top to bottom there. Their risk systems that is likely to lead to a mandate to sort of look at all of that and replace substantial components of it because we've got a package that really works well together. And we look forward to continuing that globally again as we have a footprint in Europe and Asia and North America, that sales effort should be much more routine for us.
It's important, we're on the lookout always for new sources of data as well. CoinRoutes great example of us moving into crypto currency market data that is just incredible opportunity for us to look at the potential derive data in crypto. The analytics associated with it, will be a price data. So there's more to come. We're just getting this up and going.
So as we think of the out years 2022, 2023. I know you're not giving guidance there yet. But it sounds like it will be a good tailwind to that organic recurring revenue growth rate next year and beyond.
Okay, nobody answer that question. It's too forward-looking. Debbie, can be mad at us, Brian.
All right, thank you. The next question comes from Ken Hill with Loop Capital.
I wanted to ask about ESG. I didn't hear anything in the comments today, I know that's an important initiative within Cboe. Just given the breadth of capabilities and exposure, you guys across Europe or that seems to be a little more important than the US and heading in Asia. Are there any opportunities you're excited about either from a transactional product or maybe something on the data side that could resonate a little bit better going forward?
It's a great question. Before I turn it over to John on the product. I think it's important for us to recognize. It's very top of mind for all of our associates and what that means to Cboe before we even move to what's tradable, what indices are out there and how our customers can take advantage of investing in ESG? So important for me to mention that on the front end. This is a big deal for us. It's a report that's very important to us. I just reviewed the report that we were about to send out and all of our associates, this is top of mind. So I want to start there. John, want to move to what's tradable and some of our index partners and the opportunities, we see.
Yes, thanks Ed. Hi, Ken. To Ed's point it really does start at home. We want to walk the walk and talk the talk. That gives us really insight into the thought process behind ESG. So we can have intelligent conversations with our partners. We will be proceeding forward on ESG product, whether data product or tradable products together with partners. That has always been our forte and if you think about the partners we have today, our deepest partnerships FTSE Russell, MSCI, S&P. those partners are all making substantial investments in ESG and leading the way into the future here. So we fully intend to leverage what they've built and create really interesting value-added products off of those partnerships and you'll see many of those come to light over the next couple of quarters.
Got it. Thanks for all the detail there.
Thank you. And the next question comes from Kyle Voigt with KBW.
Just wondering, if I can ask a follow-up to an earlier question around the customer reengagement and the index options complex. So if I just take a step back, index options volumes been relatively flat since 2017 and that's - long track record of kind of double-digit volume growth. I know in the past your efforts at Cboe to gather more information and data on your end clients. Really trying to understand, who is using your products? Why? I'm wondering if you have any color on how the institutional options client mix has changed over the past few years and whether the reengagement that you're currently seeing is the type of reengagement that you think can really reaccelerate that complex back to that double-digit type of growth rate.
Well that's a terrific question. I think what the biggest of observation we see is, the change in the size of the contracts that are coming into the SPX complex. It's quite remarkable. Those really, really large trades that we saw before the pandemic have been replaced with smaller order size in general which is very telling to us and then in the super short dated and a little premium contracts huge uptick in what will put in a category of traditional retail that is retail, access that's been around for years. But has been missing in the SPX, the VIX auction, mini futures, access [indiscernible] SPX and what we're looking at is it to accommodate new retail, which still does not have access to our proprietary product step.
So the rotation to smaller order side, the rotation of more traditional retail is what you see today and at roughly $1.2 million contracts a day and we're still working on providing access to new retail, which we think the more you look at our mini products and the more we allow or they allow access for their clients into SPX. I would predict that you'll see a movement like a traditional retail, out of new retail. So that's our goal. But that's what we're seeing today. That's the biggest change I can tell you, is trade [indiscernible].
Thank you. And next we'll follow-up from Rich Repetto with Piper Sandler.
This follows on the last question I guess and the other trading question earlier. That it seems like in April, someone flip the switch. If you look at the VIX chart. You know we're running at 20 in April 1. We just sort of dropped down and volumes had lightened. I guess any color or indication. It seems like we've had this stair step down with VIX and the outlook for the pickup and trading we saw in the first quarter I think there's some concern with the pandemic and people not as exposed to work from home etc. that we may see some lightening of volumes as we go into the summer. So anyway, your outlook on volumes as we hit the sort of patch in April, so far.
I think just volumes overall Rich, we see a little of the volumes we treating a little bit. But a couple weeks just for our opinion, Trendmic [ph] I actually like the momentum particularly out of retail that we kind of spending some time on, not surprisingly individual names. The attention that individual trading has had, has raised volume across the spectrum. So if you're providing that liquidity in the most volatile single names. You're looking for macro layoff as best as you can that has raised the interest for us and what we saw in AUM and ETPs. We can that in VIX options as I said before. Really were buying implied volatility to discount of what the market was trading, that since gone to a more normal relationship again, if we put today out of the mix. But then, what we would expect traditionally is if that VOL [ph] went to a more historical containment shape. We'll see the roll down. We should see the roll down trade again.
So from our proprietary product perspective. We do see that as a normal rotation. The single name excitement being replaced with more macro as VOL [ph] contracts a bit and then going back to a short VOL [ph] capture trade or roll down trade and going back to more normal cadence. But it will be interesting to see. I think the uniqueness of Cboe has having a product for many market environment and that's not different. So again and let me, a little more comment on retail.
We're after sustainable volume in retail. There's going to be flashes and we're going to have headlines there's going to be interesting stories and shiny objects in the corner. We're after what education can provide for the long-term investor and the retail investor that's going be here year in and year out. So we don't really chase those spikes, we chase sustainable growth and that's what we're after. So I appreciate that.
Got it. Thank you. Very helpful. Thanks.
Thank you and then next we also have a follow-up from Alex Kramm with UBS.
I want to ask a question that I feel like I ask every few quarters and it also pertains to the proprietary products. And maybe some of this was addressed already. But Ed and see always [indiscernible] a very good job talking about the macro and what investors are doing or clients are doing and why, what we should be looking for? But I feel like, what I still always miss is, any sort of things you can point to that the underlying customer base is structurally growing? So I don't know if it's like the market data or the access fee is growing as a sign. But with all the efforts that you've been putting and investing into new sales efforts etc. what can you tell us, when you see that there is new clients, new regions, new people that are telling you. We're trading now. We didn't trade a year ago and any sort of indication that still growing at a healthy clip or not. Thank you.
I think Alex; you set me up perfectly with the data and the demand for data. So from an institutional perspective. The data and the back testing is first. Before conversion. So that's - I love that. That's the kind of reflect some of the guidance we've seen, the demand for that data is increasing. But again, I really want to punch the fact that we've seen no conversion from new retail. Zero. There's no access from the most popular new retail sites. So those millions of new retails will engage more broadly in the market are not in our proprietary product set at all.
So the low hanging fruit for us is that conversion. We love the story. We like telling how the management of cash settled European style contracts are super easy and so that's the educational effort that's what we're going to be point out. Hopefully in the months and quarters to come. But start with data in your head a we watch those numbers and then we'll look for conversion from new retail, that is a good opportunity for us and one that, we'll be chasing the rest of this year.
This is John. I'll just jump in on one concrete example as well. While the on boarding for many of our proprietary products and the new platforms is a long process. We every quarter, every month work towards extending access. Access is one of our key strategic objectives and the great example of that is the target outcome product set which in the past year or two, went from zero to over $5 billion and asset under management between our partners at First Trust innovator, true market others. That product set is a product set that we really work for the partners to create through the whole chain of mechanics are required Flex options, Silexx entry systems, the NAV calculation and the indexes that guide those products. All of those are things we provide to our partners. So that they can offer access to our proprietary products through the wrapper of target outcome funds. And they've had needless to say in this volatile market great uptake over the last year or so.
Okay and just quick clarification, Ed. You focused very much on retail again just now. That is not; I shouldn't read this as a reflection that you think the institutional opportunities to have doubts, right? Like it's just retail you think it's a lot more low hanging fruit. Is that right?
Sorry, Alex the data reference was institutional. Retail. We've not seen a history of retail back testing, it really it is access to the market. Its super short dated. So that is lower hanging fruit and I referenced traditional retail really being a big mover into the SPX complex over the last quarters. And playing out that the low hanging fruits is the millions of customers who do not have access to our proprietary product set, that is not instead of an effort on institutions. John, I think pointed out that the institutions were lead times longer. It starts with data, back testing and [indiscernible].
Yes, just making sure. Thanks again.
Thanks, Alex, for clarification.
Thank you. And the next question comes from Sean Horgan with Rosenblatt Securities.
I just wanted to come back to the CoinRoutes announcement from December 2020. I think RealPrice data was originally expect to be available in the first quarter of 2021. Can you update us on the progress there and expand on your plans to get involved with crypto currency more broadly?
Let me start more broadly, John you can go to CoinRoutes. We know market participants are looking for exposure in crypto. Access cash to be the driver. We've talked in the past. We're trying to build an ecosystem. So we start with access to market data, that's the CoinRoutes agreement. From there you normally have a Vaneck [ph] bitcoin trust ETF in the front of the SEC. so we'd love to deliver in a trusted way, in ETF which are really customer-friendly and easy to understand. And then throughout this effort, we need focus and education. We've not done that in a big way. And then, you take the educated investor and retail access and then you from the ETF into satisfying demand for institutional participants. So all of that pretty early innings if you look at crypto more broadly and we're in it for the long haul. I think John a couple of words on CoinRoutes. Thanks, Sean, great question.
Thanks Ed. Great question, Sean. So we're actually live now on our CCCY Channel and CSMI with the CoinRoutes real price indexes and we're excited about this. A lot of great uptake and to Ed's point, it starts with identifying the price, the accurate prices at which you want to reference your crypto currency trading from there we add all the things we do as an exchange operator. So what we're solving for is at interaction between regulated exchange operator and really revolutionary crypto currency space and offering our broader services beyond just data to those participants.
That's great. Thanks Ed. Thanks John.
Thank you and it does conclude the question-and-answer session. I'd like to return the floor to Debbie Koopman for any closing comments.
Thanks Keith. That completes our call this morning. We appreciate your time and continued interest in our company. Thank you.
Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.