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Good day, and welcome to the CME Group Second Quarter 2020 Earnings Call. At this time, I would like to turn the conference over to John Peschier. Please go ahead, sir.
Good morning, and thank you all, for joining us. I’m going to start with the Safe Harbor language, then I’m going to turn it over to Terry, Julie and John for brief remarks followed by questions. Other members of our management team will also participate in the Q&A.
Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement.
More detailed information about factors that may affect our performance can be found on our website. Also on the last page of the earnings release, you will find a reconciliation between GAAP and non-GAAP measures.
With that, I'll turn it over to Terry.
Thanks, John, and thank you all, for joining us today. My comments today will be brief so we can spend the majority of our time directly addressing your questions. We released our executive commentary this morning, which provided extensive details on the second quarter. As John mentioned, John, Sean, Derek and Julie Winkler have joined me today.
In Q2, we averaged 17.6 million contracts per day, which is down from 21 million contracts per day a year ago, and down from our strong start to the year in Q1. The global exchange traded market has been challenged in many different product areas, since the beginning of the pandemic, impacting us and many others in the trading industry.
Clearly, the front end of the U.S. rate curve has become impacted from a trading perspective. Also, with the recovery of the price of oil back to the $40 range, the global crude oil market has stabilized with a fairly flat forward curve, leading to a reduction in the volatility, back to more normalized levels as the market balance its supply and demand. While in the near-term that reduces the need for some participants to manage risk with us and others, the competitive dynamic of trading volumes across different markets has not changed. However, with the global crude oil demand still depressed due to the COVID-19, which we believe is a temporary situation, we expect to see market conditions improve as global oil demand returns.
We are very fortunate to have a highly diversified business. We are looking forward to the integration of BrokerTec coming onto Globex by year end. We remain committed to achieving capital and operational efficiencies for our clients. Through all of this, I assure you we remain very disciplined as it relates to expenses.
What I'd like to do is turn the call over to Julie Winkler to provide some context on our sales outreach, what we are hearing from our customers, and she will touch briefly upon our data business. Then I look forward to answering your questions. Julie?
Thank you, Terry. Despite challenging circumstances, we are continuing to see positive momentum in our global client engagement. Similar to last quarter, many of our clients continue to work from home, and our sales organization has excelled at their virtual outreach.
During Q2, client engagement by our sales organization was up 66% versus the same period last year, and year-to-date sales activity is up 81%. We are actively engaging with clients via virtual meetings, webinars, online events, email communication and chat to support the execution of our sales and go-to-market strategy.
Clients continue to express their appreciation for how highly responsive we have been, through the peak of the crisis, and our continued focus on delivering value added solutions across product lines. Clients in some areas are beginning to return to the office, which means we will take appropriate steps to adjust our coverage model where safe and appropriate.
In Q2, we also saw an acceleration of our cross introduction and cross sell efforts to capitalize on the next acquisition. May represented a record high month with more than 300 cross introductions across our sales organization, which is more than the entire first quarter combined. A total of 500 cross introductions were made throughout Q2.
Additionally, we reinvigorated campaign selling to help bring key products and services to market. We are seeing great success with those campaigns including the re-launch of our three year treasury product, which had more than 40 clients participating on day one of trading. Our active trader retail segment performance was strong in Q2, and year-to-date, ADV is up over 70%, driven by an overall increase in retail trading resulting from the lockdown.
CME was well-positioned prior to these events and its product mix, particularly the E-Micros allowed it to take advantage of strong macro factors.
Lastly, our market data business had a strong quarter. Through the first-half of 2020, consolidated revenue was up 3%. The CME market data professional subscribers count was solid due to increased subscriptions, as traders were migrating to work from home environment. We continue to see success with our data services strategy, which confirmed the value of our data to our global customer base.
I will now turn things over to John.
Thanks, Julie. In the first-half of the year, in addition to navigating a challenging environment, we've been very active with the ongoing NEX integration. We remain on track to migrate from the legacy NEX trading systems to our Globex technology. We’ve recently announced to our clients the cutover dates for BrokerTec. BrokerTec EU clients will begin trading on November 16, and BrokerTec Americas trading will commence on December 7.
With our progress and the integration, the remote working environment and our overall strong expense discipline, we finished the second quarter with adjusted operating expenses, excluding license fees of $380 million. We are extremely focused on actively managing our costs. Based on our outlook for expenses for the rest of the year, our guidance for adjusted operating expenses, excluding license fees for 2020 is being reduced from a range of $1.64 billion to $1.65 billion, to approximately $1,595 million.
This level of spending reflects the reality of the current operating environment, and we would expect a higher level of spending next year, assuming the conditions improve from here.
With that short summary, we'd like to open up the call for your questions. Based on a number of analysts covering us, please limit yourself to one question and then feel free to jump back into the queue. Thank you.
[Operator Instructions] Our first question comes from Rich Repetto with Piper Sandler. Please go ahead.
Good morning, Terry, John and Julie. I guess the first my question is on expenses and you made a solid reduction, John, in the expense guidance. But I guess the question is, the first-half run rate, is -- you're averaging somewhere around $383 million in expenses, ex the licensing fees. If you back into that full year guidance, it'd be an 8.5% increase in the back-half. Hopefully, you get the $15 million of P&L expenses coming from the NEX synergies.
So, I guess the question is, can we go -- if the current environment didn't rebound, say, in 2020, is there more room to cut expenses, because I know there's some events have already been canceled and so forth?
Yes. Thank you, Rich. Thanks for the question. In terms of the first-half versus the back-half of the year, we do expect to have some increase in costs in the back-half of the year. For example, in depreciation as we migrate on to Globex. And also, we're in the process of data center consolidation effort. And we have a build out of a data center in the New York, New Jersey area as part of the integration efforts that we're doing with NEX.
Also, we do have plans for the back-half of the year, some opening of the some economies around the world where we would expect to see some more travel and marketing efforts, as those economies open up. So that is planned for sort of in the back-half of the year. If that doesn't happen, obviously we wouldn't expect those costs to come through. But in terms of our guidance, we did make some assumption that there would be a modest opening in Asia in particular, for example.
In terms of our overall expense discipline, we are as a management team, very focused on our expenses for this year and in planning for next year. So, we have a laser like focus on our expenses, and we're, the entire organization is making sure that we spend every dollar as efficiently as we possibly could spend it.
Got it. Thank you, and everybody, please stay safe and healthy.
You too, Rich.
Thank you. Our next question comes from Dan Fannon with Jefferies. Please go ahead.
Thanks. Good morning. My question is on market data. Julie, you mentioned some of the strengths. If you could kind of elaborate on the outlook for that business and how we should think about growth in the broader market data business for the remainder of this year and in the next?
Sure. Thank you, Dan. Yes. As mentioned, we had a great Q2 with consolidated revenue in the market data business of $135 million, which is up about 5% over the second quarter of 2019. And the majority of that was driven by those increased professional subscriber accounts. So, what has happened, right is that, in the work from home configuration, we're seeing modest demand in display devices.
And, it's also just coupled with, other licensing that we're doing across the business. And so, we're continuing to closely consult with our data vendors and our clients to gather input. We have a really great channel partner base for our data distribution, which gives us really a wide range of very flexible ways to deliver our data and new products.
As we kind of look at the outlook and what else we see, we still see increased need for our data in terms of automated trading solutions. And we also are seeing that in terms of using our data into product creation. So, that comes through as both non-display licensed revenue as well as derived data revenue.
We are certainly focused on the NEX data integration, along with what we're doing on the Globex side, there also is a lot of NEX data that needs to be integrated, as well as continuing to create more flexible distribution channels in terms of what you saw us announced with our CME smart stream and other new products.
So, this last quarter, we did the successful addition of the new 10 year treasury bond as well in our NEX data product. And that's just coupled with continued strength in our policy, our pricing, in our audit functions, and really making sure that our clients have that level playing field and access to our data, I think is contributing in, as well as the outlook for our market data business.
Thank you.
We will next go to Alex Kramm with UBS. Please go ahead.
Yes. Hey, good morning. Yes, I know this is a difficult question to answer on the rate side, but everybody can obviously see the volume and open interest trends. But curious, if there are any other data points you guys are looking at? Anything in conversations with clients that gives you some confidence that we may have troughed here and that things can improve when certain events happen, or if maybe people will start putting more risk on et cetera? Like, what are you looking forward to to get comfort?
Why don’t we -- Alex, thank you for that question. I'm going to ask Sean Tully to give you his take on that, which he has been obviously briefing all of us his thoughts with his team. So, Sean?
Hi. Thanks very much for the question. A really good question. During the March timeframe, we saw a very high volatility in interest rates. And if we look more recently, in the month of July, we've seen unprecedented low volatility across the entire yield curve from our Eurodollar futures, all the way out to our ultra-bond futures.
In fact, if you look at our eighth Eurodollar future, this is the lowest volatility we have seen since the inception of the contract in 1987. Nonetheless, the level of uncertainty in economic numbers have never been higher, when seen from the perspective of the range of possible outcomes for numbers, such as unemployment and GDP. While the Fed is currently doing everything possible to support the economy in the short run, and during the month of March and April bought as much as 300 billion a week worth of securities, and in fact, increased the size of its balance sheet from $4.2 trillion to $7.2 trillion or plus 29 -- sorry, or up $2.9 trillion in a period of just over three months, including the purchase of $1.7 trillion with our securities. Those actions obviously have dampened volatility tremendously.
Nonetheless, if you look at what happened post the financial crisis, when the Federal Reserve between 2008 and 2014, purchased $3.6 trillion. They then later on proactively reduced the size of their balance sheet. In particular, they reduced the size of their balance sheet from $4.5 trillion to $3.7 trillion from January of 2018 to September of 2019, from which we did get additional volumes and volatility.
If you look at the unprecedented deficit this year, estimated $3.7 trillion, now estimated potentially $2 trillion of deficit next year you're going to see the highest debt-to-GDP ratios, the U.S. government has seen certainly since World War II and possibly ever, and you’re going to see the highest levels of debt in the U.S. ever.
If you look at the refunding announcements, so if you look at the refunding announcements we had and the quarterly refunding announcement by the U.S. Treasury in February, versus the quarterly refunding announcement that we had in May, the growth in coupon issuance was 24% by the U.S. government in order to address that huge debt and deficit need.
Next week or the next August, the August quarterly refunding announcement, the growth in coupon securities, the growth in debt and deficits, once the Federal Reserve reduces its intervention in the market and once the pandemic recedes, the needs for hedging, the needs for our products will remain much, much larger I think than ever before in history.
So yes, July is very low volatility. However, the unprecedented debts and deficits and issuance of coupon securities means that the risk that is going to need to be managed on a go forward basis, is going to be much larger than ever. I said earlier that, the Federal Reserve was buying as much as $300 billion plus a week in securities, it's now reduced that to $20 billion a week.
So, we're already seeing significantly reduced activity by the Fed. I hope that helps.
Thank you.
Thank you. Next, we will go to Brian Bedell of Deutsche Bank. Please go ahead.
Thanks very much. Just want to Sean maybe follow on, on those comments. I guess, it is an interesting dynamic of the potential like what you said in terms of the hedgeability or the hedgeable assets that can be headgeable on treasury outstanding stock that will need to be hedged and speculated on.
I guess what's your view on -- does that stays in an intervention mode for a prolonged period of time? Is there anything you can do on your end at CME to stimulate those rate volumes or really to kind of depend on that environment?
And then maybe just a second question tied to that maybe you can also talk about the equity index franchise. You've got a lot of new products coming on in terms of the options and the telco offering as well, if you could talk about your efforts there and outlook for volume growth in those earnings?
Yes, of course. Thanks very much, I greatly appreciate the question. We’re very excited as you know, innovation has been more momentous over the last several years. That has always been part of CME Group’s DNA. So, our innovation continues unabated and the results so far this year are extremely strong.
If you look at the first-half of 2020, product launch since 2010, this is data that we frequently update for you. Anyway, the first-half of this year, we achieved 3.2 million contracts on ADV, a new product launch since 2010. You'll recall that last year those same products were just 2.1 million ADV. So, we’ve seen 52% growth year-over-year in the ADV of those products launch since 2010.
In addition to that, in the first-half this year we earned a $193 million in revenues, likewise, annualized about 25% year-over-year. So, the innovation continues on an extremely strong basis across all of our asset classes, and it's definitely a driver of growth. The single greatest product launch in CME Group history as you will be aware by now is our Micro E-mini.
The Micro E-minis have achieved 1.6 million contract of ADV so far this year. And if you look at the second quarter, they achieved 1.9 million. If you look at other -- actually in addition to that, we have recently announced on August 31, we will be launching micro options. So, these are the smaller options that are the option equivalent of the Micro E-mini futures, which we're very excited about relative to the very significant uptake that we've had in micros.
If you look the micros, another thing regarding the micros that we've talked about through time is their RPC. When we launch a new product, we typically have higher incentives. So that net RPC is going to be lower. As you know in the second quarter of 2019, the RPC on the Micro E-mini was 6.8 times, we told you at the time that we would be reducing those incentives over time and that that RPC would increase. So, we're very happy to say that in that second quarter of 2020, they're about 12.5% for our Micro E-mini, so nearly double the RPC of a year ago.
In addition to that, we recently launched the new three year Treasury future, relaunched the new three year Treasury futures. We did it as we always do in terms of having a product that delivers a lower total cost, with in fact, half of the minimum price increment of the previous contract that existed. We're very excited about our traction in the new three year future. On the first day of that contract, we had 40 participants, we had more than 50 participants in total.
Since launch, as of today, we're achieving over 3,000 ADV a day. On the first day, we achieved more volume on Globex in that contract than we did in our ultra 10 year future. So, we are very excited about participants there from banks, asset managers, hedge funds, and about 5,500 contracts open interest, which shows that it's real end users that are trading the product.
Now, that gets me back to the previous, I guess all-time great launch of CME Group history with the ultra-10 year future. I'm very happy to say that the ultra-10 year future even in this environment, the ADV is 262,000 a day, or up about 21% year-over-year, and it's open interest at 977,000 contracts, likewise up well over 20% year-over-year.
So, we continue to see innovation, so during COVID we launched a very successful new three year Treasury. We've seen extremely strong growth in our Micro E-minis and products like our recently launched ultra 10 year continue to thrive.
I might mention our silver futures, silver futures volumes are up 58% year-over-year, 45,000 contracts today. ADV we had a record open interest in March of 612,000 contracts. And again, huge growth with 3.2 million contracts a day in ADV from the financial unit coming this year from innovative new products. Thanks for the question.
Thanks, Brian.
Next, we'll move to Ari Ghosh with CME Group [ph]. Please go ahead.
Good morning, everyone. Maybe it's a quick one for Sean on the metals complex. It's a smaller revenue piece here but could be facing some nice tailwinds given Fed intervention and the rounds of stimulus. And you've also launched a new place delivery in gold contracts. So just curious the level of interest you're seeing here. You've seen interest build. And then any color on broader customer trends out of Asia? We've typically seen strong demand for both the metals and equity index products?
Ari, we're going to have Derek Sammann answer that who heads up our metals complex. Derek?
Hey, Ari, thanks for the question. It's Derek here. Yes, metals continues to be a big area of growth for us, not only just coming off the overall macro environment. It's very positive for gold and the points that you've made. We just recently have revisited the highs and come back to the highs of over $1,900 that we just last retested back in March.
Now the business this year has been spectacular. And to be honest, it's actually seeing significant market share gains relative to the broader OTC market and the portfolio [ph] market in London over the last five years as well.
From a client perspective, we put up record numbers in Q1, actually record first-half numbers as well. And what's really interesting what we like about the metals business and the precious particular is the point you just made, our international growth continues to set the pace for the overall participation in our markets. When you look at the first-half business this year, overall the business was up 18%, our Asian business is up 30% -- and from APAC.
What we like about the non-U.S. business is, I think you're aware is that our rate per contract associated with our non-U.S. customer base comes at a substantially higher rate than our U.S. franchise, primarily because they tend to be a lower percent of members. And we also see folks in the retail bucket and kind of the biocide participant coming in higher RPC.
So, the overall macro trends for gold have been and continue to be very positive. The non-U.S. business continues to set the pace. And I think one of the really interesting things that we've seen not only in the volume growth and participation from Europe and Asia is, not a lot of people pay attention to this. We're at all-time record stocks of gold in our depositories. If you go back to February, March of this year, we had about 8.5 million to 9 million ounces of gold in our COMEX warehouses. We're up to a little bit north of 30 million ounces right now.
And that tells you not only the volume trends, the global participation and the growth in the non-U.S. business, but it also means when the depositories grow like that, clearly the market is voting with its feet, to determine that COMEX branded warehouse depositories is the place where they want to have their metals. And that's been driving broader participation. So, it becomes a virtuous cycle of volume growth, international participation, adding more materials into the warehouse. And that's been one of the major reasons why we've seen not just growth in metals volumes overall, but continued high strong growth in our rate per contract as well.
I think our total rate per contract in our overall metals complex is the highest RPC contract we have at about $1.46, despite the fact that business is up 17%, 18% volume wise, we actually have an RPC that's drifting a little bit higher, I think it's about 1%, up year-on-year. So, strong growth and the non-U.S. participant, strong vote in terms of the metals flowing into depositories. And that's reflected both in the volumes, revenues and the higher rate per contract despite higher volumes.
Thanks, Derek.
Great, color. Thanks, guys.
Thank you.
We will next go to Chris Allen of Compass Point. Please go ahead.
Good morning, everyone. I appreciate the incremental color on the cross selling efforts. I wonder if you could give us any numbers in terms of how that's translating it, whether it's volumes or open interest. And also if you could provide an update, whether there's been any progress on the clearing front, in terms of realizing any synergies, would change for customers between CME and DTCC. And maybe just to refresh on what the expectations are in terms of the benefits, once the technology migration is over to Globex are completed? Thank you.
Thanks, Chris. I'm going to ask Julie Winkler to talk a little bit about the cross selling, and then on clearing with DTCC on the margin benefits, Sean can address that question. So, Julie, why don't you start?
Sure. Thanks for the question, Chris. Yes, we are really making outstanding progress as we think about how we've been able to integrate the sales team to support cross selling. As we kind of expected, right, there was a natural dip in those cost reductions in late March and April, as really the sales reps were focused on supporting those clients through this unprecedented volatility. But now what we're seeing is those efforts are really accelerating at a record pace. So, when we look at Q2 and I mentioned it earlier, the 500 cross introductions, May was a new monthly high for us where we did 300 across our respective businesses.
A little more insight on that, so nearly 70% of the cross introductions that have been made, have occurred for the transactional based businesses in Q2. The FX franchise is really a cornerstone of that and is at the forefront of the cross introduction efforts. So, that would be optimization or EBS or BrokerTec clients that are being referred into our futures and options our core business.
And, kind of right after FX, the other introductions have been happening with EBS, as well as interest rates. So, for futures and options, as well as Traiana end market data. I'd say, the other probably standout client segment that we're seeing momentum with cross selling is for our commercial clientele. And that's really happening across EBS, as well as our optimization product suite. And so this is, really kind of based on the investment that we're making in our global sales force and providing them with the training and the tools that they need to effectively cross sell this holistic suite of products.
So, still a little early days for specifics in terms of the revenue that those items are generating. Obviously, as we go into these clients going live with these products, we'll have more information on that. Thanks for the question. I'll turn it back to you, Terry.
Thanks, Julie. Sean, you want to address the current benefits with DTCC that we're working on?
Yes, absolutely. So, as you mentioned, we are working very closely with DTCC on to creating benefits or working on increasing our benefits, and potentially it’s a cross margin between our treasury futures and cash treasury. Those benefits today for the handful of clients to take advantage of them typically at 20% or 30% worth of offsets.
We do expect to get those offset percentages closer to 70% plus, once the agreements are finalized and approved by the regulators. We are working very closely with them on that. We don't have any announcements in that regard yet, though I would like to mention nonetheless, that in terms of delivering margin capital, total cost efficiencies to our customers, this is something we work on every day and we have several initiatives.
So, for example, with the increased volatility this year as with -- therefore the significant increases in margins that are required in order to cover the more volatile products. We have seen a significant uptick in portfolio margining between our OTC swaps and our interest rate futures. We added seven new clients this year, so up to 55 clients, and two clients who had stopped using the service, have started using it once again.
So this year, on average, we have achieved $5.4 billion worth of margin savings for our clients. And that's in all to an all-time record, new high in terms of the average for the year to-date. In addition to that, we are working hard. The clearinghouse is working hard on creating portfolio margining between our listed interest rate options and interest rate swaps as well. And that is another efficiency that we hope to launch in the next several months, which will also add a unique efficiency to the marketplace.
So, yes, we're working on the efficiencies, the DTCC. We're getting greater traction in our portfolio margining against OTC swaps, and we're also looking to add portfolio margining against our listed interest rate options.
Thanks, Sean.
Thank you, Chris. Thanks for your question.
Thank you. We will next go to Mike Carrier with Bank of America. Please go ahead.
Good morning and thanks for taking the question. I think the bigger picture question, given the rate backdrop, just wanted to get your take on this cycle versus the prior one. So the last time rates were here, you guys worked with clients and you were fairly innovative in creating new products, which eventually played out, but it did take some time.
So in this backdrop, are you seeing similar trends in terms of demand for some of those contracts or even product innovation? Or is it too early? And is the low rate backdrop impacting other product areas, similarly or not, versus the last cycle?
Sean, you want to go ahead and address that, and then I'll jump in as well.
Sure. It is a volatility, they're very different across the different markets. And you can see that in our volume numbers, right? So that's obviously volatility is something that is out of our control. The product innovation, interaction with clients, delivering additional value, that's all in our control and we do that every day. The volatility is outside of our control.
As I said earlier, the month of July, all time record low volatilities across the curve, from Eurodollars all the way out to the ultra-bond. If you look at the eighth Eurodollar future, the last time we've seen something like this, not surprisingly, the month of July looks to me a lot like October of 2012. And if you think about it, as I said earlier, the Federal Reserve has intervened by buying $2.9 trillion worth of securities, so increasing their balance sheet by $2.9 trillion, right in a period of three or four months. That is almost as much intervention as they did during the entire financial crisis.
During the entire financial crisis, their balance sheet grew by $2.9 trillion about $3.6 trillion. So they've already bought, almost as many securities as they did back then. So unprecedented speed and I think that’s why the July values look similar again to October 2012.
In terms of innovation, we’re very excited about the three year treasury futures, that I mentioned earlier. We’re also very excited about growth that we’ve seen in our long end, with the additional coupons even with intervention by the Federal Reserve. If you look at, as I said earlier, the ADV the ultra-10 year up more than 20% year-over-year year, the bond future ADV, if you look at the full year, ADV is up 13%. And that's the bond future and the ultra-bond up about 16%.
So, we continue to see more trading further up the curve. We had an email announcement out to our clients today, reminding them about the great news of our bond and ultra-bond futures in regards to the new 20 year issue. As you'll recall, during that May refunding, there was the announcement of the new 20 year bond by the U.S. Treasury. During the quarterly auction series the three months, the treasury did issue $50 billion worth of those bonds. And we have seen very good growth in our ultra-bond and our bond futures, where those are being used as a hedge against that new 20 year issued.
If you look at, for example, inter commodity spreads, the single most popular inter commodity spread in our rate complex today is what we call the bond spread or bond versus ultra-bond. And this is specifically around that new 20 year issue i.e. the dynamics there. We're during the WI period when the new 20 year started trading, the new 20 year bond sits right at the center of the deliverable basket of our bonds future. And the marketplace chose that it would trade in WI as a spread to the cheapest to deliver to our ultra-bond futures. So, we are seeing increasing use of our products further out curve as the treasury is issuing more securities.
We're constantly looking as well at things like lowered minimum price increments. So, you know that we had great success in lowering the minimum price increment on cash two year notes as well as two year note futures. You'll recall, we did that at the beginning of 2019, and we saw approximately extra 160,000 contracts a day additional volume in our two year note futures. That was one of the things that caused us to launch the new three year with a lower minimum price increment matching the minimum price increment on our two year and half of the minimum price increment that that contract had previously and again with a successful start. Whether it is in the cash treasury bond market where we now have BrokerTec, we are definitely looking there at the innovation, the possibility for lowered minimum price increments, and what we can do there.
And I'll also answer your question with BrokerTec, we are moving on very well in terms of the migration of BrokerTec from the BrokerTec's existing platform today, over to our CME Globex. And, as John mentioned earlier, we do expect that cutover later this year. Next year, we will we will migrate EBS over to this platform over to Globex.
Thanks, Sean. Mike, thank you for your question. I was going to add him, but I think Sean hit all the high points. So, thank you.
Our next question comes from Owen Lau with Oppenheimer. Please go ahead.
Good morning. Thank you for taking my questions. Would you be able to provide any more color on the Wells notice for your indices JV with S&P. But if not, can you talk more about ESG? Is ESG initiatives you would like to call out that CME is working on? Thank you.
John?
Sure. Thank you, Owen. This is John. In terms of the in terms of the Wells notice, that is something that we have been aware of. And that is something that does not impact our trading business at all. In any questions regarding the Wells notice at the S&P, Dow Jones JV should really be addressed to S&P Global. So, I'd encourage you to contact them to get more updates.
In terms of the ESG products, we certainly are involved in developing products around ESG initiatives. We currently have a equity product on the S&P ESG.
I'll turn it over to Julie, because she can talk a little bit about, some of the work that her research team is doing, regarding product development on the ESG space.
Yes. Thanks, John, and thanks for the question Owen. We did introduce our first ESG report just a few weeks ago on our website, which talks a little bit more broadly about CME Group's ESG strategy. And a key part of that is definitely our product-related strategy and where the progress that we've been making in terms of cross functional ESG product committee has really been looking at those across our product suite.
And we believe there's some great opportunities to adjust some of our existing products, as well as some new product introduction. And we are looking to get some of those rolled out before the balance of the year. There is a lot of interest from our client base, particularly in Europe, I would say a lot of investor interest. And that's been a key part of the success of our ESG 500 S&P index futures contracts. And we believe that that will also help drive some of the interest in these other benchmarks that we look to introduce later this year.
Thanks, Julie. Thank you, Owen.
We will move to our next question that comes from Jeremy Campbell with Barclays. Please go ahead.
Hey, thanks. And Sean, thanks for the macro color around the rates and the puts and takes of the outlook from here. I'm just wondering about the rates activity impacts, once we control for the number of users, you guys have hooked into the CME futures ecosystem. Like I think over the past like six to eight years, since the prior zero rate environment, your user base has grown in both the U.S. and abroad, but you have ADVs, excluding the first quarter of this year, that are kind of tracking more in line with a 2012 to 2014 levels.
So, I know volatility is crazy low and maybe it's the Fed crowding everybody out of it, but I would have thought even materially lower activity levels per user might have yielded a better overall activity level than the prior cycle?
Sean?
Yes. I think that's a very good question. And I think your supposition is a good one. The challenge that we're facing is that the volatility we're seeing in July is in fact, lower than we saw in October of 2012, for example, which was the all-time low for the eighth Eurodollar future. So as I said earlier, the volatility in that eighth Eurodollar future, if you look at a continuous contract is in fact the lowest it's ever been since the launch of the product.
So, I agree with your supposition, the volatility environment is more challenging now than it was in 2012 in fact, from that metric perspective. But again, with the unprecedented increase in the size of the deficits, as well as the unprecedented uncertainty around the unemployment numbers and the GDP numbers for example, I do believe that on a go forward basis, that there's going to be more hedging than ever before needed in the future, once the pandemic recedes.
Great. Thanks.
Thanks, Jeremy.
We will move next to Chris Harris with Wells Fargo. Please go ahead.
Yes. I want to ask you a little bit about 2021. I know it's early, but what do you guys need to see in order for expenses to grow in 2021? Would there also need to be revenue growth? And then related to that, I believe there's a decent amount of any ex-synergies that should flow through next year. So maybe you can flesh out why spending would exceed the synergies next year?
John?
Sure. Chris, this is John. Thank you for the question. In terms of our expense outlook, you're correct. It is early days to be able to provide you some guidance. We're all very hopeful that we can have the economies around the world open up safely. Should the environment improve? You'd see, for example, a higher level of travel and marketing spend and as we look to intensify our client outreach. So that would mean that our expenses might be higher than the low-single-digits, as we are growing off an artificially low base.
When I say low-single-digits, that's really our core expense growth base -- growth rates. So, if you look over the last several years, our expense growth rate on the core side has been about 2.5% to 3%. As you can imagine, with sales and our in-person marketing has been really curtailed. The sales efforts in terms of travel and entertainment and marketing has really been curtailed during pandemic. And hopefully as the economies open up we'll see a more intensified in-person where we can experience for our clients.
In terms of synergies, you're right. The bulk of the synergies, run rate synergy capture is in front of us. We targeted $50 million last year, we exceeded that target and hit $64 million. We're targeting a $110 million in run rate synergies for this year and we're well on our way to achieving that $110 million run rate.
When you take a look at the amount of realized synergies that we have in our income statement in 2020, we anticipated that being approximately $15 million and we've been able to accelerate that realized synergies through $25 million and that was also something that was that we were able to use to help reduce our overall expense guidance for 2020.
So really, when you think about our expense growth going into next year, similar to the model that we use this year, we've got a core expense growth rate of 2.5% to 3%. We would make any adjustments for any additional spending relative to coming out of the COVID. We would obviously reduce that for the amount of realized synergies in 2021, that we would get through the migration of EBS towards the back-half of 2021. So, we'd see synergy capture there. We’d also see a full year impact in the synergy capture when we migrate BrokerTec off the legacy platforms on to Globex.
So the puts and takes are in general, core expense growth rate, any adjustments related to coming out of the COVID and that's going to be offset by our synergy capture, as we migrate off of the legacy NEX systems into our Globex platform.
But, I mean, I think the long and short of it though is, that we as a management team are laser focused on our expenses going into this year and going into next year. This is something that we are going to have a strong eye on throughout the rest of this year, and as we planned for 2021. So, thank you. Thanks for the question Chris.
We will go to our next question coming from Patrick O'Shaughnessy with Raymond James. Please go ahead.
Hey, good morning. I'm curious what should we read into BrokerTec’s U.S. Treasury’s market share losses accelerating during the second quarter?
Sean?
Yes. So, I haven't seen that actually, so if you -- but let me actually clarify that right. So, if you look at the central limit order book share of the dealer-to-dealer market, our market share over the last 12 months has actually increased.
When we look at market share, we look at the dealer-to-dealer market. You may be looking at the dealer-to-customer market plus the dealer-to-dealer market, which we don't compete in the dealer-to-customer market, so that may be a difference there.
We have seen a small drop in our share of the overall dealer-to-dealer market, and what I mean in that regard is, there is some traction in dealer-to-dealer space coming from relationship based trading platforms.
On that front, we are working hard on a few things. First, we have launched BrokerTec stream, which is our BrokerTec dealer-to-dealer relationship based trading platform. And we are making progress on that front. We also look to enhance that technology, so we are investing in technology, that's already been planned, to improve that technology, so that becomes more competitive relative to alternative platforms.
We also will offer unique benefits, because we have the most significant central limit order book in dealer-to-dealer space. I mean, once we have that better technology in the direct trading dealer-to-dealer space. So again, main message is, first, if you may be looking at the overall treasury market which would include dealer-to-customer which we don't compete in, dealer-to-customer has grown relative to dealer-to-dealer.
Within the dealer-to-dealer space, our share of market in terms of central limit order books has actually grown over the last 12 months. If you look at the overall dealer-to-dealer market, it has receded by my calculations by about 5 percentage points, maybe 6. Again, relative to the direct trading platforms, and we are building our own and looking to grow. Thanks for the question.
Thank you.
Thanks, Patrick.
We will go next to Kyle Voigt with KBW. Please go ahead.
Hi. Thanks for taking my question. Maybe it's a cleanup question for John on this net investment income. I think 2Q revenues there imply a bit higher than the 2 basis points yield you mentioned last quarter. Just wondering if you could give a 2Q average cash balances and the yield on that in 2Q and maybe how those balances and the yield on those have trended into the third quarter?
John?
Sure, thanks. Thanks, Terry. Thanks, Kyle. Thanks for your question. Yes, when you take a look at our non-operating income and expense portion of our income statement, sequentially, it's done about $15 million, and that’s made of primarily three items.
One, you're correct. When you look at the returns we earn on cash held by clients at the clearing house, it came down. As we mentioned last quarter, the interest on excess reserves came down to about 10 basis points in the middle of March. And with that move, we adjusted our rates accordingly. That reduced our net returns from net 19 basis points in Q1 towards 4 basis points in Q2. That was partially offset by higher average cash balances, which more than doubled to $83 billion. So, that's what drove the sequential reduction.
Now, we did have a higher investment returns from the 2 basis points to approximately 4 basis points. And that's because we were able to leverage some or some say leverage, but invest in a higher yielding instruments than that at the Fed. So, we were able to take advantage of some of that which allowed us to increase our yield from about 2 to 4.
In terms of the other items in that section, we did see a reduction in the earnings from the JV of about $2 million. It's important to note that year-to-date, this line is up about 18.6% compared to last year, then we saw a small reduction in our corporate investing activities of about $1 million.
In terms of our leverage, again, as I mentioned last quarter, we did hit our one times debt-to-EBITDA target, and we paid off the balance of $100 million in commercial paper this quarter. So, we have no commercial paper outstanding. So, that would impact our interest expense, which would roll into this line.
In terms of activity going into this third quarter, when you take a look at the average so far in July, our average cash balance is about $71.5 billion, that compares to the average in Q2 of $83.1 billion. So, that’s your breakdown, Kyle.
That's helpful. And should that 4 basis point yield be sustainable?
I would anticipate higher than the 2 basis points at this point. I don't have a forecast in terms of interest rates getting to the 4 basis points. But right now, I would say it's going to be higher than the 2.
All right. Thank you.
Thanks, Kyle.
We will take our next question from Ken Hill with Rosenblatt. Please go ahead.
Hey, good morning. I wanted to ask on the international front here. In 1Q, I think the growth was pretty strong in Asia and Europe of 73% and 54%. It looks like Asia in 2Q was still slightly positive, but I didn't see a number for Europe. So, I was hoping you could provide that number for what Europe look like in 2Q?
And then maybe more broadly comment on how the environment trended throughout the quarter. Did you see people coming back into the market, as the pandemic might have eased in those areas? Or what are you seeing in the regions today as well? Thanks.
John, you will start and I'll ask Julie to join in as well.
Yes. Thank you. Thanks, Terry. Yes. Thanks, Ken. So, in terms of our international activity, year-to-date it continues to outpace U.S. performance. For the quarter, our international business, face really tough comparables. As you know, Q2 of 2019 was a second highest quarter for international activity behind Q1 of this year.
For the quarter, APAC grew about 1% year-over-year. Six out of our top 10 countries, including our top three of Singapore, Korea and Hong Kong were up. And four out of the top 10 were up double digits.
Looking at EMEA, it was down about 11% year-over-year, but we did see as we saw five out of the top 10 countries there were up, and three of those top 10 countries were up double digits. And the Netherlands, which is our second largest country by volume was up triple digits.
Now we did see some migration from the UK to the Netherlands in anticipation of Brexit, but we also saw very strong growth there as well. So, our overall international activity for the quarter was in line with full year 2019 ADV, which is a strong year for us in 2019. So, I'll turn it over to Julie in terms of the customer experience.
Yes. As you know, much of our international activity is driven by that active trader retail client segment. Equities and metals being products that were significantly transacted by those clients. And when we're looking across the space, Q2 was very strong in revenue for that segment. We saw over 130,000 new accounts coming into our market through that active trader segment, that was up more than 100% year-on-year. So obviously, the volatility is there, but also just this work from home and lockdown environment is really making that particular segment trade even more with us.
I’d also just point out, as we think about those new customers, so over 50% of those new customers that I just spoke about, again, most of those being international, traded at least one of our four E-micro equity index products, and 20% of those new customers had only traded an e- micro. And so, we continue to see that being a great new client acquisition driver for us in terms of the product suite, and that we believe is also going to lend well to that E-micro options launch that we have coming up in Q3.
Of those new clients that came in from over 166 different countries around the world, so while the U.S. was strong, as John pointed out as well as Taiwan, South Korea, Hong Kong, China. We're definitely seeing those countries and participants within those countries work, trade more with us, as well as the work that we're doing with our broker partners is really helping to drive some of those numbers. Hope that helps.
Yes. Thanks.
Thanks, Ken.
We will go to our next question from Kenneth Worthington of JP Morgan. Please go ahead.
Hi, good morning. Maybe just wrapping up on oil and gas trading. So, what is your perspective on the impact, if any from the negative WTI pricing during the April delivery? And has there been any lasting impact on trading behavior or participation?
And then why do you think there might have not been greater acceptance of the Houston-based products? They seem like a great product, but they really haven't taken off, any views there?
Derek?
Hey, Ken. Thanks for the question. Yes, good question. You look at the impacts of both the extreme levels of high volatility and the price uncertainty, driven by the huge demand destruction by the supply concerns, as created by the Saudis, and then some of the questions around storage. What we saw from the primary output from the negative pricing on April 20 was, for those firms that have problems with their systems being able to handle negative pricing, we've seen brokers and intermediaries largely update their systems in the anticipation that they need to be able to handle both pricing, but frankly margining for their clients, in case negative pricing happens again going forward.
We did see some brokers initially pull out of allowing customers, primarily in the retail side from being able to trade in the spot market trading in both WTI and Brent. And that did impact some of the self-directed trading volumes. But we are seeing some of that business come back online now that most of those brokers, if not all, have updated their systems.
Really the biggest change that we've seen from April, high degrees of volatility. I think we saw a frontline WTIs spike up to close to 106% volatility. And the biggest change over the last three months, as we've actually seen the normalization of the overall supply and demand dynamics in the global crude oil market. You certainly saw OPEC out there announcing their decisions to the rollout agreed cuts. We've seen that roll into addressing at least some of the concerns around the supply side of the equation. The demand side of the equation is still in flux right now.
What we actually see is with the price of crude oil globally rebounding to kind of the current $40 level on or thereabouts. We're actually seeing a fairly flat forward curve in both WTI and Brent with a fairly static $2 to $2.5 Brent TI spread. So, this has frankly created a less interesting market for some financial players. And we're seeing that in the reduced volumes and volatility in both June and July.
Now, if you look at the year-to-date results overall, we did deliver both record Q1 and first-half energy revenues as a whole. And we talked about the strength and some of the business we're seeing out of Europe and Asia. If you actually look at the European revenues, European revenues first-half were up 25%. So, we continue to expand our non-U.S. customer base, and that's really helped us maintain healthy overall growth.
If you look at the energy revenue, despite the overall volume has been up 20%, our rate per contract and energy as a whole has been almost static, I think down maybe $0.005, despite the 20% growth overall.
One of the really interesting parts of the overall energy franchise, we don't talk about nearly as much as natural gas. Natural gas is a business that has been following that same globalization path, that we've been seen and been talking about and been investing in, both in crude oil and in what we've seen in the natural gas market. Year-to-date, our natural gas futures business is up 46%, natural gas options are up 71%. And that continues to be a huge part of our overall energy story. And this is a market also that we need to remember we maintain that 82% market share. And this has been a boost to our overall energy business, because our rate per contract in Nat gas futures and options is higher than what we've seen in crude oil. So, that's helping the upward pressure on the overall RPC as a whole.
Very quickly on the Houston contract, it's a great point. We launched that contract back in November of 2018, explicitly focused on those folks involved in the export chain. So, remember what that Houston physical contract reference, it's allow customers that if you're involved in the export chain, you need to price for on the water Houston-based delivery, as oil flows out of Cushing down to Houston goes on barges and ships out to Europe and U.S.
Well, what we saw in the first-half of this year was, overall continued production ramps up in the U.S. up until about February. We were producing I think in the U.S. about 13 million barrels a day, of which about 3 million were going to export. And we did see that business in HCL, the Houston based [indiscernible] contract grow. But it's in the maybe 500 to 800 contracts a day sort of a volume.
What we saw, following the implosion of the both supply and demand story was not only U.S. production pulled back to that 10 million to 10.5 million barrels a day, we're actually seeing exports out of the U.S. decline as well. So, as exports declined, demand for an export focused product had declined. So, it's still out there. We're actually continuing to still innovate it, talk to our commercial customers about what we can do to enhance that contract. And we've got some conversations going into how to make that more interesting. But, that'll really be a function Ken, of what the export situation in the U.S. looks like.
The other point that I'd probably want to touch on very briefly is, we continue to see a strong growth in the August assessed contracts, primarily in Midland and in Houston. And those, as you remember, trade about 7,000 to 8,000 contracts a day, but have close to 350,000 contracts open interest. And those are additional contracts that allow customers involved in both the domestic market but also the export market. To use those contracts, they trade as a basis against WTI. And those are contracts that allow physical participants to manage their risk out into Midland, out into Houston. And so those contracts we've had that for a number of years.
But it takes a long period of time for customers to adapt, particularly commercial customers to using those products that we see that strong continued growth and significant holdings in OI as potentially path for how we see that Houston HCL contracts evolve. But that'll be a function of how we see the export market regain its footing here, as the COVID demand impacts start to level out, they start to see miles flown and miles driven increase again. So, I hope that answers your questions, Ken?
Yes, great. Very comprehensive. Thank you.
Thank you. We will move next to Alex Kramm with UBS. Please go ahead.
Yes. Hello again, sorry for dragging out the call, just a couple of follow-ups. One, coming back to the rates franchise, any updated thoughts on the floor? I know you're reopening, I think, the Eurodollar pit in August or in a couple of weeks or so. Any updated thoughts of how that may impact the overall trading markets? Again, I mean, have you looked at data a little bit more closely, how maybe the floor being closed has had a negative impact on the trading markets overall?
And then different topic, and I guess it's coming back to the oil question just now. But just one quick follow-up. I keep on reading more headlines around oil production in the U.S. may never see peaks like we had in the past. So, with that backdrop and just kind of like that underlying commodity, really not growing any more long-term. Can you still grow your oil franchise? Or is this outside of what you just said, Derek?
Why don't I go ahead and start and then Derek can talk a little bit about oil. What I don't believe the demise of oil is here just yet. So, I would say, Alex, that we've heard this before and then we saw prices either dropped precipitously or rise exponentially. So, every time someone comes out, any particular product or an asset class, it seems to move. So I would not just count it out just yet. There's still -- I think what we're seeing right now is there's so much uncertainty on the supply demand equation as it relates to the COVID, because it's not in one central location, it's around the world.
So, I would not, again, count that asset class out as not being able to move up or down. And Derek can give you more color in just a second. But on the trading floor, I don't believe that not having the floor has impacted the trading business. As you know, we've been able when we've spent many of years with our technology, being able to replicate transactions that have been done historically on the trading floor.
So, I don't see that as anything that's inhibited our business growth, especially as it relates to the Eurodollar contract. I think what John referenced is really the most important component of the fundamentals of the Eurodollar contract, which is the levels of volatility are at not just historic lows, but at contract lows since inception. That's a big statement that could have the impact.
We are excited to have the floor come back. That being said, on August 10, as you referenced. So the business, as you know, is still roughly 50-50 as it relates to the floor and the screen. So we'll see if the participants when they come back, if they can be able to continue to facilitate that business in the world that we live in today. But we don't believe it's been impacted just by the foreclosure. So with that being said, I'll turn it over to John or to Derek.
Yes. Thanks, Alex. Great question on the oil side. Listen, I think Terry is exactly right. I think there's cyclicality to the oil market, people are calling for the demise of this market. And Terry knows because he was sitting in front of Senate talking about, the market at $140 a barrel. And there were a lot of prognostications as to what that would lead to.
And we then have seen the other end of the spectrum over the last couple of months. So I think there are significant fluctuations and a lot of divergent opinions out there about what OPEC is going to do, what Russia is going to do, the U.S. capability, what certainly the U.S. has done, having lifted the export ban back in 2000 -- end of ‘14, and ‘15.
And what we've seen that mean to U.S. energy independence has been nothing but positive in terms of job creation and certainly in terms of the U.S.' ability to ramp up production from 4 million to 5 million barrels a day up to that 13 peak that we hit earlier this year, and exporting in excess of 3 million barrels a day.
We expect that that will continue to come back. That is a pure function of the demand side of the equation. The more shut-ins we have, the more states that are walking down, the more countries that are disallowing travel, that's just a cap on demand right now.
So, once we start to move into economies opening, once we start to move into vaccines, for us, we see that the lever of growth that we have pulled hard, working in conjunction with Julie's team on the international sales side is continuing to grow our non-U.S. participation. It has been the hallmark of our growth. We are early markets penetration into Europe and Asia right now. And I think the numbers you see that we continue to talk about, certainly validate that. And the growth in our sales organization that Julie has built over the last couple of years, with our focus in Europe and Asia continues to unlock opportunities for us.
So, we don't see this as a static market that has to be split up, based on who's in the market or what product they're choosing. We see this very much as our ability to access a growing demand customer base in Europe and Asia. And I think it's far too early to call it sort of a peak oil conversation here in 2020, when I think you've got this significantly artificial cap on global demand, really coming from the COVID situation and coming from economic growth. So that's how we think about it.
And Alex, the way we continue to invest in the business as a whole, internationalizing our business, extending WTI as a global benchmark, growing our options business, and then expanded education out into Europe and Asia for those customers that continue to grow that high margin business for us.
So hopefully, that puts a little extra color on top of what Terry was talking about earlier.
Yes, very good. Thanks again.
Thanks, Alex.
Thank you. We will now go to our final question from Brian Bedell with Deutsche Bank. Please go ahead.
Great. Thanks for taking my follow-up and thanks for extending the call. Just a few quick follow-ups. Just John, back on the expenses on the synergies, just want to verify. We're exiting at a $110 million of synergies at year end, after the BrokerTec conversion. Should we be considering that, like an $85 million tailwinds to the expenses and reducing expenses given the 25 million? I think you talked about for 2020. That's the first question.
The second question was just to go back to what Julie said about retail. I'm not sure if I missed it, but the proportion of volumes from retail in the second quarter versus the first quarter. And do you see is it just -- is it all concentrated in equities and metals? Are you seeing any in energy? And just along those lines, the RPC dynamic going into the third quarter obviously, it's a headwind down the equity side, but we've also seen really good RPC build in energy. Do you see that sustainable into 3Q?
Hi, Brian. This is John. I'll take the integration question and then I'll mention kind of what we're seeing in the equities RPC, which I think will be helpful for you, as you think about the third quarter. So in terms of our integration, we had a target of $50 million in terms of run rate synergies at the end of last year. We hit $64 million. We've got a target of $110 million at the end of this year, and we're on track to meet that $110 million. Obviously, the organization is focused on exceeding it, but we're well on our way to achieving the $110 million.
So, going into next year, we would have a $46 million reduction in our cost base. The difference between the $64 million that we ended last year and the $110 million that we got targeted this year. So that $46 million would be what would allow us to reduce our costs going into next year, and that would give us $110 million run rate synergies, based on what we had projected or forecasted with the acquisition of NEX. So, that's on the integration side.
Then, when you look at the RPC side, I think it's really important on the equities to really understand the product mix. So, it's a product mix story for equities this quarter. As you guys know, our micros products are tremendous success and sequentially the trading is up 30%. Now it's a premium price product from a risk adjusted perspective, but has a lower RPC that our E-minis.
In Q1 micros were 22% of our total volume and in Q2, they were 34% of our total volume. Now a couple things to note, and Sean touched on this earlier, but I'll reiterate it. The micros RPC increased from $0.112 in Q1 to $0.125 in Q2, and they're up from $0.068, the same quarter last year.
When you look at the equity RPC excluding micros, that RPC increased from $0.76 in Q1 to $0.804 in Q2, and it's up from $0.73 from the same quarter last year. That's increasing because, we did make some pricing adjustments in our equity complex, but also we find our clients are using higher price products like BTIC, like our dividend futures and like the total return futures.
So, in our equity complex, the RPCs are increasing. It's really just a mixed shift story in our equities. So that, those were the two, and I think I'll turn it over to Julie for your third question.
Sure. So, on the product mix with our active trader segment, you are correct there that we did see some declines, as Derek pointed out earlier, given the access on the brokers to that providing to clients for the WTI. We saw some declines year-to-date. We're still up on energy as well as up significantly with our equity index and our metals business, as well as FX and our Ag and interest rate is pretty flat.
We've also seen a trend, particularly from our APAC clients of transitioning from WTI into Nat gas. And that is something that is definitely positive across the energy product mix for this segment. So, that's something that we are watching as well.
And it's just the overall mix of retail within your ADVs versus 2Q versus 1Q, across the franchise?
John, do you have that number?
I don't have it just handy.
If not, I can follow up later. Thanks so much for all the detail. I really appreciate it. Thank you.
Thank you.
Thanks.
Thank you. This concludes today's question-and-answer session. Mr. Duffy, at this time I will turn the conference to you for any final remarks.
Thank you. Thank you all, I appreciate it very much. And I know the team does as well. We live in very interesting times and we truly believe that managing risk will be critically important as we continue to evolve, not only from COVID, but other issues that are affecting the entire world.
For all the reasons that Sean and Derek and Julie and John explained, we will feel very optimistic about our position. We, as a team, I will tell you that we remain laser focused on innovation, client outreach, the things we talked about capital efficiencies, the integration of NEX. And I'll stress this again, we are laser focused on expense discipline, we will continue to be disciplined as we run this business on everyone's behalf.
So, we thank you for your time this morning. We appreciate your questions. And we look forward to talking to you soon. And we wish you and your families all the health and safety. And thank you very much.
Thank you. And thank you all for your attention. This concludes today's conference. You may now disconnect.