Marex Q3 2026 Earnings Call - MAREX GROUP LTD

Hello, everyone. Thank you for joining us and welcome to the Merrick's third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Adam Strachan, Head of Investor Relations. Please go ahead. Good morning, everyone, and thanks for joining us today for Marek's Q3 2026 earnings call. Speaking today are Ian Lowett, Group CEO, and Rob Irvin, Group CFO. After their formal remarks, as usual, we will open the call to questions. Before we begin, I would like to remind everyone that certain matters discussed in today's call are forward-looking statements relating to future events, management's plans and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements, and the risk factors that may affect results are referred to in AMERICS' press release issued today. The forward- looking statements made today are as of the date of this call. AMERIX does not undertake any obligation to update them. Finally, the speakers may refer to certain adjusted or non-IFRS financial measures on this call, A reconciliation schedule of the non-IFRS financial measures to the most directly comparable IFRS measures is also available in today's earnings release. A copy of the release and investor presentation are available on the IR page of the Marex website at Mareks.com. I'll now hand the call over to Ian. Good morning, and thank you for joining us for our third quarter earnings announcement. Marex has delivered another record quarter, with revenues and profits increasing both year-on-year and sequentially. Revenue for the quarter increased 53% year-to-year to $743 million, while adjusted profit before tax rose 75% to $176 million. The adjusted profit-before-tax margin was 24%. Adjusted return on equity remained very strong at 36%, reflecting our high return on risk business model. Adjusted earnings per share increased 73% to $1.75. For the first nine months of the year, revenue reached $2.1 billion, and adjusted profit before tax increased 63% to$495 million. On a trailing 12-month basis, adjusted basic earnings per share was $6.25. These results demonstrate our ongoing success executing our strategy. We've purposefully expanded our capabilities, diversifying our earning streams to build a more resilient business capable of delivering sustainable growth. And the third quarter is a further illustration of our strategy working in practice, as I'll discuss in more detail later in my remarks. While our individual businesses are obviously impacted by market conditions, our goal is to create a portfolio of businesses which can deliver sustainable growth across a range of market environments. The operating environment for commodities remained favorable in the third quarter, where elevated prices, volatility, and exchange volumes continued to provide a supportive backdrop. Exchange volumes in aggregate are up 20% year-on-year, above the historical growth trend of 8-10%. In the third-quarter, volumes remained robust, increasing 2% over the second-quarter levels, although they were down 8% on the very strong first half. Equity markets and volatility associated with those markets were somewhat softer following a strong first half, which affects our prime and solutions businesses. Together with a seasonal summer slowdown, this would ordinarily have pointed to some reduction in earnings following a very strong second quarter. However, we delivered another record performance with adjusted profit before tax increasing 6% sequentially. It is instructive to unpack how we were able to grow in the third quarter, given that backdrop of the summer slowdown and a somewhat less supportive market overall compared to the first half of the year, as this helps to illustrate what we mean by structural growth offsetting cyclical factors. In the third quarter, we benefited from the structural growth associated with the acquisitions of Levmet and WebTraders, both of which are already making important contributions to earnings and performing well above their pre-acquisition earnings run rates. These businesses have broadened our capabilities across physical commodities and equity derivatives, creating a larger and more diversified market-making franchise. The Winterflat acquisition has also expanded our equity market-making capabilities. The disposal of its custody business in the second quarter has enabled us to focus on improving margins as we integrate the retained business into Marex. We're also seeing a material expansion of our FX franchise. Since the acquisition of Hamilton Court in July last year, revenues have tripled on a run rate basis. Importantly, this isn't being driven by taking on additional risk, as we have materially tightened our risk standards. We've consolidated three separate offerings into one, improved the client mix, and increased average ticket sizes. We've also off-boarded approximately 200 clients, where we saw limited potential for profitable growth. Combined with Marex's broader relationships, geographic reach, infrastructure, and ability to invest, these changes are enabling the business to grow very quickly. In prime and clearing, we're also continuing to win larger institutional client mandates and to deepen existing relationships. In Prime, third quarter revenues of $115 million doubled year on year, and we're only modestly below the $120 million we made in an exceptionally strong second quarter. Given the softer equity market backdrop, in particular the repricing of AI-related stocks which impacted balances in certain retail ETFs, one might have expected a more significant decline sequentially. While our third quarter balances are somewhat lower than the second quarter average, share gains offset some of the market impact and balances remained at around twice the level of a year ago. the improved brand and position of our clearing franchise is apparent in the conversations we are now having with clients the following is an example of how our brand is improving and the receptivity to do business with marix as recently as two years ago a leading hedge fund with whom we were looking to expand an existing execution relationship into clearing wouldn't even engage in a conversation about clearing with Marex. Then, a year later, when we were able to initiate the discussion, the conversation was about why they wouldn't move their clearing business away from their existing banks. Now, following their decision to clear one product with us, the conversation is about what additional business they can do with us. That's a microcosm of what's happening more broadly. This ongoing progress is apparent in the growing number of clients generating more than $5 million in annualized revenue, which is now up to 82 from 49 in 2025 and 36 in 2024. At the time of our IPO, we had a narrower franchise with earnings heavily influenced by external factors, specifically interest rates and exchange volumes. We've deliberately expanded into activities with different, less correlated earnings drivers, building a portfolio of businesses that can perform well in different environments. Successfully executing that strategy has resulted in consistent earnings growth over the longer term, with year-over-year adjusted PBT growth in 19 of the past 20 quarters, including every quarter since our IPO. Central to our strategy is attracting new, potentially large institutional clients onto our platform and then growing the business we do with them. Providing attractive new services is a cost-effective way to engage with these sophisticated clients, in addition to providing potentially important structural growth. On our second quarter earnings call, I shared with you the example of our cross-margining solution for U.S. Treasury futures and cash across the CME and DTCC, providing clients with improved capital efficiency. We've seen very strong client interest, with six clients now live and a further 15 in the pipeline, including several very large and sophisticated hedge funds. In prediction markets, we are seeing strong institutional demand for access. We recently went live on Kaoshi as an FCM and already have six major institutional clients ready to trade with us. This includes two hedge funds we have been prospecting for some time. We also plan to go live on PolyMarket, further expanding the venues available to our institutional clients. We're also seeing momentum gradually build around tokenization, and we see opportunities both to provide additional services to our existing institutional clients and to participate in what could become a significant new market. During the quarter, for example, we executed the first OTC swap on the Canton network with DRW referencing a fully tokenized index. Our work is being well received by participants already active in the space and we continue to invest and work with our partners on its development. Another area where we see opportunities to innovate is compute, the processing power needed to run AI models. Investment in AI and related infrastructure is expected to exceed a trillion dollars annually and we are focused on finding a way Mareks can provide services. We're already seeing commodity hedging activity from participants in this space which contribute to our current earnings. There is also a lot of work underway to develop new hedging products including what are being referred to as compute futures. Marek intends to participate in the development of these markets both as a clearer and market maker and we have the infrastructure in place to support these products as they become available. We're working with exchanges and other market participants on the development of contracts that could provide effective hedges, helping establish pricing data, and educating potential users while providing market access and liquidity to support institutional participation. It's very early in this process, but we're willing to experiment and work with clients and other participants in the ecosystem as the market develops. We don't know how significant these markets will ultimately become, but we believe there is value in being involved at an early stage. I'll now hand over to Rob to go through the financials in more detail. Thanks, Ian, and good morning, everyone. We delivered another strong performance in the third quarter, building on the momentum established in the first half. Revenue in the quarter increased 53% year on year to $743 million, with strong growth across all four segments. Total adjusted expenses increased by 44%, driven by performance-based compensation tied to strong revenues, continued investment in technology and infrastructure, and the integration of acquisitions. We continue to expand margins with adjusted profit before tax margin increasing to 23.7%. Adjusted profit before taxes increased 75% to $176 million. We also increase net provisions for credit losses by approximately $7 million during the quarter, primarily reflecting an increase in our stage one expected credit loss provisions. Importantly, the increase does not reflect a deterioration in underlying credit quality or concerns relating to any individual client exposures. For the first nine months revenue increased 47% to 2.1 billion and adjusted profit before tax increased 63% to 495 million dollars. I'll now take you through each business segment starting with clearing. Clearing had another strong quarter with revenue increasing 27% year-on-year to $170 million. Average clearing client balances were $18.7 billion up 41% year-one-year and materially higher than the Q4 2025 average of $14 billion. Robust new client onboarding added more than $1 billion in balances year-to-date ahead of our annual target and we continue to deepen relationships with existing clients. This drove a 35% increase in clearing net interest income to $83 million as balance growth more than offset the year-on-year reduction in interest rates. Net commission income increased 16% to $77 million, reflecting client wins and increased activity from existing clients, adjusted profit before tax increased 26% to $85 million, with the margin broadly stable at approximately 50%. For the first nine months, adjusted profit before tax increased 14% to $222 million. Agency and execution delivered another strong quarter, with revenue increasing 40% year-on-year to $361 million. Securities revenue increased 58% to $286 million, led by strong growth in Prime, FX, and equities. Prime revenues doubled year-on-year to $115 million, reflecting the increased scale of the business, and continued growth in institutional client relationships. FX revenue more than doubled to $59 million, reflecting strong growth în corporate FX, following the acquisition of Hamilton Court last year, alongside continued momentum across the broader FX franchise. Equities revenue increased 23% to $66 million, supported by increased client demand for securities lending and equity derivatives. These performances more than offset lower energy revenue, which declined 4% to $72 million. Adjusted profit before tax increased 73% to $115 million, with the margin expanding to 32%, reflecting the greater contribution from higher margin security activities, including Prime and FX. For the first nine months, adjusted profit before tax increased 68% to $323 million, with the margin increasing to 31%. Market making delivered another excellent quarter, with revenue more than tripling year on year to $151 million, albeit from an unusually low year base. Growth reflected strong organic performance, particularly in metals, together with contributions from recent acquisitions in a favourable operating environment. Metals revenue increased to $91 million, reflecting elevated prices and volatility, which supported client activity and hedging demand across precious and base metals, including copper. also benefited from the contribution from levmet following completion of the acquisition in june securities revenues increased to 36 million dollars benefiting from winter flood and the addition of web trailers following its acquisition in august energy and agricultural revenues also increase supported by strong client activity adjusted profit before tax increased to 58 million compared with seven million dollars in the prior year period with the margin expanding significantly to 38 percent for the first nine months revenue increased 165 percent to 409 million dollars and adjusted profit before tax increased to 158 million dollars turning to hedging and investment solutions which delivered revenue of 61 million dollars in the quarter, up 26% year-on-year. Hedging solutions revenue increased 42% to $32 million, supported by continued client onboarding and strong demand for hedging products across commodities and FX. Financial products revenue increased 13% to 29 million dollars, driven by continued growth in structured product issuance and new client wins. Adjusted profit before tax increased 15% to $14 million, with the margin at 23% compared with 25% in the prior year period. Lower equity volatility impacted financial products during the seasonally quieter summer period, decreasing revenues and margin versus the second quarter. For the first nine months, revenue increased 68% to $225 million, and adjusted profit before tax increased 145% to $71 million, reflecting the continued growth and increased scale of the business. Turning now to net interest income at the group level. In the third quarter, NII was $36 million, compared to $39 million dollars in Q3 2025, as higher interest expense more than offset the growth in interest income. Interest income grew by 28 million dollars year on year, reflecting 6.6 billion of higher average balances, which more than offsets a 60 basis point reduction in the average fed funds rate. However, higher interest expenses related to the group's 500 million dollar senior debt issuance completed in April and structured note issuances in solutions reduce net interest income overall. As we've said previously, we continue to hold significant liquidity headroom. While this creates a modest near-term headwind to Group NII, it reflects a deliberate and prudent decision to maintain substantial liquidity head room, strengthening the balance sheet and preserving our capacity to support clients and pursue future growth opportunities. NII increased by $6 million compared with the second quarter, primarily reflecting the 10 basis points increase in the average fed funds rate. Turning to the balance sheet, approximately 80% of our assets continue to be directly driven by client activity, which is highly liquid and largely self-funding in nature. Total assets increased to 45.4 billion at the 30th of September, reflecting continued growth across the franchise particularly within our prime business after netting client assets and liabilities the residual balance sheet is primarily comprised of corporate cash and other assets funded by group liabilities including our structured notes and senior debt issuances we continue to manage capital and liquidity conservatively with our internal framework designed to support the group's growth maintain substantial financial flexibility and underpin our investment-grade credit ratings. Following our re-domicile to Bermuda, the Group is no longer subject to consolidated FCA capital and liquidity requirements. However, our regulated entities remain subject to their applicable local requirements, and we continue to manage the Group against conservative internal standards consistent with our previous consolidated framework. Our key benchmark remains maintaining sufficient capital to support our investment grade credit ratings our risk adjusted capital ratio was 12.3 percent comfortably above the 10 level smb defines as strongly capitalized and we remain comfortable with our capital headroom on liquidity we finished the quarter with 8.9 billion dollars of total funding sources up from 6.2 billion at year end and 1.3 billion of liquidity headroom providing significant capacity above our internal assessed requirements taken together our capital liquidity and funding position remains strong and provides the flexibility to continue supporting clients and executing our strategy finally closing with risk management average daily var for the first nine months was 5.6 million dollars reflecting the increased scale of the business and the market environment. 87% of trading days were profitable, 100% of weeks and months generating positive trading revenue. That concludes the financial review, and now I'll hand you back to Ian. To conclude, the third quarter was a further demonstration of our strategy working in practice. We're executing against the priorities we've laid out, growing our existing businesses, winning mandates from larger institutional clients, and expanding our capabilities through acquisition and innovation. The market backdrop remains favorable, particularly in commodities. And based on what we can see today, we expect that to continue in the near term. While market conditions will, of course, vary, we're focused on what they need to do. We're focused in what we're able to control, executing our strategy, gaining market share, deepening client relationships, and integrating acquisitions. Looking ahead, the announced acquisition of BrightPoint will further strengthen our clearing franchise in Asia and enhance our access to China, creating additional opportunities for growth in 2027. Our acquisition pipeline remains very strong and we see further opportunities to expand our capabilities and support future growth. With our S&P REC ratio above 12%, this gives us meaningful capacity to fund future acquisitions. We are currently in the middle of our budgeting process, and based on what we see today, remain very comfortable with our target of delivering 10 to 20 percent adjusted PBT growth in 2027 from this year's level. We have a clear strategy, we're executing against it, and the results continue to demonstrate that it's working. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. your first question comes from the line of bill cats with td cowan bill your line is open please go ahead okay thank you very much good morning good afternoon everybody thank you for taking the question so i was most intrigued by the slide in the deck that sort of spoke to some of the incremental growth opportunities you sort of laid out the cross-margin on the treasury side the prediction markets of compute futures if you will could you maybe double click into that a little bit and spend a little more time on the cross-margin opportunity set and maybe the prediction markets. Those seem to be probably most near at hand in terms of the opportunity and how we might try and quantify that. And then related to the prediction markets, there's been some pretty fast development of KPIs by SIBO and some others. I just sort of wanted you to talk about your activity or interest level in getting involved with that as well. Thank you. Yeah, sure. Yeah. I mean, we're also sort of excited about those opportunities that we sort of highlight on that slide. You know, in terms of the cross-margining product, I mean I sort of think about this in two ways. I mean one is just the cost of the, the fact that you're sort of getting really attractive clients onto your platform and you're doing it in a way that doesn't require you to provide any sort of subsidy of any kind. So they're actually excited to come onto your platforms. And as we found, you know, once somebody is on your platform, you're just in a different league, you're no longer part of the very large world that are trying to get access, you're actually part of the inside. So that's probably the biggest value to us. Away from that, it feels like it's a few tens of millions of dollars of revenue associated with sort of the existing set of clients. So it's probably in the 15 to 20 run rate at the moment. What level it gets to, I don't know. At some point, we won't be the only person providing that. But right now, we have an opportunity to bring people on and have them use our platform. In terms of prediction markets, we only recently set up to clear Kaoshi. again you know it's not so much the size of the revenue that it's contributing now it's the fact that it is getting you you know into a really strong position with you know key prospects and that the people at those sort of prospect firms that are involved are you know very senior often the principal owners of those funds so that's very exciting to us again very hard for me to you know assess what you know the revenue contribution will be from that activity itself but you know, the level of interest is extremely high so that's a you know that's sort of a positive. Okay thank you. Your next question comes from the line of Patrick Moley with Piper Sandler. patrick your line is open please go ahead yes good morning thanks for taking the question ian maybe just um following up on bill's question um maybe digging more into the compute uh i think last quarter when it came up you guys said you hadn't looked into it too much and it was a big part of the prepared remarks this quarter so i guess it sounds like the opportunities moved up the priority list could you maybe just talk about what you're seeing where that you know demand is coming from is it coming from hyperscalers that you already work with or is it in reaction to some of the um exchange driven product development that we've seen here recently thanks yeah sure um so i think that uh you know it's sort of worth just sort of noting that you know obviously there's a huge amount of spend you know in this space and there's actually a lot of hedging that's going on you know around a lot these products you know whether that's you know hedging our copper or that's hedging out you know some of the power requirements so the fact is we are participating not you know in in some way just through the normal course of our business with regard to uh you know, some of them people who are investing you know these massive sums in building up this infrastructure. You know with regard to compute uh you, know I think that you know some of our sort of key partners are quite engaged in this you know and have a lot of interest and as a result you know we're being you know sort of consulted around this a fair amount in the course of the last quarter you know it's also apparent to me that you know the if these products do take off in some sort of meaningful way, that it has the potential to take down some of the sort of noise that you see around some of their companies here. So I mean, if you could actually sell some of your, you know, sort of production forward by way of example, you know, then I think that takes some of the concerns away around, you know, the mismatch of timing between expense and revenue. So I do think it's, you know, it's potentially quite important as a way to sort of stabilize these marketplaces. I have no view on when this gets approved by the regulators, and it appears as though that's been pushed off a little bit. It doesn't appear that it's imminent, but it is an area that I think we are engaged in, as you say, to a differentiated extent versus where we were a quarter ago. you know it's not a massive effort on our part but it's one where you know the potential marketplace as i think you know you you've written about is you know very substantial and you know if it is going to take off you know players like merits will have you know some part to play in their development all right great thanks for that ian thanks your next question comes from the line of dan fannin with jeffries dan your line is open please go ahead uh thanks good morning uh so ian wanted to follow up on some of your comments around uh m&a you talked about a very active pipeline so i was hoping you could expand upon that and then also you've been quite active year to date and maybe just update us on the integrations of the businesses i think you mentioned in the con and you're preparing for march winter flood in terms of uh that uh that happening? And then obviously a couple of deals this quarter that were announced, maybe some updates in terms of contribution from that as well, please. Sure. Well, look, we're really, really pleased and excited with how the acquisitions have gone. Obviously, we've talked a lot about the success we had with the Calvin acquisition, which was the basis of our very successful prime business going further back. I mean, EDNF was a transformational deal you know sort of for us um you know we talked uh in the remarks about uh you know the success we've had with hamilton court and again i think it just is a demonstration of you know what can happen if you take you know some of a franchise um that's sort of small having you know some set of challenges in the market you may get part of marix and all those sort of advantages they have you know to sort of turn into you know a lot of growth and you know in terms of of what we've committed more recently, Winterflat as you know, a sort of negative goodwill deal, and it's certainly sort of broadened our participation in equity market making. And I think we're pleased with both the integration as well as how that sort of brought it out that part of our franchise. LevMed has been really terrific. I mean, you see it in the increase in market making revenues in LevMed really has been very impactful in the course of the quarter. And I have a lot of enthusiasm for what that's going to do to diversify the franchise and provide an additional meaningful sort of growth vector for us. And Webb has also had, you know, a terrific start. So, you know, the transactions we've completed this year have been really, they've worked well, they're integrated, you know, sort of per the plan. And we're sort of excited about their prospects. Obviously, we talked a bit about BrightPoint, which, again, you're likely to close early part of next year. And again, it creates a real vector of growth for us in China, which is a priority area for us. I think I'll actually just pass over to Paolo, who's here with us, who has, you know, information about all the rest of the pipeline. Thanks, Ian. Yeah, I mean, Dan, in terms of the immediate pipeline, we have, I would say, four transactions where we've agreed commercial terms there. So in the size range that is sort of most common for us, So somewhere around the sort of revenue and contribution range that you're seeing for some of that bright point, which is, you know, clearing business. I would say, you Know, they lean towards clearing and prime in terms of in terms of services and they're also in terms of sort of geography in their sort of majority are either Asia or Latin America. So for transactions that I think, you know, are close to signing and with those sort of characteristics, there's probably another four to six transactions that are a little further away. But it is really encouraging the number of opportunities that we're, you know, we're being asked to review, that we've been shown the number of transactions we're participating in where, you know, it's a competitive process. So, I mean, of the of the sort of those that are where it's commercial term did not been agreed, you know, again, there's there's a sort of very interesting mix that perhaps, you know, is a little bit more a little more agency and execution focused prime, perhaps, elements of prime. But, you, know, it's it's surprised me just how many of these opportunities we're seeing. and i think in you know most cases you know we're you know well positioned to be able to uh you know be competitive with uh with with with uh um you know with these purchases and i'll just sort of make the you know additional point you know dan that uh you we're sitting on um in a capital position where our rec ratio is like 12.3 percent you know 10 is investment grade so we have you close to $300 million of capital that we can deploy in a way and still remain at the investment grade level. Great. Thank you. Thanks, Dan. Your next question comes from the line of Jeff Schmidt with William Blair. Jeff, your line is open. Please go ahead. Hi. Good morning. The prime services revenue continues to grow at a high rate where's that growth coming from is it mainly the on balance sheet business now or is the prime of prime still growing at a higher rate and you know how much is the leveraged etf component at this stage yeah i think that um you know we're very pleased with you know how that business has performed uh you know in the through the course of you know it does have sort of those three components that you know were described so you know the on balance sheet business the prime of prime and the outsource trading i mean the the the on-balance sheet prime you know is the largest component of it but it's not the whole of the business and um you know i think that while we don't anticipate that you know it will continue to grow at the same pace i think we remain quite optimistic about a future palette you want to add anything to yeah hi hi jeff i mean just to sort of reinforce that you know it's def it's it's more on balance sheet than it's prime of prime um i mean though in terms of the contribution uh i think you know the the ability to generate you know high returns is much greater when it's on balance sheet even if you know the number of clients that we're bringing on is sort of roughly um equal in terms of uh in terms of you know those two offerings um the the in terms of the sort of total balance sheet uh sort of levered etfs um you know represent um you know it's an important con contribution it's a relatively small amount uh you know if we look at the sort of assets under management that that that we're supporting but uh i mean it's a much higher margin business obviously being a little bit softer um with the sell-off in AI and AI-related stocks. But balances have been very stable in totality. If you take out some of this volatility, some of the day-to-day volatility, they've been very consistent through the third quarter and even going into October. We've seen levels of activity on that side of the business that are comparable to the third quadrant, point in time maybe a little bit softer towards the end of the period. But overall, it remains a stable balance and an important contributor. Given that the growth is largely on balance sheet, I think Ian's point about the sort of pace at which we're going to grow, it's going to be a little Bit more constrained than it has been because it uses capital. And so, you know, we are we have to sort of manage within our capital resources. And that will slightly, I think, you know, constrain growth. And it will probably mean that it's more comparable to the growth of the firm as a whole rather than the sort of very fast growth that you've seen this year. You know, we're not going to repeat our 100% growth. You know I wouldn't expect. We'll try. Yep, that makes sense. And then NII was a little bit lighter than expected despite strong growth in client balances. is, was that mainly related to higher funding costs and liquidity you're maintaining? I think you would be pointing that out. Or did deploying more balance sheet into the prime business have an impact as well? Just trying to think, how do we think about that trade-off? Thanks. So look, thanks, Jeff. I think NII came in broadly where we were expecting. So if we decouple the two parts, obviously what drives our net interest income is the client balances. um the client balances have grown very significantly this year um we got a little bit of a pickup um in the quarter as interest as the average fed funds increased um and then obviously going against that is our interest expense which is um from the solution structured notes and from the senior debt issuance obviously during the quarter you know we were long liquidity again. Some of that liquidity, we made a conscious decision to deploy into our trading businesses. These trading businesses typically are self-funding, but it allows us to sort of shield against the negative carry. And obviously, we could pull that back if we needed to. Did I cover what you were looking for? Yes, it is. Thank you. your next question comes from the line of alex blostein with goldman sachs alex your line is open please go ahead hey uh and good morning everyone um i wanted to go back to slide six um you provided some interesting color just around the number of clients with over five million i think you spoke to some of these metrics in the past but they continue to improve so So as you think about the incremental cross-selling opportunity, which products and maybe which segments do you see the most compelling runway for you guys to further expand this? Just thinking through, you know, kind of on an organic basis, which one of these segments is likely to see the Most Uplift from this cross-selling momentum? Yeah. Well, thanks, Alex. I think that as we sort of think about this, it's important to make a couple of points. One is that the clients that are now in the $5 million plus bucket are clients who almost, without exception, are clients who are already clients of the firm. So we're not going out and finding $5 billion clients. I think we've had one this year. But the vast preponderance is just growing clients who are ready at the firm, and we have 250 to 300 clients that are in that one to $5 million bucket that are the targets that you're going to grow. So, you know, part of what is driving this is clients who are already clients of the firm, and we're able to sort of expand the amount of business we do with them. You know, as we look at the data, you don't see any one area that is sort of the is a massive recipient of this. It really does have sort of flows in every direction. So execution clients help drive clearing. Sometimes clearing mandates drive execution. We have futures clearing clients that are now becoming prime clients. Some of the prime clients get introduced and become execution clients. Solutions clients actually are introduced to a range of the firm's capabilities, including sort of clearing and others. So as we look to say, if cross-selling is sort of the big driver of organic growth, does that favor one particular segment over another? I mean, the only segment which is sort of hard to see you know is sort of market making and that's more because we actually don't attribute client revenues to market making um so i don't i i don' see the cross-selling effort as being anything other than cross firm and contributing to all of the segments growing got it that's helpful caller thank you um and then one more if i could sneak one in i'm encouraging to hear you guys talk about 10 to 20 percent growth next year despite obviously coming off a really robust year this year um one could you comment on more near-term backdrop you're seeing in the fourth quarter phil resulted behind us and it's been you know a bumpy month so curious how october uh is trending or how has it done so far and then as you look about the 10 to twenty percent is it fair to assume that's largely organic uh grill that you're commenting on are you including some of the deals that are kind of closer in the pipeline yeah um well i mean i mean obviously we've had a really really strong nine months you know we're almost at 500 million dollars of uh sort of ppt you know as i think about you know the environment you know what we described you know at the on the last earnings call was an environment in the third quarter that felt a lot like you know so the average of the first half and i think you know that's how it's played out um you know in quite an even way across the three months and then as we look at it october we're seeing the same thing again so we're saying you know an october that looks like you know the average of the year uh you know from a market perspective and from a performance perspective and so i think you know that's all part of what's giving us sort of confidence around um you know our ability to continue to uh perform strongly through the year i mean obviously there's the you know expected slowdown around so the christmas holidays but you know we do think that you know will continue to operate in and around the level we're currently operating and then it you know reinforces our confidence you know going into next year i i mean and we have that confidence in part because you you know, essentially all the businesses are exiting the year in a much stronger position than they entered the year. You know, some of that is as a result of the acquisitions that we've closed this year. So, you know that Med and Web, which sort of stage two. Closes, you will have a full year effect associated with them. I think that as we think about the growth next year and we think about the 10% to 20%. I mean, what we really are considering, at least from a budgeting perspective, is the full year effect of the acquisitions that we've completed this year and BrightPoint, but we have not included explicitly the impact of other acquisitions that might close because we just don't know that they will. Got it. Help as always. Thank you, guys. Thanks, Alex. Your next question comes from the line of Ben Budish with Barclays. Ben, your line is open. Please go ahead. Hi. Good morning, and thanks for taking my question. Maybe just following up on some of those last comments on inorganic growth, curious if you could quantify how much LevMet contributed to the metals market-making business in Q3. It does look like things have sort structurally stepped up um in the first half of the year obviously q3 even stronger if you could unpack what's going on there spread you know volatility uh volumes uh inorganic uh what do we need to know thank you that's quite a lot um well look i think that yeah as i think about sort of metals in particular i think we have you know the strongest if not you know one of the strongest uh sort of franchise so when you're in an environment like the one we've been in you know it's not surprising to me that uh you know sort of simon and the team are delivering um such strong results and you certainly see that uh you know in in this year um you know levmet is uh in pbt terms you know sort of delivering uh actually together with web sort of you know low you know low teens of pbt in the quarter so it's you know It's very, it's a nice contributor and it's showing sort of the power of that. So some of the increase that you're seeing in Q3 versus Q2 is as a result of LevMet. But a lot of what you're saying in terms of the improvement in 26 versus 25 is, you know, the improvement in the environment and the share gains we have in our metals franchise. Okay, very helpful. Maybe a follow-up on some of the newer growth initiatives, thinking specifically about prediction markets and maybe compute futures. I guess, how do you think about the potential for volume? I guess for prediction markets, we sort of see existing volumes, compute futures, it's harder to say, but the potential for volume and capacity as these kind of products get off the ground. And maybe if you could talk about prediction markets more specifically. How should we think about market volumes relative to what institutions could handle? And maybe talk a bit about how you're thinking about managing risk there and sort of being able to effectively hedge given the level of liquidity in those markets, excluding sports. Thank you. Well, I mean, just for clarity, I mean, we're participating as a clearer here. And so we're not a market maker on sort of prediction markets. And so all we're doing is providing our clients access to those exchanges, but they want to do it in a clear format rather than having direct access themselves. And that is a trend that we think persists for all of the, I don't want to say all, for the sophisticated institutional clients that we deal with they see the protections that they have you know being a clear client versus having direct access as being extremely valuable and so all of them are looking for access to those markets in that way um you know the you know potential firepower of all of those guys is absolutely enormous but how much they're actually going to transact in prediction markets and how much they're using it as you know a way to get uh sort of data signals that they then express you know in other markets i have no view of um so you know for us it's really you know it's responding to customer demand to have access you know i think it'll be decently profitable because um you know what you know the the amount you make to sort of support that access is uh is quite attractive relative to other things of comparable amounts of notional invested um but you know what the what the take up is of you know that set of clients you know we we don't really have a particular view on so it's primarily for me about getting access to those clients um and to the extent that you know it really takes off in some material way then that's obviously just, you know, sort of added profitability for us. All right. Very helpful. Thank you. If you have a follow-up question, you are invited to press star 1 to raise your hand and rejoin the queue. Your next question comes from the line of Bill Katz with TD Cowan. bill your line is open please go ahead thank you um yep thank you very much uh so just a couple cleanup items actually um when you talk about 2026 are you including the credit provision that you took early in the year as sort of the normal backdrop just want to make sure we're thinking about the right run rate here um secondly i was wondering if you could talk a little about as you think about the deal pipeline of the timeline to which you think you might be able to close these, and you mentioned that they're running at the same size as one of the previous deals you announced, pre-synergy. So would you anticipate getting the same kind of synergies from those transactions? And then the last question is a broader question. Sorry for all the questions. As you think about the business and you continue to scale, I was wondering if you could update your framework around the operating margin or the adjusted PBT margin potential. Thank you. yeah okay um so you know when i sort of think about 2026 i think of it you know sort of on a as reported basis so in the first quarter you know we got the benefit of uh you know sort of higher revenues in some of our businesses because of the higher volatility and you know we had you know idiosyncratic you know so the credit loss so i think you know the reference point is including uh you the impact of the good and the bad which you know includes the credit loss um so we're not backing out the credit loss if that's your modeling question when we talk about the base for 2026 um you know in terms of i think the second question was around synergies from acquisitions yeah synergies in time um do you want to take that so i mean of the four transactions that we uh that we talked about bill um as having uh agreed commercial terms you know i think that um the you know the likelihood is that um the majority will be signed in this quarter or in the first quarter um closing those transactions um is dependent in almost all cases on regulatory approval so there's a bit more uncertainty there and that that that does vary by region so for example in latin america that might take a little longer, or is likely to take longer. Typically, once we've signed, it's somewhere between three and five months to closing. So in terms of the timing of the impact of these transactions, it's going to be the ones that we talked about as being highly probable or close to signing. We probably won't see much impact until the second half of next year. And then in terms operating margins, i mean i think that you know we talked you know about this a bit you know we don't manage to operating margins so operating margins are sort of the outcome of a whole range of things um so you know operating margins are going to be a function of you know revenue mix and obviously you know the the shift of revenue into you know higher margin activity helps um but it's also in in that sense a function of you know the work that we're actually doing to improve margins even in lower margin businesses um and those can be you know quite material as well uh you know it's a question of how much we invest um and you know as you've probably got a sense from you know our commentary you know we are continuing to invest in um in new products and we're excited about the prospects of those and feel that you know if we're going to deliver on our strategy which is having enough structural growth to offset cyclical factors then that's absolutely the right thing for us to be doing but that obviously impacts margins you know as we grow we get you know some scale effects both in terms of um you know the impact on support and control as well as on our fixed cost base um and i think you know all of those things sort of talk to gradually improving margins um you know we've talked about you know how we think we could you know previously we talked about how we thought we could get to the mid-20s um and obviously this year we're you know we've taken a nice step in that direction we've you know sort of gone from 21 to 24. um and we also believe you know as we've spent more time thinking about it and thought about you know the role that technology is going to play in uh you know raising productivity the potential to, you know, improve controls, but also output through AI, I think that's also sort of margin enhancing. So, you Know, we've thought that we could get to 30. And, you know, as we're getting closer to 30, I think we'll reassess and say, you know, what our next view is of, you know, what we can actually generate, but, you know, broadly, you know, we see a series of trades, all of which should be increasing margins, but in a you know, probably slower at a slower pace than we saw this year, just because, you know this year we're just seeing so much impact because the revenue growth is so high. And so just go back to your question just on the synergy opportunities. I mean, you know I would say that, you know, given that these these businesses that we're looking to acquire are in that clearing and prime space, it's reasonable to assume that the same type of revenue synergies we expect from the announced transaction from Brightpoint and BPI, you'd see in these other transactions. We very much expect that moving these businesses onto our platform is significantly revenue accreted. And just sort of make that point. I mean, we've seen that this year with FX, where revenues are sort of close to triple the run rate that we saw pre-acquisition, that's only been closed for less than 18 months and it's an area where we continue to invest we are expecting to have a payments capability live towards the end of this quarter, certainly by the first quarter and I think that sort of enhances that offering as well as giving us another sort of organic growth stream so we answer your question bill absolutely thank you for being so kind taking all of them appreciate it no problem your next question comes from the line of chris allen with kbw chris your line is open please go ahead good morning everyone thanks for the question um just kind of following up on the comment just in terms of on fx the the revenue uh tripled I'm just trying to think about the deals that you've done, which ones are at potentially full capacity or which ones there's significant room for expansion, either by injecting more capital across selling to your customer base. Hamilton Corp obviously seems like it's reaching its potential. I'm juste wondering what other ones have a clear path to growth from here. um look i i think that uh you know we've been very pleasantly surprised by the opportunity that fx uh represents and so while hamilton court i think has been you know a great success for us i think we certainly believe that you know that we can build a you know an even bigger business you know on that business model expanding uh sort of geographically and making ongoing investments so we certainly don't think that sort of you know hit its you know its its maximum um i mean i'm personally extremely excited about sort of the opportunity that you know lab med represents because it's essentially you know sort of magnifying some of the strengths we have in our metals franchise by giving us opportunity to extend out into you know some physical products and enhance some of the things that we were doing for clients before uh so i i actually think that that could be you know quite substantial uh you know sort of for us um and then i think you know obviously we can't and you know can't speak to the the acquisitions and palos sort of reference but you know those will also help um advance the franchise and then bright point And if we can utilize all the sort of connectivity that Penny and the team at Brightport have into China to sort of expand our engagement with that absolutely huge market, then that in and of itself could be a massive accelerant for the firm. So we're always sort of conservative in what we say we're going to be able to deliver with regard to those acquisitions. But notwithstanding that, they do, when made a part of our franchise, represent growth vectors that in the past have proven to be very substantial. And there's nothing in the existing crop that suggests that they'll be different in kind and that they won't represent the same sort of growth opportunity. Thanks, Josh. All right. Your last question comes from the line of Ben Budish with Barclays. Ben, your line is open. Please go ahead. Hi. Thanks for taking my follow-up. I'm just wondering if you could talk a little bit about the solutions business. It looks like the structured notes balance actually stepped up quite a bit quarter over quarter, but the revenues have been trending down off a very strong Q1. I understand things could be lumpy, and I think you talked a bit about some of that structured issuance flows through interest expense, but if you can help us understand what exactly is going on in there is there anything timing related um and you know how do we think about the relationship between either head counter or balances um you know to revenues going forward thanks sure well i think that uh you know you know the broad backdrop there is you know the business is doing really well it's grown you know very substantially nine months and nine months and even you know if you look at the third quarter to third quarter it's actually up you know sort of whatever it is 28 30 um so you know the business is is doing uh extremely well you know the hedging solution businesses um you know continue to grow in a very steady way and the financial product business you know has more variability to it i mean what i actually take away from it is really that the first half was you know what was the very unusual revenue opportunity for that business and that that's associated with very high levels of volatility that we saw in the first half and as you know as one thinks about what we're trying to do as a firm which is you know build a portfolio of businesses that are going to perform well through a bunch of different market environments then you want um you know some businesses that are going do really well in some of those environments like we saw on the first off and solutions certainly did that and recognize that you know in environments that are a little less supportive you know they're not going to do quite as well and i think that's that's really the only sort of takeaway you know sort of for this i think you know the volatility in equities was down the the rate of change in volatility was lower and that's also an important input you know for that uh for that business um you know there were sort of seasonal effects in august but i think that's the extent of you know what one should take away you know from these numbers and it remains you know a business that we have you know lot of confidence in and i think it'll you know continue to grow and thrive all right thank you very much all right well thanks for all the questions um you know as always in a good opportunity for us to provide additional color and what's going on inside the phone um you know we're obviously you know very pleased uh you know with the quarter and and you know being able to deliver you know yet another record and also to you know share you know just how you know positive and confident we are you know about the rest of this year and uh our prospects for next year so thanks everybody this concludes today's call. 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