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Virtu Financial, inc (NASDAQ:VIRT)
Q3 2021 Earnings Call
Nov 5, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and Welcome to the Virtu Financial 2021 Third Quarter Results conference call, all participants will be in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Andrew Smith, Head of Investor Relations. Please go ahead.

Andrew Smith -- Head of Investor Relations

Thank you. Anthony, and good morning everyone, thanks for joining us. Our third quarter results were released this morning and are available on our website. This morning's call. We have Douglas Cifu, our Chief Executive Officer, and Mr. Joe Molluso, our Co-President and Co-Operating Officer, and Mr. Sean Galvin, our Chief Financial Officer. They will begin with prepared remarks and then take your questions. First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are, therefore, subject to risks, assumptions, and uncertainties, which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It is important to note that any forward-looking statements made on this call are based upon information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available.

We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our Annual Report on Form 10-K and other public filings. During today's call, in addition to GAAP results, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA, and adjusted EBITDA margin non-GAAP measures should be considered as supplemental to and not as superior to financial measures prepared in accordance with GAAP, direct listeners to consult the Investor portion of our website where you'll find supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures and with that, I'd like to turn the call over to Doug.

Douglas Cifu -- Chief Executive Officer

Good morning and thank you, Andrew. This morning we reported our third quarter results, which reflects an 11% increase in adjusted EPS in a market environment that was slightly softer than the second quarter. For the quarter ended September 30, we generated $0.70 of adjusted EPS on $5.5 million per day.

Adjusted net trading income, bringing our results for the first three quarters of 2021 to $3.38 per share and an average adjusted net trading income was $7.6 million per day, our performance for the quarter, such as highlights the success of our organic business growth plan the goal of which is to increase our overall baseline performance in two ways, first by expanding our addressable market by approaching new opportunities such as options market making crypto and Virtu Capital Markets. And second, by increasing the competitiveness of profitability in our existing offerings through the hard work of integrating Virtus best-in-class technology with the businesses we have acquired evidenced by Virtu eco-technology like KCG Coinstar strategies in our customer-facing ETF's block desk.

I'll point out some important highlights for this quarter. Our growth initiatives generated over $350,000 of Anti-per day, which represents 6% of our Anti-in the third quarter since 2018. We have grown initiatives by 60% CAGAR and in many cases leverage our existing technology infrastructure to build these businesses from scratch in particular I would highlight options market-making business continues to expand. While we do not expect this business to simply grow in a straight line. We continue to evolve our capabilities connectivity and expanding amount of symbols and ventures we trade.

In the latest quarter. This business saw strong results despite options volumes being down 15% from for recent peak in early 2021. We continue to make select key hires to expenditure graphic footprint of this business and accelerate our growth. I also want to provide an update on Cryptocurrency, we formed a dedicated team of traders and technologists and plan and plan to additional resources in the near term with a lot of ETFs globally, we now train approximately 20 products across the US, Canada, and Europe We are now connected to the principal spot venues to source liquidity and meaningfully increase the number of venues and markets we can access.

Given our historical expertise in marketing making across a diverse range of products. Our scale ETF pricing combined with our global connectivity with to institutions and reach out clients. We believe Virtu is uniquely positioned to provide liquidity to our customers in crypto products, our ETF block desk continues to make meaningful progress and we are now a top 5 liquidity provider as measured by the winning hit rate and total notional volume delta in US ETF. I also want to note, the progress we have made in our commitment to return capital to our shareholders. Our Board of Directors has previously authorized a quarter $70 million in share repurchases.

To the end of October, we have repurchased 13.4 million shares, an average price of $26.95 for a total of $361 million, consistent with our previously announced targets per share repurchases in the third quarter alone, we repurchased 5.4 million shares at an average price of $25.71 for a total approximately $139 million as we look at over the next 12 to 24 months. We want to reiterate our commitment to returning capital to shareholders. And I am announcing that Virtus Board of Directors approved an additional repurchase authorization of $750 million over the next 2 years.

We believe this level is consistent with our expectations for cash flow generated by the business and we target this time horizon to complete the buy as we stated previously, we remain committed to returning capital to investors and have prioritized share repurchases, for the foreseeable future. We aim to be in the market consistently buying back shares as we work to accomplish our capital match with goals are baseline performance through the cycle is enhanced by incremental from our organic business growth plan and exact of returning capital to our shareholders through share buybacks.

We believe that over the long term. This combination will be a powerful driver growth. The steady growth of these initiatives as well as the continued less volatile performance of our Execution Services and segments, coupled with the culmination of from multi-year integrations of KCG and ITG that's trying to provide clear detail around where Virtu results should be given various levels of Anti a given time period. We believe our performance this quarter is consistent with that guidance and the value creation for shareholders. I'd like to take a few minutes to provide an update on the recent industry discussions around market structure in order flow in wholesale market. I provide a detailed update in our last public earnings call and there has been no shortage activity since then.

I have said many times, we welcome the dialog and we are eager to have facts and data discussions with regulators customers, and other constituents and we do want to regular basis since I last spoke to you it is clearer than ever that our market especially where retail order flow is concerned, remain fair transparent and resilient, study after study an empirical analysis continues to show at the US equity market are more accessible than ever US retail investor experience has never been better and is decidedly better than any market in the world and such. We and many other market participants remain concerned that call reform based on false narrative and actually unsupported or conclusions you end up.

Today we have a robust regulatory framework that has been developed and maintained by the NAC, FINRA, and others which were designed to foster competition has always been transparent back and data-driven, and mostly free of the politics of the day. In an effort to further enhance transparency. We recently petition the at this stage for specific regulatory reforms to enhance and measurement and objective disclosure of the enormous benefit that US retail investors received, we believe reform Stefano enhancing transparency and the competition will deliver tangible marketplace benefits to retail investors, [Indecipherable] political environment, we and a desire to continue to put retail investors first will win the day. When I look at the data regulators politicians and critics will see that the massive benefits of today's kind of ecosystem which regulation and transparency, we have created for retail, now I would like to turn the call over to Joe Molluso.

Joe Molluso -- Co-President and Co-Chief Operating Officer

Thanks, Doug. Sean and I'll have some brief comments, and then we will turn to questions after several quarters of elevated market activity realized volatility dropped to 1.1 which is the lowest we've seen in several years and 10% below the 2019 average, and as you know, 2019 average and this you know 2019 was a historically low point for volatility for the US equity volumes were down 8% overall and retail equity 605 volumes in the United States were down 6.6%. Despite the market conditions that were softer than a second. Quarter in meaningfully below the market activity of 2020 and first quarter of this year. Our market-making business outperformed realizing $249 million in adjusted net trading income or $3.9 million per day were 5% better than the second quarter. Our execution services business also performed better than the market opportunity. This quarter, realizing $106 million in adjusted net trading income of $1.66 million per day, which is 5% less than 2Q, however,[Indecipherable] fiscal global business in market volumes were down a larger percent quarter-over-quarter in most reasons, for example, the US was down 8%, Canada was down 21%, and Europe 6% with only impacting a slight 3% percent increase in volumes.

The year-to-continued continues to contribute to our global scale and reduce the quarter-to-quarter variability to our firmwide results. I will review some thoughts on ability to generate growth through both organic initiatives and through the excess cash flow we generate and how this whole translates into revenue and earnings growth rates, last quarter we reviewed a slide which showed Virtus ability to generate earnings at various levels of adjusted net trading income coupled with our share repurchase capabilities.

Our results year-to-date in this quarter are consistent with prior indications and demonstrate the earnings and growth potential of our base level of earnings power combined with our growth initiatives in return of cash to shareholders. Since the exception of our share repurchase program. Less than a year ago, we have repurchased approximately 7% of the company on a gross basis. Compounding this effect over a number of years should meaningfully elevate for to face earnings power regardless of these environments with our current overall debt levels.

Now, well within our long-term stable nominal amount. Our quarterly we did $0.24 is more than secure. we have no immediate plans for any major acquisitions, our ability to devote most of this substantial cash flow to repurchases will continue, the announced $750 million incremental repurchase authorization target for 2-year period and it's a recognition that over sufficient long period of time Virtu will generate significant cash flows however episodic.

Finally, our growth initiatives while themselves volatile quarter-to-quarter or we are accrue to our bottom line with significant runway to grow it is worth noting that while many of the initiatives included in our growth slide again, only a few years ago, they will not grow in a straight line volume volatilities dysfunction in the most recent quarter with this continued strength in some areas, such as options Crypto and Virtu Capital Markets and experienced a slight slowdown in August. It's like here. We remain bullish on these initiatives in the potential for them to contribute meaningfully toward growing our base by performance in any environment.

These organic initiatives together with the substantial cash flow appropriate levels of debt going forward evidence purchase ability to thrive in any environment while producing significant returns to shareholders. And now on to Sean to conclude.

Sean Galvin -- Chief Financial Officer

Thank you, Joe. In the third quarter presented on [Indecipherable] of our supplemental materials. Our adjusted net trading income events our trading gains of direct trading expenses totaled $354 million or $5.5 million per day, 2% lower than the third quarter of 2020 higher than the second quarter of 2021 [Indecipherable] $249 million or $3.9 million per day, 3% lower than a year ago quarter, 5% higher in the quarter 2021. Adjusted services net trading income was $106 million or $1.69 million which is a 1% increase year-over-year and 5% decrease in the second quarter.

Our adjusted EPS was $0.70 for the third quarter 11% higher than the second quarter our overall compensation ratios were 20% in 23.7% of adjusted net trading income respectively, which is also consistent with the second quarter previous dollar compensation ratio. Consistent with past practice year-end in South compensation to a range of percentages earlier in the year. How the remainder of the year unfolds. This may result in adjustments to our compensation ratio later in the quarter in later quarters we will update guidance for 2020 expenses with our fourth quarter report early in 2022. Overall we have our cost results going forward. System in the specific cost performance for 2021. [Indecipherable] was $200.8 million for Q3, up from $196 million quarter, [Indecipherable] prior-year quarter.

Our adjusted EBITDA margin was 59.5% for third quarter which is approximately 2% increase for the second quarter and continues to be reflective of our cost disciplined expense was $1.6 billion at quarter-end. [Indecipherable] $20 million for third quarter is flat for both the second quarter as well as prior-year third quarter. [Indecipherable] orderly event just system date of the over 25 quarters in every environment approximately $139 million share repurchase third quarter [Indecipherable]. I will now return the call to the operator for Q&A.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Richard Repetto with Piper Sandler. You may go ahead.

Richard Repetto -- Piper Sandler -- Managing Director

Good morning, Doug. Good morning, Joe and Sean, and congrats on the good quarter. And thanks for your can give remarks on our equity market structure, so is the strong quarter. We're trying to understand, one of your peers had very dismal results and blended on the lower volatility you sells recognize bind were down and volatility metrics were slightly done as well quarter-to-quarter. So I'm just trying to see where the outperformance came from if you could just highlight any of the areas, whether it's geographical or asset class. So whether it in retail markedly. Just trying to understand how you guys outperformed in the market-making firm.

Sean Galvin -- Chief Financial Officer

Thanks, Rich. and I appreciate your question, I think what you've seen in this quarter. And we've been attempting to describe it quarter by quarter is the strength of a scaled global franchise. I honestly know the competitor, you're referring to, which is a great company, but they are much more of a specialized market-making firm, I think 90 whatever it is percent of the revenue comes from the global ETF market, which is a great business but after the small part of what we do globally and the philosophy behind Virtu owing wise let's try to be the best bid and best offer in every market, possibly can electronically around the world.

In every asset class that's been our goal and so through the years, we've built this scale franchise, and certainly like in ETF block market making in the US it was a little bit down this quarter lost early in the launch of other results that we have. We, in particular, we've grown business. We've done great work internalizing between our market-making businesses. So like our ETF business is now internalizing off of our single object market-making business in our options group. It doesn't have to worry about hedging their Delta risk that you can see that off to our single object market-making business and we're able to leverage, everything that we do globally.

To really improve our market-making capabilities Retail had a nice quarter. So we don't break independently and individually because we look at this all as a single franchise at a single firm and so a lot of the investments we've made over the years, technology, and internalization continue to pay off and I think this quarter is just emblematic of what we've been talking over the last 5, 6, 7 quarters which one of this, we're going to continue to put our head down work on the integrate the firm manage our expenses and even though like 6-5 times were down like 5-6% this quarter we did better in retail market making this quarter than we did last quarter because we worked hard in strategy has performed.

Richard Repetto -- Piper Sandler -- Managing Director

Okay, that's helpful. Doug. And my related follow up would be, you sort of outline the crypto an option opportunities they both look like great opportunities for electronic market maker like yourselves, but just trying to see where you see the bigger opportunity like with crypto did the ETF approval of features ETF that sort of jump-start you bit or where do you see more opportunities I guess crypto versus auctions.

Douglas Cifu -- Chief Executive Officer

It's a great question and I sitting here today, I would say options to me is a very large compelling very well turning. I mean we can all look at what the total addressable market is. You all know what the volumes are know everything is published by the internationally, you look at the need time to look at the Nifty 50 honestly there some big index options in Europe right So, all of that kind of plays right into the Virtu strength, which I just outlined in terms of being a scaled global electronic market-making for as I reiterated a number of times in these calls, we have the key strategic into this business.

A couple of years ago and it's been a bit of a slog obviously reorienting our technology, our infrastructure, everything from the going into the, to the training infrastructure to the mill and the stocks to make sure that we have, be that you kind of options market. We've done a lot of the work, there is more work to do we're in the early innings. So we think it's exciting because we can be a non-customer market maker, there's obviously the significant customer segment here in the United States in there.

International auction then there's a whole category of non-equity options. And you know as you will be, you know very well. We're a market maker products and whatnot. So the delta hedge there is well known and understood by us. So we are in a unique position to be quite skilled and options when it comes to crypto obviously as a newer asset class. If you, we've been monitoring it very closely. But again, he's managed strategic decision and it fits nicely into what we do as a firm clearly with improving at least a futures-based ETF has widened the number of participants in the market reflects and kind of plays right into the core strength of what Virtu is all about, which is we are a market maker that is by capable of interconnecting after classes whether they are expressed as a spot of future and ETF and that's exactly what it happens.

With Crypto products So you're seeing seen in Europe and now existing where ETFs have been launched clearly Dixie saw fit to approve ETFs the corpus of which were spot in the spot crypto coin. But you would see an explosion in ETF volumes. And I think I'm going to be for Virtu because we're an authorized participant with all the issuers we have filed, we are very well known as a lead market maker, on the Stock Exchange. So all of the things that we do exceptionally well with play right into our hands you saw our friend of the CPOE decided to buy which we thought was really interesting because really what mainframe is going to be institutionalized right that institutional traders, one has to it. So our I hope and we're part of. We were a part-owner of. So we're excited about that as an opportunity to further institutionalize.

Richard Repetto -- Piper Sandler -- Managing Director

Got it. Great job, guys.

Douglas Cifu -- Chief Executive Officer

Thank you, Rich.

Operator

Our next question comes from Chris Allen with Compass Point. You may go ahead.

Ken Worthington -- JPMorgan

Hey, Good morning guys. Nice quarter, kind of follow up on Rich's question just on kind of the outperformance in market making maybe digging in a little bit in the competitive environment I mean wholesale market making looking at Bloomberg reports that provide senior for data and retail shares execute it looks like you guys are picking up share and coincidentally, also it also of decent share since cancer may comments concentration risk. So maybe you can just provide some commentary with the competitive environment look like, whether there have been some changes, maybe in response to the regulatory pressures, any commentary that would be appreciated.

Douglas Cifu -- Chief Executive Officer

Yeah, sure. I mean, again we've gotten away from looking at various like sub-segments. I would call it, our market-making business sense they become smaller parts of what we do and I am not trying to avoid the question, trying to answer the best I can. But we do look at it mosaic of market-making in the scaled opportunity continue to grow but we point out like some new areas. We've gotten into, so in terms of like I, it's not under pressure the last couple of quarters longer, organic, we'll give you the volatilities statistically out there. So I think volumes were down any commodities in volatility has been how they performed, what we do is we look at like internal metrics as to what the operator performance against those metrics. And on that basis, which obviously all internal data don't have access to and all that kind of stuff but on those metrics both that has performed well and commodities, in particular, we've seen good growth and in our Metals segment clearly and natural gas as well.

During the quarter because you saw the spike in natural gas as we come into the September-October period. And finally, we have some volatility in natural gas, I will say crude has been a slower area for ethanol. Couple 3, 4 quarters, and that's largely because of the dislocation in the crude market and remember what crude went negative within the last year. And that really that really impacted the ETF market as well. Right. So you saw a lot of folks in a lot of volumes and crude we're impacted by that. In a strange market event. So things like that around of our control. If we just looked at like crude volumes since that event. Obviously been pretty dramatically. So I would say overall, I think we continue to be pleased with segments.

Unidentified Speaker

Okay. The segment. If you look at it quarter-to-quarter is always tough. If you look at it versus 2019 and 2020 in foreign exchange 2020. If you look at the volumes on the spot venues they weren't really up much versus 2019 even a year like 2020 and the kind of flat year-over-year and in some of the other areas. There has been in energy as well. Until recently, you're really muted environment and I think over the long term. If you look at versus 2019 versus where we are today, we are pleased with where those businesses are, there is still very good solid businesses all right.

Ken Worthington -- JPMorgan

Equity capture up down sideways.

Douglas Cifu -- Chief Executive Officer

It was up this quarter which helps our results obviously Rich and asked that question earlier. And I guess I'm going to be answered, but I guess we don't publish capital because it can be a little bit of serendipity sometimes, particularly in the retail business, when you have moment of this mean stocks that kind of blow out and there is extreme volatility. A bit offers, but as an overall excluding customer and non-customer in terms of certainly US equities, which is that the number that we're looking at right now. We saw an increase in capture. Over the call I would characterize it more as kind of a growth in same-store sales of trying to recall if there were moments of volatility. I'm sure they were during the quarter, but nothing really sticks. So that's just really blocking tackling getting better an increase in same-store sales.

Ken Worthington -- JPMorgan

As a follow-up just love to get a little bit more in depth in the crypto rollout. Can you talk about the evolution of the business, maybe through the quarter and I see the prepared remarks where you broadened the resources in crypto, but are you market making at this point in spot tuck-ins futures if so what tokens are you doing or is the focus here still been on the crypto ETFs.

Douglas Cifu -- Chief Executive Officer

Yeah, good question. So to be more specific we are connected and training on metrics spot venues with 4-5 additional ones, [Indecipherable] couple of others. So we've obviously done our due diligence is counterparty risk and whatnot, because there is not really to kind of the prime brokerage and and I drive clearing again. So the we are a futures world and we are at market maker in the US and then all of the ETF number of Canada and in Europe as well. The analogy I would use candidate, it feels to me a little bit in the sense commodity business that we spot gold and silver. We got gold as a future and we've got clearly obviously gold ETFs and in US, Canada, Europe and in Asia.

So we a similar style business and one of the things we're looking at would be direct market making to retail and institutional customers that want to stream of making in tokens are pointing in or how, what we would describe them and it will be judicious about hitting those, but again we're not going to go too far out on the skew in terms of 50 odd venues because the risk management, but we think being connected to the sport. And then ultimately those 79 venues is we're going to be covering 85% of the addressable market in the universe. So that's kind of the business plan there. I would say no.

We're doing a lot of blocking and in terms of understanding the operations around borrowing in the wallet and moving back and forth a little bit different and trying to doing securely and intelligently in the Virtu [Indecipherable] I think as I've always had situation right where all the disappear some place. So the burden of say we're starting, whether or not there's any value to these things because the marketplace has spoken people into revenue. We have retail clients come to us and saying can you provide us a stream and we're in discussions with institutional counterparties that are anticipating that there. Clients will walk us.

The first question I to becomes more of a regular Ryan. I guess I would describe more institutionalized for us in terms of what the total addressable market would be in your analysis with product dealers in line in terms of is no central repository things but clearly is a ton of volume, but you could very, very nicely into what we do with the global market maker and obviously, we're going to people, but in terms of like in terms of like operational in terms of being a lead market maker and being an authorized participant and in activity. We have all those things, but the incremental spend for us to get into this is effectively de minimis or zero. So that's what they again.

The beauty of our skilled model is, we can pivot and shifting into these new opportunities with very, very minimal cost obviously is a focus cost and we're reallocating people other trading areas. So we think in this instance as well work there.

Ken Worthington -- JPMorgan

Great, thank you.

Douglas Cifu -- Chief Executive Officer

Thank you.

Operator

Our next question comes from Dan Fannon with Jefferies. You may go ahead.

Dan Fannon -- Jefferies & Company Inc.

Thanks, good morning. I just wanted to follow up on the options market making you've talked about increase and venue coverage in the prepared remarks, could you I guess give us update on kind of where that either. I don't know if you want to use a baseball analogy. Just thinking about what percentage of the market, you're actually interacting with and how we think about the kind of full coverage or what's the, what's the goal or time period for that kind of meeting what you think will be kind of the end state.

Douglas Cifu -- Chief Executive Officer

Great question, I understand. People are very focused on that, to use a baseball analogy, we're definitely out of the dugout, whether it's the versus second any or in the third inning. I don't know if I know it's still pretty early innings. It is a very different marketplace, very different market structure from what we are used to we are now training complex instruments were involved in options which is like a very important step to get into what I would call customer Market Making or other kind of quarterly what 6-5 options market making and as you know the market structure in options is very different than addition enhance equity in terms of off-exchange trading, everything exchanged through these auction processes and so we're doing that, we are very, very in the United States, and then we are now market making in index options.

I'm happy to report an agent, which is a significant expansion for us to hire laterally where we needed. We've hired options and experienced options traders that have been fully vetted combine them with Virtu technologists and people that understand market structure. And as I articulated your earlier in my prepared remarks and an answer to a prior question the fantastic thing about the firm is that when it comes to and off the delta hedge or understanding pricing around these are underlying stock or in ETF or commodity product [Indecipherable] So my friends at our options market making effort to effectively have the best in the world, which is their own internal colleagues, right. So that's really the core strength of the firm. In terms the setup. We're now all the principal and use and understanding there in the United States and understanding their DNA. I will say we're getting approached by option is all the time because people are excited to have us as a new participant. And then last piece of the puzzle is obviously from a business development standpoint when we want to get into direct for what retail market making. We obviously have all of the relationships with all of that being a small players that have options flow. So all of the infrastructure and business development and people understanding Virtu is and that we have credibility. They're all there. So it's really just the hard work, which were very good and doing the blocking and tackling any better.

I'm very, very pleased with the progress we have made very, very pleased with the progress we've made in options and I continue to be very optimistic in terms of where it will be I think 2022 is going to be key year for us. I've said publicly, and I'll say we fully intend to in the 6.5 business early in 2022 whether that my first quarter, second quarter, I'm not quite sure depends upon you can experiment. In terms of retail options market making by participating in the auctions and that's what we're doing right now. So we're Alert we fully intend to be a meaningful participant in that marketplace. For the foreseeable future.

Dan Fannon -- Jefferies & Company Inc.

Great, thank you. And then, Sean, just to clarify, I think you reiterated the previously stated expense guidance for this year. Sure. And then, but does this, and I know it's early for next year, but just remind us, there is no more synergies coming out from legacy transactions and we can just think about kind of a normal kind of inflation plus some ongoing spend is kind of a reasonable base framework to think about 2022.

Sean Galvin -- Chief Financial Officer

Yeah. Yes. [Indecipherable] So is a little bit more back continuous work on I say most of that has been realized already.

Dan Fannon -- Jefferies & Company Inc.

Okay, thank you.

Operator

Our next question comes from Alex Blostein with Goldman Sachs. Go ahead.

Alex Blostein -- Goldman Sachs & Co

Hey guys, good morning. A quick follow-up I guess on page on slide 5, around some of the new initiatives, I was hoping you guys could break down, how much various initiatives certainly kind of contribute to this organic growth numbers you put on slide, either for the quarter or year-to-date. There'll be helpful and then as it kind of a secondary part of that I haven't heard you guys talk much about credit in, I think that obviously that corner the market continues to get more electronically traded. What is sort of with the aspirations and the idea, as you might have in credit and I think you had a partnership with market access at some point of time that could maybe propel some of those initiatives are curious to get an update there as well. Thanks.

Douglas Cifu -- Chief Executive Officer

Yes, that. Thank you. I'll let me handle the credit quarter. Then I'll turn the organic initiatives over the jump in terms of credit you frankly any put it in my prepared remarks probably should have been which is because it is we have so many things going on in like opportunities that we think it's an important opportunity. It's continue to be electronified we corporates and honestly we're being on-boarded for trading in credit, which is a first for Virtu we first, portfolio trades credit, which works. I never thought I would say publicly. I didn't think it should be in the clients that would be addressable by Virtu but it is, it is, and certainly having an ETF is a significant market maker in fixed income ETFs is really helped us.

So I continue to see more and more automation we're quoting an insignificant counterparty want to deal with and, but it's a very nascent business for us. And so it has immaterial impact on our performance to date, but against strategically. We think it's really, really important. Our schedule credibility were ranked in the top 5 in the United States in terms of just hit in volumes that we're executing. So we have become a trusted counterparty. So we have dedicated folks Alex that are now in our. I guess what we call it our critically pension funds and folks that need liquid credit. So it's going to be growing, it's Joe, you want to handle even on slide 5.

We've kept it at this level of detail because it's really a mix of things between yeah, new businesses. If you look at the 2018 bar, a lot of these businesses underneath that 150,000 that they were zero obviously options crypto zero you did. It was a, a block ETF desk. But it's been really overhauled and you're adding to clients. We could add things to this as we as we need. Look, I think you the Virtu Capital. You the highlight that business just started last year. Performance is already double 20 we team has done extraordinarily well. Yeah, we are excited about that business. We expanded the team. We're hiring someone else to market.

So look, I think we're going to keep it at this level. Part of the reason is because it's going to fluctuate quarter to where you know the decline in realized volatility some of the, some of the, the real progress we've made here. So we're going to keep it at this level and we're not even talking about Execution Services on this page. That business has been really transformed. And I think this quarter as well. We're talking a lot about market making. But when we look at internally the meaningful expansion in the margin of that business we acquired ITG again, it has been really outstanding. So we don't want to focus to be only on these businesses. This is a quick, a good way for us to highlight something revenue that were, that was really next year.

Alex Blostein -- Goldman Sachs & Co

I got you. Thanks so much.

Operator

Our next question comes from Michael Cyprys with Morgan Stanley. You may go ahead.

Michael Cyprys -- Morgan Stanley

Hey, good morning, thanks for the taking the question. I just wanted to circle back on crypto. So it sounds like you're so just curious, your perspective on what you think it's going to take could be successful in crypto market making how different do you see that from other asset class. What do you have to do. Generally there and if you could also talk a little bit about which point, are you making markets in today and maybe talk about your process around determining which coins to add. Yeah, great question. Thank you, Michael. Look, I mean as I said beforehand yields like any other one of our commodities market making business take hold we gold as a spot instrument we as obviously in Chicago and in other places around the world, and it has been a proliferation of gold ETFs and just about every jurisdiction where we are market maker, so if you just a crypto clients effectively do some digital measure. Well, fair value like gold, it's no different in the strategy that we are running a crypto right now are analogous to what we do for our gold marketing strength. So that's kind of 10,000ft why it's going to work and why it makes sense for us to be in it.

As I mentioned before. However, as an operational different in the sense that line for our goal market mentioned we would go to Morgan Stanley JPMorgan or somebody like that and saying, and can you our manager. We need to actually to manage the front, can you be our prime broker and in spot because we need someone to give us leverage and to handle settlements and the ETF obviously we'd be around settlement person because we're self bear in the US but otherwise use and our partner in Europe and in Asia.

In crypto G&A, as I said, those institutions. The JPMorgan. The Morgan bandwidth are largely not providing services of prime broker as a settlement agent and it leveraging capital. So we're doing it largely on our own. There are new types of institutions. Attempting to provide some level of like you know obviously will manager while Italy help move point working there is some leverage, but it's a different the class in the sense that the new asset class and institutions have not yet is bring as part of the traditional financial services offering. So it's a little more work and certainly from a risk management perspective, we have to be branded and having reporting risk JPMorgan or Morgan Stanley or Goldman. We have counterparty risk to coin base or 2 and FDX and things like that. So we have to monitor it more closely. Those are obviously large institutions. We feel very comfortable around that. It's been nicely at segment that we can market-making operationally, there are some.

Douglas Cifu -- Chief Executive Officer

You want this, but we're really good at understanding lots of input purchase been really good. If I would and extrapolate to say, as I mentioned earlier, there obviously retail brokers today providing crypto access to clients Robinhood is one and there are others that are and are doing in those firms need liquidity as well. And so, think of that as like our customer Market Making business right where we act as a wholesaler. So it's no different and obviously all of those no us very well. Thank you, we provide good service. We've been a trusted counterparty. So we are in the process of launching, let's just call it I'd like Virtu providing a stream as well.

They are the counterparty would be Robinhood or of the retail brokers and obviously we know that we're very, very well. The last thing I would say is obviously we've got a and AMS business training. We've got a analytics becomes more institutionalized. This is going to be a need for institutions as well. Any, if you will. And they're going to be that execution obligation. So they're going to need, I want to provide analytics. So everything we do all the products and services we provide either as a market maker an institutional execution Services counterparty we each of those products, it's the Virtu playbook. This is like page one of the Virtu playbook and you got something. It's a, we can market-making and we provide services and the Execution Services counterpart.

Michael Cyprys -- Morgan Stanley

And just as a related follow-up if I could, I recall in the past, you're a little more hesitant about getting into physical market making for crypto and I think you had thought about ARRIS is more of your entry point into crypto is separate entity. So I guess what's changed from regulatory or market structure environment of debt you comfortable to enter the marketplace what hurdles did you overcome. And if you could just maybe share some updated thoughts on and the opportunity there.

Douglas Cifu -- Chief Executive Officer

Yeah, it's a great question. A very, very fair question and I guess I can secured away by new which I referred to earlier. And all those things and we've got to know firms like point base and obviously Gemini Galaxy and a couple of subsequent now a very large public company and is Robinhood has got into. It's been very it's become clear to me that like number one. This is another class that you're saying, if it's somewhat value associated with I mean a qualitative judgment, but more on quarterly number 2, there are very credible scaled institutions and a lot of money behind them. I don't know what basis market cap is but it is extraordinarily high.

And honestly that generate significant EBITDA all side of things. So looking at them as the counterparty, which means if let's about regulation, it's more about understanding counterparts in the transparent behind them. The other thing evolve is that there are number of these wallet infrastructure, I call it, of crypto infrastructure companies that have come up, not going to name names, because I don't want this to be a PSA for who were using but there's a lot of really good companies out there that are getting into the marketplace and understand I would want to name is Juvenile we do really good work with and they're regulated by the Department of Financial Services, that kind of thing. So we feel very comfortable market with them is kind of to counterparties.

They've got a clearing service and all that, that we take advantage of. So it's not quite obviously as I mentioned before, not quite goal, if you will, in terms of the infrastructure that has been built up but you're seeing baby steps toward and that's really why we've kind of changed our tune and why works and why we think we can kind of be in the middle of it.

Michael Cyprys -- Morgan Stanley

Great, thanks.

Douglas Cifu -- Chief Executive Officer

Thank you.

Operator

[Operator Instructions] Our next question comes from Chris Allen with Compass Point. You may go ahead.

Chris Allen -- Compass Point Research & Trading LLC

Hey, guys. Steam evolves, maybe a quick follow-up just on crypto maybe you give us some color. Just in terms of how much capital you're deploying this opportunity right now and how that compares to maybe how much you deploy in commodities, for example.

Unidentified Speaker

Yeah, great question, Jeff. Yeah, Chris. Yeah. We are obviously we, we don't break out I think would be material overall in Virtu land. I think just following up on the answer to the last question. Despite there being no central clearing where you could show that mechanism like to CLS in FX. The markets mature in terms of some of these services that Doug was referring to the companies have matured in terms of the size and our access to capital markets and our ability. It's not just the amount of capital that we look at very closely. Are you assuming for the, in our supplement.

We put the amount of capital that we have deployed. Overall, it really is kind of remained remain constant over a long period of time, maybe crypto matured enough that it's very liquid. You're able to, we've got the East while management transfer kind of kind of services in. We feel like we're able to better examine the that was always have things by one thing to be bilateral to prime broker. It's a large global bank and it's different with some of these venues. But again, the majority of the amount of capital around them in the visibility to us this level we're comfortable we still manage it very closely in terms of your maximum exposure.

Chris Allen -- Compass Point Research & Trading LLC

Understood. Okay. In some investor questions on, just on the expense line you said Scott, I just want to confirm there is no change there. Which implies an cash comp side, about that $40, $50 million in 4Q composite is to kind of correct way to think about that.

Unidentified Speaker

I think when you look at the full year guidance, we will be at the high end of it maybe a touch higher. I would say that full year and in total year-to-date, we're at, we're at 16% and 19% respectively. We'll be under 20% or. Right. So we may be a touch higher but we're comfortable but with where we are especially when you look at costs you net trading income and then you look at some of the peers that were referred to earlier as well. I think we still stack up well, and I think just to to reiterate what Sean said about 2022 guidance, I think we were always a very specific about guidance, because we've been going through large integrations we the cost base was moving a lot I would expect it to move less in the future I think so there.

Unidentified Speaker

Thanks guys.

Unidentified Speaker

Thank you Chris. I would like to thank everybody.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Andrew Smith -- Head of Investor Relations

Douglas Cifu -- Chief Executive Officer

Joe Molluso -- Co-President and Co-Chief Operating Officer

Sean Galvin -- Chief Financial Officer

Unidentified Speaker

Richard Repetto -- Piper Sandler -- Managing Director

Ken Worthington -- JPMorgan

Dan Fannon -- Jefferies & Company Inc.

Alex Blostein -- Goldman Sachs & Co

Michael Cyprys -- Morgan Stanley

Chris Allen -- Compass Point Research & Trading LLC

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