Good day, ladies and gentlemen, thank you for standing by. Welcome to the INTL FCStone Second Quarter Fiscal Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] We will have a question-and-answer session later and the instructions will follow at that time. Now, it’s my pleasure to turn the call to Mr. Bill Dunaway, CFO for INTL FCStone. Please go ahead.

Good morning. My name is Bill Dunaway, CFO of INTL FCStone. Welcome to our earnings conference call for our fiscal second quarter ended March 31, 2016. After the market closed yesterday we issued a press release reporting our results for the fiscal second quarter. This release is available on our website at www.intlfcstone.com, as well as a slide presentation, which we will refer to on this call, in our discussions of the quarterly results. You will need to sign on to the live webcast in order to view the presentation. Both the presentation and an archive of the webcast will also be available on our website after the call’s conclusion. Before getting underway, we are required to advise you, and all participants should note, that the following discussion should be taken in conjunction with the most recent financial statements and notes thereto as well as the Form 10-Q filed with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurance that the company’s actual results will not differ materially from any results expressed or implied by the company’s forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I’ll now turn the call over to Sean O’Connor, the company’s CEO. Sean O’Connor: Thanks, Bill. Good…

Thank you, Sean. I’d like to start my discussion with a review of the quarterly results. I’m referring to slides and the information we have made available as part of the webcast, specifically starting with Slide #3, which represents a bridge between operating revenues for the second quarter of last year to the current year fiscal second quarter. As noted on the slide, second quarter revenues were $166.1 million, which represents a 6% increase as compared to the $156.5 million in the prior year. Looking at the performance in our operating segments, the most notable change was the $9.5 million or 26% increase in Securities segment operating revenues. The largest drivers of this increase were within our equity market making and debt trading businesses. Equity market-making increased operating revenues $4.2 million or 27% despite relatively flat volumes as spreads widened. We completed the acquisition of G.X. Clarke & Co. at the beginning of the second quarter last year, so this is the first quarter where their operating revenues are included in both the current and comparative quarter in our debt trading business. Operating revenues in the debt trading business increased $3.6 million or 22% versus the prior year, driven by both improved performance in the domestic institutional fixed income business acquired from G.X. Clarke & Co. as well as in our Argentina operations. In addition, we experienced 23% growth in operating revenues or $1.5 million in our Physical Commodity segment versus the prior year, primarily as a result of the widening of spreads in the precious metals market. Clearing and Execution segment operating revenues also increased $1.8 million or 6% as revenues in both our exchange-traded and FX Prime Brokerage businesses improved versus the prior year. As Sean mentioned, these gains in operating revenues were offset by a decline in…

Thank you. [Operator instruction] And we have a question from the line of [Greg Garner] [ph]. Please go ahead.

Yes, thanks for taking my question. I wanted to ask about Commercial Hedging, since it looks like it may be at a low point here. I just want to understand if my view of it, if you could comment on it, because you mentioned the strongest quarter in new openings and there just appears to be a lack - or the concern over recession seems to be waning. And so I’m wondering - what are your thoughts are on where the Commercial Hedging contribution might be in the next few quarters? Sean O’Connor: Well, we don’t like to give forward guidance specifically. But let me address your comment in general.

Okay. Sean O’Connor: So I do think we are generally at a cyclical low point in our specific commodities business. Lot of that has been driven by two factors, I guess, which are sort of related. But firstly, the biggest part of our commodities business is grain followed by metals. The grains part of our business has been adversely affected in two ways. One, we’ve had very low prices in grains, and very low volatility. The result of that has been a lot of the grain harvest from last year has not yet been sold to the elevators. We get the hedging revenue, when the elevators get the crops. So there are leads and lags and we discussed with a number of times previously, as there are leads and lags in terms of when that product gets to the elevated network, and then when it generates revenue for us. And a lot of end producers were sitting on such low prices, they didn’t really see any incentives to sell at that point. So that certainly has been one factor and that’s driven more just the general hedging revenues on the future side, and then the low volatility makes it quite difficult for us to offer structured products, because again no incentives to really hedge, a lot of times we’re using volatility to price products with an attractive profile for our customers, that also makes it difficult. So combination of those two environments is not ideal for that segment, and combined with the fact that we have a big business down in Brazil, and Brazil had both of those factors weighing on it, but also additional political and lots of volatility in the local market. So all of those factors, I think, probably argue that - that was not a good environment for us. What we have seen, and I think, this has been reported in The Wall Street Journal, the grains prices bumped up recently and a lot of that product is now coming to market. And of course when prices bump up, volatility goes up a little bit as well. So at some point that product has to come back into the system, it has to come to market, I anticipate that will probably happen over the next two or three quarters. I don’t know, what’s going to happen with volatility, obviously hard to predict, but if volatility does pick up and it was almost at historical lows, that will probably bode well for us on OTC side, but we’ll have to see how it plays out. So that’s really what’s been driving that and it’s largely in the grain business. Our metals business has performed very well, it hasn’t been impacted by any of those factors, but grain is still kind of the big piece of what we do. Does that answer your question, Greg?

Yes, that helps quite a bit. And then questions about the Securities business, you mentioned how the Argentine devaluation of their peso has been very positive for the Securities business. With that, I mean, my understanding, perhaps that’s not the case, but my understanding is that situation sort of calming down, I’m wondering how that might impact the Securities side. Sean O’Connor: Okay. Well, bear in mind, just based on my background, I gave you, our Argentina business really have two components, and both are included in the Securities segment. One is a transactional execution business and a ranging and underwriting, almost an investment banking component, and then you’ve got asset management, right. We certainly were beneficiaries of a one-off, I guess, a nonrecurring gain due to the devaluation of the peso. And the reason for that is, we have invested a lot of the capital we had in Argentina and we couldn’t repatriate that capital and that business has been very profitable for us over the last three years. We had invested a lot of that surplus capital in dollar-linked products down there. And obviously they went up a lot, that comes through the income statements and that was sort of a one-off gain. But you’re right, now that that’s settled down, that is probably not repeatable. The core business there has honestly been one of our steadier performance over the last three years, and I think what we see is both potentially a bit of a risk, and probably a much bigger opportunity now. And the risk is we had - I guess we had reconfigured our business over time down there to adjust to the market conditions. And we had adapted very well to the bizarre situation that was in Argentina, which was money couldn’t leave, so…

Okay. Okay, great. Thank you. Sean O’Connor: Okay.

And our next question is from the line of Greg Eisen with Singular Research. Please go ahead.

Thanks, good morning. Sean O’Connor: Good morning.

I was just wondering, if you could give us any color to kind of the progression of the quarter given that we saw, at least in the United States, a large drop in the equities market. Coming out of the quarter, how is the new quarter trended compared to last quarter? Any color on that would be appreciated. Sean O’Connor: Greg, we don’t like to give guidance in that form. I think we can discuss this at our next call. But, we don’t - our business is not - we don’t take directional positions, we’re not a direct beneficiary nor do we have any issues when markets go up or down, we’re really focused on our customer activity, volatility is good for us. I think we’ve said that repeatedly in some of our markets, higher prices like the grains markets is better than lower prices just because customers lock in and do more hedging. And markets are very volatile at the moment, the prices are moving up and down a lot. It’s very hard for us to, at this point, give you any clarity and therefore we choose not to so, apologies.

Okay. Thanks.

[Operator Instructions] And your next question is from the line of Will Settle with Woodmont. Please go ahead.

Yes. Thank you. And gentlemen, thanks for the Securities business overview, I’ve been around for a while, but every time you begin to deep dive into one of your businesses, [always wondering something is there] [ph] so I appreciate that. Just a housekeeping question, you mentioned the share buyback, what’s the share count at the end of the quarter and how much is left on your current authorization and maybe if you could give us some context for what’s your appetite is given that you have… Sean O’Connor: Bill, do you have those figures for Will, yet?

Yes, I’m just pulling in here real quick. Sean O’Connor: While, Bill is looking for that, let me just touch on our buyback program, and to answer the second part of your question, Will. So we originally had a 1 million share authorization, I believe. Our buyback program, we chose them to be, and this is a repeat of what I’ve said before, but just to put it on the table. We like to be very disciplined about buybacks, I think a lot of corporate buybacks empirically, if you look at them, destroy value and that’s because CEOs are trying to get the share price up to put their options in the money or they’re trying to change the market perception. We think both of those are pointless exercises. So our only driver is to buy the shares when we believe they are intrinsically cheap and this should be accretive for our shareholders. So our intrinsic value determination is largely based around book value, that’s not necessarily book, but we come back to that as being sort of the whole guideline for intrinsic value. And then in terms of how much money we prepared to allocate, if that first decision is yes, they’re intrinsically cheap, the next question becomes how much of our liquidity do we focus on this opportunity, and that has to be weighed against the much more important opportunity of growing our business, keeping liquidity headroom available and positioning ourselves for cap decisions and so on. Because the last thing we want to do is, go do a whole bunch of buybacks and then five, six months later an amazing opportunity comes and we are unable to take advantage of it because we do not have sufficient liquidity or access to capital. So we have to weigh those things carefully, and I think out of those three decisions, liquidity headroom to make sure we can survive market events, capital for growth and acquisition, share buybacks ranked third on that priority list. So just so everyone’s aware, but when we decide that we have sufficient headroom to do that and when we’re buying our stock, we are taking advantage of the market in our view. I want to be very clear about that. When we buy, we are taking absolute advantage of the silos.

Yes. So maybe just speak to the environment for acquisitions or new opportunities. I know you guys are showing a lot of things. What… Sean O’Connor: Before we get down to that, Bill, do you have those two numbers for Will?

Yes, I mean the remaining shares in the buyback program, is roughly 600,000, so we have a 1 million authorized share to buyback. And what’s your other question, the total outstanding at the end of the quarter?

Yes, just the - if you get that…

Outstanding shares were 18,812,000. No, I’m sorry, that is the end of September. It is 18,688,729 at the end of March. So just under 18,700,000 outstanding.

Great. Thank you. Sean O’Connor: Sorry Will, your question on acquisitions is?

Yes, just you obviously mentioned that as a source for your capital as opposed to the buyback, so just curious in this environment, is the pipeline more robust than it’s been in the past in terms of deal opportunities, and you turned a lot of things away or you’re just not seeing as much, just some color on that front? Sean O’Connor: Yes, well, you always get influenced by what’s happened in the last two months, I guess to some level. So stepping away from a little bit, I think the environment we’ve seen developing over the last two, three years is one where there are a number of small and mid-sized mono-line companies. So by mono-line, I mean, they only offer equity execution or their fixed income execution shop or they do futures or they’re just an FCM, right, they just do one of the things we do. And that’s been very popular with the analysts, that’s been very popular with bankers, because it’s easy to understand. We’ve been exactly on the other side of that spectrum, right, we’ve heard from investors and our bankers, you guys do so much stuff and it’s very hard to understand and we’ve done that really to protect our bottom line, right? But the environment we now finding is those mono-line firms are really starting to struggle for a whole bunch of reasons. The first is the cost to be in business now due to regulations have gone up significantly. The infrastructure and the procedures you have to implement and the people you have to hire and the compliance requirements and oversight requirements have gone up multiples. So that’s just a straight cost on all of these businesses. The additional factor is, I think since the crisis and it’s strange how long it’s…

Great. Thanks for the insight. Sean O’Connor: Okay. All right, last chance, I don’t see any other questions out there, but anyone wants - like to ask the question, we have a couple of seconds. Operator?

We have a question from Mr. Christopher Hillary with Roubaix Capital. Please go ahead.

Hi, good morning. Thanks so much. I wanted to ask if you could just talk about some of the puts and takes going forward in the payments business, and what you expect the interaction to be on volumes and the average price per transaction. Sean O’Connor: Okay. So we still strongly believe that we are in the early part of the game in terms of volumes. We have a tremendous pipeline developing, in fact, we just had another couple of banks that have made another milestone in signing up with us and getting onboarded, each of these are very large customers, but because I don’t recognize your name, so I’m not sure if you’ve been on some of our other calls, but our onboarding process with the payments business particularly when we’re dealing with large banks is a long process, right. It’s probably from the time of the first call and to the time where we are seeing a lot of their flow come through our pipe, that could be anywhere from two to four years, it just takes a long time, right. So we’re sort of still we think in the early innings of leveraging all of those flows that we already embedded into. So we feel pretty good about how volumes are going to track out for us. I mean, clearly you can never be certain and we may be undershooting or we may be over shooting a bit, but this is probably one of the areas that we feel more confident about rather than less confident about. So that’s the volume part of the conversation, right. What we are going to see are two things that are going to impact the value per transaction. The first is we started off with a very large - not large…

Great. That does terrific. Thanks so much. Sean O’Connor: Okay. All right. I don’t see any other questions. So I think we’ll wrap it up. Thanks, everyone. Appreciate it. And we will see you in three months’ time. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program and you may all disconnect. Have a wonderful day, everyone.