Welcome to the FY '22 Third Quarter StoneX Group Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Bill Dunaway. Please go ahead, Bill.

Good morning. My name is Bill Dunaway. Welcome to our earnings conference call for our third quarter ended June 30, 2022. After the market closed yesterday, we issued a press release reporting our results for our third fiscal quarter of 2022. This release is available on our website at www.stonex.com as well as a slide presentation, we will refer to on this call in our discussion of our quarterly and year-to-date results. You will need to sign on to the live webcast in order to view the presentation. 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 the following discussion should be taken in conjunction with the most recent financial statements and notes thereto and 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 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. 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 assurances 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.…

Great, thank you. [Operator Instructions] Our first question comes from Daniel Fannon with Jefferies, LLC. Daniel, please go ahead.

I guess my first question, Sean to be on the securities business. Clearly ADVs going higher, as you mentioned, in the RPM or the capture rate going lower? And obviously an issue within that complex, but can you talk about where you are because this quarter saw a pretty massive step up in both higher on volume and lower on capture. And just thinking about going forward, maybe just a little more color on what the asset classes are in particular. And where you think you are in this normalization of going into these new markets and how we should think about these two dynamics going forward? Sean O’Connor: Yes. Sure. So Dan, probably before, [indiscernible] us a lot of time ago, when we started our global payments business, we went through this exact kind of process where we were exclusively dealing with those VM charities, and the profile of that business was large payments, and as a result, reasonably high revenue capture. And we started to transition to working with our bank partners where the payments got a lot smaller, not more of them. And that took about two years before those metrics kind of leveled off. In aggregate it’s a still a net plus for the business. I think we now are seeing the exact same thing on the security side. On the equity side, for example, the bulk of our revenue, up until now has been a market making in foreign unlisted stocks, which has a pretty high revenue capture associated with it. We now moving into the NMS market, and the revenue capture is orders of magnitude. So I'm not sure if I'm exactly correct, but I think the number of shares we trade on the NMS is now a significant portion of the national shift…

Yes, that's helpful. And then just want to understand your comment about FX and the benefit that it provided the fixed costs, I think you said 12 per annum? So is that something that was kind of in the fix -- I mean your fixed number, fixed costs came in lower in your fiscal third quarter? Is that a decent exit kind of run rate for this quarter? Or is that, based on spot rates now prospectively, just thinking about how much was already in your numbers versus potentially, benefiting still going forward? Sean O’Connor: Yes. So the $20 million number is really the benefit we've had, from the dollar low to the dollar high. So probably all experienced over the last 12 months. And we kind of looked at it and said, wow, the currency sort of coming our way here, because we have the aggregate impact of that 20 million that we've all seen and achieved in our numbers. So the current exit rate is, basic use the average rate, I think over the quarter. But that's the exit rate we have now, I think what we see built is, we'd like to try and lock that in, because what we don't want to have happen is, if the dollar goes the other way, and we're going to see a $20 million ramp up from where we are now. And in a sort of [Technical Difficulty] about it, we just got a $20 million discount on all the people we've hired and the offices we spun up, right. So we want to try preserve that lower cost space for as long as we can. So we're going to try and hedge that risk out. But to answer your question, the exit rate we have now is a good impression. And from here on in, it will be sort of net adds, and we are sort of review site, at the end of the year, we obviously are going to make some adjustments are probably going to be larger than they have been previously just because of inflation. So there'll be some impact of all of that coming into that run rate.

Yes. That's well said. Perfect. And then just another one on FX, clearly the retail side of the business, benefiting from some volatility, can you talk about is that, existing customers just trading more, can you talk about account growth or kind of just trying to understand maybe going forward? What that business might look like? Sean O’Connor: Yes. So, Dan, you're probably familiar with the GAIN business previously. And certainly that business can be vary by quarter-to-quarter, dependent on market conditions. So, we obviously had a good time of it this last quarter because the volatility was good. I would say the main driver for our increased performance was market conditions and not account growth. I think our count growth has been kind of okay, but not fantastic. And I think all of our peers are seeing the same thing, I mean, just look at Robin Hood and so on. I mean, those guys, their account bases have plummeted out haven't like we sort of grown them significantly. But market conditions have been better. And I think, we starting to see some of the benefits that I mentioned at the time of the transaction where, if we can do this right, we're going to see better revenue capture, because we can start offsetting, internal trades in the same products coming from different areas. So I do think we starting to see better revenue capture, which should help us but market conditions are still the key there and it’s hard to predict sort of market conditions going forward for that business. But it's done very, very well for us, exceeded our expectations at the time of the acquisition. And I think the business has got some exciting things it's going to [Technical Difficulty] hadn’t mentioned in my section, but we're going to be launching pretty soon, cash equities in the U.K., which sort of moves us from speculative products to investment products, we're going to launch, crypto access. So things like that I think are going to sort of drive client growth going forward. But if we can -- have good market conditions, better trading and revenue capture, I think all bodes well for that business. But volatility is also a key thing. Right?

Yep. Understood. And then I guess just lastly, for me, just thinking about the current backdrop, and valuations coming in for businesses and broadly, how you're thinking about a year and is there any, you've got a lot of organic initiatives that you're focused on. But is there a subset of the market or an area where maybe M&A makes more sense at this point? Sean O’Connor: I think it's starting to get more interesting, just because as you say, there's sort of been a bit of a fallout and I think it's going to get interesting. when some of these startups sort of find that they can't raise more money and need to go to some buyers to help them out. I mean, certainly, that would be an interesting development for us. But honestly, at this point, I think it's still early in that cycle. I think over the next sort of six to 18 months will be interesting to see if some interesting opportunities come up, but we certainly haven't seen opportunities that have been exciting to us in the last six months.

Got it. I actually do have one more question just on the interest rate sensitivity in the charts that you guys provide? So that's incremental from here. So like, the 75 basis points we've got a few weeks ago, or certainly wasn't in your run rates are -- is prospective. So just thinking about exiting, kind of the fiscal third quarter and the rate benefit you've got versus that chart that you provide in terms of incremental hikes, how we should kind of blend those together? Sean O’Connor: Yes. So I mean, I'll let Bill chime in here. Go ahead, Bill.

I was going to say, I think you're right, Dan. I mean, that certainly the 75 wasn't fully baked in, and even the 50 kind of came in a month into the quarter. So I think you should be seeing the effect of those two, kind of coming in Q4 in an onward basis for us. Sean O’Connor: I think the way you should think about it is, we invest in two things, normally, it's T bills and sort of three month treasuries and deposits on the other side. There's sort of a delay for us in catching with interest rates, particularly with banks, they don't all kind of put their rates up immediately. So there's a bit of a lag impact there. So we sort of, I guess, a little bit of maybe a three month moving average of the interest rates rather than the sort of exact interest rate at the time. So, we sort of catch it on the back end. And so I was actually pretty shocked to see that. [Technical Difficulty]. At the moment, we invest in three months treasury bills, 250 basis points, or 230 basis points. So, there's a long baked in kind of increase that we should start showing up in the next quarter or two for us.

Okay, understood. All right. Thank you. Sean O’Connor: Any other questions, operator?

At this point, we do not have any more questions. So I'd like to turn it back over to you, Sean, CEO for closing remarks. Sean O’Connor: Okay. Well, thanks very much. Thanks, everyone, for joining us on the call. Enjoy the rest of your summer and we will be speaking to you in early December again. Thanks again. Bye-bye.

Thank you all for your participation in today's conference. This concludes the program. Everyone may now disconnect.