Galen Stops looks back at how the OTC FX platforms fared in 2016 and talks to them about their strategic plans for 2017.
Speaking to platform providers at the end of 2015 about their prospects for the next year, they were all fairly bullish that a period of subdued volatility, and subsequently trading volumes, was about to come to an end.
And on the surface, the reasons they cited for this optimism were logical. The US Federal Reserve had just approved a quarter-point increase in its target funds rate, the first change in rates since 2009 and the first increase since 2006. Many hoped that further rate increases were coming and that interest rate differentials might start to produce trading opportunities and therefore lift FX volumes.
Then they pointed to a number of major geopolitical risk events that could help drive volumes, namely the Brexit vote in the UK and the US presidential election. And yet, 2016 was hardly a vintage year overall for many of the FX platforms.
The year started off well enough for some platforms – and it should be noted here that this article is concerned only with the OTC FX platforms that publicly report their volumes – with an equity sell-off in China and a surprise rate cut by the Bank of Japan driving some trading activity in January.
Interestingly, it was two of the mid-sized platforms – from a median perspective – that showed a bump in volumes that month, FXSpotStream and Hotspot, while others stayed flat or dropped off.
Then started a quiet period in the markets until the Brexit vote in June, which caused all the platforms to light up.
Although it’s perhaps worth noting that while all the platforms had a particularly good day on June 24 when the surprising outcome of the referendum was announced in favour of leaving the European Union, in terms of percentage increase from average daily volumes (ADV), Fastmatch was the star performer, registering $39.8 billion that day.
Not only was this a new daily record for the firm, but it was also a substantial increase from its previous record high of $24.4 billion on January 15, 2015 when the Swiss National Bank withdrew the EUR/CHF floor. The firm’s monthly ADV has never gone over $20 billion during the entirety of 2016.
As ever though, perspective must be maintained. Thomson Reuters reported spot trading volumes at $258 billion on June 24, and while EBS BrokerTec did not give an exact figure, in its July trading statement it said that it had topped $200 billion that day. Clearly, during this time of market stress the vast majority of new flows into the FX market were headed towards to two traditional “primary” venues.
The Brexit volatility did not stick around for long though and by August it seemed as though the entire FX industry had gone on holiday as volumes slumped across the board. They slowly recovered in September and October until all the platforms received a shot in the arm when Trump was elected as the next US president in November.
2016: Groundhog Day?
Superficially, the year in its entirety does not look that different to 2015: there were generally muted volumes punctuated by occasional bouts of volatility that didn’t seem to stick around. Talking to platform providers about 2017 though they all appear positive that it will be a good year for them.
Why? Because they see potential volatility from the continued Brexit fallout, a Trump Presidency, political elections in France and Germany that could have a major impact on the future of Europe, while the US Fed raised rates again.
Rather than being Groundhog Day, they are likely to be correct in their assumption that 2017 may be a better year for the FX trading platforms.
Britain’s withdrawal from the European Union, due to formally begin in March, is looking likely to be long, messy and divisive. Or as one platform provider puts it: “Brexit could be the gift that just keeps on giving.”
Meanwhile, no one really knows yet what a Trump presidency means, but the suspicion is that it will involve a decrease in the regulatory burden on financial services firms, a boost in infrastructure spending in the US, an increase in borrowing, lower taxes and a shift in foreign policy abroad.
While the anti-EU Marine Le Pen is not expected to win the French election and the pro-EU Angela Merkel is expected to win the election in Germany, given pollsters’ abysmal record in 2016, it seems unlikely that firms will be ruling out a surprise in either case.
Expect nervous markets heading into these elections and, if there is another surprise result, very active ones coming out.
In Asia, China’s economy still appears to be slowing slightly, if it continues to do so then the government will once again have to grapple to prevent capital outflows and might have to decide between interfering in the currency market or continuing moving towards internationalising the RMB. The leadership re-shuffle there in October 2017 could also be significant, especially for emerging market trade.
The rate hike from the Fed also feels different to last year given that Fed Chair, Janet Yellen, has indicated that the central bank plans to raise rates three times in 2017, barring any unexpected data that emerges. This latest rate increase could be the beginning of a proper rate cycle, producing a steeper yield curve that will boost FX volume.
A number of sources claim that the recent sharp but short spikes in volatility have seen quick corrections because they haven’t been driven by long-term fundamental flows. In contrast, they argue that 2017 is much more likely to be a year where firms are going to be genuinely rebalancing their portfolios, something that is likely to drive more consistent volatility.
The question then becomes, what have these platform providers done in 2016 to position themselves for further growth and what changes do they expect to implement in 2017 in order to capitalise on a potential increase in FX trading activity?
Thomson Reuters has implemented a number of changes to its FX business in 2016, restructuring it into a new trading business group to be headed by Michael Chin and Neill Penney.
It is also finishing the consolidation of its various FX platforms into the FX Trading GUI, introduced a new rulebook, brought in a latency floor to the Matching platform, added new functionality to FXall and acquired Redi, a cross-asset EMS designed for the buy side.
More detail about these changes, and the firm’s plans for 2017 can be found in Mapping Out the Plan in this issue, but, in brief, diversification appears to be one of the key themes for how it plans to grow the business.
Looking specifically at the transaction business, Penney expects 2017 to exhibit many of the same trends as platform providers saw the previous year.
“Within the transaction space, I’m expecting to see a continuation of current trends. The inter-dealer market has been shrinking over the past few years and although I think that it will slow down, I wouldn’t expect that trend to change significantly,” he says.
In contrast, Penney expects to see continued growth in the dealer-to-client market.
“We can see the growth of buy side activity in the increased volumes on FXall, which are at an all-time high, while the footprint in terms of the number of buy side customers that we have transacting on FXall is at an all-time high as well.
“Overall, it feels like we’re set up for a good year next year in terms of volumes perhaps being towards the upside. There is a generally much happier mood amongst the bank clients that I see now, they’ve come through the regulatory reform process and have customer facing models now that work for them. It’s a very different tone of conversation that we’re having compared to two years ago,” he says.
Fundamental Technology Changes
Diversification has also been a big story for EBS BrokerTec in recent years, as the firm looked to expand beyond its traditional G3 spot FX core business.
On the product side, its NDF business continues to grow as this market becomes more electronic. The deliverable forwards business – a brand new product for the firm – is a disclosed liquidity product as opposed to trading on an order book like the NDFs, is thought to be trading between four and five yards a day now, with the firm optimistic that there will be significant growth in this area in 2017.
The firm continues to consolidate its dominance in CNH liquidity and the deal it announced with CFETs, China’s official interbank trading and infrastructure platform, in June to provide it with technology for electronic execution services in mainland China was a real coup.
In terms of diversifying the firm’s client base, Seth Johnson, CEO of EBS BrokerTec, says that this has been more challenging, but claims that there has been progress made.
“Diversifying our client base has been more challenging than perhaps was initially anticipated. That’s largely due to the fact that the further you move away from the sell side, the more difficult it is to get clients to change the channels that they use to execute on, for a variety of different reasons,” he says.
Buy side firms tend to be stickier customers for trading platforms because, unlike sell side firms they aren’t as used to using multiple venues to force the market to support their requirements and they often don’t have the same need for competition, once a platform supports the requirements they have they’ll tend to stick with that platform.
They are also harder to service because they need more workflow and infrastructure support around trading, whereas the sell side usually has the trading support it needs internally.
“But although it’s been a challenge to widen our client base, we’ve definitely had success in some areas, and that’s partially due to our global footprint, which allows us to connect a variety of different client types from different geographies in a way that other channels can’t do,” says Johnson.
“We also have a prime brokerage model in place that allows non-bank liquidity providers to use our network to connect with market users they would otherwise struggle to meet. So in the next six months I’d say that we’ll see significant progress in widening our customer base, despite the challenges associated with doing so.
He adds: ““We’ve also seen and will continue to see volumes grow in the long term for both EBS & BrokerTec, and we expect additional progress in EBS Direct, EBS Select, NDFs as well as other projects.”
Another big area of change that Johnson highlights from 2016 is some of the work that the firm has concluded on EBS Market. “We have made some fundamental decisions about our technology offering in EBS Market, which we are very confident is going to result in some significant improvements in the market ecology, the customer experience and therefore overall volumes versus the total size of the spot FX market,” he explains.
These changes include upgrading the matching engines for EBS Market and changing the EBS Live Ultra market data product from a 100 millisecond time slice to a 20 millisecond time slice, with plans to reduce this even further down to 5 milliseconds in 2017.
“The net impact of EBS Live Ultra has already been an improvement in all the leading indicators, which will ultimately lead to more volumes. So we have more quotes in the book, tighter bid offers at the top of book, tighter prices at five-to-10 million VWAP and we’re getting anecdotal feedback from participants supporting our view that this is good for the overall market. Just looking at this logically, it seems inevitable that clients who were having to wait 100 milliseconds for their next update was going to lead to them trading somewhere else,” says Johnson.
Championing the Lit Markets
Johnson himself represents a significant change at the platform provider this year, having only been the CEO of EBS Brokertec since September, after the previous CEO, Gil Mandelzis, announced that he was stepping down from the role in July.
But, having been head of strategy at Icap’s global broking division before this appointment and having previously been CEO of BrokerTec before it was combined with EBS in 2014, this is hardly unfamiliar territory for Johnson.
Perhaps the biggest news story surrounding EBS BrokerTec this year has been the shift in its parent company, as Icap sold its voice broking business to Tullett Prebon and formed a new company with all its electronic businesses called Nex.
Giving declining revenues in the voice broking space, consolidation seems a necessary move, and from that perspective selling the voice business certainly makes sense for Icap. In addition, the voice broking business generated capital requirements for the Icap business as a whole. This meant that every time the non-voice business grew it would have to allocate capital to the company as a whole due to its voice business, despite the fact that the voice businesses contributions to the firm’s profits were diminishing.
Explaining what impact the transition to Nex will have for EBS BrokerTec specifically, Johnson says: “For EBS BrokerTec the one big difference it makes is how the market perceives us. As a firm, we have traditionally been very much associated with the top 10 to 20 dealers. But EBS BrokerTec is a very different animal now in terms of the mix of clients in the order book, we have many non-banks that are on our platform and provide liquidity, but also in terms of our ambitions in the dealer-to-client space, in providing channels for the sell side clients – amongst others – to price their own clients.”
Looking ahead, Johnson’s plan for building the business is fairly straightforward.
“We have all the right people and projects in place now, and my focus is going to be on executing what we started and invested in over the past few years,” he says.
If the years of Mandelzis at the helm were characterised by a continual effort to diversify the business in numerous different directions – as Profit & Loss has previously noted, with mixed success – it seems that the start of Johnson’s tenure will be more focused on building and improving what the firm already has in place.
In terms of potential volatility in 2017, Johnson argues that this can only be of benefit to the lit markets. “In a volatile environment I think there is a certain natural tendency for firms to return to public markets. When markets are volatile, people don’t know where prices are and they’re forced to hedge their risk in the lit markets, so we’ll gain on a relative basis overall from that trend,” he says.
Filling the Gaps
Like many trading platforms, Hotspot had its November volumes boosted by the US election, recording an ADV of $64.5 billion on the day and $30.4 billion for the month.
One fact that the firm will be buoyed by is that its London matching engine had an ADV of $2.5 billion for November, which although seems modest in comparison, represents 8.25% of the total trading volumes on its platform, which arguably is a decent percentage considering that it was only launched in September 2015.
“It’s certainly solved a gap in our offering and enables us to better serve our clients,” says Bill Goodbody, outgoing senior vice president, foreign exchange, at Hotspot.
He adds: “Where we’ve seen the most benefit is being able to provide local access and pricing. Rather than trade into the US, European and Asian participants can now access liquidity without any additional latency. It has quickly become a key part of our Hotspot Link offering, which is our disclosed offering for price-to-price distribution on a disclosed basis,” he adds.
“Although our US engine has the largest network effect for people to tap into, we’ve seen quite a few providers launching their disclosed businesses using the London engine as well.”
Diversification was a big theme across a number of platforms in 2016, and Hotspot was no exception. It announced in August that it was acquiring Javelin, a Swap Execution Facility (SEF) offering interest rates swaps trading, and closed the deal in November.
Although Javelin has no volumes to speak of going through its platform, Hotspot bought the SEF in order to accelerate its plans to get into the NDF market. Goodbody describes it as an “opportunistic” acquisition, explaining that the plan is to replace Javelin’s technology with Hotspot’s, re-write the rulebook and re-launch it as an NDF-focused SEF.
Although he declines to give a set date, Goodbody says the objective is to re-launch the SEF in the first half of 2017.
Hotspot’s parent company, Bats Global Markets, made the headlines in 2016 because of the $3.2 billion deal it agreed to be acquired by CBOE.
Although the merger is likely to have a big impact on the Bats business, Goodbody says that Hotspot is unlikely to change as a result. This is mainly because CBOE has no FX business and therefore there’s nothing that needs to be integrated with Hotspot and no overlapping personnel to be thinned out.
“For Hotspot, we’re probably going to be in the second wave of benefits, once the two entities are combined we can think about different products to launch, different ways to use all the assets under the umbrella and we’ll have a large global platform from which to sell,” he adds.
Hotspot’s forwards products are now live on the platform and Goodbody says that the firm is just finalising some finishing touches with prime brokers to get clients on board, a process that he says will be completed in the first half of next year.
This, in addition to re-launching the SEF and continuing to grow volumes on the London matching engine, will be the main focuses for the Hotspot management next year, according to Goodbody.
He also hails the fact that in 2016 the firm spent a lot of time focusing on improving system performance aspects of its technology, which Goodbody observes “isn’t exactly sexy work, but has paid a lot of dividends”. In addition to the new products, he says that these technology enhancements will enable the firm to get into platform improvements and functionality enhancements for its core spot platform in 2017.
Goodbody himself will not be there to oversee these changes, however. He announced in October that he would be leaving Hotspot at year-end, where he has worked since 2008, in order to re-locate to Australia. Bryan Harkins, executive vice president and head of US markets at Bats, will take over the global FX business after Goodbody’s departure.
Scaling the Business
2016 marked the first year that FXSpotStream has publicly reported its trading volumes, with the firm registering a full year-to-date ADV of $18.2 billion at the end of November and on three occasions it registered a monthly ADV of over $20 billion. On the day of the US election it registered a record high of $49 billion in trading activity.
On the 16 December, FXSpotStream celebrated its fifth anniversary. Commenting on this milestone its CEO Alan Schwarz says: “I think that we can comfortably say that the service we offer has hit a nerve, it is now a ‘need’ rather than a ‘want’ product.”
The firm now has offices in London, New York and Tokyo, has doubled the number of liquidity providers on its platform from six at its launch to 12, and plans to expand its product range with the launch of NDFs in Q1 2017.
A key part of FXSpotStream’s appeal, according to Schwarz, is it’s low cost business model together with more competitive bank pricing and he is keenly aware that the firm must maintain this model even as it scales up the business.
“Certainly as you grow, your costs grow. You add more people, you add more offices – we’ve doubled our colocation infrastructure globally, and of course that has costs,” he says.
But the important thing, says Schwarz, is that these costs have grown in line with the amount of liquidity providers on the platform that bear the costs and the amount being traded on the platform. He therefore claims that the actual cost per million for trading on the platform has effectively decreased.
“Our business model is built on offering a better service at a lower cost than other platforms, that’s the value proposition that liquidity providers expect from us, but if you’re being successful and doing more business that realistically costs more money,” he says.
“So key for us is to continue increasing trading volumes on our platform so that any additional costs that we’re incurring are actually offset by virtue of the additional volumes supported by the service such that the ‘effective commission rate’ liquidity providers pay decreases, given in our model firms pay a quarterly fee rather than per million fee so the more volume transacted the lower the effective rate liquidity providers pay and the better price takers can receive.”
Another way to reduce costs in this model would simply be to add more liquidity providers, but Schwarz is insistent that they won’t add more unless they can prove demonstrable value to the FXSpotStream ecosystem.
“We will not add liquidity providers to our venue just for the sake of adding them, that’s not our formula,” he says. “We have twelve of the largest FX global banks on the service. We have plenty of liquidity across all currencies and very competitive pricing available for our client. As long as the volumes grow we don’t have pressure to add liquidity providers for the sake of it, so when we look at adding additional liquidity providers, among other things, we also look at whether it will help bring new clients on the service and offer further diversity in the existing panel of liquidity makers.”
Five years on from its launch and Schwarz also emphasises his desire to maintain the mindset that has brought the company this far.
“It’s clearly always a challenge to maintain that startup attitude because as you grow a company, by necessity you have to become more structured and process orientated. Five years in we can’t credibly say that we’re a startup any more, but for us it is critically important to maintain the fast pace of innovation, hunger and drive that has gotten us to this point and as long as I’m behind the wheel that’s what our banks and clients will continue to see,” he says.
2016 was the first year that FastMatch separated from FXCM to operate as an independent platform and, with the caveat that it is still starting from a small base, the results were positive.
Although volumes fluctuated slightly during the year, the platform began the year with an ADV of $11.8 billion in January, which was a 37.2% year-on-year increase, and ended it with a new record ADV of $17.1 billion, a 69% year-on-year increase. With the Brexit referendum and the US elections, it also saw the two busiest individual trading days in its history.
Looking back at the OTC platform volumes over a five-year period makes clear the progress that FastMatch is making. Over the course of the last year, FastMatch has made a couple of significant functionality additions to its platform. In April it announced that it was rolling out a new order type that would “outsource” last look from the market maker to the venue.
When the new order type, called the Leak/Sweep Protection (LSP) is enabled by a maker, FastMatch will hold the orders from a taker that are attempting to match with the maker’s quote for a specified period of time.
If, during the hold time, the market moves away beyond a specified pip threshold, FastMatch will reject the order from a taker. Otherwise, FastMatch will send the order to the maker for execution at the original matched price.
Then at the beginning of December it made its proprietary algorithmic and transaction cost analysis (TCA) services available to all its subscribers.
Speaking to Profit & Loss in December 2015, FastMatch CEO Dmitri Galinov said that the key focus for 2016 was going to be to improve the firm’s distribution. This strategy was evidenced in a number of senior sales hires made by the firm in the past year, and Galinov says that it will be looking to make further hires in 2017, particularly in Asia.
Specifically, he says that the firm plans to build out its presence in Singapore in order to service the region.
Looking ahead at 2017, Galinov is hopeful that there will be significant developments in two major initiatives that he has been a very vocal champion of: a consolidated tape for FX and central clearing.
“I’m hopeful that both will come next year,” he says “There are a couple of exchanges working on clearing right now, we’re very supportive of their initiative and plan to be the first ECN to support clearing on an exchange. I think that this will decrease the cost of post-trade processing, as well as decrease risk in the market.
“On the tape side, I think that we’re also very close to being able to launch something, we’re just waiting for some banks to join. It’s something that I’ve been working on for a long time now, because it’s badly needed.
“For example, during the pound flash crash clients called us and were asking what our low of the day was, people were calling every ECN to try and figure out where the market was trading. That’s not the right way to be operating the largest market in the world,” he says.
Building the Ecosystem
The past year has also been a busy one for GTX, which announced the launch of its new London and Tokyo Matching engines at the Forex Network Chicago conference in September.
The matching engine in the LD4 facility in London went live in October and there are currently 14 liquidity providers live there, while everything is in place for the Tokyo matching engine in the TY3 facility, liquidity providers are being onboarded and GTX is hopeful that it will go live by the end of January 2017.
“The main reason why we launched these new matching engines was to expand the GTX ecosystem,” says Vincent Sangiovanni, CEO of GTX. “What we’re doing with these launches is creating a global ecosystem, not just for spot FX, but also for forwards, swaps, NDFs and our voice business.
This now allows for local matches for the clients that need this, but at the same time it’s all part of the global central limit order book that everyone can interact with.”
As it seeks to expand its global footprint, GTX has also made a number of senior sales hires in the past year. It hired Ivan Wong as an institutional sales person in Hong Kong, Thomas Reichel as a director of institutional sales in Chicago, Eduard Poltavsky as a director of e-FX sales in London, but who specialises in eastern European currency pairs, and Vince O’Sullivan as director of FX sales in London.
In November the firm also hired Edward Brown as the CEO of its SEF, which was approved for registration by the US Commodity Futures Trading Commission (CFTC) in May.
There can be no regulatory mandate to trade on SEFs without a clearing mandate first and there appears to be no mandate of this kind on the horizon in the US or Europe, which perhaps begs the question why GTX is investing in its SEF when market participants are free to transact NDFs away from the platforms.
“I’ve been asked a thousand times why I’m pursuing the growth of the SEF, and the answer is because I think that it’s going to be very important for our ecosystem moving forward. If a client wants to trade and clear the product, not because they have to, but because they want to reduce the capital requirements on their balance sheet, then we want to have an electronic facility available for that.
“Also, when you look at the NDF market, one thing that I’m very sure about is that more and more of it is going to go electronic. So we’re going to offer NDF trading off and on- SEF, but having this option within the GTX offering helps us become a one-stop shop for our clients,” says Sangiovanni.
Once again, this idea of a diversified offering is at play. Sangiovanni claims that there is still a place for a purely spot FX platform and there are some client types for whom that suits, he remains unconvinced about the scalability of such a business.
“If you look at a single offering platform, my concern would be, where is the growth coming from? Where is the scalability of bringing on different types of clients?
“We’re taking a different approach. We want to build an ecosystem where everyone can trade with everyone so that we can mix and match to find the best suitable liquidity for all of our clients. And one of the reasons why we want this ecosystem with multiple products and multiple client types is so that we can combat the lower end volatility days,” he says.
Sangiovanni adds that this approach is already seeing results as the total number of GTX users rose from 519 to 585, or 12%, year-to-date through November.
“Our target for 2017 is to take GTX’s offering and with our expanded sales team increase the diversity of client types in order to have more and different types of clients interacting with one another on our platforms,” he says.
Clearly diversification has been a big theme for a number of FX platforms in 2016 and will continue to be in the coming year. One reason for this is, as has already been pointed out, diversification provides additional revenue streams for when the spot FX market is subdued.
It also, as Goodbody points out, makes it less likely that existing customers are going to trade elsewhere. “Having more than spot is critical and that’s why you see, especially amongst the larger players, this desire to maximise the products being offered so that you become more relevant and more sticky for your customers,” he says.
Another reason why diversification seems increasingly desirable could be because the proliferation of purely spot FX venues in the past few years has diluted some of the value of such offerings.
“Technology made it easier and cheaper to set up new platforms, but for some of them their core competency was being able to connect market participants quickly and easily to that ECN. On top of this you had a large group of users who were able to make money off connecting to ECNs and provide that efficiency of pricing between different networks. But there’s a limit to how many of those people are worth connecting with each other, and my sense is that we’ve just about got there,” says one market source.
With regards to diversified businesses, the primary venues of EBS Brokertec and Thomson Reuters are clearly still miles ahead of the rest of the pack.
However, the smaller venues hope to counter this disadvantage by offering what they claim is newer technology with a lower cost base.
“Both EBS and Reuters are losing market share and they will continue to do so, I’ve seen this happen before in the equities market where NYSE and Nasdaq lost their market share to a host of new venues such as Bats,” says Galinov. “For the major ECNs to stop the bleeding they would have to massively restructure their costs and upgrade their technology and I just don’t see that happening.
“All the ECNs are connected to the same liquidity providers, so as the clients come in to take liquidity from the platform the question then becomes: which is the cheapest and best path from the maker to the taker? The newer platforms just have faster, cheaper more efficient paths,” he adds.
Discussing the importance of cost structure, Schwarz comments: “The need for the FX market to cut costs is not going away and the venues that will continue to grow are the ones that have solved this problem. The established venues will continue to struggle because they were established at a time when there was lots of volume, less choice, less venues and this supported their larger, less nimble infrastructure.”
Is Consolidation Ever Coming?
Consolidation is, as ever, another big talking point when looking at the OTC FX platform space. Nearly every platform provider that spoke to Profit & Loss, predicted that there will be some form of consolidation amongst the various venues.
Funnily enough though, they were all emphatic that their platform in particular was not for sale in 2017.
The exchange groups are typically expected to be the buyers of the platforms that are supposedly for sale which means that, assuming for one second that all the rumours are true and that every platform has it’s price eventually, that there are a lot more potential sellers than buyers.
There would be a certain irony if it turned out that when Bats and Deutsche Boerse acquired OTC FX platforms in 2015 this was the high point of the valuation market and the low point of trading volumes, while in 2017 acquisitions could occur at comparatively lower valuations just as volumes start picking up again.
Then again, if volumes do increase as the platform providers are hoping, this might reduce the desire for a sale. Certainly the FX market has confounded expectations for consolidation numerous times in the past and could yet again in 2017.
Overall, next year promises to be a fascinating one for observers of this space. It’s clear that none of the OTC platforms have been sitting still while volumes have been muted, it just remains to be seen if trading activity will really come back to the lit markets in 2017 and who has positioned themselves best for growth, regardless of whether they do or not.