MarketAxess Holdings Inc. Stock

All right. We're on. Good afternoon, everyone. Thanks for staying with us here on day one of Morgan Stanley Financials Conference. I'm Mike Cyprys, equity analyst covering brokers, asset managers and exchanges for Morgan Stanley Research, and I'm excited to welcome here for our next session, Chris Concannon, the CEO of MarketAxess; and Ilene Fiszel Bieler, the Chief Financial Officer of MarketAxess. As many of you know, MarketAxess is a leading electronic fixed income trading venue that started with a primary emphasis on credit markets and has since expanded into new geographies and asset classes. Chris, Ilene, thanks so much for joining us here today.

Thanks for having us.

Great. I thought we could start with the current market backdrop. First quarter highlighted just how quickly fixed income markets can reprice around volatility, new issuance, spread movements. I guess what has surprised you most so far this year as you look at client behavior through some of the earlier volatility? And what did it reveal about how market structure just continues to evolve here?

Sure. And first of all, the first quarter was one of those quarters where everything worked. It was quite an interesting quarter, record volumes in spite of a changing dynamic throughout the first quarter, so how we started January was very different than what March ended up with the geopolitical crisis unfolding in the world. What -- some of the things that surprised us was, one, we've been investing heavily in portfolio trading and some of the portfolio trading tools in U.S. credit. That's despite the volatility, we saw portfolio trading on the platform and in the market still at a robust number, so we saw record portfolio trading across the platform globally, not just in U.S. credit, but elsewhere. And then another area that has been a sizable investment for us has been automation. Clients want to automate their trading. This isn't a novel thing, this exists in every other asset class except for credit and fixed income generally. So we're seeing that unfold, and we see it unfold in a market where you had record volumes, so the demand for that automation played a critical role in delivering those overall turnovers.

The last piece of the puzzle in the first quarter was record new issuance despite the volatility. So on the demand side, we saw clients coming in demanding that new issue. We saw a lot of those new issues were oversubscribed by several times, so huge demand despite the geopolitical activity. What you learn when you look at just 2026, we are in record territory of new issue. And why is that the case? It's because there's so much demand to build data centers, all the hyperscalers are coming to market, all large firms are coming in, funding that AI build that we've all committed to, and we're still in the early innings of the AI build if you add up all the commitments. So we're expecting huge new issue in 2026, record levels. So all of that played out despite a lot of volatility in the quarter.

Now a few months ago, you laid out a 3-year framework calling for 8% to 9% annual revenue growth and operating margin expansion along the way. As you sit here today, which components of the plan have given you the most confidence? And where do you think investors remain the most skeptical?

Sure. First of all, we're 5 months into a 3-year plan, so we're still in early territory, and the first quarter was a record quarter in top line growth, double-digit growth, so we're excited about that. If you break down our plan, what's exciting is 50% of our top line revenue is growing double digit and consistently growing, and we see that playing out into the second quarter as well. EM is our international business, is a very big portion of that 50%, and we're still seeing it perform at higher levels. U.S. credit is where all the areas of investment is currently playing out. Things that we have delivered and we're seeing play out, portfolio trading, as I mentioned, we continue to see that grow. If you look at May activity, we saw portfolio trading pick up. That was an area of investment, sizable investment last year, and that's been playing out. Quarter-over-quarter, we are growing our portfolio trading share of the full wallet of portfolio trading.

Another area of investment that plays out in our 3-year plan is block trading. If you look at the market today, just U.S. investment grade, 50% of the market, not electronically traded is blocks, and so we're investing heavily to attack that block market. And so what we're seeing both in the first quarter and into May is block volume picking up on our platform. We've seen it in EM grow, and we've seen it in Eurobonds, and now it's growing in U.S. credit as well. But that's the 3-year plan. Did you want to add anything to the plan?

I would say as a reminder to your point, that 8% to 9% of revenue growth is average annual growth over time over the 3-year time horizon, and then the margin expansion, you talked about the operating margin expansion is also average annual growth over time over the 3-year plan of 75 to 125 basis points. I think if you think about what Chris was just talking about and particularly if you focus on the U.S. credit piece, which is a place where we've really been putting the investment dollars and where I'm sure you'll be hearing through our conversation today more of what we've been doing there, you may recall that we're saying that of our incremental growth in year 1, we would expect about 20% of incremental growth. And again, nonlinear, but if I'm talking about U.S. credit, about 20% would come from U.S. credit, and then in year 3, that growth would be about 35% for U.S. credit. So we would see that kind of a ramping of where we expect to see growth on the top line from U.S. credit, just to give a sense -- a little bit of a sense of how we think about the plans over time.

So 35% of the growth...

Of the growth coming from U.S. credit, exactly in year 3.

In year 3, yes.

Yes, exactly right. Exactly right.

Very specific.

I mean approximately, that's a very good point, approximate -- like that's the basic, if I'm going to give you a way to think about it, think of that as a rubric.

Now investors often focus on market share, but you've increasingly emphasized revenue growth and protocol adoption. So as you think about the next several years, which initiatives do you believe will continue -- will contribute most meaningfully to revenue growth and market share gains?

First, when we were building out the 3-year plan, you'll notice that we only talked revenue. We didn't talk market share. Market share is an interesting dynamic, but for us, as managers of the company, growing revenue is ultimately what investors want us to do. What's exciting about the revenue growth that we have planned for the next 3 years, it does come at a higher margin, meaning we plan to grow in areas where the variable costs are lower, so things like block trading, portfolio trading, EM trading, those are all exciting revenue opportunities for us, and -- but they're delivered through the same plant that we have existing today. So that's why we felt comfortable about the margin expansion in the 3-year plan as well.

Areas in -- just I'll focus on U.S. credit first and then move to international. In U.S. credit, again, large focus on growing our analytics and trading solutions in both automation, which we've invested heavily on and now it's more client adoption, and then as I mentioned, the block trading protocol, which is early in the market, but we plan significant enhancements to that block trading protocol come this summer, and that was all part of the original 3-year plan. We knew we had a big delivery this year of technology and front-end UI work, and that's started in Europe and is now coming to the U.S. here this summer.

On the international landscape, that's just an exciting area for us because much of that growth rate is coming from just electronic penetration. Penetration at the current client, so I think same-store sales, we're increasing the penetration of our current clients in EM. And then we're adding existing clients that really haven't fully electronified. And there, it's firing on all our different protocols, so traditional RFQ out to all-to-all is a sizable portion of our EM business. Block trading, we're seeing block trading be a key component of our growth in EM, particularly in the local markets where you have very liquid products in local markets. And then finally, portfolio trading is adding a different capacity to our growth rate in EM. And then think geographic expansion. We just added India, which is one of the biggest markets in the EM market and forecast to grow for years to come. Obviously, they are going to be building data centers and need access to the bond market as well, so exciting growth across multidimensional parts of the international business.

And if you think about, just to sort of put a bit of a point in some numbers around what Chris just said, even in just recently in May, if you look at our block trading in EM, those volumes were up about 35%. So those are the types of KPIs and indicators that we are constantly looking at and tracking to see the traction for the investments that we're putting in.

Okay. Automation continues to be a major focus across fixed income markets. Looking out, what percentage of fixed income trading do you think could ultimately be automatable, and where do you think the next leg of adoption comes from?

Great question because when we look at the other asset classes, some of which you cover, think equities, futures and things like FX, when we look at our buy-side clients' trading desk and we know them intimately, they have automated really most of their trading activity in those asset classes. And then you turn to fixed income and you see traders, a lot more numbers of them, clicking on a screen or chatting on a Bloomberg chat. Now, that will eventually change, and when you talk to the heads of these desks, they want their fixed income desk to look like their equities and FX desk, that's the corollary. So we think there is a huge growth area in automation, and we're starting to see that demand for automation.

One of our goals of our automation is to not only automate currently electronic flow, so think small RFQ and IG and high yield, but also to automate those larger block sizes, and that's a trend that we're seeing among our biggest clients. They have come in, particularly in 2026, and started adding much larger size into our automation suite of products. They're seeing the outcome, the execution quality coming back. The other nice dynamic that we're seeing is dealers in the market have increased their size of their algo pricing tools, so they are quoting much larger size in a fully automated way, which is allowing clients to add to their size in automation. So it's playing out on both sides of the trading activity, both dealer and clients are increasing their size that they're willing to put into the machine and hit send, and that's exciting because that's the use case that they have everywhere else in asset classes other than fixed income.

Let's talk about AI, which you've described, what you've increasingly talked about not simply as a productivity tool at MarketAxess, but as a way to unlock more value from proprietary data that's generated across the entirety of your network. So where do you think AI creates the greatest competitive advantage from here as you look out?

Well, certainly, as a global platform with a small 900-person company, AI is very compelling for our productivity expansion. So when it comes to development, when it comes to testing for development, AI is already proving to be very helpful to our whole product life cycle, from creating the idea from the client engagement to delivering the product. We see it accelerating just our basic product delivery, and we're seeing some benefits of AI in our current delivery schedule. We have a new issue platform coming, we have a portfolio trading enhancement coming this summer, and then we have a large delivery, as I mentioned, on our full UI suite come August, so AI has helped us along that path. So from a productivity standpoint, we benefit immensely because as you can see in this market, first mover is a true advantage when you're on the desktop of the largest buy-side client.

The other areas that we're seeing AI play out is really in the data and analytics space. If you think about the bond market, our clients are consistently trying to invest in a theme or a target, not a specific bond. And so many times, we can actually help them choose that bond that successfully fills their goal of investment in the bond market with products that are more liquid, easier to trade, and AI is proving to be super helpful in that area where AI can tell us, if you ask AI to solve an investment exposure as opposed to pick a bond, AI can come back and look at the market and produce a better portfolio for our clients. So we're very excited about what we're seeing AI do when it comes to data and analytics on our platform. Remember, all of our data is proprietary to MarketAxess. And so when someone launches an RFQ in Asia, we know about it and we can consume it in our AI products instantaneously.

The other exciting area if you think about all the protocols we just talked about, automation, portfolio trading, block trading, and traditional all-to-all RFQ, our clients are becoming confused around when to use those protocols. At what time do I trade a portfolio trade or do I go direct to a dealer, or do I launch a long list of RFQ? AI is very helpful in making recommendations around how should I trade these bonds, how should I implement my portfolio, so we can help you select your portfolio, and now we can help you execute that portfolio. The other piece where we're seeing AI being helpful is who should I trade with on this given day and at this given hour because all dealers provide different levels of liquidity depending on client flows that they have, depending on expertise that they might have in a sector or balance sheet willingness, and so AI will uncover who is the best counterparty as well as -- so we're solving for what should I trade, how should I trade it and who should I trade with, and that's super exciting.

Beyond that, we've already invested heavily in AI to produce what price should I trade. So our CP+ derived data has become a benchmark in U.S. credit. It's now really the only real-time pricing in EM because there's really no relevant pricing in that market, and it's also deployed in munis as well, which desperately needs better pricing, and so we're excited that AI is already delivering a real-time price that solves at what price should I trade.

So a number of different applications, use cases. If we were sitting here 3 years from now, where do you think AI's impact is going to be most visible when we look at MarketAxess' platform?

I'll just personalize AI about MarketAxess. I think MarketAxess will have better tech, faster delivery. I think we'll be in a world where our cadence of delivery is nightly with big releases happening on the weekend, that's an optimal place for us. From a market structure perspective, I think the biggest impact of AI will be how well the automation suite of products work. We currently today run algos that are based on machine learning, they will be deployed with AI tooling. And so the AI bots that are running trading algorithms will be outperforming most humans and most human traders. But for like very complicated trades where you need capital commitment and really sophisticated trading skills, AI will be doing the largest share of trading. We have AI driving cars in the U.S., we can have AI driving bond execution in the U.S.

And what does that path look like if it's driven off of machine learning today, what's that path to generative and agentic?

It's seamless actually. It's quite -- it's iterative to the next level of algos that we're providing, and we're already exploring algos that will be listening to AI data. That's very powerful. The data of an algorithm is more important sometimes than the trade decision. So collecting that data about what's happening in the market, what direction is the market trading a specific sector, that can be very helpful in how to trade that sector.

Great. You mentioned data, maybe just speak and spend a moment there. I think historically, you've only monetized data or a fraction of the data that generated on the platform, but AI can expand the use cases of your proprietary data sets. I guess how do you think about balancing direct data monetization versus using it to drive higher trading volumes and better execution outcomes?

This is always a strategic question for us and one that has been quite challenging because in the traditional exchange world that I grew up in, data revenue is a much bigger percentage of the overall pie, and selling data, every ounce of data that you have is an important component of growing that revenue. When I look at MarketAxess, we are not just a market but an execution solution to the buy side, and many times that data because it's very proprietary to MarketAxess can help power the next execution and generate more revenue on the follow-on execution than selling it raw. Now what we've done is a balancing act. What we've done is we've crafted data products that are broad in use cases and not specific, they're all aggregated data products, CP+, things like tradability that predicts the level of liquidity. These are all unique products, but aggregated that are free to sell to the broader populations.

The proprietary data that we see in our platform is the data that we want to keep and curate and use AI to make trade decisions or enhance the trade decisions that traders are making, and that's an area that we're constantly balancing. Many times what we find is traders like data, we produce it for them, and then we go ahead and aggregate it and productionize it for the public sale. And so there's going to be a constant stream of new products coming to market that we can sell for hard dollars, that data revenue bucket, but will likely feed our execution solutions for years to come.

Great. I want to shift and talk about some of the different protocols, maybe starting off with portfolio trading, where adoption appears to have matured relative to at least a couple of years ago, at least in that rate of change. So I guess how do you think about the next phase of growth from here for PT? And what opportunities remain to improve workflow, market share and broader adoption?

So the portfolio trading tool, obviously, it's been in our market now for at least 6 years, depending on how you count the start. We've made sizable investments in portfolio trading, and the gains are proving out. We see those, we've executed, made investments even last year and continue to invest into the fourth quarter, and we're starting to see that growth rate continue even here into May where our portfolio market share went up again. I do think -- I view it as, in investment grade, quite a mature product because we have a number of years of portfolio trading. It has kind of stabilized. It's kind of in that zone of 10% to 14% in investment grade as a percent of the overall market, and we see clients being regular users of portfolio trading. It used to be some clients who are new to portfolio trading, that's rare now, so I would say it's in a mature state of the market.

In high yield is an exciting area for us because we are, we think, one of the leading providers of portfolio trading in the high-yield market. That's a newer area that was forever down in that 7% of the total market. It has grown to 14% of the market and has really stopped at that 14%. We even saw that in May. We saw somewhere in that double-digit percent of market, and we continue to deliver. High yield is a much harder product to trade even in a portfolio. So really data and analytics is what is powering our portfolio trading tools. We have a big enhancement coming at the end of this week and this weekend that should provide further enhancements to our investment-grade portfolio trading tool that we're excited about, so we expect to see even additional growth in our market share of the PT market.

The biggest challenge for our clients right now is when to do a portfolio trade. There's times in the market where it's very helpful and you get high-quality execution, and there's times where that can be degraded in the market. We also look at what is the optimal sizing of a portfolio, somewhere over $500 million, you start to degrade on your execution quality, and then the other components of the portfolio trade is what's the right sizing of the individual line items. Sometimes it's more favorable to put in 1,000 line items at smaller size than 500 line items at larger sizes, and we can help you size your portfolio prior to going to market. And I think ultimately, the data and analytics is going to win the portfolio trading tool and the clients demand for that tool.

And then I would just, again, just to add that to Chris' point on share and sort of how we're seeing this evolve for us. Most recently, you saw our share in May at 22%, and that was up significantly. The year before was 16.8%, right? So those are the type again of metrics that we're looking at to say, okay, this is where we're putting our energy, our efforts, our investment dollars. Are we seeing a change in volume? Are we seeing additional share accretion? And those are places where we certainly have.

And one area that we've seen growth in portfolio trading because it's obviously, a developing asset, is emerging markets. We are the leading provider of portfolio trading in the emerging markets and we continue to see new client adoption of portfolio trading. I think the next level of enhancement is really being able to put together a global portfolio trade, so across USIG, high yield and EM that's kind of a demand that we're starting to hear about. We have that capability on our platform. We likely would expect to see other asset classes added to those global portfolio trades.

Great. Historically, periods of heavy issuance have not always translated into higher market share for you guys, which raises some excitement around the DirectBooks partnership and the potential there. So can you talk about this new issue workflow solution and how that may potentially change the dynamics as you think about periods of elevated new issuance for you?

So look, we love new issuance. While it dampens our market share in that given month, we don't live month by month. Unfortunately, a lot of people tend to track us month by month. But what new issue adds is secondary market trading in the months to come, and so new issuance means good, vibrant market for us and typically higher levels of turnover. Because our market share has been challenged around those new issuance times, particularly in the first 5 days, we have spent a lot of time on how can we start to attack that new issue market and be more of -- kind of an ecosystem within the new issue process. That's where the DirectBooks relationship came in. We've been working with DirectBooks for over a year. They are owned by all the major banks, so part of that relationship is making sure you have a good relationship with the major banks as well.

What's exciting about the DirectBooks opportunity for us, and that is launching this week, it's in pilot with one client. We'll roll it out one client at a time. But what's exciting about that offering is we are redistributing the DirectBooks new issuance process, so we are stepping into that syndicate distribution, not the syndicate process, that stays with the syndicate and with DirectBooks. But we will be publishing -- in fact, we are publishing today. Any new issuance in the market, it's being broadcast out to the clients that are approved to see that new issue. Remember, we -- our distribution, particularly in U.S. credit, is everyone you need for a new issue. So we have wide distribution to all the right investors, so we have access to them on the platform.

You can then participate in that new issue over the platform, send in and submit your indications of interest, and get your allocations from the syndicate process, all exciting stuff for our clients because that's not how most clients trade new issuance. It's much more manual on the client side. What we're adding to that benefit is we're getting the distribution of the data earlier in the process on MarketAxess. So that reference data that comes from the new issue prior to pricing allows us to carry that reference -- some of that reference data on our platform, so we get early information for secondary trading as that new issue goes live and goes into pricing.

In August, there's obviously a big enhancement coming in August. One of those enhancements is we'll be able to book the trade for the client, so think when you get your allocation today, you're manually key punching in that allocation. Many of our investors do that. This allows us to actually seamlessly book it into your OMS and your back office processing. We also have the benefit of net hedging on our platform, so if it's an IG new issue, we can help you with hedging and net hedging. And then finally, what most clients really want is secondary trading of new issue. Obviously, with new issue generally oversubscribed, you don't get your full allocation, so clients want to still trade that unallocated portion in the secondary market. So in August, we're rolling out streaming price for those new issues. So you can trade at the break that new issue in a streaming block form. Most dealers, both in the syndicate and outside the syndicate are willing to price new issue in larger size because it's very liquid on those early days of new issue. So what's exciting, we'll be able to participate in block size solutions with dealers streaming a price and us offering a click to trade on that price as well.

And that would be available across the entirety of the platform while the new issue DirectBooks partnership is more of a rollout. How do I contrast those two?

So the new issue -- DirectBooks partnership will be a client-by-client rollout. Each client will need to be approved, not only for the rollout, but also for the syndicate, obviously, so they can participate in the new issue, and then we can control what the client sees, what new issue on our platform generally. Once those clients are rolled out over the course of the summer, they will also be added to secondary trading access. Everyone on the platform post-August, and we'll be rolling out our new platform in August, will get secondary trading live on the platform, so they'll get the benefit of the data in August. So any protocol that a client is using today will have that new issue data in it earlier than we get today. And then obviously, the streaming price will be available to any of our clients that are using that streaming price block trading solution.

Great. Why don't we shift and talk about block trading, more broadly not just the new issue blocks. You've highlighted block is one of the largest remaining opportunities for electronic trading. What have you learned so far about client adoption? Where are we in the broader electronification journey? And talk about some of the steps you're taking to drive greater adoption of block trading.

So block trading -- the good news is we're seeing block trading adoption play out, and we're still in the early innings of getting the right product in front of all of the traders on our platform. We rolled out block trading in both EM and Eurobonds, and we're seeing higher levels of growth rates in those products when we rolled out those early -- we're seeing early adopters in those two products. We're also now seeing it in U.S. high grade. We committed that we were building a block tool, and we're starting to see clients adopt that block trading.

One interesting -- and this was part of our investment thesis in blocks, we're seeing clients add blocks to the platform and choose to go out to all, not just go direct to a dealer with a block. So the one thing that was keeping clients from coming on to the platform was, hey, I don't want information leakage around my block, so I'll choose to trade it over chat where it's private. And then when they come to the platform, they see the liquidity in that specific CUSIP, and we see them using our all-to-all tool for blocks as well. And we're seeing now clients doing both. They have access to direct to dealer to protect that information or go out to all.

Another area that we're seeing some excitement around blocks, and I mentioned it earlier, is in our automation suite, we are seeing clients add block size, we're seeing some of the largest clients who get what I'll call choice pricing in the credit space, get success with adding blocks to full automation. So that's something that we didn't see just 2 years ago, and we're seeing more and more clients increase their size that they're willing to automate on the platform. Sometimes they will select a smaller dealer group to protect that information leakage. Other times, they'll go out to all if the bond is a liquid bond.

So we're just about out of time. So final question, if we fast forward 5 years from now, what do you think is going to surprise investors most about MarketAxess, whether it's the product mix, the geographic mix, the role of AI, automation or something else entirely?

I think both our clients and our investors are going to be surprised at the level of automation in the credit market globally across EM, U.S. credit, euro bonds, and into rates as well. I think while we say rates, treasuries is a 50%, 60% electronic, and higher levels depending on how you count, I think the role of AI across treasuries and U.S. credit is going to be dramatic. Where our traders will be using algorithms to trade the full canopy of product. They will be using larger size trades just sliced into smaller segments.

The most material impact that I see from our clients' trading behavior today, in a traditional RFQ, you're crossing the spread. In chat when you're requesting price from a dealer, you're crossing spread. 95% of the executions I see in the institutional market are spread crossing execution. If you compare that to how other assets trade, they are in more like 50% is spread crossing, the other 50% clients using algorithms to avoid spread crossing. So one of the benefits that I see coming to our market is that clients will, for the first time, not be crossing the spread. They'll have better selection of bonds, so they can have a higher instance of not crossing spread and meeting another investor. I think you'll see a higher instance of midpoint trades because of the benefit of AI and how algorithms will work.

Great. Well, we're out of time. Chris, Ilene, thank you so much for joining us here today.

Thank you.

All right, everyone. Next up, we're joined by Chris Concannon, who's the CEO of MarketAxess, a leading electronic platform for fixed income. Chris has led the company since 2023 after serving as President and COO of Cboe Global Markets. Chris, thanks so much for joining us.

Thanks for having me.

All right. So you reported May metrics this morning. So before we get into the credit market share conversation, I do want to highlight what stood out to me, which has been the continued strength internationally, particularly in emerging markets. It's been a consistent bright spot for you. So could you touch on what you saw in May, how you're thinking about the international and EM opportunity and what you're looking at as kind of the most attractive opportunities in those areas?

Sure. And again, it's great to be here. And yes, our international business is really a great bright spot for us. It continues to grow. The key ingredient, we have been invested in that market for many years. So it does take a sizable investment in terms of distribution, registrations around the globe. We all live in regulated world. What's interesting about the emerging market business is when you size it, it is equivalent in size to U.S. credit. So a lot of us spend a lot of time focused on like IG, which is one portion of U.S. credit. But the EM business is similar in size. The electronic penetration of EM is quite low. It's hard to estimate because no one really knows the total turnover of emerging markets given local markets don't report, but we're somewhere around 10% of e-trading in emerging markets. So sizable TAM opportunity in EM. And when I look at the broader market of EM, it is growing. So you're seeing new issue in EM, both at the country level, but also at the credit level, the corporate level.

We've just added India. We're the only platform now that is live in India, operating and trading in India, which is exciting. So we've added to the breadth of the product in India, let's be clear, India is going to be a sizable debt market for years to come. It already is one of the largest. So again, in terms of that TAM opportunity, it's huge. When I look at the EM business from a competitive standpoint, we only really see one competitor, largely Bloomberg. And typically, that's more chat-related than E-related, but a very strong competitor in terms of distribution around the globe. The EM business, just if you look at the May report, again, it grew 18% year-over-year. This is after a record first quarter of EM, where it grew close to 30%, which is exciting.

When I evaluate the E business in EM, we've really hit on every cylinder. If you look at some of the challenges that we've had in IG, portfolio trading, dealer-to-dealer in emerging markets, we have everything fully deployed. We have -- we're the largest platform for portfolio trading in EM. We've delivered a new platform for that portfolio trading solution. We are, by far, the largest RFQ platform with that all-to-all embedded. That liquidity is unique in EM. Sometimes our EM liquidity is 50% of our overall market. So that means somewhere there is a nonbank or bank that is facing a client that it isn't set up to face. So we deliver that unique liquidity. Our dealer-to-dealer business in May also grew after a record Q1 as well. So -- and the most exciting thing about EM is growth of blocks.

So when you look at the fixed income market, and I'm talking U.S. credit, emerging markets, munis, what's most daunting when you think of all the AI that's replacing everybody's job here is we are facing competition from the phone. So there is more phone and chat-based market volume than there is electronic market volume on a global scale. So the market opportunity for electronic platforms is greater than what we've already conquered. And let's be clear, people are not going to be chatting and not being trades of 10 million bonds in U.S. credit and EM. In EM, that's where we're seeing growth of blocks. And so we're seeing that block market that's going from chat to platform finally cracking. And so that -- what's exciting about that is that's really a forecast of what we see happening in the U.S. credit market as well.

Sure. All right. Well, that's a nice segue. Shifting over to the credit markets. May seemed like was decent for you from a market share perspective, up 100 basis points in high grade, I think up 30 basis points in high yield. So improving there. So can you just comment on the share drivers in May? And then maybe big picture, whether it's portfolio trading blocks, all-to-all we've seen the increased competition. How do you think about your position in credit today and what gets this business back on a sustainable market share gain trajectory?

Yes. Great question. And obviously, U.S. credit is where we've invested heavily in that market. When I look at May, I'm excited about the share gains, but I'm more excited about what's coming out this summer from a delivery perspective. We've been hard at work for the last year on a number of different products and solutions that are rolling out. But first, let me talk about U.S. credit in particular. One area that we've seen continuous growth is portfolio trading. And so some of the drivers of our share gains in May was delivered through portfolio trading, both investment grade as well as high yield. High yield, we are one of the leading portfolio trading platforms in the U.S. We have -- we came from behind and took over that spot. In investment grade, very similar growth rates. We grew our portfolio trading in the month of May. Areas where we're not going to enter into a price war is the dealer-to-dealer space. That's a space that is commoditized pricing.

We've chosen not to engage in that pricing war. We're happy to sit where we are. Ultimately, our true value in this market is with the client-to-dealer business. Now we're fully invested in the dealer-to-dealer business. We have Mid-X, which is slowly growing month-over-month. We think that's the right investment for that space. That's new revenue, new incremental revenue. Again, it comes in at a smaller fee per million because of the competitive dynamic in dealer-to-dealer. But our investment is all around U.S. credit client business. From a competitive dynamic -- and we'll share these numbers. We probably provide too much transparency from my perspective, but the fee has been quite stable in our client business. So when it comes to client to dealer business, a quite stable fee, where movement of fee is really any movement in our mix of business. Portfolio trading grew in the month of May. We did exceptionally well in high yield and exceptionally well in IG.

That tends to come in at a lower fee per million. Another area of excitement for May, again, we continue to add blocks to our electronic platform. That is the predictor of the future of e-trading in U.S. credit. The more blocks -- remember, 50% of the investment-grade market is on phone and chat. That's truly absurd when you look at how we trade other asset classes. No other asset class, including crypto and Polymarket, it's all E. That's the final legacy of trading on Chat is fixed income. And we're showing you proof that the block trade is moving to the e-platform. And then sorry, I know it's a long-winded answer to a short question. What's exciting to me is what's coming. So tomorrow is the launch of our new issue platform. Again, it's client by client. We're rolling out to one client. It's going to be in pilot for a portion of the summer. But we MarketAxess after a year of work with dealers and direct books, we announced the partnership.

We are now -- just a couple of months ago, we're launching the product tomorrow, goes live with the client, but we are now part of the new issue syndicate process. We are redistributing direct book services. We don't engage in any part of the book building. We're just redistributing to our clients. This product has gotten more positive feedback than I've seen any other product at MarketAxess. It's an area of pain for our largest institutional investors. They have struggled with the manual processing around new issue for quite some time. We're able to deliver that through our platform. We have all the clients. We're now adding syndicate desks from our buy-side clients onto our platform. So it's just an exciting new area of growth for us is getting in the middle of that new issue process.

If you look at some of the competitive dynamics, we haven't historically done well in a new issue market, a vibrant new issue market. May is another example. May was the third largest May new issue we've seen in history. So it was a pretty big new issue, $163 billion in new issue. This does a couple of things. One, it puts us into the new issue process. Two, we get the data of new issue faster. Today, we wait several hours for that upload of data for people to trade on our platform. Now with this partnership, we are getting the data at the break. So we'll have the new issue before it even prices and allows for all the different protocols on MarketAxess to be ready to trade that new issue at the time of break.

What's exciting is in August, we're rolling out a new issue trading solution where when you're doing your allocation process, you never get 100% of your allocation. So that trader wants to trade that new issue in the open market. We will have streaming price click-to-trade solution, largely a block solution for new issue come August in front of that client on the same platform. So you'll see revenue associated with new issue trading really coming in the latter parts of the summer. But what's exciting is the rollout happens to client by client with this new issue, this ability to participate directly off of MarketAxess into the syndicate process is all new, and no one else has that.

How much penetration do you think you could see into the new issue market? Because I mean, it does represent a whole another thing that investors now have to think about in the market share world. So like if you're -- I don't know what it was this month 17% in high grade of the non-new issuance market, like where could that market share go in new issues? Is it like...

Yes. I mean our biggest challenge in market share is in a big new issue month. So Q1, if you look at Q1, record quarter for us, but that was just driven by large secondary trading activity and volatility, but market share gains. New issue was robust in Q1. Our opportunity, new issue -- first 3 days of trading of a new issue is our lowest market share. It only goes up after those 3 to 5 days of trading. So there's a huge revenue opportunity for us to just trade the new issue more aggressively. What's great about this product is we'll have eyeballs trading new issue and there'll be live trading, secondary trading. And we plan to offer gray market trading in the fourth quarter as well. So we'll have both gray and live trading of new issue at the break.

Sure. All right. So another thing you mentioned there was this idea of the price war, as you put it. And your stock has come under pressure recently. Your biggest competitor stock has been under pressure. I talked to a lot of investors who -- they want to get interested. They like the names, but some of them feel like they can't get involved until this price war is over. And you're obviously a big driver of that narrative. So from your seat, when do you think this price war will be over? How much more stress do you think there will be on pricing? And what would you say to those investors who are kind of thinking that?

Well, one, there's no price war in our core business. So in the client-to-dealer business, we have maintained price. We've maintained stability of price for some time. There's noise around a price war that really we don't feel at the client level. Where prices -- we see prices being cut is in the dealer-to-dealer space. Now I'll give you a portfolio trading as a perfect example. 3 years ago, there was probably price movement around portfolio trading. All the platforms that have viable portfolio trading solutions set price and haven't changed. We have not changed our portfolio trading pricing for several years. It's been very stable. Now unfortunately, it's at a very low price point relative to our core business. So when we do exceptionally well in portfolio trading like we did in May, average price per million comes down for the platform.

So some people are interpreting what is mix of our business as a price adjustment. It's absolutely wrong. So there is a misunderstanding in the market around how pricing is determined on our platform. In the dealer-to-dealer space, we are saying we're not engaging in the price war anymore. We feel comfortable with our offering. At the end of the day, dealers can use our platform at a reduced price. The liquidity on our platform is a unique offering. Right now, if you look at spreads in the credit market, there's lack of dispersion. We're at the tightest credit spreads we've seen in history. So that liquidity is not valued right now. It's a little bit commoditized.

So when that -- when we see the market spreads move out, that liquidity suddenly becomes a premium. And that savings that you get, we've seen dealers switch to other platforms for small savings of dealer RFQ and then come back because the liquidity was not compelling. The savings on a unique liquidity trade versus a dealer-to-dealer fee, it's immaterial relative to the spread when the spreads matter. So look, I just think we're in the client-to-dealer space. At the end of the day, moving blocks from chat and phone to our platform is our priority. And that's what we're investing in. And excitingly, that's the area of growth that we're seeing on the platform. blocks are moving from chat from phone onto e-trading platforms.

So stepping back for a minute, we have some market makers coming up here later today. Fixed income electronification has been one of the more compelling narratives in the fixed income world and in markets in general over the last decade. How do you think about where we are in the overall electronification journey? And with some of these market makers, alternative liquidity providers coming into the space, how are they changing the structure of the credit markets in which you operate?

So I'm excited what we're seeing in terms of new entry into the credit space. They've all been working on it for some time, all at different stages of growth. I would say the nonbank liquidity provider is -- just continues to grow on our platform. They certainly get the benefit of our distribution. So if you're a nonbank liquidity player and you want to trade with client flow, you come to MarketAxess because we have the largest distribution with clients, and we have an all-to-all market that is like no other. We've onboarded more clients globally than anyone else has -- runs an all-to-all business. So that's the exciting piece for the nonbanks. They all come to us first. What I'm seeing is nonbank liquidity -- now I grew up with these nonbank liquidity providers.

I was one for when -- my years at Virtu. I know their business intimately well. They run one global P&L. That's the excitement. They are trading an ETF, a credit future and an underlying corporate bond and large institutional banks, that's hard for them to do. They're all chasing that model. They just charge smaller spread. Where they get excited where nonbanks do exceptionally well is when spreads gap out, when there's an arbitrage between the ETF, the underlying or the underlying and the credit future. What's exciting to me is credit futures are growing. You see the AUM, you see the use of these products growing. That is just another tool to introduce nonbank liquidity into the credit market. When I look at the overall credit cycle, and I spend a lot of time on this because we are at a ridiculously mature cycle.

If you look at how IG is priced from a spread perspective, people think there is no defaults coming to our market for years to come. So the spread alone is mispriced, and that spread will change. History is very predictive of that. But when that spread changes, I know the nonbanks are going to come in and their models are going to take off. And so we've seen a number of nonbanks in high yield, in particular, struggle because the spread was so tight. The arbitrage between the ETF and the underlying high-yield bond was very tight. As soon as that gaps out, these nonbanks are really, really feel the benefit of their kind of global reach and ability to cross-trade between ETFs, futures and underlying corporate bonds.

Sure. Switching gears, I want to talk about tokenization. I think we talk about credit today. We talk about other aspects of the fixed income market that are still not even electronic, it's still getting done over the phone. So tokenization feels pretty far out for a lot of these things, but it is such a hot topic today. Where do you think tokenization fits into the credit ecosystem? And what potentially could MarketAxess' role be there, if you thought about it?

Sure. I mean tokenization, one, I just want to remind people, we've been talking about tokens and blockchain since '05 in equities. So the fact that we're finally there, we're going to see issuers doing issuing on blockchain is exciting to me. When I look at the credit market, again, I do think moving people from chat and phone to E is probably -- we should do that before we tokenize it, but there's heavily investments in that. There's areas of application that I'm super excited about. One thing I didn't mention on our new issue platform, what's exciting about that is it was designed for public debt. So it's public credit, but we also built it for private. One of the biggest challenges for private credit issuers is the new issue process, the most important part. But that -- so that process that we built out allows for private credit over the same solution that we're delivering public credit over. That's an exciting piece of that product that we're delivering.

I think there's great application for tokenization in things that settle inefficiently. So loans, private credit, those are all areas where there's still paper moving through the system. People are signing documents to trade private credit and loans. And that back office desperately needs efficiency. The area that we have to remind ourselves in public credit, in U.S. credit, in particular, there is something called the ETF underlying arbitrage. It all settles net at our clearinghouse. That net settlement allows for a nonbank or an ETF market maker to be short $1 billion and long $1 billion and never make payment. That is netted and they have no margin. That is a very efficient enterprise that we run. We have reduced the settlement cycle, but that ability, that liquidity that comes from that net process is lost in blockchain or tokenization.

So as long as it doesn't disrupt the liquidity that we see in the market, which is that heavily -- I mean, we are -- we have so many ETFs in our market. We have so many underlying securities going into those ETFs. That is a very important component of liquidity in our market, including the corporate bond market. Remember, our corporate bonds settle and margin at NSCC where the ETFs settle on margin. So that benefit is immense. And people -- they just don't under -- unfortunately, I spent some time in clearing. I don't brag about that. But knowing the clearing platform and how it works, there's huge efficiency, huge leverage in our market delivered by net settlement intraday, which you lose in tokenization.

Yes. Our keynote yesterday was Frank La Salla from DTCC that was a topic that was brought up. I want to ask about capital allocation. The stock has, as I said, been under pressure recently. How are you thinking about capital allocation priorities in that context? And does the current valuation change the calculus between buybacks, organic investment and M&A?

Great question. So obviously, we had launched the ASR back in December. We spent the first quarter. Our priority was pay down of debt. After our first quarter, we announced what that paydown looked like. We had gone -- we actually accelerated that paydown. So we're excited about that level of debt that we were able to pay down after the first quarter. What that affords us is really flexibility when it comes to capital allocation. We obviously like the stock at a higher level back when we launched the ASR. We do look at our investment currently into our platform.

We are rolling out new product with the current investment we've made. So we're now in product delivery mode. This summer is all product delivery mode, and that's what I'm most excited about. So in terms of capital allocation, we have a very cash-generative business. And if you look at the first quarter, even if you look at May, the margin is quite attractive. for a small enterprise like ourselves. So we have fully invested in delivery. It just gives us that more flexibility to use our balance sheet where appropriate. So it's really the change from Q1, which was priority to pay down. Now we are afforded with the flexibility to deploy cash where we see most appropriate.

Sure. And then we'll end on big picture question. You laid out a 3-year growth algorithm within the last 6 or 8 months, 8% to 9% revenue growth, 75 to 125 basis points of margin expansion annually. the stock price is telling us that the market thinks you're not going to hit those targets. So what do you think that investors are most underappreciating about MarketAxess right now? And what are the catalysts to get your business back on track?

Yes, it's a great question. Yes, clearly, when I look at the price of the stock, it's really not believing our targets. And when I look at the targets, our rollout was part of those targets. So the delivery that's coming this summer, the new issue platform that we're rolling out tomorrow was all part of that plan. I remind everyone, we had record earnings, record quarter, record revenue in Q1. We had a slowdown in April with a very large new issuance. So 1 month did redirect the market in the wrong way. The other noise that I hear in the market is this pricing war noise where people are concerned about where pricing is going to end up. fee per million will come down, not because we're cutting fees, but because the protocols that we're delivering come in at lower fee per million. Block trading will be an exciting endeavor for us. We're showing evidence of that block.

The market thinks the blocks are going to stay on chat and phone. If you look at the model, the market is predicting chat and phone is not going away in corporate credit. I think that is a mistaken belief or they're believing that if they do convert, they're at a lower price level. We don't have to change price to get a client to trade a block on our platform. I see 2 very important components coming to market that will change block trading. One is the new issue platform. that trading of new issue is block trading related. Whenever we see new issue pop in a quarter or a month, like we saw in May, block trading ends up being a bigger part of the market on TRACE. So we're attacking the block market at the new issue, which is very exciting. The other piece of our block trading is rolling out next week, where today, traders are forced to commit orders to MarketAxess.

So if you're in your OMS and Aladdin or Charles River, you have to commit that order. Typically, that's a binary decision by the trader. They say, I'm going to just commit what I can -- I know I'm comfortable trading in MarketAxess. That's been one issue that we've had for moving blocks over. We're launching next Friday, actually, what we call indications of interest. It allows the client, the trader on the desk to move a block into MarketAxess while managing that block on their desktop like it never left. And then we will use our -- some of our new technology like our Pragma technology to find a natural match for that block and alert that client. And so they can firm up that order and trade the block. So it allows us to grow our opportunity of blocks. Again, changing how blocks are traded in U.S. credit is going to happen. We're trying to be the first mover there. The investment is all about changing -- getting people off phone and chat. I'm confident that will happen.

All right. Well, I think that's all the time we have. Chris, thanks so much for joining us.

Yes, thanks.

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on May 7, 2026.

I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Good morning, and welcome to the MarketAxess First Quarter 2026 earnings conference call. For the call, Chris Concannon, Chief Executive Officer, will provide you with an update on our strategy and our business; and Ilene Fiszel Biele, Chief Financial Officer, will review our financial results.

Before I turn the call over to Chris, let me remind you that today's call may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain. The company's actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the company's future results, please see the description of risk factors in our annual report on Form 10-K for the year ended December 31, 2025. I would also direct you to read the forward-looking statement disclaimer in our quarterly earnings release, which was issued earlier this morning and is now available on our website.

Now let me turn the call over to Chris.

Good morning, and thank you for joining us to review our very strong financial results for the first quarter 2026. 2026 is all about the execution of our long-term strategy, and that is exactly what we did in the quarter.

Turning to Slide 3. We grew total revenue by 12% to a record $233 million including very strong 20% growth in product areas outside U.S. credit. Record total revenue was underpinned by record total trading ADV, driving record commission revenue. Momentum continued to build with our new initiatives and generated approximately 50% of total incremental revenue in the quarter. Strength on the trading side was complemented by 10% growth in services revenue, helping to drive trailing 12-month free cash flow generation of $316 million.

We continue to be disciplined with our expenses with 8% growth in non-GAAP expenses. And underlying these strong results was the strong progress we made in innovating and growing our franchise. First, we significantly enhanced the MarketAxess advantage by expanding our global network enhancing our differentiated liquidity and fortifying our high-value proprietary data and analytics by expanding the use of AI.

Next, we continued the rollout of our new enhanced X-Pro front end that is changing the client experience. And last, we are continuing to invest in our technology modernization, which includes our recent strategic hire, Will Quan, who joined us as our Chief Technology Officer.

Slide 4 highlights the market access advantage where we are increasingly using AI to leverage our sizable proprietary data set to deliver unique data and analytics to clients to enhance their trading outcomes. Our global network of the largest fixed income investors and the most active fixed income liquidity providers generates deep vertical IP that gives us a significant competitive advantage in generating critical analytics and insights for our clients.

In 2025, our global network generated over $5 trillion in notional inquiry information and over $34 trillion in notional response information, all of which is proprietary to MarketAxess. This unique data set across U.S. credit, emerging markets in Europe gives us a special AI opportunity to interpret the markets in real time to assist in clients' portfolio construction and to deliver a unique and enhanced execution experience. We have already delivered AI-driven data solutions like the award-winning CP+, CP+ for blocks, depth of book, sense AI and AI Dealer Select. We are now exploring the next level of AI-enhanced data products. What is critical to remember is that AI solutions are only as good as the data they are trained on. We have a unique advantage given our global proprietary data set.

Slide 5 provides an update on the macro backdrop of the first quarter and April. Recent geopolitical events drove higher levels of volatility and wider credit spreads in the quarter. The initial jump in volatility and widening of credit spreads was short-lived and credit spreads moved back to historically low levels in April. Open Trading penetration in U.S. high yield increased to 47% in the quarter, the highest level since 2023, reflecting increased demand for differentiated liquidity. Despite these shocks, the market has remained very healthy, with historic levels of new issuance in the first quarter continuing into April.

New issue pricing concessions are up modestly from lows, and deals continue to be approximately 4x oversubscribed, reflecting the very strong focus on new issues. All of these factors generated record results in the quarter but the return to lower volatility, tighter credit spreads and strong new issuance in April, combined with tougher year-over-year comparisons were key drivers of the decline in trading volumes in April.

Slide 6 highlights the shift in segmentation of U.S. high-grade trace market ADV in April, including the strong focus on the new issue calendar, which reduced our estimated market share. We believe there were several factors that reduced our estimated market share in April. First, duplicate reports in TRACE have been increasing over the past some quarters and we estimate that they inflated U.S. high-grade TRACE volumes by up to 8% in April. Adjusting for these duplicates, consistent with FINRA's recent proposal to suppress duplicate reporting, we believe our estimated U.S. high-grade market share would have been approximately 160 basis points higher in April.

Next, April's historically high new issuance further reduced our estimated U.S. high-grade market share in April. We generally have lower levels of market share and new issues during the first 2 weeks of trading. When our clients are very focused on new issues, we believe it can crowd out some of their secondary trading activity on our platform.

In summary, while there was considerable noise in the denominator used to calculate our estimated market share in April, we are now addressing the challenges of the new issue calendar with our new issue trading solution.

Slide 7 summarizes the record levels of trading volume across our credit products and the strong growth in U.S. treasuries. We delivered double-digit growth in ADD across most credit products and U.S. treasuries and double-digit growth in variable transaction revenue. U.S. high-yield liquidity provision by our long-only clients increased almost 80% compared to last year. This increase in unique liquidity is delivering a greatly improved execution experience for our high-yield clients.

Slide 8 highlights the record levels of trading volume and revenue we generated in our emerging markets franchise. Over the trailing 12 months, our EM franchise has generated $20 million in incremental revenue, representing 68% of total credit incremental variable commission revenue. This reflects the success we have had with our investments in the EM business.

In the quarter, we expanded our EM global client network to a record 1,547 active client firms and 3,410 international active client traders. Total trading volumes were up 30% in the first quarter to record levels with record levels across both hard currency and local currency markets and across all regions. We grew our hard currency revenue with high fee per million by 15% and we grew our local markets revenue with lower fee per million by 56%.

Total EM fee per million is down only 4% in part because of the mixed impact of the local markets fee per million which is over 40% lower than the hard currency business. Fee per million is simply an output that reflects the mix of business being executed while we are still focused on maximizing revenue.

Slide 9 and 10 highlight how well we are executing our new initiatives across our three strategic channels, including record levels of credit automation trading model.

On Slide 10, in the client-initiated channel, we continue to make strong progress with block trading globally. We generated 35% growth in ADD to a record $7 billion of block activity across U.S. credit, emerging markets and Eurobonds, with record block trading ADVs across all three products. Importantly, in U.S. high grade in March, dealer algos won 30% of block trades on the platform. In the portfolio trading channel, we generated a 51% increase in total global portfolio trading ADV to a record $1.9 billion.

U.S. credit portfolio trading market share increased by 100 basis points year-over-year. In the dealer-initiated channel, we generated record levels of ADV with record Mid-X ADV as well. And in April, we delivered volumes of $6.7 billion, the second highest level of monthly activity. passed in our automation suite, we had another record quarter as clients continue to leverage automation even in more volatile periods. We saw $144 billion in automation volume helped with a sizable increase in adoption of our [ Adaptive ] Algo solution.

Slide 11 shows the strong growth we have generated in U.S. credit blocks as well as the new protocols and workflow tools we are developing to attack this important segment of the market. We are starting to crack the block market, and now we have expanded the toolkit for clients to trade blocks. We are continuing to invest in block automation and targeted RFQ solutions, but we also recently launched targeted access, and we expect to launch our new issue block trading solution in the second half of 2026.

Now let me turn the call over to Ilene to review our financial performance.

Thank you, Chris. Turning to our results. On Slide 13, we provide a summary of our first quarter financials. We delivered 12% revenue growth to a record $230 million, which included $5 million from our RFQ hub acquisition and a $3 million benefit from foreign currency translation. Growth in revenue outside U.S. credit was 20% in the quarter, reflecting strong contributions from our international product areas. We reported diluted earnings per share of $2.20 or $2.25 per share, excluding notable items, representing an increase of 20%.

The benefit of our enhanced capital return program with the completed $300 million ASR flowed through in the quarter and was the key driver of the $0.12 benefit to EPS on a 6% reduction in share count. The $0.05 per share impact of notable items in the quarter consisted of approximately $1.5 million or $0.03 per share in repositioning charges in our expenses in the employee compensation and benefits line. And approximately $700,000 or $0.02 per share in other legal related notable items in the professional and consulting line.

My comments on our results from this point forward will largely exclude the impact of notable items, only on a non-GAAP basis where applicable. Looking at each of our revenue lines in turn, record total commissions revenue increased $22 million or 12% to $203 million compared to the prior year, 50% or $11 million of the incremental commission revenue in the quarter was driven by emerging markets and eurobonds on record trading volumes in each area.

Other commissions, which include FX, equities, derivatives and ETF activity, increased $5 million or 104% driven by the inclusion of RFQ hub commission revenue and higher trading volumes.

Services revenue increased 10% to a record $30 million. Information Services revenue of a record $14 million increased 12%. Post-trade services revenue of $12 million increased 5% versus the prior year. Technology Services revenue of a record $4 million increased 19%, driven by higher connectivity fees from RFQ Hub. Total other income decreased approximately $5 million, driven by lower interest income on lower rates and increased interest expense related to borrowings for the ASR. For modeling purposes, please note that we received a onetime $3 million tax credit in the other net line, which is nonrecurring. The effective tax rate decreased to 25% from 27%, primarily due to higher tax credits, lower state tax accruals and reduced stock-based compensation shortfall.

Slide 14 highlights our key performance indicators. As you can see from all the green on this slide, it was a very good quarter for us, and these strong KPIs underscores the strong revenue generation in the quarter. The investments that we have made to enhance our products and provide clients with new workflow tools and protocols gain traction and helped drive tangible outcomes in the quarter. While we are pleased with these results, U.S. credit market share continue to require attention and focus.

On Slide 15, we provide more detail on our commission revenue and our fee capture. Record total credit commission revenue of $184 million increased 9% compared to the prior year. These record results were driven by 4% growth in both U.S. high-yield and U.S. high grade. 24% growth in emerging markets and 14% growth in Eurobond's total commission revenue. We are very pleased with the improvements in U.S. credit revenue generation in the quarter relative to recent historical trends. The reduction in total credit fee capture year-over-year was due to protocol and product mix shifts. Partially offset by the higher duration of bonds traded in U.S. high grade. The quarter-over-quarter reduction was due principally to product mix.

On Slide 16, we provide a summary of our operating expenses. Excluding notable items, total expenses increased 8%, which included a headwind of $2 million due to the impact of foreign currency translation. The increase was driven principally by higher employee compensation costs and higher technology and communication costs as we continue to upgrade talent and invest in our technology modernization to drive future growth. We are continuing to invest while maintaining focus on cost discipline and operating efficiency. With our strong revenue generation, combined with our continued cost discipline, operating margin of 44% in the quarter increased almost 200 basis points, reflecting the inherent operating leverage in our model. Head count was 859, down 1% from both 870 in the prior year period and a 869 in the fourth quarter of 2025.

On Slide 17, we provide an update on our capital management and cash flow. Our balance sheet and cash generation continues to be strong with cash, cash equivalents and corporate bond and U.S. treasury investments totaling $537 million as of March 31, 2026, compared to $679 million at the end of 2025. In the quarter, we paid out $52 million in annual incentive compensation. We paid down $63 million in borrowings on the credit facility related to the ASR and we paid out $27 million in dividends.

After the quarter, we paid down an additional $20 million on the credit facility. So the drawn balance was $137 million at the end of April. And while it is not reflected in our cash flow in the quarter, we returned $60 million to investors through share repurchases with the completion of our $300 million ASR in early February. We generated $316 million in free cash flow in the first quarter on a trailing 12-month basis. As of April 30, 2026, $205 million remains on the Board's share repurchase authorization.

Now let me turn the call back to Chris for his closing remarks.

Thanks, Ilene. In summary, on Slide 18, we are continuing to execute our long-term strategy. We significantly enhanced the MarketAxess advantage in the quarter. The growth profile of the company outside U.S. credit is strong, and we are pleased that we delivered higher levels of revenue growth in U.S. credit in the quarter. We continue to make strong progress with our new initiatives across our three strategic channels, including our new issue trading solution.

We are increasingly leveraging AI to unlock more value from our proprietary data and analytics for our clients. And we are continuing to focus on expense discipline and optimizing capital deployment to maximize long-term shareholder value creation.

Now we'd be happy to open the line for your questions.

[Operator Instructions] Your first question comes from the line of Chris Allen of KBW.

Your next question comes from the line of Dan Fannon of Jefferies.

Another really strong quarter out of your non-U.S. business. I wanted to talk about competition there and what you're doing to kind of maintain your moats or defend your -- defend that as competition picks up and kind of -- and also just talk more broadly about the momentum in that business as you think about your bonds as well as the app.

Obviously, we're quite excited about the progress in our international business and just to clarify our international business really are driven through our emerging market business as well as our Eurobond business. And so that's quite a strong quarter, not just in our U.S. credit business, but obviously, in our international business, emerging markets had record ADV, record volume in Q1, up 30%. And really records across our key initiatives, the block initiative is where we've seen a lot of progress across EM and Eurobond business.

Our block business -- block volume in the euro markets in the EM markets was up 46%, and we also saw block volume up in the Eurobond business as well a record up 45%. So we're really driving those two international businesses both with traditional RFQ, where we're seeing a record volume in Q1, but also our key initiatives. Portfolio trading we saw in Eurobond market, up 90% and the dealer business as well, we had a record dealer business in the Eurobond business up 73%.

So when you think about our key initiatives, block trading, the dealer initiative and our PT or portfolio trading initiative, they all experienced growth across our international businesses. And really, that's been the strategy for just over a year and attacking the key, what I call, flank of the key RFQ businesses using the new products and new protocols that give us extended growth.

With regard to the EM business, we obviously have very little competition on the electronic trading side other than we see Bloomberg. Bloomberg is probably the only one in that space that we see as a competitor. In Eurobond business, it's obviously a Bloomberg and Tradeweb that we see as competition in the space. But largely, in the dealer-to-client business, our key franchise, we only see Bloomberg in that space really making a difference at all.

So altogether, the international business saw a record quarter, record volumes, and it was really driven by the growth of our key initiatives. Again, block trading. We've launched all the block trading tools across EM and Eurobonds. Our portfolio trading tools have been rolled out across EM and Eurobonds. And then our dealer initiated, that's where we've seen the biggest pickup using our Mid-X trading solution across Europe and recently launched in emerging markets as well.

Your next question comes from the line of Chris Allen with KBW.

Sorry about the tech issues. I wanted to dig a little bit deeper on the April commentary. I recognize the year-over-year headwinds were pretty material. But when you look at April relative to the first quarter months, we saw lower issuance and block activity that we can kind of track. So say, expectations, especially in U.S. investment grade or for stable to up share. Anything you could point to when you comp it versus the 1Q months besides tighter spreads, lower volatility that impacted share -- and more importantly, anything -- any catalysts ahead that could allow you to outperform the environment over the next few months or quarters?

Great. I'm glad we have you back, Chris. First, let me start. Just to put April in perspective, I really want to -- the set up is Q1, just as we step into April. I think it's important to take a quick look at Q1 because Q1 was really indicative of the progress we were making as we rounded out the end of 2025. Again, our key initiatives, the trends are quite consistent going through Q1.

We grew block trading, as I mentioned, on the international business, but really in U.S., we saw block trading growing. We saw growing portfolio trading as well and then growing our dealer business as well. So those key initiatives across the quarter continued on trends that we were seeing as we ended 2025. We also obviously not only had a record quarter but we really -- we closed out the month of March with smashing records.

And these -- we broke records across all products from U.S. credit to the international products even to equities and FX. And then at the end of March, we smashed our single-day trading record on the last day of March as we went into April. So all signs of phenomenal activity on the platform across all of our key channels and all of our key protocols throughout the quarter and as well as the month of March.

As April started, we walked in right into a holiday week, if you recall, both religious holidays and the European holiday fell in that first week. And then right around April 8 was when we saw the seats fire announced given the geopolitical activity that we were experiencing in the month of March. We saw the VIX drop from plus 25 down to around 17 quite rapidly. So obviously, a quick slowdown in volatility.

No, it's not unusual to see a month following what I'll call, excessive volatility, high turnover to have a material slowdown. And that's really what we saw in April, somewhat influenced by holidays, really, the slowdown that we saw in April was largely across all products. So it wasn't just U.S. credit that we saw the slowdown. Markets saw a slowdown across international products as well as treasuries or rates globally. So it was a consistent theme across the market.

The other thing we noticed in April was a return to near historic spread tightening. Again, we saw this in -- certainly in January and February. So that was broken in March with the volatility. The other thing we saw was near record-breaking new issuance return, while March was record-breaking, April was the new issuance market in April was the second highest new issuance market for any April if you had April in 2025, it would have been the second highest new issue in all of 2025.

So quite a robust new issue market. And really, that's what we really tried to show on the slides in our opening remarks was the market was largely turned its attention to that new issue market. Our clients, the client dealer side of the business certainly moved its attention to new issue particularly new issue blocks. We saw the new issue block market grow by 34% year-over-year in quite a heightened April market environment. It grew as high as 13% of the total block market. So it was a sizable percentage of the overall block market in April.

And really, what we saw with clients moving all of their training attention coming off of the high volatility and high turnover of March, they moved all their attention to that new issue market. We saw a lot of what we call switches or swaps, where clients were trading the seasoned -- exchanging seasoned bonds of the same issuer for that new issue bonds. You typically would do that in block form directly with the dealer. So when we look at April, really not at all surprised or concerned with that 1-month slowdown. We've always said 1 month does not make the year, but we were also faced with what we call fairly robust new issue market.

Now here's some good news and so some of the trends that you were asking about. We did see on month end, April 30, it was our fourth largest single-day trading record in history. So we did see a return of high activity at the month end. We also broke some high-yield PTs during the month of April. So we saw it was a high-yield PT record month for us. And then as you mentioned, it was obviously a very difficult comparison to April 2025 where we had -- we were dealing with the tariff tantrum and volatility and quite high turnover during April of 2025.

The good news is also in May, while we're certainly early in May, we have seen a return to higher levels of activity, which is quite exciting across all channels. And then my most exciting piece, and we put it in the opening remarks is that we are addressing that new issue market. We have historically saw challenges during around new issue. We are addressing that new issue market with the launch of our direct books partnership, which we announced recently. And we are excitingly launching our new issue solution in -- as a pilot form in the month of May, near the end of May. So we're excited that we are finally addressing the new issue market head on. And we have a new product coming to market that we're quite excited about.

Your next question comes from the line of Michael Cyprys, Morgan Stanley.

I was hoping to dig in on the new issue trading solution that you're going to be bringing to the marketplace. I was hoping you could elaborate on how that is going to work. Key milestones that you're looking for, how you anticipate that contributing? And then maybe you could also touch upon the closing auction, just an update there in terms of traction and milestones as you look ahead, how you see that progressing and contributing.

Great. Thanks. Well, we're quite excited about our partnership with DirectBooks and what that brings to the market. If you look at the new issue market in 2026, it's over $800 billion has been run through the new issue market year-to-date. Current forecasts are close to $2 billion -- or sorry, $2 trillion of new issue in 2026. So we're expecting a pretty vibrant new issue market in 2026.

For quite a long time, clients have been asking us to assist in the new issue market, particularly streamlining an integrated solution in that new shoe market. What we've really partnered with DirectBooks on is what's a great new issue solution. It's a brand-new offering that we'll be rolling out again in pilot form at the end of May. We've ring-fenced the solution. So it's a separate solution to traditional MarketAxess, all new UI, new technology.

What's clear is that we're not part of the offering, just to be clear, we are really just providing clients with a streamlined access to DirectBooks services. All clients have access to this seamless kind of access to this integrated offering and clients have to opt into the offering. So it's not just available to anyone. Clients actually have to opt in and dealers have to approve each client for each offering. So it's well integrated into how the new issue market operates today.

It does provide first part of the partnership with DirectBooks is largely around data sharing. So we are able to present to our clients have real-time access to the DirectBooks new issue calendar, status updates on new issue pricing information around that new issue and then ultimately, final pricing and final allocations. Our clients -- what's exciting for clients is within their current credit application, MarketAxess UI Clients can submit indications of interest to each deal being operated by the syndicate banks. Those indications of interest go direct to DirectBooks and really made available for the syndicate banks to run their normal deal process.

We are able to receive confirmation of final allocations and coming in August, those allocations will be subject to really a seamless booking and straight-through processing to the client's back office, something clients have long complained about and asked for assistance in. So we can really be involved in the new issue process from start to finish. It also allows us to present a great deal of information around of the new issue market prior to the new issue pricing but more importantly, at pricing and after pricing.

What's really exciting is what comes later in August and the second half of 2026, where we will be presenting clients with really after the break of a new issue, a streamlined single 2-way pricing a single click to trade solution for new issue trading. And this is an area that we have spent a lot of time on looking at what is the right protocol to attack the new issue market, but that where we see challenges around market share, it's right after the break of the new issue, and now we'll be able to have an offering in the second half rolled out.

That allows us to trade directly on the break using access from dealers, streaming price and a click-to-trade solution. So super focused on that new issue trading. And again, it's piloting the partnership with DirectBooks pilots starts to pilot with one or one clients at the end of the day and we'll roll out during the month of May, June and the rest of the summer. The demand and the feedback from clients that have seen the solution and looked through the steps of the solution have been overwhelmingly positive.

And obviously, the dealer community was quite supportive given their partnership and direct ownership of DirectBooks. So a very important partnership, a very exciting partnership and obviously, a very big step for MarketAxess to crack that new issue market, but also presenting clients with a solution that is quite seamless and quite simple for them to use in an aggregate way.

And on the closing auction, any update there?

Right. Sorry about that. On closing auction, again, we launched this late in the quarter -- about fourth quarter of 2025, really around December. Quite a great deal of excitement from some very large investor clients around bringing to market a new protocol where we can organize and aggregate liquidity at a single moment in time.

As you look at the fixed income market, it's unlike most markets, liquidity in most markets, equities, futures options is what we call use shaped. Liquidity start of day is quite strong and you get increased liquidity at the end of day as well, a natural U-shaped curve of liquidity. Fixed income, we tend to see high levels of liquidity in the morning. And as the day progresses, levels of liquidity start to decrease near and around the end of the day, just given the risk of holding positions.

This is designed to allow both clients and dealers to participate in a single auction where they can -- dealers can provide a sizable liquidity at different price points and clients can find liquidity in and around the close of the trading day. While we launched it at the end of the year, Unfortunately, during the quarter, with all the volatility, we made progress with clients in how to use the close, how to use the auction. We rolled out new order types. We've seen staged in our platform over $11 billion in auction orders. And then we saw submitted over $7 billion in notional orders into the auction.

While the trading volume is still light, we've seen -- we continue to see about 12 active very large buy-side clients and then four active dealers participating in the auction as well. So more to come on the auction is a novel protocol that we've delivered into the market. But there's a huge and overwhelming application for an end-of-day liquidity solution, and that's really from the client feedback that we've heard that have engaged in the auction.

Your next question comes from the line of Simon Clinch of Rothchild & Co Redburn.

I was wondering if you could expand on the success of your new initiatives in European and international markets. And just how to think about I guess the application of those in U.S. markets and what the differences are? It looks like the speed of the uptake there has been hugely positive in the international markets. But we just don't see the same level of penetration, at least initially in the U.S. So I was wondering if you could talk to that, please.

Sure. Number one, I think you have to look at where those markets, the international markets sit with regard to electronification. EM, in particular, still, we see, again, the notional volume of the total market is not clear. It's hard to estimate. But we do estimate we're still in early innings of electronification of the EM market.

So much of our penetration in the market is organic growth of penetrating new clients, adopting electronic trading.

The good news is we're using multiple protocols to engage those clients because each market -- each local market, in particular, is quite different in terms of the protocols that they gravitate to. But overall, the international market still has a great deal of growth given low levels of penetration. The good news about the different protocols that we're seeing expand on portfolio trading in EM, it's still early days relative to what we see in U.S. credit.

So we think there's a lot more runway in portfolio trading. And we would expect to see more and more what we call global portfolio trades coming to market where you are trading not just the EM bond but across U.S. and European bonds as well. And we're set up and designed to allow for global portfolio trading. Where we're most excited, and we've seen a great deal of growth is our block trading solutions.

We first launched our targeted RFQ into the EM markets. We thought it had great application given some of the local markets are truly rates markets. Our block trading in Q1 in EM smash records, it was up 46% year-over-year. It was up 11% quarter-over-quarter. So we're seeing organic -- a true organic growth of the block market really starting in the EM market.

And that's, again, where we launched it first. The dealer business as well, remember, there's quite a sizable interdealer business or a dealer-to-dealer business in not only the Eurobond market and the U.S. credit market, but also in the interdealer market for emerging markets. That market for us was up 15%, largely driven by our dealer RFQ offering.

So again, early innings on electronification of the EM market we're using, as I mentioned, the different key protocols that we've launched across all our markets. They're just -- I think the block market is most reflective of the success we're having in that EM market. And then there's one other protocol that we've had a great deal of success and it's been driving some of that block market share, and that's instead of request -- for request for market where you're really able to show more size from the client you don't reveal your direction. So clients are much more comfortable trading blocks in a request for market.

And that protocol has been growing consistently year-over-year and quarter-over-quarter. So a number of different protocols, but really, we're just seeing some of the early launch protocols like our box solution growing really outpacing some of the growth in EM than we see in other products.

And just -- when I think about the U.S. application of these initiatives then. I mean if I look at the share gains you had sort of last year on a trading 4-quarter basis, it really sort of accelerated across all the initiatives. And then it's really started to segment income down. I just wondered what's the color around that? I mean is this -- do we just need to wait for these new products to be launched to gain more traction again? Or has there been something else at play here?

Sure. Well, one, I think if you look at the first quarter, and our record volume across U.S. credit. It was driven by some of these new initiatives. So our block trading activity high grade. We saw a record up 31%. And then our PT volume was also up 35%. So some of the protocols that we've seen success in our international markets, and we've launched here in the U.S. While it's still early days in that protocol and the breadth of that protocol being adopted by clients, we're still seeing heightened growth across those protocols.

I think the one protocol that was newly launched in the U.S. is Mid-X. Mid-X is our dealer solution. It was launched earlier in Europe and EM. But we have been seeing growth in Mid-X and U.S. credit. Year-to-date, it's traded over $16 billion in volume, and we're seeing high participations from dealers. We have over unique dealers participating on a regular basis and a number of traders as well. And certainly, that's the one protocol that's still, I'd say, early days in U.S. credit.

Just one other thing I would add is, you'll recall that in the fourth quarter, we talked about the significant amount of activity we were seeing in portfolio trading in high-yield. In the first quarter, that also continued with our PP high-yield ADV up about 78%. So we are seeing, as Chris said, some of these same protocols that are doing quite well in the international markets, taking hold here as well. And there's -- obviously, we're looking to see more to come.

Your next question comes from the line of Alex Blostein of Golden Sachs.

This is actually Aditya filling in for Alex this morning. So Chris, we heard you in the prepared remarks on how you look to leverage AI to deliver unique data and analytics. Could you just help expand that a bit more on the opportunities that you see? What's reachable, the next steps from your -- and I guess, importantly, how would this create a structural advantage for market access that competitors cannot replicate.

Great. Great question. And obviously, an area that we've been spending a lot of time on. I think everybody has been spending a lot of time on. This is one that I'm super excited really for our position in the market when it comes to data. And there's really three reasons why I'm so excited about the data opportunity.

One, we have the best source data in fixed income. When you think about the breadth of our product the protocols that we use, RFQ is a phenomenal source of data because you have both the inquiry from clients around the planet as well as the response from both dealers, alternative dealers, hedge funds and clients now. So the data source that we have is the raw data and very important. The other key ingredient is we have not sold what I call the good data. We have sold things like CP+. We have sold Access All. There's really good data underlying the platform. And we've been for now several years on these calls saying we will not sell all our data. It's too important to the execution solutions that we are building.

The other reason why I'm excited is because we also protect the data that we sold. We have very tight restrictions, derived right restrictions as well as AI use restrictions on the data sources that we are selling. So we feel like we're in a very good position to take advantage of the footprint of data we have. So also the other opportunity that we have is we've been investing heavily in AI when it comes to our date for a number of years. It's not a new topic for us when it comes to data and data products.

So within the use of AI to produce data or produce product, I'll be more clear. We have AI-derived real-time data called CP+. We've had it for quite a number of years. It is now across all products. and certainly well regarded in the market, certainly viewed as real-time benchmark for trading U.S. credit, and we've been getting awards with that product as well. We are now able to predict using AI real-time block pricing based on your direction, sell or buy.

We are predicting using AI liquidity levels in the market. We were also using AI, leveraging AI to predict what we call counterparty selection or dealer selection as well. And then obviously, one of my favorite use of AI is being able to predict when it is advantageous to provide liquidity. This is a very important component. It's one of the drivers behind our algo solution, which is the theory that clients who have historically crossed spread for most of their fixed income experience may present with the opportunity to avoid crossing spread. And we are now leveraging AI to actually help with predicting when is that beneficial for you to have patience and wait.

So again, AI from a product and execution solution is really what's the most exciting part of our day. We are also, just to be clear, piloting a new AI solution with some of our clients. And the areas of exploration that's super exciting for us is, first, AI-derived real-time market intelligence. As I mentioned, our market footprint is quite broad.

So we see the markets from the start of APAC through the trading hours of Europe into the U.S. hours, and we were able to leverage AI to look at the market intelligence know what kind of direction certain sectors are experiencing volumes, volatility, spread volatility, all of the market intelligence can be derived leveraging AI sitting on top of our -- quite broad source data.

The second area of exploration where we have dabbled already is what we call portfolio optimization. Given the market intelligence that we have, given the levels of liquidity that we see in the market, AI is a wonderful tool in interpreting selection of underlying bonds when building a portfolio. And then the last area of exploration is really -- and one that we hear from our clients the most is leveraging AI to help us suggest protocols. There are times when a portfolio trade is an optimal way to trade a list of bonds. There's times when going direct to a single dealer for a large block is the right protocol for that bond.

So using AI to actually suggest protocol selection is a key ingredient to some of the areas of exploration.

Now the other area of AI, I think, which is store exciting for us, it's certainly in the way we're leveraging AI in our technology footprint. If you look at MarketAxess for the first 20 years of our history, there's probably a large underinvestment in modern tech. We have been, over the last number of years, making sizable tech modernization investment and we've been doing that both organically and inorganically. If you recall, our acquisition of Pragma was really a tech modernization acquisition. We are now leveraging that technology and things like auctions and and our automation suite.

What AI is doing for us today is what's most exciting. We're now accelerating that tech modernization, including our core trading stack. We're currently actively engaged in AI solutions that can look at refactoring our legacy code. This is an exciting component that a number of people have deployed in the market space that we're in, where they can refactor legacy code. We're also seeing AI can increase our time to market on new capabilities and new functionality. So we're expanding our use of AI across our engineering footprint.

All our developers have access to all the latest and top models and that is slowly having an impact on how fast we move.

As I mentioned in my opening remarks, we brought in our CTO, Will Quan, he has both cloud and AI experience. So that alone has accelerated our deployment of AI, and it's quite exciting. UI design is another area where we see AI development accelerating what clients can have in front of their desktop and how quickly we can turn around those UI designs.

The last point on AI, I'll make, and it's really around the M&A space that I foresee. I think AI is going to change the M&A landscape. Most of my career was -- I was involved in M&A that was -- you typically would see sizable tax synergies in M&A and some M&A was really designed either. I either had acquisitions that we were doing that were tech accretive, where technology synergies were one of the drivers of the M&A or I had companies that were acquired because of tax synergies where, again, technology synergies were a big component in the synergy analysis of the acquisition. AI is effectively reducing the value of tech synergies when it comes to M&A.

AI has the ability to, in a faster way, refactor, older technology. So it's really changing the math of deals when you actually look at what AI is capable of making some deals less attractive because they're less synergy accretive. And that's an important thing. The other important thing is really to recognize and think about the MarketAxess over 25 years of sales effort and network effect. AI does not sell and distribute services. AI can't build client networks, it can't do KYC onboarding, but they can do KYC work, but it does not onboard thousands of clients.

It doesn't take clients to dinner, and it doesn't make source data. So what really becomes valuable in this world of AI when it comes to M&A is companies that have golden source data and companies that have broad networks. And I do think AI, not only is it changing our product set, but it's also changing how fast we can deliver product. And ultimately, it changes the value of the data that we sit on and are mining today.

So sorry for the long-winded answer, but it's really reflective of the excitement that we have and the advantages that AI give us.

There are no further questions at this time. With that, I will now turn the call back over to Chris Concannon for final closing remarks. Please go ahead.

Great. Thanks a lot. Thanks for joining us today, and thanks for listening to my long-winded answer on AI. We're excited to talk to you in the next quarter to give you an update on the progress we're making. Thank you.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

Hello, everyone. Thanks for coming. I'm Alex Kramm, senior research analyst at UBS covering the exchanges and business services companies. Delighted to have for the first time on stage with me, I think, although actually last year, you were on stage as well.

I was very new though.

You were very new at the time. Now that you've been there for a year, we're excited to have Ilene Fiszel Bieler here, CFO of MarketAxess. I guess we can just jump right in.

I'd like to start fairly high level to frame the discussion. A lot of initiatives for 2026. You just had earnings on Friday, and you certainly talked about some of them. But a lot of those are continue to be focused on gaining or regaining share in U.S. credit. I know you're doing a few other things, too, we'll get to that later. But can you give us a sense how your new growth initiatives are progressing? Where you see the biggest promise? And yes, where you think we can go from a revenue and earnings perspective when it -- if you're successful?

Sure. And first, thanks for having me. Yes, it's a great question because it has been where, as you know, we have spent such a significant amount of our time on the new initiatives, particularly over the course of the last year. And I know that you and everyone know that we put out recently at the end of last year, 3-year targets with revenue growth rates of 8% to 9% on average over the 3-year time period annually. And then also, we put out margin targets. And as you can imagine, all of our new initiatives are geared towards making those a reality, right? And there's been quite a lot that we've done in the planning process there.

But in terms of the initiatives themselves and what's important to your question and how we think about it. In 2025, we obviously put out quite a number of new initiatives. And I'm going to talk to you about them really in the channels because that's probably the best way to think about it because our goal is to have our new initiatives to roll out so that they can scale globally across high grade, high yield, EM, EU, et cetera. But we're looking at them also through the horizontals and through the channels.

Now before I even kind of get into that, I would mention that, obviously, X-Pro, our new front end is a key contributor to the success of what we're trying to do. And we're continuing to enhance X-Pro continuing to roll it out across the different markets. So with that as a baseline, you've heard Chris talk about this for a long time. But within the Client-Initiated, probably our most exciting protocol and what we've been working towards is blocks.

And we just last year rolled out targeted RFQ for blocks. It started in the EU in Eurobonds and EM. And then later on, we piloted it in U.S., and there's still more to go there. But if there's one thing that I would say we've spent quite a bit of time, energy, investment in, it is definitely our block protocol and continuing to really take advantage of the opportunity there.

If you think about the credit markets and the electronification of the markets, we know that a significant, particularly in the U.S., which to your point and what you asked in your question, of what is not yet electronified really is blocks. So as you can imagine, there's an enormous amount of TAM there that we're looking at. So that's one of the new initiatives, more to come there.

Portfolio trading, maybe not so new anymore, but still for us, last year, I think, was the year where you really saw us kind of get our PT protocol to a place where we and our clients and everyone is quite pleased with it. Again, there will always be more enhancements and things that we're doing, but that was a big push in 2025 as well.

And then finally, in the dealer space, this is probably one of the things that we are very, very excited about, which is what we've been doing in the dealer-initiated space. And you saw that at the end of the year last year, we rolled out our Mid-X solution.

And so there's a lot that I just said. But if you think about it, it's -- we're really looking to do -- there's a number of smaller things, but those are some of the bigger ones that I would focus on.

Well, good thing that I have all those 3 in my next question. No, let's unpack some of these a little bit, starting with blocks. So -- and you said it yourself, very large untapped market for you. So can you see -- can you talk about what you've seen so far? I mean you mentioned yourself, EM and Eurobonds, some early success there, but the U.S. still seems to be a little bit behind. So I would be really interested to see what exactly you're seeing out there in terms of client behavior, what are people really doing? And then what is the trajectory to really get the U.S. going?

So getting the U.S. going in general, just across the board is obviously a key focus for us. We know that our U.S. credit business was relatively flat last year. We need to reignite growth there. And this is definitely one of the ways that we intend to do that. If you think about blocks, let's just sort of look at it from where are we going and where have we been most recently in 2025 when we've started to roll out our additional protocols there.

And if you look at our ADV in blocks last year, it was up 24%. That's pretty significant. And then let's take it in turn across the markets, right? We saw -- even in the U.S., where we don't have targeted really rolled out, we still are working on getting the content there, and I'll talk about that in a moment. We still saw 18% increase in ADV in blocks in the U.S. We saw a 27% increase in EM and 66% in Eurobonds. So clearly, this is making a difference, right? There's a there there.

And I think what we have found is that traders do want to trade blocks electronically. They do want to make sure, however, that there is no information leakage, right? That's always been one of the things that we've needed to help get our hands around, help them get their heads around and have the right protocols in place to achieve that. And we think with targeted RFQ as well as just what we're doing otherwise in blocks that we're getting people to see that. And I think the numbers tell you that. So that's a key component of what we're doing for our block strategy.

Now why has it worked so well in EU and EM? I think a big part of that is because we have the Axe content. We have the really good long-standing relationship with the dealers there, where we were able to get the content ahead of time, and that's been an ongoing journey for us. We're getting there in the U.S. There is more to do, which is why we still think of that as in the more piloted stage. But I look at that as an opportunity knowing what we know about the TAM there. And also having the proof points of how well it's been working in the other markets also is really -- it's a good way to think about it and what the opportunities are.

Okay. Very good. Moving on to portfolio trading. I'm going one by one here.

I am going to get comfortable.

It seems like that business is -- I think last year, kind of moved into equilibrium. So -- and also the percentage of trades has been kind of range bound, so has your share. So anything to note what you're doing there, anything to get that share higher? But then also, do you still think PT will be a bigger part of the market over time?

So I think that what you've seen from us with PT actually has been growth in terms of share and has been growth in terms of what we're doing. We needed to get the protocol to the place where it is competitive, right? And last year, we saw PT share in the U.S. of about 19%. Now that was a 270 basis point increase for us year-over-year. And then the back half of the year, I don't know you might have seen this in our earnings materials, but in high yield, for instance, the back half of the year in PT, we saw really significant share growth there of about 800 basis points.

You're right, though, for sure, in terms of it being range bound. And I know we heard others who said it was going to be quite a bit higher. There was all sorts of -- before my time, lots of prognosis and forecasting and things like that. But what we've really seen, particularly in high grade in PT is this range bound between, call it, 10% to 12%, sometimes 9% in there. So definitely meaningful, absolutely meaningful. But I don't know that it's at the levels where you may have heard people talking about in the past.

What has been interesting to us, though, is high yield. We have seen increases in PT usage and high yield, and I don't know that folks would have thought about that in the beginning. We've seen that as high as 15% last October in terms of share and 13%. So we are seeing meaningful opportunity for us in PT there.

Now of course, I'm sure you've heard me say this before, we're happy to be there. We want to be where our clients are. We want to make sure that our protocol is as good, if not better, than any in the market. It's not a big revenue opportunity for us, right? So it's important to share. It's important to our clients. For all those reasons, we're obviously going to make sure we continue to enhance it and invest in. And we have the most amazing salesperson who has sort of leads the charge on it. And she's done an incredible job as we've continued to really upgrade and enhance the protocol itself. But I would just keep that in mind as you think about it.

Fair enough. And then again, I think the third thing you mentioned is dealer-initiated trades. You mentioned Mid-X already and some of the success there. So maybe elaborate on that a little bit, but then also what other things on the dealer side are you working on? And yes, what's next?

Yes. So our dealer RSQ business in general has been growing and building, and we're very pleased to see that, obviously. Mid-X is very exciting. So Mid-X for us, we only launched it at the end of last year in the U.S. And we weren't even doing it daily, right? We were doing a couple of times a week, let's say. It's only really within the last month that we've even been doing daily sessions, and it's still only one session a day. And so in January, we saw about $3.2 billion come through in volume. And if you consider that we were sort of nowhere, that's a pretty good ramp-up. And we're very pleased.

We've heard a lot of positive feedback from the dealers themselves. They like the protocol. They like that they think that it's streamlined. They like that it's a one-step process for them. They feel that it actually does help to contain information leakage within it. They're able to anonymously exit their exhaust, right? If you think about it all day long, we've got the dealers coming in, whether it be through PTs or through RFQs where we have them coming into trades.

We never had something to help them get out of trades. And so now we're helping them offload their risk at the end of -- at the time of the mid-matching session. And so it's really something that has allowed us to also improve our relationship with the dealers, which has been very important to us. And again, we're very pleased with what we're seeing. We expect that we'll go to more than one session per day as part of the plan. And so it's really a good, good early launch.

Good. One thing you didn't mention at the beginning because I have to have something here is the new auction protocol you just launched. I mean, I think it's supposed to be open, close, I think right now is close only. I actually, from the buy side perspective, I heard some positive feedback seems -- and I'm sure you have some thoughts there. On the dealer side, maybe not so much support, but we'll see how that builds. So yes, how do we think about this opportunity? And how quickly do you think this can ramp?

I think what's very exciting about the closing auction is, first of all, it is the heart of what -- how MarketAxess was built. It's innovation. It's changing market structure. And it is a protocol that we put in place with -- in collaboration with the buy side and the sell side. So it was years in the making. That wasn't something that happened overnight. And I think it will be multiple years in the future as it continues to get understood and adopted, right? This is not something that happens overnight.

I wouldn't think of it as a big revenue driver, for instance, in 2026. However, we -- when we do new protocols, whether they be big, whether they be small, we do client forums. We had a client forum for this one that we had over 400 traders join. It was the largest amount of any forum attended that we've seen. And that tells you how much interest there is in the protocol. So I think it's early days. I think it's exciting that MarketAxess has gone back to that kind of innovation and that kind of leadership. And we're just going to continue to work with our clients on both the buy side and the sell side as it develops.

Okay. Maybe -- I don't know if it's call finishing up, but the one thing we haven't talked about is actually what historically you've been best at, which is the traditional RFQ, Open Trading, maybe even mostly focused on smaller trade sizes. So you've had a very dominant position there for a long time, but it does seem like the competitors are looking at that as well. So just -- I feel like people don't ask about this enough. Like what is happening in that part of the business? And how do you really defend your territory there?

I think we have to take a step back and think about how the market structure in fixed income has changed, right? So way before I arrived here being new to the space, let's call it, 7 years or so ago, we've done the research. You had about 80% of the market was Client-Initiated, which is our RFQ bread and butter, so to speak, and about 20% was dealer, let's say. That looks more like 58% now Client-Initiated, 10% to 12%, let's use the midpoint and say, 11% for PT and 30%, 31% for dealer. That's a very different composition on how trading is being done.

And for MarketAxess, we've only recently -- we just talked about in the beginning of this conversation, all of the initiatives and protocols that we rolled out within Client-Initiated blocks, obviously, PT itself and then within dealer, all very new and incremental for us for sure. So we are really looking to make sure that we are expanding our playing field. We needed to do that. It's not where we are at, but we have now, and we're getting very, very good feedback on all of that.

Having said that, we are still the -- have the deepest and most differentiated liquidity in RFQ and all-to-all. That is still an enormous area of strength for us, and you can just see that by the volumes that you're seeing come through. I've been hearing sort of, oh, electronification, what's happening with -- electronification has the pace slowed, right? You hear about that.

But what I think people sometimes are also missing is the amount of volume that we're seeing in the system and what has happened to the credit market since we've electronified, at least parts of it, you're talking about 65% increases in the market itself. So there is a lot more TAM to go for. And we still -- particularly now if we really start to get into what we were able to provide in terms of our unique data and how that helps our clients and what we see on our platform for RFQ and for all-to-all, we are still obviously very, very pleased with that part of our business as well.

Okay. All right. So moving on. Since most of these questions have been focused on the U.S. market and kind of recapturing share there. But I think one of the things that often has gotten lost is the strength in the non-U.S. businesses, which I think over the last few years have grown 15%. I think you talked about your new targets at the beginning of this conversation. And I think a considerable amount of growth is supposed to come from the non-U.S. business.

And actually, when I look at our model, and this is not by design. This is just continuing some of these recent trends. Most of the growth that we're expecting is also coming from non-U.S. businesses. So maybe starting with the biggest area, and I actually asked about this on the earnings call already, which is emerging markets, very dominant position, long runway, big TAM, but clearly, others are also looking at that space and are talking about it. So just give us a little bit of a lay of the land of an increasingly bigger part of your business, which is EM.

You're 100% right in terms of the growth. So when we think about our 3-year plans, and I have said this that about -- we expect 20% of the incremental growth in year 1 to come from U.S. And by year 3, we expect that to be 35%. So by definition, that means much of the growth is coming outside of it.

And EM is clearly an enormous opportunity, all the things that you've laid out and what you've said. And it is a franchise that we are just super proud of for a whole host of reasons. The protocols in EM that we just talked about and others are all working really well, right? So we saw, for instance, blocks in EM last year, we saw ADV up 27% in EM. EM also saw now on a smaller base, but 172% increase in portfolio trading, 33% increases in dealer.

I mean the amount of continuous volumes that we are seeing through the EM platform is very significant. Now if there's not a great denominator on EM, right? We have no trace type there. You'd have to scrape every central bank website and then you'd have to try to figure out the ins and outs of what all the trades meant. And believe me, we've tried to do all of this, and we have lots of models and algorithms that help us get to our assumptions. But if what we call 10% electronified, there's clearly -- and it may be a little more, maybe a little less, but there's clearly an enormous amount of opportunity in emerging markets.

We have the protocol within the Client-Initiated channel in EM that my EM team will tell you is a bit of a jewel, and it's called request for market. And it's really well regarded because our clients can go in and they can request, but they're not telling you which side of the trade they're on. So they're not giving anything away. This goes and plays very, very well in the EM market, right? It's now -- we still have a very strong all-to-all in RFQ and everything else, but this is also a really great protocol that has taken off in EM.

And if you think about where we are and what makes us different in EM, there's hard currency, right? So that's where you're -- you've got corporates and sovereigns that are trading basically in USD or other reserve type currencies. But then you also have local. And the local market currencies are really like sovereigns, local sovereigns, right?

And for folks who have worked in the emerging markets before, you know that you really have to be there, right? There's different regulatory schemes. You have to partner with the local schemes, with the local regulatory bodies, you have to make sure that you have the right relationships on the ground. It is, to a certain extent, a boots on the ground endeavor.

And we have been -- our liquidity in Argentina, in Mexico, in Brazil, that doesn't just happen overnight, right? We've been in these countries and some of them for quite some time. And in Asia Pacific as well, right, we've also been in a number of those countries as well. And so that kind of network effect, whether it be the network effect of the Singapore trader who is doing hard currency EM trading throughout Asia or the local person in Mexico, right, doing local. That for us is where we have our advantage, quite frankly. And that is very difficult to replicate.

We also have incredible client relationships. I mean I can go on and on, but I would -- I just -- I love this business. So I would just say we think that the opportunity continues to be enormous. The teams are super excited in EM about all the opportunity ahead, and our protocols are really resonating there. So it's a great business for us.

Staying on the global side, going quickly into Eurobonds. I feel like not another business that doesn't get a lot of attention. it is already much more mature and competitive, I would say. So again, any important initiatives there? Anything we should be expecting or anything from a macro perspective that you're watching? Again, it seems to be a more mature business, but you've done fairly well in that recently.

Yes. It's really interesting because it is sort of at the other end of the spectrum from EM. And yet, you're right, we've done very well there. If you think about the liquidity, it's a fractured liquidity market in some ways in that there are 26 different jurisdictions, so to speak, and it's not like a monolith U.S. type of an environment for fixed income. And our protocols really help there. And really across the board, we have been successful in Eurobonds. And whether that be, again, whether it be in RFQ in all-to-all, portfolio trading has done well there. Mid-X has done extremely well there, and it has been for quite some time in terms of they were earlier out the gate.

So we have -- the way that the market is structured, our protocols and what we offer, it just fits the market very, very well. They have best execution needs. We're able to help solve for those. So it's really -- we put things out into the market in the EU. In fact, in Europe, we will often pilot and test things because I would just remind you that we are looking to scale. So when we build our technology now when we enhance our technology, we are trying to do it so that it is efficiently across all of the different products. And the EU market is often a place where we test things out first.

Okay. Interesting. Moving on, and this is really across the whole business. I know automation and AI is a big topic for you and AI, in particular, is a big topic at this conference. I think every fireside I've hosted so far, AI was definitely a question or two. So any particular projects you would highlight? Any benefits you may be already seeing from some of the things you've been doing and anything we should be expecting or getting excited about?

Sure. Let's start with automation, and then we'll move to AI. So automation is -- for us, we have kind of classic automation that is our Auto-X protocol, which you're able to use across RFQ, across all-to-all. And it has been successful for us and it continues to grow, and we put KPIs out all the time on it every quarter, you can see what's happening with Auto-X.

And what we really like to see with automation is that it is a very sticky protocol. Now it's obviously very good for small tickets. We've been pleasantly seeing also some big tickets that are going through. We highlighted a client not that long ago who has been using automation for their trades, call it, above $2 million, and they have increased significantly to where now they're doing something like 54% through automation protocols, right? So that's -- and that's just classic automation.

Now remember, we bought Pragma and they are known for their algos, and that technology is really top notch. And so the next generation for us of automation is really going to be through the algos, and we have a suite there that we're doing. We are also looking to integrate it into X-Pro. And so for those who are ready for next-generation algos for automation, we're going to be ready, too. And that's a place we've been investing. We're very much looking forward to seeing that. But again, we already have Auto-X out there doing quite nicely.

And it's just really sticky business because we -- it allows our clients to do things more efficiently. It's a cost savings for them. So it just really embeds us in the trading fabric of what they're doing. So automation is a great opportunity area for us.

AI, how much time do we have?

We have a few minutes.

So on AI. So I think before we get into like the real heart of what you're asking for me for at MarketAxess specifically, we've all seen what's been happening lately with AI in terms of the enormous needs for data centers, for the hardware for just -- it's just such a boom right now. And obviously, a lot of that is being financed through the debt capital markets. So that's also going to be something -- I know it's not the question you asked, but I think we have to frame it appropriately in what that means for the debt markets, right, which is obviously more issuance, which...

I do cover the rating agency.

There you got it.

I'm watching it closely.

There you go. Okay. So you know exactly what I'm talking about. And so that's just one thing that is obviously going to be helpful for us from a credit trading perspective down the road.

But we look at AI and we put it into 2 buckets, really. There's what we call corporate AI and commercial AI. So corporate AI is what we can do internally to be more efficient and other things. And commercial AI is what we can monetize.

Now interestingly, MarketAxess actually spent time first on commercial AI. I think most firms spent time first on corporate AI or whatever they call it. We like to try to keep things as simple as we can with how we categorize things. So let's just look at CP+, for instance, right? It is an AI-driven pricing algorithm -- I guess protocol is probably not the right answer there, but product is probably a better way to say it. And that is something that, honestly, no one else can get. You can't get our raw data. We are not monetizing "raw data." We're monetizing the outputs of that data that can only be found on our platform.

So just to give you a sense, we, in 2025, saw $5.3 trillion inquiries on our platform. And in 2024, that was $4.7 trillion. That is the type of information that just -- you can't get it unless you're us, right? And so we can then turn that into useful information for our clients. And that's how we're monetizing the AI there, and CP+ is just one example of that.

We're also looking at doing -- there's a variety of different things we think we can do with AI. Right now, one of the exciting things we're working on is called AI Select, where we're using AI to be able to help our clients, particularly in the block space, understand who has what axes, where are they -- where is trading at what price, at what levels, what's going on in terms of where they really can find the best dealer. It's part of something we have called Smart Dealer Select or it will be. And that's another example of where AI is just becoming part of what we do for our clients. So we've actually been using AI for a while, and we're going to continue to accelerate it. And that's from a commercial standpoint, very exciting for us.

Now on the corporate side, there are things that we're doing in terms of coding, AI, we've only just begun there. Testing, we've only just begun there, continuous streamlining of our workflows with AI. We're actually calling it AI everywhere. And so from an internal perspective. So there's quite a bit more to be done, both on the commercial side as well as for us on the internal corporate side. And I mean, if you talk to me about this in a couple of months, I'll probably be even more excited with even more to tell you, but there's really a lot that we have underway.

Excellent. Moving on to another company-wide topic that always gets a lot of attention, which is pricing. There are a lot of moving pieces here. So maybe remind us where those different businesses are sitting. And then as you're successful, some of these new initiatives, they're coming with different pricing trends. So certainly, there's a lot of mix there, and you talk about this basically every month when you release your quarterly updates.

But look, I think people are also very focused and concerned about like-for-like pricing pressure. There are some aggressive competitors out there, and it's not just anecdotes, right? So maybe talk about what you're seeing on that end and where you feel like you actually need to respond once in a while.

So first thing I think is we need to come up with a way to simplify this for everybody because I understand why it comes up all the time. And so I'm going to -- it's not going to be a 1-minute sound bite, but I'm going to talk you through it and how we think about it and how we look at it just because I do think it's important.

To the answer part of your question, one of the things I would just say in terms of how pricing works is we've got pricing that goes against the verticals, so high grade, high yield, EM, EU, et cetera, and then the horizontal. So whether it be Client-Initiated RFQ and all-to-all automation, whether it be PT or dealer, right? So you have to think about this as like a checkerboard in terms of how it all works together in a matrix.

Now only high grade is the one that uses the duration component of the pricing. The rest are all price based. They're not converting spread, right? It's just price-based protocols for the other asset classes. So I would just put that out there. And if we kind of -- I'll start with PT because what has really happened is in our regular way traditional RFQ, we have seen steady pricing. And we've looked at it. I looked back over the last few years, maybe a little bit here and there, like $0.50 there, $1 here that you've seen some move in different quarters and different things happening largely probably because of what's happening with the duration trade or other things. But for the most part, the fee cards have not changed and the traditional RFQ pricing has been quite steady.

What has changed is when you hear us talk about mix and protocol mix, which you just brought up. And again, I think this goes back to what I was saying before, which is that if the market has changed significantly and we want to be protocol agnostic, and we need to be there for where our clients are trading, certain things in that protocol mix are going to come in at different pricing points, right?

So we know PT is I'm going to start with this. I'm going to go backwards waterfall, so to speak. So we know that PT comes in at the lowest revenue opportunity for us and the tightest pricing and everything else. And that's fine. That's not new news. Everybody knows that, and that's PT.

I think next, you think of dealer. And it is obviously very competitive in terms of the pricing in dealer, but it's also a place that we just haven't been. So for us, that's what's the opportunity for us incrementally from a revenue perspective, and that's how we look at that. Remember, we put out revenue targets, right? And so there's a lot of different ways to get to those revenue targets. And if dealer comes in at a price that's better than PT, but like perhaps not as high as blocks, that's okay. Like we -- it's incremental for us. That's the goal.

The next piece then as I go up the waterfall is blocks. Now blocks, it's not like there's this separate special blocks pricing. It's just within the way blocks price because of the volume themselves of the trades. You're going to get a trade price that's going to be on a fee that's a bit lower than our RFQ, let's say, but not maybe where the dealer is and obviously not where PT is. And so I'm working my way up now.

And so we also have automation and automation is something that is premium priced. It is sticky. Now it's premium in that, it is sticky and that is often smaller tickets, and therefore, you're going to get something more akin to the RFQ pricing through automation.

And so you kind of have to think about waterfall, right? There's fee per million pricing for all of the verticals in high grade is the only one where there's a duration component, which can give you upside when the weighted average years to maturity is greater out on the platform or when the yields come in. And then there's just the different protocols, and it's the mix of that, that drives the overall fee per million.

Fair enough. All right. A couple of questions here to -- that I think I'm really getting into the CFO part now. You just had earnings on Friday. And of course, with that came your section on the expense guidance. So maybe just remind us about the outlook for 2026. But then also really give us a little bit more flavor where all this money is actually going. What are the biggest investment areas and so forth.

And then really on the other side, because you still need to look at the top line, obviously, when it comes to margin expansion, which I believe is partially also in your multiyear targets, how do you think about delivering margin expansion when the environment doesn't give you what you had hoped for?

Yes. So to start, we put out expense guidance of sort of, call it, midpoint 8% over the $499 million that we had on an ex notables basis at the end of last year. So it was $530 million to $545 million basically is the expense guide. And then we also gave out some services guide in mid-single digits, right? So you saw all of that.

In terms of your question on, yes, we do have margin targets as part of the 3-year. And as I said numerous times when we announced them, and we said it again on the call, and it's very consistent, these are averages over time, not linear, right? And that margin expansion averages over time, 75 to 125 basis points and some years will be a little bit lower, maybe some higher, et cetera, and that's very consistent with what we've said.

Having said that, I think what you saw us do last year, which we haven't spent that much time on, but which I think is noting is we've probably for the first time in a while for MarketAxess really self-funded our investments, right? We went and did an efficiency exercise where we were able to save $17 million and self-fund $16 million of investments. So we did that through vendor management. We did that through some of the repositioning that we've done as a firm and really some role eliminations now that things are -- we're changing the way we're doing things to a certain extent. We really have just become much more efficient as an organization. And that kind of discipline is now in the DNA, I'm happy to say.

Having said that, we were also very clear in the plans that we're going to be investing through 2027 to hit our revenue growth goals over the medium term. And so to your question on where are we investing, we're investing, obviously, in many of the protocols that I just talked to you about, there's still so much to be done in terms of rollout. We're continuing to invest in our algo suite. We're continuing to invest in emerging markets. We're continuing to invest really in our enhancement of our X-Pro front end.

So everything we're doing really from an investment perspective is to fund the -- what we see and that our clients are asking for in terms of really making sure that our protocols are where they need to be. So it's a pretty exciting time for us because we feel like we have a vision and a road map for the next 3 years of where we see that investment, and it's all really based on driving revenue growth.

Okay. Very good. Final question that I had prepared. Capital allocation, got to finish there. What are your latest thoughts here? Buybacks, which you've stepped up and did a big ASR here recently. And then outside of that, M&A, you've done a couple of things, probably a little bit more nichey, but it seems like they've been helpful like Pragma, for example. But so yes, where do you feel like there may be other opportunities to strengthen the business inorganically?

So I think you've said it right, and I think you've seen in the last 1.5 years or so that we have significantly stepped up the capital return profile of the firm, right? The ASR, obviously, $300 million ASR. We also did last year, $120 million, just sort of regular way buybacks and then another, call it, $114 million in dividends. And so you probably saw we just announced also a little bit of an increase to the dividend as well at $0.78 per share.

So capital return is very important to us. But the first thing is the investments that we're making in the business, right? So we think of the use of our capital as what are we doing to drive growth, right? Blocks, we've been talking a lot about. There's obviously been a lot of investment there. And so inorganic sort of is kind of at the end of that capital allocation trajectory, I would say. So we start with organic investment. You've seen us do that. We talked a little bit just now about how we expect to continue to do that.

But capital return to shareholders has been also extremely important, and that's what you saw. We did the ASR. We are such a cash-generative model. And with the 3-year plan that we have, it just gave us that much more confidence in doing the ASR and really to be able to return capital, understanding what the road ahead is the expectations are.

And then finally, on M&A, to your point, if you've been watching the space for a long time, which I know you have, there's not a ton out there in terms of sort of credit market or adjacent type acquisitions. But we're always looking. We're going to do anything we would do on that front is going to have a very high bar in terms of accretion, really making sure that what we're doing is in the best interest of the business and our shareholders going forward and obviously, our clients.

And so we always have our eyes open to see if there are things that make sense that are going to help us to propel and execute on our model. But again, I would put it in the waterfall of organic investment, returning capital to shareholders and then M&A if it really fits the model and really furthers the strategy.

Excellent. I'm looking at the clock. I think we did perfect.

I didn't know.

I know. If there are any super quick questions in the room, we'll take it. Otherwise, I'll probably have to wrap given that there's only less than a minute left. All right. Why don't we just wrap it here. Thank you very much, Ilene.

Thank you.

Ladies and gentlemen, thank you for standing by, and welcome to the MarketAxess Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on February 6, 2026.

I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Good morning, and welcome to the MarketAxess Fourth Quarter and Full Year 2025 Earnings Conference Call. For the call, Chris Concannon, Chief Executive Officer, will provide you with an update on our strategy and our business; and Ilene Fiszel Bieler, Chief Financial Officer, will review our financial results.

Before I turn the call over to Chris, let me remind you that today's call may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain. The company's actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the company's future results, please see the description of Risk Factors in our annual report on Form 10-K for the year ended December 31, 2024. I would also direct you to read the forward-looking statement disclaimer in our quarterly earnings release, which was issued earlier this morning and is now available on our website.

Now let me turn the call over to Chris.

Good morning, and thank you for joining us to review our fourth quarter and full year 2025 financial results. We are pleased with the progress we achieved in delivering new protocols and functionality in 2025 and excited about our prospects and plans for 2026.

First, we enhanced the market access advantage in 2025 by expanding our global network, enhancing our differentiated liquidity and strengthening our deep proprietary data and analytics. These key components of the market access advantage are further complemented by our investment in multi-protocol solutions for the buy side and for the sell side. We made significant progress in 2025, delivering and growing protocols across our 3 channels: portfolio trading protocols, block trading protocols, dealer matching protocols, automation protocols and our closing auction protocol.

Next, we have a clear and achievable technology and product road map that positions us to achieve our 3-year targets that we announced in December. In 2025, we delivered critical protocols and workflow tools that will help achieve the first year's milestones. Now 2026 is about execution and building on the momentum we had as we exited 2025.

Turning to our financial results on Slide 3. In 2025, we generated record revenue of $846 million, including strong 10% growth in product areas outside U.S. credit. Record total revenue was underpinned by record total ADV, driving record commission revenue, combined with record services revenue helping to drive record annual free cash flow generation of $347 million.

Momentum continued to build with our new initiatives last year. We exited 2025 with a 29% increase in block trading ADV, including record block trading ADV in emerging markets, 28% estimated market share in U.S. high yield portfolio trading and over $3 billion in trading volume in our new dealer initiative protocol, Mid-X.

We continue to be disciplined with our expense management with 5% growth in non-GAAP expenses in 2025. We have returned a total of $474 million to investors through $360 million of share repurchases and $114 million in dividends. In addition to establishing our 3-year plan, we announced an enhanced capital return plan of $400 million, including a $300 million ASR. We just completed the ASR earlier this week with the final delivery of 360,000 shares. Through the completion of the ASR, we have now retired 1.7 million shares to date.

In summary, I'm encouraged by the significant product deliveries that we made in 2025 and the progress we achieved across our strategic channels, portfolio trading, dealer-initiated and block trading. The investments that we are making to help drive higher levels of revenue and market share growth in U.S. credit are beginning to show some progress.

I just wanted to provide some context for our January trading volume statistics that we released yesterday. In January, we generated record total credit ADV driven by strong growth across all credit product areas with record ADV in our emerging markets business, up 50%. Strong market volumes, combined with the continued momentum in our new initiatives, helped drive strong growth in our total credit preliminary variable commission revenue. Estimated market share in U.S. high grade was lower than we would have liked, but it was negatively impacted by a 92% increase in new issue block activity. While this has a temporary impact on share, it is good for overall market volumes and turnover growth over time. U.S. high-grade turnover increased 95% in January, levels we have not seen since approximately 2011.

Before moving to the next slide, I wanted to welcome 2 new members to our Board of Directors, Doug Cifu and Ken Schiciano, who will be joining our Board as of March 1. Doug brings deep fintech market structure and regulatory expertise from a major global market maker, and Ken has 3 decades of experience in fintech and private equity. Both will be integral to the Board and me as we continue to execute our long-term strategy.

Slides 4 and 5 really drive home how well we have enhanced the market access advantage in 2025. Most of the KPIs on Slide 4 show healthy growth rates reflecting the underlying health of our franchise. This shows that the investments we have made to enhance our products and provide clients with new workflow tools and protocols are paying off. While we are pleased with these results, U.S. credit market share continues to require attention and focus. The good news is we have a detailed plan to address it, which is embedded in our 3-year targets.

Slides 6 and 7 highlight how well we are executing on our new initiatives across our 3 strategic channels, including strong growth continuing in our automation suite.

On Slide 7, in the client-initiated channel, we continue to make progress with block trading globally. Our block solutions continue to grow in U.S. credit, emerging markets and Eurobonds, proving that blocks will move from phone to platform. We also recently launched a new [ X ] trading solution for dealers to send access directly to specific clients. The rollout is in progress and the client feedback has been positive.

We generated 24% growth in ADV to a record $5 billion of block activity across U.S. credit, emerging markets and Eurobonds, with record block trading ADV across all 3 products. Our U.S. credit ADV record was driven by record block trading ADV in U.S. high grade of over $2 billion, which represented an 18% increase. Our ADV record in U.S. high yield of over $800 million in block trading represented an increase of 19%. This strong growth continued in January with a 56% increase in block trading ADV last month. Block trading in U.S. credit, emerging markets and Eurobond now makes up about 1/3 of our credit ADV and represents the next step in the growth of electronic trading.

In the Portfolio Trading Channel, we generated a 48% increase in total global portfolio trading ADV to a record $1.4 billion, with record U.S. credit ADV and market share. U.S. credit portfolio trading market share increased by 270 basis points in 2025. In January 2026, total portfolio trading ADV was up 126% and market share in U.S. credit portfolio trading increased by 620 basis points.

In the Dealer-Initiated Channel, we generated a 33% increase in dealer-initiated ADV for the year and we exited 2025 with a strong contribution from our new U.S. credit Mid-X protocol with over $3 billion in trading volume in December alone. Again, this strong growth continued into January with a 13% increase in our dealer-initiated ADV. Total Mid-X trading volume was a record $7 billion, representing an increase of 83%.

Last, in the automation suite, we had another strong year as clients continue to leverage automation, enabling them to do more with less. Additionally, we were very pleased to see a significant increase in Adaptive Auto-X algo trading volume in the fourth quarter. Several key clients adopted more customized adaptive algo workflows to increase execution performance and generated over $8 billion in trading volume in the fourth quarter.

I'm also happy to report that our Pragma acquisition, which is powering our recent algo success, is fully accretive while also adding strategic value across our matching and automation technology modernization, including driving growth in our rates complex.

Slide 8 shows the strong growth of our new initiatives with our top 25 clients. Our top 25 clients have been driving our growth in portfolio trading with an 85% increase in PT volume coming from the top 25. While our top 25 clients have been leveraging our platform for portfolio trading, they've also been leveraging our automation suite for block trading. Automated block trading volume from our top 25 is up over 125%. And not surprisingly, given the benefits of X-Pro in managing RFQ and portfolio trades with our rich proprietary free trade analytics and data, trading volume through X-Pro is also up 80%.

Slide 9 highlights the increase in market share in U.S. high yield portfolio trading in the second half of 2025 as a result of several enhancements we made last year. The enhancements allow clients to better evaluate the pricing they receive for their high-yield portfolios. While this chart highlights the dramatic increase in estimated U.S. high-yield PT market share, we have also seen our traditional RFQ high-yield market share increased by approximately 100 basis points in the second half of 2025.

Slide 10 highlights the increase in the long-term e-trading opportunity that we have seen in just the last several years. This is a point worth emphasizing that I believe many market followers have been missing, particularly with our recent growth in blocks. While total electronification percentage rates may have plateaued in U.S. credit over the last year, the U.S. high-grade market overall has increased by approximately 52% and U.S. high yield has grown by approximately 28%. We believe that we are well positioned to capture this expanding e-trading opportunity as a result of the new initiatives that we have in the market right now as well as the ones we plan to deliver in 2026. This is why we feel good about our position and our ability to return to higher levels of revenue growth in the coming quarters.

Now let me turn the call over to Ilene to review our financial performance.

Thank you, Chris. Turning to our results on Slide 12, we provide a summary of our fourth quarter financials. We delivered 3.5% revenue growth to $209 million, which includes a $2 million benefit from foreign currency translation. We reported diluted earnings per share of $2.51 or $1.68 per share, excluding notable items. The net $0.83 per share impact of notable items in the quarter consisted of approximately $1 million or $0.02 per share in repositioning charges in our expenses in the employee compensation and benefits line and $31 million or $0.85 per share for reserve release related to the tax-related reserve we established in the first quarter of 2025.

My comments on our results from this point forward will largely exclude the impact of notable items and will be on a non-GAAP basis were applicable.

Looking at each of our revenue lines in turn. Total commissions revenue increased 4% to $181 million compared to the prior year. Services revenue increased 2% to $28 million. Information Services revenue of $13 million increased 2%. Post-trade services revenue of $11 million increased 1% versus the prior year. Technology services revenue of $4 million increased 2%, driven by higher license fees as well as connectivity fees from RFQ Hub. Total other income decreased approximately $1 million, driven by lower investment income on lower rates and increased interest expense related to borrowings for the ASR, partially offset by unrealized investment gains in the quarter. The effective tax rate was a negative 15.8% or positive 23.4% excluding the impact of the tax-related notable I referenced earlier.

On Slide 13, we provide more detail on our commission revenue and our fee capture. Total credit commission revenue of $165 million increased 2% compared to the prior year. 4% growth in U.S. high yield, 6% growth in emerging markets and 9% growth in Eurobonds, total commission revenue was partially offset by a 1% decline in U.S. high grade and a 14% decline in municipals. We were very pleased with the improvement in U.S. high-yield revenue generation at the end of 2025. The reduction in total credit fee capture both year-over-year and quarter-over-quarter was principally due to protocol mix, partially offset by the higher duration of bonds traded in U.S. high grade.

On Slide 14, we provide a summary of our operating expenses. Excluding notable items, total expenses increased 8%, which included a headwind of $1 million due to the impact of foreign currency translation. The increase was driven principally by higher consulting, technology and communications and employee compensation costs as we continue to invest in our technology modernization and upgrade talent to drive future growth. We are continuing to invest, while at the same time, looking for cost efficiencies. Headcount was 869, down 2% from 891 in the prior year period and down 3% from the third quarter of 2025.

On Slide 15, we provide an update on our capital management and cash flow. Our balance sheet continues to be strong, with cash, cash equivalents and corporate bond and U.S. treasury investments totaling $679 million as of December 31, 2025. We generated a record $347 million in free cash flow in 2025 and we returned a total of $474 million to investors through share repurchase and dividends during the year. We repurchased 2 million shares for a total of $360 million in 2025, including 595,000 shares in open market repurchases for $120 million and approximately 1.4 million shares for $240 million with the commencement of our $300 million ASR in December of last year. I'm pleased to report that we just completed the ASR earlier this week with the final delivery of an additional 360,000 shares, bringing the total shares repurchased through the ASR to $1.7 million. As of January 31, 2026, $205 million remains on the Board's share repurchase authorization.

On Slide 16 is our full year 2026 guidance. Before I move to guidance for 2026, please note that for 2025, total revenue outside of U.S. credit grew 10% and U.S. credit revenue decreased 2%. Now in terms of guidance for 2026. Total services revenue, which includes information, post trade and technology services is expected to grow in the mid-single-digit percent in 2026. We expect total expenses ex notables to be in the range of $530 million to $545 million. This would imply a growth rate of approximately 8% to the midpoint of the 2026 range. This includes the full year effect of 2025 hires, deflationary increases as well as tech investments and higher variable costs. A note on our full year 2026 expense guidance relative to our average annual operating margin expansion target. As I have stated previously, our 3-year average annual target of 8% to 9% revenue growth and operating margin expansion of 75 to 125 basis points are exactly that, averages over 3 years.

Turning to taxes. We expect that the effective tax rate will be in the range of 24% to 26%. Capital expenditures are expected in the range of $65 million to $75 million, of which roughly 80% relates to capitalized software development costs for investments we are making in new protocols and trading platform enhancements.

Now let me turn the call back to Chris for his closing comments.

Thanks, Ilene. In summary, on Slide 17, we are continuing to execute our long-term strategy. We have significantly enhanced the market access advantage with our investments over the last several years. The growth profile of the company outside U.S. credit is strong, and we are confident in our ability to return to higher levels of revenue growth in U.S. credit with our 3-year financial targets. We continue to make strong progress with our new initiatives across our 3 strategic channels. We are confident in our ability to execute in 2026 and we are continuing to focus on expense discipline and optimizing capital deployment to maximize long-term shareholder value.

Now we'd be happy to open the line for your questions.

[Operator Instructions] Our first question will come from the line of Patrick Moley with Piper Sandler.

Yes. I wanted to ask about block trading. Chris, you noted in your prepared remarks the strength you've seen there, up 24% last year and then up 56% year-over-year in January. So could you break down the strength that you're seeing there, where it's coming from and the different ways that you're attacking that market? Just trying to get a better sense for what's going on behind the scenes there?

Sure. And thanks, Patrick, for that question. Obviously, we've been investing in our key initiatives, all our new initiatives, portfolio trading, dealer initiatives and then blocks as part of the larger initiatives. We're seeing returns across all 3, so it's quite exciting. The block volumes that we're seeing are quite substantial. So I'll just run through some of the stats and then get back to your question around where we're seeing blocks come through the platform.

First of all, in 2025, you heard in my prepared remarks, we've seen growth of block trading on the platform and IG of 18% and high yield of 19%. And then key areas where we first started to deploy our block protocols, EM is up 27% and euros up a staggering 66%. So we -- the good news is the block opportunity is there and the tools we're deploying are increasing our share of blocks on the market.

Again, Q4, as you mentioned, a 24% increase, a total of $5 billion in block volume across the platform. And then here in January, still increasing our overall block volume. I'm happy to report 1/3 of our credit volume is now in blocks during the month of January. And -- in January, high-grade was up 33%, high-yield up 42% and EM up 92% and with euros up 89%. So all sizable growth numbers across the block platform. We have a number of protocols that are seeing block volume pass through it. Obviously, the data is a key ingredient to our success in block. We are now able to price blocks based on their size and their direction, and that's a key feature that clients are asking us more and more about -- our targeted RFQ, which was launched in EM and euros, is where we're seeing the strongest growth rates in our block growth rates.

And then we are seeing traditional RFQ, all to all RFQ, we are seeing blocks come through the platform there. Just the liquidity levels are quite high. The market impact of sharing your block with all participants is quite reduced. And then the other areas -- other exciting areas that we're seeing block content is in our automation solution. We're seeing very large institutional investors increased their size of block activity through automation. So there's no human involved. It's just a large block going through our Auto-X platform.

And then we're seeing blocks in our algo suite, which is really designed for block solutions, and we're seeing a pickup in blocks there. We've also seen block size in our newly launched Mid-X solution which was just launched in the fourth quarter of last year. And then we're seeing block sizes come through our newly launched auctions, closing auction platform there. That is designed for block side as well. So we have a number of protocols, some specifically designed to compete with IV, chat and phone and others where we're just seeing an increase in an appetite for putting blocks over the platform.

The other piece of the market that we're seeing higher levels of block was around new issue. So the block market in the new issue market in January increased quite substantially. So in order to move the overall trade volumes that we're seeing, while PT is an important protocol to put exposure on and off, we're seeing higher levels of block activity across the market and trying to address that activity.

Our next question will come from the line of Jeff Schmitt with William Blair.

The average fee rate in credit has obviously been sliding for the last few years and really just from a shift in the protocol mix. Can you maybe talk about if there's competitive pricing pressures driving that as well? And what type of decline are you assuming in the fee rate in your medium-term revenue growth outlook?

Yes. Great question. Again, there's a lot of parts that impact our fee per million, just to go through some of them. So the product mix, as you mentioned, can impact our fee per million. Obviously, protocol selection will definitely impact our fee per million. Maturity -- average maturity impacts our fee per million. And then things like spread and volatility have an indirect impact on our fee per million. So a lot of moving parts around fee per million.

We've seen some of the largest adjustments in fee per million through the protocol and product mix. A perfect example is move to portfolio trading that comes in at a much lower fee per million. But again, it's -- we're all about growing our incremental revenue and much of the new initiatives that may come in at a lower fee per million are obviously growing revenue -- incremental revenue.

The areas that we have seen fee per million impact -- one area, in particular, we just talked about the growth in block volume. In January, our growth in block volume does impact our fee per million but it has a net benefit to our revenue. I'll just kind of walk you through an example so you can understand the implications of doing more volumes by block. If we trade a $50,000 order, which is quite a small-sized order on MarketAxess, we'll incrementally make $17 on that trade, but that comes in at a $350 fee per million. A $5 million block trade, we'll make $700 on that same transaction, but that comes in at a fee per million of $140 million.

So you can see that as we grow these new protocols and grow incremental volume, it will have impacts on our fee per million calculation, and that's an important factor because we are growing all of these new initiatives, portfolio trading, block volume and obviously, automation and our dealer initiative is growing as well. All of those can have an impact on fee per million.

I'll turn it over to Ilene to round out the questions.

Yes. Let me just give a little bit of context also to support what Chris is saying. So if you think about the month-over-month January declined to $1.32 from $1.37, for instance, in fee per million. As you noted, it's volume mix shift largely into lower fee capture products, as Chris just discussed, but to put some more texture around it. We had a very strong month in Eurobonds with ADV up 74%, and we know Eurobonds come in at a lower capture. But we expect this, right? That's a good thing. We want to continue to see that business growing.

And then also, obviously, with high-grade blocks, that ADV was up 82% on a month-over-month basis. And it really goes to what Chris was talking about before on the question on block. Now there was a little bit of offset. There wasn't a huge change in the weighted average years to maturity month-over-month. It went from about 9.47% to 9.49%. So there was a little bit of offset in terms of high-grade duration there. But by and large, you can see these trends and that this is not new. This is what we've been talking about in terms of both product and protocol shift.

Let me get back to you also on your medium-term target question as I understand where that's coming from. I think it's important to take a step back when you think about the medium-term targets. And you've heard me say this before, I said it in my prepared remarks, right? We know that the 8% to 9% average growth is just that average, and there could be some variability on phasing in over the course of the 3 years.

Having said that, you may recall that we're being pretty clear that this is really about revenue growth and the way that we are expecting to achieve that. We think that in the first year, U.S. credit will be about 20% of the total incremental revenue growth for the company and then by the end of our 3-year plan, we think that's going to be about 35% of incremental growth expected to come from U.S. credit.

Now we've also have our services business, and you heard that guide today in terms of in the aggregate mid-single digits for 2026. And we haven't included assumptions for increases in velocity for instance, in these 3-year targets -- in our 3-year plan. And while I'm not going to give you specific of fees per million, I can confirm that we have not baked in any fee per million accretion. Our objective, really importantly, and we keep talking about this, but just to bring it back, is that we really are looking at our ways, the levers we can use to drive revenue growth. And Chris talked a lot about those initiatives, and I'm sure we're happy to go into it further, but I just wanted to get back to you on that point.

Our next question will come from the line of Alex Kramm with UBS.

Can you give us a quick update on emerging markets? It seems like that's one of the biggest standout success stories for you here over the last few years. I know it's still very underpenetrated market. So maybe define really what the road map is, what are you excited about maybe in 2026? Then look, obviously, others are watching you. So just wondering if you see any sort of shift in competitive dynamics if you're running into other people a little bit more or if this is still kind of a large market for you to capture?

Thanks, Alex. And obviously, emerging markets is an exciting area for us. We're obviously -- just to size the market, it's similar inside the U.S. credit when you talk about the global emerging market and you have 2 types of markets, both sovereign as well as corporate local as well as hard currency. So it's quite a diverse market. The nice thing about that market, it is a diverse dealer market as well. It's not what I would call top heavy. So having a diversity of dealer communities, both in the local markets and the global dealer community, is a key ingredient to the liquidity that we see over the platform.

And as you mentioned, our EM, our emerging market growth has been quite attractive over the last couple of years. It continues into January. We saw our EM growth continue into January. Our market ADV in EM just for January was over $5 billion, which was a record and up 50% year-over-year, up 56% month-over-month. So you just can see that trend line is quite positive.

In terms of the competitive landscape, we're not seeing -- we're competing dramatically with chat and phone in the EM market, it is not a well-penetrated electronic market. I think we try to estimate the electronic penetration in EM is somewhere under 10% and growing. So we see that as a huge market opportunity for us. You do need people on the ground in the local markets. So it is an investment in sales, and investment in regional offices. And that -- those investments we have made for quite some time with folks in Latin America, teams in APAC and across other areas of the globe. So exciting -- a great deal of -- and we mentioned earlier the block volume growth. We're seeing block volume in EM as well, helping us drive that growth. As we mentioned earlier, that was up 92% in January and up 70% month-over-month as well, setting a new record in blocks.

So a lot of exciting things to come, and we're obviously very focused on a protocol solutions in EM. That's one area where not only do we have an all-to-all RFQ but we have a RFM as well, which is helping to drive some of our block volume growth both in the local market as well as in the hard currency market.

Our next question will come from the line of Alex Blostein with Goldman Sachs.

I wanted to go back to your comment around revenues outside of U.S. credit growing. I think you said 10% in 2025. [indiscernible], and I know there's a lot of things that go in there. Obviously, there is some trading businesses like non-U.S., but also there's [indiscernible] revenues within there as well. I think at the slide deck at our conference in December, you talked about that being, I think, like a mid-teen percent grower over time. So maybe talk a little bit about what has driven sort of the slower growth last year? And how do you think about the growth in that non-U.S. trading part of the business on a multiyear basis as part of your overall revenue growth [indiscernible]?

Thanks for the question, Alex. So yes, of course, I know the slide you're talking about and keeping in mind that was a CAGR over 5 years, right? And so -- if you think about -- let's just take your services point to start and look at the full year 2025, right? Our services revenue there was about 6% this year and we are guiding to, for 2026, mid-single-digit growth there as well. And so I think that all fits. And then you would expect to see higher revenue growth in our trading businesses outside of U.S. credit. So this algorithm still fits, and it still is exactly as we said, if you think about the 8% to 9% average annual over time with the phase-in and variability.

And I would just say that there are different levers, right? If you think about this plan, there's obviously the volume levers. And while we don't control volume, needless to say, in the marketplace, we know that the electronification has definitely increased velocity, and Chris has certainly talked about it in the past. And if you even look at turnover in January, Alex, that was 95%. And we also -- again, while we don't control volume, we also went back and we did an analysis over time, and we looked at volumes. And only time in the last -- since 2014, for instance, since volumes have contracted in this market really was in that one post-COVID year, and we all know what 2020 was like.

So we're continuing -- the important thing for us, though, in terms of driving more velocity and driving turnover, is making sure we have the protocols in place the initiatives in place that's really going to enhance for our clients what they need. We want to be there to have the solutions there. And that goes to the market share component of the algorithm, right? When we really are looking at market share, we're looking at it as what can we do to make sure that we are protocol-agnostic, and Chris has talked a lot about that.

And so if you think about all of these things together, that is really what's driving the 3-year plan. A lot of it is really based on just sort of how do you maximize for when you're seeing volumes in the marketplace, what we're doing on the initiatives. And then obviously, the last part of that is the fee per million, which we talked about.

I don't know, Chris, if you wanted to add...

Yes. No, Alex, it's the right question. Look, our international business has been growing double digits for some time. That's really powered by EM and euros, where we see exciting growth. And again, in EM still early penetration for electronic trading. So the market opportunity is quite sizable. Around the services, particularly the data business, we have historically -- on these calls, as many times said, we will not sell some of our data. That is proving strategically correct at this point as we see what's happening around the AI space, keeping our data, which is proprietary in-house to then leverage through our own use of AI is going to be a critical ingredient going forward.

So I think when it comes to services and particularly market data revenue, we've strategically decided to keep that at a single-digit number because we want to actually hold our data for our own AI uses which will actually help our transaction business. So it was a strategic decision we made quite a number of years ago, but now it's proving to be quite valuable as we start to look at the use of AI within our data set.

Just to give you a sense of how much that data asset is growing. In 2025, we saw $5.3 trillion in inquiry volume. That's up about 13% from the prior year. That inquiry volume triggered close to $91 million in prices. So it's an increase in prices coming back. That is all unique data that is across the globe, across all the assets that we trade. And we're seeing over $35 trillion in notional prices on our platform each year. So it's quite a powerful data set. Our choice is not to sell it all in raw form. Our choice is to leverage that data for AI purposes to create higher volumes, more sticky services around our trading businesses. So that's part of what factors into our thought process around data and data growth.

Our next question will come from the line of Ben Budish with Barclays.

This is Chris O�'Brien on for Ben. I actually had a question about capital return. So it's been quite a strong start to the year for volumes across the industry and on platform at MarketAxess. So just curious if we saw a continued momentum through the rest of the year, how are you guys are thinking about share repurchases as we go through 2026?

Sure. Thanks for the question. I think as you just noted, we, for us, in particular, obviously, has significant capital return with our ASR and just closing it out. And I would remind everybody that we did take out about $220 on our revolver in order with the cash outlay in order to put a little bit of leverage on it to do that. So our first order of business is going to be to pay that down over time. And so we do know that we have $205 million left in authorization, and so we're just going to see how that goes. There's no end date on that authorization. So that's really how we're thinking about capital right now.

And you probably also saw today that we did increase our dividend to $0.78 per share. So that's another thing that we're thinking about in terms of increasing capital return, at least on the dividend side in the short term.

Our next question will come from the line of Dan Fannon with Jefferies.

I wanted to follow up, Chris, on your comments around Slide 10 and just the addressable market. I think you mentioned that 2025, some of the -- or the electronification slowed. And so just wanted to get a sense of what gives you confidence about that reaccelerating here in '26 more broadly as we just think about, obviously, the protocols you've been doing, but if there was other things idiosyncratic in the market or competition-wise, it maybe slowed that down?

Sure. Great question. Something we obviously focus on is converting this market from phone to platform. And the market opportunity is larger than what has been converted today. So when you think about that, the opportunity is enormous, and we're still early in the journey of electronification of the global fixed income market.

With regard to our slides, really, if you look at U.S. credit, that's really where the growth of electronification across the entire market has plateaued, kind of flat lined. Somewhere, it's hard to estimate, but somewhere in the 45% to 50% range. What's holding it back from further conversion, when you analyze what is not on platform, it's really phone and chat block market. So that block market makes up the next 50% roughly, and that's the market opportunity that we are chasing and very focused on.

If you look at portfolio trading, the growth of portfolio trading because it's all electronic should have increased the overall electronic footprint in the market. Ironically, it did not. It converted what was early largely electronic RFQ into just larger baskets traded as a single price basket. So it was really the growth of portfolio trading that did really a conversion of e-RFQ to e-portfolio trading.

Now -- and look, the market was quite focused on portfolio trading, both platforms, dealers and clients were making huge investments to convert their RFQs to portfolio trading. I will tell you, the focus of clients, dealers and platforms today has shifted to that 50% of U.S. credit. It's all targeting block market. That's the exciting piece. And our earlier discussion on our block growth is really reflective of the investments we're making in that block market. When you jump from U.S. credit into other product areas, EM, in particular, we're still early days electronic penetration. So we're seeing our portfolio trading in EM grow dramatically. We're seeing electronic RFQ all-to-all. We're seeing block growth in EM as well. And then finally, our automation suite of products is growing quite handsomely in EM as well. Again, a very low automation penetration in that EM bucket.

So overall, I just love the fact that our market opportunity is greater than what has been converted today around the globe, and that just is an exciting opportunity for us as we deploy more and more products targeting that specific block market, which is left to convert.

Our next question comes from the line of Eli Abboud with Bank of America.

I wanted to follow up on the last one about the overall slowdown in electronification and U.S. credit this past year. I wonder if that has changed how you think about capital allocation. Does it still make sense to allocate the incremental dollar to U.S. credit versus other areas like emerging markets or munis that are growing faster?

And then if I could just squeeze in like a follow-up here. I was hoping we could get an update to on the opening and closing auction initiative and what the early returns have been there?

Sure. Yes. First, what's great about the opportunity -- and we -- really, we were just talking about blocks where we had substantial growth. Our investment in the block opportunity is actually very similar across product set. So whether we're investing in EM blocks or we're investing in U.S. credit blocks, the way we have built our technology, our new technology on X-Pro, it scales across both product sets. So the incremental investment has very high returns because we have shifted to investing our protocols into global protocols as opposed to individual product protocols. So that's the exciting part.

So any investment in a block solution is an investment in a block solution across protocol. So the high return on that investment is quite attractive, and we'll continue to roll out our X-Pro solution, which is really delivering multiple protocols from portfolio trading to blocks to our automation delivery as well as traditional list RFQ, all delivered on the same technology stack and the same platform as we roll that out across the globe. So investments, high return because we're attacking the same unpenetrated market of EM or U.S. credit with very similar techniques in protocol.

Turning to our matching solutions, things like Mid-X and auctions. These are all new investments, quite an exciting incremental revenue investments. So we're seeing sizable growth across our matching solution Mid-X. I know, Eli, you did a nice report on that in January. I appreciate all the kind remarks around our data set and the feedback from our clients. We promise we will use it as a marketing tool to talk to the dealer community.

But Mid-X has been growing since we launched it in the fall of last year. It's quite exciting to be part of that match business in the dealer-to-dealer market. Again, we only have one match a day. We plan to increase that to multiple matches per day. So a lot of exciting growth there.

Your question on closing auctions again, a newly launched auction solution. Right now, we're just focused on a closing auction, not an opening auction, and that was launched on an entirely new tech stack brought to us by our Pragma acquisition. So a very exciting new tech stack with a new front end used by both clients and dealers. The closing auction was launched really in the -- sometime in the fourth quarter, it was in a pilot phase, and we just we just rolled out the auction to a broader set of clients. So we're -- as of 2 weeks ago, we opened it up to a broader set. But we are seeing a pretty exciting participation. We've got 3 dealers now supporting liquidity in the auction. We have about 11 buy-side clients that are active in the auction and we have some -- just some very key what I'd call, anchor dealers that are now posting block-size liquidity into the auction.

Some of the stats that we're seeing, again, this was pilot, about $2 billion in notional orders staged in the auction, over $900 million of orders submitted into the auction. And so we're seeing a great deal of participation. It's interesting we had a really great call with our clients. We did a call on this webinar, just on the closing auction. We had over 600 participants joined, was kind of one of our record webinars that we've ever seen. But the feedback has been exciting. We've had clients looking for additional bonds to be listed in the auction and looking to understand. It is a new protocol that clients have to get used to because it is a time protocol in the late afternoon of the day, which is new to the buy side. So again, we don't expect that to ramp up dramatically in the coming quarters. We think that will grow over time and be a key ingredient for larger box size trades near the end of the day.

Our final question will come from the line of Michael Cyprys with Morgan Stanley.

Just a question around artificial intelligence. I was hoping you could speak to some of your ambitions and visions around embedding AI more broadly across the business? Curious what portion of client flows do you think is ultimately automatable? And how do you think about execution outcome feedback into your AI models? And does that create any sort of flywheel that others cannot catch?

Sure. Exciting area for us, an area that we have been investing for some time. Obviously, our -- a number of our data products are AI-based. So we are along that journey in creating commercial products through AI. I'll take a step back and just mention the AI boom itself is very helpful to the bond market. If you look at the size of the bond market more recently, it is growing as a result of the funding that AI needs, both in terms of the equipment and chips that people are buying through funding using the bond market, but also the data center buildouts are all through bonds. And then you'll finally need the utility -- the utilities and the infrastructure to support those data centers, will likely also come through bond funding. So it's just -- it's going to grow the bond market quite dramatically and we feel -- we'll feel the benefits of that over the years to come.

With regard to our use of AI, we're pretty excited about where AI can obviously help us. There's what I refer to as the corporate AI use where it will make us more productive, whether it's someone in finance using AI or one of our developers deploying code through AI. We're already seeing the benefits of that development. So we're excited about what's to come. And I think we're still in the early stages of leveraging AI to increase our productivity, both in terms of product design as well as product and code writing.

When it comes to commercialization of AI within our trading platform, the data set is probably the most powerful leverage that we have, and I'm happy to report, as I mentioned earlier, our data set or our data footprint that we can leverage for -- through AI continues to grow. So things like EM -- EM most local markets are not transparent markets. And so we are leveraging AI to produce transparency in those local markets.

The other areas that we're seeing pretty interesting exploration using AI, portfolio construction is a powerful area where we can see clients giving us what I'd call market exposures and not specific bonds. And then we would use AI to produce an outcome or a suggested basket that they could buy either through a PT or something that's available in the market.

So the other area that we're exploring is trading signals. We have quite a sizable portion of the world's bond market activity across EM, U.S. credit, euro bonds and now treasuries. So we are seeing that activity before we wake up here in the morning in New York. And so the signals that are born using AI across the patterns of behavior on a marketplace are quite powerful. And we have a number of clients asking us about indicators or heat maps across sectors across the globe. So there's a number of areas that we see ourselves deploying AI using our proprietary data.

Another area is depth of liquidity in the market. Most people can't see the depth of the bond market. It's individually priced inquiries or over chat. We have the full depth of the market because of all the prices that we collect on the platform. So these are all areas.

Another area is spread prediction. We are able to predict movement in spread using AI. Again, that's a very powerful piece of information if you're a bond trader, whether you're a dealer or a client. So there's lots of uses that we're exploring right now.

The last use is just basic chat functionality using AI questions, basic language models for our clients to understand the market or make requests of our data using chat. So there's a number of places that we're exploring. The opportunities are huge. And like I mentioned earlier, we made a strategic decision not to sell all of our data and to use it for things like trading solutions that I just described. So an exciting new area for us, an exciting new area that we're going to clearly leverage here in 2026.

And that will conclude our question-and-answer session. I'll hand the call back over to Chris for any closing remarks.

Thank you all for joining us. We look forward to talking to you on our next quarterly call. Thanks again, and have a great weekend.

This concludes our call today. Thank you all for joining. You may now disconnect.

Okay. Well, wonderful. We'll get started with the next session. It's my pleasure to welcome back Chris Concannon, CEO of MarketAxess. And Ilene Fiszel Bieler, MarketAxess, CFO.

MarketAxess is a leading global electronic trading platform specializing in credit markets over the course of 2025. The firm continued to drive automation across fixed income trading ecosystem through new protocols. Enhanced use of data and customer expansion.

Chris, Ilene, thank you both for being here as always. Chris is going to kick us off with a couple of slides, and then we'll jump into the Q&A.

Great. Well, thank you, Alex, and thank you for inviting us to this wonderful conference. Every year, it's a great deal of excitement and just a great audience to have here as well. And sorry for the little surprise adjustment to the program.

In light of the announcement we made this morning around financial targets and increase to our authorized share repurchase. We thought it would be helpful to give a quick update, a few slides and then jump into -- this was originally designed to be a fireside chat. We'll get back to the fireside chat. So I promise you, I will try to be brief.

First, what I wanted to do is just quickly -- what I'm going to talk about is talk about what we call our MarketAxess advantages. These are our core competitive advantages. Then we're going to cover -- the next topic I'm going to cover, it's just 4 topics is how we -- the journey we were on to get to the announcement that we made this morning, why we felt comfortable about making an announcement about financial targets and why we were comfortable about making increasing our return to shareholders.

And then I'm going to talk a little bit about the building blocks to get to those financial targets. Both in terms of are non-U.S. credit businesses, which are growing healthy, quite healthy. And then the return of growth to our U.S. credit business and the road map and the plans that we have established for that return to growth. And then finally, a little bit of a refresher on our recently announced closing auction protocol, I thought I'd give you a little bit of explanation of what -- how that works and why it fits in the current market.

So let me first start with what we're calling our MarketAxess advantage. Obviously, these are our core competitive advantages that we see in the market. We see it day in and day out. We hear about it from clients. This is the moat that surrounds our business, key ingredients to our success as well. First, an obvious one, which is, as you can see, our global network is quite sizable and continues to grow. This is a global network of not only institutional investors but also dealers and liquidity providers. Each one of these core ingredients to our competitive advantage are interlinked with each other, and I'll explain how that works.

Over 2,000, 2,100 institutional investors and dealers, 13,000 active traders just give you a sense of the growth rate. We've just added another 250 active traders to our network. So these -- each of these are continuing to grow, 1,000 active international firms as well. You'll see more of that as we get to our EM story.

The next key pillar to our competitive advantage is our differentiated liquidity. This is made up of over 1,000 unique liquidity providers. That's more than there are dealers on the planet to be clear. These are ETF market makers, proprietary trading firms, hedge fund, systematic hedge funds. And now more importantly, in a growing area is large institutional investors, which has historically provided liquidity at a trader-by-trader position. These are now converted for the first time in 2025 to systematic plans around the large institutional investors. We haven't seen this before. They are now using our automated tools and also their own built tools.

All of that liquidity is highly dependent on the next competitive advantage, which is our data competitive advantage. This is not only market data, but it's data, pre-trade analytics and trading data that helps powered by AI. It's not just our CP+ data, which covers the globe. It's obviously the leading benchmark in U.S. credit for real-time trading, but it also involves a growing pie of liquidity data.

Just to give you a sense of how it works, for every inquiry that comes into our platform, it creates a dealer response or some liquidity response. In 2025, we saw $8.9 trillion of inquiry come into our platform. That's 14% increase over 2024. The response that, that created was $400 million prices on our platform. That is the core ingredient to our data products and the core ingredient to the investment we have made to unlock those data products. That includes CP+ globally in things like EM local markets where people don't have price discovery quite easily. That's liquidity data like tradability and our recently launched, Depth of Book. You can actually look into the fixed income market and see its depth with that recent launch.

And finally, data around dealer selection. It used to be that you would select your dealer based on dinner last night. Now you can actually have data that truly sees the performance of that dealer and how they're performing. So a very important component to our growth rates going forward.

This is not data that just unlocks hard dollars. The key ingredient here is this data helps drive the trading solutions that we offer. It powers our automation, it helps traders make trade decisions, not only selecting dealers but selecting protocols. Do I put up a portfolio trade or do I go direct to a dealer?

The other 2 areas of data investment that's quite exciting is, we are now looking at market signal data. So how are the markets performing at sector level, at issuer level. And we're also looking at portfolio construction data.

And the key ingredient of all 3 of these are interlinked and continue to grow. What I wanted to do on Slide 3 was really explain our journey and how we got here and got comfortable with announcing, not only our financial targets, but the increase in capital return.

First, now the next 2 slides, I'll cover the building blocks for those financial targets. But first, I wanted to talk a little bit about our challenges over the last few years, that '20 to '24 challenge that you see. While parts of our business were growing, certainly, in U.S. credit was where we were seeing challenges.

The 3 key challenges that we are going to highlight that we experienced in U.S. credit. One was macro-driven and 2 were self-inflected. First, the macro-driven was obviously the rate moves that we saw and the change in client behavior, and that had an impact on our fee per million, a negative impact on our fee per million.

The 2 other challenges where we underinvested in portfolio trading, and we underinvested in the dealer-to-dealer business. Those key businesses within the broader market in U.S. credit grew dramatically over those years, obviously, leading us to challenges in both growth market share and growth of revenue.

While we had a share to invest heavily in just U.S. portfolio trading and just U.S. dealer to dealer. We made a strategic decision to invest more broadly and focus on global portfolio trading and global dealer-to-dealer solutions. We also focused on broader market opportunities like block trading solutions and the recently launched innovative protocol, our closing auction, which I'll speak about quickly later in the presentation.

In 2023, we also built and launched our X-Pro, which is our new UI. This is the new technology that powers the delivery of our global portfolio trading and it also powers the delivery of proprietary data and analytics. So a key ingredient to our tech transformation that was taking place.

Now those investments, other -- all these investments I've been talking about, while we didn't focus all of our technology bandwidth on U.S. PT and U.S. credit dealer-to-dealer, all the investments that we're now seeing come to market are playing out in 2026 and beyond and what really got us comfortable with establishing these financial targets.

To be very clear, there's a lot more to do in tech transformation at MarketAxess. So we'll continue to invest in future alternatives. But what this -- all these investments leading up to this point in time, got both the management team and the Board very comfortable with announcing the targets that we put out this morning. So we are committing to deliver an average annual revenue growth rate of 8% to 9%, as you can see here. And then we are also just -- I want you to focus on average 8% to 9%. What we're saying is we expect to exit 2028 with a double-digit growth rate. So those are averages, not hard and fast perfect numbers.

Lastly, we are also committing because we want to continue our diligence around expense growth. We are also committing to an average annual margin expansion of 75 to 125 basis points through '26 to '28. Now these targets, just to be clear, do not forecast any increases in volatility. As you have seen, like the second quarter of this year, increases in volatility are very favorable to us and our model, but we did not assume them in our growth rates. These financial targets and our strong balance sheet made our Board and our management team quite comfortable with the increase in capital return, both increasing our broader shareholder repurchase plan to $500 million, $505 million to be specific. And with that, executing $300 million in an accelerated share repurchase.

Now let me just quickly go through the financial, the building blocks for the financial targets and how we got comfortable. This is a really exciting slide because 50% of our top line revenue is growing at 15% CAGR. We thought that was very important to point out because of all that broad investment that we've been making over the last few years, still funding our international investments, still funding global portfolio trading. We are seeing those returns play out, and we're still not done investing in those products.

As you can see here, the largest part of that 50% is our emerging markets business and our Eurobonds business, which is growing at a 10% and a 14% revenue growth rate, respectively. That decision to invest in global PT and global dealer-to-dealer is also yielding results. We're showing our EM and Eurobonds combined portfolio trading business is growing at 48%, and our dealer business combined is growing at 38%.

The EM business, just generally speaking, is about the size of U.S. credit. So when you think about the comparisons. It's quite a large business, somewhere around $24 trillion in size. It also has very low electronic penetration. So part of our growth expectations in EM is further penetration of electronic trading, further protocol expansion and obviously, block solutions that we've shown some growth rates in as well.

Now the key ingredient to hitting our financial targets is really accelerating growth in our U.S. credit business. And Slide 5 is really to present the road map that we -- both the management team, the tech team and the Board is comfortable with to expand our global business. Our business in U.S. credit.

We identify our 4 market opportunities. You can see sizing in the current market ADV on the right side. This really covers our key initiatives that we've been focused on client-initiated, our high touch or block solution, our global PT solution and our dealer-initiated channels.

Part of the growth in client initiative, I'll just go through some of the quick ones that we're doing. Enhancements to our X-Pro platform are rolling out in the first half of 2026. We expect this to not only help our RFQ business in U.S. credit, but also make it a little bit stickier.

The other area of great growth rates is our automation suite of products. We're making enhancements to that auto suite automation suite as well in 2026. Block trading or a high-touch channel, we've launched a targeted RFQ, which is certainly yielding some returns. And that's attacking what I call the largest part -- the largest market opportunity for us, the $19 billion in ADV. We've also recently launched our targeted AX solution. This is a new solution that allows dealers to send Axess over a platform directly to a trader and a client firm, a very powerful solution and really focused on eliminating IB chat in our world of block trading. And finally, in our dealer solution, we've recently launched our Mid-X solution. This is just a few months old, and we're yielding results and you could see that in our November release.

The good news across all of the U.S. credit things like automation are growing at double digits. Our block trading volume in U.S. credit is up 34% this year. PT market share is also growing. It increased 410 basis points. Our dealer initiated market is up 40 basis points. And that's further supported by our recent launch in Mid-X. And we also have some exciting new initiatives that we're not sharing with you all in the coming years. We try not to share them with our competitors publicly.

Again, these are -- all of these slides really gave us comfort around, not only the share repurchase and the accelerated share repurchase, but being comfortable announcing those financial targets that we laid out for you.

Now the last slide, and I'm sorry, Alex, I took more time than I was supposed to. The last slide is the fun part. This is really where we are trying to drive innovation within the fixed income market, we're kind of catering to the broader evolution of that market. This is our launch of our closing auction. This caters to growing indexation of the fixed income market. If you look at the ETF market somewhere around $2.3 trillion is now benchmarked into an ETF. That's expected to grow to $5 trillion. And then there's also a broader move to indexation across just managed fund complexes.

The key ingredient for indexation is you typically start to see dependency on closing prices. Think about the NAV for ETFs. It's a very powerful price that everyone gets struck at every day at the close. So closing prices and closing liquidity is a natural evolution that you see in an evolving indexation of a market. We've seen this play out in U.S. equities. We see it in futures and derivatives and obviously, it's going to be playing out in fixed income as well.

This is not a matching solution where you match at mid. This is where you find a true auction, a true clearing price, and you can actually trade sizable liquidity at a price somewhere near the market and set that closing price. So it's a very important point that it's a differentiated solution. It leverages our liquidity the buy-side, the sell-side, ETF market makers have all worked with us on this innovative auction solution.

I'll stop there because I did want to return back to the fireside chat.

You give me a moment to brief. So thank you for that, actually. And we were joking around. This is page out of State Street's playbook from Ilene's Fire Day. So we're totally ready for that.

So I'm going to go a little bit of a script here, just again, given the bunch of information you guys have provided. And maybe we can start with guidance and the new targets that you unveiled just a few minutes ago. So first, when you think about the 8% to 9%, you made a really important distinction there. Half of the business is non-U.S. It's grown. I think historically, you said 15%. Is the assumption embedded within the 8% to 9% that non-U.S. piece will continue at around 15%. So that's part A.

And then part B, that really implies that the U.S. piece is still growing only in kind of like low single digits. So help me understand both of those, take it into account that, hey, you got all these initiatives on the U.S. credit side of things that should yield some faster revenue growth.

So you're in the right ZIP code. So think about it this way. You saw on the slide that for the 4-year CAGR 2020 to 2024 U.S. credit was actually down 2%, right? So that was a CAGR of negative 2% growth. So we've definitely got to reignite that growth, having said that, we know that we've seen really good performance in our non-U.S. credit business, and we would expect to continue to see really good performance in our non-U.S. credit business.

So if you sort of unpack the incremental growth in the 8% to 9%. I would say -- and Chris made a good point in that this is not a straight line 8% to 9%, you got to keep that in mind. But I would say sort of year 1, we would look to see the incremental growth in U.S. credit be about 20% of that incremental number. And then I would say, by the end of the 3-year plan, we're looking at about 35% being -- coming of the incremental growth coming from U.S. credit.

So take it the other way, you're saying 80% of the incremental growth is in international or outside U.S. credit. We also have our services businesses not to forget, right? And the 8% to 9% is a full company guidance. And so -- and then obviously, to 65% once U.S. credit starts to kind of -- that momentum that we're building through all of those initiatives come through by year 3. That's how I think about it.

And then how do you think about the data revenue side of it, right? Because to your point, this is an all-in number because you talked obviously about the importance of that, and we've talked about it for a while with CP+, super important, really valuable, really unique. How much do you guys have the nontransactional more of that data piece growing over those next several years? And again, any building blocks in terms of number of users are really pricing any -- like it's volume times price, right? So like what kind of the unit growth versus what pricing dynamics you could embed within that to support that kind of revenue growth?

Sure. First, on the data front, it's -- we have to be very strategic about how we do it because we do want broad distribution. So we've priced that product under market relative to its value and the dependency that we see from our client base. The dealer community uses our data, the institutional investor community uses our data. It's now flowing to back office.

But most important part about our data is how it powers the underlying trading solutions that we are now putting out in the market, we're putting in front of a trader. So I do think we have to realize that the part of the value of the data is actually making the product that much more sticky. If you look at the growth rates in our portfolio trading in U.S. credit, it's driven off of the pre-trade data and analytics that we were putting in front of -- anyone can put together a package of bonds and trade it at a single price.

But in order to put pre-trade analytics in front of the client to help them construct that portfolio, help them perfect price, that's a unique offering and why we view it as a competitive advantage. Back to answer your question, we see the ability to sell data, hard dollar data as a very important part of our growth rate that we just announced. But we also see some of the new products. So there are embedded price increases in our current contracts, but we see the excitement is really around some of the new products that we're rolling out that really gives you the true view of the market, the market in balance in terms of depth and price and also things like block trading prices. We can actually predict based on your side your direction and your size, what price you should expect that. That could be for sale, but I'd much rather embed it in our block offering just...

Right, to just enhance the franchise, that makes sense.

So I would say our market data revenue is going to be constrained by our desire to use it as a sticky solution on our platform.

Right, right. Okay. Great. Another numbers question, and then I pivot back to some of the things we were going to talk about at a little bit macro level. But Ilene, this is probably for you, when you think about the operating leverage that is also embedded in your guidance, 75 to 125 basis points of annual margin expansion. Can you talk about the ability to deliver on that if the revenue falls short of the low end of kind of 8-ish percent. So if you're below that 8% for whatever reason, can you still kind of deliver the same type of margin expansion embedded in your targets?

Yes. And again, I'm going to reemphasize these are average annual. So it's not -- I was going to keep saying that. Average annual on all of it, it's not a straight line. So I think that's an important point. Yes. Look, we -- I think you've seen from us from an expense perspective, particularly in the last 2 years, we've made incredible strides in terms of productivity and efficiency. I mean even year-to-date this year, we're up about 5% through 3Q in terms of expenses. And if you go back to those CAGRs, that looks like 11% because we were investing in a lot of the things that Chris talked about we've been building. But we've been able to really now take a look and say, okay, what kind of guardrails can we put around our expenses and our productivity?

And so think about things like how can we -- we're looking to streamline our workflows. We're looking to make codes more efficient. We've already seen early days some benefits coming from using AI and coding and in testing. There's just a number of things that we're looking at and that we're going to continue on this path in terms of driving to the margin expansion in addition to the top line, but I understand what your question was.

So I just -- lots of plans. This one is a very, very, very detailed planning process that got us to the place where we are now where we can put these targets out. So you can imagine there's a lot that we have on the docket in terms of how we hope to continue to drive margin expansion.

Yes. I'd expect nothing less.

There's going to be some discipline. The other way to think about it is, and I mentioned this in the presentation, we made a strategic decision to invest in global protocols. That's technology building, 1 protocol built for all products. That was an important strategic decision rather than, hey, we're just going to invest in this U.S. credit thing. We're going to grow U.S. credit and defend that U.S. credit business. We said, no, let's grow our global business and solve U.S. credit EM and Eurobonds on 1 platform. That tends to give you efficiencies when you do that.

Now was it painful to do a global PT solution as opposed to a U.S. PT only solution? Yes. But those now results in much better expense growth rates and more controlled expense growth rates as we start to attack the global fixed income market with a single platform. Things like X-Pro are built for all products, not just one.

Yes. So you talked about giving yourself more operating efficiencies through this platform, which makes a lot of sense. Can you talk a little bit about the competitive moats you sort of have around your global business, right? Because when I look at the growth algo of the company, so much of that is going to be on that 15% remaining, 15% on average over multiple years...

I said ZIP code don't put a number on that. ZIP code -- line up, again.

When I think about the investments you guys have made outside the U.S., boots underground, particularly in emerging markets, what gives you sort of confidence that you can sustain those similar type of revenue growth in those markets, whereas you might have others coming in and try to compete for those pools of revenues more aggressively just like it happened in the U.S. credit?

It's a great question, one, we obviously thought long and hard about. I call it our flank. If you look at what happened to us in U.S. credit, we failed to invest in portfolio trading and the dealer-to-dealer space. That's really where competitors made huge inroads also at a time when both were kind of exploding, both for growing in U.S. credit. Obviously, we've seen the portfolio traded market kind of pull back a bit. It's kind of in IG, it's running below 10% for the first time.

So the key was to invest in portfolio trading, global portfolio trading and global dealer-to-dealer. And you see that growth rate embedded in that 15% CAGR, where we made structural decisions to invest in our flank nature, we were first to market in PT and EM local markets or PT generally, in EM, made sure we were investing in our portfolio trading and our dealer-to-dealer solutions and Eurobonds as well. And so those investments actually helped us grow and penetrate further those markets.

If you look at Eurobonds as a microcosm, it's a sizable market, but not as near big as EM. We have Tradeweb and Bloomberg as our primary competitors, and we're growing market share using portfolio trading, dealer-to-dealer, traditional RFQ, automation and now block trading solutions. So we feel really good about our competitive dynamic when we're firing on all cylinders.

Yes. All right. Let's pivot to the U.S. credit side of things. 2 questions I want to hit on. So the first one, is addressing the U.S. portfolio trading angle, as you described it and maybe the dealer-to-dealer. When you and I were here last year, you kind of brought up the idea, like, hey, look, we'll be aggressive on price. Like we were late really and we've had to build the capabilities.

We didn't mean it.

But look, the ability to continue this pace of share gains and really expand maybe within portfolio trading, feels like price will be a big part of that. So maybe talk a little bit about how you're positioned, price-wise, versus your competitors, obviously, Tradeweb, but Trumid as well. Is this where price stays? Do you see that going lower? Is it going higher? And how do you broadly expect that part of the market, whether it's PT or dealer-to-dealer to expand from here for you guys?

So first, I'll address the PT market because it's a very important market to us because it's our clients trading portfolio trade. So we want to be engaged in that regardless of where price is, where fees are. I would say fees in portfolio trading have been quite stable. The real driver to PT success is the workflow and the solutions. We rarely hear from clients around PT pricing and fees.

Normally, you hear that from the dealers, but dealers are not turning away an inbound for portfolio trade. It's quite an attractive trade for them. So while fees are a factor, they really haven't been a factor over the last couple of years from a competitive dynamic. I will tell you, I don't see them going up. I see them fairly stable over the last couple of years. And some are offering a free -- some are charging. We're all kind of in a similar zone and there's been very little movement in that area.

On the dealer-to-dealer space, it's an interesting space because of our underinvestment in that space, we have an opportunity to grow revenue at a lower fee capture. So we can actually be aggressive on price, but it's incremental to our top line. So again, why are we comfortable with the road map that we put out there and the financial targets? Some of our growth is new product growth in the dealer-to-dealer space.

What was key about launching things like Mid-X in the U.S. was it changed our dialogue with the dealer community for the first time, MarketAxess was walking into a large global dealer and offering them a solution at a very reduced rate that was attractive to that dealer. And it helped them not only get in -- we help them get into positions all day long with our client-to-dealer business and our portfolio business. Now it helps them exit those positions at a fair rate. And that has really changed our dialogue with our dealer community and certainly leads to that dealer community providing support for things like auctions where we have the dealer community working with us on the design and the build that actually participation, participating in the auctions that we have launched.

And I would just add 2 quick points on that. One is what Chris was just talking about in terms of dealer. I think you saw in November, Mid-X hasn't even been out very long, and we saw a 32% increase in volumes in dealer initiatives. That's great. I mean that's what we want.

Was that mostly Mid-X driven or...

It was a combination of dealer RFQ. But the point is that we are there now in a different way. And so you're seeing the combination is starting to come through. But I would also say with all of your questions, we contemplated all of these questions that you could -- that you're asking understandably in the targets and through the planning process. So that's all incorporated in that particular guidance.

Great. That's helpful. All right. With a couple of minutes left on the clock, I did want to spend a couple of minutes here on market on close. The protocol you announced a little while back, obviously, a big part of the story, you dedicated slide to it, so we'll have to talk about it.

So interested solution, help me understand, I guess, what feedback you've been getting from the buy-side as you sort of think about utilizing that? But also more importantly, what gives you confidence that you won't just pull sort of volumes away from other points of the day in your ecosystem where you might actually end up with roughly the same outcome? Like why is this additive to your revenue base, but also maybe the ecosystem broadly?

Sure. One, we worked with the buy-side of the -- this is a -- this has been a 3- to 5-year journey, starting from just the idea and then the building blocks that went into it. Some of the largest buy-side investors helped us design the auction. It's unique for fixed income. We didn't copy the equity market auctions. So I might know something about those. But we did work with both buy-side and the sell-side to help us build the specifics of the auction, the timing of the auction, it's near end of day, not at end of day and all the different dynamics around what goes into the auction, what shouldn't be in the auction.

So the excitement was really most telling to us when we have a client forum where we talked about dealers and institutional investors last week about the auction because we did kind of surprise the market with this announcement and the initial rollout of the auction quickly behind the announcement. We had over 400 buy-side and sell-side traders join that virtual forum and listen in. That was a record for us. No other product we've ever launched got that much interest from the buy-side and sell-side. I was just recently in Europe, where they're asking when are we launching it in the European markets, which was not part of the road map, but now we'll consider it.

Look, it really is going to take a multiyear effort. This isn't -- I wouldn't say our revenue from our closing auctions should be thought about in 2026. Those are investment years for that product. We're still in pilot. We're planning in Q1 to really roll it out more broadly to all clients and all dealers.

But it's an exciting new tool, as you think about it, the majority of liquidity historically in the fixed income market has been in the first half of the day. You see all the inquiry activity, you see all the dealer activity play out over the course of, call it, till 1 p.m. It's not a normal U-curve like you see in futures markets or equity markets where a lot of activity at the open and a lot of activity at the close. Fixed income markets historically have been very different.

What we've started to notice is the increase in not only behavior at the close, but the liquidity at the close. So if you think about it, the majority of dealers now price bonds using a computer, an algo-driven systematic pricing solution. Those don't turn off at 3. They continue to price all the way past 4:00 p.m. And so you have this natural liquidity coming into the market to power the closing auction which allows clients to slowly get comfortable.

Many clients will tell you, I don't want to wait till 3 to get done. This provides clients with the certainty that there's going to be liquidity at a moment in time where they can get sized done near the close. That's a very powerful alternative to I have to get it done by 1:00 p.m. And that's the feedback that we've been getting from the buy-side. They want to see liquidity. They're talking to their dealer partners on making sure that they're providing that liquidity.

And look, that liquidity for a dealer can be priced off market, favorable to that dealer. So they find it attractive to participate. It's not just trade at mid. It's literally trade in and around current markets based on the size and the clearing price. So an exciting new innovative solution, both for the dealer community and for the buy-side.

Got it. Great. Well, I think we'll end it there. Thank you for this. Thank you for using, by the way. this is a forum to get your targets out. So we actually do really appreciate it.

And thank you for your flexibility.

No. Any time -- maybe not any time, every once in a while.

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. The conference call is recorded on November 7, 2025.

I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Good morning, and welcome to the MarketAxess Third Quarter 2025 Earnings Conference Call. For the call, Chris Concannon, Chief Executive Officer, will provide you with an update on our strategy and our trading businesses. And Ilene Fiszel Bieler, Chief Financial Officer, will review the financial results.

Before I turn the call over to Chris, let me remind you that today's call may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain. The company's actual results and financial condition may differ materially from what is indicated in those forward-looking statements.

For a discussion of some of the risks and factors that could affect the company's future results, please see the description of risk factors in our annual report on Form 10-K for the year ended December 31, 2024. I would also direct you to read the forward-looking statement disclaimer in our quarterly earnings release, which was issued earlier this morning and is now available on our website.

Now let me turn the call over to Chris.

Good morning, and thank you for joining us to review our third quarter financial results. As highlighted on Slides 3 and 4, our third quarter results reflect a return to more challenging market conditions and historic levels of new issue in September as well as continued revenue growth challenges in U.S. credit.

Revenue was $209 million in the quarter, up slightly from the prior year. Our revenue growth outside of U.S. credit was strong at 10%. With regard to the operating environment, we are focused on providing our clients with a platform that has the right mix of protocols and workflow tools to meet their needs in all market conditions. We intend to deliver a platform that will be protocol agnostic that uses data and analytics to help clients decide the appropriate protocol for each trading situation.

Our current model does exceptionally well and higher volatility when spreads are widened out and liquidity is in higher demand. Unfortunately, we have only seen limited periods of volatility over the last several years, and we continue to see fairly tight spreads. Revenue growth in U.S. credit has also been impacted by the growth of new protocols like portfolio trading, the growth of the dealer-to-dealer market and smaller-sized trades moving from RFQ to portfolio trades at lower capture rates. The good news is that we are modernizing our technology platform, while at the same time, delivering new protocols and workflow tools to help our clients be more efficient.

Most importantly, we continue to gain significant traction with our new initiatives. In the client-initiated channel, we generated 10% growth in block trading ADV across U.S. credit emerging markets and Eurobonds. This strong growth continued in October with a 21% increase in block trading ADV.

In the portfolio trading channel, we generated a 20% increase in total portfolio trading ADV with record U.S. high-yield ADV. In October, total portfolio trading ADV was up 25% and market share in U.S. credit portfolio trading increased 300 basis points. And last, in the dealer-initiated channel, we generated an 18% increase in dealer-initiated ADV. Again, this strong growth continued into October with a 22% increase in dealer-initiated ADV, supported by strong growth in Mid-X for Eurobonds and the addition of Mid-X for U.S. credit.

As announced earlier this week, we will also be launching a new protocol introducing the concept of closing auctions to the fixed income market. Many of you are familiar with the auction protocol used in the global equity markets, now we are bringing it to the fixed income market. We believe a closing auction in the most liquid bonds will provide the market with an end-of-day liquidity solution while delivering a more organized market closing process. Protocol innovation, market data and automated solutions will continue to evolve as this market becomes more and more electronics.

Before moving to the next slide, I wanted to provide some context for our October volumes. As you will recall, the prior year period is a tough comparison for U.S. credit given the heightened level of activity in advance of the U.S. presidential election. Despite this, our U.S. high-yield ADV growth in October was strong, up 9%, reflecting a strong performance of our platform with only a slight increase in volatility during the month. While we know we need to drive higher levels of share growth, we were pleased to see the improvement of market share month-over-month in both U.S. high grade and high yield and across all of our key initiatives.

Slide 5 highlights the underlying strength of our global credit franchise. As you can see from this slide, our credit business is a global business and increasingly diversified. While U.S. credit trading volume is growing at a 4% CAGR in North America, our other credit products are growing double digits in North America and throughout the rest of the world. Furthermore, 36% of our global credit trading volume is now driven by clients outside of North America, up from 29% in 2020, and we continue to add international clients. This trend is supported by the over 6,000 international dealer and investor traders that are now on the platform. Slide 6 and 7 provide you with a year-to-date view of how well we are executing with our new initiatives in the 3 strategic channels as well as the strong growth we are continuing to see with automation.

On Slide 7, in the client initiative channel, we continue to make strong progress with block trading globally. Our targeted block solution continues to grow in emerging markets and Eurobonds, while we see consistent growth in block trading in our U.S. credit business as well. Block trading represents the next step function to the growth of electronic trading and is an opportunity for real transformation in the fixed income markets.

We are attacking the block market in two ways. First, we are leveraging automation by providing clients with unique tools that execute blocks in a more automated way. The second way we are attacking blocks is through our targeted RFQ workflow, which allows clients to target a short list of dealers for liquidity while increasing execution likelihood and reducing information leakage. Our total block trading ADV is approximately $5 billion year-to-date, up 23% across U.S. credit, emerging markets and Eurobonds. Our cumulative block trading volume since the launch of our targeted block trading solution in U.S. credit, emerging markets and eurobonds was approximately $12 billion through October 2025. The.

Next, in the portfolio trading channel, total portfolio trading ADV year-to-date is running 50% above the prior year. U.S. credit portfolio trading market share was over 18%, up 210 basis points over the prior year, including a 360 basis point increase in U.S. high yield. In the dealer-initiated channel, we are continuing to see progress. Dealer initiated ADV was $1.7 billion year-to-date, representing an increase of 34%. Our new Mid-X solution for U.S. credit was launched in September. And while it is early days as we expand the number of sessions and bring on new dealers over the last 10 days, we have executed over $1.3 billion in matching volumes. So we are pleased with the recent momentum.

The evolution underway in the U.S. high-grade market is highlighted on Slide 8. The average size of non-block trades are decreasing, while at the other end of the spectrum, the average block size trades are increasing. Blocks greater or equal to $5 million in trade size represent approximately 45% of trade volume in U.S. high grade, and they are largely executed over chat or the phone.

This is the segment of the market that we are attacking with our targeted RFQ solution. Trades less than $5 million in size, make up the other 55% of the market in terms of volume, but approximately 98% of the ticket count. This is the segment of the market that we are attacking with our suite of low-touch automation tools as well as our portfolio trading tool.

In the third quarter, 2/3 of trades executed by our largest clients were done through automation. The good news is that this business comes in at a more attractive price point and become sticky as clients convert. Part of this evolution has been the explosion in ticket count as shown on Slide 9, driving client demand for automation underpinned by our differentiated liquidity.

Trades in U.S. high grade, less than $5 million in size have almost tripled since 2021. This significant increase in tickets has been driven by a couple of factors including the growth of ETFs and SMA accounts. Assets under management and SMA accounts by some estimates are expected to top $5 trillion.

Other factors driving the explosion in tickets are the growth of portfolio trading and the increased usage of automation tools and fixed income. So the increase in automation is becoming more important to handle the increase in tickets in smaller-sized trades, but increasingly also for larger-sized trades.

We recently profiled a very large investment manager on our platform who has invested in automation by targeting block-size trades for automated execution. In just 2 years, we trade $2 million and higher, they have gone from doing 14% of their volume and 54% of their tickets to 35% of their volume and 82% of their tickets today. On our platform, automation trade count and trade volumes are growing at a 3-year CAGR of 29% and 28%, respectively.

On the dealer side, with the growth of dealer algos, execution quality and dealer responsiveness have improved with tighter bid ask spreads and higher RFQ response rates even for block trades. Dealer algos now contribute 88% of the responses and went up to 87% of trades in U.S. high grade, including 28% of the block trades.

In summary, this year has been a tale of 2 very different market environments, and we believe that the protocols and workflow tools we are developing will help us grow through all market conditions. While we are pleased with the continued strong contribution from our new initiatives, we know that we have to deliver technology enhancements faster to drive revenue growth.

While the time is taking to return to higher levels of growth has frustrated many of you, I assure you we are investing in the fixed income market of tomorrow while also addressing the competitive landscape of today. This is why we feel good about our positioning and our ability to return to higher levels of revenue growth in the coming quarters.

Now let me turn the call over to Ilene to review our financial performance.

Thank you, Chris. Turning to our results. On Slide 11, we provide a summary of our third quarter financials. We delivered 1% revenue growth to $209 million which included a $1 million benefit from foreign currency fluctuations and diluted earnings per share of $1.84.

Looking at our revenue lines in turn. Total commission revenue was flat compared to the prior year. Services revenue increased 9% to a record $29 million. Information Services revenue of $14 million increased 6% or 5% excluding the impact of currency fluctuations. Post-trade services revenue of $11 million increased 9% versus the prior year or 4% excluding the impact of currency fluctuations.

Technology Services revenue of $4 million increased 20%, driven by higher license fees as well as connectivity fees from RFQ Hub. Total other income increased approximately $2 million driven by a tax credit and lower FX losses in the current quarter of approximately $4 million. This was partially offset by lower interest income and a $1 million negative swing in unrealized gains and losses on investments. The effective tax rate was 27.1%, up from 23% in the prior year, reflecting the increased accrual for the uncertain tax position reserve we established in the first quarter of this year.

Slide 12 provides you with a quick summary of our KPIs. We continue to deliver strong growth across most of our KPIs, which reflects the progress we are making in our new initiatives. On Slide 13, we provide more detail on our commission revenue and our fee capture. Lower total credit commissions and lower total rates commissions revenue was mostly offset by higher other commission revenue which included the impact of RFQ-hub.

Total credit commission revenue of $165 million was down 2% compared to the prior year. With strong 11% growth in emerging markets and 9% growth in Eurobond total commission revenue was more than offset by a 9% decline in U.S. high-grade and flat growth in U.S. high yield. The reduction in total credit fee capture year-over-year was principally due to protocol mix. On a sequential quarter basis, fee capture was slightly up due largely to duration in U.S. high grade.

On Slide 14, we provide a summary of our operating expenses. Total expenses increased only 3%, which includes a $1 million negative impact from foreign currency fluctuations. The increase was driven principally by higher employee compensation and technology and communication costs as we continue to strike the right balance between investing to drive future growth and continuing to drive increased efficiency. Headcount was 896, up only 2% from 881 in both the prior year period and at the end of 2Q '25.

We are reconfirming our full year 2025 expense guidance and expect to be at the low end of the previously stated expense range of $501 million to $521 million on an ex notable non-GAAP basis or on a GAAP basis, $505 million to $525 million.

On Slide 15, we provide an update on our capital management and cash flow. Our balance sheet continues to be strong with cash, cash equivalents and corporate bonds and U.S. treasury investments totaling $631 million as of September 30. We generated $385 million in free cash flow over the trailing 12 months. We repurchased 595,000 shares year-to-date through October 2025 for a total of $120 million, including 239,000 shares repurchased during the third quarter at a cost of $45 million. As of October 31, 2025, $105 million remains on the Board's share repurchase authorization.

Now let me turn the call back to Chris for his closing comments.

Thanks, Ilene. In summary, on Slide 16, we are continuing to innovate and execute with our technology modernization and we are focused on the delivery of new product enhancements and new protocols for the remainder of 2025. Our new strategic hires are already making a difference in our execution and we continue to show performance across our new initiatives for block trading, portfolio trading in the dealer-to-dealer business.

Our revenue growth profile outside of U.S. credit is strong, and we are addressing our challenges in U.S. credit. And while we are pleased with the growth we are generating with our new initiatives, we are confident that we can execute faster to generate higher levels of growth.

Now we would be happy to open the line for your questions.

[Operator Instructions] Your first question comes from Chris Allen with Citi.

Yes. Morning, everyone. Thanks for the question. Nice to see solid expense control this quarter. I have a bit of a 2-parter. One on the Mid-X U.S. launch, obviously, you see nice volumes to start. Can you talk about the pipeline to add additional dealers there? How it's interacting with PT, whether you see benefits there.

And the second part, where you're seeing good uptake in new offerings like Mid-X you noted, your overall share gains have been elusive, which is leading to the investor frustration. Can you elaborate on your comments in terms of taking actions to deliver faster technology enhancements? How you're addressing competition, particularly if your legacy areas of shrink, which some are questioning whether there's been a degradation there, just so you're seeing uptick in new solutions, but overall share is moderated?

Great. Okay. Thanks, Chris. And yes, I'll try and get to all those parts of the 2-part question.

First, on the recent launch of Mid-X which is our mid-market matching solution, really finally addressing that dealer-to-dealer market that has been growing over the last few years, now about 30% of the trace market is the dealer-to-dealer market. And we obviously have been engaged in dealer initiative business particularly using our dealer RFQ, which as you can see in the numbers and certainly in October, continues to grow.

The dealer-initiated business in October was up 22%. And that's really without the full rollout of Mid-X, which only rolled out in late September and still early days. We are excited about those early days, though. As I mentioned in the opening comments, we're now seeing Mid-X run on a daily basis when it launched, it was running several times a week.

So we have plans to increased the number of Mid-X sessions. We only run on a day today. But right now, we're on track to deliver around $2.7 billion in the month. That's the kind of run rate we're on. So we're pretty excited about that, just given it's so one session a day and off to a good start. The other important piece of that Mid-X solution is really our relationship with the dealer community who are a key ingredient to our ecosystem. And as you mentioned, it has a relationship to portfolio trading really, as dealers enter into portfolio positions, they obviously want to exit those positions in an efficient way.

And certainly, the mid-market sessions that are out in the market have been very helpful to the dealer community for exiting that inventory. Unfortunately, they were priced at -- some of them were priced at quite a higher level. So part of our Mid-X offering is really to cater to the dealers' needs to get out of positions in an efficient way.

And I think we've struck that balance. But again, it will lead to that lower fee per million for that Mid-X solution. So we do want to make sure people understand the connection to that volume being helpful for dealers as part of our broader partnership with the dealer community.

On your second question and a very fair question around just our overall growth. The two areas, obviously, top line revenue in U.S. credit and our just overall growth of market share in U.S. credit really have been largely slower growth than we would like.

And I think the way to think about what we've been doing in this area, we really made a decision, I should say, I made a decision to invest in our technology using what I call a portfolio approach. As opposed to investing in a few areas, one or two critical areas we invested in several critical areas that needed to be addressed.

And first, there is the overall tech transformation that is underway here at MarketAxess. We've been investing heavily into that tech transformation. But at the same time, we had to address the competitive landscape that we sat in U.S. credit, in particular. And so we chose to make several investments not just our tech transformation, but you see us investing in portfolio trading, what we just talked about, the dealer-to-dealer business where we made sizable investments.

We made investments in our algo suite or our automation suite. And we also made investments in block trading across our -- all of our products. And finally, with the recent news this week, we were also investing in our recent announcement around closing auction.

So we made a decision to make a multitude of investments, all tech heavy investments to address each of those areas that needed either a competitive dynamic or it was part of our broader tech transformation that's underway.

As for the tech transformation, EXPAREL has been a key ingredient to that tech transformation. So those are investments that are replacing existing UI technology with new modern technology. We've also leveraged our Pragma acquisition. And we're using that Pragma acquisition technology -- acquired technology for our automation suite, where our legacy automation suite is now migrating to the Pragma technology stack.

And finally, you're seeing the first elements of the Pragma matching technology being delivered into the closing auctions. Now where those investments are working. Obviously, our portfolio trading numbers reflects a return on investment. Our dealer-initiated numbers also reflect a return on investment and automation continues to grow somewhere in 17% in Q3. So those are all up.

However, both portfolio trading and dealer initiative comes in at that lower fee per million. So that revenue challenge doesn't overcome the other areas of our core business. and the growth in that core business. The core RFQ business, obviously, has been impacted by what we call the market environment. If you look at the low volatility, very tight spreads and that we haven't -- we've been seeing over the last few quarters, it presents challenges to the growth of that traditional all-to-all RFQ platform.

And so we've seen that where we are competing with the phone and with chat and we're seeing a block market behavior going direct to dealer. So that's some of the overall environmental challenges. And obviously, while we've had block growth. It's been not big enough or not fast enough as we would desire.

So we continue to make those investments in that box strategy. We are seeing success in our Eurobond and EM products where the block growth is growing. Where we sit today, I'd say we feel good about the momentum we're seeing in all those initiatives but we would expect to deliver higher market share growth in the quarters ahead, just given all the investments that we are making and where they are and just being rolled out to the market.

So we feel pretty good that the investments we are making are yielding results in terms of volume, but we obviously want to have them yield results in terms of revenue. And look, we're not stopping that investment. We have releases going out this weekend that are targeting all of the areas I just talked about. And we have the closing auction that we just announced, which is going live this month as well. So a lot of areas of investment, some that were required for tech transformation, but most of them were required for the competitive landscape we sit in.

Your next question comes from Patrick Moley with Piper Sandler.

Yes. Wanted to ask about the closing auctions and the announcement that you made recently. Can you help us get a sense for just the size of that opportunity, what it could mean for data, what do you mean for your market share. And then how large a piece of the overall credit market do you think that, that sort of volume could become over time?

Thanks, Patrick. And obviously, a great question, just given how much time we've worked on the closing auction.

So we're very excited to finally get that news out because it's been a sizable investment for us. It's been really an ongoing strategy over the last 4 years. We have some really great partners advising us on the project. BlackRock, State Street, Alliance and DWS have just been great partners, and there's actually more large investment managers beyond that list that we didn't disclose in the release. We've been working closely with the large investment banks and ETF market makers. They are very key ingredients obviously, the liquidity and a closing option like the one we're designed.

We also have worked with the SEC, our closing auction requires filing with the SEC because it's part of our ATS. So lots of years of work and effort is finally coming to market. So we're super excited about that.

First, let me tell you what it is not. The closing auction is not a mid match -- a mid-market matching session. The fixed income market has lots of mid-market matching sessions where you match buy and sell interest and just use a price at mid of the market. That's not what we've built. We've built a true option where buy and sell interest, find a clearing price and that clearing price ends up being where all the trades that are matched execute.

So it's a very important difference to what is quite popular in the fixed income market. The other key ingredient to an auction is an all-to-all network that is sizable. So just given our position with our all-to-all network, we are able to allow any participant match with any other participants. So that's really a key ingredient in any auction and why we felt it was a unique position for us to be in to launch an auction of this size and this magnitude.

The most important part of the strategy around this auction and where we spent the most time talking to our client partners, it's really designed to support the growing indexation of the fixed income market. If you look at our overall global market, it's a $150 trillion market. the largest asset class on the planet. 20% of that market is benchmarked to an index or held within an ETF benchmark to an index. So it's a very large portion, and that 20% continues to grow each year.

Just within the fixed income ETF market, globally, that's now hit $2.7 trillion, and it continues to grow and is expected to grow over the next 5 years to somewhere close to $5 trillion. So it is designed to cater to that growing part of the fixed income market.

Every index fund -- every index fund needs a closing price and every ETF needs a NAV to close its fund. And what's interesting about the indexes that those ETFs and index-based funds are benchmarked against they tend to have higher turnover than traditional equity indices. And we see that on every month end. The month end really, there's really more new issue in the bond market than there are IPOs in the equity markets globally. So you tend to have higher turnover of the index that all this money is benchmarked towards.

And that's a really key ingredient. If you -- just to give you some stats, in U.S. investment-grade volumes, the last hour of the last day of the month, 25% of that day's volume is done in that last hour. So we're seeing aggregation of activity moving to closer to the close.

On a normal trading day, we're now seeing almost 15% of total volume now within the last hour of the close as well. So there's been a trend line where much of the bond market is moving further and further closer to the closing time of the day.

A key ingredient -- the other key ingredient other than an all-to-all network is price. The price that we are providing at the closing price has to be relevant to the index funds and the ETFs. So how do we make that relevant. You'll recall that we entered into a partnership with S&P for -- where we provide our CP+ data feed to S&P to help them input that into their evaluated pricing tool. And that's been a great partnership with S&P from just a pure data perspective. But the key ingredient is S&P also owns some very key indices, which are powered by that end-of-day price.

And so one of those key indices is the iBoxx Index, which is what the HYG and LQD is based on the iShares to iShares ETFs, the two largest ETFs on the planet. So that's an important ingredient where our CP+ price is now being delivered to the S&P eval product to help support and evaluated closing price for some very key index funds, but certainly in key ETFs as well. As the closing price closing auction rolls out, we will be targeting the more liquid end of both the IG and high-yield market. and looking to form a closing price that powers our CP+ end-of-day price in those bonds.

So the data piece, as you asked in your question, is a very critical ingredient to the success of the auction itself. So we're excited that we've been working on this for several years, and we are excited about all the partnerships that we've established and certainly, the S&P partnership is a key ingredient.

Your next question comes from Alex Kramm with UBS.

Just on the kind of laundry list of new initiatives and some of them that are running a little bit slower, maybe unpack U.S. block trading a little bit more. I know success outside of the U.S. so far, seems like U.S. block is still very early, but anything you can help us with in terms of timing of more dealer liquidity on those? And anything else where we could expect to see some uptake here?

Sure. Thanks, Alex. And certainly, we see the block market as the biggest opportunity in front of this company.

It is really -- when you think about the overall global fixed income markets. Right now, the nonelectronic portion of that market globally is far greater than what is already electronics. So we see it's rare that you have a company that has a market opportunity that is bigger than the market it sits in today. So we're pretty excited about the block opportunity globally. But particularly here in the U.S. Overall, as you saw in some of our numbers, our block growth rates in Q3 across all the products was about 10%. But in October, we saw that jump to 21%. So we are seeing the block initiatives yield some results.

I'd say in U.S., as you point out, it's not at the levels that we would want just to give you some stats in U.S. IG in October, we did see it jump to 30% growth. So our block activity in October is up. But as you can see in our share, it's up slightly. We'd like it to be up much further. I think the key ingredients are really still content. So we have made huge inroads in the content that we share with our clients, both in U.S. credit, but certainly in EM and Eurobonds where we have pretty robust content.

We are also constantly delivering new features. So we're excited about new offerings rolling out just in another week that will help address some of the key ingredients to block solutions and block trading where we want our bank partners -- our large investment bank partners to be able to share their [ acts ] content directly with our clients. That's a key ingredient for the block market to take hold.

So where we have content, we're seeing success. And now we're delivering with the rollout of EXPAREL in Europe, we're now delivering just a better workflow for that block trading content in Europe. Certainly, in the U.S., we're making regular changes to our block solution. So we're excited about the coming months and some of the changes that we're delivering.

Next question comes from Benjamin Budish with Barclays.

This is Chris O'Brien on for Ben. I wanted to ask a broader question about the environment. We're seeing continued lower credit spreads, lower volatility. Just curious how you're thinking about growing through this kind of environment if it were to persist? And is there anything that you could see that would maybe make a meaningful shift in the environment that we've been seeing over the last several months?

Sure. Great question. Certainly, over the last several years, we've seen generally lower volatility, tightening of spreads. And certainly, that has had an impact on some of our core offerings. We did see return to volatility in the second quarter. So we're happy and pleased with that second quarter spike of activity, but much of that was short-lived, and we can see how quickly volatility comes and goes in the marketplace. I'd say in the current month, we are seeing higher levels of volatility.

Obviously, you're seeing VIX above 20%, and we're seeing spreads widen in the current environment. certainly, in November, the market is reflecting higher levels of volatility. TRACE in -- is up 46% in investment grade and it's up about 25% in high yield. So we're seeing in the current month activities that would suggest a little bit of unlocking to that lower spread and lower volatility.

But as you point out, it's been -- if you look at the summer months, in the third quarter, there was very little spikes of volatility or volatility activity. So challenging environment. But certainly, both in October and now in November, we're seeing higher levels of volatility and a little bit of spread widening, which makes our all-to-all liquidity that much more attractive.

And then I would also just add, if you think about market expectations for Fed rate cuts this year, they remain sort of at the 2% to 3% with a possibility of a third cut in December, having declined a bit as we heard post Powell's remarks last week. But there's still a more likely than not probability of a December cut but perhaps with less conviction.

Having said that, the curve is still trending towards a gentle steepening but the front end is being fairly anchored. The belly largely holding and the long end remaining sort of sticky. So in other words, if you think about short-term yields could fall when the Fed cuts and long-term yields not falling maybe as much and if such a scenario plays out, this should be positive for liquidity, secondary turnover or things like that. And you could see more willingness to buy longer-duration bonds.

And I think, as you might have imagine, right, we saw just, for instance, in -- on our platform during the quarter, we saw that the weighted average years to maturity moved up to about 9.1 years. From the 8.5 year level we saw the prior quarter. And all of that said, as Chris just said, we are seeing some interesting movement in November. And even just in the first few days, we've seen weighted average years to maturity. And that was only the first 2 days. So you have to keep that in mind, but we did see weighted average years to maturity up to about 10 years, let's call it. So there are some other factors to keep in mind as well when you think about the macro environment.

Next question on comes from Michael Cyprys with Morgan Stanley.

Maybe just continuing with the last question, macro backdrop, clearly, moving your way in November as you just answered with the last question. But if that proves short-lived and macro backdrop returns to a bit more challenging backdrop like we've seen for some time.

I guess, what's the scope to returning to higher levels of growth parts of the business do you see as perhaps the most meaningful contributor to that? I know you mentioned some tangible progress on new initiatives, some of which are lower fees. So just curious how you're thinking about that as you look out over the next 12 to 18 months?

Sure. Great question. As we mentioned in our opening remarks, a key ingredient to our strategy going forward is being what we call protocol agnostic. We need to deliver protocols that our clients choose at times of high volatility or at times of low volatility.

So when I think about low vol environment, the things that tend to stand out in the market are portfolio trading, the dealer-to-dealer mid-market sessions, things like Mid-X, which we've just rolled out. And you see higher levels of block activity move into the market where spreads are stable and tight our investor clients tend to move back to going direct to dealers. They don't leverage that unique liquidity in the all-to-all marketplace that we run. So really, the key ingredient is providing those protocols seamlessly to our clients, but then using our unique proprietary market data to help them decide which protocol to choose from.

It gets complicated to decide whether to do a portfolio trade or to do a list and just go out to all via RFQ. A lot of our data can help traders decide which protocol to use for any given environment. And that's kind of the key ingredient of the strategy going forward is that protocol agnostic approach where we can provide things like block trading tools directly to the client where that client can trade directly with a dealer that has an act or has content or more importantly, we can help that client select the dealer based on their activity in the market that we see.

So all of the key initiatives, the block portfolio trading and the dealer-to-dealer initiative are really designed for lower vol environment, whereas our key liquidity solution, the all-to-all network is certainly robust in the volatility that we're seeing in today's week and the last couple of days.

Our next question comes from Simon Clinch with Rothschild.

Again, sort of thinking about the market environment. I was wondering, Chris, if you could give us some thoughts around the mix of volumes in credit and just the real reasons why and sustainability or the surge into the size of trades at the block end side and then the sort of shrinking of the size of trades to the other end.

And I kind of -- and really, what we're seeing like month in month out seems to be a squeezing of that -- the dealer to client portion of the market. And I just wanted to get a sense of is that just a trend that's going to be going for you? Or do you think that is a cyclical element here versus -- but any thoughts that would be useful.

Sure. It's a great question because it's certainly the stats that we shared in our slides are unique, where you see the smaller trades get smaller and the larger trades get larger, that you don't see that too often across an evolving marketplace. With regard to the smaller trades getting smaller, we are absolutely well positioned to capture the efficiencies that are required to handle all of those trades and all of those trade sizes, that is clearly driven by one portfolio trading. Remember, portfolio trades are big notionally, but each of the line items are quite small. So part of the growth of that -- those tickets in the market that we shared is the growth of portfolio trading over the years.

The other key ingredient to the growth of the smaller tickets is obviously the growth of SMA in the fixed income market. That's been a real driver of asset allocation among our biggest clients and will continue to be a driver as it collects more and more assets over time. And so those are certainly where we see the largest use of our automation tools are coming from clients with very large SMA, and we're happy to report that some of our biggest clients are continuing to invest in SMA either through acquisition or just overall investment in the SMA investment.

So we're expecting the smaller tickets to grow as a percent of the overall trade market. we think we're well positioned. The other reason why we think they'll grow is larger trade sizes are going to be broken into smaller trades. We're already seeing that in our algo suite, where clients are taking advantage of our credit algos where they are able to trade large blocks of 20 in sizes of $1 million or $2 million at a time and that's yielding very good returns in terms of execution quality and reducing information leakage. So we have every expectation that the overall trade will see more tickets growing.

With regards to the block market going through its growth where those tickets are getting larger. I think that is really when I look up and look at the trend line and the volatility in the market, we've really been at historically low vol and historically tight spreads over the last few years relative to prior market environments.

And I think that has led to block side being a little bit more of an attractive tool in exchanging risk. Dealers are certainly willing to trade that block size and take that risk. And obviously, clients are looking to move a lot of volume at any size they can that's efficient. So I do think that we'll end up in a world where when vol returns to a more normal level, those larger blocks get broken up, but we will continue to see like any electronic transformation the tickets will explode. Large box will get broken into smaller sized tickets, and that will be the trend line going forward.

For both, I think we've positioned ourselves to solve portfolio trading solve the small ticket automation growth. And obviously, we're trying to solve the block solution as well. Hopefully, that answers your question.

Your next question comes from Jeff Schmitt with William Blair.

So there have been a lot of growth in industry share portfolio trading through last year. It seems to have stalled out at around 11% or 12% of credit volumes. You've still been able to grow share nicely. But what do you think is driving that pause that protocol matured? Or do you think it can continue to grow?

It's a great question because we've been watching that share portfolio trading share. Remember, it's a sizable part of the market. It's a key tool for our investors. From a market opportunity, it's quite small from an overall revenue opportunity.

But because it's a critical tool for our clients, we continue to invest in it. The -- we're seeing kind of an equilibrium, I call it, in the IG market from a portfolio trading standpoint. I know some people predicted it would go to 20%. But it's really, as you point out, has really flatlined anywhere from 10% to 12% of the overall market.

However, that said, where we have seen growth is in the high-yield market. That market, even in November, is up closer to 15% of the overall market. whereas just a few years ago, it was closer to 5% and 6% of the overall market. So we are seeing a number of our clients using the high-yield portfolio trading tool as a way to access liquidity.

What's interesting is, as you point out, in IT, the flatness of the growth that is not for lack of dealer liquidity. We have seen more and more dealers move into the dealers place -- space for providing liquidity on portfolio trades. So there is ample liquidity in that portfolio trading market to support a higher percentage of the market.

I just think the market is quite comfortable at the levels that they're hitting, which is anywhere from that 10% to 12%. The only time that we see it spike up is when we see what we call a mega portfolio, something greater than $1 billion in a single portfolio. And we've seen those be anywhere from $1 million to $11 billion in size. And those are obviously rare and just come once in a while.

But yes, I think -- I do think we've hit some level of equilibrium in IG, but we are seeing this -- the growth in high-yield our high-yield market share of the portfolio trading market share has grown dramatically. We've been quite proud. We obviously talked to the dealers a lot about how we're doing in that one asset class. And we're certainly in a what we call a leadership position in high-yield PT right now. So we're excited about the investment we've made there and the returns that we're seeing.

Your next question comes from Dan Fannon with Jefferies.

You have Rick Roy on for Dan today. But I'm sure you're going to be excited for a third follow-up to the macro environment. But just on that, we see duration and yield to maturity, at least measured on the bond index, creeping up month-to-month, your charge for that as well. I was hoping you could provide an updated outlook on maybe where you think the curve could land from that perspective and maybe the updated impacts to fee per million based on that?

And then separately, with the expense control that you guys have demonstrated year-to-date and the reaffirmation of guidance today, I get to kind of an implied sequential increase in 4Q that seems a bit elevated relative to historical seasonal patterns. So if you're able to quantify which line items might be driving this increase? And if I'm so lucky to get a little bit of insight into 2026, that would be helpful as well.

Okay. Let's unpack your questions. And let me take them in turn. So if I start with the macro and the weighted average years to maturity, look, it's really -- I think I kind of laid out when I spoke before about what we're seeing in the environment in terms of the rate environment. and how things could play out in the scenarios depending on where we end up with a rate cut.

And I did talk about how we're currently -- and remember, we're talking 4 trading days here. So we've got to understand that we've got to see where this lands. But we're seeing about 10 years weighted average to maturity on the platform. And in terms of yields, we actually saw yields out a little bit, although still in significantly from the prior year time period.

So I think we're going to have to wait and see how that goes. I think you guys all remember the sensitivities at this point in terms of where high-grade duration helps us when it comes to yield if you're 100 basis points in, in terms of yield, we can see that adding, call it, $3 to $5 on the fee per million in high grade.

And obviously, we've talked about this as well, but 1 year out on weighted average use to maturity can be worth about, let's call it, $15 more or less. And so those sensitivities still hold within a high grade. Obviously, there's lots of puts and takes, and we have to look all in at the credit fee per million and the different protocols and what's happening. But that kind of gives you a sense for how to think about the high-grade duration piece of this.

And let me take your expense question. It's a good question. And I think that we, obviously, you heard me continue to guide to the low end of approximately $505 million to $525 million on a GAAP basis. And if you think about the progression of expenses, that, to your point, would imply a fourth quarter expense level of around, let's call it, $134 million with an incremental $10 million to $12 million flowing through the next quarter.

And this $10 million to $12 million increase in the fourth quarter expense relative to Q3 is really driven by items such as depreciation, technology, the impact from hires as well as some timing-related expenses that haven't yet come through the P&L. But I think we need to take a step back and really look at the expenses for the year. And I'd remind you that we took management actions in the beginning of the year. Those were to drive productivity, and we really wanted to do that through the expense base in a sustainable way and those actions reduced our full year expenses by an expected $17 million.

And those included things like vendor management, vendor consolidation, role eliminations and really better aligning our resources to the strategic initiatives that you heard Chris talk about earlier in this call.

Now those actions that we took allowed us to self fund to the tune of about $16 million of those investments in our technology, our products, our key strategic hires that we've made throughout the year. And so that's really how I would think about overall how we continue to really manage a disciplined expense base. We're really being mindful of the environment that we're in and at the same time, self-funding are really important investments.

Your next question comes from Eli Abboud about with Bank of America.

I wanted to dig into your growth in Open Trading. It looks like Open Trading kicked up to 39% of your credit volume in October, which is the highest level since the regional bank crisis. Usually, I know this is a protocol that does well in the volatile backdrop, but volatility was up pretty modestly in October, certainly not on par with the levels during the regional bank crisis in April's tariff disputes. So what can you share to help us make sense of the stronger Open Trading adoption lately?

Yes. Great question. And obviously, Open Trading, certainly in lower vol environments have not had the level of penetration that we would prefer. And certainly, in October, we saw Open Trading move up just from September from 30% up to 34% and change. So while there was spikes of volatility, as you point out in October, it was quite muted across the months.

And we -- I think one key ingredient that we've been adding to our Open Trading liquidity is new sources of liquidity. It's coming in two forms: One, we continue to add systematic hedge funds to the platform. They certainly enjoy the benefits of all to all where they can price other clients' bond requests on RFQ. And also, we've also seen a number of very large investment managers take advantage of all-to-all as well where they are providing responses to other investors request for price.

And that's actually a fairly new phenomenon here. Usually, we try to provide things like our algo suite or our auto responder to traditional buy-side clients. But we've seen one or two buy-side clients make sizable investments in their own automation tools, and we're starting to see that behavior help support the liquidity even when there's lower volatility in our OT marketplace. We also saw in where we see higher penetration is in high yield. We also saw that tick up in October up as high as 43% of that market is our Open Trading liquidity source.

So again, it's part of a longer investment of both helping large investment managers use tools to provide liquidity. And it's also the new entrants into the market that are creating unique liquidity opportunities that's increasing our overall Open Trading penetration.

Your next question comes from Patrick O'Shaughnessy with Raymond James.

So the electronification of high-yield corporate bond trading isn't as far along as investment grade, but it's also seeing share gains still out by you as well as other platforms. What are some of the unique challenges to growing electronic market share in high yield?

Great question. Obviously, the -- by nature of the high-yield market, one key ingredient is liquidity. Our clients come to us and talk about the challenges of liquidity and high yield. Obviously, when there is volatility, our high-yield our high-yield all-to-all provides that liquidity and certainly jumps in terms of market share. But really, the key complaint that we hear from clients in the high-yield market is just the lack of -- lack of liquidity, sorry, in that market.

The other challenging in the high-yield market is information leakage. If you're in a position and you're looking to move that position, you want to be very careful how that information is shared to move that position.

So picking the right bank or the right counterparty to seek that liquidity is a critical ingredient. So we spend a lot of time on the high-yield block trading solution and a high-yield dealer content to provide our clients with that unique information so they can actually reduce information leakage by increasing the likelihood of being filled when they reach out to a dealer.

We also have developed an AI tool where we help with using AI to select dealers that are more likely to respond to your request for price. So those are key ingredients that we see being deployed in that market. The other unique fact that we're seeing play out this summer and continuing into November as the growth of portfolio trading in the high-yield market.

That's a new fact, that we didn't see in prior years. We've also seen it play out in higher times of volatility. Normally, portfolio trading tends to move further down as a tool when there's high volatility uniquely high yield has recently been a tool that our clients are turning to even in heightened volatility as a way and a source to get liquidity.

So I think the -- obviously, the ETF market and having a very liquid high-yield ETF market is supporting the liquidity that we're seeing in the portfolio market as well. But I would say that we are seeing growth in the E part of the high-yield market. It's coming in the form of that portfolio trading tools.

Your final question comes from the line of Simon Clinch with Rothschild.

Thanks for the follow-up. Chris, I was wondering if you could just talk a little bit about the competitive environment as well. You were just talking about portfolio trading. And we know that there's been more competition in that space, and that's kind of reduced the revenue pool in -- are we seeing any other sort of incremental changes elsewhere that would ultimately affect the overall revenue pools in other protocols or other parts of the market?

Obviously, if you look at our fee per million, it's largely been a result of the mix. The two areas where we run lower fee per million is obviously, as you mentioned, the portfolio trading area. And that's an area of growth for us. We actually came from behind and certainly are growing against a pretty fierce competition. And then certainly, the dealer-to-dealer space, which, as I mentioned earlier, is a very large part of the market, 30% of the market is dealer-to-dealer. And it's an area that we really underinvested in that one area and made a decision to support the dealer community with better tools for exiting inventory. And so our growth in the dealer-to-dealer segment of the market certainly comes at a lower fee per million, but it's all incremental revenue.

The launch of our Mid-X matching solution is brand new. It's certainly early days, but that's at a lower fee per million, but it's all new revenue to the MarketAxess top line. So we're excited to see the early days of growth and a way to address the market as we proceed.

When we look internationally, obviously, the EM market is quite exciting for us. We've seen sizable growth across LatAm and APAC, and we continue to see that growth. We've launched India just recently. So we're excited about adding additional products to that overall market. And we feel very good from a competitive standpoint in that market. We have certainly years of investment and many, many sales visits to grow that market and add clients to that market. And obviously, our all-to-all network is a sizable portion of that market close to 40% of the liquidity in that market. And we're seeing consistent quarter-over-quarter growth in the EM market. So we're quite pleased with the competitive landscape there.

I'm also happy that we have a portfolio trading tool that is being adopted by clients in and we've launched a Mid-X for EM as well. So we've tried to address all the areas where we've seen competition move into the market, and we'll continue to do that as we invest in that EM business because it's a sizable business for us. It's -- if you look at the overall EM market, it's about the same size as U.S. credit. So it's a very exciting market to be certainly positioned where we are in that market.

There are no further questions at this time. I would now like to turn the call back over to Chris for any closing remarks.

Thanks, everybody, and we look forward to talking to you in the new year about our fourth quarter. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.

All right. Good afternoon, everyone. Welcome to Barclays 23rd Global Financial Services Conference. I'm Ben Budish, I cover the U.S. brokers, asset managers and exchanges. With us for this next fireside chat, we've got from MarketAxess, CEO, Chris Concannon; and CFO, Ilene Fiszel Bieler. Welcome. Thanks so much for being here.

Great. Thanks for having us, Ben.

Maybe just to kick it off, Chris, I think something investors are really interested in is some of the changes you've been making in the block trading business, something you guys have been talking a lot about on the earnings calls. Maybe unpack a little bit of what you're seeing, what's driving the success of block trading for EM and Eurobonds? What's kind of different about those markets versus the U.S.? Why are traders attitudes seemingly different to electronic blocks?

Great question. And again, thanks for having us here today. And it is a topic that I probably spend a lot of time on, but it's an exciting topic for me because there is a transformation that can happen in the fixed income market, and we only see the shorter end of that transformation. There's so much more to do. I know this is a fireside chat, but I thought we would just have a quick slide show just basically explain what we're facing and what we're trying to do. What I wanted to show was on this slide, really just some of the revenue challenges that we've been having at MarketAxess, particularly around the U.S. credit business. If you look at our other revenue, which is about 50% of our total revenue, we are growing that non-U.S. credit revenue at like a 13% rate. So very attractive growth rates, particularly in a fintech company like MarketAxess.

On the U.S. credit side, that's where all the challenge has been. And that's why we're trying to attack different parts of the market, particularly the block market or the portfolio trading market. Revenue has been relatively flat in that part of our business. The really 4 reasons why revenue is really flatlined. One is we all know the macro market has not been ideal for MarketAxess. We do exceptionally well in higher volatility where spreads widen out, capture rate can increase. We saw that in the second quarter, where April, we saw that spike of volatility that has subsided. And so obviously, the macro market has an impact on our growth rates and revenue.

Second has really been growth of protocols, and this goes to your question, there are protocols now in the market that we've been slow to move on, portfolio trading and the dealer-to-dealer protocols. Those are areas where when you do win at that protocol, it comes at a lower capture rate. So we've seen the impact of capture rates just doing these different protocols like portfolio trading. The third biggest challenge is, obviously, we see leakage. Our traditional small ticket size trading in RFQ has leaked into portfolio trading. So many of our clients have told us they've moved some of their traditional RFQ on MarketAxess into a portfolio trade. It's a much larger sized notional trade. But again, it's small tickets being placed into PT. And that's kind of leaked into a market where we're not dominant, and we're now growing our PT market share, which you can see on the right side of the slide.

The last challenge is just, again, macro out of our control. It's really duration. We've seen with the rate moves, the yield curve kind of invert and the activity of longer-term bonds has slowed down in the market, and that's impacted capture. We do a lot -- we make a lot more money in that higher duration bonds. So those are the kind of 4 things that have really challenged our top line growth, particularly in U.S. credit. Obviously, portfolio trading, we are attacking that market. We're growing share quarter-over-quarter, and we're seeing results of putting very good technology and data and analytics in the market, you get better results. Now that's the bad news. The good news...

Yes, can I -- if you go back, I'm just kind of curious, I think investors are very attuned to like TRACE, what levels of TRACE electronified. It's pretty easy when the top 2 competitors are public and give you a lot of data every month. What about outside the U.S.? So to what degree is this market share gains, electronic market share gains? Is duration impacting your fee capture rate outside the U.S.? How would you characterize that 13% non-U.S.?

It's a great question because that non-U.S., obviously, EM is the biggest portion of non-U.S. and the fastest-growing piece. And we're still seeing low electronic penetration in the EM market. So the opportunity there is quite large. EM, including local markets, are greater than all of U.S. credit. So the market opportunity in EM is exciting. Things like duration still impact us in the EM market. But we've just added to our EM market. We've just launched trading in India, a key component of the EM market now in the benchmark, which is important. So some of those -- that 13% growth rate of non-U.S. credit is really driven by EM rates, Eurobonds, all things where we're increasing the electronic penetration.

And that's where we go to our next slide. Some of that growth is being driven by larger trade sizes. So in U.S. credit, and this is the reason why I am fixated on the next 50% of the U.S. credit market. If you can see here, 46% of TRACE are trades of larger size. And those are largely served by chat and phone. So here we are in 2025, we're ordering our food and our cars on an app, and we're still trading huge blocks over the phone or in chat. That's not sustainable in this environment as you see big asset managers looking for efficiency, their capture rates are coming down. Their costs are being managed carefully. They want to make this part of the market efficient.

So when I look at TRACE, this is just IG. The market opportunity for MarketAxess is 2x our current market position. And that's just larger trade size. So how do we attack those larger trade sizes? And look, we've been making some inroads. If you look at year-to-date 2025, we are starting to crack the block market. But the 2 ways that we've invested to attack that block market has been, one, automation. Our view is clients are adopting automation. We're seeing signs of using automation to trade larger sizes. That's something we've invested in heavily. We had an acquisition of Pragma to help us.

The other part is new, and that's just changing how we target dealers on our platform for block size. And we call this targeted RFQ. It's only launched recently in Q1 in EM and EU, and we're seeing signs of growth. But that's basically saying, don't go to all, which has been traditionally a market access theme, go to a short list of dealers. And lo and behold, we help you select those dealers. So what we wanted to do is show -- just -- I have 3 quick -- I know this is a fireside chat, but 3 quick case studies that we did with 3 different clients.

One is a big U.S. fixed income asset manager, big adopter of automation. They've certainly embraced automation as an efficiency play. And they started to study their execution quality of larger size, and they found that on the liquid end of the bond, they could do much larger size. So they used automation in this scenario. And this has been playing out in 2025, and you don't see it under the covers of monthly market share, but this movement is quite substantial. They've been able to increase using automation block size or greater than $2 million. And now their automation has increased from 14%. So now it's making up 35% of their volume on MarketAxess is now through block trading of automation. So a sizable move. And counting those blocks in automation, that's now 80% of their tickets. And...

I think also, I was just going to say -- and it also shows that they are trading more, right? The volume is greater. We know the tickets are greater, but the volume is greater as well as they're adopting more in automation.

And what's exciting in again, U.S. high grade, we are seeing the number of clients trading blocks increase to 35%. And overall block trading is up. Overall block trading on our platform is up 38% this year alone. So we're seeing it across all products, and that's the exciting piece. Eurobonds, another exciting, this launched in Q1. This is a client -- this client has gone through a consolidation, so they're looking for efficiency gains and how they trade. They turned and -- they actually helped us design our targeted RFQ for blocks.

So they wanted to know dealer content, enrich that dealer content and they've been able to actually make use of this targeted tool. They've increased their number of blocks that they're trading quarter-over-quarter, and we're still seeing great feedback from that same client. In Eurobonds, where we've seen the biggest growth rate in blocks, our blocks are up. Number of clients trading blocks are on the platform are up 47%. We're seeing that block count continue to grow month-over-month in Eurobonds.

Volumes in Eurobonds, just to get -- and you guys probably saw this, but in August, they were up 95%.

And then just turning to our third case study, this is in EM. Again, EM is a great market for larger-sized trades. Obviously, it's filled with sovereign debt. So there's a lot of -- clients are used to trading larger size. What they are very interested in is not having information leakage. So they want to go to a targeted list of dealers. The other challenge for EM is it's a diverse liquidity solution. So dealers in certain segments of the market are strong in those kind of local bonds. So you have to find the right dealers. So that diversity of dealer is a big challenge for clients. We have built a dealer selection tool. So we use our own proprietary data, not just the dealer data to help clients make those selections.

And in EM, it's working. What's impressive is that client when they use our selection tool, they increase their fill rate. So 76% of their block trades are being done by the dealer that we preselect for them. That's really powerful. And the feedback in EM, that's super helpful because finding that dealer across the EM market in those local bonds is very difficult. So dealer selection is a powerful ingredient. And here in EM, we're seeing block trading increase year-over-year. And then we are also seeing the number of clients adopting block trading in EM grow as well.

So I know this long-winded answer to your block trading question, but it's an area -- look, one, we think that, that market opportunity is enormous, and we don't see those blocks moving to any other channel other than an e-trading solution. You just need to replicate the data that they see in chat and on phone. That's a key ingredient. Two, we are now seeing what we've been predicting play out, obviously, playing out in EM and Eurobonds, but we're also starting to see the excitement for it in US IG as well. And so the thesis that, that next 50%, that 46% of the IG market can come on to an e-trading platform. That's the opportunity that we've been building for and are super focused on.

Maybe just a couple of follow-ups. So in the U.S., you've had a number of targeted initiatives, the buildout of X-Pro to try to get people conditioned to not go to all but to go to that targeted list. Where are you in that process? Like how many of -- like the big fixed income trading firms are getting that experience when they see their market...

So in US IG, that's where we are most focused on the block solution because it's -- obviously, there's a broad liquid end. We have increased blocks that targeted solution right now is we're still filling out the dealer data. So a key ingredient to clients get comfortable trading a block is making sure that they're seeing dealer content from all their key dealers. And that's been where we've been spending all our time is that dealer content. We also have a really -- we've gotten great feedback on our -- we've put AI into our dealer selection tool in IG. So we're seeing great feedback on we're now able to help select the dealer to trade the block with. And that's a powerful ingredient.

This is slow. It's much slower than I'd like, but it is -- we're seeing that trading behavioral change occur, particularly in EM, where we have really strong dealer data, both in EM and Eurobonds. And so where we have strong data, we're seeing the trader behavior change. In IG, we're still filling out that dealer data. And so it's certainly being worked on. The good news is dealers are not objecting to putting their content on the platform. They want to know who it's going to and who's seeing it, but it's really a matter of where they are in the queue of pushing this data into our platform.

Got it. How should investors think about that time line? We're all an impatient bunch. When you say it will be slow, does that mean a couple of quarters, a year, is there any way to kind of get a sense?

It's definitely months and quarters, not years. We've been at it. We're seeing dealers onboard literally every month, adding to that dealer content. You don't have to get for the last dealer to have a robust kind of solution. And we're adding additional traders to the pilot group in the block trading solution. That said, we're still -- our automation is growing. It's one of the fastest-growing protocols that we have on the platform globally, and we're seeing more and more blocks move into automation. So we're attacking it with this new solution in our X-Pro solution where we need that dealer data, but we're also attacking the block market through automation. And so both are yielding results.

Maybe one more follow-up. I mean, how do you think about the interplay between blocks and portfolio trading? I've heard your competitor talk about portfolio trading as one of the solutions to blocks. Investors get used to single large size trades that kind of make sense logically. Is that part of your strategy? Or are they very much separate? Or is it, I don't know, everything -- whatever works best.

So what's interesting is the protocol is similar, right? Someone loads a portfolio trade. They want to see pricing from dealers and they want to engage a single dealer. They typically don't go out to a large list. It's usually a short list of 3 dealers because they don't want information leakage of the portfolio. So the protocol is very similar to a dealer loading a block and only showing it to a short list. So ironically, very similar protocol. The outcome is very different. Portfolio trade, what we've analyzed is portfolio trades average ticket size is under $1 million. So you have big trades, but small tickets, which just lots of tickets.

And what we've seen is portfolio pricing improves when you avoid putting blocks into a PT. And so that block market is still ripe to transition. The portfolio trade is really the leading edge of the block market. So I agree with our competitor that it's very similar. In fact, many times, the portfolio trader is the block trader. And so what's good news is e-trading has now went to the biggest part of the market. PTs are anywhere from $100 billion to $10 billion. And it's the same kind of group of traders that trade blocks as well.

Really interesting. Maybe switching gears a little bit, stepping back. You kind of mentioned in some of your initial commentary that there's a lot of macro factors that impact your share, the duration, the capture rates. Can you talk a bit about what you're seeing more recently, volatility spreads, how other exogenous factors are impacting the business? I think by now, we have your August update that came out last week. What are you seeing so far in September? How does the back half of the year seem to be shaping out?

Sure. One, like if you look at the macro market, it's been challenging for our model. Obviously, July and August -- even August, we had low vol, very tight spreads. I mean our dealer friends are talking about this is the tightest they've seen in years. So that makes for our protocol where we're providing additional liquidity or alternative liquidity, less in demand. Things like portfolio trading grow, things like dealer-to-dealer matching grows, all those protocols grow in that lower vol environment. Moving to September, it's a very interesting environment in September. You see a sizable new issue in the market. So we're seeing portfolio turnover. Volumes are obviously robust. And there's obviously a rate move that's hopefully pending and that can have an impact on the overall macro market. I don't know, do you want to add?

Yes. I would just say on the rate side, we all know that the probabilities on rate cuts change quite frequently. But I think what we've seen most recently, particularly with the jobs data that came out in August is obviously now I think CME FedWatch is talking about 3 cuts again, September seems folks seem pretty bullish about that particular cut. And so what you're starting to see, and we have to wait and see September 16, 17, it's going to be here soon for the FOMC. But what you're starting to see is some positioning around that in terms of what we're seeing on duration. You guys might remember that a few months back, we were seeing, call it, in the 8.5% range in terms of duration and weighted average years to maturity. Then last month, we saw that go to about 9%, and it's increased a little bit in early days, first few days of September.

But you're definitely seeing sort of a much more normalized yield curve. So think about this, right? If you look at the short end of the curve right now, you're seeing for the first time since, I think, 2022, you're seeing where yields have come in. And if you just take a look at the curve, it just looks quite a bit more normalized. And as people start to talk about, "Oh, is it a bear steepener, is it a bull steepener, if we see the jobs data where it is if inflation stays in check, and there's an argument to be made for both steepener, right? So we have to see early days with the way everything is moving, and we'll see what the Fed does, but we're certainly seeing people positioning for cuts.

And what's exciting about any rate movement by the Fed is it really has our portfolio managers kind of recycling parts of their portfolio. So they are -- there's more movement in the portfolio adjustments that we see in the market, and those are just favorable to overall market volumes. And if you look at where market volumes sit today and the new issue market that's growing, it's only going up. So that trace volume continues to grow with every new issue that we see in the market.

So what would you say are the most important factors maybe going into 2026, spread widening, market volatility, ongoing new issuance. I know there's a lot of different factors, but obviously a normalized yield curve could be pretty impactful to the FPM. But what do you think could evolve in like the most maybe constructive way for MarketAxess?

Sure. There's -- I think about it as those things that are controllable and noncontrollable. So on the noncontrollable side, any type of market volatility is favorable. We're at very low vol. And when it happens, it's episodic. It's not -- it doesn't sit around for a quarter or 2 like we saw in 2020, where the full year was just volatility. Second is rate movement is helpful as we talked about, certainly helps the yield curve and duration extension. But what we can control is really delivery of product that our clients are asking for. And that we need to accelerate. We've been -- we just launched our Mid-X solution for dealer-to-dealer is launching next week. That was put into production this week. We've launched a number of larger-sized orders solutions, more data is coming to the market. So we just as a firm, the things that we control, we have to -- we're going through a technology transformation. We have to move it quicker so we can deliver product and solutions to our base.

Maybe coming back to some of the protocols, we unpacked block trading quite a bit. Let's talk about portfolio trading a little bit. You've shown some progress over the last year or 2 in terms of your electronic -- your market share of PT volumes. What would you say were the key changes you made to catch up? How do you feel about your current level of PT share versus where you'd like to be?

One, I'm not satisfied where we need to be. I do think we can be the dominant portfolio trading tool globally. When I think about portfolio trading, it's something we see across all markets, and we need to have a solution that crosses all product. Two, it's -- we are in a position with unique data. Given our market size and RFQ, we have some unique data and insights that we can share with our clients. When they're -- the biggest question we get from clients is, how do I optimize this portfolio? What's the right portfolio to trade? And we have lots of analytics that help them really size a portfolio. We're seeing portfolio pricing degrades somewhere around $400 million in IG. So any portfolio trades that are larger, you start to see degradation of the price and execution quality. And that makes sense. That's a lot of balance sheet someone's handing you. They want returns on that balance sheet.

So all of this data that we're sharing with clients is helping them optimize portfolio trades. Anything that is a misweighting of a single line item, you have a block size line item sitting inside a portfolio trade. Even if it's $500 million, it's going to cost you too much money for that overall PT. So those adjustments, while minor, are meaningful to execution quality and the traders that we are servicing really care about that. The other piece is we're now deploying AI to the same analytical approach to PT, which is super exciting, where clients are coming to us and saying, here's what I'd like to do. Can you give me portfolio suggestions to make up that coverage in the market. And so that's another place where I think there's exciting novel new things that we are doing.

And the last piece is dealers have to recycle risk. And we have been slow to solve the dealer electronic recycling of risk. And that's just important to our dealer relationships. So things like the launch of Mid-X, which allows a dealer to take down a portfolio trade, turn around and show that inventory to the market and trade at mid. That's an exciting solution for dealers, and that's something we haven't addressed in the U.S. IG market. So it's one, the portfolio trade itself with the client, but also how dealers get out of that risk is an important component to PT trading.

Got it. We'll come back to the dealer topic in a moment. But just one more follow-up on portfolio trading. You mentioned earlier that you're seeing like smaller tickets find their way into portfolio trades. I mean how do you think about the longer-term potential for portfolio trading relative to the broader markets? How much market activity could be handled through portfolio trades in some end states?

Yes, there's a lot of factors that will go into that. One is the efficiency of the rest of the market because the portfolio trade is a very efficient trade, but it also is a well-priced trade. So we're seeing the competition by the dealers is delivering an execution quality that's quite high for the size of balance sheet that they're exposing in those portfolio trades. It's clearly increased turnover in the market. We're hearing from clients that before portfolio trading, they couldn't move this quickly in resizing their portfolios. So it's a wonderful tool for just overall turnover in the market.

I do think we've seen it -- do I think it goes to 30% of the market? It's very hard for it to get over 20%. Low teens to mid-teens is where we've seen it at its highest and its peak. Remember, these are balance sheet-intensive trades. What you win in a portfolio trade doesn't always leave your inventory, and it can take years to actually price the cost of that trade. So one, it's -- I would say there's a short list of dealers doing something that's very balance sheet intensive that makes -- that constrains how big it can get as a percent of market. And then as we automate the other portions of the market, we're delivering new efficiencies that make up some of the challenges. Look, when PMs are facing trading bonds manually, PTs portfolio trade looks really attractive. When things are much more automated and they're getting high execution quality, then there will be a balancing act where they'll have to decide, do I need to go to the portfolio market and trade these large PTs or can I get a lot more done electronically?

Got it. Maybe moving back to the D2D business. Just high level, how are you thinking about the strategy here? You talked about the Mid-X solution. What are you doing to be more competitive in this segment?

One, the dealer-to-dealer market has grown across all our markets, not just in U.S. credit, but across Eurobonds as well as EM. And we're seeing it, it's a sizable portion of the treasury market as well. It's really how do we get dealers out of their inventory in the dealer community. And now inter-dealer brokers have existed for a long time. That's a less efficient means of exiting risk. So really, that dealer-to-dealer market, we arguably have underserved. So we have dealer RFQ, but the launch of Mid-X in US IG is a very important part of our relationship with our dealer community.

We want to deliver something that not only does it -- do we help them get into risk, but we're also helping them efficiently get out of risk on our platform. So we're making sizable investments in that dealer-to-dealer space. The good news is in things like EM and Eurobonds, we already have launched those dealer-to-dealer solutions, and we're seeing growth in that segment. Again, it's not as attractive capture rate, but it is growing. And so we're making sure we solve the dealer-to-dealer business and those other products that we already are growing in across the -- outside the U.S.

How important is price in this segment?

Dealers are highly elastic. So they do move volume around price when they can control selection. When a client requests a trade from them. They have to go to the platform where that client chooses to request. So clients are less elastic, but dealers can move volume and they do move volume when there is a lower fee for execution.

And understanding the Mid-X solution hasn't really been launched yet in the U.S., right? We still saw even last month, we're seeing additional volumes just in terms of what we're doing with our dealer community up 18%. So we're excited to see where this goes in terms of the new launches here in the U.S. as well because we've seen success in our other categories.

And just a timing question, just to kind of level set. So I think you mentioned it launches next week. Will it be broadly available across your dealer community? Does it take some time?

So it clearly takes time to grow liquidity in a mid-market matching solution. The good news is it's available to all dealers next week where we've been spending the summer showing dealers the product, getting them trained up and certainly marketing the solution to dealers. So on the first day, there would be a nice healthy group of dealers coming in. It's also priced efficiently for the dealers. So that's an attractive solution. This is all new incremental revenue in a new protocol that we haven't had in the past. So it's kind of exciting growth to add not only share in IG, but also new revenue. The more important part is it also puts us in a better position with our dealer partners. Obviously, the dealers look at platforms is not helpful to their business. That has changed. And so us delivering things that help them exit risk is a key component of us growing a partnership with that dealer community.

Maybe switching gears a little bit. You talked about algorithmic trading a little bit earlier. Maybe just high level, what's your view on the overall adoption of algorithmic trading by the buy side and to what extent is this increasing electronification? Is there potential for more bond market liquidity? You kind of suggested yes, earlier and potential for turnover to meaningfully improve and then what are the P&L implications? Clearly, more electronic volume is positive? How do we think about the fee capture rate for MarketAxess?

Sure. I'll start with automation and what we're doing there and the excitement around that, and you can cover our capture rate across our automation. So in automation, there's multiple tools that we're delivering to clients. One is just auto RFQ, really just a no-touch solution where they can do what they do electronically, but do it without touching the trading platform. That's been growing sizably anywhere from 30% to 40% a year because clients need to be more efficient. It's also been growing with our clients that are either acquiring or building large SMA businesses, another area of the fixed income market that is growing rapidly. Those small trade sizes have to get efficiently executed. So automation is just perfect for that type of client.

Algorithmic trading, so taking a larger size and putting it inside an algo and then executing electronically over a period of time is still growing on the platform. We launched that over 1.5 years ago, and we're seeing more and more clients adopt it, more and more clients come in to use it. What's exciting is we've seen a number of very large traditional money managers providing price into our market. You can only do that in our all-to-all platform, but being a price maker for the first time, which is -- that's not what we've seen in the past clients providing price. So we've seen 1 or 2 large asset managers focus on just providing an algorithmic into the market.

Traditionally, we've seen that from kind of the systematic community or hedge fund community. But for the first time, we're seeing a large asset manager actually being a price leader. And if you think about it, these large asset managers know where they want to buy bonds and where they want to sell bonds. So for them to create a price, they just need the tooling to actually price bonds on a regular basis. And that's been an exciting outcome from our investment in automation. The surprising area where we've seen sizable growth is in the rates market.

When we bought Pragma, we were very focused on the credit market. We rolled out that algorithm into rates. And now we've seen some of our largest clients adopting the algo solution to move treasury bonds and they move them in big clips. These are $1 billion orders, not like $100,000 orders. So these are sizable orders running through algorithms that will provide VWAP, TWAP and other things that the clients really determine are important to them.

I would just say in terms of particularly on automation, one of the nice things about this protocol is it is in keeping with how our pricing works. So this isn't -- there are other protocols where I know people ask to say, "Oh, well, PT is at a lower fee per million. We all know that. That's been the case for a long time. Chris just talked about the elasticity in the dealer space. But with automation, it really just sort of keeps in right in sync with our other client-initiated pricing, which is great.

Okay. Great. Maybe a couple of separate topics just to touch on before we wrap up. In terms of your ICE partnership, been a little over a year since that was announced, the combination of your liquidity pools. Maybe give us an update there. What's the latest how are volumes trending?

So far, that partnership, one, we're not complete with the integration. So they're on our -- they're connected to our platform. We're integrating liquidity. That's been super exciting, particularly in the muni market where they have the TMC asset that just phenomenal liquidity in munis. Also corporate bonds, the same. So there -- the integration has been seamless. The teams worked quickly together to get it integrated with our platform. We are adding other ways to connect ICE bonds, which is exciting. So it's not just one solution. It's going to be a few solutions. We're including putting liquidity on ICE bonds on our list of things to do. So that's an exciting change as well for that relationship. But it's been a great relationship and certainly one we see growing, and we're not done with that integration, which is exciting.

Got it. Totally separate topic, private credit, this has come up a few times with you guys and some of the alternative asset managers have been increasingly talking about making those markets more liquid. How might MarketAxess be positioned to participate in that trend if it were to really pick up?

One, we agree with the vision that public and private could be together, right? The evolution of public and private being on one platform or one place in the market is the right block process. But they are different markets. One, it's private, so you can't make it distributed to everyone. So it has to be a very controlled solution. But we do see those markets merging together at some point in the future. And certainly look at our distribution channel as a huge asset, whether it's a public credit, a treasury, an EM bond or private credit, we see that distribution channel is a very powerful channel.

And maybe just lastly, capital allocation. I think you've commented recently that the balance sheet is very well positioned for potential M&A. How do you think about that M&A framework? What are your top priorities? What makes sense to buy rather than build?

Well, one, we've been quite conservative in our M&A strategy. We've obviously only looked at smaller things. We will continue to look at our -- when I look at our market opportunity, which we just kind of showed you in the slide, that market opportunity is so amazing. It's very hard to come up with an M&A solution that's better than the market opportunity in front of us. So organic growth strategy is our #1 priority. We see the market opportunity. We don't want to get distracted from that market opportunity. Things that we've seen in the past, if there's something that is technology accretive, meaning it's bringing new tech that we'd otherwise have to build, and it's faster and efficient way, that's interesting. Those are smaller bolt-on solutions. When I look at the broader market, nothing gives us the market opportunity that's in front of us. So organic growth is our #1 priority. If you look at our technology strategy, it's rolling out new products and those are all already in-house. We don't have to go and buy anything. We just have to deliver tech right now. So...

I would just say in terms of overall capital strategy and how we think about it, right? So Chris is talking about the investing in the organic opportunity, that's how we think about sort of first best highest use of capital, right? The next thing you think about really is and you seen us do this is we have looked and said, okay, where does it make sense for us from a share repurchase perspective, and you probably saw over the course of the last year, we increased our Board authorization at the highest level the firm has ever had. We're obviously a very cash-generative business. And so you've seen us go ahead and do additional buybacks this year. And in fact, by the first half of the year, we bought back the same amount, I think, that we did all of last year, right? So we're being very opportunistic in that sense from a share repurchase perspective. And then the last part is what Chris said about M&A, bolt-ons and things that would make sense for our business model and our strategy going forward to help accelerate what we're doing.

Well, we're nearly out of time. So I think we'll have to leave it there. But Chris, Ilene, thank you so much for being here. What a pleasure to have you.

Thanks for having us. Really appreciate it. Thanks.

Thank you.