Good morning and welcome to TradeWeb's third quarter 2026 earnings conference call. As a reminder, today's call is being recorded and will be available for playback. To begin, I'll turn the call over to Head of Treasury, FP&A, and Investor Relations, Ashley Serrao. Please go ahead.

Thank you and good morning. Joining me today for the call are our CEO, Billy Hult, who will review our business results and key growth initiatives. and our CFO, Sara Furber, who will review our financial results. We intend to use the website as a means of disclosing material, non-public information and complying with our disclosure obligations under Regulation FD. I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements related to, among other things, our guidance, our future performance, our proposed acquisition of TruMid, and the industry and markets in which we operate are forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our earnings release, earnings presentation, and periodic reports filed with the SEC. In addition, on today's call, we will reference certain non-GAAP measures, as well as certain market and industry data. Information regarding these non-GAAP measures, including reconciliations to GAAP measures, is in our earnings release and earnings presentation. Information regarding market and industry data, including sources, is in our earnings presentation. Now, let me turn the call over to Billy.

Thanks, Ashley. Good morning, and thank you for joining our third quarter earnings call. We delivered another outstanding quarter, generating the second highest quarterly revenue in our history and building on the record performance we achieved in the first half of the year. Through the first nine months of the year, we've generated over $1.7 billion of revenue, surpassing what we delivered in all of 2024. Growth in our markets is never going to be a straight line. Volatility changes, issuance changes, interest rates change, and client behavior changes. But if you believe that over the next 10 years, global fixed income markets are going to continue to grow and that more of the activity in those markets is going to move from voice and manual workflows towards electronic, automated, and increasingly intelligent workflows, then our opportunity is going to compound right along with that. We are already seeing that opportunity play out in our results. In the third quarter, we set a record for monthly swap share in September, posted our second highest monthly electronic share and investment grade credit in September, excluding affiliate trades, and reached our second highest U.S. Treasury share in August. And yet, as encouraging as that progress is, we believe that we are still early in this journey. The majority of global fixed income activity is done over the phone or chat, and the electronification runway in front of us is substantial. We intend to keep investing into our strength organically and inorganically. Last week, we announced we entered into a definitive agreement to acquire TruMid, which would further expand our presence across the credit markets, specifically in the new issue space that trades mainly over the phone. With this acquisition, we will expand our suite of protocols and expand our client coverage across hedge fund clients. Diving into the third quarter, strong client activity and a risk-on environment drove 14.9% year-over-year revenue growth on a reported basis. Our international business remains a key priority, with revenue growing more than 22% as our strategic initiatives across Europe, APAC, and EM continued to pay off. International continued to fire on all cylinders this quarter, contributing more than 60% over overall revenue growth. Importantly, that strength was broad-based, with revenue from European and Asian clients growing nearly 20% and 30% year-over-year, respectively. European government bonds achieved record volumes in September and their second best quarter ever, while Snap Plus usage and AIX trading volumes in European credit also reached record levels in September, underscoring the continued adoption of our innovative protocols and solutions. We continue to balance investing for growth and profitability as adjusted EBITDA margins expanded by 59 basis points relative to the third quarter of 2025. Turning to slide five, we produced the second highest quarterly revenues in our history across rates and credit. Our rates revenues were driven by continued organic growth across swaps and global government bonds. Credit revenues were led by strength across global corporate bonds, municipal bonds, and credit derivatives. Equities were led by growth in global ETFs and equity derivatives. Money markets revenue growth was led by global repos and ICD. Finally, market data revenues were up nearly 20% year-over-year, driven by our LSEG market data contract. Turning to slide 6, I will provide a brief update on a few of our focus areas, U.S. Treasuries and ETFs, and then I will dig deeper into U.S. credit and global interest rate swaps. Starting with U.S. Treasuries, yields climbed through the quarter and September brought real turbulence. The Fed raised rates for the first time since 2023. The 10-year jumped 50 basis points to above 5.2%, and intraday volatility hit its highest level of the year. Through it all, we continued to perform strongly. Our third quarter market share increased to 23.6%, up 160 basis points year-over-year, leading to over 15% year-over-year revenue growth. Institutional U.S. Treasuries once again produced another strong quarter, with revenues increasing nearly 20% year-over-year, reflecting deeper client engagement and continued adoption of electronic workflows. Our competitive position remains strong. We continue to have over 50% share in electronic institutional U.S. Treasuries versus our largest electronic peer and further widened our share lead year-over-year during the period. We're continuing to build momentum in the basis and multi-leg trades, two large and strategically important workflows that have traditionally remained predominantly voice-driven. Combined, average daily volume across these initiatives grew in excess of 50% year-over-year in the third quarter. We're still early in onboarding clients and dealers across these initiatives, and that's the exciting part because the momentum is already building and we see significant runway from here. Our wholesale US Treasuries saw revenues grow over 15% led by our sweep and wholesale streaming protocols. Wholesale remains a strategic priority for us, and our opportunity there extends well beyond competing on price alone. By broadening our execution capabilities, introducing new protocols, expanding our liquidity network, and deepening client relationships, we're focused on building a more differentiated platform and we believe that will position us to gain durable market share across the wholesale US treasury market. Turning to equities, RFQ has traditionally been a high touch market and AIX is turning into a no touch protocol, helping clients trade faster, more efficiently and at scale. We're also bringing the trade web approach to other equity linked markets that still run largely on phone and chat. were the only platform offering an electronic solution across U.S., European, and Asian convertible bonds. And our new basket trading capability lets clients trade contingently with a dealer on a list of bonds, which is resonating with clients rebalancing portfolios. Against that backdrop, ETFs posted revenue growth in excess of 25% year over year, despite a similar market volatility environment. Client engagement continues to increase and our AIX automation solution continues to be a key differentiator. AIX average daily trades were up over 65% year over year, with over 70% and 20% growth across European ETFs and U.S. ETFs, respectively. Our efforts to broaden our equity presence beyond our flagship ETF franchise continue to pay off. with institutional equity derivative revenues up over 30% year over year. Looking ahead, the pipeline remains strong as the benefits of our electronic solutions continue to resonate with our clients. We're positioned to capture ETF growth on two fronts, the structural expansion of global ETF markets and the pipeline of clients joining us to trade them. We believe the dual exposure sets us apart and it grows more valuable every year. Turning to global credit on slide seven, revenues grew 10% year-over-year driven by 15% growth in U.S. institutional credit, 8% growth in municipal bonds, and 7% growth in international credit. Strength here was partially offset by a 1% year-over-year decline in our retail credit channel. As I mentioned last week, we continue to see credit as one of the largest long-term opportunities across our markets, and our roadmap remains focused on deepening our position across the protocols our clients use most. In U.S. credit, that starts with RFQ, the protocol where most institutional volume still trades. Institutional RFQ average daily volume grew over 30% year over year, with double-digit growth in both IG and high yield. Excluding the impact of affiliate trades in trace, RFQ share of Trace reached another quarterly record. We also achieved record block share in U.S. investment grade with block average daily volume up over 30% year-over-year across IG and high yield. Growth was broad-based across portfolio trading, RFQ, and sessions, demonstrating the value of our multi-protocol approach. Portfolio trading delivered another strong average daily volume with strong double digit growth across both US and international PT. Meanwhile, all trade generated around $246 billion in volume with average daily volume up 20% year over year. Our all to all average daily volume was up over 40% year over year, and our dealer RFQ average daily volume was up over 100% year over year. In September, We enhanced AI Price, our automated pricing engine for investment-grade and high-yield corporate bonds, with expanded data inputs, upgraded machine learning models, and more responsive intraday pricing. These enhancements aim to reduce the need for manual intervention and give clients greater confidence to route larger trades through AIX. We also continued to build out Snap Plus, which uses predictive analytics and proprietary trading data to help clients identify the most appropriate liquidity providers for each trade. Terra, our AI-powered assistant launched last quarter, continues to add firms and users with engagement deepening as more firms bring on multiple active users. Clients are currently using Terra for reporting and analytics, and over time, we see it laying the groundwork for workflows where clients can set parameters, select protocols, and execute within client-defined guardrails. Looking ahead, we remain confident in the long-term outlook for global credit. In EM credit, revenues grew 23% year-over-year, while electronification in EM credit remains in its early stages, we continue to build on our established global network and broad EM product suite to support growing client adoption. In European credit, AIX average daily volume reached its second highest monthly level in September, building on the electronic spread trading protocol we launched for European credit portfolios last quarter. Together, we believe these initiatives position us well to capture the increased adoption of electronic trading and credit. Moving to slide eight, Global swaps delivered its second highest quarterly revenues of 26% year over year. The performance was driven by a combination of strong client engagement across our global suite of currencies, just as importantly, our core risk market share, which excludes compression activity and is the best indicator of our underlying franchise, reached another record, rising 330 basis points year over year. Total market share moved from 21.8% in 3Q25 to 25.3% in 3Q26. Last quarter, I highlighted that our swaps business is not one monolithic business. When we launched swaps in 2005, we offered three currencies and now we are up to 28 currencies. As rates have gone global, so have our clients and we follow our clients. In addition to a global currency set, we also have a global client base that includes asset managers, hedge funds, and numerous central banks that all have different hedging and trading goals. Macroeconomic policy was front and center as global government bonds sold off three months in a row. In August, every one of the 18 10-year benchmarks we tracked moved higher. By September, the Fed, the ECB, The Bank of Japan and the Reserve Bank of Australia had all raised rates while the Bank of England laid out a multi-year plan to shrink its balance sheet. Volatility didn't pick up in only one corner of the market either. It rose across global markets. In September, intraday volatility in dollar, euro, and sterling swaps each jumped roughly 40% from August. When every central bank is moving to its own beat, clients have to manage rate risk in every currency at the same time. Our scaled and growing swaps business saw broad-based growth across developed and emerging markets, with risk trading market share growth accelerating our performance and leading to another strong quarter. We achieved our second highest revenues across institutional dollar, euro, and EM swaps revenues, and we achieved record revenues across APAC swaps. We continue to make progress across emerging market swaps and our rapidly growing RFM protocol. Our third quarter EM swaps revenues produced another strong growth quarter, while our RFM protocol also saw average daily volume grow by more than 65% year over year, with adoption picking up. Looking ahead, we continue to believe the long-term growth potential for swaps remains significant. With just 30% of the cleared swaps market currently electronified, There is substantial runway to digitize workflow alongside our clients. We continue to partner with them to create better workflow solutions across a growing part of the cleared markets and make inroads into the uncleared swaps market. And with that, let me turn it over to Sara to discuss our financials in more detail.

Thanks, Billy, and good morning. As I go through the numbers, All comparisons will be to the prior year period, unless otherwise noted. Slide 9 provides a summary of our quarterly earnings performance. As Billy recapped earlier, this quarter we saw our second highest revenues of $585 million that were up 14.9% year-on-year on a reported basis and 15.4% on a constant currency basis, given the weakening dollar. We derived approximately 44% of our third quarter revenues from international clients, and recall that approximately 30% of our revenue base is denominated in currencies other than dollars, predominantly in euros. Total trading revenues increased 15%, comprised of 18% variable trading revenue growth and 4% growth across fixed trading revenues. Rates fixed revenue growth was driven by the addition of dealers to our mortgage, swaps, and U.S. government bond platform, as well as existing dealers opting for higher fixed fee plans and some increases in minimum fee floors. Credit fixed revenue declined slightly due to a small dealer stepping away from the credit market. Money markets fixed revenue increased due to a dealer moving from a variable to fixed fee plan. Other revenues of $7.6 million for the third quarter decreased 17% year over year, driven by lower super validator fees associated with our commercial relationship with the Canton network, along with a decline in revenue tied to periodic technology enhancements performed for our retail clients. As a reminder, our other revenue line will remain variable from quarter to quarter, reflecting fluctuations in a number of factors, including the number of Canton coins earned, The value of Canton coins, the number of super validators in the network, and periodic technology enhancements for retail clients. For modeling purposes, we believe fourth quarter other revenues will be down low single digits relative to the third quarter. The super validator fees are expected to moderate with the addition of new validators to the Canton network, reflecting the continued expansion and strengthening of the network. The third quarter adjusted EBITDA margin of 54.5% increased by 57 basis points on a reported basis when compared to our 2025 full year margins. Our net interest income of approximately $18 million decreased due to lower interest rate yields despite higher cash balances. Lastly, GAAP results this quarter reflected an $18.7 million net unrealized gain on our strategic investments. As a reminder, this portfolio is designed to invest in emerging areas like digital assets, tokenization, and prediction markets, so results here will fluctuate from quarter to quarter. Moving on to fees per million on slide 10, we provide a highlight of the key trends for the quarter. You can see slide 16 of the earnings presentation for the full detail regarding our fee per million performance this quarter. For long tenor swaps, average fees per million were down 10.5%. primarily due to an increase in compression activity and lower duration. For cash credit, average fees per million decreased 10.6%, primarily due to a mixed shift away from higher fee per million munis and retail credit and towards portfolio trading, which carry a lower fee per million. Slide 11 details our adjusted expenses. At a high level, the scalability and variable nature of our expense base allow us to continue to invest for growth and grow margins. We've maintained a consistent philosophy here. Adjusted expenses for the third quarter increased 13.9% on a reported basis and 15.1% on a constant currency basis. During the third quarter, we continued investments in tech and communications, tech consulting, and client relationship development. Adjusted compensation costs grew 8.8%. primarily due to higher salaries and performance-related compensation, along with higher headcount, which was up 6.1% year over year. Technology and communication costs increased 31.8%, primarily due to our continued investments in data strategy and infrastructure, and increased software costs, including AI. Approximately $4.5 million of the increase was driven by accelerated investments in AI and by higher reference data costs that began in the fourth quarter of 2025. Adjusted professional fees grew 38.8%, primarily due to an increase in offshore tech consultants and episodic legal and consulting fees related to strategic initiatives. We expect a slight step up in the fourth quarter professional fees relative to the third quarter. Occupancy expenses increased 22.9%, primarily from increased rent due to the move to our new New York City headquarters in September of last year, as well as increased data center rent and expanded capacity. Adjusted general and administrative costs increased 2.6%, primarily due to a pickup in travel and entertainment, but partially offset by favorable FX movements. Favorable movements in FX resulted in a $2.1 million gain in the third quarter of 26 versus approximately a $1.1 million loss in the third quarter of 25. Excluding FX, adjusted general and administrative costs grew 21.5%. Slide 12 details capital management and our guidance. On our cash position and capital return policy, we ended the third quarter in a strong position with approximately $2.1 billion in cash and cash equivalents and free cash flow exceeding $1 billion for the trailing 12 months, representing strong year-over-year growth of approximately 9.7%. Recall, we intend to pay $1.89 billion in cash consideration for TruMID once it closes. We also held approximately 1.6 billion Canton Coins, with a fair value of approximately $207.5 million. With this quarter's earnings, the Board declared a quarterly dividend of 14 cents per Class A and Class B shares, up 16.7% year-over-year. And during the quarter, we stepped up our share repurchases, buying back approximately 2 million shares for $210 million as we opportunistically took advantage of the dislocation in our stock price. There was $125 million of aggregate share repurchase authorization remaining as of September 30th, and we remain committed to offsetting dilution from equity compensation, even at current share price levels. Turning to guidance for 2026. In light of our strong continued business momentum in the third quarter and October and a potentially more dynamic foreign exchange rate backdrop, we are updating our guidance for adjusted expenses to a range of $1.155 billion to 1.175 billion, and we are currently trending towards the middle of that new range. We believe we can drive adjusted EBITDA and operating margin expansion compared to 2025 at either end of this range, although we expect the incremental margin expansion to be more muted than last year as we continue to focus on balancing margin expansion with investing for the future. Overall, we continue to capitalize on the revenue momentum by increasing investments in product and client relationships as we head into year end. Thanks, Sara.

Every day since our inception, our focus has been simple. We strive to listen to our clients and build better workflow solutions across the fixed income markets. That focus continues to take us to new highs, and we believe the best is yet to come. A couple of decades ago, people doubted that the broad fixed income markets needed to go electronic. Today, it's hard to imagine it any other way. And electronic trading keeps spreading across rates, credit, equities, and Money Markets. But there's still a lot of runway ahead. In 2026, big parts of the most important markets in the world still trade like it's 1996. Somewhere right now, a spreadsheet of a potential trade is being sent over email or chat. We believe every protocol we build and every piece of data we provide our clients moves more of that business off the phone and chat and onto the screen. with better execution outcomes for our clients. Just as importantly, the definition of macro is changing fast. Clients don't just want a price on a treasury or a swap anymore. They want exposure across rates, mortgages, credit, and increasingly new areas like crypto and prediction markets. We will always be long innovation and change. We'll keep placing bets with the right strategic partners and we'll continue to move the global markets forward The same drivers that powered the first nine months are already carrying into the fourth quarter. With two important month-end trading days left in October, which tends to be some of our strongest revenue days, average daily revenue is up 26% year-over-year relative to October 2025. The diversity of our growth remains a theme as we are seeing preliminary strong double-digit growth across rates, credit, and equities. Specifically, we are seeing double-digit volume growth year-over-year across global government bonds, mortgages, global interest rate and credit default swaps, U.S. credit, munis, and global equities. Our IG share is tracking below and high-yield share is tracking above September levels. I would like to conclude my remarks by thanking our clients for their business and partnership in the quarter. I want to thank my colleagues for their efforts that contributed to the second highest quarterly revenues in our history. With that, I will turn it back to Ashley for your questions.

Thanks, Billy. Operator, you can now take our first question.

Thank you. One moment while we can pause the Q&A roster. and our first question will be coming from the line of Dan Wilden of Wells Fargo. Please go ahead.

Hi, good morning. I wanted to touch back on the true mid-revenue opportunities and specifically around new issues. Should we think about the opportunity as more direct transaction revenue or as the larger benefit data and liquidity capture once those bonds start entering secondary trading? Thanks.

Hey, Dan, how are you? Thanks for the question. It's a good one, of course. I like the sort of the word opportunity because I think from our perspective in a very straightforward way, I think we believe strongly that all opportunity comes from the fact that you improve the trading experience of your client. So we start with that, improving the trading experience of your client. And so As we've gone from being kind of, when we went public, a sort of afterthought and credit to a 500 million Global Business and Credit. I think we've done that by, you know, improving the trading experience of our clients. I think that's like an important thing for us to kind of keep in mind as we think about kind of where we're headed. And obviously from our perspective, you know, kind of leading with strength, I think the U.S. credit business has been a key engine of that growth. And I think in an important way, to make an obvious point, we still see a long runway for electronification. As you know very well, IG at roughly 45% to 50%. electronic and high yield, much less 25 to 30. So a big long runway there. To your question, we think about modernizing markets from the day a bond is priced through every trade that follows. That's the mentality. So I think very specifically, I think it's primarily, I think we think about this as primarily a transaction Revenue Story. But as you know very well, you can never separate the data from that. I think that data is a very important part of the story. So obviously it starts in the new issue window where the price discovery happens before a bond is ever traded. You expand the distribution story connecting many more clients to these protocols across our network. And from there, It carries into secondary. New issue gets the market's attention. That's the way we think about it. New issue gets the market's attention, especially amongst an extremely important client base, which is obviously the hedge funds. And I think TruMid has used that very well to cross sell into RFQ and take swarms beyond the new issue window. And we feel really good about that. And then so we use that, kind of think about the expression, like we use that halo effect is a big part, I think, of what makes this business durable. And for sure, we see further ways to expand that halo effect. Not surprisingly, and you've heard us talk about this, data reinforces all of that. TrueMid's new issue data is expected, from our perspective, to more than strengthen our AI price and our dealer selection tools. We talk about Snap+. Better data, at the end of the day, gives clients the confidence to trade in size and with less information leakage. And that means, from our perspective, obviously more trading in size. And over time, I think the blueprint, the plan will be to connect swarms, sweep, RFQ, so a client can start a large order in one protocol and work the residual in another, all in the most important thing, which is one workflow. So think about it kind of this way, Dan, new issue is, The extremely important kind of entry point. The full bond life cycle, think about that as the opportunity. And I think to your question, I think it will primarily show up from our perspective and how you think about us in terms of transaction revenue. And we remain extremely excited about the opportunity. And thanks for the question.

Thank you. Thank you. One moment for the next question. Our next question is coming from the line of Patrick Moley of Piper Sandler. Please go ahead.

Yeah, thanks. Good morning. Billy, just maybe following up on the Truman deal, you've talked about how they bring a hedge fund and systematic client base that's different from the traditional asset manager flow that your credit business was built on. So how do you see that mix shifting towards quant and systematic flow over time? and does that change how you think about the dealer relationships and the role of all-to-all liquidity on the platform? Thanks.

Yeah, hey Patrick, how are you? It's a really good question. Could we start with like, think about it this way, you know, the combination is going to bring two complementary client bases onto one platform. And, you know, I say things very simply, as you know very well, that's one of the things we like the most about it, kind of period. And as we've scaled in U.S. credit and you kind of heard me I don't want to say brag, but talk about the stats in the last question. I think we've done that, obviously, by achieving greater penetration with asset managers, probably more so than hedge funds. We've done a great job in the hedge fund world in rates, as you know, but we've been eyeing that kind of hedge fund world in credit. and I think Trumid, without question from our perspective, has built a very loyal following amongst the hedge funds and the systematic firms. I think that's one of the things they've done best. And so, simply together, we reach across the institutional credit market in a way that neither platform could on its own. and I think that's a pretty strong statement from my perspective. I think we bring breadth. I think in an interesting way, TruMid with a lot of respect brings velocity. Hedge funds and systematic players are obviously among the fastest growing, most important, highest velocity client segments in the credit business and as a systematic trading and ETFs continue to proliferate, we believe that flow is going to become a bigger Part of the market. Bringing all of that onto one platform creates opportunities to improve liquidity, period. And better liquidity benefits all of our clients, whether they trade with dealers directly or in the all-to-all world. That's a pretty strong comment. I think hedge funds contribute less than 15%. of our U.S. credit business today, which is why we see significant room to grow there. It doesn't change how we think about our dealer relationships. As you know very well, that's a core part of who we are as a company. I think relationships matter in this market a tremendous amount. And without question, we respect that we hold a super important piece of real estate that exists between the banks and their most important clients. We never kind of lose sight of that. You've heard me talk about kind of all-to-all trading and how that is from our perspective kind of has been a historic table stakes protocol in the market. So we never minimize the importance of those table stakes. But I think at the end of the day what this combination has me all excited and jazzed about is the is the opportunity around, obviously, risk trades and block trades. And we think the combination of protocols in the market and the types of clients coming onto our platform is going to give us an interesting angle into that. Appreciate the question, Patrick, and thank you.

Yeah, thank you, Billy.

Yep.

One moment for the next question, please. Our next question is coming from the line of Alexander Bolsterd. of Goldman Sachs. Please go ahead.

Hey, Billy. Good morning, everybody. I wanted to ask you guys about the Raised Derivatives franchise. Obviously, it's been and continues to be a very important source of growth. We continue to see that in October. I guess one of the dynamics that we've gotten sort of accustomed to in market structure is typically there is a handful of like larger players competing with each other. You guys have been able to sustain your competitive mode here for some time. So curious, what do you think are the key attributes of the mode in that business and how durable do you think your market share advantages over time?

Thank you.

Yeah, good question, Alex. Yeah, really strong October. And I know where you're coming from with that question. I think it's important. You've heard me say this. I think I've said this to you in our fireside. Our clients have always had the ability to do business away from us, period. And from my perspective, in a very strong way, I think that has made us a better company. I feel that very strongly. And I think to your question, I think our strength in swaps rests, to start with, You know, the fact that we are a true global franchise. And my instinct is that's inherently in a certain way harder to build and copy. As you know very well, Swaps is a global kind of interconnected market. Clients manage rate risk across currencies that move off of one another. And so I think what we feel pretty strongly about is the only way to give our clients best-in-class liquidity is to offer the whole market in one place. So we've gone and we've built a business where we facilitate swaps trading across, I think it is, 28 currencies globally today. And that's up from $3 billion. When we went into business, assembling that footprint has been, as you know very well because you've known us for a long time, has been the work of essentially two decades. And so there's a lot of moat kind of around that. The franchise sits, as you know, on a regulated infrastructure that takes years to put in place, except in the U.S., MTF in Europe. Connectivity to the Clearinghouse is all of the really important work that gets done. Operating across these regimes as the rules evolve, I say this in a nice way, I think it's complex, and I think that's what lets clients Feel Comfortable, and on top of that infrastructure sits our kind of client solutions. Together, I think from our perspective, that drives liquidities. Dealers stream prices where clients trade. Clients trade where the solutions are. This is the kind of cadence of how you build a business. Competition, as I said, has always been a big feature of this market. We welcome it. I think our durability... I think speaks for itself. I think we currently hold an estimated, I think, 70 to 80% of the electronic swaps market, 70 to 80% of the electronic swaps market. I think that leadership has held, you know, despite, you know, obviously, you know, a well-entrenched, as you know, Bloomberg, which was actually first to market like way back when. I think when you service the clients, You're attentive to the most important liquidity providers in the market. When you have, Alex, like a pretty deep understanding of market structure and the things that matter the most to the participants, you can feel comfortable with your leadership position. But as you know very well, and I say this like very succinctly, like never too comfortable. because you have to continue to innovate. You have to continue to invest in your business. We are very, very well aware of the strength of our swaps business and we'll continue to invest in, engage with our clients and protect that business because it's best in class from our perspective. So appreciate the question. Yep, loud and clear. Thanks, Billy.

One moment for the next question. Next question is coming from the line of Dan Fenn of Jefferies. Please go ahead.

Great. Thanks. Good morning. Question on fee per million. I know you don't manage to a number as it's an output of your client behavior, but as we think about higher interest rates, can you provide some context around client behavior and maybe what products might see more or less activity in this backdrop and the subsequent impact that will have on fee per million?

Sure. It's Sara. Hey, Dan. Look, overall, a higher interest rate backdrop is generally very constructive for fixed income activity. And with all our businesses, and we maintain a portfolio of them, there are a few general ways to think about the impact on fee per million, but given that it's a portfolio, you're not going to see uniform outcomes. Three big buckets, I think, that are easy to talk about. First, and you know this so well, the most significant driver of fee per million in any scenario, in any rate environment, really is business mix. But with a higher rate environment in particular, we tend to see retail activity really pick up. Retail investors gravitate towards fixed income as yields become more attractive relative to their other alternatives like equities and bank deposits. and for us, retail activity comes in with a higher fee per million than our average. So you see that in places like meanies and credit. On the other side, higher rates tend to mute other parts of the portfolio and so we tend to see more muted mortgage issuance and refinancing activity which means our mortgage trading business tends to see less activity and that happens to be a lower fee per million business. So those are two big business activity levels that you tend to see with big moves in rates. I'd say the second bucket of behavior that we see, if you're talking about absolute levels of rates, and they don't often move in isolation, but if you just shock the system with an absolute level of rates, you'd see the most impact in swaps fee per million. So for 100 basis point move for rates going up, you'd see fee per million coming down something like 4% to 5%. and many more. If you moved out a year in duration and credit, it moves something like 3%. So that gives you the second big bucket. And then I would say the other thing that really moves fee per million, but it's probably a little bit less predictable around what the rate environment is, is client choice around protocol mix. And that's more of a function of what the client's objective is at the time. And so generally speaking, portfolio trading is on the lower end of our protocol mix. Things like RFQ, RFM are on the higher end. But I'd make the point that I wouldn't just draw a straight line if there's lower fee per million activity. That's bad for us. I think about things like compression, which we've talked a lot about in prior earnings calls. Compression comes with a low fee per million, but we like that activity. We like things that bring clients onto the platform that increase their engagement with us, and ultimately that leads to us growing revenue. And so it's not simply the only lever to look at, but I totally take your point given where rates are. And I'd maybe just highlight one other point that, you know, we have seen our ability, given this portfolio of businesses, to grow with high rates, low rates, inverted yield curve, and upward sloping yield curve. And I think that's one of the advantages of having the breadth of the portfolio and the type of free cash flow we have. We can be opportunistic about where we allocate capital. And that really, that builds a pretty durable franchise. But thanks for the question.

Great. Thank you.

One moment for the next question, please. Our next question is coming from the line of Simon Clinch of Rothschild and Company Redburn. Please go ahead.

Hi, this is Cara Thompson on for Simon Clinch. Thanks for taking my question. The last month since the end of the third quarter has seen a surge in bond yields, inflation, and broader fears over rates in the economy. How is this feeding through to the trading environment across your asset classes? and how do you consider the puts and takes for volume growth over the next year or more?

Good question. We like to say like, you know, we thrive in change and it's like be careful what you wish for. Obviously, there's a lot of change and a lot of activity, a lot of things happening in the market. If we just like, the year went by so fast, but if you just like rewind the clock for a second, I remember very distinctly I said, You know, at our earnings call in the beginning of the year that I was like super amped for 26. But I remember going into 26 and almost, I think the consensus was in an interesting way that I think we were expecting, you know, a dovish Fed with the market pricing cuts. You know, oops, obviously that consensus kind of turned out to be wrong. In 26, obviously, as you know very well, inflation came back big time to the forefront, oil, fiscal supply. The conflict in the Middle East hit the radar, all of that feeding that. And now, obviously, I think it's all interesting, but the Fed is obviously in a hiking regime, and the rate volatility backdrop is pretty strong. I think September... was a true test for the market, not just in the U.S., but I'll say this, globally. Obviously, if you just think about the raw numbers, I think the 10-year closed above 5% for the first time since way back, like 2007. And in Europe, like our friends, the Bond Vigilantes obviously came from France. I don't know how to say vigilante in French. But, you know, as the budget stalled, you know, the spread to the buns blew out to levels not seen since, like, the Euro crisis. So, like, big stuff was happening and continues to happen in our market. Treasury losses, obviously, as you guys know, are driven by inflation and supply. I think that has, you know, I think in a precise way, I think that's kind of spread into other parts of fixed income, obviously kind of including credit. Some RV and sovereign ARB strategies took some losses. I think that risk was deployed pretty quickly. To make an obvious point, September was our kind of best Treasury month on record. So kind of thriving amongst this volatility has always been sort of a big part of who we are and I think a new source of volatility is now beginning to form obviously in credit with the hyperscaler credit default swaps you know under some pressure given given some of the massive capex being funded with debt as I described that looking into 27 kind of like you know the crystal ball is a tricky one I would say this very clearly, we expect continued volume growth. The macro backdrop in rates is going to be, I think, dictated by a Fed that stays focused to start with on inflation. You have a post-midterm election landscape that's going to add Some version of uncertainty with rates likely higher for longer. I'm not an expert, but I think that's something I can say. Continued funding of the AI build-out is going to lead to more speculation, repositioning in credit. This is kind of like activity. I think we can say the market consensus is that there's going to be a pretty volatile 2027. That's my bet. I think that's TradeWeb's bet. I think we're betting the landscape's going to stay kind of like this. And my instinct is, you know, that's a pretty bullish environment for our rates and credit business. So pretty amped up and excited about kind of our opportunity as we hit, you know, 27 amongst, you know, obviously, as you know very well, a lot of moving parts in a complex market environment. Thank you for the question.

Thank you.

One moment for the next question. Our next question is coming from the line of Ken Worthington of JP Morgan. Please go ahead.

Hi, good morning. We're seeing the likes of Jump, Jane, Citadel, and Virtu raising or refinancing very large quantities of debt. As we think about their position in rates and particularly in credit, How do you see these increased capital positions changing the role of these firms from just being high turnover to ones taking on longer positions, larger positions on balance sheet? And are you seeing their presence in fixed income just getting bigger, or is it getting bigger at a faster pace as it raises capital? And ultimately, what does this mean for Trade Bud?

Yeah. It's an interesting question because I hadn't kind of thought about it exactly the way you asked it. And it's like a, yeah, it's right. I'll start with this. I think largely achieved through the success, Ken, that we've had in our combination of our ETF business and our wholesale treasury business, I think from our perspective, getting closer to Jump, Jane, Citadel, Virtu, etc., given the scope of their ambition in the markets, is probably one of the More important evolutions that we've had as a company in terms of servicing the full client base. I think that's been a really important evolution for us. Obviously, as you know, private sector intermediation has been and is back in vogue. And I think that's good for our clients, good for the market, tends to be good for TradeWeb. I wouldn't draw necessarily a perfectly straight line from a financing transaction to a firm's willingness to you know inherently warehouse more risk. Obviously firms like JP Morgan, Goldman and Citi, Morgan Stanley have done just an amazing job over the past bunch of years in very complex market warehousing significant amounts of risk. I think directionally though capital gives these kinds of firms that you're describing ultimately more flexibility to continue to invest in technology which I think supports larger client relationships that can selectively hold more inventory. I think these are important evolutions that speak to the ambitions of these firms. I think the reality is firms can like Jump, like Jane, like Citadel, et cetera, embrace technology as they look to create broader penetration inside of the markets that we live and breathe in a way that fits our eye really well. We saw and we've seen the ambition of Citadel as they've done a pretty strong job creating big market share numbers across a variety of our rates businesses. My instinct is that's going to play out more and more in the credit business where I feel like the client base is continuing to look for More counterparties, more liquidity that plays again more to direct RFQ business, I think in a fundamentally important way. As these types of firms continue to make inroads in the businesses that we live in, my instinct is the most important thing around this is that the historic I use the expression legacy banks. You know how I use that word. The JP Morgans, the Goldman's, the Morgan Stanley's, and the Citi's, Bank of America's. They are eyes wide open, ready, investing in the businesses, protecting their client base, and we're going to have an interesting road that's going to be played out in these businesses. And I think as we think about that competitive landscape, and the advent of technology, my instinct is all of this, in the most important way, is a great outcome for the client base and for the transparency and the efficiencies that continue to progress in these markets. I think the outcome is continued efficiency, continued transparency, which are the exact things that the marketplace wants. So it's going to be a very, very interesting year, to your point, as these Non-bank liquidity providers become more ambitious in different ways in the space with a lot to play for. Great. Thanks for the comments. Yeah.

One moment for the next question. Our next question is coming from the line of Jeff Schmitz of William Blair. Please go ahead.

Hi. Thank you. Could you update us on your efforts to electronify Complex and Multi-Leg Trades and Rates. And are these workflows continuing to increase as a percentage of market activity? And what are the biggest barriers to further adoption?

Good question, Jeff. We're hitting on like a lot of good topics today. I mean, I think, you know, technology and market structure change kind of in a certainly like only get you so far. I think, you know, from my perspective and from our perspective, I think the real question is almost like how you affect human behavior and what we're solving for here. So I think this is, I think, one of the fastest growing parts of our rates business. If I can kind of get this right, I think multi-leg average daily volume hit like almost $19 billion in the third quarter. That's up, I think, somewhere over 50%. year over year, and seven straight quarters of sequential growth. That's like a pretty strong statement around the stickiness here. I think the growth is based, you know, in the third quarter, like switches were up, I think, around 60%, curves up 56%. August was a record month with more than $23 billion average daily volume a day. That's like depth, you know, not just breadth. And I think what we're going to continue to do right I think this is very, very important, Jeff, is to iterate on the offering based on something that I think we do well, which is client and dealer feedback. Client and dealer feedback, client and dealer demand. And so we'll continue to focus on adding more clients, but our current client set is doing roughly 50% more with us now. I think basis... We can say pretty clearly it's probably like the next leg. 780-ish million average daily volume in the third quarter. That's up like 30-odd percent year-over-year record activity in June. So these stats are pretty impressive, and they're continuing to grow. Got to keep adding clients off a relatively small base there. So you know my blunt speak. We have kind of work to do. But I think my instinct and the instinct of the management team is that the workflow solution is resonating, and I'm clearly excited about the forward potential there. So not as clean, it's a good question, you know, not as clean almost as a kind of scoreboard around all of this stuff. But as you know, much of this activity still happens, you know, off of screens. Plenty of these clients can still execute these trades almost like one leg at a time. So you don't always get the full picture around it. Big area of focus for us. We have to be and will be a company that ultimately thrives around solving for complexity. Complexity has always been the piece of the market that sometimes can trade voice or off of screens. and that is the exact reason and that is the exact area why this area has our full attention. So as always, appreciate the question, Jeff. Thanks very much. Great. Thank you.

Thank you. And this does conclude today's Q&A session. I would like to turn the call back to Billy Holt, CEO, for closing remarks.

Great. Thank you all very much on a super busy day for joining us this morning. As always, Any follow-up questions, please feel free to reach out to Ashley, Samir, and the team. Everyone have a great day. Thank you.

This concludes today's program. Thank you for joining. You may now disconnect.