TW - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to Tradeweb's Third Quarter 2021 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 U.S. Corporate Development and Investor Relations, Ashley Serrao. Please go ahead.

Ashley Serrao

morning. good and you, Thank

who may Joining me Olesky, quarter our Lee and Billy call provide into little some growth for will review in Q&A the initiatives; contained Hult, President, who and statements. to release future our statements our the to, actual business are dive this statements the our relate the cause a a deeper CEO, presentation constitute differ our from Act I'd such, forward-looking Litigation update; today that the concerning will complying our SEC highlights and and is within CFO, expectations, a these material related may disclosing results means review We and of Information reports to with disclosure to under and are financial like Securities and obligations with other the Furber, meaning FD. that Actual Statements of Sara will during use you intend statements forward-looking Regulation Private of nonpublic results. among who in events factors things, certain forward-looking forward-looking the the as materially the remind information to statements. guidance website as of SEC. Reform XXXX. filed could periodic earnings differ from results

presentation. to $X.XX. addition, today's measures, and in this GAAP recap, reconciliations these are will of release call, measures, reference we non-GAAP certain posted morning, In per including on GAAP diluted To earnings regarding non-GAAP measures. we Information our share reported earnings

reported earnings to additional and items, historical acquisition-related information see for rate presentation effective and our of per D&A stock-based acquisition certain with SEC noncash of adjusted FX be release results. Refinitiv-related the diluted income tax expense, the Please compensation share and an the XX-Q costs net regarding $X.XX. certain of Form filed Excluding XX%, we transaction assuming and

turn the to Lee. call Now let me over

Lee Olesky

earnings third Thanks, you thank for our joining Ashley. And call. good morning, quarter everyone, and

from been, a wanted especially retiring just senior all as after we partner. good a he I of the financial a reins prepared Sara very markets, want most in role who at and I our Investor XX-year technology our to remarks, thank contributions for Bob, and welcome as Before She'll to of held I Furber the Tradeweb. the to vital having are brings continue be excited trading. recently say run my electronic taking at XXXX Relations, previously roles start our wealth successful Sara will experience, be, is how to Group firm, CFO. IEX the tremendously banking, CFO played Bob and Bob his has IPO. in friend And new

Bob Warshaw

all the words. Lee, kind Thanks, for

lies into about tremendous I happy As for that what Tradeweb, XX importantly, XX-year sit ahead my here we I opportunity more but company. the the very accomplished, have years am

Sara I'll this years. like especially of great their a my entire XX to I thank team. last is hard part the to for over As the addition Tradeweb work future, I And pass would team analysts pleasure I've years. on Sara a meeting would our it also thank few all words. and you, like that over of say had investors to to the of sell-side the to

Sara Furber

me now, that capitalize to the secular financials. to the back all to on Lee on for turn be range in I've Lee been I my you, prepared drivers and meeting I by look team, for of continue forward kind Bob, the join In introduction. business. of let the review But Tradeweb many to time here, Thank I'm short opportunities excited for to and his back it working that remarks. you to coming is the team amazed our the power will the months.

Lee Olesky

Thanks, Sara.

integrations, further leading combination grow ETF the continuation ideal revenue the of continues and strong. conditions, network, fixed hiring than and and as best We The less growth these of remains markets technology third deep volatility. income the electronify. off believe quarter a subdued to saw our people Despite pay global

our environment solutions. foundation macro create continues with growth the new to on our to While clients fluctuate, broadening team remains trading collaborating by focused our

Turning I just strength as in the believe mentality, described, of Slide first quarter. year during the this We was X. client-first display continued third to the half the saw on we

expanded Year-to-date, a on ahead margin U.S. gross XX.X% of a currency are our electronification swaps U.S. main up and the up credit, growth and growth is were currency by treasuries. The our This revenues quarter a Specifically, revenue on growth X on profitability of our and our basis. and our basis of on the XX.X%. our constant a adjusted and year-on-year, average points XXX as of constant our ongoing in year-on-year reported innovation, of profile. drivers basis improved XX.X% revenues reflects long-term to diversity and into scale markets The $XXX basis EBITDA XX.X% million basis. reported robust the XX.X% were a resulting translated global

X. Slide to Turning

respectively. marked was and quarter for our our asset strong with rates by many revenue This accounting of across XX% growth, performance classes credit and XX% of

driven continued that was credit our equity institutional highlight products. driven in grow share ETFs Credit Swaps the sector. by to bond and corporate NFI. driven efforts and Equities Specifically, bonds cash marked mortgage headwinds were robust performance partially revenues In was revenues U.S. growth healthy addition our Money broad-based trading. strong which slightly. bank by rates, issuance, growth by strong growth, continued central fueled helped quarter across to fuel retail performance U.S. market revenues overcame other rate trading swaps. in diversify strong rates by declined by growth repo while and of its European posted another and continues a revenue government institutional with was government treasuries, another organic the European and

data our data saw products. Finally, Refinitiv APA proprietary redistribution market broad-based and growth across license,

Moving to Slide on X.

growth towards year. believe to on provide me main swaps, record highs, our continues organic remain update the previous Starting areas. interest our rate volumes business Let while focus X below with brief a power industry well we another

client new swap attract overall existing clients our wallet We deepen to leading growing share, continue volume XX% year-on-year. by and to

versus result, continue and we to excited remain a we as Longer swaps gain increased We competitor, Europe. year-on-year term, U.S. Clarus. believe to in by share our the As Bloomberg, by market closest growth the both share opportunity XX.X% we strategy our here a minutes. believe multiyear turns. our market and few give we scale initiatives, update rate the cycle electronifies an on the we have as will you Billy in measured

treasuries. on Moving to

and by continues well, both to been acquisition. aided driven volumes by by the XX.X% gains of rates healthy Another perform clients product rose record institutional have backdrop the further our share The doing share a wholesale U.S. to market. treasury NFI channel, the up the of business year-on-year to support and business XX% into existing that and led our issuance market. and with more T-bill continues institutional inroads Market

continue substantially Looking where invest year. versus PLUS, last driving volumes Tradeweb we ahead, the in adoption to like rose early-stage protocols of streaming institutional

which offering, provides treasury with a U.S. trading more streams wholesale another disclosed Our strong now clients quarter. liquid CLOB, session our posted and

been is so continues share clients. quarter we far. has the progressing platforms NFI, protocol onboard dialogue into is exceeding Early as take streaming our peer One new from well. our client and Our to expectation of business encouraging the ownership integration

high hires to growth. Shifting revitalize long-term also augmented have few foundation the but XX.X% trading not with with NFI credit, only to in yield the a to CFETS. share and the another we in record to this a integration being investment-grade hitting with with revenue business quarter. a We electronic milestone We credit process, of the strategic help our X.X% with create million team expanded revenues. our gains already China continues business the revenues million $XXX China initiative. what our XXXX. surge quarter to addition generating made in ahead in also reaching It's than It's share great share southbound the in another of more as believe Outside Year-to-date a consistent spread was this we partnership see the the of of recently all in encouraging exceeded amazing for to to record long-term our offering to bonds did growth see of success U.S., with $XX quarter. is have electronic drive

rate a strategy of is in we eventually more Looking details believe and a activity credit into higher opportunity retail Billy dive our ahead, as lot when normalizes environment. in platform our to continue momentarily. scales on there will

a within average as healthy XX% and volumes quarter industry quarter. new healthy helped ETFs produced with year-on-year daily client drive equities, the in volume up wins institutional Finally, growth the

XX% ETFs quarter, comprised contributing with equity fixed our of global income XX%. During the volume

Our other fruit, initiatives to bearing are momentum expand derivatives. beyond our flagship equity also ETF franchise in continuing with

in year-on-year. were growth up these Specifically, revenues newer products double-digit

continued well With to to positioned turn remained the as from and in I benefit initiatives believe scale. our ETFs Billy. ahead, over it growth will globally growth Looking that, we we

Billy Hult

Lee. Thanks,

X Slide to look for a at Turning credit. closer

with mentioned, hitting both market another high-yield we share. for produced As quarter new IG strong Lee records and very

Tradeweb think how can for efficiencies build way. clients, with into does solve think have. problems the we our and the we same, that we about more the what business using best, When and network right remains formula vast by we network liquidity Our them get create about

quarter by We our innovation are to our doing to AllTrade have brand execution adopting daily XX% biggest increasingly our and by protocols another Clients channel. goes feedback the credit future of volume with credit of our variety year-over-year. electronic a shape strong strong offering RFQ, leveraging up trading loop portfolio institutional responded this trading. The beyond of average in and protocol, institutional growth produced net healthy spotting.

of a never their year-over-year. been believe trades solution We and The liquidity competition. and all-to-all. of peers we facilitated revenues diversity believe proven the in have continues shifted And stronger. XXXX, the trading while so they to stakes have clients has can some pleased also putting the refer we debate in strongly light and business bright. the the a in Portfolio how which this to increase we of better. do we still and from to believe fast-growing limitations the more their as has third solution, an in are trading dealers believe that are it have of see traditional the a even up usage. trading innings as record innovation, trading, and value quarter accepted our often of with Clients onboarding wholesale benefiting be. increasingly And then Our list we it using RFQ that Tradeweb progress with offering once portfolio continues to XXX% testing we are billion in far, perform made by shine tackling potential year-over-year. $XX are out portfolio table Clients than credit portfolio significantly I protocol, bulb of improved expanding understand early We the big the innovation. to well

an comprising XX% the which increase growth rapid of portfolio record of in in portfolio volume, of the in-comp volumes, portfolio AllTrade, solution The reached year-over-year. quarter matched anonymous year. levels XX% our of third trading by $XX XX% over strength trading last up was Our from billion trading saw in liquidity

We dealer continue and all-to-all RFQ, our integrating responder enhancing by in AiEX improving to network invest functionality.

have to and will the to providers key as trading that dealers continue a healthy believe role ecosystem. We historically play liquidity remain

advance, technology is this we have and of providers. activity We alternative this As and traders large believe trading a it launch recognized migrates Session pools as to increasingly through trend the liquidity algo portfolio that clear we has ago liquidity today, trading. dealers liquidity their years of risk. continues access difficult desks fastest-growing with to the to to of And manage and deepest for believe that few become we much voice amount a

diverse seeing this strength portfolio, our are innovative marketplace. tools the different risk our Tradeweb's credit build to continue We by developing workflows offering offload the Today, their trading in we sessions. actively dealer and dealers for of leveraging in pool,

connecting their We leveraging participants all-to-all with also can Tradeweb's inventory uploads. our where ReMatch, session by our access pools retail and are liquidity liquidity seamlessly

further first multi-client against the believe by our year-over-year. billion U.S. Finally, our X:XX multi-client our net most lead net in advanced on spotting launched net saw over up XX% another spotting with the All $XX competitors. platform, At our which leverages clients we now p.m. extends pool, spotting. volume, with enabled we quarter solid liquidity to alone, spot spotting, which popular XX% deep are treasury quarter net time offering, for in and increased savings

achieved of grew XX% revenues rest institutional institutional record and business. the our to muni credit European credit Turning revenues We in year-over-year. over

entire double-digit strong to drive Our by CDS in the by market, saw drive for We attacking client we ahead, but product the regions. revenues also across type, excited strategy year-over-year our geography also only a the clients believe and room look better not In protocol, growth credit outcomes we tremendous credit. growth. with this quarter sum, healthy by And and for helped our provides map across our of diversity dealers. create to are as road us innovation markets

bucket revenue our to the is rate within on swaps, franchise. which biggest Moving

the Just a swaps variable The things quarter XX.X% XX% our rate higher weaker strong primarily share per low fee we like volatility and brand revenues another with drove decline year-over-year, by in continues 'XX, credit, protocols. the multiyear increased our by X% contrast, swaps In as combined swaps supported decline. volumes. year-over-year growth we volumes driven XX% market environment a despite and can registered million year-to-date registering strengthen story and industry industry over quarter climbing trends, on stark continues grew to believe focus We in trading control. as to third

and We higher marketplace, continue ago. closely with changed drive to years with network our our solve to collaborate participants a since geographies swaps highlight. across this being electronification products, way innovating we many in protocols share Today, work This leveraged marketplace higher. a are we market with growth by mantra particular to the problems for driving market and international customized hasn't enter

Specifically, our momentum GXX-denominated want products with euro and on major in with swaps. gains in saw our I a innovate. during and the spend currencies third record across we clients and partner broad little continues quarter, time how share to we other

legacy our change. low These tool firms another the tool we many and into sitting single-digit help represent risk-free volumes is to regulatory reduce this help phased their LIBOR of rates had to XXXX and became of a it our our switch at globally. by example clear, a positions navigate responded tweaking LIBOR on be clearinghouses. switch Once that we percentage help trades clients books of their would we For out, years, how have clients compression from number other trades

reaching significant and the back SOFR putting seen our franc coming on with win-win yen-denominated help Swiss of risk quarter. a and that's have to in the progress our to for think the percentage in made new date transitions. trading highs as And they sterling, We platform we trades risk and LIBOR are us us clients. We record clients,

structural trading. rate swaps of changes growth to protocol continue we as to market, respond risk-free Beyond RFM multi-asset transition, swaps, the EM the such and in the cleared adoption

quarter, see EM liquidity to third record is we the electronification as interesting dealers spur the noncleared we RFM deepen EM swaps. onboard the a to and pool. During additional cleared electronification continue on and It activity saw also clients swaps, EM and our of

encouraged sterling this We in evolution electronification it and have to again. seen of see and before swaps the unfold innings early are dollar

innovation sterling our multi-asset successful offering. We to package also complement expanded our euros, to already

swaps revenue growth ahead, is potential Looking the we long-term meaningful. believe

the With help markets that market a market XX% electronified, still the clients' only remains swaps there workflows and our digitize lot we fixed income can while to broader manual global grow. do

U.S. sophisticated we AiEX third grew continue AiEX. globally capability, is over credit than XX% treasuries. Inbound XXX firms clients it across are leading for automated solution year-over-year the client product XXXX AiEX This our is and bulb in more another number in invest and light AiEX one about launched we in XX their The classes. to Today, be trading trades groups to with for across using asset our strong, Finally, and expanding by of most rates, AiEX clients equities. usage We with our products. across quarter. inquiry continues deployed have

a them quarter, As new the life ultimately hit clients allows avoid rejected to don't it them work recently because way their approve data-driven Europe, to in have rates. traders save preset we trade highlighted that execution rules. traders redundant inspect allows cycle. AiEX to enhancement I enhancement achieve to rolled need flight, they get love to AiEX out higher a is trades This intelligence and allowing that trade time, automate provide, last institutional In and that the entire able gives

innovations, technology client improve more continue to forward, as detail. with more the provide And turn will we to financials features invest to discuss let our me to our that, Sara experience. with it Looking to in all over

Sara Furber

Thanks, Billy.

I all numbers, be year go the period, otherwise comparisons the unless As prior noted. through to will

ETFs, The gross revenues in currency in customers international highest on X. our a and XX% notable basis. summary performance. revenue XX.X% from denominated Let XX% with on swaps year-over-year of on We XQ revenue and Slide predominantly when up swaps. by XX% reported third begin is daily a credit. our base volumes bonds, Europe. average include provides me Slide approximately derived global a billion, constant reported XX of volume earnings nearly currencies and quarterly XX.X% translated our quarter institutional of than short-tenor excluding increasing repos into and approximately XX% overview dollars, volumes recall that our corporate We growth of our government Areas $XXX of of other up an in

by our on related down asset Our NFI revenues were total increased major the by Other a continued XX% and of up revenue X revenue was X.X%. Total trading classes variable growth revenues driven XX.X% Rates primarily to and by basis. trading constant currency fixed grow, the our fixed addition XX%. to increased XX% acquisition. revenues

As margin a net data retail and EBITDA expanded as from we All and in, enhancements in continue item reported XX.X% reminder, per tied at lumpy XXX Adjusted 'XX we it for scale. as by line is in by income XX.X% performed diluted affected by to Market growth revenues technology Refinitiv, basis data increased to to due nicely points to $X.XX. came of share clients. XQ this products. proprietary our APA adjusted relative periodic benefit is

cash and our our million Moving on driven to result of million various within of year-over-year, blended than and equities. per credit X a fee I'm are classes. as growth sum, stronger asset per higher increased about mix to describe XX. million trends fees per X-year the on by a In Slide primarily fees XX% swaps The products greater

short-tenor per were futures, Excluding million blended XX%. up lower fees fee and per our swaps million

for per up X%. class, underlying asset by rates. rates the with Let's Average were starting trends million review fees

were in X%, due products, million up per U.S. million For fees per to primarily higher cash rate fee treasuries. growth

fees For other carries includes OIS, and per credit in derivatives, increased fees due fees fees In XX% rates which million were FRAs. growth for Average per XX% products quarter credit, swaps on per increased million long-tenor activity swaps, growth features due while fee up XX% electronically third the growth, rates higher fee million which lower as which saw growth credit million fee per processed overall swaps, credit. to fee short-tenor high-yield, to a credit. higher high-grade in cash per average EM down primarily average per cash million million per Continuing million Drilling lower to declined XXXX. carries compared RFM. to due XX% U.S. in per million in a stronger decreased and than than strong cash to

electronically per Looking U.S. and with driven down million. was fee average per growth million processed equities, for per credit at equities category, fees in credit derivatives fees increased CDS cash X%, X% the million by overall. Continual

share fees in cash growth traded. to equities, increased than equity decreased an the recharge for by volume decrease XX% within U.S. in to U.S. derivative Recall For driven the per XX% derivatives not fees due per increase million ETF traded. per and carry EU and million value per fee fees U.S., million per share Equity in fee in a average ETFs. due U.S. lower average million a notional was derivatives, million per per by average. which

fees repo other fee money decreased carries which Institutional XX%. markets, million levels. market per reached in money record per million a repo, primarily lower This products. was driven by than within growth institutional Finally,

favorable pressured markets XX.X% continue constant invest 'XX money In inclusion 'XX expenses. XQ growth details no been our operating employee expenses and by in growth. and of to XX.X% technology XX.X% At adjusted the G&A XQ expense NFI. to rate interest compensation. to increased headcount than Compensation There other high were movements base low due has a Slide higher million for basis, to partially increased costs due Adjusted Recall, and compensation, as increased performance-related currencies for expense technology support remained respectively. is on predominantly XX sterling. of currency per primarily the we as FX. higher to business environment. a XQ due on expenses XX.X%. compared fee in level, XX% addition, change as a our noncomp basis noncomp the constant our on to currency and reported here. and Adjusted denominated our basis, dollars, Adjusted higher G&A, expense communications, communications well reported philosophy to higher in increased offset increased XX.X% a approximately and by retail

communication and higher and and technology volumes. to clearing treasury AllTrade result costs increased streaming due as a Specifically, data U.S. growing of credit primarily fees in volumes

saw spend. $X.X in the increased communicated due strategy quarter entertainment primarily In strategy gain costs and gradually the acquisition in due of million FX Adjusted XX marketing resulted we general pandemic data realized the 'XX infrastructure. our and increase guidance. costs previously with and movements and addition, XX.X% details management loss realized increased Professional continued administrative to in in recover higher and in and an our a investments impact data $XXX,XXX and this associated continued in also XQ from in travel XQ as to fees versus investment NFI Slide capital 'XX. technology. infrastructure Favorable

cash our reached and XX strong million XQ ended capital position a and return million equivalents cash on policy. flow holding We cash position, trailing First, for in in months. the cash $XXX free $XXX and

dilution end. development timing roughly a for this that spent the per primarily flat of to the quarter access Class equity the of investment quarter's $XXX software remained spend. due million CapEx quarter revolver Board $X.XX quarter. undrawn declared as quarterly to capitalized A during of $XX Class year-over-year, share. have $XX dividend and offsetting and million, With a We We earnings, B million was

Specifically, million million leaving at quarter. regular $XX the program, share the $XX deployment future spent for under we end of buyback our

exercise the stock shares withheld In tax cover $X options. payroll upon in addition, we of million to obligations

our price. we sensitivity our to have mostly you XX, we use On authorization count ongoing repurchase reminder, share for models offset your to XXXX calibrate quarterly from to share dilution for compensation. plan help our updated in equity a share As Slide fluctuations

previously there change is no Finally, XXXX. guidance communicated for our to

concluding back it turn I'll to remarks. Lee for Now

Lee Olesky

despite expense we our trends our guidance given environment. operating business raised the were we subdued the seeing quarter, strong in Last Sara. Thanks,

are revenue this Following million what for $XXX on we we third surpassed XXXX. in at year Tradeweb. believe already of quarter, a all record absolute of has track did another year growth Remarkably, we strong so far

As the by We and of growth here that of the acceleration trends ahead, all growth our to secular trading we potential pandemic electronic good for look spurred intact. we about feel the and the remain stay and longer-term is believe XXXX. the electronification powering durability revenue

In believe support as macro our rates raise shifting governments our should taper great environment, addition, we the favorably, potentially It's global a interest growth. also business. in and time to be

While on designing investing we market we and to the macro our staying fluctuates, by will our to to growth. software control what can continue focus close new drive share clients, in people

great the spot We proud a talent are Best and to continue Company list Workplaces to innovators. of earn for Fast attract on

so In to cash additive October strong time to share volumes has October, seen far XXXX. and to continued a and with all revenues we with classes left rates, with opportunities, we couple evaluating strength being across our by M&A of addition continuing double growth, continues would up growth highlights. digits which RFQ, in overall and AllTrade. portfolio is notable to have this swaps asset led be spend volume credit The Market in cash trading credit increase momentum year we're relative month-end being network to with the trading organic believe important days

Before had look to report. at I hope has sustainability our everyone a inaugural conclude, chance corporate I

report additional prominence and topic to are the the our employees. clients investors, the while, in DNA While for ingrained our across been as disclosure in to provide many happy we continues have grow described the a in items we of

trading issuance the clients strong want the actively at with On in continues our grow. CBI-screened colleagues Ashley to closing, be for thank for turn front, to to partnership and efforts year-on-year business that With quarter green green that, their and to to I thank Tradeweb. I'll over another quarter contributed their it back volume and clients all engaged increased questions. to business for I your In my and as bond our we bond XX% continue our trading want

Ashley Serrao

Thanks, Lee.

will take yourself Feel limit and please hop reminder, Time. only. question question. to can first back end. AM a the to questions end XX:XX now into As one ask free you Eastern at Q&A at Operator, additional queue, our

Operator

Kyle question Voigt comes from KBW. Our with first

Kyle Voigt

more even share growth U.S. Fixed we So good seeing X you growing any have year-on-year excluding just acquisition was provide particularly to to some treasury the the Treasury disproportion months, client wondering to in business. you're share the by just as more color in understand over Income gains clients? trading If growth your driven or been the still And which really sort try now could dissect last even of if if business, the of Nasdaq's strongly? I'm being business segments that trying

Lee Olesky

Kyle, Thanks it's Lee. for the question.

growth different we've platform. Let we we at the particular we right look like have year-to-date just what into we've diversity -- the clients hedge protocols When space, in start on the they institutional in the we've of built wholesale off the strong dealers volumes, by us. and we across our futures saying So with course our before, funds, seen and of business, the do pension asset that, treasury in from me the that continue seen trading market, clients, to said brokers. we've more strong this really space, And business now in when managers, we've really principal board, look got sovereign right? the across and growth streaming funds, firms, all

our this -- we remarks. So and prepared highlighted in

firm. client-centric a are We

able with And of these be hit collaborate the for clients their kind really market. many of to the aspects to years different that's been continue to all improve to We our star the company north for trading experience.

Operator

from Morgan comes question Cyprys next Stanley. with Our Michael

Michael Cyprys

stands you the kind I could of was do an hoping penetration quarter. drivers trading you trading? portfolio Maybe you elaborate just on update portfolio where for can a the of contribution And bit ahead how give the growth from in on see us today?

Billy Hult

that's times clients. I've me these I've deal move moment execution, Thanks of little principles bunch, resonated, to client the right? little right? for lightbulb clients, really Michael, a big So of for slices, a of kind that, start tired talked a used kicked trading, only And the say There's once, with I part because much, expression, for kind our all of talked a that about this concept which a quick almost of chunks I table about all principles are let a big big clients. frame of trading. it for the lot Lee There was minimizing this right? understand. when wasn't of so has base, it for that's put at certainty think of a right? used progression. kind expression story, but all Because ago. cool I've it kind natural this. of about second, deal of a sort we that kind clients of It's a really right? hearing there the a of me under of me trading sort know have a think it portfolio resonated couple long -- big he's a around of tells that leakage. That's big of it's kind risk to deal have about Billy. also I've of the with It's ability on question. And I portfolio this concept we information for X portfolio bit around all

work. was The expect XX portfolio was starting clients in you'd doing we trades, investment system was we for start in kind trades. And started and was It right? obviously, it quarter the think had to working. where of lightbulb smaller-size it to of on I XXXX, off about our third us off grade,

I universe these was these change high-yield, in right? All of been to I sudden, that And one mentioned, flash of things credit right? in a quantitative the fund this would has moment, I the us, specific a are a embraced around companies a been in you portfolio trades trading the through the how portfolio universe of question with through right? credit So in XXX very we And say is, we've think way, were environment big next around, in And system, trading market All interesting really coming would over different very XXXX. principles now right? has the to forward all I happening. of right change around and time have obviously, hedge say, period trades the sudden, big risk big now then

market, think into volatile principles these certainty think and risk, in credit to leakage information and more those the marketplace. more execution, volatile in I outperforms strong very big slices a move a as described, really I feeling move minimizing is interesting a way, more of of our I ability we a

this our as this They've has of probably our trading Quick I talk in we Lee XXXX, out time. functionality. new enter it about kind to with been So into all and around credit never team. shout them achieved the what nailed higher. world portfolio we've coming in really confidence

confident trading So super And thanks high a portfolio for we're the level. question. around at

Operator

Rich from Piper comes with Repetto question next Our Sandler.

Richard Repetto

the saying So second. of how double-digit some holding any just this environment I the rates know a volatility analogy for I did -- as of like away the you they there the into XQ. come have talked lot mid-October? But this that of I image a about guess, beginning But and much treasury you a forth, we Billy as saying is back shiny least way. jump at the at was I lightbulb, turn increase, see in I'll towards God fixed really of from when credit come income market, -- Lee. like and good this way though. saw September to on the beginning of end least And

Lee Olesky

we this question. it, you and rises. we of mentioned remarks, come volatility saying, obviously this just in -- October's let Rich, thanks prepared welcome start Yes. by that's for activity Europe, even additional especially the strong. We with morning I Look, just in me highlighted Asia. just out the markets, rate And in been the saw our

about going terms on that, when they're is with there change. banks government start the with talk of we really respect like our change business to of well uncertainty rate kind to all we sort This of wrap as market October. central along I see swaps is out of and And trading, as is the interest a in we bond part bit to and And and would debate globally of So definitely up rate change, a that's doing in pace rates We the good a that and rates thing. direction hikes of -- strength kick change. huge going to in. taper, say of

real our this for positive So all markets. is

yes, the things positive If you Tradeweb, over for what's in look at They're these are month, for last right? not rates happening volumes. market. They're just the been positive positive

for that's It's back of going going changes, to we always continue So of doing investing of business clients it, to I back. week-to-week volatility. this real of big to difficult of that it's it business. on sorts really can we the take general in It and benefit layer it's I and sort these -- -- our been top a of give automation. the you for think get at to digitization This in concrete from to the in these We've That's -- things. answer give but like at a question, should to important terms welcome moving a years sort tailwind to will know that that That's And on have terms us to need positive people towards move digitization think it debt our talk a continue constant. about efficient are sort sort We earnings diverging of of have secular a business. to markets day-to-day, responding the views, our to -- Is not yield certainly positives. make you accelerate. core, scale our a should come what all the of time. outstanding. terms and is grow and surge our It stay try and difficult business. comment more of forward and long in we back in this help should of up step too power. of us our a to increase I more in process it help a focused and and your caught automation

sets mean a are for us So business. our well. positive things all real up I It these

more about and excited October the we're We in month that of seeing expect right to a now We're volatility. see bit that.

Operator

Our next question comes from Alex Kramm with UBS.

Alexander Kramm

longer-term Wanted on question the to just swaps business. ask a

I'm that's just in I mean by how very that some There's when business, trading they look Billy, feel with a may think, animal. and different LIBOR LIBOR a much rates of of was asking may be complex people marketplace world about seems rates, strategies, because the how just if like they these a lot different. But talked we're lot may transition, -- And simpler. is lot what sometimes new the the And once I of been new you basis it wonder to trading talk transition. you curious I that this done about helping.

nobody crystal I'm these if in not how just And wondering on you know I'm So but markets curious if that they that ball, just there's vibrant are risk views the have today. a just I as has a swaps future as any are may….

Billy Hult

throughout transition really industry sure, this from. a hyper-focused a I market, top say, moment you're would good and general at without right. prepared really kind the of sort important swaps on levels has for question, get where question, That's the totally in like and getting level, of coming It's for the been kind high industry the and I of

say, actively prices. not As helping this. being a our we are, alternative on kind migrate company, of I clients passive to We're would

very to some this really And as us. for you say clients a words, bit point, volumes of be these community a is material migration that those sort to very lot In feel with other I some impact would deep through we're role risk, of look a markets -- happens, we're of and like so the have it, the as in going forward. this having continue as good going transition are forward. is use around of manage rate of and going swaps this. the marketplace has switch to for are period. this our financial questions just on active our kind no liquid interest what I to think sure doing little about know, of continue trades, a to strong your there's we doing And What feeling to question this market We that your we

really like things think is the in a good I and of an than preparation, for and done pure rates opinion we've And be swaps feel the going our to is industry we feel all forward think CLO extremely we market us. is more vibrant like market going market. the the place, we affect like place the

Operator

next Blostein Sachs. comes Our Goldman from with Alex question

Alexander Blostein

the a maybe So swap just slightly continuing second, question but around from business for rate a the with angle. different

So in you sound markets, up. electronic, more notion as right? of is go the happens to the market XX% see there's things general income world the business, rates like today, about what picks turnover obviously that electronic turnover So curious fixed around with electronic, becomes

a same seeing the of as credit larger We haven't to extent about? sort sort analogy seen there a are to swaps? And that be it when Maybe in will that credit. electronic. you gets percentage is of quite What in of reasonable out think

Lee Olesky

of philosophical it's Alex, it's for say but question. -- bit one It's it's bit of a a because Yes. hate a to to tough question it's Thanks a Lee. answer. the a and -- I it,

think I general is thesis the correct.

transparency swaps case of in the many more electronic when years. tougher in these think I It's the time kind you that think And definitely Or participants. market? activity. to institutional. the see institutional gone the shorter coming We more a have market? That's respect it are have I've with markets some the there to proven but largely frame. is, more into see things you participants, studied more There's I activity, stay be participants the in does turnover so market, get more question more it's it to more as and market over largely

goes there's frequency market, look little participants, there's are that's more it gauge been of and if E. easy expect going transparency, to so more So of if just see short is to the if that the I see I more and continued volumes the of there's turnover the argue backwards, a in acceleration percentage and and would foremost and The you're E, if more we'll turnover. just and proven historically, But what first question tougher just access we run. more

volume. more see to going You're

Alexander Blostein

All that right. electronic of of it like evidence to But any Or hard what's in already? kind know? turned is

Lee Olesky

anything. more dictated than because market and activity, market pull the I entirely that the volumes think it's hard still by to out are

started and several -- force a meaningfully the really significant ago, do right? to even though that relatively last it's at years. an had in more much in E So time full it's decade we've active look market you on if horizon a short this come So we swaps,

comparisons it's So I to based in look hard history. other think Anecdotally, when adjacencies markets, look that you it's the at short if at jump you conclusion and to on there.

Operator

next with Our Ken Worthington comes question JPMorgan. from

Kenneth Worthington

those a of in streaming of hit part terms Wanted rough time is integration? getting of same the of follow-up on the was sort line And the NFI. to to excitement integration CLOB And the big the on and of sort around milestones a milestones? thought are platform. what big just What deal I the

well? come already, assuming hasn't part as come when it that does So

Lee Olesky

that. thanks Lee. for Ken, It's

So first, remarks, I June, integration yes, first in so our late I it this -- with in the time pleased the closed just lines in in -- prepared me I think said we're terms of say, these few June. let very and months said we

strengthen as will We've gate. the out, So some made what with We've the streaming. it, really you've combined out I doing hires pointed of good progress offering. we're that think with

across actually of different that -- platform it largest all protocols the We offer. have to trading is we for the be we treasuries and consider what

of this anyone's in pulled and access things. terms So think, different these trading over we all ways treasuries, costs of time which those will be first for of sorts a clients positive together time, the is and real our

say going It's kind been So I pick helps we're up as markets of velocity. that. well. it with pleased would

in So October. from the sure we're for we're of benefiting And that out good gate.

issues lines, way just with are makes from to different point evolutions operating these that by which terms it's just of put we That's respect there the All year. lines In clients all now kind of this RFQ to this system. respect connection also, in of the other streaming that other it's coming time have of point our we've sure as one it platform, years be one integrated time to I'm having into there for And of NFI. terms the that looking we're And the whole several lower order that be get we way of in of book out created the us from protocols cost -- out with to solve treasuries. there, trading, a out easier a it's will for to right? will on of the end next thing types of some history trading

Kenneth Worthington

very, some like interpretation? early sounds that have. in filling that it of hiring still And So Is accomplishment the people really very in the some the days. you is space white

Lee Olesky

the I I see, numbers -- first I gate, think right? So part that's with mean, July, let's We're Yes, out of the it. the we're these had strong of we're add success August, in pleased would pleased adding. September. we've with

So it's like X.X months or so of operations.

so days So few into a But early or quarter relatively going months, yes, a it. well. it's

Operator

comes next question with from Our Dan Jefferies. Fannon

Daniel Fannon

is my guidance question expenses of changed. I much the guess on kind hasn't -- and outlook, the obviously, not so

are be of year think we've areas those kind just spend of of what it's that much to we and going the investment, different about where next than seen pace, more maybe -- areas As what recently? from you curious and if and level about

Sara Furber

It's question. Sara. for the Thanks

our can you in we're As process right budget imagine, now.

think, here. year. philosophy for So that We're more to long-term about the expansion, obviously, balance with next specific, so it. And same think area. I guidance Typically, change can quarter. in and durable, quarter we'll to for growth margin be continued to say update really no investments to help in continue we'd you next we're there's going going that But not provide I invest next

Operator

Our next Deutsche Brian question Bank. from with Bedell comes

Brian Bedell

trading. a volatility, question. And list backdrop in within credit. And trading increasingly expected -- of markets markets, on you going can X-part versus portfolio treasury maybe to be your trading to think vibrant that portfolio said kind But you of Billy, still credit a both just list debt for list guess, we question get other into next I discussion back are then with in you what in treasury and volatility question A trading fair compare think part much is substantially the will volatility negotiations credit? the market? the you as backdrop versus round whether of increase the of advantages higher volatility I the think in you trading, terms of dealing December portfolio a in trading in And

Billy Hult

this important the super the but deal, certainty is like foremost. busy, In going then it around mentioned the a marketplace, markets of a the really first things problem, like high-class about get a to like other it's fundamentally of execution, when is get is, right? base to all And big busy, information. of care flow and It comfortable the markets particularly when concept I That's to sounds that. volatile reality client minimizing feel thing

get to portfolio really X are a different things get of innovation make when like have into strong market going kind is this cycle. us really strong that into those around and we if feel big legs we really So trading

don't comes -- other, And just live our like to lateral feel We honestly. other of really question they I'm when portfolio thing around don't specifically win off possibly we going would one I we RFQ We again, all feel like is trades that have The in in trading, together trading. feel selling to well. out feel debt quite win to say don't credit, of Lee. portfolio the we both at like We the volume.

think And so diverse are structure to fundamentals all-to-all market too. complicated to it's our is business, trading, credit also all other RFQ our the -- trading But going the of because I about to feel yes, in as there. we and of look a complex important those be kick going is, tenants aspects market confidently what different we into environment, we're what the around a portfolio going market

want evidence lot don't And they I clients, to really, together portfolio for a off seen one feel other. We of the both that a like the we've getting so them. get really And feel for component we right we and that that functionality business work RFQ I today make as of well. trading like way sure right correct where of their cheats we explain get because

Brian Bedell

Okay. on Yes, debt the filling. then that's Lee, And fair.

Lee Olesky

a had have We brownout.

mean, number of It's happening feel ball in yes, the one. to a respect happening what's is right look, so markets. taxes. predicting sort rates is terms with going like it these how -- on volatility But this kind respect obviously that's like October don't it think volatility That we're right a how feel on more go, debt this is So And does suspicion the depends happening we the now. with I in crystal expressing now. just like to and in have have will My it goes. itself it's or more either environment down. feels impacting I Depending volatility I just what's with much And it don't the we're of ceiling. factors this of Washington, banks, volatility. there's there's to in -- happening now. in What's central slow right of increase it's markets

issues we question, other around precise It's of but and see don't answer a happening the a it's on think fair afraid I'm I world. I number the one. that have really of kind that

Operator

a from Rich with Repetto have I follow-up Sandler. Piper

Richard Repetto

was increase and and question U.S. the still looks international. a you back on bit on X, your little I portfolio international Xx like it probably there grew an last if trading. U.S., look, And in portfolio trading One doubled. look the in in Slide actually pulled the quarter-over-quarter

basket, get -- such get illiquid executed we're guess is, smaller bit like there benefits? highlight trades bonds -- well. the I efficiency. that a people putting So the things gets -- later, you bit it think them But on the question also, And is little little a and is getting small hearing of Billy? international you helping everybody can as other because can it a is get it's any I

sort handle that stuff. -- of the And to the of that forcing dealers liquidity

Lee Olesky

sure. of for there is some that Yes, Rich,

both bit your came that what's party, say kind now on that's around this, it's because analysis described. this generally so But I to speaking, momentum, Europe right me that there's and trading more the graphs to regions. in happening around there of think Let portfolio very later build bluntly, competition now the mainstream. And I you can okay, for little continues become sure you're a and that's those say

So that's the it. reality of

a around is very of think, point. one I say a And trading. is interesting think benefits very and clearly plays role kind community portfolio the -- strong there dealer of this that highlighting, I the let's very You're

kind move lot, trading important. the we've more market this highlighted in dealer a So world really desired and this the an the why environment keeps that electronic, In is is strongly that a of certain I think of kind trading as I way, really another with the I really, resonates buy-side. balance think community, about always a that's for electronic it is. very it around strongly net we've moves there's all-to-all markets around community right? to talked And in And way creating that a important think that their buy-side So felt sure, as portfolio support the the you principle. way, electronic the versus counterparty because

I think the feel we remain vibrant trading electronic very dealer a part credit community. And still of about strongly the that.

Operator

time, the at back like questions. And I'd hand I'm this Olesky further over comments. conference showing for closing no to Mr. Lee to

Lee Olesky

Okay.

underpin Ashley, we of our the these as feel Obviously, Billy, record you any potential. our the classes. to capitalize today. on reach the a And basically, innovation, team. profile so into to had about to asset and great look me, we're growth all we thank that continue again for us, proud all and you a from joining of business we've say for believe us. Obviously, ahead, upside year trends this with free diverse on out all anyone if for our day. team, So pretty secular have to to feel have joining good our Thanks is I that want ability questions, year We just far. us turning pleased the performance our We're

Operator

for concludes you your This call. Thank conference today's participation.

now may a have You day. disconnect. wonderful Everyone,

Tradeweb Markets (TW) 28 Oct 212021 Q3 Earnings call transcript