So we are growing the all-to-all network across all our products. So you can’t look at it as a static offering today. It continues to expand globally. It does have spikes of activity during higher vol, obviously. And those — we have seen those in the past. The one other important thing to mention when we’re thinking out longer term, the regulatory landscape is constantly changing. And right now, we continue to hear from globally on enhancing bank capital rules. And those proposals that are out there are tightening bank capital rules, and we heard from one very large bank recently in their earnings call. Mentioned that it could tighten capital rules by as much as 20%, which would obviously impact dealer liquidity in the U.S. in credit globally.
And so those — the importance of alternative liquidity solutions will gain over time if those bank capital rules continue to tighten. Rich, do you want to add anything?
Richard Schiffman: Yes, Simon, I was just kind of add to that. It’s about two things that our clients are looking for and what PT delivers in particular is workflow efficiencies. And it’s quite similar to the workflow gains that came when list trading was first introduced over 20 years ago. It’s much easier to do that collection of bonds all at one time. And now add to that the guaranteed execution that typically comes with the PT to have it all done in one shot. What is missing is the other part that the investor clients are typically looking for, which is execution cost reduction and getting high quality execution from that. That’s where the open trading comes in. And it is on us to work and come up with the solutions that combine those two things.
Just having PT, which works great in the low volatility environment. But when the market gets a lot choppier, it becomes a much more expensive trait. And we know that our clients are looking for both of those characteristics from us. So the focus is on trying to deliver both of those things simultaneously. And with that, we think that’s going to build our business and grow our market share.
Simon Clinch: Great. Appreciate that answer. Thank you.
Operator: Your next question comes from the line of Kyle Voigt from KBW. Please go ahead.
Kyle Voigt: Hi, good morning. I’m going to try to squeeze in a two part question on pricing. Historically, there hasn’t been much or any transaction pricing pressure in the industry. And it seems like there’s still a really wide and unique moat around Open Trading due to your liquidity pool and that network effect you just mentioned in the prior question. But with respect to protocols where there may be somewhat less differentiation on liquidity, is pricing becoming even a small part of client decisions on where to trade for protocols like PT or standard RFQ trading? So that’s the first part of the question. Second part of that question is really has to do with — do you think any of your clients are becoming sophisticated enough to RFQ out to all platforms where pricing may be already impacting where they execute orders if the cover price the same across those platforms?
Chris Concannon: Great. On pricing, obviously, we don’t see a lot of pricing pressure across our market globally. In fact, we’ve seen competitors like Bloomberg introducing pricing where they were free in the past. So we have seen unique price increases across the competitive landscape in certain protocols, pricing, as you mentioned, certain protocols that are more workflow functionality and less unique to the liquidity that you’re bringing together. We’ve seen fairly static pricing. So we haven’t seen price competition hit there. Again, clients, if you think about this universe we operate in, it’s largely a dealer pay model. So the clients are less price sensitive and more focused on workflow solution, ultimately getting execution at higher levels, better pricing, better liquidity.
We do not see clients are at queuing across multiple platforms with the same RFQ. In fact, that’s problematic. And we — if we see that type of behavior, we obviously need to control for that behavior because it creates really a request for price that ultimately falls on one platform and is not honored. So we do regulate that. We are — we do pay attention to that. And I think our clients have been quite professional about that type of behavior. Rich, anything to add?
Richard Schiffman: Yes. Kyle, I’ll just add to Chris’ comments on the fees and things that come up there. We price our service commensurate with the value that’s delivered with it. And you’re aware of that in the fee schedule, there’s — for example, high yield, where it’s $0.03 to $0.06 or Open Trading, where we have our highest fees that we’re charging where we think we’re delivering the most value to our clients. The individual performance to what we call price improvement from Open Trading that comes, right now, we’re at lows where it’s just shy of 2 basis points in high grade, and it’s about $0.28 in the last quarter in high yield. Those price improvements or execution cost savings, that’s net of the fees that we charge.
So when it comes to the decision for where someone is going to trade, where you can get that type of performance, additional quality of execution, net of the fees that we’re charging, it’s a pretty easy decision about where to send the inquiries. So if there’s a competing platform where the actual transaction fee is a little bit smaller, we’re talking about tens of basis points or a couple of cents compared to the performance that gets delivered when Open Trading wins. And as I noted before, we’re the large liquidity provider on the platform in these products, then the decision is pretty straightforward for the investors. And that’s a message that we’re continually reminding our clients about.
Kyle Voigt: Very thorough. Thank you very much.
Operator: Your next question comes from the line of Michael Cyprys from Morgan Stanley. Please go ahead.
Michael Cyprys: Great. Thank you. Good morning. I wanted to ask on portfolio trading. You guys continue to show momentum there, growing volumes meaningfully. I was hoping you might be able to unpack how much of the portfolio trading volume is coming across in IG versus in high yield? Any notable differences that you’re seeing? And as you look out, is there one area where you see a bigger opportunity with portfolio trading?
Chris Concannon: Sure. First of all, we’re seeing growing demand for portfolio trading. It’s such a convenient workflow solution particularly when our clients are getting large inflows, it’s obviously a very easy way to get exposure quite quickly. The other method that we have seen clients use are just using outright fixed income ETFs to get that exposure and then unwinding the ETF and going into the underlying. We do see portfolio trading globally. As I mentioned, we’re seeing some of our global clients using portfolio trading. And many times, they’re trading a global list, not just a U.S. high-grade or U.S. high-yield credit list. So we do see that offering growing over time. And obviously, the tools that our clients are using, remember this — when this portfolio trading was born, it was born on Excel spreadsheet.
