Tom Pluta: Hi, Chris, good morning. Good to hear from you. It’s Tom. So, yes, compression trading ebbs and flows during the normal course of business, clients put risk on and then they manage out old risk through compressions. And both clients and dealers find it a very efficient tool to reduce derivative notional balances. The biggest players are the macro hedge funds and they can drive large amounts of the volume, so they continue to be big drivers. We have been broadening out and increasing the number of participants in the compression protocols, so it’s all been a very positive story. Now to your question about how that relates to risk trading, what we’ve learned is that our most active compression clients become very sticky to the platform and they’ve also been significantly growing their volumes of risk traits with us, which are, as you know, more profitable.
Last quarter, we did have some charts in the investor presentation that highlighted this powerful correlation as well. And the key takeaways from that are in the charts last time, our top five to 10 compression clients have not only had very significant growth in compression volumes, but also very large growth in their risk trading volumes as well. So those clients moved up very significantly in the rankings with us in risk trading. So we think that compression continues to be a very useful tool and very complementary and additive protocol to our overall swaps business. Thanks for the question.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Kyle Voigt with KBW. Your line is now open.
Kyle Voigt: Hi, good morning. So you called out adoption of RFQ trading as being a key driver of credit volume growth in the quarter and in March specifically. And I think in the prepared remarks, you noted success on both the institutional RFQ and dealer RFQ side. Just more broadly speaking, just wondering if you could talk about why you’re having success with that RFQ protocol right now. What is resonating with these end clients across both the institutional and dealer segments? Is it price, capabilities or something else driving the outsized growth on the platform?
Billy Hult: Yes. Hey, Kyle, it’s Billy. It’s a good question because as you know really well, it sometimes feels like when you talk about credit, it’s like the world gets divided between portfolio trading and alt to all trading, and those kind of pick up the kind of big headlines, but those are kind of headlines sometimes. And we feel like RFQ trading is really in a pretty straightforward way our biggest tangible opportunity in credit right now. It’s a foundational protocol that you have to get really right to be in the flow of things. So that’s like a huge, huge area of focus for us. And so when we think about that RFQ world, we think about first and foremost the institutional side, where we’ve been kind of growing our volumes there really now for years as our network expands and our efforts to kind of cross sell pay off.
I say this in a pretty simple way. We’re building deeper and stronger relationships with our clients. And part of that has been, from our perspective, getting things right, adding value around portfolio trading, adding value around the alt to all network. And then sometimes what happens in a very straightforward way is then you wind up getting that RFQ volume. It’s like you’ve kind of earned that type of business. And that’s been a big kind of area of growth for us. Dealer RFQ, which is a sort of change in market structure, is a more recent initiative for us. So still in early stages of building that protocol, but we feel given the relationships we have with the dealers, with the banks that the momentum there is quite promising. So answer your questions for a second on some numbers.
RFQ activity increased almost 30% for us, dealer RFQ almost 40% in the first quarter. So we’re getting really into some big numbers. And a little bit technically on the RFQ side, we continue to sort of make the investments and the enhancements that you would expect us to make some of those quite bespoke for specific clients. It continues to kind of resonate with the broader market. It’s a big area of investment for us, huge growth potential. And I kind of emphasize this point to you. You start to get some of that after you’ve added some of these efficiencies that we’ve talked a lot about in terms of portfolio trading and rounding out our liquidity and alt to all trading. Then all of a sudden you start to get some real kind of momentum in terms of the client activity.
So thanks very much, Kyle, for your question. Appreciate it.
Operator: Thank you. Our next question comes from the line of Benjamin Budish with Barclays. Your line is now open.
Benjamin Budish: Hi. Good morning and thanks for taking the question. Maybe, I think, circling back, I think it was Patrick’s question on M&A, just can you maybe give an update on r8fin? You’ve owned the asset for about a quarter now. Any updated thoughts on what Tradeweb can do to sort of accelerate that business? What’s sort of the potential upside from now having access to that futures trading workflow, having had a little bit more time owning the asset? Thank you.
Tom Pluta: Hi Ben, good morning. Yes, so as Billy and Sara mentioned, we remain very excited about this asset and the opportunity for growth, which nicely complements our existing businesses. As mentioned in the prepared remarks, the acquisition is off to a very strong start and already contributing about 1.5 percentage points to our U.S. treasury market share. So that’s very significant volumes starting day one. Over the last quarter, we spent a lot of time engaging with the r8fin client base, working on full integration into the Tradeweb infrastructure. And our focus ahead will be on onboarding more Tradeweb clients to r8fin, which will add to an already very rapid pace of client growth that existed before we got involved.
So there’s a lot of momentum on the client side and the feedback that we’re getting from existing clients and prospective clients is extremely positive. We now have a market-leading technology offering that’s allowing us to capitalize on growing demand for intelligent execution of multi-legged orders across cash treasuries and treasury futures. This access to U.S. bond futures is a nice compliment to the rest of our rate products. I think you heard us talking about finding ways to get involved in that space. And now we are. As far as what’s ahead to your question there, looking forward, there is a lot of excitement outside of the U.S. on this acquisition as well, and our plans include expanding into new markets with European cash and futures and potentially swaps likely next on the agenda.
So we see growth in the U.S. with the existing products and international expansion coming in the relatively near future. Thanks for the question.
Operator: Thank you. Our next question comes from the line of Michael Cyprys with Morgan Stanley. Your line is now open.
Michael Cyprys: Hey, good morning. Thanks for taking the question. Just wanted to circle back on the Aladdin integration for the credit business. I was hoping you can update us on the progress there. Maybe just remind us what exactly is going to be changing in terms of what customers will have access to, that they didn’t have access to previously. And how do you think about the opportunity set? And if there’s any sort of lessons learned from the integration on the rate side that occurred years ago, if I’m not mistaken.
Billy Hult: Sure, I’ll take that one as well. So the Aladdin partnership remains an important component of our growth strategy and credit and a significant part of our plan of expanding our network, particularly in high-yield. We’ve made great progress and have been working through the three phases of this integration. So in Phase 1, we completed that in the second half of last year, and that was focused on getting dealer access and inventory data into Aladdin. Phase 2, we recently completed, and that allows Aladdin clients to respond to auto inquiries right from their Aladdin dashboard. And in Phase 3, clients will be able to initiate an RFQ on Tradeweb from within Aladdin and then also use our automation tools. So we expect, we’re progressing – we expect all phase of this to be completed over the next 12 months.
And as far as the results for us on volumes, revenue and market share, we expect this to be a steady progression as we move forward with more clients within Aladdin using Tradeweb functionality. So your question on lessons learned, yes, we integrated with Aladdin in rates a number of years ago. And the main lesson there is really that Aladdin is a very important tool for many asset managers and being partnered with them and providing easier access for those clients to Tradeweb is beneficial to us and growing our volumes. We learned that in rates. That’s what we’re expecting and learning and seeing in credit as well. Thanks for the question.
Operator: Thank you. Our next question comes from the line of Dan Fannon with Jefferies. Your line is now open.
Dan Fannon: Thanks. Good morning. I guess sticking with you, Tom, you had mentioned in your prepared remarks about looking to replicate the success and invest in high-grade and high-yield. And I think Aladdin to your previous response as part of that, but maybe you can elaborate on what you expect on other things you’re doing and really kind of a time period you think to gauge the success of the potential share gains?
Tom Pluta: Sure. So in high-yield, the goal is to continue to build out the client network, and we have been doing that. Billy mentioned, we’re hiring salespeople to help build out that client footprint, and we have been making notable progress. We’re also building out the dealer network, and you can see in the stats on the increase in the number of responses, clients will come on the system, but ultimately, they want liquidity, and they want a lot of responses and they’re getting that. As Aladdin functionality rolls out, as I mentioned, over the course of the year, this will continue to boost high-yield volume. So there’s no time frame as far as when we’re there and when we’re done, but it’s more a continuum, and we do expect to continue to grow our share over time.
And this is a very sustained effort. It’s blocking and tackling. It’s getting clients to come over to Tradeweb for the first time and we are getting there. So that’s what we’re going to continue to do. Thanks for the question.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Craig Siegenthaler with Bank of America. Your line is now open.
Craig Siegenthaler: Good morning, everyone. Our question is on pricing and credit. So as competition here in credit continues to intensify, how are you thinking about pricing over the long-term? And in your discussions with buy-side clients, is this becoming a more relevant topic? Thank you.
