Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, simply press star. Then the number one, on your telephone keypad. If you would like to withdraw your question, press the pound key at any time. Please note, each person is limited to one question, before being asked to rejoin the queue. As a reminder, this conference is being recorded January 29, 2020. I would now like to turn the call over to Dave Cresci, Investor Relations Manager at MarketAxess. Please go ahead, sir.
Good morning, and welcome to the MarketAxess Fourth Quarter 2019 Conference Call. For the call, Rick McVey, Chairman and Chief Executive Officer. Will review the highlights for the quarter, and the full year 2019. Chris Concannon, President and COO, will discuss progress in Open Trading, and automation. Then Tony DeLise, Chief Financial Officer, will review the financial results. Before I turn the call over to Rick, let me remind you, that today's call may include forward-looking statements. These statements represent the company's belief, regarding future events that. By their nature, are uncertain. The company's actual results, and financial condition. May differ materially, from what is indicated in those forward-looking statements.
For a discussion of some of the risks, and factors that could affect the company's future results. Please see the description of risk factors, in our annual report on Form 10-K. For the year ended December 31, 2018. I would also direct you, to read the forward-looking statement disclaimer, in our quarterly earnings release. Which was issued earlier this morning, and is now available on our website. Now let me turn the call over to Rick.
Good morning, and thank you for joining us. To review our fourth quarter, and full year 2019 results. Our fourth quarter results contributed, to our 11th straight year of record revenues, and earnings. Revenue growth for the quarter was 15%, in spite of the challenging year-over-year comparisons, to fourth quarter 2018. You will recall, that credit spreads widened significantly in Q4 last year. Leading to a robust quarter, for trading on MarketAxess. This year, credit spreads continued their march. To the low end of the historical credit spread range, and volatility declined. Operating income for the quarter was up 13%, and EPS was up 9%. Our acquisition of LiquidityEdge closed on November first, and added about $3.2 million. In expenses this quarter, which Tony will cover in more detail. U.S. high-grade estimated market share reached 19.9%.
International client volume was up 44% year-over-year, and Open Trading volume was up 16%. Due to our strong results, and growing free cash flow. Our Board of Directors approved an 18% increase, in our quarterly dividend to $0.60 per share. Slide four highlights our record full-year results. Our long-term results, reflect our consistent track record of growth. With five-year compound revenue growth of 14%, and compound EPS growth of 22%. For full year 2019, revenue growth was 17%, and EPS growth was 18%. The results this year, reflect strength in all four of our core credit products. With record volume, and revenue in U.S. high-grade, high-yield, global EM, and Eurobonds. Total credit trading volume was up 22% this year. And we had new records in all four core products, for active institutional clients.
Active international client firms reached 830, up from 293 in 2014. The number of client firms trading three or more products is just shy of 1,000. Nearly double the total, from five years ago. Our success in growing our global network of institutional customers. Has created a diverse base of trading revenue. Commission revenue in 2019, was up 19%. We believe our lead, in global electronic trading revenue. In credit products, grew significantly during 2019. 96% of credit trading revenue, at MarketAxess is generated by institutional client order flow. While we believe our key competitors, earn the vast majority of their credit trading revenue, in the dealer-to-dealer segment. According to FINRA trade volume data, client-to-dealer trading. Represents approximately 78% of combined high-grade, and high-yield TRACE volume. Slide five provides an update on market conditions.
Our record results this year, were achieved in a market environment. That is not normally favorable for our business. Credit spreads declined throughout 2019. And ended the year, near the low end of historical credit spread ranges. Credit spread volatility, declined in the second half of the year. New issue activity levels, were strong throughout the year. While monthly share numbers, will always fluctuate. The six-month estimated rolling average market share, for combined U.S. high-grade. And high-yield shows consistent growth, and ended 2019 at the highest levels ever. Our investment in trading automation, is adding important trading efficiency. For both dealers, and investors. Open Trading continues to provide an important addition. To market liquidity, and is reducing transaction costs. For the full year 2019, Open Trading price improvements. Delivered estimated transaction cost savings, of $385 million to our clients.
Slide six outlines the breadth, and growth of our global network. Volume and revenue growth is being driven by a healthy combination. Of increased activity with existing clients, and new investor client relationships. Total active institutional clients exceeded 1,700 this year. Nearly double the active client base, from five years ago. We are especially pleased, with the progress we continue to make outside of North America. Active international client firms now total over 800. And international firms, represent 30% of total trading volume. Up from 17% in 2015. European clients' volumes were up 38% last year. And global Emerging Markets volume was up 29%. We are excited, about the long-term growth opportunity. We see in CEMEA, Asia, and Latin America. Now let me turn the call over to Chris, t o provide an update on Open Trading, and automation.
Thank you, Rick. Slide seven provides an update on Open Trading. Open Trading adoption grew, to 27.2% of global trading volumes. Representing $136 billion in notional volume. The number of active Open Trading firms, reached a new record of 1,436 firms, up 10% year-over-year. The number of active client firms, also drove significant growth. Across our four core products, notably in Emerging Markets. With a 92% increase, and Eurobonds with 109% increase year-over-year. We are also seeing an increase in inter-dealer activity, as dealers continue to leverage Open Trading. To move risk off their balance sheets. In the fourth quarter, over $31 billion of dealer-to-dealer volume. Was executed on the platform, up 45% on the prior year. Inter-dealer volume now represents 6%, of our total credit trading volume.
Open Trading also continues, to deliver significant transaction cost savings for participants. With an estimated $79 million in aggregate savings, in the fourth quarter. For both liquidity providers, and liquidity takers. As announced last quarter, we launched the pilot phase of Live Markets. Our live order book for active, and newly issued corporate bonds. We are now actively onboarding clients, and dealers. To build a robust streaming liquidity solution. This innovation will allow participants to click to trade, and leave live resting orders. Which is a new way of trading credit. Our effort to move, toward a self-clearing model is progressing well. And we expect, to be fully live early in the second quarter. We expect self-clearing, to favorably impact our clearing costs. While improving our client experience. Slide eight demonstrates the growing momentum of automation, and credit trading.
Automated trading volumes rose, to over $24 billion in the fourth quarter. Up from $9 billion, in the fourth quarter of 2018. 78 firms used our auto-execution functionality in the fourth quarter, up from 31 the prior year. Our new Auto-Responder functionality will allow investor clients, t o more efficiently engage. In liquidity provision, through the Open Trading marketplace. The use of dealer algorithms is also growing. With approximately 2.4 million, algo responses in the fourth quarter, a 33% increase year-over-year. Dealer algos also drove an increase. In the average number of price responses per inquiry, to 7.3 in the quarter, up from 5.8 the year prior. This increase in pricing activity across liquid, and illiquid corporate bonds. Ultimately, can improve execution quality, and the likelihood of execution. Slide nine provides a summary, of our trading volume across product categories.
We are pleased with the 14% increase, in overall credit trading volume in the fourth quarter. In light of less favorable market conditions for electronic trading. Our U.S. high-grade volumes were up 5% year-over-year, to $253 billion for the quarter. Solely due to an increase, in estimated market share. With flat trades volumes year-over-year. Other credit category trading volumes were up 26% year-over-year. Emerging Markets, and Eurobonds volumes were both up more than 30%. On a combination of higher estimated market share, and an increase in estimated market volumes. Our rates category is mainly composed of trading volume in U.S. Treasuries. And reflects the post-acquisition contribution from LiquidityEdge. On a pro forma basis, average daily volume for U.S. Treasuries, was up 62% from 2018- 2019. Resulting in over $14 million in total annual revenue.
We believe these volume gains, were primarily driven by an increase in market share. 2020 will be a build year, for our rates business. As we focus on integration efforts with LiquidityEdge. Including the development of a dealer-to-client solution. As a sign of the early integration success, our auto-hedging solution was launched in December 2019. And has already executed, close to $400 million in Treasury hedges. 2020 will also see continued investment, in our other new initiatives. Including portfolio trading solutions, treasury net hedging, Live Markets, munis, automated trading enhancements. And our recently announced green bond trading program. Our January month-to-date average daily credit volume, is tracking more than 10% higher, than January 2019. While U.S. high-grade, and high-yield market volumes are somewhat flat. Our U.S. Treasury volume, is tracking more than 20% higher versus January 2019.
I am happy to report, that our January volumes include over $1.7 billion in green bonds. Which will plant close to 9,000 trees, under our new Green Bond Initiative. Now, let me turn the call over to Tony, to discuss the financials in more detail.
Thank you, Chris. On slide 10, we provide a summary of our quarterly earnings performance. Overall revenue was $130 million, up 15% year-over-year. The 14% increase in credit trading volume, and the inclusion of U.S. Treasuries trading commissions. Result in a 15% uplift in commissions. Information services revenue was up 21% in the fourth quarter. And includes one-time data sales of approximately $700,000. Expenses were up 18%, and operating income was up 13% year-over-year. Excluding the impact of the LiquidityEdge acquisition, expenses were up 12%. And operating margin was approximately, 48.5% in the fourth quarter. The effective tax rate was 18.9% in the fourth quarter, and 20.4% for full year 2019. During the quarter, we recognized $3.6 million of excess tax benefits. Related to share-based compensation awards. Our diluted EPS was $1.32.
The increase in our diluted share count, was largely due to the 146,000 shares. Issued as part of the LiquidityEdge acquisition. On slide 11, we have laid out our commission revenue, trading volumes, and fees per million. Total variable transaction fees were up 19% year-over-year. Driven by the increase in credit trading volume, and the inclusion of U.S. Treasuries trading commissions. U.S. high-grade fee per million, was little changed from the third quarter level. Years to maturity on bonds traded over the platform, was similar to the third quarter. Our other credit category fee per million, decreased by $5 on a sequential basis. Principally due to the impact, of two high-yield dealers migrating. From the all-variable plan, to the distribution fee plan.
Rates fee per million, was $4.81 in the fourth quarter. Which is slightly higher, than the estimate we provided, in our December volume release. And is a blended fee capture for U.S. Treasuries, and U.S. agencies. There could be some variability in rates fee capture. As our U.S. Treasuries fee plans, are typically volume tiered. Please also note that, the fourth quarter rates category fee per million. Only includes two months, of U.S. Treasuries trading activity. Reflecting a full quarter of activity, and continued strong growth in Treasury trading volume. We would expect the rates category fee capture, to run around $4 per million prospectively. Overall distribution fees were $1.9 million higher, than the third quarter level. Principally, due to higher unused minimum fees. On certain all-variable plans, and the two high-yield dealer migrations in the fourth quarter.
We expect distribution fees, in the first quarter of 2020. Will be similar, to the fourth quarter level. Slide 12 provides you, with the expense detail for the quarter. The LiquidityEdge-related operating expenses, amortization of acquired intangible assets, and deal costs. Expenses were up 12% year-over-year, and very similar to the third quarter level. Excluding the LiquidityEdge impact, compensation and benefits. Accounted for 65% of the year-over-year change in expenses. As we continue to add personnel, to support our growth initiatives. A year-over-year increase in headcount of 73. Higher stock-based compensation expense, and higher variable bonus provision. Were the main contributors, to the rise in compensation, and benefits. On slide 13, we provide balance sheet information. Cash, and investments as of December 31st were $500 million. And free cash flow reached a record $227 million in 2019.
Dividends and share repurchases aggregated $93 million. And capital expenditures were $35 million in 2019. Our recurring quarterly dividend is an important element, of our capital management strategy. Our dividend rate has kept pace. With our increase in earnings, and free cash flow generation. With the announced 18% increase, in the quarterly dividend to $0.60 per share. We have nearly, tripled the dividend level over the past five years. We expect to maintain our standing repurchase program. With the intent of offsetting dilution, from equity grants. During 2019, we repurchased a total of 60,000 shares under the plan. On slide 14, we have our 2020 guidance for expenses. Capital expenditures, and the effective tax rate. We expect that total 2020 expenses, will be in the range of $297 million- $314 million.
This guidance range, reflects a full year of LiquidityEdge expenses. Including $2.8 million, for amortization of acquired intangible assets. In addition, it's important to note that variable clearing, and technology costs. Are expected to represent, roughly 50% of LiquidityEdge's revenue. Excluding LiquidityEdge expenses, the midpoint in the guidance range. Would represent an approximate, 11% year-over-year increase in expenses. 2020 capital expenditures are expected, to range from $44 million-$49 million. Of which roughly half relates, to capitalized software development costs. Resulting from the investments we are making in new protocols, and enhancements to the trading platform. The guidance also includes approximately, $7 million of build-out costs, f or additional office space in London. We expect that the effective tax rate for full year 2020, will range from 20%-22%. The guidance range incorporates an estimate. For excess tax benefits, related to share-based compensation awards.
Now, let me turn the call back to Rick.
Thank you, Tony. We are pleased, with the consistent long-term growth. We have delivered to our shareholders, and even more excited about. What we see for the next decade. The current product, and client trends show an acceleration of momentum. Toward greater fully electronic trading in global credit products. In addition to our core product success. We are excited to have a serious entry point, into the rate space with LiquidityEdge. And we see additional product opportunities. Emerging in municipal bonds, and elsewhere. We would now be happy, to open the line for your questions.
Thank you. As a reminder, to ask a question. You will need, to press star one on your telephone. We ask that you please limit your questions to one, and rejoin the queue if necessary. To withdraw your question, press the pound key. Our first question is from, Dan Fannon with Jefferies. Please go ahead.
Thanks. I guess, my question is going to be on the expense guidance. Just curious, in terms of the spend levels. How they might be differing? In terms of, what you're allocating to in 2020 versus last year? And also, just clarifying whether that includes, the benefit from self-clearing?
Thanks, Dan. It's Tony. Thinking about the expense guidance, and we gave some color. Probably, more color we've done in the past. In terms of, what's driving the expenses? When you look at the individual line items, as expected. The line item, with the biggest growth year-over-year. Would be in comp, and benefits. We expect to add more personnel in 2020, to support our growth initiatives. It's concentrated in technology, and sales, and business support. We also have the full year impact, of the almost 75 people that we added in 2019. That comp, and benefits line will be, one of the drivers of the growth. If two other areas, so. You know, when I was looking at consensus estimates. And looking at, where our base budget varies. The two other areas are, our big investment areas. It's around depreciation, and amortization, and technology, and communication.
On the depreciation, and amortization side. We've made a significant investment, in the trading platform protocols, products. And that shows up, in capitalized software development. Chris and Rick rattled off trading automation. Building out the client to dealer Treasuries, portfolio trading, hedging, Live Markets. All of that, results in an increase in capitalized software development. We end up amortizing that over three years. You're going to see an uplift there. I think also, the amortization of the LiquidityEdge deal intangibles. Also contribute to that rise in depreciation, and amortization. The other area where there was, again, a sizable variance. Between consensus estimates, and where we're looking at a base budget. Was in tech, and communications. There, that one had really two big components. On the LiquidityEdge side, the technology costs today, do vary directly with revenue.
As we're expecting an uplift in treasury activity, and revenue derived from Treasuries. We're also expecting an uplift, in that technology line. The second area, to support all of the product development work. We are building out a cloud development, and tools to support the growth. That's where you're going to see, some variances in the expense growth as well.
Thank you. Our next question comes, from Kyle Voigt with KBW. Please go ahead.
Hi, g ood morning. I actually, just wanted to ask a follow-up on Dan's question. Because I think, he also asked about self-clearing. If there's any benefit from self-clearing, embedded in the 2020 guide? Sorry if I missed that. Also, just the 11% organic growth rate for 2020, excluding LiquidityEdge. Over the past, I don't know, five or seven years. It just feels like the organic growth rate, and expenses. Has kind of been in this 8%-10% range on average. I'm just wondering, how should investors think, about the medium-term expense growth rate? Organic expense growth rate of the business, given the investments that you're making? Is it in the double-digit range? Is it in the 10%-12% range? Should we be thinking about, that over the medium term?
If you just kind of remind us, your thoughts on operating margin expansion, o perating leverage? And how much you think, you can generate in operating leverage, on a normalized basis given the business? Thanks.
I think, you had more than one question there, Kyle. But I'm happy to answer them. I will say one thing. First, on the organic growth rate. If you're looking at, say, a three-year, five-year, 10-year basis on organic expenses. They have been double digits. They've been around 12% or 13%. I don't think anything, where we're guiding to for 2020. Again, absent LiquidityEdge overlay, anything we're guiding to would be inconsistent. With what we've done in the past. This is all about investing in the opportunity, to expand the geographic reach. The addressable market, new products, and protocols. I think we're doing exactly, what investors want us to do? And I do think, again, if you look back historically. It wouldn't be inconsistent, with the way expenses have grown. The second part on clearing, yes.
What we're guiding, to includes an expectation. For the MarketAxess core or legacy business. When we transition over to self-clearing in the U.S., and we transition to a new clearing broker. Outside of the U.S., we are anticipating cost savings. That is built into the numbers. Fully embedded. Chris mentioned in his prepared remarks, we expect to go live sometime in Q2. Fully embedded in the guidance we're providing. The other piece you mentioned, which was question number two, was around operating margins. You've heard this, from us in the past. Where we are investing, and we've had a period here, over the last several years. Where we've invested significantly, in building out our geographic reach. And launching new products, and protocols. Again, you can reference back all of the initiatives, we have underway right now.
At the same time, we've been delivering operating margins around 50%. We don't think, that's a bad answer. But this is all about growing, and addressing the opportunity here. If we're right about investing today. We think there is an ability, for margins to expand. If we're right around our client, to dealer Treasury trading. If we have an uplift in muni trading, if market share accelerates in our core business. That's all going to drive revenue growth forward. I think there is an opportunity, for margins to expand. This is about investment. Look at this past year, we delivered. You can look at it, and say that the expenses were up significantly in the past year. But our net income was up 18%. We're not managing, to a margin number right now. I do think, there's opportunity to expand. But today it's all about investment.
Thank you. Our next question is from, Rich Repetto with Piper Sandler. Please go ahead.
Good morning, Rick and Chris, and Tony. I guess, what caught my attention was? Rick, when you highlighted 96% of your business is institutional? And you think peers are D2D, and you also highlighted that. I think, the FINRA TRACE is 78%. I guess the point here is, what are you trying to say versus your competition? And I assume the D2D space is much lower capture, but isn't it good liquidity as well? Or what are you trying to say about, differentiating your platform with those numbers, I guess?
I guess, what I am trying to outline, Rich. Is in the institutional client to dealer segment, for fully electronic trading. We feel better about, our market position than ever before. It's important to remember that, there are no industry standards, for electronic trading volume reports. And every company is different in what, and how they report? I think it's important to look at, what's going on in the revenue side. To compare with, what is being reported on the volume side. When we really talk to the major dealers, in this space that see the order flow. We continue to feel like, we have been strengthening our leadership position. In the most important space for credit trading. Which is the client, to dealer institutional space. When you look at the competitors, that all of you follow. The retail space is primarily a dealer-to-dealer business.
There's also institutional dealer-to-dealer, both electronic, and voice brokerage going on. I believe that our lead has grown throughout the year, in the institutional customer space. Yes, when you look at the facts within FINRA TRACE. That helps to frame out the size of the market. 78% of the combined high-grade, and high-yield volume reported. To TRACE involves a customer trade, and 22% is a dealer-to-dealer trade. In addition to that, some of the stats that Chris outlined. Is that dealers are using our vast liquidity pool, for credit trading. For their own liquidity, more than ever before. We're excited, that we're also starting to compete, in the dealer-to-dealer space. Just to keep that in context, it represents 6% of our trading volume, and 4% of our revenue.
I think, if all the competitors in this space. Would follow that lead, in terms of the granularity around. Revenue reporting by client segment, it would add to your understanding. Of what's really going on electronically, by client segment as well as investors.
Rich, I would just add. I just think, the importance of the client business. As we look at our network value, and value that client business. It is a global business, and it is quite a sticky business versus the dealer-to-dealer business. That we've seen, on other platforms shift rapidly. The build-out, and the investment, and the cost. Both in terms of time, and human value to build that client network. That is an enormous advantage that we have. And an advantage that we're clearly using, as we jump into other product areas. Like rates, munis, and if you look at our success in Emerging Markets. The client network is a network of great value. We look at those volumes, as an important metric of our global growth.
Thank you. Our next question is from, Jeremy Campbell with Barclays. Please go ahead. Your line is open.
Hey, thanks. As you guys highlighted earlier, non-U.S. clients, and volumes have been very strong. And Emerging Markets in particular is a pretty big market. And has been a pretty big growth driver for you. I think, kind of overarching. You guys have previously noted, that every 1% market share pickup. Is like $30 million-$40 million of additional revenue. Just kind of wondering, with the recent switch to your new non-U.S. settlement agent. That has better kind of relationships, and expertise in local markets. Maybe just discuss, what your expectations are for potential accelerated market share gains, in Emerging Markets? 2020, and maybe whether if, that's a function of new client sign-ons, or deeper wallet share.
Thanks for pointing that out. We couldn't be more excited, about the opportunity in global EM. And the progress, that we are making. In the prepared remarks, we did highlight that international growth. Over the last several years, has been faster than North American growth. And it's primarily, because of our success in our EM franchise. Europe took the lead last year, with a 38% increase, in client volume within the region. EM was an important part of that. We also saw, a significant increase in active clients in Asia. An improvement in our franchise in Latin America. What we feel great, about is that for many years. Our EM volume gains were primarily, driven by hard currency EM trading.
We are now seeing, an acceleration of interest in growth, in local EM market trading. Where we have 26 different local markets, available for trading on the platform. So, this is another sign of the demand, for trading automation in electronic trading, is growing well beyond the United States. It's turning this into very much a global opportunity. With really healthy trends, in Latin America, CEMEA, and Asia.
Thank you. Our next question is from, Chris Allen with Compass Point.
Morning, guys. Just following up on that point. You talked about, investing in different regions. Is that where the investments can be driven from? Boots on the ground in APAC, and LatAm. To keep the Emerging Markets growth going?
There's certainly some of that. We're increasing our headcount internationally. To capitalize on the growing demand, that we are seeing. It's also a technology investment. It's a combination of client-facing people, to work with the growing base of international clients. That we serve, as well as technology investment.
I will just add, we've made a number of headcount investments. Certainly, in Latin America as well as in Asia. We are seeing dividends paid, as a result of those human investments, we've made a t people on the ground. In both regions, and growing our penetration in those regions.
Thank you. Our next question comes from, Ken Hill with Rosenblatt.
Hey, good morning. I had a question on the muni bond trading. You mentioned it, in the prepared remarks. But I know that's been an opportunity for some time. Hoping that volume kind of, moves a little bit more electronic. I was hoping you guys, could provide a little bit more of an update. On kind of behind-the-scenes effort, what you're hearing from clients? That might move that a little bit more electronic over time. Because I know, it's a big opportunity. Not only maybe, what you're doing with clients? But how long you see, that kind of playing out? Before we see, some more substantial electronic volume.
Sure, g reat question. Obviously, we've got a great deal of focus on the muni bond area. Just here in January, we're seeing our month-to-date volume. Increasing from both December, and obviously, prior year, January 2019. We're close to, or just over $800 million in volume in the month. A pretty exciting area. We are seeing a shift from, among the retail dollars moving into SMA accounts. Which are putting muni dollars, in the hands of large institutions. Where we have a competitive advantage. We've seen some uplift, from adoption of our traditional institutional clients. As they shift, how they handle their muni desks. We are seeing rewards from, both technology investments. And also, the OMS solutions that we provide those institutions. We're excited, about the muni space. We expect, obviously, to see continued penetration. In our clients, across the institutional region. We also are seeing benefits.
Many of the green bonds, are found in the muni space. So, we're deriving some green bond benefits, as a result of the demand in green bonds. That are coming in from both Europe, Asia, and the U.S. Our green bond activity is growing, as a result of our muni growth, ironically.
Thank you. Our next question comes from, Ari Ghosh with Credit Suisse.
Hey, good morning, everyone. Just on back to LiquidityEdge, Chris, maybe you could take this one. Could you update us on the timeline? Around the rollout of some of the new offerings, and cross-sell opportunities, that you see this year? If I think, about the Treasury space. Maybe talk about a little bit, about your competitive positioning? As the industry adoption of, some of these streaming protocols increase. Thanks.
Yeah, great question. Obviously, we're very excited about the LiquidityEdge acquisition. And just the dealer-to-dealer business, and the progress that LiquidityEdge has made in the year. We've got over 125 banks, and dealers on the platform, 21 of the 23 primary dealers. Obviously, their ADV was tracking in 2019 over 2018. Probably, about a 60% growth over 2018. We think about the integration of LiquidityEdge, on the MarketAxess platform. We start with the hedging solutions. That we launched, in December of last year. We are also expecting net hedging solutions, coming in the second quarter. So further enhancements, and build-out on our hedging solutions. For our corporate bond trading. More importantly, our dealer-to-client integration. Where we actually, allow our institutional clients. From the MarketAxess platform, to access dealer streaming liquidity. We expect that, to be launched in the second half of 2020.
We're excited, about the build-out there as well.
Thank you. Our next question comes from, Brian Bedell with Deutsche Bank. Please go ahead.
Thanks, g ood morning. Chris and Tony, if you could talk a little bit more about. The spending on growth initiatives in a few areas. And I guess the scalability of, how you're developing these? And maybe kind of rank them a little bit. It would be obviously Open Trading, but Auto-Ex. Obviously, you've gotten very strong traction there. If you can talk about, the spending in the 2020 plan? For that, and how that is already scaling? I think, Chris, you mentioned the portfolio trading solutions, also being a big growth area. Thanks.
Sure. Well, first on the scaling. I think, it's most evident in our automated trading solutions. Our Auto-Ex feature, as I mentioned. Saw $24 billion in volume, just in the fourth quarter alone. We didn't add headcount, to offer additional Auto-E xecution functionality. And yet we are seeing, those levels of volume coming across the platform. We're also seeing better penetration, within clients that have already adopted Auto-Ex. And what I mean, by that is either rolling out to additional product. Or offering larger sizes, in their Auto-Ex solution. Some of the growth is, both new clients adopting auto- execution solutions. But also, current clients increasing, their use of auto- execution. As I think, about portfolio trading. Probably, has the most scale, because it's built.
We're adding features, throughout the year 2020. The largest part of the building, has been done. Now it's really client adoption. We have 93 clients now onboarded, to execute portfolio trades. That's about 830 traders, across our institutional client base. Now 11 dealers supporting, pricing in our portfolio trading solution. We're excited about, what the portfolio trading technology can do? And how much volume can come through, those very large block trade portfolio trades.
Then just one add, on the spend. If you looked at 2019, our spend for enhancements to the platform. Rolling out these new protocols, it was almost double the spend in 2018. Just to put it in perspective, 2018. Capitalized software development, roughly $11 million, 2019, roughly $22 million. When we look at 2020, and in the prepared remarks. You saw some color or commentary there. We expect that, capitalized software development, to have another uplift in spend. We had a big uplift in 2019, and we're expecting another year of heavy investment in 2020.
I'll just add, our Green Bond Initiative will scale quite nicely. We saw close to $20 billion, in green bond activity in 2019. As I mentioned, we already have $1.7 billion in green bond trading, just in this month alone. We're excited. We really didn't have much of an initiative in 2019, for green bond trading. As we look at 2020, we're excited about planting five trees . For every $1 million in green bond trading. We think that's an enormous incentive, for our clients. Because they will get credit, ESG credit. For trading on our platform. As you know, ESG is quite a hot topic. Not only in 2019, but clearly in 2020. I would say our green bond trading incentive is probably, our most scalable offering on the platform right now. But I'm a little biased.
Thank you. As a reminder, ladies and gentlemen, to ask a question. Just press star then one, to get in the queue. We ask that you please limit your question to one, and then rejoin the queue. Our next question is from, Alex Blostein with Goldman Sachs. Please go ahead.
Hey, guys. Good morning, t hanks for the question. Bigger picture question for you guys. Electronic trading of credit obviously, continues to expand. Beyond the sort of, traditional RFQ model. You guys have, very strong presence in the Open Trading market. And obviously, launching portfolio trading, and other kind of protocols. Can you help us think about, the competitive landscape? In that part of the market, outside of the RFQ model. Which obviously, where is MarketAxess more dominant? Importantly, how you think pricing dynamics, will evolve for some of those newer protocols? Thanks.
Sure. I'll take first crack at that, Alex. Good morning. First of all, on portfolio trading, the demand is growing. But it is in very early stages. What we have seen, and also heard consistently from the market is. That portfolio trades still consistently, tend to be bilateral trades. Although there is some increase, starting to occur in multi-dealer portfolio trades. In our early portfolio trading on MarketAxess. We are providing value, by primarily processing a trade. That's taking place off the system. Dealers, and clients are still negotiating the bonds in the portfolio. And the pricing benchmarks, that they will use. Off system with spreadsheets, and then taking advantage of the processing benefits online. It's our understanding, that that's generally what's taking place elsewhere. I would expect that to continue. To develop in terms of, more automated portfolio trading solutions.
My view is that, it's in early stages today. The other thing that we do is track. What we believe to be portfolio trades, that hit the TRACE tape. While the growth rate, has been very high. The estimates that we have, that we've confirmed. With major participants, in portfolio trading. Are around 3% or 3.5%, of U.S. high-grade TRACE volume. Taking place through portfolio trading, and more like 2%-2.5% in high-yield. It's an important, and growing segment. But still a relatively, small part of the secondary market. The other piece is that, there is some demand emerging for sessions-based trading. And that really has led, to our investment in Live Markets.
We think, that very active benchmark bonds as well as new issues. Can trade closer, to a Live Markets environment. That is exactly, why we've invested the time, and effort into Live Markets. We do see reason for optimism there. With the client, and dealer demand. That we're starting to see for Live Markets.
I will just add, when you think about, our Auto-E xecution functionality. We are taking the traditional RFQ market, and creating a no-touch solution. While pricing doesn't change, they continue to be automated RFQs. Over time, how we execute an auto- execution. And the speed, of the RFQ can be increased. You get the similar benefits, to a streaming price. As you speed up RFQ, into a continuous RFQ. Or a request for stream, type of model. When I look at the rates business. Obviously, the most liquid asset class on the planet, is our U.S. Treasury market. It continues to be serviced, by an RFQ model. From the dealer-to-client market, in the dealer-to-client market. We are looking at not only that solution, but a request for stream solution as well. To help solve the speed of execution, in the treasury market.
Just as Rick mentioned, our Live Markets is still in pilot form. It's out there being offered. We have 37 participants, live on the platform. Seven dealers currently on the platform. We're still waiting on dealers, to connect and stream price. And that's a critical change, in the credit market. As dealers build out their capability, to stream live pricing throughout the day. I think that's an important development both in Europe, and in the U.S. As all of our traditional dealers start, to build out streams for pricing. And that's when the market solutions can change. Obviously on Live Markets, our trading desk headed by Mike Sheehan. Is routinely contacting clients, letting them know about activity on the platform. We have the eyes, and the ears of active trading going on Live Markets.
Thank you. Our next question comes from, Chris Shutler with William Blair. Please go ahead.
Hi, guys, g ood morning. Two questions, i n high- grade, it looks like Open Trading. As a share of your total volume, has been pretty flat, over the course of the year. Maybe just talk about, what's caused that stabilization, that percentage? Then secondly, in portfolio trading. I hear what you're saying? That it's early days, but over time. As that functionality does, become more automated, and matures? How should we think about, the fee capture for a portfolio trade, relative to your current averages?
Sure, Chris, it's Rick. I'll take the first crack at that one. When you look at Open Trading percentages, 27% is still a significant addition. In new market liquidity, for credit market participants. It will also vary, in our opinion. With overall market conditions. We saw a huge increase in Open Trading percentage, in the fourth quarter of last year. When we had a significant pickup, in credit spread volatility, and widening spreads. That was not the case this year. Where we had, a decline in credit spreads. Throughout the year, and a decline in volatility. I think you'll see it vary, with different market conditions. The other point to remember, is that our trading automation tools. Have allowed dealers, to be much more responsive. On the system, to client inquiries.
The dealer responses, have gone way up. Over the last year, and a 1/2 or two on the back of. The work that we've done, with many of them. To promote their algos on MarketAxess. I think it's a combination, where dealer pricing continues, to get better on the platform. Open Trading is providing an important additional layer of liquidity. But also, market conditions, which throughout the year. Saw declining spreads, and declining bid offer.
I would just add, that portfolio trading. While it's something, that we hear a lot about. It's still a relatively, small part of the market. It's also a market, that we don't touch today. These are large blocks, that are going off. And the large block market is something, that we have been striving. To get in the middle of. Portfolio trading solution, it really requires a great deal of efficiency today. Dealers, and clients are passing back spreadsheets. Our solution really is a workflow solution at first. Over time, we think it can generate, more secondary trading activity on the platform. As a result of either dealers liquidating positions, brought down from a portfolio trade.
The pricing of our portfolio trading. And again, i ts initial rollout pricing, is lower than traditional RFQ. But the size of the portfolios, can get quite large. And it is a target market, that we don't have on the platform today. And one that we're chasing.
Thank you. I'm not showing, any further questions in the queue. I would like to turn the call back, to Rick McVey for his final remarks.
Thank you for joining us this morning, and we look forward. To catching up, with you again next quarter.
With that, ladies and gentlemen. We thank you, for participating in today's conference. You may now disconnect. Have a wonderful day.