Earnings Call: Q2 2018

Jul 25, 2018

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. As a reminder, this conference call is being recorded July 25, 2018. I would now like to turn the call over to Dave Cressey, Investor Relations Manager at MarketAxess. Please go ahead, sir. Good morning, and welcome to the MarketAxess 2nd quarter 2018 conference call. For the call, Rick McVeigh, Chairman and Chief Executive Officer, will review the highlights for the quarter and will provide an update on trends in our businesses and 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. 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 ks for the year ended December 31, 2017. 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 discuss our Q2 2018 results. This morning, we reported strong second quarter results driven by increased trading volumes, year over year market share gains across all four of our core products and record open trading activity. Overall trading volume of $421,000,000,000 was up 16% year over year. Our estimated U. S. High grade market share of 17.4% was up from 17% last year. 2nd quarter revenue of $107,000,000 was up 11% compared to Q2 2017. Operating income for the quarter was $52,000,000 up 6% from a year ago, and diluted EPS was up 7% to $1.07 Open Trading adoption continues to accelerate and reach record volume of $89,000,000,000 up 57%. Additionally, emerging market and Eurobond volumes both saw rapid growth during the quarter. Slide 4 provides an update on market conditions. Overall secondary trading conditions were less favorable in the Q2 versus Q1. Credit spread volatility and interest rate volatility both declined and high grade new issue volume was up. That combination in the short term creates a more difficult environment for market share gains. In addition, the flattening of the yield curve tends to reduce average years to maturity of bonds traded on the platform. This is one of the factors that negatively impacts our high grade fee capture. Strong results during the quarter in other products helped to offset slower than normal growth in high grade. Slide 5 provides an update on Open Trading. Open Trading volume growth accelerated during the quarter and was up 57% to a record $89,000,000,000 Open trading represented 21% of our volume in Q2, up from 16% last year. Over 256,000 open trading transactions were completed in the 2nd quarter, up from 155,000 in Q2 2017. Liquidity providers or price makers on the platform drove 802,000 price responses representing a 45% increase in activity in the 2nd quarter. Liquidity takers saved an estimated $38,000,000 in transaction costs through open trading on the system, up 71% from the Q2 last year. Participants benefited from average transaction cost savings of approximately 2 basis points in yield when they completed a U. S. High grade transaction through Open Trading protocols. Importantly, Open Trading volume is growing rapidly across all four core products as dealer and investor clients embrace this new source of liquidity. Slide 6 demonstrates the benefits of greater automation and credit trading. Inquiry and trade count were both up strongly in Q2, motivating market makers to continue to invest in automated tools for market making. Total trade count was up 18% year over year to over 800,000 transactions during the quarter. Dealer algo responses are growing rapidly, especially for ODOT inquiries. Algo generated price responses were up over 120% year over year. The growing use of algos is improving the investor client experience with average responses per inquiry reaching new highs across the system. Growing automation on the market access trading platform creates a highly competitive environment including small micro lot orders. High grade micro lot volume was up 23% year over year and estimated market share is strong at 24%. We are also seeing growing use of investor auto execution tools to lower the cost of trading on low market impact transactions. We believe that cost benefits will continue to drive investor and dealer clients to higher levels of automation in credit trading. Slide 7 provides an update on international progress. Our international business experienced another quarter of rapid growth. MiFID II continues to have a positive impact on client trading behavior leading to a 27% increase in volume with European clients. Eurobond volumes from European clients were up 34% year over year. Emerging market volume was up 27% with strong growth in both external debt markets as well as the 24 local EM markets where we currently operate. We now have over 600 international client firms active on the platform, representing a 17% increase in the number of institutions year over year. Our growing footprint in international credit trading significantly expands the long term growth opportunity for our shareholders. Now let me turn the call over to Tony to discuss the financial results in greater detail. Thank you, Rick. Please turn to Slide 8 for a summary of our trading volume across product categories. U. S. High grade volumes were $231,000,000,000 for the quarter, up 13% year over year, primarily due to an 11% increase in U. S. High grade trays market volume. We completed approximately 5,200 block trays during the Q2. However, the tailwinds from major short dated paper selling programs experienced in the Q1 did not repeat in the second quarter and new issuance was fairly robust in 2Q. Volumes in the other credit category were up 23% year over year, while estimated aggregate market volumes for emerging markets, high yield and euro bonds was down 7%. Market share gains were the main driver behind the 32% growth in eurobond volume and 27% growth in emerging markets volume. Healthy growth in client engagement is evident across each of our core products. We now have over 14 50 client firms active on the platform, an increase of over 300 in just the past 2 years and we have almost 850 clients trading in 3 or more products. With 5 important trading days remaining in July, estimated U. S. High grade market share is running slightly below the 2nd quarter level and estimated high yield market share is running well ahead of the 2nd quarter level. On Slide 9, we provide a summary of our quarterly earnings performance. Overall revenue was up 11% year over year. The 16% increase in trading volume drove commissions 10% higher. The $1,100,000 uplift in post trade services revenue is primarily due to a combination of new MiFID II services and new customers. Expenses were up 16% year over year, leading to a 6% increase in operating income. Excluding duplicate rent expense recognized during the build out phase of the company's new corporate offices in New York City, operating income was up 10%. The effective tax rate was 23.9% in the 2nd quarter 22.6% year to date. We expect the effective tax rate for full year 2018 will be within the 23% to 25% guidance range. Our diluted EPS was $1.07 on a fairly stable diluted share count of 37,900,000 shares. On slide 10, we have laid out our commission revenue trading volumes and fees per million. Total variable transaction fees were up 2% year over year as the 16% increase in trading volume was offset by the impact of our new high yield fee plan implemented in the Q3 and revisions to the Eurobond fee plan together with a mix shift within certain products. U. S. High grade feet per million was up $4 compared to the Q1 of 2018, as the mix shift tapering smaller trade sizes under our Tier C plan more than offset lower duration. The $1,000,000 sequential increase in U. S. High grade distribution fees was principally due to one market maker moving to the distribution fee plan. A portion of the distribution fees recognized in the 2nd quarter related to a prior period. We expect that 3rd quarter high grade distribution fees will be roughly $500,000 lower than the Q2 level. Our other credit category fee capture was down $6 on a sequential basis. At a granular level, fees per million for emerging market corporates and emerging market sovereigns, European high grade and high yield and U. S. High yield that trades on either a price or a spread protocol were all consistent with the Q1. That said, there was a mix shift among products with a greater percentage of volume derived from Eurobonds and emerging markets, resulting in lower sequential fee capture in the other credit category. Slide 11 provides you with the expense detail. Sequentially expenses were flat as lower commission compensation and benefits costs were offset by increases in several other line items, most notably marketing and advertising. A reduction in the variable bonus accrual, which is tied directly to operating performance and seasonally lower employment taxes and benefits accounted for the $2,600,000 drop in compensation and benefits costs. The timing of various programs and events greatly influences the quarterly marketing and advertising expense. We believe the 2nd quarter level is more indicative of the run rate for marketing and advertising expenses for the next two quarters. Our full year 2018 expenses are projected to fall in the lower half of the guidance range of $220,000,000 to $232,000,000 inclusive of approximately $8,000,000 in duplicate rent expense. On slide 12, we provide balance sheet information. Cash and investments as of June 30 were $420,000,000 compared to $407,000,000 at year end 2017. During the Q2, we paid a quarterly cash dividend of $16,000,000 and repurchased 32,000 shares at a cost of $6,600,000 We also spent $9,000,000 on construction associated with the build out of the New York City office space. Trailing 12 months free cash flow was a record $169,000,000 Based on these results, our Board has approved a $0.42 regular quarterly dividend. Now let me turn the call back to Rick for some closing comments. Thank you, Tony. We are pleased with the overall growth in trading activity during the quarter. Most importantly, we are seeing good progress on long term growth priorities including open trading and international expansion. The increased investment in trading automation by both dealer and investor clients is a clear sign that the future of electronic trading and credit is bright. Now I would be happy to open the line for your questions. Thank you. And our first question comes from Kyle Vogt from KBW. Your line is now open. Hi, good morning. Excuse me. I think so first question I guess is on probably like you noted some of the micro lot success that you said you're having there. And I think it's mostly on the institutional side, obviously, but there were some retail assets you looked at last year. They didn't end up winning. But at that time, it sounded like there was analysis done regarding this build versus buy mentality for the retail space. And it sounds like you may be kind of looking at developing some point to click the trade functionality for to introduce this year. Just wondering, has that been an investment priority this year? And then is there something that you anticipate rolling out more directly in the retail space, I guess, over the near to medium term? Yes, that's a good question, Kyle. Thank you for that. But I think we're very highly comfortable that our liquidity pool is among the most competitive for micro lot trade sizes. We have not prioritized the investment in the retail segment in the first half of the year, but we continue to look closely at that opportunity and it would involve some modest tweaks to the technology platform to suit the retail client segment and some improved focus on sales and marketing toward that community. Not only are we active in micro lots, we have a tremendous amount of overlap in the market makers that are active in small tickets for institutions and also make markets in the retail segment. So we are engaged with those market makers and increasingly talking to participants in the retail segment and that is we think a long term opportunity for the company to look at how we could enter that space organically. Okay, fair enough. And just second question, just be on open trading, just given the record percentage of your volume in the quarter at 21%. Can you just talk about, I guess, longer term, what internally like what targets do you have? Or where do you think that can go as a percentage of your total market of your total volume? And then I guess what time what kind of timeframe do you think it will take you to get there? I don't know that we have a specific target on where open trading percentages will go. Our focus has always been on broadening and deepening our liquidity pool to better serve our clients. And the best part of open trading is it's the most important thing we think we've done to add new liquidity and broaden the liquidity pool and improve execution quality. So, judging by the rapid growth in the last few years, we would expect Open Trading to be a significantly higher percentage of our volume. That said, dealers continue to be a very important part of the liquidity pool and we expect that to be the case, especially in larger trades and less liquid bonds. So there will always be in our mind a balance between Okay. And then last one for me, just a follow-up on open trading. You gave the kind of breakdown of open trading penetration between your different products. It looks like the Eurobond and EM uptake of open trading continues to grow pretty rapidly from a lower base and some of the other products. Can you just talk about what's changed there in each of those buckets in EM and Eurobond over the past year, whether it be regulatory changes driving increased adoption or protocol changing or I think you introduced maybe on the local EM side. But yes, if you just kind of highlight what's changed and what the outlook is there? Thank you. Yes. Thank you for that. I think we mentioned in last quarter's calls that we have call that we made some technology changes in open trading for euro bonds and that has made it easier for market makers to respond to open trading orders and we've seen the benefit of that through greater open trading activity in Eurobonds. We've also introduced some new protocols that have been important to investors. So really we think that's been mostly some technology enhancements that we've been able to deliver to make it easier for market participants to respond in euro bonds. On the EM side, I think it's just organic adoption as the quarters roll on and dealers and investors are seeing more trading opportunities available in EM in the open order book. The behavior is changing and we're seeing better price responses coming back. Most of it is in external debt. It is very difficult to solve the riddle around trade settlement in many of the EM local markets. We're working through that one market at a time, but the bonds that trade and settle through Euroclear are significantly easier for trade settlement than many of the local markets. So it is organic growth in EM open trading activity, primarily in external debt markets. Great, thanks. I'll hop back in the queue. Thank you. And our next question comes from Rich Repetto from Sandler O'Neill. Your line is now open. Yes. Good morning, Rick. Good morning, Tony. Good morning, Rich. Good morning, Rich. So not to beat this anymore, but tremendous success with the open trading. And I guess what surprises me, and this is reflected in the other numbers as well, but as the previous call said, the penetration, but your volume in open training was up quarter to quarter off the robust first quarter levels. So I guess my question is, how much what's driving from the Q1 to now, there had to be some changes to get this penetration? Like what's the incremental change that actually saw your penetration go up so much, your volume go up in Open Trading when overall volume was down I think 9%, 9.5%? I think it's a sign of the growing acceptance of all trading in credit. It's really all cylinders contributing to the sequential growth that we announced this morning, Rich, that dealer community is using Open Trading more actively for their own source of liquidity. It's an increasingly valuable tool for them to turn their balance sheets over more rapidly and move bonds off their balance sheet that may have become aged. Investors are responding to more trade inquiries as they see opportunities rolling through. And then the 3rd piece is really what I talked about earlier in trading automation and the increased use of algos that can go to work, whether it's a disclosed inquiry or an anonymous inquiry. So I think all three pieces of that are combining to create a much more valuable marketplace and source of liquidity for both our dealer and investor clients. And again, not to get too deep into this, Rick, but the volume being up, but if you look quarter to quarter again, the price responses were down, the 802 price responses down from 820 1,000. So we may be getting too far in the weeds in this. But just a last follow-up on this is that is block trading as a lower percentage? And was it also the size of trades, block trading be a lower percentage 2Q versus 1Q that helps open trading? Yes, that could be a piece of it too. I think that's a reasonable observation. As I mentioned, I think the very modest decrease in price responses had much more to do with market conditions than anything else. As you know, looking at the other companies you cover, the Q2 was significantly quieter than the first and we were the beneficiary of better interest rate and credit spread volatility in Q1, and the changing investor sentiment drove a lot of short end block programs on the system and created the best block quarter that we had ever had. That was not the case in Q2. You saw much lower levels of volatility in both credit spreads and interest rates. I think I saw this morning that we had 21 days where the 10 year note was stuck in a 7 basis point range. So it was just a different quarter and I think that was the primary driver of slightly reduced trading activity levels across the platform and slightly fewer price responses. Got it. And just one last regulatory, I guess, sort of follow-up or question. During the quarter, the SEC Commissioner Jackson, who I know you know, talked in, I think he's out quoted saying that the fixed income markets were had conflicts of interest, hidden costs and were just did not provide a level playing field. You're on the fixed income advisory committee. And I guess the question is how much action what could we expect in the second half of the year in regards to regulation or let's just say the next 18 months in the fixed income market since you're so close to it? And how would that do you see that benefiting market access in the electronic platforms? Sure. Thanks for that. And coincidentally, FinTech just met a week ago and the subcommittee that I chair on E Trading and Technology made the one recommendation of the day this quarter for the SEC to really revisit and consider modernizing the regulatory framework for fixed income e trading, which is currently fragmented because what you find is that platforms that have protocols that look closer to cross matching, primarily the retail platforms are regulated primarily as ATS systems and report their volumes as ATS. However, the institutional market, which has favored RFQ protocols, really does not fit with the current ATS framework whatsoever. So we are today primarily regulated as broker dealers. And so we think that there it is an important time for the SEC to focus on fixed income e trading and make sure that they're mitigating risk around any systemic risk in the industry, make sure that the regulatory framework is consistently applied across all platforms, and what we recommended is that the FTC form a working group with FINRA and the MSRB to make sure that there is a thoughtful and consistent regulatory framework that emerges without redundancies. The other risk that we see is that if all three of them continue to regulate different pockets of the e trading industry, there will be redundancies that really don't pass any cost benefit analysis. So that was universally supported by FIMSAC a week and a half ago. I think that led to Commissioner Jackson's comments that you saw in the media, and I do expect that this working group will be up and running and that there will be focus on this topic in the second half of this year. We view it as a good thing. We think that improving the soundness and best practices around e trading for the entire industry will be a good thing for market participants in U. S. Fixed income. And we are highly supportive. We are regulated in parts as an ATS and parts as a broker dealer and of course as a public company with public reporting. So we are supportive. We think this will be a good thing for the e trading markets in fixed income. Got it. Thanks for the update, Rick. Thank you. And our next question comes from Patrick O'Shaughnessy from Raymond James. Your line is now open. Hey, good morning guys. Good morning, Patrick. First, I was hoping you could speak to some of the puts and takes in your information services post trade services revenues in the Q2 and what your expectations are going to be like for the remainder of the year? Sure, Patrick. The line item that probably sticks out more is on the post trade services side. And in the prepared remarks, I was commenting year over year on what drove that change, which is really new MiFID II related services and new customers associated with that. When you look at it sequentially, post trade services was down around $1,000,000 sequentially. And there's several items, all of them around a couple of $100,000 which drove that variance. So we didn't have a repeat of some non recurring MiFID II implementation fees that was a couple of $100,000 The dollar did strengthen in the second quarter versus the Q1. That was a couple of $100,000 And then there was there are clients that are on variable plans where dependent on their volume activity, it does influence revenue as well. So you tally those up and you see the host trade services revenue down around $1,000,000 or so. Looking forward, the growth there, it is going to be dependent on new clients and new services. And we do think over the next several quarters, the quarterly run rate will look a bit better than what you saw in 2Q. So assume if you look at the Q2 numbers, assume going forward it will be somewhere in that $3,500,000 to $4,000,000 range for post trade services. On the information services side, which is mainly data revenue, it's our bond ticker data service, volume, pricing, liquidity data, it's our access all service and reference data as well. It was up around 7% year over year. If you look historically for that business strike, we've grown revenue around 10% per year. The vast majority of that revenue is recurring. And we do have a fairly robust pipeline that we're that are in various levels of closure. And I expect that information services line, we still feel good around that 10% growth area year over year. Great. Thank you for that detail. I want to follow-up on I guess you guys touched on block trading a little bit, but I don't know if I caught what your market share of block trading was in the second quarter? Yes. So Patrick, we didn't stay with the block share number was. But you'll recall in the Q1, we were we ended up a little bit shy of 11% in the Q1. And in the second quarter, we were just a little bit north of 9%, which that's pretty consistent with where we were in full year 2017. And really the main driver there in the Q1 around the interest rate movement, principally right in the middle of the Q1, There were a number of short dated selling programs in the marketplace. We saw a lot of that activity on our platform. We did not see a repeat of that in the quarter. Got it. Okay, great. And I guess maybe a final question, a bigger picture question. So we've seen a lot of growth, it would seem like in some of the retail oriented trading platforms, the ones that had the streaming executable quotes. And I think there's some data that suggests that the quotes are actually reasonably small, although maybe there's not a whole lot of depth of book at the inside quote. Do you think we're at a point where the market structure is ready for streaming quotes to move up market and for institutions to be able to be willing to trade off of that type of protocol? Or do you think that request for a quote is going to remain the dominant trading protocol for some period of time? Yes, it's a good question, Patrick. It's I think you're seeing increased automation and trading at all levels of the client spectrum. Our understanding is that the retail ATS systems, the average trade sizes tend to be around $30,000 or $40,000 so it's a very different business than the institutional platforms operate today. Most of what is streaming are offers on those platforms. The bid side, as we understand it, tends to be more RFQ. And we are actively engaged with the market makers that are active both on our platform and on the retail systems. And I think you get a mixed view on whether they're ready for a true central limit order book and whether they see that as a benefit to their business model or not. So to date, the evidence is that for the institutional market, they're getting more competitive levels from RFQ protocols. They have been able to trade on the retail platforms if they choose to for many years, and there's not much sign that they've gone there at this point. And I think the reason is that right now they see more competitive pricing through RFQ protocols. But this is something we have to keep a close eye on. We do have that micro lot liquidity base. And if market makers and clients believe that they're ready for a full live environment, that is something that we have to be prepared to provide. From a technology standpoint, we think it's fairly straightforward for us to add that protocol. The message from clients today is mixed. And our next question comes from Chris Allen from Compass Point. Your line is now open. Good morning, guys. Good morning, Chris. Thanks for the color on July in terms of the market share. I was just wondering if you could give us maybe a little more flavor in terms of how the environment is shaping up relative to 2Q. It looks like volumes according to bond ticker for high grade and high yield are down decent amount, but obviously you have the July 4 week there. So any color just in terms of the July environment and maybe how the month has been progressing, whether it's starting to pick back up again in the back half of the month or it's just been consistent over the course of the month? Sure, Chris. So it's been a pretty typical July from a market volume standpoint. And when you look at the tepid trading around 4th July, it's every year we have that same anomaly. And if you took the first, say, 10 trading days of the month versus the second 10 trend trading days, you get a wildly different answer. Right now, we're looking at U. S. Credit, looking at high grade and high yield market volumes compared to say July of last year at the same point in time. They are running about 5% lower right now. So a little bit softer, but I would just caution that we still have 5 trading days left here in the month. And I could not that I would guarantee anything, but I could pretty much guarantee that more than a quarter of the volume is still ahead of us. There's still 5 days left at the 21 day months and it was pretty slow and pretty unusual to have 4th July fall right up. And the other thing, Chris, just from a market condition standpoint, the new issue calendar really in that 1st week, the week of 4th July was shut down. What we've seen in the last 2 weeks is much healthier new issuance. So that is a little bit different than what you saw in the first half of the month. Thanks. Just expand on that a little bit, Chris. Over the medium term, one of the things that we're watching is the great unwind of quantitative easing around the world. The Fed has obviously stopped their quantitative easing program and allowing the balance sheet and bonds to slowly mature and wind down. The ECB should be out of quantitative easing by the end of this year and you've seen some recent comments from the Bank of Japan. I personally think that's a big deal, right? That was a massive program collectively across the central banks around the world. They had been buying an awful lot of government bonds in the case of ECB, quite a few corporate bonds. So I think that that will actually be an important event in terms of the market environment over the coming quarters. And it will be interesting on the treasury side because the Fed is no longer buying treasury bonds and the treasury is about to start issuing a lot more bonds. So I do think that the likelihood is that the market environment will improve as we see this gradual unwind of quantitative easing. Thanks. One thing that caught my eye recently was a recent report, just a news article about liquidity, particularly over in Europe and corporate bond markets being a bit challenged, people using more derivatives there in the credit markets. Wondering how you like whether you've seen similar action and how you guys are thinking about the impact of that theoretically on you guys? Yes. In some of the European government markets, the futures contracts have more liquidity than the underlying cash market. So that's been the case for a long time. So it's not surprising in a market like Italy when ball picks up that the primary beneficiary is futures market more so than the cash market. Hasn't really been the case on the credit side. We did see slightly lower volumes during Q2, which we think is related to lower volatility, but we don't really see the same impact on the credit side. And if you look at EM year to date, there has been more caution in EM markets over the course of this year, but our best estimate is that EM volumes year to date are down 7% or 8 percent from where they were first half of last year. Got it. And then just a quick numbers question. Compensation declines question continues. How do we think about the trajectory of that line moving forward? Continues. How do we think about the trajectory of that line moving forward? Yes, Chris. So the when you look at it sequentially, you're right. It wasn't a variable comp line. That was about half of the delta. And our variable compensation pool is very formulaic. So it is tied directly to operating income. So when you see revenues declining from Q1 to Q2, it does have a direct impact on the variable bonus accrual. Going forward and looking at the second half of the year, we would expect an uptick in that line compared to the second quarter. So right now looking at the sort of the headcount picture, we are tracking about 30 new hires expected to start in the Q3. About half of those are with our new analyst sales and technology program. So we are tracking a fair number of headcount that joined here in the 3rd quarter. So you would expect some uptick there. But when you look at it overall, I've had some comments in the prepared remarks around overall expenses. And what we're looking at right now, if you look at that guidance range we gave, what I said was we're tracking toward the lower half of that guidance range. There are still some swing factors in there, but we feel pretty good about being in the lower half of that guidance range right now. Great. Thanks, guys. Thank And our next question comes from Chris Shutler from William Blair. Your line is now open. Hey, guys. Good morning. Good morning, Chris. In the second quarter, I guess I would have thought that with the volume in some of big high yield ETFs growing pretty nicely in the quarter that market share and high yield would have been up a little bit more. I know there's always a lot of puts and takes, but maybe just could put that in perspective for me. Yes. Chris, on the high yield side, what we saw on our platform was a little bit less of a bid wanted market. We do better when the order flow is more way toward bid wanted. We did see volatility drop in the high yield market. And for us, the ETF community, it's an important element of our high yield business. And we track the percentage of their volume to our overall volume. It did decline in the Q2. So they were a little bit less active. Okay. That helps, Tony. And then just one bigger picture question. Rick, I want to get your thoughts on some of these fixed income data aggregation platforms, so Alpha probably being the best known one. Obviously, really early days. But how do you look at the kind of the long term competitive risk from those? And in other words, is it, in your view, really important to own the Traders Desktop? Yes, there's quite a bit of movement on data aggregation across the industry. We're tracking about 12 or 13 different data aggregators in the EMS space currently, and that number seems to grow every quarter. So there are more solutions out there. I think it's another sign that clients have more data available to them ever before and they need technology tools to aggregate and filter that data to make sense of it for their trading operation. We think it's a natural evolution of the market. We are not only on the desktops of clients today, we're also offering aggregation and EMS tools ourselves. So it's very early to predict where it will all end up, but I think it's logical to expect that institutional investors are going to increasingly look for aggregation tools. The important piece for us, Chris, in all this is to differentiate our liquidity pool. And I think historically we've done a very good job of that. It hasn't been for lack of competition and EMS tools may make it easier for people to direct traffic to different platforms of their choosing, but we've passed the test of time by constantly innovating and adding to our liquidity pool in order to differentiate the transaction costs and pricing available on the platform, and I think that's the key for us. All right. Thanks a lot. Thank you. And we have a follow-up question from Rich Repetto from Sandler O'Neill. Your line is now open. Yes. Hi, Rick. I apologize if you mentioned this, but I'm getting a bunch of e mails here to ask you what your actual volume in July to date is? You've got a curious client base, Rich. I think Tony touched on it. It was an unusual 4th July week with the holiday falling right in the middle of the week. And so I think if you look at the trade numbers, you'll see significantly lower average daily volumes in high grade and high yield credit during that week. If you look at the numbers since then, it's pretty close to normal. So I think this all balances out over the quarter, but it was an unusual holiday week with the 4th on a Wednesday. The only thing that I would reiterate are the comments that Tony already made on share that month to date high grade share is running a bit below Q2 average and high yield share is running significantly above the Q2 average. So we've got a mixed bag and it's 2 or 3 weeks of trading, so I wouldn't read too much into it in any case. Okay. And I did want to follow-up on your volume comments and the pullback on quantitative easing. I guess, I think most of us in the market, we're trying to understand the volumes. I think everybody sees they're down across the board and trying to figure out whether there's anything incremental beyond just the July 4 seasonality and things like that. And so I guess the question is, do you feel like this is all or do you think it's more seasonality here with the volumes or do you think that as we go through this transition of quantitative easing, that could go through a low in volumes before the market sort of takes over and steps in? I think in the short term, it's seasonality. We're in July, and we had a very soft week over the 4th. Volatility is our friend. There's no question about that in our mind that when vol picks up, we do better. And we saw vol pick up in Q1 in both interest rates and credit spreads, and you saw the best results the company has ever produced. So we will do better when volatility is higher. And over the medium term, I think the odds are that both interest rate and credit spread volatility will be higher, not lower, but we're in a bit of an air pocket here right now where if you look at treasury yields and credit spreads, they've been pretty stable the last 2 or 3 months. Got it. That's helpful, Rick. Thank you. Thank you. And I am showing no further questions at this time. I would now like to turn the call back to Rick McVey, Chief Executive Officer for any further remarks. Thank you for joining us this morning. Enjoy the rest of the summer and we'll talk to you next quarter. Ladies and gentlemen, thank you for your participation in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.