Good morning, welcome to Tradeweb's second quarter 2021 earnings conference call. As a reminder, today's call is being recorded and will be available for playback. To begin, I'll turn the call over to Head of U.S. Corporate Development and Investor Relations, Ashley Serrao. Please go ahead.
Thank you, good morning. Joining me today for the call are our CEO, Lee Olesky, who will review the highlights for the quarter and provide a business update, our President, Billy Hult, who will dive a little deeper into some growth initiatives, and Robert Warshaw, our CFO, who will review our financial results. We intend to use the website as a means of disclosing material, non-public information and complying with the disclosure obligations under SEC Regulation FD. I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements related to, among other things, our guidance are forward-looking statements. Actual results may differ materially from these forward-looking statements.
Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our earnings release and periodic reports filed with the SEC. In addition, on today's call, we will reference certain non-GAAP measures. Information regarding these non-GAAP measures, including reconciliations to GAAP measures, are in our posted earnings release and presentation. To recap, this morning we reported GAAP earnings per diluted share of $0.27. Excluding certain non-cash stock-based compensation expense, acquisition-related transaction costs, acquisition and Refinitiv-related D&A and certain FX items, and assuming an effective tax rate of 22%, we reported adjusted net income per diluted share of $0.39. Please see the earnings release and the Form 10-Q to be filed with the SEC for additional information regarding the presentation of our historical results. Now let me turn the call over to Lee.
Thanks, Ashley. Good morning, everyone, and thank you for joining our 2nd quarter earnings call. We have previously talked about how historical exogenous events, like the acceptance of the internet or the waves of regulation that have unfolded in the financial markets, created opportunities for Tradeweb to drive change. In doing so, we continue to move markets forward on their journey towards more electronification. This time is no different. More than one year after the pandemic, we believe our 2nd quarter results are a testament to the ability of our people to innovate with our customers and solve complex trading challenges, and more importantly, drive enduring behavioral change. Despite a macro environment that was relatively subdued compared to last year, Tradeweb experienced a record first half, notching up four months where clients traded in excess of $1 trillion on average daily.
Turning to slide four, this enduring behavioral change I just described was on display as we reported our second-best revenue and volume quarter. Specifically, gross revenues of $261 million were up 23% year-on-year on a reported basis, and 20.2% on a constant currency basis. The three main drivers of our growth in the second quarter were US credit, global swaps, and U.S. Treasuries. The revenue growth and the resulting scale translated into improved profitability year-on-year as adjusted EBITDA margin expanded by 280 basis points to 50.6%. Turning to slide five, this quarter was marked by strong performance across many of our asset classes, with credit and rates accounting for 47% and 43% of our revenue growth, respectively. Specifically, credit posted its second-best quarter, driven by record U.S. high yield and strong U.S. investment-grade and European credit trading.
Cash rates revenue were another highlight, driven by healthy central bank issuance, which continues to fuel global government bond trading. While mortgage revenue growth was flat given subdued volatility and tight spreads, which led to muted trading activity. Swaps revenues continued its robust performance, hitting another market share record. Equities revenue growth was driven by European institutional ETFs and our efforts to diversify beyond ETFs that more than offset the decline in our more volatility-sensitive wholesale ETF business. Money markets performance was fueled by organic growth in institutional repo that trumped continued rate headwinds in the retail sector. Finally, market data saw broad-based growth across our Refinitiv redistribution license, APA, and proprietary data products. Moving on to slide six, let me provide a brief update on our four main focus areas.
Starting with interest rate swaps, which is our largest and fastest-growing rate product, a relatively more challenging macro backdrop versus last year was more than offset by continued organic growth. We continue to attract new clients and deepen our existing client wallet share by introducing new products and protocols. This led to overall swaps volume growing by 23%. As a result, swaps market share increased to a record 14.7% as measured by Clarus. We believe we continue to gain share versus our closest competitor, Bloomberg, in both the U.S. and Europe. Longer term, we remain excited by the multi-year opportunity we believe we have here as we scale our growth initiatives, the market electronifies, and the rate cycle turns. Billy Hult will give you an update on our strategy in a few minutes.
Moving on to U.S. Treasuries, another rates product that continues to perform well with volumes up 16% year-on-year, led by both the institutional and wholesale business. Market share rose to a record 16.5% of the U.S. Treasury market. The backdrop of healthy issuance continues to support the institutional channel, and our share gains have been driven by existing clients doing more business, competitive share gains versus Bloomberg, and further inroads into the T-bill market. Looking ahead, we continue to invest in driving the adoption of our early-stage institutional streaming protocols like Tradeweb+. Volumes here rose substantially versus last year. Our wholesale U.S. Treasury offering, which has been centered on disclosed streams and session trading, posted another strong quarter. We continue to onboard new clients and take share from streaming platforms.
We believe our efforts to lead with proprietary technology and really understand what our clients want are paying off. We are excited about the next chapter of our wholesale business with the closing of the Nasdaq U.S. Fixed Income acquisition on June 25th, and the integration is proceeding as planned. Clients are looking for more competition in the CLOB space, and we believe we can be an ideal partner as we leverage our DNA in U.S. Treasuries to revitalize the business. We believe the central limit order book, which today represents approximately 70% of the wholesale market, will remain an important protocol. Our clients now have the ability to complement their streaming activity with a liquid CLOB, especially in more volatile environments. We believe we will also be able to lower their connectivity costs and enhance our U.S. Treasuries data offering with the depth of book.
As a reminder, this transaction is accretive to adjusted earnings, and we believe we can improve EBITDA margins to at least Tradeweb's adjusted EBITDA margin exiting the first year of a two-year integration period. Shifting to credit, this was another great quarter as our business continues to surge ahead, generating more than $72 million in revenues. Our first half revenues of $146 million nearly matches what we did in the first three quarters of last year. It's amazing to see the consistent share gains being made in IG credit, with electronic share reaching a record 13.1% in June. It is also encouraging to see the progress being made in high yield, with electronic share eclipsing 5% for the first time in June.
Looking ahead, we believe we continue to see a lot of opportunity in credit as our platform continues to scale and when retail activity eventually normalizes in a higher rate environment. Billy will dive into more details on our strategy momentarily. Finally, within equities, institutional ETFs produced a healthy quarter, with average daily volume up 29% year-over-year as new client wins more than offset the substantial pullback in U.S. and European ETF industry activity. During the quarter, equity ETFs comprised 62% of our global volume, with fixed income contributing 32%. Our other initiatives to expand beyond our flagship ETF franchise are also bearing fruit, with momentum continuing in equity derivatives. Specifically, revenues in these newer growth products were up 51% year-over-year. Looking ahead, we believe we remain well positioned to benefit from the continued growth in ETFs globally, our newer product additions, and expanding client footprint.
With that, I will turn it over to Billy.
Thanks, Lee. Turning to slide seven for a closer look at credit. We produced another very strong quarter with both IG and high yield hitting new records for revenue and share. Our formula remains the same. Listen to our clients, offer a variety of execution protocols, and relentlessly innovate to shape the future of credit trading. Clients have responded to our brand of innovation by increasingly adopting AllTrade, portfolio trading, and net spotting. Equally important to the growth of our U.S. credit business has been the rapid increase in RFQ activity as we cross-sell and continue to gain more wallet share. RFQ is our biggest institutional protocol, with volumes growing 39% year-over-year during the second quarter. The strong growth in credit goes beyond our institutional channel. Our fast-growing wholesale and retail middle market businesses continued to perform well, with revenue up significantly year-over-year.
Stepping back, the diversity of our credit growth has never been stronger. While we are pleased with the progress made so far, we strongly believe we have the potential to do even better. Portfolio trading which I refer to as a light bulb solution, has become synonymous with Tradeweb. It is a prime example of the strong feedback loop we have with our clients. It's a great protocol that has cemented itself as an efficient risk transfer solution by improving upon some of the limitations of list trading using traditional RFQ and all-to-all. Portfolio trading is structurally changing client behavior and demand continues to build. Tradeweb facilitated a record $74 billion in portfolio trades in the second quarter of 2021, an increase of more than 125%. Clients are also increasingly putting dealers in competition.
Our in-comp portfolio trading reached record volumes comprising 73% of volume, up from 39% in the second quarter of last year. In the U.S., we estimate industry portfolio trading now regularly makes up 5% of trade volumes versus 2% at the beginning of 2019, with June hitting a new record. A recent survey of the buy side by Aite Group expects portfolio trading to grow to 10% of trade volumes within the next 12 months. Moreover, a number of large asset managers expect portfolio trading to comprise up to 25% of their future trading activity. In response, dealers have built out dedicated portfolio trading desks anticipating future demand. We continue to leverage our first-mover advantage and launch the next generation of our portfolio trading solution a few days ago. The use case for portfolio trading continues to multiply as the sophistication around price discovery and portfolio construction increases.
Examples include a fund managing large inflows or outflows, or a long-short systematic fund buying and selling bonds at the same time. Another use case relates to active managers looking to tilt a portfolio towards a specific duration, credit rating, sector, or region. Portfolio trading is also replacing smaller size RFQ lists for clients that value the certainty of execution, given hit rates in excess of 95%. It is also allowing clients to trade large blocks. In fact, our largest multi-dealer trade during the quarter exceeded $2 billion. That is a significant amount of risk being transferred electronically and speaks to how portfolio trading is quickly becoming a table stakes protocol in credit. AllTrade, the broadest suite of our anonymous protocols on the market today, connecting liquidity between our three sectors, also reached record levels.
Clients traded more than $88 billion, an increase of over 135% year-over-year, as our investments to grow our all-to-all network, integrate AiEX, and improve responder functionality continues to pay off. Session trading, another key AllTrade protocol, also hit a new record. Our newest innovation, Rematch, is still early in its rollout, but is seeing growing adoption. Finally, our advanced net spotting offering saw another solid quarter with over $107 billion in volume, up 9% year-over-year. On busy days, we see thousands of trades across clients, dealers, and protocols that are benefiting from our net spotting functionality. We recently rolled out our Multi-Client Net Spotting offering in the first quarter, which we believe further extends our lead against competitors. Since then, we have onboarded the majority of our largest clients, who have increased their savings by over 10% versus traditional net spotting.
Turning to the rest of our credit business, we achieved record revenues across European credit and institutional munis. Our CDS revenues also grew year-over-year, despite volumes falling 15%, led by growth in EM CDS. In sum, the diversity of our business shined through the quarter, not only by product, but also by protocol, geography, and client type. We believe this diversity provides us with tremendous room for growth, and we have an exciting roadmap to lead innovation across the credit markets. Moving on to swaps, the biggest driver of our rates franchise. The multi-year growth story continued as swaps registered its second-best revenue quarter, despite industry volumes falling to the lowest levels since the third quarter 2017. Variable revenues grew 50%, driven primarily by market share climbing to a record 14.7%, and increased trading and higher fee per million protocols.
The low interest rate and volatility environment pressured industry volumes in the quarter, which were down 19% year-over-year. The lower industry volumes were driven by a decline in FRA and overnight index swaps. Macro conditions remain in flux as client debate continues regarding inflation expectations and the shape of the yield curve, while the overall rate picture acts as a headwind for the business. We continue to focus on things in our control. Specifically, we're driving our market share higher by innovating across products, protocols, and geographies. The market share increases in the quarter were driven by a broad gains across our three products, with June overall market share climbing to a record 16%, as measured by Clarus. On a currency basis, our momentum in major currencies continued with record share in dollar an d GBP-denominated swaps.
We continue to respond to structural changes in the swaps market, such as the growth of EM swaps clearing or the transition to alternative reference rates. The second quarter, we saw a record EM and RFM activity and the first electronic SOFR swap spread and Japanese TONA switch trades. On the EM front, we added the Brazilian real in April and continue to onboard additional dealers and clients and deepen our liquidity pool. Looking ahead, we believe the long-term swaps revenue growth potential is meaningful. With the market still only 25%-30% electronified, there remains a considerable amount of business done via voice, and that's our opportunity, innovating to digitize manual flow while the global fixed income markets and broader swaps market continues to grow. We continue to invest in our leading automated trading capability, AiEX.
This tool lets clients streamline their workflow, identify cost-saving opportunities, and free up time to focus on managing more complex trades and client relationships. Adoption continues to increase as clients get increasingly comfortable with low-to-no touch trading. The number of AiEX trades grew by 81% year-over-year in the second quarter, with growing usage across rates, credit, and equities. Institutional clients love the data-driven intelligence that AiEX is able to provide. They face zero technology build costs and can fine-tune more than 100 pre-trade parameters. They can choose to have their flow interact with several of our protocols, such as AllTrade, to maximize the probability of finding a match, or RFQ to minimize information leakage. Post-trade, clients can quantify transaction costs using our proprietary TCA tool. This solution, which automates the entire trade life cycle, is really resonating with clients, and we expect momentum to continue to build from here.
With that, let me turn it over to Bob to discuss our financials in more detail.
Thanks, Billy, and good morning. As I go through the numbers, all comparisons will be to the prior year period, unless otherwise noted. Let me begin with an overview of our volumes on slide nine. We reported our second-highest quarterly average daily volume of $976 billion, up nearly 26% year-over-year, and up 25% when excluding short tenor swaps. Areas of notable growth include U.S. government bonds, European government bonds, swaps greater than one year, U.S. corporate credit, European corporate credit, institutional U.S. ETFs, and repos. Slide 10 provides a summary of our quarterly earnings performance. The second quarter volumes translated into gross revenues increasing by 23% on a reported and 20.2% on a constant currency basis. We derived approximately 37% of our revenues from international customers and recall that approximately 30% of our revenue base is denominated in currencies other than dollars, predominantly in euros.
Our variable revenues increased by 33.7%, and our total trading revenue increased by 24.4%. Total fixed revenues related to our four major asset classes continued to grow, up 7.9% and 4.4% on a constant currency basis. Credit fixed revenue growth was primarily driven by the addition of new dealers in U.S. credit and additional clients in Chinese bonds. Equities fixed revenue growth was driven by the addition of new dealers and the impact of FX. Other trading revenues were up 2.5%. As a reminder, this line item is lumpy and is affected by periodic revenues tied to technology enhancements formed for our retail clients. Market data increased by 8.2% due to growth in Refinitiv, APA, and proprietary data products. Adjusted EBITDA margin came in at 50.6% and expanded nicely by 280 basis points relative to second quarter 2020 as we continued to benefit from scale.
All in, we reported adjusted net income per diluted share of $0.39. Moving on to fee per million on slide 11, the trends I'm about to describe are driven by a mix of various products within our four asset classes. In sum, our blended fee per million increased 5% year-over-year, primarily as a result of stronger growth in higher fee per million credit and improving fee per million greater than one-year swaps due to the previously stated growth initiative in emerging markets IRS and RFM. Excluding lower fee per million short tenor swaps and futures, our blended fee per million was up 6%. Let's review the underlying trends by asset class. Starting with rates, average fee per million for rates was up 12%.
For cash rates products, which include government bonds and TBAs, fees per million was up 4%, primarily due to growth in higher fee per million U.S. Treasuries. For long tenor swaps, fees per million was up 25%, primarily due to growth in EM swaps and RFM. In other rates derivatives, which includes rates futures and short tenor swaps, average fees per million increased 52% due to growth in FRAs, which carries a higher fee per million than overnight index swaps. Continuing to credit, average fees per million for credit increased 48%, as higher fee per million cash credit products saw strong growth with record volumes in U.S. high yield, while lower fee per million CDS activity declined compared to a volatile second quarter in 2020.
Drilling down on cash credit, average fees per million increased 3% due to stronger growth in U.S. high yield, which carries a higher fee per million than overall cash credit. Looking at the credit derivatives and electronically processed U.S. cash credit category, fees per million increased 8%, driven by growth in U.S. high-grade electronically processed volume, which carries a higher fee per million than the credit derivatives average. Continuing with equities, average fees per million for equities was down 30% overall. For cash equities, average fees per million decreased by 15% due to a decline in fee per million within U.S. ETFs. This was driven by rising asset values inflating notional traded. Recall in the U.S., we charge per share and not for notional value traded.
Equity derivatives average fees per million decreased 41% due to growth in U.S. and European derivatives and U.S. equity futures, which carry a lower fee per million than the equity derivatives average. Within money markets, fees per million decreased 26%. This was primarily driven by growth in repo, which reached record levels. Repo carries a lower fee per million than other money market products. The higher fee per million retail money markets business remained pressured by the low interest rate environment. Slide 12 details our expenses. At a high level, we continue to invest for growth. There has been no change to our philosophy here. Since going public in early 2019, we have now grown quarterly revenues by 40% and expanded adjusted EBITDA margin over 750 basis points. We continue to believe there is more revenue and margin upside from here.
Adjusted expenses for second quarter increased 15.6% and 12.8% on a constant currency basis. Recall approximately 15% of our expense base is denominated in currencies other than dollars, predominantly in sterling. Second quarter 2021 adjusted operating expenses were higher as compared to second quarter 2020, primarily due to increased employee compensation, G&A, and technology and communication. Compensation costs increased 14% due to higher headcount to support our growth, as well as higher performance-related compensation. Adjusted non-comp expense increased 19.1% on a reported basis, primarily due to G&A and technology and communications, and unfavorable movements in FX. Adjusted non-comp expense on a constant currency basis increased to 15.4%. Specifically, technology and communication costs increased primarily due to higher clearing and data fees as a result of higher AllTrade volumes in credit and streaming U.S. Treasury volumes, which continue to grow.
In addition, this quarter also saw the continued impact to our previously communicated investments in data strategy and infrastructure. Adjusted general and administrative increased primarily due to an increase in travel and entertainment as we gradually recover from the pandemic, higher marketing spend, and unfavorable movements in FX, which resulted in a $300,000 realized loss in second quarter 2021 versus a $200,000 realized gain in second quarter 2020. Recall, we adjust out unrealized FX hedging gains or losses and the impact of FX on our cash balances. Professional fees increased 12% due to increased consulting fees related to our investment in data strategy and infrastructure technology. Slide 13 details capital management and our guidance. First, on our cash position and capital return policy.
We ended the second quarter in a strong position, holding $680 million in cash and cash equivalents subsequent to the NFI acquisition, and free cash flow reached $434 million for the trailing 12 months. We have access to a $500 million revolver that remains undrawn as of quarter end. CapEx and capitalized software development for the quarter was $12.9 million, an increase of 19% year-over-year, primarily due to timing of investment spend. With this quarter's earnings, the board declared a quarterly dividend of $0.08 per Class A and Class B share. We spent $59.7 million offsetting equity dilution during the quarter. Specifically, we spent $52 million under our regular share buyback program, leaving $98 million for future deployment at the end of the quarter. In addition, we withheld $8 million in shares to cover payroll tax obligations upon the exercise of stock options.
As a reminder, we plan to use our share repurchase authorization to mostly offset ongoing equity compensation. On slide 14, we have updated our quarterly share count sensitivity for 2021 to help you calibrate your models for fluctuations in our share price. Turning to other guidance items for 2021. We will continue to invest in 2021 and are now expecting adjusted expenses to range from $565 million-$580 million, which incorporates our recent NFI acquisition and expectation of a strong revenue environment in the back half of the year, and increased investments to support our growth businesses. We continue to believe we can drive substantial operating margin expansion compared to 2020 at either end of this range. For forecasting purposes, we continue to use an assumed non-GAAP tax rate of 22% for the year.
We expect CapEx and capitalized software development to now be $49 million-$53 million, given the NFI acquisition. Acquisition and Refinitiv transaction-related G&A, which we adjust out due to the increase associated with pushdown accounting and the impact of the NFI acquisition, is expected to now be $124 million. Now I'll turn it back to Lee for concluding remarks.
Thanks, Bob. The operating market remains subdued. Low credit volatility and low rates are certainly not supportive. However, we continue to focus on helping our clients digitize their workflows to drive market share growth in what we believe is shaping up to be another record year for Tradeweb. This focus, coupled with the multi-year secular trends powering electronification and automation, point to potential for a long runway for growth. We are moving forward to capitalize on these trends, as Bob mentioned, by continuing to invest in our people, technology, and network. In addition to organic growth, we continue to spend time evaluating potential M&A opportunities that we believe would further augment our network given our cash position. With a couple of important month-end trading days left in July, momentum from the second quarter has continued with overall volumes up double digits relative to July 2020.
The strong volume growth is being led by all asset classes. Electronic IG credit market share is running in line with the last quarter, while electronic high yield credit share is running higher, with notable strength across portfolio trading and AllTrade. Before I conclude, I'd like to welcome Balbir Bakhshi to our board of directors. Balbir brings an enterprise perspective shaped by a wide range of risk management roles. As we continue to grow and broaden our reach, this perspective will be vital to our board and management team. I would also like to thank Brian West for his two+ years of service on our board and wish him all the best in his new role as CFO for Boeing.
I'd like to conclude my remarks by thanking our clients for their business and partnership in the quarter. I want to thank all my colleagues for their efforts that contributed to a strong quarterly revenue and volume at Tradeweb. With that, I'll turn it back to Ashley for your questions.
Thanks, Lee. As a reminder, please limit yourself to one q uestion only. Feel free to hop back in the queue and ask additional questions at the end. Q&A will end at 10:30 A.M. Eastern Time. Operator, you can now take our first question.
Thank you. Our first question comes from Chris Allen from Compass Point. Your line is now open.
Morning, guys. With the eSpeed closing about a month in, I was hoping you'd maybe provide a little bit more granularity around the deal in terms of what you're hearing from clients, what the opportunity set is from a market share perspective, where it kind of currently stands, and what other opportunities are there to improve the platform moving forward?
Thanks, Chris. Good question. We're very excited about the potential for the business. It's now residing within our Dealerweb franchise. From our perspective, this is a market that we've been involved in literally for decades. Our collective relationships, the clients we have, the connections that we have with those clients are really very strong. Essentially, this is really our beginning of our company. I refer to it as our kitchen. It's in our D&A, it's part of our business. I think that with respect to your question, we look at this as if it's an opportunity for significant growth because the customers want competition in this space, in this central limit order book space, that historically has been split among a couple of different participants, eSpeed, BrokerTec.
I think that customers, the dealers, and other participants are really looking for a more balanced situation. That's a starting point. I think the other thing that we have that really helps us in this whole structure is it's a combination of all different protocols now that we're offering across the treasury market, right? Even when you look at the dealer market, we'll be able to combine both a CLOB and a streaming offering which will be unique. That'll be eventually moved to a single API, which will reduce connectivity costs for our clients and save them money. Overall, it's this outreach to customers, the relationships we have, that's really an advantage for us here. The kicker, I think, really gets back to what we always talk about at Tradeweb, which is people.
With respect to this business, we will invest in the team, in the talent. We recently hired Dan Cleaves, who was a former leader at BrokerTec, who was back at the business when I started BrokerTec many years ago. A very experienced hand. We're really thrilled to have him on board. We've got Chris Amen running the business, Joseph Noviello, who helped build eSpeed from a technical standpoint, so it's really a world-class team, and several other individuals. We're excited about it. We're going to bring a lot of new energy to this business. We think we'll revitalize the business. I can say, it's only a month into it, but the initial signs are really encouraging and strong and we think there's a lot of potential.
Thank you. Our next question comes from Brian Bedell from Deutsche Bank. Your line is now open.
Great. Thanks very much for taking my question. Maybe oriented towards Billy and/or Lee, just totally focusing on portfolio trading in the corporate bond market. Just a multi-part question. First of all, if you can attribute some of your share gains in the last few months to portfolio trading versus other protocols within credit, and then, I think Billy, you mentioned the 25% of trades in that survey being done through portfolio trading. I guess maybe if you can offer some perspective on when you think the market would move to that or if it would move to that, the proportion of trades in portfolio trades. Just the dynamics you mentioned about certainty of execution versus the quality of execution that's in list trading, if you can comment on that, and then just your long-term defensibility of your portfolio trading protocols.
Sure. Hey, Brian, how are you? Thanks for the question. It's interesting. On these kind of market innovations, definitely, as we all know, portfolio trading is kind of having its moment in the sun. There's always this kind of interesting sort of back-and-forth debate, kind of conjecture on how impactful this innovation will be. As we were kind of really getting behind the steering wheel on this a bunch of years ago, I think we did sort of exactly what you would expect us to do, which was highly engage with our clients, collaborate with our clients. The kernel was always about what you referred to, which is, how do I get my hard-to-price line items better execution, right? That all became around certainty of execution, hit rate, minimization of information leakage, right?
Today we sit back and, yeah, absolutely, it's a big driver of our credit market share, 100%. We think we're playing the leadership role around portfolio trading. As you know, June was a record month for us in portfolio trading. It's now, I think I quoted as 5% of the TRACE volume. Really what that evolution now is all about and where it's going is this kind of further evolution around portfolio trading becoming a real risk transfer protocol, a real risk transfer mechanic. As we kind of look at the stats, I mentioned, I think it was in the quarter, the average was 107 line items at $82 million size. We did a trade that was almost 900 line items over $2 billion. Now we are really and truly getting into the kind of risk transfer game, right?
Lee's always mentioned, innovation is one thing, how do you continue to kind of further innovate it once you have that leadership position? What is that kind of feedback loop, how are you continuing to kind of hone your skills? We've always said this, very healthy respect for the competitive landscape in the space, right? There's no sleeping on our leadership position. We're going to continue to innovate portfolio trading and continue to kind of build that moat. Part of that's going to be about things like now we're doing allowing dealers to quote portfolio prices on reference price, not just outright. That's going to be something meaningful. That's going to help us get at more of those kind of voice trades.
At the end of the day, we feel like we're really kind of onto something significant with portfolio trading, and it's continued to be one of the big drivers of our credit market share. Thanks for the question.
Yep. Thanks very much.
Thank you. Our next question comes from Rich Repetto from Piper Sandler. Your line is now open.
Good morning, Lee and Billy and Bob. Just to keep hammering away on the credit issue here. First, thanks, Billy, for the prepared remarks because I think you said we're portfolio trading months or whoever you use that sort of prediction. I guess my question is, even if you had 100% of the 5%, it doesn't explain all your credit market share gain over the past year, over 600 basis points. Can you explain, Billy, sort of why you've done well where we see peers talking about the low volatility, tight spreads that have caused them to lose market share, other than the portfolio trading?
Rich, that's a great question. It's putting the pieces of the puzzle together. Way back when, we sensed there was an opportunity for the company in credit, but we knew we needed to differentiate ourselves. That differentiation was really around, and you've heard us talk about this, net spotting and net hedging. That was the first version of it. Now we feel like we are really playing a leadership role in portfolio trading. Some of the other business now is coming as a consequence of that. Our RFQ business is up significantly. I do point to this very basic principle, and I do think it's important, which is the marketplace really does want to support competition and credit.
As we're doing these things, I think that are really adding value for clients and really creating a differential for clients, we're starting to see some of that other type of business come our way as a follow-up. That I would describe to you as the traditional kind of RFQ business, which has done exceptionally well for us this past quarter.
Thanks. I'll get back on the queue. Congrats on the sheer gain.
Thank you, Rich.
Thank you. Our next question comes from Alex Blostein from Goldman Sachs.
Okay, awesome. Hey, good morning, everybody. Maybe continuing along the questions with respect to credit, I really was hoping to zone in on the AllTrade as a bucket for you guys. Lots of growth, particularly this quarter. There's a lot that goes in there. I was hoping you could help us sort of parse through some of the composition of AllTrade today. Maybe you can talk about it in terms of dealer to dealer versus dealer to client volumes. Specifically, any color you could provide with respect to all-to-all within AllTrade specifically. Again, either sizing it or any stats with respect to the number of advisory participants that are coming into that protocol, because obviously it's been an important industry dynamic as people look to execute in an anonymous way in a kind of all-to-all fashion.
It'd be helpful to break that out. Thanks.
Thanks for the question. I'm going to start out by talking a little bit about our all-to-all volumes and what's going on there, because I think it's kind of interesting. Billy talked about that in his prepared remarks, and we showed some information about it as well. One of the interesting things about all-to-all for us is we're starting to see what we think is critical mass. Why is that happening? It's happening for several reasons. One is that we're starting to see more hedge funds coming onto our platform. That generally means that there's an acceptance that we've hit the levels of liquidity that we need to have to be able to satisfy the trades, and that's kind of a good hint of a healthy ecosystem as we build it further. The feedback we're getting as well is that the market really wants a competition.
It isn't really just a competition, it's really a competition about capabilities as much as anything else, what features and other things can we add to the environment that will drive engagement higher? I think that what we think is happening is, particularly in high yield, a sort of a growing interest in the way we're doing things and in particular the volumes and the participants that we have. We think that we are doing some other things as well that are really important. We're exposing our all-to-all network to retail participants, retail liquidity providers, and our all-to-all network participates in Rematch protocol after a session. We've talked about that in the past of the way that we sort of draw wholesale interest into the same common universe.
It's really our story of we have these different participants, and they share the ability to get to our liquidity pools, which increases the viability of those pools and the importance of those pools. I think that's a really important part about price discovery and all the other parts that is what attracts and builds volume.
I think, Alex, just to add to Bob's point. It's a really good question, but it's this virtuous circle, I think, that we've been after where we're trying to, you've heard me use this expression before, connect the dots between different markets, between different protocols, between different customer segments. That is the differentiator for Tradeweb. Not only do we have the all-to-all in what we call AllTrade, not only do we have portfolio trading, we also have session trading, and the session trading comes from our price generation, right? These matching sessions occur because we have such strong pricing information, which is coming from our AiEX. That's a combination of all these sources of data that gives the market confidence to match at a point that we've set the standard at.
You have to think about these things, I do think, holistically and as best you can to connect them. Bob was giving an example of, well, if it doesn't match in a session, we kind of waterfall it to the next thing. You're going to continue to see from us the use of, it really is almost algorithms and pricing and links between different customer segments and different types of protocols that allow for a larger aggregate number of matches, where you've got the buyer and the seller meeting through what I would say is an assisted sort of software enhancement through all these different protocols, different customer segments, and different types of protocols.
Thank you.
Thank you. Our next question comes from Ken Worthington from JPMorgan. Your line is now open.
Hi. Good morning. Thank you for taking my question. I wanted to go to the durability of credit trading and how the durability of that business is improving as your market penetration grows. I think we saw volumes in market share trail off in the early days of COVID. I think it exposed sort of session trading as being a bigger part of your business. I am wondering ultimately how you see the durability of credit kind of evolving in different environments with initiatives like Rematch and portfolio trading growing. For initiatives like Treasury spotting, it looks like, I think on one of your slides, that Treasury spotting is a shrinking part of credit. I know you spoke about the continued success that you are seeing in spotting, but is credit becoming less dependent on that service over time?
Let me take a crack at that, Ken. Thanks for the question. Look, I think when you talk about, I'm not sure I 100% understand your question. I think when you're talking about durability in different market conditions, you're referring to volatility, and if you go back to the beginning of the pandemic, we had this extreme situation, and our market share dropped because of all the extreme activity happening in credit. Obviously, it rebounded pretty quickly, and we are at a point now where we've accelerated considerably over a number of months. I think it's a mistake to get too caught up in the moment of what's happening in the markets. The markets are going to go up and down in terms of volatility.
Volumes will surge, they'll retreat, I think what's really critical here is not predicting what the next bout of volatility will be in a market, but rather to be focused on having a complement of tools and types of ways firms can match with other firms, we call protocols. To deal with any type of environment, right? Any type of market environment. When Billy Hult was talking before about innovation and our ability to kind of stay one step ahead of the competition, which we've been doing historically now for a couple of decades, that is the key, right? Figuring out what is going to be an acceptable protocol, linking it together, rather than necessarily kind of focusing on the durability of a particular moment with respect to volatility. That's not what we try to do.
We're trying to solve for problems that our customers have in a variety of different environments, different segments. The advantage of that is one thing feeds upon another, right? I'll go off point a little bit, but you take the portfolio stuff that we built years ago because the team led by Chris Bruner and Billy Hult, of course, saw this coming years ago. We're able to innovate and take it to the next generation and move it into different asset classes and move it into different regions. That's true of things we've done going all the way back to RFQ. We try not to get too caught up in the moment, what's happening at this particular second in terms of yields, in terms of volatility, because we know for certain these moments will change. The second question was spotting. I don't know.
It was out of the gate, Ken, the net spotting and the net hedging. It was a great way for us to open the door in credit because of our foundation and rates and because of our ability to solve workflow. As we've done better, and I hear you as you're quoting those kind of stats, it's actually not surprising at all to us that in some level, that piece of it gets minimized because we're doing so well in other spots now. It was 100% the kind of the big door opening for us in credit, and it continues to play a large role for clients. It's a piece of the puzzle, you've kind of heard us both Lee and I use that expression a lot. It's an important piece, it's a piece of the puzzle.
Now we're seeing a lot of other type of business as a consequence of us playing that leadership role around net spotting and hedging.
Great. Yep, that was the intent of the question. Thank you.
Thank you.
Thank you.
Our next question comes from Michael Cyprys from Morgan Stanley. Your line is now open.
Hey, good morning. Thanks for taking the question. I noticed that the share buybacks picked up a bit in the quarter. I was just hoping you could talk a little bit about capital management, how you were thinking about that, and more bigger picture, if you could just update us on how you're thinking about the opportunity to enhance your footprint and growth through M&A. I guess, what gaps remain at this point in the platform, or where do you see opportunities in the marketplace where M&A could really help accelerate your penetration, as you did with the Nasdaq Fixed Income business? What other opportunities remain, and how do you think about the hurdles and requirements that you have for that?
Thanks for the question. It's a lot of question, actually. I'll start with the buybacks. We've been talking about this. This is a program we put together, and we started it in the second quarter in terms of the actual activity. It's really aimed at limiting, reducing dilution related to ongoing equity compensation. It's to some extent opportunistic. We don't expect to have the same volume of buybacks in subsequent quarters as we had in the second quarter. We have a plan that we'll continue. I think we've talked about we have still about $98 million over a two year period that we're allowed to spend with some rules associated with that, and we will do that as it seems appropriate, either under the control of sort of typical 10b5-1 or in open periods where it makes sense. It is a longer program.
There isn't any effort to make sudden shifts in the way we're structured. I think there's that piece to it. You also asked about
M&A.
I'm sorry.
M&A.
M&A. Always get spaced between the two points of the question. M&A. I'm going to give that to Lee as a strategy thing. I think the key there is to kind of look at the fact that we're still building substantially a good amount of flexibility in terms of our cash position. We had over $400 million in trailing 12 months free cash flow. Even after the NFI transaction, we still have hundreds, a good amount of money, $680 million on our balance sheet, I think, approximately. It says that we still have the ability. We also have the revolver, which we haven't drawn down at all, $500 million. We still have the ability to support it, and we are actively continuing to look for opportunities. We've always talked about those opportunities have to be around networks, product, technology capabilities, geographies that would enhance our current capabilities.
That's an ongoing activity that has a full team of people here in London who spend their time pretty much focused on looking at opportunities in the marketplace.
Sure.
Thank you. Our next question comes from Kyle Voigt from KBW. Your line is now open.
Hi. Just to follow up on a prior question on the credit business. You mentioned that the RFQ business is benefiting because clients want competition, and you're seeing more RFQ flow because you're winning and having success in portfolio trading and other protocols. I'm curious, when you talk to customers about RFQ and why they're doing more business with you, is pricing a factor at all when you're having those conversations as to why they're doing more? Then also, do you think that there is explicit client switching that's occurring from other electronic platforms? Or is this RFQ growth that you're seeing still really being solely driven by voice conversion?
Good question. Listen, it's a very reasonable and good question. Let's answer it super bluntly. We're not hearing that sort of pricing is the driver. Right? What we're hearing for sure is that we're doing a lot of things right, and as a consequence of that, we're getting more of that business. We feel really strong about where our pricing is, but we don't feel like that in and of itself is the driver of business, and I'm just giving you that information because you asked the question sort of directly from clients. That's kind of what we're hearing, very bluntly. What was the second part of your question?
Do you think there's explicit client switching that's occurring from other electronic platforms, or is the RFQ growth really being solely driven by voice conversion at this point?
I think there's a lot of voice conversion happening, and it's a great question. There's a lot of voice conversion happening, right? This is a moment where there's just so much momentum around electronic penetration. We feel really strongly about how that traditional voice business is moving our way. I think customers rotate. I think there's an impulse on customers to rotate. The general piece of it, I think, that we would say we feel strongly about is that there's continued voice business that's converting to electronics.
Yeah. Kyle, the numbers suggest, it's pretty obvious. The aggregate number of the percentages of the overall market going electronic have surged. We're getting a really fair share of that surge, and obviously, I agree with Billy's point. I think there is an element of rotation. I think that this innovation, though, is really a driver of getting customers to take a look at what we have. Whether it was the net spotting that we did early on, or the portfolio activity that we're doing, as we innovate and we solve customer problems or challenges, we're more likely to get new customers and customers trying us. That's a benefit, and they may have been using other systems for sure. They see, okay, Tradeweb's got this.
Yeah
We're doing that. They've got the links into their treasury market with respect to spotting. These are all really positive developments for the market. It's not as if those people using us for portfolio or for spotting were not trading electronically previously. Clearly, we're picking up some business from some of our competition in that respect. The big lift has really been this overall growth of digitization that we're seeing in the credit market, and those numbers are public. They're out there. You can see it.
I'll add one more thing, which is interesting in terms of RFQ. We're also seeing our trade sizes increasing, and our trade sizes are increasing. If you're looking at investment grade, I think it's increasing by 32%, and for high yield, it's 91%. Those numbers almost don't matter. What matters is that they're increasing faster than the average trade sizes are increasing. That gives you some sense, potentially, that we are, in fact, as Lee has said, electronifying trades that aren't yet electronic because of the to that formula.
Thank you. Very helpful.
Thank you. We have a follow-up question from Chris Allen from Compass Point. Your line is now open.
Hey, guys. Thanks for taking my follow-up. This one's for Lee, I believe. I just want to ask if you have any plans to expand in emerging market credit. I know you have a decent footprint in China, and you mentioned emerging market CDS, but it's a high-growth area that's ripe for electronification. Any color there would be helpful.
Sure. Thank you, Chris. Look, we believe EM is going to become increasingly important component of our growth internationally and even domestically here, and that there's plenty of room to grow the network. Our view on this is very similar to what you've heard from Billy and Bob, and you'll hear from me constantly, which is play to your strengths. Right? We talk about that internally. We have a very strong market position in the derivative space, in interest rate swaps and CDS. When we started in EM, we focused on that one particular area, EM interest rate swaps. The volumes in EM interest rate swaps were up almost 70% year-on-year when you look at it. We just expanded into Brazil as the most recent addition back in April.
We now have 13 currencies in EM IRS, and if you look at the electronification in EM IRS, that's very low single digit, maybe 5% of that market is electronic. Very early innings. We've got the software and the design and the understanding of those markets in addition to the customers connected. We're going to see more and more of that activity year on year. Same thing with portfolio trading. Portfolio trading, we realized, was a real positive development for the markets over the last several years that we've been in it. What do we do? We want to leverage that pole position in the U.S. and Europe with respect to portfolio functionality, to tactically expand into EM cash credit. Now clients can trade IG, high yield European EM bonds in 1 portfolio. It's a natural extension.
We think there's a big opportunity there to do more, and over time, you'll be hearing more and more from us about this as we work with our clients to go after the areas where we can add value.
Thanks, Arthur.
Yeah.
Thank you. We have a follow-up question from Rich Repetto from Piper Sandler. Your line is now open.
Again, one last question sort of for Bob here to outperform. On expenses, the previous guidance was at the high end of that range of $560 million. Now it's $565 million-$580 million. Let's just take it to midpoint, it's at $572 million. It's up about $12 million from prior guidance, at least the way an analyst would look at it, I guess. The Nasdaq Fixed Income, they're doing roughly $3 million in expenses a quarter, so that'd be about half of it. I guess the question is, where's the other $6 million? Does Billy really need that to innovate an extra $6 million in the back half of the year?
Well, thanks for the question, Rich. I will let Billy speak for himself, but I think a couple of things. The Nasdaq number has got a little bit more in advance. The NFI number has a little bit more in it, I think. I think where you've sort of identified as sort of the identifiable expenses. When we take on the business, we also have some D&A that adds to that. We sort of see the number more closer to $8 million, maybe a little bit more than that, $8-$9, but in sort of that range of the numbers. The rest is really just as you described it. It's a series of, we have some things we think we can push forward in terms of the work we can do in 2021 for things in 2022 that we are thinking about.
As revenue's been going up, of course, there's still this revenue drives a bit of our compensation expense. Those are the things that are in the number, but it tells you kind of what the big portion of it really is, NFI. You identified as half, it's a little more than that because of D&A.
Yeah. Got it. Billy only needs $3 million to innovate in the back.
We're not negotiating, are we, Rich?
Rich, we almost made it through a whole call without mentioning your jogging speed.
No comment on that. I'm faster than what you think. Thank you. That's all I ask.
Okay. Thank you. I am showing no further questions. I would now like to turn the call back over to Lee Olesky for closing remarks.
Yeah. Well, I just want to say thanks to everyone for joining us this morning. We've started the first half of 2021 on a very strong note. We remain very excited about the rest of 2021 and tackling the multi-year opportunities in front of us. Obviously, if you have any questions, feel free to reach out to Ashley or anyone on the team. Have a great day. Thanks for joining us.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.