Good morning, and welcome to the Tradeweb Second Quarter 2022 Earnings Conference Call. As a reminder, today's call is being recorded and will be available for playback. To begin, I will turn the call over to Head of Treasury, FP&A and Investor Relations, Ashley Serrao. Please go ahead.
Thank you and good morning. Joining me today for the call are Chairman and CEO, Lee Olesky, who will read you the highlights for the quarter and provide a business update. Our CEO-elect and President, Billy Hult, who will dive a little deeper into some growth initiatives, and our CFO, Sara Furber, who will review our financial results. We intend to use the website as a means of disclosing material non-public information and complying with 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. 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 of $0.33 per diluted share. Excluding certain non-cash stock-based compensation expense, acquisition-related transaction costs, acquisition Refinitiv-related D&A, and certain FX items, and assuming an effective tax rate of 22%, we reported adjusted net income of $0.47 per diluted share. Please see the earnings release in the Form 10-Q to be filed with the SEC for additional information regarding 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 second quarter earnings call. The frantic beginning to 2022 continued into the second quarter as growing recession fears increased investor uncertainty. Amidst the backdrop of global rate hikes, surging inflation, supply chain issues, and the continuation of a brutal war in Ukraine. These macro events led to 10-year government bond yields hitting three-year highs in June, coupled with wider corporate bond spreads and lower equity market valuations. We remain very engaged with our clients as they traded more than $1 trillion daily on average, setting another quarterly record. Our record volumes translated into continued and strong double-digit revenue growth as Tradeweb generated its highest second quarter revenues in our history. It certainly wasn't all one-way traffic.
While certain products were hampered by more risk-off client mentality or the yield curves, the same conditions allowed other products to thrive. Our early mover advantage in building diversity across our global multi-asset class client and multi-protocol business over the last 25 years really shines in moments like this. We achieved record second quarter revenues across U.S. Treasuries, Global Swaps, U.S. Credits, Munis, CDS, global ETFs, equity derivatives, and repo. In fact, we also achieved record second quarter revenues in European government bonds and European Credit on a constant currency basis. It's also great to see the continued pickup in the retail business, which produced its highest quarterly revenue in our history. Turning to slide four. Record second quarter revenues of $297 million were up 13.9% year-on-year on a reported basis, and 17.8% on a constant currency basis.
The revenue growth and the resulting scale translated into improved profitability relative to full year 2021 as our second quarter Adjusted EBITDA margin increased to 52.4%. Turning to slide five. This quarter was marked by strong performance across all of our asset classes, with Rates and Credit continuing to lead the way, accounting for 48% and 32% of our revenue growth respectively. Specifically, Rates posted its best second quarter revenues ever, driven by our continued growth across global government bonds and swaps. In Cash Rates, global government bond revenues were partially helped by growing government debt levels, higher volatility helping the wholesale channel and the addition of NFI. Swaps produced another solid quarter with positive market share growth while mortgage revenues declined given the challenging rate backdrop.
Similarly, Credit posted its highest second quarter revenues, driven by strong Muni, U.S. Corporate Credit, and CDS trading. Not to be overshadowed, Equities also posted its highest second quarter revenues driven by institutional ETFs and our efforts to diversify and grow our other equity products. Money markets set a new record fueled by organic growth in institutional repos, coupled with improving fundamentals in our retail CD franchise. Finally, market data revenue growth was equally split across our Refinitiv contract and our proprietary data products, which continue to enjoy robust growth. Moving on now to slide six, let me provide a brief update on our four main focus areas, global interest rate swaps, U.S. Treasuries, U.S. Credit, and global ETFs. Interest rate swaps, which is our largest rate product, achieved record second-quarter revenues.
Our overall swaps volume grew by 43%, led by an improved macro backdrop relative to last year and our continued organic growth efforts, which drove market share higher to 15.1% as measured by Clarus. We continue to attract new clients and deepen our client wallet share by driving higher engagement with both existing and newer products and protocols. Moving on to Treasuries. Our volumes increased 23% year-on-year, led by the wholesale business and aided by our NFI acquisition. Market share rose to 19.6% of the U.S. Treasury market. In terms of client behavior, our asset manager and hedge fund clients moved to the sidelines and trimmed risk as volatility spiked. In contrast, the pickup in volatility continued to aid our wholesale channel.
Our share gains have been driven by existing clients doing more business, and we continue to focus on making further inroads into the T-bill market. Looking ahead, we continue to invest in driving the adoption of early-stage institutional streaming protocols like Tradeweb AllTrade. The end of June also marked the one-year anniversary of the acquisition of NFI. We're pleased with the integration progress and are currently awaiting regulatory approval to consolidate the two broker-dealers. NFI margins are progressing as initially planned, and we expect further NFI margin expansion moving forward. Shifting to Credit. This is another great quarter as our business continues to surge ahead, generating $84 million in revenues despite fee per million pressures in our largest business, institutional Corporate Credit. Our first half revenues of $170 million were up 16% from the first half of last year.
Seven years into our journey, it's amazing to see the sustainability of the business despite tough client conditions and lackluster Corporate Credit industry volumes. We are continuing to see growing institutional client demand, with users increasing across Munis, portfolio trading, AllTrade, net spotting, and growing wholesale adoption of session trading and Rematch. Looking ahead, we continue to see a lot of opportunity in Credit as our platform continues to scale and the retail business continues to recover. Finally, within Equities, institutional ETF produced strong quarterly revenue growth, with the average daily volume up 50% year-on-year, driven by new client wins and strong industry volumes. We produced the strongest first half revenues in our history as institutional investors continue to embrace ETFs as a low-cost, highly liquid and flexible option to navigate a wide range of market environments.
The increasing adoption of RFQ has also driven greater usage of ETFs within institutional portfolios as it gives investors the ability to efficiently trade large amounts of risk and quickly alter the exposures of their portfolios. Looking forward, we believe we remain well-positioned to benefit from continued global ETF growth and as our growth initiatives scale. With that, I will turn it over to Billy.
Thanks, Lee. Since our inception, Tradeweb has been focused on meeting our clients' needs while being at the forefront of technological developments across the trading ecosystem. Our competitive advantage is our people, network, and technology, and we remain hyper-focused on continuing to grow that moat. On the people front, as we continue with the CEO transition, we are excited that Tom Pluta will be joining the firm in October as President-elect before officially becoming president at the start of next year. Tom is a seasoned global leader who most recently spent his last 27 years at JP Morgan and has had a long relationship with the firm as a client, trader, investor, and most recently, as one of our board of directors. Tom likewise believes in our client-first approach, and we believe he will further enhance the team's ability to drive further innovation for our clients.
On the network and technology front, we recently launched the Spotlight dealer diversity program. This was a very important initiative that we crafted carefully in collaboration with our clients over the last year, placing a lot of importance on genuinely leveling the playing field. Now, diverse dealers will be able to elevate their profile and leverage electronic trading in a meaningful way by having the option to either directly provide liquidity or intermediate trades on our AllTrade network. The initiative has already hit the ground running. Turning to slide seven for a closer look at Credit. Last quarter, we believe we received validation that our strategy of catering to the entire Credit market was the correct one. This quarter, the first word that comes to mind is resiliency. As Lee highlighted in his opening, our clients are operating in a very uncertain and complicated time.
The diversity of our Credit business shined during the quarter. Institutional Corporate Credit continued to grow, overcoming fee per million pressures in investment-grade bond trading from duration falling 20% year-over-year. On the other hand, wider spreads boosted our CDS business and higher rates helped our Retail Credit and overall Muni businesses. As we built our Corporate Credit business, we always thought we needed to respect the complexity of the fixed income market and give our clients the choice of picking a protocol that suits them best. Today, we are very pleased by the product protocol diversity powering our business, and we continue to pay close attention to our clients' need for competition. Our institutional growth continues to be underpinned by growth in RFQ and portfolio trading. Our second quarter RFQ average daily volume grew 25% year-over-year, driven by both investment-grade and high yield.
Expanding our RFQ presence remains our biggest opportunity, and we continue to see great success cross-selling the innovations we have brought to the Credit market to gain wallet share. Despite the continued increase in spreads and volatility, we also continue to see strong portfolio trading activity on the platform, with average daily volume growing 29% year-over-year. As we step back, the underlying trends were impressive. Globally, the number of users and line items traded were up over 50% year-over-year, while our largest trade was greater than $1.5 billion in the quarter. When you introduce something new, behavior takes time to change, and these trends speak to the growing comfort that clients have in executing large trades using portfolio trading despite the volatile macro environment.
Dealers also remain very engaged as our in-comp portfolio volume reached 84%, up from 73% last year. Behaviorally, we also continue to see clients substitute some RFQ and all-to-all trading with portfolio trading, taking advantage of the certainty of execution, time and cost savings associated with the protocol. In fact, Barclays Credit Research recently published a deep dive on portfolio trading. They concluded that despite the pickup in volatility, portfolio trading remains more effective relative to other protocols in terms of the transaction cost savings, reducing costs by 30%-40%, depending on the level of volatility. They also noted that the robust growth prospects for ETFs bodes well for future growth and adoption of portfolio trading.
The strength in RFQ and portfolio trading was matched by the strong growth of our anonymous liquidity solution, AllTrade, which saw over $94 billion in volume, with average daily volume increasing 7% year-over-year. Session trading submission volumes continue to remain steady despite the increased volatility, and we remain laser-focused on maximizing the value of session liquidity uploaded on our platform through newer protocols like Rematch, which access our all-to-all liquidity. Our Rematch average daily volume was up nearly 100% in the second quarter. Turning to the rest of our Credit business, it was great to see a lot of our products really thrive. We achieved record constant currency revenues in institutional European Credit, with strong growth driven by portfolio trading.
Our Muni business achieved record second-quarter revenues as the retail market sprung back to life in the institutional business, which grew more than 100% year-over-year, continues to attract new clients. Last quarter, we announced the launch of Ai-Price for Munis, and the team is seeing strong interest out of the gate for the product, given the quality of the pricing. The volatility in the market also boosted our CDS revenues, which grew by over 70% year-over-year, with strong growth across regions. Looking ahead, we continue to invest in building out our EM Credit offering, and we're excited about our collaboration with London Stock Exchange Group's FXall to develop hedging workflow solutions that allow emerging market products to be traded more efficiently.
In sum, it was another solid quarter for Credit, and we continue to believe we have a lot of potential for growth as we look ahead. Moving on to Swaps. Just like Credit, the multiyear growth story continues as swaps registered another strong quarter aided by rebounding industry volumes and market share gains. Our variable swap revenues grew 26% year-over-year, driven by strong growth across tenors and market share climbing to 15.1%. Our momentum in major currencies continues with record first half share in euro and pound-denominated swaps. We believe the LIBOR transition is progressing well. 47% of our first half volumes came from SOFR trades, up from 12% in the year ago period, with 95% of our dollar swap clients having executed a SOFR-based trade since the start of the year.
I wanted to spend a minute on inflation swaps, which have become an important tool in today's environment. Like Credit, product and protocol diversity in the swaps market is equally important. Since executing our first cleared inflation swap transaction in 2017 using our RFQ protocol, we have responded to increasing demand from our clients to become the leaders in electronic trading of inflation swaps. Today, clients can aggregate inflation swap liquidity across four major cleared indices, taking advantage of the efficiencies of electronic trading. Our efforts are seeing early success, with first-half volumes up over 30% year-over-year. Beyond the risk-free rate transition and inflation swaps, we continue to respond to structural changes in the swaps market, making strong but early advances in cleared EM swaps, RFM protocol adoption, and multi-asset trading.
We saw record EM share in the first half, with revenues increasing by over 140% year over year. We also saw record RFM activity as we continue to onboard dealers and deepen our liquidity pool. Our first-half RFM activity is over 90% of the activity we saw in full- year 2021, with strong growth across U.S., EMEA, and APAC regions. Looking ahead, we believe the long-term Swap revenue growth potential is meaningful. This quarter, we successfully completed the first-ever fully electronic institutional SOFR swaps and trade. Just another example of how we, in conjunction with our customers, look to grow the electronic pie. With the market still only 30% electronified, we believe there remains a lot we can do to help digitize our clients' manual workflows while the global fixed income markets and broader Swap market grows.
Finally, we continue to invest in our leading multi-asset class automated trading capability, AiEX. 10 years into our journey, the second quarter is a testament to how we're helping our clients lower operational risk and transaction costs across trades of various sizes and complexities. Specifically, the number of AiEX trades grew by over 35% year-over-year in the second quarter. We have recently seen the lessons learned from COVID-19 being applied by traders to navigating new challenges brought on by the Russia-Ukraine War, surging inflation, and central bank rate hike fears. The upshot has been that clients are auto-trading with relative ease, modifying rules on the fly to manage transaction costs using AiEX innovative features. As clients become more comfortable with automation, we are seeing them get more comfortable trading larger volumes through AiEX.
With that, let me turn it over to Sara 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 record quarterly average daily volume in excess of 1.1 trillion, up 20% year-over-year and up 16% when excluding short tenor swaps. Among the 22 product categories that we include in our monthly activity report, five hit quarterly records, while another four achieved their second-highest quarterly ADV. Perhaps even more notable, 10 of the 22 product areas produced year-over-year volume growth of more than 20%. Areas of strong growth include European government bonds, Global Swaps, U.S. Corporate Credit, global ETFs, and institutional repo. Slide 10 provides a summary of our quarterly earnings performance.
The record second-quarter volumes translated into gross revenues increasing by 13.9% on a reported basis and 17.8% on a constant currency basis. We derived approximately 36% 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 20.7%, and our total trading revenue increased by 14.6%. Total fixed revenues related to our four major asset classes continued to grow, up 1.3% and 5.5% on a constant currency basis. Rate fixed revenue growth was primarily driven by the addition of the NFI acquisition, while money markets fixed revenue growth was driven by global repos. Other trading revenues were down 3%.
As a reminder, this line does fluctuate as it is affected by periodic revenues tied to technology enhancements performed for our retail clients. Market data increased by 5.1% due to growth in Refinitiv and our proprietary data products. This quarter's Adjusted EBITDA margin of 52.4% increased by 181 basis points relative to the second quarter of 2021. Our Adjusted EBITDA margin for the first six months of the year increased 115 basis points from the full year 2021 margin. We remain committed and on track to delivering annual margin expansion in 2022, and there has been no change in our philosophy of balancing revenue growth with margin expansion. All in, we reported adjusted net income per diluted share of $0.47.
Moving on to fees per million on slide 11. The trends I'm about to describe are driven by a mix of the various products within our four asset classes. In sum, our blended fees per million increased 3% year-over-year, primarily as a result of stronger growth in higher fee per million Rates derivatives and cash Equities. Excluding lower fee per million short tenor swaps and futures, our blended fees per million were up 7%. Let's review the underlying trends by asset class, starting with Rates. Average fees per million for Rates were up 1%.
For Cash Rates products, fees per million were up 12%, primarily due to growth in higher fee per million U.S. Treasuries and migration of certain European government bond clients from fixed to variable contracts at the end of last year. For long tenor swaps, fees per million were down 4%, primarily due to lower duration and billable volume mix while we continue to see growth in emerging market swaps and RFM. In other Rates derivatives, which includes Rates, futures, and short tenor swaps, average fees per million decreased 21% due to a shift towards OIS, which carries a lower fee per million than FRAs. Continuing to Credit. Average fees per million for Credit decreased 18% due to the relative product mix, with stronger volume growth and lower fee per million Credit derivatives and electronically processed trades.
Drilling down on Cash Credit, average fees per million increased 12% due to stronger growth in U.S. high yield, U.S. high grade and Munis, which carry a higher fee per million than overall Cash Credit. Notably, our U.S. high grade volumes were a record in the second quarter. Looking at the Credit derivatives and electronically processed U.S. Cash Credit category, fees per million decreased 2%, driven by stronger growth in CDS, which carries a lower fee per million than the group average. Continuing with Equities. Average fees per million for Equities were up 36%. For cash Equities, average fees per million increased by 26% due to an increase in fees per million within U.S. ETFs, which was driven by a decrease in notional per share traded. Recall in the U.S., we charge per share and not for notional value traded.
Equity derivatives average fees per million increased 11% due to an increase in fees per million within equity futures. Finally, within money markets, fees per million decreased 6%. This was primarily driven by a decrease in our U.S. Repo fees per million. The higher fee per million retail money market business continues to improve given the higher interest rate environment. Slide 12 details our expenses. Adjusted expenses for the second quarter increased 9.9% and 12.6% on a constant currency basis. Recall approximately 15% of our expense base is denominated in currencies other than dollars, predominantly in sterling. Second quarter 2022 adjusted operating expenses were higher as compared to the second quarter of 2021, primarily due to increased employee compensation, G&A, and technology and communication. Compensation costs increased 7.3% due to higher headcount and performance-related compensation.
Adjusted non-comp expense increased 15.6% on a reported basis, primarily due to G&A, technology and communications, D&A, and professional services, but were helped by favorable movements in FX. Adjusted non-comp expense on a constant currency basis increased 19.8%. Specifically, technology and communication costs increased primarily due to higher clearing and data fees as a result of higher Credit AllTrade volumes and streaming U.S. Treasury volumes, which continue to grow. In addition, this quarter also saw the continued impact of our previously comMunicated investments in data strategy and infrastructure. Adjusted general and administrative costs increased primarily due to an increase in travel and entertainment as we recover from the pandemic. Favorable movements in FX resulted in a $1 million gain in the second quarter of 2022 versus a $300,000 loss in the second quarter of 2021.
Professional fees increased 15.6% due to higher legal costs and the inclusion of NFI expenses following our acquisition in June of last year. 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 $959 million in cash and cash equivalents, and free cash flow reached $538 million for the trailing twelve 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 $15 million, an increase of 17% year-over-year. We continue to expect capital expenditures and capitalized software to be in the range of $62 million-$68 million for the full year.
With this quarter's earnings, the board declared a quarterly dividend of $0.08 per Class A and Class B share. We spent $11.2 million offsetting equity dilution during the quarter. Specifically, we spent $9 million under our regular share buyback program, leaving $18 million for future deployment as of the end of the quarter. In addition, we withheld $2.2 million in shares to cover payroll tax obligations related to equity compensation. As a reminder, we plan to use our share repurchase authorization to mostly offset dilution from ongoing equity compensation. Turning to other guidance items for 2022. In line with our previous guidance, we expect adjusted expenses to range from $620 million-$655 million. For forecasting purposes, we continue to use an assumed non-GAAP tax rate of 22% for the year.
Finally, on slide 14, we have updated our quarterly share count sensitivity for the third quarter of 2022 to help you calibrate your models for fluctuations in our share price. Now I'll turn it back to Lee for concluding remarks.
Thanks, Sara. Halfway through, 2022 is off to a strong start, and I'm very encouraged by the diversity of growth across products and the reemergence of our retail channel, which further solidifies our growth foundation. While areas of the business continue to contend with more risk-off client behavior, we remain focused on investing in our leading position across products to drive further electronification and our earnings power higher. Taking a step back, in the majority of our markets, our clients are still trading over the phone, and we believe we have a meaningful revenue growth opportunity as we continue to collaborate and innovate with our customers to improve their trading experience. We released July volumes this morning, and the secular trends powering electronification were on display again, having already facilitated more than 1 trillion in average daily volumes.
July volumes increased over 10% year-on-year, led by growth across interest rate swaps, money markets, and institutional ETFs. The diversity of our Credit business was on display yet again, with strong growth in U.S. IG Credit, Munis, and CDS. Before I conclude, I'd like to welcome Tom, who I think will be a terrific leader at Tradeweb. I would also like to welcome Jacques Aigrain and welcome back Rana Yared to our board of directors as we increase the independence of our board. Jacques brings more than 30 years of financial service expertise and global leadership and human capital experience to our board. Rana previously spent five years on the board prior to our IPO and brings a strong leadership and financial experience to the board.
I'd like to conclude my remarks by thanking our clients for their business and partnership in the quarter, and I want to thank my colleagues for their efforts that contributed to the record quarterly revenues and volumes of Tradeweb. With that, I will turn it back to Ashley for your questions.
Thanks, Lee. As a reminder, please limit yourself to one question 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. Again, ladies and gentlemen, to ask a question, please press star one one on your touch-tone telephone. Our first question comes from Alex Blostein of Goldman Sachs. Your line is open.
A bit of an ecosystem question for you guys, I guess, but we've seen excess capital at a number of large money center banks decline pretty meaningfully the cycle, and that's before, I guess, considering any potential Credit issues, which is sort of leading to various balance sheet and RWA mitigation across the space. Not asking you to obviously predict volumes, but curious how you think smaller bank balance sheets and maybe less liquidity in the system, sort of in general, impact Tradeweb's various businesses, but in particular Rates, as that one tends to be, I guess, a little bit larger from, you know, as I think about the bank's balance sheet consumption. Is there a risk? Are there positives, are there negatives? How are you sort of thinking about that dynamic? Thanks.
Hey, Alex, it's Lee.
Is there a risk? Are there positives, there are negatives? How are you sort of thinking about that dynamic? Thanks.
Hey, Alex, it's Lee. Thanks for the question. I guess the first part of my response to that is, you know, it's tough when you group all the banks together, right? Not all banks are the same. We have a large network of liquidity providers who are gonna react to the environment differently. Some will dial up risk, others will pull back. I think, you know, what's most important here, either way, regardless of how individual banks react to the market, is that, you know, as an electronic platform, we believe we're gonna continue to play a critical role in helping clients find liquidity and dealers manage their balance sheets. You can see this. In recent months, we've consistently traded over $1 trillion daily as the macro environment has changed.
You know, from a bank perspective, the bottom line is our biggest products are relatively capital efficient, right? Our large cash products attract very low risk weightings, and the vast majority of derivatives are essentially cleared. You know, for sure on the margin, high yield repos could be impacted, but, you know, they're not that far along in their electronification journey. I think another point here is, you know, market structure is continuing to evolve. You know, if you look at where banks and a broader set of non-banks are now playing sort of a bigger role in our treasury market, right? You know, they're more than 50% of the accepted liquidity in 2022, right? You know, this is an important point.
Principal trading firms are also playing a larger role in markets like U.S. Credit. When we take a step back, we think we're very well positioned. Market remains fluid. You know, we're very engaged with our sales force, and even in today's stressed environment, we have new clients, you know, shifting from voice to electronic. We're very laser-focused kind of on this future opportunity that we believe we continue to have.
Great. Thanks for that context.
Sure.
Thank you. Our next question comes from Rich Repetto of Piper Sandler. Your line is open. One moment.
Hello?
Hey, Rich. You're on.
Our apologies. Looks like he disconnected. If you do have a question, you can press star one one again. One moment. He may have disconnected. Our next question comes from Craig Siegenthaler of Bank of America. Your line is open.
My question is on MBS volumes, which continue to decline. Is this more of a function of lower industry volumes due to higher rates, or share declines, for electronic trading given less issuance? With the bond markets now starting to price in rate cuts, by 2023, we want to get your perspective also on the potential for MBS volume re-acceleration next year.
Hey, Craig, it's Billy. Good question. Thanks for asking it. I think, as you know really well, we have, like, a very strong leading franchise position in mortgages, both on the institutional side and the wholesale side. The mortgage market is going through a rough spell. It's a combination of higher yields, lower issuance, and I think, as you know very well, a sort of technical situation with the Fed, sort of being in the middle of the mortgage trade. Volumes are, you know, challenging right now. We feel really good about our, you know, our position from a market share perspective in that space. We do feel like this is a very resilient marketplace.
It's gone through ups and downs before, and ultimately we feel like the Fed exiting the mortgage trade will be an impetus for volumes increasing there. The forwards from our perspective around mortgage volume will look good, and we love the way that we are kind of set up in that space with a very strong market share kind of across the board. Thanks for the question.
Thank you, Billy.
Thank you. Our next question comes from Michael Cyprys of Morgan Stanley. Your line is open.
Thanks. Good morning, guys. Wanted to ask about the Munis business. You guys are putting up some very strong volumes there. I think it was up 100% in the quarter. It looks like the strength is continuing here in July, up over 90% year-on-year. I was just hoping you could elaborate a bit on the strength that you guys are seeing from your Munis franchise. How much of that is coming from retail versus institutional? Then can you talk about some of the initiatives and priorities to make your Munis business a more meaningful revenue contributor at Tradeweb? Is there any sort of role for M&A to play to help accelerate your presence within the Muni space?
Hey, it's Billy. It's not, like, the exact opposite of the mortgage story, but it's like, it's basically an inverse, right? Lots of good things are happening in the Muni space right now, right? It's, from our perspective, one of the things that's really great is this has been, you know, these last bunch of months with higher rates has been a real validation from our perspective just around our retail strategy. In an obvious way, the Muni volume is sort of the engine, you know, around our retail strategy.
At the same time, to your point, we're also investing and hyper-focused on building out and continuing to build out a Muni institutional platform where we feel like that market will obviously benefit from a tremendous amount of transparency and efficiency and a modernization of that business. It's really like a two-pronged approach for us in Munis, both on the retail side and the institutional side. We feel like this is an opportunity kind of sitting right in front of us where we're putting, you know, the exact amount of emphasis and muscle into those businesses you'd expect. It's kind of, you know, traditionally a super old-school market, and in a lot of ways that sets up perfectly for us because we're.
To Lee's point in his prepared remarks, we're constantly focused on sort of transitioning phone business into the electronic world, and in a certain way, the Muni market represents that at the highest level for us. It's a big priority for us as a company.
Great. Thank you. Just on the M&A point, just any thoughts there, if that could be helpful.
Nothing that I think that would, like, absolutely kind of come to mind for us right now around that. Obviously, we're always looking at M&A opportunities and ways that would help our business grow our network or add a piece of technology that we feel would be incredibly useful for us. I don't think that we would have, like, a big comment around a sort of M&A lean in that space, in part because we feel really good about how we're approaching this business organically.
Great. Thank you.
Yeah.
Thank you. Our next question comes from Kyle Voigt of KBW. Your line is open.
A question for Billy. You mentioned in your prepared remarks the external hire of Thomas Pluta to fill that President position. I'm just wondering if you could elaborate a bit more on why you landed on Tom to fill that role and more specifically, someone with an interest rate trading background. Just wondering if we should infer from that move that you're kind of doubling down in Rates versus maybe choosing a candidate with a Credit background, for example.
Yeah. It's a great question. You know, not surprisingly, you know, Lee and I spent, like, a ton of time on this because I think bringing someone at a very senior position into the company externally means a lot. We were very focused on getting this hire right. And to make an obvious comment, we feel great about it. Tom has, you know, very strong sort of tangible qualities, both, you know, his background, 25... I don't want to date him too much, but 25+ years at JP Morgan, kind of living and breathing in, you know, the space that Tradeweb opeRates. Gives him a tremendous amount of experience into our world.
We've known Tom for a long time, both as a client, a board member, and I've had a tremendous amount of kind of confidence in his market background. I would also say in a very kind of genuine way, there's always also the concept of kind of intangibles, and intangibles at a company like Tradeweb matter a lot. We describe that, you know, in a very specific way. Intangibles do matter. We got very, very comfortable with how Tom opeRates. He's exceptionally transparent. He's a great comMunicator. We felt in a very strong way that he would be a very additive person to our management team.
The really good news, I would say, is from our perspective, you know, the team and the company has reacted really well to his hire, and so we're excited for him to start, you know, in October, and we feel really good about the skills and the background that he brings into the equation. The Rates history and the Rates background that he has is only a good thing. We have a very strong kind of Rates team here, and they're excited to have him on board. By the way, so is our Credit team. We feel like his contribution is really gonna be across the board in every way that you would expect him to have. Thanks for the questions.
Thank you.
Thank you. Our next question comes from Alex Kramm of UBS. Your line is open.
Just hoping you could give us an update on high yield Credits trading. I think the you know year-over-year trends in electronic trading are clearly solid, but it seems like the market share gains have stalled out a little bit. Just wondering you know specific efforts in that area, macro environment, and then maybe just remind us around you know pricing relative to other I guess IG and competitors how we should be thinking about that business. Thank you.
That's a good question. We wouldn't say sort of dismiss month-to-month market share numbers or even quarter-to-quarter market shares as sort of static noise because we care about everything. You guys know that we are, you know, a very, very competitive company that wants to win every day, every week, every month, every quarter. We care about all of it. That being said, if you take a step back, right? We have from sort of March of 2020 sort of increased our market share, just specifically speaking in high yield from basically less than 1% to up to 8%, in January. Of course, there's always going to be some sort of back and forth around the numbers.
If I was gonna describe it to you specifically, what I would say is, just again, very bluntly, you know, through February, March, and April of this past year, as the markets got more volatile, our take on it all is that more business went into the all-to-all channel than through portfolio trading, which has been our historical strength and lead. One of the things I think that we do a very good job at and pay a lot of close attention to is what I would describe to you as sort of signposts or sort of indications of, from our perspective, franchise strength. Around high yield, what we would say to you, I think in a very specific way, is that, you know, in the second quarter, our responder rate on Tradeweb was up 25%, year-over-year.
That's a very strong and important number. Our average daily volume was up 16% in the second quarter year-over-year, and the percent of high yield RFQ trades that utilized AiEX increased over 30% or up 4 x actually since 2020. These become kind of very important indicators of where we are going. In a really important way, they sort of mimic stats that we saw along the way as our IG market share continues to do exceptionally well, now up over 13%-odd, and it continues to sort of increase and play a leading role for us. Those are the kind of things that we focus on and we think about when we look at where we are, you know, around all of this.
Thank you.
Yeah.
Thank you. Our next question comes from Dan Fannon of Jefferies. Your line is open.
Sara, I was hoping you could provide some additional color on just the expense outlook halfway through the year with FX and as, you know, kind of a benefit with inflation maybe as a headwind. Maybe talk about how you're tracking as you think about the full year based on, you know, kind of current spending levels.
Sure. Thanks for the question. Based on where we are for the first half of the year, we're trending towards the middle of our range for expenses, which is $620 million-$655 million. To your point on FX, that's partially being helped by the depreciation of the pound, which we've seen in the first six months of the year. As we think about the rest of the year, and as you're trying to get a handle on it, you know, a significant portion of our expense base is variable. About 30% varies with revenues, and a large part of that is really compensation, obviously, which is impacted by how well we do in terms of revenue and margins.
Beyond that, I would just say in terms of the year-over-year comparisons or as you look at sequential quarters, obviously, we expect tech and communication to grow on an absolute basis as volumes continue to grow. G&A clearly is an area where we're seeing tick up with T&E, which is not a bad thing, you know, when you think about coming out of the pandemic. From an absolute level, I'd expect those to increase. I just keep an eye on currency, which obviously hasn't been as big a factor in years past. You know, when you look at the first half, we talked about an impact, and we lay a lot of that out in the Q. Even in July, we're seeing the pound is down, you know, almost another 5%.
That's another element, just as you think about the overall expense range. Overall, I think we feel comfortable that we're in the middle of that. You know, I think that's in a variety of markets and FX conditions.
Thank you.
Thank you. Our next question comes from Kenneth Worthington of JP Morgan. Your line is open.
Zach, congrats on hiring Tom. It's a loss for us and I think a big win for you. Maybe for Billy or Lee, you mentioned that you're working more closely with LSEG, and you call that FXall as an initiative. LSEG would seem to have some unique businesses and capabilities which might be relevant for Tradeweb. As you look out at the opportunity set for Tradeweb innovation and new products in the future, how big a deal, if it is a big deal, are opportunities for further LSEG collaboration, and are there any asset classes that represent bigger opportunities than others?
Hey, Kenneth. Lee, thank you. I'll kick off with this one. Yeah, so, look, we're always on the hunt for opportunities to, you know, to partner with important market players like LSEG. You know, in particular, I think we announced the EM FX effort that we've got going on with them and their FXall capabilities. We think that's really interesting. You know, it's always. We're always gonna focus on the customer and what is it that we are able to deliver to the market that is solving some problems, creating some efficiency, reducing some costs. You know, we have a great dialogue with LSEG, and, you know, the sort of first evidence is this EM FX initiative that we've started.
It's a place where we've shown really nice traction with respect to the swap space in EM, and we're looking at, you know, across the board, all of the opportunity in EM. This is an important collaboration. As I said, we're in constant dialogue with market participants in order to find places where we can connect and deliver a solution to our customers, you know, that's beneficial. I'm sure there's gonna be more opportunities with LSEG and other significant market participants to, you know, combine and do things that are beneficial to the market. Thanks, Ken.
Thank you.
Thank you. Our next question comes from Gautam Sawant of Credit Suisse. Your line is open.
My question, just given the heightened level of volatility in the market, how is Tradeweb positioned to grow the firm's client network near-term? What is attracting new domestic or national clients to the firm's platform? Longer term, could you expand on what some of the most important factors are for growing in Europe and Asia? Thank you.
You know what? Thanks for that. I'll take them. This is Lee. Let me start off on the international perspective. You know, this has proven to be a terrific business for us over time. I forget exactly what the revenue participation is, 36%-37%. You know, a real focus for us, really for decades, and that team has done an amazing job to grow that business. It's all about, you know, doing what we do at a high level in terms of solving, as I was saying before, solving client issues, building efficiencies for clients. You know, our competitive advantage in Europe and Asia, you know, what we would call international, is very similar to what we have in our business collectively.
It's the people, it's the network, it's the technology. The great thing about the technology is it scales very globally, and the people, on the people side, we've built a franchise both in Europe and Asia over the last several decades that supports this. It's been a number of years that we've been doing this. We're always looking to add new regions, new asset classes, further protocols, you know, into this global network. I would point out that our leading position in Global Swaps, which by the way, we started in Europe, you know, a while ago now, continues to grow tremendously. We have lots of greenfield opportunity both in Europe and in Asia with respect to that. We continue to leverage our technology and our footprint into things like emerging markets with respect to swaps.
We think we have a strong competitive advantage, and a real opportunity to accelerate that. When it comes to EM, we've added 14 EM currencies to date. The most recent is the Israeli shekel, which I think we started in July. The Asia region continues to be playing a bigger component in our international growth story, and we think that will accelerate over time. We've got a lot of room to grow our network, cross-sell our products, and extend our global kind of reach through the presence that we have in Europe and in Asia.
Thank you. Our next question comes from Brian Bedell of Deutsche Bank. Your line is open.
Maybe just on portfolio trading. Billy, if you want to share or if you can share sort of any kind of updated view on how dominant that could become in the market, given you know you're citing different studies about the resiliency of portfolio trading in a more volatile environment, and whether and to what extent you're actually seeing that play out, as we move into the summer here, in terms of market share gains from portfolio trading across your complex.
Very good question. Thanks for asking. If you weren't sure if portfolio trading would work as well in super volatile market environments, you found out that it would. That's a really important test that portfolio trading went through if you think about the kind of months of February, March and April. It's becoming stickier and more resilient with clients, and they're using portfolio trading for both high yield and investment-grade trading. Those are kind of big statements that I'm making. If you believe in the growth of the ETF business, you believe in the growth of portfolio trading.
I would say clients are getting more and more sophisticated and are becoming very good at quantifying the ability to save time and money as they continue to use portfolio trading, and it's becoming more and more resilient. As we've continued to make these really strong market share progress in IG, the power behind that progress in a lot of ways continues to be the leadership role that we play in portfolio trading. As high yield becomes a kind of challenging market environment, we feel very strongly that portfolio trading plays a very strong role in getting clients best ex, and they are getting more and more sophisticated in understanding what that value is. By the way, we always wanna make sure that we stress this, it's a global initiative.
In a lot of ways, our European volume obviously leads the way in terms of how we think about portfolio trading, specifically as a mechanic to transfer real risk. It was important to us as a company within Credit that we would find something that was a real differentiator for us in terms of client experience. I think that we played that leadership role around portfolio trading, and it continues to be one of our strongest protocols within the Credit suite. Thanks for the question.
Yep, that's great, Billy. Thank you.
Yeah.
Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your touch-tone telephone. Again, to ask a question, please press star one one. One moment, please. I'm showing no further questions at this time. Let's turn the call back over to management for any closing remarks.
Oh, okay. Thank you. Thanks very much for joining us this morning. As you heard from us and saw in the numbers, it was a great first half of the year. That strength has absolutely continued into July. Of course, if you have any follow-up questions, feel free to reach out to Ashley and Sameer and the team. Have a great day. Thanks for joining us. Take care.
Thanks, gentlemen. This does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.