Patrick Moley: Yeah. Good morning. Thanks for taking the question. I just — not to hammer on portfolio trading, but appreciate the disclosure around market share in the last day of April being 40%. I was hoping you could just maybe frame — help us frame that like how did that compare to the rest of the month and maybe where you’ve been year-to-date? And then given that this is going to be a big focus area moving forward, is there anything you can give us in terms of guidepost for kind of measuring how you guys are performing from a market share standpoint in portfolio trading? Thanks.
Christopher Concannon: Yes, thanks, Patrick. And obviously, we expected a focus on portfolio trading today and we’ve obviously been focused on portfolio trading for some time, particularly with rollout of new solutions to solve the portfolio trading market. We do think the portfolio of trade is an important tool for our largest clients. Obviously, it’s a tool for immediacy and efficiency of trading. In this credit environment where we’re seeing high levels of demand for fixed income products, that’s a benefit to our client franchise, and we’re seeing them convert those — that demand for fixed income into large portfolio trades. I think the month of April was what I’d call an unusual month for portfolio trading. We saw a number of very large portfolio trades during the month, somewhere around $10 billion and $7 billion in size.
So those are quite sizable portfolio trades that we haven’t seen, almost record size. We expect portfolio trading to continue to be a vibrant part of the credit market, and that’s why we’re so focused on delivering a solution. As we mentioned, just a number of trades, a handful of trades can swing market share in the PT market. But it’s such an important part of our clients’ demand for immediacy that we’re trying to deliver an enhanced solution through X-Pro to solve the PT. We do think that those pre-trade analytics are a critical part of our traders and we get positive feedback. We’ve added things like tradability that help you really analyze your portfolio and make decisions around what should and shouldn’t be in the portfolio. We’ve added other portfolio construction tools as well.
And we’ve also increased the line item capacity. So our clients can trade very large line items, over 2,000 line items is part of the demand we’re seeing from the largest clients. So we do see it as a critical tool kit in our clients’ tool kit, and we will continue to report. Obviously, we have our monthly reports where we share our PT volume regularly and the overall TRACE PT volume in the market. So hopefully, you could just look out for our monthly reports and you’ll see greater progress throughout the course of the year in our PT volume.
Patrick Moley: Okay. Thanks for that. And then you repurchased 10.1 million worth of shares this quarter. I think that was the first or the most significant repurchase you did since the middle of 2022. Can you just — can you talk about that decision and maybe what we should expect in terms of the size and pace of buybacks from here? Thanks.
Stephen Davidson: Yes. Hi, Patrick, it’s Steve here. So there’s really been no change to our approach with capital. I think we’re still focused on the dividend. And our buyback activity is really still focused on just offsetting dilution. And I think that we basically front-loaded some repurchases about two years ago. So we almost put like two years of repurchases a couple of years ago. So I think we’ll be opportunistic going forward in terms of repurchases and — but no change overall in terms of the philosophy for capital.
Patrick Moley: All right. Great. Thanks, guys.
Operator: Our next question comes from the line of Kyle Voigt from KBW. Please go ahead.
Kyle Voigt: Hi. Good morning. Maybe just first on the high yield side. The share has been a bit volatile month to month this year. I guess a question on April with the uptick in share, was that primarily from higher pure ETF market maker flow given some of the elevated high yield ETF volumes we saw in the month, but the systematic traders have remained disengaged? Or are you really starting to see in April some of those systematic traders or hedge funds reengage in that market yet that you had called out earlier this year that had kind of pulled back?
Richard Schiffman: Hi, Kyle, it’s Rich. It’s a combination. I mean we were happy to see a little bit of a pickup back from March, 13.9 versus 12.7 from March. We’ve still got a way to come back, but we’re seeing the signs that the market conditions are becoming more favorable. It’s a combination of activity from both real money and from the ETF community. So it’s definitely trending in the right way here, so.
Kyle Voigt: Okay. And then just maybe one more follow-up on PT. You noted some of the added functionality there. But can you remind us of differences in fee structures in your PT offering versus your competitors? I recall there was maybe something you were evaluating in terms of changing the fee structure of the billing for the product. I guess, have any final decisions been made on that? And do you think that could make a difference in positioning the offering competitively in addition to what you’re doing in terms of adding functionality to the product?
Richard Schiffman: Yes. Thanks, Kyle. It’s definitely a competitive space on PTs. And we’ve talked about it in the past that the PT fee capture is at a lower rate than income business and substantially lower than, say, all-to-all Open Trading business. And there are different ways to levy the fees. We know there are competitors out there that are trying to make a name for themselves and break into this market even going sometimes without any fees on it. We are shifting to a model where it’s a levying of the fee on the dealer. It’s consistent with the way others in the market are charging and we didn’t want to have a fee model that was standing out and putting us in an adverse position. So I’d say competitive on the fees and consistent in the manner of charging fees with others who are levying fees on these trades.
Kyle Voigt: And sorry is that already in place? You said the move to build the dealers or?
Richard Schiffman: That’s going to come in place with our next major release, which is coming in the next few weeks.
Kyle Voigt: Understood. Thank you.
Operator: Our next question comes from the line of Dan Fannon from Jefferies. Please go ahead.
Daniel Fannon: Thanks. Good morning. Sticking with the topic of PT. I was hoping you could just talk about what you think the normal steady state of this protocol is as a percentage of volume or where it could get to? I think you put out some numbers previously, but the market has continued to evolve. So I was hoping to get your updated thoughts on kind of what you think that protocol can ultimately be on a consistent basis?
Christopher Concannon: Sure. I’ll take that. And look, we certainly are at a fairly historically low levels of credit spreads and credit spread volatility. That certainly creates a ripe environment for not only in portfolio trading, but also the dealer-to-dealer mid-market match solutions. So we certainly see at these levels of volatility that we’ve witnessed here in 2024 and certainly, at times during 2023, higher levels of PT and higher levels of mid-market matching solutions. So we — as credit spread volatility can increase, we do see it impacting levels of PT. Certainly, in April, we had some spikes of volatility. During those periods, we saw slight decreases in PT during the trade day, but we continue to see a high level of PT throughout the month of April as volatility decline.
So we are not — certainly not predicting that these levels, historically low levels of credit spread volatility will remain for the continued period of time. They typically go through cycles. We do think portfolio trading — that said, portfolio trading will be an important tool for our clients, and they will continue to remain at levels that we’re seeing today. And we don’t expect massive growth of the PT market over time. We do think it’ll probably stabilize at a certain level and be just another important part of the market ecosystem.
