Jeff Schmitt: Great. Thank you.
Operator: Our next question comes from the line of Brian Bedell from Deutsche Bank. Please ask your question.
Brian Bedell: Great. Thanks. Good morning, guys. Maybe just sticking with X-Pro. I think you quoted about 16% of your volume now is running through X-Pro and it’s accounting for 60% or nearly 60% of your portfolio trades. Just maybe if you can just comment on where you ultimately want to get that to or you think you can get X-Pro to in terms of your overall volume. And then to what extent is portfolio trading a big part of that process or if we — if the market does shift back away from portfolio trading over time because of higher credit spread volatility, how do you see that algorithm working within X-Pro of getting more of your volume on and having that expand your overall market share?
Christopher Concannon: Great question. And obviously, X-Pro is designed to replace our legacy user interface for our clients. So we intend to put X-Pro in front of all traders and all clients globally. X-Pro, you’ll see X-Pro rolling out in Europe and throughout the international client base this summer. So we’re excited to continue the rollout of X-Pro not just for traditional RFQ, but more importantly, for portfolio trading. As I mentioned, we started that rollout for what we call power users. That’s where we see the biggest benefit. The workflow efficiency designed in X-Pro does help those users. And we do think that the portfolio trading tool is also a benefit. Rich mentioned some of the features and the benefits of longer — larger line item capacity on X-Pro.
We do see — the biggest opportunity for X-Pro is really this summer and the quarters ahead around the block trading solution. One of the biggest feedback that we hear from our clients and traders are information leakage with regard to all-to-all and X-Pro allows our clients to easily engage dealers directly, either one-on-one or multidealers in an RFQ. That’s being rolled out and should — really, we’re targeting to, call it, the $3 million to $10 million size bucket, which is a very large part of the TRACE market here in the US. And so really X-Pro is designed to touch every trader, every client and across all our products when we’re done with the overall rollout. More importantly, as I mentioned, X-Pro does allow us to move at a quicker pace from a development and delivery standpoint.
And that’s the most exciting part about this new technology and as we roll out across the client base.
Brian Bedell: That’s great. Actually, that leads into the second follow-up question on that, and that’s the large block sizes. So I think you quoted that last time like 30% [Technical Difficulty] of the market is trade sizes over $5 million. That’s obviously been the area where more has been done with voice over time, and it’s been tougher to crack. So I guess, what is your view on that part of the market electronifying over, say, the next, call it, three years or so as sort of the next leg of the electronification of the market?
Richard Schiffman: Yes, Brian, it’s Rich. I mean we think it’s going to increase. And I’ve said before, we’re going to see a high penetration rate across all sizes. Some of that might just be trade processing and more efficient ways to do a bilateral trade with a known dealer. And that’s fine. That’s part of what this portion of X-Pro is designed to do very efficiently. But we want to make sure that we’ve got a way to — when a trader puts their orders into our system that they have a variety of ways that they can trade that, whether it’s going to be recommending to them who the likely dealers are to engage, whether it’s just processing a trade bilaterally with a trade that’s been executed maybe on the phone, let’s say, or it might be engaging in Open Trading in some way with clients that we’re able to identify who are likely to engage with that party on the trade.
So think of it as a central point where that trader can access all of the tools that MarketAxess has available, the different ways of trading across our variety of protocols, all from one place where they manage their order. And that’s the key part of it is once their order is in X-Pro, they can kind of launch off in these different directions, depending upon what’s available, what’s best recommended for that, how they want to operate, all from one point, which is a little bit different than the way our legacy system works, which is a bit more siloed in the capabilities and making the trader work a little harder to tap into the capabilities. With X-Pro, it’s all central and available right from their order.
Christopher Concannon: Brian, I would just add that we hear regularly from our clients that they obviously want to do more with less. They’re not hiring traders on their desks. That’s a trend that we’ve seen. And this area of the market is a fairly inefficient area from just a workflow perspective. You can imagine using phones and chat has not been the end result of this market evolution. What we’re trying to do is replicate their experience on phone and chat, minimizing information leakage to just the right important dealers in that CUSIP. And that both the data and the pre-trade analytics and the content that we’re collecting and pumping through X-Pro will help those traders, one, identifying the size of their order that the market can consume and two, the best dealers to interact with for that specific order.
So we’re pretty excited about the opportunity to convert a sizable portion of what is today phone and chat market onto the electronic platform. And it’s definitely — one thing we see from portfolio trading and the demand for portfolio trading is the need for immediacy, certainty and efficiency of workflow is high, at an all-time high among our clients as they see more capital flowing into their own platforms, they are not hiring traders to solve that influx of capital.
Brian Bedell: That’s great. That’s great color. Thank you.
Operator: Our next question comes from the line of Michael Cyprys from Morgan Stanley. Please go ahead.
Michael Cyprys: Great. Thank you. I have a question on Pragma. Maybe changing topics away from PT. I was hoping you could update us on the progress there with Pragma. Maybe you can elaborate on the contribution of the business, how you see the growth path ahead. And strategically, maybe you could update us on how you see this being strategically additive to the firm?
Christopher Concannon: Sure. Obviously, we closed on the Pragma transaction in the fourth quarter, and we’re quickly integrating Pragma into the broader MarketAxess technology framework. We’re excited about some of the technology synergies that we’re seeing. Obviously, Pragma has been a key ingredient to the launch of the first credit algo in the credit space. So we’re excited to see that algo and the demand that — and the feedback that we’re getting from clients on the algo. More importantly, Pragma, we’re seeing opportunities to use Pragma technology throughout our technology footprint. Right now, Pragma, is consuming some of our automation suite. So what we want to do, the goal of the current integration is to have both algos and automation all be part of one suite of offering, so you can get basic auto RFQ, basic auto responder and a suite of algos all within the same API or the same suite of selection of products.
