Billy Hult: Yes, it’s a good question. And not that I’m sort of like known for nonanswers, but it’s — that’s actually like a pretty tough question to kind of answer perfectly, Dan, but I’ll do my best. We’re in 50 products globally and 3 different client channels. So trying to always figure out like what ultimately is that sort of best environment can be different because to make an obvious point, these different businesses are affected differently by the environment, and that’s a part of kind of our business outlook. First of all, I would say, just in general, to your question, Dan, the concept of an upward sloping yield curve which I think is seen 80% of the time, from our perspective, leads clients to trade on the longer end of the curve, which obviously increases duration, which is an overall positive for our business, right?
Second thing I would just say is what I would describe as sort of like normal market volatility, and that becomes almost like a difficult thing to perfectly say exactly what is normal market volatility, but something around like the normal cadence of market and having something also that spurs from our perspective, that kind of healthy debate around direction of the market has been beneficial to us, right? And so to make an obvious point, and we talked about this a little bit earlier in the year, shocks to the system like happened around the pandemic or the regional bank crisis when there can be market dysfunction tend to be setbacks as clients take risk off. And I’m kind of describing the back and forth of things. And then the last thing I would just say, which I think is an interesting point because we’re seeing it kind of play out in an important region, a market that’s free from what we would describe as limited yield curve control, for example, what had happened in Japan.
But with what the BOJ has taken off in terms of yield curve control is a very healthy outcomes for our business, right? And so we’re seeing that play out in that region. And that would be the third kind of dynamic that I would sort of describe to you. But without question, from our perspective, this is a really good environment. And so you hear this from me consciously always aware of what environment we are in. But at the same time, always very well aware of picking up market share in all of these businesses that we are in. And then this continued sort of like migration around phone business into the electronic world always remains from my perspective, like the number one priority of the company. So it’s an interesting kind of balance. And it’s an excellent question that you asked and thank you.
Operator: Please stand by for our next question. which is from Kyle Voigt with KBW.
Kyle Voigt : So maybe just a follow-up with respect to Dan’s question. We’ve had — we’ve seen a lot of pockets of extreme ball over the last few years with the pandemic and the banking crisis,and with long end rates now in October kind of hitting their highest levels since ’07 and the move index spiking back higher. I was just curious if you could provide a bit more color on what you’re seeing in October in terms of the interest rate swaps market. we’re obviously seeing really strong volumes. I don’t know if you can comment there on whether you’re seeing above the kind of mid- to high teens that you set for the total company on the swaps business specifically? And then also if you could just comment on whether there’s any evidence of deleveraging alongside these really strong volumes or whether this is simply creating just better demand for hedging?
Tom Pluta: Great. Kyle. Yes. So we’ve definitely had volatility spikes, including the big one in March of this year during the regional banking crisis when the move index hit, I think, $200 million. But the current VAW levels that we’ve seen have been consistent with what we’ve had over the last 2 years have moved sort of in this 100 to 160 range most of the time during this aggressive Fed tightening cycle. And currently, it’s about 130. So we do feel that the current levels of delivered volatility are very healthy for our business. We’re seeing consistent hedging activity in swaps as large trading — large bank trading desks are focused on prudent risk management, the regional banks, obviously, their practices have been highlighted and they’re doing some more hedging.
The other positive thing, I think, going forward is there’s still a very wide dispersion on views around the path of inflation, whether the Fed hikes anymore, whether they’re going to start cutting soon or whether they will be on an extended hold period. So because of that, I think high levels of activity will continue as people have a lot of different views there and react to every data point that comes out. The — As far as the question about deleveraging, we really haven’t seen it. We — I think the hedge fund community has done very well on this extended move higher in rates and the steepening of the curve. They’ve been on those trends. So there’s still a healthy amount of activity from all our various client segments. And I think your point on the curve steepening is a good one.
We’ve had a massive steepening and disinversion of the curve over the last 4 months. pretty staggering. If you look at a very broad curve measure, say, 2-year against 30-year treasuries, that’s moved over 100 basis points in 4 months from negative 105 to just about 0 this morning. So the steeper curve that we’re seeing is allowing for extension of duration trades out of the curve, which, of course, is positive for us as well. So — The only other general point I would make to add on to Billy’s comments from the last question is over the last 4 years, we’ve been through a really wide range of macro environments. The COVID volatility, the Fed cutting rates from 2.5% to 0 and now back up to 5.5% as inflation is surged. We’ve had QE in that period, QT.
We’ve had bank failures and big yield curve shift. But through all of those environments, Tradeweb is continuing to deliver significant revenue growth, significant volume growth and significant income growth. So I think that’s a testament to, as Billy said, we’ve got 50 products around the world across asset classes and in the various client channels. So I think that diversification benefit we’re continuing to see over and over through the macro cycles and I think remains a key differentiating strength for us going forward.
Billy Hult: And we’re going to keep working at it. Like the focus is going to be, the focus, and it’s really going to be on this concept back to that first — very first question about the business, like the concept of 60% of the client dealer electronic, 60% of the client dealer business and treasury still being done, like it’s 1994 is the thing that keeps us kind of as energized as a company as we are. And so our focus going forward is going to be continue to electronify these markets that we live and breathe in through that collaboration that we described with our most important clients. That’s all of the kind of upside that we feel so strongly about in terms of what we do.
