Operator: Our next question comes from Alexander Blostein with Goldman Sachs.
Alexander Blostein : So maybe just building on this last question around global swaps. And look, the volumes obviously continue to surprise to the upside over the course of the quarter. and based on the CEF data, October looks pretty awesome as well. So obviously, volatility is a part of that, but there’s been quite a bit of noise given the LIBOR transition, et cetera, in compression volumes that you’ve highlighted in the past. So I know it’s difficult, but could you help sort of dissect the recent volume trends and sort of frame what is sort of transitory versus more things that you’ve been talking about with expansion of protocols, expansion of clients and the environment? So that kind of framework would be helpful. And then when it comes to fee per million, and I know a separate question, but sort of related, any way to help us frame to what extent extension and duration that we are seeing in the market today could help that swap fee per million as we look out?
Tom Pluta: Sure. Great question and great to hear from you, Alex. So in the normal course of business, compression activity, ebbs and flows and moves around a lot. As far as the LIBOR transition, which was completed on June 30. That’s all done. We kind of thought that might have been a peak from all of that activity. But you’re right, we continue to see increases. Generally, what happens with compressions as clients put risk on through the risk trades and then old risk on the books, they manage off the books through compression. What we’ve seen is we’ve onboarded some large macro hedge funds that have been doing a very significant amount of compression trading with us recently, and that’s led to the uptick. For example, in the third quarter, we saw 100% year-over-year growth in greater than 1-year compression activity ADV versus, say, 20% in greater than 1-year risk trading ADV and swaps.
So definitely very elevated. So I guess what I would describe as more compression trading is obviously good. Yes, we get paid less for it, but it leads to the significant increase in volumes. The offset to that obviously is an impact on FPM a negative impact on FM. But generally, the more business is good. I guess, I’ll pass it to Sara.
Sara Furber: I think, Tom, it was well put. I think in terms of fee per million, which obviously is a complicated metric, it’s really an output. We are obviously focused on revenue growth. It fluctuates on a quarterly basis. So I’ll try to give you a little bit more color. So 1 year plus swaps, so greater than 1-year swap fee per million, even through the third quarter was relatively volatile. So we had lows in August, and then we saw a rebound in September. And it followed a decrease in compression activity in September. But obviously, it is remaining elevated and in October compression activity is higher, which has a negative impact on fee per million. That said, duration is also an incredibly important factor on fee per million and duration would be things like increasing the duration of trading and risk trading, and we are seeing positive signs of that in October, particularly there’s been more volatility on the longer end of the curve.
So fee per million impacted by both of those things. And obviously, like as Tom said, overall, we want to see our clients trading on our platform, and we’re focused on overall revenues, which remains strong.
Billy Hult: And as you know, Alex, we kind of live and breathe with these, what we describe as like micro trading protocols, right? And so that’s really code word for, like understanding how your clients engage with the marketplace, right? So a little while ago in Europe, specifically with European swaps, and Tom mentioned the macro head fund community, we launched a protocol that we call request for market, which was the ability for a client to trade on one or the other side of a marketplace. And that is really the habit and the style of how those clients trade. We wound up picking up market share from launching that protocol, but as importantly, onboarded those clients, which led to some of the sort of compression activity. that Tom was describing and then things feed on themselves from there. So this constant sort of ability to create protocols that mimic real trading workflow is really an intense focus that we have as a company.
Operator: Our next call comes from Alex Kramm with UBS.
Alex Kramm : All good. I don’t think anybody has asked about the new data agreement, unless I’ve missed it, but why don’t we go there for a second. And I’m particularly interested in your commentary around, I’m paraphrasing here, but more freedom to pursue your proprietary opportunities. So can you maybe just remind us what you have in place today that’s not through [indiscernible] Refinitiv? And kind of what initiatives you think you’re now more able to do? And obviously, the greatest thing would be if you have any idea about the TAM for those things that you can now pursue, maybe easier than you had in the past?
Billy Hult: We were thinking we might get asked that question, so we have like 3 pages of preparation for it. No one is more prepared than 0Sara. So you take this is a great question.
Sara Furber: Yes. Thank you. Look, we’re really pleased about the new data deal. I think from our seat, it’s largely covering the same data sets in the prior contract, but it definitely does allow us to have more flexibility and do things alongside on a nonexclusive basis. It does position both companies, I think, for a win-win. And so importantly, our ability to grow not only that line with new use cases, but grow our third-party data line is really a lot of the flexibility. So the FTSE announcement that came out, I think it came out yesterday is a perfect example where we are going to monetize that through selling closing prices, some of which Refinitiv will do and some of which we can also do on our own. So I think that is a key important point.
And I think the flexibility allows us to make sure that the data is getting in the hands of as many people as possible, which really is an important benefit for the market. I’d just add one other point, which is we’re pleased with this. But obviously, our primary focus away from Refinitiv in growing the third-party data line, which is growing well in excess of double digits is to deliver better client execution outcomes. And that is multiples of value in our mind of how we monetize it. I don’t know if you want to add anything.
Operator: Stand by for our next question. And we have Chris Allen with Citi.
