Chris Allen : Maybe just one on credit. You noted the second highest block market share across both hybrid and high yield. Any color on where that is currently? What are the kind of keys to gaining more share there? And also on the ETF market maker side, just kind of curious how material they are to your current business and any opportunities to penetrate deeper?
Tom Pluta: Chris, yes, as far as the credit block trading efforts, it’s still relatively early in terms of our penetrating the block market, but we did achieve our second highest block share across IG and high yield in the third quarter. Our efforts right now are really led by portfolio trading as it’s a protocol that’s really well suited for going after the block market. So — And we’re also continuing to focus on ways to deliver dealer inventories and access most efficiently to clients, as that’s where the big size can also gets done. So we’re quite focused on that, and we do expect to continue to grow going forward. And overall, I think our penetration across all 3 client channels really does put us in a strong position to build solutions that will continue to grow those volumes.
On the ETF market maker side, clearly, ETF, the trend and the growth in ETFs is very strong and very healthy and will continue for years to come, particularly in fixed income. So we’ve seen our ETF volumes grow. We’ve seen the interaction with ETF market makers and cash credit continue to grow, and we think that will be a growing share of our market. I believe it’s around 10%, 10% for us today, but we do see that sector of the market continuing to grow going forward. And thanks for the question.
Operator: And our next question comes from Kenneth Worthington with JP Morgan.
Kenneth Worthington : I wanted to ask about the Treasury CLOB business. You mentioned fierce competition in the prepared remarks. I guess where is Tradeweb’s market share currently? And as the new liquidity providers come on, where would you expect that to go? And then on the fierce competition, are they leading with price? Or are there other factors driving share? And then, I guess, lastly, I think NFI, Tom, was more dominant in off the run how do you see sort of the Treasury CLOB competing in the on-the-run versus the off-the-run markets?
Tom Pluta: Ken, the — so we did get through the data center migration earlier this year. As you know, the client feedback on that has been positive, and the team has been continually focused on boarding more clients and trying to grow with our existing ones. That process does take time. There’s a lot of coding and calibrating involved, balancing against other technology priorities in all of these firms. But we did see our share bottom in April and begin to rise since then. We think we do have a lot of potential to narrow the gap with the larger competitors. In addition, the other huge part of our U.S. Treasury actives business, as we call it our — on the Run business is our wholesale streaming protocol, which continues to grow significantly.
So the combination of these 2 protocols allows us to provide great liquidity alternatives to our wholesale clients. And increasingly, we’re — we try to integrate those 2 offerings to give clients different opportunities to access the actives market. So as far as factors driving share, I think it’s that. I think it’s providing a complete solution across the active business as opposed to just looking at the CLOB or looking at streams or looking at something else, and that’s what we’re focused on. As far as the question on-the-run versus off-the-run, our offering is an on-the-run platform for the time being. But thanks for the question, Ken.
Operator: Our next question comes from Michael Cyprys with Morgan Stanley.
Michael Cyprys : Just a question on the new bank capital requirements, the Basel III and game proposal. Just curious how you see the proposal potentially impacting the marketplaces where you operate just in terms of volumes, liquidity, competitive landscape. And how might the proposal impact the opportunity set for Tradeweb with potential for more activity to move towards the electronic markets? And any sort of thoughts on which areas might be slated to benefit most for you?
Tom Pluta: Michael, great to hear from you. So the Basel III end game is sort of in the process of finalizing and implementing these rules Essentially, what I think about — how we think about it is it’s the prospect of yet more additional capital charges on banks, which continues the trend that we’ve seen since the GFC and the Dodd-Frank rules came out. So what that means is, unfortunately, I think it’s harder for banks to continue to grow their balance sheets, they’re committed to these markets. and certainly can’t grow in line with the continued growth in fixed income markets because of growing deficits and debt loads. So I think what this allows for as far as market structure is the continued emergence of these nontraditional market makers, we should probably stop calling them that because there are huge factors in the market already.
But these other types of market makers will continue to grow to fill in the gaps. The PTFs, the algorithmic and systematic market makers continuing to come in and grow. These types of dealers, they’re heavily quant-oriented. they’re data oriented, they lead with technology and they trade most of the business electronically. So this should continue to grow, this development and these trends should continue to grow the electronic share of the market and lead to higher velocity.
Billy Hult: And there’s a direct line to that question and go back to the very first question that we got about what the banks are going through in the concept of belt tightening. And so we’re in the exact same zone and Tom mentioned in the previous question, 2 different things. One was the concept of the off-to-on market in the wholesale space moving into a more electronic space. We can completely correlate that reality to the question. And then the other thing I would describe is this focus that we have as a company in credit on bank inventories and the electronification of bank inventories as this process of balance sheet winds up getting worked out. These are massive themes. And for the very reason why you asked that question, I would say, intense levels of focus for us as a company.
Operator: And our last question of the morning comes from Brian Bedell with DB.
Brian Bedell : Great. A lot of great color on the call, so I appreciate all the answers that you guys are giving. My one will be just on another angle on regulatory. Just view on basis trading between cash treasuries and futures and potential regulatory scrutiny on this as well. Just I guess your viewpoint on the merits of the strategy and any sense of within your cash treasury volumes have significant, a portion of that is?
Tom Pluta: Sure. Brian. So yes, there’s been a couple of articles written about this, that perhaps the regulators are focused on the growing size of the cash futures basis trade has been growing. They’ve been and talking about, obviously, we had that big unwind during the initial COVID shock in 2020 that caused some — a little bit of disruption to the markets. But overall, I think that it’s a very healthy trade that exists because what’s happening is there are segments of the market, and particularly, again, off the runs that are not highly sponsored, they cheapened up significantly when they cheapen up to a point where there’s value in the trade, these hedge funds will come in, and they will buy the treasuries and sell futures against it.
