MarketAxess Holdings Inc. (MKTX) Earnings Call Transcript & Summary

Good morning. I'm Tony DeLise, and welcome to the 2021 MarketAxess Investor and Analyst Day. It's been quite a while since our last Analyst Day. And I believe we have put together a great agenda for you focused on our growth initiatives and key differentiators. I'm also excited about the lineup of today's presenters. The investment community is obviously very familiar with Rick and Chris Concannon. But you'll also get to hear from a number of our colleagues that typically aren't investor-facing, but have critical roles in ownership for our domestic and international businesses, Open Trading, automation and data solutions and technology. Turning to the agenda. We have roughly 90 minutes of prepared material. Rick will kick off with a strategic overview, focused on the market opportunity and our growth strategy. We then have 6 sections and deeper dives on our core products, new product areas like munis and U.S. Treasuries, our data strategy, new protocols under our Open Trading umbrella and automation, and then wrapping up with a discussion on our technology strategy. We will take a 10-minute break after the prepared remarks and then begin a live Q&A session. To facilitate Q&A, similar to a quarterly earnings call, we have invited the sell-side analysts who cover MarketAxess to ask questions. In addition, during the prepared remarks, investors may submit questions to us through the Open Exchange portal. You can do this at any time by accessing the Questions tab in the upper left corner of the screen. We look for common themes and then post the questions on your behalf. During today's event, we're going to make forward-looking statements. Let me remind everyone that our actual results could differ materially from what we discuss today, and these statements regarding future events are uncertain by their nature. I'd encourage investors to familiarize themselves with the risk factors discussed in our Form 10-K filed with the SEC. And finally, by tomorrow, we hope to post a replay link and full transcript of this meeting on the Investor Relations section of our website. So I want to thank you once again for joining us today and look forward to hearing your feedback. Now let me turn the call over to Rick.

Thank you, Tony. Good morning, and thank you for joining us for our Investor and Analyst Day. We are excited to share our vision and strategy with you, along with a detailed explanation of the growth initiatives underway. We are enthusiastic about the large and growing opportunity set in front of the company. Transparency is a key value at MarketAxess, and we appreciate your time to share more detail on our business strategy and business model with you. MarketAxess is a 21-year history of innovation and leadership in e-trading for global credit markets. Our primary goals have always been to improve trading efficiency and reduced trading costs for our clients. We have had 3 main phases of expanding the liquidity pool on MarketAxess for investors. In our early years, we aggregated large dealer liquidity after receiving our early funding from 8 large dealers. In the second phase, we expanded the dealer pool, including regional dealers and alternative market makers. And in our most recent phase, we have completed the circle by moving to all-to-all trading through our hallmark Open Trading marketplace. We have also consistently expanded our client footprint outside the U.S. to become a truly global company. The net result is compound growth rates of 18% for revenue and 22% for EBITDA over the last 10 years. I am confident this represents the fastest growth rates in our space during this period. It is also worth noting that historical growth rates have been achieved almost entirely organically. More recently, we have been active with bolt-on acquisitions to expand our product offering and client network, and you will hear more from Chris on this shortly. It is also important to note that market conditions led to exceptionally strong years but also single-digit growth years like 2014 and 2017. Interestingly, the market conditions in those years were very similar to the current market conditions with very low credit spreads and low credit spread volatility. Those years with below average revenue and earnings growth were offset by the very strong years we have seen when liquidity is at a premium and volatility is high. Global debt markets are growing rapidly, both government debt as well as corporate bonds. This trend is expected to continue growing the e-trading opportunity in credit, rates and emerging markets. The recent G30 research study on market structure in U.S. Treasuries stresses the importance of the repo market, all-to-all trading and central clearing given the growing size of the government bond markets. You will hear shortly from Rich Schiffman on our Open Trading strategy to solve liquidity challenges in global fixed income. As well as we have done over the last decade, we are even more excited about the decade to come. The revenue opportunity is large and growing. The chart above shows our estimate of the revenue opportunity today based on the products that we are in and the average market volumes. The middle chart shows what we expect the revenue opportunity to look like 10 years from now based on historical growth rates where the revenue opportunity is expected to grow from $5 billion per annum currently to $8.5 billion. If we sprinkle in an expected increase in trading velocity, we could see the market opportunity grow to $11 billion or more. The growth rate that we have applied in the third pie chart adds increases in trading velocity of 4% to 5% per year on top of the historical growth rate of approximately 4%. Part of the growth opportunity is also in adding new product areas. Most recently, we have been focused on municipal bonds and U.S. Treasuries, but the list of potential new products is long. We have many untapped opportunities in global EM and we are especially excited about the Asia opportunity and trading in Chinese government bond markets. In most of the EM markets, we currently see electronification in single digits of the total market opportunity. On top of the trading revenue opportunity, we also expect to continue to grow our footprint in data opportunities as well as post-trade services. Outside studies show that fixed income data revenues around the world are in the area of $13 billion to $14 billion. As we continue to grow valuable real-time and executable data, we would expect to participate more fully in that data opportunity. We've also been very pleased, as you will hear later, with the growth in our post-trade business, and we see a larger opportunity there. One of the benefits of operating in credit markets is that we are participating in product areas where the current level of electronic market share is generally low. We view credit as in early stages of electronification creating a very long runway for future growth. We have no reason to believe that the e-trading share in global fixed income won't reach 75% or more of the total market opportunity in the years ahead. Trading velocity is also another area of potential growth for our business. When we look at other asset classes, we have seen trading velocity increase volume from 3x to 10x previous levels. And in fact, the estimates that I gave earlier on growing the revenue opportunity through velocity may prove to be conservative. We have 4 main pillars to our growth strategy. First, we expect to continue to increase market share in our core credit products. Secondly, we will continue to expand into new product areas to increase the opportunity set. Third, as you will hear more in a little bit, we are expanding our trading protocols to leverage the Open Trading network. And fourth, we are investing very heavily to grow our international footprint through investments in technology, regulatory status and additional sales resources. With respect to our core products, we have enormous opportunities remaining where -- in product areas where we have already established a leadership position. Year-to-date, average daily volume in our core products at MarketAxess is running at approximately $11 billion versus an estimated $96 billion market opportunity. The graph at the top right shows the long-term trend in share gains for both high-grade and high-yield in the U.S. In the long run, the trend is very consistent and clear. Short-term deviations are mostly due to market conditions that create cycles in Credit Trading. At the bottom right, we show the year-over-year share gains and credit spread volatility are correlated. Our differentiated liquidity pool is most valuable when volatility is high, and secondary liquidity is at a premium. It's been a really interesting 18 months where volatility went from the highest levels in the second quarter of last year to the lowest levels historically, currently in such a short period of time. This slide shows the growing footprint of our product offering. All of these sectors of fixed income are large and growing opportunities in global fixed income. We currently trade Chinese government bonds in hard currency today, and we expect to be able to add local market bonds soon. All of these markets have unique trading protocols, market structure and settlement solutions. The process to build critical mass is long, but once you have it, the barriers to entry are significant. You will hear shortly from my colleagues how we are successfully adding trading protocols well beyond RFQ. The key thing to remember is that we are the only platform in the world today that embraces all-to-all trading in everything we do. Our Open Trading offering is unique, and it delivers valuable liquidity to fixed income markets to reduce transaction costs and diversify the sources of market liquidity. In addition to expanding our product offering, we are successfully adding new and valuable protocols all supported by all-to-all liquidity. You will also hear today about the great success we are having expanding and diversifying our business internationally. International client revenue has grown from 15% of total revenue in 2016 to 28% currently. Our clients come from 64 different countries and we trade bonds in over 35 currencies. We believe if we have equal success internationally to the current U.S. business, our revenues will be roughly 50-50 over time. This, too, demonstrates the large revenue opportunity still in front of us. With that, let me turn the call over to Chris Gerosa to discuss M&A and capital management.

Thank you, Rick. I am very excited to be here today presenting to the investment community in my first public appearance as CFO. I'm going to present 3 topics to you today. Our M&A strategy, a historical review of fee capture and the factors that drive variability and conclude with a snapshot of our capital management strategy and the capital resources we have to invest in the future. Let's take a few minutes to review our M&A strategy. Our focus to date has been targeting bolt-on acquisitions that add new markets, new client segments, new products or provide data or content that makes the platform stickier. Currently, we do not see the need for a transformational transaction as we believe there is tremendous opportunity to expand our share in the fixed income markets we operate in today. The hallmark of our success has been our ability to focus on growing our core product offering and avoid being distracted by opportunities that did not fit in our wheelhouse. The runway for growth in our current product set is enormous. Our estimated composite market share, which is a combination of high-grade, high-yield, emerging markets and eurobonds, is just under 20%, and in new products such as U.S. Treasuries and munis are less than 5%. With that being said, any transaction that can help us accelerate our market share growth will be on our radar. However, we will only pursue fairly priced transactions that are expected to provide long-term value creation to our shareholders. Let's take a look at the transactions we recently completed. We acquired LiquidityEdge in the fourth quarter of 2019 for approximately $150 million. This transaction provided us the opportunity to broaden our Rates product offering by entering into the U.S. treasury markets with a dealer-to-dealer solution. The long-term value play with this transaction is to offer U.S. Treasury trading to our investor clients and expand in the European government bonds and other Rates products. Chris Concannon and Nichola Hunter will provide a deeper dive on this strategy later in the presentation. During the fourth quarter of 2020, we acquired Regulatory Reporting Hub for approximately $45 million. This transaction provided the opportunity to expand the footprint of our post-trade business by adding over 500 clients across Europe, while benefiting from the additional trade information that will enhance our data product offering. And just last quarter, we purchased MuniBrokers for approximately $40 million. With this transaction, we are able to connect our trading technology with the liquidity of one of the industry's largest electronic inter-dealer marketplace venues for trading muni bonds. Not only will this accelerate the adoption of muni bond electronic trading on our platform, it also positions us to leverage muni bond trade data that will enable us to build our muni bond data offering. Collectively, the 3 transactions totaled $250 million and will accelerate the growth in our Rates, post-trade and muni businesses. Now before I discuss our capital management strategy and capital resources, I want to touch upon some recent trends in fee capture and address certain sensitivities impacting our fee capture. On the right-hand side of the page, we've laid out the historical fee capture for our 4 core products going back to the first quarter of 2018. Let's first take a look at our high-grade fee performance in the chart in the upper right. This fee plan has been in place for 15 years, and it scales very well. However, it is impacted by a number of factors, including the trade size, years to maturity, yields and dealer fee plan mix. Over the last 3.5 years, high-grade fee capture has been the most variable, ranging from $150 per million in 2018, peaking out to $200 million in 2020 and more recently [ selling ] back down the prepandemic levels at $174 million. I would like to quantify some of the factors that do impact high-grade fee capture. For example, every year to maturity equals a $10 to $15 per million impact. Every 100 basis point move in yield curve also equates to a $10 to $15 per million impact, and any dealer mix shift equals a $2 to $3 million (sic) [ per million ] impact. The peak in 2020 that you see on the right was primarily attributable to lower yields and longer years to maturity. The takeaway here is there can be a lot of variability in high-grade fee capture due to the factors I mentioned above. Now the chart on the lower right provides fee capture performance for high-yield and EM and eurobonds, the 3 main products in our other credit product category. The quarterly variability you see in our other credit product fee capture is mainly driven by the mix shift in high-yield, emerging markets and eurobond trading volume. Other credit product fee capture is not sensitive to all the factors that impact high-grade, and therefore, the fee capture is much more stable. The gradual decrease in high-yield fee capture since 2018 is mainly due to the migration of dealers to a distribution fee plan otherwise known as a fixed fee plan from an all-variable fee plan. It's important to note that the distribution fee plans demand higher fixed fees and lower variable fees. Over the course of this 3-year period, you will see our distribution fees, otherwise known as fixed fees, in other credit, have been increasing mainly due to the migration of high-yield dealers to the distribution fee plan. So we need to appreciate how dealer movement among fee plans impact the mix of distribution fees and transaction fees thereby impacting our fee capture. I would note that most major dealers on our platform are signed up for the distribution fee plans. Now let me turn to emerging market fee capture. A reminder, we do charge more in emerging market corporate bonds than we do for emerging market sovereign bonds. The gradual decline in emerging market fee capture you see to the right is due to our expansion in EM local markets, which mainly comprised of sovereign bonds with lower fees. Finally, eurobond fee capture has remained relatively stable, while we do have volume tiered fee plans and different fees for high-grade and high-yield Eurobonds, the trading activity has been relatively stable among the different buckets. And one last comment on fees. I want to remind everyone that the depth of the Open Trading network provides significant cost savings well in excess to the fees that we charge our clients. Now let me provide an overview of our capital management strategy and the capital resources we have available to support the investments that will fuel the growth and the opportunities my colleagues are about to present to you today. Our trailing 12-month free cash flow has experienced strong growth since 2015, reaching $320 million at June 30, 2021. This strong cash flow generated from our operations enables us to support 3 main areas of focus: Continued investments in trading system enhancements, opportunistic M&A transactions and returning value to our shareholders through consistent dividend and share repurchase programs. Our recent M&A investments I mentioned earlier were supported by our organic cash flow, and we have consistently increased our annual dividend since 2011 and continue to repurchase shares to offset dilution from new equity awards. The strong cash flow has also enabled us to support our cash deposits and liquidity requirements associated with our self-clearing activities while accumulating a cash balance in excess of $400 million. We do believe our broker-dealer subsidiaries are well capitalized today to support the future growth in the business. As of June 30, our regulated subsidiaries had $550 million in excess regulatory net capital, including $343 million at our self-clearing broker-dealer MarketAxess Corporation. We maintain a $500 million unsecured credit facility with an additional $250 million accordion feature at MarketAxess Holdings to provide additional cash resources if needed to support general corporate needs, including our strategic investments. I hope you appreciate the low-risk profile of our unlevered balance sheet and the very strong capital position we are in to support the full investment agenda that will expand our global footprint and market share in the addressable market, which I remind everyone, could surpass an $11 billion trading opportunity in 2031. Now let me turn it over to Kevin and Christophe to discuss our core products. Thank you.

Thank you, Chris. I'm Kevin McPherson, and I lead global sales here at MarketAxess. I'm joined today by my colleague, Christophe Roupie, Head of EMEA and APAC. Together, we're going to discuss our core product offering and potential for growth across products and geographies. At the core of our strategy is connecting the most robust network of participants to an advanced full trade life cycle solution, including diverse protocols, integrated and actionable data and post-trade services. Our network of over 1,800 institutional firms around the world is unparalleled in credit markets. The network and ease with which participants can connect is difficult to replicate and is a key differentiator. And what we know from the 20 years we have spent building this network, liquidity begets liquidity. The breadth and depth of trading opportunities deliver superior execution quality, which in turn attracts additional flow and liquidity to the plate. Open Trading, which Rich will discuss in more detail later, has been a core growth driver for the firm. Open Trading allows all types of market participants to seamlessly connect with one another. This ultimately increases trading velocity, reduces transaction costs and drives increased electronic trading adoption. Open Trading is a part of our core trading products U.S. investment grade, U.S. high-yield, emerging markets and eurobonds. We're actively working on extending the open trading to all of our products, including U.S. Treasuries, leveraged loans and municipal bonds. While MarketAxess is the dominant electronic trading venue for credit, there still remains significant opportunity ahead of us in both core products and in new markets. With each 1% in estimated market share, there's the potential to realize between $50 million and $60 million in additional revenue. We believe that our investment in developing efficient trading protocols that meet the needs of our clients' trading strategies and support unique characteristics of the market in which we operate will drive market share growth. An example of investment in the application of our Open Trading capabilities is U.S. Treasuries via anonymous request for quote, a first in the client-to-dealer market. In our 20-year history, we have achieved tremendous growth as we have improved the way the credit market works, thanks to collaboration and partnership with all of our clients around the world. Our transition to agile software development over the recent years has taken this partnership to the next level. The agile process, which allows our tech team to integrate client feedback in our development process sooner and deliver technology enhancements faster. Nick will talk about this in more detail later in the presentation. Innovation has always been at the core of all we do. In 20 years, I've not seen the market evolve at the pace it is currently. We continue to focus on building automation tools that allow credit -- clients to improve Credit Trading efficiency while reducing transaction costs. Our session-based Mid-X solution is allowing clients to trade at mid-market by leveraging our AI-powered Composite+ pricing engine. And while we are proud of the progress we've made in these areas, there is tremendous opportunity to continue to expand our global footprint by growing our network and investing in new product areas. For example, municipal bonds and leveraged loans are notoriously manual and inefficient marketplaces, albeit systematically important to the capital market infrastructure. While it's still early days in the electronic trading adoption for these markets, we see early signs of behavioral shifts taking place, highlighted by volume growth we've seen in both products. Municipal bond trading volume is up 82% in the first half of 2021 compared to the first half of 2020 and leveraged loan trading volume is up 96%. As I've said, our network is of over 1,800 firms. It's a true differentiator, and we are encouraged with the trends towards further diversification and types of institutions in the way they interact on our platform. Across all of our core products, we have seen significant growth in the number of active firms around the world in the last 5 years. Our business with hedge funds, ETF market makers private banks and dealer segments is expanding and evolving rapidly, leading to new product development designed for their specific needs. Highlighting a recent shift in market dynamics, dealers are now seeking liquidity via Open Trading at a record pace and have conducted over $250 billion in volume via the dealer RFQ trading protocol this year. In many cases, investor clients are responding as a liquidity provider to dealer RFQ inquiry. While dealer RFQ has experienced significant growth in the past year, there is still material upside as it only accounts for 10% total MarketAxess trading volume during the period. Over 29,000 orders, $15 billion in notional value available through Open Trading on an average day in the second quarter, dealers can source liquidity from across the market. The diversity of participation on MarketAxess is truly unique driven by the connections created by the Open Trading marketplace. Now let me hand it over to Christophe to walk you through our global expansion strategy.

Well, thank you, Kevin, that's great, and hi, everyone. My name is Christophe Roupie, I head MarketAxess for EMEA and APAC, and it is a pleasure to spend the next few minutes in the growth of the international business. I would like to focus on 3 underlying things: Client diversification and new protocol adoption being the first one; the second theme being our growing auto footprint, especially as it relates to dealers; and third, within our core products, the emerging market opportunity in both hard and local currencies. And please do accept my apologies for repeating some of what Rick and Kevin have been discussing earlier. So trading behaviors are adapting globally. The chain roles of buy-side traders of sell-side market makers, risk takers and also alternative liquidity providers in making and taking market across a much deeper and diverse liquidity pool has been well documented. And the growth of our open trading penetration rate for European products from single digits in 2016, to close to 25% in 2021, which is an all-time high, is a clear sign of these changes accelerating further. Our market share across EMEA and APAC is steadily increasing as we double the number of investors and dealers in the last 5 years. And in addition to our MTF in the U.K., we successfully launched 2 newly regulated trading platforms in Singapore in 2017 and in 2019 in Amsterdam to support that growth. And as our products are becoming more and more sticky with 80% more clients trading 3 or more products since 2016, we are seeing steady percentage gains across all core credit products as international [ trading ] volumes continue to increase. The ADV actually, for EMEA and APAC, shows a CAGR of 26% over the same period of 5 years. And in certain sectors, that growth is clear competitive displacement such as in our private banking business, which now accounts for nearly 5% of global revenues. And as a recent Greenwich report noted, MarketAxess is picking up share in the private bank segment, a historic strength for Bloomberg, but one where MarketAxess is now a close second. So the diversification of clients by both segments and not just your traditional global loan-only asset managers, but also domestic investors, local dealers as well as hedge funds, ETF market makers, private bank, as we just discussed on Central Bank, just to name a few, but also the diversification of clients by regions has helped to drive our growth and cement our competitive advantage in providing unique liquidity and accessing new markets. And in APAC, we've seen our client base expand significantly outside of our traditional hubs of Singapore and Hong Kong, gaining new business across Taiwan, across Japan, South Korea and Australia. And despite the pandemic last year, we have onboarded over 70 new major local buy-side clients and dealers since March of last year. And the year-on-year volume growth in APAC is up nearly 40% on the back of already a record year in 2020. And as we already heard Kevin, the dealers are increasingly becoming converted to the store of MarketAxess and Open Trading, and it holds true for the international business. Dealer RFQ is up well over 100% year-on-year across EMEA and APAC. And dealers are seeing the opportunity for on-demand execution to Open Trading liquidity and they are also adapting swiftly to newer protocols. And alongside the ability to initiate RFQs and take liquidity through our Open Trading network, dealers can now use Mid-X, our session-based mid-price matching protocol, and this has seen a near 80% increase in adoption quarter-on-quarter in Europe, and the dealers are [ usually ] to shed and wanted inventory very quickly and efficiently. So Open Trading is unique to MarketAxess and its many benefits are increasingly driving more dealer activities to our platform. And clearly, as we look forward to expanding our footprint and growing our market share in existing and new products and markets, these [ trader ] dealers will play a vital role. And before we look at the last theme, which is the emerging market opportunity, I would like to point out how the addressable market, in which we are competing for share in EMEA and APAC, is big. And what we're facing really [ with ] the firm is the traditional client-to-dealer relationships, and it does remain our key competition. And going back to Greenwich in one of their latest report, they actually noted still the significant lag between Europe and Asia and the U.S. in the adoption of new execution protocols. So there is a large runway and, therefore, a very large opportunity to further drive adoption of all-to-all trading and automated trading in particular. And we see every day, by talking to our clients and dealers, the increase in systematic in data-driven and quant-built investment and trade execution strategies. And we also see the shifting dynamics between their portfolio managers on one side and their execution [ best ]. And actually, emerging markets have been the showcase for a new protocol adoption and technology enhancement. We're looking at execution management system integration, looking at new protocols like portfolio trading, RFM or request for 2-way markets to support block trading, looking at curve trading, switch trading, looking at Auto-Execution all being rolled out or enhanced for EM trading in the last few years. Emerging markets ADVs up over 15% year-on-year, including several record months of trading activities. We do support 26 local emerging markets, and we are adding new markets as index [indiscernible] actually grows. We are deepening our onshore domestic liquidity across these local markets as they make up a significant portion of our EM growth. And EMEA and APAC is a core part of that global EM narrative, and it includes across India and, of course, China, where hard currency credit bonds are now the third most trading EM product on MarketAxess. And in 2020, we were voted the best emerging market trading platform by clients somewhere across all our markets. And I believe that we're extremely well positioned to increase our dividend position in the year to plan as our trading community keeps expanding into new markets. And last but not least, and Kevin referenced data, the best data wins, and we have the best data that underpins the success of everything that we're developing from new automation tools to expansion into European government bonds or developing new and local markets and on [indiscernible] new protocols. Our ability really to capture, to aggregate, analyze and integrate real-time accurate future pricing that seamlessly into the trade execution workflow is a key differentiator. Our clients have confidence in our ability to bring the right data, intelligence and technology driven the most inefficient and manipulative markets. Data gives our clients the confidence to use new protocols or even to trade bigger sizes on our platform. So time now for me to close and hand it over to Chris and Nichola to talk you through our investments in new products. Thank you for listening.

Thank you, Christophe. I'm Chris Concannon, President of MarketAxess. I'm here with Nichola Hunter, our Global Head of Rates to talk about our new product opportunities. A key element to our growth strategy is leveraging our client network, our dealer network and our platform functionality to expand into other product areas. Over the years, MarketAxess has successfully executed this strategy in high-yield bonds, eurobonds, and more recently in emerging market bonds. In recent years, we have made significant investments in municipal bonds, U.S. Treasuries and ESG-related bonds. As you can see, the municipal bond market is over $4 trillion in notional outstanding with nearly $5 billion in daily turnover. Electronic penetration of this market is very low at an estimated 10% to 15% of the market. We believe the municipal bond market is right for electronic trading adoption. Not only is there a significant opportunity for greater electronic trading in munis, but there is a significant revenue opportunity as well. For every 1% of market share gains, we could realize approximately $10 million in additional annual revenue. Like other markets that have converted from manual phone-based models to a more automated electronic workflow, these conversions can take time. However, we have recently seen increased adoption of our electronic muni bond offering as more and more large investors wrestle with the costs associated with supporting this highly manual market. In the first half of 2021, over $11 billion in municipal bonds traded on MarketAxess. To help us accelerate our growth in munis, we recently acquired MuniBrokers, the leading interdealer electronic platform. Integration efforts are well underway, and we anticipate a sizable contribution from MuniBrokers to our overall municipal bond business. Over $18 billion of municipal bonds traded over MuniBrokers in the second quarter of this year. We are also making strides in expanding our municipal bond offering by integrating liquidity from our Open Trading marketplace. Open Trading, our all-to-all market now represents 67% of our exempt muni bond volume and over 39% of our taxable muni bond volume. This is a clear sign that our unique liquidity is a significant driver of our over -- our growth in muni bonds. Now let me turn the presentation over to Nichola to discuss our growth plans and global rates.

Thank you, Chris. My name is Nichola Hunter, and I run the Rates business here at MarketAxess. Rates is one of our new initiatives where we are focused on the cash U.S. Treasury and EGB markets. We view it as an area of significant opportunity, with trading volumes on a daily basis exceeding $600 billion in treasuries and more than $65 billion in EGBs. These markets are highly liquid, subject to significant issuance and see a high trading turnover, making them compelling for MarketAxess to offer services. As well as the large notional volumes that trade today, there is also an opportunity for further electronification. It is commonly understood that the government bond market is highly electronic, especially in the interdealer space but less well known as the upwards of 50% of volume is still traded via voice protocols in the dealer-to-customer space in treasuries. Together with a focus on automation for low-touch execution and new workflows for voice trades, we aim to surface all areas of the market. In the backdrop of the global pandemic, we also see an opportunity to drive innovation and change. Heightened market structure scrutiny following the liquidity issues of last March has paved the way for MarketAxess to look at how all-to-all trading via Open Trading protocol can be applied to these markets. Thoughtful implementation in places where we can remove friction and facilitate maximum access to liquidity for all participants will see MarketAxess establish the first successful all-to-all trading [ venue ] government bonds. We will do this by offering a full suite of solutions to the global rates execution. We will support known and trusted protocols such as a fully disclosed RFQ and will drive change through access to new means of execution for the buy-side community through Click-To-Trade streaming. Click-To-Trade being an efficient protocol where participants can execute against the live an executable streaming price in an order book that has been curated specifically for their needs. We also have a keen eye on delivering workflow and efficiency improvements to our clients. First by offering all to hedging and net hedging to our corporate plan customers who want a cost-effective and efficient process to support their flow and further by introducing electronic trading to replace voice execution for workflows, such as our brand-new trade flow spread order type. Lastly and probably most significant is the launch of Open Trading in rates. Market structure will continue to evolve. We have heard from the Group of 30 industry experts who are exploring avenues to help improve resiliency of the market through recommendations on increased transparency, market regulation, central clearing, among others. And we've also heard from regulators such as [indiscernible], the Fed, who has said that the market should explore the potential for all-to-all trading. And it is through Open Trading that we will do this. For the first time in rates, MarketAxess will facilitate buy side to buy side trading dealers as liquidity takers, better facilitation of cross-border flow, non-dealer liquidity providers and a broader access to clients for all dealers, being only some of the examples of participant combinations we would facilitate. Through OT, we'll be truly offering something unique and new to these markets, which will help grow our footprint and ultimately drive meaningful market share growth in the months and years to come. And now I will hand back to Chris to speak about ESG.

Thanks, Nichola. In addition to bringing more efficiency and transparency to the global bond market, we believe it's our duty to also be a responsible corporate citizen. We approach environmental, social and governance topics or ESG, on both the corporate and commercial level. Our 4 pillars of corporate citizenship guide our thinking and have helped shape our commitment to these important topics, including our corporate governance, our promotion of diversity and our corporate philanthropy. Last year, we signed the UN Women's Empowerment Principles, and I'm proud that 4 of our female leaders across legal, product management and technology have won highly respected industry awards for their contributions to our markets. We are also expanding our philanthropic and community partnerships. And in the fourth quarter of 2020, we established the MarketAxess charitable foundation. As part of that, we have supported important work being done in New York, London and Singapore to bring food to those in need throughout the pandemic. In addition to our corporate ESG responsibilities, we see a great opportunity to help our clients solve their own ESG-related needs. ESG-related investment products are expected to grow to over $50 trillion by 2025. As a result, we are delivering ESG-related trading solutions to help our global clients satisfy their own ESG mandates. In 2020, we launched our Trading for Trees program, which helps clients seamlessly identify and trade green bonds on MarketAxess. But it is also -- it also provides ESG-related incentives by planting 5 trees for every $1 million in green bonds traded on the platform. In the second quarter, over $13 billion worth of green bonds were traded on our platform, resulting in over 65,000 trees being planted. We have now planted over 131,000 trees since the beginning of the year, which nearly surpasses our 2020 full year record. Shortly, you will also be -- hear about our recently launched ESG solution called our Diversity Dealer Initiative, or DDI. With that, thank you, Nichola. In our next session, I will be joined by David Krein, our Global Head of Research and Data for a discussion about our global data opportunities. Joining me today is David Krein, our Global Head of Research and Data. We'll be discussing our glowing -- growing market data opportunity. As you can see, the global revenue opportunity for fixed income data is quite substantial. Fixed income markets are generally illiquid. Illiquidity is fragmented. And transparency standards are inconsistent across the global markets. Those challenges increase the value of fixed income data in general, particularly real-time pricing data. The global fixed income data opportunity is estimated to be somewhere around $13 billion to $14 billion. That opportunity falls into several areas that David will cover in more detail. Real-time pricing data, middle and back office data, end-of-day portfolio valuation data, portfolio and index construction data and finally, analytics. While our focus has been on using our data to improve the trading experience for our clients, we are excited about the opportunity to commercialize our data beyond the trading desk and expand into these areas. We see opportunities for our data applications within risk departments, portfolio management, portfolio valuation, index providers and compliance teams. Data is at the heart of every trade, particularly in fixed income markets where data is scarce and transparency is limited. Our data strategy is simple. We will use our data to drive trading, and we will monetize the data that comes from our trading activity. Every price action, every transaction on our platform grows our data opportunity exponentially. We are the market and we are where price is formed. Data also feeds the entire trading life cycle. It supports pre-trade price discovery, it informs execution at the point of trade, and it is used to analyze post-trade transaction costs. Our post-trade business in Europe, which was recently expanded through the acquisition of the regulatory reporting hub also drives our unique data opportunity. Our post-trade data source is remarkably valuable given the opaque nature of the European data markets and the lack of price transparency for emerging market bonds. However, it is important to mention that our data opportunity can easily be compared to a traditional exchange market. We have unique data on our platform, and not all of our data will be commercialized. Some of this unique data will be used to exclusively inform our execution solutions. We are at the early stages of creating innovative execution solutions that will be primarily informed and driven by our proprietary data to create outcomes for our clients that are difficult to replicate. Now let me turn the presentation over to David, who will walk you through some of our data solutions in more detail. David?

Thanks, Chris, and hello, everyone. I'm David Krein, Global Head of Research and Data at MarketAxess. Picking up where Chris left off. It's worth detailing how we build and deploy data products at MarketAxess. The left side of the slide showcases a stylized example of how we think about an approach to challenge. First and foremost, we prioritized 3 key product areas to drive trading innovation: Pricing tools, liquidity tools and analytics. We very specifically look to leverage our unique data points and derived insights to maximize trading usefulness and must have stickiness, capturing more data, more market data, doing so faster are also important qualities. And then we incorporate these new products into existing and forthcoming trading protocols, including our automation suite to improve trading efficiency and provide effective trading differentiation versus competitors. The output of that process includes some of the functions shown in the center of the slide. On our trading system, we display Composite+ and Axess All our price discovery widget. These data products are delivered into market-making functions among liquidity providers. They facilitate Auto-Execution and Auto-Responder functionality within our automation suite. Post trade, they provide and support transaction cost analysis as well as other analytical functions. There's a range of ways in which we can measure the usefulness of these tools. I've included 2 of them on the slide on the right. In the upper right, we're looking at client or liquidity taker side activity of our Auto-X functionality on both account and volume basis. That upward slope means that there's more activity in our Auto-X functionality over time. As it's grown, that functionality has included Composite+ as the threshold price for virtually every transaction that occurs in that facility. That -- our Composite+ is the basis for that liquidity occurring for clients, being delivered for clients. In the lower right, we look at the total number of algo trades and responses on our platform. Within our ecosystem, the MarketAxess algos that deliver prices are often powered by and informed by the data products that we deliver to those clients, to those dealers and liquidity providers. They're generating prices to facilitate liquidity and those prices come from, in part, the data products that they receive from us. The other side of our business is the commercial data side. The left side of this slide showcases our information services revenue over the last 5 years. That consistent growth comes from our current product suite, showcased in the center of the slide. Composite+, our real-time algo price, Axess All, our intraday trade tape for European bonds, TRACE as well as Trax represent the standards by which clients understand traded activity in those respective markets. BondTicker is our front-end GUI for analytics and real-time data and other various bulk data offerings. These specific examples lead our product suite and our commercial offerings with our clients. A key lesson that has come from the process of delivering these products to clients is that there are applications for these best-in-class products for functions beyond simply trading. The opportunity to grow data revenue is substantial throughout the larger fixed income market. Chris alluded to some of these earlier, and I've included some of them on the slide on the right. Real-time data and closing NAV, middle and back office functions, including risk, indices and portfolio evaluation and construction and other analytical applications are all critical parts of the fixed income ecosystem, and our products can be used to support those functions. It's worth spending a moment on Composite+ as a specific example of how we launch and continue to innovate over time. Composite+ is our real-time Algo price. We launched it about 4.5 years ago initially for the U.S. market. We've since continued to roll out enhancements in a number of ways that have grown its usefulness as a commercial data offering, but also within the trading system. After the U.S. launch, we rolled out European offering for European corporates as well as emerging market hard currency bonds. We've since added a number of other markets, including SaaS, European government bonds and non-dollar markets such as Japan, Australia and New Zealand. All of those in aggregate, facilitate engagement and trading on our platform. We have further plans to continue to expand coverage from our current roughly 30,000 bonds in real-time to more than 200,000, which would give us roughly 99.9% coverage of our market universe. Lastly, it's worth touching on a new market opportunity that is well established outside of MarketAxess, but we've recognized an opportunity using our data and analytics to power innovation in that space as well. We sit near the center of the index and asset management ecosystem. Managers, issuers and ETF-authorized participants all trade on our platform. And we've seen many of the specific challenges related to global corporates. There's often a poor relationship between a bond's inclusion in a portfolio and its tradability. We've also seen slippage between -- for on-demand trading of bonds and baskets, which remains a challenge. Our data can be used to better define liquid instruments for managers by focusing on accurate real-time pricing and demonstrable liquidity. This allows us to help resolve the pressing issues and enables further AUM growth, especially in the ETF space, which facilitates even further -- more trading on our platform. Initially, we've evaluated the U.S. market. But we can easily expand this approach to other markets, including Europe and emerging markets, but also across specialty and custom designs, including ESG. With that, I'll turn it over to Rich Schiffman, who will talk about our new trading functionality.

Hi, everyone. I am Richard Schiffman, and I'm responsible for the Open Trading business here at MarketAxess. I'm going to talk about OT plus our broader product strategy around new protocols, and then I'll turn it over to my colleague, Chiqui Matthew, who is going to review our new Diversity Dealer Initiative. So what is Open Trading? Open Trading is MarketAxess' industry-leading all-to-all trading service. It provides our clients with the deepest, broadest liquidity pool possible while delivering big cost savings when they trade. OT allows any of our 1,800 clients around the world to trade with each other whenever they want, meaning they're no longer solely dependent on banks for their liquidity needs. And OT lets any type of firm be a liquidity provider, meaning they can act like a dealer without the overhead of being one, capturing the bid-ask spread instead of paying it. Open Trading is delivering really meaningful benefits to our clients. We've become the #1 counterparty on the platform in all of our core products. And for many clients, MarketAxess is their top counterparty on and off the system. OT now represents about 1/3 of our overall activity. And in a sign of things to come, it's 50% of our high-yield market. This has led to annualized cost savings for clients of about $1 billion, split half and half between takers and providers. And a better description of these savings, it's really about investment return, enhanced investment return for our clients. And this is not just about buy-side benefits. Actually, our fastest-growing usage of Open Trading is from the dealer community. We make the same Open Trading services we have for clients available to sell-side traders. Dealers are now our top providers of anonymous liquidity, and dealers taking liquidity and now represent 1/3 of Open Trading activity. We see a big opportunity for servicing dealers in the coming years and are devoting a lot of resources to capturing it. So Open Trading is a really big differentiator for us. It's not just an add-on or a secondary aspect of our business as it is with our competitors. OT is actually central to our strategy and makes our platform a truly unique trading venue. So I thought a bit of history would provide some valuable context for the journey that we're on at MarketAxess, and on how we operate and why Open Trading is having such a big impact on the bond market. The first corporate bond was issued actually 400 years ago. And for the next 380 years from then, the operating model has been pretty much the same. The only way for an investor to trade was to talk to a few dealers to obtain quotes and then buy or sell their bonds with them. MarketAxess was formed in 2000, and we soon made it effortless for our clients to interact with as many dealers as they had relationships with. By 2007, we had 30 of the largest bond dealers available, and it became commonplace for clients to put all of them in comp when they wanted to trade. During the financial crisis, large banks drastically reduced their capital for market making, leaving bond investors desperate for any new source of liquidity they could find. So in response, we onboarded over 100 regional and smaller dealers, most of whom were not traditional counterparties for larger clients. This major expansion of dealers was a precursor to Open Trading. So we figured if traders were willing to show an inquiry to, say, 40 or 50 dealers at a time, why not show it to the entire market and see if an even better response can be found? At first, we had a simple page where clients could share their inquiries publicly, and those interested would call a dealer to respond on their behalf. But the big bang moment for Open Trading came in 2013 when MarketAxess began acting as a broker in the middle, allowing any firm to trade with any other firm without needing to know each other. Over the last 21 years, MarketAxess has transformed the old school bond market into a highly efficient global central marketplace. We've created an exchange-like environment for trading bonds while maintaining the familiar over-the-counter structure. Anyone can trade with anyone else, while still benefiting from the traditional relationships on which the bond market was built. So on this next slide, it illustrates the approach we're taking to building the bond market of the 21st century. It's a multifaceted, integrated trading solution with OT at its core. There are 3 key aspects of our strategy. First, we're offering a variety of protocols to capture all of the different ways traders need to engage in the market. RFQ has been our flagship protocol since day 1 and is likely to remain the most common way of trading in the future. But markets are made up of many different types of firms, different trading styles, which is why we offer 5 unique ways to engage on our platform. We don't want to give any one reason to revert to the phones. Second, we believe Open Trading provides the best quality of execution over the long haul. The decision for how to work is always left up to the trader, but the record is clear, best execution is achieved by engaging broadly in the market. If there's a better price available somewhere, you should get it. A single relationship with MarketAxess opens up the global investment community as potential counterparties. The third leg of our strategy is to allow all of our assets to be leveraged across all of the trading protocols. So we've got our vast global network of clients and dealers, 1,800 firms, just about everyone that matters is onboarded to MarketAxess and is ready to trade. And the entire network is available on each of these protocols. Straight-through processing offers a highly efficient workflow. We support 100% electronic flow from order inception to trade completion, including post-trade allocation, every trade regardless of how it's executed uses our STP. We have extensive and proprietary market data for supporting trading decisions. We provide the market color and the context for traders to work independently, no longer needing the conversations with salespeople on the phone. And then finally, automation services that boost trader productivity. Today, Auto-X lets traders execute far more line items than they can do so manually. In the future, Auto-X is going to help traders take advantage of all of these protocols and do it in a unified manner. These capabilities drive our platform, allowing clients to leverage their investment in our service while having consistent operations across a variety of trading solutions. So let me talk a little bit more about the protocols themselves. RFQ, I mentioned already. That's our original and remains our flagship protocol. It's where most of the trading is taking place today, particularly with lists. It's most familiar to traders because it really is just an electronic version of the way people have always worked in the bond market, of course, a lot more efficient. And it remains the most broadly applicable service for the widest range of bonds. Portfolio trading is relatively new, represents about 3.5% of the market right now. And it's really just a specialized version of RFQ list trading. It has some key characteristics that differentiated, that being a large number of line items can be done at one time. And it's often with buys and sells on the same list. And guaranteed execution is a really attractive part of it for the entire portfolio. And also having it all done at a single net price versus having to look at individual line items. Now portfolio trading, it's definitely in the early stages and still evolving. Much of it really is single-dealer voice negotiation with electronic processing. Next year, our plans are to incorporate Open Trading into portfolio trading so that clients can get its benefits combined with more competitive best execution that comes from the OT model. Next, streaming. So there's a lot of talk about streaming now in the markets, dealer streaming directly into clients, which it's nice information to get. We think that's a pretty inefficient model because it's a lot of direct bilateral connections that need to be made. What we do is we reduce the complexity by providing a single place for clients to receive all of the content from the dealers as well as being able to trade bilaterally with them. Most importantly, we offer Open Trading streams as well. So any firm in the market, not just dealers, can stream prices out to any others and then trade through our anonymous protocol. Next is central limit order books. So we launched our club that we call Live Markets about a year ago. It's a true live and executable order book, just about as close as you can get to trading bonds in an equity style manner. It's designed for the most active segment of the market where price transparency is high and it's a faster, more streamlined trading style that we think makes sense for those types of bonds. Investment-grade team first and high yield is going to be launching later this fall. We've got 4 dedicated market makers live already, including Goldman and Barclays with more on the way. Then matching sessions. So we launched our matching protocol called Mid-X in the Eurobond market last fall. And Mid-X involves a once-a-day session where traders submit lists of buy and sell orders and then match up at mid-market using our CP+ pricing and then each party sharing in the savings on the execution. So it's a great protocol for cleaning up line items, not really applicable when time is of the essence because it's only once per day, but a really easy way to, say, clean up line items and basically split the bid-ask spread. So that's our trading protocol strategy in a nutshell. We've made great progress over the last 21 years, but there's so much more to be doing going forward. We believe they're still in the early stages now with a major transformation in the bond market, and we intend to remain at the forefront of it. So with that, I'd like to turn it over now to Chiqui who's going to talk about our Diversity Dealer Initiative. Chiqui?

Thanks, Rich. Good morning. My name is Chiqui Matthew, a client sales manager in the New York office. We wanted to spend some time here discussing the Diversity Dealer Initiative, which is a key component of our strategy to promote a more open and more inclusive fixed income marketplace. As Rich mentioned, since the launch of Open Trading, now going back almost a decade, we were driven by the belief that more participants, more competition, more transparency leads to better outcomes for all of our clients. We've always had minority women and veteran-owned broker dealers as part of our platform's ecosystem. But over the past few years, our asset manager clients, in particular, have begun to push for more trading opportunities with diversity dealers. Some of our asset manager clients have explicit mandates from their own investor clients, a given percentage of secondary trading activity in a fund by rule must be conducted with a diversity dealer. And some of our clients have ESG directives that emphasize the importance of diversifying the counterparties they do business with. And most of our clients, on some level, believe in the idea that a more diverse marketplace is a better marketplace. The fact is the challenges were consistent across the board despite the differing motivations amongst our client base. Fixed income is a highly competitive market, and MarketAxess' cornerstone is to provide the best execution through that hyper-competitive dynamic. Some of our largest clients have been asking the same question. How do we diversify the counterparties we transact with while fulfilling best execution mandates? The unique breadth and depth of our Open Trading network provided the foundation to facilitate more frequent connections between our asset manager clients and the diversity dealers. The Diversity Dealer Initiative or DDI, as we call it, is at its core, a very simple mechanism that makes it easy for our clients to achieve their goals of a more diverse counterparty distribution while maintaining the best execution on every trade. Once a client has enabled DDI, when they submit a size eligible RFQ, and the best level in the response back is from an Open Trading liquidity provider, then there is an opportunity for an automatic interdealer trade to occur, where the asset manager client faces one of their selected diversity dealers, that diversity dealer faces the MarketAxess broker-dealer, which connects to the Open Trading liquidity provider on the other side. These actions occur seamlessly, allowing for rapid TRACE reporting and the automatic straight-through processing that our clients rely upon. The simplicity of the protocol and the connection to our unique liquidity pool make DDI tick. Our clients can select the diversity dealers they would like to include in their round robin. And then they use the system just as they normally would with the automatic distribution, equitable distribution amongst their diverse counterparties happening in the background. We started our DDI pilot just before the end of last year with a handful of clients and diversity dealers. We stand here today with over $3 billion in executed volume through the protocol. We have 24 buy-side clients who are now live, that includes insurance money, global asset managers, pension funds, hedge funds, really the whole gamut. And we have 6 minority women and veteran-owned broker-dealers who are currently acting as counterparties in the system with many more in the dealer pipeline as well. The products we currently support are high-grade credit, high-grade muni taxable, high-yield credit, muni tax exempt, floating rate notes and agencies. And our plan over the next few months is to roll out the DDI protocol in every market where the Open Trading network supports liquidity. Emerging markets, hard currency and our growing Rates business present great opportunities to expand the protocol as well. The Diversity Dealer Initiative is only the first step in what we hope is a growing collaboration with our clients and minority-owned brokers to promote a more open fixed income marketplace in the future. With the future in mind, I'll hand things off to Gareth to discuss the prominent role that automation plays in our growth strategy going forward.

Thanks, Chiqui. I'm Gareth Coltman, Global Head of Trading Automation at MarketAxess. I'm going to be talking to you today about the growing use of trading automation and fixed income markets and how MarketAxess automation solutions are helping our clients increase efficiency and gain execution advantage. I'll also be sharing our vision for the future of trading automation in this rapidly evolving market. Fixed income markets are undergoing rapid transformation underpinned by the emergence of new value networks, data and machine-based trading. Market participants are beginning to embed automation at the center of their trading workflows, as they've realized the potential of this technology to help achieve their business goals. Despite increasing adoption in recent years, we believe that we are only at the beginning of this innovation journey with clients today largely focused on automating their electronic trading workflows, for example, automating the submission and execution of RFQs. However, we're now seeing growth in the usage of automation to act more opportunistically in the search for liquidity and price improvement through our Open Trading network. We're also discovering demand from clients to create more sophisticated automation workflows that reach across all available protocols and liquidity. Ultimately, we envisage solutions that would allow clients to use our predictive analytics to optimize their trading workflows in real time, automatically adjusting parameters to market conditions to ensure the most positive outcomes. I'll be talking to you shortly about adaptive Auto-X, the latest addition to our automation toolkit, which is designed to help clients take the first steps towards achieving this next level of efficiency and performance. Before I get into more detail about our product offering, I'd like to share some information on the market backdrop driving this evolution. The history of trading automation technology in capital markets is a well-trodden path with the explosion of algorithmic trading equities and listed derivatives in the 2000s and more recently in FX markets. However, despite rapidly growing electronification of fixed income markets, the use of algos and trading automation tools has remained subdued versus the growth we've seen elsewhere. The recent rise in fixed income passive products has increased cost sensitivities across both buy and sell-side firms has accelerated market velocity increased appetite to deploy automation within the fixed income asset class. Barriers to automation have been overcome with the introduction of AI-driven pricing tools, such as MarketAxess, Composite+, and access to a broader network of liquidity providers via Open Trading. And that result, these market structure changes, has been a rapid increase in automation within fixed income, with asset managers now executing 27% of their activity using Auto-X in Q2 versus 8% in the second quarter of 2018. The sell side facing similar cost pressures and the need to create balance sheet velocity has also seen an equally dramatic rise in the use of automation. Here, large sell-side dealers are deploying their own auto quoting algorithms in response to growing electronic volumes with algo trading -- sorry, with algo-driven responses in MarketAxess, having more than doubled since 2019. Finally, we've seen automation act as a catalyst to open trading with dealers, professional firms and most recently, traditional asset managers using automation technology to systematize the liquidity provision across the Open Trading marketplace. Growing demand for trading automation has been evident in the increasing number of buy-side firms and traders adopting MarketAxess solutions. More than 100 firms used our technology to execute over 200,000 trades in the second quarter of this year. By comparing the time and effort of manual versus machine execution, we estimate our automation solutions remove the need for over 400,000 human interactions and saved 3,600 cumulative workouts for these firms. In addition to creating efficiency through time and cost saving, automation creates opportunities for maximizing price improvement by allowing buy-side clients to systematize their interaction with the Open Trading network. We've seen clients using automation to benefit from Open Trading cost savings as a price taker using Auto-X RFQ, but also save full bid offer by using Auto-Responder. The financial benefits to firms choosing to adopt these workflows can be considerable, especially in markets where liquidity is sporadic or spreads wide. At the heart of any decision-making engine will be the data, and the quality of those decisions can only be as good as the data fueling them. MarketAxess' automation solutions, along with many proprietary systems developed by our dealer and professional client base, rely on our data and analytics such as Composite+ and relative liquidity score to ensure execution is always properly informed. Given these advantages and opportunities, it's no surprise that automation is a top priority for our clients moving forward. The 2020 Greenwich Associates report showed that a client survey, nearly 2/3 are already automating or plan to do so in the next year. The recipe for best-of-breed trading automation is clear. Liquidity, data and client connectivity. And as you've already heard from Chris, Rich, David and the other speakers, MarketAxess is uniquely positioned to deliver these ingredients and create automation solutions that meet the fast-evolving needs of our clients. Auto-X allows clients to automate submission and execution of RFQ based on predefined tolerance parameters around an inquiry size, liquidity and quality of responses. Clients are able to leverage MarketAxess Composite+ or they use their own limit levels to determine a price target with clients electing to on Composite+ over 90% of the time. These rules are highly customizable and can be set at multiple levels of granularity from market all the way down to CUSIP depending on the clients' needs. Only when all rules and requirements are met will the trade automatically occur with the best level. Ensuring the client's best execution process is always followed. Open Trading is fully embedded within Auto-X, meaning clients are able to take advantage of all of the liquidity and cost saving benefits available through manual execution. Auto-X is also capable of being fully integrated into a client's order management system, creating the potential for 0 touch workflows and further efficiency benefits for clients. We've seen significant adoption over the past 2 years as trading desk rolled out fixed income automation. The second quarter this year saw a record $40 billion in volume executed through Auto-X. These numbers are striking. We anticipate this is likely just the beginning of the shift towards automation. Even accounting for the overwhelming client benefits, trades sent through Auto-X RFQ only accounted for 17% of all the trade tickets on MarketAxess in Q2 2021, up from 11% in Q2 of the previous year. A likely signal we're only just entering the early majority phase of adoption. Although usage to date has focused on liquid credit with U.S. high-grade being the most advanced at 23% of total trades in Q2, we're starting to see growth in U.S. high yield and emerging markets and ultimately expect to see adoption across all markets and geographies. We're also in the process of adding automation capabilities to our treasuries and European government bond markets where high levels of liquidity should foster rapid adoption. The Open Trading Auto-Responder is an innovative and unique to MarketAxess trading protocol that combines resting order technology and our proprietary data analytics to enable traders to automatically respond to incoming RFQ inquiry. The protocol has allowed traders to both save time and systematically capture price improvement by being a bid or offer in response to any of the $15 billion daily average notional volume available through Open Trading in the second quarter of 2021. During that quarter, over 7,500 bid responses were automatically generated for clients using the tool. Once again, MarketAxess' unique data at the heart of this technology, clients have the option to respond using our own levels, but can also utilize Composite+ to ensure their responses track the market and remain competitive. By resting large orders within Auto-Responder and having them fill gradually throughout the day as opportunities arise, clients can complete block orders with no further intervention required. This approach to sweeping passive liquidity minimizes information leakage while ensuring the opportunities to capture bid offer spread and never missed. Auto-Responder also supports no-touch workflows by our clients' order management systems and is fully integrated into our Axess IQ solution, enabling private banks to rest limit orders and benefit from matching liquidity throughout the day. The tool is in early adopter phase with clients adapting their traditional workflows to include this new form of automation, but has already generated over 5 billion in response volumes since launch. As you've heard from Rich and others, MarketAxess is adding new protocols and services to its ecosystem to diversify our business and meet the evolving needs of clients. Our vision is that automation provide a frictionless mechanism to move between these interconnected protocols and to maximize client opportunities for liquidity discovery, price improvement and efficiency gains. Adaptive Auto-X will extend our automation rules engine to support more sophisticated multistep workflows and provide automated access to the entire suite of MarketAxess trading protocols. It will allow clients to rest large blocks within the MarketAxess ecosystem and then leverage our unique predictive analytics to drive choices around protocol selection, timing, sizing or sequencing workflows. We've already taken our first steps with clients, Adaptive Auto-X launched in beta in Q2. This initial release offers workflows to a trader that can automatically transition from a liquidity provider to a liquidity taker based on time or residual order size triggers. We're pleased to see multiple clients are already experimenting these new workflows, and we plan to add further protocols in the coming months. We believe this technology will supercharge efficiency and cost benefits for clients, but also be a catalyst for MarketAxess growth, lowering barriers to adoption of new markets and protocols. Thank you very much for listening. That's the conclusion of the Trading Automation section. Now I'll hand over to Nick, who's going to walk you through our technology investment strategy.

Hello, everyone. My name is Nick Themelis, and I am the Chief Information Officer at MarketAxess, a role that I've held for nearly 18 years. From our inception, the vision was fairly straightforward, create the most efficient, fair and intuitive bond trading experience possible. Thus far, we've accomplished this in a number of ways. Number one, we continue to bring innovative protocols to the market such as Open Trading, Live Markets and Mid-X. You'll hear more about those shortly. These are bold, creative and at times disruptive, but have generated tremendous cost and time savings for our clients, and we're only just beginning. The synergies of having built an amazing community of virtually everyone that participates in our market has provided great benefits in terms of comprehensive feedback, access to global data and our ability to seamlessly connect participants in things such as Open Trading. Another important part of the MarketAxess training experience is access to the treasure trove of unique data, coupled with our strong machine learning capability. thus allowing us to deliver analytics that help our clients gain insight into the market and to optimize their execution. Amazon and Netflix changed their respective markets with sophisticated use of data, AI and predictive engines. We are using similar strategies to modernize institutional bond trading. I am extremely proud of all we have accomplished. But despite our success, it was clear that how we got here isn't going to be how we move forward. So starting in early 2019, we reimagined how we build software, what technology stack we use and how to fully leverage the cloud. And importantly, how we continue to attract and retain the talent needed to keep our business thriving. As part of our strategy, we move to an agile-based methodology and organized into autonomous scrums, which allowed us to be even more responsive to our clients' demands and flexible in pushing out features and new technology. The last year, we saw our pace double from prior years, and I attribute much of that to this rearchitecture of our delivery method. Now let me turn it over to our CTO, Madhu Chalamani.

Thank you, Nick. I am Madhu Chalamani, Chief Technology Officer for MarketAxess. At MarketAxess, we are on a mission to define the future of global bond trading using modern technologies. We believe modern technology platform provides us a sustainable competitive advantage for years to come. There are 4 key pillars to our modern technology platform: data, cloud, machine learning and automation. Access to broad and deep data sets is key for building new and innovative products. Between our trading and postpaid ecosystems, we have near real-time access to billions of data points. Our enterprise data platform built from ground up using modern technologies, allowing us to access and process the data quickly and efficiently. Cloud technologies have been fully adopted across MarketAxess technology portfolio. We're effectively applying cloud technologies to improve speed to market, speed of innovation and productivity across all our technology functions. There are a number of our applications already running in the cloud. machine learning-based deep analytics differentiate our products and services. We're remind the trailblazers in applying machine learning to solve real-world problems. Our award-winning CP+ product suite is fully leveraging machine learning. We strongly believe data and analytics are essential part of everything we do. We have strategically built a deep pool of talent and capabilities of mission learning technologies. Lastly, we have adopted automation everywhere approach to automate all repeatable tasks across the technology delivery classes. This is allowing us to deploy precious human capital for high-value work. Many of our capabilities already run on the modern technology platform. To give you an example, Live Markets, which is a central limit order book with Click-To-Trade live pricing fully built on our modern technology platform. This is a highly innovative product, first of its time in the market. Another example is Mid-X, our newest session-based protocol. This is running entirely in [indiscernible]. Our model technology platform enabled us to bring this product to market quickly and efficiently. This will conclude my highlights on our technology modernization. Thank you very much. I will now hand over to Christine to talk about talent.

Thank you, Madhu. Hi. I'm Christine Nolan, Head of Trading Technologies at MarketAxess. We heard from Nick and from Madhu about our great tech stack and our adoption to agile and which helps us deliver features and products faster to our clients. Now in addition to that, we need great talent and great people to implement our vision, our technology vision, so we can continue to deliver at this pace to our clients. As most of you know, it is hard to hire and to retain great technology talent in this extremely competitive environment, especially developers. So we had to change our recruiting strategy a bit. So first, we have to ask ourselves, what do technologists want? What do they -- what are they looking for in their next employer? They always want to update their tech skills. They want to stay current. Two, they want to have ownership and growth opportunities; and three, of course, a competitive salary. So from a tech perspective, our technology speaks for itself. We are constantly innovating. This keeps our developers current and engaged. We also allocate time for our developers to learn about new technologies that are upcoming or the ones that we're going to be using soon if their team has already not started to use it. Now this is all embedded in our agile process. This basically keeps our employees happy, us investing in our employees, keeps them motivated and keeps them longer at MarketAxess. Now another thing that technologists also want is ownership. They want to make an impact. They want to know what they're building and why. And we've never been a tech shop, where requirements are thrown over the wall to -- from the business side to technology, and we code it away and return it. Instead, we have always been extremely collaborative with the business side. Now with the agile transformation, this has become even more closer. The relationship has grown even more. We work with -- the technologists work with the sales side and the product side, and they work very closely to deliver products that we need for clients. Now the technologist is able to -- because they know what the client wants, they are able to build exactly what the client wants using the right technology. And the client gets exactly the features and the products that they want. It's a win-win for the technologists, the client and, therefore, MarketAxess. Now how do we find all this great talent? Well, we do recruiting from colleges, LinkedIn recruiters, and we have online outlets such as Stack Overflow, The Muse, NYC -- Built In NYC. This is where technologists go to, to basically look at future or potential employers and basically what opportunities that are out there. We also have videos on these -- on some of these sites of our own developers talking about their day-to-day experiences of how -- when they work at MarketAxess of how they deliver products. Now if I was a developer, I would love to get some insight into a real developer and how they work and the technologies that they use. So -- and in addition to this, we also have been ahead of the curve in terms of hiring women. Now this has been something very important to me personally, of course, and to the firm. We have a Women in Tech committee at the group that -- where we do recruiting events specifically for women and we join women forums. So this basically opens up another pool of talent, which are specifically women developers. And lastly, what we've learned from this pandemic is that developers, technologists can be extremely productive in the office or at home. For us -- so therefore, we pivoted to a hybrid work for our workspace, and this really helped us open a whole another pool of talent. So as a result of doing all of this, we are able to continue to hire strong technologists and have low attrition rates. So while we've had success in recruiting and retention, we need to be continuously diligent in bringing in top talent that makes MarketAxess a great place to work. And on that, I will pass it back to Tony for the Q&A session. Thank you.

Thank you, Christine. That concludes our prepared remarks. We're now going to take a 10-minute break and then resume the Q&A session at 10:15. Speak to you shortly. [Break]

Welcome back. We're now going to start the Q&A session. As a reminder, we've invited the sell-side analysts to ask questions. [Operator Instructions] So let's turn to our first question.

Yes. The first question is from Rich Repetto from Piper Sandler.

So thanks, Rick and team, for a really informative morning. So if I had to just sort of summarize in my mind what you want to be focused on was the automation and growth opportunities. And I guess, Rick, the question would be, what do you see -- what growth opportunities do you see most impactful over the next year to 2 years? And I guess, in aggregate, what might you see as the impact of the treasury munis, market data, China sort of opportunities that you highlighted today?

Great. Thanks, Rich. I'm happy to start with that, and I'm sure my colleagues will chime in as well. But one of the historical strengths of MarketAxess is the focus that we have on broadening our product and protocol agenda during periods like this when the core business might be a bit slower than it normally would be with normal volatility in the market. And I'm really pleased with the investment strategy that we have going that will not only increase the total size of the revenue opportunity we are chasing but significantly diversify our business across products, protocols and geographic regions. And within that, to your question, the areas that I'm personally most excited about are the opportunities that we see in municipal bonds. And Rich and Kevin both talked about that in the prepared remarks where this is a fragmented market, much too much manual effort currently, especially in the institutional market. We think the fragmentation leads to a great benefit from Open Trading, and the opportunity is large. So in terms of impact in the near term, we expect the municipal bond business to be a much bigger contributor as we look into '22 and beyond. Similarly, I'm sure you've been following this closely, Rich, there's a lot of regulatory focus on the U.S. treasury market as well and a lot of questions about potential improvements in U.S. treasury market structure. That's really the first time in our history that we've heard so much regulatory and market support for moving toward an all-to-all marketplace in U.S. treasuries. And of course, we think our biggest differentiator and competitive advantage is all-to-all our Open Trading. And we're really excited about pulling the pieces together from our acquisition of LiquidityEdge and the liquidity pool that we have there and an order book style of trading with all of the client to dealer and RFQ functionality and Open Trading that's available from the MarketAxess side. So there's a really ambitious and aggressive agenda on pulling those pieces together in the remainder of this year to really fill that market need that's being expressed very broadly for an all-to-all solution in U.S. treasuries. And it's a focal point of some of Chairman Gensler's early focus on the fixed income market is U.S. treasury market structure. So I would list that very high on my list as well. And then finally, not just China, but local EM is an enormous opportunity that's in very early days of electronification. And our EM business is roughly 70% hard currency volume and revenue today, 30% local markets. Longer term, the local market opportunity is larger. We're already active in 26 different currencies in local markets. As we mentioned in the prepared remarks, we're able to offer Chinese government bonds in hard currencies today. We do expect to be able to offer the local market Chinese government bonds in the second half. Third largest government bond market in the world, clearly taking steps to open up, fits perfectly with what we've done well with global EM and our global EM client network. So China and APAC are also a big area of focus for us that we think could be significantly larger in '22 and beyond. And Rich or Kevin, maybe you have some things that you'd like to add on to that as well.

Yes. Thanks, Rick. Rich, just adding on to what Rick said in the muni market, I've been looking after that one for us for about the last year now. And it's really -- it looks like how Credit Trading was several years back, and we're going to do the same thing in munis as we've done in the credit markets. In terms of bringing broader liquidity, I mean, right now, the majority of the activity is taking place with buy-side firms just sending inquiries directly out to dealers. There's no way to tap in without our system for them to tap into the broader client base in terms of getting broader liquidity and, in particular, for buy-side firms to act as liquidity providers to be able to set up a watch list and actually respond and provide liquidity to someone else. So we think that's going to make a major difference in this market. The straight-through processing is a big deal. Right now, the solutions in munis, they're pretty rough. And a lot of things get done manually. So we want to bring the same type of automation and straight-through processing that we have in the credit markets into the muni markets. And then finally, you're aware of the acquisition we did of MuniBrokers last year. That's going to allow us to better integrate the interdealer market with the client market or basically create one single marketplace. Again, that's been our focus in credit. We want to do that in munis, too. We think that's going to make a really big difference.

Yes. And happy to add on a little bit what's happening in the U.S. rates markets on the platform, too, Rich. And it's been a pretty exciting time for us. And ironically, some of the feedback we hear from investor clients is that the rates market has maybe been underinvested in over the last few years from the trading platform. So we're still integrating our LiquidityEdge acquisition. We feel good about the pool of liquidity takers that's growing there on the investor side. We're really close to getting ready to launch our RFQ platform. That should be the first sort of open trading opportunity for U.S. rates, and the client demand seems really good. And I think it's a chance to really take that market. But if you look at it right now, it's really separated from a client to dealer piece, an interdealer piece and a high frequency piece and combine all those pieces. So a lot of great feedback on that, and we look forward to sort of building that out over the next year or so.

Rick, you stole my follow-up about Chair Gensler because in his prepared remarks for his testimony today, he does mention as part of his priorities fixed income market structure as well as credit market structure. So you already sort of mentioned that. So I guess my follow-up question would be, Rick, it was very helpful the slides that you've put in that talked about your market share and how it is related to volatility, especially with the low volatility we're going through now. Is this -- do you see anything different in this period of low volatility? And could you talk about anything that you might have learned in the past periods that sort of pulled either market -- mainly the market out of it and sort of got the market share back on track and sort of the volumes back on track overall in the market, not just MarketAxess?

Sure. The short answer is when we look back at very low-spread, low-vol environments like the ones I mentioned in the prepared remarks in '14 and '17, this has a lot of similarities. What's really different about this, Rich, is the amount of excess liquidity that's around the fixed income markets globally. And what is different is the level of central bank intervention today in global fixed income markets. And that, of course, has led to $16 trillion in government bonds that are trading at negative yields and, of course, a highly unusual situation where if you look at today's inflation rates, the majority of the high-yield market is trading at negative real yields. So that's extremely different. So what you have is a dynamic right now where the central banks are buying up a lot of the net new issue supply in sovereign debt around the world, the ECB even active in corporate bonds. I think we'll see a sea change when they start to pull back on that quantitative easing and we get the central banks less involved in global fixed income markets. But you have -- because of this low-rate, negative yield environment, you have consistent cash flows coming into credit markets and especially U.S. credit markets, and you have very low volatility. So there's less secondary turnover among institutional investors. They have these new cash flows coming in, and the new issues are very active. So at the margin, this becomes a market focused on dealers and new issues and underwriters. And I think that dynamic is different. And it creates a different dynamic around the secondary trading business. When we come back, and I'm highly confident that credit spreads and credit spread volatility will mean revert as they always do, I think you'll see the differentiation in our liquidity pool through Open Trading coming back, just like it did all of last year when we had higher-than-normal volatility and much higher than industry average growth rates at MarketAxess. That, I think, really showed how unique the liquidity pool is. And of course, what you heard this morning is about all of these new investments. So our goal is that when those market conditions improve, we're going to get the dual benefit of the core business performing better and also the return on all of the investments that we've made on new products and new protocols kicking in together to create really attractive growth rates.

Our next question is from Patrick O'Shaughnessy from Raymond James.

Want to dig into portfolio trading for a second here. To what extent do you see portfolio trading as displacing single bond or list trading? Or do you think it represents incremental market volume?

So I'm happy to start with that. I know Kevin will have some responses, too. But portfolio trading is situational. And we're really pleased with the progress we've made on portfolio trading over the last 3 or 4 months, and I'll share some stats on that. But what we see is mostly new business or business that was conducted through dealers, it's now being conducted in a different way. There is a little bit of evidence, Patrick, that occasionally, it's used for what might have been a better list -- a better offer list in the past. And now given low volatility, low price dispersion, the ease of execution in a basket is higher than it normally would be in a normal volatility environment. But that's, I think, is a minority of the PT volume. You see a lot of asset allocation swaps. You see duration swaps going on. You see tax trades going on. Those do not normally overlap with what we would see and bid and offer list. So there's a little bit of the bid offer list business going through, but majority of it is not. It's important for everyone to remember that we have a very accurate way, we think, of tracking portfolio trading volume on the TRACE tape. And if anyone has questions about how we do that or how to do it, I would encourage you to get in touch with Dave Cresci or Tony to talk about that. It's running around 3.5% or 4% of secondary TRACE volume in the U.S. today and we think significantly lower elsewhere in the world. So while it's growing in its importance, it's really important to keep it in context. And then our investment area has really increased in portfolio trading. We've had several important releases over the last 3 or 4 months, and our Q3 portfolio trade count and trade volume is running at 2.5 to 3x where we were in Q1. And in August alone, we think our portfolio trading on MarketAxess represented about 15% market share. So tremendous growth coming through on the MarketAxess system. And we're also seeing broad-based client and dealer interest in our portfolio trading solutions. So we think we've closed the gap there. And maybe I can just pass it over to Kevin to talk a little bit about the client and dealer trends that we're seeing on MarketAxess in portfolio trading.

Sure. I would agree with that. Thanks, Rick. And Patrick, thanks for joining us today. And look, I think to Rick's point, it's one of the things that we were maybe loosely focused on as it was building, right? When you think about it, with all the hype and everything that's going on in the market, it's still around 3.5% of the market. In August, we had it as low as 3%. But we had a lot of client demand both on the dealer and investor side for MarketAxess to really pay attention and get involved. And the reason for that is that they do most of their electronic credit trading on MarketAxess. So we've been really, really excited since we spent time building this out earlier in the spring. The response has been extremely positive. We think we've closed any technology gaps that we've had along the way. We've got every sort of major dealer participating, providing liquidity. We've had over 40 clients use the platform on a regular basis. And look, we feel really good about the direction of volumes and the use of the MarketAxess platform in portfolio trading. So really feels like there was a little bit of a gap to close. We've closed it really quickly. And as we're looking forward and watching this on a day-to-day basis, it continues to be used more by both the investor and dealer clients. So we feel like we've really got a handle on it, and I think it's a place to watch here at MarketAxess, for sure.

Great. And then shifting gears, thanks for that slide talking about your TAM and market data. As you guys define your data revenue opportunity and some of the use cases there, it would seem that you're going to be pushing more into an area historically dominated by Interactive Data. How do you see MarketAxess' competitive position relative to an IDC or some of the other data solutions that are out there?

Thanks, Patrick. And Chris, do you want to take a start on that question?

Sure. I'm happy to take that, Patrick. And so on data, obviously, we see a very large opportunity in real-time trading data. I think that's our primary focus with our CP+ offerings, both our CP+ for high-grade and high-yield and launching additional CP+ products, particularly in European government bonds, which was a recent launch. So we are highly focused on real-time trading, call it pre-trade price discovery, that assists our clients in trading, assists our dealers in pricing bonds. Certainly, end-of-day price is an area that we continue to look at and end-of-day valuation for portfolios, ETFs and other managed fund portfolios. So we do think there's an opportunity once we continue to grow our real-time data pricing solution and increase our coverage of bonds. That's a critical part of the dynamic. As you see our market share grow across high grade, high yield, but also EM and Europe, we're increasing our overall coverage. And we have a number of new products launching this year that will quickly increase our coverage of product that allows us to enter that opportunity of end-of-day valuation opportunity. The other piece, and I touched on it in our prepared remarks, there's some data inside MarketAxess that's critical to our execution solutions. So while we'll provide real-time pricing data and real-time execution data, there's also data on how to execute a trade that we will add into our automated tools, our automated execution tools and keep resident within MarketAxess and not sell that and commercialize it. So we have really 2 data opportunities: One is growing the real-time and end-of-day opportunity and entering into some of those end-of-day evaluated pricing services; but more importantly, growing our analytics around how to trade intraday, what's the best size, how to trade a CUSIP and what sizes should you trade throughout the day, what is the impact, the expected impact of those trades. So the analytics around the MarketAxess data environment presents us with not only a commercial data opportunity but also a growing execution opportunity.

Next question is from Kyle Voigt from KBW.

So I think you outlined how many firms are using your automation solutions today. It looks like just over 100 clients. I guess can you just go over like what is the biggest pain point in terms of onboarding new buy-side clients to your automation solutions today? Is it really just these small- and medium-sized firms that are left, like don't have the sophistication to join that? And then I guess with the Adaptive Auto-X rollout, do you think this will really like lower the barrier to, what, so almost nothing for firms to join? And I guess if you just go over what are the major barriers that would really remain once that offering is kind of fully up and running.

Thanks for the question, Kyle. And Rich, do you want to kick off on that one? And then Chris, you can follow up.

Sure.

Yes. And Kyle, sorry, on the automation piece...

Rich, I'm happy to jump in.

Do you want to do the automation? Yes.

Yes. Kyle, look, when you're looking at our automation, and it's really the sales cycle around getting a client to adopt automation, there's 2 sales cycles. There's obviously the initial adoption, and then there's the further penetration. It's very attractive to our largest institutional clients because the sheer automation of the tickets that they have to deal with, it does improve dramatically their cost of trading. The first step to adoption is our automated solutions are dependent on our data, so it's related to our last question, as our clients get comfortable with our CP+ data as the benchmark to trade. And they're getting more and more comfortable with that because most of the dealers are pricing based on our CP+ data feed. But as clients get comfortable with that benchmark to trade, the adoption is quite easy. And Auto-X, our initial product, has quite an impressive adoption across our largest clients. Right now, it's -- it makes up, in August, about 6.5% of our total volume. So it had a record month in August. It's about 18.6% of our total trades on MarketAxess. So it's a sizable portion of our market. Our large clients, some of our largest institutional clients, we see at least half of their trade activity is done through automation. So it's a huge workflow efficiency, and that's what's so attractive about it. If you look at some of the new products that we're offering, Auto-Responder is one of the more difficult products to get our clients to adopt because it's really asking them to put -- place limit orders in the market and have those limit orders be waiting for another RFQ to be launched. What's great is we now have data that will give you a predictive -- a prediction on which CUSIP and which ISIN is likely to get an RFQ launched during the day. Adaptive Auto-X is a newer solution, which allows a client to not only respond throughout the day to another client or another dealer's Auto-X -- sorry, RFQ, but to also then automatically execute through an Auto-X solution. So it's a -- Adaptive Auto-X is a way to combine a number of different automated solutions to make it easier for clients to adopt both Auto-Responder and Auto-X. As we see growth around automation, we talked to you in the prepared remarks around a number of our different protocols. Live Markets, Mid-X, we're seeing growth in all of those protocols. Our Adaptive Auto-X will leverage a client's interaction with those protocols. So not only do you get RFQ solutions in Adaptive Auto-X, we can actually expand the interactions across all the different protocols. So there's a suite of strategies that we plan on rolling out through Adaptive Auto-X.

Chris, can I just add a couple of points to that?

Yes.

So a lot of stats, but I -- there's really not a lot of friction to getting people on to automation, I think, as Chris has pointed. Right now, IG is roughly 23% of that inquiry. It is used an automation tool. Just a fun stat, we looked in the last quarter, it saved our clients roughly 400,000 actions. So think about that as clicks, which we then kind of translated into about 3,600 hours of time savings. So -- and that's just going to keep growing. The other thing I want to mention around data and how important it is, incredibly important for internal in our road map, 90% of clients using automation use CP+, our price, as a benchmark, traded a basis point off of it or our price, so -- some range off of our CP+ price. So incredibly valuable. Yes, it's going to become more commercial as well, but really driving a lot of our volume. And our road map going forward relies quite a bit on automation and our unique data assets.

Nick, maybe I can add, too. Kyle, I think it's funny, what we hear very, very clearly from all of our global investor clients are the need for 3 things. And it's liquidity, and we addressed that with Open Trading and our data with CP+ and other products that we've got. And that's for pre- and post-trade decision-making and looking at how the process works. And then it's automation, the ability to do things faster with less operational risk. And we think all of these 3 things tie together so well with all of our offerings. If you think about the additional liquidity we were giving to customers for Open Trading, our data continues to be market leading. And people are excited about it. And then the automation, I think, to your question, it's just going to continue to grow the better the liquidity and the data they get on the platform. So it's definitely first and foremost with customers when we're speaking with them around the globe.

Got it. And my follow-up is on portfolio trading. I think Rich mentioned that you plan to integrate Open Trading with portfolio trading. Just wondering if we can get a little bit more details there. I know there's only a handful of dealers today that have this kind of sophistication to respond to a lot of these portfolio trades electronically. So when you say integrating that with portfolio trading, I imagine it's not just allowing the buy side to interact. But is it allowing some sort of functionality when you break up the portfolio trade or try to send individual bonds out on Open Trading? So any more color there and then anything on when you'd expect that kind of new iteration of portfolio trading to launch.

Sure. Yes, Kyle. So when I mentioned that, as you know, we definitely believe in open competition. But that said, there are benefits to portfolio trades and efficiency to that workflow where it makes sense for the clients. But we said, wouldn't be great if you can combine the 2 and get the benefits of the PT workflow with the greater competition that comes from Open Trading? So the first aspect of that is pretty straightforward, which is just allowing an anonymous provider to be -- respond to the entire portfolio. So we have firms out there that can be very competitive in this market that don't necessarily have a relationship with those clients to be able to see it directly, and that's relatively straightforward. But the more interesting one is when -- ultimately have MarketAxess be the aggregator of the liquidity from the Open Trading pool and be able to formulate a response to a PT and then ultimately -- and we would expect probably pretty often have the most competitive price for the overall portfolio. That's definitely a little trickier to pull together, and there's often some tail risk with these portfolios that need to be dealt with. But we think that will ultimately lead to better results for investors to be able to introduce the competitive element to the portfolio trading workflow. It's something we're -- it's kind of on the whiteboard now. I'd expect sometime next year to be able to bring out at least the first part of this, which is the single responder, single anonymous responder to a portfolio trade with MarketAxess being the intermediary between the parties.

And Kyle, maybe I can add just quick as well. I mean, there's demand on both the investor and dealer side because if you think about it, leveraging all of that liquidity through Open Trading has been a really big deal, particularly as the market shifts away from the low volatility environment we're in now. If you think about what's happened, there's a whole level of think about regional broker-dealers that have been a little bit disintermediated from the portfolio trading process, anxious to get involved. Large investors, including systematic funds, et cetera, looking to get involved. So the demand is running high for a more robust portfolio trading solution out there right now. So we're pretty focused on it.

And Kyle, just one other added point. The dealer side of portfolio trading has grown and evolved over the last several quarters, too. So what was a market dominated by 4 or 5 dealers now has at least 10 or 12 large dealers involved in making markets. All 10 -- all of those are onboarded on MarketAxess and active today. So we have traded portfolios with more than 10 dealers. And the 40-plus investors that are active on MarketAxess currently represent, we believe, the vast majority of the PT volume because that -- the buy-side activity is pretty concentrated, too. So we're in a really good shape in terms of onboarding on both the dealer and investor side for future growth.

The next question is from Dan Fannon from Jefferies.

Another question on data. Just curious about the time period to monetize the data versus kind of create or trying to incentivize more volume on the platform. So as you think about those revenue opportunities, do you think you can grow and address the data opportunity while still obviously trying to grow the transaction side and increase electronification? Or is there a level of electronification that needs to be reached before you can really address and monetize the data?

And Chris, why don't you start on that one?

Yes. Thanks, Dan. Really, when it comes to market data, we set out probably 2 years ago to grow what we call double-digit growth rates. So it's a really -- it's a balancing act, to your point. We want to grow volume on the platform and incent our clients to use the platform. Data is an important component, but we also want to commercialize the data that we're building. What's great about the growth rates that we're experiencing is we're doing both. We're growing not only clients' use on the platform, but they're enriching our data, which is making it more valuable. So with every piece of market share that we grow, that data becomes more enriched given the activity levels on our platform. Our CP+ data feed right now is definitely a premier product in the industry, in the corporate credit space. Really, when you look at the dealers trading on our platform, they're really relying on that CP+ data feed. So it's an important part of our ecosystem. But if you look at our -- even our growth rates this year, in Q2, we grew our market data pie by just about 17%, 16.8% over Q2 '20. So those double-digit growth rates is really what we're targeting. We also see new products being products that we can commercialize. I mentioned earlier a broadening our cover of product. We plan on launching a product this -- before the end of the year that will broaden our current CP+ bond coverage, which is really targeted for commercialization. It's really targeting folks that need values across a broader area. Our CP+ right now is certainly a premier product to trade the more liquid end of the bond market, but this new product will be more designed for commercial.

And then just as a follow-up, just in overall spending, and you guys obviously addressed CapEx in some of the other areas. But if we just think about kind of the number of products, the new initiatives, the level of investment and the opportunity, does the pace of kind of expense growth as we think about it maybe not this year but on a multiyear basis, is it accelerating? Or should we think about it being maintained at this level? Or just kind of trying to get a multiyear view of kind of how you're thinking about internal investment and expenses.

Chris Gerosa, do you want to start on that one?

Yes. Rick, I'll take that one. Thank you, Dan. When we think about our long-term expense growth, we do need to recognize that for 2021, our operating expenses included some new expense activity associated with Reg Reporting Hub and MuniBrokers. When you carve those out, I think our long-term expense growth rate is going to be in the low teens to around 12%, 11%. And from a CapEx perspective, Dan, I don't think the issue is that we don't have the capital to invest. It's prioritizing the trading technology deliverables to our clients, and we have a long roster of investments that we need to make. And again, prioritizing what makes sense for our clients and what makes sense for us, that's what we're challenged with today.

So just -- I'm sorry, just a follow-up then. So is the level of spend, do you think going forward, picking up? Or do you think that what you're seeing this year is kind of what we should anticipate on a multiyear basis?

Yes. I would say that we've typically seen our CapEx spend increase 5% to 10% year-over-year. And in the near term, we would expect a similar increase from our CapEx expenditures going forward.

And I think overall, Dan, the answer is similar. We're certainly not going to slow down investment. We see a very large and accelerating global growth opportunity. There are very few competitors in this space. We want to be involved in as many markets and as many protocols with as many client segments as we possibly can be to take advantage of this tremendous opportunity. So you should expect that we're going to continue to invest very heavily, and we have a great benefit because the business is a high-margin business. It generates a lot of cash flow, and we're pouring that back into new products and protocols.

Next question is from Michael Cyprys from Morgan Stanley.

Just a question around trading protocol mix. I understand you expect RFQ to remain the common way of trading in the future, but we are seeing an uptick in other protocols. So I guess what gives you confidence there? How do you expect the shares of protocols to evolve over time? And maybe you could talk a little bit about what percent of the market and MarketAxess today is RFQ. And where do you see that going over the next 5 to 10 years for MarketAxess and for the industry?

Rich, do you want to take a first crack at that one?

Yes. Sure. Thanks, Michael. And yes, I can address that question. So yes, I mentioned in the remarks earlier, I mean, the RFQ is definitely the most prevalent. And frankly, it's where we get a majority of our activity right now. It's what's most natural for our investor clients. It's the way they've always worked. It's a replication of what happens on the phone, although, obviously, a lot more efficient and taking advantage of the open market. But we are combining in now other protocols and one, in particular, like matching sessions. We call ours Mid-X. We've had great adoption since the launch of that in the fourth quarter of last year in the eurobond market. We're bringing that over to the States now in the fourth quarter coming up for investment-grade and high yield and then ultimately for emerging markets, too. So we believe that has a place and is going to definitely capture some material activity, remembering, though, it's once a day. So it's not the perfect fit for every kind of trade. The typical buy-side firm, they have needs throughout the day. You think about RFQ, it's more liquidity on demand. When I need to trade something right now, and I want to scour the market and I'll go out and put out that inquiry, the cost of doing so is paying the bid-ask spread. And our system does a great job of getting the most competitive level. But at the end of the day, it's still lifting an offer or hitting a bid. And that's where these other protocols come in. When a trader has more flexibility, they're able to do something like, let's say, trade in that session and get mid-market or participate in an order book and lead with a price, leaving a resting order in the market and being able to at least try to execute where they want to get that trade done. So we believe that, that mix of protocols will -- ultimately, it's going to increase activity overall in the market. We'll see more turnover. It is not, by any means, going to replace RFQ. We really think that, that's still the majority way that people will trade. But these additional ways are going to allow us to capture more activity in the market. That's probably happening in voice now, where it doesn't really have a way to happen. We'll be able to move that over electronically.

And Michael, clearly, our philosophy is to offer a full menu of protocols and let the client choose based on their own liquidity needs. So we're really pleased that we're well positioned beyond RFQ with the growth that we've seen in Mid-X and euros that we will be bringing over, as Rich mentioned, the availability of a robust portfolio trading solution now on MarketAxess as well as an order book for both treasuries and credit. So we think we're in a great place. And the sessions-based trading in the early days has been mostly relevant in the dealer-to-dealer community. This is an easy way for dealers to clean up stale inventory items through matching sessions. The institutional client business is still heavily dominated by RFQ. So this is the liquidity on demand that Rich talked about and investors being used to being able to move bonds when they want to and not necessarily wait for sessions. We'll see if that changes, but the bulk of investors still prefer RFQ, albeit with greater and greater levels of automation. So there's less manual effort on their part. And we're able to reduce their trading time and trading costs, both with lower transaction costs and lower trading time and straight-through processing.

Great. And just maybe as a follow-up question on Live Markets, I was hoping maybe you could elaborate there a bit on some of the traction you're seeing. Any particular numbers you could share on volume, market share growth on the newer Live Markets protocol that you have?

Yes. Happy to do so. And look, we'll acknowledge it's early days on that, although the growth rate has been nice, and it's pretty significant quarter-on-quarter. We announced a second streaming liquidity provider from Barclays joining Goldman Sachs. We have 3 other firms, not named, that are active in terms of posting Live Markets on their resting orders, and it's active every day. So we're very optimistic about where it's going. We are seeing larger trade size taking place in Live Markets, 4x that which happens in RFQ. And it's kind of -- was our intention. It's meant to be able to do the more active bonds and in larger size very quickly. And we're pleased to see in the early days that, that's what's happening. But it's a big behavior shift, and it's going to take some time. And we'll keep investing in it and expanding upon it. We'll be launching our high-yield capabilities later in the fourth quarter. We've been piloting that through the summer and getting good interest and traction there. So it's a long-term investment for us. And again, we think it's going to be a great addition to the liquidity suite that we are offering to both clients and dealers.

Next question is from Christopher Allen from Compass Point.

Wanted to ask about the international revenue contribution. You noted the potential to get there to 50% of revenues over time. Wondering if you could help us think about the time frame to get there and where you see the best opportunities for expansion, whether it's increased share, penetrating new markets overseas. Any color there would be helpful.

Yes. It's a long-term investment area. We mentioned the 5-year time frame on almost doubling international revenues as a percentage of our total. And I think over the next 5 to 7 years, we can move closer and closer to that 50-50 revenue split, which would reflect, I think, good balance with the opportunity in global fixed income. It will come from everything we've talked about today, Chris. It will come from increased market share in the products that are most important to the clients in regions outside of the U.S., so eurobonds, but importantly, emerging markets. It will be -- it will come from new protocols being utilized. There's a lot of client onboarding still in front of us in APAC. This is a newer region. The level of electronification in the region is low today but growing very quickly. We're adding sales resources and committing more technology to the region and hope to add more local markets to the platform. We think that's going to be a really attractive growth area for us for the next 5 to 7 years. And Latin America was slow to get going, but we're now getting the local market participants onboard and trading more actively in big local markets like Mexico and Brazil. So it's a full slate. And as we've said before, EM is not just one market for us. It's close to 30 markets and growing. So it is a massive long-term opportunity for us and will be a key part of growing that international percentage of our overall revenue.

Just a follow-up from earlier. Just on the muni opportunity, I think munis leveraged loans, you talked about behavioral changes, starting to see signals there. Are you still seeing it on the dealer side or is that more on the buy side right now? I know that the dealer desks have been a big barrier based on electronification over time. So I'm wondering like where is that behavior changing and kind of maybe the pace of change.

Rich, why don't you go ahead on that one?

Yes. No, happy to. And thanks, Chris. I mean, the -- there's no question, the muni market moves at a different pace than the rest of the bond market. And there's still work to go in terms of onboarding and things with the dealers. But we're seeing growth in the activity coming from clients. We see a lot of activity coming from dealers as well acting as liquidity providers. And as a reminder, we offer the same capabilities to sell-side traders that we do to buy-side firms. And we do see really nice adoption in terms of -- that we call that dealer RFQ activity right now, and quite a bit of that is going on. And those firms get liquidity from other dealers as well as from buy-side firms responding, acting as liquidity providers to The Street. So that's been a nice growth area for us in munis as well as the other areas. And then again, going back to the MuniBrokers acquisition, which is an interdealer platform, it is our intention ultimately to integrate that into our system, bringing together the interdealer-broker market together with the overall muni bond market so that buy-side firms can interact. And we believe that integration of those 2 kind of what's now a bifurcated market is going to lead to more electronic activity on our platform.

And loans, Rich, do you want to make a quick comment there?

Yes, sure. And loans, so we've run our loan business now for several years. It leverages off of our high-yield business. And a lot of the same traders are involved. That is a traditional -- its request for quote, and it's direct business. The Open Trading that we have available in loans, we are not able to stand in the middle of loan transactions today. So while we have an open trading capability, buy-side firm, if they see an opportunity that they'd like to respond to, they have to interact and send that response through another dealer. So it is a little bit of a limiting factor in how the all-to-all can work in the loan market. But it's definitely another market ripe for further electronification. As you know, it's not a very efficient market and particularly on the settlement side of it, where you've got 20-day settlement that needs to take place. The information availability, there's no trace in the loan market. So we feel there's a lot of opportunity to take what we've done again in the regular bond markets on the credit side and bring those features to the loan market. So again, that's introducing wider competition allowing people to go to as many dealers as they want to on a loan inquiry, and ultimately building upon the Open Trading capability so that buy-side firms can trade with other buy-side firms having a bank intermediary to ultimately settle that trade. So again, we think it's an area of great opportunity for us now, and a lot of runway. It's not a market that has gone much electronic, yet.

Okay. Our next question is from Brian Bedell with Deutsche Bank. Brian, I'm not sure if you're having issues with your mic, but we can't hear you right now. Okay. Moving on, our next question is from Alexander Blostein from Goldman Sachs.

I appreciate all the details here. I guess maybe another follow-up around portfolio trading. I guess when you survey your clients, what do you think is the percentage of the sort of overall trading that they see migrating over to a portfolio trading protocol over time? So I know right now, it's pretty small, you said it's around 3%. But if you look out over the next 3 years, just curious to what you hear on the ground from customers? And as you look about sort of MarketAxess' market share within that, I think you said it's about 15% in August or in the third quarter. Is the goal to maintain that? Do you think you have an opportunity to grow that market share even further? And maybe you can comment on pricing as well, kind of portfolio trading on MarketAxess and the capture rates on that business compared to sort of the blended capture rates?

Sure. Let me start with that, Alex. And First of all, client views vary greatly on the pros and cons of portfolio trading today. And that's why I think you see 40 or 50 large investors that are dominating most of the portfolio trading activity. they constantly have to be thinking about, are they able to demonstrate best execution through a portfolio trade that goes to 1 or 2 or 3 dealers relative to what they might accomplish through a bid and offer list that goes out to the entire market. So there's a lot of trial and error going on with investors today to see what the benefits are, what the quality of execution is, what the certainty of execution is and compare that to what they've been doing on MarketAxess for 20 years with a wide-open bid and offer list. And so I think the jury is still out. And I think if you survey 30 clients, you get 30 very different answers on where it goes. But I'd tell you what the people that are most involved, I think they can see 8%, 10%, maybe 12% of secondary trading going that way over time, but they don't expect it to be significantly higher than that. So that's where we are. We're really pleased to be involved in competing because it's an important protocol for our clients. And with respect to where we are, listen, we've grown very quickly over the last 6 months, and it's the investment in technology, combined with the muscle memory where clients trade lists on our platform all day long. So they've got the choice of trading a bid or offer list or a portfolio trade right here. There's a little moat in portfolio trading because, one, we have all the same dealers onboarded as the other platforms do. Two, it's a limited number of clients that we all have on boarded that are trading portfolio. It's all client to dealer today. And it's largely still complemented with spreadsheets that are being shared between dealers and clients that are processed, whether that's on MarketAxess or one of the other systems. So there's very little barrier to entry or moat around portfolio trading, and we think we're going to be a much larger percentage than where we are today because this is where clients are doing the rest of their credit trading and they have the great option of do we trade a list or do we trade a portfolio, but we can do both really well on the same platform. So we would expect our share of that overall volume to continue to grow in the quarters ahead.

Got it. Great. And my follow-up question is around maybe market structure broadly, and maybe some technology-related question. But how do you think about the evolution sort of the front office technology on the buy side over time? So thinking about sort of kind of varies maybe EMS platforms sort of great that perhaps could sort of simplify the execution process within credit markets. But then at the same time, as they aggregated maybe reduce some of the stickiness of some of the trading platforms. So is that a real threat? Is it an opportunity? Kind of how do you guys think about the evolution of that piece of the funnel, so to speak?

Chris, do you want to start with that one?

Yes. I've seen lots of markets and a lot of aggregators across lots of markets. There's a very unique thing about the bond market, and that is the sources of liquidity across the diverse product of the bond market, you can't aggregate 5 dealers and solve the market. You need 50 dealers depending on what your portfolio looks like. So we look at the market structure and we see the network effect and the value of that network effect aggregating liquidity, and that's what MarketAxess is really doing. Open Trading is a massive part of that liquidity solution that we've built into. If you look at all of our products, Open Trading is a very valuable source of liquidity. So it's that liquidity aggregation that happens on MarketAxess, it's hard to replicate that through an EMS solution as market structure starts to evolve in both the credit market and overall bond market, globally. We do think that the biggest opportunity for us, and we -- and Rich kind of mentioned this in some of the protocols is today, the bond market and the large institutions around the globe are really requesting price. So they regularly request price, which, by definition, has clients crossing spread. The bond market has one of the largest spreads across all asset classes. So it's a sizable expense to the overall execution. As we form new protocols and new design new market automation tools, it's all focused on allowing clients to join spread, to actually make spread, to add a limit order into the market, to price a bond for the market to trade with them. So it's all designed to save large dollars in their execution, their entry point or their exit point for their portfolio. And so those market models are just a very different design. You need a large network of clients to allow -- clients to avoid that very expensive spread crossing. So as the market model evolves in bonds, it's going to allow clients to have better automated tools, more sophisticated data to solve those -- direct those tools on how to trade the market. And then really that network effect of liquidity, both from, obviously, the dealer market globally, but also the institutional market will be part of the liquidity source in the future of the bond market.

Rick and team, I've been fielding some questions from investors. And a number of the questions we've addressed in the first 50-odd minutes here. But there's 2 questions I did want to get to, one is more competitive related. One is more client segment related. So let me just run with those 2 questions. So question really more competitive-related competitors talk about their all-to-all solutions, how are the MarketAxess all-to-all or Open Trading solutions differentiated from competitors claiming they're developing similar solutions.

Well, I mean I'm happy to start on that, Rich, you can follow on. But look, one of the great benefits of the space that we're in is that it takes a long time to build the right client and dealer network and invest in the right trading technology to reach the position that we are in. And there are 2 others that have a similar position in the fixed income markets around the world, and that's Bloomberg and Tradeweb. So they have this massive opportunity in front of us with just 3 companies that are really out in front that have been investing in this for more than 20 years is a great starting point. And we're looking forward to taking advantage of more of that in the years ahead. When it comes to Open Trading, you've heard us say in many different ways today that we think what we do is totally different than the other competitors. Bloomberg has great benefits in desktop space around the world, and operates in a lot of fixed income markets. But to our knowledge, it's entirely a client-to-dealer trading business today. So they haven't really started down the path of going toward all-to-all as far as we are aware. And Tradeweb is doing it a little bit differently from what we hear from dealers and investors where it's not 1 single liquidity pool the way that we run it here where dealer investor orders, all land in the same pool, and all of our nearly 2,000 clients have access to the same orders in the same pool. Their fastest-growing credit business is dealer sweeps. The information is publicly available on the TRACE tape for anybody that wants to follow it, but we're convinced that, that D2D business conducted in dealer web is the fastest-growing revenue area for Tradeweb. And credit -- hats off to them. They've done a great job with it. They have a very big dealer-to-dealer business, both electronic and voice, and they've leveraged that with dealer sweeps. But what we don't really understand is what the true definition of all trade is. Because it would appear that dealer sweeps that show up on TRACE's, 100% D2D also show up in all trade. And I think the definition is where Tradeweb stands in the middle of the trade, that's different than our definition of Open Trading, where everybody is in the same pool. All the orders are in the same pool, dealers initiate orders, clients initiate orders, it's all in 1 pool. So I think Tradeweb is going about it differently with a segmented approach between Tradeweb retail, Dealerweb and Tradeweb. We do not have the same philosophy. We are all 1 pool in MarketAxess on Open Trading, and I think that's the big differentiator. One final point is that Trumid really has 2 different businesses. One is a client -- a pure client-to-dealer streaming business that's dealer attributed. The other is a matching session called Swarms. Much earlier stage company, but the Swarms are more of an all-to-all environment, but the majority of the volume growth based on the publicly available TRACE information that we can observe seems to be coming from the single dealer client-to-dealer streaming business. So there are 2 different protocols there. One, I would say, is more Open Trading oriented. The other is purely a client-to-dealer protocol.

Yes. I'll just add on a little bit to that, Rick. It's definitely the case. We think Open Trading first year. Everything about the way we're building this out and again the equal access for both clients and dealers. It's a single open marketplace for everyone to operate in. And then when it comes to the functionality and the protocols, it leverages all of the same capabilities. So it's the same order flow, it's the same straight-through processing, the alerting and watch list and alerting mechanism, for example, when you set an alert that you want to be notified of a certain bond, it tells you across the protocols. So that you can engage in any of those ways. Certainly, the global network that we have, the 1,800 clients, not just that they're on our platform, but they are onboarded to our broker-dealer and able to trade. So we've basically taken all of the friction out of cross-border trading, and we have hundreds of millions of dollars worth of trades going on every day between Europe and Asia and the U.S. and Latin America, all around the world, everywhere we have users, anyone can trade with anyone else, not having to worry about the relationship or how they're connected. And then the final point I'll make is about definitely it takes more than just the platform and the protocols to run an all-to-all trading business. And we've been building up our broker dealer for many years now to support this business in a really efficient way. So we have a trading desk. We've got 15 people located in New York, London, Hong Kong that support that activity very actively. So it's a very high degree of support when anyone has a problem with the trade, when they need to work up a trade to a larger size or any of the issues that might come up in trading, we have an expert team that deals with that. And then last year, we made the switch to central -- or self-clearing, I should say. And it is our intention to be the most efficient counterparty for any client of ours in the business, when it comes to how the information comes in, dealing with allocations, making things as seamless and electronic as possible so that it's really efficient to trade with us. And again, we think those are all the key differentiating factors for our all-to-all business.

So before circling back to the sell side, let me just get this next investor question in on client segments. And we talked about expanding client segments. Can you talk specific -- about specific initiatives or how you're gaining traction with dealers, ETF market makers, private banks, et cetera?

Kevin, maybe you want to take the first cut at that?

Yes, happy to take the first crack at that. I think I spoke a little bit about it in the remarks earlier. And one of the things that we've seen over the last 5 years or so is just a real change in terms of who's using the platform and how they're using the platform. And it really dovetails into a lot about what Rich was saying about Open Trading. Investors and dealers alike have the ability to take or provide liquidity, however they want them over the platform. And that's just been a really big deal. But if you think about the traditional start of the firm, it was this real set base of long-only insurance companies, long-only investment managers, taking liquidity from large banks. But what we've seen over the last 3 years, in particular, hedge funds, ETF market makers, private banks on the platform, systematic investors coming into the market. And just talking a little bit about some of those, probably the biggest change that we've seen is the large banks taking liquidity over the platform when the traditional way of using the platform was providing liquidity. We've seen that business grow upwards of 50-plus percent for the last few years. We think there's an even bigger opportunity there. They're finding it a much more efficient and effective way to get liquidity and get better execution. The other thing that's happening is, traditionally, that group may have gotten just prices in the interdealer market from other banks. Now they're seeing routinely, prices come in from end investors, and it makes a really big difference in cost savings for how they're using the platform. Private banks, particularly in Europe and Asia, continue to be a big part of the system. Our Access IQ offering is really a unique piece of technology that takes their specific workflow and gives them the ability to leverage all the liquidity on the platform with how it best fits for their business. The other thing we talked a little bit about, too, is seeing systematic folks that were not involved in fixed income before coming into the fixed income markets. That's a huge opportunity when you think about investors coming into the fixed income, and the credit markets in particular. And that's our liquidity pool makes that possible. Our data that hasn't been involved in the market before makes that possible. And automation is really just bringing in all these new sets of customers. So we feel really good about sort of the diversification. We've added almost 300 new customers to the platform this year. And the market has just really changed. If you think about what's happened over the last, call it, 5 years with Open Trading, gone is the traditional way of doing things. Now it's any global investor, any point trading with anybody else anywhere on the planet, the ability to provide to take liquidity. So it's been pretty amazing to watch the evolution of the client footprint. It's really become considerably more diverse. I don't know if, Rick, do you want to add anything?

Yes. No, thanks, Kevin. And Chris, you might talk about the growing success that we're having with hedge funds as well and why we view that as an important add to the client segments that are active on MarketAxess.

Yes. And Kevin mentioned a little bit of this, the growth in the hedge fund space, particularly the systematic hedge fund space is largely avoided the credit market, partly because of some of their strategies and how they deploy them. They're now entering this market, and we've had a lot of Kevin's team has a very focused approach to the systematic hedge funds. They do bring velocity to the market, something that we love here at MarketAxess. They're highly dependent on data. So their entry is really starts with acquisition of data and understanding the data and how the data flows and then turns into both utilizing our automation tools or just utilizing Open Trading and that liquidity that's in Open Trading. They do like to trade both passive and aggressive. So they will cross the spread, but they also choose to respond to other RFQs. So it's an important part of their ecosystem and their trading strategies to be passive and avoid that spread crossing. So that entry, I think, does change the market dynamic for years to come. And certainly, there's a long list of systematic funds that haven't entered the market are just now getting accustomed to the market.

Great. And Tony, any others rolling in or...

Yes. Our final question is from Brian Bedell of Deutsche Bank. Okay, I see Brian is still having mic trouble.

Can you hear me now?

There you are.

Yes.

I had the wrong headphones in. Yes. Maybe just to wrap it all up. Most of my questions have been asked about the specific segments and protocols, but maybe just wrapping up thinking about even just the U.S. high-grade and high-yield markets, where you see eventual electronic penetration going and, say, 5-plus years or even longer-term, 10 years? And what are the major friction points you think that you have to overcome or may actually remain friction points in the market that would be a hurdle for getting higher penetration over time in those markets?

Yes. Thanks, Brian. I mentioned in my prepared remarks earlier today that our belief is that this will follow the path of other asset classes towards 75% electronification over time. And a lot of the groundwork has been laid to have networks with critical mass, lots of protocols, new sources of liquidity emerging. And the automation tools are extremely valuable in terms of reducing trading costs. So you get this benefit of lower transaction costs and reducing trading and operational costs. I think dealers and investors both win with greater levels of electronification. So I think we're on our path in credit towards that 75% area in terms of market penetration. And Chris, you might comment. But I think in terms of your question about roadblocks and obstacles. We haven't seen much behavioral change yet in the block trading business. But we also have seen this movie before in other asset classes. And I think automation is going to have a role in providing new solutions for block trading as well. But Chris, maybe you can expand a little bit about ways that we're thinking about the block trading area and how we think we can increase electronic penetration in that part of the business.

Sure, Rick. And I do think, Brian, that there are points in the electronic conversion, that evolutionary change. And I might be a little bit more aggressive than Rick's 75%. But if there's a point where you hit -- I call it electronic capitulation, where you hit around 50%, and there's a massive accelerant and you move much quicker towards electronification. We haven't reached that point, obviously. But there is a point where the market sees their competitors already converted, and they now are at a competitive disadvantage. And so they do turn to platforms like MarketAxess to help outsource their adoption of electronic trading. I do think that will come in this market somewhere around that 50%, where the first [ 50 ] is slow, the next [ 20 ] to [ 40 ] is even faster because dealers are capitulating and clients are capitulating. One of the things on blocks that we see and certainly other asset classes we've seen it in futures, we're now seeing it in it's really time slicing of blocks that happen. As the market further electronifies trade sizes will start to get smaller and smaller, and large blocks start to get sliced into smaller-size trades. So there is a high likelihood that those block-sized executions that we see are going to start making their way. They can make their way into -- we're seeing our size in Auto-X grow because that's a no-touch or a low-touch solution. But more importantly, as you start to create strategies around taking a block and starting to put it into smaller sized orders and put it into the market without any market impact that's quite attractive to the buy side. And we've seen that adoption in other asset classes. And I would predict that same outcome here that wheel grow into the block market, but the block market will actually become a much smaller size of the overall market.

And then maybe just a follow-on to that. The other markets as well from muni market, Eurobond and EM perspective, do you see that following the same trajectory as high grade and high yield in the U.S. And how much longer do you think [indiscernible]?

Yes. Yes. I do. I think the time frames are different. Eurobonds, I think, are at least as electronic as U.S. high-grade today and by some accounts, even higher. So they're on sort of the same time table. We gave some estimates of electronification in munis and EM in the prepared remarks. So they are at much earlier stages. So it may take us longer to get to that kind of 75% target. But that's the exciting part is that we're in early stages of so many of these significant bond markets around the world in terms of the level of electronification. And we've had great growth over the last 10 years in some of those early-stage markets, and we have a lot more to work on still in front of us today.

Rick, I think we're going to wrap it up here. We're probably in a bit of overtime right now. So it is [indiscernible] for your comments.

All right, great. Well, thanks so much, everyone, for joining us for our Investor Day this morning. We appreciate your time and interest and attention. As always, if you have follow-up questions, Tony and Dave or any of us are available to you to answer those questions. And if not, we look forward to speaking to you in the third quarter earnings call next month. But thanks again for joining us today.