Tradeweb Markets Inc. (TW) Earnings Call Transcript & Summary

Okay, as I was just told, we are now getting to the good stuff according to Mr. Hult. So -- but we do -- we have set this up in segments, and we certainly have an enjoyable time as we get to the fixed income electronic platform. So it's my pleasure to introduce Billy Hult, the CEO of Tradeweb. Billy took over this year, but he is by no means -- he's a pioneer of fixed income electronic -- was it 23 something years?

Too long.

But when we talk about where the theme of the conference is a celebration of electronic trading, this is an asset class that's still converting. It still has a ways -- it still has promise and potential in my mind. So anyway, thank you, Billy, for participating. And he will participate in the panel as well.

So first question. Maybe if you just give a backdrop, we started off the year with certainly higher rates, less Fed -- prospectively less Fed intervention. Fixed income being a true asset class again. So now the bank crisis might have had some impact. But I guess for you, Bill, if you can just give -- Billy give us a view of the outlook on fixed income trading?

Yes, for sure, thanks for having me, Rich, here. I don't think I'm the only one that's wondering if that fire is real, because it's about 100 degrees, especially like in the back of that room. Yes, you're spot on. We started the year -- and I was using the expression kind of natural cadence of the market. And we sometimes underestimate really how unprecedented 2022 really was. And so as we kind of hit January and February, I was very conscious of kind of using the expression that it felt like the market was back into a very natural cadence. That all got kind of thrown out the window by the sort of first week, second week in March. And I remember very distinctly when I saw you in Florida, we were going through unprecedented -- when we were working as hard as we were in Florida, we were really at a very unprecedented move in the marketplace when you think about what happened in the Treasury markets and what was happening in the credit markets. I think the reality is, from my perspective, Tradeweb's business performed exceptionally well at that moment in time, specifically speaking. We set record upon record upon record in our rates markets, probably in a way that everyone here would have expected us to. I think what happened on the other side of that is pretty well known, but I think very interesting for everyone, which is I think the market shifted into much more of a risk-off marketplace as a consequence of what happened in March. I think April always has a little bit of, what I would describe to everyone as, a little bit of an idiosyncratic kind of tone to it. The good news, I would say, is that May absolutely was back into a little bit more of a risk-on moment in time in the marketplace. Our business have done exceptionally well. And I'm sort of really looking forward to kind of getting back to this moment where we talk about the sort of like the new equilibrium of where we're at in the marketplace. And from my perspective as CEO of Tradeweb, super excited about where we're positioned and kind of where the trends on our businesses are going across the board. We'll talk more about this in this half hour, and I'm sure we'll come up a little bit in the panel. I think there's something about the sort of one-stop shopping around what Tradeweb offers its client base. If you really think about the fact that we're in as successful and as we are in, in the rates business, the absolute success that we've had in credit picking up market share, our commitment to be in the ETF space. And while we've done all of those things, we've also built out a full throttled market structure picture as we've developed a retail business and a wholesale professional business. That's a lot. And from my perspective, what that does is it gives us a lot of optionality as these markets continue to develop. So a very exciting time in our world.

And you highlight, Billy, the multi assets, different product and the different channels of the retail wholesale institution. But I purposely, as a -- you mentioned a new CEO, I purposely went out of order and questioned you.

Throw me for curve. Thank you. I appreciate it. I'm going to miss you by the way.

I will miss you, too. So -- but we do have a question about the new CEO role. So you experienced and done the job and spoke at conferences before taking over at the beginning of this year. But what new things -- what roles have you -- so given to Tom Pluta, for the new CEO? And what things have you given off and delegated and what things do you -- do spend more of your time on as now the leader deserving these?

Yes, I think that's a great -- it's a great question. I'll answer the question, I think, super bluntly, which I know a lot of people here know me, and I'll answer it super bluntly. I got great advice early on, which was as you become CEO of a company, be yourself. And so I decided very clearly that I was going to take that advice and be myself. I wasn't going to go into a phone booth and come out a different person. And so what that meant from my perspective, and I'll say this in a very straightforward way, was an exceptionally strong commitment to being external. And that might be how we interact with investors that might be how I interact with analysts that might also be, for sure, 100%, how I interact with the biggest and most important clients of the company. And I was going to set a tone for the company in terms of how I operated that I made sure everyone realized was a priority. We're in the service business. We're a financial technology company, but we live and breathe in the service business, so I wanted to make sure I led with that. And that's something that I feel very, very strongly about. Obviously, there do need to be adjustments. And I think in an interesting way, and I'll describe it for you this way for a second, Rich. I think it takes some getting used to around putting yourself in a position where you're slightly less comfortable with something. So Lee and I had, had a very strong partnership for a very long time, as you know very well. I hadn't spent as much time, for example, on the technology side of the business, spending time with the technologists, spending time with our CTO, who is excellent. And I really wanted to get out -- to go out of my way early on in my tenure around spending time on things that I had not spent time with before. Tom was an excellent hire for us. I feel great about his landing at Tradeweb, 20-odd years, running rates businesses at JPMorgan, first language real understanding of the markets that we live and breathe in. Sara Furber, who you know very well, our CFO, also off to a great start. So from my perspective, one of the things as CEO that you really want to get right is the senior management team at the highest level, you really want to re-create and have that partnership. And I'm feeling quite good about how our team is set up.

And I would say, Billy, that your willingness, I don't think this -- you had to put it at risk. Your willingness to communicate with investors has remained stronger.

I learned early on in the process of Tradeweb going public. When you and I kind of like first met way back when that -- and I hope this is true that the investors and the community appreciates candor and bluntness. And so I was pretty willing early to kind of lead with that, which is you don't always get everything right. And so you have to be willing to talk about things that aren't working as well as kind of just going into sort of infomercial world. I think the community around the company like Tradeweb is sophisticated. And so they know that really are there are moments in time where everything is working. And so let's talk about things that aren't working as well. And so you and I have had conversations about that. I think when you leave that way, I think, hopefully, people do appreciate that.

And here's my example. And these guys are going to whatever. But my example is right out here, we're going to have a panel of -- was the President's panel, now it's the CEO panel. And the willingness, you don't see CEOs get up and debate, not that we're going to debate. I think it's the personality measures that work as well. But there was no hesitation on Billy as well as Chris Concannon and Mike Sobel from Trumid to again do now a CEO panel rather than a president.

That's true. I think for a second, if I can say this, maybe as part of your comment, Rich, everyone is -- in my world, there has to be a level of very strong competitiveness. And so we'll be friendly, and we know each other well on the panel coming up. And then afterwards, we'll go out and we'll try to -- if not kill each other, we'll try to compete for business. But the headline, I think, is actually sort of different and in some ways, more important than that, which is I've said this loudly, and you've heard me say this, the real competitor is still, from my perspective, in all of these businesses that Tradeweb lives in is the old-fashioned way of doing business. It's the telephone and it's still this sort of relentless need to change human behavior from acting like it's 1993 when it's 2023. And so that allows a little bit of, I think, some of the report that exists, because I think deep down, there's a like-mindedness that there is room in the space and that there is a 1 single real competitor out there, and that's the old way of doing business, and there's opportunity still around getting after and getting that business, and that's where the real -- the winner's stakes are.

You did -- the theme of the conference is a celebration of electronic trading and fixed income is still an opportunity that you highlighted and talked about in operating.

Tradeweb, first market that we were in. Everyone here knows very well, U.S. government bonds, right? The voice market share in government bonds is still fairly and really robust, right? The question -- the obvious question is why, right? And so what I would describe to this room is that there are still different types of trades at moments in time that still revert back to the phone, right? And that might be super large market moving, real, real capital or risk trades. And it might be something where there is an expectation that there's a level of negotiation. And so we'll spend a ton of time on really problem solving and creating workflows to solve for that. I think one of the big shifts over the last few years for sure, and you've heard us talk about this a lot, Rich, is really this kind of one-way train around, what I would describe to the room, is around kind of algorithmic trading or what we call a Tradeweb AiEX, which is really the ability for the client base to consume and bring data into their search for liquidity on the system. And a lot of times, what that does is break down these big large market moving trades that forever and ever and ever, have always been done on the phone where I can hear someone's voice on the other side, into smaller trades, more digestible trades, and the client base is absolutely accelerating in that direction. And from my perspective, that is an absolute advantage that we have as a company and a very smart move that we put in place a bunch of years ago to get behind all of that. It takes a little bit of, guts would be a stretch, but it takes a little bit of confidence around a willingness to allow your client base to access your liquidity or your network in a less conventional way. So it becomes much less about logging into Tradeweb and clicking that mouse and relying on the liquidity that exists as part of your network and the biggest and most sophisticated clients are kind of running hard in that direction.

So I want to give you a chance to -- we've already started specific on Tradeweb, but more of the product opportunities and the growth -- you talked about the algorithm trading, I know that's an area of growth, but maybe interest rate swaps or other growth opportunities that you see to highlight to the investors?

A couple things -- good question. A couple of things I would say on that, Rich, really quickly. I mentioned the concept that in a very clear and strong way the arc of Tradeweb has always been about, I think, really understanding market structure and a commitment to build out, I think, a multipronged approach around market structure. And so what the heck does that mean? That basically means we were never just satisfied living in the client dealer space and competing with Bloomberg. We early on felt that there were other opportunities for us as a company. And so what that meant was we were going to build out side-by-side businesses in the wholesale marketplace, where we felt like we could compete with our friend, who I know is going to be here later, Howard, and it also meant a very strong move from our perspective to get into the retail trading business. The reason why we did that was that we felt like we could compete in those businesses. But the more important reason why we did that was that we felt like there would be absolute blending over time of these market structures. And by making a decision to be in those markets, we would be essentially in a unique position. And so when I look at the world going forward, and I see some changes that have happened, for example, obvious changes that have had, for example, in credit, where the market structure has shifted and changed pretty dramatically over the years through things like all-to-all trading, which we talk about a lot. And I look at, for example, some headlines out there back to government bonds where there is, as everyone knows here well, most likely impending regulation around all-to-all trading. But more importantly, I would say, an absolute receding of certain types of perennial market makers in the space. And so from my perspective, what that means is the opportunity for further blending of market structure, for example, in government bonds. And when I look at the pieces that a company like Tradeweb has to offer around that, I am excited, and I see tremendous opportunity around execution there, right? So today, I am PIMCO, and I go on Tradeweb and maybe I access it the old-fashioned way with logging in and using a mouse, but maybe I access it a little bit more in the way that I was describing before around something like AiEX. But at the end of the day, I have 4 or 5 dealers that I will send an inquiry to. My instinct is, and I would say strong instinct is that there's going to be a point in the future where that becomes "like not enough", right? And so on PIMCO, I want broader access to liquidity. And by the way, I want that access to include wholesale order books. And I want it integrated. I don't want to have to get out an order book and have to fight it out with everyone else. I want it integrated into my workflow and I want to be able to click and trade on it. That, to me, super interesting, by the way. And I'm not -- I can kind of say this not totally guessing that, that's what they want, kind of knowing that, that's what they want. And so I feel like there's like a tremendously interesting opportunity around that. Like being in the change business is fun. It's interesting and things wind up developing truthfully differently a lot of times than you think they will. But the change piece of it is always there. And all you have to do is look at, again, a couple of examples. You just have to look at how the credit market has significantly changed very recently. And the government bond market has changed dramatically. When you think about the role of the PTFs as real liquidity providers to the banks and you really kind of gain theory where that business is going, huge amounts of opportunity.

Billy, you mentioned something, and I know other companies say this sort of rings home a bit to me, when you say I know what they want. Like I think one of the hallmarks of Tradeweb with you as well as with Lee is that we listened to -- if I've heard that once, I've heard it 10x from you?

Yes. It's -- I get the question asked a bit. I think no one in the room that I can see has kind of asked me this, but I get the question asked, which is a little bit of -- has the low-hanging fruit of all of this stuff been picked. And I get the question a lot, like it's a good question, and it's an interesting question. I have a very kind of strong emotional reaction sometimes to that question, which is like if you were kind of in the shoes all the way through, you would really have an understanding that it was an absolutely never low-hanging fruit, like absolutely never low-hanging, because, yes, you have to go out and listen to customers, right? And you had to really understand what they were saying and what they wanted. The meetings could be quick if you weren't picking up what they wanted. And so you had to be pretty on the screws around all of that stuff. But as everybody here knows, we live in this amazingly interesting sort of balance between what the PIMCOs of the world wants, what the BlackRocks of the world want and then what the Goldman Sachs and the JPMorgans of the world wants. This is -- these are trading businesses with significant outcomes around how you sort of create these rules of the road. And so you really have to be able to understand the balance of it all really well. Otherwise, you're going to tip it in 1 direction, and it's absolutely not going to work. So it is, to your point, and I appreciate the way you described it, Rich, there is a little bit of, I think, an important kind of listening skill, but it's also a little bit of a -- where is the -- what am I listening to and how do I create this balance out there that I need to create, because I am not going to be able to do everything that you want all the time. And that's kind of -- that's also interesting. I remember, I mean, we could talk now or some time over about 1,000 beers. Some cold rooms over the years. We want to make -- Tradeweb wants to make the interest rate swap market electronic at a moment in time in the 2006, 2007 when the mortgage market had gone electronic or the -- and the government bond market had gone electronic like, wow, that's a bad idea. Like I might not call security like right this second, but I'm considering it, right? Like this is a voice market that we want to stay as a voice market. And it takes a little bit of relentlessness to kind of hang in there on these ideas. Interestingly, around swaps, what I would say is, it's a headline story around being early into something, being in some ways, wrong around the timing of it all and then ultimately being exceptionally right, because of the force of regulation that came through as a consequence of the crisis. That's a big -- that's a lot of -- that's a mouthful of stuff kind of there. But in a great way, that's our biggest business now, the global swaps business. And it's an incredibly important business for us. But that was like capital are resistance back in the day.

Interesting. We have the wedding crasher -- he's been a consistent crasher over the years. The peer CEO that...

Yes.

Stay there. We will teach -- we've definitely veered off. I know your IR people are going to have this, we veered it off the -- but this is -- I think the content is more important. The conclusion we want to get -- I don't know how many years we've known each other, plus 10, 15, but you've been 23 years at it or so. But what are the things? What do you think -- and you've watched this behavior, you just talked about how you listen to clients and it's -- again, I think it's -- I feel like to suspect a scale of yours as Tradeweb, we don't know about. We'll learn whether it's a peer scale. But the question is what new behaviors -- what surprised you most over the past 5 years as far as behaviors moving to electronics? And then what will investors be surprised at going forward, but that you would predict in the coming 5 years, what might change?

We in an interesting way, talked about off script, we talked about the concept of like this real resistance that existed out there. Why was there a resistance, right? The resistance was coming from the most obvious place in the world, which is as these markets move electronically, it's harder for me to make money. Transparency is the enemy of my profit, right? I think one of the absolute shifts over the past few years, and I know -- and Chris would 100% agree with me on this, is the sort of puncturing of that myth. As these markets have gotten significantly more electronic, and we can talk about maybe drawing the sort of entry point around the pandemic, but the momentum was kind of clearly, clearly already there. I think that the way that the client base of ours, the very, very important client base of ours kind of truthfully sort of printed money in our space is a significant story and a deviation from this long-standing resistance thing. And so as I look into the future, the good news is, I think the attitudes and the sentiment around all of this have dramatically changed and there are facts and reasons as to why. And I think that's maybe a little bit of a under-- it's not quite as an understood story as it should be. What the citadels of the world have been able to do, which is essentially say, I am going to enter into this significantly competitive marketplace of U.S. government bonds or European government bonds or global swaps and I am going to be able to compete with the JPMorgans and the Goldman Sachs and the Morgan Stanleys of the world, and I am going to do that not through hiring, and I love salespeople, but not through hiring 60 salespeople. I'm going to do that through sophisticated technology. That's a big deal. Like they're smart guys, right? And so now they're going to be looking, obviously, at credit, they're going to be looking at other marketplaces, and then you're going to start having the sort of copycat kind of waves around that. That's where we're headed.

That's really gave us a view of what to look forward going to. And I would wrap up and just say, Billy is going to be on the next panel, which we will dive into more of these topics. But as I retire, one of my regrets is to seeing where fixed income electronics advances. And more importantly, how you do as a leader, which I know you'll do positively at Tradeweb?

I have -- and Chris knows this sitting at the back, I've been a very strong proponent that you can have friends in this business. So I had, for sure, mixed emotions when you called me and told me you're retiring. I thought -- I knew it wasn't because of me that you were retiring. I thought I might have been because -- but you've been excellent all the way through, so we appreciate your support a lot.

Thanks. So we will follow up right next with the fixed income electronic panel with Billy as well as Chris Concannon of MarketAxess and Mike Sobel of Trumid. Thank you.

Okay.

You would think after all these years, he would get this down. Can we start on time?

This is part of the program where I need to be at the -- on the best on my toes, so to speak.

Well, your toes aren't touching.

I know. Are you making -- 15 years and no respect here. No, this is the panel, I'll be blunt, I have the most fun here without question. But I also have to acknowledge this is -- these CEOs now, there -- it was the presidents' panel. They -- we don't do -- you don't see us doing the CEOs of the exchanges together, the CEOs of the e-brokers. These guys are willing to come up and sort of talk about the issues and have fun and be a little bit sarcastic.

You set up this format years ago, we saw that coming. We were lucky to get promoted actually. Rank each other up.

We're going to try to sit by rank, but we decided just to make -- who get promoted earlier. So anyway, that you're hitting on the first question. Just I think Billy was January 1. Chris, April 4, I believe.

Third.

Third. I'll give you the extra date. Mike has been a year.

A year, yes.

So first question is, and it's a highly technical question, but what's it like to be king now? What does it take to be leading the firm. We got into it a little bit, Billy, what are your impressions of leading the firm and what's different?

Billy?

King would be -- to say it's a massive stretch. I might not kind of get at the exact way to describe that.

How are people treating you differently now that you're, I don't want to say a king again, but CEO.

I did notice something different.

What did you notice?

To date, everyone laughs at your jokes. And even the bad ones, and you see, you test people and you see...

There's a lot of bad ones from me.

Sorry, I don't want to.

No. But I think you're right. I was -- what I was going to say is if people start really truthfully treating you differently then you have some kind of real issue. And what I would say is -- and I know you guys feel very similarly, chemistry is not a willingness to agree. Chemistry is really a willingness to like disagree, right? So I will have plenty of meetings, which is a version of what you're saying, Chris, around the kind of laughter of it. I'll have plenty of meetings where if I feel like there's too much agreement of what I'm saying or ideas that I have or opinions that I have, something is wrong. So I absolutely day 1, want to make sure that I am setting a culture of please express your opinion and please feel free to disagree with me because the mistake around it all is not hearing other views. And it's an easy -- no matter what office you wind up sitting in, when you've been doing it for a while, it's easy to be, if not arrogant, to be dismissive. And so you really, really have to go out of your way to make sure that you are setting up a structure that allows for a difference of opinions and people feeling really comfortable challenging you. And that's something, I think, like at a high level is like massively important just in terms of making sure you get stuff right.

I think we've got a relatively flat structure and we work hard to keep it that way. And I think that is consistent with what with what Billy is saying. And probably in the new role is king, which I agree doesn't -- sure doesn't feel like that every day. It's probably the newer folks in our organization, probably 25-ish percent headcount is probably joined since we shifted titles around a little bit since my big promotion and trying to make it clear to those folks that we are still -- this is still an environment that supports open disagreement. And if you've got something to say, just reach out kind of directly who thinks that there's some formal process for getting on my calendar or that my first cut at something is pretty disposed to be the right one. I think we actually have to make an effort to get through that in order to stay kind of agile, nimble and just recognize the reality that the good ideas don't necessarily come from the top. And in fact, most often probably come from someone who's got a different viewpoint or is newer to the subject or something like that. The other thing I would say is with respect to the king idea or being kind of anointed, I think, and I'm sure you guys enjoy this as well, I think beat the credibility as a market operator and this is institutionally as trustworthy market operator, provider of liquidity, technology partner is more important than ever, we'll get into the market condition thing. But we ask our client base to invest their time and energy in what we're doing to lift a finger to connect to the new thing or give something to try and that kind of demonstrated track record in this -- in the current kind of economic environment, I think, is really more important than ever. If you were trying to go from nothing to critical mass today, that's a lot -- whole lot harder than it was when we all respectively were doing in the past.

Go ahead. Improve upon that.

No. I can. I mean candor is definitely key. I just think we all have stakeholders that we have to -- you can't be king to, right? Whether it's your Board, whether it's your founders of the company, we have that. More importantly, we operate in an environment where you have massive dealers and massive investor clients that really tell you what they want and how the market structure should work. And so you're -- we're constantly catering to the needs of our clients and it just doesn't feel like you're ever king. You're really running around trying to build things for people globally. So there's -- the transition is not what most people would think.

I hope when you go home, you can still be king.

No way. That's the worst place you can be.

I joke about it, but the 3 have been open to communications. And I think that's a little bit of an indication of the open communications at your company that you're encouraging. And I think we totally get the founder and the other stakeholder aspect of it as well. So we got -- let's get beyond the king thing. I think the most questions we get are the primary question is what's the market outlook. Billy, we talked about a little bit. But I guess maybe a little bit different. Is there any other environments, your experienced guys, whether it be in this asset class or not, but give us the outlook on the environment. Is this similar to any other environments that you can draw some parallels or analogies and so forth because it seems like the investment community is search and trying to get their arm and a good understanding of what the outlook is for volumes and the healthier businesses.

I mean I'm shocked at when you look at the economic environment, and you hear from CEOs outside of financial services, talking about layoffs and challenges ahead and we still have a banking crisis. There's still $8 billion leaving regional banks a day. We're not headed into a great place. Yet you have the VIX is sitting at 14 today. And so I just think the market is trying to read the environment, and they're not sure, and we had that a little bit not a near death, but Washington wasn't helping with the debt ceiling crisis. And the Fed sending signals that are confusing right now. And so I just think, certainly, the clients that I've talked to, there's no investment conviction right now. And so there's a lot of people waiting to see what's the next shoe to drop.

I think the credit market environment, the environment for corporate bonds is maybe surprisingly so, is kind of decent in that -- and particularly, yields are hundreds of basis points higher than they were a few years ago. And I think we do see that in alternative investors, investor types including outside of the U.S., looking at U.S. fixed income and it's about as attractive as it's been in quite some time. So in the, call it, intermediate term, I think that is a positive for overall interest in and participation in the asset class. So that's good. It does -- it is difficult to reconcile with an uncertain economic outlook. And when we're thinking about building and running businesses and again, getting our clients sell side, buy side to invest with us and do the bits of work that it does take to evolve protocols and technology that is a real challenge. Budgets are constrained, headcount is constrained. So we are while the VIX and S&P really no asset class would suggest this. We're kind of living and operating in a quasi-recession or environment, and that is definitely tricky. I think it just means it's super important to kind of be credible and deliver for clients and get closer to your clients. And at some point, we kind of come out of this and we'll benefit from the hard work that was done when things don't feel so great.

That's right. I think if I thought to myself, what's like a bad environment? What's an environment that's like not good for kind of anyone here up on the stage. I would probably say an environment where there is kind of Fed policy in the mix that keeps rates at essentially 0. I would probably say, do it by -- do it in a way where the Fed is large and a little bit clogging the base paths of liquidity in the markets that we kind of exist in. And I would say, probably put some regulation in the mix that kind of reduces the ability for our clients to kind of warehouse risk. That's why I would think of like a bad environment. The good news is we're a long way from that, right, in significant ways. We're way past all of that. And so when you ask a question, which I think is really good around like what does this environment feel like? I'm not really sure. I can't really quite pinpoint it. There's a little bit of we've been around doing this for long enough. There's a little bit of like '94, '95, if you think about the way that the Fed hiked rates last year that feels very similar to some of the things that happened in '94, '95, lower base rate now, even more acceleration, but a little bit of that, and that was obviously the headline kind of like Kidder, Peabody news and then interesting things that happened around banking like way back then. The reality is, is we talked about this a little bit before, we're getting to this like new point around like where is the equilibrium going to kind of land in. And I use the expression kind of natural cadence we're getting back to this natural cadence again. This environment is a really good environment for our businesses now, kind of across the board. And so now that we're all kind of breathing again, and we feel like we're back into that a little bit more of an equilibrium that's good. This is an excellent environment for our business.

I think that's a good point to contrast Billy, that it may not be right at the moment as strong as right at the meeting because you had the debt sale in the bank, right, but compared to the 0 rate environment, the interventionist FED, you guys are coming in with the tailwinds behind you, so to speak.

Yes, I recently have spent the last 4 months going out to see clients. And the theme coming back from the clients was clearly short-term concern, long-term bullishness like when it comes to the bond market, bonds are definitely cool again. And people feel the big investors that held massive positions in bond funds are obviously quite excited what's to come. But very challenged by the current environment. And you can see that in the numbers.

Actually, to that point, it is likely, and I think we're seeing this. The tourists for lack of a better term, in the bond market, which is just in the credit market, which is just to say the investors that choose globally, which asset class to be in that right now are as they should be, compelled by interested in U.S. fixed income. Oftentimes, those will be the drivers of kind of evolution because they are aware of the cool things that one can do, the ways you leverage data, the ways that you engage and make trading decisions and other asset classes. So they will -- they are a tailwind, I think, to kind of the evolution that we're all driving. And I think that probably continues for the next couple of years.

Back to your first question around kind of the transition to becoming a CEO. It's -- one of the things has to be about what are the right messages that you deliver to your company. And I think part of that message has to be around control, which you can control and kind of leave other stuff in the rearview mirror a little bit. No one in this room can control market environment, but we can control how we react, how we build, how we innovate, how we make sure that we are on the right side of change. And that's a little bit about what you're describing. It's you have to be on the right side of these kind of changes that are occurring. No one is building a business today in the markets that we operate in around hiring tons of bodies. That's like the old way of transacting in the market. So at a minimum, what we have to talk about and think about is 100% being committed to being on the absolute right side of this one-way train with all of the opportunity, and I was mentioning this when Chris walked in before with all of the opportunity to get after the #1 competitor that still exists in our world, which is the phone and the old way of doing business and the types of trades that still get done phone-based. That's like tremendous, tremendous opportunity.

I don't have anything.

I agree.

This is just the tension you talked about the agreement of friction. But if I...

We're on the same side.

Yes, if I got this right, the outlook is more positive. You're finally at the cool kids table. After all these years.

Yes. All these years, scratching at the table. I would say -- sorry, we're still unlike your first question. We should just run this panel...

You've tried to do that...

No. If you look at the first quarter, it has very interesting attributes, particularly around velocity of trading. In the first quarter, absent the March calamity, felt like very bullish bond market, all the things that we just talked about, it was real in the first quarter. We're now in a short-term holding pattern given some of the challenges. But I do feel that coming back, that velocity in the market coming back. And that excites me with even cash moving into the bond market, as Mike mentioned, that's just going to continue.

So you've seen maybe in the last 6 to 12 months, the market really changed. You had a little high yield run. You had the beginning of the year was strong, we were at record levels and then you had the banking. So each have strengths in certain protocols. So I think that's the next question that I get asked most by investors after the outlook is what protocol -- what's working these days? What will work in sort of the short to medium-term future? You've got all-to-all strength. You've got portfolio trading strengths; you got block trading straight. So what's working and what might take a little more of the return to normal market environment to get back to scale?

Well, the phone clearly works. And it's annoying. And actually, the one thing we probably all saw even in the rate space was the phone was active during the banking cards.

So that was this default going back to the phone.

Yes. Definitely, there was a default back to the phone, particularly around trading Credit Suisse bonds, anything distressed tends to go to the phone. But I think we're still at the beginning, and Billy really talked about it during his fireside chat, like it's all evolving pretty rapidly. I don't think there's one protocol for these markets. Think about how diverse the products that we all trade and the liquidity curve is quite steep in those products from the most liquid to some that don't trade. And so each protocol is going to serve the different product liquidity and then end client demand. But what we're seeing is diversity of protocols is at an all-time high, meaning RFQ is going to continue to be the dominant electronic solution. But RFM, request for market streaming prices, it's different than RFM. All of this is coming -- a true order book, like that's all going to play out in the fixed income market, it's different for each product. Treasuries already has order book. It has streaming prices. It has RFQ. It's all kind of changing and evolving.

Yes, I agree with that. Honestly, I think all the protocols are working. RFQ is -- has been the kind of the law of the land for quite some time, so 2/3 of all electronic trades or so are a few probably isn't going to change materially. Other protocols are growing, will continue to grow. We -- look obviously, we just announced we are doing RFQ as well. So we're excited to think there are growth prospects. We think some really logical reasons and evidence that bigger sized trades are becoming increasingly comfortable to do via RFQ. I think the reason when asked that investors -- market participants continue to pick up the phone is large trades and a sense that information is somehow better handled and managed over the phone. I don't think either of those are kind of permanent state of affairs. Those are both, I would argue like untrue statements. So improvements in the protocols, better handling of information and data that certainly technology is well equipped to provide will, I think, continue to expand the use case of electronic trading generally and totally agree with Chris. It's that ecosystem of protocols and the ability to move between them and have them actually kind of cross-pollinate each other information coming in through one way enhances your ability to do kind of something else. That's kind of the key to the future from our perspective.

Very quickly picking up what Mike said, completely agree. Ecosystem or protocols like these are complicated products, complicated protocols, have to get them all right. Half a step back, from my perspective, it's an absolute combination of everything we just described around that diversity of protocols. But again, half a step back from my perspective, it is also about this sort of like ability to deliver to your client base like this massive diversity of product offerings, right? So jokingly, one of the reasons why this group can get along so well is because I'm going to have an elbow contest with our friend Howard later this afternoon because I compete directly with his business all the time. I love how Tradeweb is set up from a diversity of product offerings, right? To be as strong as we are in the rates business to be able to figure out a way to compete with my friends and credit to build the global swaps business to get into the ETF business. This massive diversity of products, I think, is really important. And at the same time, obviously, building out the scale that I mentioned before around wholesale and retail, I think, is interesting and important.

Got it. We are getting close on time, but there's actually 2 things I want to. So if we can keep your thoughtful well well-spoken questions to concise. But anyway, market share.

Just like that question.

It took a long meeting. It took longer to get out before...

We're out of time.

Just give me a yes or no. So quickly, market share, what's good about it, what's bad about it? What does it tell about the business in 30 seconds.

Market share is good, more market shares are good.

Okay. But reporting a market share. Good, bad, is it...

Reporting of it or...

Yes. Like should investors pay attention to market share changes, what does it really talk -- tell you about the platforms?

I think it's more important to look at trend lines, not short-term market share movement in all of our businesses because there are so many -- so much noise. Sorry, I was...

We're proud of market share. I agree. It's a barometer. It's not the be-all and all. We spend a lot of time thinking and talking about the kind of activation of the network, what type of liquidity is there, diversity of liquidity. I don't think...

This is much longer than my answer.

I don't know why you should or do care about, do you have X percent market share, Y percent? It's like can I get a trade done and who am I trading with.

More information generally better than less. I get all that. I do agree with both of you that sometimes it feels like there's just a little bit too much static and scrutiny on moments in time. There are times, and you know this better than anyone Rich where we'll be doing our version of an earnings call. And it seems like the first 4 questions are always about a 0.5% move in high yield, et cetera. I get it. I like it, and I understand why everyone is focusing on that. My instinct is if we could get to the bigger picture of it all and see these where these trends are going, it ultimately is a better conversation because, again, are you on the right side of all of this change or not. To me, that's like the most important thing.

Fair point. Last question. So where -- when do we hit, we have the capitulation, the move towards automation, the inflection point. Is it something that -- and we've got to be short and concise. But is this something we -- investors, the community, the investment community should be watching?

Well, we are cutting into my fireside chat. I thought I should point out.

I'm trying to fight for your time.

Let's just roll right into. I am staying out up here for your question.

No. I didn't invite you guys. Look, if you look at other asset classes that went through this, absent a regulatory market structure change you don't know the point of capitulation when you're in it. You only know it from looking back in history and go, that must have been the point of capitulation.

Good point.

When I hear the -- I've heard this and said a number of times, leaders of both buy-side and sell-side institutions on the trading side, that the credit trader of the future is to obviously, tech aware, data aware. I think it's happening. It's a -- this asset class will evolve differently than others. It's going to be a hybrid of humans and technology. Data is not -- it doesn't have to be intelligence, it doesn't need to be artificial intelligence. It's just intelligence through data with humans playing a very important role. So I don't know that there is a point of capitulation. It's a steady and pretty fast trend.

Why is there certain types of business that still gets done in 2023 like it's 1993, why? And focus on the why, focus on the types of trades that are still done the old-fashioned way and ask us and get fine-tuned around how we are building protocols and getting after that kind of business. I think from all of our perspectives, that's a massive, massive opportunity.

The larger size trades.

Yes.

Okay. Unfortunately, we could do this panel for longer but we'd cut into Chris' time. We don't want to do that.

Yes. We don't want to do that.

But I want to thank these 3 are open to debating and talking about the issues as a panel. And you don't see that in other industries or other asset classes. So [indiscernible] see how this develops over the next year and the leadership skills [indiscernible] save your calendar.