Good morning, and welcome to the MarketAxess Third Quarter 2025 Earnings Conference Call. For the call, Chris Concannon, Chief Executive Officer, will provide you with an update on our strategy and our trading businesses. And Ilene Fiszel Bieler, Chief Financial Officer, will review the financial results. Before I turn the call over to Chris, let me remind you that today's call may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain. The company's actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the company's future results, please see the description of risk factors in our annual report on Form 10-K for the year ended December 31, 2024. I would also direct you to read the forward-looking statement disclaimer in our quarterly earnings release, which was issued earlier this morning and is now available on our website. Now let me turn the call over to Chris.

Good morning, and thank you for joining us to review our third quarter financial results. As highlighted on Slides 3 and 4, our third quarter results reflect a return to more challenging market conditions and historic levels of new issue in September, as well as continued revenue growth challenges in U.S. credit. Revenue was $209 million in the quarter, up slightly from the prior year. Our revenue growth outside of U.S. credit was strong at 10%. With regard to the operating environment, we are focused on providing our clients with a platform that has the right mix of protocols and workflow tools to meet their needs in all market conditions. We intend to deliver a platform that will be protocol agnostic that uses data and analytics to help clients decide the appropriate protocol for each trading situation. Our current model does exceptionally well in higher volatility when spreads are widened out and liquidity is in higher demand. Unfortunately, we have only seen limited periods of volatility over the last several years, and we continue to see fairly tight spreads. Revenue growth in U.S. credit has also been impacted by the growth of new protocols like portfolio trading, the growth of the dealer-to-dealer market, and smaller-sized trades moving from RFQ to portfolio trades at lower capture rates. The good news is that we are modernizing our technology platform while at the same time delivering new protocols and workflow tools to help our clients be more efficient. Most importantly, we continue to gain significant traction with our new initiatives. In the client-initiated channel, we generated 10% growth in block trading ADV across U.S. credit, emerging markets, and Eurobonds. This strong growth continued in October with a 21% increase in block trading ADV. In the portfolio trading channel, we generated a 20% increase in total portfolio trading ADV with record U.S. high-yield ADV. In October, total portfolio trading ADV was up 25% and market share in U.S. credit portfolio trading increased 300 basis points. And last, in the dealer-initiated channel, we generated an 18% increase in dealer-initiated ADV. Again, this strong growth continued into October with a 22% increase in dealer-initiated ADV, supported by strong growth in Mid-X for Eurobonds and the addition of Mid-X for U.S. credit. As announced earlier this week, we will also be launching a new protocol introducing the concept of closing auctions to the fixed income market. Many of you are familiar with the auction protocol used in the global equity markets; now we are bringing it to the fixed income market. We believe a closing auction in the most liquid bonds will provide the market with an end-of-day liquidity solution while delivering a more organized market closing process. Protocol innovation, market data, and automated solutions will continue to evolve as this market becomes more and more electronic. Before moving to the next slide, I wanted to provide some context for our October volumes. As you will recall, the prior year period is a tough comparison for U.S. credit given the heightened level of activity in advance of the U.S. presidential election. Despite this, our U.S. high-yield ADV growth in October was strong, up 9%, reflecting a strong performance of our platform with only a slight increase in volatility during the month. While we know we need to drive higher levels of share growth, we were pleased to see the improvement of market share month-over-month in both U.S. high grade and high yield and across all of our key initiatives. Slide 5 highlights the underlying strength of our global credit franchise. As you can see from this slide, our credit business is a global business and increasingly diversified. While U.S. credit trading volume is growing at a 4% CAGR in North America, our other credit products are growing double digits in North America and throughout the rest of the world. Furthermore, 36% of our global credit trading volume is now driven by clients outside of North America, up from 29% in 2020, and we continue to add international clients. This trend is supported by the over 6,000 international dealer and investor traders that are now on the platform. Slide 6 and 7 provide you with a year-to-date view of how well we are executing with our new initiatives in the 3 strategic channels as well as the strong growth we are continuing to see with automation. On Slide 7, in the client initiative channel, we continue to make strong progress with block trading globally. Our targeted block solution continues to grow in emerging markets and Eurobonds while we see consistent growth in block trading in our U.S. credit business as well. Block trading represents the next step function to the growth of electronic trading and is an opportunity for real transformation in the fixed income markets. We are attacking the block market in two ways. First, we are leveraging automation by providing clients with unique tools that execute blocks in a more automated way. The second way we are attacking blocks is through our targeted RFQ workflow, which allows clients to target a short list of dealers for liquidity while increasing execution likelihood and reducing information leakage. Our total block trading ADV is approximately $5 billion year-to-date, up 23% across U.S. credit, emerging markets, and Eurobonds. Our cumulative block trading volume since the launch of our targeted block trading solution in U.S. credit, emerging markets, and Eurobonds was approximately $12 billion through October 2025. The next, in the portfolio trading channel, total portfolio trading ADV year-to-date is running 50% above the prior year. U.S. credit portfolio trading market share was over 18%, up 210 basis points over the prior year, including a 360 basis point increase in U.S. high yield. In the dealer-initiated channel, we are continuing to see progress. Dealer initiated ADV was $1.7 billion year-to-date, representing an increase of 34%. Our new Mid-X solution for U.S. credit was launched in September. And while it is early days as we expand the number of sessions and bring on new dealers over the last 10 days, we have executed over $1.3 billion in matching volumes. So we are pleased with the recent momentum. The evolution underway in the U.S. high-grade market is highlighted on Slide 8. The average size of non-block trades are decreasing, while at the other end of the spectrum, the average block size trades are increasing. Blocks greater or equal to $5 million in trade size represent approximately 45% of trade volume in U.S. high grade, and they are largely executed over chat or the phone. This is the segment of the market that we are attacking with our targeted RFQ solution. Trades less than $5 million in size make up the other 55% of the market in terms of volume, but approximately 98% of the ticket count. This is the segment of the market that we are attacking with our suite of low-touch automation tools as well as our portfolio trading tool. In the third quarter, two-thirds of trades executed by our largest clients were done through automation. The good news is that this business comes in at a more attractive price point and becomes sticky as clients convert. Part of this evolution has been the explosion in ticket count as shown on Slide 9, driving client demand for automation underpinned by our differentiated liquidity. Trades in U.S. high grade, less than $5 million in size have almost tripled since 2021. This significant increase in tickets has been driven by a couple of factors including the growth of ETFs and SMA accounts. Assets under management and SMA accounts by some estimates are expected to top $5 trillion. Other factors driving the explosion in tickets are the growth of portfolio trading and the increased usage of automation tools in fixed income. So the increase in automation is becoming more important to handle the increase in tickets in smaller-sized trades but increasingly also for larger-sized trades. We recently profiled a very large investment manager on our platform who has invested in automation by targeting block-size trades for automated execution. In just two years, they have gone from doing 14% of their volume and 54% of their tickets to 35% of their volume and 82% of their tickets today. On our platform, automation trade count and trade volumes are growing at a 3-year CAGR of 29% and 28%, respectively. On the dealer side, with the growth of dealer algos, execution quality and dealer responsiveness have improved with tighter bid-ask spreads and higher RFQ response rates even for block trades. Dealer algos now contribute 88% of the responses and went up to 87% of trades in U.S. high grade, including 28% of the block trades. In summary, this year has been a tale of two very different market environments, and we believe that the protocols and workflow tools we are developing will help us grow through all market conditions. While we are pleased with the continued strong contribution from our new initiatives, we know that we have to deliver technology enhancements faster to drive revenue growth. While the time it is taking to return to higher levels of growth has frustrated many of you, I assure you we are investing in the fixed income market of tomorrow while also addressing the competitive landscape of today. This is why we feel good about our positioning and our ability to return to higher levels of revenue growth in the coming quarters. Now let me turn the call over to Ilene to review our financial performance.

Thank you, Chris. Turning to our results. On Slide 11, we provide a summary of our third quarter financials. We delivered 1% revenue growth to $209 million, which included a $1 million benefit from foreign currency fluctuations, and diluted earnings per share of $1.84. Looking at our revenue lines in turn. Total commission revenue was flat compared to the prior year. Services revenue increased 9% to a record $29 million. Information Services revenue of $14 million increased 6% or 5% excluding the impact of currency fluctuations. Post-trade services revenue of $11 million increased 9% versus the prior year or 4% excluding the impact of currency fluctuations. Technology Services revenue of $4 million increased 20%, driven by higher license fees as well as connectivity fees from RFQ Hub. Total other income increased approximately $2 million driven by a tax credit and lower FX losses in the current quarter of approximately $4 million. This was partially offset by lower interest income and a $1 million negative swing in unrealized gains and losses on investments. The effective tax rate was 27.1%, up from 23% in the prior year, reflecting the increased accrual for the uncertain tax position reserve we established in the first quarter of this year. Slide 12 provides you with a quick summary of our KPIs. We continue to deliver strong growth across most of our KPIs, which reflects the progress we are making in our new initiatives. On Slide 13, we provide more detail on our commission revenue and our fee capture. Lower total credit commissions and lower total rates commissions revenue was mostly offset by higher other commission revenue which included the impact of RFQ-hub. Total credit commission revenue of $165 million was down 2% compared to the prior year. With strong 11% growth in emerging markets and 9% growth in Eurobond total commission revenue was more than offset by a 9% decline in U.S. high-grade and flat growth in U.S. high yield. The reduction in total credit fee capture year-over-year was principally due to protocol mix. On a sequential quarter basis, fee capture was slightly up due largely to duration in U.S. high grade. On Slide 14, we provide a summary of our operating expenses. Total expenses increased only 3%, which includes a $1 million negative impact from foreign currency fluctuations. The increase was driven principally by higher employee compensation and technology and communication costs as we continue to strike the right balance between investing to drive future growth and continuing to drive increased efficiency. Headcount was 896, up only 2% from 881 in both the prior year period and at the end of 2Q '25. We are reconfirming our full-year 2025 expense guidance and expect to be at the low end of the previously stated expense range of $501 million to $521 million on an ex notable non-GAAP basis or on a GAAP basis, $505 million to $525 million. On Slide 15, we provide an update on our capital management and cash flow. Our balance sheet continues to be strong with cash, cash equivalents and corporate bonds and U.S. treasury investments totaling $631 million as of September 30. We generated $385 million in free cash flow over the trailing 12 months. We repurchased 595,000 shares year-to-date through October 2025 for a total of $120 million, including 239,000 shares repurchased during the third quarter at a cost of $45 million. As of October 31, 2025, $105 million remains on the Board's share repurchase authorization. Now let me turn the call back to Chris for his closing comments.

Thanks, Ilene. In summary, on Slide 16, we are continuing to innovate and execute with our technology modernization and we are focused on the delivery of new product enhancements and new protocols for the remainder of 2025. Our new strategic hires are already making a difference in our execution, and we continue to show performance across our new initiatives for block trading, portfolio trading in the dealer-to-dealer business. Our revenue growth profile outside of U.S. credit is strong, and we are addressing our challenges in U.S. credit. And while we are pleased with the growth we are generating with our new initiatives, we are confident that we can execute faster to generate higher levels of growth. Now we would be happy to open the line for your questions.

Your first question comes from Chris Allen with Citi.

Yes. Morning, everyone. Thanks for the question. Nice to see solid expense control this quarter. I have a bit of a two-parter. One on the Mid-X U.S. launch, obviously, you see nice volumes to start. Can you talk about the pipeline to add additional dealers there? How it's interacting with PT, whether you see benefits there? And the second part, where you're seeing good uptake in new offerings like Mid-X you noted, your overall share gains have been elusive, which is leading to investor frustration. Can you elaborate on your comments in terms of taking actions to deliver faster technology enhancements? How you're addressing competition, particularly if your legacy areas of shrink, which some are questioning whether there's been a degradation there, just so you're seeing an uptick in new solutions, but overall share is moderated?

Thank you, Chris. I'll address both parts of the question. First, regarding the recent launch of Mid-X, which is designed for the mid-market matching solution, we are finally targeting the dealer-to-dealer market that has been growing significantly, now accounting for about 30% of the trace market. We have been actively involved in dealer initiatives, particularly through our dealer RFQ, and this is reflected in the numbers as well as in the growth we observed in October, where dealer-initiated business increased by 22%. This growth occurred even before the full rollout of Mid-X, which began in late September, so we are still in the early stages. However, we are encouraged by these early results. Since its launch, Mid-X is now being run daily, whereas initially, it was running several times a week. We plan to increase the frequency of Mid-X sessions and are currently on track to achieve around $2.7 billion in monthly transactions, which is an exciting milestone so soon after the launch. An essential aspect of the Mid-X solution is strengthening our relationship with the dealer community, which plays a crucial role in our ecosystem. As dealers take on portfolio positions, they need efficient ways to exit these positions, and mid-market sessions have been valuable for them. Unfortunately, some of the previous offerings were priced higher than ideal. Our Mid-X solution aims to meet dealers' needs for efficient exits, which will lead to a reduced fee per million in our offering. Therefore, we want to clarify that the connection to increased volume is beneficial for dealers, aligning with our broader partnership with them. To address your second question about overall growth, particularly in U.S. credit, our growth in these areas has been slower than desired. I made a conscious decision to invest in our technology using what I refer to as a portfolio approach. Instead of focusing on one or two critical areas, we allocated resources across multiple key areas requiring attention. One significant area is our ongoing tech transformation at MarketAxess, where we have been making substantial investments. Additionally, we are addressing the competitive landscape in U.S. credit. This includes investments in portfolio trading, dealer-to-dealer business, our algo and automation suites, block trading across all products, and recently announced efforts around closing auctions. These investments are technology-focused and aim to tackle competitive challenges and facilitate our tech transformation. In this tech transformation, the adoption of EXPAREL has been crucial, as we are upgrading existing UI technology for more modern solutions. We are also leveraging the Pragma acquisition to enhance our automation suite, moving from our old systems to the Pragma technology stack. Early implementations of Pragma's matching technology are already visible in our closing auctions. Our portfolio trading efforts show positive returns on investment, and dealer-initiated transactions reflect growth as well. Automation has seen a 17% increase in Q3. However, both portfolio trading and dealer initiatives operate on lower fee structures, which impacts our overall revenue. Our core RFQ business has faced challenges due to low volatility and tight spreads in the recent market environment, leading to competition with phone and chat services, as well as direct dealings among dealers. While we have observed growth in blocks, it has not reached the desired scale or speed. We remain committed to investing in block trading strategies, particularly where we see growth in Eurobond and emerging market products. Currently, we feel optimistic about the momentum in our initiatives and anticipate higher market share growth in coming quarters, supported by our ongoing investments. We expect these efforts to yield positive results in transaction volume, but we also aim for corresponding revenue growth. Our investment strategy is ongoing, with releases planned this weekend targeting all the discussed areas, including the launch of the closing auction this month. We are focusing on various investment avenues necessary for our tech transformation and to strengthen our competitive stance.

Your next question comes from Patrick Moley with Piper Sandler.

Yes. Wanted to ask about the closing auctions and the announcement that you made recently. Can you help us get a sense for just the size of that opportunity, what it could mean for data, what do you mean for your market share? And then how large a piece of the overall credit market do you think that, that sort of volume could become over time?

Thanks, Patrick. That's a great question, especially considering the extensive time we've dedicated to the closing auction. We're thrilled to share this news as it's been a significant investment for us and a crucial part of our strategy over the past four years. We have wonderful partners advising us on this project, including BlackRock, State Street, Alliance, and DWS, along with several other large investment managers not mentioned in the release. We've collaborated closely with major investment banks and ETF market makers, since they are essential for the liquidity and functionality of the auction we are designing. Our closing auction requires an SEC filing as it's a part of our ATS, so a lot of work has led to this market introduction, which we are very excited about. It's important to clarify what the closing auction is not. It is not a mid-market matching session, which is common in the fixed income market where buy and sell interests match around a mid-market price. Instead, we've developed a true auction where buy and sell interests find a clearing price, making it a significant difference from popular practices within the fixed income sector. Another critical aspect of the auction is having a substantial all-to-all network, allowing any participant to match with any other participant. This unique positioning enables us to launch an auction of this size and scope. The strategy behind our auction is aimed at supporting the increasing indexation in the fixed income market. Our global market is valued at $150 trillion, the largest asset class, with 20% indexed or held in ETFs linked to an index, and this segment is growing annually. The global fixed income ETF market has reached $2.7 trillion and is projected to approach $5 trillion within the next five years. Our auction is designed to serve this expanding segment. Every index fund relies on a closing price, and every ETF needs a net asset value to conclude its operations. Indexes tied to these ETFs generally exhibit higher turnover compared to traditional equity indices, observed particularly at month-end when there tends to be more new issuances in the bond market than IPOs in the global equity markets. In U.S. investment-grade volumes, for instance, 25% of daily volume occurs in the last hour on the last day of the month. We're observing a trend where a significant portion of bond market activity is increasingly concentrated around the closing time of each trading day. Another key element, aside from our all-to-all network, is the closing price's relevance to index funds and ETFs. To ensure relevance, we partnered with S&P to provide our CP+ data feed, which assists them in their evaluated pricing tool. This collaboration with S&P has been fruitful, especially since they manage vital indices that rely on this end-of-day price, such as the iBoxx Index, which underpins the largest ETFs globally, like HYG and LQD. As we launch the closing auction, we will focus on the more liquid segments of both the investment grade and high-yield markets to establish a closing price that supports our CP+ end-of-day price for those bonds. The data aspect is indeed a critical factor for the auction's success, and we are thrilled about our years of preparation and the partnerships we've established, particularly with S&P.

Your next question comes from Alex Kramm with UBS.

Just on the kind of laundry list of new initiatives and some of them that are running a little bit slower, maybe unpack U.S. block trading a little bit more. I know success outside of the U.S. so far seems like U.S. block is still very early, but anything you can help us with in terms of timing of more dealer liquidity on those? And anything else where we could expect to see some uptake here?

Thank you, Alex. We view the block market as the largest opportunity for our company. When considering the overall global fixed income markets, the non-electronic segment is significantly larger than the electronic portion. It's uncommon for a company to have a market opportunity that exceeds the market it currently occupies, so we are enthusiastic about the global block opportunity, especially in the U.S. In Q3, our block growth rates across all products were around 10%, but in October, this increased to 21%. This demonstrates that our block initiatives are starting to produce results. In the U.S., while progress has been made, it's not at the levels we desire. For example, U.S. Investment Grade in October saw a 30% growth. Our block activity is up, but we'd like our market share to increase more significantly. A crucial factor is content. We have made substantial advancements in the content we provide to clients, particularly in U.S. credit, emerging markets, and Eurobonds. We are continuously launching new features, with additional offerings coming in a week that will enhance our block solutions and trading, allowing our large investment bank partners to share their content directly with clients. This is essential for the success of the block market. Where we have strong content, we are finding success. With the launch of EXPAREL in Europe, we are improving the workflow for block trading content there, and we are also making regular updates to our block solution in the U.S. We are excited about the upcoming months and the changes we are implementing.

Next question comes from Benjamin Budish with Barclays.

This is Chris O'Brien on for Ben. I wanted to ask a broader question about the environment. We're seeing continued lower credit spreads, lower volatility. Just curious how you're thinking about growing through this kind of environment if it were to persist? And is there anything that you could see that would maybe make a meaningful shift in the environment that we've been seeing over the last several months?

Sure. That's a great question. Over the past several years, we've generally experienced lower volatility and tight spreads, which have impacted some of our core offerings. We did notice a return to volatility in the second quarter, and we were pleased with that spike in activity, although much of it was short-lived. It’s evident how quickly volatility can fluctuate in the marketplace. Currently, we're observing higher levels of volatility, with the VIX above 20% and spreads widening. In November, the market is showing increased volatility, with TRACE up 46% in investment grade and about 25% in high yield. This month, we are witnessing activities that suggest a potential shift from lower spread and lower volatility. However, if we look back at the summer months, there were minimal spikes in volatility in the third quarter, making the environment challenging. Nevertheless, both October and November show higher levels of volatility and widening spreads, which enhance the attractiveness of our all-to-all liquidity.

I would also like to mention that market expectations for Fed rate cuts this year are hovering around 2% to 3%, with a possibility of a third cut in December. This has decreased somewhat following Powell's comments last week, but there remains a more than even chance of a December cut, albeit with less certainty. The yield curve continues to trend towards a gentle steepening, though the short end remains stable, the middle section is largely holding, and the long end is somewhat sticky. In other words, short-term yields may decline when the Fed cuts rates, while long-term yields might not drop as significantly. If this occurs, it could enhance liquidity and secondary market activity, possibly increasing the willingness to purchase longer-duration bonds. For example, during the last quarter on our platform, the weighted average years to maturity increased to about 9.1 years from the previous quarter's 8.5 years. As Chris mentioned, we are noticing some interesting trends in November. Even within the first few days, we've recorded the weighted average years to maturity reaching approximately 10 years. Thus, there are additional factors to consider when evaluating the macro environment.

Your next question comes from Michael Cyprys with Morgan Stanley.

Maybe just continuing with the last question, macro backdrop, clearly, moving your way in November as you just answered with the last question. But if that proves short-lived and macro backdrop returns to a bit more challenging backdrop like we've seen for some time. I guess, what's the scope to returning to higher levels of growth parts of the business do you see as perhaps the most meaningful contributor to that? I know you mentioned some tangible progress on new initiatives, some of which are lower fees. So just curious how you're thinking about that as you look out over the next 12 to 18 months?

Sure. Great question. As we mentioned in our opening remarks, a key ingredient to our strategy going forward is being what we call protocol agnostic. We need to deliver protocols that our clients choose at times of high volatility or at times of low volatility. So when I think about low vol environment, the things that tend to stand out in the market are portfolio trading, the dealer-to-dealer mid-market sessions, things like Mid-X, which we've just rolled out. And you see higher levels of block activity move into the market where spreads are stable and tight; our investor clients tend to move back to going direct to dealers. They don't leverage that unique liquidity in the all-to-all marketplace that we run. So really, the key ingredient is providing those protocols seamlessly to our clients, but then using our unique proprietary market data to help them decide which protocol to choose from. It gets complicated to decide whether to do a portfolio trade or to do a list and just go out to all via RFQ. A lot of our data can help traders decide which protocol to use for any given environment. And that's kind of the key ingredient of the strategy going forward is that protocol agnostic approach where we can provide things like block trading tools directly to the client where that client can trade directly with a dealer that has an act or has content or, more importantly, we can help that client select the dealer based on their activity in the market that we see. So all of the key initiatives, the block portfolio trading and the dealer-to-dealer initiative are really designed for lower vol environment, whereas our key liquidity solution, the all-to-all network is certainly robust in the volatility that we're seeing in today's week and the last couple of days.

Our next question comes from Simon Clinch with Rothschild.

Again, considering the market environment, Chris, could you share your insights on the mix of volumes in credit? Specifically, what are the reasons behind the significant increase in the size of block trades and the corresponding decrease in smaller trades? It appears that each month we're observing a compression in the dealer to client segment of the market. I'm curious to know if you foresee this trend continuing or if you believe it is more cyclical in nature. Any thoughts you can provide would be appreciated.

It's a great question because the statistics we shared are unique, showing that smaller trades are getting smaller while larger trades are getting larger, which is not common in an evolving marketplace. Regarding the smaller trades, we are well-positioned to take advantage of the efficiencies needed to handle all trade sizes, driven by portfolio trading. Although portfolio trades are substantial in scale, each line item tends to be small. The growth in portfolio trading contributes to the increase in those tickets in the market. Additionally, the growth of Separately Managed Accounts (SMA) in the fixed income market has significantly influenced asset allocation among our largest clients and will continue to do so as they accumulate more assets over time. The largest use of our automation tools is coming from clients with substantial SMA, and we're pleased to report that our biggest clients are continuing to invest in SMA through acquisitions or overall investments. Consequently, we anticipate that smaller tickets will grow as a percentage of the overall trade market. We believe we are well-positioned for this. Another reason for expecting growth in smaller trades is the tendency for larger trade sizes to be divided into smaller trades. We are already witnessing this in our algorithmic trading suite, where clients utilize our credit algorithms to trade large blocks in sizes of $1 million or $2 million, which yields favorable execution quality and reduces information leakage. Therefore, we expect to see an increase in the total number of tickets traded. Concerning the block market, we have seen historically low volatility and tight spreads over the past few years, making block sizes a more appealing tool for risk exchange. Dealers are willing to trade block sizes, and clients want to move large volumes efficiently. I believe that as volatility returns to more normal levels, those larger blocks will be divided into smaller trades, continuing the trend of electronic transformation where ticket sizes will increase. For both trends, we have positioned ourselves to address portfolio trading, small ticket automation growth, and the block solution. Hopefully, that answers your question.

Your next question comes from Jeff Schmitt with William Blair.

So there have been a lot of growth in industry share portfolio trading through last year. It seems to have stalled out at around 11% or 12% of credit volumes. You've still been able to grow share nicely. But what do you think is driving that pause? That protocol matured? Or do you think it can continue to grow?

It's a great question because we've been monitoring the share portfolio trading share, which is a significant part of the market and an essential tool for our investors. While the overall revenue opportunity from this market is relatively small, we continue to invest in it due to its importance to our clients. We're observing an equilibrium in the IG market concerning portfolio trading. While some had predicted it would reach 20%, it has remained stable between 10% and 12% of the overall market. However, we have seen growth in the high-yield market. Even in November, it accounted for closer to 15% of the overall market, up from about 5% and 6% a few years ago. Many clients are using the high-yield portfolio trading tool for accessing liquidity. Interestingly, the flat growth in IT is not due to a lack of dealer liquidity, as more dealers are providing liquidity for portfolio trades. There’s sufficient liquidity in that market to support a higher market share. However, the market seems to be comfortable at the levels it's operating, which range from 10% to 12%. The only notable spikes happen with mega portfolios greater than $1 billion, which are rare. I believe we have reached some level of equilibrium in IG, but we are seeing substantial growth in high-yield, where our market share has increased significantly. We take pride in our progress and regularly discuss our performance in this asset class with dealers. Currently, we hold a leadership position in high-yield portfolio trading, and we are excited about the investments we've made and the returns we are seeing.

Your next question comes from Dan Fannon with Jefferies.

You have Rick Roy on for Dan today. But I'm sure you're going to be excited for a third follow-up to the macro environment. But just on that, we see duration and yield to maturity, at least measured on the bond index, creeping up month-to-month, your charge for that as well. I was hoping you could provide an updated outlook on maybe where you think the curve could land from that perspective and maybe the updated impacts to fee per million based on that? And then separately, with the expense control that you guys have demonstrated year-to-date and the reaffirmation of guidance today, I get to kind of an implied sequential increase in 4Q that seems a bit elevated relative to historical seasonal patterns. So if you're able to quantify which line items might be driving this increase? And if I'm so lucky to get a little bit of insight into 2026, that would be helpful as well.

Okay. Let's address your questions one by one. Starting with the macro environment and the weighted average years to maturity, I've previously outlined what we're observing in terms of interest rates and potential outcomes based on a rate cut. Currently, we're looking at about 10 years weighted average to maturity on our platform over just four trading days, so we'll need to see how things develop. Yields have shifted slightly, but they are still significantly lower compared to last year. It's important to remember the sensitivities regarding high-grade duration and its impact on yields; for instance, a 100 basis point change in yield can add around $3 to $5 in fees per million for high grades. Additionally, a one-year increase in weighted average maturity could equate to an additional $15 roughly. These sensitivities remain relevant within high grade, though we must consider various factors, including the overall credit fee per million. Now, regarding your question about expenses, we are still guiding towards the lower end of approximately $505 million to $525 million on a GAAP basis. This suggests that our anticipated expense level for the fourth quarter is around $134 million, with an additional $10 million to $12 million expected in the following quarter. This increase in fourth-quarter expenses compared to Q3 is mainly due to depreciation, technology investments, hiring impacts, and some timing-related expenses that have yet to be recognized. It's important to look at our overall expenses for the year. We implemented management actions at the start of the year aimed at enhancing productivity sustainably. These actions are expected to reduce our total annual expenses by $17 million and included vendor management, consolidation, role eliminations, and aligning resources with our strategic initiatives. The actions we took helped us self-fund about $16 million for investments in technology, our products, and key strategic hires made throughout the year. This approach reflects our commitment to managing expenses carefully while making essential investments.

Your next question comes from Elias Abboud with Bank of America.

I wanted to dig into your growth in Open Trading. It looks like Open Trading kicked up to 39% of your credit volume in October, which is the highest level since the regional bank crisis. Usually, I know this is a protocol that does well in the volatile backdrop, but volatility was up pretty modestly in October, certainly not on par with the levels during the regional bank crisis in April's tariff disputes. So what can you share to help us make sense of the stronger Open Trading adoption lately?

Yes, that's a great question. Open Trading hasn't reached the penetration levels we would like in lower volatility environments. However, we did see an increase in Open Trading from 30% in September to about 34% in October. Although there were some spikes in volatility in October, overall it was quite subdued. One important factor contributing to our Open Trading liquidity is the introduction of new liquidity sources. This includes adding systematic hedge funds to the platform, which appreciate the benefits of all-to-all trading where they can price bond requests from other clients. Additionally, several large investment managers are also utilizing the all-to-all model, responding to requests for price from other investors. This is a relatively new development for us. We've traditionally provided tools like our algorithmic trading suite to standard buy-side clients, but now we've noticed that some buy-side clients have invested significantly in their own automation tools, which is enhancing liquidity even in less volatile conditions in our Open Trading marketplace. Furthermore, we observed a notable increase in Open Trading penetration in the high yield sector, which climbed to 43% in October. This reflects our ongoing efforts to help large investment managers become more effective in providing liquidity, as well as new market participants generating unique liquidity opportunities that are boosting our overall Open Trading penetration.

Your next question comes from Patrick O'Shaughnessy with Raymond James.

So the electronification of high-yield corporate bond trading isn't as far along as investment grade, but it's also seeing share gains still out by you as well as other platforms. What are some of the unique challenges to growing electronic market share in high yield?

Great question. The high-yield market inherently relies on liquidity. Our clients often discuss the liquidity challenges they face in this space. In times of volatility, our high-yield all-to-all platform enhances liquidity and significantly increases our market share. However, the main concern we hear from clients is the limited liquidity available. Another issue is information leakage. When clients want to adjust their positions, they must be cautious about how they disclose that information. Selecting the appropriate bank or counterparty for liquidity is crucial. We dedicate considerable resources to our high-yield block trading solution and dealer content to offer our clients unique insights that can minimize information leakage and improve the chance of execution when they contact a dealer. Additionally, we've developed an AI tool that aids in identifying dealers likely to respond favorably to price requests. These are essential aspects we see being implemented in the market. Another notable trend we've observed this summer and continuing into November is the increase in portfolio trading in the high-yield market, something we hadn't witnessed in previous years. This trend has persisted even in times of heightened volatility. Historically, portfolio trading would decrease in high volatility situations, but clients are now turning to it for liquidity in the high-yield sector. The liquid high-yield ETF market also supports this liquidity growth in portfolio trading. Overall, we are witnessing growth in the electronic segment of the high-yield market, primarily through these portfolio trading tools.

Your final question comes from the line of Simon Clinch with Rothschild.

Thanks for the follow-up. Chris, I was wondering if you could just talk a little bit about the competitive environment as well. You were just talking about portfolio trading. And we know that there's been more competition in that space, and that's kind of reduced the revenue pool. Are we seeing any other sort of incremental changes elsewhere that would ultimately affect the overall revenue pools in other protocols or other parts of the market?

Our fee per million has been primarily influenced by the mix. We have lower fees per million in the portfolio trading area, which is a growth segment for us, and we're gaining ground in a competitive market. The dealer-to-dealer segment also has lower fees; however, it comprises a significant portion of the market, about 30%. We previously underinvested in this area but have since decided to support the dealer community with enhanced tools for inventory management. Our growth in the dealer-to-dealer space is generating incremental revenue, even at these lower fees. The Mid-X matching solution we just launched is new and also brings in revenue despite lower fees. We’re optimistic about its initial growth and the way it addresses market needs moving forward. Additionally, the emerging markets, particularly in Latin America and Asia-Pacific, present exciting growth opportunities. We recently launched in India and are eager to introduce more products in this sector. We are well-positioned competitively, given our years of investment and numerous client interactions, and our all-to-all network captures nearly 40% of liquidity in that market. We're consistently witnessing quarter-over-quarter growth in emerging markets. Moreover, we're pleased to have a portfolio trading tool gaining traction among clients, and we've introduced a Mid-X for emerging markets. We are focused on strengthening our position in this sector as it's substantial, roughly the same size as the U.S. credit market, making it an exciting area for us.

There are no further questions at this time. I would now like to turn the call back over to Chris for any closing remarks.

Thanks, everybody, and we look forward to talking to you in the new year about our fourth quarter. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.