MarketAxess Holdings Inc. (MKTX) Q1 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on May 7, 2026. I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Good morning, and welcome to the MarketAxess First Quarter 2026 earnings conference call. For the call, Chris Concannon, Chief Executive Officer, will provide you with an update on our strategy and our business; and Ilene Fiszel Biele, Chief Financial Officer, will review our 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, 2025. 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 very strong financial results for the first quarter 2026. 2026 is all about the execution of our long-term strategy, and that is exactly what we did in the quarter. Turning to Slide 3. We grew total revenue by 12% to a record $233 million including very strong 20% growth in product areas outside U.S. credit. Record total revenue was underpinned by record total trading ADV, driving record commission revenue. Momentum continued to build with our new initiatives and generated approximately 50% of total incremental revenue in the quarter. Strength on the trading side was complemented by 10% growth in services revenue, helping to drive trailing 12-month free cash flow generation of $316 million. We continue to be disciplined with our expenses with 8% growth in non-GAAP expenses. And underlying these strong results was the strong progress we made in innovating and growing our franchise. First, we significantly enhanced the MarketAxess advantage by expanding our global network enhancing our differentiated liquidity and fortifying our high-value proprietary data and analytics by expanding the use of AI. Next, we continued the rollout of our new enhanced X-Pro front end that is changing the client experience. And last, we are continuing to invest in our technology modernization, which includes our recent strategic hire, Will Quan, who joined us as our Chief Technology Officer. Slide 4 highlights the market access advantage where we are increasingly using AI to leverage our sizable proprietary data set to deliver unique data and analytics to clients to enhance their trading outcomes. Our global network of the largest fixed income investors and the most active fixed income liquidity providers generates deep vertical IP that gives us a significant competitive advantage in generating critical analytics and insights for our clients. In 2025, our global network generated over $5 trillion in notional inquiry information and over $34 trillion in notional response information, all of which is proprietary to MarketAxess. This unique data set across U.S. credit, emerging markets in Europe gives us a special AI opportunity to interpret the markets in real time to assist in clients' portfolio construction and to deliver a unique and enhanced execution experience. We have already delivered AI-driven data solutions like the award-winning CP+, CP+ for blocks, depth of book, sense AI and AI Dealer Select. We are now exploring the next level of AI-enhanced data products. What is critical to remember is that AI solutions are only as good as the data they are trained on. We have a unique advantage given our global proprietary data set. Slide 5 provides an update on the macro backdrop of the first quarter and April. Recent geopolitical events drove higher levels of volatility and wider credit spreads in the quarter. The initial jump in volatility and widening of credit spreads was short-lived and credit spreads moved back to historically low levels in April. Open Trading penetration in U.S. high yield increased to 47% in the quarter, the highest level since 2023, reflecting increased demand for differentiated liquidity. Despite these shocks, the market has remained very healthy, with historic levels of new issuance in the first quarter continuing into April. New issue pricing concessions are up modestly from lows, and deals continue to be approximately 4x oversubscribed, reflecting the very strong focus on new issues. All of these factors generated record results in the quarter but the return to lower volatility, tighter credit spreads and strong new issuance in April, combined with tougher year-over-year comparisons were key drivers of the decline in trading volumes in April. Slide 6 highlights the shift in segmentation of U.S. high-grade trace market ADV in April, including the strong focus on the new issue calendar, which reduced our estimated market share. We believe there were several factors that reduced our estimated market share in April. First, duplicate reports in TRACE have been increasing over the past some quarters and we estimate that they inflated U.S. high-grade TRACE volumes by up to 8% in April. Adjusting for these duplicates, consistent with FINRA's recent proposal to suppress duplicate reporting, we believe our estimated U.S. high-grade market share would have been approximately 160 basis points higher in April. Next, April's historically high new issuance further reduced our estimated U.S. high-grade market share in April. We generally have lower levels of market share and new issues during the first 2 weeks of trading. When our clients are very focused on new issues, we believe it can crowd out some of their secondary trading activity on our platform. In summary, while there was considerable noise in the denominator used to calculate our estimated market share in April, we are now addressing the challenges of the new issue calendar with our new issue trading solution. Slide 7 summarizes the record levels of trading volume across our credit products and the strong growth in U.S. treasuries. We delivered double-digit growth in ADD across most credit products and U.S. treasuries and double-digit growth in variable transaction revenue. U.S. high-yield liquidity provision by our long-only clients increased almost 80% compared to last year. This increase in unique liquidity is delivering a greatly improved execution experience for our high-yield clients. Slide 8 highlights the record levels of trading volume and revenue we generated in our emerging markets franchise. Over the trailing 12 months, our EM franchise has generated $20 million in incremental revenue, representing 68% of total credit incremental variable commission revenue. This reflects the success we have had with our investments in the EM business. In the quarter, we expanded our EM global client network to a record 1,547 active client firms and 3,410 international active client traders. Total trading volumes were up 30% in the first quarter to record levels with record levels across both hard currency and local currency markets and across all regions. We grew our hard currency revenue with high fee per million by 15% and we grew our local markets revenue with lower fee per million by 56%. Total EM fee per million is down only 4% in part because of the mixed impact of the local markets fee per million which is over 40% lower than the hard currency business. Fee per million is simply an output that reflects the mix of business being executed while we are still focused on maximizing revenue. Slide 9 and 10 highlight how well we are executing our new initiatives across our three strategic channels, including record levels of credit automation trading model. On Slide 10, in the client-initiated channel, we continue to make strong progress with block trading globally. We generated 35% growth in ADD to a record $7 billion of block activity across U.S. credit, emerging markets and Eurobonds, with record block trading ADVs across all three products. Importantly, in U.S. high grade in March, dealer algos won 30% of block trades on the platform. In the portfolio trading channel, we generated a 51% increase in total global portfolio trading ADV to a record $1.9 billion. U.S. credit portfolio trading market share increased by 100 basis points year-over-year. In the dealer-initiated channel, we generated record levels of ADV with record Mid-X ADV as well. And in April, we delivered volumes of $6.7 billion, the second highest level of monthly activity. passed in our automation suite, we had another record quarter as clients continue to leverage automation even in more volatile periods. We saw $144 billion in automation volume helped with a sizable increase in adoption of our [ Adaptive ] Algo solution. Slide 11 shows the strong growth we have generated in U.S. credit blocks as well as the new protocols and workflow tools we are developing to attack this important segment of the market. We are starting to crack the block market, and now we have expanded the toolkit for clients to trade blocks. We are continuing to invest in block automation and targeted RFQ solutions, but we also recently launched targeted access, and we expect to launch our new issue block trading solution in the second half of 2026. Now let me turn the call over to Ilene to review our financial performance.

Thank you, Chris. Turning to our results. On Slide 13, we provide a summary of our first quarter financials. We delivered 12% revenue growth to a record $230 million, which included $5 million from our RFQ hub acquisition and a $3 million benefit from foreign currency translation. Growth in revenue outside U.S. credit was 20% in the quarter, reflecting strong contributions from our international product areas. We reported diluted earnings per share of $2.20 or $2.25 per share, excluding notable items, representing an increase of 20%. The benefit of our enhanced capital return program with the completed $300 million ASR flowed through in the quarter and was the key driver of the $0.12 benefit to EPS on a 6% reduction in share count. The $0.05 per share impact of notable items in the quarter consisted of approximately $1.5 million or $0.03 per share in repositioning charges in our expenses in the employee compensation and benefits line. And approximately $700,000 or $0.02 per share in other legal related notable items in the professional and consulting line. My comments on our results from this point forward will largely exclude the impact of notable items, only on a non-GAAP basis where applicable. Looking at each of our revenue lines in turn, record total commissions revenue increased $22 million or 12% to $203 million compared to the prior year, 50% or $11 million of the incremental commission revenue in the quarter was driven by emerging markets and eurobonds on record trading volumes in each area. Other commissions, which include FX, equities, derivatives and ETF activity, increased $5 million or 104% driven by the inclusion of RFQ hub commission revenue and higher trading volumes. Services revenue increased 10% to a record $30 million. Information Services revenue of a record $14 million increased 12%. Post-trade services revenue of $12 million increased 5% versus the prior year. Technology Services revenue of a record $4 million increased 19%, driven by higher connectivity fees from RFQ Hub. Total other income decreased approximately $5 million, driven by lower interest income on lower rates and increased interest expense related to borrowings for the ASR. For modeling purposes, please note that we received a onetime $3 million tax credit in the other net line, which is nonrecurring. The effective tax rate decreased to 25% from 27%, primarily due to higher tax credits, lower state tax accruals and reduced stock-based compensation shortfall. Slide 14 highlights our key performance indicators. As you can see from all the green on this slide, it was a very good quarter for us, and these strong KPIs underscores the strong revenue generation in the quarter. The investments that we have made to enhance our products and provide clients with new workflow tools and protocols gain traction and helped drive tangible outcomes in the quarter. While we are pleased with these results, U.S. credit market share continue to require attention and focus. On Slide 15, we provide more detail on our commission revenue and our fee capture. Record total credit commission revenue of $184 million increased 9% compared to the prior year. These record results were driven by 4% growth in both U.S. high-yield and U.S. high grade. 24% growth in emerging markets and 14% growth in Eurobond's total commission revenue. We are very pleased with the improvements in U.S. credit revenue generation in the quarter relative to recent historical trends. The reduction in total credit fee capture year-over-year was due to protocol and product mix shifts. Partially offset by the higher duration of bonds traded in U.S. high grade. The quarter-over-quarter reduction was due principally to product mix. On Slide 16, we provide a summary of our operating expenses. Excluding notable items, total expenses increased 8%, which included a headwind of $2 million due to the impact of foreign currency translation. The increase was driven principally by higher employee compensation costs and higher technology and communication costs as we continue to upgrade talent and invest in our technology modernization to drive future growth. We are continuing to invest while maintaining focus on cost discipline and operating efficiency. With our strong revenue generation, combined with our continued cost discipline, operating margin of 44% in the quarter increased almost 200 basis points, reflecting the inherent operating leverage in our model. Head count was 859, down 1% from both 870 in the prior year period and a 869 in the fourth quarter of 2025. On Slide 17, we provide an update on our capital management and cash flow. Our balance sheet and cash generation continues to be strong with cash, cash equivalents and corporate bond and U.S. treasury investments totaling $537 million as of March 31, 2026, compared to $679 million at the end of 2025. In the quarter, we paid out $52 million in annual incentive compensation. We paid down $63 million in borrowings on the credit facility related to the ASR and we paid out $27 million in dividends. After the quarter, we paid down an additional $20 million on the credit facility. So the drawn balance was $137 million at the end of April. And while it is not reflected in our cash flow in the quarter, we returned $60 million to investors through share repurchases with the completion of our $300 million ASR in early February. We generated $316 million in free cash flow in the first quarter on a trailing 12-month basis. As of April 30, 2026, $205 million remains on the Board's share repurchase authorization. Now let me turn the call back to Chris for his closing remarks.

Thanks, Ilene. In summary, on Slide 18, we are continuing to execute our long-term strategy. We significantly enhanced the MarketAxess advantage in the quarter. The growth profile of the company outside U.S. credit is strong, and we are pleased that we delivered higher levels of revenue growth in U.S. credit in the quarter. We continue to make strong progress with our new initiatives across our three strategic channels, including our new issue trading solution. We are increasingly leveraging AI to unlock more value from our proprietary data and analytics for our clients. And we are continuing to focus on expense discipline and optimizing capital deployment to maximize long-term shareholder value creation. Now we'd be happy to open the line for your questions.

[Operator Instructions] Your first question comes from the line of Chris Allen of KBW. Your next question comes from the line of Dan Fannon of Jefferies.

Another really strong quarter out of your non-U.S. business. I wanted to talk about competition there and what you're doing to kind of maintain your moats or defend your -- defend that as competition picks up and kind of -- and also just talk more broadly about the momentum in that business as you think about your bonds as well as the app.

Obviously, we're quite excited about the progress in our international business and just to clarify our international business really are driven through our emerging market business as well as our Eurobond business. And so that's quite a strong quarter, not just in our U.S. credit business, but obviously, in our international business, emerging markets had record ADV, record volume in Q1, up 30%. And really records across our key initiatives, the block initiative is where we've seen a lot of progress across EM and Eurobond business. Our block business -- block volume in the euro markets in the EM markets was up 46%, and we also saw block volume up in the Eurobond business as well a record up 45%. So we're really driving those two international businesses both with traditional RFQ, where we're seeing a record volume in Q1, but also our key initiatives. Portfolio trading we saw in Eurobond market, up 90% and the dealer business as well, we had a record dealer business in the Eurobond business up 73%. So when you think about our key initiatives, block trading, the dealer initiative and our PT or portfolio trading initiative, they all experienced growth across our international businesses. And really, that's been the strategy for just over a year and attacking the key, what I call, flank of the key RFQ businesses using the new products and new protocols that give us extended growth. With regard to the EM business, we obviously have very little competition on the electronic trading side other than we see Bloomberg. Bloomberg is probably the only one in that space that we see as a competitor. In Eurobond business, it's obviously a Bloomberg and Tradeweb that we see as competition in the space. But largely, in the dealer-to-client business, our key franchise, we only see Bloomberg in that space really making a difference at all. So altogether, the international business saw a record quarter, record volumes, and it was really driven by the growth of our key initiatives. Again, block trading. We've launched all the block trading tools across EM and Eurobonds. Our portfolio trading tools have been rolled out across EM and Eurobonds. And then our dealer initiated, that's where we've seen the biggest pickup using our Mid-X trading solution across Europe and recently launched in emerging markets as well.

Your next question comes from the line of Chris Allen with KBW.

Sorry about the tech issues. I wanted to dig a little bit deeper on the April commentary. I recognize the year-over-year headwinds were pretty material. But when you look at April relative to the first quarter months, we saw lower issuance and block activity that we can kind of track. So say, expectations, especially in U.S. investment grade or for stable to up share. Anything you could point to when you comp it versus the 1Q months besides tighter spreads, lower volatility that impacted share -- and more importantly, anything -- any catalysts ahead that could allow you to outperform the environment over the next few months or quarters?

Great. I'm glad we have you back, Chris. First, let me start. Just to put April in perspective, I really want to -- the set up is Q1, just as we step into April. I think it's important to take a quick look at Q1 because Q1 was really indicative of the progress we were making as we rounded out the end of 2025. Again, our key initiatives, the trends are quite consistent going through Q1. We grew block trading, as I mentioned, on the international business, but really in U.S., we saw block trading growing. We saw growing portfolio trading as well and then growing our dealer business as well. So those key initiatives across the quarter continued on trends that we were seeing as we ended 2025. We also obviously not only had a record quarter but we really -- we closed out the month of March with smashing records. And these -- we broke records across all products from U.S. credit to the international products even to equities and FX. And then at the end of March, we smashed our single-day trading record on the last day of March as we went into April. So all signs of phenomenal activity on the platform across all of our key channels and all of our key protocols throughout the quarter and as well as the month of March. As April started, we walked in right into a holiday week, if you recall, both religious holidays and the European holiday fell in that first week. And then right around April 8 was when we saw the seats fire announced given the geopolitical activity that we were experiencing in the month of March. We saw the VIX drop from plus 25 down to around 17 quite rapidly. So obviously, a quick slowdown in volatility. No, it's not unusual to see a month following what I'll call, excessive volatility, high turnover to have a material slowdown. And that's really what we saw in April, somewhat influenced by holidays, really, the slowdown that we saw in April was largely across all products. So it wasn't just U.S. credit that we saw the slowdown. Markets saw a slowdown across international products as well as treasuries or rates globally. So it was a consistent theme across the market. The other thing we noticed in April was a return to near historic spread tightening. Again, we saw this in -- certainly in January and February. So that was broken in March with the volatility. The other thing we saw was near record-breaking new issuance return, while March was record-breaking, April was the new issuance market in April was the second highest new issuance market for any April if you had April in 2025, it would have been the second highest new issue in all of 2025. So quite a robust new issue market. And really, that's what we really tried to show on the slides in our opening remarks was the market was largely turned its attention to that new issue market. Our clients, the client dealer side of the business certainly moved its attention to new issue particularly new issue blocks. We saw the new issue block market grow by 34% year-over-year in quite a heightened April market environment. It grew as high as 13% of the total block market. So it was a sizable percentage of the overall block market in April. And really, what we saw with clients moving all of their training attention coming off of the high volatility and high turnover of March, they moved all their attention to that new issue market. We saw a lot of what we call switches or swaps, where clients were trading the seasoned -- exchanging seasoned bonds of the same issuer for that new issue bonds. You typically would do that in block form directly with the dealer. So when we look at April, really not at all surprised or concerned with that 1-month slowdown. We've always said 1 month does not make the year, but we were also faced with what we call fairly robust new issue market. Now here's some good news and so some of the trends that you were asking about. We did see on month end, April 30, it was our fourth largest single-day trading record in history. So we did see a return of high activity at the month end. We also broke some high-yield PTs during the month of April. So we saw it was a high-yield PT record month for us. And then as you mentioned, it was obviously a very difficult comparison to April 2025 where we had -- we were dealing with the tariff tantrum and volatility and quite high turnover during April of 2025. The good news is also in May, while we're certainly early in May, we have seen a return to higher levels of activity, which is quite exciting across all channels. And then my most exciting piece, and we put it in the opening remarks is that we are addressing that new issue market. We have historically saw challenges during around new issue. We are addressing that new issue market with the launch of our direct books partnership, which we announced recently. And we are excitingly launching our new issue solution in -- as a pilot form in the month of May, near the end of May. So we're excited that we are finally addressing the new issue market head on. And we have a new product coming to market that we're quite excited about.

Your next question comes from the line of Michael Cyprys, Morgan Stanley.

I was hoping to dig in on the new issue trading solution that you're going to be bringing to the marketplace. I was hoping you could elaborate on how that is going to work. Key milestones that you're looking for, how you anticipate that contributing? And then maybe you could also touch upon the closing auction, just an update there in terms of traction and milestones as you look ahead, how you see that progressing and contributing.

Great. Thanks. Well, we're quite excited about our partnership with DirectBooks and what that brings to the market. If you look at the new issue market in 2026, it's over $800 billion has been run through the new issue market year-to-date. Current forecasts are close to $2 billion -- or sorry, $2 trillion of new issue in 2026. So we're expecting a pretty vibrant new issue market in 2026. For quite a long time, clients have been asking us to assist in the new issue market, particularly streamlining an integrated solution in that new shoe market. What we've really partnered with DirectBooks on is what's a great new issue solution. It's a brand-new offering that we'll be rolling out again in pilot form at the end of May. We've ring-fenced the solution. So it's a separate solution to traditional MarketAxess, all new UI, new technology. What's clear is that we're not part of the offering, just to be clear, we are really just providing clients with a streamlined access to DirectBooks services. All clients have access to this seamless kind of access to this integrated offering and clients have to opt into the offering. So it's not just available to anyone. Clients actually have to opt in and dealers have to approve each client for each offering. So it's well integrated into how the new issue market operates today. It does provide first part of the partnership with DirectBooks is largely around data sharing. So we are able to present to our clients have real-time access to the DirectBooks new issue calendar, status updates on new issue pricing information around that new issue and then ultimately, final pricing and final allocations. Our clients -- what's exciting for clients is within their current credit application, MarketAxess UI Clients can submit indications of interest to each deal being operated by the syndicate banks. Those indications of interest go direct to DirectBooks and really made available for the syndicate banks to run their normal deal process. We are able to receive confirmation of final allocations and coming in August, those allocations will be subject to really a seamless booking and straight-through processing to the client's back office, something clients have long complained about and asked for assistance in. So we can really be involved in the new issue process from start to finish. It also allows us to present a great deal of information around of the new issue market prior to the new issue pricing but more importantly, at pricing and after pricing. What's really exciting is what comes later in August and the second half of 2026, where we will be presenting clients with really after the break of a new issue, a streamlined single 2-way pricing a single click to trade solution for new issue trading. And this is an area that we have spent a lot of time on looking at what is the right protocol to attack the new issue market, but that where we see challenges around market share, it's right after the break of the new issue, and now we'll be able to have an offering in the second half rolled out. That allows us to trade directly on the break using access from dealers, streaming price and a click-to-trade solution. So super focused on that new issue trading. And again, it's piloting the partnership with DirectBooks pilots starts to pilot with one or one clients at the end of the day and we'll roll out during the month of May, June and the rest of the summer. The demand and the feedback from clients that have seen the solution and looked through the steps of the solution have been overwhelmingly positive. And obviously, the dealer community was quite supportive given their partnership and direct ownership of DirectBooks. So a very important partnership, a very exciting partnership and obviously, a very big step for MarketAxess to crack that new issue market, but also presenting clients with a solution that is quite seamless and quite simple for them to use in an aggregate way.

And on the closing auction, any update there?

Right. Sorry about that. On closing auction, again, we launched this late in the quarter -- about fourth quarter of 2025, really around December. Quite a great deal of excitement from some very large investor clients around bringing to market a new protocol where we can organize and aggregate liquidity at a single moment in time. As you look at the fixed income market, it's unlike most markets, liquidity in most markets, equities, futures options is what we call use shaped. Liquidity start of day is quite strong and you get increased liquidity at the end of day as well, a natural U-shaped curve of liquidity. Fixed income, we tend to see high levels of liquidity in the morning. And as the day progresses, levels of liquidity start to decrease near and around the end of the day, just given the risk of holding positions. This is designed to allow both clients and dealers to participate in a single auction where they can -- dealers can provide a sizable liquidity at different price points and clients can find liquidity in and around the close of the trading day. While we launched it at the end of the year, Unfortunately, during the quarter, with all the volatility, we made progress with clients in how to use the close, how to use the auction. We rolled out new order types. We've seen staged in our platform over $11 billion in auction orders. And then we saw submitted over $7 billion in notional orders into the auction. While the trading volume is still light, we've seen -- we continue to see about 12 active very large buy-side clients and then four active dealers participating in the auction as well. So more to come on the auction is a novel protocol that we've delivered into the market. But there's a huge and overwhelming application for an end-of-day liquidity solution, and that's really from the client feedback that we've heard that have engaged in the auction.

Your next question comes from the line of Simon Clinch of Rothchild & Co Redburn.

I was wondering if you could expand on the success of your new initiatives in European and international markets. And just how to think about I guess the application of those in U.S. markets and what the differences are? It looks like the speed of the uptake there has been hugely positive in the international markets. But we just don't see the same level of penetration, at least initially in the U.S. So I was wondering if you could talk to that, please.

Sure. Number one, I think you have to look at where those markets, the international markets sit with regard to electronification. EM, in particular, still, we see, again, the notional volume of the total market is not clear. It's hard to estimate. But we do estimate we're still in early innings of electronification of the EM market. So much of our penetration in the market is organic growth of penetrating new clients, adopting electronic trading. The good news is we're using multiple protocols to engage those clients because each market -- each local market, in particular, is quite different in terms of the protocols that they gravitate to. But overall, the international market still has a great deal of growth given low levels of penetration. The good news about the different protocols that we're seeing expand on portfolio trading in EM, it's still early days relative to what we see in U.S. credit. So we think there's a lot more runway in portfolio trading. And we would expect to see more and more what we call global portfolio trades coming to market where you are trading not just the EM bond but across U.S. and European bonds as well. And we're set up and designed to allow for global portfolio trading. Where we're most excited, and we've seen a great deal of growth is our block trading solutions. We first launched our targeted RFQ into the EM markets. We thought it had great application given some of the local markets are truly rates markets. Our block trading in Q1 in EM smash records, it was up 46% year-over-year. It was up 11% quarter-over-quarter. So we're seeing organic -- a true organic growth of the block market really starting in the EM market. And that's, again, where we launched it first. The dealer business as well, remember, there's quite a sizable interdealer business or a dealer-to-dealer business in not only the Eurobond market and the U.S. credit market, but also in the interdealer market for emerging markets. That market for us was up 15%, largely driven by our dealer RFQ offering. So again, early innings on electronification of the EM market we're using, as I mentioned, the different key protocols that we've launched across all our markets. They're just -- I think the block market is most reflective of the success we're having in that EM market. And then there's one other protocol that we've had a great deal of success and it's been driving some of that block market share, and that's instead of request -- for request for market where you're really able to show more size from the client you don't reveal your direction. So clients are much more comfortable trading blocks in a request for market. And that protocol has been growing consistently year-over-year and quarter-over-quarter. So a number of different protocols, but really, we're just seeing some of the early launch protocols like our box solution growing really outpacing some of the growth in EM than we see in other products.

And just -- when I think about the U.S. application of these initiatives then. I mean if I look at the share gains you had sort of last year on a trading 4-quarter basis, it really sort of accelerated across all the initiatives. And then it's really started to segment income down. I just wondered what's the color around that? I mean is this -- do we just need to wait for these new products to be launched to gain more traction again? Or has there been something else at play here?

Sure. Well, one, I think if you look at the first quarter, and our record volume across U.S. credit. It was driven by some of these new initiatives. So our block trading activity high grade. We saw a record up 31%. And then our PT volume was also up 35%. So some of the protocols that we've seen success in our international markets, and we've launched here in the U.S. While it's still early days in that protocol and the breadth of that protocol being adopted by clients, we're still seeing heightened growth across those protocols. I think the one protocol that was newly launched in the U.S. is Mid-X. Mid-X is our dealer solution. It was launched earlier in Europe and EM. But we have been seeing growth in Mid-X and U.S. credit. Year-to-date, it's traded over $16 billion in volume, and we're seeing high participations from dealers. We have over unique dealers participating on a regular basis and a number of traders as well. And certainly, that's the one protocol that's still, I'd say, early days in U.S. credit.

Just one other thing I would add is, you'll recall that in the fourth quarter, we talked about the significant amount of activity we were seeing in portfolio trading in high-yield. In the first quarter, that also continued with our PP high-yield ADV up about 78%. So we are seeing, as Chris said, some of these same protocols that are doing quite well in the international markets, taking hold here as well. And there's -- obviously, we're looking to see more to come.

Your next question comes from the line of Alex Blostein of Golden Sachs.

This is actually Aditya filling in for Alex this morning. So Chris, we heard you in the prepared remarks on how you look to leverage AI to deliver unique data and analytics. Could you just help expand that a bit more on the opportunities that you see? What's reachable, the next steps from your -- and I guess, importantly, how would this create a structural advantage for market access that competitors cannot replicate.

Great. Great question. And obviously, an area that we've been spending a lot of time on. I think everybody has been spending a lot of time on. This is one that I'm super excited really for our position in the market when it comes to data. And there's really three reasons why I'm so excited about the data opportunity. One, we have the best source data in fixed income. When you think about the breadth of our product the protocols that we use, RFQ is a phenomenal source of data because you have both the inquiry from clients around the planet as well as the response from both dealers, alternative dealers, hedge funds and clients now. So the data source that we have is the raw data and very important. The other key ingredient is we have not sold what I call the good data. We have sold things like CP+. We have sold Access All. There's really good data underlying the platform. And we've been for now several years on these calls saying we will not sell all our data. It's too important to the execution solutions that we are building. The other reason why I'm excited is because we also protect the data that we sold. We have very tight restrictions, derived right restrictions as well as AI use restrictions on the data sources that we are selling. So we feel like we're in a very good position to take advantage of the footprint of data we have. So also the other opportunity that we have is we've been investing heavily in AI when it comes to our date for a number of years. It's not a new topic for us when it comes to data and data products. So within the use of AI to produce data or produce product, I'll be more clear. We have AI-derived real-time data called CP+. We've had it for quite a number of years. It is now across all products. and certainly well regarded in the market, certainly viewed as real-time benchmark for trading U.S. credit, and we've been getting awards with that product as well. We are now able to predict using AI real-time block pricing based on your direction, sell or buy. We are predicting using AI liquidity levels in the market. We were also using AI, leveraging AI to predict what we call counterparty selection or dealer selection as well. And then obviously, one of my favorite use of AI is being able to predict when it is advantageous to provide liquidity. This is a very important component. It's one of the drivers behind our algo solution, which is the theory that clients who have historically crossed spread for most of their fixed income experience may present with the opportunity to avoid crossing spread. And we are now leveraging AI to actually help with predicting when is that beneficial for you to have patience and wait. So again, AI from a product and execution solution is really what's the most exciting part of our day. We are also, just to be clear, piloting a new AI solution with some of our clients. And the areas of exploration that's super exciting for us is, first, AI-derived real-time market intelligence. As I mentioned, our market footprint is quite broad. So we see the markets from the start of APAC through the trading hours of Europe into the U.S. hours, and we were able to leverage AI to look at the market intelligence know what kind of direction certain sectors are experiencing volumes, volatility, spread volatility, all of the market intelligence can be derived leveraging AI sitting on top of our -- quite broad source data. The second area of exploration where we have dabbled already is what we call portfolio optimization. Given the market intelligence that we have, given the levels of liquidity that we see in the market, AI is a wonderful tool in interpreting selection of underlying bonds when building a portfolio. And then the last area of exploration is really -- and one that we hear from our clients the most is leveraging AI to help us suggest protocols. There are times when a portfolio trade is an optimal way to trade a list of bonds. There's times when going direct to a single dealer for a large block is the right protocol for that bond. So using AI to actually suggest protocol selection is a key ingredient to some of the areas of exploration. Now the other area of AI, I think, which is store exciting for us, it's certainly in the way we're leveraging AI in our technology footprint. If you look at MarketAxess for the first 20 years of our history, there's probably a large underinvestment in modern tech. We have been, over the last number of years, making sizable tech modernization investment and we've been doing that both organically and inorganically. If you recall, our acquisition of Pragma was really a tech modernization acquisition. We are now leveraging that technology and things like auctions and and our automation suite. What AI is doing for us today is what's most exciting. We're now accelerating that tech modernization, including our core trading stack. We're currently actively engaged in AI solutions that can look at refactoring our legacy code. This is an exciting component that a number of people have deployed in the market space that we're in, where they can refactor legacy code. We're also seeing AI can increase our time to market on new capabilities and new functionality. So we're expanding our use of AI across our engineering footprint. All our developers have access to all the latest and top models and that is slowly having an impact on how fast we move. As I mentioned in my opening remarks, we brought in our CTO, Will Quan, he has both cloud and AI experience. So that alone has accelerated our deployment of AI, and it's quite exciting. UI design is another area where we see AI development accelerating what clients can have in front of their desktop and how quickly we can turn around those UI designs. The last point on AI, I'll make, and it's really around the M&A space that I foresee. I think AI is going to change the M&A landscape. Most of my career was -- I was involved in M&A that was -- you typically would see sizable tax synergies in M&A and some M&A was really designed either. I either had acquisitions that we were doing that were tech accretive, where technology synergies were one of the drivers of the M&A or I had companies that were acquired because of tax synergies where, again, technology synergies were a big component in the synergy analysis of the acquisition. AI is effectively reducing the value of tech synergies when it comes to M&A. AI has the ability to, in a faster way, refactor, older technology. So it's really changing the math of deals when you actually look at what AI is capable of making some deals less attractive because they're less synergy accretive. And that's an important thing. The other important thing is really to recognize and think about the MarketAxess over 25 years of sales effort and network effect. AI does not sell and distribute services. AI can't build client networks, it can't do KYC onboarding, but they can do KYC work, but it does not onboard thousands of clients. It doesn't take clients to dinner, and it doesn't make source data. So what really becomes valuable in this world of AI when it comes to M&A is companies that have golden source data and companies that have broad networks. And I do think AI, not only is it changing our product set, but it's also changing how fast we can deliver product. And ultimately, it changes the value of the data that we sit on and are mining today. So sorry for the long-winded answer, but it's really reflective of the excitement that we have and the advantages that AI give us.

There are no further questions at this time. With that, I will now turn the call back over to Chris Concannon for final closing remarks. Please go ahead.

Great. Thanks a lot. Thanks for joining us today, and thanks for listening to my long-winded answer on AI. We're excited to talk to you in the next quarter to give you an update on the progress we're making. Thank you.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.