Dave Cresci - IR Manager Rick McVey - Chairman, CEO Tony DeLise - CFO.

Mike Adams - Sandler O'Neill Hugh Miller - Macquarie Niamh Alexander - KBW Patrick O'Shaughnessy - Raymond James Ashley Serrao - Credit Suisse.

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded April 22, 2015. I would now like to turn the call over to Dave Cresci, Investor Relations Manager at MarketAxess.

Please go ahead, sir..

Good morning. And welcome to the MarketAxess First Quarter 2015 Conference Call. For the call are Rick McVey, Chairman and Chief Executive Officer, will review the highlights for the quarter and will provide an update on trends in our businesses; and then Tony DeLise, Chief Financial Officer, will review the financial results.

Before I turn the call over to Rick, 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. 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, 2014.

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 Web site. Now, let me turn the call over to Rick..

Good morning. And thank you for joining us to discuss our first quarter 2015 results. This morning we reported a strong start to 2015 with record revenues of $77 million up 21%, record pre-tax income of $39 million up 39% and record diluted EPS of $0.65 up from $0.46 a year ago.

Accelerating market share gains across high-grade, high-yield emerging market and euro bond products drove our record results. Our estimated adjusted U.S. high-grade market share was 15.6% for the quarter up from 13.4% a year ago.

We are pleased with the ongoing momentum in our European business with euro bond volumes up over a 100% and total trading volumes from clients in the region up 75% year-over-year.

Our record quarter in open trading volumes and participation reflects the value that we are delivering to dealers and investors through our innovative, all-to-all, trading protocols. Slide 4 provides an update on market conditions. Increased credit spread volatility drove robust secondary trading volumes in the first quarter.

High-yield markets were particularly active sending high-yield TRACE volumes up 25% year-over-year. Combined high-grade and high-yield TRACE volume in the first quarter represents the best quarter ever for secondary volume since FINRA introduced TRACE in 2002.

We are seeing a tailwind from secondary market volumes brought on by the large increase in corporate debt outstanding and the up tick in market volatility. Improved market volumes and accelerating share gains delivered the record high-grade and high-yield trading volumes on MarketAxess despite heavy U.S. high-grade new issuance in the first quarter.

Taxable bond funds experienced net inflows during the quarter while interest rates remained low. Slide 5 provides an update on Open Trading. Strong momentum continues in open trading with another record quarter for volumes and participation. Our average daily volume for Q1 was $300 million up 187% compared to the first quarter of 2014.

This represented a total of $18 billion traded during the quarter. Over 35,000 open trading transactions were completed compared to 11,800 in the year ago quarter and over 9% of our U.S. trade now take place using open trading protocols. We believe that one of the key benefits of open trading comes from the diversity of liquidity provision.

During the quarter, 346 different firms responded to open trading increase up from 172 in the first quarter of 2014. Approximately 42% have completed open trading transactions were won by traditional asset managers, 39% by dealers and about 19% by alternative liquidity providers such as hedge funds and ETF market markers.

We are seeing open trading adoption across a range of products with 62% of our trades in U.S. high-grade, 26% in high-yield and 12% in other products. And we continue to enhance our open trading platform. Most recently we added anonymous work out functionality to our client access protocol to support trading in larger sizes.

This new source of all-to-all liquidity is creating efficiencies that deliver real cost savings to our global clients. During the first quarter, we estimated our client saved on average of 3 basis points in yield in transaction cost savings for the open trades that were completed.

In dollar terms based on the average maturity of bonds traded on MarketAxess, we estimate client saved on average $1800 per million traded for a high-grade bond and $3400 for a million traded for a high-yield bonds. The MarketAxess liquidity pool continues to get more diverse and valuable for both our dealer and investor clients.

Slide 6 provides an update on Europe. We are seeing the results of our strategic investments in Europe through the continued growth of our business in the region, the enhancements to our trading platform and introduction of unique and valuable data tools have been well-received with trading volumes from European clients up 75% year-over-year.

We added four new dealers to the platform during the first quarter further broadening our European liquidity pool. This followed the launch in January of open trading per European products. Although it is early days, we are already seeing 24% of euro bond increase being sent to the Market Lists open order book.

In February, we launched Axess All, the first intra-day trade tape for European fixed income markets. And last night, we announced the launch of a MarketAxess composite price that provides market participants with greater pre-trade visibility into euro bond pricing.

Both of these new data products demonstrate our continued commitment to credit market transparency. This quarter, we also completed our build out of the Trax technology representing an important milestone in the integration of the two businesses. These developments are driving the growing revenue and earnings contribution from the European region.

Now, I would like to hand the call over to Tony for additional detail on our volumes and financial results..

Thank you, Rick. Please turn to Slide 7 for a summary of our trading volume across product categories. Our overall global trading volumes were up 30% year-over-year to $244 billion. U.S. high-grade volumes were a record $145 billion for the quarter up 22% from the first quarter of 2014.

The majority of the high-grade volume gain was attributable to the 220 basis point increase in estimated market share. Estimated U.S. high-grade TRACE volume was up approximately 5% year-over-year. Volumes in the other credit category were up 63% compared to the first quarter of 2014 driven by an over 70% increase in order flow.

We reported a record trading volumes for high-yield and emerging market bonds and more than doubling in euro bond trading volume. Trax and TRACE data indicate that overall emerging markets and euro bond market volumes were roughly flat and high-yield market volume was up approximately 25% year-over-year.

This means that the vast majority of volume growth in our other credit category resulted from market share gains. In CDS, average daily trading volume during the first quarter was $1.8 billion or 54% above the fourth quarter 2014 run rate although short-term revenue opportunities remain modest. Slide 8 displays our quarterly earnings performance.

Revenues of $76.8 million were up 21% from a year ago driven by the record trading volume and commission revenue. The stronger dollar dampened the revenue growth by approximately $900,000. Information in post-trade service revenue, the majority of which is derived from our Trax business was flat year-over-year in local currency.

We expect modest sequential growth information in post-trade services revenue as we introduce additional data products and increase trade matching rates. Technology product and services revenue was down to 30%, but the result was consistent with the revenue expectation comments made on our year-end earnings call.

Total expenses were $38.3 million up 7% from the first quarter of 2014, absent the impact of a stronger dollar; the expense increase was approximately 10% year-over-year. Operating margin expanded more than 600 basis points year-over-year and ticked above 50% in the first quarter.

The effective tax rate was 36.1% for the first quarter although the full year 2014 rate of 36.9%. While there are a number of variables in play, the full year 2015 effective tax rate is currently projected at the low-end of the guidance range of 36% to 38%. Our diluted EPS was a record $0.65 on a diluted share count of 37.6 million shares.

The year-over-year decline in our diluted count was principally due to share repurchases. On Slide 9, we have laid out our commission revenue, trading volumes and fees per million. Total variable transaction fees were up 43% year-over-year mainly due to the 30% increase in trading volume and higher overall fee capture.

An increase in trading volumes and execution fees from our all variable fee plan accounted for the sequential change in U.S. high-grade fees per million.

The sequential and year-over-year decline in the other credit category fees per million was due to a mixed shift within this category with heavy weighting to euro bond volume and sovereign emerging market bonds. The $600,000 sequential drop in distribution fees was mostly due to a decline in unused minimum commitment fees under our all variable U.S.

high-grade fee plan. Slide 10 provides you with the expense detail. On a sequential basis, all of the non-compensation expense categories were inline with the fourth quarter figures.

The sequential increase in compensation and benefits was largely attributable to a higher variable bonus accrual which is tied directly to operating performance and seasonally higher employment taxes and benefits.

On a year-over-year basis, the 14% growth in compensation and benefits was due to a combination of higher variable bonus accrual, wages and equity based compensation. The year-over-year change in non-compensation costs was consistent with variations over the past several quarters.

Depreciation and amortization increase as a result of a significant investment in product enhancements and technology over the past several years and professional and consulting fee to client. We still expect full year 2015 expenses will be within our expense guidance range. On Slide 11, we provide balance sheet information.

Cash and securities available for sale as of March 31st were $223 million compared to $234 million at year-end 2014. During the first quarter, we paid out our year-end employee cash bonuses of roughly $23 million, the quarterly cash dividend of $7.5 million and capital expenditures of $3.5 million.

During the first quarter, we repurchased 117,000 shares at a cost of $8.9 million under our share buyback program. As of March 31, approximately $53 million was available for future repurchases under the program. Based on the first quarter results, our Board approved a $0.20 regular quarterly dividend.

There was no change in our capital structure during the first quarter, we have no bank debt outstanding and didn't borrow against our revolving credit facility. Now, let me turn the call back to Rick for some closing comments..

Thanks Tony. The first quarter represents a great start to the New Year. The increase in market volumes reflects a small increase in market volatility and a large increase in outstanding corporate bond debt. For the second quarter in a row, we have seen an acceleration of market share gains across all of our core products.

Open trading is already delivering meaningful new liquidity and transaction cost savings to our clients. Now, I would be happy to open the line for your questions..

[Operator Instructions] Our first question comes from the line of Mike Adams of Sandler O'Neill. Your line is now open..

Good morning guys. I'm starting to sound like a broken record, but congrats on the record results here..

Thank you, Mike..

Thanks Mike..

So first, the detail that you guys provided last night in the open trading was really helpful. So couple of questions on that subject, first, could you try to explain why high-yield customer seem to be more rapidly adopting the open trading 14% of high-yield volume compared to 8% in IG.

Given if there is less electronic penetration in high-yield, I guess I find that surprising. And then the second part of it, can you remind us what the transaction cost savings are for customers in the traditional disclosed RFQ trade.

I would like to see how that compares to the 3 basis points that you updated us on for the open trading?.

Sure. On the first question, the liquidity challenges in high-yield over the last few quarters have been more significant than high-grade. And Mike I'm sure you are aware that is primarily due to the volatility in the high-yield market caused by the significant move in many of the energy issuers.

And as a result, I think the attraction on the draw to open trading was greater over the last few quarters. The other thing we noticed in our high-yield business, which we have mentioned in the past is that we do see a significant percentage of high-yield trading on MarketAxess being conducted with the ETF community.

And that percentage is higher in high-yield than it is in high-grade and that community is also drawn to the open trading order book. So I think for both of those reasons, the percentage of trades in our high-yield business is conducted with open trading protocols is higher than the percentage of trades conducted in high-grade.

What we are doing with the cost savings is we are looking at the execution price achieved when a trade has won through the open trading protocols and comparing that to the best level available from a traditional liquidity provider. And that leads to the cost saving numbers that we provided both in the release last night and on the call this morning.

I need to refresh the data on cost savings when we were looking at the cover of the price improvement from traditional liquidity providers prior to the launch of open trading. But my recollection is that was around 2 basis points, this is another 3 basis points beyond the best traditional level achieved on the platform..

Interesting, interesting. Thank you. And then I would like to touch on European operation.

So you mentioned some of the product enhancements this quarter and then even some last night, have you see any share pick up since the upgrades whether you are actually taking share from other electronic platforms over the overall market it is – is there anyway you can quantify that for us?.

Mike, its Tony. In the prepared remarks I mentioned that based on the Trax information, we think that euro bond volume is roughly flat and they actually be down year-over-year. So when you see for example we posted for euro bond volume 126% increase in volume year-over-year, we think that virtually all of that is from market share gains.

And because the information isn't perfect, we think that we are sort of mid to high single-digit in market share, but that would be double where it was last year..

Okay.

And I appreciate there is not a lot of transparency today, but did you think you are taking it from other electronic platforms or is this or you taking it from the void?.

It's hard to know. But, the electronic market in Europe has been growing overall, and it would be our guess that we have taken some share from the other electronic providers in Europe, having said that, we can do much better in the region.

We haven't performed up to our expectations historically in Europe and all the metrics that we can see through Trax trade reporting suggest that Europe needs new sources of liquidity even more so than the U.S. credit markets because transaction cost in the European region are higher than they are in the U.S. and turnover is lower.

So we are really excited about the launch of open trading and the extension of our alliance with Black Rock for open trading into Europe.

And the addition of some really valuable data products to provide greater transparency in the region because we really think that we can provide more value and clients in the region do a much better job for our shareholders..

Okay.

And then one other follow up on Europe, do you have any near-term plans to explicitly charge for the Axess All product because I believe you are not charging for that today, you are sort of seeing it from increased trading activity?.

It's a brand new product. So the first step is to get broad market exposure and understanding for the Axess All product and why it's different than all of the other source of data that institutional investors or dealers are used to using in the region.

We will charge for those services in coming quarters we don't know exactly what the take up will be but the first step is to make sure its broadly available to people and they understand the data products over the next several months we will revisit the charging structure.

We have had a number of large dealers in particular saying that they would like to receive that data through intra-daying FTP files and we have that underway this quarter. So as Tony mentioned in prepared remarks we are optimistic that we will see a modest improvement in data revenues throughout the course of the year and beyond..

Okay. Thank you, gentlemen, and congrats again..

Thank you..

Thank you. And our next question comes from the line of Hugh Miller of Macquarie. Your line is now open..

Hey. Good morning..

Good morning, Hugh..

Welcome back, Hugh..

Thank you. I guess wanted to start-off with one housekeeping question and you gave us some color on the FX impact on the revenue side in the press release. And I know you made some comments on the call, but I was wondering if you could just – do remind us what the impact was on the expense side in the quarter..

Hugh, it was – I mentioned that on the revenue side, it was about $900,000. And today when we look at our – it's really our sterling denominated revenue and expenses. They are pretty similar. So the expense impact was also approximately $900,000.

You look at that the dollar strengthening, and just to put it in perspective, if the dollar went from one spot six to one spot five, which is basically what we saw over the course of the year.

For us, on an annual basis that $2.5 million or $3 million impact on both revenue and expenses that leads the way our sterling denominated business is situated right now..

Okay. That's helpful. Thank you. And transitioning to some other follow-up questions on Europe, obviously, you guys are seeing substantial progress there. Was wondering you commented about obviously driven by market share and some of which being taken from maybe the other providers there from the electronic sources.

We have seen some of those competitors that can be fairly, I guess competitive from a pricing perspective in some of their other product offerings. What do you guy see as the potential for risk there for them to try and defend market share by competing on price. I know that you guys are providing some services that they don't offer that are in-demand.

But, can you give us your thoughts on that..

Yes. There is consistency in the pricing model for the leading – the current leader in Europe electronic fixed income trading. And then it's a bundle pricing model. So their fee structure is all based on the price of the terminal whether you look at the swap markets or the bond markets, they do not typically charge exclusively for transaction.

So that is there pricing model, which means that in order for us to compete Hugh effectively, we have to differentiate our liquidity pool and the quality of the transaction prices on MarketAxess.

And that is why the journey that we are on now to provide investors and dealers with more choice and more outlets to liquidity is so important to our success in Europe because what we have seen in the U.S.

is that by differentiating liquidity pool, the transaction cost savings that we can deliver to clients are exponentially greater than the transaction fees that we build into transactions.

So it's really important that we continue to prove that we can deliver a better price of execution given the state of the pricing model with the market incumbent in Europe..

It was very helpful. Thank you. And I guess just looking at the domestic market here and looking at some trends for April, it looks like industry ADV a bit slower on a year-over-year comparison. I was wondering if you could just provide us with some insight as to what you are seeing so far in April and thoughts on market share performance for U.S.

high-grade..

What you are seeing is consistent with what we are seeing in, when you look at high-grade volume right now, it is also the first quarter run rate for TRACE, what we are seeing is, it's down to 16% or 17% or 18% versus the first quarter. High-yield is off as well, it looks like it's off 6% or 7%. So that the ADV – the ADVs are down.

It's a little early right now in the quarter. We still have or in the month – we still have seven trading days left in April here. And we don't see any thing surprising in share or in trading volume, but a little earlier you started talking about that market share number more discretely there..

That's helpful. And as I look at kind of you guys have always been opportunistic on a share buyback and you try to mitigate the impact of share or dilution from share grants. Obviously, we have been seeing the stock that's doing quite well and appreciating faster than kind of with the earnings of the company which has obviously been strong as well.

But, I was wondering can you give us a sense of your appetite for share repurchase as you look at things now.

And should we be considering the potential to see maybe some more creep than we have seen in years past just thoughts on that would be helpful?.

Consistent with what we have – how we acted on the past we are more aggressive when we think we trading at a discounted fair value or discounted to DSF. Otherwise, we have been using the program; you have seen at the past several quarters we are using the program to offset solutions from the equity grants.

And you just put it into perspective on those equity grants we have been averaging somewhere between 200,000 and 300,000 shares per year in those equity grants. The 10b5 one grid that we set up, we typically act in these share repurchases under on an organized 10b5 one plan.

It is price sensitive and that price sensitivity means the lower the share price, the more shares we are repurchasing and then it works in the inverse, the higher the share price, the fewer shares that we are repurchasing. We are pretty close to hitting our target diluted share count.

And what that tells you is that what we will be doing here is really continuing to offset dilution from our equity grants. And that's what you saw in the first quarter..

Okay. That's helpful. Thank you very much for all the insight..

Thank you. Our next question comes from the line of Niamh Alexander of KBW. Your line is now open..

Hi. Thanks for taking my questions and congrats from me too..

Good morning, Niamh..

Good morning. And back to the market share and the momentum, such a strong start to the year and we didn't even see nearly as much of a dip in the market share if at all that we would see seasonally. And you talked about accelerating momentum as well and I know it's too early to kind of talk about April.

But, what do you think is driving this, the train has left the station on adopting the electronic trading as people kind of giving up maybe trying some of these new venues that aren't – somewhat weakened euro is not having much success.

And how do you feel about the momentum from here?.

Yes. I think its 2 or 3 different things Niamh over the last two quarters, really one is market volatility is up. So there has been more emphasis and focus on secondary trading. So that is always a good environment for us.

The first two or three quarters of last year, we were dealing with very low volatility lots of inflows and focused on the new issue calendar that reversed in Q4 and Q1 and that's always a healthy thing for us and our share. Secondly, I think the recognition is growing that market structure is changing in credit.

That bank owned dealers do have more constraints on market making because of the regulatory changes that have taken place and each quarter especially when volatility picks up institutional investors feel those changes.

And as a result, I think it's causing a behavioral shift where they are inclined to trade more electronically and explore new sources of liquidity. The third factor that I would suggest is that the success that we are having in open trading is adding more appeal and value to the MarketAxess system.

It's increasing the value of the platform to existing clients and it's creating additional opportunities for new clients. So we see both share growing with our existing clients and a number of participants that are active on the platform growing sequentially.

So all of those things I think have contributed to the acceleration of share gains that we are really seeing across all of our core products over the last several quarters..

Okay. That's really helpful. Thanks Rick. I guess back to the first one, the market environment and the volatility picking up, as we get maybe towards rates rising later in the U.S. and who knows when it happens.

But, a rising rate environment it might impact the fees, I think only in the investment grade complex not the other credit complex that's right. But, shouldn't that be a better environment for MarketAxess as well..

Niamh, you are right on the impact on the fee plans. That's where – it's really sort of isolated to the high-grade complex where that rate movement impacts the fee capture. And you are also right that all things being equal, if we had that rising rate environment you could see some change and a decline in a fee capture.

You are also right that what we may see in this rising rate environment is, if there is a pick up in volatility and recollect some of the comments that Rick made, some of the pick up in volatility, we think that's good for market volume; we think that's good for our share.

And while it seems to be pushed off, it seems like with Fed and the others just thinking as the rate movement has been pushed back to later this year. We are – if we do happen to hit that rising rate environment it comes with the increased volatility, we are looking forward to it..

Okay. Fair enough. That's helpful. Thanks. And then just lastly you had other questions on the dividend and the buyback, but you are growing the cash nicely here.

And make sure that we are still kind of focused on, is it the best opportunity, you are primarily organic growth initiatives and your investments is primarily focused on organic right now so probably likely to continue to build cash all else equal?.

Niamh, what you see from us when look at the opportunity we have in front of us with the core product set. That's the focus today.

And you look at the key initiatives which have been pretty consistent over the past several years and that's round to open trading and the investments that we have made in Europe, the returns there are just difficult to match otherwise..

Yes. Yes. Fair enough..

That is where the focus is right now..

Okay. Thanks so much..

Thank you. Our next question comes from the line of Patrick O'Shaughnessy of Raymond James. Your line is now open..

Hey, good morning, guys..

Hey, good morning, guys..

Good morning, Patrick..

Curious about reverse to Yankees, so obviously a lot of U.S. companies have started to issue bonds over in Europe because of lower rate environment over there. Is that a positive catalysts for you guys, I'm thinking kind of from perspective of – you have a lot of U.S. firms that are used to trading these companies dead over in the U.S.

and now they want to trade over in Europe.

Is that kind of a source of your market share pick-up in Europe, right now?.

Curious about reverse to Yankees, so obviously a lot of U.S. companies have started to issue bonds over in Europe because of lower rate environment over there. Is that a positive catalysts for you guys, I'm thinking kind of from perspective of – you have a lot of U.S. firms that are used to trading these companies dead over in the U.S.

and now they want to trade over in Europe.

Is that kind of a source of your market share pick-up in Europe, right now?.

I don't really think so. I think that the protocol changes that we have made in Europe and the addition of new and valuable data products are really driving the share gains there. You are right with the rapid drop in the rate environment in Europe there has been some trend back toward greater growth in issuance in Europe, having said that, the U.S.

high-grade market just finished a record quarter in issuance here. So the issuance environment has been healthy in both regions and part of that driven by what has been a very active M&A calendar to kick-off 2015 which often comes with [indiscernible]..

Got it. Thanks. And then I guess to follow up on Europe since the topic, does your -- so you talked about how obviously your biggest competitor for electronic trading over there has basically a free model. But, is there opportunity for you guys to raise your pricing there over time because European pricing is less than half of what your U.S.

variable pricing looks like.

You are providing that value for your customers, does your long-term plan kind of assume any sort of upside from pricing in Europe?.

Got it. Thanks. And then I guess to follow up on Europe since the topic, does your -- so you talked about how obviously your biggest competitor for electronic trading over there has basically a free model. But, is there opportunity for you guys to raise your pricing there over time because European pricing is less than half of what your U.S.

variable pricing looks like.

You are providing that value for your customers, does your long-term plan kind of assume any sort of upside from pricing in Europe?.

To be determined, I can tell you that it's not in the scope of plans in the near term or really focusing on driving more value to our European and dealer investor clients through differentiating transaction costs on the system and our data products.

Longer term we will always revisit all of our fee plans to make sure that they are competitive in the marketplace and best suited for market share gains and returns to our shareholders. But we would anticipate any changes in any of our pricing models in the near term..

Got it. And the last one for me, it seems like we are seeing headlines from different regulators that really talking about the stability of the fixed income market including corporate bonds.

How much of this is just kind of noise at this point and how much are there actual kind of actionable constructive suggestions by the regulators at this point?.

Got it. And the last one for me, it seems like we are seeing headlines from different regulators that really talking about the stability of the fixed income market including corporate bonds.

How much of this is just kind of noise at this point and how much are there actual kind of actionable constructive suggestions by the regulators at this point?.

I think there is a lot of healthy dialog going on and what we like is they are reaching out to industry participants to conduct their research and better understand the challenges in the credit market.

But it was interesting just yesterday Commissioner Piwowar had a speech and was saying; he is very encouraged by all the innovation that he sees in the electronic trading space. He wants to make sure that regulations don't get in the way of that innovation.

So we are pleased to see that and as I mentioned in prior calls, the first focus that we are seeing from the SEC and FINRA on the corporate bond market seems to be directed primarily at the retail market.

But they are conducting lots of research and talking to industry participants and with the SEC in particular we like to thank that they got a very constructive approach with the industry and trying to find ways that they maybe helpful..

Got it. Thank you..

Got it. Thank you..

Thank you. [Operator Instructions] Our next question comes from the line of Ashley Serrao of Credit Suisse. Your line is now open..

Good morning, guys..

Good morning, Ashley..

Good morning, Ashley..

Rick as you think about the European opportunity irrespective of liquidity pool, can you provide just comparing contrast number of dealers you have in the U.S. versus Europe.

I'm just trying to get a sense of how many more dealers you could add to diversify the pool there?.

Sure. We have been adding dealers as we mentioned earlier and the reason its now easier to add dealers is do dealers can have access to more order flow because of the increase in investor choice that we have provided recently with our European protocols.

The total population Ashley that we see today is not as great as the U.S., if we are 80 or so in the U.S., we don't see it growing to that number. But there certainly are still 10 or 15 opportunities to add traditional dealer market makers to our European platform and that we are working on that.

The other thing that I will add is that because of open client choice and trade increase and open trading, we have enabled new dealers to participate in the credit markets in the U.S. and many of them have become very active participants on MarketAxess.

So just by opening the architecture in Europe, we would expect it to attract new capital and new dealers in much the same way it did in the U.S. over the last five years or so..

Okay. That makes sense. Maybe that just gives you open trading, just what are your thoughts around just average trade size as this initiative gains more traction, do you expect to built from here..

We are certainly investing very heavily in protocols that will help our clients with larger trade sizes conducted electronically.

And it's no surprise that the average trade size currently is similar to what it was in our previous protocols because most of what is being used today is a natural extension of our RFQ business where investors are sending orders to their dealer counterpart at the same time that they are posting the orders in Market Lists.

But we are seeing over the last two or three months more take-up in client access which is a more passive form posting orders and identifying matches and just recently we added the work up capabilities once that matches has been identified. That work up we think comes with very clever tools to eliminate information leakage.

So we match the lowest common denominator between the two parties and don't disclose what else might have been available. And that's the beginning we think focusing more on protocols that are designed around the larger trade sizes. This will be the evolution.

It's a – we are very pleased with the success that we have had but we have five protocols out today. And most of our trading is using one of those protocols.

We will enhance what we already have out and we will continue to add new protocols and we are speaking to dealer investor clients' everyday to get their input and we think over the next year or two you will see more innovation from us in some of those specifically designed at large trade sizes..

Okay.

And just final question for Tony, can you just remind us what the average pricing of the three products in other credit bucket currently stand at?.

Ashley the pricing does work differently for each of those products for euro bonds, emerging markets and high-yield. And even within euro bonds for example we have several key plans working there much like we do in the U.S. where we have one plan that is a combination of distribution fees and variable fees; we have another plan which is all variable.

In between emerging markets there is different pricing for corporate and severance for high-yield bonds, the pricing looks different for bonds that trade on price versus bonds that trade on spread.

I'm not going to provide all of the granular details there, I will tell you that as expected given the bid offer on high-yield for example, the higher fee capture in that product category comes from high-yield. And then at the office end of the spectrum in that group would be euro bond.

Across that spectrum it probably runs from a $100 at the low end to something closer to $600 per million at the high end..

Just a very helpful color from both of you. Thanks for taking my questions..

Thanks Ashley..

Thank you. And our next question comes from line of Mike Adams of Sandler O'Neill. Your line is now open..

Hey, guys. Just a couple of follow ups from me. First to build up Ashley's question, would you mind commenting on the mix of the other credit volume in April, I know it's only a few weeks here. But, I'm curious to have the euro bond momentum continue to sort of increase in terms of the overall mix..

Mike, again, it's a little bit early on this what I mentioned before is that there is really nothing we are seeing in April that stay consistent with the first quarter..

Okay. And then Tony one other one for you, in regards to the distribution piece, you talked about a decline in unused commitment fees in the first quarter which I guess makes sense given how active the trading was on the platform.

Were there any unused commitment fees recognized in 1Q, just trying to figure out, could there be another step down?.

It's a good question Mike and just as a reminder, under our all variable plan, the dealers are paying a variable fee and then there is this execution fee which is subject to a minimum commitment. And we do have a level and it was around $750,000 of unused commitment fee. The better news would be if that unused commitment fees were zero.

That means that all of our dealers on that particular plan are active in trading and it could swing there is, it's tough to predict what will happen going forward on the distribution fees and on these unused minimum commitments.

There could be some movement going forward, if there is movement on that in our – you see the all variable client dealers like what you saw on the first quarter, if you see them winning a larger percentage of our trade. There could be a decline in distribution fees but that would largely be offset by an increase in variable transaction fees.

So it's a bit neutral to overall, but it would impact the individual categories..

Sure. Great. Thank you, Tony..

Thank you. I'm showing no further questions at this time. I would like to hand the call back over to Mr. Rick McVey for any closing remarks..

Thank you for joining us this morning. And we look forward to talking to you again next quarter..

Ladies and gentlemen, thank you for participating in today's conference. This will conclude today's program. You may all disconnect. Have a great day everyone..