Richard M. McVey
Chairman and Chief Executive Officer at MarketAxess
Good morning, and thank you for joining us to review our third quarter results. We continue to execute our growth strategy and delivered the second consecutive quarter of record market share gains across nearly all of our products, strong increases in trading volumes, and significant execution cost savings for clients through our unique all-to-all trading protocol Open Trading.
Our dealer and institutional investor clients are facing very challenging credit market trading conditions and our focus is delivering value for them to help navigate through elevated market volatility. And through these challenging markets, our leadership position in global credit continues to expand beyond just US high grade with record estimated market share in high yield and municipal bonds in the US, record share in Eurobonds, and accelerating share gains in emerging markets. The breadth of our global market share gains continues to expand in this volatile market. Engagement of institutional investors and dealers on our platform continues to increase with a record of nearly 2,000 active client firms and a record number of active traders. We have seen especially strong growth in our international business with nearly 1,000 client firms now active including strong growth in Asia.
As traditional sources of liquidity have become scarce, the importance of our diversified liquidity pool increases, and further enhances our leading market position. It is encouraging to see institutional clients and dealers leaning into MarketAxess across so many products during a period of challenging liquidity. We are also making excellent strides in developing new growth cylinders with another record quarter in municipal bond trading volume and a record quarter in portfolio trading volume.
In US Treasuries, there were 226 active client firms trading on the platform, up from 122 in the prior year as we continue to gain traction with investors in our unique all-to-all treasury solution. US corporate and emerging markets debt outstanding in the market has been growing at three-year compound growth rates of approximately 4% and 9% respectively, which, when combined with higher rates, sets a strong foundation for trading growth in the institutional client e-trading space. In summary, the breadth of our business has never been stronger with accelerating growth in trading volume, new market share records, increasing momentum in new product areas and a growing addressable market opportunity.
Slide 4 provides an update on market conditions. Just one year ago on our earnings call, we stated that Central Bank tapering would lead to a more normalized yield levels and volatility in the bond markets around the world, and that is exactly what has happened. In a very short 10-month period, we have moved from massive Central Bank quantitative easing to the current state of Central Bank quantitative tightening due to the elevated levels of inflation. We have seen a rapid increase in yields around the world and investment grade bond indices are down a remarkable 22% year-to-date. While current trading conditions are extremely volatile, we believe higher bond yields create a better investing and trading environment.
We maintain our view that bond trading velocity will grow in the years ahead due to growing bond market participation and increased adoption of trading automation. What we did not predict was historically rapid rise in interest rates, driving one of the steepest declines in corporate bond duration dropping 18% year-over-year. This reduction in duration has had a negative impact on our high-grade fee capture, which is the only bond product that institutional investors trade in yield instead of price.
At the same time, the US dollar index moved to 20-year highs in a short period of time. Despite these short-term revenue headwinds, our overall revenue growth trends have improved materially in the last few quarters and we would expect both the duration and FX revenue headwinds to diminish in the future as market conditions stabilize. In the very early weeks of Q4, total credit and rates average daily volume is running similar to September levels and well above last October.
Slide 5 shows the strong year-over-year increases in estimated market share and the magnitude of our share gains since the pre-pandemic period. This is the second consecutive quarter of top quartile market share gains as compared to our long-term average year-over-year share gains. All but one of our primary products were in the top quartile of historical data for year-over-year quarterly growth versus the past 10 years. We focus on the longer term trends, and as illustrated on this slide, we have grown market share by almost 550 basis points per product since the third quarter of 2019, which equates to an annual increase of approximately 180 basis points across products. These growth rates reflect the strength of our franchise and underpin our confidence in our ability to capture the market opportunity in front of us.
Slide 6 illustrates the tremendous growth opportunity that is driving our approach to investing. The strong market share gains we delivered this quarter only served to reinforce the sizable revenue and earnings opportunity that we have ahead of us. We have a unique position in large and growing global debt markets. We are leveraging our global client network and technology to grow share in existing products and add new product areas to the platform. And as we grow market share, our data and content become even more valuable which makes us even more excited about the many ways that we are pursuing the data and ETF opportunity. We believe we can capture this opportunity and deliver superior returns to our shareholders.
Now let me turn the call over to Chris Concannon to provide more detail on the significant progress we are making with our investments in new initiatives.