Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an ~~“emerging~~emerging growth ~~company”.~~company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of ~~October 26, 2017,~~July 21, 2020, the number of shares of the Registrant’s voting common stock outstanding was ~~37,536,939.~~37,971,735.

	As of						As of
	September 30, 2017			December 31, 2016			June 30, 2020			December 31, 2019
	(In thousands, except share and per share amounts)						(In thousands, except share and per share amounts)
ASSETS
Cash and cash equivalents	$	138,992		$	168,243		$	404,148		$	270,124
Investments, at fair value		237,221			194,404			131,372			230,477
Accounts receivable, net of allowance of $71 and $82 as of September 30, 2017 and December 31, 2016, respectively		63,027			50,668
Goodwill and intangible assets, net of accumulated amortization		63,155			63,443
Accounts receivable, net of allowance of $200 and $57 as of June 30, 2020 and December 31, 2019, respectively								99,222			62,017
Goodwill								147,394			146,861
Intangible assets, net of accumulated amortization								59,552			60,986
Furniture, equipment, leasehold improvements and capitalized software, net of accumulated depreciation and amortization		35,321			31,104			78,461			71,795
Operating lease right-of-use assets								77,933			81,399
Prepaid expenses and other assets		16,174			11,618			41,102			30,770
Deferred tax assets, net		8,457			8,562			33			501
Total assets	$	562,347		$	528,042		$	1,039,217		$	954,930

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued employee compensation	$	31,027		$	34,783		$	39,434		$	47,365
Income and other tax liabilities		4,507			7,582			24,906			16,690
Deferred revenue		3,191			2,515			4,068			3,499
Accounts payable, accrued expenses and other liabilities		12,714			15,149			22,624			19,294
Operating lease liabilities								94,701			97,991
Total liabilities		51,439			60,029			185,733			184,839

Commitments and Contingencies (Note 10)
Commitments and Contingencies (Note 12)

Stockholders' equity
Preferred stock, $0.001 par value, 4,855,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016		—			—
Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016		—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized, 40,296,774 shares and 40,106,360 shares issued and 37,547,951 shares and 37,543,775 shares outstanding as of September 30, 2017 and December 31, 2016, respectively		121			120
Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016		—			—
Preferred stock, $0.001 par value, 4,855,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019							$	—		$	—
Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019								—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized, 40,775,124 shares and 40,746,593 shares issued and 37,937,960 shares and 37,935,984 shares outstanding as of June 30, 2020 and December 31, 2019, respectively								122			122
Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019								—			—
Additional paid-in capital		342,113			342,311			327,970			342,541
Treasury stock - Common stock voting, at cost, 2,748,823 and 2,562,585 shares as of September 30, 2017 and December 31, 2016, respectively		(153,682	)		(117,330	)
Treasury stock - Common stock voting, at cost, 2,837,164 and 2,810,609 shares as of June 30, 2020 and December 31, 2019, respectively								(164,676	)		(153,388	)
Retained earnings		332,506			255,140			704,219			591,086
Accumulated other comprehensive loss		(10,150	)		(12,228	)		(14,151	)		(10,270	)
Total stockholders' equity		510,908			468,013			853,484			770,091
Total liabilities and stockholders' equity	$	562,347		$	528,042		$	1,039,217		$	954,930

The accompanying notes are an integral part of these consolidated financial statements.

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016		2017		2016		2020			2019			2020			2019
	(In thousands, except share and per share amounts)								(In thousands, except per share amounts)
Revenues
Commissions	$	86,270	$	81,456	$	267,307	$	246,788	$	172,092		$	114,124		$	328,046		$	226,884
Information and post-trade services		8,372		7,322		24,460		23,687
Investment income		964		534		2,551		1,469
Information services										8,427			7,156			17,069			14,522
Post-trade services										4,054			3,956			8,207			8,056
Other		1,095		959		3,588		3,539		222			254			451			519
Total revenues		96,701		90,271		297,906		275,483		184,795			125,490			353,773			249,981

Expenses
Employee compensation and benefits		25,595		23,914		78,417		74,256		41,636			32,623			82,830			65,281
Depreciation and amortization		4,583		4,325		14,066		13,546		8,305			6,345			16,372			12,427
Technology and communications		5,035		4,245		14,442		12,826		8,592			6,474			16,753			12,256
Professional and consulting fees		5,547		4,342		13,912		12,449		8,065			6,296			13,740			12,127
Occupancy		1,795		1,220		4,621		3,606		3,286			2,798			6,760			5,747
Marketing and advertising		2,089		2,140		6,757		5,742		1,810			3,667			4,485			5,966
Clearing costs		1,476		1,035		4,320		4,754		5,713			2,610			11,223			5,187
General and administrative		3,364		2,696		8,974		7,029		3,253			3,800			6,386			6,924
Total expenses		49,484		43,917		145,509		134,208		80,660			64,613			158,549			125,915
Operating income										104,135			60,877			195,224			124,066
Other income (expense)
Investment income										714			2,096			1,983			4,085
Other, net										(446	)		(64	)		(1,102	)		(22	)
Total other income										268			2,032			881			4,063
Income before income taxes		47,217		46,354		152,397		141,275		104,403			62,909			196,105			128,129
Provision for income taxes		13,087		15,436		37,781		48,268		20,549			14,804			37,435			27,502
Net income	$	34,130	$	30,918	$	114,616	$	93,007	$	83,854		$	48,105		$	158,670		$	100,627

Net income per common share
Basic	$	0.93	$	0.84	$	3.11	$	2.52	$	2.25		$	1.30		$	4.25		$	2.72
Diluted	$	0.90	$	0.82	$	3.01	$	2.46	$	2.20		$	1.27		$	4.16		$	2.66

Cash dividends declared per common share	$	0.33	$	0.26	$	0.99	$	0.78	$	0.60		$	0.51		$	1.20		$	1.02

Weighted average shares outstanding
Basic		36,865		36,889		36,856		36,847		37,340			37,049			37,322			37,046
Diluted		38,019		37,792		38,069		37,738		38,153			37,910			38,115			37,871

The accompanying notes are an integral part of these consolidated financial statements.

	Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017		2016			2020			2019			2020			2019
	(In thousands)											(In thousands)
Net income	$	34,130		$	30,918		$	114,616	$	93,007		$	83,854		$	48,105		$	158,670		$	100,627
Net cumulative translation adjustment and foreign currency exchange hedge, net of tax of $(953), $346, $(2,586) and $4,448, respectively		1,102			(1,052	)		2,061		(5,093	)
Net unrealized gain (loss) on securities available-for-sale, net of tax of $16, $(27), $10 and $109, respectively		26			(44	)		17		177
Net cumulative translation adjustment and foreign currency exchange hedge, net of tax of $121, $721, $2,562, and $269, respectively													(351	)		(1,100	)		(4,210	)		18
Net unrealized gain on securities available-for-sale, net of tax of $259, $144, $104, and $287, respectively													820			459			329			918
Comprehensive income	$	35,258		$	29,822		$	116,694	$	88,091		$	84,323		$	47,464		$	154,789		$	101,563
			��

~~The accompanying notes are an integral part of these consolidated financial statements.~~

Common
Stock
Voting

Additional
Paid-In
Capital

Treasury Stock -
Common
Stock
Voting

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Stockholders'
Equity

(In thousands)

Balance at December 31, 2016
$
120

$
342,311

$
(117,330
)

$
255,140

$
(12,228
)

$
468,013

Net income

—

—

—

114,616

—

114,616

Cumulative translation adjustment and foreign
   currency exchange hedge, net of tax

—

—

—

—

2,061

2,061

Unrealized net gain on securities available-for-sale,
   net of tax

—

—

—

—

17

17

Stock-based compensation

—

10,989

—

—

—

10,989

Exercise of stock options

1

1,639

—

—

—

1,640

Withholding tax payments on restricted stock
   vesting and stock option exercises

—

(12,906
)

—

—

—

(12,906
)
Repurchases of common stock

—

—

(36,352
)

—

—

(36,352
)
Cumulative effect of change in accounting for
   employee share-based payments

—

80

—

(51
)

—

29

Cash dividend on common stock

—

—

—

(37,199
)

—

(37,199
)
Balance at September 30, 2017
$
121

$
342,113

$
(153,682
)

$
332,506

$
(10,150
)

$
510,908

The accompanying notes are an integral part of these consolidated financial statements.

	Common Stock Voting		Additional Paid-In Capital			Treasury Stock - Common Stock Voting			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	(In thousands, except per share amounts)

Balance at January 1, 2020	$	122	$	342,541		$	(153,388	)	$	591,086		$	(10,270	)	$	770,091
Net income		—		—			—			74,816			—			74,816
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			(3,859	)		(3,859	)
Unrealized net loss on securities available-for-sale, net of tax		—		—			—			—			(491	)		(491	)
Stock-based compensation		—		6,677			—			—			—			6,677
Exercise of stock options		—		80			—			—			—			80
Withholding tax payments on restricted stock vesting and stock option exercises		—		(21,243	)		—			—			—			(21,243	)
Repurchases of common stock		—		—			(5,415	)		—			—			(5,415	)
Cash dividend on common stock ($0.60 per share)		—		—			—			(22,773	)		—			(22,773	)
Balance at March 31, 2020		122		328,055			(158,803	)		643,129			(14,620	)		797,883
Net income		—		—			—			83,854			—			83,854
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			(351	)		(351	)
Unrealized net gain on securities available-for-sale, net of tax		—		—			—			—			820			820
Stock-based compensation		—		5,791			—			—			—			5,791
Exercise of stock options		—		659			—			—			—			659
Withholding tax payments on restricted stock vesting and stock option exercises		—		(6,535	)		—			—			—			(6,535	)
Repurchases of common stock		—		—			(5,873	)		—			—			(5,873	)
Cash dividend on common stock ($0.60 per share)		—		—			—			(22,764	)		—			(22,764	)
Balance at June 30, 2020	$	122	$	327,970		$	(164,676	)	$	704,219		$	(14,151	)	$	853,484

The accompanying notes are an integral part of these consolidated financial statements.

	Common Stock Voting		Additional Paid-In Capital			Treasury Stock - Common Stock Voting			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	(In thousands, except per share amounts)

Balance at January 1, 2019	$	122	$	341,860		$	(184,962	)	$	463,252		$	(12,394	)	$	607,878
Net income		—		—			—			52,522			—			52,522
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			1,118			1,118
Unrealized net gain on securities available-for-sale, net of tax		—		—			—			—			459			459
Stock-based compensation		—		5,196			—			—			—			5,196
Exercise of stock options		—		172			—			—			—			172
Withholding tax payments on restricted stock vesting and stock option exercises		—		(11,803	)		—			—			—			(11,803	)
Repurchases of common stock		—		—			(5,184	)		—			—			(5,184	)
Cash dividend on common stock ($0.51 per share)		—		—			—			(19,212	)		—			(19,212	)
Balance at March 31, 2019		122		335,425			(190,146	)		496,562			(10,817	)		631,146
Net income		—		—			—			48,105			—			48,105
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			(1,100	)		(1,100	)
Unrealized net gain on securities available-for-sale, net of tax		—		—			—			—			459			459
Stock-based compensation		—		5,929			—			—			—			5,929
Exercise of stock options		—		350			—			—			—			350
Withholding tax payments on restricted stock vesting and stock option exercises		—		(258	)		—			—			—			(258	)
Repurchases of common stock		—		—			(3,486	)		—			—			(3,486	)
Cash dividend on common stock ($0.51 per share)		—		—			—			(19,237	)		—			(19,237	)
Balance at June 30, 2019	$	122	$	341,446		$	(193,632	)	$	525,430		$	(11,458	)	$	661,908

The accompanying notes are an integral part of these consolidated financial statements.

	Six Months Ended June 30,
	2020			2019
	(In thousands)
Cash flows from operating activities
Net income	$	158,670		$	100,627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,372			12,427
Amortization of operating lease right-of-use assets		3,325			2,835
Stock-based compensation expense		12,468			11,125
Deferred taxes		4,741			1,631
Other		2,199			(296	)
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(37,457	)		(8,883	)
Decrease (increase) in prepaid expenses and other assets		6,124			(131	)
Decrease in trading investments		63,274			8,854
(Increase) in mutual funds held in rabbi trust		(1,359	)		(1,743	)
(Decrease) in accrued employee compensation		(7,931	)		(12,384	)
Increase (decrease) in income and other tax liabilities		3,839			(3,661	)
Increase in deferred revenue		569			1,000
Increase (decrease) in accounts payable, accrued expenses and other liabilities		3,460			(877	)
(Decrease) in operating lease liabilities		(3,072	)		(1,422	)
Net cash provided by operating activities		225,222			109,102
Cash flows from investing activities
Acquisition of business, net of cash and cash equivalents acquired		(533	)		—
Available-for-sale investments
Proceeds from maturities and sales		68,596			130,875
Purchases		(32,865	)		(128,189	)
Purchases of furniture, equipment and leasehold improvements		(9,264	)		(6,114	)
Capitalization of software development costs		(13,003	)		(7,310	)
Other		—			2
Net cash provided by (used in) investing activities		12,931			(10,736	)
Cash flows from financing activities
Cash dividend on common stock		(45,668	)		(38,323	)
Exercise of stock options		739			522
Withholding tax payments on restricted stock vesting and stock option exercises		(27,778	)		(12,061	)
Repurchases of common stock		(11,288	)		(8,670	)
Net cash (used in) financing activities		(83,995	)		(58,532	)
Effect of exchange rate changes on cash and cash equivalents		(3,678	)		21
Cash and cash equivalents including restricted cash
Net increase for the period		150,480			39,855
Beginning of period		274,253			247,458
End of period	$	424,733		$	287,313

Supplemental cash flow information
Non-cash activity
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	688		$	—

Nine Months Ended September 30,

2017

2016

(In thousands)

Cash flows from operating activities

Net income
$
114,616

$
93,007

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

14,066

13,546

Stock-based compensation expense

10,989

10,636

Deferred taxes

326

(1,387
)
Other

1,290

10,044

Changes in operating assets and liabilities:

(Increase) in accounts receivable

(12,535
)

(16,439
)
(Increase) in prepaid expenses and other assets

(4,503
)

(2,151
)
Decrease (increase) in corporate debt trading investments

8,338

(74,535
)
(Increase) in mutual funds held in rabbi trust

(1,730
)

(1,328
)
(Decrease) in accrued employee compensation

(3,756
)

(750
)
(Decrease) in income and other tax liabilities

(3,277
)

(843
)
Increase in deferred revenue

676

694

(Decrease) increase in accounts payable, accrued expenses and other liabilities

(2,917
)

2,646

Net cash provided by operating activities

121,583

33,140

Cash flows from investing activities

Available-for-sale investments

Proceeds from maturities and sales

146,295

32,025

Purchases

(196,810
)

(42,495
)
Purchases of furniture, equipment and leasehold improvements

(7,245
)

(4,754
)
Capitalization of software development costs

(10,094
)

(9,058
)
Other

(53
)

383

Net cash (used in) investing activities

(67,907
)

(23,899
)
Cash flows from financing activities

Cash dividend on common stock

(36,717
)

(28,914
)
Exercise of stock options

1,640

2,172

Withholding tax payments on restricted stock vesting and stock option exercises

(12,906
)

(5,929
)
Repurchases of common stock

(36,352
)

(13,874
)
Net cash (used in) financing activities

(84,335
)

(46,545
)
Effect of exchange rate changes on cash and cash equivalents

1,408

(980
)
Cash and cash equivalents

Net (decrease) for the period

(29,251
)

(38,284
)
Beginning of period

168,243

199,728

End of period
$
138,992

$
161,444

The accompanying notes are an integral part of these consolidated financial statements.

MarketAxess Holdings Inc. (the “Company” or “MarketAxess”) was incorporated in the State of Delaware on April 11, 2000.Through its subsidiaries, MarketAxess operates a leading electronic trading ~~platform that enables~~platforms delivering expanded liquidity opportunities, improved execution quality and significant cost savings across global fixed-income ~~market participants to efficiently trade corporate bonds and other types of fixed-income instruments using MarketAxess' patented trading technology.~~markets. Over ~~1,300~~1,700 institutional investor and broker-dealer firms are active users of ~~the MarketAxess~~MarketAxess’ patented trading ~~platform,~~technology, accessing global liquidity on our platforms in U.S. ~~high-grade corporate~~investment-grade bonds, ~~emerging markets and~~U.S. high-yield bonds, ~~European bonds,~~ U.S. ~~agency bonds, municipal bonds, credit default swaps~~Treasuries, emerging market debt, Eurobonds and other fixed-income securities. Through its Open Trading™ protocols, MarketAxess executes ~~certain~~ bond ~~transactions~~trades between and among institutional investor and broker-dealer clients ~~on a matched principal basis by serving as counterparty to both~~in the ~~buyer and the seller in trades which then settle through a third-party clearing broker.~~leading all-to-all anonymous trading environment for corporate bonds. MarketAxess also offers a number of trading-related products and services, including: Composite+ pricing and other market data products to assist clients with trading decisions; auto-execution and other execution services for clients requiring specialized workflow solutions; connectivity solutions that facilitate straight-through processing; and technology services to optimize trading ~~environments; and execution services for exchange-traded fund managers and other clients. Through its Trax® division, MarketAxess~~environments. The Company also offers a range of pre- and post-trade services, including trade matching, trade publication, regulatory transaction reporting and market and reference data across a range of fixed-income and other products.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated. These consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. The consolidated financial information as of December 31, ~~2016~~2019 has been derived from audited financial statements not included herein. These unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to Form 10-Q and reflect all adjustments that, in the opinion of management, are normal and recurring, and that are necessary for a fair statement of the results for the interim periods presented. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. Interim period operating results may not be indicative of the operating results for a full year.

Effective January 1, 2017, the Company adopted ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. Beginning January 1, 2017, the tax effects related to share-based payments are recorded through the income tax provision and the Company has elected to account for forfeitures as they occur. The adoption of ASU 2016-09 will cause volatility in the Company’s net income, effective tax rate and diluted earnings per share. The volatility in future periods will depend on the Company’s stock price at the vest date for restricted stock awards or exercise date for stock options and the number of awards that vest or are exercised in each period. Under the new guidance, excess tax benefits from share-based compensation are included as an operating activity in the Company’s Consolidated Statements of Cash Flows. Prior period cash flows have been adjusted to conform to the new presentation.

In ~~May 2014,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2014-09, “Revenue from Contracts with Customers”~~2018-15, “Intangibles—Goodwill and Other—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU ~~2014-09”~~2018-15”) ~~requiring an entity to recognize revenue for~~. The standard requires the ~~transfer~~capitalization of ~~goods or services equal to the amount that it expects~~implementation costs incurred in a cloud computing arrangement to be ~~entitled~~aligned with the requirements for capitalizing costs incurred to ~~receive~~develop or obtain internal-use software. The updated guidance is effective for ~~those goods or services.~~annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company ~~intends to adopt the new guidance using the modified retrospective method beginning January~~adopted ASU 2018-15 effective July 1, ~~2018. The Company’s~~ implementation efforts include the identification of revenue streams within the scope of the guidance, the evaluation of certain revenue contracts underlying the revenue streams, discussions with our advisory consultants, and periodic discussions with our audit committee. T~~he Company’s evaluation of the impact~~2019 on a prospective basis. Adoption of this ~~accounting~~ guidance ~~is ongoing although it does~~did not ~~expect this guidance to~~ have a material ~~effect~~impact on ~~its~~the Company’s Consolidated Financial ~~Statements or disclosures.~~

In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”) requiring lessees to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. ASU 2016-02 will be effective for the Company beginning January 1, 2019 and early adoption is permitted and should be applied prospectively. The Company is currently evaluating the potential adoption impact and expects to recognize lease assets and lease liabilities in its Consolidated Statements of Financial Condition. The Company does not expect material changes to the recognition of operating lease expense in its Consolidated Statements of Operations.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other” (“ASU 2017-04”). ASU 2017-04 simplifies the testing for goodwill impairment, which eliminates the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. ~~The guidance~~Instead, goodwill impairment testing will be ~~effective for~~performed by comparing the fair value of the reporting unit with its carrying amount and recognizing impairment by which the carrying amount exceeds the reporting unit’s fair value. The Company ~~beginning~~adopted ASU 2017-04 effective January 1, 2020 ~~and early adoption is permitted and should be applied prospectively. The adoption~~on a prospective basis. Adoption of this guidance isdid not ~~expected to~~ have a material ~~effect~~impact on the Company’s Consolidated Financial Statements.

Cash and cash equivalents includes cash and money market instruments that are primarily maintained at one major global bank. Given this concentration, the Company is exposed to certain credit risk in relation to its deposits at this bank. The Company defines cash equivalents as short-term interest-bearing investments with maturities at the time of purchase of three months or less.

The Company determines the appropriate classification of securities at the time of purchase which are recorded in the Consolidated Statements of Financial Condition on the trade date. Securities are classified as available-for-sale or trading. The Company’s available-for-sale investments are comprised of ~~municipal bonds and~~ investment grade corporate debt securities. Available-for-sale investments are carried at fair value with the unrealized gains or losses reported in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. Trading investments ~~primarily~~ include investment grade corporate debt securities and U.S. Treasuries and are carried at fair value, with realized and unrealized gains or losses included in other, ~~income~~net in the Consolidated Statements of Operations.

The Company assesses whether an other-than-temporary impairment loss on the available-for-sale investments has occurred due to declines in fair value or other market conditions. The portion of an other-than-temporary impairment related to credit loss is recorded as a charge to other, net income in the Consolidated Statements of Operations. The remainder is recognized in accumulated other comprehensive loss if the Company does not intend to sell the security and it is more likely than not that the Company will not be required to sell the security prior to recovery. NoNaN charges for other-than-temporary losses were recorded during the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019, respectively.

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” A three-tiered hierarchy for determining fair value has been established that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as Level 1 (unadjusted quoted prices for identical assets or liabilities in active markets), Level 2 (inputs that are observable in the marketplace other than those inputs classified in Level 1) and Level 3 (inputs that are unobservable in the marketplace). The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of its money market funds, securities available-for-sale, trading securities and foreign currency forward contracts. All other financial instruments are short-term in nature and the carrying amount is reported on the Consolidated Statements of Financial Condition at approximate fair value.

All accounts receivable have contractual maturities of less than one year and are derived from trading-related fees and commissions and revenues from products and services. The Company continually monitors collections and payments from its customers and maintains an allowance for doubtful accounts. The allowance for doubtful accounts is based upon the historical collection experience and specific collection issues that have been identified. Additions to the allowance for doubtful accounts are charged to bad debt expense, which is included in general and administrative expense in the Company’s Consolidated Statements of Operations.

Fixed assets are carried at cost less accumulated depreciation. The Company uses the straight-line method of depreciation over three to seven years. The Company amortizes leasehold improvements on a straight-line basis over the lesser of the life of the improvement or the remaining term of the lease.

The Company capitalizes certain costs associated with the development of internal use software, including, among other items, employee compensation and related benefits and third party consulting costs at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed. Once the product is ready for its intended use, such costs are amortized on a straight-line basis over three years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.

The Company capitalizes certain costs associated with cloud computing arrangements, including, among other items, employee compensation and related benefits and third party consulting costs that are part of the application development stage. These costs are setup as a pre-paid asset on the balance sheet and are amortized over the period of the hosting service contract. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.

Cash is provided as collateral for broker-dealer clearing accounts. Cash provided as collateral is included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition.

Assets and liabilities denominated in foreign currencies are translated using exchange rates at the end of the period; revenues and expenses are translated at average monthly rates. Gains and losses on foreign currency translation are a component of accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. Transaction gains and losses are recorded in ~~general and administrative expense~~other, net in the Consolidated Statements of Operations.

The Company enters into foreign currency forward contracts to hedge its net investment in its U.K. subsidiaries. Gains and losses on these transactions are included in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition.

The ~~majority~~Company’s classification of revenues in the ~~Company’s~~Consolidated Statements of Operations represents revenues ~~are derived~~ from ~~commissions~~contracts with customers disaggregated by type of revenue. The Company has 4 revenue streams as described below.

Commission Revenue – The Company charges its broker-dealer clients variable transaction fees for trades executed on its ~~platform~~platforms and, under certain plans, distribution fees ~~that are billed~~or monthly minimum fees to ~~its broker-dealer clients on~~use the platforms for a ~~monthly basis. The Company also derives revenues from information and post-trade services, technology products and services, investment income and other income.~~

~~Commission revenue.~~ ~~Commissions~~particular product area. Variable transaction fees are generally calculated as a percentage of the notional dollar volume of bonds traded on the ~~platform~~platforms and vary based on the type, size, yield and maturity of the bond traded. Under the Company’s disclosed trading transaction fee plans, bonds that are more actively traded or that have shorter maturities are generally charged lower commissions, while bonds that are less actively traded or that have longer maturities generally command higher commissions. Variable transaction fees, distribution fees and unused monthly fee commitments are invoiced and recorded on a monthly basis.

For Open Trading trades that the Company executes between and among institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller, the Company earns ~~the~~its commission through the difference in price between the two trades. The commission is collected upon settlement of the trade, which typically occurs within one to two trading days after the trade date. For U.S. Treasury matched principal ~~trades. Fee programs for certain products include distribution fees which~~trades, commissions are ~~recognized monthly.~~invoiced and recorded on a monthly basis. The following table presents commission revenue by fee type:

Information ~~and post-trade services.~~ ~~The Company generates revenue from information~~ services ~~provided~~– Information services includes data licensed to ~~our~~the Company’s broker-dealer clients, institutional investor clients and data-only ~~subscribers. Information~~subscribers; professional and consulting services; technology software licenses; and maintenance and support services. The nature and timing of each performance obligation may vary as these contracts are either subscription-based services transferred over time, and may be net of volume-based discounts, or one-time services that are ~~invoiced monthly, quarterly or annually. When billed~~transferred at a point in ~~advance,~~time. Revenues for services transferred over time are recognized ratably over the contract period as the Company’s performance obligation is met whereas revenues ~~are deferred and recognized monthly on~~for services transferred at a ~~straight-line basis. The Company also generates revenue from regulatory transaction reporting and trade matching services. Revenue is~~point in time are recognized in the period the services are provided.

~~Technology products~~ Customers are generally billed monthly, quarterly, or annually; revenues billed in advance are deferred and ~~services.~~ The Company generates revenues from professional consulting services, technology software licenses and maintenance and support services. Revenue from professional consulting services is recognized as services are performed and software license subscription revenue and maintenance and support services are recognized ratably over the contract period. ~~Technology products and~~The following table presents information services revenue by timing of recognition:

Post-trade services – Post-trade services revenue is ~~reported~~generated from regulatory transaction reporting, trade publication and trade matching services. Customers are generally billed monthly in ~~other income~~arrears and revenue is recognized in the ~~Consolidated Statements~~period transactions are processed. Revenues billed in advance are deferred and recognized ratably over the contract period. The Company also generates one-time implementation fees for onboarding clients which are invoiced and recognized in the period the implementation is completed. The following table presents post-trade services revenue by timing of ~~Operations.~~ recognition:

Other revenues – Other revenues primarily includes revenue from telecommunications line charges to broker-dealer clients.

Contract liabilities consist of deferred revenues that the Company records when cash payments are received or due in advance of services to be performed. The revenue recognized from contract liabilities and the remaining balance is shown below:

The majority of the Company’s contracts are short-term in nature with durations of less than one year. For contracts extending beyond one year, the aggregate amount of the transaction price allocated to remaining performance obligations was $33.4 million as of June 30, 2020. The Company expects to recognize revenue associated with the remaining performance obligations over the next 25 months.

The Company measures and recognizes compensation expense for all share-based payment awards based on their estimated fair values measured as of the grant date. These costs are recognized as an expense in the Consolidated Statements of Operations over the requisite service period, which is typically the vesting period, with an offsetting increase to additional paid-in capital. ~~Effective upon the Company’s adoption of ASU 2016-09, the Company accounts for forfeitures~~Forfeitures are recognized as they occur. ~~Prior to the adoption of ASU 2016-09, expected forfeitures were included in determining share-based compensation expense.~~

Income taxes are accounted for using the asset and liability method. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized against deferred tax assets if it is more likely than not that such assets will not be realized in future years. The Company recognizes interest and penalties related to unrecognized tax benefits in ~~general and administrative expenses~~other, net in the Consolidated Statements of Operations. ~~Effective upon the Company’s adoption of ASU 2016-09,~~ ~~all~~All tax effects related to share-based payments are recorded through tax expense in the periods during which the awards are exercised or vest.

Business combinations are accounted for under the purchase method of accounting. The total cost of an acquisition is allocated to the underlying net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of certain assets acquired and liabilities assumed ~~is judgmental in nature~~requires judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, growth rates and asset lives.

The Company operates as a single reporting unit. Subsequent to an acquisition, goodwill no longer retains its identification with a particular acquisition, but instead becomes identifiable with the entire reporting unit. As a result, all of the fair value of the Company is available to support the value of goodwill. An impairment review of goodwill is performed on an annual basis, at year-end, or more frequently if circumstances change. Intangible assets with definite lives, including purchased technologies, customer relationships and other intangible assets, are amortized ~~on a straight-line basis~~ over their estimated useful lives ~~ranging~~which range from ~~three to15 years.~~one to 15 years using either a straight-line or accelerated amortization method based on the pattern of economic benefit the Company expects to realize from such assets. Intangible assets are assessed for impairment when events or circumstances indicate the existence of a possible impairment.

Basic earnings per share is computed by dividing the net income attributable to common stock by the weighted-average number of shares of common stock outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average shares outstanding of common stock reflects the dilutive effect that could occur if convertible securities or other contracts to issue common stock were converted into or exercised for common stock.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

During the first quarter of 2016, the Company determined that it had incorrectly recorded deferred taxes for the cumulative translation adjustment (“CTA”) that arises from converting the local currency financial statements into U.S. dollars. Upon making a permanent reinvestment assertion on unremitted earnings from foreign subsidiaries effective January 1, 2013, the Company should have eliminated any deferred tax balances derived from the CTA balance. The Company also determined that gains and losses on the foreign currency forward contracts used to hedge the net investment in certain foreign subsidiaries were not appropriately considered as taxable income or expense in the consolidated tax returns. The Company assessed these errors and determined that they were not material to previous reporting periods. Therefore, the Company recorded these items as out-of-period adjustments in the three months ended March 31, 2016 by decreasing deferred tax assets by $3.1 million, decreasing other comprehensive income by $2.1 million and increasing prepaid expenses and other assets by $1.0 million in the Consolidated Statements of Financial Condition.

Certain reclassifications have been made to the prior period’s Consolidated Financial Statements in order to conform to the current year presentation. Such reclassifications had no effect on previously reported net income.

Certain U.S. subsidiaries of the Company are registered as a broker-dealer or swap execution facility (“SEF”) and therefore are subject to the applicable rules and regulations of the SEC and the Commodity Futures Trading ~~Commission.~~Commission (“CFTC”). These rules contain minimum net capital requirements, as defined in the applicable regulations, and also may require that a significant part of the registrants’ assets be kept in relatively liquid form. Certain of the Company’s foreign subsidiaries are regulated by the Financial Conduct Authority (“FCA”) in the U.K. or other foreign regulators and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of ~~September~~June 30, ~~2017,~~2020, each of the Company’s subsidiaries that are subject to these regulations had net capital or financial resources in excess of their minimum requirements. As of ~~September~~June 30, ~~2017,~~2020, the Company’s subsidiaries maintained aggregate net capital and financial resources that was ~~$128.2~~$287.5 million in excess of the required levels of ~~$12.6~~$19.6 million.

Each of the Company’s U.S. and foreign regulated subsidiaries are subject to local regulations which generally prohibit repayment of borrowings from the Company or affiliates, paying cash dividends, making loans to the Company or affiliates or otherwise entering into transactions that result in a significant reduction in regulatory net capital or financial resources without prior notification to or approval from such regulated entity’s principal regulator.

The following table summarizes the valuation of the Company’s assets and liabilities measured at fair value as categorized based on the hierarchy described in Note 2.

	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
	(In thousands)										(In thousands)
As of September 30, 2017
As of June 30, 2020
Money market funds	$	25,213	$	—		$	—	$	25,213		$	153,750	$	—		$	—	$	153,750
Securities available-for-sale
Corporate debt		—		168,278			—		168,278			—		102,151			—		102,151
Trading securities
Corporate debt		—		65,885			—		65,885			—		21,645			—		21,645
Mutual funds held in rabbi trust		—		3,058			—		3,058			—		7,576			—		7,576
Foreign currency forward position		—		591			—		591			—		1,396			—		1,396
Total	$	25,213	$	237,812		$	—	$	263,025		$	153,750	$	132,768		$	—	$	286,518

As of December 31, 2016
As of December 31, 2019
Money market funds	$	58,573	$	—		$	—	$	58,573		$	99,755	$	—		$	—	$	99,755
Securities available-for-sale
Corporate debt		—		118,870			—		118,870			—		137,835			—		137,835
Trading securities
Corporate debt		—		74,207			—		74,207			—		31,120			—		31,120
U.S. Treasuries												—		55,305			—		55,305
Mutual funds held in rabbi trust		—		1,327			—		1,327			—		6,217			—		6,217
Foreign currency forward position		—		(266	)		—		(266	)		—		(2,772	)		—		(2,772	)
Total	$	58,573	$	194,138		$	—	$	252,711		$	99,755	$	227,705		$	—	$	327,460

Securities classified within Level 2 were valued using a market approach utilizing prices and other relevant information generated by market transactions involving comparable assets. The foreign currency forward contracts are classified within Level 2 as the valuation inputs are based on quoted market prices. The mutual funds held in a rabbi trust represent investments associated with the Company’s deferred cash incentive ~~plan (see Note 14).~~plan. There were no financial assets classified within Level 3 during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019.

The Company enters into foreign currency forward contracts to hedge the net investment in the Company’s U.K. subsidiaries. The Company designates each foreign currency forward contract as a hedge and assesses the risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure and how effectiveness is to be assessed prospectively and retrospectively. These hedges are for a one-month period and are used to limit exposure to foreign currency exchange rate fluctuations. The fair value of the asset is included in prepaid expenses and other assets and the fair value of the liability is included in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Gains or losses on foreign currency forward contracts designated as hedges are included in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. A summary of the Company’s foreign currency forward position is as follows:

	As of					As of
	September 30, 2017		December 31, 2016			June 30, 2020		December 31, 2019
	(In thousands)					(In thousands)
Notional value	$	89,035	$	66,972		$	179,109	$	155,885
Fair value of notional		88,444		67,238			177,713		158,657
Fair value of the asset (liability)	$	591	$	(266	)	$	1,396	$	(2,772	)

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
	(In thousands)									(In thousands)
As of September 30, 2017
As of June 30, 2020
Securities available-for-sale
Corporate debt	$	168,455	$	18	$	(195	)	$	168,278	$	101,001	$	1,167	$	(17	)	$	102,151

Trading securities
Corporate debt		65,940		67		(122	)		65,885		21,556		90		(1	)		21,645
Mutual funds held in rabbi trust		2,729		329		—			3,058		7,680		54		(158	)		7,576
Total trading securities		68,669		396		(122	)		68,943		29,236		144		(159	)		29,221

Total investments	$	237,124	$	414	$	(317	)	$	237,221	$	130,237	$	1,311	$	(176	)	$	131,372

As of December 31, 2016
As of December 31, 2019
Securities available-for-sale
Corporate debt	$	119,073	$	13	$	(216	)	$	118,870	$	137,119	$	721	$	(5	)	$	137,835

Trading securities
Corporate debt		74,394		47		(234	)		74,207		31,120		14		(14	)		31,120
U.S. Treasuries											54,738		567		—			55,305
Mutual funds held in rabbi trust		1,212		115		—			1,327		5,173		1,044		—			6,217
Total trading securities		75,606		162		(234	)		75,534		91,031		1,625		(14	)		92,642

Total investments	$	194,679	$	175	$	(450	)	$	194,404	$	228,150	$	2,346	$	(19	)	$	230,477

The following table summarizes the fair value of the investments based upon the contractual maturities:

	As of				As of
	September 30, 2017		December 31, 2016		June 30, 2020		December 31, 2019
	(In thousands)				(In thousands)
Less than one year	$	133,207	$	117,904	$	77,068	$	120,850
Due in 1 - 5 years		104,014		76,500		54,304		109,627
Total	$	237,221	$	194,404	$	131,372	$	230,477

Proceeds from the sales and maturities of investments during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 were ~~$170.1~~$144.4 million and ~~$48.1~~$175.7 million, respectively.

The following table provides fair values and unrealized losses on investments and by the aging of the securities’ continuous unrealized loss position as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016:~~2019:

	Less than Twelve Months					Twelve Months or More					Total					Less than Twelve Months					Twelve Months or More					Total
	Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses
	(In thousands)															(In thousands)
As of September 30, 2017
As of June 30, 2020
Corporate debt	$	173,000	$	(284	)	$	5,426	$	(33	)	$	178,426	$	(317	)	$	11,578	$	(18	)	$	—	$	—		$	11,578	$	(18	)

As of December 31, 2016
As of December 31, 2019
Corporate debt	$	136,667	$	(449	)	$	2,000	$	(1	)	$	138,667	$	(450	)	$	27,999	$	(18	)	$	4,406	$	(1	)	$	32,405	$	(19	)

5.On November 1, 2019, the Company and one of its subsidiaries completed their acquisition (the “Acquisition”) of all of the outstanding equity interests of LiquidityEdge LLC (“LiquidityEdge”) pursuant to the terms and conditions of a Unit Purchase Agreement entered into among the Company, LiquidityEdge, the holders of all the outstanding equity interests in LiquidityEdge and certain other persons named therein on August 12, 2019 (as amended, the “Agreement”). The aggregate consideration for the Acquisition was $152.7 million, comprised of approximately $103.9 million in cash and 146,450 shares of common stock of the Company (valued at approximately $48.8 million as of the closing date of the Acquisition, as described below). The aggregate consideration was increased by $0.5 million in the first quarter of 2020 to adjust for cash on hand, outstanding debt, transaction expenses and working capital as set forth in the Agreement. A portion of the stock consideration, amounting to 43,937 shares of common stock, was placed in escrow for up to 18 months to secure the sellers’ indemnification obligations under the Agreement. In addition, under the Agreement, the sellers were generally prohibited from transferring any of the Company common stock received in the Acquisition for a period of six months following the November 1, 2019 closing date. The value ascribed to the shares by the Company was discounted from the market value on the date of closing to reflect the non-marketability of such shares during the restriction period.

LiquidityEdge is a limited liability company organized in the state of Delaware and is a broker-dealer registered with the SEC and the Financial Industry Regulatory Authority (“FINRA”). LiquidityEdge offers an electronic trading platform for U.S. Treasuries.

The Company has completed a preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed at the date of acquisition. The Company utilized an independent third-party to determine the fair value of the acquired intangible assets. It is possible that the purchase price allocation will be adjusted upon finalization of the accounting for the acquired assets. The purchase price allocation as of June 30, 2020 is as follows (in thousands):

The acquired intangible assets are as follows (in thousands, except for useful lives):

Goodwill and intangible assets with indefinite lives was ~~$59.7~~$147.4 million and $146.9 million as of ~~both September~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019, respectively. Intangible assets that are subject to amortization, including the related accumulated amortization, are comprised of the following:

	September 30, 2017							December 31, 2016							June 30, 2020							December 31, 2019
	Cost		Accumulated amortization			Net carrying amount		Cost		Accumulated amortization			Net carrying amount		Cost		Accumulated amortization			Net carrying amount		Cost		Accumulated amortization			Net carrying amount
	(In thousands)														(In thousands)
Technology	$	5,770	$	(5,770	)	$	—	$	5,770	$	(5,770	)	$	—	$	5,770	$	(5,770	)	$	—	$	5,770	$	(5,770	)	$	—
Customer relationships		5,645		(2,203	)		3,443		5,628		(1,897	)		3,731		64,316		(4,793	)		59,523		64,332		(3,451	)		60,881
Non-competition agreements		380		(380	)		—		380		(380	)		—		380		(380	)		—		380		(380	)		—
Tradenames		370		(370	)		—		370		(370	)		—		400		(371	)		29		490		(385	)		105
Total	$	12,165	$	(8,723	)	$	3,443	$	12,148	$	(8,417	)	$	3,731	$	70,866	$	(11,314	)		59,552	$	70,972	$	(9,986	)	$	60,986

Amortization expense associated with identifiable intangible assets was ~~$0.3~~$1.3 million and ~~$0.6~~$0.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Estimated total amortization expense is ~~$0.4~~$3.2 million, $5.7 million, $6.9 million, $7.9 million and $6.7 million, respectively, for each year from ~~2017~~2020 through ~~2021.~~2024.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			Three Months Ended June 30,						Six Months Ended June 30,
	(In thousands)												2020			2019			2020			2019
Current:													(In thousands)
Federal	$	11,331		$	13,273		$	28,676		$	30,898		$	10,887		$	9,948		$	18,653		$	16,472
State and local		1,651			1,895			4,579			5,055			3,917			1,957			6,827			3,350
Foreign		1,191			1,714			4,234			4,599			3,741			3,273			7,188			6,044
Total current provision		14,173			16,882			37,489			40,552			18,545			15,178			32,668			25,866
Deferred:
Federal		(930	)		(918	)		130			6,895			1,475			(176	)		3,380			1,426
State and local		(158	)		(154	)		(64	)		964			266			(31	)		618			218
Foreign		2			(374	)		226			(143	)		263			(167	)		769			(8	)
Total deferred provision		(1,086	)		(1,446	)		292			7,716			2,004			(374	)		4,767			1,636
Provision for income taxes	$	13,087		$	15,436		$	37,781		$	48,268		$	20,549		$	14,804		$	37,435		$	27,502

Effective tax rate														19.7	%		23.5	%		19.1	%		21.5	%

The Company recognized excess tax benefits on share-based payments of $3.8 5.7 million and $14.80.4 million through the provision for income taxes for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2020 and 2019, respectively, and $12.0 and $3.5 million for the six months ended June 30, 2020 and 2019, respectively.

The Company or one of its subsidiaries files U.S. federal, state and foreign income tax returns. ~~Income tax returns for U.S. Federal (through 2013), New York City (through 2003) and state (through 2009) and Connecticut state (through 2003) have been audited. An examination of the Company’s~~The Company is currently under a New York State income tax ~~returns~~examination for the tax years 2010 through ~~2013 is currently underway. The~~2017 and a New York City income tax examination for the tax years 2016 through 2018. At this time, the Company cannot estimate when the ~~examination~~examinations will conclude or the impact such ~~examination~~examinations will have on the Company’s Consolidated Financial Statements, if any. Generally, other than New York State, the Company is no longer subject to tax examinations by tax authorities for years prior to 2016.

~~The Company has determined that unremitted earnings of the Company’s foreign subsidiaries are considered indefinitely reinvested outside of the United States.~~

~~Stock-based~~Total stock-based compensation expense ~~for the three and nine months ended September 30, 2017 and 2016~~ was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2020		2019		2020		2019
	(In thousands)								(In thousands)
Employees	$	3,280	$	3,387	$	10,273	$	9,963	$	5,512	$	5,645	$	11,911	$	10,561
Non-employee directors		241		312		716		673		279		284		557		564
Total stock-based compensation	$	3,521	$	3,699	$	10,989	$	10,636	$	5,791	$	5,929	$	12,468	$	11,125

The Company records stock-based compensation expense for employees in employee compensation and benefits and for non-employee directors in general and administrative expenses in the Consolidated Statements of Operations.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company granted to employees ~~and directors~~ a total of ~~65,462~~39,174 shares of restricted stock or restricted stock units, 13,900 options to purchase shares of common stock and performance-based shares with an expected pay-out at target of ~~22,338 shares of common stock and 54,838 options to purchase~~13,295 shares of common stock. The fair value of the restricted stock and performance-based share awards was based on a weighted-average fair value per share at the grant date of ~~$156.79~~$376.51 and ~~$168.89,~~$360.90, respectively. Based on the Black-Scholes option pricing model, the weighted-average fair value for each option granted was ~~$40.08~~$91.43 per share.

As of ~~September~~June 30, ~~2017,~~2020, the total unrecognized compensation cost related to all non-vested awards was ~~$26.7~~$44.5 million. That cost is expected to be recognized over a weighted-average period of 2.1 years.

On June 8, 2020, the Company’s stockholders approved the Company’s 2020 Equity Incentive Plan, which replaces the Company’s 2012 Incentive Plan. An additional 2,500,000 shares will be available under the 2020 Equity Incentive Plan for the grant of stock options, stock appreciation rights, restricted stock, performance shares, performance units, or other stock-based awards as incentives and rewards to encourage employees, consultants and non-employee directors to participate in the long-term success of the Company.

The following table sets forth ~~the computation of~~ basic and diluted weighted average shares outstanding used to compute earnings per ~~common~~ share:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2020		2019		2020		2019
	(In thousands, except per share amounts)
Net income	$	34,130	$	30,918	$	114,616	$	93,007
									(In thousands)
Basic weighted average shares outstanding		36,865		36,889		36,856		36,847		37,340		37,049		37,322		37,046
Dilutive effect of stock options and restricted stock		1,154		903		1,213		891		813		861		793		825
Diluted weighted average shares outstanding		38,019		37,792		38,069		37,738		38,153		37,910		38,115		37,871

Basic earnings per share	$	0.93	$	0.84	$	3.11	$	2.52
Diluted earnings per share	$	0.90	$	0.82	$	3.01	$	2.46

Stock options and restricted stock totaling ~~10,729~~19,101 shares and ~~6,480~~232,043 shares for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively, and ~~40,485 shares~~41,033 and ~~112,004~~289,185 shares for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020, and ~~2016,~~2019, respectively, were excluded from the computation of diluted earnings per share because their effect would have been antidilutive. The computation of diluted shares can vary among periods due, in part, to the change in the average price of the Company’s common stock.

~~In October 2015, the~~The Company ~~entered into a two-year~~is party to an amended and restated credit agreement (the “Credit Agreement”) that ~~provided~~provides for revolving loans and letters of credit up to an aggregate of $100.0 million. ~~As of September 30, 2017, the Company had $0.9 million in letters of credit outstanding and $99.1 million in available borrowing capacity under the Credit Agreement.~~ The ~~Company amended the~~ Credit Agreement matures in October ~~2017 and extended the maturity date to October 2018. The amended Credit Agreement also provides for two additional one-year extension options and modified certain borrowing terms and covenants.~~2020. Subject to satisfaction of certain specified conditions, the Company is permitted to upsize the borrowing capacity under the Credit Agreement by an additional $50.0 million. As of June 30, 2020, the Company had $1.0 million in letters of credit outstanding and $99.0 million in available borrowing capacity under the Credit Agreement.

Borrowings under the Credit Agreement will bear interest at a rate per annum equal to the base rate or adjusted LIBOR plus an applicable margin that varies with the Company’s consolidated total leverage ratio. The Credit Agreement requires that the Company ~~satisfies~~satisfy certain covenants, which ~~includes~~include leverage ratios and minimum earnings before interest, tax, depreciation and amortization (“EBITDA”) requirements. The Company was in compliance with all applicable covenants at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019.

The Company’s existing and future domestic subsidiaries (other than any regulated ~~subsidiary and MarketAxess Colombia Corporation so long as its assets and revenues remain below an agreed threshold)~~subsidiary) have guaranteed the Company’s obligations under the Credit Agreement. Subject to customary exceptions and exclusions, the Company’s borrowings under the Credit Agreement are collateralized by first priority pledges (subject to permitted liens) of substantially all of the Company’s personal property assets and the personal property assets of the Company’s domestic subsidiaries that have guaranteed the Credit Agreement, including the equity interests of the Company’s domestic subsidiaries and the equity interests of certain of the Company’s foreign subsidiaries (limited, in the case of the voting equity interests of the foreign subsidiaries, to a pledge of 65% of those equity interests).

If an event of default occurs, including failure to pay principal or interest due on the loan balance, a voluntary or involuntary proceeding seeking liquidation, change in control of the Company, or one or more material judgments against the Company in excess of $10.0 million, the lenders would be entitled to accelerate the borrowings under the Credit Agreement and take various other actions, including all actions permitted to be taken by a secured creditor. If certain bankruptcy events of default occur, the borrowings under the Credit Agreement will automatically accelerate.

The Company leases office space under non-cancelable lease agreements expiring at various dates through 2033. Office space leases are subject to escalation based on certain costs incurred by the landlord. Minimum rental commitments as of September 30, 2017 under such operating leases were as follows (in thousands):

Rental expense was $4.1 million and $3.1 million for the nine months ended September 30, 2017 and 2016, respectively, and is included in occupancy expense in the Consolidated Statements of Operations. Rental expense has been recorded based on the total minimum lease payments after giving effect to rent abatement and concessions, which are being amortized on a straight-line basis over the life of the lease. The Company is contingently obligated for standby letters of credit amounting to $0.9 million that were issued to landlords for office space.

During 2016, the Company entered into a lease agreement for our new global headquarters in New York City. The Company expects to relocate its headquarters to approximately 83,000 square feet of newly built office space at 55 Hudson Yards upon the building’s completion in late 2018. The fifteen-year lease for the new headquarters will commence when the Company receives possession of the premises, which is currently expected in the first quarter of 2018.11. Leases

The Company has ~~assigned~~operating leases for corporate offices with initial lease terms ranging from one year to 15 years. Certain leases contain options to extend the initial term at the Company’s discretion. The Company accounts for the option to extend when it is reasonably certain of being exercised. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The Company determines whether an arrangement is, or includes, a lease ~~agreement~~at contract inception. Operating lease right-of-use assets and liabilities are recognized at commencement date and are initially measured based on ~~a leased property~~the present value of lease payments over the defined lease term. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments.

The weighted average remaining lease term (in years) and weighted average discount rate are as follows:

The following table presents the maturity of lease liabilities as of June 30, 2020:

The Company has entered into agreements that assign the Company’s lease obligations on 2 properties to a third ~~party~~parties and is contingently liable should the ~~assignee~~third parties default on future lease obligations through the lease termination dates of November 2020 ~~lease termination date.~~and February 2022. The aggregate amount of the future lease ~~obligation~~obligations under ~~this arrangement~~these arrangements is ~~approximately $0.9~~$2.8 million as of ~~September~~June 30, ~~2017.~~ 2020.

In the normal course of business, the Company and its subsidiaries included in the consolidated financial statements may be involved in various lawsuits, proceedings and regulatory examinations. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings, if any, utilizing the latest information available. For matters where it is probable that the Company will incur a material loss and the amount can be reasonably estimated, the Company will establish an accrual for the loss. Once established, the accrual will be adjusted to reflect any relevant developments. When a loss contingency is not both probable and estimable, the Company does not establish an accrual.

Based on currently available information, the outcome of the Company’s outstanding matters is not expected to have a material adverse impact on the Company’s financial position. It is not presently possible to determine the ultimate exposure to these matters and there is no assurance that the resolution of the outstanding matters will not significantly exceed any reserves accrued by the Company.

The Company, through ~~two regulated~~ certain of itssubsidiaries, executes ~~certain~~ bond transactions between and among institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades which settle through third-party clearing brokers. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. ~~For the nine months ended September 30, 2017 and 2016, revenues from matched principal trading were approximately $34.4 million and $26.6 million, respectively.~~ Under securities clearing agreements with third party clearing brokers, the Company maintains collateral deposits with each clearing broker in the form of cash. As of ~~September~~June 30, ~~2017~~2020 and ~~2016,~~December 31, 2019, the amount of the collateral deposits, which are disclosed in the Consolidated Statements of Cash Flows as restricted cash and included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition, was ~~$1.2~~$20.6 million and ~~$1.1~~$4.1 million, respectively. ~~For~~During April 2020, the ~~nine months ended September 30, 2017 and 2016,~~Company increased the amount of the collateral deposits with clearing ~~expenses associated with~~brokers to support increased trading volume in the Company’s matched principal ~~transactions were $4.3 million and $4.8~~

~~million, respectively, and are classified under clearing costs on the Consolidated Statements of Operations.~~business. The Company is exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is a miscommunication or other error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge the Company for any losses they suffer resulting from a counterparty’s failure on any of the Company’s trades. The Company did not record any liabilities or losses with regard to this right for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019.

In the normal course of business, the Company enters into contracts that contain a variety of representations, warranties and ~~general indemnifications.~~indemnification provisions. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects the risk of loss to be remote.

During both the nine months ended September 30, 2017 and 2016, no single client accounted for more than 10% of total revenue. One institutional investor client accounted for 12.8% and 14.6% of trading volumes during the nine months ended September 30, 2017 and 2016, respectively.

In January ~~2016,~~2019, the Board of Directors authorized a two-year share repurchase program for up to ~~$25.0~~$100.0 million ~~of the Company’s common stock. In October 2016, the Board of Directors approved a $50.0 million increase~~that commenced in ~~the size of the repurchase program.~~April 2019. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company repurchased ~~191,394~~28,564 shares of common stock at a cost of ~~$36.4~~$11.3 million. In September 2017, the existing share repurchase plan was terminated and the Board of Directors authorized a new fifteen-month share repurchase program for up to $100 million commencing in October 2017. Shares repurchased under ~~each~~the program will be held in treasury for future use.

The Company operates an electronic ~~multi-party~~ platform for the trading of fixed-income securities and provides related data, analytics, compliance tools and post-trade services. The Company considers its operations to constitute a single business segment because of the highly integrated nature of these product and services, of the financial markets in which the Company competes and of the Company’s worldwide business activities. The Company believes that results by geographic region or client sector are not necessarily meaningful in understanding its business.

For the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, the U.K. was the only individual foreign country in which the Company had a subsidiary that accounted for 10% or more of the total revenues or total long-lived assets of the Company. Revenues and long-lived assets are attributed to a geographic area based on the location of the particular subsidiary. Long-lived assets are defined as furniture, equipment, leasehold improvements and capitalized software. Information regarding revenue for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 and long-lived assets as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016		2020		2019		2020		2019
	(In thousands)								(In thousands)
Revenues
United States	$	82,076	$	77,571	$	252,485	$	235,078	$	157,727	$	104,141	$	299,337	$	207,756
United Kingdom		14,250		12,433		44,277		39,165		22,086		20,706		44,505		40,973
Other		375		267		1,144		1,240		4,982		643		9,931		1,252
Total	$	96,701	$	90,271	$	297,906	$	275,483	$	184,795	$	125,490	$	353,773	$	249,981

	As of				As of
	September 30, 2017		December 31, 2016		June 30, 2020		December 31, 2019
	(In thousands)				(In thousands)
Long-lived assets, as defined
United States	$	25,602	$	23,370	$	63,915	$	62,356
United Kingdom		9,700		7,713		14,527		9,410
Other		19		21		19		29
Total	$	35,321	$	31,104	$	78,461	$	71,795

The Company offers a non-qualified deferred cash incentive plan to certain officers and other employees. Under the plan, eligible employees may defer up to 100% of their annual cash incentive pay. The Company has elected to fund its deferred compensation obligations through a rabbi trust. The rabbi trust is subject to creditor claims in the event of insolvency but such assets are not available for general corporate purposes. Assets held in the rabbi trust are invested in mutual funds, as selected by the participants, which are designated as trading securities and carried at fair value. As of September 30, 2017 and 2016, the fair value of the mutual fund investments and deferred compensation obligations were $3.1 million and $1.3 million, respectively. Changes in the fair value of securities held in the rabbi trust are recognized as trading gains and losses and included in other revenues and offsetting increases or decreases in the deferred compensation obligation will be recorded in employee compensation and benefits. For the nine months ended September 30, 2017 and 2016, the trading gains and compensation expense were $0.3 million and $0.2 million, respectively.

I~~tem~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we ~~are under~~undertake no obligation to revise or update any forward-looking statements contained in this ~~report.~~report, except to the extent required by applicable law. Our company policy is generally to provide our expectations only once per quarter, and not to update that information until the next quarter. Actual future events or results may differ, perhaps materially from those contained in the projections or forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this report, particularly in the section captioned Part II, Item 1A, “Risk Factors.”

MarketAxess operates a leading electronic trading ~~platform that enables~~platforms delivering expanded liquidity opportunities, improved execution quality and significant cost savings across global fixed-income ~~market participants to efficiently trade corporate bonds and other types of fixed-income instruments using our patented trading technology.~~markets. Over ~~1,300~~1,700 institutional investor and broker-dealer firms are active users of our patented trading ~~platform,~~technology, accessing global liquidity on our platforms in U.S. ~~high-grade corporate~~investment-grade bonds, ~~emerging markets and~~U.S. high-yield bonds, ~~European bonds,~~ U.S. ~~agency bonds, municipal bonds, credit default swaps~~Treasuries, emerging market debt, Eurobonds and other ~~fixed-income~~fixed income securities. Through our Open ~~Trading™~~Trading protocols, we execute bond trades ~~in certain bonds~~ between and among institutional investor and broker-dealer clients in anthe leading all-to-all anonymous trading environment ~~on a matched principal basis.~~for corporate bonds. We also offer a number of trading-related products and services, including: Composite+^TM pricing and other market data products to assist clients with trading decisions; auto-execution and other execution services for clients requiring specialized workflow solutions; connectivity solutions that facilitate straight-through processing; and technology services to optimize trading ~~environments; and execution services for exchange-traded fund managers and other clients. Through our Trax® division,~~environments. In addition, we ~~also offer~~provide a range of pre- and post-trade services, including trade matching, trade publication, regulatory transaction reporting and market and reference data across a range of fixed-income and other products.

Our ~~platform’s~~platforms’ innovative technology solutions are designed to increase the number of potential trading counterparties ~~on our electronic trading platform~~ and create a menu of solutions to address different trade sizes and bond liquidity characteristics. Our traditional request-for-quote (“RFQ”) model allows our institutional investor clients to simultaneously request competing, executable bids or offers from our broker-dealer clients and execute trades with the broker-dealer of their choice from among those that choose to respond. Our Open ~~Trading™~~Trading protocols complement our ~~request-for-quote~~RFQ model by increasing the number of potential counterparties and improving liquidity by allowing all participants to interact anonymously in an all-to-all trading environment. ~~Our platform also provides~~Clients can use our ~~broker-dealer clients~~auto-execution technology with both our traditional RFQ and Open Trading protocols, thereby using rules-based execution to connect to diverse sources of liquidity while reducing trading inefficiencies and human errors. Leveraging the benefits of our Open Trading marketplace, we recently launched Live Markets, an order book that will create a ~~solution that enables them to efficiently reach our institutional investor clients~~single view of two-way, actionable prices for the ~~distribution~~most active bonds, including newly issued debt, benchmark issues and news-driven securities. We expect that Open Trading participants will improve their trading ~~of bonds.~~capacity through the Live Markets order book, by more efficiently trading liquid names in larger size and accessing integrated real-time market data, such as Composite+.

~~The majority of our revenues are derived~~We derive revenue from commissions for trades executed on our platform, ~~and distribution fees that are billed to our broker-dealer clients on a monthly basis. We also derive revenues from~~ information ~~and~~services, post-trade services ~~technology products and services, investment income~~ and other ~~income.~~revenues. Our expenses consist of employee compensation and benefits, depreciation and amortization, technology and communication expenses, professional and consulting fees, occupancy, marketing and advertising, clearing costs and other general and administrative expenses.

Our objective is to provide the leading global electronic trading platform for fixed-income securities, connecting broker-dealers and institutional investors more easily and efficiently, while offering a broad array of trading, information ~~trading~~ and technology services to market participants across the trading cycle. The key elements of our strategy are:

The global economy is currently experiencing a period of significant turmoil and deteriorating economic conditions due to the outbreak of the COVID-19 pandemic (the “Pandemic”). The steep drop in economic activity in the first quarter had an immediate and substantial impact on global credit markets with sharp credit spread widening. These conditions largely continued during the second quarter. Credit yield spreads in U.S. corporate bonds, as measured by the Credit Suisse Liquid U.S. Corporate Index (“LUCI”), increased from 1.1% over U.S Treasuries in December 2019 to 1.5% in March 2020 and credit spread volatility in U.S. corporate bonds, as measured by the LUCI Index, increased from 1.1% in December 2019 to 11.6% in March 2020. During the second quarter, both credit spreads and credit spread volatility tightened dramatically and issuance of U.S. investment grade and high-yield corporate bonds reached record levels. As a result, U.S. credit trading volumes reached record levels in the second quarter, and electronic trading market share on our platforms continued to increase. The average daily trading volume of U.S. high-grade and high-yield corporate bonds for the three months ended June 30, 2020, as measured by Trade Reporting and Compliance Engine (“TRACE”), increased by 35.6% and 36.9%, respectively, compared to three months ended June 30, 2019.

As a result of the Pandemic, we have experienced significant changes in our daily operations. In mid-March, we successfully implemented a global work from home mandate for all of our employees and, as a result, we have continued to provide our trading platforms and other services to our clients without interruption. In particular, we believe that Open Trading liquidity was increasingly essential to the functioning of credit markets during the Pandemic, and MarketAxess played a valuable role keeping our clients connected to the market as traders moved from their centralized trading floors to home offices. Since the outbreak of the Pandemic, we have helped over 10,000 individual users connect to our trading platforms from their homes. Although we have reprioritized certain technology projects due to the changing needs of our clients in the current market environment, we expect to continue with our hiring plans, capital expenditures and the expansion of our trading platforms and services into new jurisdictions.

The global spread of the Pandemic is complex and rapidly-evolving, with authorities around the world implementing numerous measures to try to contain the coronavirus, such as travel bans and restrictions, social distancing, quarantines, shelter in place, stay at home or lockdown orders and business limitations and shutdowns. While we remain confident that we can continue to maintain business continuity, serve our clients and provide efficient execution in a virtual environment as necessary, we have re-opened our offices and have allowed our employees to return to work where local regulations have permitted. The re-opening of offices has created additional risks and operational challenges. We also anticipate that the re-opening of our offices may require investments in the design, implementation and enforcement of new workplace safety protocols. These efforts may divert management attention, and the protocols may create logistical challenges for our employees which could adversely impact employee productivity and morale.

We believe that we have sufficient liquidity and flexibility to operate during any future disruptions caused by the Pandemic. While we have experienced increased market volumes and market share since the outbreak, we are cautious of the damaging impact the Pandemic may have on the global economy in the longer-term and the adverse impact that a global recession could have on liquidity and market volumes in the global credit markets.

We expect that current cash and investment balances, in combination with cash flows that are generated from operations, will be sufficient to meet our liquidity needs and planned capital expenditure requirements for at least the next twelve months. We have not drawn down on our existing line of credit facility and we have not altered our capital management programs, including our dividend and stock repurchase programs. We ended the quarter with a strong balance sheet, no borrowings and with capital significantly in excess of our regulatory requirements.

In response to the current economic conditions, the Federal Reserve Bank of New York has established a Secondary Market Corporate Credit Facility (“Facility”) that will lend money, on a recourse basis, to a special purpose vehicle (“SPV”) that will purchase in the secondary market corporate debt issued by eligible issuers. The SPV will purchase in the secondary market eligible individual corporate bonds, as well as eligible corporate bond portfolios in the form of exchange-traded funds (“ETFs”). The

combined size of the Facility and the related Primary Market Corporate Credit Facility is expected to be up to $750 billion. It is not possible at this point in time to predict the effects of the Facility on U.S. secondary credit market volumes or our trading volumes.

The global fixed-income securities industry is risky and volatile and is directly affected by a number of economic, political and market factors that may result in declining trading volume. These factors could have a material adverse effect on our business, financial condition and results of operations. These factors include, among others, credit market conditions, the current interest rate environment, including the volatility of interest rates and investors’ forecasts of future interest rates, economic and political conditions in the United States, Europe and elsewhere, and the consolidation or contraction of our broker-dealer and institutional investor clients.

Our results of operations are impacted by a number of factors, including market conditions and the overall level of market volumes in our core products. In the first half of 2020, estimated U.S. high-grade and U.S. high-yield market volume, as reported by TRACE, increased 19.4% and 30.7%, respectively, compared to the first half of 2019. We experienced increased trading volumes and market share in the first half of 2020 due to the extreme market dislocation and volatility caused by the Pandemic.

The global fixed-income securities industry generally, and the electronic financial services markets in which we engage in particular, are highly competitive, and we expect competition to intensify in the future. Sources of competition for us will continue to include, among others, bond trading conducted directly between broker-dealers and their institutional investor clients over the telephone or electronically and other multi-dealer or all-to-all trading platforms. Competitors, including companies in which some of our broker-dealer clients have invested, have developed or acquired electronic trading platforms or have announced their intention to explore the development of electronic platforms or information networks that may compete with us.

In general, we compete on the basis of a number of key factors, including, among others, the liquidity provided on our platform, the ~~level of commissions charged for trades executed on our platform, the~~ magnitude and frequency of price improvement enabled by our platform, total transaction costs and the quality and speed of execution. We believe that our ability to grow volumes and revenues will largely depend on our performance with respect to these factors.

Our competitive position is also enhanced by the familiarity and integration of our broker-dealer and institutional investor clients with our electronic trading platform and other systems. We have focused on the unique aspects of the credit markets we serve in the development of our platform, working closely with our clients to provide a system that is suited to their needs.

Our ~~industry has been and~~business is subject to ~~continuous regulatory changes and may become subject to new~~extensive regulations ~~or changes~~ in ~~the interpretation or enforcement of existing regulations, which could require us to incur significant costs.~~

~~Following the global financial crisis and other recent events in the financial industry, governments and regulators in both~~ the United States and ~~Europe called for increased regulation~~internationally, which may expose us to significant regulatory risk and ~~transparency~~cause additional legal costs to ensure compliance. The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in enforcement of new laws and regulations that apply to our business. The current regulatory environment in the over-the-counter markets. As a result, the Dodd-Frank Act was signed into law in 2010 and, among other things, mandated the clearing of certain derivative instruments (“swaps”) through regulated central clearing organizations and mandatory trading of those instruments through either regulated exchanges or swap execution facilities (“SEFs”), in each case,United States may be subject to ~~certain key exceptions.~~ future legislative changes, including those which may be driven by the current presidential administration as it largely pursues policies of financial deregulation. In 2017, the SEC established a Fixed Income Market Structure Advisory Committee in order to provide the SEC with diverse perspectives on the structure and operations of the U.S. fixed-income markets, as well as advice and recommendations on matters related to fixed-income market structure. The impact of any reform efforts on us and our operations remains uncertain.

Various rules promulgated since the financial crisis could also adversely affect our bank-affiliated broker-dealer clients’ ability to make markets in a variety of fixed-income securities, thereby negatively impacting the level of liquidity and pricing available on our trading platform. For example, while the Volcker Rule does not apply directly to us, the Volcker Rule bans proprietary trading by banks and their affiliates. In addition, ~~enhanced leverage ratios applicable~~the U.K. ceased to ~~large banking organizations in the U.S. and Europe~~

require such organizations to strengthen their balance sheets and may limit their ability or willingness to make markets on our trading platform. We cannot predict the extent to which these rules or any future regulatory changes may adversely affect our business and operations.

~~Following President Trump’s election in November 2016, he has pursued~~be a ~~path of financial deregulation, including by signing an executive order that requires the Treasury Department to review the provisions~~member of the Dodd-Frank Act. As a result, the Treasury Department has begun a process of reviewing existing U.S. capital markets regulations, and has issued a report with recommendations to improve corporate bond liquidity.

Similar to the U.S., regulatory bodies in Europe are developing new rules for the fixed-income markets. MiFID II and MiFIR were approved in June 2014 and introduce significant changes in market structure designed to: (i) enhance pre- and post-trade transparency for fixed-income instruments with the scope of requirements calibrated for liquidity, (ii) increase and enhance post-trade reporting obligations with a requirement to submit post-trade data to Approved Reporting Mechanisms, (iii) ensure trading of certain derivatives occursE.U. on ~~regulated trading venues and (iv) establish a consolidated tape for trade data. MiFID II and MiFIR are expected to take effect in~~ January 2018 and the final rules may have an adverse effect on our operations or our ability to provide our electronic trading platform in a manner that can successfully compete against other types of regulated and non-regulated venues for the fixed-income trading needs of our clients. In addition, MiFID II is expected to cause us to expend significantly more compliance, business and technology resources, incur additional operational costs and create additional regulatory exposure for our trading and post-trade businesses. While we generally believe the net impact of the rules and regulations may be positive for our businesses, unintended consequences of the rules and regulations may adversely affect us in ways yet to be determined.

~~In March 2017, the U.K. notified the European Council of its intention to leave the European Union~~31, 2020 (commonly referred to as “Brexit”)~~. By invoking Article 50 of the Lisbon Treaty,~~, triggering a period during which the U.K. ~~is currently set~~will continue to ~~leave~~observe applicable E.U. regulations through December 31, 2020 or any later extension date (the “Transition Period”). In preparation for Brexit, we obtained authorizations from the ~~European Union in March 2019. Depending on~~Netherlands Authority for the ~~terms agreed between E.U. member states and the U.K. as part of the exit negotiations,~~Financial Markets for our U.K. subsidiaries may not be able to rely on the existence of a “passporting” regime that allows immediate access to the single E.U. market. Accordingly, we have begun the process of establishing one or more new regulated subsidiaries in the ~~E.U.~~Netherlands in ~~order~~2019 and, during the Transition Period, we are able to provide ~~our trading platform and certain post-trade~~regulated services to our European clients in reliance on the cross-border services passport held by our Dutch subsidiaries. Brexit is expected to lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate, which may impact our ability to comply with the extensive government regulation to which we are subject. In addition, the cost and complexity of operating across increasingly divergent regulatory regimes could increase following Brexit.

~~Rapid Technological Changes~~Compliance with regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. However, we believe new regulations may also increase demand for our platforms and we believe we are well positioned to benefit from those regulatory changes that cause market participants to seek electronic platforms that meet the various regulatory requirements and help them comply with their regulatory obligations.

We must continue to enhance and improve our electronic trading platform. The electronic financial services industry is characterized by increasingly complex systems and infrastructures and new business models. Our future success will depend on our ability to enhance our existing products and services, develop and/or license new products and technologies that address the increasingly sophisticated and varied needs of our existing and prospective broker-dealer and institutional investor clients and respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. We ~~have been issued 13 patents covering~~plan to continue to focus on technology infrastructure initiatives and continually improve our ~~most significant~~platforms to further enhance our leading market position. We expect that our transition to agile software development processes will help us continue to be a market leader in developing the technology solutions for our clients’ trading ~~protocols~~needs.

We experience cyber-attacks and ~~other aspects of~~attempted security breaches. Cyber security incidents could impact revenue and operating income and increase costs. We therefore continue to make investments, which may result in increased costs, to strengthen our ~~trading system technology.~~cybersecurity measures.

The majority of our ~~revenues are~~revenue is derived from commissions for transactions executed on our ~~platform~~platforms between and among our institutional investor and broker-dealer clients and monthly distribution fees. We believe that there are five key variables that impact the notional value of such transactions on our ~~platform~~platforms and the amount of commissions and distribution fees earned by us:

We believe that overall corporate bond market trading volume is affected by various factors including the absolute levels of interest rates, the direction of interest rate movements, the level of new issues of corporate bonds and the volatility of corporate bond spreads versus U.S. Treasury securities. Because a significant percentage of our revenue is tied directly to the volume of securities traded on our ~~platform,~~platforms, it is likely that a general decline in trading volumes, regardless of the cause of such decline, would reduce our revenues and have a significant negative impact on profitability.

Commissions are generally calculated as a percentage of the notional dollar volume of bonds traded on our ~~platform~~platforms and vary based on the type, size, yield and maturity of the bond traded. Under our disclosed trading transaction fee plans, bonds that are more actively traded or that have shorter maturities are generally charged lower commissions, while bonds that are less actively traded or that have longer maturities generally command higher commissions.

For Open Trading trades that we execute between and among institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller, we earn our commission through the difference in price between the two trades. ~~Distribution fees include any unused~~For U.S. Treasury matched principal trades, commissions are invoiced and recorded on a monthly ~~fee commitments under our variable fee plans.~~basis.

U.S. High-Grade Corporate Bond Commissions. Our U.S. high-grade corporate bond fee plans generally incorporate variable transaction fees and fixed distribution fees billed to our broker-dealer clients on a monthly basis. Certain dealers participate in fee programs that do not contain monthly distribution fees and instead incorporate additional per transaction execution fees and minimum monthly fee commitments. Under these fee plans, we electronically add the transaction fee to the spread quoted by the broker-dealer client. The U.S. high-grade transaction fee is generally designated in basis points in yield and, as a result, is subject to fluctuation depending on the duration of the bond traded. The average U.S. high-grade fees per million may vary in the future due to changes in yield, years-to-maturity and nominal size of bonds traded on our ~~platform.~~platforms. Distribution fees include any unused monthly fee commitments under our variable fee plans.

Other Credit Commissions. Other credit includes Eurobonds, emerging markets bonds, high-yield bonds, municipal bonds and ~~municipal bonds.~~leveraged loans. Commissions for other credit products generally vary based on the type of the instrument traded using standard fee schedules. ~~During the third quarter of 2017, we changed our~~Our high-yield fee plan ~~structure. Similar~~structure is similar to our U.S. high-grade fee ~~plans, certain~~plans. Certain dealers ~~now~~ participate in a high-yield fee plan that incorporates a variable transaction fee and fixed distribution fee, ~~and~~while other dealers participate in a plan that does not contain a monthly distribution ~~fee~~fees and instead incorporates additional per transaction execution fees and minimum monthly fee commitments. Prior to the fee plan change, our high-yield fee plan options generally consisted solely of variable transaction fees. During the fourth quarter of 2016, our Eurobond fee plan structure was changed to contain standardized minimum monthly commitments and variable transaction fees. Prior to the fee plan change, our European fee plans generally incorporated some combination of monthly distribution fees and variable transaction fees. The average other credit fees per million may vary in the future due to changes in product mix or trading protocols.

~~Liquid Products~~Rates Commissions. ~~Liquid products~~Rates includes U.S. Treasury, U.S. agency, European government bonds and credit derivatives. Commissions for ~~liquid~~rates products generally vary based on the type of the instrument ~~traded using standard~~traded. U.S. Treasury fee ~~schedules.~~plans are typically volume tiered and can vary based on the trading protocol. The average rates fee per million may vary in the future due to changes in product mix or trading protocols.

We anticipate that average fees per million may change in the future. Consequently, past trends in commissions are not necessarily indicative of future commissions.

~~In addition to the commissions discussed above, we earn revenue from information and post-trade services, investment income and other income.~~

~~Information and post-trade services.~~ We generate revenue from ~~information services provided~~data licensed to our broker-dealer clients, institutional investor clients and data-only ~~subscribers. Information services are invoiced monthly, quarterly or annually. When billed in advance,~~subscribers; professional and consulting services; technology software licenses; and maintenance and support services. These revenues are ~~deferred~~either for subscription-based services transferred over time, and may be net of volume-based discounts, or one-time services. Revenues for services transferred over time are recognized ~~monthly on~~ratably over the contract period while revenues for services transferred at a ~~straight-line basis. We also generate revenue from trade matching and regulatory transaction reporting services. Revenue is~~point in time are recognized in the period the services are provided. Customers are generally billed monthly, quarterly, or annually; revenues billed in advance are deferred and recognized ratably over the contract period.

~~Investment Income.~~ ~~Investment income consists of income earned on our investments.~~Post-trade Services

~~Other.~~ ~~Other revenues include~~We generate revenue from ~~professional consulting services, technology software licenses~~regulatory transaction reporting, trade publication and ~~maintenance~~trade matching services. Customers are generally billed monthly in arrears and ~~support services,~~revenue is recognized in the period that the transactions are processed. Revenues billed in advance are deferred and recognized ratably over the contract period. We also generate one-time implementation fees for onboarding clients which are invoiced and recognized in the period the implementation is complete.

Other revenue includes revenue generated from telecommunications line charges to broker-dealer ~~clients, initial set-up fees and other miscellaneous revenues.~~clients.

Employee Compensation and Benefits. Employee compensation and benefits is our most significant expense and includes employee salaries, stock-based compensation costs, other incentive compensation, employee benefits and payroll taxes.

Depreciation and Amortization. We depreciate our computer hardware and related software, office hardware and furniture and fixtures and amortize our capitalized software development costs on a straight-line basis over three to seven years. We amortize leasehold improvements on a straight-line basis over the lesser of the life of the improvement or the remaining term of the lease. Intangible assets with definite lives, including purchased technologies, customer relationships and other intangible assets, are amortized over their estimated useful lives, ~~ranging~~which range from ~~three~~one to 15 ~~years.~~years, using either a straight-line or accelerated amortization method based on the pattern of economic benefit that we expect to realize from such assets. Intangible assets are assessed for impairment when events or circumstances indicate a possible impairment.

Technology and Communications. Technology and communications expense consists primarily of costs relating to maintenance on software and hardware, our internal network connections, data center hosting costs and data feeds provided by outside vendors or service providers. The majority of our broker-dealer clients have dedicated high-speed communication lines to our network in order to provide fast data transfer. We charge our broker-dealer clients a monthly fee for these connections, which is recovered against the relevant expenses we incur.

Professional and Consulting Fees. Professional and consulting fees consist primarily of accounting fees, legal fees and fees paid to information technology and other consultants for services provided for the maintenance of our trading ~~platform,~~platforms, information and post-trade services products and other services.

Occupancy. Occupancy costs consist primarily of office and equipment rent, utilities and commercial rent tax.

Marketing and Advertising. Marketing and advertising expense consists primarily of print and other advertising expenses we incur to promote our products and services. This expense also includes costs associated with attending or exhibiting at industry-sponsored seminars, conferences and conventions, and travel and entertainment expenses incurred by our sales force to promote our trading ~~platform and~~platforms, information services and post-trade services.

Clearing Costs. Clearing costs consist of fees that we are charged by third-party clearing brokers for the clearing and settlement of matched principal ~~trades.~~trades and regulatory reporting fees.

General and Administrative. General and administrative expense consists primarily of general travel and entertainment, board of directors’ expenses, charitable contributions, provision for doubtful accounts ~~foreign currency transaction gains (losses)~~ and various state franchise and U.K. value-added taxes.

Expenses may grow in the future, notably in employee compensation and benefits ~~primarily due~~as we increase headcount to support investment in new products and geographic ~~expansion. We also expect occupancy expense~~expansion, depreciation and amortization due to ~~increase~~increased investment in ~~2018 as a result of the~~ new office space for our global headquarters in New York City. See Item 2 of the Annual Report on Form 10-K for a discussion of our properties. However, we believe that operating leverage can be achieved by increasing volumes in existing products and ~~adding new products without substantial additions~~enhancements to our ~~infrastructure.~~trading platforms, and technology and communication costs. Expenses may also grow due to acquisitions.

Investment Income. Investment income consists of income earned on our investments.

Other, Net. Other, net consists of unrealized gains or losses on trading security investments, realized gains or losses on investments, foreign currency transaction gains or losses, investment advisory fees and other miscellaneous revenues and expenses.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States, also referred to as U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. We base our estimates and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Note 2 of the Notes to our Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of our Consolidated Financial Statements. There were no significant changes to our critical accounting policies and estimates during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

See Note 2 to the Consolidated Financial Statements for a discussion on recent accounting ~~pronouncements.~~pronouncements, including but not limited to the Company’s adoption of the new U.S. GAAP cloud computing arrangements standard on a prospective basis effective July 1, 2019.

We operate an electronic ~~multi-party platform~~platforms for the trading of fixed-income securities and provide related data, analytics, compliance tools and post-trade services. We consider our operations to constitute a single business segment because of the highly integrated nature of these product and services, of the financial markets in which we compete and of our worldwide business activities. We believe that results by geographic region or client sector are not necessarily meaningful in understanding our business. See Note 1314 to the Consolidated Financial Statements for certain geographic information about ~~the Company’s~~our business required by U.S. GAAP.

Three Months Ended ~~September~~June 30, ~~2017~~2020 Compared to Three Months Ended ~~September~~June 30, ~~2016~~2019

~~Total revenues increased by $6.4 million or 7.1%~~On November 1, 2019, we completed our acquisition of LiquidityEdge, now operating as MarketAxess Rates, which enabled us to ~~$96.7 million~~expand our trading capabilities to include U.S. Treasuries. For additional information regarding this acquisition, see Note 5 to the Consolidated Financial Statements.

The following table summarizes our financial results for the three months ended ~~September~~June 30, ~~2017, from $90.3 million~~2020 and 2019. Results for the three months ended ~~September~~June 30, ~~2016. This increase in total revenues was primarily due to higher commissions~~2020 include MarketAxess Rates related revenue of ~~$4.8~~$3.2 million and ~~information~~expenses of $3.8 million, including amortization of acquired intangibles expense of $0.6 million:

A 3.4% change in the average foreign currency exchange rates of the British pound sterling compared to the U.S. dollar from the three months ended June 30, 2019 had the effect of decreasing revenues and ~~post-trade services revenue of $1.1 million.~~

~~Total~~ expenses ~~increased~~ by ~~$5.6~~$0.7 million ~~or 12.7% to $49.5~~and $0.6 million, respectively, for the three months ended ~~September~~June 30, 2017, from $43.9 million for the three months ended September 30, 2016. This increase was primarily due to higher employee compensation and benefits of $1.7 million, professional and consulting fees of $1.2 million, technology and communication costs of $0.8 million, general and administrative costs of $0.7 million and occupancy costs of $0.6 million.2020.

Income before taxes increased by $0.9 million or 1.9% to $47.2 million for the three months ended September 30, 2017, from $46.4 million for the three months ended September 30, 2016. Net income increased by $3.2 million or 10.4% to $34.1 million for the three months ended September 30, 2017, from $30.9 million for three months ended September 30, 2016.

Our revenues for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, and the resulting dollar and percentage changes, were as follows:

	Three Months Ended September 30,															Three Months Ended June 30,
	2017					2016										2020					2019
	($ in thousands)															($ in thousands)
	$		% of Revenues			$		% of Revenues			$ Change		% Change			$		% of Revenues			$		% of Revenues			$ Change			% Change
Commissions	$	86,270		89.2	%	$	81,456		90.2	%	$	4,814		5.9	%	$	172,092		93.1	%	$	114,124		90.9	%	$	57,968			50.8		%
Information and post-trade services		8,372		8.7			7,322		8.1			1,050		14.3
Investment income		964		1.0			534		0.6			430		80.5
Information services																	8,427		4.6			7,156		5.7			1,271			17.8
Post-trade services																	4,054		2.2			3,956		3.2			98			2.5
Other		1,095		1.1			959		1.1			136		14.2			222		0.1			254		0.2			(32	)		(12.6	)
Total revenues	$	96,701		100.0	%	$	90,271		100.0	%	$	6,430		7.1	%	$	184,795		100.0	%	$	125,490		100.0	%	$	59,305			47.3		%

Commissions. Our commission revenues for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, and the resulting dollar and percentage changes, were as follows:

	Three Months Ended September 30,											Three Months Ended June 30,
	2017		2016		$ Change			% Change				2020		2019		$ Change			% Change
	($ in thousands)											($ in thousands)
Variable transaction fees
U.S. high-grade	$	34,020	$	33,765	$	255			0.8		%	$	75,208	$	42,914	$	32,294			75.3		%
Other credit		31,381		30,181		1,200			4.0				66,977		47,233		19,744			41.8
Liquid products		545		798		(253	)		(31.7	)
Total credit													142,185		90,147		52,038			57.7
Rates													3,846		615		3,231			525.4
Total variable transaction fees		65,946		64,744		1,202			1.9				146,031		90,762		55,269			60.9
Distribution fees
U.S. high-grade		16,305		15,077		1,228			8.1				19,635		17,483		2,152			12.3
Other credit		3,844		1,466		2,378			162.2				6,329		5,774		555			9.6
Liquid products		175		169		6			3.6
Total credit													25,964		23,257		2,707			11.6
Rates													97		105		(8	)		(7.6	)
Total distribution fees		20,324		16,712		3,612			21.6				26,061		23,362		2,699			11.6
Total commissions	$	86,270	$	81,456	$	4,814			5.9		%	$	172,092	$	114,124	$	57,968			50.8		%

U.S. high-grade variable transaction fees increased $32.3 million due to a 56.2% increase in trading volume and a 12.2% increase in average variable transaction fee per million. Other credit variable transaction fees increased $19.7 million due to a 31.7% increase in trading volume and a 7.7% increase in the average variable transaction fee per million. Open Trading volume totaled $243.8 billion during the three months ended June 30, 2020, up 86.5%, and represented 27.5% and 20.6% of commission revenue for the three months ended June 30, 2020 and 2019, respectively. The ~~following table shows the extent to which the~~525.4% increase in variable transaction fees for ~~the three months ended September 30, 2017~~rates was attributable to ~~changes~~the inclusion of U.S. Treasuries trading volume and commissions from LiquidityEdge, which was acquired in ~~transaction volumes and variable transaction fees per million:~~November 2019.

U.S. high-grade and other credit distribution fees increased $2.2 million and $0.6 million, respectively, mainly due to the migration of certain dealers from all-variable fee plans to plans that incorporate a monthly distribution fee.

Our trading volumes for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 were as follows:

	Three Months Ended September 30,											Three Months Ended June 30,
	2017		2016		$ Change			% Change				2020		2019		$ Change		% Change
	($ in millions)											($ in millions)
Trading Volume Data
Trading volume data
U.S. high-grade - fixed rate	$	192,092	$	172,006	$	20,086			11.7		%	$	398,006	$	249,025	$	148,981		59.8	%
U.S. high-grade - floating rate		8,734		6,442		2,292			35.6				16,574		16,335		239		1.5
Total U.S. high grade		200,826		178,448		22,378			12.5				414,580		265,360		149,220		56.2
Other credit		133,757		122,821		10,936			8.9				327,266		248,503		78,763		31.7
Liquid products		12,189		20,880		(8,691	)		(41.6	)
Total	$	346,772	$	322,149	$	24,623			7.6		%
Total credit												$	741,846	$	513,863	$	227,983		44.4	%

Rates													955,594		13,174		942,420	N/M

Number of U.S. Trading Days		63		64									63		63
Number of U.K. Trading Days		64		65									61		61

For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates. The ~~12.5%~~56.2% increase in our U.S. high-grade volume was principally due to an increase in our estimated market share coupled with growth in overall market volume. Our estimated market share of total U.S. high-grade corporate bond volume ~~as reported by Financial Industry Regulatory Authority (“FINRA”) Trade Reporting and Compliance Engine (“TRACE”)~~increased to ~~17.2%~~21.5% for the three months ended ~~September~~June 30, ~~2017~~2020 from ~~16.0%~~18.7% for the three months ended ~~September~~June 30, ~~2016, coupled with an increase in overall market volume as measured by TRACE.~~2019. Estimated U.S. high-grade TRACE volume increased ~~4.5%~~by 35.6% to ~~$1.2~~$1.9 trillion for the three months ended ~~September~~June 30, ~~2017 from $1.1 trillion for the three months ended September 30, 2016.~~2020.

Other credit volumes increased by ~~8.9% for the three months ended September 30, 2017 compared to the three months ended September 30, 2016, primarily~~31.7% due to ~~an increase~~increases of ~~21.8%~~84.9% in high-yield bond volume, 17.3% in Eurobonds volume, and 14.4% in emerging markets bond volume ~~offset by~~as a ~~decrease~~result of ~~7.8%~~increases in estimated market share and estimated market volumes. Estimated high-yield, bond volume. Liquid products volume (excluding credit derivatives) decreased by 41.6% for the three months ended September 30, 2017 compared to the three months ended September 30, 2016, due mainly to a 38.4% decrease in U.S. agency bondTRACE and Trax® reported emerging markets market ~~volume as reported by TRACE.~~volumes and Eurobonds were up 36.9%, 3.3% and 3.1%, respectively.

Our average variable transaction fee per million for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 was as follows:

	Three Months Ended September 30,				Three Months Ended June 30,
	2017		2016		2020		2019		$ Change			% Change
Average Variable Transaction fee per million
Average variable transaction fee per million
U.S. high-grade - fixed rate	$	174	$	195	$	186.67	$	168.05	$	18.62			11.1	%
U.S. high-grade - floating rate		67		38		55.06		65.22		(10.16	)		(15.6	)
Total U.S. high-grade		169		189		181.41		161.72		19.69			12.2
Other credit		235		246		204.66		190.07		14.59			7.7
Liquid products		45		38
Total		190		201
Total credit						191.66		175.43		16.23			9.3

Rates						4.02		46.69		(42.67	)		(91.4	)

Total U.S. high-grade average variable transaction fee per million ~~decreased~~increased 12.2% to ~~$169~~$181 per million for the three months ended ~~September~~June 30, ~~2017 from $189 per million for the three months ended September 30, 2016,~~2020 mainly due to ~~a decrease~~an increase in the duration of bonds traded ~~an increase in the number of larger sized trades and the migration of certain of~~on our ~~broker-dealer clients from an all-variable fee plan to a plan that incorporates a monthly distribution fee.~~platforms. Other credit average variable transaction fee per million ~~decreased~~increased 7.7% to ~~$235~~$205 per million for the three months ended ~~September~~June 30, ~~2017 from $246 million for the three months ended September 30, 2016,~~2020 mainly due to a larger percentage of trading volume in ~~emerging market~~high-yield bonds that command ~~lower~~higher fees per ~~million, as well as a~~million. The significant decrease in ~~high-yield average variable fee per million as a result of~~ the ~~change in the structure of our high-yield fee plan options implemented in August 2017. The decrease in other credit~~ average variable transaction fee per million for rates products was ~~partially offset by an increase in Eurobond~~primarily attributable to the inclusion of U.S. Treasuries trading volumes that command lower fees per ~~million as a result of the change in structure of our Eurobond fee plan which was implemented in the fourth quarter of 2016.~~

U.S. high-grade distribution fees increased $1.2 million principally due to the migration of certain of our broker-dealer clients from an all-variable fee plan to a plan that incorporates a monthly distribution fee. The $2.4 million increase in Other credit distribution fees principally relates to a $3.3 million increase in distribution fees under the high-yield fee plan structure implemented in August 2017 that allows our broker-dealer clients to elect a plan that incorporates a monthly distribution fee. This was offset by a decline of $1.0 million relating to the change in the Eurobond fee plan implemented in the fourth quarter of 2016.million.

Information ~~and Post-Trade~~ Services. Information ~~and post-trade~~ services revenue increased ~~$1.1~~$1.3 million for the three months ended ~~September~~June 30, ~~2017~~2020 principally due to ~~higher~~new data ~~revenue of $0.8 million and an increase in post-trade~~contracts.

Post-Trade Services. Post-trade services revenue ~~of $0.3 million related to MiFID II implementation services. Our transaction reporting business processed 247 million transactions for the three months ended September 30, 2017 compared to 302~~increased $0.1 million for the three months ended ~~September~~June 30, ~~2016.~~ 2020.

~~Investment Income.~~ ~~Investment income increased by $0.4 million primarily due to higher investment balances and an increase in interest rates in 2017.~~

~~Other.~~ ~~Other income was $1.1 million and $1.0 million for the three months ended September 30, 2017 and 2016, respectively.~~

~~Our~~The following table summarizes our expenses for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019. Expenses for the three months ended June 30, 2020 include $3.8 million of expenses related to MarketAxess Rates, including amortization of acquired intangibles expense of $0.6 million.

	Three Months Ended June 30,
	2020		2019		$ Change			% Change
	($ in thousands)
Expenses
Employee compensation and benefits	$	41,636	$	32,623	$	9,013			27.6		%
Depreciation and amortization		8,305		6,345		1,960			30.9
Technology and communications		8,592		6,474		2,118			32.7
Professional and consulting fees		8,065		6,296		1,769			28.1
Occupancy		3,286		2,798		488			17.4
Marketing and advertising		1,810		3,667		(1,857	)		(50.6	)
Clearing costs		5,713		2,610		3,103			118.9
General and administrative		3,253		3,800		(547	)		(14.4	)
Total expenses	$	80,660	$	64,613	$	16,047			24.8		%

Employee compensation and benefits increased by $9.0 million, primarily due to higher employee incentive compensation of $5.8 million, which is tied to operating performance, and an increase of $3.5 million in salaries, taxes and benefits on higher employee headcount.

Depreciation and amortization increased by $2.0 million primarily due to higher amortization of software development costs of $1.1 million and amortization of acquired intangibles expense of $0.6 million. For the three months ended June 30, 2020 and 2019, $5.0 million and $5.5 million, respectively, of equipment purchases and leasehold improvements and $6.2 million and $4.1 million, respectively, of software development costs were capitalized.

Technology and communications expenses increased by $2.1 million primarily due to higher cloud hosting costs of $0.9 million, IT license and support costs of $0.7 million and U.S. Treasury platform licensing costs of $0.7 million.

Professional and consulting fees increased $1.8 million mainly due to higher recruiting fees of $1.3 million.

Marketing and advertising expense decreased $1.9 million due to reduced sales related travel and entertainment activities as a result of the pandemic.

Clearing costs increased by $3.1 million primarily due to $2.1 million of additional clearing expenses associated with higher Open Trading volume and $1.0 million of clearing expenses associated with U.S. Treasuries matched principal transactions. Clearing costs as a percentage of Open Trading matched principal trading revenue from credit products decreased from 11.1% to 9.9%.

General and administrative expenses decreased $0.5 million as a result of lower general travel and entertainment expense.

Our other income for the three months ended June 30, 2020 and 2019, and the resulting dollar and percentage changes, were as follows:

Three Months Ended September 30,

2017

2016

($ in thousands)

$

% of
Revenues

$

% of
Revenues

$
Change

%
Change
Expenses

Employee compensation and benefits
$
25,595

26.5

%

$
23,914

26.5

%

$
1,681

7.0

%
Depreciation and amortization

4,583

4.7

4,325

4.8

258

6.0

Technology and communications

5,035

5.2

4,245

4.7

790

18.6

Professional and consulting fees

5,547

5.7

4,342

4.8

1,205

27.8

Occupancy

1,795

1.9

1,220

1.4

575

47.1

Marketing and advertising

2,089

2.2

2,140

2.4

(51
)

(2.4
)

Clearing costs

1,476

1.5

1,035

1.1

441

42.6

General and administrative

3,364

3.5

2,696

3.0

668

24.8

Total expenses
$
49,484

51.2

%

$
43,917

48.7

%

$
5,567

12.7

%

	Three Months Ended June 30,
	2020			2019			$ Change			% Change
	($ in thousands)
Investment income	$	714		$	2,096		$	(1,382	)		(65.9	)	%
Other, net		(446	)		(64	)		(382	)		596.9
Total other income	$	268		$	2,032		$	(1,764	)		(86.8	)	%

~~Employee Compensation and Benefits.~~ ~~Employee compensation and benefits increased~~

Investment income decreased by ~~$1.7~~$1.4 million primarily due to ~~an increase~~lower investment balances, due in part to the $103.9 million of ~~$1.9 million~~cash paid for the LiquidityEdge acquisition in ~~salaries and benefits, principally as a result of higher employee headcount.~~

~~Depreciation and Amortization.~~ Depreciation and amortization increased by $0.3 million. For the three months ended September 30, 2017 and 2016, $1.5 million and $0.8 million, respectively, of equipment purchases and leasehold improvements and $3.4 million and $2.9 million, respectively, of software development costs were capitalized.

~~Technology and Communications.~~ ~~Technology and communication expenses increased by $0.8 million due to higher software subscription costs of $0.4 million and technology maintenance and support costs of $0.3 million.~~

~~Professional and Consulting Fees.~~ ~~Professional and consulting fees increased by $1.2 million primarily due to fees related to various regulatory initiatives of $0.8 million.~~

~~Occupancy.~~ ~~Occupancy increased by $0.6 million due to an increase in rent expense of $0.3 million for additional space to accommodate our increased headcount~~November 2019, and a ~~non-recurring lease expense of $0.3 million.~~ decrease in interest rates.

~~Marketing and Advertising.~~ ~~Marketing and advertising expenses were $2.1 million for both the three months ended September 30, 2017 and 2016.~~

~~Clearing Costs. Clearing costs increased~~Other, net decreased by $0.4 million primarily due to ~~higher~~changes in unrealized and realized gains (losses) on trading volume. Third-party clearing costs as a percentage of matched principal trading revenue increased from 10.2% for the three months ended September 30, 2016 to 13.1% for the three months ended September 30, 2017.

~~General and Administrative.~~ General and administrative expenses increased by $0.7 million principally due to an increase in general travel and entertainment expenses of $0.3 million and employee relocation expenses of $0.3 million.securities.

The provision for income taxes and effective tax rate for the three months ended ~~September~~June 30, ~~2017 was 27.7%, compared~~2020 and 2019 were as follows:

The income tax provision reflected $5.7 million and $0.4 million of excess tax benefits related to ~~33.3% for~~share-based compensation awards that vested or were exercised during the three months ended ~~September~~June 30, 2016. The tax provision for the three months ended September 30, 2017 includes excess tax benefits of $3.8 million relating to a new standard for share-based payments accounting adopted effective January 1, 2017.2020 and 2019, respectively. Our consolidated effective tax rate can vary from period to period depending on ~~the~~ geographic mix of our earnings, changes in tax legislation and tax rates and the amount and timing of excess tax benefits related to share-based payments, among other factors.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2019

~~Total revenues increased by $22.4 million or 8.1% to $297.9 million~~The following table summarizes our financial results for the ~~nine~~six months ended ~~September~~June 30, ~~2017, from $275.5 million~~2020 and 2019. Results for the ~~nine~~six months ended ~~September~~June 30, ~~2016. This increase in total revenues was primarily due to higher commissions~~2020 include MarketAxess Rates related revenue of ~~$20.5 million. An 8.2%~~$8.0 million and expenses of $8.8 million, including amortization of acquired intangibles expense of $1.2 million:

A 2.9% change in the average foreign currency exchange rates of the British ~~Pound Sterling~~pound sterling compared to the U.S. dollar from the ~~nine~~six months ended ~~September~~June 30, ~~2016 to the nine months ended September 30, 2017~~2019 had the effect of decreasing revenues and expenses by ~~$3.2 million.~~

~~Total expenses increased by $11.3~~$1.3 million ~~or 8.4% to $145.5~~and $0.9 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, 2017, from $134.2 million for the nine months ended September 30, 2016. This increase was primarily due to higher employee compensation and benefits of $4.2 million, general and administrative costs of $1.9 million, technology and communications expenses of $1.6 million, professional and consulting fees of $1.5 million, and $1.0 million in both occupancy costs and marketing and advertising costs. The change in average foreign currency exchange rates had the effect of decreasing expenses by $3.3 million in the nine months ended September 30, 2017.

Income before taxes increased by $11.1 million or 7.9% to $152.4 million for the nine months ended September 30, 2017, from $141.3 million for the nine months ended September 30, 2016. Net income increased by $21.6 million or 23.2% to $114.6 million for the nine months ended September 30, 2017, from $93.0 million for nine months ended September 30, 2016.2020.

Our revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, and the resulting dollar and percentage changes, were as follows:

	Nine Months Ended September 30,															Six Months Ended June 30,
	2017					2016										2020					2019
	($ in thousands)															($ in thousands)
	$		% of Revenues			$		% of Revenues			$ Change		% Change			$		% of Revenues			$		% of Revenues			$ Change			% Change
Commissions	$	267,307		89.7	%	$	246,788		89.6	%	$	20,519		8.3	%	$	328,046		92.7	%	$	226,884		90.8	%	$	101,162			44.6		%
Information and post-trade services		24,460		8.2			23,687		8.6			773		3.3
Investment income		2,551		0.9			1,469		0.5			1,082		73.7
Information services																	17,069		4.8			14,522		5.8			2,547			17.5
Post-trade services																	8,207		2.3			8,056		3.1			151			1.9
Other		3,588		1.2			3,539		1.3			49		1.4			451		0.2			519		0.3			(68	)		(13.1	)
Total revenues	$	297,906		100.0	%	$	275,483		100.0	%	$	22,423		8.1	%	$	353,773		100.0	%	$	249,981		100.0	%	$	103,792			41.5		%

Commissions. Our commission revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, and the resulting dollar and percentage changes, were as follows:

	Nine Months Ended September 30,											Six Months Ended June 30,
	2017		2016		$ Change			% Change				2020		2019		$ Change		% Change
	($ in thousands)											($ in thousands)
Variable transaction fees
U.S. high-grade	$	102,411	$	101,104	$	1,307			1.3		%	$	133,178	$	85,415	$	47,763		55.9	%
Other credit		110,221		94,928		15,293			16.1				132,587		93,267		39,320		42.2
Liquid products		1,746		2,096		(350	)		(16.7	)
Total credit													265,765		178,682		87,083		48.7
Rates													9,432		1,172		8,260		704.8
Total variable transaction fees		214,378		198,128		16,250			8.2				275,197		179,854		95,343		53.0
Distribution fees
U.S. high-grade		47,985		43,598		4,387			10.1				39,609		35,461		4,148		11.7
Other credit		4,506		4,437		69			1.6				12,987		11,332		1,655		14.6
Liquid products		438		625		(187	)		(29.9	)
Total credit													52,596		46,793		5,803		12.4
Rates													253		237		16		6.8
Total distribution fees		52,929		48,660		4,269			8.8				52,849		47,030		5,819		12.4
Total commissions	$	267,307	$	246,788	$	20,519			8.3		%	$	328,046	$	226,884	$	101,162		44.6	%

U.S. high-grade variable transaction fees increased $47.8 million due to a 37.2% increase in trading volume and a 13.7% increase in average variable transaction fee per million. Other credit variable transaction fees increased $39.3 million due to a 36.0% increase in trading volume and a 4.5% increase in the average variable transaction fee per million. Open Trading volume totaled $452.4 billion during the six months ended June 30, 2020, up 70.7%, and represented 26.7% and 20.5% of commission revenue for the six months ended June 30, 2020 and 2019, respectively. The ~~following table shows the extent to which the~~704.8% increase in variable transaction fees for ~~the nine months ended September 30, 2017~~rates was attributable to ~~changes~~the inclusion of U.S. Treasuries trading volume and commissions from LiquidityEdge, which was acquired in ~~transaction volumes~~November 2019.

U.S. high-grade and ~~variable transaction~~other credit distribution fees ~~per million:~~increased $4.1 million and $1.7 million, respectively, mainly due to the migration of certain dealers from all-variable fee plans to plans that incorporate a monthly distribution fee.

Our trading volumes for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 were as follows:

	Nine Months Ended September 30,											Six Months Ended June 30,
	2017		2016		$ Change			% Change				2020		2019		$ Change		% Change
	($ in millions)											($ in millions)
Trading Volume Data
Trading volume data
U.S. high-grade - fixed rate	$	599,783	$	525,331	$	74,452			14.2		%	$	710,194	$	508,858	$	201,336		39.6	%
U.S. high-grade - floating rate		24,024		20,169		3,855			19.1				34,380		33,912		468		1.4
Total U.S. high grade		623,807		545,500		78,307			14.4				744,574		542,770		201,804		37.2
Other credit		438,055		370,963		67,092			18.1				657,019		482,994		174,025		36.0
Liquid products		40,840		53,982		(13,142	)		(24.3	)
Total	$	1,102,702	$	970,445	$	132,257			13.6		%
Total credit												$	1,401,593	$	1,025,764	$	375,829		36.6	%

Rates													2,400,472		27,450		2,373,022	N/M

Number of U.S. Trading Days		188		189									125		124
Number of U.K. Trading Days		189		190									125		124

For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates. The ~~14.4%~~37.2% increase in our U.S. high-grade volume was principally due to an increase in our estimated market share coupled with growth in overall market volume. Our estimated market share of total U.S. high-grade corporate bond volume ~~as reported by TRACE~~increased to ~~16.7%~~20.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 from ~~15.6%~~18.1% for the ~~nine~~six months ended ~~September~~June 30, ~~2016, coupled with an increase in overall market volume as measured by TRACE.~~2019. Estimated U.S. high-grade TRACE volume increased ~~7.2%~~by 19.4% to ~~$3.7~~$3.6 trillion for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $3.5 trillion for the nine months ended September 30, 2016.~~2020.

Other credit volumes increased by ~~18.1% for the nine months ended September 30, 2017 compared~~36.0% due to ~~the nine months ended September 30, 2016. Emerging~~increases of 77.8% in high-yield bond volume, 24.8% in Eurobonds volume, and 21.9% in emerging markets bond volume ~~increased 41.6%~~as a result of increases in estimated market share and estimated market volumes. Estimated high-yield, Eurobonds and TRACE and Trax® reported emerging markets market volumes were up 30.7%, ~~while high-yield~~18.3% and ~~Eurobond volume decreased by 2.8% and 0.5%~~11.7%, respectively. Liquid products volume (excluding credit derivatives) decreased by 24.3% for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due mainly to a 30.3% decrease in U.S. agency bond market volume as reported by TRACE.

Our average variable transaction fee per million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 was as follows:

	Nine Months Ended September 30,				Six Months Ended June 30,
	2017		2016		2020		2019		$ Change			% Change
Average Variable Transaction fee per million
Average variable transaction fee per million
U.S. high-grade - fixed rate	$	168	$	191	$	185.04	$	163.15	$	21.89			13.4	%
U.S. high-grade - floating rate		62		37		51.38		70.65		(19.27	)		(27.3	)
Total U.S. high-grade		164		185		178.86		157.37		21.49			13.7
Other credit		252		256		201.80		193.10		8.70			4.5
Liquid products		43		39
Total		194		204
Total credit						189.62		174.19		15.42			8.9

Rates						3.93		42.69		(38.76	)		(90.8	)

Total U.S. high-grade average variable transaction fee per million ~~decreased~~increased 13.7% to ~~$164~~$179 per million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $185 per million for the nine months ended September 30, 2016,~~2020 mainly due to ~~a decrease~~an increase in the duration of bonds traded ~~an increase in the number of larger sized trades and the migration of certain of~~on our ~~broker-dealer clients from an all-variable fee plan to a plan that incorporates a monthly distribution fee.~~platforms. Other credit average variable transaction fee per million ~~decreased~~increased 4.5% to ~~$252~~$202 per million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $256 million for the nine months ended September 30, 2016,~~2020 mainly due to a larger percentage of trading volume in ~~emerging market~~high-yield bonds that command ~~lower~~higher fees per ~~million, as well as a~~million. The significant decrease in ~~high-yield fee per million as a result of~~ the ~~change in structure of our high-yield fee plan implemented in August 2017. The decrease in other credit~~ average variable transaction fee per million for rates products was ~~partially offset~~primarily attributable to the inclusion of U.S. Treasuries trading volumes that command lower fees per million.

Information Services. Information services revenue increased $2.5 million for the six months ended June 30, 2020 principally due to new data contracts.

Post-Trade Services. Post-trade services revenue increased $0.2 million for the six months ended June 30, 2020.

The following table summarizes our expenses for the six months ended June 30, 2020 and 2019. Expenses for the six months ended June 30, 2020 include $8.8 million of expenses related to MarketAxess Rates, including amortization of acquired intangibles expense of $1.2 million.

	Six Months Ended June 30,
	2020		2019		$ Change			% Change
	($ in thousands)
Expenses
Employee compensation and benefits	$	82,830	$	65,281	$	17,549			26.9		%
Depreciation and amortization		16,372		12,427		3,945			31.7
Technology and communications		16,753		12,256		4,497			36.7
Professional and consulting fees		13,740		12,127		1,613			13.3
Occupancy		6,760		5,747		1,013			17.6
Marketing and advertising		4,485		5,966		(1,481	)		(24.8	)
Clearing costs		11,223		5,187		6,036			116.4
General and administrative		6,386		6,924		(538	)		(7.8	)
Total expenses	$	158,549	$	125,915	$	32,634			25.9		%

Employee compensation and benefits increased by $17.5 million, primarily due to higher employee incentive compensation of $8.9 million, which is tied to operating performance, an increase of $7.5 million in ~~Eurobond~~salaries, taxes and benefits on higher employee headcount, and a $1.1 million increase in stock-based compensation.

Depreciation and amortization increased by $3.9 million primarily due to higher amortization of software development costs of $2.1 million and amortization of acquired intangibles expense of $1.2 million. For the six months ended June 30, 2020 and 2019, $9.3 million and $6.1 million, respectively, of equipment purchases and leasehold improvements and $13.0 million and $7.3 million, respectively, of software development costs were capitalized.

Technology and communications expenses increased by $4.5 million primarily due to higher cloud hosting costs of $1.4 million, IT license and support costs of $1.4 million and U.S. Treasury platform licensing costs of $1.8 million.

Professional and consulting fees ~~per~~increased $1.6 million mainly due to higher recruiting fees of $1.0 million and consulting expense of $0.4 million related to our self-clearing initiative.

Marketing and advertising expense decreased $1.5 million due to reduced sales related travel and entertainment activities as a result of the pandemic.

Clearing costs increased by $6.0 million primarily due to $3.4 million of clearing expenses associated with higher Open Trading volume and $2.6 million of clearing expenses associated with U.S. Treasuries matched principal transactions. Clearing costs as a percentage of Open Trading matched principal trading revenue from credit products decreased from 11.2% to 9.8%.

General and administrative expenses decreased $0.5 million as a result of ~~the change in structure of our Eurobond fee plan which was implemented in the fourth quarter of 2016.~~lower general travel and entertainment expense.

U.S. high-grade distribution fees increased $4.4 million principally due to the migration of certain of our broker-dealer clients from an all-variable fee plan to a plan that incorporates a monthly distribution fee. The $0.1 million increase in Other credit distribution fees was due to a $3.3 million increase in distribution fees under the high-yield fee plan implemented during the third quarter of 2017, a $0.2 million increase in emerging markets minimum fees, partially offset by a decline of $3.5 million relating to the change in the Eurobond fee plan implemented in the fourth quarter of 2016.

~~Information and Post-Trade Services.~~ ~~Information and post-trade services revenue increased by $0.8 million~~Our other income for the ~~nine~~six months ended ~~September~~June 30, 2017. The negative impact of foreign exchange of $1.5 million was offset by a $2.2 million increase in data revenue from new data contracts. Our transaction reporting business processed 770 million transactions for the nine months ended September 30, 2017 compared to 892 million for the nine months ended September 30, 2016.

~~Investment Income.~~ ~~Investment income increased by $1.1 million primarily due to higher investment balances~~2020 and ~~an increase in interest rates in 2017.~~

~~Other.~~ ~~Other income was $3.6 million and $3.5 million for the nine months ended September 30, 2017 and 2016, respectively.~~

~~Our expenses for the nine months ended September 30, 2017 and 2016,~~2019, and the resulting dollar and percentage changes, were as follows:

Nine Months Ended September 30,

2017

2016

($ in thousands)

$

% of
Revenues

$

% of
Revenues

$
Change

%
Change
Expenses

Employee compensation and benefits
$
78,417

26.3

%

$
74,256

27.0

%

$
4,161

5.6

%
Depreciation and amortization

14,066

4.7

13,546

4.9

520

3.8

Technology and communications

14,442

4.8

12,826

4.7

1,616

12.6

Professional and consulting fees

13,912

4.7

12,449

4.5

1,463

11.8

Occupancy

4,621

1.6

3,606

1.3

1,015

28.1

Marketing and advertising

6,757

2.3

5,742

2.1

1,015

17.7

Clearing costs

4,320

1.5

4,754

1.7

(434
)

(9.1
)

General and administrative

8,974

3.0

7,029

2.6

1,945

27.7

Total expenses
$
145,509

48.8

%

$
134,208

48.7

%

$
11,301

8.4

%

~~Employee Compensation and Benefits.~~ ~~Employee compensation and benefits increased~~Investment income decreased by ~~$4.2~~$2.1 million primarily due to ~~a $3.9~~lower investment balances, due in part to the $103.9 million ~~increase~~of cash paid for the LiquidityEdge acquisition in ~~salaries and benefits, principally as a result of higher employee headcount,~~November 2019, and a ~~$0.3 million increase~~decrease in ~~stock-based compensation.~~interest rates.

~~Depreciation and Amortization.~~ ~~Depreciation and amortization increased~~Other, net decreased by ~~$0.5~~$1.1 million primarily due to ~~a $0.6 million increase~~changes in ~~amortization expense of leasehold improvements~~unrealized and higher amortization of software development costs of $0.5 million offset by a $0.4 million decrease in production hardware depreciation expense. For the nine months ended September 30, 2017 and 2016, $7.2 million and $4.8 million, respectively, of equipment purchases and leasehold improvements and $10.1 million and $9.1 million, respectively, of software development costs were capitalized.realized gains (losses) on trading securities.

~~Technology and Communications.~~ Technology and communication expenses increased by $1.6 million due to higher software subscription costs of $0.8 million, technology maintenance and support costs of $0.3 million and market data costs of $0.3 million.

~~Professional and Consulting Fees.~~ Professional and consulting fees increased by $1.5 million primarily due to fees related to various regulatory initiatives of $1.3 million and new systems implementations of $0.5 million, offset by lower risk consulting fees of $0.4 million.

~~Occupancy.~~ Occupancy costs increased by $1.0 million primarily due to an increase in rent expense of $0.7 million for additional space to accommodate our increased headcount and a non-recurring lease expense of $0.3 million.

~~Marketing and Advertising.~~ ~~Marketing and advertising expenses increased by $1.0 million due to higher advertising costs of $0.4 million associated with our Open Trading~~™ ~~protocols and travel and entertainment expenses related to sales activities of $0.4 million.~~

~~Clearing Costs~~. Clearing costs decreased by $0.4 million. During the third quarter of 2016, we amended the terms of our agreements with our third-party clearing brokers which resulted in a reduction in transaction and other clearing costs. Third-party clearing costs as a percentage of matched principal trading revenue decreased from 17.9% for the nine months ended September 30, 2016 to 12.5% for the nine months ended September 30, 2017.

~~General and Administrative.~~ General and administrative expenses increased by $1.9 million principally due to a decrease in foreign currency transaction gains of $0.6 million, an increase in general travel and entertainment expenses of $0.6 million and an increase of $0.3 million in employee relocation expenses.

The provision for income taxes and effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2017 was 24.8%, compared to 34.2% for the nine months ended September 30, 2016.~~ 2020 and 2019 were as follows:

The income tax provision ~~for the nine months ended September 30, 2017 includes~~reflected $12.0 million and $3.5 million of excess tax benefits ~~of $14.8 million relating~~related to ~~a new standard for~~ share-based ~~payments accounting adopted effective January 1, 2017.~~compensation awards that vested or were exercised during the six months ended June 30, 2020 and 2019, respectively. Our consolidated effective tax rate can vary from period to period depending on ~~the~~ geographic mix of our earnings,

changes in tax legislation and tax rates and the amount and timing of excess tax benefits related to share-based payments, among other factors.

During the past three years, we have met our funding requirements through cash on hand and internally generated funds. Cash and cash equivalents and investments totaled ~~$376.2~~$535.5 million at ~~September~~June 30, ~~2017.~~2020. Our investments are invested in investment grade securities. We limit the amounts that can be invested in any single issuer and invest in short- to intermediate-term instruments whose fair values are less sensitive to interest rate changes. We believe our investments as of June 30, 2020 that were in an unrealized loss position were not other-than-temporarily impaired, nor has any event occurred subsequent to that date, including the recent developments related to the Pandemic, that would indicate any other-than-temporary impairment.

~~In October 2015, we entered into a two-year~~We are party to an amended and restated Credit Agreement that provides for revolving loans and letters of credit ~~agreement (the “Credit Agreement”) that increased our borrowing capacity~~up to an aggregate of $100.0 million. ~~As of September 30, 2017, we had $0.9 million in letters of credit outstanding and $99.1 million in available borrowing capacity under the Credit Agreement. In October 2017, we amended the~~The Credit Agreement ~~and extended the maturity date to~~matures in October ~~2018. The amended Credit Agreement also provides for two additional one-year extension options and modified certain borrowing terms and covenants.~~2020. Subject to satisfaction of certain specified conditions, we are permitted to upsize the borrowing capacity under the Credit Agreement by an additional $50.0 million. As of June 30, 2020, we had $1.0 million in letters of credit outstanding and $99.0 million in available borrowing capacity under the Credit Agreement.

	Nine Months Ended September 30,													Six Months Ended June 30,
	2017			2016			$ Change			% Change				2020			2019			$ Change			% Change
	($ in thousands)													($ in thousands)
Net cash provided by operating activities	$	121,583		$	33,140		$	88,443			266.9		%	$	225,222		$	109,102		$	116,120			106.4		%
Net cash (used in) investing activities		(67,907	)		(23,899	)		(44,008	)		184.1
Net cash provided by (used in) investing activities															12,931			(10,736	)		23,667			(220.4	)
Net cash (used in) financing activities		(84,335	)		(46,545	)		(37,790	)		81.2				(83,995	)		(58,532	)		(25,463	)		43.5
Effect of exchange rate changes on cash and cash equivalents		1,408			(980	)		2,388			(243.7	)			(3,678	)		21			(3,699	)		(17,614.3	)
Net (decrease) for the period	$	(29,251	)	$	(38,284	)	$	9,033			(23.6	)	%
Net increase for the period														$	150,480		$	39,855		$	110,625			277.6		%

The ~~$88.4~~$116.1 million increase in net cash provided by operating activities was primarily due to ~~an increase~~increases in net income of ~~$21.6~~$58.0 million, net sales and maturities of trading investments of $54.4 million and depreciation and amortization of $3.9 million.

The $23.7 million increase in net cash provided by investing activities was primarily due to a decrease in net purchases of ~~corporate debt trading~~available-for-sale investments of ~~$82.9~~$33.0 million, offset by an increase in ~~working~~ capital expenditures of ~~$9.5~~$8.8 million.

The ~~$44.0~~$25.5 million increase in net cash ~~used in investing activities was primarily due to increases of $40.0 million in net purchases of available-for-sale investments and capital expenditures of $3.5 million.~~

~~The $37.8 million increase in net cash used in~~(used in) financing activities was principally due to ~~an increase of $22.5 million in repurchases of our common stock, a $7.8 million increase in the cash dividend paid on common stock and a $7.0 million increase~~increases in withholding tax payments on restricted stock vesting and stock option ~~exercises.~~exercises of $15.7 million, cash dividends paid on common stock of $7.3 million and repurchases of common stock of $2.6 million.

Past trends of cash flows are not necessarily indicative of future cash flow levels. A decrease in cash flows may have a material adverse effect on our liquidity, business and financial condition.

In addition to ~~cash flow from operating activities~~reporting financial results in accordance with GAAP, we use acertain non-GAAP financial ~~measures called “Free Cash Flow”~~measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow (“FCF”). ~~Free Cash Flow is defined~~We define FCF as cash flow from operating activities excluding the net ~~purchases of corporate debt~~change in trading investments less expenditures for furniture, equipment and leasehold improvements and capitalized software development costs. We believe ~~this~~these non-GAAP financial ~~measure is~~measures, when taken into consideration with the corresponding GAAP financial measures, are important in ~~gaining~~understanding our operating results. EBITDA and FCF are not measures of financial performance or liquidity under GAAP and therefore should not be considered an ~~understanding~~alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. We believe that EBITDA and FCF provide useful additional information concerning profitability of our ~~financial strength~~operations and business trends and the cash flow ~~generation.~~available to pay dividends, repurchase stock and meet working capital requirements.

The table set forth below presents a reconciliation of our net income to EBITDA:

The table set forth below presents a reconciliation of our cash flow from operating activities to ~~Free Cash Flow, as defined, for the twelve months ended September 30, 2017 and 2016:~~FCF:

	Twelve months ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2020			2019			2020			2019
	(In thousands)						($ in thousands)
Cash flow from operating activities	$	177,898		$	67,832
Add: Net (sales) purchases of corporate debt trading investments		(8,678	)		74,535
Add: Excess tax benefits from share-based compensation previously recorded under financing activities		292			9,274
Net cash provided by operating activities							$	104,853		$	69,733		$	225,222		$	109,102
Exclude: Net change in trading investments								(6,880	)		(2,839	)		(63,274	)		(8,854	)
Less: Purchases of furniture, equipment and leasehold improvements		(8,876	)		(5,819	)		(4,973	)		(5,465	)		(9,264	)		(6,114	)
Less: Capitalization of software development costs		(13,154	)		(12,130	)		(6,225	)		(4,126	)		(13,003	)		(7,310	)
Free Cash Flow	$	147,482		$	133,692		$	86,775		$	57,303		$	139,681		$	86,824

We believe that our current resources are adequate to meet our liquidity needs and capital expenditure requirements for at least the next 12 months. However, our future liquidity and capital requirements will depend on a number of factors, including expenses associated with product development and expansion and new business opportunities that are intended to further diversify our revenue stream. We may also acquire or invest in technologies, business ventures or products that are complementary to our business. In the event we require any additional financing, it will take the form of equity or debt financing. Any additional equity offerings may result in dilution to our stockholders. Any debt financings, if available at all, may involve restrictive covenants with respect to dividends, issuances of additional capital and other financial and operational matters related to our business.

Certain of our U.S. subsidiaries are registered as a broker-dealer or a SEF and therefore are subject to the applicable rules and regulations of the SEC, FINRA and the CFTC. These rules contain minimum net capital requirements, as defined in the applicable regulations, and also may require that a significant part of the registrants’ assets be kept in relatively liquid form. Certain of our foreign subsidiaries are regulated by the ~~Financial Conduct Authority~~FCA in the U.K. or other foreign regulators and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of ~~September~~June 30, ~~2017,~~2020, each of our subsidiaries that are subject to these regulations had net capital or financial resources in excess of their minimum requirements. As of ~~September~~June 30, ~~2017,~~2020, our subsidiaries maintained aggregate net capital and financial resources that were ~~$128.2~~$287.5 million in excess of the required levels of ~~$12.6~~$19.6 million.

Each of our U.S. and foreign regulated subsidiaries are subject to local regulations which generally prohibit repayment of borrowings from our affiliates, paying cash dividends, making loans to our affiliates or otherwise entering into transactions that result in a significant reduction in regulatory net capital or financial resources without prior notification to or approval from such regulated entity’s principal regulator.

As of ~~September~~June 30, ~~2017,~~2020, the amount of unrestricted cash held by our non-U.S. subsidiaries was ~~$85.7~~$159.9 million. We have determined that unremitted earnings of our foreign subsidiaries are considered indefinitely reinvested outside of the U.S. Any repatriation of such foreign earnings by way of dividend may be subject to both U.S. federal and state income taxes, reduced by applicable foreign tax credits. However, we do not have any current needs or foreseeable plans to repatriate cash by way of dividends from our non-U.S. subsidiaries.

We execute certain bond transactions between and among institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades which settle through third-party clearing brokers. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. ~~For the nine months ended September 30, 2017 and 2016, revenues from matched principal trading were approximately $34.4 million and $26.6 million, respectively.~~ Under securities clearing agreements with ~~third-party~~third party clearing brokers, we maintain collateral deposits with each clearing broker in the form of cash. As of ~~September~~June 30, ~~2017~~2020 and ~~2016,~~December 31, 2019, the amount of the collateral deposits, which are disclosed in the Consolidated Statements of Cash Flows as restricted cash, and included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition was ~~$1.2~~$20.6 million and ~~$1.1~~$4.1 million, respectively. ~~For~~During April 2020, we increased the ~~nine months ended September 30, 2017, and 2016,~~amount of the collateral deposits with clearing ~~expenses associated with~~brokers to support increased trading volume in our matched principal ~~transactions were $4.3 million and $4.8 million, respectively, and are classified under clearing costs on our Consolidated Statements of Operations.~~business. We ~~are~~may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is a ~~miscommunication~~trade dispute or ~~other~~ error ~~in executing~~relating to a matched principal transaction.

Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge us for any losses they suffer resulting from a counterparty’s failure on any of our trades. We did not record any liabilities or losses with regard to this right for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019.

In the normal course of business, we enter into contracts that contain a variety of representations, warranties and ~~general indemnifications.~~indemnification provisions. Our maximum exposure from any claims under these arrangements is unknown, as this would involve claims that have not yet occurred. However, based on past experience, we expect the risk of material loss to be remote.

In January ~~2016, our~~2019, the Board of Directors authorized a two-year share repurchase program for up to ~~$25.0~~$100.0 million ~~of our common stock. In October 2016, our Board of Directors approved a $50.0 million increase~~that commenced in the size of the share repurchase program. In September 2017, the existing share repurchase plan was terminated and our Board of Directors authorized a new fifteen-month share repurchase program for up to $100 million commencing in October 2017.April 2019. Shares repurchased under ~~each~~the program will be held in treasury for future use.

In ~~October 2017,~~July 2020, our Board of Directors approved a quarterly cash dividend of ~~$0.33~~$0.60 per share payable on ~~November 22, 2017~~August 19, 2020 to stockholders of record as of the close of business on ~~November 8, 2017.~~August 5, 2020. Any future declaration and payment of dividends will be at the sole discretion of our Board of Directors. Our Board of Directors may take into account such matters as general business conditions, our financial results, capital requirements, contractual obligations, legal, and regulatory restrictions on the payment of dividends to our stockholders or by our subsidiaries to their respective parent entities, and any such other factors as the Board of Directors may deem relevant.

Because the majority of our assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation may affect our expenses, such as employee compensation, office leasing costs and communications expenses, which may not be readily recoverable in the prices of our services. To the extent inflation results in rising interest rates and has other adverse effects on the securities markets, it may adversely affect our financial condition and results of operations.

As of ~~September~~June 30, ~~2017,~~2020, we had the following contractual obligations and commitments:

	Payments due by period										Payments due by period
	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 - years		Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
	(In thousands)										($ in thousands)
Operating leases	$	144,498	$	4,907	$	18,571	$	19,695	$	101,325	$	137,384	$	5,308	$	22,120	$	20,630	$	89,326
Foreign currency forward contract		88,444		88,444		—		—		—		177,713		177,713		—		—		—
	$	232,942	$	93,351	$	18,571	$	19,695	$	101,325	$	315,097	$	183,021	$	22,120	$	20,630	$	89,326

During 2016, we entered into a lease agreement for our new global headquarters in New York City. We expect to relocate our headquarters to approximately 83,000 square feet of newly built office space at 55 Hudson Yards upon the building’s completion in late 2018. The fifteen-year lease for the new headquarters will commence when we receive possession of the premises, which is currently expected to occur in the first quarter of 2018.

We enter into foreign currency forward contracts to hedge our exposure to variability in certain foreign currency cash flows resulting from the net investment in our U.K. subsidiaries. As of ~~September~~June 30, ~~2017,~~2020, the notional value of the only foreign currency forward contract outstanding was ~~$88.4~~$179.1 million and the fair value of the asset was ~~$0.6~~$1.4 million.

Market risk is the risk of the loss resulting from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates.

The global financial services business is, by its nature, risky and volatile and is directly affected by many national and international factors that are beyond our control. Any one of these factors may cause a substantial decline in the U.S. and global financial services markets, resulting in reduced trading volume and revenues. These events could have a material adverse effect on our business, financial condition and results of operations.

As of ~~September~~June 30, ~~2017,~~2020, we had ~~$234.2~~$123.8 million of investments, which were invested in corporate bonds ~~and~~that were classified as securities available-for-sale or trading securities. Adverse movements, such as a 10% decrease in the value of these securities or a downturn or disruption in the markets for these securities, could result in a substantial loss. In addition, principal gains and losses resulting from these securities could on occasion have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period.

Interest rate risk represents our exposure to interest rate changes with respect to our cash, cash equivalents and investments. As of ~~September~~June 30, ~~2017,~~2020, our cash and cash equivalents and investments amounted to ~~$376.2~~$535.5 million. A hypothetical ~~five~~100 basis point decrease in ~~short-term~~ interest rates would decrease our ~~annual pre-tax earnings~~investment income by approximately ~~$0.2~~$5.0 million, assuming no change in the amount or composition of our cash and cash ~~equivalents and investments.~~equivalents.

As of ~~September~~June 30, ~~2017,~~2020, a hypothetical 100 basis point increase or decrease in interest rates would decrease or increase the fair value of the available-for-sale investment portfolio by approximately ~~$1.4~~$0.4 million, assuming no change in the amount or composition of the investments. The hypothetical unrealized gain (loss) of ~~$1.4~~$0.4 million would be recognized in accumulated other comprehensive ~~income~~loss on the Consolidated Statements of Financial Condition.

A similar hypothetical 100 basis point increase or decrease in interest rates would decrease or increase the fair value of the trading securities portfolio by approximately ~~$0.8~~$0.1 million. The hypothetical unrealized gain (loss) of ~~$0.8~~$0.1 million would be recognized in other, ~~income~~net in the Consolidated Statements of Operations.

We conduct operations in several different countries outside of the U.S., most notably the U.K., and substantial portions of our revenues, expenses, assets and liabilities are generated and denominated in non U.S. dollar currencies. Since our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Accordingly, increases or decreases in the value of the U.S. dollar against the other currencies will affect our net operating revenues, operating income and the value of balance sheet items denominated in foreign currencies.

During the twelve months ended ~~September~~June 30, ~~2017,~~2020, approximately ~~12.7%~~13.3% of our revenue and ~~27.0%~~26.6% of our expenses were denominated in currencies other than the U.S. dollar, most notably the British Pound Sterling. Based on actual results over the past year, a hypothetical 10% increase or decrease in the U.S. dollar against all other currencies would have increased or decreased revenue by approximately ~~$5.0~~$8.2 million and operating expenses by approximately ~~$5.1~~$7.2 million.

Our limited derivative risk stems from our activities in the foreign currency forward contract market. We use this market to mitigate our U.S. dollar versus British Pound Sterling exposure that arises from the activities of our U.K. subsidiaries. As of ~~September~~June 30, ~~2017,~~2020, the fair value of the notional amount of our foreign currency forward contract was ~~$88.4~~$177.7 million. We do not speculate in any derivative instruments.

Two of our subsidiaries, MarketAxess Corporation and MarketAxess Capital Limited, act as a matched principal counterparty in connection with the Open Trading™ transactions that we execute between clients. We act as an intermediary in these transactions by serving as counterparty to both the buyer and the seller in trades which then settle through a third-party clearing broker. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded.

We are exposed to credit and performance risks in our role as matched principal trading counterparty to our Open Trading™ clients executing bond trades on our platform, including the risk that counterparties that owe us money or securities will not perform their obligations. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. Adverse movements in the prices of securities that are the subject of these transactions can increase our risk. In connection with Open Trading™ or other anonymous protocols, we expect that the number of transactions in which we act as a matched principal will increase.

We have policies and procedures in place to identify and manage our credit risk. In connection with the recent growth of our Open Trading™ protocols, we have implemented additional automated controls to help us manage our credit risk exposure. There can be no assurance that the policies, procedures and automated controls we use to manage this credit risk will effectively mitigate our credit risk exposure. Some of our risk management procedures are reliant upon the evaluation of information regarding the fixed- income markets, our clients or other relevant matters that are publicly available or otherwise acquired from third party sources. Such information may not be accurate, complete, up-to-date or properly assessed and interpreted by us. If our risk management procedures fail, our business, financial condition and results of operations may be adversely affected. Furthermore, our insurance policies are unlikely to provide coverage for such risks.

Cash and cash equivalents includes cash and money market instruments that are primarily maintained at one major global bank. Given this concentration, we are exposed to certain credit risk in relation to our deposits at this bank.

(a) Evaluation of Disclosure Controls and Procedures. Our management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of ~~September~~June 30, ~~2017.~~2020. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by MarketAxess in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting. As a result of the Pandemic, our global workforce rapidly shifted to a work-from-home environment beginning in mid-March 2020. We have concluded that the changes to the working environment as a result of this shift did not have a material effect on our internal control over financial reporting during the second quarter. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended ~~September~~June 30, ~~2017~~2020 identified in connection with the evaluation thereof by our management, including the Chief Executive Officer and Chief Financial Officer, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In the normal course of business, we and our subsidiaries included in the consolidated financial statements may be involved in various lawsuits, proceedings and regulatory examinations. We assess liabilities and contingencies in connection with outstanding legal proceedings, if any, utilizing the latest information available. For matters where it is probable that we will incur a material loss and the amount can be reasonably estimated, we will establish an accrual for the loss. Once established, the accrual will be adjusted to reflect any relevant developments. When a loss contingency is not both probable and estimable, we would not establish an accrual.

Based on currently available information, the outcome of our outstanding matters is not expected to have a material adverse impact on our financial position. It is not presently possible to determine our ultimate exposure to these matters and there is no assurance that the resolution of the outstanding matters will not significantly exceed any reserves accrued by us.

~~There~~With the exception of the following item, there have been no material changes in our risk factors from those disclosed in our most recent Form 10-K for the year ended December 31, ~~2016.~~2019. For a discussion of the risk factors affecting the Company, see “Risk Factors” in Part I, Item 1A of our ~~2016~~2019 Form 10-K.

Our business has been, and our results of operations and financial condition may be, impacted by the outbreak of, and global response to, the COVID-19 Pandemic and such impact could be materially adverse.

The global spread of the novel coronavirus (COVID-19) has created significant volatility in the markets we serve, and has increased uncertainty and economic disruption. The extent to which the Pandemic impacts our business, operations, and financial results is uncertain and will depend on numerous evolving factors that we may not be able to accurately predict, including:

In addition, the increase in our employees working remotely has amplified certain risks to our business, including increased demand on our information technology resources and systems, increased phishing and other cybersecurity attacks as cybercriminals try to exploit the uncertainty surrounding the Pandemic, and an increase in the number of points of potential attack, such as laptops and mobile devices (both of which are now being used in increased numbers), to be secured, and any failure to effectively manage these risks, including to timely identify and appropriately respond to any cyberattacks, may adversely affect our business.

Due to the uncertainty of the duration, scope and severity of the Pandemic, the uncertainty as to what governmental measures may yet be taken in response to the Pandemic and the unpredictable effect on our business, our employees and our clients, we are not able to reasonably estimate the extent of any potential impact of the Pandemic on our financial condition or results of operations at this time, but the impact could be material. Even after the current COVID-19 outbreak has subsided, we may continue to experience impacts to our business as a result of the Pandemic’s global economic impact. Further, as the COVID-19 situation is unprecedented and continuously evolving, COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or in a manner that we currently do not consider to present significant risks to our operations.

Any of the above factors could cause or contribute to the risks and uncertainties identified in our fiscal 2019 Form 10-K and could materially adversely affect our business, financial condition and results of operations.

During the quarter ended ~~September~~June 30, ~~2017,~~2020, we repurchased the following shares of common stock:

During the three months ended ~~September~~June 30, ~~2017,~~2020, we repurchased ~~92,453~~37,426 shares of common stock. The repurchases included ~~28,953~~13,064 shares repurchased in connection with our share repurchase program and 24,362 shares surrendered by employees to us to satisfy the withholding tax obligations upon the exercise of stock options and vesting of restricted ~~shares and 63,500 shares repurchased in connection with our share repurchase program.~~shares.

InOn January ~~2016,~~30 2019, we announced that our Board of Directors authorized a two-year share repurchase program for up to ~~$25.0~~$100.0 million of our common ~~stock. In October 2016, our Board of Directors approved a $50.0 million increase~~stock that commenced in ~~the size of the current share repurchase program. In September 2017, the existing share repurchase plan was terminated~~April 2019 and ~~our Board of Directors authorized a new fifteen-month share repurchase program for up to $100 million commencing in October 2017.~~will expire on March 31, 2021. Shares repurchased under ~~each~~the program will be held in treasury for future use.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		52-2230784
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

~~299 Park Avenue, 10th~~55 Hudson Yards, 15th Floor New York, New York		~~10171~~10001
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☑☒	Accelerated filer	☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
Emerging growth company	☐		~~Emerging growth company~~	☐

		Page
PART I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Financial Condition as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019	3
	Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	4
	Consolidated Statements of Comprehensive Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	5
	Consolidated ~~Statement~~Statements of Changes in Stockholders’ Equity for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2020 and 2019	6
	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~	7
	~~Notes to Consolidated Financial Statements~~2019	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3640
Item 4.	Controls and Procedures	3741
PART II — Other Information
Item 1.	Legal Proceedings	3842
Item 1A.	Risk Factors	3842
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3843
Item 3.	Defaults Upon Senior Securities	3843
Item 4.	Mine Safety Disclosures	3943
Item 5.	Other Information	3944
Item 6.	Exhibits	3944

	December 31, 2019		Payments received in advance of services to be performed		Revenue recognized for services performed during the period			Foreign Currency Translation			June 30, 2020
	(In thousands)
Information services	$	2,138	$	4,314	$	(3,844	)	$	—		$	2,608
Post-trade services		1,361		7,395		(7,203	)		(93	)		1,460
Total deferred revenue	$	3,499	$	11,709	$	(11,047	)	$	(93	)	$	4,068

Purchase price	$	153,210
Less: acquired cash		(2,935	)
Purchase price, net of acquired cash		150,275
Accounts receivable		(1,811	)
Intangible assets		(58,780	)
Prepaid expenses and other assets		(4,168	)
Accounts payable, accrued expenses and other liabilities		2,165
Goodwill	$	87,681

	Costs		Useful Lives
Customer relationships	$	58,690		15 years
Tradename - finite life		90		1 year
Total	$	58,780


Remainder of 2017	$	1,266
2018		4,815
2019		9,464
2020		10,577
2021		10,129
2022 and thereafter		108,247
	$	144,498

		Three Months Ended June 30,						Six Months Ended June 30,
Lease cost:	Classification	2020			2019			2020			2019
		(In thousands)
Operating lease cost	Occupancy	$	3,357		$	2,656		$	6,806		$	5,401
Operating lease cost for subleased/assigned properties	Other, net		635			583			1,171			1,156
Variable lease costs	Occupancy		7			31			23			155
Sublease income subleased/assigned properties	Other, net		(635	)		(583	)		(1,171	)		(1,156	)
Net lease cost		$	3,364		$	2,687		$	6,829		$	5,556

	As of
Lease Term and Discount Rate	June 30, 2020			December 31, 2019
Weighted average remaining lease term (in years)		12.9			13.3
Weighted average discount rate		5.9	%		5.9	%

	(In thousands)
Remainder of 2020	$	5,308
2021		11,893
2022		10,227
2023		9,982
2024		10,648
2025 and thereafter		89,326
Total lease payments		137,384
Less: interest		42,683
Operating lease liabilities	$	94,701


	•	the number of participants on our platforms and their willingness to originate transactions through the platforms;
	•	the frequency and competitiveness of the price responses by participants on our platforms;
	•	the number of markets that are available for our clients to trade on our platforms;
	•	the overall level of activity in these markets; and
	•	the level of commissions that we collect for trades executed through the platforms.

	Change from the Three Months Ended September 30, 2016
	U.S. High-Grade			Other Credit			Liquid Products			Total
	($ in thousands)
Volume increase (decrease)	$	4,234		$	2,687		$	(332	)	$	6,589
Variable transaction fee per million (decrease) increase		(3,979	)		(1,487	)		79			(5,387	)
Total increase (decrease) in variable commissions	$	255		$	1,200		$	(253	)	$	1,202

	Change from the Nine Months Ended September 30, 2016
	U.S. High-Grade			Other Credit			Liquid Products			Total
	($ in thousands)
Volume increase (decrease)	$	14,514		$	17,169		$	(510	)	$	31,173
Variable transaction fee per million (decrease) increase		(13,207	)		(1,876	)		160			(14,923	)
Total increase (decrease) in variable commissions	$	1,307		$	15,293		$	(350	)	$	16,250

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans and Programs		Dollar Value of Shares That May Yet Be Purchased Under the Plans and Programs
							(In thousands)
July 1, 2017 - July 31, 2017		47,137	$	200.45		20,000	$	23,030
August 1, 2017 - August 31, 2017		22,916		197.24		22,700		18,552
September 1, 2017 - September 30, 2017		22,400		182.41		20,800		—
		92,453	$	195.28		63,500

	MARKETAXESS HOLDINGS INC.

Date: ~~October 27, 2017~~July 24, 2020	By:	/s/ RICHARD M. MCVEY
		Richard M. McVey
		Chief Executive Officer
		(principal executive officer)

Date: ~~October 27, 2017~~July 24, 2020	By:	/s/ ANTONIO L. DELISE
		Antonio L. DeLise
		Chief Financial Officer
		(principal financial and accounting officer)