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 every Interactive Data File required to be submitted 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 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 growth 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 ~~28, 2020,~~21, 2021, the number of shares of the Registrant’s voting common stock outstanding was ~~37,963,482.~~

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 September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
	(In thousands, except per share amounts)												(In thousands, except per share amounts)
Revenues
Commissions	$	150,586		$	119,869		$	478,632		$	346,753		$	142,826		$	150,586		$	475,095		$	478,632
Information services		8,501			7,693			25,570			22,215			9,608			8,501			28,614			25,570
Post-trade services		4,689			3,784			12,896			11,840			9,444			4,689			29,553			12,896
Other		230			251			681			770			215			230			629			681
Total revenues		164,006			131,597			517,779			381,578			162,093			164,006			533,891			517,779

Expenses
Employee compensation and benefits		37,583			32,681			120,413			97,962			40,878			37,583			129,698			120,413
Depreciation and amortization		9,032			6,700			25,404			19,127			13,964			9,032			38,840			25,404
Technology and communications		8,417			7,381			25,170			19,637			10,665			8,417			31,245			25,170
Professional and consulting fees		8,269			7,018			22,009			19,145			10,847			8,269			31,191			22,009
Occupancy		3,445			2,802			10,205			8,549			3,265			3,445			9,882			10,205
Marketing and advertising		1,148			2,506			5,633			8,472			1,821			1,148			6,153			5,633
Clearing costs		4,838			2,782			16,061			7,969			3,269			4,838			12,335			16,061
General and administrative		3,467			3,762			9,853			10,686			3,381			3,467			9,893			9,853
Total expenses		76,199			65,632			234,748			191,547			88,090			76,199			269,237			234,748
Operating income		87,807			65,965			283,031			190,031			74,003			87,807			264,654			283,031
Other income (expense)
Investment income		344			2,211			2,327			6,296			108			344			322			2,327
Interest expense		(1,046	)		—			(1,046	)		—			(314	)		(1,046	)		(676	)		(1,046	)
Other, net		860			(838	)		(242	)		(860	)		697			860			(1,952	)		(242	)
Total other income (expense)		158			1,373			1,039			5,436			491			158			(2,306	)		1,039
Income before income taxes		87,965			67,338			284,070			195,467			74,494			87,965			262,348			284,070
Provision for income taxes		20,189			13,336			57,624			40,838			16,536			20,189			56,645			57,624
Net income	$	67,776		$	54,002		$	226,446		$	154,629		$	57,958		$	67,776		$	205,703		$	226,446

Net income per common share
Basic	$	1.81		$	1.46		$	6.06		$	4.17		$	1.54		$	1.81		$	5.49		$	6.06
Diluted	$	1.78		$	1.42		$	5.94		$	4.08		$	1.52		$	1.78		$	5.40		$	5.94

Cash dividends declared per common share	$	0.60		$	0.51		$	1.80		$	1.53		$	0.66		$	0.60		$	1.98		$	1.80

Weighted average shares outstanding
Basic		37,386			37,066			37,343			37,053			37,529			37,386			37,502			37,343
Diluted		38,160			37,995			38,129			37,913			38,084			38,160			38,114			38,129

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

Net income

—

—

—

67,776

—

67,776

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

—

—

—

—

4,423

4,423

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

—

—

—

—

(871
)

(871
)
Stock-based compensation

—

6,451

—

—

—

6,451

Exercise of stock options

—

9

—

—

—

9

Withholding tax payments on restricted stock
   vesting and stock option exercises

—

(6,784
)

—

—

—

(6,784
)
Repurchases of common stock

—

—

(4,165
)

—

—

(4,165
)
Cash dividend on common stock ($0.60 per share)

—

—

—

(22,784
)

—

(22,784
)
Balance at September 30, 2020
$
122

$
327,646

$
(168,841
)

$
749,211

$
(10,599
)

$
897,539

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)																	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
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		—		—			—			52,522			—			52,522			—		—			—			83,854			—			83,854
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			1,118			1,118			—		—			—			—			(351	)		(351	)
Unrealized net gain on securities available-for-sale, net of tax		—		—			—			—			459			459			—		—			—			—			820			820
Stock-based compensation		—		5,196			—			—			—			5,196			—		5,791			—			—			—			5,791
Exercise of stock options		—		172			—			—			—			172			—		659			—			—			—			659
Withholding tax payments on restricted stock vesting and stock option exercises		—		(11,803	)		—			—			—			(11,803	)		—		(6,535	)		—			—			—			(6,535	)
Repurchases of common stock		—		—			(5,184	)		—			—			(5,184	)		—		—			(5,873	)		—			—			(5,873	)
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
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
Net income		—		—			—			48,105			—			48,105			—		—			—			67,776			—			67,776
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			(1,100	)		(1,100	)		—		—			—			—			4,423			4,423
Unrealized net gain on securities available-for-sale, net of tax		—		—			—			—			459			459			—		—			—			—			(871	)		(871	)
Stock-based compensation		—		5,929			—			—			—			5,929			—		6,451			—			—			—			6,451
Exercise of stock options		—		350			—			—			—			350			—		9			—			—			—			9
Withholding tax payments on restricted stock vesting and stock option exercises		—		(258	)		—			—			—			(258	)		—		(6,784	)		—			—			—			(6,784	)
Repurchases of common stock		—		—			(3,486	)		—			—			(3,486	)		—		—			(4,165	)		—			—			(4,165	)
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
Net income		—		—			—			54,002			—			54,002
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—			—			—			(1,416	)		(1,416	)
Unrealized net gain on securities available-for-sale, net of tax		—		—			—			—			70			70
Stock-based compensation		—		7,944			—			—			—			7,944
Exercise of stock options		—		363			—			—			—			363
Withholding tax payments on restricted stock vesting and stock option exercises		—		(6,210	)		—			—			—			(6,210	)
Repurchases of common stock		—		—			(2,770	)		—			—			(2,770	)
Cash dividend on common stock ($0.51 per share)		—		—			—			(19,268	)		—			(19,268	)
Balance at September 30, 2019	$	122	$	343,543		$	(196,402	)	$	560,164		$	(12,804	)	$	694,623

Cash dividend on common stock ($0.60 per share)																			—		—			—			(22,784	)		—			(22,784	)
Balance at September 30, 2020																		$	122	$	327,646		$	(168,841	)	$	749,211		$	(10,599	)	$	897,539

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


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2021			2020
	(In thousands)						(In thousands)
Cash flows from operating activities
Net income	$	226,446		$	154,629		$	205,703		$	226,446
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		25,404			19,127			38,840			25,404
Amortization of operating lease right-of-use assets		5,146			4,304			5,055			5,146
Stock-based compensation expense		18,919			19,069			20,312			18,919
Deferred taxes		8,655			73			3,038			8,655
Other		727			886			(46	)		727
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(20,232	)		(15,479	)
Decrease (increase) in accounts receivable								11,820			(20,232	)
(Increase) in receivables from broker-dealers, clearing organizations and customers		(304,023	)		—			(288,107	)		(304,023	)
Decrease in prepaid expenses and other assets		521			3,855
Decrease (increase) in trading investments		62,636			(371	)
(Increase) decrease in prepaid expenses and other assets								(1,915	)		521
(Increase) decrease in trading investments								(5,569	)		62,636
(Increase) in mutual funds held in rabbi trust		(1,819	)		(1,770	)		(1,914	)		(1,819	)
Increase (decrease) in accrued employee compensation		3,561			(3,971	)
(Decrease) increase in accrued employee compensation								(13,280	)		3,561
Increase in payables to broker-dealers, clearing organizations and customers		138,120			—			170,113			138,120
Increase (decrease) in income and other tax liabilities		10,098			(3,279	)
Increase in deferred revenue		1,593			921
Increase (decrease) in accounts payable, accrued expenses and other liabilities		5,786			(2,000	)
(Decrease) increase in operating lease liabilities		(4,669	)		800
(Decrease) increase in income and other tax liabilities								(914	)		10,098
(Decrease) increase in accounts payable, accrued expenses and other liabilities								(1,418	)		7,379
(Decrease) in operating lease liabilities								(5,338	)		(4,669	)
Net cash provided by operating activities		176,869			176,794			136,380			176,869
Cash flows from investing activities
Acquisition of business, net of cash and cash equivalents acquired		(527	)		—
Acquisitions, net of cash and cash equivalents acquired								(17,078	)		(527	)
Available-for-sale investments
Proceeds from maturities and sales		170,657			156,809			0			170,657
Purchases		(32,865	)		(149,575	)		0			(32,865	)
Purchases of furniture, equipment and leasehold improvements		(13,022	)		(8,683	)		(14,567	)		(13,022	)
Capitalization of software development costs		(21,124	)		(13,863	)		(24,650	)		(21,124	)
Other		—			22
Net cash provided by (used in) investing activities		103,119			(15,290	)
Net cash (used in) provided by investing activities								(56,295	)		103,119
Cash flows from financing activities
Cash dividend on common stock		(68,104	)		(57,233	)		(74,999	)		(68,104	)
Exercise of stock options		748			885			6,948			748
Withholding tax payments on restricted stock vesting and stock option exercises		(34,562	)		(18,271	)		(33,371	)		(34,562	)
Repurchases of common stock		(15,453	)		(11,440	)		(18,192	)		(15,453	)
Proceeds from short-term borrowings		478,356			—			70,348			478,356
Repayments of short-term borrowings		(478,356	)		—			(70,348	)		(478,356	)
Net cash (used in) financing activities		(117,371	)		(86,059	)		(119,614	)		(117,371	)
Effect of exchange rate changes on cash and cash equivalents		431			(1,261	)		(4,720	)		431
Cash and cash equivalents including restricted cash
Net increase for the period		163,048			74,184
Net (decrease) increase for the period								(44,249	)		163,048
Beginning of period		274,253			247,458			608,050			274,253
End of period	$	437,301		$	321,642		$	563,801		$	437,301

Supplemental cash flow information
Cash paid for income taxes							$	48,669		$	38,488
Cash paid for interest								676			1,046
Non-cash activity
Contingent consideration payable assumed in connection with acquisitions								26,898			0
Exercise of stock options - cashless								2,750			10,288
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	705		$	422			1,891			705

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

2. Significant Accounting Policies

Basis of Presentation

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, ~~2019.~~2020. The consolidated financial information as of December 31, ~~2019~~2020 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. Certain reclassifications have been made to the prior periods’ consolidated financial statements in order to conform to the current period presentation. Such reclassifications are immaterial, individually and in the aggregate, to both current and all previously issued financial statements taken as a whole and have no effect on previously reported net income.

Accounting Pronouncements, ~~Recently~~Not Yet Adopted

In ~~August 2018,~~March 2020, the Financial Accounting Standards Board (“FASB”) issued ~~Accounting Standards Update~~ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (the “ASU”), which is designed to ease the potential burden in accounting for the transition away from the London Inter-bank Offered Rate (“ASU”) 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 2018-15”LIBOR”). The ~~standard requires the capitalization of implementation costs incurred in a cloud computing arrangement~~ASU applies to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be ~~aligned~~discontinued and replaced with ~~the requirements~~alternative reference rates as a result of reference rate reform. The ASU provides optional expedients and exceptions for ~~capitalizing costs incurred~~applying U.S. GAAP to ~~develop or obtain internal-use software.~~contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The ~~updated guidance is~~ASU was effective for ~~annual~~all entities as of March 12, 2020 and ~~interim reporting periods beginning after~~can be adopted from this date through December ~~15, 2019, with early adoption permitted.~~31, 2022. The Company ~~adopted ASU 2018-15 effective July 1, 2019 on a prospective basis. Adoption~~does not expect adoption of this ~~guidance did not~~ASU to have a material impact on ~~the Company’s~~its Consolidated Financial Statements.

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. Instead, goodwill impairment testing will be 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 adopted ASU 2017-04 effective January 1, 2020 on a prospective basis. Adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

Cash and Cash Equivalents

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

Investments

~~Investments~~

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 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 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, 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. NaN charges for other-than-temporary losses were recorded during the three and nine months ended September 30, 2020 and 2019, respectively.9

Fair Value Financial Instruments

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.~~contracts, and contingent consideration payable associated with acquisitions. 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.

Receivables from and Payables to Broker-dealers, Clearing Organizations and Customers

Receivables from broker-dealers, clearing organizations and customers include amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (‘‘securities failed-to-deliver’’) and cash deposits held at clearing organizations and clearing brokers to facilitate the settlement and clearance of matched principal transactions. Payables to broker-dealers, clearing organizations and customers include amounts payable for securities not received by the Company from a seller by the settlement date (‘‘securities failed-to-receive’’). Securities failed-to-deliver and securities failed-to-receive for transactions executed between and among institutional investor and broker-dealer clients on a matched principal basis where the ~~Company’s U.S. broker-dealer subsidiary~~Company serves as a counterparty to both the buyer and the seller are recorded on a settlement date basis. The Company presents its securities failed-to-deliver and securities failed-to-receive balances on a net-by-counterparty basis within receivables from and payables to broker-dealers, clearing organizations and customers. The difference between the Company’s trade-date receivables and payables for unsettled matched principal transactions reflects commissions earned and is recorded within accounts receivable, net on a trade-date basis.

Allowance for ~~Doubtful Accounts~~Credit Losses

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~~credit losses is based ~~upon~~on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific collection issues that have been identified. Account balances are grouped for evaluation based on various risk characteristics, including billing type, legal entity, and geographic region. Additions to the allowance for ~~doubtful accounts~~credit losses are charged to bad debt expense, which is included in general and administrative expense in the Company’s Consolidated Statements of Operations. Balances that are determined to be uncollectable are written off against the allowance for credit losses.

Depreciation and Amortization

Fixed assets are carried at cost less accumulated depreciation. The Company uses the straight-line method of depreciation over three to seven ~~years.~~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.

Software Development Costs

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.~~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.

Cloud Computing Costs

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~~prepaid asset on the ~~balance sheet~~Consolidated Statement of Financial Condition 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.

Foreign Currency Translation and Forward Contracts

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 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.

Revenue Recognition

The Company’s classification of revenues in the Consolidated Statements of Operations represents revenues from 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 platforms and, under certain plans, distribution fees or monthly minimum fees to use the platforms for a particular product area. Variable transaction fees are recognized on a trade date basis, ~~and~~are generally calculated as a percentage of the notional dollar volume of bonds traded on the 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~~traded, as well as individual client incentives. Bonds that are more actively traded or that have shorter maturities ~~are~~ generally ~~charged~~generate lower commissions, while bonds that are less actively traded or that have longer maturities generally command higher commissions. ~~Variable~~Under the Company’s disclosed trading transaction fee plans, 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 its commission through the difference in price between the two trades. ~~The commission revenue for these trades is recorded on a trade-date basis.~~ 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, commissions are invoiced and recorded on a monthly basis. The following table presents commission revenue by fee type:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)
Commission revenue by fee type
Variable transaction fees
Disclosed trading	$	75,044	$	80,354	$	258,443	$	260,233
Open Trading - matched principal trading		34,356		40,565		120,557		128,296
U.S. Treasuries - matched principal trading		2,748		2,264		8,645		9,851
Total variable transaction fees		112,148		123,183		387,645		398,380
Distribution fees and unused minimum fees		30,678		27,403		87,450		80,252
Total commissions	$	142,826	$	150,586	$	475,095	$	478,632

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(In thousands)

Commission revenue by fee type

Variable transaction fees

Disclosed trading
$
80,354

$
69,541

$
260,233

$
202,905

Open Trading - matched principal trading

40,565

26,444

128,296

72,934

U.S. Treasuries - matched principal trading

2,264

—

9,851

—

Total variable transaction fees

123,183

95,985

398,380

275,839

Distribution fees and unused minimum fees

27,403

23,884

80,252

70,914

Total commissions
$
150,586

$
119,869

$
478,632

$
346,753

Information services – Information services includes data licensed to the Company’s broker-dealer clients, institutional investor clients and data-only 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 transferred at a point in time. Revenues for services transferred over time are recognized ratably over the contract period as the Company’s performance obligation is met, whereas revenues for services transferred at a 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. The following table presents information services revenue by timing of recognition:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)
Information services revenue by timing of recognition
Services transferred over time	$	9,389	$	8,227	$	27,946	$	23,852
Services transferred at a point in time		219		274		668		1,718
Total information services revenues	$	9,608	$	8,501	$	28,614	$	25,570

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(In thousands)

Information services revenue by timing of recognition

Services transferred over time
$
8,227

$
7,203

$
23,852

$
21,472

Services transferred at a point in time

274

490

1,718

743

Total information services revenues
$
8,501

$
7,693

$
25,570

$
22,215

Post-trade services – Post-trade services revenue is generated from regulatory transaction reporting, trade publication and trade matching services. Customers are generally billed in the current month or monthly in arrears and revenue is recognized in the 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 recognition:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)
Post-trade services revenue by timing of recognition
Services transferred over time	$	9,444	$	4,557	$	29,544	$	12,655
Services transferred at a point in time		—		132		9		241
Total post-trade services revenues	$	9,444	$	4,689	$	29,553	$	12,896

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

(In thousands)

Post-trade services revenue by timing of recognition

Services transferred over time
$
4,557

$
3,775

$
12,655

$
11,811

Services transferred at a point in time

132

9

241

29

Total post-trade services revenues
$
4,689

$
3,784

$
12,896

$
11,840

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:


	December 31, 2020		Payments received in advance of services to be performed		Revenue recognized for services performed during the period			Foreign Currency Translation			September 30, 2021
	(In thousands)
Information services	$	3,203	$	8,064	$	(7,614	)	$	—		$	3,653
Post-trade services		1,045		11,810		(11,740	)		(15	)		1,100
Total deferred revenue	$	4,248	$	19,874	$	(19,354	)	$	(15	)	$	4,753

December 31, 2019

Payments received in advance of services to be performed

Revenue recognized for services performed during the period

Foreign Currency Translation

September 30, 2020

(In thousands)

Information services

$
2,138

$
7,467

$
(6,093
)

$
—

$
3,512

Post-trade services

1,361

11,490

(11,234
)

(37
)

1,580

Total deferred revenue

$
3,499

$
18,957

$
(17,327
)

$
(37
)

$
5,092

The majority of the Company’s contracts are short-term in nature with durations of less than one year. For contracts with original durations extending beyond one year, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$27.3~~$18.1 million as of September 30, ~~2020.~~2021. The Company expects to recognize revenue associated with the remaining performance obligations over the next 2332 months.

Stock-Based Compensation

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. Forfeitures are recognized as they occur.

Income Taxes

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 the provision for income taxes in the Consolidated Statements of Operations. All tax effects related to share-based payments are recorded ~~through tax expense~~in the provision for income taxes in the periods during which the awards are exercised or vest.

Business Combinations, Goodwill and Intangible Assets

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 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~~Following 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 over their estimated useful lives which range from 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.

Earnings Per Share

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.

Use of Estimates

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.

3. Regulatory Capital Requirements

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, the Financial Industry Regulatory Authority (“FINRA”) and the Commodity Futures Trading 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 30, ~~2020,~~2021, 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 30, ~~2020,~~2021, the Company’s subsidiaries maintained aggregate net capital and financial resources that ~~was $305.6~~were $577.3 million in excess of the required levels of ~~$23.7~~$23.2 million.

~~In August 2020, one~~One of the Company’s U.S. broker-dealer subsidiaries converted to a self-clearing model for the U.S. bond trades to which it is a counterparty via its Open Trading™ functionality. Previously, these bond transactions were settled through a third-party clearing broker. As a result of this conversion, the broker-dealer subsidiary is required to segregate funds in a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Securities Exchange Act of 1934. As of September 30, ~~2020,~~2021, the broker-dealer subsidiary had a balance of ~~$50.0~~$50.1 million in its special reserve bank account. This broker-dealer subsidiary also maintained net capital that was $381.4 million in excess of the required level of $3.4 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.

4. Fair Value Measurements

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 2.2:

	Level 1		Level 2			Level 3		Total
	(In thousands)										Level 1		Level 2		Level 3		Total
As of September 30, 2020
											(In thousands)
As of September 30, 2021
Assets
Money market funds	$	24,424	$	—		$	—	$	24,424		$	4,454	$	—	$	—	$	4,454
Securities available-for-sale
Corporate debt		—		—			—		—
Trading securities
U.S. Treasuries												—		24,964		—		24,964
Mutual funds held in rabbi trust												—		10,803		—		10,803
Foreign currency forward position												—		1,813		—		1,813
Total assets											$	4,454	$	37,580	$	—	$	42,034

Liabilities
Contingent consideration payable											$	—	$	—	$	41,084	$	41,084

As of December 31, 2020
Assets
Money market funds											$	20,856	$	—	$	—	$	20,856
Trading securities
Corporate debt		—		23,237			—		23,237			—		19,222		—		19,222
Mutual funds held in rabbi trust		—		8,037			—		8,037			—		8,889		—		8,889
Total assets											$	20,856	$	28,111	$	—	$	48,967

Liabilities
Contingent consideration payable											$	—	$	—	$	15,026	$	15,026
Foreign currency forward position		—		(1,932	)		—		(1,932	)		—		805		—		805
Total	$	24,424	$	29,342		$	—	$	53,766

As of December 31, 2019
Money market funds	$	99,755	$	—		$	—	$	99,755
Securities available-for-sale
Corporate debt		—		137,835			—		137,835
Trading securities
Corporate debt		—		31,120			—		31,120
U.S. Treasuries		—		55,305			—		55,305
Mutual funds held in rabbi trust		—		6,217			—		6,217
Foreign currency forward position		—		(2,772	)		—		(2,772	)
Total	$	99,755	$	227,705		$	—	$	327,460

Total liabilities											$	—	$	805	$	15,026	$	15,831

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. ~~There were no financial assets~~

Liabilities classified within Level 3 ~~during~~reflect contingent consideration payable assumed as part of acquisitions. During the nine months ended September 30, ~~2020~~2021, $26.9 million of contingent consideration payable was recognized in connection with a business combination and ~~2019.~~a revaluation related to an asset acquisition. Significant unobservable inputs used in the valuation of contingent consideration payable include estimates of client retention, electronic order flow and license fees over periods of 18 to 24 months from the acquisition dates. The following table summarizes the change in the Company's Level 3 liabilities for the nine months ended September 30, 2021:


	December 31, 2020		Additions - acquisitions		Revaluations		Foreign Currency Translation			September 30, 2021
	(In thousands)
Contingent consideration payable	$	15,026	$	22,500	$	4,448	$	(890	)	$	41,084

The table below presents the carrying value, fair value and fair value hierarchy category of the Company's financial assets and liabilities that are not measured at fair value on the Consolidated Statement of Financial Condition. The carrying values of the Company's financial assets and liabilities not measured at fair value categorized in the fair value hierarchy as Level 1 and Level 2 approximate fair value due to the short-term nature of the underlying assets and liabilities.

	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Total
					(In thousands)								Carrying Value		Fair Value		Level 1		Level 2		Level 3		Total
As of September 30, 2020
													(In thousands)
As of September 30, 2021
Financial assets not measured at fair value:
Cash and cash equivalents	$	310,368	$	310,368	$	310,368	$	—	$	—	$	310,368	$	432,715	$	432,715	$	432,715	$	—	$	—	$	432,715
Cash segregated under federal regulations		50,033		50,033		50,033		—		—		50,033		50,134		50,134		50,134		—		—		50,134
Accounts receivable, net of allowance														67,766		67,766		—		67,766		—		67,766
Receivables from broker-dealers, clearing organizations and customers		380,853		380,853		76,830		304,023		—		380,853		551,841		551,841		80,862		470,979		—		551,841
Total	$	741,254	$	741,254	$	437,231	$	304,023	$	—	$	741,254	$	1,102,456	$	1,102,456	$	563,711	$	538,745	$	—	$	1,102,456

Financial liabilities not measured at fair value:
Payables to broker-dealers, clearing organizations and customers	$	138,120	$	138,120	$	—	$	138,120	$	—	$	138,120	$	303,439	$	303,439	$	—	$	303,439	$	—	$	303,439

As of December 31, 2019
As of December 31, 2020
Financial assets not measured at fair value:
Cash and cash equivalents	$	270,124	$	270,124	$	270,124	$	—	$	—	$	270,124	$	460,858	$	460,858	$	460,858	$	—	$	—	$	460,858
Cash segregated under federal regulations														50,059		50,059		50,059		—		—		50,059
Accounts receivable, net of allowance														79,577		79,577		—		79,577		—		79,577
Receivables from broker-dealers, clearing organizations and customers														279,915		279,915		97,043		182,872		—		279,915
Total													$	870,409	$	870,409	$	607,960	$	262,449	$	—	$	870,409

Financial liabilities not measured at fair value:
Payables to broker-dealers, clearing organizations and customers													$	133,326	$	133,326	$	—	$	133,326	$	—	$	133,326

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 following table summarizes the Company’s foreign currency forward ~~position is as follows:~~position:


	As of
	September 30, 2021		December 31, 2020
	(In thousands)
Notional value	$	198,299	$	157,057
Fair value of notional		196,486		157,862
Fair value of the asset (liability)	$	1,813	$	(805	)

As of

September 30, 2020

December 31, 2019

(In thousands)

Notional value
$
157,195

$
155,885

Fair value of notional

159,127

158,657

Fair value of the (liability)
$
(1,932
)

$
(2,772
)

The following ~~is a summary of~~table summarizes the Company’s investments:


	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
As of September 30, 2021
Trading securities
U.S. Treasuries	$	24,989	$	-	$	(25	)	$	24,964
Mutual funds held in rabbi trust		9,941		862		—			10,803
Total investments	$	34,930	$	862	$	(25	)	$	35,767

As of December 31, 2020
Trading securities
Corporate debt	$	19,081	$	141	$	—		$	19,222
Mutual funds held in rabbi trust		7,680		1,209		—			8,889
Total investments	$	26,761	$	1,350	$	—		$	28,111

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses

Estimated
fair
value

(In thousands)

As of September 30, 2020

Trading securities

Corporate debt
$
23,130

$
107

$
-

$
23,237

Mutual funds held in rabbi trust

7,680

126

231

8,037

Total trading securities

30,810

233

231

31,274

Total investments
$
30,810

$
233

$
231

$
31,274

As of December 31, 2019

Securities available-for-sale

Corporate debt
$
137,119

$
721

$
(5
)

$
137,835

Trading securities

Corporate debt

31,120

14

(14
)

31,120

U.S. Treasuries

54,738

567

—

55,305

Mutual funds held in rabbi trust

5,173

1,044

—

6,217

Total trading securities

91,031

1,625

(14
)

92,642

Total investments
$
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, 2020		December 31, 2019		September 30, 2021		December 31, 2020
	(In thousands)				(In thousands)
Less than one year	$	21,362	$	120,850	$	10,803	$	18,290
Due in 1 - 5 years		9,912		109,627		24,964		9,821
Total	$	31,274	$	230,477	$	35,767	$	28,111

Proceeds from the sales and maturities of investments during the nine months ended September 30, 2021 and 2020 ~~and 2019~~ were ~~$252.2~~$19.4 million and ~~$238.5~~$252.2 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 30, 2020 and December 31, 2019:~~

5. Receivables from and ~~payables~~Payables to ~~broker-dealers, clearing~~Broker-dealers, Clearing organizations and ~~customers~~Customers

On ~~November 1, 2019,~~April 9, 2021, the Company acquired MuniBrokers LLC, a central electronic venue serving municipal bond brokers and one of its subsidiaries completed their 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”)dealers. The ~~aggregate consideration for the acquisition was $152.7 million, comprised~~purchase price consists of ~~approximately $103.9~~$17.1 million in cash paid at closing and ~~146,450 shares~~up to $25.0 million of ~~common stock of the Company (valued at~~contingent consideration payable within approximately ~~$48.8 million as of the closing date~~two years 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~~Company is accounting for 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~~transaction as a ~~limited liability company organized in the state of Delaware~~business combination 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 an 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~~assist in determining the fair value of the acquired intangible assets. The accounting purchase price ~~allocation~~was $39.6 million, comprised of $17.1 million of cash and $22.5 million of contingent consideration payable, which is included within accounts payable, accrued expenses and other liabilities on the Consolidated Statement of Financial Condition. The Company recorded $32.0 million of amortizable intangible assets and $7.4 million of goodwill as of ~~September 30, 2020 is as follows (in thousands):~~

the acquisition date.The acquired intangible assets ~~are as follows (in thousands, except for~~consist of customer relationships and technology and have useful ~~lives):~~lives ranging from 1 to 15 years.

~~In September~~On November 30, 2020, the Company ~~entered into agreements to acquire~~acquired Regulatory Services GmbH, the pan-European regulatory reporting business of Deutsche BöBörse Group. The purchase price consists of $22.5 million in cash paid at closing and ~~MuniBrokers LLC,~~up to $24.6 million in contingent consideration payable in cash within 18 months of the closing. The Company is accounting for the transaction as a ~~central electronic venue serving municipal bond inter-dealer brokers~~purchase of assets and ~~dealers. The acquisitions are expected to close~~recorded $37.4 million in amortizable intangible assets and $14.7 million of contingent consideration payable as of the ~~fourth quarter~~acquisition date. In 2021, the Company recognized an increase of ~~2020, subject~~$4.4 million to the ~~satisfaction~~contingent consideration payable and the cost basis of ~~customary closing conditions.~~the acquired intangible assets as a result of updated projections of the expected final contingent consideration payments.

Amortization expense associated with identifiable intangible assets was ~~$2.0~~$9.8 million and ~~$0.3~~$2.0 million for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~Estimated~~Annual estimated total amortization expense is ~~$3.2~~$13.3 million, ~~$5.7~~$17.1 million, ~~$6.9.~~$17.5 million, ~~$7.9~~$15.4 million and ~~$6.7~~$12.3 million, respectively, for ~~each year from 2020~~2021 through ~~2024.~~ 2025.

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 are now 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 Company has entered into agreements that sublease or assign the Company’s lease obligations on 32 properties to third parties and is contingently liable should the third parties default on future lease obligations through the lease termination dates of ~~November 2020~~February 2022 and May ~~2022.~~2022. The aggregate amount of the future lease obligations under these arrangements is ~~$2.6~~$0.8 million as of September 30, ~~2020.~~ 2021.

16. Cash and ~~cash equivalents~~Cash Equivalents and ~~restricted cash~~Restricted Cash

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 undertake no obligation to revise or update any forward-looking statements contained in this 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 leading electronic trading platforms delivering expanded liquidity opportunities, improved execution quality and significant cost savings across global fixed-income markets. Over ~~1,700~~1,800 institutional investor and broker-dealer firms are active users of our patented trading technology, accessing global liquidity on our platforms in U.S. investment-grade bonds, U.S. high-yield bonds, U.S. Treasuries, emerging market debt, Eurobonds and other fixed income securities. Through our Open Trading® protocols, we execute bond trades between and among institutional investor and broker-dealer clients in the leading all-to-all anonymous trading environment 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. In addition, we 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 platforms’ innovative technology solutions are designed to increase the number of potential trading counterparties 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 protocols complement our 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. Clients can use our 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 launched Live Markets, an order book that will create a single view of two-way, actionable prices for the most active bonds, including newly issued debt, benchmark issues and news-driven securities. We expect that Open Trading participants will improve their trading 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+.

We derive revenue from commissions for trades executed on our platform, information services, post-trade services and other 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~~platforms for fixed-income securities, connecting broker-dealers and institutional investors more easily and efficiently, while offering a broad array of trading, information 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. 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 and third quarters, both credit spreads and credit spread volatility tightened dramatically and issuance of U.S. investment grade and high-yield corporate bonds reached record levels. The average daily trading volume of U.S. high-grade and high-yield corporate bonds for the nine months ended September 30, 2020, as measured by Trade Reporting and Compliance Engine (“TRACE”), increased by 14.8% and 23.3%, respectively, compared to the nine months ended September 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 has been increasingly essential to the functioning of credit markets during the Pandemic, and MarketAxess has 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 have largely continued 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 relating to maintaining the health and safety of our employees. 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 and the ability to borrow under our Credit Agreement, will be sufficient to meet our liquidity needs and planned capital expenditure requirements for at least the next twelve months. 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 (“FRBNY”) 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”). In September 2020, we were designated by the FRBNY as an Eligible Seller for the Facility, which will allow us to provide end investors and broker-dealers the opportunity to use Open Trading to respond directly and anonymously to the FRBNY’s requests to purchase bonds. 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.

On August 10, 2020, MarketAxess Corporation, our broker-dealer subsidiary, converted to self-clearing for the U.S bond trades to which MarketAxess Corporation is a counterparty via its Open Trading™ functionality. On August 19, 2020, we amended our Amended and Restated Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. to, among other things, (i) permit investments of up to $500 million in MarketAxess Corporation and (ii) increase the aggregate commitments of the lenders under the Credit Agreement from $100 million to $450 million, which we intend to use from time to time to make advances to our broker-dealer subsidiaries to assist with certain capital or liquidity requirements related to our self-clearing and trade settlement activities and for other general corporate purposes.

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.~~clients.

~~Our results~~The global economic and credit market environments during the nine months ended September 30, 2021 were markedly different as compared to 2020. During 2020, the global economy experienced a period of ~~operations are~~significant turmoil and deteriorating economic conditions due to the outbreak of the COVID-19 pandemic (the “Pandemic”). The steep drop in economic activity in 2020 impacted byglobal credit markets and resulted in sharp credit spread widening and an increase in credit market volumes. During the nine months ended September 30, 2021, however, the improving economic conditions resulted in lower volatility, credit spreads tightening to historical lows for a ~~number~~prolonged period of ~~factors, including~~time, a rising interest rate environment and a decline in U.S. credit market ~~conditions and the overall level of market volumes in our core products.~~volumes. In the nine months ended September 30, ~~2020, estimated~~2021, market volumes in U.S. high-grade and U.S. high-yield ~~market volume,~~corporate bonds as reported by ~~TRACE, increased 15.5%~~Financial Industry Regulatory Authority’s Trade Reporting and ~~23.9%~~Compliance Engine (“TRACE”) decreased 7.0% and 8.0%, respectively, compared to the nine months ended September 30, ~~2019.~~2020. We ~~experienced increased~~believe that the benign credit market conditions in 2021 have negatively impacted trading ~~volumes~~velocity and ~~market share~~activity conducted over our platforms.

As a result of the Pandemic, we have continued to experience significant changes in ~~the nine months ended September 30,~~our daily operations. In mid-March 2020, ~~due~~we successfully implemented a global work from home mandate for all our employees and we were able to continue to provide our trading platforms and other services to our clients without interruption. In particular, we believe that Open Trading liquidity was essential to the ~~extreme~~functioning of credit markets during the Pandemic, and MarketAxess played a valuable role keeping our clients connected to the market ~~dislocation~~as traders moved from their centralized trading floors to home offices. While we remain confident that we can continue to maintain business continuity, serve our clients and ~~volatility~~provide efficient execution in a virtual environment as necessary, as local public health conditions have improved in some locations, we have recently re-opened our primary offices.

We expect that current cash and investment balances, in combination with cash flows that are generated from operations and the ability to borrow under our 2021 Credit Agreement, will be sufficient to meet our liquidity needs and planned capital expenditure requirements for at least the next twelve months, including during any future disruptions caused by the Pandemic. We ended the quarter with a strong balance sheet, no borrowings under our 2020 Credit Agreement and with capital significantly in excess of our regulatory requirements.

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 magnitude and frequency of price improvement enabled by our ~~platform,~~platforms, 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 unique liquidity provided by our Open Trading functionalities and 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 business is subject to extensive regulations in the United States and internationally, which may expose us to significant regulatory risk and cause additional legal costs to ensure compliance. The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in the enactment and enforcement of new laws and regulations that apply to our business. ~~The current regulatory environment~~For example, the new administration elected in the ~~United States~~2020 U.S. presidential election may ~~be subject~~enact regulatory changes that may affect our business. The SEC has recently solicited public comment to ~~future legislative changes. In 2017, the SEC established a Fixed Income Market Structure Advisory Committee~~obtain information about fixed income electronic trading platforms in order to ~~provide~~help the SEC and other regulators evaluate potential regulatory gaps that may exist among such platforms with ~~diverse perspectives on the structure~~respect to access to markets, system integrity, surveillance, and ~~operations of the U.S. fixed-income markets, as well as advice and recommendations on matters related to fixed-income market structure.~~transparency, among other things. The impact of any of these reform efforts on us and our operations remains uncertain.

In addition, the U.K. ceased to be a member of the E.U. on January 31, 2020, ~~(commonly referred to as “Brexit”),~~ triggering a transition period ~~during~~in which the U.K. ~~will continue~~continued to observe applicable E.U. regulations through December 31, 2020 ~~or any later extension date (the “Transition Period”~~(commonly referred to as “Brexit”). In preparation for Brexit, we obtained authorizations from the Netherlands Authority for the Financial Markets for our subsidiaries in the Netherlands in ~~2019 and, during the Transition Period,~~2019. Following Brexit, we ~~are able to~~now provide regulated services to our ~~European~~ clients within the E.U. in reliance on the cross-border services passport held by our Dutch subsidiaries. Brexit ~~is expected to lead~~has led 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~~has made it more difficult and costly 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~~has increased and is likely to continue to increase following Brexit.

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.~~platforms. 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 plan to continue to focus on technology infrastructure initiatives and continually improve our 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 needs.

As the overall share of electronic trading grows in global credit products, we are experiencing continued demand for, and growth in, our automated trading solutions. Automated trading volumes rose to $42.3 billion in the third quarter of 2021, up 39.1% from $30.4 billion in the third quarter of 2020. In addition, the use of dealer algorithms is continuing to grow on our platforms, with approximately 4.4 million algorithmic responses in the third quarter of 2021, up 17.4% from the same period last year.

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

The majority of our revenue is derived from commissions for transactions executed on our 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 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 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 recognized on a trade date basis, ~~and~~are generally calculated as a percentage of the notional dollar volume of bonds traded on our platforms and vary based on the type, size, yield and maturity of the bond ~~traded. Under our disclosed trading transaction fee plans, bonds~~traded, as well as individual client incentives. 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. For U.S. Treasury matched principal trades, commissions are invoiced and recorded on a monthly 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 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 leveraged loans. Commissions for other credit products generally vary based on the type of the instrument traded using standard fee schedules. Our high-yield fee plan structure is similar to our U.S. high-grade fee plans. Certain dealers participate in a high-yield fee plan that incorporates a variable transaction fee and fixed distribution fee, while other dealers participate in a plan that does not contain monthly distribution fees and instead incorporates additional per transaction execution fees and minimum monthly fee commitments. Other credit distribution fees include subscription revenues associated with the MuniBrokers platform. The average other credit fees per million may vary in the future due to changes in product mix or trading protocols.

Rates Commissions. Rates includes U.S. Treasury, U.S. agency, European government bonds and credit derivatives. Commissions for rates products generally vary based on the type of the instrument traded. U.S. Treasury fee 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.

We generate revenue from data licensed to our broker-dealer clients, institutional investor clients and data-only subscribers; professional and consulting services; technology software licenses; and maintenance and support services. These revenues are 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 ratably over the contract period while revenues for services transferred at a 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.

We generate revenue from regulatory transaction reporting, trade publication and trade matching services. Customers are generally billed in the current month or monthly in arrears and 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.

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, which range from one to 15 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.~~providers and U.S. treasuries technology platform licensing fees. 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 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 platforms, information services and post-trade services.

Clearing Costs. Clearing costs consist of fees that we are charged by third-party clearing brokers and depositories for the clearing and settlement of matched principal trades, regulatory reporting fees and variable transaction fees assessed by the provider of our ~~third party~~third-party middle office system.

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

Expenses may grow in the future, notably in employee compensation and benefits as we increase headcount to support investment in new products, operational support and geographic expansion, depreciation and amortization due to increased investment in new products and enhancements to our trading platforms, and technology and communication costs. Expenses may also grow due to acquisitions.

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

Interest Expense. Interest expense consists of financing charges incurred on short-term borrowings.

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, credit facility administrative 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 months ended September 30, ~~2020,~~2021, 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, ~~2019.~~2020.

See Note 2 to the Consolidated Financial Statements for a discussion onof recent accounting ~~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.~~pronouncements.

We operate electronic 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, the financial markets in which we compete and our worldwide business activities. We believe that results by geographic region or client sector are not necessarily meaningful in understanding our business. See Note 15 to the Consolidated Financial Statements for certain geographic information about our business required by U.S. GAAP.

Three Months Ended September 30, ~~2020~~2021 Compared to Three Months Ended September 30, ~~2019~~2020

On November 1, 2019, we completed our acquisition of LiquidityEdge, now operating as MarketAxess Rates, which enabled us to expand our trading capabilities to include U.S. Treasuries. For additional information regarding this acquisition, see Note 6 to the Consolidated Financial Statements.

The following table summarizes our financial results for the three months ended September 30, ~~2020~~2021 and ~~2019.~~2020. Results for the three months ended September 30, ~~2020~~2021 include ~~MarketAxess Rates~~Regulatory Reporting Hub and MuniBrokers related revenue of ~~$2.4~~$4.6 million and expenses of ~~$3.3~~$5.5 million, including amortization of acquired intangibles expense of ~~$0.6 million:~~$2.5 million.

A ~~6.5%~~5.0% change in the average foreign currency exchange rates of the British pound sterling compared to the U.S. dollar ~~from the three months ended September 30, 2019~~ had the effect of increasing revenues and expenses by ~~$1.2~~$1.0 million and ~~$1.0~~$0.9 million, respectively, for the three months ended September 30, ~~2020.~~2021.

Our revenues for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and the resulting dollar and percentage changes, were as follows:

Commissions. Our commission revenues for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and the resulting dollar and percentage changes, were as follows:

U.S. high-grade variable transaction fees ~~increased $15.5~~decreased $15.0 million due to a ~~16.5% increase~~9.0% decrease in trading volume and a ~~15.0% increase~~17.2% decrease in average variable transaction fee per million. Other credit variable transaction fees increased ~~$9.1~~$3.3 million due to a ~~11.3%~~12.4% increase in trading volume ~~and~~offset by a ~~6.2% increase~~6.0% decrease in the average variable transaction fee per million. Open Trading credit volume totaled ~~$200.3~~$188.0 billion during the three months ended September 30, ~~2020, up 41.3%~~2021, down 4.6%, and represented ~~32.9%~~30.5% and ~~27.6%~~32.7% of variable transaction fees for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~462.8%~~19.9% increase in variable transaction fees for rates was mainly attributable to ~~the inclusion of~~higher U.S. ~~Treasuries~~Treasury trading ~~volume and commissions from LiquidityEdge, which was acquired in November 2019.~~ volume.

U.S. high-grade ~~and other credit~~ distribution fees increased ~~$3.0~~$1.5 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.~~ fee and higher unused monthly minimum commitment fees. Other credit distribution fees increased $1.8 million mainly due to subscription revenues associated with the MuniBrokers platform of $1.2 million.

Our trading volumes for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates. The ~~16.5% increase~~9.0% decrease in our U.S. high-grade volume was principally due to ~~an increase in our estimated market share coupled with growth~~a decrease in overall market volume. Estimated U.S. high-grade TRACE volume decreased by 5.8% to $1.3 trillion for the three months ended September 30, 2021. Our estimated market share of total U.S. high-grade corporate bond volume ~~increased~~decreased to 21.4% for the three months ended September 30, 2021 from 22.2% for the three months ended September 30, ~~2020 from 20.2% for~~2020.

Other credit volumes increased by 12.4% due to increases of 22.1% in Eurobonds volume, 19.0% in emerging markets bond volume, and 92.4% in municipal bonds volume, offset by a decrease of 6.4% in high-yield bond volume. Estimated emerging markets volumes increased 0.6% whereas estimated U.S. high-yield and Eurobond market volumes decreased 2.6% and 10.4%, respectively, compared to the three months ended September 30, ~~2019. Estimated U.S. high-grade TRACE~~2020. Rates trading volume increased ~~by 6.2% to $1.4 trillion for the three months ended September 30, 2020.~~

~~Other credit volumes increased by 11.3%~~22.2% primarily due to ~~increases of 45.6%~~an increase in ~~high-yield bond volume and 4.3% in Eurobonds volume, as a result of increases in~~U.S. treasuries dealer-to-dealer estimated ~~high-yield and Eurobond market share and estimated high-yield market~~average daily trading volume. ~~Estimated TRACE reported high-yield market volumes were up 8.6%. Emerging markets volume was down 1.6% mainly due to the 20.6% reduction in TRACE and Trax® reported emerging markets market volume.~~

Our average variable transaction fee per million for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 was as follows:

Total U.S. high-grade average variable transaction fee per million ~~increased 15.0%~~decreased 17.2% to ~~$199~~$165.02 per million for the three months ended September 30, ~~2020 mainly~~2021 due to ~~an increase~~a decrease in the duration of bonds traded on our ~~platforms.~~platforms and the migration of certain of our broker-dealer clients from all-variable fee plans to plans that incorporate a monthly distribution fee. Other credit average variable transaction fee per million ~~increased 6.2%~~decreased 6.0% to ~~$208~~$195.72 per million for the three months ended September 30, ~~2020~~2021 mainly due to a larger percentage of trading volume in ~~high-yield~~emerging market bonds that command higher fees per million. The significant decrease in the average variable transaction fee per million for rates products was primarily attributable to the inclusion of U.S. Treasuries trading volumesand Eurobonds that command lower fees per million.

Information Services. Information services revenue increased ~~$0.8~~$1.1 million for the three months ended September 30, ~~2020~~2021 mainly due ~~revenue from~~to net new data ~~contracts~~contract revenue of ~~$0.5~~$0.9 million and the positive impact of foreign exchange of $0.2 million.

Post-Trade Services. Post-trade services revenue increased $4.8 million for the three months ended September 30, 2021 principally due to additional regulatory transaction reporting revenue of $3.4 million generated by Regulatory Reporting Hub, which was acquired on November 30, 2020, new post-trade services contract revenue of $1.1 million and the positive impact of foreign exchange of $0.3 million.

~~Post-Trade Services.~~ Post-trade services revenue increased $0.9 million for the three months ended September 30, 2020 due to revenue from new Securities Finance Transaction Regulation (“SFTR”) reporting services of $0.4 million and the positive impact of foreign exchange of $0.3 million.

The following table summarizes our expenses for the three months ended September 30, ~~2020~~2021 and ~~2019.~~2020. Expenses for the three months ended September 30, ~~2020~~2021 include ~~$3.3~~$5.5 million of expenses related to ~~MarketAxess Rates,~~Regulatory Reporting Hub and MuniBrokers, including amortization of acquired intangibles expense of ~~$0.6~~$2.5 million.

Employee compensation and benefits increased by ~~$4.9~~$3.3 million, primarily due to higher salaries, taxes and benefits ~~of $4.5 million~~ on higher employee ~~headcount, and employee incentive compensation of $1.4 million, which is tied to operating performance, offset by a $1.0 million reduction in stock-based compensation expense.~~headcount.

Depreciation and amortization increased by ~~$2.3~~$4.9 million primarily due to higher amortization of acquired intangibles expense of $3.2 million and amortization of software development costs of ~~$1.4 million and amortization of acquired intangibles expense of $0.6~~$1.6 million. For the three months ended September 30, 2021 and 2020, ~~and 2019, $3.8~~$4.8 million and ~~$2.6~~$3.8 million, respectively, of equipment purchases and leasehold improvements and ~~$8.1~~$8.2 million and ~~$6.6~~$8.1 million, respectively, of software development costs were capitalized.

Technology and communications expenses increased by ~~$1.0~~$2.2 million primarily due to ~~U.S. Treasury~~higher software subscription costs of $1.1 million, higher platform technology licensing costs of $0.5 million, and higher ~~software subscription~~market data costs of $0.4 million.

Professional and consulting fees increased ~~$1.3~~$2.6 million mainly due to higher acquisition-related integration consulting fees ~~associated with our self-clearing initiative~~of $1.1 million, higher IT consulting fees of $0.9 ~~milllion~~million and ~~a $0.3 million increase in~~higher recruiting ~~fees.~~fees of $0.5 million.

Marketing and advertising expense ~~decreased $1.4~~increased $0.7 million due to ~~reduced sales related~~the resumption of certain advertising and travel and entertainment ~~activities as a result of~~costs which had been reduced in 2020 due to the Pandemic.

Clearing costs ~~increased~~decreased by ~~$2.1~~$1.6 million primarily due to ~~$1.3 million of additional clearing expenses associated with higher~~the benefits from our conversion to self-clearing. While Open Trading ~~volume and $0.8 million of~~credit volumes decreased 4.6% compared to the three months ended September 30, 2020, clearing ~~expenses associated with U.S. Treasuries matched principal transactions.~~ costs decreased 32.4%. Clearing costs as a percentage of Open Trading matched principal trading revenue from credit products decreased from ~~10.5%~~9.8% to ~~10.0%~~6.6%. U.S. Treasuries matched principal clearing costs increased $0.2 million due to higher U.S. Treasuries volume.

~~General and administrative expenses decreased $0.3 million as a result of lower general travel and entertainment expense.~~

Our other income (expense) for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and the resulting dollar and percentage changes, were as follows:

Investment income decreased by ~~$1.9~~$0.2 million primarily due to lower investment balances, due in part to the $103.9 million of cash paid for the LiquidityEdge acquisition in November 2019, new self-clearing related deposit, reserve and liquidity requirements and a decrease in interest rates.balances.

Interest expense ~~increased~~decreased by ~~$1.0~~$0.7 million due to ~~short-term borrowing~~lower financing activity ~~during the three months ended September 30, 2020~~.related to our clearing arrangements.

Other, net ~~increased~~decreased by ~~$1.7~~$0.2 million primarily due to ~~$1.1 million in~~lower realized gains on ~~available-for-sale~~the sale of investments ~~that were sold during the three months ended September 30, 2020.~~of $1.6 million and higher credit facility administration costs of $0.4 million, partially offset by higher foreign exchange gains of $1.7 million.

The provision for income taxes and effective tax rate for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

The provision for income ~~tax provision~~taxes reflected ~~$5.9~~$1.7 million and ~~$3.5~~$5.9 million of excess tax benefits related to share-based compensation awards that vested or were exercised during the three months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~During the three months ended September 30, 2020, we recorded anadditional provision for unrecognized tax benefits of $4.8 million.~~ Our consolidated effective tax rate can vary from period to period depending on 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 Months Ended September 30, ~~2020~~2021 Compared to Nine Months Ended September 30, ~~2019~~2020

The following table summarizes our financial results for the nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020. Results for the nine months ended September 30, ~~2020~~2021 include ~~MarketAxess Rates~~Regulatory Reporting Hub and MuniBrokers related revenue of ~~$10.5~~$13.5 million and expenses of ~~$12.1~~$14.1 million, including amortization of acquired intangibles expense of ~~$1.8 million:~~$5.8 million.

A 8.2% change in the average foreign currency exchange rates of the British pound sterling compared to the U.S. dollar had the effect of increasing each of revenues and expenses by $5.0 million and $4.9 million, respectively, for the nine months ended September 30, 2021.

Our revenues for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and the resulting dollar and percentage changes, were as follows:

Commissions. Our commission revenues for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and the resulting dollar and percentage changes, were as follows:

U.S. high-grade variable transaction fees ~~increased $63.2~~decreased $26.4 million due to a ~~30.5% increase~~8.1% decrease in trading volume and a ~~13.7% increase~~6.1% decrease in average variable transaction fee per million. Other credit variable transaction fees increased ~~$48.4~~$16.7 million due to a ~~27.5%~~12.1% increase in trading volume ~~and~~offset by a ~~5.0% increase~~3.0% decrease in the average variable transaction fee per million. Open Trading credit volume totaled ~~$652.6~~$650.6 billion during the nine months ended September 30, ~~2020,~~2021, up ~~60.4%~~1.2%, and represented ~~32.2%~~30.9% and ~~26.4%~~32.0% of variable transaction fees for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~625.9% increase~~8.3% decrease in variable transaction fees for rates was mainly attributable to ~~the inclusion of~~lower U.S. ~~Treasuries~~Treasury trading ~~volume and commissions from LiquidityEdge, which was acquired in November 2019.~~ volume.

U.S. high-grade ~~and other credit~~ distribution fees increased ~~$7.1~~$4.2 million ~~and $2.3 million, respectively,~~ mainly due to the migration of certain dealers from all-variable fee plans to plans that incorporate a monthly distribution ~~fee.~~fee and higher unused monthly minimum commitment fees. Other credit distribution fees increased $3.1 million due to subscription revenues associated with the MuniBrokers platform of $2.3 million.

Our trading volumes for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates. The ~~30.5% increase~~8.1% decrease in our U.S. high-grade volume was principally due to ~~an increase in our estimated market share coupled with growth~~a decrease in overall market volume. Estimated U.S. high-grade TRACE volume decreased by 7.0% to $4.6 trillion for the nine months ended September 30, 2021. Our estimated market share of total U.S. high-grade corporate bond volume ~~increased to~~was 21.0% and 21.2% for the nine months ended September 30, 2021 and 2020, ~~from 18.8% for~~respectively.

Other credit volumes increased by 12.1% due to increases of 17.5% in Eurobonds volume, 15.9% in emerging markets bond volume and 85.2% in municipal bonds volume. Estimated emerging markets and high-yield market volumes were down 9.1% and 8.0%, respectively, compared to the nine months ended September 30, ~~2019.~~2020. Estimated ~~U.S. high-grade TRACE~~Eurobond market volume ~~increased by 15.5% to $4.9 trillion for the nine months ended September 30, 2020.~~

~~Other credit volumes increased by 27.5%~~was up 0.9% year-over-year. Rates trading volume decreased 7.0% primarily due to ~~increases of 66.4% in high-yield bond volume, 18.2% in Eurobonds volume, and 13.6% in emerging markets bond volume as~~ a ~~result of increases~~decline in estimated ~~market share and estimated~~U.S. treasuries dealer-to-dealer market volumes. ~~Estimated TRACE and Trax® reported high-yield, Eurobonds and emerging markets market volumes were up 23.9%, 11.8% and 0.6%, respectively.~~

Our average variable transaction fee per million for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 was as follows:

Total U.S. high-grade average variable transaction fee per million ~~increased 13.7%~~decreased 6.1% to ~~$185~~$173.64 per million for the nine months ended September 30, ~~2020 mainly~~2021 due to ~~an increase~~a decrease in the duration of bonds traded on our ~~platforms.~~platforms and the migration of certain of our broker-dealer clients from all-variable fee plans to plans that incorporate a monthly distribution fee. Other credit average variable transaction fee per million ~~increased 5.0%~~decreased 3.0% to ~~$204~~$197.56 per million for the nine months ended September 30, ~~2020~~2021 mainly due to a larger percentage of trading volume in ~~high-yield~~emerging market bonds that command higher fees per million. The significant decrease in the average variable transaction fee per million for rates products was primarily attributable to the inclusion of U.S. Treasuries trading volumesand Eurobonds that command lower fees per million.

Information Services. Information services revenue increased ~~$3.4~~$3.0 million for the nine months ended September 30, ~~2020 principally~~2021 mainly due to net new data ~~contracts.~~contract revenue of $2.9 million and the positive impact of foreign exchange of $1.2 million, offset by lower non-recurring data sales of $1.1 million.

Post-Trade Services. Post-trade services revenue increased ~~$1.1~~$16.7 million for the nine months ended September 30, ~~2020~~2021 principally due to additional regulatory transaction reporting revenue of $11.2 million generated by Regulatory Reporting Hub, which was acquired on November 30, 2020, net new ~~post-trade~~post -trade services ~~contracts related to~~contract revenue of $4.2 million and the positive impact of foreign exchange of $1.3 million.

The following table summarizes our expenses for the nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020. Expenses for the nine months ended September 30, ~~2020~~2021 include ~~$12.1~~$14.1 million of expenses related to ~~MarketAxess Rates,~~Regulatory Reporting Hub and MuniBrokers, including amortization of acquired intangibles expense of ~~$1.8~~$5.8 million.

Employee compensation and benefits increased by ~~$22.5~~$9.3 million, primarily due to higher ~~employee incentive compensation of $10.3 million, which is tied to operating performanc, and an increase of $12.0 million in~~ salaries, taxes and benefits on higher employee ~~headcount.~~headcount of $12.6 million and higher stock-based compensation expense of $1.3 million, offset by lower employee incentive compensation of $4.6 million.

Depreciation and amortization increased by ~~$6.3~~$13.4 million primarily due to higher amortization of acquired intangibles expense of $7.9 million and amortization of software development costs of ~~$3.5 million and amortization of acquired intangibles expense of $1.8~~$4.6 million. For the nine months ended September 30, 2021 and 2020, ~~and 2019, $13.0~~$14.6 million and ~~$8.7~~$13.0 million, respectively, of equipment purchases and leasehold improvements and ~~$21.1~~$24.7 million and ~~$13.9~~$21.1 million, respectively, of software development costs were capitalized.

Technology and communications expenses increased by ~~$5.5~~$6.1 million primarily due to higher software subscription costs of $3.1 million, higher market data costs of $1.2 million, higher cloud hosting costs of ~~$1.3 million, IT license and support costs of $1.1~~$0.8 million and ~~U.S. Treasury~~higher platform technology licensing costs of ~~$2.2~~$0.9 million.

Professional and consulting fees increased ~~$2.9~~$9.2 million mainly due to higher ~~recruiting~~acquisition-related integration consulting fees of $3.5 million, higher consulting fees associated with self-clearing of $1.4 million, higher IT consulting fees of $2.1 million, higher other consulting fees of $1.2 million and ~~consulting expenses~~higher insurance fees of ~~$1.3 million related to our self-clearing initiative.~~

~~Marketing and advertising expense decreased $2.8 million due to reduced sales related travel and entertainment activities as a result of the Pandemic.~~$0.8 million.

Clearing costs ~~increased~~decreased by ~~$8.1~~$3.7 million primarily due to ~~$4.7 million of~~lower clearing expenses ~~associated with higher~~due to the benefits from our conversion to self-clearing. While Open Trading credit volume ~~and $3.4 million of~~increased 1.2% compared to the nine months ended September 30, 2020, clearing ~~expenses associated with U.S. Treasuries matched principal transactions.~~ costs decreased by 23.2%. Clearing costs as a percentage of Open Trading matched principal trading revenue from credit products decreased from ~~10.9%~~9.9% to ~~9.9%~~7.4%.

~~General and administrative expenses decreased $0.8 million as a result of lower general travel and entertainment expense~~.

Our other income (expense) for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, and the resulting dollar and percentage changes, were as follows:

Investment income decreased by ~~$4.0~~$2.0 million primarily due to lower investment balances, due in part to the $103.9 million of cash paid for the LiquidityEdge acquisition in November 2019, new self-clearing related deposit, reserve and liquidity requirements and a decrease in interest rates.balances.

Interest expense ~~increased~~decreased by ~~$1.0~~$0.4 million due to ~~short-term borrowing~~lower financing activity ~~during the nine months ended September 30, 2020.~~related to our clearing arrangements.

Other, net increased by ~~$0.6~~$1.7 million primarily due to ~~$1.1 million~~an increase in ~~realized gains on available-for-sale investments offset by $0.4 million in foreign currency transaction losses during the nine months ended September 30, 2020.~~credit facility fees and administration costs.

The provision for income taxes and effective tax rate for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

The provision for income ~~tax provision~~taxes reflected ~~$17.9~~$11.4 million and ~~$7.0~~$17.9 million of excess tax benefits related to share-based compensation awards that vested or were exercised during the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~During the nine months ended September 30, 2020, we recorded an additional provision for unrecognized tax benefits of $4.8 million.~~ Our consolidated effective tax rate can vary from period to period depending on 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 nine months ended September 30, ~~2020,~~2021, we have met our funding requirements through cash on hand, internally generated funds and short-term borrowings. Cash and cash equivalents and investments totaled ~~$341.6~~$468.5 million atas of September 30, ~~2020.~~2021. Our investments are generally invested in ~~investment grade~~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 September 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~~

In October 2021, we entered into the ~~recent developments related to the Pandemic, that would indicate any other-than-temporary impairment.~~

~~We are party to an amended and restated credit agreement (the “Credit Agreement”) that provides for revolving loans and letters of credit up to an aggregate of $450.0 million. In August 2020, the~~2021 Credit Agreement ~~was amended to increase the aggregate commitments from $100.0 million to $450.0 million~~provided by a syndicate of lenders and to permit investments and loans of up to $500.0 million in our broker-dealer subsidiary. The Credit Agreement was further amended in October 2020 to extend the maturity date from October 2020 until the earlier to occur of (i) the date that we enter into a new credit facility with JPMorgan Chase Bank, N.A., as administrative agent, that ~~is intended to replace~~provides aggregate commitments totaling $500.0 million, consisting of a revolving credit facility and a $5.0 million letter of credit sub-limit for standby letters of credit. The 2021 Credit Agreement replaced the 2020 Credit Agreement and ~~(ii) November 16, 2020.~~will mature on October 15, 2024, with our option to request up to two additional 364-day extensions at the discretion of each lender and subject to customary conditions. The 2020 Credit Agreement, which also provided aggregate commitments totaling $500.0 million, replaced the 2015 Credit Agreement. As of September 30, ~~2020,~~2021, we had $1.0 million in letters of credit outstanding and ~~$449.0~~$499.0 million in available borrowing capacity under the 2020 Credit Agreement. See Note 11 to the Consolidated Financial Statements for a discussion of the 2020 Credit Agreement and Note 17 to the Consolidated Financial Statements for a discussion of the 2021 Credit Agreement.

In connection with its self-clearing operations, ~~MarketAxess Corporation,~~one of our U.S. broker-dealer ~~subsidiary, has~~subsidiaries entered into an agreement (the “Collateralized Agreement”) with its settlement bank to provide loans up to an aggregate of $200.0 ~~million.~~million on an uncommitted basis. Borrowings under the Collateralized Agreement are collateralized by securities pledged by ~~MarketAxess Corporation~~the broker-dealer subsidiary to the settlement bank, subject to applicable haircuts and concentration limits. As of September 30, ~~2020, MarketAxess Corporation~~2021, the broker-dealer subsidiary had no borrowings outstanding and $200.0 million in available borrowing capacity under the Collateralized Agreement. See Note 11 to the Consolidated Financial Statements for a discussion of the Collateralized Agreement.

Under arrangements with their settlement banks, certain of our U.S. and U.K. operating subsidiaries may receive overnight financing in the form of bank overdrafts. We incurred interest expense such overnight financing of $0.7 million during the nine months ended September 30, 2021. As of September 30, 2021, we had no overdrafts payable outstanding.

As a result of our self-clearing and settlement activities, we are required to finance certain transactions, maintain deposits with various clearing organizations and clearing broker-dealers and maintain a special reserve bank account for the benefit of customers pursuant to SEC Rule 15c3-3. As of September 30, ~~2020,~~2021, the aggregate amount of the positions financed, deposits and customer reserve balances associated with our self-clearing and settlement activities was ~~$270.3~~$293.8 million. These requirements can fluctuate based on trading activity, market volatility or other factors which may impact our liquidity or require us to use our capital resources.

The ~~$0.1~~$40.5 million ~~increase~~decrease in net cash provided by operating activities was primarily due to ~~increases~~lower proceeds from net sales of trading investments of $68.2 million and a decrease in net income of ~~$71.8~~$20.7 million, net sales and maturities of trading investments of $63.0 million, income tax liabilities of $13.4 million, deferred taxes of $8.6 million, accounts payable, accrued expenses and other liabilities of $7.9 million and depreciation and amortization of $6.3 million. These increases in cash provided were offset by ~~increases of $165.9 million~~a decrease in the change in net receivables from broker-dealers, clearing organizations and customers associated with our ~~self-clearing conversion and $4.8~~clearing activities of $47.9 million.

~~The $118.4 million increase~~decrease in net cash ~~provided by~~flows from investing activities was primarily due to ~~an increase~~a decrease in net sales of available-for-sale investments of ~~$130.6~~$137.8 million, ~~offset by~~ an increase in ~~capital expenditures~~net cash used in acquisitions of ~~$11.6~~$16.6 million and an increase in capitalization of software costs and purchases of furniture, equipment and leasehold improvements of $5.1 million.

The ~~$31.3~~$2.2 million increase in net cash (used in) financing activities was principally due to increases in cash dividends paid on common stock of $6.9 million and repurchases of common stock of $2.7 million, offset by an increase in exercises of stock options of $6.2 million and a decrease in withholding tax payments on restricted stock vesting and stock option exercises of ~~$16.3 million, cash dividends paid on common stock of $10.9 million and repurchases of common stock of $4.0~~$1.2 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.

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 liquidity requirements associated with our self-clearing operations and 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 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 30, ~~2020,~~2021, 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 30, ~~2020,~~2021, our subsidiaries maintained aggregate net capital and financial resources that were ~~$305.6~~$577.3 million in excess of the required levels of ~~$23.7~~$23.2 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 30, ~~2020,~~2021, the amount of unrestricted cash held by our non-U.S. subsidiaries was ~~$146.3~~$125.0 million.

We execute bond transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. ~~In August 2020, one~~One of our U.S. broker-dealer subsidiaries ~~converted to~~operates under a self-clearing model for the settlement of such transactions. Our other U.S. and U.K subsidiaries ~~continue to~~ settle their transactions through third-party clearing ~~brokers.~~brokers or settlement agents. 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. Under both the self-clearing and the third-party clearing ~~broker~~ models, 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 or other~~an 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 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 counterparty failures for the nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

In the normal course of business, we enter into contracts that contain a variety of representations, warranties and 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 2019, ~~our~~the Board of Directors authorized a two-year share repurchase program for up to $100.0 million that commenced in April ~~2019.~~2019 and expired on March 31, 2021. In January 2021, the Board of Directors authorized a new share repurchase program for up to $100.0 million that commenced on April 1, 2021. Shares repurchased under ~~the~~each program will be held in treasury for future use.

In October ~~2020,~~2021, our Board of Directors approved a quarterly cash dividend of ~~$0.60~~$0.66 per share payable on November ~~25, 2020~~17, 2021 to stockholders of record as of the close of business on November ~~11, 2020.~~3, 2021. 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.

~~In September~~On November 30, 2020 we ~~entered into agreements to acquire~~acquired Regulatory Services GmbH, the pan-European regulatory reporting business of Deutsche Börse ~~Group,~~Group. The purchase price consists of $22.5 million in cash paid at closing and up to $24.6 million in contingent consideration payable in cash within 18 months of the closing. On April 9, 2021 we acquired MuniBrokers LLC, a central electronic venue serving municipal bond ~~inter-dealer~~ brokers and dealers. ~~Both acquisitions are expected to close in the fourth quarter of 2020, subject to the satisfaction of customary closing conditions~~. The ~~aggregate~~ purchase price ~~for the two transactions is approximately $88.0~~consists of $17.1 million in cash ~~plus transaction costs, with $39.0 million in the aggregate payable in connection with the respective closings~~paid at closing and up to ~~$48.0~~$25.0 million ~~in the aggregate~~ in contingent consideration payable in cash within ~~18 months to three~~approximately two years of the ~~closings. The aggregate purchase price for the two transactions is expected to be funded from available cash on hand.~~closing.

In addition to reporting financial results in accordance with GAAP, we use certain non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow (“FCF”). ~~We define~~As a result of our conversion to self-clearing in the third quarter of 2020, we redefined FCF as cash flow from operating activities excluding the net change in trading investments and net change in securities failed-to-deliver and securities failed-to-receive from broker-dealers, clearing organizations and customers, ~~(added to FCF as a result of our self-clearing conversion),~~ less expenditures for furniture, equipment and leasehold improvements and capitalized software development costs. We believe these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in understanding our operating results. EBITDA and FCF are not measures of financial performance or liquidity under GAAP and therefore should not be considered an 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 operations and business trends and the cash flow 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 FCF:

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 30, ~~2020,~~2021, we had the following contractual obligations and commitments:

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 30, ~~2020,~~2021, the notional value of the only foreign currency forward contract outstanding was ~~$157.2~~$198.3 million and the fair value of the ~~liability~~asset was ~~$1.9~~$1.8 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 30, ~~2020,~~2021, we had ~~$23.2~~$25.0 million of investments ~~which were invested~~ in ~~corporate bonds~~U.S Treasuries that were classified as 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 30, ~~2020,~~2021, our cash and cash equivalents and investments amounted to ~~$341.6~~$468.5 million. A hypothetical 100 basis point ~~decrease~~increase in interest rates would ~~decrease~~increase our ~~investment~~interest income by approximately ~~$3.3~~$4.7 million, assuming no change in the amount or composition of our cash and cash equivalents.

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 $0.1 million. The hypothetical unrealized gain (loss) of $0.1 million would be recognized in other, 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 30, ~~2020,~~2021, approximately ~~13.0%~~16.3% of our revenue and ~~26.3%~~31.0% 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 ~~$8.4~~$11.5 million and operating expenses by approximately ~~$7.4~~$10.7 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 30, ~~2020,~~2021, the fair value of the notional amount of our foreign currency forward contract was ~~$159.1~~$196.5 million. We do not speculate in any derivative instruments.

Through certain of our subsidiaries, we execute bond transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. ~~In August 2020, one~~One of our U.S. broker-dealer subsidiaries ~~converted to~~operates under a self-clearing model for the settlement of such transactions. Our other U.S. and U.K subsidiaries ~~continue to~~ settle their transactions through third-party clearing ~~brokers.~~brokers or settlement agents. 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 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, procedures and automated controls in place to identify and manage our credit risk. There can be no assurance that these policies, procedures and automated controls will effectively mitigate our credit risk exposure. Some of our risk management procedures are reliant upon the evaluation of information regarding the ~~fixed- income~~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 ~~two~~three major global banks. Given this concentration, we are exposed to certain credit risk in relation to our deposits at these banks.

(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 30, ~~2020.~~2021. 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 third quarter.

In August 2020, one of our U.S. broker-dealer subsidiaries converted to a self-clearing model for the bond transactions we execute between our institutional investor and broker-dealer clients on a matched principal basis where we serve as a counterparty to both the buyer and the seller. Previously, the transactions were settled through a third-party clearing broker. The self-clearing conversion represents a material change in internal control over financial reporting since management’s last assessment, which was completed as of June 30, 2020.

There were no ~~other~~ 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 30, ~~2020~~2021 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. 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.See Note 13 to the Consolidated Financial Statements for a discussion of our commitments and contingencies.

~~With the exception of the following items, there~~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, ~~2019.~~2020. For a discussion of the risk factors affecting the Company, see “Risk Factors” in Part I, Item 1A of our ~~2019~~2020 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.

~~Self-clearing exposes us to significant operational, financial and liquidity risks~~

We began self-clearing substantially all of our bond transactions for our U.S. operations in the third quarter of 2020 and we may expand self-clearing to our foreign operations in the future. Self-clearing requires us to finance transactions and maintain margin deposits at clearing organizations. Self-clearing exposes our business to operational risks, including business and technology disruption, operational inefficiencies, liquidity and financing risks, regulatory risks and potentially increased expenses. In connection with our conversion to self-clearing for our U.S. operations in 2020, we experienced operational inefficiencies and technology issues which, in combination with the capital and liquidity requirements that are imposed on all new self-clearing members, resulted in increased fail rates in the immediate period following the conversion. In the future, we may encounter difficulties with self-clearing that lead to operating inefficiencies, technology issues, dissatisfaction amongst our client base, disruption in the infrastructure that supports the business, inadequate liquidity, increased margin requirements with clearing organizations and third-party settlement agents who provide financing with respect to transactions, reductions in available borrowing capacity and financial loss. Any such delay, disruption, expense or failure could adversely affect our ability to effect transactions and manage our exposure to risk. Moreover, any of these events could have a material adverse effect on our business, financial condition and operating results.

During the quarter ended September 30, ~~2020,~~2021, we repurchased the following shares of common stock:

During the three months ended September 30, ~~2020,~~2021, we repurchased ~~33,179~~9,420 shares of common stock. The repurchases included ~~8,748~~9,189 shares repurchased in connection with our share repurchase program and ~~24,431~~231 shares surrendered by employees to us to satisfy the withholding tax obligations upon the exercise of stock options and vesting of restricted shares.

OnIn January 30 2019, ~~we announced that our~~the Board of Directors authorized a two-year share repurchase program for up to $100.0 million ~~of our common stock~~ that commenced in April 2019 and ~~will expire~~expired on March 31, 2021. In January 2021, the Board of Directors authorized a new share repurchase program for up to $100.0 million that commenced on April 1, 2021. Shares repurchased under ~~the~~each 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.)

55 Hudson Yards, 15th FloorNew York, New York		10001
(Address of principal executive offices)		(Zip Code)


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐		~~Smaller reporting company~~	☐
~~Emerging growth company~~	☐


		Page
PART I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Financial Condition as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	45
PART II — Other Information
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4746
Item 3.	Defaults Upon Senior Securities	4746
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	48
Item 6.	Exhibits	48


	As of						As of
	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
	(In thousands, except share and per share amounts)						(In thousands, except share and per share amounts)
ASSETS
Cash and cash equivalents	$	310,368		$	270,124		$	432,715		$	460,858
Cash segregated under federal regulations		50,033			—			50,134			50,059
Investments, at fair value		31,274			230,477			35,767			28,111
Accounts receivable, net of allowance of $166 and $57 as of September 30, 2020 and December 31, 2019, respectively		81,706			62,017
Accounts receivable, net of allowance of $82 and $163 as of September 30, 2021 and December 31, 2020, respectively								67,766			79,577
Receivables from broker-dealers, clearing organizations and customers		380,853			—			551,841			279,915
Goodwill		147,388			146,861			154,789			147,388
Intangible assets, net of accumulated amortization		58,873			60,986			119,797			95,354
Furniture, equipment, leasehold improvements and capitalized software, net of accumulated depreciation and amortization		82,074			71,795			95,575			85,204
Operating lease right-of-use assets		76,692			81,399			72,586			75,924
Prepaid expenses and other assets		26,191			30,770			30,948			29,039
Deferred tax assets, net		52			501
Total assets	$	1,245,504		$	954,930		$	1,611,918		$	1,331,429

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued employee compensation	$	50,926		$	47,365		$	49,046		$	62,326
Payables to broker-dealers, clearing organizations and customers		138,120			—			303,439			133,326
Income and other tax liabilities		34,822			16,690			44,871			42,750
Deferred revenue		5,092			3,499
Accounts payable, accrued expenses and other liabilities		25,297			19,294			69,300			44,354
Operating lease liabilities		93,708			97,991			89,963			93,612
Total liabilities		347,965			184,839			556,619			376,368

Commitments and Contingencies (Note 13)

Stockholders' equity
Preferred stock, $0.001 par value, 4,855,000 shares authorized, 0 shares issued and outstanding as of September 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 September 30, 2020 and December 31, 2019		—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized, 40,809,252 shares and 40,746,593 shares issued and 37,964,882 shares and 37,935,984 shares outstanding as of September 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 September 30, 2020 and December 31, 2019		—			—
Preferred stock, $0.001 par value, 4,855,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020								—			—
Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020								—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized, 40,907,339 shares and 40,851,100 shares issued and 38,026,483 shares and 38,005,330 shares outstanding as of September 30, 2021 and December 31, 2020, respectively								123			123
Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020								—			—
Additional paid-in capital		327,646			342,541			323,631			329,742
Treasury stock - Common stock voting, at cost, 2,844,370 and 2,810,609 shares as of September 30, 2020 and December 31, 2019, respectively		(168,841	)		(153,388	)
Treasury stock - Common stock voting, at cost, 2,880,856 and 2,845,770 shares as of September 30, 2021 and December 31, 2020, respectively								(187,715	)		(169,523	)
Retained earnings		749,211			591,086			929,853			799,369
Accumulated other comprehensive loss		(10,599	)		(10,270	)		(10,593	)		(4,650	)
Total stockholders' equity		897,539			770,091			1,055,299			955,061
Total liabilities and stockholders' equity	$	1,245,504		$	954,930		$	1,611,918		$	1,331,429


	September 30, 2021		December 31, 2020
Receivables from broker-dealers, clearing organizations and customers:	(In thousands)
Securities failed-to-deliver - broker-dealers	$	216,916	$	93,294
Securities failed-to-deliver - customers		250,016		87,685
Deposits with clearing organizations and broker-dealers		80,862		97,043
Other		4,047		1,893
Total	$	551,841	$	279,915

Payables to broker-dealers, clearing organizations and customers:
Securities failed-to-receive - broker-dealers		184,755		70,917
Securities failed-to-receive - customers		110,930		60,784
Other		7,754		1,625
Total	$	303,439	$	133,326


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	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
	(In thousands)
As of September 30, 2020
Corporate debt	$	—	$	—		$	—	$	—		$	—	$	—

As of December 31, 2019
Corporate debt	$	27,999	$	(18	)	$	4,406	$	(1	)	$	32,405	$	(19	)

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

	September 30, 2020							December 31, 2019
	Cost		Accumulated amortization			Net carrying amount		Cost		Accumulated amortization			Net carrying amount
	(In thousands)
Technology	$	5,770	$	(5,770	)	$	—	$	5,770	$	(5,770	)	$	—
Customer relationships		64,326		(5,481	)		58,845		64,332		(3,451	)		60,881
Non-competition agreements		380		(380	)		-		380		(380	)		-
Tradenames		400		(372	)		28		490		(385	)		105
Total	$	70,876	$	(12,003	)		58,873	$	70,972	$	(9,986	)	$	60,986


	As of
Lease Term and Discount Rate	September 30, 2021			December 31, 2020
Weighted average remaining lease term (in years)		11.6			12.3
Weighted average discount rate		5.9	%		5.9	%

	(In thousands)
Remainder of 2020	$	2,417
2021		11,979
			(In thousands)
Remainder of 2021			$	3,049
2022		10,328		11,031
2023		10,083		10,790
2024		10,750		11,252
2025 and thereafter		89,546
2025				11,079
2026 and thereafter				79,031
Total lease payments		135,103		126,232
Less: interest		41,395		36,269
Operating lease liabilities	$	93,708	$	89,963


	Statement of Financial Condition Location	September 30, 2021		December 31, 2020
		(In thousands)
Cash and cash equivalents	Cash and cash equivalents	$	432,715	$	460,858
Cash segregated for regulatory purposes	Cash segregated under federal regulations		50,134		50,059
Deposits with clearing organizations and broker-dealers	Receivables from broker-dealers, clearing organizations and customers		80,862		97,043
Other deposits	Prepaid expenses and other assets		90		90
Total		$	563,801	$	608,050


	•	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.


	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	$	135,103	$	2,417	$	22,307	$	20,833	$	89,546	$	126,232	$	3,049	$	21,821	$	22,331	$	79,031
Foreign currency forward contract		159,127		159,127		—		—		—		196,486		196,486		—		—		—
	$	294,230	$	161,544	$	22,307	$	20,833	$	89,546	$	322,718	$	199,535	$	21,821	$	22,331	$	79,031

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
							(In thousands)
July 1, 2020 - July 31, 2020		24,908	$	520.18		600	$	76,342
August 1, 2020 - August 31, 2020		3,123		493.15		3,000		74,861
September 1, 2020 - September 30, 2020		5,148		463.40		5,148		72,476
Total		33,179	$	467.06		8,748


Number		Description
10.1		Severance Protection Agreement, dated as of ~~July 31, 2020,~~August 12, 2021, by and between MarketAxess Holdings Inc. and ~~Tony Delise~~Christopher N. Gerosa (incorporated by reference to Exhibit 10.1 to the ~~Company’s~~registrant's Current Report on Form 8-K ~~filed on~~dated August ~~4, 2020)~~12, 2021)#
10.2		~~Severance Protection~~Credit Agreement, dated as of ~~July 31, 2020, by and between MarketAxess and Scott Pintoff (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 4, 2020)~~
~~10.3~~		Severance Protection Agreement, dated as of July 31, 2020, by and between MarketAxess and Kevin McPherson (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 4, 2020)
~~10.4~~		Severance Protection Agreement, dated as of July 31, 2020, by and between MarketAxess and Nick Themelis (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 4, 2020)
~~10.5~~		MarketAxess Europe Limited Severance Protection Agreement, dated as of July 31, 2020, by and between MarketAxess Europe and Christophe Roupie (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on August 4, 2020)
10.6*		~~Third Amendment, dated as of August 19, 2020, to Amended and Restated Credit Agreement by and~~October 15, 2021, among MarketAxess ~~Holdings.~~Holdings Inc., ~~the other loan parties party thereto,~~ the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated October 20, 2021)
10.731.1		Fourth Amendment, dated October 8, 2020, to Amended and Restated Credit Agreement by and among MarketAxess Holdings Inc., the other loan parties party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent
31.1*		Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
104		The cover page from the Company’s Quarterly report on Form 10-Q for the quarter ended September 30, ~~2020~~2021 has been formatted in Inline XBRL and is included in Exhibits 101.

*	~~Filed herewith.~~
*	Filed herewith.
#		Management contract or compensatory plan or agreement.

	~~MARKETAXESS HOLDINGS INC.~~

	MARKETAXESS HOLDINGS INC.

Date: October ~~30, 2020~~26, 2021	By:	/s/ RICHARD M. MCVEY
		Richard M. McVey
		Chief Executive Officer
		(principal executive officer)

~~Date: October 30, 2020~~	~~By:~~	~~/s/ ANTONIO L. DELISE~~
Date: October 26, 2021	By:	~~Antonio L. DeLise~~/s/ CHRISTOPHER N. GEROSA
		~~Chief Financial Officer~~Christopher N. Gerosa
		Chief Financial Officer
		(principal financial and accounting officer)