MKTX - Earnings call transcript Q3 2017 | MarketAxess Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, October 25th, 2017. I would now like to turn the call over to Dave Cresci, Investor Relations Manager at MarketAxess. sir. ahead, go Please

Dave Cresci

welcome MarketAxess and Conference Quarter Call. to morning, Third the XXXX Good

Rick Chief results. provide Chairman review the will then, McVey, For call, Financial Chief and in businesses. for Officer quarter, Tony DeLise, trends the the the Executive and on will financial update review our And highlights will Officer

their represent that may include by forward-looking Before I to are over events call call nature belief Rick, let future These what forward-looking Company’s today’s and statements the indicated The turn the me Company’s regarding statements. remind differ in those actual you condition financial uncertain. statements. is materially that, results from may

XXXX. forward-looking risk the some Company’s Annual which Report factors and could December of of web the and on risks to also on earnings affect statement issued Form discussion our disclaimer would XX-K is earlier future XXst, factors you see the release, please for our this that morning quarterly of available in was For direct results, read I year-ended our now in the site. descriptions the

the me Now, turn let to over call Rick.

Rick McVey

And, joining thank you the for Quarter Call. morning. us Earnings Good Third for

in Our reflects morning report solid trading a earnings remained environment challenging. quarter this a

and to XX%. up regulatory to $XX.X a up ongoing a of year-over-year. were with in volumes EPS XX% our investments to billion client for trading of experienced emerging increase record our up expenses of Expenses to was trading global quarter $XX Third new quarter $XX and XX% million. quarter this related momentum volume were in International Revenues Diluted third business Open up X% $XXX increased X% client participation. billion, XX% changes. area set trading $X.XX the due by were market continued volume. product in

volumes spread the increased very inflows continue and continue TRACE XX%. investors due trend to quarter scares to for believe demand business these coupled In market Like trading credit of performed quarter. In volatility global lower like for down four in has The were conditions. relative and investor alternative levels. TRACE update XX.X% share yield. well low from historically market the our our for makers high-grade high-yield players, for in fund segments relatively market business. estimated important to volatility quarter while business. high-grade Slide value X%. Overall lack third participants market credit strong provides trading fewer with be Third an conditions we U.S. trading flat to remained led environment at high-yield on during low U.S. market very difficult volatility market market the high-yield QX client credit create spreads both were chasing year-on-year, to opportunities volumes other TRACE EPS our

quarter. strong price, same the trading $XX completed when we bond real-time corporate the remained for transaction new transaction issue investor increase compared Liquidity Liquidity platform period year. quarter. from of $XX points makers price all or the trading Open approximately up estimated in providers were XXX,XXX takers in are average trading initiated transactions last the completed of costs from Participants volume a usage. from XXXX. quarter, to through third trading price trades QX through a daily XXX,XXX high with XX% XX% drove in efforts open in on on Approximately the XX% responses the savings issuance demand midmarket to trading. quarter open up new protocols. open Dealer billion system. open an third issuers activity The Open savings yield Slide our transaction on volatility of reached third average they five estimated issue market X.X an becoming low refund yields. increases historically and in trade bonds, high-grade calendar. the focus provides the update as increase dealers distribution U.S. corporate balance volumes low of costs. in strong million When trading combination New at achieving in and open were saved high and on their trading a basis believe new benefited velocity cost increasingly similar to channel the reduce is composite transaction sheet an XX% important liquidity volume providers for in open in

number for of international dealers the Our volume, and by driven market the quarter, up increase local XX% Slide of clients in accounted progress. market clients active an up to especially six U.S. up an markets emerging during client XX%. firms four XX% active open to growth XXX International over EM XX% bonds. EM an had In XX% firms. of We tool trading was dealers activity and operating of vast third update products to open international core continue volume, U.S. the investors volume of volumes network trading provide additive quarter. show the trading with trading Overall quarter. and volume. provides approximately during volumes Emerging a was our year-over-year XX% All high-grade in move high-yield our were XX% XXX liquidity on clients. strong globally were solid

EM are conditions. we benign spite We the of in by in encouraged momentum see market

continued been in regulatory and to meeting reporting. tracks to their trade publishing MarketAxess as FCA ARM on MiFID support transaction schedule are have results reached APA by [indiscernible] approval for milestones II MarketAxess and preparations our for multiple the obligations. clients granted has operators Our the providing for regulatory Asia prior U.K. in in a by the we are approved Singapore also demand trading demonstrates our of but in RMO. in II clients Authority clients MiFID an addresses the new platform needs recently implementation. that meets as with a Monetary by to structure of to region, our operate normally This invest

reporting, trading greater We drive solutions. market electronic obligations for and transparency, execution best data MiFID expect II the demand and to

upcoming all changes. areas We significant regulatory clients have made three investments our with help in to the

more on for detail Tony to our financial over call the me let results. Now

Tony DeLise

our turn categories. across product summary Thank for to volume trading Rick. Please you, Slide of a X

increased up U.S. while year-over-year. our continued volume market quarter, of were primarily in over than in with estimated spite up the trading high-grade been growth has emerging $X year. volumes pattern $XXX XX% average a Global high-yield, quarters X%, increase X% There category volumes environment. estimated market, growth to X% were trading billion the and global passed other in fairly three for was in aggregate volumes the in share. consistent credit $XXX markets Eurobonds. lower strong Eurobond market and on platform up emerging lackluster year-over- high-yield down market billion year-to-date due Volumes year-over-year for trillion on in Our an basis, the past a

municipal like For of in and high-grade trading. platform trade U.S. the Micro the trading in $X exceeded was in news cap the first bonds volume time quarter bonds. Recent Lot on open the trading through billion over XX%

five Our the trading market in Lot volume and share past years. significantly grown Micro over has

early volume quarter. in overall was the to quarter trading tracking estimated and five volume. increase by Quarterly APS share daily side average Our XX% reflects month, tax revenue. the excess income half of commission effective and Xst, high up compared under accounting it’s full the tracking taxes. X, revenue rate $X.X volume the now were XX% by range. speculate the The in X% Corporate reduction data before XX%. of trade trading the yield aggregate days third year increase With million are deductions quarter Federal a business tax budget, on up, The end for to consistent of earnings retail summary trending and approximately the all by tax tax we towards XXX,XXX relating third a XXXX is approximately and the the X% rate standard post-trade Income similar by levels. to increased and fairly third would overall XX% earnings is that Operating too Well, $X.XX below revenue to share-based market was Tax effective year-over-year heated compensation and in XXXX. guidance XX% lower XX% estimate effective reform X% U.S. of point in X% EPS Information services to quarterly tax market mix. provided slide new drop revenue increase driven with rate overall and the our and are while in at consecutively effective January important high-grade level remaining to The trading platforms We our On and performance. leading higher point. Rate of expenses outcome adopted the trading discussions XX% were growth it’s XX% share around

a was quarter. by U.S. on of increase The on up stable shift commission X% roughly sequential much a up size diluted $X.XX bonds high-grade very our count X, share Slide bucket X% the million volumes trading diluted was per out half $X million. the a make volume for fee increase fees Total platform. percentage as our high-yield to new we’ve capture to Our variable shares. did the our of maybe traded in in volume per and plan. million XX of on and sure years transaction tiered the fees laid a in over due fee year revenue, basis On in impact the offset trading second was were year-over-year quarter EPS mix

on Our was category basis. other credit the down sequential $XX fee capture

among In from addition only capture protocol. mix and to resulting the fee products and fee typical swings was

all implementation we the the high-yield roughly implemented impact effective Xst. other The distribution new credit this fees. also third million participating trading distribution time monthly plan structure has August million $X.X been fee XX have to in amounts million variable post transaction dealers quarter per which reflects At for the fee in fee bond per of fee the high-yield And, $XXX.

XX higher be Slide expenses expense of expenses you original quarter up from plan tracking fourth initiatives $XXX the compensation increased as guidance variance expected distribution year third end Overall land our XXth, expenses. expect expense regulatory half in XXXX guidance approximately the were months up range, midpoint lower $XXX in variable We X% trailing with non-recurring balance the and higher headcount advertising year cost the of range to by September original quarter. expenses provide XX, by and information. we majority associated anticipated is and investments, decrease million. embraced, $XXX of $X.X and various of incentive XX than million and Slide with Sequentially full lower year-to-date a level. is to approximately flow On million marketing to of from X% compensation. The close detail. related consulting loan a our provides the versus our September $XXX sheet than are free results XXXX offset with fee million mainly as cash XX fee million. to and of were lease Tax were

approved board dividend In cost of repurchase Xnd. $XX new existing results, a grants. from primary million shares the at under we was the plan, dividend. $.XX of began quarter with terminated new and million. quarterly new During our prior on million Consistent employee repurchase share program program is our the Facing offset quarterly $XX third also the pay a October quarter equity the cash XX,XXX repurchased and September, $XXX the the Repurchases of program. intention has regular board approved a dilution program to

Now closing call let me the Rick to for comments. some back turn

Rick McVey

Tony. many seeing in pleased you, our of extremely Thank trading growth we with difficult are conditions, are business. In aspects the of spite we

are technology meet our our for ever opportunity trading position large trading been never solutions remains to We more and investing regulatory future than and their in credit stronger. in markets needs. has competitive electronic clients The for

to be for happy would open line your the I questions. Now

Operator

Raymond the comes James. line [Operator our Patrick of Instructions] from from O'Shaughnessy And, question first

Your open. line is

Patrick O'Shaughnessy

good Hey, morning guys.

Rick McVey

Patrick. morning Good

Tony DeLise

Good morning.

Patrick O'Shaughnessy

from So, BondPoint acquired in competitive is do would BondDesk XXXX? for threat you ICE we with see that there How at in to the do future? pose evaluate when news ICE point million. the of difference And, some $XXX Tradeweb any yesterday’s selling

Rick McVey

that institutional Patrick. and institutional Today Tradeweb remained operate the segment where ago business into our see as largely acquisition an BondDesk retail intersection apart has business the don’t we to without dynamic. from really largely changes four-five much retail any to that of day years we business of the this example that business. Thanks, And, and separate remains

accomplish to team that great respect what the for acquisition. are we and have been they have ISE Japanese sure and We they’ve about been thoughtful able at

been with growing in trade in thought calculation variety we of and a three been active things view our coming at and those MarketAxess And, a greater the very of continue it’s opportunities market we System. participants. today. are vast in think them advisors the now where under But really the sit aggregate. here brokerage other known key in market in segment is that I Tony providing we Micro marketplace, are XXX already little that And, is retail responses the retail retail there providers prices for that’s we has the well see providers the an and of increasing to liquidity believe our $XXX,XXX finding a we part in with successful Lot bit of today, systems component And, liquidity retail phase share from to different very opposed to driving one probably our liquidity, would through market process firms platform of and comfortable assets the all need are market we to available presence and retail it queue is The And, business what from of for our of the given in the reasons takers, to liquidity in rapidly is And, of when very less a was boundaries, that for have network the we of as very that as we on retail that System. streaming so institutional make our do a and us. are order comfortable on beauty pointed flow on on technology. with sizes. wealth than share in time change our participants active clients that and there the trade our have we retail is effort the all feel that are focused look increasing trading and sizes no create more and been growing MarketAxess ATS long are that a

Patrick O'Shaughnessy

this And, competition with aggressive thanks, strategy helpful. entered new look more everything somebody do pricing concern a would can trading that, hey, concern it’s there would, then kind of what you had us right, would would in it very would were somebody protocols, it I the different say, that. we institutional you really that anything is past? there follow to in If to as we��ve somebody see seen and space, if an be the more, up from - All guess, out

Rick McVey

to I that credit investment providers think building with there you protocols following space. to rates picked pricing strongest sign third all think that institutional we’ve we growth be but the and And, we that our zero some were I case anyone up investing, is the I we’re data not be our were we variety Patrick as I entrance in through wide past, think pricing enormous us new in lead. to time know, on various to Well, of you’ve the what continue our is technology has reality based that space demonstrates are come in seen standing The that with but cases, seen very liquidity and seen protocols by during what them be quarter competitors platform of a we’ve mistake. maintain that new that come that margin. years, have schedules of if changing, the building of we’ve And, what still share our in clients an no network would we lot trading XX is the more come in heavy we broadest is proven investing platform new relevant done made extending a than system to and for again competitive worry including E-trading a our the we think the and many markets on And, in been hoping approaches, it the years new to investors. has difficult for with

very add me lead. investment add heavily continue systems, segments, to data to And, so are trade in client to competitive clients. add to to importantly continue products continue gives protocols. continue we for new what trading to include, we investing And, me our can is tool extend new that we we we So, we our confidence, our

Patrick O'Shaughnessy

All back jump right, queue. very thanks in I’ll much. the

Operator

our from Fitzgerald Thank line from Sachs. comes of question you. And, next the Conor Goldman

Your line open. is

Rick McVey

Good morning.

Conor Fitzgerald

look I part guess, the was matrix of that the on up thought about two maybe again. BondPoint deal talk you on of at some Can the bay? an to appreciate made to on go different, keep comments matrix those have want opportunity of the M&A when for sense And, that. just you a it deal could on competitor broadly? beyond given, little this then discuss kind been scenario you your where more some process circle consider specifically just And, I your to I at a to

Rick McVey

Well happy to sure, I’m those. answer of both

to the are in under they sizes any of add to today. or product MarketAxess think really important platform clients acquisitions I new those retail clients didn’t our would mentioned as the interested of have we very share This trade capabilities already the XXX,XXX System and new largest we going expect, as or do I are geographies. you deal on are an

can in achieve But XX So, from very or in a our in a bit accretion accretion modest much add on a playing shareholders we our here, think for in is calculation organically, full investing in one to shareholders technology case by focused at past we this better where have think game that earnings now. we And, about was X sales the terms long lower more a of very our earnings cost. years are we we this we this be want much as a in price. for

or beneficial to open wide are be acquisitions we we that that something is interested would very are anything to our products shareholders that We clients - would trading systems to our and in. add really continue to technology be

trading services and are the to don’t valuable trade in ourselves analytics, we restrict past, us. also we acquisition As to post mentioned dealer, data

So, look are we potential kind about think things those the that of I acquisitions. at think we as

Conor Fitzgerald

building on now thoughts trading updated the your market? your get to want just BondPoint off then own the And, Thanks. platform, helpful. retail That’s

Rick McVey

RFQ place a and into we more we directly $XXX,XXX of is attraction segment a we the in lots and than which had put the that in on sales institutional are trade of most protocol clients have focus firms competitive takes larger anyone we’re bit happy under is lot gaining part an an advantage our the wealth I of Well, why and wide our the participants on to world the together and pretty share of to MarketAxess, largest price is is and businesses highly trade under that’s a because increasingly to sure, use retail confidence a more to the on retail. margin. a retail stage best retail else What the now important the expand effort. convert focused the of and what take opportunity which but to for continue ATS terms to our why we And, is you amount liquidity to in focused price tremendous a have is change said, places add straightforward above would We’ve convincing in the the for that organic market system. in specific that an business. numbers, MarketAxess share reason And, of that been as retail is with we that have retail am providers space do micro compete XXX,XXX like we see by need highly I brokerage this advisors daily an more competitive pricing

Conor Fitzgerald

M&A very position come potential off Got balance always opportunities changing rich, that can operated partly Thanks. time-to-time, one sheet the been for Tony and I you’ve a that’s sheet, on And, it, cash clean any leverage from think because opportunities just helpful. on that’s [indiscernible]? thoughts now you your with balance then one

Tony Delise

us like around dividend. around there having really the free act, if we in strong thought with activity around or in balance flow it capital around We’ve thought about change X/X always returns the no the the been repurchases, what opportunistically no of targeting doing had M&A of share philosophy earnings. we are in is the out operating sheet, Really the change opportunity a pay the cash flexibility, some to gives around, we’ve sheet, balance the

increase repurchase XXX% having had we dividend repurchase in side on like are TRACE, in for increase increased delusion now [ph] XXXX cash the we that pace the since from have it going earnings kept offsets stated stay we’ve a to a flow. launched And, the and has in and the with policies we free been, on it We place that. course repurchase repurchase equity plan that plan primary right in

have change right there flow plans, if it’s But to today us event we have right have policy on an yes, to leverage put but something status it no unusual to jump amount it’s on but made think now, that now, been do on, do would balance have flexibility we to I sheet. a would So, the retail and the we the balance leverage - in have little have been of sheet, wouldn’t a would an leverage really space that. was that the on and the bit capital the bit add

Rick McVey

for my Thanks taking questions.

Operator

question from Chris Thank line you. of comes the And, next our Blair. Shutler William from

Your is open. line

Chris Shutler

markets now I’m high-grade right open trading the know tough how about guess or are guys, a interested Hey I I just in environments for of morning. market now slowed XX% has trading been of particularly that of open good total open as percentage has trading but talk think four volume? the high-grade you quarters, consecutive - of ratio volatility, On so impacts very and why volume

Rick McVey

of to trading sources are that market show right market move liquidity. But in to going add to from open with for is in trading, is growing bonds alternative for the environment participation doubt the trading, an of looking we both numbers U.S. we’re has there dealers valuable as and but with that impact the being those an the that overall that for the participation business. happy see market are is especially of as continue for source And, a growth to we when in we way out We is was we very I business heavily normal future one conditions looking we in open does time the think grow on terms when environment our investors change. open credit value And, this investors think it dealing see where are rates for now. to when environment its our secondary and liquidity from market the a clients investors two really no well way far extremely both positioning in dealers an

Chris Shutler

you sense Okay, and the talked the can occurring or lower, an year And, that know in what the I MiFID on at can revenue any higher may about changes everything, opportunity how and a guys maybe expenses; this or just, great. then you sense? then point, perspective what this from be but benefit, perspective you global you next broad and regulatory talked to quantify you’re quantify year any

Tony DeLise

Yes, Chris, revenue we’ll the Rick bit I’ll you a have and on cover some give sense on little expense side side. the then

to we’ve additional recurring, is it but new quarter venues to are them technology this particular, an and of hit are become we to somewhere recur, to We the period, trading consulting register things that incurred this around quarter II this as that. piece the professional costs related, expenses MiFID addition and it’s you there landscape saw and quarter the year-over-year in do can increase you third expense evolving have also to majority start quarter, capitalized the goes from will second the year, the that’s you more line, this uplift and need million the and see regulation only on line, embraced $X.X another what those will are expenses but we had of here, non in not some a of that costs the establishing - we across of jurisdictions recur, these that has globe, to And, clients over majority what that APA real and some and an you’re some in MiFID live, changes capitalized third uplift of registered chunk year been but the expect recur. is more has that Arm additional of in this like we that some we with year about was million-$X.X do meeting see of once II three occurring which the expenses consulting $X jurisdictions responding to to will well, in - all had planning the that item some changes, seeing will respond other professional the as expenses other that to amortizing the million

Rick McVey

I be advantage II, beginning of increase or for are primarily reporting benefit On well obligations reporting take in MiFID tractions, changes and January taking the option the advantage revenues anticipate to investors position first side the the status our do well from given the regulatory we course revenue through business of the next mechanism, Chris, the think clients place dealers and should we of reporting both will higher in of year. track

and regulated dealers transaction to critical II, data in rates and well lot signs grow that investors to the think specifically trading trading that and growth Secondly and think seeing finally and about costs regulated already our activity their venues, expect doing on are required really trade we European with growth trading from clients products is that MiFID to And, venues the are on world. a clearly advantage the and trading of that execution data of a generates our are analysis. built tracks on component products then we that data are of will in we more elsewhere our for and its side, clients currently trading would into volume as rates outpacing continue

products. adoption electronic regulatory our growing from our and benefit base increase think will revenue out a in we data So, all business reporting really from trading then of of three sides from of an from bigger we revenue coming

Chris Shutler

more the little quarter? one last so quarter today October that Tony, levels And, turning fee Okay, high-grade the high-grade the looks on is thanks. one QX from fee in bonds, like to a far rates tilted are down larger so capture it volumes little

Tony Delise

up picked category volume little and if capture are like with that tell granularity, you I third I’ll for this like be overall of fee plan that selected of you other high-yield as month-to-month just have set high-grade quarter. like, Chris providing larger going typically on trades are right it in look looks you remember didn’t defensive look sizes the that much we would thing the day-to-day at you, to thing As when one this capture, you credit the our the bit. at fee in full October, one level But trade forward looks fee is capture not month to you tell even a that we have about fee

down see would fee So, being go credit you equal, other you the to to often will capture fourth expect quarter.

they the to So, just of today’s and be is distribution transaction bit a and level cautious flip that don’t outline mildly of And, - be between actually know actually plan accreted. high-yield balance. you fees, variable volume cautious, is just I fees have

bit just a it’s to line capture which that of credit. fee sent So, another geography of

Chris Shutler

Okay. lot guys. a Thanks

Operator

And, question from the you. comes our Thank Voigt Kyle from line KBW. of next

is open. Your line

Kyle Voigt

Hi, good morning.

a could guess I outlined just you that on Just electronic in accelerate follow up verification the II, market. MiFID

verification letter to dynamic you then You understand potential risk? the believe trading market. could to II if to But I’m to you from that’s [ph] electronic in quarter just or or us its Europe accelerate ESMO in understand could this the - platforms drive saw Europe. going in away could in MiFID help MarketAxess other we business trying addressed

Rick McVey

Sure.

with does Our concern it. signs you onerous regulatory EU. client reporting will client so some the segments requirements operate not in that that the see environment to that the need choose that to within And, be already any II are of of are that is directly outside captured not MiFID

letters, are income the MiFID but never thousands for that II necessarily now have And, that would we possible changes our which reporting the view of our customers. had transactions a active make for cases. built into pretty that’s markets many investors burden is I clients working do are tracks hard institutional very so. or don’t avoid think European acceptance, can in working easiest that, that amount anyone it significant I that the think very trading within out, acknowledge the But of are any that for will point day I we region, is the set So, [ph] in is our a obligations PLs trade-by-trade that that fixed something reporting emerging seen to obligations within of we hard XX right to and client do to thing, is requirement European have think

Kyle Voigt

point lot including on II, I of more you U.S. the with of MiFID, one color some know going seeing U.S. in business what your having outpacing of Europe isolated growth, or U.S. is just discussions to Okay. business European these trying to but to this from the then, growth this the changing you’re at behaviors with I terms on regulations? in asset you adding - said really guess of MiFID And, view kind out entire the be these there managers a stay out of global are is

Rick McVey

I Europe. do that That’s it’s Europe, think now, adopt I But having managers areas now, in and unfortunately an view the with deal just just that’s area firm they focused we it’s they I standards if slightly question on to primary that. area component has and - an opinion the not run right for say directly think are grappling dealer and right is or about global global think asset we whole in it’s open right II the research. to the for are safe And, The a implication need portfolio beyond entire a every MiFID Europe? different portfolio

on involved requirements ready ripple MiFID II. the built Most with there that clients within So, of fulfill beyond new and activities requirements, into get all are as Europe is of were to new reporting a their that Europe. effect the comply best going set obligations the

Kyle Voigt

Okay.

one increases for by in in the the the is automated recent more and article written trading debt a there U.S. corporate of dealers regarding markets. Just me, journal ALGOS really

you what your past, wondering you just the if increased in seeing your I to hit in rates could that you overtime? and increased the impact are business, this adoption your mentioned think but platform be wondering could platform, opportunity by think is an just ALGOS this of in dealers

Rick McVey

positive is more the will the because that part electronic for significantly of we are sizes see that System have number clients the very increasing, is ALGOS price bonds. responses XXX,XXX We But is definitely is for in development of are it’s trades. increase corporate live in ticket - on And, corporate growing are the that of we’ve under success ALGOS we the most from the the fully trade activity that small that an MarketAxess bonds having those tick business competition and sizes and it’s I growth aware ALGOS an back are pricing that and think and on of small work seen investments. more more coming, the and that smaller

Kyle Voigt

Okay, thank you.

Operator

Sandler our Thank O'Neill. of comes the Repetto line next from question you. And, from Rich

open. is line Your

Rich Repetto

anyway. your don’t guys. likes Hi operator but Yes. me, I think

my has the Ricky other emerging that more growth and the question year-over-year. in high-yield So, But case about look a more certainly it’s markets, is, talked this credit you in probably Eurobonds that’s outpaced mix. recently if first lot

growth So, in markets like so that is insight in I bucket other off could, add if dropping on don’t bucket, to guess, what’s credit cause, there there any high-yield going between whether Eurobonds now any you you it’s quarter-over-quarter rates markets the different that and forth? the can emerging know emerging looks like, I

Rick McVey

growth is Rich not dropping the rate off? mean You slowing is your point is

Rich Repetto

Yes.

Rick McVey

growth rate is slowing? You the mean

Rich Repetto

Yes.

Rick McVey

in market we global I it not kind all next at the do are is go because to are because to platform trade and that think when be on where in credit community new board anything the volatility the going any any technology other you lowering MarketAxess great that question for on relative the local embracing coming credit exciting coming that no is growth I putting rates level boundaries, Latin in markets, benign, board a growth starts regions we’ve has on in think new These is you now especially the periods are when America. are arising spreads And, growth because now all when suggest in by not compare debt your big we that normally when can get in and is think right in good any of only I past to EM. expense the think do else Asia, by and nice overall to rate levels the clients where spreads, had external clients we EM the this together are great ability see Rich, and still reached is accrual to about world so as you flatter around when EM environments, this it’s the opportunity that look happen. they’re look market growth have and credit well transaction together with when each around I more place lower, efficiency the try rates in marketplace EM we spreads thing the companies not spread costs. mentioned the would was are single of only previous participants we I it’s to high at major our back wider as key market creating And, EM means. clients patch markets growth; doing, we cover the are exceptionally beginning reckoning is in trades, that it’s quarter in And, look our includes we share good. digits And, environment what takes we this going on, is currencies normal so you see you in growth move everything

the MarketAxess. are being markets a going of breadth the growth this term the great that So, is there we confidence that be area participation, of system, opportunity gives that client is activity long all to are on breadth the there, traded seeing, tremendous a us from

Rich Repetto

explained this lot have on I pointed retailer, you expect a you lot one lot the fact would you liquidity, the streaming given guess assume be your of BondPoint, and in a last That’s assume out fair, fair. you what a for have you of except coding question that’s customers, much your capabilities. match I that Rick, you have liquidity, would rates small of I way higher

is is, fast can do of how build have it you my it, capability, you and using could the I build question of the so guess, and investment BondPoint, question why that you and case a capital if streaming that’s been than forth? that, liquidity other like allocation if is have So, people the how fast or

Rick McVey

prioritization, you’re an it’s more trades. ever and for of credit before. right But client all Absolutely retail in when look right? about those you market in on to share look And, in under the of there us trades given inside adoption you the platform U.S. reason X% than segment technology our what the is is trade, about is yes, that modest total Rich, market retail it’s now clear changes will trades see you at the $XXX,XXX invest

market almost in you communities when X% space. retail market, these Furthermore, of D-to-D market retail to retail business, the trade look are you today ATS entirely look the XX% space So, and it’s and sizes makers firms at at you’re X% Trace we’ve the other, been retail the each if the is about focusing so on operating D-to-D with under down business the of brokerage $XXX,XXX volume. an the D-to-D trading in

So, has MarketAxess. larger building client and in our have because been that the so market trades, part our the liquidity been why institutional for is on of priorities and trading is for but under increasingly segment $XXX,XXX clients, MarketAxess retail good our an the investing and technology finding

that we can based are are those it’s based trading here that further. converting retail changes brokerage which us pricing trading and is even the is that participation we our what that used a and trade optimistic the to into firms of here price grow So, and segment were matter make rather

Rich Repetto

Okay. That’s Rick. helpful, Thank you.

Operator

a from follow Instructions] from [Operator James. Patrick Raymond O'Shaughnessy And, up we have question do

line open. Your is

Patrick O'Shaughnessy

gain Follow share. market trade much from makers much attend build Micro market ETF comes Yes. makers, share and managers up this smaller up with lots? of effort to of of been on how retail that market Lot in your wealth your How market some share and has function to the

Rick McVey

in for platform, those are always throughout that there many, a would and for platform platform participation bigger us of been is of today space much from for that the those two, key Lot the makers have former, is been the market small majority opportunities in venue sizes the that trade our an are or source getting the a has the trading traditional The because think I investors that on we a makers there say of involved it’s day trading increasingly conduct area retail the ETF the growth so retail market a important it tickets. makers. market liquidity cannot on last many over and Micro in year but been on institutional I

Patrick O'Shaughnessy

Obviously that their share I the done. Got could? question lower? are can days see the see it, to to and in they In more inclined be liquidity variable has providers and high-yield high-yield your early more provide conversations new market what now with still and then if liquidity pricing more do your going strategy costs space, one we

Rick McVey

well, yes, to on that model we them, and are in we answer I are is getting. scales think fee volume plan, a the that new get that’s the dealers the obviously roughly well And, liquidity it’s to for half of anecdotally our prior sense the includes to plan we the more that do the the fee embracing XX takers system for very where fee as feedback new high-yield because had fee variable change. clients to benefits been and major obviously is pleased

also and to trading, high-yield see trading are of difference it J ETF right the trading of ETF doesn’t with in or bonds, big around funds, Patrick is in business. quarter - that with the traditional at their the growth major and those that all doubt willing just significant but shares in on versus are mind limited trading activity, high-yield And, So, really are that support you anything we really share better that investors now the do our now. think this major in dealers, our in players high-yield look no to volatility model The will drive have high-yield. quite institutional the the share HYG, K, very a it’s the and story it’s is, you drop-offs just very high-yield, dealers all a are the opportunities see right you future and very active not fee in each here, significant if there can happier this that’s plan drop-off are major and funds, quarter

Patrick O'Shaughnessy

All Thank right, you. very helpful.

Operator

Thank a from William from question Shutler Chris And, up have Blair. you. follow do we

open. is line Your

Chris Shutler

pricing, share over quarters, trading, for the today, in how quick and the ones, year-over-year? then market share you the Two do taking give given market it’s real see the thanks in Eurobonds, guys, and but adjust the of that need small ups. us declines numbers Hey block any just follow can secondly couple changed you to last

Tony DeLise

around, call, recall concern various in Eurobond dealers raise there at second in Europe to market new some adjustments you in fee looked and were to Chris had with the on that some high-yield, September all that some the the we very did our earnings specific components. the actually specific our of some In if couple the probably and high-yield plan of elements revisit of components some make comments we quarter fees we in we’re consistent reduced side, So, fee U.S. had the

sort said changes, is We long just high-yield made also and made dominating tracks environment Rick now. is macro of but a some what changes so, landscape to we data had the the lot again see of right paper, those weren’t were on

the do these around it’s we changes have around to So, the that limited plan. they impact, but some specific of say components expect had that noise medium to hard

Rick McVey

back that, the that what of see I Just it broadly, now indicative European easing of in has a time going on ECB U.S. Euros. than on over quantitative and think included follow-up on are what’s you the credits spreads in business are is Chris the is last at that XX months and investors and corporate purchases, European trading all Eurobond more institutional low bond levels, are they in EM our

yield see but credit and activity of tomorrow a change you possible the it’s EM European because well, products demand in ECB the investors U.S. business quite not And, of is for invoke that policies, is us very or growing among for that Euros. might So, market on change market would product their investors European versus balance what to what and quantitative it away the announcements the they and XX are beginning of overall if see easing to sheet stops more over do, been with to storing back months. the intend institutional bonds significant the trading what dealing terms private but buying corporate awaiting last going the opportunities is on in and we’ve be ECB trading a the them

Chris Shutler

the market block That’s Rick. then really on And, helpful, share?

Tony DeLise

Yes, was X%. saw very right on market block quarter what was around I’m you on share the second Chris, consistent which it sorry the

the about So, quarters year, have full for the QX, recall this second X% when it, X%. two and right you last it talked we on the call, last was been around year around X% quarter

Chris Shutler

a Right, thanks lot.

Operator

Thank Rich we Sandler have O'Neill. follow And, Repetto from do a you. from up question

Your open. line is

Rich Repetto

can exclusive? exclusive platform, Rick, relationship your Hey or or just Aladdin it BlackRock up the or to is follow other Aladdin already hookup is hooked they’re people and with up one on that

Rick McVey

ensuring efforts find trading price liquidity, clients. hooked different when best for best that to pricing, other a solution it with just They always for making to that they they clients. you as know, for all totally that risk expect, up you they’re are Aladdin confidence their people. would they so highly And, That they BlackRock Aladdin the their great comes card their integration efficient venues and is analytic many And, are are clients by is credit believe not trading to as to global serving broad the and connected delivering great are MarketAxess of continue System. that to

Rich Repetto

you. it; Got thank

Operator

closing Q&A McVey remarks. now this concludes to And, like for I today’s the would over you. call Rick turn to session. back Thank

Rick McVey

joining for forward you Thank to We to us. next talking quarter. you look

Operator

conclude may Everyone you Ladies conference. day. great and disconnect. gentlemen, all have today’s the thank a program does you for This participating in and

MarketAxess (MKTX) 25 Oct 172017 Q3 Earnings call transcript