MKTX - Earnings call transcript Q1 2018 | 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, April 25, 2018. 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, First the XXXX Good

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

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

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

Now, call Rick. over let the to turn me

Rick McVey

you billion joining to XXXX. Good driven thank first record results first of morning, we for results. compared And us reported quarter our to by volume trading quarter up morning. XX% XXXX $XXX discuss This QX,

across records products. quarter volume Additionally, would four set each core our of this

XX.X%. Our from estimated U.S. this high grade market share also XX% quarter reached a up record of

in up Expenses trading XX% of of XX% were from ago for back new to EPS of $XX a including income strong X% first duplicate $X.XX. a Hudson expense $XXX up was volumes, QX, and Yards. up XX% million compared the to rent quarter diluted a year XXXX. million, $X.X million was $XX.X high up the million On quarter were for revenues record Operating

up Open As adoption billion to per volume continues and trading year-over-year. been EPS XX% of double reached $XX have XX%. record the accelerate would up charge, rent

moved the four XX%. an quarter, volume quarter. record grade interest Additionally, provides higher volumes X%. relatively credit conditions market year-on-year conditions. were volumes $XXX a both first down Interest volatility this in of high trades were in trade’s the flat with spreads. trading on yield increase billion QX and while an in Overall trading Slide market international representing improved high update modestly and rate secondary rate Overall reached clients improved

result a driven growth volume share by trading As our and was revenue gains. primarily market

versus down credit issuance New last to mutual first continue XX% close U.S. was fund quarter. years’ be strong. in

for the Slide in We open volume year. takers trend up in Approximately are costs our remain trading managers survey, same traded context of the market implementation in up first and average XX% the quarter in $XX five completed led in of estimated and XXX,XXX on when our from in the important volume international first represented volumes markets. approximately activity European a in benefited XX% confident volume. the the in representing traded XXXX. protocols. year. XX.X% emerging quarter. open U.S. in increase business on pleased on last drove responders $X.X from makers trade continued MiFID venue. and last yield of a in update secular high a provides an Liquidity our with In II Client transaction environment post trading Open most open Associate in up volumes from transaction quarter and an six open trading European with global year-over-year XX% all-to-all international XX% increase first first our through XX% the bond improvements Client credit update staged they completed XXX,XXX Liquidity basis year. transactions II. were or period provides from price selecting average two trading volume trading million from the daily up volume in Greenwich investment were market electronic was up greater Participants results and in Open growth euro trading on momentum the of billion system traded last recent quarter a XX% towards points trading. an QX MiFID a the first as citied price by in price million factors a XX% grade progress the quarter. providers XXX,XXX X.X savings the Slide The transaction revenue. in platform $XX contributed QX, increase in cost through

II In RM with non-recurring addition, our revenues level. services MiFID dealers over In QX investor on II due venue up in new Inc. Trax’s Singapore. post-trade were fees. are primarily engaged to revenue million onboard accelerating implementation XX%. trading data date, and regulated To XX the Asia, $X.X MiFID in reporting by is clients XX and regulatory client increased services European

XX%. business emerging its Our $XXX global on the are in EM active up with quarter continues markets record Approximately of firms XXX trajectory system. strong billion first trading now volume trading growth

addition, encouraged three of system in bonds. the now available volume local the clients represents volume on by XX% with grew from EM during up debt further In trades. Volume from trading international are Trading years the making local we block XX XX% progress we in currency progress XX% the in are the global ago. External markets quarter by EM

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

Tony DeLise

high quarter, was XX,XXX Please estimated trades trades of to you, the for markets euro Higher estimated the XX% volume is during bond for completed estimated hit up And in block the categories. market during volume credit Thank billion X ago. in all first grade XX% number years gain to the share almost as the U.S. vast grade contributor in majority the turn approximately trade percentage high first X.X were quarter, volume volumes Volumes share double Rick. potentially overall seven of a share. high two high just was size our market in for our up an and the U.S. slide X%. quarter accounted over were volume records We during trading million of category U.S. our trade as point up grade yield year-over-year. the $XXX other market trading product the quarter. to increase summary X% emerging and big across year-over-year market a

market of U.S. a for high of XX% eight, share due we quarter met Aggregate and up to post the higher. Sterling. year-over-year U.S. spreads. to levels grade a the grade the type a conditions volumes first quarterly decline share behind down is Sooner, a weaker similar gains The volume and Operating running a is income. Overall, our the were was below core but revenue summary in and estimated expenses new dollar and Pound the high-yield of were the volume volatility The to market On the January. in with markets April, drove are With posted days combination [April to uplift bond in yield increase credit main in quarter products seen driver revenue customers impact high market remaining versus levels. few operating commission surfaces XX% earnings estimated X% trading leading XXXX provide euro in slide XX% and up had trade emerging from the X% performance. growth. in increase year-over-year. market services trading first four U.S. important our around share high reverent]

during share new Cuts and the offices Tax was tax changes recognized XX%. Jobs build duplicate rent City & reflects a New $X.X operating tax of in XX.X% corporate associated compensational The based rate the and up the first York expense with income the out effective access related quarter rate and was to reduction company’s Excluding income phase other federal million awards. in in benefits the Act cash in

the tax three XX%. the quarters call, will be we mentioned for As January next the rate on earnings expect effective roughly

implemented EPS slide volume up of million diluted diluted in on and fourth year-over-year. year-over-year shift the fairly are primary XX% impact fee period a high our varies commission to quarter capture down Now high offset fees of from variable products as trading volumes period. up stable trading was and laid share fees $X.XX XXXX. within from by and transaction nine, new fee per reasons quarter fee revenue high third increase of There grade US plan was in three sequentially Total capture both our U.S. On the we was our the the X% grade shares. million. XXXX certain XX.X were mix count yield have of

choice the sequential of sized duration decline the [fee fee our fees on second a duration in The First, plan to we per is based traded volume ticket fee on a reflects years size, dependent plan. we are high caused buckets dealers maturity. percentage give lower million higher of modular and grade and in decline third, in by tiered] earned bond

schedule to $XX down on variance was category January Approximately implemented changes credit of Xst. effective due sequential product we fee the was half Our captured a basis. Eurobond

namely taxes is the in higher The cost. a percentage up volumes The rent year-over-year were provides million. compensation up typical the experienced first, basis due benefits the bond higher of were occupancy was due typical benefits expense from also details. in sequential expense XX% $X.X to duplicate We were XX%. million employment to and and XX with swing market mix in you expenses higher Sequentially Slide sovereign variable up bonds. shifts largely resulting -- emerging the the first cost the On seasonality. reflecting increase quarter expenses $X.X

March uplift the of $XXX we impact information. year-over-year to Cash movement of drove from in rent as $X.X On total cost. million compensation XX approximately duplicate Roughly expenses and weaker expense at the foreign and the year sheet X%. balance increase benefits in Excluding XX% investments the $XXX end were dollar, the million XXXX. was provide currency average headcount compared in million XX, slide increase and

related million. full our the the of $XX quarterly quarter, year we roughly taxes paid yearend cash bonuses of dividend During $XX first and and million out of

share also of quarter, our net during program under obligation in We downs investing and upon XX,XXX stock associated awards. shares tax including buyback with repurchased employee total XX,XXX the XX,XXX

million As board quarterly the approved available of regular was XX, $XX results, approximately for share quarter buyback under future a the our Based on March $X.XX first has dividend. program. repurchases

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

Rick McVey

Tony. you, Thank

our our important pleased for in is Adoption quarter. are market to savings the of to in momentum clients. open business. to the secondary International MiFID trading in We record cost implementation the environment market and European improvement leading and share leading created transaction accelerating has volumes additional II see

happy be I'd to the questions. your for lines Now open

Operator

Instructions] with first [Operator from question William Our Shutler Blair. Chris is

Your line open. is now

Chris Shutler

good morning. guys, Hey

Rick McVey

morning, Chris. Good

Tony DeLise

Good morning, Chris.

Chris Shutler

two think that extent what auto to that’s your sizes, year for are think think quoting trade trend we you in, with million, that what dealers two, or the bigger seen increase? happening dealers trades seeing on range. somewhere you and mostly under thresholds And the today I million is a are in those you over in smaller get So more last inning just to on want I the take

Rick McVey

There generated Sure, Chris. better significant price increase over the responses take last I’d [in that one algo] been has years. a two

virtually seeing whereby met when certain are high our through is and as As trade what new would a we sub responses where are or intervention execute they inning of of seeing we where But even up on price probably X manual probably trading execution quarter. prices Most well. algos is parameters I dealers adoption without are think are specifically I of responding XXX,XXX. the come dealers say increasingly the are well, and grade more client with far with picking they transformation every receive trade million that as fourth sub fifth are algos, you as

a important the think this is I development really for market.

trades nearly XX% are that of tickets all aware under their $X million. reported are You

So this lower dealer is costs we smaller that for of investor significantly in trading and tickets increase both efficiency can clients. the way another

Chris Shutler

longer as Right, share And blocks look trades, then you great especially regarding you progress what all. on well, at there assuming give if good by a Rick. what duration block paper shorter extent improvements sense are I’m in seeing duration, of – can to so at you paper. Thanks. so thanks, us duration

Rick McVey

that in the the block Sure, anticipated. in us great some quickly and more in had I’ll as the people well. will numbers activity trading. uptick the a up move year big for one rates than fed that economic quarter growing increase starting was world, inflation The It take was expectation for story

block On numbers a it the many to blocks pricing quite see leading that, market come of record we share. the list back consistent pleased into end short activity are a of receive led and in or great bit and to record were to

a quarter it trades those of block and mentioned, list. was Tony block over As more

in one – seen majority was under quarter capture We’re end the that was but the activity curve, at grade factors in shorter years the of this reduced high which within maturity. the three of the the during improvement quarter. of curve and the of We block the out well, as a fee had trade

Chris Shutler

just that relationship the means maybe means, Okay. in Thanks. of talk the And on be on what Asia, marketing expanded kind with message, it the about guys ground? what Blackrock lastly then

Rick McVey

important in open the in think I And Europe full and as trading you us. been activity has is great progress Blackrock support know made their to open trading have throughout with partner region. third we Well U.S. promote a this the very Asia and really increasing momentum the with leg for

activity. So client them network. before mentioned are both market also that piece of one they trading fully and as there of the the what have important with is well integration protocols on excellent in lots get from believe of us the things with support to and We advice for with components work part Latin the they would that’s the an Blackrock, – I is their trading move partnership all

so venture Blackrock into region. in extension Asia parts are motion those our with And with the all the joint of

Chris Shutler

Thank right. guys. All you

Operator

from our O'Neill. question is Sandler And with Rich next Repetto

line open. Your now is

Rich Repetto

Yes, Tony. morning. hi Rick, Good hi

I of expect the on general Is the the pricing understand you trend? you per question So and continue what out. sort if a first to you dynamics. over the rate last China the the with fee to know play [Indiscernible] rates looked million. you Can up, any would guess you generally parts million moving moves us you of go outlined turned and If know give is different per down. sort it How it it and

was rates know significantly high the so, help you’ve going before can zero, done that scenario you down the back to any so grade us rates way that looked less sort of analysis think you If about forward? went

Tony DeLise

size, if given And or choice dealer the in we those to movements and rule had to the at Rich, trade I – the curve, has or even thumb probably When give to yields guidance I point for bigger around in variables items change. that's million maturity example, say $XX big that look could of perspective. probably sensitivity can. important dealer all we've the that out three something so percentage equal said are is some yield you just plan. times around a put mix a of the one and a the the three yield duration or probably of thumb they rule those least pieces per a change you on on prepared And the across like $XX and around they're influence. big equate fee remarks and at would The how items,

largest and XX mark per distribution plans. fees tell first $XXX side, have million came maturity the some impact where some I for see did away When you the high maturity high the had mark On be hit of the for one we so would far of year dealer on dealers the we look per over if of water $XX that you $XX quarter. dealers as the terms could million, do we Every by almost maturity the with in dealer versus XX the plan. million, or Today mix this per was influence fourth in the which yes the the basis, has million choice impact quarter we you at have a on or plan. a there. per $XXX high-grade longer year on fee little water well, to

fees So, and in coming through lower if geography you have switched coming recall through there's variable where fees a fees fees. just we a more distribution

influence mixes and see longer dealer size those as well. outcome So around term duration a it’s around significantly. Shorter the term choice trade you

Rich Repetto

we're but that's you go you when but would number just XX as fee decline all far to factor? as know but biggest dealers to the expect up and a – longer on, go to focused volumes it’s revenue, up, you as I I And increase guess and more say where go term revenue longer term capture maybe

Tony DeLise

fee and to doing. in predict in forecast predict. XX They're we're are We or variable to tough their another time tracking do. of the we own to tough particular what responding dealers choices economics predict We are It's what the so are get tough to U.S. They're It's to our dealers high-grade up. provide to dealers any the but and plan, now projection. two, do going responding we Every under distribution fee plan. so to going one say migrate have and XX plan who or it's high-yield. right on not

So there is moment, potential now for a anything. not tracking right but we're

Rich Repetto

Got it.

head expected some question, for last is I then the the below what guess I and was so of expenses, And expense the count the the out saw first question flat be year quick year from the the so just pushed the we year, would same get Okay. question the of later end, were versus one and expenses on remains quarter? did in expense increases guidance sort in certainly

Rick McVey

swing XX movement performance, influence right expenses but come down. up one where we're the that's foreign anything saying be that expenses range. forward. factor those on to there. that million on the XXXX exchange give of we accruals I'll where on the the tell out more the to which And but count you variable where just guidance have which that we in the going bonus one some not expense tie out, expecting by still could I'll And now I'll fall we swing we Rich, and range. you is the within or expenses we factors have can figure factors head second, move around headcount that comment expecting The is movement there come within so we're FX in swing out is still

already, up. you to expect that do the we last XX about another If We of the you those We've to to May forward expect from forecasting are And expect one new And tell analyst versus expect other you go hires bodies you'd items, if that would those this been half new so with and at already so expect QX would an come later point by up. the I the positions the we just line XX years. XX%, up. that starting are half have of have in by hires end April you for go filled, year, several one tech rest compensation for at of in for got go do figured of programs to to add in bodies pretty the go are to look isolating headcount year. we We've that committed summer. almost in between expectation headcount the the the so

the you and in What dependent advertising indicative see marketing of trade is QX. on and On is line, QX, It's saw first advertising you're on it dependent in going the QX, participation. to show campaign. not what

will line an in going You item increase forward. see that

Rich Repetto

and thanks Tony Thanks, Understood. Rick.

Rick McVey

you. Thank

Operator

next is Our KBW. from question Kyle with Voigt

Your line is now open.

Kyle Voigt

post-trade Thanks you obviously I line first questions. for realized my is strong Hi. taking first in the quarter. really on the guess growth

fees some mentioned be I think may MiFID. you those that of one-time for implementation

if wondering versus line maybe growth out frame us for if revenue of help and greater post-trade you new Just XX% there's the those that for the previously? range had growth you a could break said kind than

Tony DeLise

Yes.

of to million services in we and $X.X saw three about quarters post-trade that increase new is related reported that, customers was II. You MiFID in year-over-year new

the would non-recurring. that's we take was I do So one-time so chunk around implementation largest $XXX,XXX, more is that it repeatable. out, believe this There were in that's some fees, –

maybe $XXX,XXX the so. around exchange that had have would or impact also same We been foreign and

looking going million as million in be several out quarter. $X.X the would expect you're projecting $X next in that revenues get to to we out, to as going probably of terms we're per quarters and If that's good

year driven. step that function So to of MiFID you increased the year last sort from is II this see

to line quarters, crystal services, customers dependent per on narrow million right ability several Going that we our bring sort new $X.X now new forward ball next be going a quarter. to looking to $X for but to to its to what – have is at add that on of arrange the I'd

Kyle Voigt

Okay, great.

well. a Just trading as guess the follow-up, on block I

said you share trading. think gain X.X% portion block market I decent the of from a was

quarter? right deck you help what is it the during charts could of range. the looks half the and those slide average about if And that at trades also in the like then rate block understand us capture the Looking on

Tony DeLise

on We block wasn't So, share trading. share. Kyle, all had market across good news that bucket gains the it a size – the so it's market

million, half the robust If million from trade million X X million size, board. look the gains trading. yes, about over was of was to trade you gain at million pretty X size. XXX,XXX was it to There in block And across X the probably

On a capture, to fee it’s harder the answer. one

it exactly Remember million. in trading depended but vary look if over to you on in trade's $XX duration you if its doesn't size, block our somewhere trade XX from between billion it designation, does but million up the period peaks looking with plan to is $XX as at period, fee size. well, at On over XX were per trade the block match

Kyle Voigt

right. helpful. really a just trading. All And me open That's on is Okay. question last one from

disclosed X% XX% using Eurobond lower think weren't just fact clients you maybe side that maybe to buy due it inquiries. of to Eurobond specifically, I respond as thought that to last year protocol comfortable volume open so a I than was or price was trading.

that guess Eurobond you're what's specifically driving uptake X% accurate Open and number Trading year? so? and Just last And if if in I that seeing just quoted for good I was if wondering

Tony DeLise

with making last the and seeing that progress introduced European We protocols just with uptake there. clearly to challenges Open Trading. we're protocols of There's introducing a new a four three we make the we're page of good price because done, more that work new it’s or difference. for Kyle, But so and mentioned. pleased are result to some months protocols you the be have over it starting

Kyle Voigt

much. very you Thank Great.

Tony DeLise

you. Thank

Operator

Fitzgerald Goldman Conor from Sachs. is with question next Our

is Your now open. line

Conor Fitzgerald

Hi, morning. good

Rick McVey

Conor. morning, Good

Conor Fitzgerald

say And grow on good role product longer another how just flexibility? think continues this think impacting we business about should works be Open product curious should sheet obviously your just example? in term this quarter about for years, balance question, Maybe how prospects for clearing how be your five Trading, XXXX to want maybe you for on larger for this Kyle this get thinking just we follow-up to I then as thoughts just in the

Tony DeLise

Do take the you take sheet. about the second balance one? I'll

Rick McVey

ahead. go You

the with balance sheet. start You

Tony DeLise

So open influence that, on agent. my If and we of clearing holding historical Conor, stress the consciously our excess excess regulated default if in capital capital the look the capital capital up output of today guess at requirement. trading million even around models we business if in counterparties that than great is March we the regulatory business our environment, trading. I It nature to does on end are really in our entities principal regulated Trading you at support using matched said now. entities, of a losses the we had to residing us. that's sheet, based Open trade lower balance Having through credit so use look is somewhere and estimated $XXX is significantly not the

So position. we're comfortable with the balance sheet

capital We than continue So even get trading that does feel at that – multiples with Open to counterparties what this have we will get healthy today. even comfortable our will, credit. we're – Trading if we grow position still we and help

view the regulated capital retaining So were no we the immediate excess in change in entities. the around

Rick McVey

from that in think we use capital to corporate investor long-term with have risk opportunity to working messages to to longer the two further industry the positive post-trade huge I electronic there's real-time in our expect as on And as solutions. digital would On whole would those at periods believe trading and current and our for to and reduce dealer this so I grows bonds. messages continues in decline days continuing will activity period, are reduce are the see the digital, we a outlook clients a we settlement term going we grow time and shorter that settlement settlements as progress settlement benefit

think working expect We more time benefit most some part big how yet that and of be we electronic we the of is as know you'll progress I of pros of be overall. efficiency would today. at to the We we markets. would the partner you for to this are in with and but settlement And be to expect greater initiatives where think examine settlement the would see that clearly credit trading self-clearing, the around improve cons trade another industry carefully supporters would because

Conor Fitzgerald

That's one I'm pulled clear traders I back some of really think Thanks. last was XX% XXXX the been volume from to it, the remembering gains I really know on of in it then, had it just And like and market that the share [e-TFR] you your year. color. more in was down market, helpful had of pretty XX% drags was peak

Just volatility in curious given pickup players saw some XQ? of you how much in from volume these resumptions of

Rick McVey

you I the where quantitative have believe all year been from bond move quickly the in we over regions starting a significant different market see Fed. It we own from with two to-date environment years my is and where of this quarters. And absolutely last eight the to through or versus better of posture beginning than very three over more especially consistent year. the next were or the change to we view very four is last global And that going there a quantitative the quarters last or see is buying are unwinding in easing is that three nine easing.

are a Japan taking are with market changes of That place this important change me Bank the whether the is for up level see important and ECB You also to very need the and very, a odds stimulus. of to volatility. we participation they half so to keep wondering greater in is with my from activity, more opinion higher that that client more rates on segment. lead with And positive there ETFR likely the comes volatility the that

Conor Fitzgerald

me, or of reference the number XX% was decline Tony, from clarification industry in one the you just volumes? maybe And Thanks. that Thanks. mentioned your

Tony DeLise

Eurobonds what and what our seeing across we're quarter. market XX% referenced we're coming seeing the seeing so markets volumes U.S. high-yield The decline in volume, high-grade, through emerging Trax coming trades first we're I what XX% business versus was about Yes. through market

Rick McVey

basis I would more months of the March credit tell of about really XX-year heated up, of first just beginning about well. year, in went way had direction trade the around XX the ago as add to points treasury and and treasury went rate when interest mid did and then the yields yields that discussions reverse couple spreads and a week up other

so had has shift we through have in there of again a reverse and obviously the been end rates did the the but market fluid week quarter. last most seen different a we QX, than we rates higher, direction three-week environment, over short moving yet it where of some is pretty the environment have situation of created that the had are market term activity short first in So a period the block this which pause also in

Conor Fitzgerald

That's question. taking for Thanks helpful. my

Operator

Our Patrick Instructions] with next O'Shaughnessy is from James. [Operator Raymond question

line Your now is open.

Patrick O'Shaughnessy

Hey, morning, guys. good

Tony DeLise

Patrick. morning, Good

Patrick O'Shaughnessy

Question maybe order are any for of there an on terms Is not of you dealers initiative industry market. getting their electronic venue that terms primary if in to comfortable of second gets creating allocation issuance impact [ETFR] electronically? bond more comfortable the the on the allocation, the like in secondary guys primary market push secondary trading bunch trying the the you but market out so on for are

Rick McVey

so heavily we something for at that and all overlap the the And what view protocol access [Indiscernible] the there entire the trading. issue we technology is should been technology peacefully existence of the co-exiting many be. with is like of on Patrick, syndicate But that that different isn't is in to and issue have work really There community have seen technology in seeing technology XXXX. in for syndicate dealer broadly and what secondary have beginning media been is much for underwriting we've new dealers in invested what in should which that's by that you're look what for the we solution market has know technology similar new [Ipreo] utilized today a of years some and

don't any didn't really So I see change the what issue new in as we landscape that significantly between in do. technology

Patrick O'Shaughnessy

clients it. It's MiFID can talk that of you maybe Got I your workflow And II? was implement some about helpful. then had hoping introduction of given changes the

Rick McVey

we that mentioned in of investments of term the say, large Yes. client prepared been and managers the was that it regulatory expansion have changing A around reporting, the in our I'd obligations source remarks. the near for has the biggest that new

dealers. requirements So non-equity MiFID pretty right, I change, big the purely reside the reporting previous because with with

Now of terms was change for going so But reporting prepared be a throughout But managers that would reg they II. MiFID of manages. everyone know lot include to with the XXXX investment regime beginning it’s investment that as comply work in you significant on a XXXX.

part that of opportunities for The sales one in data measurements consistent other for the execution. sales reasons demonstrating which it Europe. growth analytical we're us, of seeing in up This is is data around opens new best

better the the regulated a off The the Europe third reporting is any venue. is market low prevailing trading in view regulatory on shift trade impact obligation through where that venue part,

volume So think we that impact earlier. low trading the for reported that trades an on we has the done resulting increases in impact market behavior

Patrick O'Shaughnessy

Got ability the high-grade have it. how then you Do pricing That's might that curve has past guys yield and given variables the the to helpful. impact on impacted And and that now just me. how trade your many curve one too look analysis? here's to right looks the involved caps there really or revenue from say, look okay, at yield the what at last the curve changes yield

Rick McVey

trade the rate – to rate flatter, curve could bit. you when to what so much to the at and to and of other can back here. capture means you're we lots little note capture factors granular more our and sort dated work so thumb longer yield as that specifically term you impacts shorter at about trends We in if to because in that Patrick, many clients oppose and is going capture, fee story. yield much and high-grade go in of and have isolate to floating see do on And look levered there's before yield look fee curve not capture different U.S. the what I work. we're that you're of of it's whole fixed fee get the telling I a talking fee that are movement gave the compared see but going come rule trading the caution it, paper probably

Tony DeLise

the different block to is fee saw fewer we has parts fairly the earlier flatten capture treasury programs all market And the good month example being capture the what complicated actually our Patrick this to up versus moving cure fee because the trading the even in in is short-term in due being of while predict year.

do fully and So they're predict and you basis report the we next. we to how capture works with month a lots best fee on how there is regular of transparent the to but moving difficult could model on are our fee one parts average on impacting is it very

Patrick O'Shaughnessy

Fair you much. enough. Thank very

Operator

Allen Chris Rosenblatt. from is with question next Our

is open. line now Your

Chris Allen

Morning guys.

Tony DeLise

Chris. morning, Good

Chris Allen

rule last in quarter its kind durational concern us revert. of I'm question past just prior us a there prior of just lot profile following maybe this kind look forward that's give for as just to know terms the give on normalized up wondering going I rates you've maybe revert terms levels as Patrick's peaks color. and given investors like at and moving characteristic what well. guess, any a if you realize of some been in of versus of I us of trough, thumb more I

So this in quarter if troughs and that's prior of that helpful? you give would us any color peaks in where terms be in past very

Rick McVey

and first fee earlier, it much XX-year Peak U.S. about of yield high-grade little At at $XXX in nine the I so years we a mature years and versus change was percentage XX-year capture, that to third was million. quarter about were treasury quarter. per the in XXXX bit capture Yes. was not our but where fee point, the X.X the mentioned yield

year that reported half capture a we and $XXX fee maturity per so about a were the the million. did Here's influence when longer,

reported more today as would by would put larger But we side. the and crisis far the have around on difference largest dealer fee are peak trade been was our the mentioned difference be where we capture And And XXX trough, by of choice per every biggest before plan $X where in to this quarter distribution first in on. were the do on. away we a just rule in just we first as away post trading third impact the quarter about accruing we but that with to the the given that were and from thumb million. the the dealer has plan of per plan of choice reduces the million in million for fee perspective, fee between per volume far and XXX fee were at year today's by they other The to before plan variable if dealers plan at had it the XXXX, XXXX, $XX quarter $XX difference, moves

XX% our that looking plan note per of you of business years. And is just fee floating XX%, rate million. difference capture, plan. So the rate business, years, because and fee difference X.X maturity The that's $XXX X.X down short $XX variable mention just of biggest trough, difference where look choice like down of the was big was they lower, were years per duration, notes. today we fee at X% just on at capture we about decline very briefly for at our floating there a pre-prices in that biggest pre-prices were the time was today, appreciably something to of the I'll and were sort the if the million you're on were at we're dealer in the trough if

years eight difference XXX we pieces we of than today something difference So where again than appreciably and today. but reported ago its we lower here, different is when are its XX moving ago, lots than years environment and reported

Chris Allen

My helpful. have been other guys. answered. Very questions Thanks Thanks.

Tony DeLise

Thanks, Chris.

Operator

Kyle And we have KBW. with a follow-up question from

now open. is line Your

please unmute. is on phone your mute, If

Kyle Voigt

guys. Sorry,

its Sorry Kyle again.

or on two more capture. more one Just fee

those distribution seems for to volume options just monthly there your said fees? change platform, introduce Just the any most or dealers given your to desire very plan, to on fee for in be more it tiers of distribution fee attractive you

Tony DeLise

in them any don't conducted to changes electronically have motivation of plan, Kyle, trading access. more on mind, in more fee market the We because gives our on have further like No. distribution we really their dealers view it

happy way the we with So that plan works. are

I change think alignment and to plans dealers good plan. creates access we and the it fee have don't currently distribution any market between the

Kyle Voigt

I Okay. expect Eurobond other to go remarks where then, is us in range in And you prepared you give the fee impacted going schedule. fee was Can to changes the shaking business for forward? terms you a the that general think and mentioned of capture Eurobond credit capture that fee by earlier out

Tony DeLise

is business. Kyle. line us more growing obstacle be clients. being We then II, the Sure, it that growing specifically lots we've fees on put don't so post European did we the of Eurobond schedules in Eurobond to market. fees where light to don't the effective we have MiFID we in and visibility we the and in stake, make market, And some Xst There stake and reevaluate transparency in Eurobond outpricing did changes lot January we are so with did increase so is make adjustments some to obstacle as competitive of that is with business our our predicted to momentum a

in You almost we It XX%. day was numbers the posted. volumes daily X.X saw your up billion volume, a average

So European is in we markets than have more volume U.S. from half to remember credit. from our clients that emerging of that also the

out now in Xst, of put a because place is on it there bit it $XXX specifically changes the a range, we're we trading. that they bonds $XXX in So based. we're It set even I January that million to that we're months are coming a where maturity on size-based. into fee is little per caution Very diverse capture four and is and

We first yields range for European XXX about million. grade, fees have investment XXX do than the high months we four I the here been caution, for per different do so but to

Kyle Voigt

or That's Okay. local EM you so I Thanks. one EM could external capture in the specifically capture the from it then for fee over of the me. rapidly or us in product last has The but is local EM EM, been And EM again guess entire you're just the explain dynamics market. go local tell the complex that rates? differential between fantastic, growth growing and

Tony DeLise

sovereigns we you market will markets we million XXX majority market tell per remember so on the $XXX but Kyle, of now, have and that point I prior transparent of emerging in for its emerging typically and million. at I regardless Okay. completely per right covered on and corporates are its size, look sovereign of on million I'll fees, $XXX we if and market corporates break calls, emerging And most probably per regardless market including big bonds this. don't again do local be emerging then sovereign this bond is you two what

our our is It the rules. have fee on new We posted schedules SEF under website. posted

XXX that's corporates, for for how our works fee XXX that plan see you'll sovereigns, right now. So

Rick McVey

most bonds. is local And market sovereign trading

Kyle Voigt

Yes.

very Okay. much. Thank you

Operator

now any no I further further like Rick turn for to would call showing questions. to the I'm McVey back And remarks.

Rick McVey

Thank quarter. and next you us we spring morning talking for and you this joining to look this to joining forward

Operator

gentlemen, you in participating and Ladies thank for conference. today's

disconnect. may have now great You day. a Everyone

MarketAxess (MKTX) 25 Apr 182018 Q1 Earnings call transcript