MKTX - Earnings call transcript Q4 2019 | 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 January 29, 2020.

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, Fourth the XXXX Good

Rick Chief DeLise, year Chairman review the automation; financial discuss McVey, For call, results. Trading Open and Officer, President COO, for and will quarter progress the in Concannon, then the the Executive Financial and Chris full Tony XXXX; and and will Chief highlights will Officer review

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

also factors For the a on that statement please future of issued the quarterly to XXXX. website. description XX, you Form read year direct December discussion our morning this earlier see release, results, forward-looking company's XX-K the available earnings is of and I affect on ended now some annual and Factors our risks could in our Risk in the report which would for of disclaimer the was

turn to Rick. call let the Now me over

Rick McVey

for and to joining thank our fourth review quarter Good and morning full you results. XXXX year us

our challenging year-over-year quarter comparisons results XX% record fourth earnings. the of for straight and Revenue XXXX. revenues to Our growth contributed XXth to spite of year quarter was the in quarter fourth

in widened last trading a spreads will leading significantly MarketAxess. quarter QX on recall credit that You for robust year, to

Operating EPS X%. the was march low volatility credit to range end for the of This quarter declined. historical year, spread and credit was continued the and up XX% up their spreads income

expenses $X.X which November added about this will in LiquidityEdge X closed cover on million Our detail. acquisition more quarter, of Tony and in

was high-grade increase an board cash to quarterly market in international and up dividend volume to Trading reached directors strong was estimated share. approved volume XX% $X.XX our of XX% free flow, XX%. client our Due share and per up year-over-year results Open XX.X%, U.S. growing our

our highlights X results. Slide record full year

consistent growth compound record growth XX%. our long-term revenue track of XX% five-year and reflect compound with Our results EPS growth of of

XXXX, XX% was was this record products in in of full and all our For volume EPS global XX%. growth credit core U.S. four The strength reflects and EM with year growth high-yield, year high-grade, Eurobonds. and revenue results revenue

three new Total credit is all of had four trading just in nearly number volume institutional year ago. products products shy XXX XXX from total trading The Active we records reached for five core up more this the international client and XXXX. was or XX% of clients. firms years X,XXX active up firms client in from double

Our of success customers our diverse space has trading growing institutional network of global revenue. a created in

XXXX credit significantly was electronic XXXX. trading order institutional lead of grew flow. client up credit at revenue We in XX% XX%. revenue products in revenue global believe Commission in is trading our MarketAxess during by generated

TRACE volume. we trading believe are in FINRA high-grade XX% and vast data, represents to While the trading segment. approximately of credit high-yield volume TRACE According their in the revenue majority of our client-to-dealer dealer-to-dealer combined competitors key

an conditions. market X provides Slide update on

year. the credit Our record year the favorable and is the market in were our in end results for near declined that half a low Credit second XXXX ended of declined this spread achieved of environment year throughout ranges. spreads not business. historical Credit volatility normally spread the

levels year. activity throughout strong issue New were the

ever. the highest average for always rolling levels and will share month numbers fluctuate, growth and combined ended six XXXX shows consistent the market at monthly high-grade estimated high-yield While share

transaction liquidity addition is Our is provide and investment efficiency adding trading important reducing costs. to in automation important to Trading dealers for both and Open continues trading investors. market an

XXXX, cost of our savings transaction price $XXX clients. estimated For million Open to Trading the delivered full year improvements

growth ago. is new years by X,XXX from investor active revenue growth and breadth clients year, increased a with Slide clients combination this the of healthy X Total outlines being double institutional base Volume relationships. activity nearly and five client our driven client and active of exceeded network. existing global the

pleased outside year progress firms from make of represent XX%. we especially Active trading to XXX volume international of was emerging international client were the America. with are global markets XX% volumes up North over up and European XXXX. XX% total continue now We in XX% volume firms up totaled last clients’ and

Latin excited long-term about growth CEEMEA, America. in the and we We opportunity are see Asia

to Now update provide Trading automation. to an and let over me turn Chris the on call Open

Chris Concannon

client grew in Slide volumes, Open Thank X a of record trading year-over-year. active volume. firms our drove to firms The update $XXX increase emerging you, core also markets Trading XX% a of Rick. number and XXX% up an global XX% products, across growth provides X,XXX adoption Eurobonds increase year-over-year. notably of significant with The active in reached billion with number new Open notional representing four XX.X% Trading Trading. firms Open on of

$XX quarter total move providers fourth Interdealer activity cost to volume. also million the significant Trading off balance Open our as billion to In a X% to liquidity continues represents continue takers. credit $XX in in interdealer for with and volume for on dealer-to-dealer aggregate volume fourth in over increase executed transaction leverage an participants Trading was up both the XX% the seeing trading an on savings sheets. also deliver savings now dealers of year. are risk quarter the of platform, liquidity their We estimated Open prior

the pilot order As our issued newly live announced of and book live bonds. launched phase markets, corporate we quarter, active for last

We and a is click-to-trade allow actively clients which live of leave streaming now onboarding to orders, resting way innovation trading will to credit. new build dealers This a and robust are liquidity participants solution.

early model expect we toward early to move fully a in progressing self-clearing to live – be the well quarter. effort and second in is Our

to self-clearing improving costs expect We experience. clearing favorably impact while our client our

XX quarter quarter trading the momentum automation from year. $X used the the functionality Automated $XX XXXX. to of rose execution from growing the demonstrates of in XX credit firms and X over in prior auto quarter, up billion the our Slide trading. up fourth fourth in billion volumes fourth

autoresponder dealer growing, of increase million marketplace. year-over-year. algorithms Our in more the the investor approximately in engage also X.X new will functionality through Open quarter, XX% clients The algo fourth allow a is provision use efficiently to liquidity responses Trading with

Dealer per to drove in the across activity average and and corporate increase also X.X responses X.X execution. the can illiquid prior. of ultimately an price inquiry execution in up quarter, from improve in increase pricing algos of the number likelihood year quality This the liquid bonds

summary a trading of across product categories. Slide volume X provides our

less We’re pleased trading. overall in volume conditions market the credit light in increase electronic the with in quarter trading of favorable for XX% fourth

the an increase in due to trades flat share volumes to for estimated quarter, solely $XXX high-grade market volumes U.S. year-over-year. Our were X% up year-over-year billion with

Other on Eurobond XX% credit estimated year-over-year. Emerging combination up both category than and XX% trading markets share and market an volumes higher in of more a were estimated increase volumes. were up market volumes

treasuries acquisition is trading Our the volume in U.S. from mainly and post reflects composed of LiquidityEdge. contribution rates category

basis, million a pro believe were to year total client volume daily XXXX On share. the our in driven over business XXXX annual by an development efforts focus increase primarily solution. XXXX, XX% LiquidityEdge, rates integration we in for in dealer of as including revenue. volume will for U.S. to forma be We average a a with on $XX treasuries resulting market up was from these gains build

Green hedges. also announced close was As in launched continued a trading we’ll to solutions, has including and hedging early and our markets, success, portfolio investment executed treasury million December of enhancements the automated already other XXXX recently our $XXX hedging, net XXXX, in sign integration auto Bond live solution program. new see and trading initiatives, our treasury trading munis,

January than are Our volume XX% January and while somewhat is market high-grade month-to-date daily average more higher high-yield XXXX, credit than U.S. flat. tracking volumes

Our happy over report our will U.S. $X.X which versus close billion volumes in under include our higher XX% January volume new Bonds, Bond X,XXX XXXX. than And Green treasury plant to more is I’m trees that tracking Green to initiative. January

over call detail. the in Tony to turn me financials let more the to discuss Now

Tony DeLise

in in Thank the On credit uplift Chris. earnings Slide XX% in result commissions we XX% XX% our year-over-year. quarterly provide treasury you, and performance. The was million, volume increase a trading trading summary commissions. revenue U.S. of of up inclusion $XXX Overall, XX,

Expenses Services year-over-year. revenue XX% was fourth up onetime income up of was operating sales Information and up and approximately the XX% were quarter includes $XXX,XXX. in data XX%

of XX% and the were operating fourth impact up LiquidityEdge margin XX.X% approximately in quarter. expenses the was Excluding acquisition, the

The in effective quarter and rate for the XX.X% fourth was XXXX. tax XX.X% full year

tax the $X.X excess million awards. During share-based benefits of to related we quarter, compensation recognized

Our part The due issued diluted $X.XX. largely count LiquidityEdge increase EPS was in diluted was our shares to XXX,XXX acquisition. the of share the as

the fees high-grade our out the third changed volume driven On million in revenue Slide fees and inclusion per trading little from was million. transaction U.S. have commission XX% commissions. year-over-year, laid were Total volumes and treasury credit trading up fee increase by variable per the quarter U.S. we level. of trading XX,

platform to traded third similar bonds to the Years Maturity was the over quarter.

principally fee category to the decreased distribution million plan. the per by all by sequential $X credit the from of increased on fee basis, to – due other migrating two dealers plan Our high-yield variable impact a

be than treasuries Rates fee which provided typically in in tiered. fee variability the U.S. for could a plans fee fee estimate as some as was captured volume higher and rates per the release, million and in December slightly U.S. U.S. fourth is we There $X.XX our quarter, agencies. volume our are capture treasuries blended

in quarter run treasuries that note of million of a and to capture only Reflecting respectively. includes category strong around million fee per trading we fee growth two quarter per the expect treasury $X trading also would rates volume, U.S. rates the Please full months continued activity fourth activity. category

minimum two higher in high-yield level, Overall distribution quarter. to fees higher unused fourth and certain on dealer were plans $X.X the quarter variable principally all third migrations the than the million due fees

XXXX distribution to quarter quarter of level. similar fourth fees the in expect be first We the will

expenses detail. for Slide XX% year-over-year On the were a with provides you basis, XX up the quarter. expense

intangible $X.X approximately deal very up were and related expenses, operating year-over-year acquired to of third million level. costs, similar amortization XX% quarter and assets LiquidityEdge of expenses Excluding the

impact, of change for to continue our Excluding LiquidityEdge growth year-over-year the personnel compensation we in support accounted as add to and XX% initiatives. expenses, benefits the

stock-based rise headcount contributors bonus Our where the compensation provision, of in and the compensation main higher higher increase in year-over-year benefits. and variable expense XX, to

balance XX, investments aggregated Slide capital million share December a Dividends information. sheet reached cash million Cash in XXXX. in $XXX and million expenditures and of $XX flow repurchases provide free $XX as record million and were XX XXXX. were and we On $XXX

capital strategy. an Our our dividend important of recurring element is management quarterly

in we and and generation dividend increase our the with the have pace the the in earnings kept past $X.XX has per free nearly rate increase dividend with to flow cash announced level quarterly years. over dividend XX% tripled five Our share,

maintain We our grants. with intent to expect standing equity of from the offsetting dilution program repurchase

repurchased the plan. During of total XXXX, a shares we XX,XXX under

expenditures On tax Slide rate. for our guidance the and effective capital we XXXX have expenses, XX,

for million of be full intangible range $X.X the year This million expect amortization to reflects LiquidityEdge assets. acquired range in We $XXX of a $XXX total expenses million. the expenses, of XXXX will guidance including

In technology addition, to that costs note are of roughly and clearing to LiquidityEdge’s expected represent revenue. it’s variable important XX%

Excluding the an expenses. increase in LiquidityEdge year-over-year represent midpoint approximate in range expenses, guidance the XX% would

from new in XXXX protocols enhancements $XX London. from of of guidance platform. half capitalized capital costs to relates to the are making the million approximately are investments a buildout $XX expenditures which for also software we additional $X expected roughly range development resulting trading includes The million space costs, to and to million office

expect share-based We rate related compensation range tax full XX% an estimate to effective range will for from the that guidance The for to year tax excess incorporates awards. XX%. XXXX benefits

to call Rick. Now the turn let back me

Rick McVey

Thank you, Tony.

product the We next and of even toward electronic in growth about excited consistent fully have client we greater to delivered our shareholders for current an credit products. we are what with more the trends decade. trading show The global acceleration momentum long-term see and pleased

we product In and point addition to we entry LiquidityEdge serious bonds the a success, our additional and to opportunities excited We happy open are into core would questions. the for rate your emerging be now product to municipal in space line see with have elsewhere.

Operator

Dan our Please And Thank from with Jefferies. Instructions] you. go ahead. is Fannon [Operator first question

Dan Fannon

clarifying, you’re I question differing terms to curious, of going versus guess, the they the in just that be Thanks. whether guidance. in be expense what last to allocating year. from self-clearing. of just how my in benefit also includes terms might is And XXXX the And on levels, spend

Tony DeLise

It’s Tony. Dan. Thanks,

you and and XXXX expense some in we the more When the as the in our benefits. of the year-over-year technology the item gave concentrated guidance at to done we’ve would items what’s more expect look terms we line probably, expected, about and personnel expenses. line color driving biggest growth in past individual thinking be comp It’s growth in So support. color, add sales And and in initiatives. to support with business the

we XXXX. We also XX year impact the in have the of almost people full that added

our the of the benefits I where looking estimates The are and areas. though, – depreciation and other investment growth. will budget our areas and the and technology up varies, a of was side, in comp two one the at around that big that And at So be line two amortization drivers we and software looking base other shows when consensus amortization It’s the capitalized and products made significant protocols, depreciation trading platform investment communication. on and in and we’ve had development. that areas,

automation, rattled treasuries, So trading amortizing trading, to off end building an years. live software Chris in capitalized and markets, dealer that, we Rick portfolio hedging, of the out all three up results in increase development, that over client

going there. uplift you’re to see So an

in think the LiquidityEdge also that the I And also to and deal of tangibles contribute rise amortization in depreciation amortization.

budget was sizable between a tech consensus other where where looking communications. base at we’re and and estimates was, The a in there variance area again,

two costs a big directly revenue. vary on had do with In components the there, really today side, one technology LiquidityEdge that

in So treasuries, also line. revenue technology uplift and we’re an from derived activity expecting as in we’re uplift an treasury that expecting

all area the are product work, growth. And building the second to the of development a support to tools support development we and cloud out

you’re some well. as that’s where the expense going growth to variances So in see

Operator

next And ahead. Please with Voigt question comes our you. Kyle KBW. from Thank go

Kyle Voigt

and average. for you’re I you guys investors Hi, just if in then of think, wanted expenses or in ask it just medium-term? self-clearing, your given to of I missed benefit on And leverage the Thanks. expense on XXXX leverage good that about should the organic it I you just to wondering, organic expense much rate thinking the Is it been on also about in think expansion, And that also if margin I to the you business. normalized kind Dan’s asked embedded that. on if double-digit investments the us Should the over can Is you growth any range rate X% feels just XX% because rate think generate business, the about the then operating organic given medium-term the operating growth be thoughts of XX% XX% the how remind growth range? past kind XXXX, range? self-clearing – a from kind follow-up we years, growth just, I’m a XX% – can how rate operating of Actually, an like this basis LiquidityEdge. and morning. sorry the making. has – guide, five over there’s seven question, in just excluding he

Rick McVey

say, I had one think more on Kyle. on the you than question growth there, But the – first rate. I organic will

a basis say, at, year, or five XX% looking been XX expenses, you’re year, double digits. around They’ve been If organic three on year have XX%. they

in we’re to absent think would overlay, don’t Again, inconsistent to I be the past. XXXX. anything what guiding LiquidityEdge for So where anything we’ve done we’re with guiding

addressable about investing expand products to is the reach, market, geographic all this and protocols. And in opportunity the the new

it the wouldn’t way expenses what exactly historically, back grown. if again, we’re look investors do inconsistent want be doing think have do. to I think, And you I us with

guiding what transition to outside and business, the for self-clearing includes we the an of or legacy over MarketAxess the when The core part in – U.S. on new we clearing, to to U.S. we’re a second broker clearing yes, transitioned the expectation

are We cost is into savings. That the built anticipating numbers.

embedded. live in remarks, we his fully go sometime QX. prepared Chris So expect mentioned in to

embedded fully providing. guidance in So the we’re

Chris Concannon

and and can now. last initiatives you of our in back where invested operating building around past, number And protocols. we’ve – you launching and years, was have are here was the geographic the several piece we out products period heard all underway other reference in margins. mentioned, had question The new from two right you’ve a over which this investing this And we we’ve reach us the significantly where again,

we’re accelerates don’t same delivering the revenue If We a drive around investing an the to we’ve right addressing treasury if to margins to all this all been – if share trading, At XX%. but for margins about That’s is answer, business. have forward. core operating ability time, We there in think think muni growth is opportunity we and our we there if uplift in is around about that’s think bad we’re today, going here. an our client expand. trading, right dealer market growing

think is margins this past Look year, at an there about But for delivered. to investment. this opportunity And expand. I is we

the in look and net significantly up XX%. at You can the it say year, were expenses but our that was up past income

we’re today it’s do So number about to not to expand, opportunity investment. there’s managing margin a I but right now. think all

Operator

is from with our Thank next question go Repetto Piper you. ahead. Sandler. Rich And Please

Rich Repetto

your attention of and peers you good XX%. think what are Yes, and highlighted FINRA institutional that and guess, you is I Rick, XX% the Tony. Chris also highlighted was morning, I DXD my is business and you when caught think Rick TRACE

here versus – much with numbers, And liquidity but isn’t your to the guess. are So DXD is I your as space say to say trying good guess, What capture, platform I is, assume point that about those are differentiating trying I competition. you what you a lower well? isn’t

Rick McVey

guess, I’m institutional feel in electronic remember client it’s what different they volume to that our outline, segment we how important position and to about for trading, Rich, there no what is in better trying standards market company than electronic ever fully trading I before. industry to And every reports. the is are for report. dealer And

going I being volume is think it’s on side reported to in with So important the side. the what’s look on to at compare what revenue

really primarily you both of follow, electronic in see brokerage been also like the the space. dealer-to-dealer the the that to you credit feel voice And retail institutional for leadership to on. dealer and space when at There’s dealer-to-dealer, space all going is space important major business. flow, client a have we competitors we position the the is institutional look most dealers trading, to that when continue talk which order And in we the our strengthening

And yes, involves has I high-yield that and to the volume our trade. reported a the year grown believe helps frame and dealer-to-dealer TRACE And the facts of market. in FINRA the within the space. when size high-grade customer you customer that a a combined throughout TRACE lead of XX% the at look And institutional XX% out trade is

our liquidity addition In pool are dealers some is for before. of their Chris that the for credit ever that liquidity own using than outlined stats that, more trading to vast

in X% that revenue. would the to represents well as in around that revenue by space, we’re the and we’re space investors. excited all the in of to X% but our So volume starting of compete understanding it of dealer-to-dealer reporting client as to if in it our segment lead And I competitors add would follow think, that really the keep context, trading also just terms on client granularity electronically by going your segment, what’s of

Chris Concannon

It I client is of business a business would shift sticky a the business other quite think – rapidly. I that on versus our importance look just seen as a business is it just we’ve Rich, and platforms value and we add global value the the client at business. that network dealer-to-dealer And

build that look areas out using that and into the in time emerging other in you cost, and network. client advantage both and that advantage we success product like we’re human the rates, build in an our munis clearly value of as have if at to jump we and markets. the So an terms enormous investment That is

those as we metric network of look an at and our the – great is value that important So global volumes, so client of growth. network a

Operator

Jeremy with go Please from Thank Campbell our Barclays. question next ahead. you. And is

is open. line Your

Jeremy Campbell

thanks. Hey,

a and you. big As very a you has non-U.S. highlighted markets, been in pretty strong and volumes growth guys and particular, for is pretty have driver earlier, market big clients been emerging

of of X% million have I every $XX revenue. is that to million pickup guys noted market overarching, share additional $XX think kind you previously like

wallet whether agent, gains kind your deeper what local of emerging are function non-U.S. the share switch markets with recent relationships in your a for better expertise market just or share. and new new wondering, of kind potential if Maybe that’s markets. to sign-ons client Just XXXX in of that has settlement and discuss expectations maybe accelerated in

Rick McVey

No. Thanks pointing for that out.

progress remarks, – that EM about growth And over we because than of Global several be And did and highlight the been growth. in has couldn’t international faster we more opportunity are making. it’s last the that primarily the prepared we North our excited years that. EM with was volume America. our We’re Europe the American part saw franchise. But and a active increase lead franchise in also success client in last increase within clients we EM a XX% in the the improvement in Latin in significant an year and region in took Asia important of our in

years, And currency primarily what feel about volume many trading. hard EM is for EM great were driven we gains by that our

We where we in acceleration in interest trading markets on EM for seeing XX growth an local are platform. have now the market different of local trading, available

it’s this another is demand electronic trading the really sign turning healthy growing this and global opportunity very a that for automation CEEMEA with States Latin in well and So is much the trends into Asia. beyond trading United America, and

Operator

Thank you.

Chris with Our Point. next Allen Compass question from is

Chris Allen

morning, Good guys.

and up investments following where in Just keep driven the talked on on ground the – about investing in that your growth boots AP point, market that Is to regions. from could emerging going? different the LatAm you be

Rick McVey

There’s of some that. certainly

headcount on growing We’re demand investment. we But our the technology capitalize are a it’s increasing also that to internationally seeing.

client that well combination the as it’s investment. technology as of So base international of people clients we to work serve growing facing with a

Chris Concannon

we’ve add, just in Asia. investments, of Latin a in number certainly, headcount as will I as And made well America

human those as of in We both seeing the regions penetration people are growing result at investments regions. and we’ve paid on made a dividends in ground those our

Operator

Thank you.

with Hill next Rosenblatt. comes Ken Our from question

Ken Hill

on electronic moves on volume a an bit little of time, know had remarks. morning. that hoping that I opportunity. trading, I kind in an that’s was you’re prepared more muni bond that move it’s good Hey, over been could know might the hearing guys behind I of kind it little I a scenes update provide bit for you opportunity what a more clients a the from more question because effort, little the of electronic. mentioned big you bit a hoping But sometime

how long of some kind you maybe see clients, electronic substantial out but only before not playing see doing with what more volume. So we that you’re

Rick McVey

great area. of a question. got Great Obviously, Sure. we’ve the focus on muni deal bond

seeing prior Just both December here increasing January year, from our January, volume month-to-date XXXX. in we’re and obviously,

$XXX in over just the volume million to close in month. We’re

a muni have So accounts, among into advantage. we the dollars institutions where competitive SMA moving are are a in area, retail a from exciting the hands which large seeing shift pretty we – dollars putting of

uplift we've of technology those their some institutions. adoption OMS So they seen rewards both handle shift we the seeing from desks. that as institutional traditional, our they and provide clients And investments also solutions we're muni how from

So we're excited about the muni space.

We expect obviously to see continued the penetration in institutional our clients region. across

also Bonds benefits, found We seeing space. are muni many the the are in of Green

as activity So of we're demand and the deriving are a benefits in our Green growing our result Europe, U.S. in some Bond ironically. Asia both Green a muni of and result Bond that the as from is growth coming Green Bonds

Operator

you. Thank

Ghosh from Credit question next comes with Ari Suisse. Our

Ari Ghosh

everyone. Hey, morning good

cross-sell And So maybe offerings you about the Could year? of the about and rollout you increase? Thanks. new little the just I you protocols think of Chris, about take adoption some on the space, that these positioning of timeline LiquidityEdge, industry this of – your then talk update could back one. this bit see treasury opportunities streaming a maybe as to some on around us if the competitive

Chris Concannon

and over obviously growth their XX% got excited the XXXX probably tracking made question. and and XXXX. the Obviously, the just XXXX LiquidityEdge ADV in about business primary was dealers over dealers XXX XX and the XX a LiquidityEdge We've year. the platform, the that great in about banks has on very Yes, dealer-to-dealer we're acquisition over of progress

– we MarketAxess think the integration As platform, LiquidityEdge with December launched hedging of to solutions the we start the we able about that we're year. last of on in

expecting hedging the also are coming in quarter. solutions net second We

corporate our build bond hedging enhancements So solutions – and on for further trading. our out

actually dealer-to-client we be half More of launched clients to integration the MarketAxess XXXX. in the allow second where expect dealer platform our institutional we access to that our liquidity, importantly, from streaming

we're build well. So there as out the about excited

Operator

from question Deustche Brian Bedell with Thank ahead. And you. Bank. our next go Please comes

Brian Bedell

spending a kind Maybe initiatives bit you few strong a guess, the in of obviously talk And of little Good Thanks. very how how I Chris obviously, little these Auto-X the more – maybe and about be a Tony, areas. you've traction developing could growth again, Open you it scalability a morning. you're on there. but would them But and Trading. rank gotten bit, if

also can XXXX talk solutions already about growth the Chris, being plan a is you the that how I in portfolio If for area. And scaling. spending mentioned Thanks. that you the big then think and trading

Tony DeLise

Sure. Well, scaling, trading think our automated in most I it's the on solutions. evident first

Auto-X feature, billion Our just fourth the I mentioned, as in $XX alone. saw quarter a in volume

execution we seeing So to didn't platform. the And volume we of yet offer are add coming levels those additional across headcount auto functionality.

within We have Auto-X. by additional are also out solution. that in rolling is penetration their that offering seeing sizes to better clients adopted what already And Auto-X I or either mean product larger

scale think about trading because portfolio of but of adding part growth then of client adopting I XXXX, the both some has a really that's So the been most building features is largest adoption. done year auto but execution. clients And use new auto their built, throughout as the now and has the it's it's increasing we're execution solutions also clients probably current the

trades. about client now and base portfolio our XXX institutional That's dealers We execute XX solution. trading portfolio to now our traders supporting across have clients in XX onboarded pricing

So do excited trade about portfolio block we're much the and trading volume those what large through can portfolio very trades. technology how can of come

Chris Concannon

And one just spend. add-on the then on

to out software double XXXX $XX XXXX put million. in almost for XXXX capitalized protocols, at looked so enhancements our it was $XX roughly in spend roughly these million, rolling just XXXX perspective, spend development, platform the you the it new If

look there. some at prepared the and When remarks, we saw – XXXX you or commentary in get color some

uplift spend. development have software to that another in expect We capitalized

heavy So uplift investment year another of a XXXX. expecting we and we're had big XXXX in in

Rick McVey

I just as say $XX And Green nicely. in in scale Green we add, we trading saw I and Green Bond in will $X.X billion quite month activity We XXXX billion close looked just mentioned, will – have in Bond Bond already initiatives to our this alone.

million So because planting excited we're Bond our in We will dollars trading platform. for our ESG we much for look initiative And enormous incentive XXXX, get excited, trading. of XXXX at every for didn't clients Green we as five about in that's an we're they Bond think have trading. for Green on credit, an really trees credit

not And is quite ESG a as but you XXXX only topic, in in XXXX. hot know, clearly

So scalable I Bond platform offering right I'm a the probably would little on trading say, biased. our But our incentive is now. Green most

Operator

Thank question you. Blostein Alex Please Goldman Sachs. Our [Operator Instructions] is with ahead. from go next

Alex Blostein

and the question morning guys. Good Bigger picture question. for guys. Hey thanks you for

model. trading electronic obviously RFQ beyond expand So, of to credit of sort the continues traditional

all that kinds the part have where RFQ very strong of obviously market and will outside competitive think how some help MarketAxess portfolio think in the for us You importantly, of trading market, part other more presence the newer protocols. pricing Thanks. Can model, about in dynamics guys launching of the which the you is protocols? landscape obviously you those of dominant, and of and evolve

Rick McVey

at I'll crack that. Alex, morning. And Sure. take first good

First growing of is and portfolio demand from although multi-dealer is very also early stages. seen still trades, in increase in that the have consistently but to And is market bilateral some trades be occur all, on there is trades. portfolio to it consistently we what tend trading starting heard the portfolio

the primarily taking on our system. a processing value early in that's trade are place trading by MarketAxess, portfolio providing off we But

use negotiating that's portfolio expect understanding bonds automated in taking solutions. terms of trading dealers I advantage elsewhere. online. off still more benefits that and that spreadsheets to then So develop it's the portfolio would and pricing taking the will they what's processing And in to generally with the benchmarks the that are system continue place our clients of and

the been rate X.X% of early trading we participants But the trading portfolio And has and the And tape. we stages confirmed or the portfolio X% my trades be we other we've place in TRACE hit view that like that that believe TRACE very while track that to Taking around high, have an do with estimates what today. high-yield. is X% major thing also growth through high-grade to that in is it's volume. more X.X% portfolio –

still the segment important but So and market. it's of relatively a an secondary growing part small

bonds as very well to live We that that piece other market has and new trading some emerging live benchmark is led closer trade The think based to that is for environment. as can our in issues a demand sessions really markets. investment there active

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Chris Concannon

you our we add RFQ taking auto market creating solution. a and just And functionality, when traditional about no-touch I'll execution the think are

doesn't pricing While the be automated over increased. we change, continue to execution time and the an execute speed can they be auto RFQ are of RFQs how

the When U.S. I the speed the at a that in it class a model planet treasury you rates – serviced of for as price to business market. asset the RFQ or the dealer-to-clients up stream So an a get RFQ liquid benefits from look streaming be model. on the continuous our dealer-to-client market, RFQ obviously you similar market to most is continues by into request type

markets live form. So Rick mentioned, solve we offered. are there It's being execution looking then for at to pilot market. our the help speed request solution, not only but well of just that still a as the solution stream is as And in out in treasury

We their the participants dealers the waiting dealers as to and capabilities live on change platform critical are the out day. stream to And still stream on have build platform. seven the currently pricing price. dealers throughout We're in market live a that's connect on credit XX a

by routinely on who development – the our obviously, out market them is think know Europe change. contacting pricing. headed I live letting all to activity that's traditional And our the when our Mike in platform. can that's about dealers build is start as in is trading of streams on solutions an And routinely important the desk markets desk and Sheehan, And trading clients, for both U.S.

active we on So markets. live going of the on, and ears the trading eyes have

Operator

question And William Shutler ahead. next with our go you. Please Blair. Chris from comes Thank

Chris Shutler

morning. Good stabilization the over has been looks early questions, it's days, just trading, course that more in guys. hear of to the trade think for and is then as saying but Hi, like pretty a become portfolio in matures. caused time that relative Two our your over flat high-grade, portfolio secondly you're fee it talk How averages? functionality that we about should share I what current year. that capture the what's about automated does Maybe And volume in percentage. total of your Trading Open

Rick McVey

a Trading But overall a take market liquidity the huge volatility. XX% increase crack participants. a in this Open last that it’s percentages, And a spreads decline at with in decline look That saw opinion year, widening Rick. pickup when had credit case conditions. Open year Chris, Trading first significant of is vary I'll percentage credit and But throughout volatility we at when it Sure, spreads. one. you in the will new in the we a credit for fourth in market also year where in and still our quarter the addition was market we had spread not in significant

think So conditions. different it see I vary market you'll with

much dealers to responsive automation point remember tools the to allowed is our be system The trading more other that inquiries. client to on have

last we've algos responses two So half done to on the them work many over or on of MarketAxess. gone have way of dealer year with promote the back up their the the that and a

it's better platform. the So providing is which to but Open year declining the conditions liquidity pricing declining throughout saw an market of I think important spreads a combination offer. a Trading get continues also bid dealer additional where and on layer

Chris Concannon

that add small of while a portfolio of to market. have middle clients passing of really off trading, And something and It's today. a lot requires are a portfolio part striving solution, it's also – large I’ll market. still that These hear that it blocks we deal in don't about, It's a relatively it's the market that we are going the large we touch the that today, just are in dealers block efficiency get spreadsheets. something back great been trading

workflow from trading it is solution a down so a either secondary dealers more we brought our first. positions generate the think activity a really at on trade. Over result liquidating solution can platform as And of time portfolio

So And chasing. the target have and today lower we the platform don't market RFQ quite again the get the a than and is pricing size on is can pricing portfolio of traditional initial of it our that large. rollout portfolios we're but trading its one that

Operator

call I'm I further And the like for you. Thank the would questions showing final to his queue. Rick any turn not back McVey remarks. to in

Rick McVey

look for again up you to next forward we with joining catching this and you Thank morning quarter. us

Operator

gentlemen, for today's in participating you And thank and ladies with we conference. that,

wonderful You may now disconnect. day. a Have

MarketAxess (MKTX) 29 Jan 202019 Q4 Earnings call transcript