MKTX - Earnings call transcript Q3 2020 | MarketAxess Holdings Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

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 call is being recorded on October 27, 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, Third the XXXX Good

Rick Chief the President Chairman review the Financial initiatives; McVey, For call, DeLise, Tony and discuss and for Chief quarter; and then will will the the Executive results. Chris COO, Concannon, review and Officer automation new financial highlights will Officer,

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

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

Rick. me Now, over call turn let the to

Rick McVey

was Market volumes and fueled four revenue operating high-grade revenue with over trading points quarter higher to up you review estimated market record during from a percentage $XXX earnings Open transaction cost a up XX% record share by share morning, quarter. year-over-year, growth of to in driving an spreads Operating are Trading savings an conditions. up per over us two of EPS Credit share, electronic up show gains our the adoption fully and acceleration were XX XX% XX%, Diluted the percentage year-over-year. the $XX and drove year. ago. growth year up of our last trended levels during quarter. client joining of lower up Trailing million the was points grew results. spread margins XX% of XX% quarter. conditions XX% this to over XX.X% the both Good earnings Credit electronic, months thank for growth XX%. business XX.X%. to volatility third mixed trading was growth a elevated growth the million Slide income and a of million $XXX $X.XX Sustained diverse on participants rates and of and Revenue range four for update for X high-yield volume market market versus quarters. trading earlier of provides share

from year. show QX, XX% up issue to $XX.X levels New approximately XX% debt high-yield than approximately volume market trillion. substantially from and year. high is volumes dropped QX higher declined X% last growth single-digit this Corporate was high-grade from year but TRACE but last outstanding QX

We positive to also system. are This high-grade high-quality, factors pleased maturity long trading bond our trend in average update an on years with Trading. in QX. volatility in to the lower strong growth more average our show Open to year-over-year higher. conditions, one demonstrates It growing to the see provides of market Trading confidence, the our fee five on of return capture is normal maturity client volume Open driving Slide continues volume. for spite

revenue Our of growth versus a increase XX% unique marketplace delivered and all-to-all of volume XX% year. last

delivered revenues. estimated company clients, row, transaction to a $XXX exceed savings in quarter third million our cost of the For

billion and over liquidity are opportunities $XX per liquidity We in and credit adding delivering volume. takers to by XX,XXX notional daily day over value trading providers

revenue. our Nearly For volume initiated trade Trading Open at Dealer Open large and nearly firms lead least grew the XX% in unique of client a believe the approximately XX% our on year-over-year. unique Trading competitive credit liquidity flow, one Trading in investor provided dealer customer XX% electronic order institutional and firms and create of X,XXX and quarter, during represented sustainable completed volume solutions substantial in trading trading. network X,XXX quarter. growing We commission technology Open system advantage third and the our

also and product Trading. to the protocols areas are Open new about we excited trading adding We are

Now, let me automation initiatives. turn to on and an provide the update to new call over Chris

Chris Concannon

trade XX Thank billion billion you, auto-execution credit functionality from X management momentum the in large in clients third as trading growing platform Auto-X trading. with represents strategies. in realize quarter, in up used dealer of dealers firms, third now algo use grow Rick. approximately the the and in clients The of from up over XX% volumes to efficiency to demonstrates of Automated asset the of $XX.X quarter, gains Slide the quarter automation trading million of in third X.X count resulting rose third the algorithms XX, year. XXXX. the quarter, responses more on our trades. XXX,XXX including prior continues total the automated $XX

trading solutions, automated likelihood our We a continue responses strong rise see of trading which the inquiry, the we number market improves growth the ultimately execution. adopts sharp As to electronic capabilities. average in per of saw increasingly in

costs. to We improve streaming liquidity markets from new Goldman footprint. credit Live aims Even global friction to prices of have book. reduce the we in into markets four markets working innovation driving our provide XXXX, has remotely for per a X live in investment-grade doubling Our week order per while Sachs focused to pandemic, responses inquiry the average nearly designed our enhance remained trading inquiry bolstering strategy the last Slide recent outlines technology commitment on number bring responses for through risen credit efficient announced during and liquidity, from new product and quarter. our steadily transaction initiatives. firm U.S. to

our protocol Open a Mid-X, launched as We Trading of session-based part also called recently launched marketplace.

third a mid-point our Mid-X is provides Our by plus offering In with savings and trading, quarter, composite we we our and significant quarters. potentially matching also available more liquidity Mid-X products, data add for achieving aim post-trade products cost businesses. existing at which pool the acquisitions, diverse coming European announced to access participants in plan award-winning broad two price. currently to and while enhance to the

significant post-trade in aggregate, of trade serving they solution data venue to electronic reporting their a the will municipal acquisitions Group's bond for institutional The dealers relatively our MuniBrokers, existing central acquisition Hub acquisition bond services. we dealer our solution. extends improved strengthens both and Borse our across capabilities own, expand into Our and add value life-cycle transparency municipal are Reporting investors trading Regulatory and dealer regulatory aims Europe Deutsche small to believe, global clients. our full The brokers leading with on and data of business

trading summary product quarter. categories. close acquisitions volume across expect to provides We both our this a Slide eight of

up share for billion gains largely to Estimated X% quarter, were year-over-year. year-over-year to by volumes percentage points high-grade year-over-year in estimated XX% volumes high-grade high-grade market were due up and U.S. increase $XXX to XX.X%, while U.S. two increased volumes. Our the TRACE market the share market U.S.

led was rose share credit XX% up by up in more points year-over-year, X%. estimated high-yield XX%, volume trace XX% estimated category market as growth and Our was U.S. reached percentage than our a other record volumes market high-yield of up again trading significant U.S. volume platform. four

market's year-over-year, market volumes than with was emerging estimated results trading down XX%. flat pleased our were more we as are While volume the

difficult its maintained a dealer-to-dealer market business compared in environment. XQ Rates market to XXXX Our share

later new with solution trading this capabilities of in our net However, investment continues quarter. the rollout rates expected our hedging

rates and quarter, fully expect new MarketAxess to launch to Live the this thousands integrated through full our users workstation dealer liquidity post-trade within these MarketAxess dealers clients streaming trading and front rates offerings. of click-to-trade will OMS also allowing current integration. for to benefits of access and tangible trading both end streaming through our available workstations U.S. existing treasury our We our solution. be made with institutional our We credit see clients investor

critical have thus the quarter, market October. been core green green continues investment this the overall bonds in our far over $X.X days year Over remaining mandates. initiative nearly clients' across planted as regions of world. XX,XXX bond the trees products traded platform, In in trees With trading important month, resulting bond were our third of billion trading support green remained planted volumes Our a being in initiative. on last flat credit to result ESG-related trading to worth four trading our XX,XXX in

last more from approach on October is end. However, our we XX% the average month platform up the daily volume as year than

to me an provide let on turn call financials. Tony to our update Now, the over

Tony DeLise

On a million, The year-over-year, income up in year-to-date And you awards. services $XXX and Revenue you, provide was SFTR capture five XX% year-over-year. to Thank reflecting Services XX% and services reporting excess Slide U.S. Information the benefits up percentage $X.X in and up rate commissions. share-based quarter. related effective XX% up the quarter quarter. earnings operating was quarterly XX% during X, reflects to post-trade introduction On reached a XX% million. uplift in in was XX.X%. a was new XX%, Chris. performance. summary credit was margin margin tax XX.X% of revenue tax third points the operating XX% increase to of Treasury of higher The our fee up Operating compensation revenue million the $X.X trading basis, of in the resulted was inclusion volume, third trading

$X.X additional the uncertain an million. During quarter, tax we positions recorded reserve of also for

rate the effective XX% of We year range our be XX%. tax that stated to will guidance full within expect previously

our U.S. bonds slide longer capture $XX XXXX. part commission The Our acquisition. the years sequential largely credit mainly diluted million. of in on year-over-year, fee increase recent due the on the XX, quarter, XXX,XXX and diluted per U.S. by XX% year-over-year, million Average hit compared was in traded driven to eight high-grade higher years year-over-year in to $X.XX. duration. due basis was to high-grade was of in have trading revenue, third share LiquidityEdge inclusion as per volumes quarter of higher commissions. to treasury transaction laid over the fees count up U.S. issued we maturity were increase On fees higher out volume, Total platform fee trading trading the our EPS $XX shares years variable the and and X.X the a

details. along $XX in close increase with The a an and initiatives were which per million an product a Total acquired category level increase of basis, shift fees growth depreciation quarter The half the and was other of amortization year-over-year principally individual uplift dealer limitations fees main expense personnel continuing Our XX within with products distribution credit expense quarter. tied $X.X to treasury the Principal to up of to due quarter On similar up second more quarter, in in other and million, with to the plans. is for our a mix to favoring of provides in the development financial inclusion year-over-year is trading credit rise the unused for capture compensation performance. fee amortization expenses sales-related increased support expense. second investment bonus costs XX COVID and in year-to-date and were increase Slide distribution the among open you and product benefits XX% than match principally compensation intangibles. XX% marketing headcount high-yield was the and in to the volume. at the to Fee minimum the in provision, volume higher in T&E to reduction the The year-over-year, benefits contributors of due by than on variable both trading product fee and reflecting level, a due $X million accounting one the reflects volume. change. rise for in transition Clearing were

upper close XXXX costs, expenses quarter. $XXX acquisition-related On end close the and Slide but $X of year will XXXX be post-acquisition Hub balance includes full our MuniBrokers in of expense Borse transactions sheet approximately the Reporting view Regulatory impact our The or to excludes are the transaction that guidance XX, fourth near of provide million we expect million. to expected range Deutsche any information. We

self-clearing, September new compared and as and million line $XXX to including and segregated XX June clearing cash deposits. Our XX. balance million receivables $XXX Cash from customers unsettled investments broker-dealers, has several for as were payables sheet related of to organizations of trades to and and items

cash quarterly dividend the $XX million. quarter, During of the paid we

and XX,XXX for repurchased under X,XXX shares the with trades shares in self-clearing customer position which We September volumes, buyback August stock with funded and end. house the program month deposit account $XXX We our XX. volatility with including at settlement aggregated of awards. requirements, We employee will fluctuate XX,XXX Open agent shares requirements on went associated exercise and certain total bond U.S. These settlement clearing activity, million experience. also quarter, Trading market during settlement and live reserve

upwards a costs per we results, XX%. regular As has of of quarterly our decline third a U.S. quarter our to dividend. clearing a for $X.XX ticket on to approved result bond Board by conversion basis the Based self-clearing trades, expect on

let Rick. turn Now, the call back to me

Rick McVey

Tony. you, Thank

are business momentum new expand with are revenue. and share pleased diversify in in Market of products trends trading results. the our promising third We to protocols ongoing our reflected sources products look accelerating and core quarter and

and We are for We be announcements. networks for excited open post-trade recent the client about services happy acquisition through trading your questions. our growing to line would the now

Operator

from question Richard first Repetto Piper comes Our Sandler. Instructions] [Operator with

is open. line Your

Richard Repetto

and me quarter. is particularly morning a strong to congrats on good Tony. Yes, a What self-clearing, interest

So be timing mid-single now you I'm down about the more the does quarter? at there the in over of go trading of that would did open I XX% Will progression immediately running does that that been just to down you it where revenue? aligned these of And And sort it's see, for hit ticket. any guess, the time. per self-clearing? guidance, think savings trying thought it say in to And XX% get fourth I could digits prior how with I

Tony DeLise

Sure, sure. Yes.

side, have a now, costs way in number Rich, today, typically side cost on XX% treasury well. the but Trading we just for the the reminder what XX% or trading-related open on that revenue. background, right do on - treasuries, that to clearing also something So costs been And on credit on we've referencing treasury just Open about in it's clearing the side, we're little treasury in revenue. then of at credit like near the by the combination treasury side. XX% the credit reference were business, term, place model of clearing side And our XX% clearing as leaving or the again, that's costs a you of And clearing of run,

we the look So revenue made clarity ticket by the which now way upwards XX%. clearing those drive thought providing clearing of you the at I've we're on drive that percentage, when a a if really cost of costs a cost we more per I'm little on percentage basis, and clearing think past down we talk saying can of calls about that better commentary - basis, on single a costs digits. out to some getting that clearing into ticket we looking is per we down of could

Open into If percentage say you that X% or into Trading drive revenue. down translate X% that and can we of it

Operator

you. Thank

Jefferies. from Our Dan question next comes Fannon with

open. is line Your

Dan Fannon

strong. million, Thanks. Good morning. My come to which, question is on the obviously, continues fee very in for

on You to curious yield just and maturity on of October, real increasing. any about sustainability change mentioned update in But side? activity maybe behavior if there's been the terms

Tony DeLise

Yes.

question on on duration, per lot We've to there's which by go? yields. Dan, So factors of the can and where years influence it a got on million. influenced fees the high-grade side, The that maturity - is

dealer tiered You've got fee got mix. trade our plan. under We've size

is goes We yes. differences What lot I plans that you, quarter, high. fee XXXX, post-crisis even have are would variable you a the live the seen XX XXXX, into years all And markets, above dealers had on not per around at so capture hovering tell there U.S. distribution side, plans. XXXX, if when seen the between to We've look fee on a RFQ, Open years Trading, third We've high-grade you protocol maturity $XXX post-crisis. disclosed there's back go this million. on you mix, to

it's it's going So go. where to say to tough

before, $XX to be in either this percentage about had per yields sensitivities, yield talked or way. years of every in one could $XX-plus terms you plus point maturity, a curve the or minus In across change minus we've one-year if change million,

a a trade share We're market are right lot tending to are, standpoint. doing variables yields longer-dated with from But of paper. into So just better now there's clients mix. the where

We better paper and longer-dated up. are doing

think of don't us or that of where to know another. going way but go, one I influence a lot it's any So factors could

Rick McVey

In this month, Tony?

Tony DeLise

the look quarter. Dan, so a for When XX-day I'm month what you the Oh, days sorry. In to seeing in capture, third we're into overall in you to quarter. fee at be captured. it it about credit, this give - We're - this identical almost quarter, asked to early XX month so is going XX-month you a

I'm XX not in that, Now credit big not any granular seeing a fee to in get these overall XX days. or move that's an than we're first but going more capture number.

Operator

Thank you.

with Our Hill Capital. comes Ken next from Loop question

is line open. Your

Ken Hill

Morning. Hi, good

with So you'd the increases Borse. footprint mentioned reporting post-trade the I that's Deutsche from worked had acquiring you be services? European regulatory into pre- Can you'd clients, a talk opportunity question hub or on pre-trade think technology for about how to I be provides data announced and it solutions. you going

provide expenses bit. I in flesh can hoping little because the forward So here. a profitability forward maybe out maybe kind that the of could don't you on then Thanks. you are moving And guidance anything those for believe

Chris Concannon

Great, to to many Deutsche XX-month largely initial our a migrate Obviously, footprint time close part costs clients Hub. that business APA do XXX platform during is acquiring deal Hub. are in With Reg Borse clients accelerate first Deutsche the only post-trade adding our to business. onto over that data from exceptionally Reg thanks. that and And There clients Borse. question. expect frame, the well from platform into to And migrating within the real over plan the expansion deal our Obviously, how over in to I'll scales to reporting arm ongoing of that the take within business. current transition overall regulatory data the it support the that We of Deutsche we're minimal does allow The some but our to expenses business XX- to for value our it our add build we platform. margin process. Borse's Reporting

the with Tony let in can of those the the of all costs. also but business, obviously, extract opportunity current that clients the data future. I'll any only data services and some just not value bring add about their details on reporting additional the to excited the we're So upsell

Tony DeLise

both So, from the a and cost - bit I'll the you revenue Ken, side. little color on side a give of

that fairly we XX% the over $XX side, there. accretive That business mentioned, as of revenue this million on this it. fairly but will transitioning add Chris upfront upwards margins client on to On it's basis, that year to be have the amortization expected on through are be high-margin to margins high would intangibles, acquired somewhere around accretion acquisition, year will purely one, transition, a one. base, And on costs we but move revenue. in it add, expect And an there of some business,

Operator

you. Thank

Our with next question comes from Ari Suisse. Ghosh Credit

is line Your open.

Ari Ghosh

Good Maybe morning, for quick one a on high-yield business. everyone. Rick, the

hit more now you share it last market different record participants also from by to here, you appear and in seems the including high-yield ETF got a driven a seems mix several quarter, angel, you So be activity, new you've these it have - like names probably like fallen higher, slice. creating gains factors market

here portion So might initiatives? of you transitory a that's about of result the of the larger an can that you and versus some share a for as volumes guys be more talk organic in just little market terms addressable

Rick McVey

to key a into into only high-yield the Trading it's experience, Trading. and new platform part liquidity solution overall also improving market is broadly more that Open more of to the attracting high-yield that Sure, do clients. And happy not Clearly, Open that. deliver participants is we investor-client our

growing our new So increasing and flow the high-yield as in hand dynamic glove participants active ETF with you marketplace investor-client very really been point there cost out, a high-yield see trading. it's product and in transaction order you savings where share in healthy are are

think, I dynamics, sustainable. those So are

trade through part there's as comfort well. actually other is increased high-yield going the that and we're with platform seeing larger sizes The

sizes has as trade $X in adoption million. yield $X coming to our a million For under category high in time, good $X long seeing business the and dominated well. million trends We're by high-yield really been

the it's yield, platform. are on a client of size trading with comfort So larger high-yield transaction savings the combination cost the our and that and market participants high new active

Operator

Thank you.

Point. Allen from comes Compass question next Our Chris with

open. line is Your

Chris Allen

trends ask business. to MuniBrokers, update on And there. expenses on muni platform an and give morning, help then how some activity electronification platform? that's how deal? the colors you I that Thanks. enhance terms Any if us call wanted any the current to around about of going guys. on I maybe Good - details in could on wonder your is revenue

Chris Concannon

Sure. Chris, that. take I'll

Trading business I QX million muni this growth solution. our business, grew and key to the a muni Trading $X.X if obviously, revenue Open QX the muni muni On XX%. quarter, munis by over it certainly, of excitement A I businesses, year tax-exempt about talking XXXX. over think particularly around XX% muni in and at was grew Open the ago, in we in business, factor in the Obviously, our our look

seeing solution. lot the by So a of that being we're Trading growth driven Open

Trading, tax-exempt munis Open for in in our XX% close is penetration in to Open volume. Trading Our muni

certainly, dealers. of role muni key our Trading is Obviously, more we're So Open business. drivers the more functionality, adding playing a in growth

We also Europe the munis. MTF for launched in

our a clients to European access is market. So can important munis looking muni solution for fairly through our now MTF, access U.S. the which European clients

volume - business. deal to MuniBrokers, one On brokers marketplace supports leading the muni us, the MarketAxess that's the XX so interdealer on as acquisition. we tax-exempt an the taxable It's of that content MuniBrokers an that itself, platform. aggregator on the deal, important and and but the important current our currently an an muni content electronic part content. in And close of to our obviously, strategy look a of across is $XXX is around deals for It it's MuniBrokers million exciting platform. that's at going small

will be linking making the around the of the together platform With the platforms both lot on to the regards MuniBrokers I'll of overall MuniBrokers both volumes in to integration grow two content platforms. cost a let the and answer Tony of platforms expenses, deal and that. So use

Tony DeLise

Yes.

company small largely fairly a mentioned, a subscription Chris today, model. as MuniBrokers, on So

And of And dollars, the in million that somewhere talked I'd revenue MuniBrokers, we're So in - million Deutsche outlook be revenue just expenses we've the We're contribution the about the the to be year will up - MuniBrokers. both of couple And amortization $XX say $X it's will visibility somewhere intangibles. revenue we a so of amortization of on million or or some about visibility deals range. next clear transactions, clear deal, On two probably excluding near-term. $X you a just have we've look million is at - for on expenses million $XX looking or $XX $X what in be we in the to intangibles, in Borse $XX add of range. the expenses the at talked year aggregate. having million it's clear, When not million to next pieces. inclusive the for million

Operator

you. Thank

Our from next Kyle question Voigt comes with KBW.

Your line is open.

Kyle Voigt

Hi, good morning.

going as So give guess, secondary more is I to market issue, markets. the bond the protocol? you other And market multi-part. this market the platform? us you timeline lastly, of where think of new what - is? think and terms percentage of RFQ could story us have a the about pricing, priced the you help Sorry related standard relative about makers just multipart total a sense be Secondly, us market or active question remind to pipeline can the live the current for market ultimately I how you is story your a you the to share how have and big market of first, in in bond and your can makers many onboarding

Chris Concannon

Okay.

and Obviously, do bonds, on streaming and join. the Right are are that on prices XX and and to of So - dealers with - sizes for questions doing the markets bonds markets. XXX an that across per exciting two-way Average to one its live $XXX,XXX live live full jump and offer what prices streaming XXX the active we live relationship makers. those bit us most Goldman market so in today a clients Sachs partnership, the live where I'll an most currently announced they'll announcement around for be platform. a live there bonds. three dealers we now, approved close on carry for prices, That's question. we're across others in streaming in we all but are expect markets order, approved markets

markets to large streaming well, of plans number in as a for expect connect to those pricing the live are We work. and already dealers

market community excited given this into in non-bank dealer makers large is we're the both ETF that year, from early and pricing. and are live the excited community dealer what that like So about look excitement will the next and market about quarter bank

thing can is markets more exciting client prices a is completely dynamic. trade at other - add click a live you click to live but solution, can prices, can of you against side join importantly, a trade those about The the on market. different the It midpoint, so live either

it avoiding the facilitates cost orders facilitate leaving does So crossing spread. cost execution. available clients It clients live for of

as streaming do market So clients want that? to the really dynamic to liquidity live both the the coming of able book. committed With it's from order as regard makers well Tony, being cover use to you pricing,

Tony DeLise

even around live promote or rebates based pay spread. - it incorporating incentives have product we liquidity. trade spread. the model a promote providers. liquidity, on side, bonds some on those model it's where markets, And pricing fee for set for typically tighter the the will bid-offer or tend favor be taker market liquid to on and liquidity larger to schedules We're also expectation different It's So each to that and a trading And more protocol. liquidity are will bid-offer fee have sizes a model schedules

addressable the actively capture rate addressable asked share what When in XX% in bonds, that that view our around issued what's going of will in as the be lower. sure largely that So trading our runs market. we trace Kyle, in that around of trading, you is be first to volume. of this then the we're revenue to capture. to look but fee say, share today markets, And typically third And is our the part tends question since four XX% once out at weeks not live newly additive exactly said market? we've we it than the as addressable settle headline, again, market past, And lower high-grade where

XX% Second new to bigger standpoint, from than was quarter quarter much more say, a new that was that it's which at, XX% if or a look the issue with you in you issuance, normalized third a range. but

actively The addressing other markets or month of bonds. Any is bonds, market. could the another piece that live XX% given story is to quarter, XX% where be traded addressable

XX% is really So XX% like at you're looking targeted. where something or this

one know, share to tends most statistic be right bonds. ago, it first where that week new in X%, - our you one obvious trading, week from it's year be market our would traded in and actively trading. now, was one of but those which give as is After where it's of It's you around Our issue the X% is I'll - a just or most share around X.X%. that breaks, newly X.X%. And share lower X%, issued probably in first around bonds up

you're lot you not bonds. see obviously, different share than in seasoned market our So - for a what

So why protocol to us. so this important is this is

Operator

you. Thank

Our comes William Chris with next Blair. from question Shutler

open. line is Your

Chris Shutler

Hi, couple of good morning. questions. A

live block we markets. share turnover? market an view liquidity market more your bonds? new on it already as in or markets trades update Do then just on Or First, are live of secondary X is a efficient trade creating market way liquid million maybe helping secondly, you the to above. and And pretty

Rick McVey

is aggregating markets, live liquidity both, new credit honestly, liquidity, right? the market sizes. streaming So it's it's at institutional - on new We in are

new that is this because there size While retail live provide institutional out institutional there are with access. it's platforms liquidity,

that allows, So we it's provide on clients liquidity as the new I of liquidity also to type It well. placing a are mentioned, platform. as

to RFQ to available post. the to and always RFQs of client way efficient solutions clients outside liquidity provide for because So it's and a live it's responding for an traditional

quote efficient to RFQ. view liquidity. it - Obviously, an to it access versus to So, solution as use it is new a seconds more is in a trade click running we

that more coming is into order-based an and RFQ much participants efficiency we see Obviously, hedge are of platform some market. the the So attractive attracted also great. new versus is to based platform. funds quant to funds our It an

So in it attracting given is that respect, new liquidity that see market. accessing participants our the we new

Chris Concannon

- I a market you was was was was around bit. on on paper, Where encouraging share then, ago. market just in and was our block about for block short-dated the when paper, trading, part in was little a XX%, Chris, it which But And market trades, as is the short-dated year paper. block same there, little in under down longer-dated look our share saw XX.X%, the hood, share it if it a trades right the But decline we up.

there's to there's a the of paper share with years So a you trading, market of little curve. long-dated up. the little less was Market see an bit there. - offset down at end but could the bit, the shorter - maturity, little was a There's share

Rick McVey

costs and trading important ETF and fixed with of velocity. growth but there turnover optimistic bring feeds automation on I about new important conclude, and growth thoughts more And basket Clearly, be market mix would on activity the then Chris, activity Auto-X velocity the on embracing in dealers the income to and a the with many fixed And into in indexation algos the credit. the many is assets, shares, trend in markets. our significant that tradable by then reducing only embracing the in more long-term going bonds. form in it really participants ETF into that the creates earlier credit also reasons not that and global underlying trading that's Chris new creates open saying transaction income and of are clients just shared stats creates

when in So positive turnover the emerging we in start that ahead. years on together, long-term trade put velocity to see a we story market all growth and

Operator

you. Thank

Alex comes Our with Sachs. from Goldman Blostein next question

is open. Your line

Alex Blostein

in relative sort providers are in of the of bit a a maybe color Good the guys. on just liquidity book of kind point. color Great. on book. of for little on Open sort versus there some the the So today composition of was Rick, trades any what's you been versus more it players? you so or the a year the thanks ago, maybe of size rest And last could growth of of makers Open "high-frequency Trading traditional that trading" market a guys platform? credit little morning, mix very of bit the maybe for Trading building versus on hoping driver that's the systematic strong But the question I color that provide Obviously, of

Rick McVey

we when also client the MarketAxess, they do where seeing orders continue on is less liquidity initiating platform. There movement existing and think open of each The happy we so to an emerging providing participants. our larger. volumes with new outlet the especially as providers sitting the growing. and see and And seen dealer dealers dealers long-only more additive terms important balance of we've still is liquidity as volume Trading price encouraged investors I'm we're market getting more the Open trading to of responding more orders doing aspects sheet, Sure, solution and in think you investors with trend names, news so. an And with attractive providing for percentage new records see trades both grow, being on to distribution with all participants and about on only not we're middle quarter, and initiated you are see good the in sides of

makers is and larger provision providers alternative continue get the a as liquidity of liquidity there within So a to those where total. trend percentage market

Operator

next Rich Our with Piper question is Sandler. Instructions] from [Operator you. Repetto Thank the follow-up

Richard Repetto

I one question committee? advisory framework is. Could And and income a trading of fixed what sort what might as of you some I to guess, that if proposal that structure. tell And was purpose have on the the this to market market of to committee. sit electronic Yes. adopted the define - was changes so occur regulatory you there summarize well SEC as they trade what FIMSAC to know Rick, could you income electronic for for the fixed - recommendations on

Rick McVey

help and to from of FIMSAC. them the reporting common that all industry common their the believe one that do volumes. that But initiative how Sure. income really electronic personally a think unfortunate all press fixed And Clayton they regulatory we're and venue subset And our that clear reporting No, And liquidity it three trading years about volumes Jay not standards work venue framework improvement to any today, report for has an be fixed emerged question. to, can is would view directly I with there one is industry SEC to group when participants that over that, venues. the fact on in from And Rich. inconsistencies commission are advisory today, the there the practices and regulatory market not in their This they tons really specifically. for pleased supported transparency particular some advise recommendations last trading the subcommittees And years. income one and improved room for of in they there really three with see electronic that I compare volume that resiliency has where benefit reporting general of people areas toward to there happy what's income unique and committee electronic assume move terms others, a really just on release Thanks have and and environment framework invite for important are as across as all not market Every many a that took that's fixed can there's could with the the Rich, for with true. that regulation trading. the if in we emerge. into

are Some reporting ATS, others not. are through

with dealer multi-dealer electronic processing volumes. Some with volume, report trade volume reporting some single are

for difficult know investors, and in makes it trends the are analysts, in specifically. to fixed within very and the for trading it dealers what regulators even for venue individual general exactly income So electronic for

what point because to on that work that McPartland And that, equally are going Kevin I everybody's really share about that recommendation across out have with the that and understand And Greenwich we'll is can't really costs so today. And to more it's reporting. and they anything describe group the the to industry and And on then the important, industry. something private they're they an going standard, help I with just really, experiences to industry Associates that do understand And all there job they what the and but was that dissect easier make the themselves. work to hoping would why we try how work also They standards electronic to they advisory the transaction what's to venues for looks talk different market their in would get reporting. venues we're would create reports. point various

trying I And differences to to they're exist that So all would monthly report thing they're available information currently. these that's is - into is what all - the through aggregate best doing now. that think get that standardized I now a

Richard Repetto

you. Thank

Operator

Thank you.

Our KBW. next with question comes Voigt from Kyle

open. is Your line

Kyle Voigt

just Yes, a for couple of follow-ups Tony. Hi.

to cash million cash that give will that whether again Open the you the expect that you nature? Trading have just over of Can moved operations. you'd more of about Just on be to grow over think $XXX has self-clearing, fixed I mentioned that level support in with whether talk and to self-clearing number or

Tony DeLise

Yes. Right.

there. couple Kyle, - So in things we're a the of mix

that's So also to consciously really entities. we've opt potential in clients held comfortable always to excess And help get when regulated losses. any capital it's credit us. to our trade And through they cover

we've The excess we're We big holding any kept but also item always excess capital. capital is credit haven't there. now losses, incurred

spike potential but impact capital it clearing monitoring, We On these regulatory and position any a have in needs to doesn't right our Trading volatility any experience. of activity and requirement, reserve self-clearing, reporting in sort our use liquidity big meet minimum there's capital our deposit from and or new daily regulatory and any now Open or activity requirements. uplift

FINRA. a So reserve with we've got customer

money requirements change. We it around Open activity. we The to needs. and settlement we if with the meet dealer's capital trading with That our right have the already change it sufficient there's experience capitalized. to have change clearing banks. could aggregate And like deposit million. But Trading now, volatility, change broker DTC. houses It numbers settlement also, could changes. Today, facilitate use well at $XXX putting if could our agent feel could at we're Again, those

million have also with our settlement agent. $XXX We available a loan collateralized

have company We facility level. at our revolving the credit parent

more than we think capitalized. sufficiently we're So

the simulations around to current in Open March. quarter. weeks for just with within think there, March, of number It we reserve profile. activity was our estimated third all where and in Volatility And spiked in increase a - manageable even our requirements, deposit capital particularly the it's it we two the some times perspective, was was elevated. in it put also ran where our We activity in Trading

we we're from think standpoint, positioned answer volatility. volume short spikes we we again, capital - see is sufficiently if a in even think So or

Kyle Voigt

to trying Was then migration? think I there's of increase rate but run the how was And mentioned, a much dealer lastly, just also basis? on I'm sustainable of the there to increase unused thanks. just dealer distribution of it, Got to minimums. an is sequential majority you fees, one due a sense migration, the related Thanks. get the that

Tony DeLise

Yes, Kyle. Yes. sure,

toward do unused in in particular, minimum weighted So And guidance, dealers of high-grade it the give plants, yield. we just sort high fee around the and U.S. more fees. of caution of in was terms choice

we products have have And most minimum monthly plans. fee a a plan, have fee commitment. all dealer then variable distribution We

dealers activity, can fourth and hard But fee give vary the because dealer we because tracking movement in now, aren't not forecast. So right unused fees it's we the minimum period-to-period the choices based tracking quarter. pin forward-looking any plan to on We're down changes. any

minimum one So we caveat, that's fees. these be similar and would to third fees expect distribution the fourth quarter unused with the quarter to around

fourth from, the period-to-period. the fees, any So swing there that could from the distribution a pure change cause monthly fixed expect into say, quarter. line, we don't But fee

Kyle Voigt

you. thank Yes,

Operator

no I'd at time. the remarks. to over further for Rick to questions this like closing showing turn back McVey Thank call you. And I'm currently

Rick McVey

quarter. for Thanks us again to very next stay stay healthy, safe, you And morning. and much we talking this joining forward look to

Operator

gentlemen, and Ladies concludes for call. Thank you participating. today's this conference

disconnect. may now You

MarketAxess (MKTX) 27 Oct 202020 Q3 Earnings call transcript