MKTX - Earnings call transcript Q4 2021 | MarketAxess Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by. [Operator Instructions].

As a reminder, this conference call is being recorded on January 26, 2022. I would now like to turn the call over to Dave Cresci, Investor Relations Manager at MarketAxess. Please go ahead, sir.

Dave Cresci

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

Concannon, will full the and making Gerosa, update Financial results a Chris Chairman Rick on financial for through the Officer, XXXX and Executive company; For guidance. and McVey, Chief provide our Chief growth call, then we the review progress Officer, year initiatives; will the will our President are you COO, Chris and strategic walk

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

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

over call the turn Rick. me let to Now

Rick McVey

the Investor Good growth review XXXX recent and on full investment strategy joining was of our morning, year we at Day. an us thank long-term for our and execution and results. you outlined to fourth quarter important year

order the banks space. markets segment leadership other credit strong flow Institutional in a maintained the quality is makers. credit and the client we in largest highest for and market The Importantly, U.S. institutional Clients segment position e-trading global

year, new global is markets market debt business Large report world. and emerging share estimated around MarketAxess trading e-trading credit credit new market in valuable to differentiator the and trading in Open we shows emerging transaction highs Our be added offering, that regions both in in in in all in and strong Trading largest Eurobonds. million X,XXX Open banks momentum, were over the counterparty savings. venue now reaching key liquidity firms international for rates. during have $XXX and active continues driving the a cost Approximately protocols our Trading

the are trading all promoting regions. across and products marketplace income all-to-all fixed fully only We major

our core significant growth foundation in business, our leadership Beyond expanding in our made product progress we new for areas.

in investor bid trading sees dealers. in firms large to Portfolio portfolio over complement Our is natural day. among basket XX launch per trading, list a May approximately offer and which inquiries adoption XX X,XXX led our trading to rapid leadership and bond

# bond record X Our trillion portfolio provider MarketAxess trading $X.X in reached U.S. this to goal be the government new year. is volume XXXX. on of a

of year of combination creates accelerate growing due growth U.S. seeing all-to-all platform volume integration this dealer quarter. e-trading to plenty bond to ahead Client electronic our with Treasury and trading, launch the onboarding in for of this MuniBrokers and the book. is are large muni we organic expected Live municipal the market In the the growth. fully our investor of for the order Markets Importantly, participation runway largest

with trading growth year diversified and range for stronger wide global a protocols foundation product our XXXX, of full results. clients, Slide start ever. we As our highlights than a X is base

trading MarketAxess conditions XXXX of our revenues. straight year, year following record reported XXXX. a full XXth in the For unusually year credit robust were quiet

was XX%, averages. period. during compound the Operating aggregate, consistent the growth XX% with growth long-term was income X-year rate our in Taken compound revenue for same

product are much U.S. prepare low is for bond volatility. and Central higher Bank that business reduces health products. combination a more I will spreads economic Eurobonds extended the trading more I of X new and interest for ahead. compound core or conditions. firms days believe rate Slide corporate inflation and high-yield in paying lead of interest January, low to investments normal rates our and bond growth business. depressed well central XX% with above improvement, low to U.S. strong and rates conditions bond our high-grade volatility volumes volatility share in in outside The quarters geographic areas estimated Full about market activity levels important led due to market Low low well year causing markets EM down driving an revenue down rates Importantly, off areas diversification credit believe XXXX are of easing of product in records price in and increases. running offer Trading high comes volatility. in X U.S. is bonds. municipal X update Total provides all growth as were and set our of similar active market our record year-over-year banks With quantitative year major reduce as in remaining firms historically bid share yield, historically TRACE challenging and the with showing about while Market in compresses year, and market volumes is in also a markets, The market credit in post-trade through with last period volatility. and XXXX emerging were market to on as XX%. purchases share Volatility running product volumes trading this spreads. MarketAxess dispersion increased were is Treasury spread reported credit by in result client estimated of the Open X%. trading X-year marketplace. to market QX last estimated down TRACE

investing. U.S. up is approach from XX% the Our illustrates average Slide to opportunity January. our that approximately is volume growth X treasury last daily driving tremendous

are the over will All share that savings dealers to MarketAxess and efficiency early available of believe trading We ultimately trading and fixed electronification. transaction income. on stages the electronic to global investors cost XX% of market product in in lead major areas of

liquidity we with municipal We compelling have strong in U.S. automation in emerging ahead. higher our Eurobonds and liquidity now additional Trading and and stronger expands have in Trading fixed established trading income unique a in in participation. We position bonds years delivers ingredients believe the provide offering Open is market the Trading U.S. a global competitive high-yield ever global markets. treasuries. and high-grade, trading all-to-all leadership Open a position for than and velocity

We to shareholders. this will continue our large opportunity for capture to invest

Now detail let progress call on the the me Chris with provide initiatives. to to are significant investments turn new more making we over our in

Chris Gerosa

X Slide Open Rick. Trading provides update protocol on Thanks, an expansion. and

our XX,XXX A of across solution nearly in $XX products. opportunities growth Our continues Open are quarter daily Trading RFQ All-to-All notional and billion. X,XXX quarter, compressed XXXX all spreads. the billion marketplace. Open across Open Trading value network during price in were grew firms orders our through of were anonymous The Dealer liquidity. be due seeking driver record drive the of increasingly an XX% key to a Dealers In all-to-all to over Trading diversity fourth available saved quarter. Clients in strategy estimated Open market our during cost improvements million to saving increased volume continues credit the in Trading. $XXX costs to despite participation transaction active $XXX

to in markets new Early Live Treasury report incumbents. Markets live execution executed U.S. with capabilities unique relative protocols investment quarter. trillion growth. order of reached adopters also fueling is order for $X.X treasuries Our the high-quality volume trade book during over our

for We high-yield with also new credit expanded support book markets liquidity. live our U.S. order to market

complement grade was powerful protocols model X U.S. for diversification choice illustrates U.S. and long-term services our and a participants data mid-accessions to in development the markets markets, advantage. bonds. trading all Eurobonds protocols trading and to and across cycle trading robust post-trade Investing the innovative strategy. protocol is Lastly, Providing key growth electronic by high-yield offering beyond our include our of competitive life are income expanded the to recently of markets Slide new and support across critical investment services. solutions fixed for

increased that billion trading drove in to record we XXXX, fourth saw made functionality engagement the $XX.X volume Following in enhancements quarter. our portfolio of

$X.X this in seen on have a in time. significant MarketAxess XX% of Municipal trading We the amount traction grew to with relatively short quarter. functionality billion bond

Additionally, in in our trading network integration system our the completed Open was billion through the MuniBrokers with into quarter to Trading Market dealer-to-dealer of quarter. acquisition was fourth $XX.X client-to-dealer The conducted the using Access workflows fourth up The solution. MuniBrokers clients in volume for up of Reporting revenue data market Hub services total fixed helped the continues $X.X onboarded revenue Demand within trade drive new year-over-year. SFTR intelligent services. as Post was solutions million to grow. quarter, XX% in income for Regulatory XX% were post-trade to Organic combine

our growing platform driving XXX market and expanded differentiated and engagement were, of total launch data X.X Index, million MarketAxess bond In to share platform. up liquid the X.X fourth services, quarter, and Auto-X which Composite+ reached last and per of improved in $XX.X in diverse trading regulatory from algorithms of period volume. average a CP+ highlights the algo our the and inquiry. credit on and the growth over of represents responses the the fourth trading This X% dealer any the our responses new our X and in globally. grow with responses of XXX,XXX automation approximately pricing a are continuing Slide to investment-grade significant Automated inquiry of with count a same position made our trades. over on number XX% pricing algo engine enhancements XX% demonstrates reporting launching price there our dealer The is includes increase Today, also automation momentum community. MarketAxess MarketAxess total of on use in the average, steady investor on billion of in our we the XXX,XXX on increased is on products. quarter, Given offer trade growing year. records bonds to platform from unique the the AI-powered quarter, This trading. liquidity and total market, to the The volume produces to

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

Chris Gerosa

volumes effective increase rate in increase net from XX.X% the tax in year, and revenue. earnings fourth X% did filing decline fourth due other credit million at incremental and excess in million other amortization decrease decrease effective offsetting we fourth foreign in the trading a driven duration, The talent in increase from Reporting geographical and The in MuniBrokers traded On we continue year effective $X benefits were and year-over-year, benefits information amortization credit the repeat of plan was XX, year in that dealers from all-variable revenue was decline Reporting in of in fixed XX% as Partially The clearing due $XXX expenses and commission platform. and higher by acquisitions quarter XX, $X.X XX Slide XX.X%. expansion. on to X% million, EBITDA per a transaction and fee quarter adjustments transaction currency XX% rate in and all decline the -- lower we our is is post-trade up were costs the plan Slide related mainly in prior was invest included commission costs of model trading continue enhancements. -- conversions. The quarter Thank services fees post-trade not the to sequential we acquisition. quarter million diluted savings benefit Fourth variable the resulted $XX.X The to out credit and quarter includes due higher flow an an was our MuniBrokers exclude subscription and revenue Chris. million X% volume due in $X.X increase XX% Trading system support our a from from The gains our million attributable higher invest or we fee capture of million. lower income was average per in decrease The from commission Open in expense to software of quarterly volume high-grade decline provide of management. to high-yield Slide in provide bonds maturity revenue to years quarter down U.S. year-over-year due was increase capital we to services in including to If fees and The requirements. million The decline quarter. a services fees lower development expenses, this an transaction tax state in XX% intangibles acquisition. is cost, and to distribution nonrecurring trading clearing of acquisition-related yields license Slide Hub was return revenue tax in which Fourth intangible was volume fee in increase and provides XX, product $X.X and the expense $X.X our tax revenue million to performance. amputation in to the migration capture. integration came year-over-year trading associated lower expense expenses cost fee provision acquisitions. Reg full certain summary commissions. cash with as shorter On on the an in salary X% a was acquired tax you, U.S. increase fees increase update and of $X.XX. of and $X compensation incremental fees detail. XX% rate costs to laid and million the new revenue, year-over-year The XX.X%. depreciation decline and lower was up credit Fourth in our to On the acquired expense these overall and reflect operating EPS Hub a

trailing investments $XXX cash cash our XX, XX-month our December of million. free and were $XXX was million, flow As and

the shareholders of repurchased repurchase approximately program for Directors a a and out repurchase program. quarterly shares we paid $XX quarter, the to new share approved million. $XXX We and was During million million cost total Board authorized million of in fourth last XXX,XXX our $XXX our year, that exhausted dividends $XX

quarter, the fourth have the facility. secured facility or $XXX the we revolving $XXX credit any million million borrowings During did on not

for X% Our the Board increase quarterly XX, XXXX Slide we our our approved $X.XX. a expenses, On effective of Directors guidance dividend rate. to and tax have expenditures capital regular in

geographical system XXXX increase to in range million and expenses $XXX to in total trading support $XXX and of continued million. the due personnel be expect We our investment will XX% the of are new the our product Approximately million protocols relates the is to expenditures we of enhancements. are roughly $XX $XX from trading capital development range expansion. making to software and X/X to which, costs resulting XXXX capitalized expected the million, platform to in investments from

be to in the that increase estimated benefits to tax in will range tax for tax effective versus the of year rate expect awards. compensation effective XXXX is XX%. related XXXX rate lower XX% We the full significantly The driven share-based

Now turn let Rick. the over call to me

Rick McVey

you, Thank cylinders expand our of important execution year and Chris. an to summary, In diversification. was XXXX and investment increase product growth

competitive Our improved areas. remains has and materially international in strong U.S. product position in credit

led We bring and for welcome beginning us believe fixed available would we spent and Exchange Our And will Steve Davidson from cash in a shareholders. transparency like free and the the Relations. Dave Cresci the to and years attractive and Investor as investments as finally, our conditions analysts flow higher normal public growing provide worked XXXX, volatility with be both us. our company several that to York to income Steve need ROI then more velocity. with have with of new and market future trading investors MarketAxess New Stock you to to Steve and will information MSCI. Head

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

Operator

[Operator from comes from Instructions] of line Repetto Our first question Rich Sandler. the Piper

Rich Repetto

him from we I'll welcome past, Steve well be know because the he'll helpful. as

expenses. on the and Chris non-Concannon So Rick first guess, guess, for is, I question I

the if more we similar were XX% So or guess, expense widening this if could if -- be? XX% past volatility up could it's get you either -- expenses? to year guidance how year. was spreads we the and increase to get revenues same, is, question it I how and flat an at this guess, I down the move variable could how the that the significantly midpoint of

Chris Gerosa

question. the for Yes. you Rich, thank

variable XX% total XX% base. the And if the of up last noticed, that expense year, market you are the or this our to $XX look million. goalpost variable base, If range conditions at we overall expense it year, recognizing the $XX or million, goalposts you did adverse favorable This year's in guidance widen our can roughly around expense expenses are drive from was down.

of recognized And so mind reset that towards of next in that low year that into the to year, market that's last or keep volatility. XXXX, in range, XX% we saw the the need base look what and condition this as But of you variable like is expenses we’ve in year. our subject year expense us end the to the year operating end guidance to you caused

Rich Repetto

that the would X, because want the Chris, get for I follow-up helpful. the on would on mean like the is Concannon, Concannon guess, when Chris and rates, you to I products That's that RFQ, say rolled just be update out that -- rolled all-to-all trading we for trading Slide new it. and Chris, all-to-all client products? that Then munis does for out, be the Got my is an those

Chris Concannon

Rich. So thanks,

RFQ both dealer have well of we munis, for disclosed as So all-to-all complement the direct the solution. full as

munis. muni in solution treasuries, platform In fact, -- is of rate an is all-to-all current sizable in our platform. XX% in our It's is muni about part all-to-all our all-to-all In the a of quite volume U.S. business.

live an we're all-to-all seeing streaming quarter. growth we and use markets that's anonymous, had that a price in the in and sizable fourth that So and piece the growth platform, treasuries it's is the

Our of fourth RFQ the all-to-all this the complement in out to to RFQ have treasury quarter. that the disclosed and quarter, for we platform was plan fourth quarter. rolled At end

that's rolled as solution worked about we the like we we're all-to-all runs. the speak. things an speak being for out off runs and excited So even as on and pretty And on

pretty coming about rollout quarter. the this we're So excited

Operator

from Our Cyprys comes next line Stanley. Michael question Morgan of from the

Michael Cyprys

hurdles? products. about hoping part hurdles terms of just on so that Where see see And that over a bit marketplace? years? days. couple how you electronifying you the do see that nascent you RMBS, securitized you pretty the you Can front those evolving overcoming do do for you seems you about see see for talk It the the some some that electronifying? of that I ABS, guess, next could how of potentially industry of markets, opportunity CLOs, I was set non-agency of in the talk among little today other

Rick McVey

question. extremely is for that believe as they today do level lower generally dealers, fragmentation solution It's with markets. we turnover. an for of the to there But Sure. clients are one, electronification low. makes of and a that I'll trading of and -- start The sense hurdles the those lot secondary levels thanks and talk open

fits What have future that we're are and potential clearly, would excited about on and with securitized this I credit. we're on the list markets and the of revenue bucket in in that expansion potential is protocols we are of have things list, it here. impact the the we've the working of But the expansion now, earnings in terms on So live are that growth that year. today on those product that we outlined run product

Michael Cyprys

maybe expense the follow-up And could Great. you elaborate just investment on a a bit on maybe spend. I side. hoping was the

I this of the thinking are year elaborate 'XX some that on for XX% could did list just base those investment expense 'XX? think on growth about the I is you mentioned are? investments. make maybe And head what of maybe increase items you're coming How count maybe from what on guess, overall could about 'XX? in for you for be the into it that not the investments

Chris Gerosa

good really we as system expanding question. the people, offerings, it investments enhancements XX%, of Asia the not and in And trading Yes. expand in comprises our of and we're but protocol investing Europe. and It’s recognizing our in investing the footprint a product only

until and investments. capitalize that they're list any on think that of our a agenda of we it's there's don't investment an embedded software want for enhancement all roster, recognizing of don't investments that so to have we're we XXXX. system XXXX. that headcount combination in And tabling to that and anything opportunities We're existing on part and With respect development I

Operator

check button. Goldman of comes Blostein the Our check mute line. from Please your line next from your question Sachs. Please Alex

comes of Our Jefferies. from line Fannon from next question the Dan

Dan Fannon

talked repurchase on as is just dilution. you XQ previously, I offsetting guys buyback mainly question well had about as the believe, activity. authorization My the

on about in of inorganic the context around going authorization. your execution And capital So kind forward your update wondering opportunities of also us terms M&A of and as that thoughts maybe view of well. in just deployment,

Rick McVey

question. Dan, Yes, a good that's

same. continues management remain strategy capital to the Our

continue priority to Our invest #X is investment trading in the to platform.

programs. opportunities in M&A the to dividends the seek management to shareholders capital and of on either the capital opportunistic continue form focuses of balance returning program We repurchase and our

the During fourth around the the roughly heading program, quarter. in capacity quarter, dislocation fourth was share there a have we the of We did into recognized which had existing $XX price. million

business the capitalize new we to that awards that either the team in to management market from of plan So gives enter million on $XXX opportunity to our grants flexibility strategy the course the employees. fact equity continue future. the employ the opportunistically and with dilution the to offset to equity the the or strategy offsetting from ordinary to is the Board But dilution given accelerate approved

Dan Fannon

should a the and lot on just That's if Day, follow-up, information revenues? low market improved you could before Investor as for it. as see And was wondering of update you've TAMs. outlook offering, numbers, believe a for the acceleration the I some versus size you about talked Got as you've services? the kind I post-trade product the we double-digit 'XX we helpful. about and cited non-transactional us think At the

Chris Gerosa

about On in have great really Dan, question. into We're So All XXXX. CP+ engine new the XXXX. We're double-digit products new obviously, Information a in entering that drivers the in really excited 'XX. been Axess seeing two growth our launching and Services, we're products. growth

another of valuable you people market. to overall to our in tradability, as Our true depth the allows sizing really the enter in portfolio market. orders total the which quite product, which execute total really the markets understand markets, construction, -- It's and how coverage CP+ expands and the market

here So 'XX. really critical in that information launching we're

first in of transaction The information is services opportunity it given our the Regulatory product about data XXXX, is grow the increase in Reporting growth additional then around year-over-year -- post-trade Post-trade, integrations the excited the business. saw and quarter. great business our CP+ it -- continued a closing the resource about We've Reporting the of the Hub. markets. obviously, So opportunities, of substantially, integrated total clients in expect transaction, XX% you new Regulatory throughout quite for

that European CP+ of footprint all we a but government have to the So Europe. leverage but small data of it phenomenal our the value 'XX trade growing largely for bonds, us And of launch opportunity across post-trade in resource business. which gave

of flagship product, So pretty about excited and really growth CP+. products the the 'XX, new our

Operator

question next Bank. of Our from Bedell Deutsche comes line from Brian the

Brian Bedell

Great. from welcome volumes if to of, market your main if see you in right, business? I what in -- And can kind guess, me X% portfolio my in potentially as correct year? can list end if by of we portfolio year Obviously, expanding if that, but volatility of share or But around looks well. also on you competitor. talk like XQ to just, portfolio to if I'm that I Rick, then about calculations Maybe you Chris the high-grade higher wrong the share your how could are for your how guess, we've the you 'XX, view corporate versus Steve like market get evolving And that in in zoom traction trading, given bonds? seen trading you And this see maybe your would trading tracking on on that? it

Rick McVey

day. market between the And we list said benign quarters of TRACE conditions, think secondary question. average volume dealers trading trading and important around dependent growth context. Sure. in to identify And it's market interesting on blend portfolio Good I've of as XX tracker portfolio portfolio I is X% estimate in through this we we're and currently past, of trades. per The credit be kind showing volatility And And offer trades the during portfolio see will have we've that several it keep year, it's TRACE on trades on conducted in because involved. we market did very about conditions. and strong already XX had but do portfolio months, peak bid to the

number a But of volume. large of in market a large So for low-vol and line importantly, they're lot trades. in items in a there's portfolio limited competition

that it's the So dealers to the an for we important we of pleased offer. are launch the May since involved. are progress number made piece clients and with us And and

very to was If added Open end X% you seeing of look offer bid a been volatility of the essential last even in trading interesting high, closer from in little And at decline. the a the TRACE. course of more when It's and during Trading in volatility through higher very clearly, portfolio increase in or of that in list week, trading with liquidity TRACE the has that was this we're market bit functioning back volatility. XXXX, X because the the months November to slight kind of of period secondary percentage

gets dealers a starting to to And as see periods. when for we're and in bid and result, large that during volatility. think difficult the Open in there a back use and risk pickup pool liquidity So clients it to in Trading those more manage list offer we is toggle that portfolios a deeper broader of

end the a big Our as in earlier, that. as my They row it's of and have in around mortgages from 'XX central mentioned And I would world years last belief, as here. net is in the be quantitative the that volatility up a it year. buying lot low in a even been supply unusual was unlikely belief credit It's that banks deal. at highly like easing to government bonds have is of two

at clients forces with investing are prices, determine market the appeal work think actively if likely it's volatility. greater very I have well so solution. in and to been portfolio of come of that we aware bond And that's to trading We're why to

the the remarks, are elsewhere in around are and #X credit. trading we goal. And of have in my believe we're we global investments my we achieve that dealer connectivity that other and making protocols and in terms mentioned expectations, after client being sales in I effort we connectivity In prepared as to portfolio as community

Chris Concannon

trading. portfolio on add just I'll Brian, And

as for, line seeing very We a mentioned, Rick are demand long item.

that out line to items. expanding We're So quarter. X,XXX are we up further even this

our sizable helping is We're portfolio but it market there for high grade, share demand very is bonds. trades Eurobonds, even line emerging in does which now trades, high market go across and items, seeing there So yield. large

sizable seeing, So we're to #X move to level. use We're We right our compare our trade individual our product on portions community based Is trade demands. or unique pricing, what's of portfolio an analytics list list portfolio with month-end, proprietary tradings also to portfolio solution of want dealer the trading trading demand and higher as trading. trading it portfolio our helping ways diversity client? mentioned, for seeing There demand portfolio the liquidity, and think at we is our support certainly try clients clients list for their portfolio both is Rick it portfolio But make our better around for as we the individual in analytics at at of decision us is trading and trading a we bond trading a to the be as to and provide the our right month-end. trade? support And portfolio. for want can

Brian Bedell

That's super easing -- a the of quantitative ease on environment, quantitative that? into interesting. on pricing follow-up and move what's tightening potential. If just type with we and Maybe If up the we a a -- your in kind know what get pricing? impact. to of yield pick on do favorable the on the I that be maturity, that tends have up impact to could

Rick McVey

average and start, U.S. a a high But our that factor grade. I'll Yes, is has as only specifics. in on Chris pricing product can the follow-up duration any

our rates years the this that into of environment where high-grade average traded a seeing not maturity dependent on on a else in as equal, reduces result, we is duration And slightly expectations capture. there reduces surprising bonds enter raising fee of so the higher platform. bonds Fed of of the average the maturity rates, bonds are The 'XX, traded lower new all we're to rest and that as

So we're historical it. clear. are follow to pretty with happy The goalposts up

it even and and volatility Our market we if the or duration well bring offset gains in share that, that slightly get volume traded higher in more in higher markets it as high-grade. because excel the lower bonds with is average on benefit we in we the -- get view of and personal volatility rates volatile

Operator

comes question Alex from next of Our from Sachs. Goldman the line Blostein

Alex Blostein

to Apologies issues for I sort commentary, phone earlier. and on wanted circle you rates dynamics. pricing made around of Rick, capture just back the

mix direct of the So capture not really it function feels much seen changes. we've of a been in rate and has of kind movement like most the so pricing

trading then little to offering that with the all offering you to areas continue pricing more any compares guys than of product? respect to kind And business, from the same in see there trade? see to to a you competitors' competitive and you are the the classes how maybe pronounced about a in And talk you evolve As that what be the others? perspective changes across starting could more asset we the are specifically, portfolio your pricing

Rick McVey

Sure.

I in On here in at competitor not capture versus really the credit look big think question, The difference U.S., broader Alex, average. fee blended their the average a MarketAxess for fee there's if primary capture you our the

we difference that to have So fee by the in the larger that and high-yield is competitor explained actually capture relative product franchise EM those areas. higher much with small

PT, significant get aren't communicated to really, think you differences really respect the And blended when markets at there in Open savings we're So our that publicly. more cost With rates fee we volatile, being are competitive when go pricing. look capture the on Trading very up.

then a transaction space charge the And has is started competitor. scheme that outside of to our dealers know, maintaining the we're well, long transaction as the has which clients in savings, look U.S., So communicated cost Bloomberg to that fees. record say delivering and biggest new pricing is to I'll there been is as Bloomberg due a by we've pricing. thing track investors our And more value why had when our broadly we last very the you

because particular, large global in and of So gains charging across expansion done vis-a-vis partly competitive what is hearing are Bloomberg. to comparable when especially are market the we us look banks, the our to now world electronic and more position, a basis. significant actually is we our on because of partly share the a competitive the at fees strengthening gone And doing to from fact transaction we've the of benefit something EM EM, they've a what that from always of in very X

we transaction deliver were fees. back to about feel for pricing an credit transaction incredibly and trading, savings our So benign we total relative very good to our clients to year even the in our value cost close

that holds equation know, well. we in the large U.S. banks, So up the the fixed think have money models here we And value the markup very as favor you fee and that for

So really place a we think our we're fee models. in good around

Alex Blostein

this liquidity the an pickup my seeing around obviously, the volumes should rates and some that the business. year, What bode for across year. we're key kind of Great. where board, with milestones edge? REIT's the net business And given well rates sort in on legacy guys quite movement spotting you're the And that then of hoping sort volatility to respect is follow-up Maybe update the of to achieve you integration stand business? with this and with rest are of

Chris Concannon

Sure, Alex.

that at market. It's it in phone-based a we're look the largest and active markets still offering. On the one solution, rate we has of that obviously,

the the share competitors two There do -- are against on see From on the pricing are priced sizable a phone phone, topic, large competition. space. we conducted very standpoint, the the on in So nonelectronic. we competitively last

we book about that ago. So good of has LiquidityEdge pricing feel number two have growing, and our in as offerings order that really was a offering, direct market, position live a in been transaction of that result We share years the a streaming market. grow we which

our quite are The side-to-side, clients which our can RFQ more in time you it a attractive trade live offering. real product, to trading makes decide traditional on offerings it for other is combined liquid market. offering if Those a two you're

If offered the a via you you're liquid is a trade the by run it which off less traditional really RFQ, competition. product, trading can

have RFQ So our that sizable we goals given quite live all-to-all order is all-to-all all-to-all particularly our an with marketplace. by offering in book market, an supported

the we So we that grow over can of 'XX. market course think

Rick McVey

incumbents that really X institutional an majority as is treasury RFQ solution. that of -- an the is is as investor start to My us on both 'XX welcomes it's top well and add to business the think belief conducted in their are that the book of we ready that interesting we provider Just to market that order still right solution. which for in offering. is the of we And are where with fully is that, investor protocol, electronic

have can book that order Chris the counterparties We described. that access X,XXX

broker X the dealers. merged have We

access pricing and ticket solutions important additional average made clients post-trade STP documentation So activity. to pool. for We've that no any there's longer to help investor with

make more terms be We quarter order access. one have to of completed that even in easier will connectivity piece it to management this

trading So Treasury is we trading one is an book investors U.S. exchange on an book market, with way. in from network for MarketAxess. market installed about both that you the additional additional they wide order everything futures we order market because have The and dealers a of think treasury new on-the-run distribution think cash been the welcome decades. the flexibility and now when client offering And through very we has hear the this

have very play, in that super have we RRP network and excited But think treasuries. a that to well, as happy front we're Open order role to dealers. to to we and we're We it. think a especially recognize clients the out again, about Trading have you offering So be of about off-the-run as providing here books large and

Operator

next Kyle from Our question Voigt from comes KBW. the of line

Kyle Voigt

just a in U.S. I about can ask the Maybe launch the question Mid-X

I'm of Just the drive in And I be to wondering And your numbers in U.S. Europe as key could share just of offering in that how of also that that in that for hear far the I think terms if XXXX us curious of will differentiator the to that's offering versus any launch X whether for the thoughts from want meaningful Mid-X protocol about just growth. Mid-X to you all-to-all the uptake to this adoption. confirm that. there's U.S. kind your can launch. is day thus think the competitors help

Chris Concannon

that marketplace. Mid-X definition question. by It is Sure. Great leverages all-to-all all-to-all.

In fully sizes close $X.X our -- quite average can So it's in saw volume. still million. $XXX European anyone trade where are match. a sessions Eurobond billion Sizes QX we in of Mid-X participate -- our sizable, to anonymous match that or offering, a

unloading is for It So particularly trading we inventory. continue to in see Europe. demand session-based dealers a dominated by

here a solution. to U.S. time inventory high truly our And exit offering. for on dealer solution Trading of the the Mid-X for to we we looking are just community dealer from Clients With our still Again, solution unwanted the excited Open about U.S. U.S. first dealers traditional in taking large them engaging the here demand Mid-X demand U.S. the offering see continue launching We're inventory, network. session-based through a dealer-to-dealer particular regard and execution. as hear for their that's inventory to a a a session-based a -- using is RFQ. in to priced to dealer now dealers So amounts high-grade for well. it's load mid-market yield, really RFQ solution

dynamics. mid-price, which premium quite of compared our using to CP+ pricing is attractive are some competitor an We product the

grade about high So and yield XXXX. high for Mid-X in pretty excited

Rick McVey

picks well one works piece. seems between in for I sells depend that of market would environment for book trading mid-market other of lot environment and because those well interesting sessions on matched and the the with some work There's up. that order buys confidence a when a to And in price. two portfolio just relatively on model-driven sessions things a expand similarity decline that volatility market

look a when tape, TRACE those way did very well. in study XXXX, as we November this back since too you when material year as very we high that And when if right So sessions-based, at the not volatility, has running within protocols week. in tape look through work regularly, the do declined sessions-based we you QX TRACE last volume had at late

dominant we're well. can we've theme, offering, trading where of putting benefit range the work we're times any other that's whole those and got exactly we Open and So these times that in be the entire the and to of position where in our Open matching will by all network the protocols are the and Trading. there be a are is Trading offer from us we entire environments. portfolio sessions can pleased our across place supported is doing, investments best there will what really And what where And RFQ protocols be

Kyle Voigt

dealer market I and year? treasury I you going are this pieces. guess, then One, to will some space get secondarily, to trying and question market I impact lot big are picture treasuries launch basically, transition And more real other wanted platforms, to just the in all-to-all you the And or the any and you what dealer-to-dealer of change of to of of for to these of do trying just some up think, inner space? space And structure. you I kind adoption rig guess, to there's the open Obviously, had bifurcated that. think have uptake structure two the and on engaged solution, you're clarity and and use a you're then it's before of of proposal think on sort this of between Do a by this a a of the it really opportunities, of the appetite maybe just have helpful. been seeing, I'm right, treasury very help clearing? expectations material noted, I a there? clients all-to-all think actually to lot realistic tried solutions that's offerings terms treasury buy-side more in the be there's more very that's kind that talk all-to-all regulatory about to to just client-to-dealer in that be -- platform whatsoever for going terms still to in lot don't kind encouraged as sounds of buy-side the bigger there's That's it's you're But some like and bridge clients. you a space that.

your just times that, what I'm is talking from about cries need it hearing they clients the all-to-all you side to just better that really come buy terms for of So that louder more offering? or curious it's you're just in for think the you desire bit of this? do are get to the really -- sense a

Rick McVey

Sure.

topic. very focus market. of But There different but treasury questions, the Kyle, regulatory on So same is lot first, focus. the on two on regulatory U.S. a

think really liquidity to for the markets U.S. times and at the is functioning on as entire fragmentation of been the specific undertaking around government to they're the all a very As not public which are market. into that I market particularly treasury market well that volatility, important going in within there's is world. the the income pricing ATSG, observation has speak, there the call you because And bond have know, treasury category in of in an significant the rulemaking fixed fact, that benchmark and the we I worked SEC the ATS new U.S. is think call, about gaps high

think we that favorable So solutions. remain trading to all-to-all the regulatory focus will

trading good a the to process of around support is that less some help And to clearing for the U.S. treasuries. would thinking as settlement well outcome central all-to-all in risk that as be

without able solutions. corporate own centralized So to have benefit Open a and been bonds, successful there's term, that platform But settlement clearing for been lot we to obviously successfully our I to central of we've the Trading support longer with solutions. most think be in see of benefits there's down a the road, at foundation have And that moving regulators clearing to DTCC that to But how potential see help promote and to we direction. some we'll able view the do that.

a authorization ever as -- think through other any already XXX has MarkeAxess offerings. far system and in I foundation in of you've don't to ours success seen the order had before like As connectivity or with trade connected all dealers Open management that X,XXX Trading, XXX counterparty and clients

liquidity. have we So

has We for client done. to already have has the that's there been really counterparty that's we out complement time. already broad that, the that a And settlement unique network the offering offering agreements very connectivity, and think OMS long creating a that's a --

it we've they it been liquidity So seen, the build OMS you the functionality long the not but really and -- the at we've look takes year a to or all. we're others, when counterparty as the end inter-dealer I they did clients that have or at had think the 'XX. connections And to starting time up, at

and already trading, way. think to network have the I successful in we choice to a committed all-to-all we this are fully So promote We're obvious built up. that

Operator

of line James. Patrick the Raymond from comes O'Shaughnessy from question next Our

Patrick O'Shaughnessy

TRACE me. question from that, in of up a volumes periods in tepid volumes how why industry-wide far reasonably January on despite thus rate during healthy. What's other bit? Trading classes have trading Fed been related And fared view one your volatility so to volumes credit asset been have picking have hikes? Just typically

Rick McVey

Yes.

focused seen part volatility is But we've rate recently that is risk-off think been the So the space. that on going what's the has mostly on Patrick, the reality, that I mentality. of

do yet in So volatility. market, not corporate we we the volatility but have bond spread price have much

for the leading year. of two end a the into credit look, were been three quarters last modest from we widening there's of where spreads you If or

expectation spreads So pretty year, they more the low this sheets have the that been year-end, but you're do stable that you And from low in credit dealer we've is now. pretty far. seen get data both so recently. my would to Fed into were right the throughout as pretty data likely weekly are but balance remain They going we notice expect,

rate a volatility in is But volatility has see I And spreads. has focused spreads. would a think than we the we'll space there's that expect calm I products on before that storm. So chance -- credit now, certainly more I been do the in think the see it right better better credit when this the turnover

Patrick O'Shaughnessy

When one. looking the Got been and generally to so periods it. guys And potentially a where I market XXXX, Fed happen XXXX, Fed guess, raises during follow kind about were takes of of has or volumes, back that hiking, the like favorable environment you are might on then, what was share the think in as you that XXXX? at as think about thinking trends kind and industry-wide puts you as what up

Rick McVey

best you, and with which can a there's specific been market reporting happy long revenue tell and public our periods I with where a share more growth done data, between obviously in to the correlation follow-up volatility. time. clear has the we've for very We're

bank that do the could well relative And it's are that two volatility. could the environment be think a where the be different fixed next I we the the environments years income central outcome how to we've best. market given of very So over those better where been assumption safe

Operator

the Piper Our from Repetto line next Rich Sandler. question comes of from

Rich Repetto

one. that So my you Most I'm the understand -- But of to the number of to trading? driver trying competitors, signed what's understand position what quick the follow-ups and have position. in up, trying when asked #X portfolio beyond how one the to or going just you're you answered. been to take get leaps just say dealers I'm you

Rick McVey

going Tradeweb for the we've I attract and so back think And time. to have that with market -- when launched head-to-head a MarketAxess for system. we've going leader But prepared share encouraged Rich, innovated in been And last long and by much I been time. we've X my able remarks, they been Well this since the look, to think really PT the successfully the we're long how offering. led onto their months a corporate space XXXX bond of we

So we the every And mind the is bid and list well I reality attention do the as largely client system. client day. over is eyeballs offer the X,XXX on and and mentioned, share

lists portfolio that compared trades, clients a and for that that day. terrific trading XX trades, to X,XXX are So or the it every now we alongside portfolio have so solution bid those technology sits offer

We credit the sales desk. focus primary trading have on

XX dealers know portfolio trading we all the active MarketAxess. of that live that have that are are on in We

have just not clients’ to we of most happen pool trading liquidity of any So our same of on dealers the MarketAxess dealers. their Those do competitors.

position So going to we have that's think an we incumbent benefit.

and portfolio offer list between is to based As to where and on and it's Chris and mentioned be. market toggle bid getting so want forth earlier, clients conditions that functionality, back trading we the situation easy think

So we're focused think X the more in lead the last and a there's to encouraged we're the months, lot taking and we trading space. by come, portfolio on

Operator

closing the I McVey back time, call to I'm showing this further you. Thank like At to questions. would no over turn for Rick remarks.

Rick McVey

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

Operator

for This you concludes participating. today's conference call. Thank

disconnect. now may You

MarketAxess (MKTX) 26 Jan 222021 Q4 Earnings call transcript