- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on October 19, 2022. I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Stephen Davidson

Brendan. you, Thank welcome conference and MarketAxess quarter third Good to earnings call. XXXX morning, the

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

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

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

Rick. turn me over the let call Now to

Richard McVey

and quarter you review morning, us our joining results. to Good thank for third

cost We quarter strong products, increases continue delivered of for and across protocol to consecutive through all execute and Open clients all-to-all of our trading in execution our the record significant gains second savings growth our strategy Trading. volumes, nearly market unique share trading

to estimated through market challenging credit is Eurobonds our record volatile share X,XXX delivering firms record expand position in nearly help bonds market them market continues share share in gains to are investors markets, of a very in continues record and to of and expand high increase institutional dealers breadth traders. credit in focus platform market grade gains our conditions global of record institutional emerging these beyond navigate active volatility. trading with market. leadership and and markets. to Engagement our clients and with our client just a for investor and The And share facing yield dealer high number through U.S., elevated municipal in continues active global accelerating the Our on in U.S. value of challenging this

growth firms We strong now client especially growth have with Asia. seen X,XXX strong international our active in including nearly in business

diversified leading As leaning across clients institutional enhances and of It our see a have so MarketAxess liquidity period become to products further importance encouraging sources traditional into dealers increases, market scarce, many our challenging liquidity and the of position. pool is liquidity. of during

were with at space. e-trading growth institutional sets compound summary, when three-year which, respectively, strong breadth the In making firms there a growth approximately platform, are debt XXX been in also X% trading provides growing in of excellent treasury the the traction up active in Treasuries, all-to-all markets record bond conditions. market Slide with for the gain trading in client has growth on market prior combined higher cylinders quarter volume stronger momentum emerging been growing of never areas rates volume. X in trading as increasing and solution. has our and X% foundation with product portfolio records, opportunity. investors in with in an new In addressable in strides our business accelerating on corporate market update and U.S. year from U.S. market new volume, to a we the outstanding continue unique a developing record new municipal growth share in trading quarter and We another rates, client trading XXX

and tightening the has stated our In lead state yield to that of the and very the would a levels easing more quantitative volatility Bank is on period, ago moved one massive in world, exactly to Just call, levels Central normalized quantitative Bank markets tapering year that we have to we happened. Central the earnings Bank around bond inflation. Central current short what due a XX-month from elevated of

yields a We down XX% indices the world seen are rapid around have increase and bond in year-to-date. remarkable investment-grade a

and since our materially that of current improved highs yields in extremely trade revenue XX-year year-over-year. short-term average to has We not which volatile, very one to a last impact At conditions few in the of stabilize. we the growing duration price. trading credit our bond we is did the market institutional we in early rise U.S. due in and only instead dollar negative our and volume is was ahead duration view years in trading quarters on While same time, that overall historically September period trends trading growth steepest investors daily expect will running rapid of maintain headwinds, the high-grade trading This XX% in revenue the yield levels index predict moved would bond last October. a duration FX have participation of driving interest In to believe the increased are had time. product market these the investing What future grow bond Despite and reflect of in illustrates our per better the for of in gains bond revenue the short XXX above ability points basis a equates we weeks higher pre-pandemic rates, reduction create growth market The capture environment. adoption diminish bond automation. and dropping revenue third were primary declines of These corporate longer-term compared as as fee velocity franchise quarter conditions X our and market growth trends, focus of rates, well the Slide similar year-over-year tremendous both total products in is to headwinds is QX, this as consecutive market our capture market of XXXX, We one on this our quarter gains. share This earnings the the XX we were of All X our opportunity quarter and the illustrated past years. second and points in which underpin the annual only strength investing. we and slide, the almost our delivered top historical and basis have average quartile growth sizable data ahead gains share year-over-year of products. grown in strong versus opportunity by increase quartile share us. our year-over-year quarterly on share that long-term to strong the the the XXX to to share across to driving gains confidence of opportunity the in top the the shows have estimated to increases approach period. share Slide an product approximately market of served magnitude that front since rates of us. reinforce

a have in large unique and We growing position debt global markets.

products areas which our and grow can We are in returns new even technology And about content become opportunity. and the the deliver ways are existing valuable us the capture client We and opportunity believe leveraging and add market excited product pursuing to to we share superior as data many shareholders. that we this data more more even makes our platform. and we grow to global ETF network share, our

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

Chris Concannon

QX, the of our savings percentage Trading Open an importance of Slide direction of price the X in global Trading all-to-all are generated on Open clients trade provides shown of improvement market clearly in our in moving estimated significant improvement. benefits Trading. is execution price We delivered trading our in from of that from clients. year savings volumes of ago. Open benefiting trading. levels The million $XXX Rick. benefits form the the one in through The transaction update all-to-all for believe coming Thanks, double savings cost because to increases our cost the is record in

Treasury innovating space. and bringing municipal bond the model to also We this U.S. are and

adoption client One of the our XX% from with trade treasury overall our view. dynamic Open unique at highlights X% $XX Slide of heightened penetration viewpoint during volatility. X,XXX Auto-X our record market This fee. the and trade using with tools benefit XX% income count and increasing of represents trading asset least speaks penetration increasing executed over continued Trading the data of their managers QX, over we or of our in suggesting Trading This trades seeing agree comfort automation Open credit investor released base X with data We of reflecting dealers in the in Today, total to that record in all-to-all clients billion and credit firms that entire piece A CP+ the would shift PIMCO, the strong a in U.S. quarter. world, to and high-yield have volume. our confidence a XX%. period Trading a momentum their of fixed record recently to and XX% trading. the is by increased active Open are Automated shown trading network XXX,XXX during volume through trading. one clearly largest

are also quality. are We their volume clients record optimizing where our trading seeing execution Auto-Responder

impressive grow growth the period quarter, year. platform use suite. the the slide is with third automation the shown continuing our X in algo strong same on from reflect The million XX% three-year long-term algorithms Additionally, up of last dealer to approximately this trade on of CAGR responses the

trading. Slide an impact our XX we will over use tools portfolio see the automation velocity of increases, As believe in we time. trading illustrates growth on

our quarter secondary for flat of volume portfolio trading trading strong in an another to X% and strong have over XX% emerging market continue growth diversification. remained growth of Slide Estimated we and trading volumes record volume basis continued trading around in portfolio $XX basis. was X% at XX% last high-yield up EMEA-based volume volume and share. the XX% in quarter, Eurobond's was trading quarter portfolio achieved trading trading a and the clients third XX% international approximately relatively the local markets We performance the see XX increased We on of currency total The doubled X% constant through reported over markets on is several portfolio billion market executed billion. a this markets' XX% $XX delivered update with EM quarter. currency trading sequentially. markets volume growth portfolio high-grade a emerging quarters. where Local in on to of basis. volume during constant on

platform, for our record and We XX traded is of local growing continue EM market which the we huge local in on trading of active markets, opportunity to and XX markets. is new market the with emerging clients a us. XX% in onboard clients X,XXX

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

Chris Gerosa

XX, financials. Slide we On provide of a Chris. summary you, our Thank quarterly

and the by and lower in impacted was revenue duration up by record strengthening quarter negatively U.S. U.S. dollar. market a million, share bonds trading volume growth driven X% of was traded Third strong gains, but high-grade $XXX

fluctuations, revenues level estimate X%. All FX. third excluding currency foreign assuming revenue or of change volume, and of trading equal, would have the revenue up of Excluding Information same approximately lowered high-grade our the increased in impact U.S. the the impact XX% by Services $X approximately million. else we quarter X% duration was that

our continue to rate year growth basis. revenue constant levels full on historical our We around XXXX to information a XX% services expect currency growth of hit

Third the compared to million quarter quarter. post-trade included impact approximately strengthening revenue on of $X.X dollar negative prior a year the U.S.

on and income Excluding higher from the more $X.X in a growth due attractive we The environment quarter, activity benefiting equity million as gain to in year-over-year interest rate of of impact have income investment onetime and been was would $XXX,XXX a approximately other rate investment. FX revenue X%. the are our the increase principally

we commission in tax to rate expect was from our We we income expect on slightly that higher balances. and yields few XX.X%, full the XX% provide effective at the on upper range reconfirming to fees deposit commission as year detail quarters plan other and next to rate revenue increased The to increase revenue XX%. investment our benefit Slide tax the are effective X%. million. we cash stated more XX, Total per our end and of of On the be previously we

lower was year-over-year by maturity in bond of across bonds yields. in traded principally was volume expense share, detail. commission but fee lower our On fee remained the provide estimated driven years capture partially U.S. by healthy total stable revenue driven increases by trading credit The and platform. with high-grade weighted growth Slide our in rates higher and XX, U.S. average average high was total The on capture to has you high grade. Our offset market we grade

enhance quarter the driven Third our increased X% to expenses data offering. investments and by principally system trading product

and initiatives. customer-facing Technology impact of roles mainly in support consulting increased driven million and FX, growth to expenses increased and decreased subscriptions, Excluding and $X XX%. and expense $X have expenses revenue Employee consulting would and by the lower recruiting lower communications on fees. million technology $X fees. an benefits increased expenses technology head on hosting in cloud acquisition-related compensation million expense licensing software count higher Professional increase

operating Given midpoint full an the previously fluctuations $XXX are to million would impact year stated Slide of progression guidance million and expense expenses year-to-date, XXXX of million. the FX $XXX XX, imply we year-over-year. to range refining On of new capital flow $XXX to cash million we the growth The provide from and range on X% management. $XXX update our

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

impact to million to FX million fixed We year of $XX are our range full of mainly investments. a from and our to purchasing to assets a $XX $XX million XXXX on the due refining guidance million $XX international CapEx leasing to range transition

quarter, out of on in have shares for $XX we million repurchase the XXX,XXX shareholders. dividends outstanding And During remains million, we $XXX the a total quarterly paid year-to-date, authorization. our repurchased third million to $XX

of quarterly Board Directors Our $X.XX, which of of on declared the was performance financial a company. cash the dividend based record

back Rick. to Now turn the me let call

Richard McVey

our we and In competitive record continue both client well share on and control. our pulling very the levers institutional in all and Chris. summary, are the the our enhanced you, strategy within execute delivered space, market front. U.S. growth Thank We to of e-trading international in the position levels against

increasingly improvement us record turning offering deepen in expand. unique before .The footprint market diversify liquidity Open price clients. significant is and for the global and opportunity we and to our continues Our market and achieve solution our broaden to to active as product Trading growth continues

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

Operator

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

Your line open. is

Richard Repetto

you like that Rick, good the on to and can the liquidity is, situation what's market the gains Chris. similar it high grade I gains and Yes Rick really the quarter. you is market But in pandemic? driving have first last the yields early the morning, gains, question starting share market it some similar high and and guess characterize it probably know, question Chris share demand? U.S. Is guess U.S. saw is and of significant I volatility you

Richard McVey

approximately a of of XX% about is certainly already you look where our indices - were ago, are we double and It they if at they they yield and high grade, were bid-ask XXXX. high Rich - year March are XX% where at near in to

liquidity on challenging. of are So are a improvement. conditions have that as model diversified price for And liquidity yield incredibly we in clients result, leaning the all-to-all sources and high trading developed

So different what's trading. dealers and I'd improvement of the all-to-all the run consistency price a high their with delivering platform. volume completely model say driving is on execute in we it's of clients yield to that us more obviously And

Richard Repetto

one Got changes you regulatory treasury and is This the, proposed it follow-up, and market on to Rick. central know, clearing. clearing the

the see from And but and if including to that you you audience, require the the what wrong, I - of clearing guess I'm SEC treasuries central sum rules occur, So correct, have it a the and if traders, as do proprietary know, me treasury guess, I marketplace on wider sum impact up had do proposed hedge the if funds. I and to you to was up would proposal? I correct the from

Richard McVey

that. at the cut you do I take Chris, first

Chris Concannon

at benefit the DTC guaranteed the and DTC benefits from settlement lawyer that I of summary. of and is, that because that view the The proposal market centralizing Rich policy activity, provides reading will DTC like Sure, we proposal you're proposal was have are the goals like way to accurate SEC's the provides. settlement The of treasury clearing a net say the sound. a an

favorable centralized the overall the to have market. is organizing market So more clearing to

that rule the key And are that are because that I that more in think the clearing proprietary particularly favorable if structured, dealers, the piece proposed embedded we it's clearing to for is how way firms them change get allow other changes. benefits there. a really agencies some broker the to there clearing rules are customer There of supports of the rule protection behalf proposal trading proposal the is on have capital the treatment to proposing steps, SEC firms. they're

least the do implementation and rules, the clearing to that then sound, get still There's agency year that repo so policy the final of think their benefits the the to really use incorporated a the the around two approve have rules own the Remember, few we steps SEC proposal some into at the away overall final obviously I we're or the steps to get proposed So outcome. we are a SEC that that agencies clearing from Again, rule the away. with clearing it's rules. file proposal. to has discussion comply for the

ways the there other but from are we implementation the some proposal. of the final think do I So impacts, are of away goals

Richard Repetto

Got positive. it. lawyers lawyer of of of a degrees, as those comment I'll take that suspect I'm any Chris. lawyer usually

Chris Concannon

always not I around lawyers, to them be as of much. just try highly think

Operator

from is the Chris Allen. of line question next Your

Your line is open.

Christopher Allen

Any it pulling and other around specifically local back start on quarter, dynamics, just my for us has over guys, per the an could disclosure until thought the a morning million, it breaking products? a been obviously versus Good to EM hard up the if taking the give there thanks see fee going how maybe stability little you on fee was Wanted what progressed high stock? the overhang million the of you Wonder about whether course grade, terms some also on color currencies, there? different bit per to in bit on of between some which that's of question. it's talk an process

Chris Gerosa

what view decline was every around provide on that was fee $XX. I credit. we to yields And we're for and Slide is maturity up years into stable, the provide and maturity on merits get mean, you down There grade move total of capture the X speaking in were technical some look to the the slightly. in one a I pressure bond the the deck maturity around $X technical high XQ basis years But charts to movement or slightly to perspective, the that of the every - impact should fee bond sequential in I'll like say relatively is yields is we from And of and a so to Chris, on point deck. Hi bond - XXX $XX the of yields the giving remind that year just discussion capture.

were Of and grade there exit total the grade, movements relatively we're due roughly speaking, capture. it of duration So levels. And high same. the seeing of to to the slight the impact balance in there from was capture XX% October and fee is on mix. product fee credit the high what to $XX was protocol and so decline in far that was pressure the QX around was But stable XX% due

high there was that asked but I well. grade hit a about was just as you contributing other So sequential, variables that comparison, decline. bigger And a the the year-over-year to that know I Chris, were but year-over-year impact, were wanted to

Richard McVey

And to - half basis, we the capture, rather in couple started monthly increased because we've way, credit provide a on responses a there than Chris, quarterly. transparency question your on of the on have thoughts one, and capture total second fee one of fee

be will that investors. think received we by So well

of where we on were more lot than the many granularity the of examples capture a one rest market. it's providing Secondly, fee

that the said, was by to credit majority as in with that of duration. see we've think I And bonds. fee what of going thirdly you to total rates going capture, the available to bond what's and aligned fee industry. elsewhere And change point And we've high corporate on show and we there a in is will point all corporate capture you publicly So duration. duration vast would grade with the the all that's increase data the index due we ourselves

do high monthly try other index. to products, that, bond versus the it the to grade wants with to dissect or than date there a that anyone So on public is follow way corporate more

full the drove and to all, to of those factors three monthly credit million. fee to shift per a decision capture So go

Chris Concannon

mentioned as that EM, to you I so Chris, answer obviously, And have question well.

market that's EM market is year-over-year. quarter Our the QX in face over mentioned, volumes as the last about year. volume up X.X% local you being XX% ADB is But of down. in up And -

local local so our obviously, capture, up you tap on market, So obviously grow. slight piece volumes year-over-year. impact we're that for overall, it's market a exciting super because us has EM to notice. it excited super But that And large, as continue into to about

Christopher Allen

Got ahead bit isn't more in trading Are liquidity This terms function I gave to are activity? high-grade heard impacting there. the catalysts I environment of appreciate with other on But specifically kind there wanted - some I'm the on are - there on yield, the environment, color commentary economy. what's you we've for high on about potential kind to of better? they a just some of - there. high up. maybe just Why follow-up And it, the clients a little of is challenges a just of is the guess, from activity outflows spreads then widening colors the are grade trying side? from waiting the improve to picture involved think factors so

Richard McVey

year-to-date the and the market given volumes are holding volatility reasonably liquidity. well Yes, up the in high-grade extreme actually the market with challenges

volume see EM, And translation a had in market products, have the I the in reporting. particular, in risk-off huge part is But the have clearly environment more international investors our FX into XX% funds. career. you in actually about most here changes worst was bond there back had look - down challenges are and of that don't just a You you year clearly are you in think outflows dollars last of fact, these and I've index, X%, kind if funds price XX anything seen used not It's years, in at the corporate ever in the bond in high-grade we in and down to we've mutual year-to-date. my ETFs. the

as outflows So well. has driven it some

at the are increase over work. number to velocity, And We increase but that debt still of very term factors been. the participation going as continue to it there automation in that those market volume that are contributing has factors is in challenges strongly to we near I time world feel all in grow really will So think the very of in growth. some are a feel on

Operator

from Gautam line Credit of Suisse. the Sawant is question with next Your

line open. Your is

Gautam Sawant

morning. good Hi,

of key One differentiators your of to to the Can platform if value-added capabilities? there's changes any MarketAxess offering? the data. to and been data enhancements recent is pricing your And analytics speak you

Chris Concannon

Sure.

on data obviously our So two premier products community have front, are we the and obviously, of product, both CP+ and dealers that a clients. Axess large by All, used

to see We for demand because products CP+. product additional we've particularly rolled but continue both high in CP+ for out

also have only we not CP+ So have for Eurobonds, for we but U.S. as EM. EGBs We've launched well. for a CP+ and it now treasuries do corporates,

working share growing as we we we as see well, that. out So an products. grow on as well opportunity additional roll and launches as in market looking demand we municipals as at as We're future

are in are liquid XXX Index where bonds they're in their I'll An been our growing activity of the clients that other has by on we that's what based select data from The portfolio really investment XXX right our interest bonds example construction portfolio. a is space. most used our clients the select when to help this the That in market how bonds MarketAxess And call platform. area perspective bonds our grade liquidity and across data. - the we constructing

[LQIG] construct partnership ETF now use It's an with to in into XXX. data So been the launched MarketAxess the index, we State investment-grade that Street.

portfolio the demand being and platform able a the given super market to clients liquidity time. can we're take the that And help So in we're portfolio, around into construct data they in about seeing from our on that particularly seeing liquid basis use on our higher challenges we're construction. it data that daily to convert excited unique to and most higher our this

Gautam Sawant

expect it. could the see coming expense And any And into carry excluding a just you where estimates? of are initial your benefits, those narrowed FX next range, follow-up, benefits to in year? Got as some the of you as below consider expense expenses

Chris Gerosa

market was going every behind be XX-Qs the FX where the And around disclosure Yes. on The on particularly expenses. $XX section, rationale XX% sterling range in to by the the good euro tightening move provide driven operating we a impact. in around and liquidity the is our really million exchange impact rates, risk

So is leasing that's in platform and as from just FX income for headwind the it's our We're and us, spend shifting felt community. as investment to strategy. across was range to the not purchasing. investment changing the just the statement. the appropriate doing we back compared all the to philosophy pulled continuing for if was our But investment But we've invest it tighten a

Operator

Your is next question of Goldman with from Sachs. the Blostein Alex line

open. line is Your

Unidentified Analyst

as press growth Hi we well you few on Michael to XX% a enhancements and are step trading investment guys costs. incremental release there on extra is of required range? Where still that. guys, And think to XX% tech over are meaningful Or licensing about subscription years? -- and following next investments? making what up higher just this was Thanks. systems that Maybe think and should for the support as the this in Alex. up communication spend referenced quarter. And I

Chris Gerosa

Yes.

outlook So investment business. It's Treasury the licensing expense IT cloud support is today's going exchange in that's course, we're around growth levels. the of an we're at around out. And called budget security preliminary in of assuming, that investing, our that year-over-year for around think expenses. area And to we're it is looking the we our our as but rate about early platforms we operating days XXXX U.S. for planning, a guidance, that big XX% see our us.

foreign us. markets So currency where on that's take change depending subject the to

Richard McVey

gains we is new say our just and average, with portfolio addition euro to in gains to really continue the And we're competitive to of the desire is. all we're our investing trading business that driving and bonds, the and of government well. our market now excited making market. share would and terms adoption markets see how the I bonds we delivering behavior share as and we're encouraged internationally, and And emerging that products well what's in big in a protocols clearly and super -- see above have opportunity client offering being that -- we're the what progress core in municipal about the

is and have trading more view signals to their want our in automate an years that the to add clients So we're additional fixed more around And the world. do products getting we with all products existing that ahead. to opportunity right continue income of the also our

Unidentified Analyst

the specifically Great. bit. understand gears market from shifting ETF of us that's little Thanks. a help in That's XXXX? makers, you how much the high-yield maybe helpful. quarter, and Maybe how revenue versus Can be coming changed might

Chris Concannon

market ETF an obviously, part high all of our are overall of makers yield. just not our products, across market important So

particularly balance the Open Trading of seeing other more provide from penetration gaps and and ETF don't We up providers partners liquidity our filling overall of Trading Open a -- they reflective any our record XX% alternative they traditional of challenged as Our perspective. strong a us give statistics market clients. liquidity that liquidity the in market to stepping out the partner share segment, in sheet are certainly is of liquidity one a market on to strong but makers, providers are

platform. to expect would market I on ETF makers to the So grow continue

would market. and at of look the expect market market offerings come makers would you products correlations As correlations we being higher our ETF into the product the expect delivered If we part market, being to ETF growth that new of market, higher of more

is have of ETF all the out presence. sizable thing The market-making investment to large other point banks

of no ETF making to what is what investment deal business. discern is and market bank, anymore way really to there's with traditional client separate type So

hedge space, -- fund clients. including it's in our some everybody So ETF is the of

So is quite difficult really to what do. try that to and triangulate is,

Richard McVey

and -- would going are just remind market-making we open the that high trading. and community, There all three you growing. of market-making are those main alternative And over liquidity, half see lot yield you participants. volume through what the in ETF is they I a One sources of are call and is that

for have they dealers for in platform, here. to have flow And The order relationships just businesses second flow may anywhere that efficiently. the not compete our but allowing market-making order is are dealers are utilizing more compete that that with clients counterparty can world those

I this, we're you provider. are And investors price environments is liquidity The challenging, more in best the three liquidity example with different that when third, that most being that, and and in marketplace. like and seeing leading those long think see. price as is opportunistic interesting segments term of all the to out, of diversification high-yield point And the contributing . our is we of the liquidity

Operator

the is next Your of Jefferies. Dan line Fannon from question with

is line Your open.

Daniel Fannon

the Appreciate time. Thanks.

on Just yield. wanted high again follow to up

comparison the the what about Just beginning benefits of thinking and with high sustainability some high that were activity in and as talking at But the in the of some your a some a of normalizes pandemic seas slows looking market share the with the of it of your and about of momentum. grade tighten the territory. to kind just you platform share, come to back anticipate more and you normalization yield spreads of and Would kind bit? normal spreads if when gains down

Richard McVey

the three-year But market. why share. liquidity the a see actually you in depending on the think conditions do fluctuations And overall that's trend. view provided we I on

'XX the the So three-year then reversion went conditions very trend some see spike you you look even is pretty up market that in can When were volatile and in 'XX with through at extremely darn clear. growth, period stable. we when though

going so This of very is on Quite for do that high. It all dealing market in certainly going on challenge likely I that to will short based expectation with to see I significant the impact out conditions. honestly, overall positive. central share year. is quarter-to-quarter, travel to sending think when we a my the own economy direction is look they're it's 'XX, remain volatility that But world And the me in delicate next without balance way. to recession inflation try be of a the around sure to looks into to control like term, is banks

is to on volatility going outlook likely our our So into 'XX. model favor it's that

Daniel Fannon

stable And return, Okay. levels. quarter a three of relatively this then were I appreciate buybacks after just like on follow-up looks capital that. of quarters it halted kind

your share repurchases Just for here. outlook curious on

Chris Gerosa

Yes.

we're we So the XXX,XXX equity management attractive to year, spent has employee environment. a repurchases grants. years in which more to And is awards accomplished our Dan, of And two we what's capital offset money give equity this $XX of around dilution a dilution different almost million employees. from the lot strategies essentially shares, been share today, from offsetting repurchasing much investment-yielding

to higher about management think shareholders our about about our through capital we on we when returning something our balances deploying value think cash, returns So cash that thinking is forward. we're going as strategy

Operator

next is Stanley. the from question Your line Cyprys of Michael Morgan with

is Your open. line

Michael Cyprys

question. morning. good Hi, the taking for Thanks

trading circle to automation. Just back commentary some wanted the around to of

but the XX% volumes. about automated of of X% mentioned trades, are you trades think I

expand about across hoping I automated Maybe could base. bit could trade a them. you're you of talk to to of initiatives about expand working customer to talk the how larger and hurdles, trading and sizes usage overcome the little you your some So some was

Chris Concannon

I'm happy Sure. answer that. to

mentioned, grow the we as platform. across obviously, to continues automation So

If obviously look solutions. there's outsource 'XX our a need challenges cuts back and macro take their to at revenue, particularly with AUM, a of step which the you in trading clients, falling

automation And and for in help automation up demand that to -- so them over that our feeling the seeing with we're XX% in solutions their solve obviously need record the seeing billion quarter, the $XX that there -- from trading, we're at growth year. clients they

the grow Auto-Responder come processed. two the then my say and where sizes directly an It's particularly continues. basic CP+. automated really feed. market. would orders it's really no adoption be I in continue comfortable has seeing solution given this clients It's current interest, where to no-touch demand, heightened -- where workflow, in an API in controlled and I this and heightened working where Auto-Responder are mentioned in through areas the with execution capture this So order also we're They're the we're is That's to rates the trader is market seeing the levels by volatile spread they're the region, small demand obviously, solution The And remarks, even our there which market. areas. and all in able very high. data in spread been involved,

space. The in Auto-X the workflow first executed in us muni we is our of in ticket that muni and demand the a sizes heightened market. small we very Again, area. of quarter, lot growth see munis, with associated other In the for area exciting in municipal and bonds,

super not high-yield also the but we in Eurobonds EM, and what only we're high-grade, do muni space. can excited So about in

Michael Cyprys

think $XXX the Great. but do follow-up certain or you million Thanks. but here, organically on position. with filling -- maybe also of be accelerating growth And a about might in the areas? in the M&A? business, that just side, buybacks, -- helpful terms any cash deploying sheet Where prioritizing balance that gaps How or in investing

Chris Gerosa

Yes.

investment line the the think opportunistic M&A the that we of about and invest potentially think we the investment when item. in to -- platform, I'll repeat the million, So about just priorities, some And shareholders. capital return $XXX also cash,

and today supporting round X%, numbers, investment our it's And million business around is working is capital Open is that balanced is million $XXX needs. roughly representative our $XXX which of million. So for earning $XXX But $XXX funds. Trading Fed million

our we're So as repurchase have we through balancing the opportunities programs. strategy return our and shareholders dividend yield capital investment going in front for on to to working XXXX budget, our with with the capital are how recognizing connection management and we're we that through

Michael Cyprys

then, quickly So there. cash $XXX about if investments? cash Does million follow-up, excess of and that imply really just I just

Chris Gerosa

of X/XX. as Yes,

Operator

Atlantic from the Your Clinch next is Simon of Equity. line question with

Your line open. is

Simon Clinch

wondering area could is the accelerate? the robust about share you we've that And was market. you. market wondering late? And it where, how segments the mean seen share take given Hi. of here. pick the sort the you going one question I just if me why other case, just high-grade obviously, market I back to volatility should of appreciate trends think What's I really understand as haven't that this for for to as be the to been my help to circle trends.

Richard McVey

Yes.

lots it market think significant is have I gone bond that this look portfolio things at shocked going we and the is successfully corporate The the to meaningful competitors institutional think so outflows year price are there. they to we if what client in still we've clients investor you if through and do a on look relevant I at values experiencing. you at drop it trading the with -- a us. lot of clearly growth done indices -- lead around have our RFQ. a But space, add interesting in to have very of

the space use We more, inventory the dealers actually DXD market. historically quickly more trading that's have to been through move not as competitive in growing electronic

usage more automation that to some successful effectively have DXD. the We there compete in our are to think said, around for we And mind in velocity tools how likely and trading both the I platform. be could increase ideas on as

ahead. leadership the space in strong institutional in continue years today, it's gains ideas the we position and share have think many a we the to market So

Simon Clinch

for environment that to retract of that of sort if and Thanks I trading portfolio I the said know follow-up a was look much on about of it's just price becomes higher share is the still volumes there. creeping just And in higher. for much of riskier it expecting volatility the maybe Okay. as you But that. side. at at a numbers, portfolio kind And participants actually, share you from to X% harder given trading flatlined a trading X%. portfolio bit

of environment? So to regardless volatility high the creeping figure should just that expect we keep

Richard McVey

this were in of trends I the growth Creeping in higher rates prior two higher. significantly think, is, explanation year. the a portfolio trading years good the And

much growth some of were than we've year. So observed higher expectations analyst the this on what

it's mostly But and has very winning liquidity that impact portfolio do to trading we selectively concentrated see and volatility there be yes, large that today ago too, on dealers and where portfolio portfolios you do think around MarketAxess become community. pricing situations the three So We four was through volatility in does makers think market can moved than it's dealer market. becoming used for I concentrated that observed more no going trading, where be portfolio we well. dealer the trades or a year will more

we higher opportunities it think continue yes, creep would continued probably exactly And be ahead. we in So that that, have share. years expectation will take our to the to

Operator

of is the line Repetto next Sandler. Rich with Piper from question Your

open. is line Your

Richard Repetto

until asked earlier. just going not whenever. also questions this I on it's on two of number good that Chris, I reasons, on a margin. to -- have be clearing Yes, a is follow-up treasury follow-ups for but it requires And know regulation, central were

trading a the these down But hedge environment? plus or in up could to year traders they're cleared road. centrally another it required proprietary was it if said put You funds, of impact margin

Chris Concannon

dramatic house. as proprietary as trying that the down of clearing into trading clearing clearing. there's seen volume firms think and clear on benefit the the margin the that's the - not that coming margin activity you that to clearinghouse. of elements, around they're reflective would There's of volume a sizable number grow one clearing treasury portion you out house. central they're challenges Two impact So have for market treatment the a mentioned, central over netting outside But more business. to expect if clear would I I offsets But firms. traders. be the that for volume Obviously, that as a those things treatment firms, charged, clears in it's central the dramatically, would of They're the outside the they today, fees clearing clearing create of overall I to all of obviously, created as margin get clearing way are step is of central will because really favorable the of the key of -- be others the more for behalf clearing organize also capital you're years that that happen cleared we've of away. the fees

of more see trading of in others, clear we'd on clearing to you proprietary firms firms behalf mentioned. that clear those behalf on step So

out, see is rules. SEC SEC's proposed volume bringing the rules - the aware there we comply be are actually into the the as that that their at well that a more of And rules as the agencies both capital Again, to detail draft for clearing. with the So solutions. has well back worked on when of clearing some central lot impacts there's

a for it's capital opportunities complicated So there's, trading to proprietary favorable number step-by-step process, of a firms. and create the treatment

Richard Repetto

the compared And as the and then the has like U.S. stagnant Chris. share I well guess lately question what on you as what But last surrounds guess is, I been peers done. question Rick, thank in more proxy the capture and other high markets you've positive spoke grade I it, fee on way the investors grade understand have your pros disclosure as and pressure pretty still to for cons of in market U.S. like Got - the over I therefore, Is is about high And go high that on U.S. disclosure the the more grade mature opportunities call. you - well credit think or that - the any the you're as time? can don't that market?

guess So I the...?

Richard McVey

the information happy we're with monthly So is that But fixed granularity added market to And and the that product. income transparency and fee we've we had to haven't capture positive duration duration have on terms the we're to think point the we we are that disclosures, going of that e-trading a you factors provide - anyone in analysts to market asset challenged I I of investors. that environment, you most the classes. the that view and detail important follow our opportunity to impacting space to need the in view other our platform transparent some in shifts continue in see and

across noticeably classes. today investors they of I think values are the demand for automation asset higher ago the were asset than in drop with because year a Rich,

electronic from five asset place back to look similar it's think when to that other product ahead. electronically. I in in XX% it's investment XX% need, And landed all it the volume share years for continue clients' see, areas in with And a is we're so, automation we of our expectation in when our trading going across higher years fixed levels will the classes the income and drive to to the now, place - to XX taking

Chris Concannon

our in we're the of recognize categories. if today There's the really And come, up that just capture of Rich, product to of is growth we think I not want breadth platforms far we just investment is, disclosure as offering, we rate. breadth the Rick which want the records growing. of add, space. and putting we're it MarketAxess in And one that years product to product the are product grade more And than would not disclosure, across about you in that our mentioned, most

the than to across you products, more But look overall on category. And the just categories, the not sure basis disclosure transparent actually of make breadth so, made if We've records most platforms in we become we've monthly adjustment. this that product space. want a one reflects at our

Operator

the comes Kyle from Your with next Voigt KBW. line of question

open. Your line is

Kyle Voigt

should you how much share Bloomberg good their total the up left Hi Tradeweb this be you. term? how then gains to electronic? in ask from seeing in with just competitive Bloomberg on share question estimate an seeing should that I of I'll significant give question update is terms market do offering guess this obviously I in follow-up you catch And Eurobond Maybe kind can of developing on your ask to or of is, to do that perspective, much share a morning. we the us still anything believe if investing market? in that in you continuation one seeding their there. shares that are continue investors electronic or a strategically protocols expect on And the of of could and platform? share is, Can kind near business you And significant my see market Thank that share. just

Richard McVey

and challenging has to also Yes, CEMEA market very favorable I'd - in all-to-all been participants of given environment the a us for environment. the EM that comment. course, think benefits Eurobonds happy I drive trading for to market And we

coming hard I competitive at in pure volume both core electronic that we of is that in see true the their in to is numbers. share. e-trading today that Eurobond of our EM you because believe advantage Europe Unfortunately, include So saying what processing Kyle, our the the I'm that I it's get in market number share and think competitors correct through have

electronic dealers they're way to providing volume we see stay coming the that's when is look reports, it, total in the the their in, processing get we've think public share Europe Eurobonds that we and in electronic the world. to decided volume we out. so, reports the elsewhere And But and true And seeing of at fully XX% when market. mixed only around our probably the around

And think I of trends, just the we're the competitors. electronic see volume, share closely you at not share gaining look that you'll from you only an room fully and plenty on basis, yet grow. to gaining when there's absolute include we're So

Chris Concannon

- sizable mention opportunity a block just would I the trading. in in terms electronic market Eurobond of there's

record small gaining still see, market. market trade well. to share as we relative But sizes our block block average to continue are the are obviously, We share

in price think electronic quite opportunity to the think of large-sized Eurobond I trades. providing Eurobond a Obviously, the is the the So of there's comfortable huge for And are quite trading market. blocks. market sizable increase opportunity dealers we that in

Kyle Voigt

question. more Thanks in squeeze I just and if could one

call Now just here. And in bit terms think, of think last uptake I launched around be U.S. year is running the would that the the in kind just I Mid-X update of what it was maybe the a some But protocol, all-to-all of at there an little end you the of enthusiasm, that kind the uptake seeing of that guess given pure levels the client and year U.S., of high utilizing still this around interest levels I throughout nature on are protocol. there. good or in long

Chris Concannon

approach dealer-to-dealer dealer-to-dealer I Mid-X the Yes, really way think, a and the business - we is offering.

and terms request dealers. continue other growth dealer-to-dealer as And as Mid-X of in higher in see the RFQ platform both across in We Europe, U.S. our price the well Open we continue it. and and to we for RFQ business dealer-to-dealer have live and from see U.S., for offering In business, in dealer demand use globally can where we're market. Trading anonymously demand that seeing dealers to Eurobond the come

like we that In are dealer-to-dealer session-based I RFQs at markets, things So mid-market environment live is growing a as as that certainly think the trading. this look offerings, mid-market a business. rapidly with They those difficult inventory are typically looking waiting to move manage heightened around little than dealers volatility, more out more bit of section. a their mid-market for are because sessions to well

for So any see solutions. RFQ those heightened of demand we dealer over mid-market

Operator

no further turn are at will There McVey. this questions I call over Mr. back Rick Instructions] time. the to [Operator

Richard McVey

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

Operator

today's concludes call. participating. Ladies and conference for gentlemen, thank This you

disconnect. You may now

MarketAxess (MKTX) 19 Oct 222022 Q3 Earnings call transcript