MKTX - Earnings call 3 2023 | MarketAxess Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess Third Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded on October 25, 2023.

I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. sir. ahead, go Please

Stephen Davidson

Good Earnings welcome Conference Christa. Third the Quarter XXXX Call. morning, you, to and MarketAxess Thank

For the company. through walk call, you then provide the Head you Chris Chris for Trading the on Concannon, Chief a of Financial this quarter. update financial Executive how strategic Gerosa, we results on quarter will Chief you the Solutions, Rick executed Global with Schiffman, update Officer, and will will Officer,

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

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

to Chris let turn call the Now me Concannon. over

Christopher Concannon

you morning. enhance the progress third growth. Good our long-term on quarter franchise to very I'm we pleased update to significant the made in and drive

million. income $XX revenue generated earnings First, of was we on of of $XXX million in net quarter, the terms per share $X.XX

volatility period. volatility early we some Our in the quarterly are results were summer higher low signs credit by impacted But October. of positive during of unusually seasonally slower levels spread seeing

taking growth right we growth ahead. our rates in rates steps the believe with to happy we U.S. in not our our credit, are business years in improve but the are We

Turning to Slide on update X. my strategic

address rising trading in -- in analytics believe portfolio our our specifically and and to solutions of trading low trading X the become portfolio targeted trades We growing share market challenges. prevalent superior data pre-trade trading during X U.S. volatility for our to our trading protocols. dealer dealer of growing In Activity market launch platform, to more our innovate solution through like a protocols because X protocol portfolio markets with of Pro. protocols RFQ and selection. open we Mid-X that Pro low we the on to delivers new Pro are also focus proprietary continue high-grade We dealer-centric on X% our comprehensive continuing increases volatility liquidity. quarter. have RFQ environments, We

X pre-trade trading the month costs October like third up We are tradability, analytics pleased X on unique only quarter. XX% from portfolio date, to our increasingly were available of see our our in portfolio leveraging, Pro to trades through Pro. executed in XX%

Pro. offering X We continue to data deliver enhancements portfolio and to our functionality in trading unique

our Pro X algorithms and a user These pricing Execution seamlessly data, manner market integrates of into a more improve them trading protocols AI-driven suite products demand solutions Pro line access, far trading allow execution growing protocols sophisticated best clients' reducing and do operating to leverage a Auto-X, like while cockpit automated our in impact. less. X traders provides real-time available Adaptive manage of the accessing the a to our analytics, to outcomes help answer our simple Adaptive allows market integrate of efficient trading trader with items the fully to pre-trade being power our that solution productive. all and and trader fully liquidity possible the more that more in Auto-X while market. programmatically

impact and show promising the U.S. during transaction cost still Adaptive reduced market was Auto-X grade. quarter, Although in in results savings phase high pilot early

in across and our XX stronger has clients strong growth over X,XXX been franchise We active international with record in never businesses of client a municipals. delivered Our countries.

as of Trading product acquisition out the and global emerging closed we footprint revenue well emerging solidifying local off. [ the integrated pay data to investments As in several further We geographical rolled and our Pragma, Open we our our markets, as broaden markets mini-broker leadership to record e-trading. ] platform,

illustrates X X how less. do are traders Slide more to Pro integrating help proprietary we with next-gen our with

depth Our predict matchability unique another leveraging matching help helps the portfolio These buyer market the likelihood of tradability their liquidity data. platform. of of on proprietary price can soon-to-be data our clients construction scores, and bond, clients tools data with a objectives by and data the seller the finding the launched

RFQ, trading, their clients optimal their dealer Last, trading. can selection automation. optimize on data, our dealer with or bond trading select of Our protocol the inform about launch AI based we are selection open they now data help the portfolio clients also help across tools our

Slide rates, by credit, expansion totaling billion an protocols products our acquisition trading post our $X new trade. technology levers product Pragma and while to growth a new of organic protocols and estimated all market expansion our X We footprint. Acquisitions market. velocity, market. this our workflows our past new addressable of opportunity and of across highlights $XXX years capture expanding data several are million accelerant An and believe ability be the will could of addressable additional enhancing that expanded key have that our market, enhance in higher investments addressable approximately significant and the over

turnover mature debt borrowers Slide have at Since on much high-yield trillion ETF their continued years, potential debt on U.S. maker X refinance ETF benefited $X quarter. of to High-yield update from will activity higher the ADD market in has end the market conditions. has the volatility creating rates, of in the higher for third X levels corporate third higher, up to share. is estimated move and market our platform an With next global secondary markets. in the which provides to quarter, XX% that the over

diverse liquidity bank balance pool a additional of lead sheets like to further for on open the new requirements could highlighting trading. making, constraints importance Proposed market capital bank

provide call October Current on October. wanted high-grade turn levels. trends Schiffman, over update estimated September an I volumes slightly show market share the and Before to market to I Rich above

September volumes levels. While share both are high-yield estimated and above market

month, trading in remaining days and high-grade last in share the high-yield market important X show and the month. have We the week increases of normally both

Additionally, QX portfolio in ADV approximately million, from October is levels. XX% $XXX trading up global

to the me Rich provide with you turn let call on Now over to an market. update our

Richard McVey

are client record our the active our up from prior XX% credit have clients trading year had significant Thanks, our Chris. fund the client products period. this on trading quarter, trading our included A record more reflecting XX% quarter or We X of in active in the strong the X,XXX Slide private and record we the active with deep advancing platforms, volume X,XXX firms that bank partnership firms U.S. from Trading third sources of record our trading highlights had investors year-over-year made in market client a XXX increased quarter, firms We liquidity in progress expansion which volume of the integrate X,XXX a represented and XX% bond hedge network. a our are liquidity. brokers total active we firms with dealers. X municipal to platforms power and of clients on platform, open client and our to for credit. expand on muni business. We and continuing

On business. Slide of our X, international trading we highlight growing diversification the

and XX%. daily in up up emerging strong by enhancements international volume Eurobond quarter local XXX% U.S. increased driven XX% high-grade markets front by particularly in private private clients, clients count average Europe. on year. trade for Third was and of banking QX XX% trading on has was Access our trading The very and XX%, our volume This price volume like trade growth to received Trading launch prior trading been end bank compared the well volume in IQ, respectively.

investor credit protocols a of XX% CAGR and now record count the increase new Auto-X X suite of record volume credit tools of volume trade total are our dealers quarter, We of record count grow, firms. of shown to on total open costs an live like million CAGRs how a our a liquidity and with reduce engage were algorithms, our of With year-over-year Auto-X, a active was to represents trade of rates. and platforms. X% quarter a of new continues trading products client Auto-X our our client while Adoption Historically, as XX%, X-year across the algo suite X-year automated respectively, and responses trade markets automation continues and trading XX. execution there XXX increase increasing traders auto XX% comprehensive in record experienced clients. we for selecting Slide In XX% record responder with XX%. Adoption third volume, Adaptive to ecosystem. to the of with our from leveraging responsible are

to size the trade. the of sophisticated Now to a protocol, algorithm counterparty they and the when the on AI-driven ability decision have order, the the that helps make use

Slide at XX% liquidity reported update reflecting to ADV of Open trading in positive running total $X.X volatility billion some open an XX XXXX. XX%, signs pool. provides up trading our well the an above trading, open quarter is billion the of credit increase volume $X.X of all-to-all on early in compared running is share third and in QX, market-leading

increasing of largest XX% trading markets. trading liquidity quarter. liquidity in XXX expand on U.S. provided hedge the secondary in We source to continue open funds the Open providers. the the available is increase liquidity year. the A prior number from by of alternative single record A consistently credit

in cost approximately savings ticked has improvement delivered year-to-date. price While lower, million we have $XXX

between Auto-X count Republic, dealer our powerful providing providers. to and In the franchise, and This of high access to of trade no Czech of Hungary trading open the global open U.S. institutional Poland, EM emerging step and executed algo expansion liquidity a onshore is unique a Africa. We on with in touch trades XX% investors including evolution South next dealers trading. local recently markets, announced grade, represented select

let financial call performance. review to Now our to the over me Chris turn Gerosa

Christopher Gerosa

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

line data favorable up Record services healthy product we million tax XX%, year. as XX.X%, and pipeline this the per quarter, experience rate was of focus reported of continue $XX in by environment to suite. EPS was share. driven with effective $XXX revenue million, to interest from was the of million. $X.X $X.X prior of diluted rate we strong revenue The contributed contracts strong we adoption The across $X.XX up million delivered For new interest of income, Information our

share lower the ETF X% revenue capture. on decreased credit decline fee our impact commission XX, revenue the volumes. quarter, in by in our volatility negative detail On market The estimated had U.S. total commission mix products, due duration total U.S. credit by strong trading commission international a revenue was prior capture Total from but contributed fee high-grade shift the lower is principally offset Slide generated revenue The fee other traded X% credit The a year-to-date year above of partially in year. provide to market lower spread U.S. of and decrease from during high running prior and yield. credit making to more we in platforms reduction in quarter market levels our capture and on activity, our high-yield U.S. in product which credit bonds maker a was driven over credit share. primarily lower

summary XX, we Slide expenses. On a of our operating provide

expenses were trading the mainly Third initiatives. was system intangible to increased Approximately year-to-date. amortization increase M&A amortization we development consulting and growth and our expense. enhancements the in and expenses Professional quarter operating expense to XX% depreciation in acquired our XX%, related during investments XX% higher by as continued $X.X The costs headcount $X.X due compensation million offering. and expenses in operating to driven revenue and employee and benefits XX% of product to quarter is support software the increased million data increase due

of [ M&A. expense impact exchange been Our have operating ] the would and X% foreign you rate if growth exclude

of stated XXXX provide $XXX we company million was a incremental expenses $XX.X $XXX XXXX the million Based its XX, you expense of of to range million previously savings expense variable operating incentive refining and updated the of year year Slide is Pragma, guidance On costs full by $XXX cost mostly progress range guidance. million. acquisition expense expenses. our with on M&A-related the million full and offset from clearing to Lower new to $XXX compensation

rate be to expected Excluding our growth expense X%. M&A-related is core expenses, approximately

QX $X.X million, estimated operating Pragma acquired Our which intangible expense amortization includes direct expense. for is

$X.X was For modeling revenue purposes, total Pragma third quarter XXXX million.

Slide an on XX, balance provide sheet, we and management. flow our update On capital cash

we we with $XXX On investments borrowings continues purchased under to XX solid million X, the balance of of and million $XX $XXX sheet and consisting as outstanding credit for cash approximately $XX September Our totaling million, of had stock. no facilities. in and cash Pragma October million be

net rate interest the We deliver take invest continue interest quarters. continue cash to strong actively to favorable income in to environment advantage coming our to of the

dividend our we a to financial our based $XXX and regular the in Board Directors months, performance During dividends company. $X.XX approximately quarterly quarterly shareholders, XX cash the of past paid of out the declared million on of

his Now let the to call back turn closing me Chris for comments.

Christopher Concannon

summary, Chris. we XX, continue to In against execute very our Thanks, strategy. growth Slide on well

We positive market ETF month-to-date. are increased volatility, levels signs yield and pleased U.S. activity high trading maker of to in activity driving some levels early of see open higher of higher

Our across and depreciation products. client ] continued stronger with segments, [ franchise and network regions been has client never

We our are the clients better data, trader which functionality with trading Pro Pro, by on X tradability making leverage excellent increasing powered trading as Portfolio more of proprietary outcomes. is progress rollout data. driving X efficiency and increasing is while enhanced our

believe our we rates strategy we higher levels the current be happy the not with But of well deliver to backdrop to quarters growth ahead. are positioned growth will macro we in as improves, credit. and execute U.S. We in continue

like Throughout been would our about trading on Carlos I Directors. JPMorgan, them at to market have board. are the his Hernandez of back and and electronic to back to we delighted forward-thinking Carlos career Finally, Board welcome has structure,

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

Operator

Instructions]. [Operator

first Allen of line question from Your Citi. from the Chris comes

Christopher Allen

tracking? clarify on myself, driven lot help terms you Maybe how October. from an activities what has some ETFs. how of portfolio like perspective, is trading a environment? things. a just update. nice October from been you perspective, of questions kind more by particularly there, in historically advancements you're clearly volatile high-yield trading us And the making And just A color couple Can a of of then much is industry give sounds of it portfolio overall into can But

Christopher Concannon

the thanks Great. Chris, for questions.

it's from driving volatility But September, spread the has only activity. market, in slightly credit to of comes credit Just important volatility it see up. when remains with ETF think volatility, regard look we to high-yield to been Obviously, at do credit higher the unchanged the volatility I current VIX activity, spread high-yield levels it which fairly is

slightly increase. So in by volumes increase market a we're X days share the September. we of in as where high-grade month which Obviously, do above month critical just the the is running encouraged part mentioned, I volatility, have the remaining is

is grow ball lower yield, we protocol. in our above high then are And that slight QX. year, given we leveraging as certainly regard a volatility in We've And increase seen seeing trading September. trading, portfolio clients in saw that this to that with the portfolio months

users. target portfolio trading solutions. We we're Pro our And specifically continue as for trading built that to we to to in enhance see Pro continuing demand and X We rolled portfolio out rolled out X to August.

enhancements. So very out X of month and right additional we mentioned portfolio we have that's by still PTs Pro days trading, roll x for on where And October, I been days early still just as of X our today. now stand encouraged early up global Pro our XX% Pro, as But the again it's it's and in of from we're QX.

Operator

Patrick comes Your Piper next from Moley question the Sandler. line from of

Patrick Moley

one expenses. just had I on

million the to related You of Pragma. was the that mentioned guide, in $X.X

if some in that whether could forward? 'XX is run rate good reductions potentially for or expense there or assume opportunity So maybe going synergies wondering there quarterly just be a to

Christopher Gerosa

intangible $X.X $X.X Yes. good the amortization acquired estimate run for roughly Chris. But that We're million price around This the of is the is that. a purchase current XXXX. still represents It's million rate accounting finalizing expense.

that your that's in layering with process I And modest a 'XX. our I would decent for be growth on working our planning would a XXXX rate for growth still so rate top through We're terms models, assume a run expect good with to for of consistent you. budget. But of core run budget

Operator

of from UBS. comes question the from line Your Alex Kramm next

Alex Kramm

on the following environment. about discussion operating the Just up

today volume September the You in of made for release second September was and last you've best the repeated that comment your it the company. ever that week week

kind contrast so here. So little of us maybe we so week remind you and October, that far a can changed what in and how bit has in just so that environment compare can good was

Christopher Gerosa

were was, volumes. a end monthly that low were and excited in very -- Well, obviously, new issue issue. grade we September coming typically see of low month week Alex. vol high both to and The of and quarter yield, a closing fairly the month month new about Sure, closing recall, activity because off with high you if last we we large regard higher pretty

So there's going of people into end a higher level of repositioning bond that turnover some that of month issue activity. new

lower. levels and issue during in periods days of new But as and slightly the typically, the So September higher we there the see that last did the month we, in also higher market is in slightly the those was of access market but market, experiences days Obviously, last well. month -- X around see of X month, volume October. share

Unknown Executive

condition through the VIX we a volume to And upper I'll you everybody high you perspective, that a alluded for to was capture VIX the that just product. from fee the track Chris return and was highest volatility capture in that that platform, credit good And we see and if which tailwind most the for suppressed fee saw the market October. that, coming is go to [indiscernible] add yield the QX, to, high-yield of of slides, continue our into right, really

that $XXX the million. at roughly more the through, month recapture in our bottoms we elevate for the [ ] month to the seen so where the high-yield it entirety million seeing October surfs in comes will of that we're QX. what was naturally the $XXX that So of And we volume September, had of per that experienced trading far

Operator

is next Budish Barclays Benjamin from line the from of Your question Capital.

Benjamin Budish

Chris, Pragma. expand maybe terms Christie, wonder then TAM. accelerant going of rate if to going you the I to the And be next it's that. should just up of where QX think ability prepared prior you how sort the could are you the in your remarks, about of wanted said I year, the key capture reported? think to alluded expanded earlier? be on follow your is for a And growth question to on for you to on on we number

Christopher Concannon

company. Great. able a Pragma. Thanks, were quite Pragma most Ben. pretty people about And close We of about think quickly. how we're and it. excited technology to is announce obviously, the should addition That's

equity our enhancing business and us. algo-driven an as are obviously Pragma new well technology footprint have we with So to very as that solution brings algo FX an business. tech They

areas of X interest. So

they're offering, Adaptive there, to we helping which importantly, Auto-X, algo helping enhance More we're this our us -- launched year.

So quite is that technology helpful.

we The piece that be they we functionality. NYC EMS could They license EMS to and platform of Pragma other across as multi are the synergistic exploring, quite attractive it's that solution. find assets have their an

been we we've of that ahead. types levels that growing clients solutions from order -- rolling well. Adaptive excitement see in So then some unique the in the automation Auto-X, platform, that our around leverage we credit then as And out the from for of platform years EMS demand in our both rates we are and given looking excitement on do clients our to we higher think and both anticipate algo rates given and

of So we're rates see expertise around just access kind our algo as we're kind excitement levels as excited market obviously, at that we And to technology, first-ever in well. in credit. algos have for of seeing of demand the in-house

Christopher Gerosa

called then the for is 'XX. roughly And quarterly earlier, as still around process I revenue budgeting mentioned projections, the revenue out, $X working on million. I But the we're through,

intangible run growth in you But those each when a for X layer there item. numbers that are I $X.X numbers amortization used line rate slight expense with the is total in So modest rate on the good drag think million.

Operator

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

Daniel Fannon

historically you times activity several in volume other other then you? those You've the around was increased the specifics of participants what or of but And they that. Can beyond parts starting seeing or volatility, to ETF more pick for about activity -- you maker the being breadth have been ETF market mentioned percentage makers, are up disclose broadly, You as curious market you've of more market activity. mentioned in terms well? of mentioned I

Christopher Concannon

Sure, Dan.

XX% to market First, up that make XX% makers volume. ETF about of our

fund are that is funds particularly market high managers the importantly, we've the shapes both volumes More and grade during makers up, while credit of across activity, sizes the high credit market. overall activity as large both and pickup market community. overall slightly activity U.S. investment in ETF seen have certainly been well systematic the hedge firms, The large as but all presence across hedge yield, and in

we So all seeing are a across firms. pickup

largest used We more trading continue portfolio seeing to and as international portfolio our solutions more see trading clients. as across a We're well. using clients solution

selection is again, definitely theme. So the multiprotocol

The consistently traders. because asking clients important not our workflow solutions not efficiencies traders. solve that's to are critically adding other them us are adding theme for They deliver is they technology are that

from more that getting technology And what look of and so a all consistently do the traders from really to the it's of it with rolling we're at if more less, you allowing less with feedback that's perspective, theme we're clients. out our

Operator

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

Brian Bedell

on that improve portfolio the what talk Pro? of of I terms how the to how X then I if that share grow? are increased timing I of can X know clients, or and missed rollout, data -- to or Pro. in about from XX have that the and I I you the so that's talk lot. point expect was the a valid a of mean you just I number still then you want last portion comment if on to say of if now TRACE if you that believe, about Chris, But Maybe about little expect October. I that portfolio -- And using bit talk a share said was how think you could trading it, reiterate can trading, the think that X%, just X% you you

Unknown Executive

Brian, here. Rich it's Yes.

We've been got active Pro and traders it. it's on talk the X it going over can You XXX now up about XXX adoption firms and great.

that gains PT It's those active for earlier, particularly because for a noted in Chris also because lot of to large quite X As portfolios been is out large them trades, trading way pronounced. in sort. to there our manipulate tending large we've list or outstand small really focused list, doing users that easier of trade on Pro productivity are numbers, it's portfolio with the bit most a large things

our numbers we going the growing of of on And It's emphasis. this to continue pace PT, rapidly. we're big lots kind most continue users So should expect tickets. active with push with pretty adoption type large that at -- this of be at to

Christopher Concannon

And averages is the obviously, overall portfolio of of trades historical just on portfolio market, above trading to X% X%. closer for trading

we that's So global are in my what mentioned trading seeing PT us was XX% up And typical up just I lower over remarks, is higher October trading the our ADV volatility levels level. of within U.S. in opening our but portfolio portfolio portfolio market portfolio trading, portfolio We did environment. ADV, in for volumes And from XX% the share are now volumes, our XX%. of QX over trading then U.S., market.

to continue we see So more penetration.

you manage convenient Pro We our is It a the leading all tool delivers. line analytics with it as can given trader X number are that mentioned, for Rich portfolio and items the -- pre-trading platform. we're of the

out And then rollout, XXX overall, we traders. slowly over there's at rolling We're only that great of and training XX,XXX a the do because X traders deal of on with carefully traders. we're Pro,

our Pro the still through days, coming it's of U.S. volume today. So credit X% early X only is in

days. early So still

them our among comparing volume power when we've those that of we've power power a as users increase users, we trend important in One traders targeted we've from on seen the what users. as we've XX% both actually, well call portfolio old platform. seen, And our

higher efficiencies So to the they it trading that sitting are trader does individual when tool. deliver in

Operator

comes from the Your of Redburn from next line Clinch question Simon Atlantic.

Simon Alistair Clinch

like I penetration. time to credit was portfolio historically, bit And volatility spread could the if of you environment. the back below more looks broader a look during spike. the larger really volt just open a being square the volatility wondering significant But than just portfolio back a just tends the about that and you I step of of [ auto take trading of time, of where trading wanted I because of there's when X% look we get you average over just see auto periods again be given those trading elevated whether was pondering trading how for trading at credit of now -- periods these ]. And be idea and progression value delivers to and think that it quite the it's the quite actually volumes lot today. the actually And low.

Christopher Concannon

question. credit, when Well, globally a seeing Network across fact important there's to called open dynamic market providers first, we And as the and Great comes Sure. alternative trading it the entering are all-to-all delivers. liquidity well EM. very trading Eurobonds Trading, Open that U.S. as

So we continue entering to providers see new market. the alternative liquidity

adding We to the you about we're clients dynamics marketplace, and we're of think the also, if our enhancements our liquidity. be providers that allowing to

a liquidity as on market, the passive side, Adaptive Auto-X, being both is provider our algo solution the enter as side. well and a key ingredient to meaning the that allowing quietly aggressive clients to on

all-to-all our growing all So the products. we across are network

obviously. spikes the those look activity continues offering It it does So today. vol, It during you static can't to of seen we past. expand And at -- globally. have have in those as a higher

earnings mention bank thing changing. are to longer thinking important tightening globally. the in heard obviously by dealer bank we U.S. in from credit hear it call. from when the rules there as The recently impact capital landscape regulatory one the right And out in term, XX%, tighten very proposals would Mentioned which we other are capital liquidity bank is as that globally much capital regulators constantly to that those continue out one and large rules, rules. we're on now, And enhancing could

add? do liquidity over time Rich, if will And to tighten. those solutions you all of so gain rules the importance bank continue those the -- want capital to

Unknown Executive

similar it Yes, first quite about PT comes particular, all things that years the that ago. when X may that looking shot. for now the was introduced If XX It's it's guaranteed the one easier to is have over efficiencies. that It's that. came PT to workflow our all done collection add And delivers just the and bonds time. with much to of clients to are gains I at do trading in workflow execution add And what typically one in that to

the getting is execution us clients for, combine reduction come those missing And is is to with X and trading in. up investor and cost high-quality which What is typically it execution from other that things. comes are the That's part solutions on work where that looking the the open that.

in of our And trait. great much Just volatility becomes characteristics that expensive gets a having those we both clients PT, which choppier, works it the when low us. are know from a environment. But market lot for the looking more

trying business both So to of And the deliver simultaneously. our focus grow and going is that, those share. to that's market we think on our build things with

Operator

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

Kyle Voigt

effect protocols liquidity, in Historically, even just I'm a like going moat hasn't But in question to where on to on And pricing. PT small the pressure it is due be where or in mentioned becoming network a to and you there's try been really there trading. less much pricing question. that around standard of to RFQ the open may protocols still to trade like pricing prior decisions trading part seems somewhat squeeze industry. or a with there respect unique client transaction liquidity differentiation for your pool on any wide X-part and

question. So the that's of part the first

impacting may to question RFQ the that the where platforms? across clients are has where do same do they those if of platforms out your becoming pricing enough price part think cover you Second to sophisticated already is be of execute really any all orders to -- with

Christopher Concannon

pricing obviously, pressure our Great. see don't we On market lot across globally. pricing, of a

the introducing past. In fact, pricing like were free they competitors we've seen where in Bloomberg

that across fairly the static workflow protocols landscape seen So together. we mentioned, the have are unique you're seen pricing, more as that protocols, and you bringing unique less We've functionality liquidity competitive certain to certain increases in pricing. price

seen about hit if think haven't we it's So we Again, there. price operate competition model. clients, you universe in, a dealer pay largely this

workflow ultimately are the higher at levels, and more focused clients liquidity. execution So price better less pricing, getting better sensitive on solution,

same are queuing multiple clients across see not do We the with platforms RFQ.

falls on problematic. one request we because to type see that obviously and price for need that's of creates honored. really behavior a we fact, that And platform ultimately not if we is for control In it behavior, that --

that. we So do regulate

have pay that. anything We And clients to Rich, think professional type that do about are add? -- quite behavior. our I of been to we attention

Richard McVey

with call we ] clients. that the just Chris' service high aware with trading to it's comes, performance we're that and now, The points most of fees [ from highest yield, the come in fees $X.XX that for there's We that's up we're Those improvement our shy to value -- where charging delivering it's delivered I'll the schedule, comments fee to fees individual lows the And at value the $X.XX net to example, that Kyle, it. that what open on of high high our where right price our just the in Yes. we improvements price and that's have or commensurate we grade, of about things last where quarter basis or yield. open you're $X.XX cost in we it's price add in think execution where charge. trading, savings, there. we're X

someone comes the fees execution, that additional going it send for get the the where to of performance, charging, inquiries. quality can net where easy type where of a it's of we're trade, when you So to pretty to that about decision decision is

the platform investors. or wins. competing when provider these talking And clients the a reminding couple tens noted where message little actual delivered the that the a then large a decision continually of transaction for as liquidity cents And in to pretty our basis is there's open before, I compared on the the bit we're products, if gets that's fee platform we're performance straightforward trading about. that smaller, we're about a is points So of

Operator

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

Michael Cyprys

ask trading. to portfolio wanted on I

with was portfolio unpack show to volumes you in see you that Any And opportunity yield? there growing meaningfully. I one there, you're trading? much momentum hoping continue portfolio is high where the to versus able volume be might differences you as in across look how is notable guys coming seeing? You of a IG bigger trading out, area

Christopher Concannon

Sure.

we're getting demand convenient our of exposure very all, for it's large seeing such when growing obviously clients a way trading. First quickly. It's workflow quite easy are to solution portfolio inflows, particularly get a

get trading outright and portfolio unwinding then that are exposure The do to clients We other and the the see have going globally. use just income fixed that we ETFs method into ETF seen underlying. using

trading As I list. many using list, high-grade global they're a not U.S. some our mentioned, trading. And credit or of high-yield seeing portfolio just we're times, global U.S. clients a

tools So obviously, time. growing the over born, was Excel using, we are do see And this remember that trading spreadsheet. was on offering that our born clients this -- when portfolio it

in clients they real we think grade and once a as Asia your PT with bonds trade well. weighted selection XX% asking But again, about largely yield. picking can portfolio is of helpful. drives where answer list is a as analytics their does, portfolio for portfolio they optimize of as either you they if looking we portfolio put that really a they really meaning portfolio see think the offering. across growing now and or buying high pricing, that bonds. by well, towards The bond truly the bonds recently to construction both only to large that's bond they're adding it, price in tool solution that many portfolios that global portfolio in helps the them and trade, investment in the construct less it's PT that for are very offering optimize we high-yield. a and it that portfolio switching, our or impact once global And a in the times, have our so load and Europe volumes, So We we've to Traders the with high-grade a on come And pre-trade intend that certain way. in investment And they or would you about it's portfolios that selling EM which deselecting to were real they're the overall our their using. out And portfolio. need construction quite across using global XX% expect grade an question, trade fact, -- see long portfolio portfolio

Operator

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

Alexander Blostein

there has expense you have you Chris, to just look guys a noise. guys been maybe in deal I the back pull you the challenged. When you back or mostly wanted philosophy get question going but function sort doesn't obviously, levels XXXX just And ex-kind to improve been and trajectory. company you mentioned expenses? backdrop, around run at get rate the management a are revenue will margin But U.S. of leverage could to the And of X% be. appropriate to to less as is, and be the used I performed some has of growth, of levers you look the it selling Is expense that's I growth the mix. business part necessarily expense the of how really for operating positive it credit that suggested part with and somewhat guess, disappointed to core you revenues if revenue at environmental think the ask that growth of

Christopher Gerosa

Yes.

amortization So Alex, M&A as we've levels the number of made elevated to contributed expense. the the investments activity, know, over Chris years. X acquired which a you intangibles to last lot alluded of of

we've Auto-X solution. final Pro, all automation little built bit rolling provides come the out X a and of where for our noise, from out out perspective where a we're the suite tools Adaptive it's So with core of this rolling that we're year the together teams

and where And more was expenses. this M&A-related where to in savings for is to high today, operating underperformance that recognizing single-digit by $XX seen of million from or less $XX million offset were year, $XX.X down what year, we expenses beginning more the are roughly the the million that the our were future planning less or that XX% the variable have that for growth of business, we expenses of our rate expense we've due we stand core the of So we're thinking to XX% variable. -- experienced some roughly

through are the think prospects. build our as we the going and priorities philosophy would say -- think top I growth to resources expenses. model But the near-term internally, revenue reallocating redirecting the we're we So levers we're get about variable that to where expense

Christopher Concannon

laser-focused And where just now. the our for tech critical right company are Alex, period would across We're we're mention we I stack. on technology introducing also in new a expenses

investment, that and requires we've been that's of So higher what doing. levels

the both are the expense technology time. and acquisitions Pragma So platform we growth, And when obviously, that you that covering platform the like at legacy as well. at look new footprint enhance same

these look So you great models that think, highly number over leverage to be I grow -- leveraged. that and of And companies are operating to in Alex, system, we have cover a designed but time. their

we produce data rolling over could for help as data to that It the our is now products Pro data, on output. to grow as are for grow X we margin future. the be operating really our is point the the that important an anything data, producing. XX%, that other various see the in revenue. grow. and just piece that One And data Remember, share our that data market trading. continues the market doesn't revenue across to data sophistication but grew than designed cost is And we're again, that It's saw really in us of that more sale out you're today not market sale you data will quarter,

collect be that And to the as data in dollars going we're as over a leveraging data into be to able orders market. bond to so hard we'll leverage And that well. way time,

Operator

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

Patrick O'Shaughnessy

that today access speaking [indiscernible] you've to potentially to allow been market. Innovations market trade

Christopher Concannon

sorry, What I'm broke of Patrick, last question? that you the bit. was part up little a

Patrick O'Shaughnessy

the you about What's better intent block help market? penetrate the you trade

Christopher Concannon

Okay, Patrick.

levels EM, market particularly local in activity. are first, we So our higher around of seeing block growth,

been have We market our there. block share growing

introducing touch with that in Pro X quarter opportunity platform, that fourth in a to order. higher data, And you to for We what tends is really And leakage one, key of you market the have that larger use rolled the this clients our important decide on out but information are that hopefully AI many an ] offering When high to helps [ we larger quarter. that is order designed high-touch solutions we XXXX, of to dealers obviously, impact uptake in in November a you select call pre-trade is choose. protocol want minting you're have introduce the rollout protocol see the a selection. obviously and analytics to market which size attract would Dealer however reduce order, for ingredient which to One activity. to requested an our need Select that the then of block number request a sizes

So using want of choose you may or dealers, our market which there is you levels would Pro number you're if protocol if discrete can only liquidity should market, to and of to you offering go know tradability, like to to entire select would dealers from decide, levels tradability at use one, of into use looking all-to-all then X number from. things lower price you requesting dealers, new a in dealers, an the help you're -- you what where want

really is desktops to the in offering targeted that hopeful see November, but it across really So 'XX. launch cloud quarter first on of

Unknown Executive

coming initial about It's phase, and that Adaptive out we're Rich. coming early phase clients and days but pilot in the from Auto-X from adaptive even we're talking we of it. it's, still thing, one seeing just And larger other the of this orders small have number again,

to into gives the tap So we remember, different the it ability that available. have protocols

some information the the out And book. to we've type gets then size to information a leave that engage other initially. $XX People of about without million couple without full encouraging and order used $X it common of block then working larger work had in cases a all up million. size starts of leakage being million up $XXX at quietly $XX when that trade where parties quietly we've part million we larger to that able and of the initial or worked that's algo where concerned that seen done the to a a are that size order workup. gets leakage. being And that showing million resting or to a completed, order then up or early is multiparty operation examples So call in And

expands. the that Auto-X as we see Adaptive adoption So rollout expect to greater of

Operator

Citi. the question from of Your line Chris Allen comes next from

Christopher Allen

Sorry, guys. I had in mute.

expect the cycle. ask Do afford end basically with of you're at year-over-year, to that expense in Just the efficiency [ cycle kind prime wanted you term? to of you where guys any ] opportunities XX% longer hiring up FTEs

Christopher Concannon

was quarter over 'XX. cycle high hiring into Obviously, the market the a we the first competitive of Sure. that quite quite 'XX last entered into and years, few

and technology reduced. among market With banks has large dynamic that layoffs the across the investment companies the

So more friendly environment. much hiring it's a

And obviously us of on overall technologists, Pragma which out with is around probably rolling market footprint access. access. addition added overall with focused hiring And we market XXXX, comfortable products the see going the just of are heads XX out the rolling solutions the add and brings great a of obviously, We to that into and marketplace. we're quite we've footprint already to

doing the more side we replatforming of overall grow we're Pro number continuing automation then the And that our of importantly, have to tech on things X platform, and a rolling solutions. out

tech So investments see in sizable we plants those continue all those to and of of all opportunities.

Operator

to have the We Concannon, queue will no further for Chris I remarks. in time. closing the you this turn call at questions

Chris Concannon

ahead important the joining Well, for out are Great. today. levels Obviously, and of a about in and the quarter things thank very rolling activity ahead. quarters we're that quarter this have we number of the us pretty and excited you

quarter. joining So in and for thank you we'll us, to you another talk

Operator

conference you your today's this And disconnect. Thank concludes you now call. participation, may and for

MarketAxess (MKTX) 25 Oct 232023 Q3 Earnings call transcript