MKTX - Earnings call transcript Q4 2024 | MarketAxess Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] And as a reminder, this conference call is being recorded on February 6, 2025. I would now like to turn the conference over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Stephen Davidson

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

Schiffman, Trading For Officer, our Financial with Rich Officer, will call, trading provide Head the Chris Ilene the you a Concannon, businesses, and will strategic Bieler you review will update Solutions, Chief then Executive Global on of Chief update. results. financial

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

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

let to me over Chris. turn Now the call

Christopher Concannon

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

fixed global would our and I Directors to to in [ our wealth international Before effective Voters integral like Board markets be continued March update, my income provide Roberto strategic experience I of of welcome will to Hornweg ] expansion. X, XXXX.

of both trading share. portfolio our of trading estimated needs focused portfolio U.S. levels on block rate the with levels we We high-grade commission year ADD We clients. made solid solid trading high-touch X% generated our services with also record strongest revenue turning revenue, X XXXX in Now XXXX, strategic since record record strategy record In results progress financial with growth to Slide XXXX the for portfolio with and my growth reported of revenue our revenue. trading of and in update. meeting annual market

on in this focus block on during of the be clear, end Eurobonds, blocks To solution launched credit solution late in year. year, was high-touch QX build markets our XXXX year, will U.S. a our QX now and year in and we delivery the trading at full out we will of Building and execution. be emerging rolling be our XXXX block and a

dealer highly on across focused We our portfolio our the be share channel, will the leading market initiated growing trading channel client-initiated channel. and

and the to record back each and progress of levels we credit we regularly we in million delivered generated record these in In XXXX. credit record total report our on on rates in X Slide across most revenue of product ADD. record areas And commission ADD illustrates plan channels. revenue $XXX a commission credit,

while in maintained in our areas growing product markets, credit, have position rates. other RFQ Eurobonds, client-initiated U.S. emerging our in munis and We leadership across

Our solutions across walk XXXX. I increased differentiated to challenge share was U.S. in client expected data and key market are revenue innovative will functionality drive protocols. our how you and credit enhanced market share through

Turning our Rates business. to

and our ADD rates from in very day billion our client-focused $X.X ADV Trading to billion a to more 'XX this low per growth lot been work Q our in increased with by algos, of have A driven pool they We time which block specific clients range. $XX.X over impact XXXX. leveraging in pleased was market rates significantly QX. growth with use orders larger first

the Slide see X expect launching our illustrates in as more to strong Pragma QX. XXXX, have client migrate In strategy. we made with algos we high-touch progress to clients our of we block technology usage

trading emerging in EXPO in XXX our we high-grade delivered in platform and training points portfolio basis trading, U.S. share First, of portfolio new and munis. rolled portfolio tools in over terms while we XXXX, gained in markets, out Eurobonds

our trading of volume to launch was our we in the to portfolio with trading quarter, pleased 'XX. to markets, up XXXX volume approximately XQ in offering, in portfolio Global XXXX. compared emerging Eurobonds million fourth over portfolio that ADV full did report $XX In Munis $XXX PT XXXX. I'm the doubled XXX% billion in In the in versus year for trading

our high-touch to block Turning solution.

in During dealers trades investment November, trade trading selection continued by block in in with tool. of our our recommended we over block Since proprietary and in now our late are signs $X.X progress. over billion seeing done XX% we've won of XXXX, by our we solution, early markets free trades launch emerging

positive pre-trade That win and very clients QX rate our and and credit our as U.S. reduces solutions substantially information dealers expand from Eurobond in block 'XX. leakage analytics platform. is feedback we The on into

we Before of XXXX, released which January our and continued our disappointing drivers high-grade I expected market elevated yesterday metrics discuss share. market in trading U.S. volumes growth reflect the

have into We much month-over-month market too always look longer-term and at January. the in investors share experienced in gotten trends read not as we to fluctuations our

spread tightening spread low continued saw we volatility. January, of month and the During

block jump drop We and in in the volumes. volumes sizable a also non-block saw market in a

on more have high-grade us an block our on for factors even make Both the trading share, focused solving they but solution impact market our clients.

benefits next a return acquisitions which credit XXXX I you walk growth in our share clear market to across strategy our slide. will that investments we will X the and to on see and U.S. begin now We to we of believe in through the channels, have

Slide innovative drive differentiated X functionality, solutions XXXX. data expect in and growth client that we the enhanced to highlights

clear client-initiated are where on smaller-sized in X As increasing channel are channels. key on initiatives focused and focused I trades, block earlier, have these mentioned a we our leadership position The share. our

process investments, out global also realize we a trading market we channel, high-yield in the portfolio very where deliverables of of in just the solution, pickup enhancing are X saw we been In the acquisitions. dealer for solutions. share we in have January. modernization dealer initiative benchmark we lays benefits key and that our channel, our tech XXXX trading launched as our portfolio Slide The trading portfolio the excited

high-touch solution, EM in this high-touch we launch our Bonds have rollout block our Dura and on solution, our with in launched are are we the which focused trading channel, block in global the half client-initiated in year. first of the in this quarter, target began on December. First, trading to of

With like to with automation products support Auto-X our set integrate our algo solutions ICE product markets and key solutions, we're bonds. our global suite with low-touch client like expanding our Adaptive

In U.S. X XPO portfolio high terms in of and of to Pro, Pro Europe our first the on is in half expanding our traditional out tools touch X trading the goal in XXXX while roll

dealer the Next, channel, from a the the in benchmark migration in benefit portfolio is expected to are rollout offering. our of trading, continue MidExxonPragma enhance and channel, for for trading last PRO technology, to dealers, XXXX. half to to portfolio we're full both expecting will first pricing and And we global X in looking the of we RFQ dealer-initiated relaunch

dealer Our the client of the our enhancements opportunity half U.S. is channels Slide for be first available XXXX frames portfolio market and channel expectation share. our attacking QX. launched and grow trading initiative the are X that channels that the in market and to high-grade and in will be will complete initiative the to feature dealers we

of is of very of in the is market have opportunity opportunity. estimated in is $XXX U.S. XXXX grade. where a trades. client end share and and This penetration at initiative low. Blocks we XX% very the position approximately representing revenue channel leadership electronic total e-trading have clear the up high First, XX% small-sized an estimated million high the made

This for seeing is we opportunity positive and the us, are trends. in exciting most the market already

gains analytics the Next which perspective. pre-trade portfolio a in from is X the channel, integral perspective, and share revenue market trading portfolio share Pro Pro from been X a that important is have but our trading. smaller to fuel

dealer-initiated representing million Last which approximately the is of also is TAM. channel attractive, the or $XXX XX%

RFQ, for our Mid-X, market attacking new protocols, supported live our are data dealers. and We X our channel by our this with and for Pro dealers, automation dealer

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

Richard Schiffman

the Chris. indicators for Slide performance Thanks, channels across XX, highlight businesses year our trading for we full XXXX. On key

this the our market in as largely challenges. business. we our share, the with to across comprehensive key platform a address credit focused highlighted, indicators And laser reflecting underlying market As our fundamental Chris U.S. and clearly slide credit performance exception are the of are strength plan of and XXXX green U.S. have shows,

to we record the largest record in across billion product billion. a First, ADV client-initiated EM markets record We generated to up up ADV in our $X.X We are growth produced XX%. international $X addressable of $X strong an U.S. local saw perspective. XX% ADV, opportunity credit EM up channel, from over billion local The XX%. market markets

diversification a share year. the is example from positive product XX% our up with X%, of estimated Our market and record prior municipal in X% record up ADV strategy performance of bonds in

and high-yield started This our are price-based with and pleased is grade. now the coming investment bonds. very to We from expanded U.S. partnership with with municipals U.S. liquidity ICE

active billion experienced of $X automation in $XXX our in liquidity an clients another volume becoming open up is XXXX. from Open in for record growth U.S. prior enabled clients XX micro-lot trade corporate We XXXX, quarter ICE strong of automation in provider are XXX of algos, a a the in valuable had up with trading. We ADV increase record XX%. now Trading X%. was XX year. billion,

the single U.S. largest our to in driven secondary diverse source liquidity be pool. continues liquidity credit Trading Open markets, of the by

ADV million total of XXXX. was over generated up blocks PT and grade channel, share share record portfolio from the of of XX%, Our in million $XXX U.S. of trading with In credit market XX%. over record slightly high $XXX PT U.S. just we record ADV

Last, a ADV year. $X.X over and a billion, the record dealer representing in was channel, the prior dealer-initiated increase Mid-X RFQ XX%

expanded the Europe. seeing are innings we dealer by we in are While improvement strategy, activity our are early in we of encouraged Mid-X the services in

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

Ilene Bieler

Rich. you, Thank

delivered our of quarter results. year. to $XXX $XXX our in to the prior provide we of total fourth summary On million revenue XX, financials. Slide compared a million We Turning

share. and Looking turn. by lines offset volumes, increased our by largely at partially of Commission increased lower driven market X% each revenue revenue market in

million especially benefit million Information strong to over benefit versus revenue suite, across FX. $XX resubmission up from a The XX% product $XXX,XXX the driven million Services CP and continue included of was we $XXX,XXX revenue. as included from year our of plus. by period a prior The FX. increase contracts data Services experience $X Post was onetime adoption new revenue included $XX prior flat Trade and year was in

other $X principally of driven income license million $X the in approximately gain Total Technology of approximately related Services the versus mark-to-market decreased portfolio $X quarter revenue prior by U.S. our period. a due treasury Pragma XX%, to in losses current $X million fees. million on of higher increased million year

earnings effective XX, million $XXX was rate our compared we tax share XX% up partially and $X.XX. credit provide per reported fee year. revenue decline diluted up in the a detail commission in emerging $XXX commission X%, high of credit to on spread more by was revenue markets and The and lower commission up was municipals, our we Eurobonds U.S. On XX% Total XX%, Slide volatility. capture. of Strong in yield prior across million growth and revenue levels XX%, offset

The with plans. was in distribution reduction principally driven lower credit capture in fees the fee high-yield by total driven fixed credit activity. capture The 'XX from prior product dealer Total decline specifically principally mix year migrations in fee to was by fee line levels. was XQ variable

administrative provide Higher and offset expenses. and of Pragma benefits, lower expenses employee anniversary professional we a prior were $XXX costs tech acquisition. and year Fourth to quarter XX, depreciation consulting of by Slide On and compared and and X% operating and as general amortization, partially million operating our we marketing the comp costs. increased communications summary the

Headcount cash was flow. management we our Slide an capital up provide on and On update X%. XX,

million to of balance end as million sheet the of equivalents cash, with last at December treasury XX and corporate be and totaling investments Our up continues U.S. $XXX cash from $XXX strong year. bonds

the of generated months, cash flow We increase X% million over in $XXX free an quarter. last over trailing XX

million, For repurchased the XXX,XXX $XX a XXXX, shares during at quarter the $XX million. year shares repurchased fourth total full a for cost XX,XXX of of we including

authorization. As of the remains XXXX, million $XXX January on XX, current

our full information, trade believe are disciplined Slide while capital. includes provide striking post stewards We Total we being to the grow On and the expected mid-single digits we at to technology year XXXX. growth, of which revenue, in you XXXX same is investing services guidance. the time drive XX, future in right of services with balance

in effect imply the growth to This in hires, be $XXX to the and expenses X% $XXX to approximately off well would as range. as XXXX million of total expect a the XXXX base tech higher inflationary This of $XXX of million range investments variable year million, of includes full a costs. midpoint XXXX. the rate increases We of

We expect tax XX.X% effective will range in XX.X%. that the rate to of be the

trading which of the for and new making XX% in software roughly of enhancements. in $XX development to the are million we range expenditures protocols expected $XX Capital relates million investments platform to costs are capitalized

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

Christopher Concannon

XXXX, summary, financial solid progress on solutions. solution block made In high-touch tools, dealer portfolio Ilene. Slide in we our training solid delivered In Thanks, results our we XXXX. our XX, trading building and

of Our focus those all delivering realizing the in our our acquisitions channels. on XXXX investments X and and benefit is now of solutions the across

XXXX forward reporting coming on through of to is progress and year the we a quarters. look delivery, the

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

Operator

[Operator Instructions] question the With Allen that, comes your of Chris Citi. first line from with

Christopher Allen

ensure to trading wanted moving of [indiscernible] to the about forward? integral that with in deals is been what having think curious board launch we've success led the trading you're penetration you U.S. on success. about kind steps talk we for the which I emerging the block why just taking block first. block And markets anticipated on U.S., I'm the in how launch, When

Christopher Concannon

Chris. block about Sure. about launch, pending for where both a obviously, high-touch and about in our some been quite trading pretty from yes, launch U.S. the we solution And I've talking the time. very perspective excited are Thanks, excited the

-- it to from both of dealer We see in that we of year. great and EM then did markets targeted is it Eurobonds, first, in targeted have December we launched because analytics of a what was So largely great pre-trade inventory axes. those the last

call here And have AI select We also Smart U.S., in tools. Dealer analytics have the that dealer pre-trade Select. we we then

and about when we we time. pre-trade for particular. EM all a in were And in obviously, added really what the analytics, excited seeing at for So have very in it's were the clients solution EM been we looked asking up block some

and XX%. mentioned the by I EM Blocks fourth remarks. really market opening we increase. our in was as in it seen did So have the about we in see EM in market quarter, launch right share to And block our increased

electronic a leakage. In to their an in time back. looking bond a solved. what of The just present interest ingredient clients RFQ for want blocks, at you trading your and market we look, information trading key have block price to The back the taking lot a is step spent challenge big our to get and market,

broadly block, do not have you're information the to And trading it you so when the a want on can share of market. because impact that

a around regularly, liquid we've market. to in target information all. block and that seen makes block all dealer do trading that is stats our market block, to all they all-to-all so want a with for of But what quite [indiscernible] specific less all-to-all -- that over So the to to years we reduced choose target a leakage. share list they wants and want attractive clients for that all they that in and see a market, block, our short a In dealers our

price. a that is this execute is The respond dealer that, want the point, and most -- what important has in fair and high to at know to likelihood our seeing we're tool success a they

information is act ingredient. showing is price a just key more whether so or or price an a than indicative And dealer a

comes So to it trading. matters data block when

Axis there's and we in XX% can targeted And an analytics. platform, that And relative the our hit Eurobond a very electronic block Based our RFQ, selection. high our trading our more tool. we we're in seeing present on tool, so present Dealer as the on rates block data trading to rate Smart hit seeing traditional we're about pre-trade

where to So XX% XX% exceptionally in high rate. traditional closer that's hit to rate, an hit RFQ, it's

it's days. we still And are -- early

billion -- in in importantly, as block active done just we in over about of $X.X trade our we've using December, yesterday, launched targeted have volume our more tool. We solution. clients trading And it block XX in just

excited through, are about, but very that having going days, but the clients that experience importantly, early the more volumes one, the still are that So in tool.

want What response, a to And really what likelihood they'll know that's price, list asking we trading They information want response. a that see to they for one high clients that are is feedback they the a share call of our trading. tool. block getting we're dealers of with a their and click get that to want with small

direct-to-dealer and QX. in the will I'll and in have enhanced here high U.S. the solution, it launching be the solution high we block will yield, is what of Getting U.S. a your part where We at call with block click us. sorry, very one because dealer. of a grade to U.S. long-winded beginning that an solution this it's your -- can second you question answer for topic exciting

the comp with this is clients. perceive That's reception It's ingredient what's dealers, important But putting how second about of in list inquiry part of them dealers pay question from of broad Winners the dissemination price and for like an of a because very dealers all-to-all. called your dealers have the supportive shorter an been a us curse. do in

The a whole to a so to on based block, when or market they position being a their that And on tend comes are shorter list it inquiry. -- counterparty there's on to aggressively the that people like a targeted taken just knows that inquiry. own for you've seeing even of price that number they know that

that's dealer-friendly component. this so It's solution. important trading actually block an And

And so feedback dealers the positive, the from very have feedback positive. clients and been from been has

Operator

Jefferies. line question from next Fannon of your And Dan with the comes

Daniel Fannon

first terms I driver gives think is going you improving today products, come? of that? goals market that of the answer protocols are in And some rolling just a going this Do think if what you grow drive is have of share? are and the out you around Or this, wanted that and but on to the hit prepared grade lot market the ability to you still to remarks follow you high curious be what increased is of up I confidence year kind but to of your share. assume on in your what share

Christopher Concannon

Thanks, Dan.

is funds the itself a income to Inflows they January. market -- First, here positive fixed in favorable perspective, quite income generally macro market to yields continue be where from are positive, I'll stand. and currently the broadly market fixed into in just start

a So macro perspective, from attractive. market is the fairly still

is new a forecasts predict saw XXXX. throughout in issue strong of issue year quite most heavy New a robust. issue market We and January, market market new the

of pieces the to high at other to what puzzle XXXX. market be turnover in we the similar rates continues in The saw of turnover

the So market. of the velocity

of to And RFQ I electronic driven by growth think of portfolio that drive IG velocity it's particular, trading continues solutions largely in the in trading, electronic trading.

The other of our market, entry also growth liquidity, alternative takers to of market. a of funds from overall as key piece a providers. but ingredient very as velocity is systematic the both into robust liquidity growth That's the trading the in bond and

RFQ to factors that an a our all have vol. provider All are model, our liquidity great in alternative a volatility solution high all-to-all tight very very low of The spreads. model struggle for with and been is

the appropriate market so is in our XXXX key offering multiple And multiple are protocols in for being growth is types that -- rates of environments.

as largest alternative we market. So about alternative the U.S. in liquidity liquidity are you liquidity credit it, think solution, electronic solution solution, the

for provides platform an sizes. small electronic RFQ Our

solution what trading. have an I'd automation We strong no-touch call exceptionally for

low solves and all-to-all trading. no market our both touch So touch

we're completing And PT now near the edges of solution. our

I won't will an feature functionality for and rollout for doesn't clients sizable new in new That ask PT portfolio mean think in a be in QX. there used supply endless complete I have QX that of feature remarks we in prepared but my trading. analytics

in release a had in just January. We Q

competitive just next portfolio as week, see just having trading in a release ourselves offering another February -- we QX. in highly in have and We being

launching talked next it's block other market. very of question, the I is excited of it finally with our just appropriate call I about, the The high about -- what growth solution we're Chris exciting where is Allen's XX% in area quite grade, that that trading U.S. and what's we're targeting about

it, grade. in our If That's today. it's portion still a the trading targets quite really EM that evidence the exciting trading tool huge that high market is high-grade and the in of than think opportunity we're to EU a electronic us seeing And you while both launch about tool all solve. of early bigger market days, block around in our on just for

us January not that in look, was share a -- disappointing was for January. So market

XXXX. when schedule. see to execution look year, in being dates dates as the of And regimented we're and at of rest the about we excited the and delivery quite we're about you committed can remarks, in And our quite prepared those

piece So our is confident the that XXXX market. in are the new product we're continuously business. quite a in the U.S. strategy across introducing about rollout dealer we corporate And last

January. business. The dealer-to-dealer the portion U.S. about grade to in sizable business XX% the market, of XX% That's high in is a exact be of

We grow. continue expect the to of that portion business

As much dealers turn come. market the inventory higher a in rate at over to

grade and the both but rolling solution RFQ gains, out mentioned dealer already saw for yield out matching we a X January, front-end in That, Pro in rolling out new a high mid-market remarks, Mid-X in rolling throughout in dealers we a platform. As in share and in robust high fact, and starting a we're have market or QX we're QX.

So first of as number half we rolling through intend of market we to those impact product have share Each XXXX. a out of the product have a result. deliveries, deliveries

Operator

And question Barclays. line from with your Benjamin of comes the next Budish

Benjamin Budish

Chris, on But I to in to terms ask at you sort you about, which where touched of kind kind anyway. a higher-level it was I'll wanted left of there's market of electronify. of room the ask look what

guess And historically largely side, phone. I market, I electronified how I'm you maybe said of how that unelectronified way? you describe what's not where the always the of the sort -- terms block there curious low-hanging important either either market competitors, key competition? are is about it is a that in as -- you all but necessary think matter the think else You've parts do of would the that's of think but fruit or

over increasing do your growing next electronification. think of share you the X as of is like important years? you sort matter which think those more How about few Is of it a about

Christopher Concannon

spend Great question, on. of a time we one that lot Yes.

to our invest to about investment in If you solution. XXXX, decision our block think we continue strategic in made high-touch a

part laid presentation, But competition the facing in is of as is we the we not While that block we obviously, the far out TAM were electronic. by in portfolio largest market knew part the trading.

blocks, see flowing through. when ID looking and it's at And we for inefficient clients continuously -- blocks leakage electronic phone, just are don't call want And better a really ways in platform, the we the information it's flock it's that's phone to our or and very but over workflow trade phone training and really replicated They that fashion over I what chat. look to ID perfected in targeted the solution. and what our you

is space, other really really of The it's areas and around the fixed opportunity across retail whole across U.S. corporates market. the and income

platform We month-over-month private bank targeting growth market the is to continues year-over-year. deliver called and It obviously, Access have a that volumes IQ. and

in So encouraged private targeting bank largely the and Bank. APAC U.S. was have That we're now tapped that European Private the we into banks private space

So healthy we're growth retail from seeing market. the

electronic emerging the so to levels I see investment of opportunity retail the biggest the more space. higher It's is an U.S. broadly, to of attractive, equivalent And continue yield. you're with markets. in rates area in the -- total really activity but the size to going being market other markets, denominator think the emerging think U.S. it's in areas, I high to of then electronic get grade really evolution in full hard true the total size,

market. penetrated. at And only X% estimates, we're under our sizable is A by looking electronically

ingredient And solutions most data. to the there's EM So the important all around is within opportunity really electronic a these market. huge

becomes protocols. And touch in these becomes. much which rolling important across footprint electronify most new valuable. data your footprint market, out we're data really data data grow the products market, the And better can't the that's the intelligence our more The we and data rolling ingredient. You out and our more a that the you our in we're pace absent same as

by So which protocol to touch RFQ block trades, our and portfolio going both automation next really offering be more trades complicated trade. mid sizes, and line of The you all-to-all the replicate have we when lots have touching is other and through auto but see are items. the trade We'll year, liquid, multiple algos that importantly, trades, current protocol largest, were largest this to complete for those we'll suite, low that. then RFQ, ways full highly with

the will ability in and investing to it deliver XXXX, building complete these the be of So all year out full a we 'XX. products offering in spent and

Richard Schiffman

Ben, Rich. it's

Just thing is the to to let's on areas one of that the believe this wanted say, area, as even not odd highlighted going block the this. remarks he smaller-sized say, add space, let's the in Chris' And electronic I thing all continue where like But for trading well lot to is, this in grow example. is to one we trades, definitely penetrated segment.

like of bonds we lead to It's is And to range going that got in easily. out liquidity providers what adoption are happened more a new trading size lot all view. systematic of the that the believe the And just to equities electronic in and we've turnover our more with right internet for there are get has enabling solutions to capture strategies flow. people that

expect it growing. to keep we So

going commenting to I before increasing volume us capture. means seen in high a which days of for is There's sweet of on well just which a billion likelihood above trace of call, spot, couple were running more the we $XX the averages. the that's in we've mean, grade, activity

Operator

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

Kyle Voigt

business. bigger could just market on Maybe ask if XX%. January I a the picture share near question high-yield

which you in know maybe number headwinds, I a I think some kind were well. But to the X years XX% cyclical with been XX% of been segments there's headwinds structural market. share are There's over still changes market growth? to yield, years. understand where X progress good trying at seeing client seeing client type just past look you ago, and the as the of you're range. good I'm if some high by

think as or migrate share seeing marketplace most pull trajectory and you here? the or where we're back from pullback the clients share away the then And about are growth trying from just to

Christopher Concannon

volatility very market and investors, macro perspective tight, were Yes. XXXX, markets, saw Great for was from high low. yield a in certainly end attractive question itself challenges the spreads

market ETF to arbitrage. borrower XXXX. makers, For a up the trade trading That's very went in as rate ETF sizably particularly anyone difficult market in,

quite an So high-yield put on market across the arbitrage became to being difficult. able

is January systematics the We what that product some high talk to yield most we that still So some down. market. closed still we were be see see because coming exit systematics to yield to players, high pads trading return on saw ETF really investment volatility trading funds high-yield to continue will we ETF hedge at be the saw to and really high-yield R the trading that those the are market. in continue in -- into high-yield there and in make an of We they XXXX to want the that investing the

and we opportunity straight they'll the snap that Certainly, a have yield really if and you yield, so vol high there back back out have macro yield widen just high will traditional is buy will for to attractive. volatility high high for When spread issuer and individual very through from but the be predicting still see in it perspective, yield, any credit they'll that they're eventually have opportunity solutions. comes arbitrage, side, dealer challenges

That is attractive. rate environment very

see benchmark launched it about market. So the portfolio tend picking And in inflows which X% funds. our we the to high-yield yield. in into high-yield of portfolio We've high to trades we benchmark really, we seen tool, up high more to yield. up see continue recently And come trading is training

in up portfolio increase January, encouraging. pick did So we was share trading did which market

considered hear from yield Not around a about bond. liquid sizes do smaller. more to are block in high-touch is The trade million high trading to high-yield block trade information probably again, that clients block they're a sensitive particular. $X we in They're but in talk leakage very our

challenges high the targeting welcomed either at block yield dealer the high of by the that's continue those traders small maintaining of levels, on hit your just solution and single biggest X inquiries. it's be or a based dealers high-yield rate a a list most is will in just trading hit high So if rates because

Operator

question next of comes your line And Blostein Goldman with from Sachs. the Alex

Alexander Blostein

Lots of really hard the great we'll I as but I it's be to answer, try to appreciate know a question anyway. color. going I analysis guess well. TAM

of you accomplishments high the year high that. it within would and grade share success to you to build-out yield terms the comes benefits So big U.S. of XXXX define expect when How see 'XX, market in in

and market pushing forward? You ultimately, per all you're X that you lot of X constant. of from and the fee macro sense efforts named of will kind And million? what per et get recoup of portfolio that help a I And I else cetera, that be some revenue or things that like and the of could things the guess implications that you to the share just impact are ultimately then fee that million think implication was mix top protocols much could given a trying what know lower these kind with a come trading,

Christopher Concannon

Okay.

and XXXX. swings and your see think and Let what portfolio the What impacts obviously want you call, each Obviously, focused through will And portfolio focus is share have me a for one sizable predict the it's platforms impacts me offer with impacts. very our can like this QX. in sizable area individually trading I we've It because on revenue this, you trading. to certainly been and overall last of market start share us that to I quarter could protocols we've let sizable market seen obviously simplify on for do ours question of I'll share continues our in share certainly because go market has revenue. predicted

mega In Anything those There smaller we a just in in it was to come number our that lot call There see was size. PTs $X the trades portfolio in are December, trade. what January, more a market. sizable low level very of mega we portfolio mega there Whereas those of We saw of in market. actually own of market. billion-plus trades.

move share revenue So portfolio share you market the trading perspective perspective, on can not a swing around from based really tools. a we TAM around you showed and PT, because

with portfolio tool. And we'll QX few on trading in next releases excited we our the think we're where just be very

high I with it to PT. of a not attractive fee and block has It talking that like has touch lot Moving more time impact about side. schedule. sizable spent the It's revenue obviously, consistent on fee schedule. share has traditional and but certainly a a blocks, very RFQ

attractive. quite does doesn't sizes, larger it is it doesn't fee all. capture again, But at -- involve it have But trade so

the fast has And we've -- a momentary with to announcements the out extent different of there's volatility all-to-all higher new the it of and administration. of volatility. coming levels slightly fee furious So to an certainly, spikes capture seen

that the just all-to-all to saw we expect activity is To what this volatility, rapidly, the the we extent weekend. out platform with similar came news would to tariff the around up our pick over there week spike in

for and the all-to-all all obviously a that platform. sizes smaller is U.S. RFQ traditional all So protocol to have we for high-grade network in really high-yield great automation, for largest RFQ for and U.S.

The piece obviously volatility But is last around can share all-to-all automation. movement spiking, see we again, with platform. that

more sophisticated see to ask clients of for levels continue automation. We

volume was 'XX, XX% quarter, in fourth Just the our in year-over-year. by XX%. up automation it And grew

January, And so XX% to continue volume. demand. to continue our January. in automation that we It grew grow year-over-year In we see

is that of large So suite They're offering sizes a sweet is is that clients And solutions. demand. that getting high through that spot their in the are trade channel automation areas smaller SMA one in of SMA business. the

quite so adopting And automation rapidly. they're

out suite of the active over and X,XXX around is globe. XXX our automation touching Our clients recently, clients just that's

demand relative base for if is And the but continues the up grow growth SMA from projected grow. for those to That's $X So $X growth a grow. it's for grow, you to follow for base the, the fixed call the markets still to client automation penetration low it, in income across our alone, demand global as us the trillion area to of automation trillion. client will obviously projections great the current

the spot of all to elements terms covered clients all all great to trade through feel market. So I the to for is nice in like and our thing offering market a in of in going for environments designed protocols protocols. The different we multiple be our of different we're designed

Ilene Bieler

protocols about, of key question. about there, me Chris that per part puts the let the per in right? But lower in Chris million. And about fees those again, about talked that trading. this bit is a revenue We about know future. sort talked He portfolio blocks. about at talked million and of thinking of Alex, you come per terms million and And fee fee your share, take are there takes of sort driving think X So the if driving

almost talked Trading driver know it in step down that [indiscernible] a X takes right, from, we a the back come just fees to maturity Open about duration. was it, then puts for higher And think about, But in million, and think And per high and in And which was the we and X and we average last and versus So largest over year, change let's in it, take automation, about that there. call what at right? of January. there's now the saw you instance, was a X, it, years grade, was in in December. X, little that's also if duration, you January weighted X X.X years call that bit

big what was that So of driver happened. pretty a

we go another up also think that in you to over yields We past And X%. that's in about calculation. duration the January this headwind if that, saw saw

and to a can already quickly So even about now needless February mean days think let's now first how first for that that not say. behavior could what that, days trading can make year of we've duration. the of just few in it And We actually seen change happen. know the February, few does

much things. have duration we think in these of really types I does to mind But keep how impact

terms component. it's really this and are I a high I so these is a know been [indiscernible] years, products grade, people know and really right? And few puts takes and just this remind I are over to the key step of and these want about take there think important million, it, to And us that And duration obviously quite back, you if across about we've how model credit is, our you I But when get trying about. the all think it talked our in of and fee has card of I past most that. average stable

a million, a of them PT per and time okay, mentioned I but there's our a points the of happened think know that right? and year-over-year, on over know I -- impact period, a was because also talked them. XXX and per fees you But growth looked the basis was takes, lot it, we $XXX you through call think if here, And I'll even puts so on I've X-year back just it if think what that I it know over, that call [indiscernible] got if about about about at I you and said, again time look the go about, last few when and million. that has you've of I sort talked average about that just Rich just what we of period, this negative

a were space. million. and high-yield per well, in know about tailwind the just benefit on yield, and going also that, significant And we Chris And then we fees talked know instance, high has that, for we that asked, what's

maker if as get overall So benefit be could well. our an ETF that we clients see market more active,

grade So possibility, vol you that another benefit about more if possibility, we see about if in as if think and a you you if benefit pick think duration up. high changes as see

is of to again, think in this product additional And how that million. could which terms but all got of how a open see trading, premium per about we've you works fees more out, create

all that there -- know do these environment. would different to we've to of I also the macro look the sort terms how that you you happening that's So changing also about and the got in what's that the think day. just of environment we by factors Now rate is go see at [indiscernible] into say day Fed

trading also that obviously, impacts So activity.

if you rate at think trading think happening on in more environment. so the the you people really, sort to call or they'll environment, curve And in how you is not a that how about going curve, of whether if the at look will or look the go have it about longer what's moving, activity longer they're elongated, out if their rate take

into have so take And of of to types we effect. all things these

that kind puts of mind. I that that's helpful would general. I -- you about keep so in is in And when [indiscernible] say to and takes the think hope

Operator

Jeff comes from Schmidt of with Blair. And your line the question next William

Jeffrey Schmitt

high-yield What high-grade drive do is at levels? driving around least. pause? been gains months for continue think industry trading it and Portfolio a you percent you And it's the probably stays to X activity, can as of if at these XX% share there even last that

Christopher Concannon

quite It's you from fixed an attractive spread done a at First, market. at a volatility, look at volatility portfolio been to attractive in perspective, income the get look if macro spread price. trade if and you

of volatility, levels trade to have in of seen We difficult a again, large in past but higher we seen haven't it vol. lot becomes portfolio -- more the a

range I the all levels think XX% trades. these range an at attractive is quite so And for portfolio of

There that have market. out counterparties portfolio in of also number and moved has been trading of a the

profitability a trading difficult more So and inventory taking that been attractive more around vol, the down bit up manage to portfolio vol little becomes that for has it's a portfolio low higher in trade. dealer and you're probably down. And large

is It capital-intensive dealer. trade for a

obviously is will that they engaged finds going the anywhere. side are buy have it around. capital not that tool -- in the So large to be move portfolio and flows attractive It banks a highly It's trading. we see obviously

I portfolio dictate think the market environment from from in and year-to-year. capital where willingness quarter-to-quarter moves will really the trading market

by obviously to a it Because in overall share a to will regard investment grew around portfolio we We With notional portfolio grade time. that just portfolio continue tool be last trading, grow trading year. our long trading in trading is for our XX%.

our are not encouraged performance where but we with need we So to be.

new we're excited So quarter. what's about features rolling with out this happening

Portfolio competitiveness smaller. an bigger. the We trades our getting Not will in trading have are portfolio do on space. impact it think

line number common of seeing line place becoming portfolio a X,XXX the So for over is that trades. we're items

volatility, you we that of up could levels And into that the teens. so XX%. certainly market continue to in move to see expect these move and it around At

and we're comes that market. market, into it in is for out the of buy obviously. be the executed It investor if in around tool time and for market the expect flow and But the some the valuable in to end are for prices change the And to side getting relatively quickly that to is very a we come. That of market quite volatility could buy side aggressively. part seeing that attractive the where move

focused having we're And multiple across platform. so our that's on why protocols

PC, we're trade or list touch below trade a a sitting So at That's trade you if block Trade in key fully the automated. you're that our targeting trade ingredient Desk, XXXX. can

Richard Schiffman

that maybe of it's liquidity. thing a of And the convenience I'll Jeff, firms. about PT there's pretty it's trade the a no way just about X add that. of being dominated the I fairly talking it, you're liquidity concentrated to and easy X, move makes to unique But market question X it lot XX about it's kind in mean of line really terms Rich. And items. and not to by

the So it in terms the confident the different is be. our share, under the it's going market a on in mean maybe grabbing venues. ability to But of whatever market same on I there. take little And liquidity percentage terms bit share, we're the really of I'll in of

So clients as XX% the build we It's looking are was that and number. our where volume continue our features to for, let's say, to in comp business, that pretty that's Open the and easy analytics increase in different Trading move. represents, all build capabilities than we QX the the quite feel area, in that, that

keeping not in the stickier going the get of about share the it us. volume PT from market to percent comes whatever ability makes be. really increased places, But confident our X,XXX That's other with we providers. existing of over that replicated which is liquidity to feel unique And easily

Operator

Eli line And comes the Abboud, of Bank of your question America. next from

Elias Abboud

materiality through Can are more Is financial clients picture, asset? of the us you rest impact RFQ the motivation of to priority there? And extent speak you a like bigger behind hub to that your cross and walk something then the acquiring become to feel it for demanding? what is you

Christopher Concannon

about RFQ platform. Yes, we a RFQ Eli. hub hub. question, for is and the It for the prospects Thanks multi-asset exceptionally excited

sizable the and We're block market, through market a is U.S. and a So It also on ETFs. Asia. in there's focused opportunity ETFs the as here derivative as very RFQ. in Europe is the well throughout ETF obviously both trading for platform. That and

So derivatives, derivatives. it offers swaps and complex other equity futures,

out market. that's platform where And the the really in European particularly started first, OTC

important flexible our platform. an fixed income about client able the the exciting have easily. by we market assets having can see income traded access fixed client We being side. ingredient cross base, quite very to synergies to to where offer on add product it's side really ETF is So platform and large base It's we a so think

That is an important component.

so trading the really in underlying the PC clients ETF the every ETF. where have to the PT really portfolio and to at of relative real is a bond And trading If trading dependent directly of is on that it's you look at correlated time underlying choice growth portfolio. a in or market, trading NAV

exposure choices manager we just itself in way block liquid instant analytics portfolio are can to fixed the can through income for form. and is which PT trading clients offer ETFs data trading a So around traded a market. or be highly get they're and great to that there the bond correlated the ETF, are

fixed So that to offer we it's income another solutions just our clients. in our want tool protocol

Again, partnership we RFQ hub we're about excited of own So transaction. through XX% already Virtu. that with our

number a dealers the invested well. have as that We platform in of

products still So market into dealer And suite. the it's access those continuous alternative there's bringing the platform. support in all

across synergy And marketplace. key is really, ability to huge to is network client redistribute what presence our small platform and international the the a very our successful institutional our

Ilene Bieler

obviously you And has opportunity the of of there. guys terms RSQ consolidated you can Chris sort that current equity our that results statement probably once earnings unconsolidated just at get affiliate the know consolidated this, on and But that really you will another in but operations, way talked see And that's on. it and can of the rate and that's about about bring ownership. of look into we think that operating

Operator

line question the Cyprys of next with your from Morgan Michael And comes Stanley.

Michael Cyprys

a are volumes revenues basis, on The today. very the to up to moment. still smaller year-on-year touch a but hoping there for platform contributor a Just on rates nicely

some just to your scale initiatives in business. the this talk you of the have about part you So mind across further that platform of rates can

of see of you time? the maybe And uptake the What's this contributing had a about I tool? your sort Talk net this ambitions for us update over bit. on you you've some been here, spotting also know customers? how from could

you see broader platform? well that the Just to how contributing do as

Christopher Concannon

that for in number certainly XXXX seen and that space. a of we've in thanks exciting about happening we growth It's And love rates. and rate Great. asking a certainly, product things

RFQ First, the many by It's dealers to typically that RFQ for to I it's recognize do way X think electronic largely traditional years. side. to in been really that market, we RFQ, have the driven buy rates

in innovation comes lot market also side, we interesting the when haven't of the protocols have in or new terms in so tools. innovation platforms And seen rates to client a of to The it of RFQ are enjoyed spikes We've electronic the that to we volatility, clients quite to concerned rate seen alternative direct liquidity. volatility. talk but they low the levels don't of space have access that

when yet volatile turns in to to becomes volatility. market those the liquidity much more moments a challenging alternative tend providers Because that trade, market liquidity of provide more it

we've seen just on And that our corporates. traditional platform and all-to-all in

clients And dealers large we so liquidity a in there's and interaction a the all-to-all market times need. making key to healthy of ingredient, think, sure is rates ultimately between

we've mostly to clients market rate innovative in space the in large-sized the our offering solutions orders ability without client provide Where smaller is but impact. algo trade been that size

through take liquidity really liquidity So smaller both a algorithm. passive to systematic using being orders or providers size

and tooling great I'm this in the us onto excited of for on algo our platform we're market, we that which we're products gives clients interesting our month controls suite algos Pragma algo offer. just can that just launching solution Pragma, so our around very migrating rates the

of is our for some years rates our number has We in bigger. corporate to ago. It continues a get other hedging time. The piece net for been quite launched that market bond

for Again, powerful rates. and see It's don't turn banks it hedging it actually us on large to more more liquidity for all adopted. with We way adopt clients provide continue to net clients. the is very We a just client and solution.

So net for hedging, offer hedging we offer and dealers. we

continues to that here continues grow saw to rates in the complex you overall, January. and grow So

community do XXXX, plan our we're more the much client So is in launching familiar We on excited about which rates. RFQ solution, with.

solutions. So well offering electronic offering have a as where solutions want traditional we're hybrid to we RFQ as both algorithmic

Operator

And Redburn Atlantic. Simon your from last of line Clinch with question comes the

Simon Alistair Clinch

macro and thanks to those I of kind that least very today. refer September for would useful kind bottom Chris, [indiscernible] obviously or And million heard at X about and and people in you think my of really today. been just so for go questions are Slide a most to of in I was saw to at the see thus take the just if scenarios million the left, to the the I sensitive. just detail duration much wondering go to what I XX conditions we relationship or and stuff below where color below duration, have talk lows we 'XX lot between which of the what we need wanted could

you're like Or to -- January is if what of Just how for still of curious just down plenty number drop bottom? -- that I are thinking about kind conditions as we a as guess, the part. room continue to was there

Ilene Bieler

question, Simon. the for Thanks Sure.

hot particularly I making behavior dealing when policy. it's at hard something always So to talking you're and when a banks with trading mean, about and call rate to you're central a talking bottom economic about changes you're environment

see So I and do see how don't do and is behavior, want go think I to think about what But we I right? to at rate the environment look think we we there. need trading where

Watch, to X. right, I look we is, want the cuts know that if rate the think, say, FedWatch, at I X call Right CME, recent, most most now, for we to recent

X to X. what see ago wanting while the type so saw to behavior trade normal saw little Just folks as that a you wasn't That's were X if out further ago, that to for, see And it long curve. we you when people on calling of a steepening. you pretty X

call a cycle. we've quite been and would it not saw some a [ unusual would what a [indiscernible] seen steepener bit a it's Now of ] we you most expect that's rate-cutting what recently, and bear in

of that, And recently, terms so rapidly. outcomes economic most decisions, sort different changing said quite as policy I having in of with said things

went Honestly, I quite of seeing, years said call we the X maturity few years average before, duration. weighted as on last saw it also to in in from, X%. quickly it, from just days, change to You're behavior

you can't quick that there, behavior. we saw quite I change tell a staying it's I Now but tell in you can

inflation, to normal of like would in happening all looking So what's have at you think numbers? those what's happening things bond look you traders the at with things

the of going out. is How Fed environment are is saying come in we or rate the terms seeing to there what where

going Will What things to matter. in to what's is think the in these I of to mean, the we do all rates. be down But landing? of again, so we have for And terms in come happen of really things it matter. take environment. there a longer all see these Fed going will to happen soft

in because the to We have talked mean are turn out the on to the know, a platform When where I see as we've well X-year about you increase as yields you sensitivity worth going grade. worth before. about And high see that yields see that can years basis $X, come average $XX be in for XXX to us if $X you weighted be and maturity, to points, can right?

environment. is happens of what all in we've got this So to macro see -- the

Christopher Concannon

space, focused And million per go lots as client will Simon, in would I to that pointed just obviously, into to of come there's factors add, what dealer figuring our Ilene out out, fee but on good really, the functionality, features, client data perspective, we get concerns clients is around from don't -- the and more news analytics and from out spend time really fee pressure.

features are spread that of help fees them and -- trading. overall broader trade of to about they clients our small the perspective, market it's ultimately need to So market functionality a delivering cost really from

see really pressure really present is dialogue functionality, marketplace. a or not the as fee don't the that competitive share see So analytics way is in rolling out around We to data and weapon just new we a move fees tool

Operator

And turn that closing would Concannon for ends it to like our question-and-answer remarks. to I session. back Chris

Christopher Concannon

joining everyone, for Thanks, us.

As you our our heard both and in Q&A. prepared remarks

we're and out dates, rolling on are product, that lines now and on spent execution specific time laser We product. We levering delivery. building XXXX focused specific

put public excited call. in rollout we're we on that XXXX, out and product we're about So this excited the about the

I and look to forward talking next you, quarter. to you Thank

Operator

for concludes And all you call. you. conference gentlemen, joining. and today's this Thank Thank ladies

You may disconnect. now

MarketAxess (MKTX) 6 Feb 252024 Q4 Earnings call transcript