MarketAxess(MKTX)2022-10-19 18:48Financial Data and Key Metrics Changes - Third quarter revenue was 25 billion in Q3 [26] - Automated trading volume increased to 260 million in estimated transaction cost savings for clients, double the savings from the previous year [21] Market Data and Key Metrics Changes - Emerging markets trading volume grew 8% during the quarter, with local markets' trading volume increasing 33% on a reported basis [27] - U.S. Treasuries saw an increase in active client firms trading on the platform, from 122 to 226 year-over-year [10] - Investment-grade bond indices were down 22% year-to-date, reflecting significant market volatility [12] Company Strategy and Development Direction - The company continues to execute its growth strategy, focusing on expanding market share across various products and enhancing its competitive position in the institutional client e-trading space [41][42] - The leadership position in global credit is expanding beyond U.S. high-grade bonds, with record market share in high yield and municipal bonds [7] - The company is leveraging its global client network and technology to grow share in existing products and add new product areas [17] Management's Comments on Operating Environment and Future Outlook - Management believes that higher bond yields create a better investing and trading environment, despite current volatility [13] - The expectation is that volatility will remain high in 2023, which may favor the company's trading model [87] - The company anticipates that the demand for automation in trading will continue to grow, driven by clients' needs for efficient trading solutions [96] Other Important Information - The effective tax rate was 24.8%, with expectations for the full year to be at the upper end of the previously stated range of 24% to 26% [33] - The company paid out 88 million year-to-date [39][90] - Cash and investments as of September 30 were 239 million [38] Q&A Session Summary Question: What is driving the market share gains in U.S. high yield? - Management indicated that liquidity conditions are challenging, leading clients to rely on the all-to-all trading model for diversified sources of liquidity and price improvement [45][46] Question: What is the impact of proposed SEC regulations on central clearing? - Management believes that central clearing will benefit the market overall, but the implementation is still a year or two away [48][51] Question: How did fee per million progress during the quarter? - Fee capture was stable for total credit, with slight pressure from high-grade due to movements in bond yields and years to maturity [56][58] Question: What is the outlook for high-grade trading activity? - Management noted that high-grade market volumes are holding up well despite volatility, but outflows from bond funds are impacting activity [65][66] Question: What enhancements have been made to data and analytics capabilities? - The company has rolled out additional products for its CP+ offering and is seeing growing demand for portfolio construction data [68][71] Question: What are the investment priorities for the cash position? - The company plans to invest in the platform, consider opportunistic M&A, and return capital to shareholders through dividends and repurchases [96][97]