MarketAxess(MKTX)2024-11-06 18:56Financial Data and Key Metrics Changes - The company reported revenue of 1.90 [34] - Operating expenses rose by 14% to 180 million, with U.S. high-grade commission revenue up 24%, emerging markets up 18%, Eurobonds up 25%, and municipals up 28% [35] - The company achieved a market share of 20% in U.S. credit portfolio trading, several hundred basis points higher than the previous quarter [17] - The dealer-to-dealer segment saw a 28% growth in dealer RFQ and an 11-fold increase in Eurobonds Mid-X trading volume [19] Market Data and Key Metrics Changes - Trade volume was up 23% year-over-year, with a three-year CAGR of 17%, and trade count increased by 16% with a three-year CAGR of 24% [22] - Emerging markets trading activity saw record volumes, with LatAm and APAC trading volumes up 51% and 30%, respectively [14] - Fund flows into high-grade ETFs and mutual funds increased by 158% from the prior year, contributing to tighter credit spreads [20] Company Strategy and Development Direction - The company is focused on enhancing its global portfolio trading solution and has launched key elements of its targeted block trading capability [11][12] - A strategic partnership with S&P Global was announced to combine market data with S&P's evaluated bond pricing solution, enhancing pre-trade analytics [12][66] - The company aims to grow market share in U.S. credit while continuing to expand in global fixed income markets [10][41] Management's Comments on Operating Environment and Future Outlook - Management noted a constructive operating environment with robust new issue calendars and increased trading velocity [20][41] - There is optimism about the growth potential in emerging markets, particularly with the introduction of new trading protocols [81] - The company is well-positioned to deliver continued growth in the coming quarters, supported by strong market volumes and strategic priorities [41] Other Important Information - Rick McVey, the company's Founder and Executive Chairman, will retire from the Board at the end of the year, with Carlos Hernandez appointed as the new Chairman [6][8] - The company generated 236 million remaining under current share repurchase authorization [39] Q&A Session Summary Question: Insights on October trading and block activity - Management reported record overall volumes in October, crossing over $1 trillion in total credit volume, with a slight decline in portfolio trading [45][46] - The targeted block trading solution was launched recently, focusing on capturing large block trades that have shifted to phone and chat [49][50] Question: Portfolio trading gains and competitive positioning - Management acknowledged that while portfolio trading gains are encouraging, there is still work to be done to reach parity with competitors [60][61] - Enhancements to the portfolio trading tool are expected to improve competitiveness and client satisfaction [62] Question: Impact of S&P partnership on data and analytics - The partnership with S&P Global is expected to enhance pre-trade analytics and integrate CP+ data into their evaluated pricing tool [64][66] Question: Block trading and fee capture dynamics - Management indicated that large trades would fall under the regular pricing fee schedule, with some scenarios offering reduced fees for process trading [69][72] Question: Emerging markets growth and competitive landscape - The company is experiencing strong growth in emerging markets, with a focus on electronic trading solutions to penetrate traditionally brokered markets [81][84] Question: Dealer-to-dealer channel strategies - Significant investments are being made in the dealer business, including enhancements to RFQ protocols and automation solutions [87][90] Question: 2025 expense priorities and planning - Management is focused on balancing growth investments with disciplined expense management as they plan for 2025 [95][96] Question: Regulatory changes and their impact on electronification - Management believes that the adoption of electronic trading is driven more by commercial reasons than regulatory changes, positioning the company favorably [98]