MarketAxess Announces Monthly Volume Statistics for January 2024

Rhea-AI Summary

MarketAxess Holdings Inc. (Nasdaq: MKTX) reported a record total credit trading ADV of $15.0 billion for January 2024, driven by a 20% increase in U.S. high-grade ADV to a record $7.5 billion and an 8% increase in emerging markets ADV to a record $3.7 billion. The company also highlighted the impact of single-dealer portfolio trading volume on U.S. high-grade trading volume and estimated market share. However, the preliminary FPM for total credit for January 2024 was approximately $156, down from $160 in the prior year. The decline in total credit FPM compared to the prior year was due principally to product and protocol mix shift.

Insights

Financial Analyst

The reported average daily volume (ADV) figures for MarketAxess Holdings Inc. reflect a significant uptick in trading activity within specific sectors of the fixed-income market, particularly U.S. high-grade and emerging markets. The 20.2% increase in U.S. high-grade ADV and the 8.2% rise in emerging markets ADV suggest a robust demand for these assets, which could be indicative of broader market trends such as a search for yield or diversification amidst global economic uncertainties.

However, the decline in U.S. high-yield ADV by 25.4% and the corresponding decrease in market share suggest a shift in investor sentiment or strategy, potentially due to perceived risks or a pivot towards higher quality credit amidst the reported low levels of credit spread volatility. This could have implications for liquidity providers and investors focusing on high-yield segments.

The reduction in preliminary variable transaction fees per million (FPM) for total credit from $160 to $156, while seemingly marginal, can impact revenue when applied to the scale of MarketAxess's operations. This shift in product and protocol mix, as well as the decline in ETF market maker client activity by 34.5%, could signal changes in trading behavior that merit close monitoring by investors and competitors alike.

Market Research Analyst

MarketAxess's strategic initiatives, such as the roll-out of the X-Pro platform, are resulting in increased client engagement, which is a positive sign for the company's ability to innovate and adapt to the evolving needs of the market. With approximately 12% of their largest client firms active on this platform, there is evidence of successful adoption, which could lead to increased trading volumes and market share over time.

The record $18.3 billion in total portfolio trading volume, an 88.4% increase from the previous year, reflects a growing appetite for portfolio trading solutions. This trend could reshape the traditional bond trading landscape, providing a more efficient way to execute larger trades and manage risk. The stable Open Trading share of 35% of total credit trading volume also demonstrates the sustained relevance of MarketAxess's Open Trading platform in the market.

Economist

The increase in estimated market share for municipal bonds, from 6.0% to 6.2%, despite a decrease in municipal bond ADV, may highlight a relative outperformance in a shrinking market segment. This could be due to a combination of factors, including fiscal policy changes, interest rate movements, or shifts in investor preferences for tax-exempt income. The broader decrease in total rates ADV by 25.1% aligns with broader market trends that could be reflecting shifts in monetary policy or investor risk appetite.

Furthermore, the revision in methodology for calculating market statistics for municipal and U.S. government bonds indicates a commitment to providing more accurate and transparent market data. This change could enhance investor trust and potentially attract more participants to MarketAxess's platform, which is critical in markets that depend on confidence in data integrity.

Record Total Credit Trading ADV of $15.0 billion Driven by Record U.S. High-Grade ADV of $7.5 Billion and Record Emerging Markets ADV of $3.7 Billion

NEW YORK--(BUSINESS WIRE)-- MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, today announced monthly trading volume and preliminary variable transaction fees per million (“FPM”) for January 2024.¹

Chris Concannon, CEO of MarketAxess, commented:

“We delivered record total credit ADV of $15.0 billion, driven by a 20% increase in U.S. high-grade ADV to a record $7.5 billion, and an 8% increase in emerging markets ADV to a record $3.7 billion, on record levels of hard currency trading volume. The roll-out of X-Pro is continuing and client engagement is increasing with approximately 12% of our largest client firms active on the platform. These solid results helped to offset lower levels of U.S. high-yield trading activity and estimated share on our platform driven by continued low levels of credit spread volatility. Our U.S. high-yield client franchise is strong, with a record 1,300 active client firms. We believe that higher levels of credit spread volatility will help drive a return to more normal levels of trading activity in U.S. high-yield in the coming months.”

Select January 2024 highlights*

• Record total credit average daily volume (“ADV”) of $15.0 billion, up 6.9%.
• Record U.S. high-grade ADV of $7.5 billion, up 20.2%. Estimated market share of 19.1%, down slightly from 19.5% in the prior year. Including the impact of single-dealer portfolio trades, U.S. high-grade ADV would have been $7.7 billion, up 22.8%, and estimated market share would have been 19.7%, compared to 19.7% in the prior year.² U.S. high-grade estimated market ADV increased 22.6%.
• U.S. high-yield ADV of $1.4 billion, down 25.4%. Estimated market share of 13.0%, down from 16.8% in the prior year. U.S. high-yield estimated market ADV decreased 3.8%. We believe the decrease in U.S. high-yield market share year-over-year was driven, in part, by lower levels of credit spread volatility, a greater focus on the new issue calendar by our long-only client segment, and a higher mix of lower-rated bonds in U.S. high-yield TRACE market volumes, which are less likely to trade on electronic platforms. Lower levels of credit spread volatility drove an estimated 34.5% decrease in ETF market maker client activity on our platform.
• Record emerging markets ADV of $3.7 billion, up 8.2%. The year-over-year increase was driven by record hard currency trading volume, up 12.4%, and 18.2% growth in local currency markets trading volume.³
• Eurobonds ADV of $1.9 billion, up 0.5%.³
• Municipal bond ADV of $405 million, down 21.5% with estimated market ADV down 26.1%. Estimated market share of 6.2%, up from 6.0% in the prior year.³
• Record $18.3 billion in total portfolio trading volume, up 88.4% from January 2023, and up 35.9% from December 2023 levels.
• 35% Open Trading® share⁴ of total credit trading volume, in line with the prior year.
• Total Rates ADV of $16.9 billion, down 25.1%.
• The preliminary FPM¹ for total credit for January 2024 was approximately $156, down from $160 in the prior year, but in line with the $156 reported for 4Q23. The decline in total credit FPM compared to the prior year was due principally to product and protocol mix shift. The preliminary FPM for total rates was $5.30, compared to $4.19 in the prior year.

*All comparisons versus January 2023 unless otherwise noted.

Table 1: January 2024 trading ADV

			CREDIT							RATES
$ in millions (unaudited)	US/UK Trading Days5	Total ADV	Total Credit	High-Grade	High-Yield	Emerging Markets	Eurobonds	Municipal Bonds	Total Rates	US Govt. Bonds	Agcy./Other Govt. Bonds
Jan-24	21/22	$31,855	$14,964	$7,481	$1,397	$3,726	$1,943	$405	$16,891	$16,406	$485
Jan-23	20/21	$36,561	$14,000	$6,223	$1,873	$3,444	$1,933	$516	$22,561	$22,104	$457
% Change		(13%)	7%	20%	(25%)	8%	1%	(22%)	(25%)	(26%)	6%

Table 1A: January 2024 estimated market share

	CREDIT				RATES
(unaudited)	High-Grade	High-Yield	High-Grade/High-Yield Combined	Municipals3	US Govt. Bonds3
Jan-24	19.1%	13.0%	17.8%	6.2%	1.8%
Jan-23	19.5%	16.8%	18.8%	6.0%	3.1%
Bps Change	(40) bps	(380) bps	(100) bps	+20 bps	(130) bps

1 The FPM for total credit and total rates for January 2024 are preliminary and may be revised in subsequent updates and public filings. The Company undertakes no obligation to update any fee information in future press releases.

2 For January 2024, the Company is highlighting the impact of single-dealer portfolio trading volume on U.S. high-grade trading volume and estimated market share, but will continue to exclude single-dealer portfolio trading activity from reported trading volume, estimated market share and the total credit FPM calculation.

3 See “General Notes Regarding the Data Presented” below.

4 Open Trading share of total credit trading volume is derived by taking total Open Trading volume across all credit products where Open Trading is offered and dividing by total credit trading volume across all credit products where Open Trading is offered.

5 The number of U.S. trading days is based on the SIFMA holiday recommendation calendar and the number of U.K. trading days is based primarily on the U.K. Bank holiday schedule.

General Notes Regarding the Data Presented

Reported MarketAxess volume in all product categories includes only fully electronic trading volume. MarketAxess trading volumes and TRACE reported volumes are available on the Company’s website at investor.marketaxess.com/volume.

Beginning with January 2024, the Company will no longer be providing Emerging Markets or Eurobonds market ADV or estimated market share. The Company is currently reviewing its methodology for calculating such statistics, which historically have been derived from MarketAxess TraX data, to ensure that the statistics presented provide a complete and accurate view of the market.

In addition, for periods beginning with January 2024, the Company has made changes to the market volume data used to calculate estimated market share for Municipal and U.S. Government Bonds. For Municipal Bonds, the Company previously used estimates, derived from data issued by the Municipal Securities Rule Making Board (“MSRB”), including estimates for new issuance, commercial paper and variable-rate trading activity, and excluded these volumes from the estimated market volume data. While the Company still uses estimates, the new methodology for identifying and excluding these volumes from the market volume data is now based on MSRB “flags” to identify new issuance, commercial paper, and variable-rate volumes. For U.S. Government Bonds, the previous data source for estimated market volumes was the Federal Reserve Bank’s Reported Primary Dealer U.S. Treasury Bond Trading Volumes, which was reported on a one-week lag. The new source for U.S. Government Bond trading volumes is FINRA’s U.S. Treasury TRACE data. The Company believes that the refined methodology used for Municipal Bonds, and the new data source for U.S. Government Bonds, provides more accurate measures of estimated market volumes and estimated market share. Prior comparable periods have been recast retrospectively for both Municipal and U.S. Government Bonds to conform to the updated presentation of the data. The new estimated market volume data is also available on the Company’s website at investor.marketaxess.com/volume.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including statements about the outlook and prospects for Company, market conditions and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. The Company’s actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: global economic, political and market factors; risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic; adverse effects as a result of climate change or other ESG risks that could affect our reputation; the level of trading volume transacted on the MarketAxess platform; the rapidly evolving nature of the electronic financial services industry; the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; reputational or credibility risks related to our data products and index business; the variability of our growth rate; our ability to introduce new fee plans and our clients’ response; our ability to attract clients or adapt our technology and marketing strategy to new markets; risks related to our growing international operations; our dependence on our broker-dealer clients; the loss of any of our significant institutional investor clients; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matched principal trades; risks related to self-clearing; risks related to sanctions levied against states or individuals that could expose us to operational or regulatory risks; the effect of rapid market or technological changes on us and the users of our technology; our dependence on third-party suppliers for key products and services; our ability to successfully maintain the integrity of our trading platform and our response to system failures, capacity constraints and business interruptions; the occurrence of design defects, errors, failures or delays with our platforms; our vulnerability to malicious cyber-attacks and attempted data security breaches; our actual or perceived failure to comply with privacy and data protection laws; our ability to protect our intellectual property rights or technology and defend against intellectual property infringement or other claims; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our dependence on our management team and our ability to attract and retain talent; limitations on our flexibility because we operate in a highly regulated industry; the increasing government regulation of us and our clients; risks related to the divergence of U.K. and European Union legal and regulatory requirements following the U.K.’s exit from the European Union; our exposure to costs and penalties related to our extensive regulation; our risks of litigation and securities laws liability; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; and other factors. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these and other factors affecting MarketAxess’ business and prospects is contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at www.marketaxess.com.

About MarketAxess

MarketAxess (Nasdaq: MKTX) operates a leading electronic trading platform that delivers greater trading efficiency, a diversified pool of liquidity and significant cost savings to institutional investors and broker-dealers across the global fixed-income markets. Over 2,000 firms leverage MarketAxess’ patented technology to efficiently trade fixed-income securities. MarketAxess’ award-winning Open Trading® marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets. Founded in 2000, MarketAxess connects a robust network of market participants through an advanced full trading lifecycle solution that includes automated trading solutions, intelligent data and index products and a range of post-trade services. Learn more at www.marketaxess.com and on Twitter @MarketAxess.

Table 2: Trading Volume Detail
			Month Ended January 31,
In millions (unaudited)			2024								2023									% Change
			Volume				ADV				Volume					ADV				Volume				ADV
Credit
High-grade			$	157,093			$	7,481			$	124,458				$	6,223				26.2		%		20.2				%
High-yield				29,330				1,397				37,460					1,873				(21.7	)			(25.4		)
Emerging markets				78,249				3,726				68,878					3,444				13.6				8.2
Eurobonds				42,755				1,943				40,598					1,933				5.3				0.5
Other credit				8,767				417				10,536					527				(16.8	)			(20.9		)
Total credit trading1				316,194				14,964				281,930					14,000				12.2				6.9
Rates
U.S. government bonds2				344,527				16,406				442,086					22,104				(22.1	)			(25.8		)
Agency and other government bonds1				10,516				485				9,447					457				11.3				6.1
Total rates trading				355,043				16,891				451,533					22,561				(21.4	)			(25.1		)
Total trading			$	671,237			$	31,855			$	733,463				$	36,561				(8.5	)			(12.9		)
Number of U.S. Trading Days3							21									20
Number of U.K. Trading Days4							22									21

1 Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company's reported volumes when the Company executes trades on a matched principal basis between two counterparties.

2 Consistent with industry standards, U.S. government bond trades are single-counted.

3 The number of U.S. trading days is based on the SIFMA holiday recommendation calendar.

4 The number of U.K. trading days is based primarily on the U.K. Bank holiday schedule.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240204137907/en/

INVESTOR RELATIONS

Stephen Davidson

MarketAxess Holdings Inc.

+1 212 813 6313

sdavidson2@marketaxess.com

MEDIA RELATIONS

Marisha Mistry

MarketAxess Holdings Inc.

+1 917 267 1232

mmistry@marketaxess.com

 

Source: MarketAxess

FAQ

What was MarketAxess Holdings Inc.'s total credit trading ADV for January 2024?

MarketAxess Holdings Inc. reported a record total credit trading ADV of $15.0 billion for January 2024.

What drove the record total credit trading ADV for January 2024?

The record total credit trading ADV for January 2024 was driven by a 20% increase in U.S. high-grade ADV to a record $7.5 billion and an 8% increase in emerging markets ADV to a record $3.7 billion.

What was the impact of single-dealer portfolio trading volume on U.S. high-grade trading volume and estimated market share?

The impact of single-dealer portfolio trading volume on U.S. high-grade trading volume and estimated market share was highlighted by the company.

What was the preliminary FPM for total credit for January 2024?

The preliminary FPM for total credit for January 2024 was approximately $156, down from $160 in the prior year.

What caused the decline in total credit FPM compared to the prior year?

The decline in total credit FPM compared to the prior year was due principally to product and protocol mix shift.