As MarketAxess’ run as an independent company nears an end, there’s one person uniquely qualified to offer the final word: Rick McVey.
McVey founded MarketAxess in April 2000, served as Chairman and CEO until 2023, and then was Executive Chairman until his retirement in December 2024.
In an exclusive interview with The DESK, McVey discussed MarketAxess’ journey – from its founding as an electronic fixed income trading platform at the turn of the century, to the halcyon days of the 2010s and the challenges of the 2020s, to the recently announced $6 billion planned acquisition by Intercontinental Exchange.
How would you encapsulate the story of MarketAxess?
The incubation of MarketAxess took place in 1999 at J.P. Morgan while I was running N.A. Fixed Income Sales. I led the effort internally, with a big assist from one of my bosses and friend, Nick Rohatyn. Rich Schiffman was an important part of the effort to map out a technology strategy. I spent time with trading heads, the syndicate desk, and J.P. Morgan Asset Management to zero in on the right trading model.
Once we were satisfied that our model served the client needs of both bank trading desks and asset managers, we approached other banks about investing in the new multi-bank credit trading platform. Three other banks joined J.P. Morgan in the early funding rounds, and four more followed soon after. The market validation gave us the confidence to spinout the business to make it an independent company in January, 2000. There were about 50 other electronic bond-trading startups at the time.
The first year focused on building the 1.0 technology platform, and securing client trading documents. Onboarding clients was arduous and painfully slow with the legal reviews.
Trading began in late 2000. We started with U.S. corporate bonds, followed by Eurobonds, High Yield, and Global Emerging Markets. Our management team was skilled, focused, and scrappy – a true start-up mentality.
Client adoption and trading volume grew strongly in 2002 and 2003. Our bid and offer wanted list trading capabilities were a major breakthrough for investor rebalancing trades. By the end of 2003, several bank owners pitched an IPO for the company. We completed the IPO in November, 2004 at $11/share. That was the step that made the company truly independent, with a balanced focus on serving the needs of market makers and asset management clients.
The business was growing according to plan until the financial crisis in 2008. That led to a year-long setback due to bank balance sheet challenges which led to bank regulatory reform in 2012. The permanent changes to bank capital requirements led to our innovation and expansion into all-to-all trading, which we call Open Trading. In 2013, we announced a joint venture with BlackRock to support Open Trading and build alternative sources of liquidity for global credit markets. These new sources of liquidity were transformational for credit trading and supported both investor and dealer liquidity needs.
MKTX became the #1 public company for shareholder returns in the entire U.S. equity market for the decade from 2010-2020. We started the decade at $13/share and ended at $354/share. In 2019, we became part of the S&P 500 Index. This was incredibly exciting for the company.
Our management team deserves credit for the hard work and persistence that led to this outcome. We had tremendous support from our clients, and our board also made important contributions.
Open Trading was invaluable to our clients during the volatile period of the Covid pandemic in 2020. Clients were able to find liquidity, and credit market volumes kept pace throughout the market disruption. Market share on MKTX continued to grow strongly through 2022.
At the end of Q1 2023 I stepped down as CEO and transitioned to Executive Chairman, a position I held until full retirement at the end of 2024.
MarketAxess is a long-term success story, but the 2020s have been challenging. How would you characterize recent years?
As is often the case, business success and high operating margins attract competition. Tradeweb started corporate bond trading in 2004 but it was not their primary focus. They ramped up their investment in credit trading around 2014, and became a formidable competitor over time. Bloomberg was also a strong competitor, especially in Europe. Competitors looked for opportunities to serve institutional clients in areas where we were not entrenched, namely D2D trading and portfolio trading. Their success led to a decline in MKTX market share from late 2023 to the present. At the same time, the company also lost some of its edge for innovative trading solutions.
What are your thoughts on ICE acquiring MarketAxess – as the company founder and as a MKTX shareholder?
As Jeff Sprecher mentioned during the recent announcement of the ICE acquisition of MKTX, we had been discussing the strategic rationale of the combination since 2010. The combined electronic trading, data, and clearing solutions for clients create a unique offering with scale. MKTX will also benefit from the vast technology resources of ICE. I am confident that Jeff, Chris Edmonds, and the ICE leadership team will be strong operators of the business. There is no doubt in my mind that this is the best combination for MKTX, and the business is likely to restore growth momentum following the close.
What are you doing now, professionally and personally?
Retirement is not to be taken lightly, especially after 42 years in financial markets! It is a big adjustment, but it is also a lot of fun.
I am enjoying more time with my wife Lara, our combined families, and my four grandchildren.
I am thrilled to support my undergraduate alma mater on the Miami University (OH) Board of Trustees. I am also a senior advisor for an AI company that is focused on building unique data sets for illiquid assets like commercial real estate and private credit, where transparency is sorely needed.
My biggest gratification comes from my philanthropic work with Miami University, Colby College, as well as youth organisations like Hope Ignites in Cleveland, and Good Shepherd Services in New York City.
I am also fortunate that I now have time to play golf more regularly. Golf is a real passion that feeds my competitive side and is great socially and physically.
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