MarketAxess hit 21.5% of investment grade TRACE volume in Q2

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Fixed-income market and infrastructure operator, MarketAxess, has seen revenues for the second quarter of 2020 increase 47% year-on-year (YoY) to US$184.8 million, up from to $125.5 million for the second quarter of 2019.

“Record corporate bond new issuance and elevated credit spread volatility led to record corporate bond market volumes in the second quarter,” said Rick McVey, chairman and CEO of MarketAxess. “Institutional investors and dealers both leaned into our Open Trading marketplace to meet their trading and liquidity needs, driving record estimated market share for both high-grade and high-yield bonds on the system. Estimated transaction cost savings delivered back to our clients reached an all-time high, with client savings exceeding company revenue for the second quarter in a row. We are encouraged by the breadth of volume and market share gains across all credit products and geographic regions, leading to robust revenue and earnings growth. Accelerating market share gains, record active clients, and growing product diversification all position the company well for future growth.”

Rick McVey
Rick McVey, CEO, MarketAxess

Net income totalled US$83.9 million, or US$2.20 per share on a diluted basis, compared to US$48.1 million, or US$1.27 per share, for Q2 2019.

Commission revenue for the second quarter of 2020 increased 51% to US$172.1 million, compared to US$114.1 million for the second quarter of 2019. Variable transaction fees increased 61% to US$146 million for the second quarter of 2020, compared to variable transaction fees of US$90.8 million for the second quarter of 2019.

US investment-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume increased to an estimated 21.5% for the second quarter of 2020, compared to an estimated 18.7% for the second quarter of 2019. Variable transaction fees in the second quarter of 2020 included approximately US$3.2 million of US Treasuries trading commissions related to the November 2019 acquisition of LiquidityEdge, now operating as MarketAxess Rates.

All other revenue, which consists of information services, post-trade services and other revenue, increased 12% to US$12.7 million, compared to US$11.4 million for the second quarter of 2019. The increase in all other revenue was principally due to higher information services revenue of US$1.3 million.

Total expenses for the second quarter of 2020 increased 25% to US$80.7 million, compared to US$64.6 million for the second quarter of 2019. The increase in total expenses was largely due to higher employee compensation and benefit costs, mainly due to an increase in headcount, of US$9.0 million, clearing costs, mainly due to record Open Trading activity and U.S. Treasury matched-principal trading, of US$3.1 million, technology and communications costs of US$2.1 million and depreciation and amortization of US$2.0 million. MarketAxess Rates expenses, including amortization of acquired intangibles expense, totalled US$3.8 million during the second quarter of 2020.

Employee headcount was 561 as of 30 June 2020, compared to 480 as of 30 June 2019. The increase in headcount was due to the continued investment in the firm’s growth initiatives, including geographic expansion, trading automation, new trading protocols and the transition to self-clearing.

©The DESK 2020
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