MarketAxess rides all-to-all and volume growth to record revenues in Q1

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Bond market operator MarketAxess has reported Q1 2021 revenues of US$195.5 million, up 16% on the previous year and a company record. While Q1 volume outstripped the same quarter in 2020, it was lower than in Q2 2020 suggesting the revenues were driven by more than the scale of activity alone

Within its set of trading protocols, its all-to-all ‘Open Trading’ set new records according to CEO Rick McVey.

He told analysts that the firm had seen an average of 34,000 orders per day totalling over US$19 billion in notional value per day in credit products, with investment grade, high-yield, and emerging markets showing open trading volume increases in excess of 20%.

“Dealer initiated open-trading orders were up 78% year-over-year,” he said. “Our dealer-to-dealer (D2D) business now represents 8% of our credit trading volume and 7% of credit trading revenue as we compete effectively in this client segment with more traditional D2D competitors through open trading.”

He noted that 66% of system-wide orders in open trading were transacted with a traditional dealer as one counterparty, and that one-third found price improvement in Open Trading which saw its average daily volume (ADV) reach a new record of US$4 billion per day, up 22% year-over-year.

“For the fifth quarter in a row, estimated transaction cost savings of $197 million delivered to our clients were in excess of total company credit trading revenue,” he said.
The firm also saw growth in automated trading protocols, with over 205,000 trades completed using automated execution, up from 149,000 trades in 1Q20, more than 370,000 algo trades executed in Q1, up 50% on the same quarter in 2020.

MarketAxess reported its Auto-X represented 14% of total trade count and 5% of trade volume in 1Q21, managing US$39 billion in volume, up 24% from Q120 with 95 firms actively using the protocol and 22 firms using Auto-Responder.

“We are also seeing healthy adoption of Auto-X across investment grade, Eurobonds, high-yield and emerging markets,” said president and chief operating office Chris Concannon. “The use of dealer algorithms is continuing to grow on the platform, with approximately 4.8 million algo responses in the first quarter, up 57% from the same period last year. The growth in the average number of responses per inquiry has resumed, following a decline in the first half of last year. The increasing responses, ultimately improves the likelihood of execution across the platform.”

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