MarketAxess : Q2 2022 Earnings slides

Q2 2022 Conference Call and Webcast

July 20, 2022

Strategic Update

• Rick McVey, Chairman and CEO

2

2Q22 Strategic Update & Highlights¹

Increase penetration in

core credit products

• Record total credit trading volume; record composite corporate bond2 estimated market share of 20.2%.
• Record combined U.S. high‐grade and U.S. high‐yield estimated market share, of 20.9%, up from 19.1%.
• Record U.S. high‐yield estimated market share of 17.3%, up from 14.3%.
• Record emerging markets (FINRA TRACE‐reportable)3 estimated market share of 29.2%, up from 26.4%.
• Record Eurobonds estimated market share of 15.1%, up from 11.7%.
• Record 1,935 total active clients; record 11,298 total active traders.

Expand into new

products

• Record U.S. Treasury estimated market share of 3.7%, up from 2.3%; 160 active client firms, up 19%.
• Record municipal bond trading volume and ADV of $23.0 billion and $371 million, respectively.
• Significantly expanded ETF / index strategic capabilities with launch of MKTX Investment Grade 400 Corporate Bond Index and ETF with State Street Global Advisors, strategic collaboration with MSCI and RFQ‐hub investment.

Expand trading	•	Market conditions continue to improve-wider spreads, higher spread volatility driving increased client cost savings.4
•	$238 million in estimated cost savings4 ($439 million YTD); average cost savings per million of $1,030.
protocols & leverage	•	Record total Portfolio Trading volume of $22.8 billion, up from $4.1 billion in 2Q21; 96 clients executing trades in 1H22.
the Open Trading®
•	$3.5 billion in Live Markets credit trading volume in 1H22; 171 active client firms.
Network
•	Record trade automation (trading volume and trade count); record levels of automation in Eurobonds.
Grow our business	•	Record 982 total active international clients, up 6%.
•	Record total European (561) and Asia (229) active clients, up 5% and 12%, respectively.
through geographic	•	Record 5,269 total active international traders, up 7%.
diversification	•	Record total APAC trading volume of $34.6 billion, up 45%.
	•	Record emerging markets local markets trading volume of $68 billion, up 38%.

1. All period comparisons are 2Q22 vs. 2Q21 unless otherwise noted.
2. Composite corporate bond estimated market share is defined as combined estimated market share across U.S. high‐grade (derived from FINRA TRACE‐reported data), U.S. high‐yield (derived from FINRA TRACE‐reported data), emerging markets (derived from FINRA TRACE‐reportable emerging markets volume) and Eurobonds (derived from MarketAxess TRAX data which is estimated

	to represent approximately 75% of the total European market) product areas.	3
3.	Emerging markets estimated share is based on FINRA TRACE‐reportable emerging markets volume.
4.	Estimated liquidity taker cost savings is defined as the difference between the winning price and the best disclosed dealer cover price. Estimated liquidity provider cost savings is defined as the
	difference between the winning price and then current Composite+ bid or offer level (offer if the provider is buying, bid if provider is selling) at the time of the inquiry.

Market Conditions and U.S. Credit

LIQUID U.S. CORPORATE INDEX (LUCI)

	Benchmark Spreads*	3‐Month Rolling Volatility	scale)
	210	12.8
(bps)	190	(% log
6.4
170
Benchmark Spreads	3.2	Month Rolling Volatility
150
1.6
130
0.8
110
0.4
90
70	0.2
50	0.1

U.S. HIGH‐GRADE & U.S HIGH‐YIELD TRACE VOLUME

U.S. High‐Grade		U.S. High‐Yield

	3,000
billions)$	2,500
2,000
(in	1,500
500
Volume
	1,000

‐‐

Q2 YoY Change

HG TRACE: 5%

HY TRACE: ‐1%

2Q12

2Q13

2Q14

2Q15

2Q16

2Q17

2Q18

2Q19

2Q20

2Q21

2Q22

3

Source: Credit Suisse Global Credit Strategy *Data based on quarterly average

COMPOSITE CORPORATE BOND ESTIMATED

MARKET SHARE1

New Record

25.0%

20.2%

Share

20.0%

Market

15.0%

Estimated

10.0%

15.6%

5.0%

+460 bps Improvement

from Pre‐Pandemic Levels

‐‐

1Q14

4Q14

3Q15

2Q16

1Q17

4Q17

3Q18

2Q19

1Q20

4Q20

3Q21

2Q22

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

Source: BondTicker

10‐YEAR & 2‐YEAR TREASURY YIELD & MKTX U.S

HIGH‐GRADE WEIGHTED AVG. YEARS TO MATURITY

				2Y TSY			10Y TSY		Weighted Avg. Years‐to‐Maturity
	3.5%																11.0
YieldTreasury	3.0%																10.5	Years‐to‐MaturityAvg.
2.5%																10.0
															9.5
	2.0%
														9.0
	1.5%
														8.5
	1.0%																	Weighted
														8.0
	0.5%																7.5
	‐‐															7.0
			1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21	3Q21	4Q21	1Q22	2Q22
	Source: Federal Reserve						Note: Data based on quarterly average

1. Composite corporate bond estimated market share is defined as combined estimated market share across U.S. high‐grade (derived from FINRA TRACE‐reported data),	4
U.S. high‐yield (derived from FINRA TRACE‐reported data), emerging markets (derived from FINRA TRACE‐reportable emerging markets volume only) and Eurobonds

(derived from MarketAxess TRAX data which is estimated to represent approximately 75% of the total European market) product areas.

Expanding the Client Network

HIGHLIGHTS

• Record 1,935 total active client firms, up 5%
• • Record 982 international active client firms, up 6%
  • Record Asia active client firms, up 12%, representing over 45% of the increase in international active client firms
  • Record European active client firms, up 5%
• Record 11,298 total active traders
• • Record 5,269 total active international traders
• 92% of credit trading on the platform was executed by institutional investor clients

ACTIVE CLIENT FIRMS BY REGION

North America		Europe		South America		Asia

	2,000
	1,800
Firms	1,600
1,400
Active	1,200
	1,000

800

600

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

ACTIVE CLIENT FIRMS

Active Domestic Firms		Active International Firms

	2,000
Firms	1,500
1,000
Active
	500

‐‐

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

ACTIVE INVESTOR CLIENT AND DEALER TRADERS

	11,300
Traders	9,300
7,300
Active
5,300

3,300

1,300

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

=Investor Traders (Intl.)

=Dealer Traders (Intl.)

=Investor Traders (Dom.)

=Dealer Traders (Dom.)

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