Record 4Q23 Portfolio Trading Volume, Up 36%; Record $33.4 Billion in Municipal Bonds Trading Volume

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 the fourth quarter ended December 31, 2023.¹

Chris Concannon, CEO of MarketAxess, commented:

“In the fourth quarter of 2023, total credit ADV increased approximately 9% compared to the prior year and increased 18% from 3Q23 levels, which benefited from record portfolio trading and record municipal bond trading volume. Client engagement with MarketAxess X-Pro, our unique proprietary data products and our automated solutions continues to build, and we believe that the strong market volumes in 4Q23 reflect an improving market backdrop as we begin 2024.”

Select 4Q23 highlights*

• Total credit average daily trading volume (“ADV”) of $13.1 billion, up 8.9% versus the prior year, and up 17.5% versus 3Q23 levels.
• U.S. high-grade ADV of $6.2 billion, up 13.3% from the prior year, and up 20.0% versus 3Q23. Estimated market share of 20.9%, down slightly from 21.1% in the prior year, and up from 20.0% in 3Q23. U.S. high-grade estimated market ADV increased 13.9%, compared to the prior year, and was up 14.7% versus 3Q23.
• U.S. high-yield ADV of $1.7 billion, down 8.4% compared to the prior year, but up 27.8% from 3Q23 levels. Estimated market share of 17.2%, down from 20.5% in the prior year, but up from 16.1% in 3Q23. U.S. high-yield estimated market ADV increased 9.0% versus the prior year, and increased 19.4% compared to 3Q23. The decrease in U.S. high-yield estimated market share year-over-year was driven principally by an estimated 18.6% decrease in ETF market maker activity on the platform.
• Emerging markets ADV of $2.9 billion, up 9.8% from the prior year, and up 4.6% from 3Q23 levels. The year-over-year increase was principally due to a 25.6% increase in local currency trading ADV. Emerging markets estimated market ADV increased 12.1%, compared to the prior year, and increased 4.2% compared to 3Q23.²
• Eurobonds ADV of $1.8 billion, up 12.6% from the prior year, and up 19.1% from 3Q23.
• Record municipal bond ADV of $539 million, up 7.8% from the prior year, and up 38.9% from 3Q23. Estimated market share of 5.8%, up from 5.0% in the prior year and in line with 3Q23 levels. Estimated market ADV down 7.0% compared to the prior year, but up 38.5% compared to 3Q23.
• AxessIQ, the order and execution workflow solution designed for wealth management and private banking clients, achieved record ADV of $140.6 million, up 67.0% from the prior year, and up 41.9% from 3Q23 levels.
• Record $41.8 billion in total portfolio trading volume, up 35.8% from the prior year, and up 52.1% from 3Q23. Approximately $11.6 billion, or 30.3%, of our portfolio trading volume (in-competition only) was executed over MarketAxess X-Pro, our new trading platform, compared to approximately $4.8 billion, or 18.2%, in 3Q23.
• 36% Open Trading® share³ of total credit trading volume, down from 38% in the prior year, but up from 34% in 3Q23.
• Total rates ADV of $16.5 billion, down 10.1% versus the prior year, and down 8.8% from 3Q23 levels.
• The preliminary FPM¹ for total credit for 4Q23 was approximately $156, compared to $164 in the prior year, and $155 in 3Q23. 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 $4.50, compared to $4.16 in the prior year.

*All comparisons versus 4Q22 unless otherwise noted.

Table 1: December 2023 trading ADV

Table 1A: December 2023 estimated market share

Table 1B: 4Q23 trading ADV

Table 1C: 4Q23 estimated market share

General Notes Regarding the Data Presented

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

For periods beginning with January 2024, the Company will be making 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, will provide more accurate measures of estimated market volumes and estimated market share. Prior comparable periods will be recast retrospectively for both Municipal and U.S. Government Bonds to conform to the updated presentation of the data. Beginning in January 2024, the new estimated market volume data will also be 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.

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