MarketAxess at Morgan Stanley Conference: Strategic Execution and Growth

On Tuesday, 10 June 2025, MarketAxess Holdings Inc. (NASDAQ:MKTX) participated in the Morgan Stanley US Financials, Payments & CRE Conference 2025. The conference call, featuring CFO Eileen Fazelle Bieler, highlighted the company’s strategic execution, capital deployment, and market share dynamics. While MarketAxess reported positive trends in trading volumes and market share, the discussion also touched on challenges related to market volatility and competition.

Key Takeaways

• MarketAxess repurchased $60 million in shares through May, significantly up from $24 million the previous year.
• The company is focusing on expanding its high-grade market share and emerging markets presence.
• Operational efficiency is being enhanced through the integration of Pragma and optimized vendor management.
• Strategic initiatives include expanding block trading and relaunching the MIDEX platform.
• MarketAxess maintains stable pricing in core businesses, with new protocols offering incremental revenue opportunities.

Financial Results

MarketAxess demonstrated robust financial performance with an increase in share repurchases:

• Share Repurchases: $60 million through May, compared to $24 million last year.
• Remaining Authorization: $160 million available for future buybacks.
• Volatility Impact: April’s CVIX was 56 for high-grade and 390 for high-yield, normalizing in May to 33 and 190, respectively.
• Emerging Markets Growth: Year-to-date volumes increased by 14%, with May seeing an 18% rise.

Operational Updates

MarketAxess is enhancing operational efficiency through strategic integrations and technology adoption:

• Pragma Integration: Pragma’s technologists are helping reduce additional engineering hires.
• Vendor Management: Optimization efforts are underway for cost efficiency.
• Client Onboarding: 250 clients onboarded for automation volume; 80 clients on adaptive automation.
• MIDEX Platform: Scheduled relaunch in the third quarter.
• Leadership Changes: New appointments include a head of EM, COO, and co-head of North America sales.

Future Outlook

MarketAxess is poised for growth with several strategic initiatives:

• Block Trading: Expansion in US credit, leveraging successful EM and Eurobond implementations.
• Portfolio Trading: Aim to be "feature complete" and protocol agnostic.
• Dealer Access: Expanding through the MIDEX platform to facilitate dealer risk reduction.
• EM Expansion: Continued relationship building and market presence in local currencies.
• Automation: Ongoing focus on trading automation to enhance trader work quality.

Q&A Highlights

Key insights from the Q&A session included:

• Pricing Stability: Core RFQ and Open Trading businesses maintain steady pricing, with macro factors influencing fluctuations.
• Protocol Mix: Newer protocols offer incremental revenue opportunities without fee pressure.
• Block Trading: Emphasis on revenue potential through block trading initiatives.

In conclusion, MarketAxess’s strategic focus and operational improvements position it well for continued growth. Readers are encouraged to refer to the full transcript for a detailed account of the conference call.

Full transcript - Morgan Stanley US Financials, Payments & CRE Conference 2025:

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Alright. You ready? Alright. We’re gonna go ahead and get started here. For important disclosures, please see the Warren C.

LA disclosure website at www.morganc.la.com/researchdisclosures. Note that taking your photographs and use of recording devices are not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. With that out of the way, good afternoon. Thanks for sticking with us here on day one of Morgan Stanley’s Financials Conference.

I’m Mike Cyprys, Equity Analyst, covering brokers, asset managers and exchanges for Morgan Stanley Research. And welcome to our fireside chat with MarketAxess. And I’m excited to welcome Eileen Fazelle Bieler. Perfect. There we go.

CFO of MarketAxess. MarketAxess, as many of you know, is an electronic fixed income trading venue that started with a primary emphasis on credit markets and has since expanded into new geographies and new asset classes. Eileen, thank you for joining us and welcome back.

Eileen Fazelle Bieler, CFO, MarketAxess: Thank you for having me.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. So, why don’t we start off a little bit of a quick intro. Eileen, it’s been, a year since, you joined MarketAxess and also a year since your appearance at our conference. I think at the time, you were just a couple of days new on the job.

Eileen Fazelle Bieler, CFO, MarketAxess: Yes. Couldn’t believe you guys decided to put me on stage.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Thought that was Chris’ decision. It was a game day moment when you decided to join us on stage. I think everyone was a little surprised.

Eileen Fazelle Bieler, CFO, MarketAxess: Now it’s Including me.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Okay. Now it’s you. It’s been a year. Maybe talk a little bit about your transition to market access and where you’re spending most of your time and focusing now.

Eileen Fazelle Bieler, CFO, MarketAxess: Great. Thank you so much again for having me. And it has been a really interesting and exciting year. I would say that the firm has evolved so much since I started. And my focus has really been in, I would say, three different areas.

The area and then I’ll go through it a little bit. But the area has really been on execution of the strategy and really being able to furnish our businesses with the right metrics, the right data, and the right analytics to be able to drive execution. And what we’re doing is we’re taking those measures and those metrics, and we’re driving them down further into the firm. And that’s something that has been an evolution since I’ve been there. And we think it’s been really helpful as we continue to roll out our new protocols.

And we can talk more about that as we go along. But I would say, so the area of focus for me has really been on helping the business to execute by giving them the tools they need for decision management and to drive performance. So that’s been one of the key things we’ve worked on. And I have a great team. I was very lucky, and they’ve been great with driving this forward.

The place that I spent a lot of time and this I did very early on was really around capital deployment. And you may recall that pretty soon after I joined MarketAxess, I went to the board and asked for a larger repurchase authorization than the firm had ever had. And I really wanted the optionality. We are such a cash generative model. And I think historically, the share repurchase philosophy had really been more about offsetting dilution from issuing employee shares for compensation.

And that’s great. But I also felt like I wanted to have a bit more in my arsenal in terms of what we could do to return capital to shareholders. And so what you’ve seen, for instance, through May was about we’ve already repurchased this year like $60,000,000 in buybacks. And that compares to just $24,000,000 last year. And so I think all of last year, did about $75,000,000 in buybacks.

So I really wanted to have that optionality. And I still have about $160,000,000 on that authorization. It doesn’t have an end date. We can do it over time, etcetera. But capital deployment, really looking at how we were utilizing our capital and making sure it’s as accretive as possible for shareholders was a key area of focus for me.

And so those are the two. The area was really what I think of as good corporate hygiene. Market access for a long time has been investing, which is great. This is a business that you need to keep investing in. And we will continue to invest in that business.

But I also wanted to look at a way that you started to see us last year really practice good expense discipline and expense management. And how can we do more of that? So one of the things you saw us do is we brought on Pragma. We have top notch technologists from Pragma. And what that’s allowed us to do is really be able to flex their expertise across the firm in a way that allows us not to perhaps maybe hire more people to do some of the engineering and things that we’re able to do with Pragma.

And so really making sure that we’re looking at our talent and utilizing our talent in the best way has been an important part of that. But even just regular way vendor management and looking at what can we do? Are there places where we can switch out in our technology vendors, for instance? And our team has really been looking at that from an efficiency perspective. So how can we continue to free up dollars to invest so that we can move forward but do it in a way that is very productive and efficient for the firm?

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. Why don’t we shift and talk about volumes, market share? On the first quarter conference call back in May, you noted the macro environment remains supportive for volumes and market share into early May. Can you talk about what we saw in April in a period of heightened uncertainty? How that fared into the month of May as the environment normalized?

And what are you seeing so far here in June?

Eileen Fazelle Bieler, CFO, MarketAxess: Yeah. So I think everybody who’s in the markets world and is watching what’s been happening knows that in April, we saw a real uptick in vol. If you looked at where the CVIX was on average in April for high grade, you saw that at about 56. High yield was about three ninety. I mean, you saw some really, really high numbers revolve relative to what we’ve seen in the prior two years.

So that was something that in April was very clear. Now in May, interestingly enough, you saw that normalize some. Now we’re still at levels that I would say were elevated from what we had seen for the prior two years. But for instance, that CVIX 56 number came down to about 33, which has been about the median this year in terms of what we’re seeing in vol on high grade. And then for high yield, that came down to about 190.

So you definitely see a difference in volatility. But what has been so interesting to me in terms of the macro environment is even with this difference in vol, what you’re also seeing is an incredible amount of velocity going through the system. Volumes have been up pretty much across the board. And while they ebb and flow month to month, you’re still seeing elevated levels of volumes. And a lot of that is being driven by what you’re seeing in terms of the turnover and what’s happening in velocity.

So I think from a macro perspective, we saw through May still really nice volumes and elevated velocity. And then I think probably the last thing that we’ve been looking at and that we pay a lot of attention to is what’s happening in the rate environment, because that obviously helps to drive what traders do in terms of how far out on the curve they’re trading. And the forward curve has kind of been all over the place. Mean, started the year. People thought there would be three or four cuts.

Then it was two or three. And I think the most recent probabilities are giving you one or two. And so we’re looking at those differences as well. And kind of put all of that together, spreads I think the only thing I haven’t commented yet in terms of macro is spreads. We obviously saw spreads widening considerably in April.

That came back in a little bit in May, but not as low as we had necessarily seen previously. But definitely a step down in terms of tightening of spreads. So all in all, I think the conditions that we saw have been relatively favorable, although we obviously saw a significant change between April and May.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Your comment on velocity and turnover being a bit more elevated and sort of sustaining into May is an interesting one because people have been talking about prospects for a pickup in velocity for many years now. I guess how do you think about the prospects for that to sustain as we move forward? And were you surprised that it sustained in May?

Eileen Fazelle Bieler, CFO, MarketAxess: I mean, I think, well, if you look at the volumes, we know they came down a little bit in May, but they were still elevated from what you saw the prior year.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Particularly on a year over

Eileen Fazelle Bieler, CFO, MarketAxess: year On a year over year basis, for sure. And so I think what has happened is, in some ways, the electronification of these markets has made this possible. And that, I think, is a big driver. And that bodes well.

We’ll have to obviously, we always have to wait and see how things go. But I do think that having the electronification that we’ve seen is allowing that velocity to stay at perhaps levels that are higher than what you would have seen just a few years ago.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. Why don’t we shift and talk about market share, implications of talking about volumes now, market share. I guess what are the biggest needle movers here for accelerating your investment grade market share? Again, it was pretty robust in April. I think it was flat sequentially into May.

Eileen Fazelle Bieler, CFO, MarketAxess: Actually in May market share was up high grade.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Up on a year on year basis. Year on

Eileen Fazelle Bieler, CFO, MarketAxess: year basis. But flat

Mike Cyprys, Equity Analyst, Morgan Stanley Research: sequentially month on month.

Eileen Fazelle Bieler, CFO, MarketAxess: Right, right.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: And then rebounding and high yield, how do you think about the prospects for that as well in terms of the timeframe there to see even continued strength in investment grade? What sort of backdrop would you need for that?

Eileen Fazelle Bieler, CFO, MarketAxess: Yeah. And I would just say even in high grade, though, just want to say we did almost get to 20%, 19.9% in high grade in May versus it was about 19.4% in April. So we were even up on a month over month basis, just saying. And that’s actually an important point that I’ll come back to later. But here’s how I think about the business, and how when I came in in the year, I think I needed to get a real sense for how do I structurally think about growth and how we’re driving things forward.

Because there’s a lot of protocols, there are certain things that are coming online that are very exciting. But I wanted to understand, how does it work by client channels? How does it work by if you think about there’s horizontals and there’s verticals. Folks have heard me say this before. The verticals are high grade, high yield, EM, EU, and that’s where you see share most readily.

But what we’ve been doing is really driving our business through channels that horizontally cross all of them. And that’s important also from a technology rollout perspective, because we are building technology now that can cross all of those asset classes or markets within credit. And so you’ve got the client initiated channel, And that is our bread and butter, what we’ve been so good at for so long, RFQ, open trading. And then one of the key pieces and protocols that will help drive we expect to help drive continued share there is our block trading protocol. And I know we can talk more about that in a bit.

And that’s sort of part of we think of that as part of the client initiated horizontal. Then you’ve got portfolio trading. And portfolio trading in and of itself also could be considered part of client initiated. But because there’s been so much focus on it, we like to break it out and look at it separately and really measure it and focus on it as its own channel. And then there’s dealer initiated.

So think of those three areas. If you think of client initiated as being maybe 60% of market in high grade, and you think of PT as maybe 10%, and then dealer as 30, We’ve got opportunity in the high touch block protocols that you’ve heard about us rolling out within the client initiated channel to help with market share there, to drive market share. We are now at a place with PT and happy to go into more on this in a bit where we feel we are feature complete. We had to get ourselves into a place where we can be really competitive with our functionality. And we feel very good about that now with PT.

There’s always going to be more to do, but we feel like we’re now on the front foot there. And then dealer is a place where we have a lot that we can still achieve. We’re very nascent in the dealer market. So those are areas where we think there’s still quite a bit of market share growth for us.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. And we’re going to dive into each of those. Maybe just on automation. In the first quarter, we saw record automation volume, nearly two fifty companies clients, excuse me, have onboarded so far. So maybe just remind us how these algos work and how this is changing trader behavior and your outlook for further adoption.

Eileen Fazelle Bieler, CFO, MarketAxess: Yeah, so automation is really interesting. And someone in one of the meetings earlier today said to me that they’re talking about we’ve always seen systematics in other marketplaces, like in the equities market and other. And now you’re starting to hear about systematics and credit. And what does systematics need to be successful on the other side? They need the algos.

They need automation. And that’s really great to hear that you’re getting the buy side of the Systematics becoming more and more excited about the algos and automation on our side. So if I think about how our automation suite works, there’s three main areas right now for us. There’s AutoX, which is our generation automation. That’s the two fifty year clients that you’re talking about.

And that’s really where people are able to request for quote and really do it in an automated way. And we see great data insights that are very helpful for them with that. And data is such a key differentiator for us across all of these different protocols we’re talking about. It really makes a difference for market access is our data. And then the next generation of that is what we call adaptive or ADX.

And that’s really a smart router system of algo, where you can place your order and then the algo will tell you the best place to go with it. Where are you going to get the best price? Where are you seeing the deepest liquidity? Think of it almost as like your self driving automation, self driving algo. And that’s a place where we feel good we’ve got about 80 clients now that are onboarded there.

And then we’ve got the dealer algos is the next component. So you’re seeing a lot of consistency and synergies between all of these different protocols and things that we’re doing. And that’s also exciting is that the business model is really coming together. And that is something that we think is also going to help us drive where we want to get to.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. Why don’t we shift and talk about blocks? You referenced that earlier. Your high touch block trading solution has shown some early success in EM and also on Eurobonds, which you had launched late last year and earlier this year. What specific features or elements there would you say have resonated in the marketplace with your clients?

And can you talk about the further rollout ahead for other geographies and products, including your recent launch here in The US for a high touch block solution in US credit?

Eileen Fazelle Bieler, CFO, MarketAxess: So Chris has probably been talking to you guys about blocks for a while. It has been a real focus for him, particularly when you think about the electronification and the next stage of electronification of the credit market. And that block space is really the next frontier for us in terms of electronification. And what we’ve done with blocks and just to your point about EU and EM, which has been very exciting in what we’ve seen in volumes. So euro is obviously euro bonds on a much smaller base.

But even in May, we saw 116% increase in volume in euro bonds blocks. We saw about a 24% increase in EM. And that was after 88% increase in April and about maybe 27% or something like that increase in EM in April. So you’re seeing some pretty nice consistent numbers of increases in volumes in our block protocols. And so what did we do in EM in The EU that is helping to drive that?

Well, we launched just at the end of last year. So this is still relatively new. You know that these things take time for adoption and rollout. But we did it in a way that I think was very, very smart. We went into markets where we took time.

We worked with our clients. And we said, Okay, what are their needs? Well, they want to know what the axes are. What are the dealers axes? What are the inventories?

What do they have? And we worked with dealers in those markets to get the axes. And we worked on that for quite some time. So you’ve got three components to why Block works. You’ve got the access and having that information.

You’ve got the technology and making it so that they could go targeted to just a few dealers through our platform, which is something we hadn’t had in the past. It was new technology that allowed them to feel more confident that we were minimizing the possibility for information leakage. And that’s something you hear about in blocks, as though we don’t want to do the block electronically because everyone will know what it is. Well, we’ve now created a protocol that helps minimize that concern through our targeted block solution. And then the piece, which is really, I think, the thing that really wraps it all together the functionality that wraps it all together is our ability to truly give them best pre trade analytics, the best data through CP plus And CP plus really does an incredible job of looking at what’s on our platform, what’s happening in trades, what’s happening in other places, to really give as close to real time pricing as you can get in the credit markets.

And so it has been when you put all of that together, we’ve seen very, very good reactions from clients in EU and EM. And I think those numbers that I just told you of merit that out. So in The US, what’s exciting now we’ve only launched two weeks ago in The US. It’s small still. We’re working with our clients.

We’re building the axe content. We obviously the really great data and analytics that we have is already in place. So we’re really excited about the opportunity set in The US. It’s early days, but we’ve learned a lot, I think. And for instance, one of the things we also learned in The US that’s a little bit different than in the other markets is that in The US, they may want to go just to one dealer.

So we’ve created the functionality that they can do that. Click once, dealer, one dealer. So we really did everything to replicate what it would mean to be on chat so that it’s comfortable for people to change behavior into a more efficient workflow by doing this electronically through us through our block solution. So we’re pretty engaged on this.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: And curious, why start in EM and Europe versus The US?

Eileen Fazelle Bieler, CFO, MarketAxess: I think it’s just we decided to go to those markets. It’s where we had good axe content. It’s where we felt that we had all three of those components that I was mentioning were was in a good place. And we just thought that that was a good market those were good markets for us to start in.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: And maybe CP plus being a big part of the EM business too, to your Why don’t we talk about portfolio trading? You alluded to that earlier in terms of area of focus. And sounds like you’ve completed the build there, which is great to see. Your market share, I think, has grown to over 20%, but it can be a little volatile, I think, on a month to month basis. What’s driven the success there?

And how does your portfolio trading protocol today stack up versus the competition? Where is the room for further innovation that could help expand market share from here and also further adoption?

Eileen Fazelle Bieler, CFO, MarketAxess: So I think for us with portfolio training, it’s certainly no new news that we needed to play catch up there. And we are at the place now where we feel we are feature complete. That doesn’t mean, by the way, that there won’t be enhancements. I think the one thing we know for sure is that there’s always going to be innovation. And we want to stay ahead of that innovation curve.

But what we’re hearing now from our clients is that we are at a place where we are feature complete, and they have what they need, whether it be net hedging, whether the variety of different things, the benchmark PT. There were certain things that we needed to add on. And now we’re at a place where we have what they need. And that’s been great. And as you mentioned, you’re seeing that come through in the numbers.

What is really important to us, though, about all of the investment and everything we’ve done in PT because to be frank, PT is not your biggest revenue TAM. It’s just not. TAMs we have for blocks, the TAMs for dealer, are multiple x of what it is for PTA. But why PTA is important, besides the fact that we want to be there for our clients, which is very critical. If they want to use it, we want to provide it.

We have talked about being protocol agnostic, and that is really, really critical for us. So we want to make sure that regardless of the macro environment, whether it’s low vol, high vol, lots of velocity sustained or not, what our clients need to trade, we want to be their go to platform for that. And that’s what we mean when we say protocol agnostic, that however they want to trade, we’ve got the right protocol for them. And if that’s PT, we’re going to be there. The other thing that’s really important to us though about PT is those traders who are trading PTs are often the same traders that are trading the blocks.

And so we want to be on their desktop. We want to be giving them what they need. We want that functionality to be easy for them and direct. And so that’s also a lot of why we spent so much investment and focus in portfolio trading. And to your point, we’re seeing really, really nice results there.

I do think what is different for us, again, it’s our data. We still have the ability to give them the best insights, the best pre trade analytics, the best data that you can get through CP plus And I think that’s also making a difference. So we needed to build the functionality. We have the data. We needed to build the functionality.

And now we’ve got both.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Anything from a feature standpoint? I know you’re feature complete, but further enhancements you allude to. Anything of to mind on that front over the next couple of years?

Eileen Fazelle Bieler, CFO, MarketAxess: I mean, I think we’re going to continue to see if there are other tweaks and things that our clients are looking for. The guys in product are really on top of this and looking at it. You probably have seen we have announced a number of new hires over the last few months. We have Spencer Lee, who joined us as the head of product. He comes from an EMS as well as from a large dealer in his background.

We know that we’re seeing 90% of PTs over X Pro now. And for instance, right under Spencer, we also hired a new head of client solutions who’s really focused on X Pro. He also comes from a dealer. And so that is, for us, a big focus is on making sure we’ve got the right people in the seats who can be on top of innovation and are also very well connected to both the buy side and the sell side. So you’re seeing a lot of focus on talent for us as well.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: And is there more to go in terms of key hires?

Eileen Fazelle Bieler, CFO, MarketAxess: I could keep going. When we start to talk about dealer, we hired a new person also to run our dealer business for us that has a new area. We’re calling it Dealer Access, which is another area that we didn’t have before. He’s been with us for probably a little less than a year now, maybe six months. So that’s another new hire.

And you probably also saw we hired a new chief operating officer. He hasn’t started yet. He’s going to be in London. We’re very excited about that.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: He’s from a very large London based

Eileen Fazelle Bieler, CFO, MarketAxess: Correct. Correct. And he’ll also be running the EMEA and APAC businesses for us. And he’s fantastic. We also hired a new co head of North America sales.

She has incredible depth of knowledge in the credit markets. And she’s joining up with someone who’s already at the firm who also has incredible relationships in the market to co head it. So I think what you’re seeing is us looking at people who are truly innovative on the technology side as well as people who are good on the credit side. I mean, that’s what we need. We need to put that together.

So we’ve made a lot of really as I said when I started, we’ve made a lot of positive change over the last year.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Right. Maybe just final thing on PT. You mentioned net hedging. That was something I think you guys rolled out within the PT suite earlier this year. Just anything to speak of in terms of notable traction, uptake on that?

I know it’s probably a little early.

Eileen Fazelle Bieler, CFO, MarketAxess: It’s a little early. I mean people have been positive on it. But again, it’s just another thing that we wanted to have to really round out the offering. And so far, we’ve just been hearing positive feedback.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Okay. Another offering or sort of new offering from you guys is the MIDEX platform is expected to relaunch in The U. S. In the second quarter using the Prakma technology. So I guess the question here is how is the revamped version going to compare to what you’ve had in the market previously?

What’s different with this? And what differences might we see in terms of reception uptake in The U. S. Versus the Midex solution that we’ve seen from you guys in Europe for many years that has successful over there. And Midex, just to clarify for everyone, is the sessions based

Eileen Fazelle Bieler, CFO, MarketAxess: It’s mid market matching

Mike Cyprys, Equity Analyst, Morgan Stanley Research: amongst dealers.

Eileen Fazelle Bieler, CFO, MarketAxess: Amongst dealers. That’s right.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Dealer solution.

Eileen Fazelle Bieler, CFO, MarketAxess: So it’s in that dealer initiated horizontal channel that I talking about. So we keep talking about what’s within client initiated. That’s RFQ, Open Trading, LOX. Then we talked about PT, and now dealer you’ve moved on to dealer initiated. Dealer.

Thank you for following my rubric of how I think about driving the business forward. So we think it’s going to be a third quarter later this year launch for Midex. And we also, by the way, launched it in Asia as well just recently. And so we really see this as we’ve been working with the dealer community, really understanding what they need, what they’re looking for. And that, to us, has been the driving force behind what they’re looking for from a mid market matched protocol.

And we’re excited for the rollout there. It is an area where there is significant opportunity for us. And we have dealer RFQ, but it’s just not a space that we’ve played in in a big way. So it gives us a really good opportunity to continue to drive forward. And so that’s exciting.

Again, we’ll be able to provide great data. We’re really going to be able to help dealers with getting out of risk. They have exhaust. They have risk that they want to get out of. They don’t want to cross spread.

And we’re going to be able to provide them with a protocol that will do that for them.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. Maybe shifting gears to emerging markets, which has become a larger part of the business today. I think probably your

Eileen Fazelle Bieler, CFO, MarketAxess: It is our largest.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Largest business now. Which countries are the biggest contributors, would you say to that? How does the business portfolio look sort of when you peel under the hood there? And as you look out over the next couple of years, which countries could see a meaningfully larger contribution? And talk to some of the steps you’re taking.

Eileen Fazelle Bieler, CFO, MarketAxess: So EM is a great business for us. I love that business. That’s actually another place where we hired. He’s been there for about as long as I have. We also have a new head of EM over.

He sits in London, and he’s fantastic. And he has a very good partner that he works with in Asia as well. And we are in about 30 local currencies there. And if you think about what it takes to be successful, our biggest currencies for the most part that you asked about are Mexico, Brazil, South Korea, Argentina, Malaysia are probably some of the biggest ones. Malaysia.

Yeah. Yeah, we are. And so think about how we’ve created a real network and relationships on the ground. So the EM business is broken up into hard currency and local. Hard currency for Us is about 60% of the business.

Local currency is about 40% currently. There is more opportunity in local. And hard currency, as you’re probably aware, is think of that as I’m a local corporate and I’m issuing in dollar, euro, yen. That’s hard currency. And then there’s all the local currency opportunities for us.

And we’re there. We’ve been there. Think about every time you’re trading in one of these you need a certain license for the most part depending on how you structure it. None of these things are overnight. It takes a while to build up the kind of EM franchise that we have.

And we have a great network. We’ve got great liquidity. Think of it this way too. Let’s say you have dealers in investment grade. Maybe you need five.

That in EM, because you’re dealing with to make it happen with local currencies, you need to have relations with all those local dealers. And so this is not hard and fast, but I’m just giving you order of magnitude. So for the five in investment grade, you need 25 in local. And so we’ve been building those relationships for years, for years. We have great relationships with our clients.

You’ve seen our growth. I think volumes year to date are up 14% in emerging markets after a few years of things being EM had a tough road for a while. And then I think our most recent May numbers were up about 18% in volume. So we’ve got a block protocol that we talked about. We’ve got a PT protocol.

We have something really, really interesting in the market that is in some ways they’ll tell you, if you talk to our guys over there, the gem, which is request for market versus request for quote. Request for market is you might be asking about a certain bond at a certain price, but you’re not saying what direction you’re going in. So you’re not necessarily divulging on, want to buy this, I want it. And it’s yet another protocol that works incredibly well in that market from a client perspective. And that’s been, in fact, a driver of some of the block activity as well.

So overall, I could go on and on about the EM business. It’s a great business. We always are looking for ways to see what we can do there to expand and do more, but we’re really very happy with that business.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Just curious on the topic of EM, when you sort of feel under the hood in terms of the volumes, is it emerging market clients trading with each other? Or is it a lot of the volume coming out of Europe and The US that’s trading amongst each other for emerging market? Who’s on the other side?

Eileen Fazelle Bieler, CFO, MarketAxess: Yeah, I think it’s certainly mystery

Mike Cyprys, Equity Analyst, Morgan Stanley Research: there.

Eileen Fazelle Bieler, CFO, MarketAxess: Yeah. No, it’s a good question. I think there’s more to be done on the locals. There’s more to be done there. It’s certainly for us, if you think about hard currencies and you think about the fact that we’re a global firm, you have a lot of global players as well.

So I just think there’s kind of opportunity across the board.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Got it. I know we have just a few minutes left. Just wanted to see if there’s any questions in the room from anyone. If not, we can keep going, and talk about competition and pricing, big topic. I’ll take

Eileen Fazelle Bieler, CFO, MarketAxess: that for the last two minutes.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: People’s minds. Just curious how you see the competitive landscape evolving as you look out over the next three to five years, whether it’s newer players, new technology solutions, dealers trying to establish direct connections and maybe we could tie in there how you’re seeing pricing evolve. I know one of the competitors out there recently made some changes to dealer pricing in credit, I guess. And what scenario might market access reassess and adjust?

Eileen Fazelle Bieler, CFO, MarketAxess: Yeah. So I think, obviously, pricing has certainly been a question that we’ve received, and understandably so. And again, I look at pricing as pricing within the channels that we talked about, so client initiated, portfolio trading, and dealer. And pricing within client initiative and client initiated in our core traditional RFQ business and Open Trading has been very steady. And you have a certain amount of fluctuation that you’ll see based on, in particular, high grade macro driven duration trade.

And so we know that weighted average years to maturity, if we see an additional year in high grade on the platform, that can be worth, call it, dollars 15 in fees per million. And for yields, if we see those come in about 100 basis points, that can be worth, call it, three to five. So you’re always going to get some fluctuation from the macro in terms of what you see in high grade. But that’s not pricing pressure. That’s fluctuation based on the DBO1 and what we need to see in understanding how to translate a spread based business into dollars so that we have the fee protocol there.

And our pricing has been very, very steady beyond, for the most part, that situation of the macro piece of it. What I think you’ve heard Chris say before, and is certainly not new news, is some of these other newer protocols, they come in at different prices than that traditional business. And so we know that PT comes in lower. And so as you know, this is a little bit of the irony, I would guess you could say, is that you want to see the market share in PT. Now, us, we also actually want to see PT because of the opportunity in block trading.

And that’s where the revenue opportunity is for us. But we also know that PT comes in at a lower fee capture. And dealers are sensitive. And so you’re going to see some sensitivity within that space as well in those protocols. But what I think is really critical to keep in mind is that is a mix.

That’s about mix. That’s about bringing on new products, new protocols within these channels that we have not been in before, that we haven’t been doing before. So it’s the opportunity for incremental revenue. And that’s about mix. That’s not about fee pressure.

Those are very different concepts to me. If you’re keeping your rate card for the most part on your core business relatively static. And the fluctuations there are based on macro and could go up as well as down. But also, have opportunity based on the macro. That’s not fee pressure.

That’s not cat issues. But these other pieces are about mix. But we are very excited about the opportunity to have incremental revenue in those particular protocols.

Mike Cyprys, Equity Analyst, Morgan Stanley Research: Great. I’m afraid we’ll have to leave it there. We’re out of time. Please join me in thanking Eileen for joining us.

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