MARKETAXESS HOLDINGS INC

Previous wording

During the first quarter of 2024, the new issue calendar was very active across U.S. credit. U.S. high-grade and U.S. high-yield new issuance were $530.9 billion and $87.6 billion, up 34.0% and 116.5%, respectively, from the prior year. A strong new issue calendar can negatively impact our market share in the short-term, but is expected to positively impact secondary trading volumes over the long term. Strong new issuance and low levels of credit spread volatility negatively impacted our U.S. high-yield volumes and estimated market share in the first quarter of 2024. The low levels of credit spread volatility contributed to a decrease in exchange-trade fund (“ETF”) market maker activity on our platforms, and we believe our institutional investor clients decreased their secondary market trading activity in light of the increased availability of new issues during the quarter. The decrease in U.S. high-yield activity also negatively impacted our total credit average variable fee per million.

Current wording

In the second quarter of 2024, the new issue calendar continued to be strong across U.S. credit, but not as robust as in the first quarter of the year. U.S. high-grade and U.S. high-yield new issuance increased 8.9% and 43.9% to $344.3 billion and $77.9 billion, respectively. In addition, credit spread volatility remained low in the second quarter of 2024. A strong new issue calendar and low levels of credit spread volatility can contribute to a decrease in exchange-trade fund (“ETF”) market maker activity on our platforms, as the increased availability of new issues may lead to reduction in secondary market trading, especially in U.S. high-yield. A strong new issue calendar can also negatively impact our market share in the short-term, but is expected to positively impact secondary trading volumes over the long term. The decrease in U.S. high-yield activity during the quarter negatively impacted our total credit average variable fee per million.

Previous wording

We primarily compete on the basis of our client network, the liquidity provided by our dealer, and, to a lesser extent, institutional investor clients, the total transaction costs associated with our services, the breadth of products, protocols and services offered, as well as the quality, reliability, security and ease of use of our platforms. We believe that our ability to grow volumes and revenues will largely depend on our performance with respect to these factors.

Current wording

We primarily compete on the basis of our client network, the liquidity provided by our dealer, and, to a lesser extent, institutional investor clients, the total transaction costs and fees associated with our services, the breadth of products, protocols and services offered, as well as the quality, reliability, security and ease of use of our platforms. We believe that our ability to grow volumes and revenues will largely depend on our performance with respect to these factors.

Previous wording

Our business is subject to extensive regulations in the United States and internationally, which may expose us to significant regulatory risk and cause additional legal costs to ensure compliance. The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in the enactment and enforcement of new laws and regulations that apply to our business. In January 2022, the SEC proposed rules that will expand Regulation ATS and Regulation SCI to alternative trading systems (ATS) that trade government securities and amend the SEC rule regarding the definition of an “exchange” to include Communication Protocol Systems, such as our request-for-quote protocols. Based on these proposed rules, we expect that we will have to operate all of our trading protocols in compliance with Regulation ATS and we could become subject to Regulation SCI for certain parts of our business in the future. The SEC has also adopted final rule amendments that, effective May 2024, will shorten the standard settlement cycle for most broker-dealer securities transactions from two business days after the trade date (T+2) to one business day after the trade date (T+1). The shortening of the settlement cycle will lead to a reduction in the length of exposure to trading counterparties and lower margin requirements for our clearing operations, but it is also expected to increase the operational costs and complexities associated with cross border transactions conducted on our platforms. The SEC also recently adopted final rules regarding the central clearing of certain secondary market transactions involving U.S. Treasury securities. This central clearing mandate will impact certain of our participants who do not centrally clear such trades today, and some have expressed concerns about the potential impact of additional clearing costs. The impact of any of these reform efforts on us and our operations remains uncertain.

Current wording

Our business is subject to extensive regulations in the United States and internationally, which may expose us to significant regulatory risk and cause additional legal costs to ensure compliance. The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in the enactment and enforcement of new laws and regulations that apply to our business. In January 2022, the SEC proposed rules that will expand Regulation ATS and Regulation SCI to alternative trading systems (ATS) that trade government securities and amend the SEC rule regarding the definition of an “exchange” to include Communication Protocol Systems, such as our request-for-quote protocols. Based on these proposed rules, we expect that we will have to operate all of our trading protocols in compliance with Regulation ATS and we could become subject to Regulation SCI for certain parts of our business in the future. The SEC has also adopted final rule amendments that became effective in May 2024 and shortened the standard settlement cycle for most broker-dealer securities transactions from two business days after the trade date (T+2) to one business day after the trade date (T+1). The shortening of the settlement cycle has led to a reduction in the length of exposure to trading counterparties and lower margin requirements for our clearing operations. The SEC also recently adopted final rules regarding the central clearing of certain secondary market transactions involving U.S. Treasury securities, which will become effective for certain cash market transactions on December 31, 2025 and repurchase and reverse repurchase transactions on June 30, 2026. This central clearing mandate will impact certain of our participants who do not centrally clear such trades today, and some have expressed concerns about the potential impact of additional clearing costs. The impact of any of these reform efforts on us and our operations remains uncertain.

Previous wording

As the overall share of electronic trading grows in global credit products, we are experiencing continued demand for, and growth in, our automated and algorithmic trading solutions. We also support a large and growing base of dealer market making algorithms. In the first quarter of 2024, trading volumes in Auto-X, one of our automated trading protocols, rose to $93.6 billion, up 36.4% from $68.7 billion in the first quarter of 2023. There were 231 active client firms using Auto-X in the first quarter of 2024, up 60.4% from the prior year. In the first quarter of 2024, there were 10.8 million dealer algorithmic responses on our platforms, up 50.2% from the first quarter of 2023.

Current wording

As the overall share of electronic trading grows in global credit products, we are experiencing continued demand for, and growth in, our automated and algorithmic trading solutions. We also support a large and growing base of dealer market making algorithms. In the second quarter of 2024, trading volumes in Auto-X, one of our automated trading protocols, rose to $88.3 billion, an increase of 20.9% from $73.1 billion in the second quarter of 2023. Trade count on Auto-X increased 37.3% to approximately 580,000 from approximately 423,000 in the second quarter of 2023. There were 248 active client firms using Auto-X in the second quarter of 2024, an increase of 69.9% from the prior year. In the second quarter of 2024, dealer algorithmic responses on our platforms increased 37.9% from the second quarter of 2023 to 10.2 million.

Previous wording

As further described under “— Critical Factors Affecting our Industry and our Company — Economic, Political and Market Factors” and “— Results of Operations — Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023,” our trading volumes and average variable transaction fee per million decreased compared to the three months ended March 31, 2023.

Current wording

As further described under “— Critical Factors Affecting our Industry and our Company — Economic, Political and Market Factors,” “— Results of Operations — Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023” and “— Results of Operations — Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023,” our trading volumes increased and our average variable transaction fee per million decreased compared to the three and six months ended June 30, 2023.

Previous wording

Depreciation and Amortization. We depreciate our computer hardware and related software, office hardware and furniture and fixtures and amortize our capitalized software development costs on a straight-line basis over three to seven years. We amortize leasehold improvements on a straight-line basis over the lesser of the life of the improvement or the remaining term of the lease. Intangible assets with definite lives, including purchased technologies, customer relationships and other intangible assets, are amortized over their estimated useful lives, which range from one to 15 years, using either a straight-line or accelerated amortization method based on the pattern of economic benefit that we expect to realize from such assets. Intangible assets are assessed for impairment when events or circumstances indicate a possible impairment.

Current wording

Depreciation and Amortization. We depreciate our computer hardware and related software, office hardware and furniture and fixtures and amortize our capitalized software development costs on a straight-line basis over three to five years. We amortize leasehold improvements on a straight-line basis over the lesser of the life of the improvement or the remaining term of the lease. Intangible assets with definite lives, including purchased technologies, customer relationships and other intangible assets, are amortized over their estimated useful lives, which range from one to 15 years, using either a straight-line or accelerated amortization method based on the pattern of economic benefit that we expect to realize from such assets. Intangible assets are assessed for impairment when events or circumstances indicate a possible impairment.

Previous wording

We maintain the 2020 Plan, which provides for the grant of full value awards, stock options and other stock-based awards to encourage employees, consultants and non-employee directors to participate in our long-term success. We make critical accounting estimates related to performance shares and performance stock units granted under the 2020 Plan.

Current wording

We maintain the 2020 Plan, which provides for the grant of full value awards, stock options and other stock-based awards to encourage employees, consultants and non-employee directors to participate in our long-term success. We make critical accounting estimates related to performance stock units granted under the 2020 Plan (the “PSUs”).

Previous wording

In 2022, 2023 and 2024, annual performance stock units (the “PSUs”) were granted to the executive officers and certain senior managers. Each PSU is earned or forfeited based on our level of achievement of certain predetermined metrics, including pre-tax adjusted operating margin, U.S. credit market share and revenue growth excluding U.S. credit. The vested share pay-out ranges from zero to 200% of the PSU target. The number of PSUs that vest, if any, is determined by the level of achievement of the performance metrics during the three-year performance periods, as certified by the Compensation and Talent Committee following the conclusion of the performance period. In addition, participants must provide continued service through the vesting date, subject to death, disability and qualified retirement exceptions, as applicable. Compensation expense for the PSUs is measured using the fair value of our stock at the grant date and estimates of future performance and actual share payouts. Each period, we make estimates of the current expected share payouts and adjust the life-to-date compensation expense recognized since the grant date. As of March 31, 2024, a 10.0% change in the expected final share payouts would increase or decrease the life-to-date compensation expense by $1.7 million. The estimated final share payouts for the 2022 and 2023 awards as of March 31, 2024 decreased 9.2% compared to December 31, 2023.

Current wording

In 2022, 2023 and 2024, the PSUs were granted to the executive officers and certain senior managers. Each PSU is earned or forfeited based on our level of achievement of certain predetermined metrics, including pre-tax adjusted operating margin, U.S. credit market share and revenue growth excluding U.S. credit. The vested share pay-out ranges from zero to 200% of the PSU target. The number of PSUs that vest, if any, is determined by the level of achievement of the performance metrics during the three-year performance periods, as certified by the Compensation and Talent Committee following the conclusion of the performance period. In addition, participants must provide continued service through the vesting date, subject to death, disability and qualified retirement exceptions, as applicable. Compensation expense for the PSUs is measured using the fair value of our stock at the grant date and estimates of future performance and actual share payouts. Each period, we make estimates of the current expected share payouts and adjust the life-to-date compensation expense recognized since the grant date. As of June 30, 2024, a 10.0% change in the expected final share payouts would increase or decrease the life-to-date compensation expense by $1.5 million. The estimated final share payouts for the 2022 and 2023 awards as of June 30, 2024 decreased 20.7% compared to December 31, 2023.

Previous wording

Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $0.8 million and $0.6 million, respectively, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $0.3 million and $0.2 million, respectively, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Previous wording

Credit variable transaction fees increased $0.5 million driven by a 7.4% increase in total credit trading volume, partially offset by a 6.6% decrease in total credit average variable transaction fee per million. Open Trading credit volume totaled $269.4 billion during the three months ended March 31, 2024, down 3.6%, and Open Trading credit variable transaction fees represented 31.5% and 36.5% of total variable transaction fees for the three months ended March 31, 2024 and 2023, respectively. Rates variable transaction fees decreased $1.1 million driven principally by a 29.0% decrease in trading volumes, partially offset by a 16.3% increase in average variable transaction fee per million. Other variable transaction fees include equities and foreign exchange commissions earned by Pragma.

Current wording

Credit variable transaction fees increased $8.9 million driven by a 14.2% increase in total credit trading volume, partially offset by a 5.9% decrease in total credit average variable transaction fee per million. Open Trading credit volume totaled $247.4 billion during the three months ended June 30, 2024, an increase of 9.7%, and Open Trading credit variable transaction fees represented 30.2% and 33.4% of total variable transaction fees for the three months ended June 30, 2024 and 2023, respectively. Rates variable transaction fees increased $1.2 million driven principally by a 32.9% increase in trading volumes, partially offset by a 5.3% decrease in average variable transaction fee per million. Other variable transaction fees include equities and foreign exchange commissions earned by Pragma.

Previous wording

Credit fixed distribution fees decreased $1.4 million mainly due to the consolidation of two global dealers and lower unused minimums in U.S. high-grade on increased activity, partially offset by dealer migrations to fixed fee plans.

Current wording

Credit fixed distribution fees decreased $2.0 million mainly due to the consolidation of two global dealers and migrations to variable fee plans, partially offset by the addition of new dealer fixed fee plans.

Previous wording

The 16.1% increase in our U.S. high-grade volume was principally due to an increase in estimated market volumes, partially offset by a decrease in our estimated market share. Estimated U.S. high-grade market volume as reported by FINRA’s Trade Reporting and Compliance Engine (TRACE) increased by 19.3% to $2.4 trillion for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 19.3% for the three months ended March 31, 2024 from 19.9% for the three months ended March 31, 2023. U.S. high-yield volume decreased by 30.5% mainly due to a decrease in our estimated market share. Lower levels of credit spread volatility drove a significant decrease in ETF market maker client activity on our platform, which negatively impacted our U.S. high-yield market share. Emerging markets volumes increased by 15.4%, mainly due to an increase in local markets trading volumes. Eurobond volumes increased by 8.9%. Other credit volumes decreased by 8.2% due to lower estimated municipal bond market volumes, partially offset by an increase in our estimated municipal bond market share. Rates trading volume decreased 29.0%, primarily due to a decrease in our estimated market share.

Current wording

The 14.8% increase in our U.S. high-grade volume was principally due to an increase in estimated market volumes, partially offset by a decrease in our estimated market share. Estimated U.S. high-grade market volume as reported by FINRA’s Trade Reporting and Compliance Engine (“TRACE”) increased by 27.0% to $2.2 trillion for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 18.7% for the three months ended June 30, 2024 from 20.7% for the three months ended June 30, 2023.

Previous wording

Credit average variable transaction fee per million decreased by 6.6% to $154.15 per million for the three months ended March 31, 2024, mainly due to a decrease in the duration of U.S. high-grade bonds traded on our platforms and product mix-shift in other credit products.

Current wording

Credit average variable transaction fee per million decreased by 5.9% to $148.16 per million for the three months ended June 30, 2024, mainly due to a decrease in the duration of U.S. high-grade bonds traded on our platforms and product mix-shift in other credit products.

Previous wording

Technology Services. Technology services revenue increased by $2.6 million for the three months ended March 31, 2024 due to technology services revenue generated by Pragma.

Current wording

Technology Services. Technology services revenue increased by $2.8 million for the three months ended June 30, 2024 due to technology services revenue generated by Pragma.

Previous wording

Employee compensation and benefits increased by $8.9 million, primarily due to increases in salaries, taxes and benefits on higher employee headcount of $7.1 million and higher employee incentive compensation of $2.1 million.

Current wording

Employee compensation and benefits increased by $8.4 million, primarily due to an increase in salaries, taxes and benefits of $5.0 million on higher employee headcount, largely driven by the Pragma Acquisition, higher employee incentive compensation of $2.3 million and higher stock compensation expense of $1.2 million.

Previous wording

Depreciation and amortization increased by $1.7 million, primarily due to higher amortization of software development costs of $1.0 million and higher amortization of intangibles of $0.9 million, partially offset by lower depreciation of office hardware of $0.2 million.

Current wording

Depreciation and amortization increased by $1.4 million, primarily due to higher amortization of software development costs of $0.8 million and higher amortization of intangibles of $0.5 million.

Previous wording

Technology and communications expenses increased by $2.1 million, primarily due to higher connectivity costs related to Pragma of $0.7 million, higher software subscription costs of $0.7 million, higher market data costs of $0.3 million and higher equipment lease costs of $0.2 million.

Current wording

Technology and communications expenses increased by $2.5 million, primarily due to higher software subscription costs of $0.8 million, higher connectivity costs of $0.7 million, higher production data costs of $0.3 million, higher market data costs of $0.2 million, higher data center hosting costs of $0.2 million and higher U.S. Treasury platform licensing fees of $0.2 million.

Previous wording

Marketing expenses decreased by $1.2 million, primarily due to lower advertising and public relations costs.

Current wording

Marketing expenses decreased by $0.3 million, primarily due to lower advertising and promotional costs.

Previous wording

Interest income increased by $1.7 million driven by higher interest rates.

Current wording

Interest income increased by $1.1 million driven by higher interest rates.

Previous wording

Interest expense increased by $0.2 million primarily due to higher financing charges incurred under our short-term borrowings.

Current wording

Interest expense increased by $0.6 million primarily due to higher financing charges incurred under our short-term borrowings.

Previous wording

Information Services. Information services revenue increased by $0.9 million for the three months ended March 31, 2024, mainly due to net new data contract revenue of $0.7 million and the positive impact of foreign currency fluctuations of $0.2 million.

Current wording

Information Services. Information services revenue increased by $1.8 million for the six months ended June 30, 2024, mainly due to net new data contract revenue of $1.5 million and the positive impact of foreign currency fluctuations of $0.3 million.

Previous wording

Post-Trade Services. Post-trade services revenue increased by $0.8 million for the three months ended March 31, 2024, principally due to net new contract revenue of $0.6 million and the positive impact of foreign currency fluctuations of $0.2 million.

Current wording

Post-Trade Services. Post-trade services revenue increased by $1.7 million for the six months ended June 30, 2024, principally due to price increases and net new contract revenue of $1.5 million and the positive impact of foreign currency fluctuations of $0.2 million.

Previous wording

Professional and consulting fees decreased by $0.7 million, primarily due to lower IT consultant expense of $1.8 million, offset by higher audit and tax fees of $0.7 million and higher acquisition related legal and consulting costs of $0.5 million.

Current wording

Professional and consulting fees decreased by $1.1 million, primarily due to lower IT consulting costs of $2.3 million, offset by higher audit and tax costs of $0.9 million and higher acquisition-related integration consulting fees of $0.2 million.

Previous wording

General and administrative expenses decreased by $1.0 million, primarily due to lower reserves related to a dispute with a vendor of $0.5 million, lower value-added taxes of $0.2 million and lower travel and entertainment costs of $0.1 million.

Current wording

General and administrative expenses decreased by $0.9 million, primarily due to lower reserves related to a dispute with a vendor of $0.5 million and lower employee relocation expense of $0.2 million.

Previous wording

During the three months ended March 31, 2024, we have met our funding requirements through cash on hand, internally generated funds and short-term borrowings. Cash and cash equivalents and investments totaled $512.5 million as of March 31, 2024. Our investments generally consist of investment-grade corporate bonds and U.S. Treasury securities. We limit the amounts that can be invested in any single issuer and invest in short- to intermediate-term instruments whose fair values are less sensitive to interest rate changes.

Current wording

During the six months ended June 30, 2024, we have met our funding requirements through cash on hand, internally generated funds and short-term borrowings. Cash and cash equivalents and corporate bond and U.S. Treasury investments totaled $558.8 million as of June 30, 2024. Our investments generally consist of investment-grade corporate bonds and U.S. Treasury securities. We limit the amounts that can be invested in any single issuer and invest in short- to intermediate-term instruments whose fair values are less sensitive to interest rate changes.

Previous wording

As a result of our self-clearing and settlement activities, we are required to finance certain transactions, maintain deposits with various clearing organizations and clearing broker-dealers and maintain a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Exchange Act. As of March 31, 2024, the aggregate amount of the positions financed, deposits and customer reserve balances associated with our self-clearing and settlement activities was $244.9 million. These requirements can fluctuate based on trading activity, market volatility or other factors which may impact our liquidity or require us to use our capital resources.

Current wording

As a result of our self-clearing and settlement activities, we are required to finance certain transactions, maintain deposits with various clearing organizations and clearing broker-dealers and maintain a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Exchange Act. As of June 30, 2024, the aggregate amount of the positions financed, cash deposits and customer reserve balances associated with our self-clearing and settlement activities was $223.0 million. These requirements can fluctuate based on trading activity, market volatility or other factors which may impact our liquidity or require us to use our capital resources.

Previous wording

Cash Flows for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

Current wording

Cash Flows for the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Previous wording

The $12.5 million decrease in net cash (used in)/provided by operating activities was primarily due to a change in net receivables from broker-dealers, clearing organizations and customers associated with our clearing activities of $9.1 million and a decrease in income and other tax liabilities of $14.9 million, offset by lower accounts receivable of $11.4 million.

Current wording

The $1.0 million increase in net cash provided by operating activities was primarily due to higher net income of $4.1 million, higher depreciation and amortization of $3.1 million, lower accounts receivable of $10.2 million, lower prepaid expenses and other assets of $12.2 million and an increase in accrued compensation, income and other tax liabilities, and accounts payable, accrued expenses and other liabilities of $16.3 million, partially offset by higher net receivables from broker-dealers, clearing organizations and customers and securities sold, not yet purchased associated with our clearing activities of $45.3 million.

Previous wording

The $16.9 million decrease in net cash used in investing activities was primarily due to lower net purchases of available-for-sale investments of $21.2 million, offset by higher capital expenditures of $4.3 million.

Current wording

The $14.0 million decrease in net cash used in investing activities was primarily due to lower net purchases of available-for-sale investments of $24.4 million, offset by higher capital expenditures of $10.4 million.

Previous wording

The $4.4 million increase in net cash used in financing activities was principally due to higher repurchases of common stock of $10.1 million and higher cash dividends of $1.1 million, offset by lower withholding tax payments on full value awards vesting of $5.6 million and higher exercises of stock options of $1.3 million.

Current wording

The $26.3 million increase in net cash used in financing activities was principally due to higher repurchases of common stock of $43.6 million and higher cash dividends of $2.0 million, offset by lower withholding tax payments on full value awards vesting of $5.5 million, lower payments of contingent consideration of $12.5 million and higher exercises of stock options of $1.3 million.

Previous wording

The $6.5 million change in the effect of exchange rate changes on cash and cash equivalents was driven by changes in the cumulative translation adjustment.

Current wording

The $10.9 million change in the effect of exchange rate changes on cash and cash equivalents was driven by changes in the cumulative translation adjustment.

Previous wording

Certain of our U.S. subsidiaries are registered as broker-dealers and therefore are subject to the applicable rules and regulations of the SEC and FINRA. These rules contain minimum net capital requirements, as defined in the applicable regulations. Certain of our foreign subsidiaries are regulated by the FCA in the U.K. or other foreign regulators and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of March 31, 2024, each of our subsidiaries that are subject to these regulations had net capital or financial resources in excess of their minimum requirements. As of March 31, 2024, our subsidiaries maintained aggregate net capital and financial resources that were $545.0 million in excess of the required levels of $35.7 million.

Current wording

Certain of our U.S. subsidiaries are registered as broker-dealers and therefore are subject to the applicable rules and regulations of the SEC and FINRA. These rules contain minimum net capital requirements, as defined in the applicable regulations. Certain of our foreign subsidiaries are regulated by the FCA in the U.K. or other foreign regulators and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of June 30, 2024, each of our subsidiaries that are subject to these regulations had net capital or financial resources in excess of their minimum requirements. As of June 30, 2024, our subsidiaries maintained aggregate net capital and financial resources that were $565.6 million in excess of the required levels of $35.8 million.

Previous wording

Each of our U.S. and foreign regulated subsidiaries are subject to local regulations which generally limit, or require the prior notification to or approval from such regulated entity’s principal regulator before, the repayment of borrowings from our affiliates, paying cash dividends, making loans to our affiliates or otherwise entering into transactions that result in a significant reduction in regulatory net capital or financial resources. As of March 31, 2024, the amount of unrestricted cash held by our non-U.S. subsidiaries was $216.9 million.

Current wording

Each of our U.S. and foreign regulated subsidiaries are subject to local regulations which generally limit, or require the prior notification to or approval from such regulated entity’s principal regulator before, the repayment of borrowings from our affiliates, paying cash dividends, making loans to our affiliates or otherwise entering into transactions that result in a significant reduction in regulatory net capital or financial resources.

Previous wording

We execute securities transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. Our operating subsidiaries settle such transactions using their self-clearing operations or through the use of third-party clearing brokers or settlement agents. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. Under both the self-clearing and the third-party clearing models, we may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is an error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge us for any losses they suffer resulting from a counterparty’s failure on any of our trades. We did not record any liabilities or losses with regard to counterparty failures for the three months ended March 31, 2024 and 2023. Substantially all of our open securities failed-to-deliver and securities failed-to-receive transactions as of March 31, 2024 have subsequently settled at the contractual amounts.

Current wording

We execute securities transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. Our operating subsidiaries settle such transactions using their self-clearing operations or through the use of third-party clearing brokers or settlement agents. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. Under both the self-clearing and the third-party clearing models, we may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is an error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge us for any losses they suffer resulting from a counterparty’s failure on any of our trades. We did not record any liabilities or losses with regard to counterparty failures for the six months ended June 30, 2024 and 2023. Substantially all of our open securities failed-to-deliver and securities failed-to-receive transactions as of June 30, 2024 have subsequently settled at the contractual amounts.

Previous wording

We have leases for corporate offices and equipment with initial lease terms ranging from one year to 15 years. We have total future contractual rent payments on these leases of $102.8 million, with $13.0 million due within the next 12 months and $89.8 million due beyond 12 months.

Current wording

We have leases for corporate offices and equipment with initial lease terms ranging from one year to 15 years. We have total future contractual rent payments on these leases of $99.7 million, with $12.8 million due within the next 12 months and $86.9 million due beyond 12 months.

Previous wording

We enter into foreign currency forward contracts to economically hedge our exposure to variability in certain foreign currency transaction gains and losses. As of March 31, 2024, the notional value of our foreign currency forward contract outstanding was $63.3 million and the fair value of the liability was $0.2 million.

Current wording

We enter into foreign currency forward contracts to economically hedge our exposure to variability in certain foreign currency transaction gains and losses. As of June 30, 2024, the notional value of our foreign currency forward contract outstanding was $62.7 million and the fair value of the asset was $0.5 million.

Previous wording

In January 2022, our Board authorized a share repurchase program for up to $150.0 million that commenced in March 2022. Shares repurchased under the program will be held in treasury for future use. As of March 31, 2024, we had $89.9 million of remaining capacity under the program.

Current wording

In January 2022, our Board of Directors authorized the 2022 Repurchase Program for up to $150.0 million. As of June 30, 2024, we had $56.4 million of remaining capacity under the 2022 Repurchase Program. In August 2024, the Board of Directors authorized the 2024 Repurchase Program for up to $200.0 million, in addition to the $50.0 million remaining under the 2022 Repurchase Program. Shares repurchased under the Repurchase Programs will be held in treasury for future use.

Previous wording

In April 2024, our Board approved a quarterly cash dividend of $0.74 per share payable on June 5, 2024 to stockholders of record as of the close of business on May 22, 2024. Any future declaration and payment of dividends will be at the sole discretion of our Board.

Current wording

In July 2024, our Board of Directors approved a quarterly cash dividend of $0.74 per share payable on September 4, 2024 to stockholders of record as of the close of business on August 21, 2024. Any future declaration and payment of dividends will be at the sole discretion of our Board of Directors.

Previous wording

On April 19, 2024, the Company entered into an agreement to acquire an additional 49.0% interest in RFQ–hub Holdings LLC for approximately $37.9 million of cash consideration. The acquisition is subject to various closing conditions, including the receipt of certain regulatory approvals. The acquisition is expected to close during the second half of 2024. Upon the closing of the acquisition, the Company will hold a 92.0% controlling stake in RFQ-hub Holdings LLC.

Current wording

On April 19, 2024, we entered into an agreement to acquire an additional 49.0% interest in RFQ–hub Holdings LLC for approximately $37.9 million of cash consideration. The acquisition is subject to various closing conditions, including the receipt of certain regulatory approvals. The acquisition is expected to close during the second half of 2024. Upon the closing of the acquisition, we will hold a 92.0% controlling stake in RFQ-hub Holdings LLC.

Previous wording

The table set forth below presents a reconciliation of our net income to EBITDA and net income margin to EBITDA margin, as defined above, for the three months ended March 31, 2024 and 2023:

Current wording

The table set forth below presents a reconciliation of our net income to EBITDA and net income margin to EBITDA margin, as defined above, for the three and six months ended June 30, 2024 and 2023: