MARKETAXESS HOLDINGS INC

Previous 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.

Current wording

A strong new issue calendar, which we have seen in recent periods, 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, but the increase in higher duration bonds traded in U.S. high-grade positively impacted our total credit average variable fee per million.

Previous wording

There has been increased demand for portfolio trading workflows over the last few years, which has resulted in heightened competition among trading platforms to enhance their portfolio trading offerings and expand them across different geographies and products. During periods of relatively lower credit spread volatility, clients are beginning to use portfolio trading workflows in lieu of more established trading protocols designed to generate price competition on individual bonds. Our dealer clients have also increased their usage of matching sessions offered by competing platforms in recent periods. To the extent that our clients increase their use of portfolio trading and matching session protocols offered by other platforms, our market share in those products could decrease.

Current wording

There has been increased demand for portfolio trading workflows over the last few years, which has resulted in heightened competition among trading platforms to enhance their portfolio trading offerings and expand them across different geographies and products. During periods of relatively lower credit spread volatility, clients have been using portfolio trading workflows in lieu of more established trading protocols designed to generate price competition on individual bonds. Our dealer clients have also increased their usage of matching sessions offered by competing platforms in recent periods. To the extent that our clients increase their use of portfolio trading and matching session protocols offered by other platforms, our market share in those products could decrease. Due to the large size of the trades and the concentration of activity at the end of the month, portfolio trading can drive significant swings in trading volumes and estimated market share.

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 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.

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 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 of our investor clients have expressed concerns about using platforms that will require the clearing of any resultant trades executed on such platforms. 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 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.

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 third quarter of 2024, trading volumes in Auto-X, one of our automated trading protocols, rose to $96.1 billion, an increase of 27.6% from $75.3 billion in the third quarter of 2023. Trade count on Auto-X increased 36.6% to approximately 612,000 from approximately 448,000 in the third quarter of 2023. There were 249 active client firms using Auto-X in the third quarter of 2024, an increase of 49.1% from the prior year. In addition, in the third quarter of 2024, dealer algorithmic responses on our platforms increased 24.3% from the third 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,” “— 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.

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 September 30, 2024 Compared to Three Months Ended September 30, 2023” and “— Results of Operations — Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023,” our trading volumes increased and our average variable transaction fee per million decreased compared to the three and nine months ended September 30, 2023.

Previous wording

General and Administrative. General and administrative expense consists primarily of general travel and entertainment, board of directors’ expenses, regulatory fees, media subscription costs, charitable contributions, provision for doubtful accounts, various state franchise and U.K. value-added taxes and other miscellaneous expenses.

Current wording

General and Administrative. General and administrative expense consists primarily of general travel and entertainment, board of directors’ expenses, regulatory fees, subscription costs, charitable contributions, provision for doubtful accounts, various state franchise and U.K. value-added taxes and other miscellaneous expenses.

Previous 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.

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 September 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 September 30, 2024 decreased 25.7% 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 $0.3 million and $0.2 million, respectively, for the three months ended June 30, 2024 compared to the three months ended June 30, 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 $0.9 million and $0.7 million, respectively, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Previous wording

Total revenues for the three months ended June 30, 2024 include Pragma revenues of $7.9 million.

Current wording

Total revenues for the three months ended September 30, 2024 include Pragma revenues of $7.7 million.

Previous 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.

Current wording

Credit variable transaction fees increased $25.8 million driven by a 28.5% increase in total credit trading volume, partially offset by a 3.8% decrease in total credit average variable transaction fee per million. Open Trading credit volume totaled $265.4 billion during the three months ended September 30, 2024, an increase of 31.7%, and Open Trading credit variable transaction fees represented 30.4% and 31.7% of total variable transaction fees for the three months ended September 30, 2024 and 2023, respectively. Rates variable transaction fees increased $1.8 million driven principally by a 48.0% increase in trading volumes, partially offset by a 9.0% 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 $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.

Current wording

Credit fixed distribution fees decreased $2.6 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 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.

Current wording

The 37.8% 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 41.6% to $2.3 trillion for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 19.5% for the three months ended September 30, 2024 from 20.0% for the three months ended September 30, 2023. We exclude single-dealer portfolio trading activity from our reported U.S. high-grade and high-yield trading volume and estimated market share. Including the impact of single-dealer portfolio trades, our estimated U.S. high-grade market share for the three months ended September 30, 2024 was 20.0%, compared to 20.1% in the three months ended September 30, 2023.

Previous wording

U.S. high-yield volume decreased by 7.8% mainly due to a decrease in our estimated market share. Emerging markets volumes increased by 24.9%, mainly due to an increase in local markets trading volumes. Eurobond volumes increased by 10.1%. Other credit volumes increased by 35.0% due to higher municipal bond volumes on higher estimated market share. Rates trading volume increased 32.9%, primarily due to higher estimated market volumes and an increase in our estimated market share.

Current wording

Emerging markets and Eurobond volumes increased by 21.0% and 29.4%, respectively, mainly due to an increase in estimated market volumes. Other credit volume increased by 49.2%, primarily due to higher municipal bond volume driven by higher estimated market share. Rates trading volume increased 48.0%, primarily due to higher estimated market volumes.

Previous 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.

Current wording

Credit average variable transaction fee per million decreased by 3.8% to $148.97 per million for the three months ended September 30, 2024, mainly due to product and protocol mix-shift reflecting lower levels of U.S. high-yield activity and increased portfolio trading, which was partially offset by an increase in the duration of U.S. high-grade bonds traded on our platforms.

Previous 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.

Current wording

Information Services. Information services revenue increased by $1.2 million for the three months ended September 30, 2024, mainly due to net new data contract revenue of $0.9 million and the positive impact of foreign currency fluctuations of $0.3 million.

Previous wording

Post-Trade Services. Post-trade services revenue increased by $1.0 million for the three months ended June 30, 2024, principally due to price increases and net new contract revenue.

Current wording

Post-Trade Services. Post-trade services revenue increased by $0.5 million for the three months ended September 30, 2024, principally due to net new contract revenue of $0.3 million and the positive impact of foreign currency fluctuations of $0.2 million.

Previous wording

Total expenses for the three months ended June 30, 2024 include Pragma expenses of $7.8 million.

Current wording

Total expenses for the three months ended September 30, 2024 include Pragma expenses of $8.2 million.

Previous 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.

Current wording

Employee compensation and benefits increased by $9.6 million, primarily due to an increase in salaries, taxes and benefits of $4.6 million on higher employee headcount, largely driven by the Pragma Acquisition, higher employee incentive compensation of $4.2 million and higher stock compensation expense of $0.7 million.

Previous 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.

Current wording

Depreciation and amortization increased by $1.2 million, primarily due to higher amortization of software development costs of $0.7 million and higher amortization of intangibles of $0.5 million.

Previous 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.

Current wording

Technology and communications expenses increased by $3.2 million, primarily due to higher software subscription costs of $0.5 million, higher connectivity costs of $1.2 million, higher market data costs of $0.6 million, higher data center and cloud hosting costs of $0.4 million and higher U.S. Treasury platform licensing fees of $0.3 million.

Previous 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.

Current wording

Professional and consulting fees decreased by $2.2 million, primarily due to lower acquisition-related legal expenses of $1.1 million, lower IT and other consulting costs of $1.4 million, offset by higher audit and tax costs of $0.2 million.

Previous wording

The following table summarizes our financial results for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our financial results for the nine months ended September 30, 2024 and 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 $1.2 million and $0.8 million, respectively, for the six months ended June 30, 2024 compared to the six months ended June 30, 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 $2.0 million and $1.6 million, respectively, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Previous wording

Total revenues for the six months ended June 30, 2024 include Pragma revenues of $15.5 million.

Current wording

Total revenues for the nine months ended September 30, 2024 include Pragma revenues of $23.1 million.

Previous wording

Commissions. Our commission revenues for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

Current wording

Commissions. Our commission revenues for the nine months ended September 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

Previous wording

Credit variable transaction fees increased $9.5 million driven by a 10.6% increase in trading volume, partially offset by a 6.3% decrease in average variable transaction fee per million. Open Trading credit volume totaled $516.8 billion during the six months ended June 30, 2024, an increase of 2.4%, and Open Trading credit variable transaction fees represented 30.9% and 35.1% of total variable transaction fees for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Credit variable transaction fees increased $35.3 million driven by a 16.1% increase in trading volume, partially offset by a 5.6% decrease in average variable transaction fee per million. Open Trading credit volume totaled $782.2 billion during the nine months ended September 30, 2024, an increase of 10.7%, and Open Trading credit variable transaction fees represented 30.7% and 34.1% of total variable transaction fees for the nine months ended September 30, 2024 and 2023, respectively. Rates variable transaction fees increased $1.9 million driven principally by an 11.7% increase in trading volumes. Other variable transaction fees include equities and foreign exchange commissions earned by Pragma.

Previous wording

Credit fixed distribution fees decreased $3.5 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.

Current wording

Credit fixed distribution fees decreased $6.1 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

Our trading volumes for the six months ended June 30, 2024 and 2023 were as follows:

Current wording

Our trading volumes for the nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

The 15.5% increase in our U.S. high-grade volume was principally due to an increase in overall market volume, partially offset by a decrease in our estimated market share. Estimated U.S. high-grade market volume as reported by TRACE increased by 22.8% to $4.5 trillion for the six months ended June 30, 2024. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 19.1% for the six months ended June 30, 2024 from 20.3% for the six months ended June 30, 2023.

Current wording

The 22.3% increase in our U.S. high-grade volume was principally due to an increase in overall market volumes, partially offset by a decrease in our estimated market share. Estimated U.S. high-grade market volume as reported by TRACE increased by 28.6% to $6.8 trillion for the nine months ended September 30, 2024. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 19.2% for the nine months ended September 30, 2024 from 20.2% for the nine months ended September 30, 2023. We exclude single-dealer portfolio trading activity from our reported U.S. high-grade and high-yield trading volume and estimated market share. Including the impact of single-dealer portfolio trades, our estimated U.S. high-grade market share for the nine months ended September 30, 2024 was 19.6%, compared to 20.3% in the nine months ended September 30, 2023.

Previous wording

U.S. high-yield volume decreased by 20.8%, mainly due to a decrease in our estimated market share. Emerging markets volumes increased by 19.9%, mainly due to an increase in local markets trading volumes. Eurobonds volume increased by 9.5%. Other credit volumes increased 11.8%, driven by higher municipal bonds volume on higher estimated market share. Rates trading volume decreased 4.9%, primarily due to a decrease in our estimated market share.

Current wording

Emerging markets and Eurobond volumes increased by 20.2% and 15.2%, respectively, mainly due to increases in estimated market volumes. Other credit volume increased 23.8%, primarily due to higher municipal bonds volume driven by higher estimated market share. Rates trading volume increased 11.7%, primarily due to an increase in estimated market volumes.

Previous wording

Our average variable transaction fee per million for the six months ended June 30, 2024 and 2023 was as follows:

Current wording

Our average variable transaction fee per million for the nine months ended September 30, 2024 and 2023 was as follows:

Previous wording

Information Services. Information services revenue increased by $0.9 million for the three months ended June 30, 2024, mainly due to net new data contract revenue.

Current wording

Information Services. Information services revenue increased by $2.9 million for the nine months ended September 30, 2024, mainly due to net new data contract revenue of $2.4 million and the positive impact of foreign currency fluctuations of $0.5 million.

Previous 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.

Current wording

Post-Trade Services. Post-trade services revenue increased by $2.3 million for the nine months ended September 30, 2024, principally due to price increases and net new contract revenue of $1.8 million and the positive impact of foreign currency fluctuations of $0.5 million.

Previous wording

Technology Services. Technology services revenue increased by $5.5 million for the six months ended June 30, 2024 due to technology services revenue generated by Pragma.

Current wording

Technology Services. Technology services revenue increased by $8.3 million for the nine months ended September 30, 2024 due to technology services revenue generated by Pragma.

Previous wording

The following table summarizes our expenses for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our expenses for the nine months ended September 30, 2024 and 2023:

Previous wording

Total expenses for the six months ended June 30, 2024 include Pragma expenses of $15.6 million.

Current wording

Total expenses for the nine months ended September 30, 2024 include Pragma expenses of $23.8 million.

Previous wording

Employee compensation and benefits increased by $17.4 million, primarily due to an increase in salaries, taxes and benefits of $12.1 million on higher employee headcount, largely driven by the Pragma Acquisition, higher employee incentive compensation of $4.3 million and higher stock compensation expense of $0.9 million.

Current wording

Employee compensation and benefits increased by $26.9 million, primarily due to an increase in salaries, taxes and benefits of $16.7 million on higher employee headcount, largely driven by the Pragma Acquisition, higher employee incentive compensation of $8.5 million and higher stock compensation expense of $1.7 million.

Previous wording

Depreciation and amortization increased by $3.1 million, primarily due to higher amortization of software development costs of $1.8 million and higher amortization of intangibles of $1.4 million.

Current wording

Depreciation and amortization increased by $4.3 million primarily due to higher amortization of software development costs of $2.5 million and higher amortization of intangibles of $1.9 million.

Previous wording

Technology and communications expenses increased by $4.6 million, primarily due to higher software subscription costs of $1.4 million, higher connectivity costs of $1.4 million, higher market data costs of $0.5 million, higher production data costs of $0.3 million, higher data center hosting costs of $0.3 million, higher IT support costs of $0.3 million and higher U.S. treasury platform licensing fees of $0.2 million.

Current wording

Technology and communications expenses increased by $7.8 million primarily due to higher connectivity costs of $2.6 million, higher software subscription costs of $2.0 million, higher market and production data costs of $1.6 million, higher data center and cloud hosting costs of $0.9 million, higher U.S. Treasury platform licensing fees of $0.5 million and higher IT support costs of $0.3 million.

Previous wording

Professional and consulting fees decreased by $0.4 million, primarily due to lower IT consulting costs of $0.4 million, lower acquisition-related integration consulting fees of $0.4 million and lower recruiting fees of $0.3 million, offset by higher legal expenses of $0.6 million and higher audit and tax costs of $0.2 million.

Current wording

Professional and consulting fees decreased by $3.3 million primarily due to lower IT consulting costs of $3.1 million and lower acquisition-related legal expenses of $1.3 million, offset by higher audit and tax costs of $1.1 million.