MARKETAXESS HOLDINGS INC
For the period ended Mar 31, 2025. Filed May 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
MKTX$165.59+0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000950170-24-122345
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000950170-25-065612
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 168 previous paragraphs and 139 current paragraphs.
76 unchanged; 49 reworded; 13 added; 32 removed; 11 previous and 1 current paragraphs rearranged.
Tables are not compared: 20 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
In the first quarter of 2025, the market backdrop for the Company showed strong increases in estimated U.S. credit market volumes, with U.S. high-grade and U.S. high-yield market average daily volume up 8.4% and 14.1%, respectively, compared to the prior year. However, despite an increase in volatility during March, credit spreads and credit spread volatility remained at relatively low levels throughout much of the first quarter of 2025. With regard to the international products traded on our platforms, emerging markets estimated market volumes increased significantly compared to the prior year.
Current report
Expenses
Current report
Other Income (Expense)
Current report
Uncertain tax positions
Current report
Our interpretations of tax laws around the world are subject to review and examination by the various taxing authorities in the jurisdictions where we operate, and disputes may occur regarding our view on a tax position. These disputes over interpretations with the various taxing authorities may be settled by audit, administrative appeals or adjudication in the court systems of the tax jurisdictions in which we operate.
Current report
In accounting for income taxes, we recognize tax positions in the financial statements only when it is more likely than not that the position will be sustained on examination by the relevant taxing authority or the court of last resort based on the technical merits of the position. We reassess our unrecognized tax benefits as necessary when new information becomes available, including changes in tax law and regulations, relevant tax court rulings and interactions with taxing authorities. Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured based on the largest amount of benefit that we believe is more-likely-than-not to be realized upon settlement. It is possible that the reassessment of our unrecognized tax benefits may have a material impact on our effective income tax rate in the period in which the reassessment occurs. See Note 8 for a discussion of our provisions for unrecognized tax benefits related to current and prior periods.
Current report
Expenses
Current report
Technology and communications expenses increased by $1.0 million primarily due to higher cloud hosting costs.
Current report
Clearing costs decreased by $0.7 million, primarily due to lower U.S. treasury platform clearing expenses.
Current report
General and administrative expenses increased by $1.0 million, primarily due to higher subscription costs.
Current report
Other Income (Expense)
Current report
Cash flows from operating activities consist primarily of net income adjusted for non-cash items that primarily include depreciation and amortization, stock-based compensation expense, deferred tax expense and changes in receivables and payables on the consolidated statement of financial condition. The $34.6 million increase in net cash provided by operating activities was primarily due to favorable changes in income and other tax liabilities and net receivables from broker-dealers, clearing organizations and customers associated with our clearing activities, offset by lower net income and an unfavorable change in accounts receivable.
Current report
The table set forth below presents a reconciliation our net income to net income, excluding notable items, diluted EPS to diluted EPS, excluding notable items, and the effective tax rate to effective tax rate, excluding notable items for the three months ended March 31, 2025 and 2024:
Removed paragraphs (32)
Previous report
In the third quarter of 2024, the market backdrop for the Company continued to improve with strong increases in estimated U.S. credit market volumes, a modest increase in credit spread volatility relative to second quarter 2024 levels, and an increase in the velocity of trading in U.S. high-grade. U.S. high-grade and U.S. high-yield market average daily trading volume increased 39.4% and 22.6%, respectively, and U.S. high-grade and U.S. high-yield new issuance increased 41.2% and 89.7% to $403.9 billion and $74.3 billion, respectively. In addition, while credit spread volatility remained at historically low levels, it was higher in the quarter than in the first half of 2024. Furthermore, in advance of the Federal Reserve cutting rates by 50 basis points in September 2024, clients increased their activity in longer duration bonds traded in U.S. high-grade, which benefited our U.S. high-grade average variable fee per million.
Previous report
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 report
On the international side of our business, Eurobonds and emerging markets estimated market volumes have increased significantly compared to the prior year. Emerging markets estimated market volumes have been particularly strong relative to prior years, driven by a more favorable macroeconomic outlook in developed markets, reflecting easing concerns over inflation and the lower probability of an economic recession.
Previous report
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 report
Total revenues for the three months ended September 30, 2024 include Pragma revenues of $7.7 million.
Previous report
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 report
U.S. high-yield volume increased by 0.3% mainly due to an increase in estimated market volumes, offset by a decrease in our estimated market share. Our estimated market share of total U.S. high-yield corporate bond volume decreased to 13.0% for the three months ended September 30, 2024 from 16.1% for the three months ended September 30, 2023. Including the impact of single-dealer portfolio trades, our estimated U.S. high-yield market share was 13.4% for the three months ended September 30, 2024, compared to 16.1% in the three months ended September 30, 2023.
Previous report
Total expenses for the three months ended September 30, 2024 include Pragma expenses of $8.2 million.
Previous report
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 report
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 report
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 report
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 report
Other, net increased by $0.6 million primarily due to unrealized gains of $0.8 million on our U.S. Treasury investments in the current period compared to unrealized losses of $0.2 million in the prior period and higher income from our equity method investee under a transition services agreement of $0.5 million, offset by higher foreign exchange losses of $1.1 million.
Previous report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous report
Revenues
Previous report
Our revenues for the nine months ended September 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:
Previous report
Total revenues for the nine months ended September 30, 2024 include Pragma revenues of $23.1 million.
Previous report
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 report
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 report
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 report
U.S. high-yield volume decreased by 15.0%, mainly due to a decrease in our estimated market share. Our estimated market share of total U.S. high-yield corporate bond volume decreased to 13.1% for the nine months ended September 30, 2024 from 17.1% for the nine months ended September 30, 2023. Including the impact of single-dealer portfolio trades, our estimated U.S. high-yield market share was 13.4% for the nine months ended September 30, 2024, compared to 17.3% in the nine months ended September 30, 2023.
Previous report
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 report
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 report
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 report
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 report
Total expenses for the nine months ended September 30, 2024 include Pragma expenses of $23.8 million.
Previous report
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 report
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 report
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 report
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.
Previous report
Provision for Income Taxes
Previous report
The $16.9 million increase in net cash provided by operating activities was primarily due to higher net income of $20.6 million, higher depreciation and amortization of $4.3 million, lower prepaid expenses and other assets of $21.4 million, lower purchases of trading investments of $23.7 million and an increase in accrued compensation and accounts payable, accrued expenses and other liabilities of $10.0 million, partially offset by higher net receivables from broker-dealers, clearing organizations and customers associated with our clearing activities of $65.8 million.
Reworded paragraphs (49)
Previous wording
MarketAxess operates leading electronic trading platforms delivering greater trading efficiency, a diversified pool of liquidity and significant cost savings to our clients across the global fixed-income markets. Over 2,000 institutional investor and broker-dealer firms use our patented trading technology to efficiently trade U.S. high-grade bonds, U.S. high-yield bonds, emerging market debt, Eurobonds, municipal bonds, U.S. government bonds and other fixed-income securities. Our award-winning Open Trading marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets, creating a unique liquidity pool for a broad range of credit market participants. We leverage our diverse set of trading protocols, automated and algorithmic trading solutions, intelligent data and index products and a range of post-trade services to provide an end-to-end trading solution to our robust network of platform participants.
Current wording
MarketAxess operates leading electronic trading platforms delivering greater trading efficiency, a diversified pool of liquidity and significant cost savings to our clients across the global fixed-income markets. Approximately 2,100 institutional investor and broker-dealer firms use our patented trading technology to efficiently trade U.S. high-grade bonds, U.S. high-yield bonds, emerging market debt, eurobonds, municipal bonds, U.S. government bonds and other fixed-income securities. We leverage our diverse set of trading protocols, automated and algorithmic trading solutions, intelligent data and index products and a range of post-trade services to provide an end-to-end trading solution to our robust network of platform participants. Our award-winning Open Trading marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets, creating a unique liquidity pool for a broad range of credit market participants.
Previous wording
We provide automated and algorithmic trading solutions that we believe, when combined with our integrated and actionable data offerings, will help our clients make faster, better-informed decisions on when and how to trade on our platforms. In 2023, we introduced X-Pro, our newest trading platform, to more seamlessly combine our trading protocols with our proprietary data and pre-trade analytics. We expect that our recent acquisition of Pragma, a quantitative trading technology provider specializing in algorithmic and analytical trading services, will accelerate our development of artificial intelligence driven execution algorithms across many of our key product areas.
Current wording
We provide automated and algorithmic trading solutions that we believe, when combined with our integrated and actionable data offerings, help our clients make faster, better-informed decisions on when and how to trade on our platforms. In 2024, we continued our roll-out of X-Pro, our newest trading platform, to more seamlessly combine our trading protocols with our proprietary data and pre-trade analytics. Our AI-driven technology, such as CP+, our real-time pricing engine, is a critical data input and pricing source for multiple MarketAxess trading protocols and solutions, including Auto-X™ and portfolio trading. In 2024, we leveraged our recent acquisition of Pragma, a quantitative trading technology provider specializing in algorithmic and analytical trading services, to accelerate our development of AI driven execution algorithms across all of our key product areas. We believe that we will be able to enhance our capabilities and increase our efficiency by leveraging Pragma technology across our technology stack.
Previous wording
We also provide a number of integrated and actionable data offerings, including CP+™ and Axess All®, to assist clients with real-time pricing and trading decisions and transaction cost analysis. We have a range of post-trade services, including straight-through processing, post-trade matching, trade publication, regulatory transaction reporting and market and reference data across fixed-income and other products.
Current wording
We also provide a number of integrated and actionable data offerings, including CP+ and Axess All, to assist clients with real-time pricing and trading decisions and transaction cost analysis. We offer a range of post-trade services, including straight-through processing, post-trade matching, trade publication, regulatory transaction reporting and market and reference data across fixed-income and other products.
Previous wording
Our objective is to provide the leading global electronic trading platforms for fixed-income securities, connecting broker-dealers and institutional investors more easily and efficiently, while offering a broad array of trading information and technology services to market participants across the trading cycle. The key elements of our strategy are discussed in Part I, Item 1. “Business – Our Strategy” of our Form 10-K for the year ended December 31, 2023.
Current wording
Our objective is to create the leading global network for the trading of fixed-income securities for our broker-dealer and institutional investor clients to help them connect, be more efficient and achieve better trading outcomes. We seek to achieve this goal by offering our clients full end-to-end electronic trading solutions and workflow tools, powered by a broad array of proprietary data and analytical tools. The key elements of our strategy are discussed in Part I, Item 1. “Business – Our Strategy” of our Form 10-K for the year ended December 31, 2024.
Previous wording
The global fixed-income securities industry is risky and volatile and is directly affected by a number of economic, political and market factors that may impact trading volume. These factors could have a material adverse or positive effect on our business, financial condition and results of operations. These factors include, among others, credit market conditions, the current interest rate environment, including the volatility of interest rates and investors’ forecasts of future interest rates, the duration of bonds traded, economic and political conditions in the United States, Europe and elsewhere, and the consolidation or contraction of our broker-dealer and institutional investor clients.
Current wording
The global fixed-income securities industry is risky and volatile and is directly affected by a number of economic, political and market factors that may impact trading volume. These factors could have a material adverse or positive effect on our business, financial condition and results of operations. These factors include, among others, fixed-income market conditions, the current interest rate environment, including the volatility of interest rates and investors’ forecasts of future interest rates, the duration of bonds traded, economic and political conditions in the United States, Europe and elsewhere, including recent and potential future changes in tariffs, international trade agreements or trade policies, and the consolidation or contraction of our broker-dealer and institutional investor clients.
Previous wording
Because the majority of our assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation impacts our expenses, such as employee compensation, technology and communications expenses, which may not be readily recoverable in the prices of our services. To the extent inflation continues to result in high interest rates or has other adverse effects on the securities markets or the economy, it may adversely affect our financial position and results of operations.
Current wording
Because the majority of our assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation impacts our expenses, such as employee compensation, technology and communications expenses, which may not be readily recoverable in the prices of our services. Interest rates have remained higher since 2023 due to a period of increased inflation. To the extent interest rates remain high or inflation has other adverse effects on the securities markets or the economy, our financial position and results of operations may be adversely affected.
Previous wording
We expect that current cash and investment balances, in combination with cash flows that are generated from operations and the ability to borrow under our 2023 Credit Agreement, will be sufficient to meet our liquidity needs and planned capital expenditure requirements for at least the next twelve months. We ended the quarter with $749.9 million in available borrowing capacity under the 2023 Credit Agreement and capital significantly in excess of our regulatory requirements.
Current wording
We expect that current cash and investment balances, in combination with cash flows that are generated from operations and the ability to borrow under our Credit Agreement, will be sufficient to meet our liquidity needs and planned capital expenditure requirements for at least the next twelve months. We ended the quarter with $749.9 million in available borrowing capacity under the Credit Agreement and capital significantly in excess of our regulatory requirements.
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 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.
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. 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 competitive position is enhanced by the unique liquidity provided by our Open Trading functionalities and the integration of our broker-dealer and institutional investor clients with our electronic trading platforms and other systems. We have focused on the unique aspects of the credit markets we serve in the development of our platforms, working closely with our clients to provide a system that is suited to their needs.
Current wording
Our competitive position is enhanced by the unique liquidity provided by our Open Trading functionalities and the integration of our broker-dealer and institutional investor clients with our electronic trading platforms and other systems. We have focused on the unique aspects of the fixed-income markets we serve in the development of our platforms, working closely with our clients to provide a system that is suited to their needs.
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 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.
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 additional 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 are currently set to become effective for certain cash market transactions on December 31, 2026. Once effective, 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. While we expect this change will increase our own platform efficiency, it is still unknown at this time the full impact of this change, and what effect it will have, whether positive or negative, on our industry, our clients or us. In addition, following the change in U.S. presidential administrations in January 2025, it is unknown to what extent new legislation will be passed into law or whether pending or new regulatory proposals will be adopted, abandoned or modified, or what effect such passage, adoption, abandonment or modification will have, whether positive or negative, on our industry, our clients or us.
Previous wording
As a result of the U.K.’s departure from the E.U. in 2020 (commonly referred to as “Brexit”), we obtained authorizations from the AFM for our subsidiaries in the Netherlands in 2019. We now provide regulated services to our clients within the E.U. in reliance on the cross-border services passport held by our Dutch subsidiaries. Brexit has led to an ongoing divergence between the U.K. and E.U. financial regulations, which has made it more difficult and costly to comply with the extensive government regulation to which we are subject. The cost and complexity of operating across increasingly divergent regulatory regimes has increased and is likely to continue to increase in the future.
Current wording
We provide regulated services to our clients within the E.U. in reliance upon the authorizations our subsidiaries have received from the AFM in the Netherlands. Brexit has led to an ongoing divergence between the U.K. and E.U. financial regulations, which has made it more difficult and costly to comply with the extensive government regulation to which we are subject. The cost and complexity of operating across increasingly divergent regulatory regimes has increased and is likely to continue to increase in the future.
Previous wording
Compliance with regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. For example, the E.U.’s Digital Operational Resilience Act (DORA), which will become applicable to portions of our business in 2025, will require us to dedicate additional financial and operational resources to meet the significant additional information communication technologies services-related governance, risk management, resilience testing and sub-contracting requirements created by the legislation. However, we also believe new regulations may increase demand for our platforms and we believe we are well positioned to benefit from those regulatory changes that cause market participants to seek electronic trading platforms that meet the various regulatory requirements.
Current wording
Compliance with new regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. For example, the E.U.’s Digital Operational Resilience Act (“DORA”), which focuses on the security of network and information systems of financial services entities, as well as third parties which provide certain information communication technology services (“ICTs”) to them, became applicable to portions of our business in January 2025. DORA has, among other things, introduced significant additional ICT-related governance, risk management, resilience testing and sub-contracting and notification requirements. However, we also believe new regulations may increase demand for our platforms and we believe we are well positioned to benefit from those regulatory changes that cause market participants to seek electronic trading platforms that meet the various regulatory requirements.
Previous wording
For further description of the regulations which govern our business, see Part1, Item I. “Business – Government Regulation” of our Form 10-K for the year ended December 31, 2023.
Current wording
For further description of the regulations which govern our business, see Part I, Item 1. “Business—Government Regulation”
Previous wording
We must continue to enhance and improve our electronic trading platforms. The markets in which we compete are characterized by increasingly complex protocols, systems and technology infrastructure requirements. Our future success will depend on our ability to enhance our existing products and services, develop and/or license new products and technologies that address the increasingly sophisticated and varied needs of our existing and prospective broker-dealer and institutional investor clients and respond to technological advances and emerging industry and regulatory standards and practices on a cost-effective and timely basis. For example, in 2023, we introduced MarketAxess X-Pro, our new trading platform, which provides traders with a flexible user experience, intuitive workflows and access to our proprietary data and pre-trade analytics. We plan to continue to focus on technology infrastructure initiatives and improving our platforms with the goal of further enhancing our leading market position.
Current wording
We must continue to enhance and improve our electronic trading platforms. The markets in which we compete are characterized by increasingly complex protocols, systems, technology and infrastructure requirements that require us to devote substantial resources to modify and adapt our services. Our future success will depend on our ability to enhance our existing products and services, develop and/or license new products and technologies that address the increasingly sophisticated and varied needs of our existing and prospective broker-dealer and institutional investor clients and respond to technological advances and emerging industry and regulatory standards and practices, including cloud and AI technologies, on a cost-effective and timely basis. For example, in 2023, we introduced MarketAxess X-Pro, our newest trading platform, which provides traders with a flexible user experience, intuitive workflows and access to our proprietary data and pre-trade analytics. In addition, 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. We plan to continue to focus on technology infrastructure and automation initiatives to support more efficient trade execution by our clients.
Previous wording
The majority of our revenue is derived from commissions for transactions executed on our platforms between and among our institutional investor and broker-dealer clients and monthly distribution fees. We believe that the following are the key variables that impact the notional value of such transactions on our platforms and the amount of commissions and distribution fees earned by us:
Current wording
The majority of our revenue is derived from commissions for transactions executed on our platforms between and among our institutional investor and broker-dealer clients. We believe that the following are the key variables that impact the notional value of such transactions on our platforms, the amount of commissions earned by us and our variable transaction fees per 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 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.
Current 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, 2025 Compared to Three Months Ended March 31, 2024,” our trading volumes increased and our average variable transaction fee per million decreased compared to the three months ended March 31, 2024.
Previous wording
Technology services includes technology services revenue generated by Pragma and revenue generated from telecommunications line charges to broker-dealer clients.
Current wording
Technology services include technology services revenue generated by Pragma and revenue generated from telecommunications line charges to broker-dealer clients.
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. We base our estimates and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Critical accounting estimates for us include stock-based compensation.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. We base our estimates and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Critical accounting estimates for us include stock-based compensation.
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 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.
Current wording
In 2023, 2024 and 2025, 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 payout 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, 2025, 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, 2025 decreased 7.2% compared to December 31, 2024. See Note 9 for a discussion of the Company’s stock-based compensation expense.
Previous wording
We operate electronic platforms for the trading of fixed-income securities and provide related data, analytics, compliance tools and post-trade services. We consider our operations to constitute a single business segment because of the highly integrated nature of these products and services, the financial markets in which we compete and our worldwide business activities. We believe that results by geographic region or client sector are not necessarily meaningful in understanding our business. See Note 15 to the Consolidated Financial Statements for certain geographic information about our business required by GAAP.
Current wording
We provide end-to-end trading solutions, including the operation of electronic platforms for the trading of fixed-income and other securities and related data, analytics, compliance tools, post-trade services, automated trading services and technology services. We consider our operations to constitute a single business segment because of the highly integrated nature of these products and services within the trading lifecycle, the use of a single inter-connected suite of technology solutions underlying all services, the financial markets in which we compete and our worldwide business activities. See Note 15 to the Consolidated Financial Statements for certain geographic information about our business required by GAAP.
Previous wording
Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $0.9 million and $0.7 million, respectively, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Current wording
Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of decreasing each of revenues and expenses by $0.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.
Previous 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.
Current wording
Credit variable transaction fees decreased by $5.7 million, driven by a 9.7% decrease in total credit average variable transaction fee per million offset by a 6.3% increase in trading volume. Rates variable transaction fees increased by $1.8 million, driven principally by a 52.9% increase in trading volumes, partially offset by a 12.3% decrease in average variable transaction fee per million. Other variable transaction fees include equities and foreign exchange commissions earned by Pragma.
Previous 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.
Current wording
The 1.2% 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 TRACE increased by 8.4% to $2.6 trillion for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 18.0% for the three months ended March 31, 2025 from 19.3% for the three months ended March 31, 2024. U.S. high-yield volume increased by 5.4% primarily due to an increase in estimated market volumes partially offset by a decrease in our estimated market share. Our estimated market share of total U.S. high-yield corporate bond volume decreased to 11.9% for the three months ended March 31, 2025 from 12.9% for the three months ended March 31, 2024.
Previous 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.
Current wording
Emerging markets and Eurobond volumes increased by 8.5% and 14.8%, respectively. Other credit volumes increased 38.5%, mainly due to an increase in estimated municipal bond market volumes. Rates trading volume increased 52.9%, primarily due to an increase in estimated market volumes.
Previous 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.
Current wording
Credit average variable transaction fee per million decreased by 9.7% to 139.18 per million for the three months ended March 31, 2025, 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 $1.2 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.
Current wording
Information Services. Information services revenue increased by $1.0 million for the three months ended March 31, 2025, mainly due to net new data contract revenue.
Previous 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.
Current wording
Post-Trade Services. Post-trade services revenue increased by $0.4 million for the three months ended March 31, 2025, principally due to net new contract revenue of $0.6 million, partially offset by the negative impact of foreign currency fluctuations of $0.2 million.
Previous wording
Technology Services. Technology services revenue increased by $2.8 million for the three months ended September 30, 2024 due to technology services revenue generated by Pragma.
Current wording
Technology Services. Technology services revenue increased by $0.4 million for the three months ended March 31, 2025 due to higher Pragma-related license and technology fees.
Previous wording
Interest income increased by $3.2 million driven by higher interest rates.
Current wording
Interest income increased by $1.2 million, driven by higher cash and investment balances.
Previous wording
Interest expense increased by $0.9 million due to higher financing charges incurred under our short-term borrowing arrangements.
Current wording
Interest expense decreased by $0.1 million due to lower financing charges incurred under our short-term borrowing arrangements.
Previous wording
Other, net increased by $1.4 million primarily driven by unrealized gains of $0.9 million on our U.S. Treasury investments in the current period compared to unrealized losses of $0.5 million in the prior period.
Current wording
Other, net increased by $2.3 million primarily driven by unrealized gains of $1.1 million on our U.S. Treasury investments in the current period compared to unrealized losses of $0.3 million in the prior period and lower foreign currency transaction losses in the current period compared to the prior period of $0.9 million.
Previous wording
Our consolidated effective tax rate can vary from period to period depending on the geographic mix of our earnings, changes in tax legislation and tax rates and the amount and timing of excess tax benefits related to share-based payments, among other factors.
Current wording
Our consolidated effective tax rate can vary from period to period depending on the geographic mix of our earnings, provisions for unrecognized tax benefits, changes in tax legislation and tax rates and the amount and timing of excess tax benefits or detriments related to share-based payments, among other factors. The provision for income taxes for the three months ended March 31, 2025 includes provisions for unrecognized tax benefits of $54.9 million and $1.4 million for uncertain tax positions related to prior periods and the current period, respectively.
Previous wording
During the nine months ended September 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 $602.5 million as of September 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.
Current wording
During the three months ended March 31, 2025, 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 $642.1 million as of March 31, 2025. 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
In August 2023, we entered into the 2023 Credit Agreement, which provides aggregate commitments totaling $750.0 million, including a revolving credit facility, a $5.0 million letter of credit sub-limit for standby letters of credit and a $380.0 million sub-limit for swingline loans. The 2023 Credit Agreement will mature on August 9, 2026, with our option to request up to two additional 364-day extensions at the discretion of each lender and subject to customary conditions. As of September 30, 2024, we had $0.1 million in letters of credit outstanding and $749.9 million in available borrowing capacity under the 2023 Credit Agreement. Borrowings under the 2023 Credit Agreement will bear interest at a rate per annum equal to the alternate base rate or the adjusted term SOFR rate, plus an applicable margin that varies with our consolidated total leverage ratio. The 2023 Credit Agreement requires that we satisfy certain covenants, including a requirement to not exceed a maximum consolidated total leverage ratio. We were in compliance with all applicable covenants at September 30, 2024. See Note 11 to the Consolidated Financial Statements for a discussion of the 2023 Credit Agreement.
Current wording
In August 2023, we entered into the Credit Agreement, which provides aggregate commitments totaling $750.0 million, including a revolving credit facility, a $5.0 million letter of credit sub-limit for standby letters of credit and a $380.0 million sub-limit for swingline loans. The Credit Agreement will mature on August 9, 2026, with our option to request up to two additional 364-day extensions at the discretion of each lender and subject to customary conditions. As of March 31, 2025, we had $0.1 million in letters of credit outstanding and $749.9 million in available borrowing capacity under the Credit Agreement. Borrowings under the Credit Agreement will bear interest at a rate per annum equal to an alternate base rate or the adjusted term SOFR rate, plus an applicable margin that varies with our consolidated total leverage ratio. The Credit Agreement requires that we satisfy certain covenants, including a requirement to not exceed a maximum consolidated total leverage ratio. We were in compliance with all applicable covenants at March 31, 2025. See Note 11 to the Consolidated Financial Statements for a discussion of the Credit Agreement.
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 September 30, 2024, the aggregate amount of the positions financed, cash deposits and customer reserve balances associated with our self-clearing and settlement activities was $240.2 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 March 31, 2025, the aggregate amount of the positions financed, restricted cash deposits and customer reserve balances associated with our self-clearing and settlement activities was $227.3 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 Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current wording
Cash Flows for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024
Previous wording
The $11.7 million increase in net cash used in investing activities was primarily due to higher net purchases of available-for-sale investments of $5.2 million and higher capital expenditures of $6.5 million.
Current wording
The $1.3 million increase in net cash used in investing activities was primarily due to higher capital expenditures.
Previous wording
The $45.7 million increase in net cash used in financing activities was principally due to higher repurchases of common stock of $58.6 million, higher cash dividends of $2.9 million and lower net proceeds from short-term borrowings of $4.0 million, offset by lower withholding tax payments on full value awards vesting of $5.6 million, lower payments of contingent consideration of $12.5 million and higher exercises of stock options of $1.7 million.
Current wording
The $24.5 million increase in net cash used in financing activities was principally due to higher repurchases of common stock and lower exercises of stock options, offset by lower withholding tax payments on the vesting of Full Value Awards.
Previous wording
The $12.5 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 $11.8 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 September 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 September 30, 2024, our subsidiaries maintained aggregate net capital and financial resources that were $607.1 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 are subject to the applicable rules and regulations of the SEC, FINRA and the CFTC. 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, 2025, 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, 2025, our subsidiaries maintained aggregate net capital and financial resources that were $552.1 million in excess of the required levels of $36.6 million.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
of our Form 10-K for the year ended December 31, 2024.
Rearranged previous paragraphs (11)
Previous report — wording carried elsewhere
The following table summarizes our financial results for the nine months ended September 30, 2024 and 2023:
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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 report — wording carried elsewhere
Our trading volumes for the nine months ended September 30, 2024 and 2023 were as follows:
Previous report — wording carried elsewhere
For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates.
Previous report — wording carried elsewhere
Our average variable transaction fee per million for the nine months ended September 30, 2024 and 2023 was as follows:
Previous report — wording carried elsewhere
Credit average variable transaction fee per million decreased by 5.6% to $150.48 per million for the nine 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.
Previous report — wording carried elsewhere
The following table summarizes our expenses for the nine months ended September 30, 2024 and 2023:
Previous report — wording carried elsewhere
Our other income (expense) for the nine months ended September 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:
Previous report — wording carried elsewhere
The provision for income taxes and effective tax rate for the nine months ended September 30, 2024 and 2023 were as follows:
Previous report — wording carried elsewhere
Our consolidated effective tax rate can vary from period to period depending on the geographic mix of our earnings, changes in tax legislation and tax rates and the amount and timing of excess tax benefits related to share-based payments, among other factors.