MARKETAXESS HOLDINGS INC

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, 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 U.S high grade 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. In the first three months of 2026, the market backdrop for the Company reflected increases in estimated market volumes in most of the Company’s key markets compared to the prior year, due, in part, to increased levels of event-driven volatility.

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 U.S high grade 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. In the first six months of 2026, the market backdrop for the Company reflected increases in estimated market volumes in most of the Company’s key markets compared to the prior year, due, in part, to periods of event-driven volatility and elevated primary issuance.

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 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 $592.9 million in available borrowing capacity under our 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 $637.9 million in available borrowing capacity under our 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. Certain clients have been increasingly 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 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. Furthermore, portfolio trading is generally provided under a lower-fee structure than other protocols and the growth of portfolio trading on our platform will likely have a negative impact on our average credit variable transaction fee per million.

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. Certain clients have been increasingly 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 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. Furthermore, portfolio trading is generally provided under a lower-fee structure than other protocols, and the growth of portfolio trading on our platform will likely have a negative impact on our average credit variable transaction fee per million. In addition, block trading may generate lower fees per million than other activity, and could have a negative impact on our average credit variable transaction fee per million.

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 us to incur additional expense. 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. The SEC 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. These reforms may also change how our clients trade and where they clear when using our platforms to trade U.S. Treasury securities. While we expect this change will increase our own platform efficiency, it could also negatively affect trading activity and liquidity in the markets in which we operate and the full impact of this change is still unknown at this time. In April 2026, FINRA filed a proposed rule change that would require member firms to identify and flag certain affiliate back-to-back trade reports in TRACE (as defined below). If adopted, the rule would suppress qualifying affiliate principal transactions from reported monthly TRACE volumes and could affect the Company’s estimated market share for U.S. high-grade, U.S. high-yield and U.S. Treasury products. The proposed rule change is subject to SEC review and public comment, and FINRA will announce the effective date if the rule is approved. It remains unknown to what extent new legislation will be passed into law or whether other 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.

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 us to incur additional expense. 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. The SEC 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. These reforms may also change how our clients trade and where they clear when using our platforms to trade U.S. Treasury securities. While we expect this change will increase our own platform efficiency, it could also negatively affect trading activity and liquidity in the markets in which we operate and the full impact of this change is still unknown at this time. In July 2026, the SEC approved a proposed rule submitted by FINRA that will require member firms to identify and flag certain affiliate back-to-back trade reports in TRACE (as defined below). FINRA has stated that it will not implement these requirements without providing firms with at least 12 months prior notice of the implementation date, but that it will permit firms to comply with these requirements on a voluntary basis prior to the mandatory implementation date. When fully implemented, the rule will suppress qualifying affiliate principal transactions from reported monthly TRACE volumes and could affect the Company’s estimated market share for U.S. high-grade, U.S. high-yield and U.S. Treasury products. It remains unknown to what extent new legislation will be passed into law or whether other 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 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, 2026 Compared to Three Months Ended March 31, 2025,” our trading volumes increased and our average variable transaction fee per million decreased.

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 June 30, 2026 Compared to Three Months Ended June 30, 2025,” and “— Results of Operations — Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025,” our credit trading volumes increased and our average credit variable transaction fee per million decreased compared to the three and six months ended June 30, 2025.

Previous wording

In 2024, 2025 and 2026, 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, 2026, a 10.0% change in the expected final share payouts would increase or decrease the total value of the awards by $1.7 million. The estimated final share payouts for the 2024 and 2025 awards as of March 31, 2026 decreased 12.3% compared to December 31, 2025. See Note 9 for a discussion of the Company’s stock-based compensation expense.

Current wording

In 2024, 2025 and 2026, 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 June 30, 2026, a 10.0% change in the expected final share payouts would increase or decrease the total value of the awards by $1.7 million. The estimated final share payouts for the 2024 and 2025 awards as of June 30, 2026 decreased 15.2% compared to December 31, 2025. See Note 9 for a discussion of the Company’s stock-based compensation expense.

Previous wording

Identifiable intangible assets are tested for impairment annually, or sooner when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Judgment is required to evaluate whether indications of potential impairment have occurred, and to test identifiable intangible assets for impairment, if required. An impairment is recognized if the estimated undiscounted cash flows relating to the asset or asset group is less than the corresponding carrying value. During the three months ended March 31, 2026, there were no events or changes in circumstances that suggested our intangible assets’ carrying values exceeded their fair values, and as such, no impairment charges were recorded.

Current wording

Identifiable intangible assets are tested for impairment annually, or sooner when events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Judgment is required to evaluate whether indications of potential impairment have occurred, and to test identifiable intangible assets for impairment, if required. An impairment is recognized if the estimated undiscounted cash flows relating to the asset or asset group is less than the corresponding carrying value. During the six months ended June 30, 2026, there were no events or changes in circumstances that suggested our intangible assets’ carrying values exceeded their fair values, and as such, no impairment charges were recorded.

Previous wording

Emerging markets and eurobond volumes increased by 29.8% and 20.4%, respectively. Other credit volumes increased 10.2%, mainly due to an increase in estimated municipal bond market volumes. Rates trading volume increased 15.6%, primarily due to an increase in estimated market volumes.

Current wording

Emerging markets and eurobond volumes increased by 12.0% and 2.3%, respectively. Other credit volumes increased 1.9%, mainly due to an increase in estimated municipal bond market share. Rates trading volume decreased 18.6%, primarily due to a decrease in estimated market share.

Previous wording

Technology Services. Technology services revenue increased by $0.6 million for the three months ended March 31, 2026 due to higher license and connectivity fees.

Current wording

Technology Services. Technology services revenue increased by $0.3 million for the three months ended June 30, 2026 largely driven by higher license and connectivity fees reflecting the inclusion of RFQ-hub.

Previous wording

Depreciation and amortization increased by $1.0 million, primarily due to higher amortization of software development costs and higher amortization of intangibles.

Current wording

Depreciation and amortization increased by $0.1 million, primarily due to higher amortization of internally-developed software costs and higher amortization of intangibles.

Previous wording

Clearing costs increased by $0.2 million primarily due to higher trading volumes.

Current wording

Occupancy increased by $0.2 million, primarily due to higher office management and facilities expense.

Previous wording

Marketing and advertising expenses increased by $0.3 million primarily due to higher sales-related travel and entertainment costs.

Current wording

Marketing and advertising expenses increased by $0.5 million, primarily due to an increase in advertising expense and timing of sales-related events.

Previous wording

Other, net increased by $1.0 million primarily driven by receipt of tax credits in the current period partially offset by unrealized losses on investments in the current period compared to unrealized gains in the prior period.

Current wording

Other, net decreased by $2.5 million, primarily driven by foreign currency transaction losses in the current period compared to foreign currency transaction gains in the prior period.

Previous wording

Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $3.4 million and $2.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Current wording

Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $4.1 million and $3.0 million, respectively, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Previous wording

Credit variable transaction fees increased by $14.5 million, driven by a 17.0% increase in trading volume, partially offset by a 5.0% decrease in total credit average variable transaction fee per million. Rates variable transaction fees increased by $2.0 million, driven by a 15.6% increase in trading volume and an 11.4% increase in total rates average variable transaction fee per million. Other variable transaction fees include equities and foreign exchange commissions and, beginning in May 2025, derivative and ETF commissions earned by RFQ-hub.

Current wording

Credit variable transaction fees increased by $5.9 million, primarily driven by a 8.6% increase in trading volume partially offset by a decrease of 6.5% in total credit average variable transaction fee per million. Rates variable transaction fees increased by $2.0 million, driven principally by a 17.0% increase in average variable transaction fee per million, partially offset by a 3.1% decrease in trading volume. Other variable transaction fees include equities and foreign exchange commissions and, beginning in May 2025, derivative and ETF commissions earned by RFQ-hub.

Previous wording

The 10.9% 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 the FINRA Trade Reporting and Compliance Engine (“TRACE”) increased by 17.1% to $3.0 trillion for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 17.1% for the three months ended March 31, 2026 from 18.0% for the three months ended March 31, 2025. U.S. high-yield volume increased by 11.6% primarily due to an increase in estimated market volumes and an increase in our estimated market share. Our estimated market share of total U.S. high-yield corporate bond volume increased to 12.2% for the three months ended March 31, 2026 from 11.9% for the three months ended March 31, 2025.

Current wording

The 3.2% 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 15.2% to $5.8 trillion for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Our estimated market share of total U.S. high-grade corporate bond volume, including SD PT, decreased to 17.7% for the six months ended June 30, 2026 from 19.2% for the six months ended June 30, 2025. U.S. high-yield volume increased by 1.1% primarily due to an increase in estimated market volumes and increase in our estimated market share. Our estimated market share of total U.S. high-yield corporate bond volume, including SD PT, increased to 14.0% for the six months ended June 30, 2026 from 12.8% for the six months ended June 30, 2025. Excluding SD PT, our estimated market share of total U.S. high-grade corporate bond volume decreased to 16.8% for the six months ended June 30, 2026 from 18.7% for the six months ended June 30, 2025. Excluding SD PT, our estimated market share of total U.S. high-yield corporate bond volume decreased to 12.1% for the six months ended June 30, 2026 from 12.3% for the six months ended June 30, 2025.

Previous wording

Credit average variable transaction fee per million decreased by 5.0% to $132 per million for the three months ended March 31, 2026, mainly due to protocol and product mix, partially offset by higher duration of bonds traded in U.S. high grade.

Current wording

Credit average variable transaction fee per million decreased by 6.5% to $130 per million for the six months ended June 30, 2026, mainly due to protocol and product mix, partially offset by higher duration of bonds traded in U.S. high grade.

Previous wording

Information Services. Information services revenue increased by $1.5 million for the three months ended March 31, 2026 due to net new contract revenue and the positive impact of foreign currency fluctuations.

Current wording

Information Services. Information services revenue increased by $4.5 million for the six months ended June 30, 2026, primarily due to net new contract revenue of $4.0 million and the positive impact of foreign currency fluctuations of $0.5 million.

Previous wording

Post-Trade Services. Post-trade services revenue increased by $0.5 million for the three months ended March 31, 2026 mainly due to the positive impact of foreign currency fluctuations.

Current wording

Post-Trade Services. Post-trade services revenue increased by $1.0 million for the six months ended June 30, 2026, mainly due to the positive impact of foreign currency fluctuations of $1.1 million.

Previous wording

Interest expense increased by $2.7 million due to borrowings on the Company’s credit facility that were used, along with cash on hand, to fund the ASR.

Current wording

Interest expense increased $4.4 million, primarily due to borrowings on the Company’s credit facility that were used, along with cash on hand, to fund the ASR.

Previous 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 decrease in the effective tax rate for the three months ended March 31, 2026 is mainly due to the reserve for unrecognized tax benefits established in the first quarter of 2025.

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 decrease in the effective tax rate for the six months ended June 30, 2026 is mainly due to the reserve for unrecognized tax benefits established during the first quarter of 2025.

Previous wording

During the three months ended March 31, 2026, 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 $537.4 million as of March 31, 2026. Our investments generally consist of investment-grade corporate bonds and U.S. Treasury securities. We limit the amounts that can be invested in any single issuer and invest in short- to intermediate-term instruments whose fair values are less sensitive to interest rate changes.

Current wording

During the six months ended June 30, 2026, 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 $404.8 million as of June 30, 2026. 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

The Credit Agreement provides for aggregate commitments totaling $750.0 million and matures on February 2, 2029, 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, 2026, we had $157.0 million of borrowings and $0.1 million in letters of credit outstanding and $592.9 million in available borrowing capacity under the Credit Agreement. As of April 30, 2026, we had $137.0 million of borrowings and $0.1 million in letters of credit outstanding and $612.9 million in available borrowing capacity under the Credit Agreement. Borrowings under the Credit Agreement 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, 2026. See Note 11 to the Consolidated Financial Statements for a discussion of the Credit Agreement.

Current wording

The Credit Agreement provides for aggregate commitments totaling $750.0 million and matures on February 2, 2029, 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 June 30, 2026, we had $112.0 million of borrowings and $0.1 million in letters of credit outstanding and $637.9 million in available borrowing capacity under the Credit Agreement. As of July 29, 2026, we had $92.0 million of borrowings and $0.1 million in letters of credit outstanding and $657.9 million in available borrowing capacity under the Credit Agreement. Borrowings under the Credit Agreement 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 as of June 30, 2026. See Note 11 to the Consolidated Financial Statements for a discussion of the Credit Agreement.

Previous wording

In connection with their self-clearing operations, certain of our operating subsidiaries maintain agreements with a settlement bank to allow the subsidiaries to borrow an aggregate of up to $500.0 million on an uncommitted basis, collateralized by eligible securities pledged by the subsidiaries to the settlement bank, subject to certain haircuts. Borrowings under these agreements will bear interest at a base rate per annum equal to 1.00% plus the higher of (i) the upper range of the Federal Funds Rate, (ii) one-month SOFR plus an applicable margin or (iii) 0.25%. As of March 31, 2026, the subsidiaries had $71.3 million of borrowings outstanding, secured by $75.1 million of receivables from broker-dealers, clearing organizations and customers pledged as collateral, and up to $428.7 million in available uncommitted borrowing capacity under such agreements. See Note 11 to the Consolidated Financial Statements for a discussion of these agreements.

Current wording

In connection with their self-clearing operations, certain of our operating subsidiaries maintain agreements with a settlement bank to allow the subsidiaries to borrow an aggregate of up to $500.0 million on an uncommitted basis, collateralized by eligible securities pledged by the subsidiaries to the settlement bank, subject to certain haircuts. Borrowings under these agreements will bear interest at a base rate per annum equal to 1.00% plus the higher of (i) the upper range of the Federal Funds Rate, (ii) one-month SOFR plus an applicable margin or (iii) 0.25%. As of June 30, 2026, the subsidiaries had no borrowings outstanding and up to $500.0 million in available uncommitted borrowing capacity under such agreements. See Note 11 to the Consolidated Financial Statements for a discussion of these agreements.

Previous wording

Under arrangements with their settlement banks, certain of our operating subsidiaries may receive overnight financing in the form of bank overdrafts. As of March 31, 2026, we had no overdrafts payable outstanding.

Current wording

Under arrangements with their settlement banks, certain of our operating subsidiaries may receive overnight financing in the form of bank overdrafts. As of June 30, 2026, we had $3.9 million in overdrafts payable outstanding.

Previous wording

As a result of our self-clearing and settlement activities, we are required to finance certain transactions, maintain deposits with various clearing organizations and clearing broker-dealers and maintain a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Exchange Act. As of March 31, 2026, the aggregate amount of the positions financed, restricted cash deposits and customer reserve balances associated with our self-clearing and settlement activities was $335.9 million. These requirements can fluctuate based on trading activity, market volatility or other factors which may impact our liquidity or require us to use our capital resources.

Current wording

As a result of our self-clearing and settlement activities, we are required to finance certain transactions, maintain deposits with various clearing organizations and clearing broker-dealers and maintain a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Exchange Act. As of June 30, 2026, the aggregate amount of the positions financed, restricted cash deposits and customer reserve balances associated with our self-clearing and settlement activities was $412.6 million. These requirements can fluctuate based on trading activity, market volatility or other factors which may impact our liquidity or require us to use our capital resources.

Previous wording

Cash Flows for the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Current wording

Cash Flows for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

Previous wording

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 $105.0 million decrease in net cash provided by operating activities was primarily due to unfavorable changes in net receivables from broker-dealers, clearing organizations and customers, accounts receivable, prepaid expenses and other assets and income and other tax liabilities partially offset by higher net income and favorable changes in accounts payable, accrued expenses and other liabilities.

Current wording

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 $181.9 million decrease in net cash provided by operating activities was primarily due to unfavorable changes in net receivables from broker-dealers, clearing organizations and customers, income and other tax liabilities and accounts receivable, partially offset by higher net income and favorable changes in accounts payable.

Previous wording

The $48.4 million decrease in net cash used in financing activities was principally due to lower repurchases of common stock and an increase in net proceeds from borrowings.

Current wording

The $30.0 million increase in net cash used in financing activities was principally due to net repayments of outstanding borrowings in the current period and payment of excise tax on repurchases of common stock, partially offset by lower repurchases of common stock.

Previous wording

The $12.9 million change in the effect of exchange rate changes on cash and cash equivalents was due to changes in the cumulative translation adjustment, principally driven by the weakening of the British Pound and Euro versus the U.S. Dollar in the current period.

Current wording

The $31.7 million change in the effect of exchange rate changes on cash and cash equivalents was due to changes in the cumulative translation adjustment, principally driven by the weakening of the British Pound and Euro versus the U.S. Dollar in the current period.

Previous wording

One of our U.S. subsidiaries is registered as a broker-dealer and is 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, 2026, 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, 2026, our subsidiaries maintained aggregate net capital and financial resources that were $629.7 million in excess of the required levels of $39.8 million.

Current wording

One of our U.S. subsidiaries is registered as a broker-dealer and is 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 June 30, 2026, each of our subsidiaries that are subject to these regulations had net capital or financial resources in excess of their minimum requirements. As of June 30, 2026, our subsidiaries maintained aggregate net capital and financial resources that were $600.5 million in excess of the required levels of $47.4 million.

Previous wording

We execute securities transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. Our operating subsidiaries settle such transactions using their self-clearing operations or through the use of third-party clearing brokers or settlement agents. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. Under both the self-clearing and the third-party clearing models, we may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is an error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge us for any losses they suffer resulting from a counterparty’s failure on any of our trades. We did not record any liabilities or losses with regard to counterparty failures for the three months ended March 31, 2026 and 2025. Substantially all of our open securities failed-to-deliver and securities failed-to-receive transactions as of March 31, 2026 have subsequently settled at the contractual amounts.

Current wording

We execute securities transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. Our operating subsidiaries settle such transactions using their self-clearing operations or through the use of third-party clearing brokers or settlement agents. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. Under both the self-clearing and the third-party clearing models, we may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is an error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge us for any losses they suffer resulting from a counterparty’s failure on any of our trades. We did not record any liabilities or losses with regard to counterparty failures for the six months ended June 30, 2026 and 2025. Substantially all of our open securities failed-to-deliver and securities failed-to-receive transactions as of June 30, 2026 have subsequently settled at the contractual amounts.

Previous wording

We have leases for corporate offices and equipment with initial lease terms ranging from one year to 15 years. We have total future contractual rent payments on these leases of $80.1 million, with $12.4 million due within the next 12 months and $67.7 million due beyond 12 months.

Current wording

We have leases for corporate offices and equipment with initial lease terms ranging from one year to 15 years. We have total future contractual rent payments on these leases of $78.7 million, with $11.9 million due within the next 12 months and $66.8 million due beyond 12 months.

Previous wording

We enter into foreign currency forward contracts to economically hedge our exposure to variability in certain foreign currency transaction gains and losses. As of March 31, 2026, the notional value of our foreign currency forward contracts outstanding was $96.3 million and the fair value of the liability was $1.6 million. We also enter into interest rate swap agreements to manage our exposure to the effect of interest rate changes on our unrealized gains and losses on U.S. Treasury investments. As of March 31, 2026, the notional value of our interest rate swaps outstanding was $100.0 million and the fair value of the asset was $0.3 million.

Current wording

We enter into foreign currency forward contracts to economically hedge our exposure to variability in certain foreign currency transaction gains and losses. As of June 30, 2026, the notional value of our foreign currency forward contracts outstanding was $145.5 million and the fair value of the liability was $1.6 million. We also enter into interest rate swap agreements to manage our exposure to the effect of interest rate changes on our unrealized gains and losses on U.S. Treasury investments. As of June 30, 2026, the notional value of our interest rate swaps outstanding was $100.0 million and the fair value of the asset was $1.0 million.

Previous wording

On December 9, 2025, the Company entered into the ASR with JPMorgan, pursuant to which the Company paid $300.0 million and received an initial delivery of 1,386,001 Initial ASR Shares, representing 80% of the value of such payment in shares, calculated based on the closing share price of $173.16 per share on December 9, 2025. Final settlement of the ASR occurred on February 4, 2026 with the delivery of 359,782 additional shares. The average purchase price per share for shares of common stock purchased by the Company pursuant to the ASR was $171.84, which was determined based on the daily volume-weighted average price of the Company’s common stock during the term of the ASR, less a discount. The 2024 Repurchase Program was exhausted by the ASR.

Current wording

On December 9, 2025, the Company entered into the ASR with JPMorgan for $300.0 million. Final settlement of the ASR occurred on February 4, 2026. The 2024 Repurchase Program was exhausted by the ASR.

Previous wording

The table set forth below presents a reconciliation of our total expenses to total expenses, excluding notable items, operating margin to operating margin, excluding notable items, net income to net income, excluding notable items, diluted EPS to diluted EPS, excluding notable items, and the effective tax rate to the effective tax rate, excluding notable items for the three months ended March 31, 2026 and 2025:

Current wording

The table set forth below presents a reconciliation of our total expenses to total expenses, excluding notable items, operating margin to operating margin, excluding notable items, net income to net income, excluding notable items, diluted EPS to diluted EPS, excluding notable items, and the effective tax rate to the effective tax rate, excluding notable items for the three and six months ended June 30, 2026 and 2025:

Previous wording

The table set forth below presents a reconciliation of our net income to EBITDA and net income margin to EBITDA margin, as defined above, for the three months ended March 31, 2026 and 2025:

Current wording

The table set forth below presents a reconciliation of our net income to EBITDA and net income margin to EBITDA margin, as defined above, for the three and six months ended June 30, 2026 and 2025:

Previous wording

The table set forth below presents a reconciliation of our net cash provided by operating activities to free cash flow, as defined above, for the three months ended March 31, 2026 and 2025:

Current wording

The table set forth below presents a reconciliation of our net cash provided by operating activities to free cash flow, as defined above, for the three and six months ended June 30, 2026 and 2025: