MarketAxess Reports Third Quarter 2012 Revenues of $48.3 Million, Pre-Tax Income of $21.2 Million and Record Diluted EPS of $0.36
Third Quarter Financial Highlights*
-
Revenues of $48.3 million, up 3.6%
-
Expenses of $27.0 million, up 11.5%
-
Record diluted EPS of $0.36, up from $0.34
-
Record estimated U.S. high grade market share of 12.5%, up from 11.6%
*All comparisons versus third quarter 2011.
NEW YORK--(BUSINESS WIRE)--Nov. 2, 2012--
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading
electronic trading platform for U.S. and European corporate bonds,
emerging markets bonds and other types of fixed-income securities, today
announced results for the third quarter ended
September 30, 2012.
“We are pleased with our solid market share gains in U.S. high-grade
this quarter and the continued strong growth in high-yield and emerging
markets trading volume. U.S. high-grade TRACE volume also rebounded
significantly in the past two months, following softer volumes in
August,” said Richard M. McVey, chairman and chief executive officer of
MarketAxess. “As announced earlier this morning, MarketAxess has agreed
to buy Xtrakter Limited, a provider of regulatory transaction reporting,
trade matching services and data services to the European securities
market. We believe this acquisition will provide MarketAxess European
clients with an expanded set of technology solutions ahead of incoming
regulatory mandates from MiFID II in Europe.”
Third Quarter Results
Total revenues for the third quarter of 2012 increased 3.6% to $48.3
million, compared to $46.6 million for the third quarter of 2011.
Pre-tax income was $21.2 million, compared to $22.3 million for the
third quarter of 2011, a decrease of 4.9%. Net income totaled $13.5
million, or a record $0.36 per share on a diluted basis, compared to
$13.4 million, or $0.34 per share on a diluted basis, for the third
quarter of 2011.
Commission revenue for the third quarter of 2012 totaled $42.4 million
on total trading volume of $137.8 billion, compared to $39.8 million in
commission revenue on total trading volume of $131.7 billion for the
third quarter of 2011. U.S. high-grade trading volume as a percentage of
FINRA’s U.S. high-grade TRACE trading volume increased to a record
estimated 12.5%, compared to an estimated 11.6% for the third quarter of
2011.
All other revenue, which consists of technology products and services,
information and user access fees, investment income and other revenue,
was $5.9 million, down 12.8% from $6.7 million for the third quarter of
2011. The decline was primarily due to lower technology professional
service fees.
Total expenses for the third quarter of 2012 increased 11.5% to $27.0
million, compared to $24.3 million for the third quarter of 2011. This
increase was primarily due to higher professional and consulting costs
and employee compensation and benefits costs. Professional and
consulting fees in the third quarter of 2012 include $0.5 million of
Xtrakter acquisition-related costs. Employee compensation and benefits
costs for the prior year period reflected a downward adjustment to the
year-to-date cash incentive bonus accrual.
The effective tax rate for the third quarter of 2012 was 36.4%, compared
to 39.7% for the third quarter of 2011. The decline in the effective tax
rate was due principally to a refinement in certain state tax
apportionment methodology resulting in a decrease in the 2012 projected
tax rate.
Employee headcount as of September 30, 2012 was 235, compared to 234 as
of September 30, 2011.
Dividend
The Company’s board of directors declared a quarterly cash dividend of
$0.11 per share of common stock outstanding, to be paid on November 26,
2012 to stockholders of record as of the close of business on November
12, 2012.
Balance Sheet Data
As of September 30, 2012, total assets were $304.9 million and included
$204.3 million, or $5.44 per diluted share, in cash, cash equivalents
and securities available-for-sale. Total stockholders’ equity as of
September 30, 2012 was $271.9 million.
Guidance for 2012
The Company expects that its full year 2012 expenses and capital
spending will be at the high end of the guidance ranges of $107.0
million to $112.0 million and $8.0 million to $11.0 million,
respectively. The Company also anticipates that the overall effective
tax rate for 2012 will be between 39% and 41%.
Non-GAAP Financial Measure
EBITDA is a non-GAAP financial measure. The Company believes that this
non-GAAP financial measure, when taken into consideration with the
corresponding GAAP financial measure, is important in understanding the
Company's operating results. See the attached schedule for a full
reconciliation of GAAP net income to EBITDA.
Webcast and Conference Call Information
Richard M. McVey, chairman and chief executive officer, and Antonio L.
DeLise, chief financial officer, will host a conference call to discuss
the Company’s financial results and outlook on November 2, 2012, at 9:00
a.m. Eastern time. To access the conference call, please dial
877-299-4454 (U.S.) or +1-617-597-5447 (international). The passcode for
all callers is 42452936. The Company will also host a live audio Webcast
of the conference call on the Investor Relations section of the
Company's website at http://www.marketaxess.com.
A replay of the call will be made available by dialing 888-286-8010
(U.S.) or +1-617-801-6888 (international) for one week after the
announcement. The passcode for replay callers is 41146492. The Webcast
will also be archived on http://www.marketaxess.com
for 90 days following the announcement.
About MarketAxess
MarketAxess operates a leading electronic trading platform that enables
fixed-income market participants to efficiently trade corporate bonds
and other types of fixed-income instruments using MarketAxess’ patented
trading technology. Over 1,000 investor and broker-dealer firms are
active users of the MarketAxess trading platform, accessing global
liquidity in U.S. high-grade corporate bonds, European bonds, high yield
and emerging markets bonds, agency bonds, asset-backed and preferred
securities and credit default swaps. MarketAxess also offers a number of
trading-related products and services, including: market data to assist
clients with trading decisions; connectivity solutions that facilitate
straight-through processing; technology services to optimize trading
environments; and execution services for exchange-traded fund managers
and other clients.
MarketAxess maintains its headquarters in New York and has offices in
London, Chicago, Salt Lake City, Hong Kong, Singapore and São Paulo. For
more information, please visit www.marketaxess.com.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including
statements about the outlook and prospects for Company and industry
growth, as well as statements about the Company’s future financial and
operating performance. These and other statements that relate to future
results and events are based on MarketAxess’ current expectations.
Actual results in future periods may differ materially from those
currently expected or desired because of a number of risks and
uncertainties, including: the level and intensity of competition in the
fixed-income electronic trading industry and the pricing pressures that
may result; the variability of our growth rate; the rapidly evolving
nature of the electronic financial services industry; the level of
trading volume transacted on the MarketAxess platform; the absolute
level and direction of interest rates and the corresponding volatility
in the corporate fixed-income market; our ability to develop new
products and offerings and the market’s acceptance of those products;
our exposure to risks resulting from non-performance by counterparties
to transactions executed between our clients in which we act as an
intermediary in matching back-to-back trades; our dependence on our
broker-dealer clients; our ability to enter into strategic alliances and
to acquire other businesses and successfully integrate them with our
business; our future capital needs and our ability to obtain capital
when needed; and other factors. The Company’s actual results and
financial condition may differ, perhaps materially, from the anticipated
results and financial condition in any such forward-looking statements.
The Company undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise. More information about these and other factors affecting
MarketAxess’ business and prospects is contained in MarketAxess’
periodic filings with the Securities and Exchange Commission and can be
accessed at www.marketaxess.com.
|
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MarketAxess Holdings Inc.
Consolidated Statements of Operations
|
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|
|
|
|
|
|
|
|
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Three Months Ended
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Nine Months Ended
|
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September 30,
|
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September 30,
|
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|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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2012
|
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|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
(In thousands, except per share data)
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
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|
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(unaudited)
|
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Revenues
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
|
|
|
$
|
42,379
|
|
|
|
$
|
39,822
|
|
|
|
$
|
129,971
|
|
|
|
$
|
116,683
|
|
Technology products and services
|
|
|
|
|
|
2,979
|
|
|
|
|
3,779
|
|
|
|
|
9,107
|
|
|
|
|
10,871
|
|
Information and user access fees
|
|
|
|
|
|
1,896
|
|
|
|
|
1,831
|
|
|
|
|
5,557
|
|
|
|
|
5,239
|
|
Investment income
|
|
|
|
|
|
251
|
|
|
|
|
303
|
|
|
|
|
822
|
|
|
|
|
912
|
|
Other
|
|
|
|
|
|
752
|
|
|
|
|
829
|
|
|
|
|
2,360
|
|
|
|
|
2,259
|
|
Total revenues
|
|
|
|
|
|
48,257
|
|
|
|
|
46,564
|
|
|
|
|
147,817
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|
|
|
|
135,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Employee compensation and benefits
|
|
|
|
|
|
14,636
|
|
|
|
|
13,707
|
|
|
|
|
45,782
|
|
|
|
|
45,079
|
|
Depreciation and amortization
|
|
|
|
|
|
2,081
|
|
|
|
|
1,799
|
|
|
|
|
5,896
|
|
|
|
|
4,988
|
|
Technology and communications
|
|
|
|
|
|
3,262
|
|
|
|
|
2,772
|
|
|
|
|
9,232
|
|
|
|
|
7,996
|
|
Professional and consulting fees
|
|
|
|
|
|
3,202
|
|
|
|
|
2,247
|
|
|
|
|
9,063
|
|
|
|
|
7,784
|
|
Occupancy
|
|
|
|
|
|
732
|
|
|
|
|
721
|
|
|
|
|
2,248
|
|
|
|
|
2,195
|
|
Marketing and advertising
|
|
|
|
|
|
1,067
|
|
|
|
|
1,280
|
|
|
|
|
4,246
|
|
|
|
|
3,502
|
|
General and administrative
|
|
|
|
|
|
2,068
|
|
|
|
|
1,742
|
|
|
|
|
6,193
|
|
|
|
|
4,553
|
|
Total expenses
|
|
|
|
|
|
27,048
|
|
|
|
|
24,268
|
|
|
|
|
82,660
|
|
|
|
|
76,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Income before taxes
|
|
|
|
|
|
21,209
|
|
|
|
|
22,296
|
|
|
|
|
65,157
|
|
|
|
|
59,867
|
|
Provision for income taxes
|
|
|
|
|
|
7,727
|
|
|
|
|
8,852
|
|
|
|
|
25,553
|
|
|
|
|
23,706
|
|
Net income
|
|
|
|
|
$
|
13,482
|
|
|
|
$
|
13,444
|
|
|
|
$
|
39,604
|
|
|
|
$
|
36,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Per Share Data:
|
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|
|
|
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|
|
|
|
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|
|
|
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Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic
|
|
|
|
|
$
|
0.37
|
|
|
|
$
|
0.36
|
|
|
|
$
|
1.08
|
|
|
|
$
|
0.98
|
|
Diluted
|
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.34
|
|
|
|
$
|
1.05
|
|
|
|
$
|
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Cash dividends declared per common share
|
|
|
|
|
$
|
0.11
|
|
|
|
$
|
0.09
|
|
|
|
$
|
0.33
|
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Weighted-average common shares:
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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Basic
|
|
|
|
|
|
36,500
|
|
|
|
|
37,126
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|
|
|
|
36,521
|
|
|
|
|
36,798
|
|
Diluted
|
|
|
|
|
|
37,541
|
|
|
|
|
39,828
|
|
|
|
|
37,892
|
|
|
|
|
39,539
|
|
|
|
|
|
MarketAxess Holdings Inc.
Consolidated Condensed Balance
Sheet Data
|
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|
|
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|
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|
|
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|
|
|
|
|
September 30, 2012
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
150,101
|
|
|
|
$
|
169,620
|
|
Securities available-for-sale
|
|
|
|
|
|
54,181
|
|
|
|
|
78,110
|
|
Accounts receivable, net
|
|
|
|
|
|
33,414
|
|
|
|
|
36,170
|
|
All other assets
|
|
|
|
|
|
67,232
|
|
|
|
|
65,558
|
|
Total assets
|
|
|
|
|
$
|
304,928
|
|
|
|
$
|
349,458
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
$
|
32,994
|
|
|
|
$
|
37,019
|
|
Total stockholders' equity
|
|
|
|
|
|
271,934
|
|
|
|
|
312,439
|
|
Total liabilities and stockholders' equity
|
|
|
|
|
$
|
304,928
|
|
|
|
$
|
349,458
|
|
|
|
|
|
MarketAxess Holdings Inc.
Reconciliation of Non-GAAP
Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
$
|
13,482
|
|
|
|
$
|
13,444
|
|
|
|
$
|
39,604
|
|
|
|
$
|
36,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
55
|
|
|
|
|
14
|
|
|
|
|
128
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
|
|
7,727
|
|
|
|
|
8,852
|
|
|
|
|
25,553
|
|
|
|
|
23,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
2,081
|
|
|
|
|
1,799
|
|
|
|
|
5,896
|
|
|
|
|
4,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (EBITDA)
|
|
|
|
|
$
|
23,345
|
|
|
|
$
|
24,109
|
|
|
|
$
|
71,181
|
|
|
|
$
|
64,901
|
|
|
|
|
|
MarketAxess
Holdings Inc.
Volume
and Fee Per Million Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Trading Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. high-grade - multi dealer 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
fixed-rate
|
|
|
|
|
$
|
83,193
|
|
|
|
$
|
79,233
|
|
|
|
$
|
265,876
|
|
|
|
$
|
238,577
|
|
floating-rate
|
|
|
|
|
|
2,795
|
|
|
|
|
2,761
|
|
|
|
|
9,104
|
|
|
|
|
9,524
|
|
Eurobond
|
|
|
|
|
|
6,016
|
|
|
|
|
7,580
|
|
|
|
|
26,543
|
|
|
|
|
28,891
|
|
Other 1,2 |
|
|
|
|
|
45,748
|
|
|
|
|
42,092
|
|
|
|
|
138,995
|
|
|
|
|
122,814
|
|
Total
|
|
|
|
|
$
|
137,752
|
|
|
|
$
|
131,666
|
|
|
|
$
|
440,518
|
|
|
|
$
|
399,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Daily Volume
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. high-grade 1 |
|
|
|
|
$
|
1,365
|
|
|
|
$
|
1,281
|
|
|
|
$
|
1,463
|
|
|
|
$
|
1,313
|
|
Eurobond
|
|
|
|
|
|
94
|
|
|
|
|
117
|
|
|
|
|
141
|
|
|
|
|
154
|
|
Other 1,2 |
|
|
|
|
|
726
|
|
|
|
|
658
|
|
|
|
|
739
|
|
|
|
|
650
|
|
Total
|
|
|
|
|
$
|
2,185
|
|
|
|
$
|
2,056
|
|
|
|
$
|
2,344
|
|
|
|
$
|
2,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of U.S. Trading Days 3 |
|
|
|
|
|
63
|
|
|
|
|
64
|
|
|
|
|
188
|
|
|
|
|
189
|
|
Number of U.K. Trading Days 4 |
|
|
|
|
|
64
|
|
|
|
|
65
|
|
|
|
|
188
|
|
|
|
|
188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Variable Transaction Fee Per Millon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. high-grade - multi dealer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
fixed-rate
|
|
|
|
|
$
|
209
|
|
|
|
$
|
195
|
|
|
|
$
|
203
|
|
|
|
$
|
188
|
|
floating-rate
|
|
|
|
|
|
37
|
|
|
|
|
24
|
|
|
|
|
30
|
|
|
|
|
21
|
|
Total U.S. high-grade
|
|
|
|
|
|
203
|
|
|
|
|
189
|
|
|
|
|
198
|
|
|
|
|
182
|
|
Eurobond
|
|
|
|
|
|
79
|
|
|
|
|
108
|
|
|
|
|
71
|
|
|
|
|
101
|
|
Other
|
|
|
|
|
|
216
|
|
|
|
|
175
|
|
|
|
|
208
|
|
|
|
|
177
|
|
Total
|
|
|
|
|
$
|
202
|
|
|
|
$
|
180
|
|
|
|
$
|
193
|
|
|
|
$
|
174
|
|
|
|
|
|
1 Consistent with FINRA TRACE reporting standards, both sides of
trades are included in the Company's
|
|
reported volumes when the Company executes trades on a riskless
principal basis between two counterparties.
|
|
|
|
2 Effective January 2012, the Company no longer reports credit
default swaps trading volumes.
|
|
Credit default swap volumes previously reported in "Other"
trading volume have not been removed.
|
|
|
|
3 The number of U.S. trading days is based on the SIFMA holiday
recommendation calendar.
|
|
|
|
4 The number of U.K. trading days is based on the U.K. Bank
holiday schedule.
|
|
|
Source: MarketAxess Holdings Inc.
Media and Investor Relations:
MarketAxess Holdings Inc.
Tony
DeLise, +1-212-813-6017
or
Florencia Panizza, +1-212-813-6029
or
William
McBride & Associates
William McBride, +1-917-239-6726