10-Q
P1Y--12-311P1Y0001278021Q1false2022-01-31P3Ytrue0001278021us-gaap:CollateralizedDebtObligationsMember2022-03-310001278021srt:AsiaMember2022-03-3100012780212022-04-220001278021us-gaap:ValuationTechniqueDiscountedCashFlowMembersrt:MinimumMember2022-03-310001278021srt:AsiaMember2022-01-012022-03-3100012780212020-12-310001278021us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001278021us-gaap:RetainedEarningsMember2022-01-012022-03-310001278021mktx:OtherRevenuesMember2022-01-012022-03-310001278021us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001278021us-gaap:FairValueInputsLevel2Membermktx:MutualFundsHeldInRabbiTrustMember2021-12-310001278021us-gaap:CollateralizedDebtObligationsMemberus-gaap:BaseRateMember2022-03-310001278021mktx:EmployeeCompensationPlanMember2021-01-012021-03-3100012780212022-01-012022-03-310001278021mktx:ShareRepurchaseProgramMember2022-01-012022-03-310001278021us-gaap:TreasuryStockMember2021-01-012021-03-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:FairValueInputsLevel1Member2022-03-310001278021srt:MaximumMember2022-01-012022-03-310001278021us-gaap:FairValueInputsLevel3Member2021-12-310001278021us-gaap:LetterOfCreditMember2020-11-302020-11-300001278021us-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:RetainedEarningsMember2021-01-012021-03-310001278021mktx:MuniBrokersLLCMembermktx:AccountsPayableAccruedExpensesAndOtherLiabilitiesMember2021-04-090001278021srt:MinimumMemberus-gaap:SoftwareDevelopmentMember2022-01-012022-03-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:TreasuryStockMember2021-12-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021mktx:EmployeeCompensationPlanMember2022-01-012022-03-310001278021mktx:InformationServicesMember2021-12-310001278021us-gaap:FairValueInputsLevel2Memberus-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021srt:MinimumMember2022-03-310001278021us-gaap:StandbyLettersOfCreditMember2020-11-300001278021us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:OtherRevenuesMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel1Membermktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:StandbyLettersOfCreditMember2021-10-150001278021us-gaap:OccupancyMember2021-01-012021-03-310001278021mktx:PostTradeServicesMember2022-01-012022-03-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001278021us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2022-03-310001278021us-gaap:IndefinitelivedIntangibleAssetsMember2022-03-310001278021us-gaap:CommonStockMember2022-03-310001278021us-gaap:AdditionalPaidInCapitalMember2021-12-3100012780212021-10-012022-03-310001278021us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001278021us-gaap:NonvotingCommonStockMember2021-12-310001278021mktx:ShareRepurchaseProgramMember2022-01-310001278021us-gaap:TreasuryStockMember2022-01-012022-03-310001278021us-gaap:NewYorkStateDivisionOfTaxationAndFinanceMemberus-gaap:LatestTaxYearMember2022-01-012022-03-310001278021mktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:ValuationTechniqueDiscountedCashFlowMembersrt:MaximumMember2021-12-310001278021srt:AsiaMember2021-12-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021mktx:InformationServicesMember2021-01-012021-03-310001278021mktx:MutualFundsHeldInRabbiTrustMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel2Membermktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310001278021us-gaap:CommonStockMember2021-12-310001278021us-gaap:RevolvingCreditFacilityMember2022-01-012022-03-310001278021mktx:CommissionRevenueMember2022-01-012022-03-310001278021us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001278021us-gaap:RetainedEarningsMember2022-03-310001278021mktx:PostTradeServicesMember2021-01-012021-03-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310001278021us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:IndefinitelivedIntangibleAssetsMember2021-12-310001278021us-gaap:TreasuryStockMember2021-03-310001278021srt:AmericasMember2021-12-310001278021us-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001278021mktx:MuniBrokersLLCMembermktx:AccountsPayableAccruedExpensesAndOtherLiabilitiesMember2021-04-092021-04-090001278021mktx:InformationServicesMember2022-03-310001278021srt:MinimumMember2022-01-012022-03-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001278021srt:AmericasMember2022-03-310001278021us-gaap:AdditionalPaidInCapitalMember2022-03-310001278021us-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021srt:MaximumMember2022-03-310001278021us-gaap:SeriesAPreferredStockMember2022-03-3100012780212021-09-300001278021mktx:MuniBrokersLLCMember2021-04-090001278021mktx:MuniBrokersLLCMember2021-04-092021-04-090001278021us-gaap:AdditionalPaidInCapitalMember2021-03-310001278021mktx:InformationServicesMemberus-gaap:TransferredOverTimeMember2021-01-012021-03-310001278021us-gaap:CustomerRelationshipsMember2021-12-310001278021mktx:NonEmployeeDirectorCompensationPlanMember2021-01-012021-03-310001278021us-gaap:ValuationTechniqueDiscountedCashFlowMember2022-03-310001278021mktx:InformationServicesMemberus-gaap:TransferredOverTimeMember2022-01-012022-03-310001278021us-gaap:RetainedEarningsMember2021-03-310001278021us-gaap:OccupancyMember2022-01-012022-03-310001278021us-gaap:USTreasurySecuritiesMember2022-03-310001278021us-gaap:CommonStockMember2020-12-310001278021us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2021-12-310001278021mktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-03-310001278021mktx:InformationServicesMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-03-310001278021us-gaap:RevolvingCreditFacilityMember2022-03-310001278021us-gaap:FairValueInputsLevel2Member2022-03-310001278021us-gaap:OtherNonoperatingIncomeExpenseMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:RetainedEarningsMember2020-12-310001278021mktx:TechnologyAndOtherIntangiblesMember2022-03-310001278021us-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001278021mktx:PropertyOneMember2022-01-012022-03-310001278021us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:PostTradeServicesMember2021-12-310001278021mktx:CashSegregatedUnderFederalAndOtherRegulationsMember2021-12-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMember2022-03-310001278021mktx:MuniBrokersLLCMembersrt:MaximumMember2021-04-090001278021us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001278021us-gaap:NonvotingCommonStockMember2022-03-310001278021us-gaap:CarryingReportedAmountFairValueDisclosureMembermktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:USTreasurySecuritiesMember2021-12-310001278021mktx:CustomerRelationshipsAndTechnologyMembermktx:MuniBrokersLLCMembersrt:MaximumMember2021-04-092021-04-090001278021us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMembersrt:MaximumMember2022-01-012022-03-310001278021us-gaap:RevolvingCreditFacilityMember2020-11-300001278021mktx:NonEmployeeDirectorCompensationPlanMember2022-01-012022-03-310001278021us-gaap:CashAndCashEquivalentsMember2021-12-310001278021us-gaap:TreasuryStockMember2020-12-310001278021us-gaap:FairValueInputsLevel2Membermktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:NewYorkCityDivisionOfTaxationAndFinanceMemberus-gaap:EarliestTaxYearMember2022-01-012022-03-310001278021us-gaap:AdditionalPaidInCapitalMember2020-12-310001278021mktx:MutualFundsHeldInRabbiTrustMember2021-12-310001278021mktx:CashSegregatedUnderFederalAndOtherRegulationsMember2022-03-310001278021us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:FairValueInputsLevel1Membermktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:RevolvingCreditFacilityMember2021-10-152021-10-150001278021us-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMembercountry:GB2022-01-012022-03-310001278021us-gaap:FairValueInputsLevel1Member2021-12-310001278021us-gaap:CarryingReportedAmountFairValueDisclosureMembermktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:GeographicConcentrationRiskMemberus-gaap:SalesRevenueNetMembercountry:GB2021-01-012021-12-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:CommissionRevenueMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel2Membermktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:RegulatoryServicesGMBHOfDeutscheBorseGroupMember2020-11-302020-11-300001278021srt:EuropeMember2021-12-310001278021mktx:TradingInvestmentsMember2021-01-012021-03-310001278021mktx:ShareRepurchaseProgramMember2021-01-012021-01-310001278021srt:EuropeMember2022-03-310001278021srt:AsiaMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel2Memberus-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021mktx:RegulatoryServicesGMBHOfDeutscheBorseGroupMembersrt:MaximumMember2020-11-300001278021mktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:CustomerRelationshipsMember2022-03-310001278021srt:EuropeMember2021-01-012021-03-310001278021srt:EuropeMember2022-01-012022-03-310001278021srt:AmericasMember2022-01-012022-03-310001278021mktx:CustomerRelationshipsAndTechnologyMembermktx:MuniBrokersLLCMembersrt:MinimumMember2021-04-092021-04-090001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:USSubsidiariesMember2022-03-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMember2021-12-310001278021us-gaap:NewYorkStateDivisionOfTaxationAndFinanceMemberus-gaap:EarliestTaxYearMember2022-01-012022-03-310001278021us-gaap:TransferredOverTimeMembermktx:PostTradeServicesMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021mktx:USBrokerDealerSubsidiariesMember2022-03-310001278021mktx:PostTradeServicesMember2022-03-310001278021mktx:CommissionRevenueMemberus-gaap:USTreasurySecuritiesMember2021-01-012021-03-310001278021mktx:ShareRepurchaseProgramMember2021-01-310001278021mktx:CommissionRevenueMemberus-gaap:USTreasurySecuritiesMember2022-01-012022-03-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021mktx:RegulatoryServicesGMBHOfDeutscheBorseGroupMember2020-11-300001278021us-gaap:LatestTaxYearMembermktx:NewYorkCityDivisionOfTaxationAndFinanceMember2022-01-012022-03-310001278021us-gaap:TreasuryStockMember2022-03-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021mktx:TradingInvestmentsMember2022-01-012022-03-310001278021srt:AmericasMember2021-01-012021-03-310001278021us-gaap:FairValueInputsLevel2Membermktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:FairValueInputsLevel2Membermktx:MutualFundsHeldInRabbiTrustMember2022-03-310001278021mktx:ReceivablesFromBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310001278021us-gaap:FairValueInputsLevel3Member2022-03-310001278021mktx:PostTradeServicesMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-03-310001278021mktx:CashSegregatedUnderFederalRegulationsMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001278021us-gaap:CarryingReportedAmountFairValueDisclosureMembermktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-3100012780212021-01-012021-03-310001278021mktx:EmployeeCompensationPlanMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310001278021mktx:TechnologyAndOtherIntangiblesMember2021-12-310001278021mktx:StockOptionsAndRestrictedStockMember2021-01-012021-03-310001278021us-gaap:RevolvingCreditFacilityMember2021-10-150001278021us-gaap:RetainedEarningsMember2021-12-310001278021us-gaap:NewYorkStateDivisionOfTaxationAndFinanceMember2022-01-012022-03-310001278021us-gaap:OtherNonoperatingIncomeExpenseMember2022-01-012022-03-310001278021us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:AccountsReceivableMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-310001278021us-gaap:CashAndCashEquivalentsMember2022-03-3100012780212021-12-310001278021us-gaap:ValuationTechniqueDiscountedCashFlowMembersrt:MaximumMember2022-03-310001278021us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMembersrt:MinimumMember2022-01-012022-03-310001278021mktx:InformationServicesMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-03-310001278021us-gaap:RestrictedStockMembermktx:EmployeeCompensationPlanMember2022-01-012022-03-310001278021us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2021-12-310001278021us-gaap:ValuationTechniqueDiscountedCashFlowMember2021-12-310001278021us-gaap:CashAndCashEquivalentsMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310001278021mktx:StockOptionsAndRestrictedStockMember2022-01-012022-03-310001278021mktx:MutualFundsHeldInRabbiTrustMember2022-01-012022-03-310001278021us-gaap:ValuationTechniqueDiscountedCashFlowMembersrt:MinimumMember2021-12-310001278021mktx:PostTradeServicesMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-03-310001278021us-gaap:FairValueInputsLevel2Member2021-12-310001278021us-gaap:TransferredOverTimeMembermktx:PostTradeServicesMember2022-01-012022-03-310001278021us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100012780212022-03-310001278021us-gaap:CommonStockMember2021-03-310001278021us-gaap:SeriesAPreferredStockMember2021-12-310001278021mktx:InformationServicesMember2022-01-012022-03-310001278021mktx:MutualFundsHeldInRabbiTrustMember2022-03-3100012780212021-03-310001278021mktx:PayablesToBrokerDealersClearingOrganizationsAndCustomersMemberus-gaap:FairValueMeasurementsNonrecurringMember2022-03-31mktx:Institutional_Investor_and_BrokerDealer_Firmmktx:Revenueutr:Ratexbrli:purexbrli:sharesmktx:Segmentiso4217:USDxbrli:sharesmktx:Agreementiso4217:USD

 

 

 

[]

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34091

 

MARKETAXESS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

52-2230784

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

 

55 Hudson Yards, 15th Floor New York, New York

 

10001

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (212) 813-6000

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol

 

Name of each exchange on which registered

Common Stock, $0.003 par value

 

MKTX

 

NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of April 22, 2022, the number of shares of the Registrant’s voting common stock outstanding was 37,741,996.

 

 

 

 


 

MARKETAXESS HOLDINGS INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS

 

 

 

 

Page

 

PART I — Financial Information

 

 

Item 1.

Financial Statements (Unaudited)

 

3

 

Consolidated Statements of Financial Condition as of March 31, 2022 and December 31, 2021

 

3

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021

 

4

 

Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2022 and 2021

 

5

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2022 and 2021

 

6

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

 

7

 

Notes to Consolidated Financial Statements

 

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

36

Item 4.

Controls and Procedures

 

37

 

PART II — Other Information

 

 

Item 1.

Legal Proceedings

 

38

Item 1A.

Risk Factors

 

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

Item 3.

Defaults Upon Senior Securities

 

39

Item 4.

Mine Safety Disclosures

 

39

Item 5.

Other Information

 

39

Item 6.

Exhibits

 

40

 

 

 

 

 

 

2


 

PART I — Financial Information

Item 1. Financial Statements

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

 

 

As of

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(In thousands, except share
 and per share amounts)

 

ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

364,567

 

 

$

506,735

 

Cash segregated under federal regulations

 

 

50,187

 

 

 

50,159

 

Investments, at fair value

 

 

35,875

 

 

 

36,078

 

Accounts receivable, net of allowance of $168 and $140 as of March 31, 2022 and December 31, 2021, respectively

 

 

75,520

 

 

 

63,881

 

Receivables from broker-dealers, clearing organizations and customers

 

 

721,127

 

 

 

408,346

 

Goodwill

 

 

154,789

 

 

 

154,789

 

Intangible assets, net of accumulated amortization

 

 

111,620

 

 

 

116,377

 

Furniture, equipment, leasehold improvements and capitalized software, net of accumulated depreciation and amortization

 

 

95,302

 

 

 

96,061

 

Operating lease right-of-use assets

 

 

69,189

 

 

 

70,960

 

Prepaid expenses and other assets

 

 

29,309

 

 

 

27,066

 

Total assets

 

$

1,707,485

 

 

$

1,530,452

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accrued employee compensation

 

$

26,166

 

 

$

59,719

 

Payables to broker-dealers, clearing organizations and customers

 

 

458,476

 

 

 

229,325

 

Income and other tax liabilities

 

 

42,614

 

 

 

40,456

 

Accounts payable, accrued expenses and other liabilities

 

 

70,297

 

 

 

71,218

 

Operating lease liabilities

 

 

86,391

 

 

 

88,425

 

Total liabilities

 

 

683,944

 

 

 

489,143

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.001 par value, 4,855,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock voting, $0.003 par value, 110,000,000 shares authorized, 40,907,961 shares and 40,911,506 shares issued and 37,816,250 shares and 37,918,956 shares outstanding as of March 31, 2022 and December 31, 2021, respectively

 

 

123

 

 

 

123

 

Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

318,119

 

 

 

330,262

 

Treasury stock – Common stock voting, at cost, 3,091,711 shares and 2,992,550 shares as of March 31, 2022 and December 31, 2021, respectively

 

 

(271,512

)

 

 

(232,712

)

Retained earnings

 

 

995,192

 

 

 

956,966

 

Accumulated other comprehensive loss

 

 

(18,381

)

 

 

(13,330

)

Total stockholders' equity

 

 

1,023,541

 

 

 

1,041,309

 

Total liabilities and stockholders' equity

 

$

1,707,485

 

 

$

1,530,452

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

3


 

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

(In thousands, except per share amounts)

 

Revenues

 

 

 

 

 

Commissions

$

166,113

 

 

$

175,838

 

Information services

 

9,809

 

 

 

9,162

 

Post-trade services

 

9,912

 

 

 

10,261

 

Other

 

223

 

 

 

203

 

Total revenues

 

186,057

 

 

 

195,464

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

Employee compensation and benefits

 

47,756

 

 

 

48,088

 

Depreciation and amortization

 

15,174

 

 

 

11,779

 

Technology and communications

 

12,192

 

 

 

10,036

 

Professional and consulting fees

 

9,621

 

 

 

9,640

 

Occupancy

 

3,387

 

 

 

3,317

 

Marketing and advertising

 

1,789

 

 

 

1,204

 

Clearing costs

 

4,575

 

 

 

4,694

 

General and administrative

 

3,459

 

 

 

3,232

 

Total expenses

 

97,953

 

 

 

91,990

 

Operating income

 

88,104

 

 

 

103,474

 

Other income (expense)

 

 

 

 

 

Investment income

 

59

 

 

 

107

 

Interest expense

 

(173

)

 

 

(191

)

Other, net

 

2,429

 

 

 

(1,589

)

Total other income (expense)

 

2,315

 

 

 

(1,673

)

Income before income taxes

 

90,419

 

 

 

101,801

 

Provision for income taxes

 

25,650

 

 

 

21,344

 

Net income

$

64,769

 

 

$

80,457

 

 

 

 

 

 

 

Net income per common share

 

 

 

 

 

Basic

$

1.73

 

 

$

2.15

 

Diluted

$

1.71

 

 

$

2.11

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.70

 

 

$

0.66

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

Basic

 

37,384

 

 

 

37,470

 

Diluted

 

37,824

 

 

 

38,155

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

4


 

 

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

(In thousands)

 

Net income

$

64,769

 

 

$

80,457

 

Cumulative translation adjustment

 

(5,051

)

 

 

(1,932

)

Comprehensive income

$

59,718

 

 

$

78,525

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

5


 

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

Common
Stock
Voting

 

 

Additional
Paid-In
Capital

 

 

Treasury Stock –
Common
Stock
Voting

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Stockholders'
Equity

 

 

 

(In thousands, except per share amounts)

 

Balance at January 1, 2022

 

$

123

 

 

$

330,262

 

 

$

(232,712

)

 

$

956,966

 

 

$

(13,330

)

 

$

1,041,309

 

Net income

 

 

 

 

 

 

 

 

 

 

 

64,769

 

 

 

 

 

 

64,769

 

Cumulative translation adjustment and foreign currency exchange hedge, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,051

)

 

 

(5,051

)

Stock-based compensation

 

 

 

 

 

8,099

 

 

 

 

 

 

 

 

 

 

 

 

8,099

 

Exercise of stock options

 

 

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

50

 

Withholding tax payments on restricted stock vesting and stock option exercises

 

 

 

 

 

(20,292

)

 

 

 

 

 

 

 

 

 

 

 

(20,292

)

Repurchases of common stock

 

 

 

 

 

 

 

 

(38,800

)

 

 

 

 

 

 

 

 

(38,800

)

Cash dividend on common stock ($0.70 per share)

 

 

 

 

 

 

 

 

 

 

 

(26,543

)

 

 

 

 

 

(26,543

)

Balance at March 31, 2022

 

$

123

 

 

$

318,119

 

 

$

(271,512

)

 

$

995,192

 

 

$

(18,381

)

 

$

1,023,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common
Stock
Voting

 

 

Additional
Paid-In
Capital

 

 

Treasury Stock –
Common
Stock
Voting

 

 

Retained
Earnings

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Total
Stockholders'
Equity

 

 

 

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2021

 

$

123

 

 

$

329,742

 

 

$

(169,523

)

 

$

799,369

 

 

$

(4,650

)

 

$

955,061

 

Net income

 

 

 

 

 

 

 

 

 

 

 

80,457

 

 

 

 

 

 

80,457

 

Cumulative translation adjustment and foreign currency exchange hedge, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,932

)

 

 

(1,932

)

Stock-based compensation

 

 

 

 

 

7,424

 

 

 

 

 

 

 

 

 

 

 

 

7,424

 

Exercise of stock options

 

 

 

 

 

244

 

 

 

 

 

 

 

 

 

 

 

 

244

 

Withholding tax payments on restricted stock vesting and stock option exercises

 

 

 

 

 

(27,422

)

 

 

 

 

 

 

 

 

 

 

 

(27,422

)

Repurchases of common stock

 

 

 

 

 

 

 

 

(520

)

 

 

 

 

 

 

 

 

(520

)

Cash dividend on common stock ($0.66 per share)

 

 

 

 

 

 

 

 

 

 

 

(25,079

)

 

 

 

 

 

(25,079

)

Balance at March 31, 2021

 

$

123

 

 

$

309,988

 

 

$

(170,043

)

 

$

854,747

 

 

$

(6,582

)

 

$

988,233

 

 

The accompanying notes are an integral part of these consolidated financial statements.

6


 

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

(In thousands)

 

Cash flows from operating activities

 

 

 

 

 

Net income

$

64,769

 

 

$

80,457

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

15,174

 

 

 

11,779

 

Amortization of operating lease right-of-use assets

 

1,596

 

 

 

1,664

 

Stock-based compensation expense

 

8,099

 

 

 

7,424

 

Deferred taxes

 

(643

)

 

 

591

 

Other

 

(1,229

)

 

 

(74

)

Changes in operating assets and liabilities:

 

 

 

 

 

(Increase) in accounts receivable

 

(11,699

)

 

 

(7,880

)

(Increase) in receivables from broker-dealers, clearing organizations and customers

 

(296,015

)

 

 

(270,491

)

(Increase) decrease in prepaid expenses and other assets

 

(2,445

)

 

 

3,082

 

Decrease in trading investments

 

 

 

 

5,495

 

(Increase) in mutual funds held in rabbi trust

 

(117

)

 

 

(1,613

)

(Decrease) in accrued employee compensation

 

(33,553

)

 

 

(34,103

)

Increase in payables to broker-dealers, clearing organizations and customers

 

229,151

 

 

 

174,942

 

Increase in income and other tax liabilities

 

3,049

 

 

 

4,814

 

Increase in accounts payable, accrued expenses and other liabilities

 

1,932

 

 

 

2,599

 

(Decrease) in operating lease liabilities

 

(1,799

)

 

 

(1,845

)

Net cash (used in) operating activities

 

(23,730

)

 

 

(23,159

)

Cash flows from investing activities

 

 

 

 

 

Purchases of furniture, equipment and leasehold improvements

 

(1,396

)

 

 

(4,257

)

Capitalization of software development costs

 

(9,425

)

 

 

(8,075

)

Net cash (used in) investing activities

 

(10,821

)

 

 

(12,332

)

Cash flows from financing activities

 

 

 

 

 

Cash dividend on common stock

 

(27,425

)

 

 

(25,454

)

Exercise of stock options

 

50

 

 

 

244

 

Withholding tax payments on restricted stock vesting and stock option exercises

 

(20,292

)

 

 

(27,422

)

Repurchases of common stock

 

(38,800

)

 

 

(520

)

Proceeds from short-term borrowings

 

100,000

 

 

 

69,302

 

Repayments of short-term borrowings

 

(100,000

)

 

 

(35,000

)

Net cash (used in) financing activities

 

(86,467

)

 

 

(18,850

)

Effect of exchange rate changes on cash and cash equivalents

 

(4,356

)

 

 

(1,027

)

Cash and cash equivalents including restricted cash

 

 

 

 

 

Net decrease for the period

 

(125,374

)

 

 

(55,368

)

Beginning of period

 

625,567

 

 

 

608,050

 

End of period

$

500,193

 

 

$

552,682

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

Cash paid for income taxes

$

8,487

 

 

$

6,250

 

Cash paid for interest

 

134

 

 

 

191

 

Non-cash activity

 

 

 

 

 

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

 

91

 

 

 

878

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 

 

 

 

 

 

7


 

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. Organization and Principal Business Activity

MarketAxess Holdings Inc. (the “Company” or “MarketAxess”) was incorporated in the State of Delaware on April 11, 2000. Through its subsidiaries, MarketAxess operates leading electronic trading platforms delivering expanded liquidity opportunities, improved execution quality and significant cost savings across global fixed-income markets. Over 1,900 institutional investor and broker-dealer firms are active users of MarketAxess’ patented trading technology, accessing global liquidity on its platforms in U.S. investment-grade bonds, U.S. high-yield bonds, emerging market debt, Eurobonds, municipal bonds, U.S. government bonds and other fixed-income securities. Through its Open Trading® protocols, MarketAxess executes bond trades between and among institutional investor and broker-dealer clients in the leading all-to-all anonymous trading environment for corporate bonds. MarketAxess also offers a number of trading-related products and services, including: Composite+™ pricing and other market data products to assist clients with trading decisions; auto-execution and other execution services for clients requiring specialized workflow solutions; connectivity solutions that facilitate straight-through processing; and technology services to optimize trading environments. The Company also provides a range of pre- and post-trade services, including trade matching, trade publication, regulatory transaction reporting and market and reference data across a range of fixed-income and other products.

 

2. Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated. These consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The consolidated financial information as of December 31, 2021 has been derived from audited financial statements not included herein. These unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to Form 10-Q and reflect all adjustments that, in the opinion of management, are normal and recurring, and that are necessary for a fair statement of the results for the interim periods presented. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. Interim period operating results may not be indicative of the operating results for a full year. Certain reclassifications have been made to the prior periods’ consolidated financial statements in order to conform to the current period presentation. Such reclassifications are immaterial, individually and in the aggregate, to both current and all previously issued financial statements taken as a whole and have no effect on previously reported net income.

Accounting Pronouncements, Recently Adopted

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (the “ASU”), which is designed to ease the potential burden in accounting for the transition away from the London Inter-bank Offered Rate (“LIBOR”). The ASU applies to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued and replaced with alternative reference rates as a result of reference rate reform. The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The Company adopted this ASU as of January 1, 2022, and determined that it did not have any contracts, hedging relationships, or other transactions impacted by this ASU.

Cash and Cash Equivalents

The Company defines cash equivalents as short-term interest-bearing investments with maturities at the time of purchase of three months or less.

Investments

The Company determines the appropriate classification of securities at the time of purchase which are recorded in the Consolidated Statements of Financial Condition on the trade date. Securities are classified as available-for-sale or trading. Available-for-sale investments are carried at fair value with the unrealized gains or losses reported in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. Trading investments include U.S. Treasuries and are carried at fair value, with realized and unrealized gains or losses included in other, net in the Consolidated Statements of Operations.

8


 

Fair Value Financial Instruments

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” A three-tiered hierarchy for determining fair value has been established that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as Level 1 (unadjusted quoted prices for identical assets or liabilities in active markets), Level 2 (inputs that are observable in the marketplace other than those inputs classified in Level 1) and Level 3 (inputs that are unobservable in the marketplace). The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of its money market funds, trading securities and contingent consideration payables associated with acquisitions. All other financial instruments are short-term in nature and the carrying amount is reported on the Consolidated Statements of Financial Condition at approximate fair value.

Receivables from and Payables to Broker-dealers, Clearing Organizations and Customers

Receivables from broker-dealers, clearing organizations and customers include amounts receivable for securities not delivered by the Company to the purchaser by the settlement date (“securities failed-to-deliver”) and cash deposits held at clearing organizations and clearing brokers to facilitate the settlement and clearance of matched principal transactions. Payables to broker-dealers, clearing organizations and customers include amounts payable for securities not received by the Company from a seller by the settlement date (“securities failed-to-receive”). Securities failed-to-deliver and securities failed-to-receive for transactions executed on a matched principal basis where the Company serves as a counterparty to both the buyer and the seller are recorded on a settlement date basis. The Company presents its securities failed-to-deliver and securities failed-to-receive balances on a net-by-counterparty basis within receivables from and payables to broker-dealers, clearing organizations and customers. The difference between the Company’s trade-date receivables and payables for unsettled matched principal transactions reflects commissions earned and is recorded within accounts receivable, net on a trade date basis.

Allowance for Credit Losses

All accounts receivable have contractual maturities of less than one year and are derived from trading-related fees and commissions and revenues from products and services. The Company continually monitors collections and payments from its customers and maintains an allowance for doubtful accounts. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific collection issues that have been identified. Account balances are grouped for evaluation based on various risk characteristics, including billing type, legal entity, and geographic region. Additions to the allowance for credit losses are charged to bad debt expense, which is included in general and administrative expense in the Company’s Consolidated Statements of Operations. Balances that are determined to be uncollectable are written off against the allowance for credit losses. The allowance for credit losses was immaterial as of March 31, 2022 and December 31, 2021.

Depreciation and Amortization

Fixed assets are carried at cost less accumulated depreciation. The Company uses the straight-line method of depreciation over three to seven years. The Company amortizes leasehold improvements on a straight-line basis over the lesser of the life of the improvement or the remaining term of the lease.

Software Development Costs

The Company capitalizes certain costs associated with the development of internal use software, including, among other items, employee compensation and related benefits and third party consulting costs at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed. Once the product is ready for its intended use, such costs are amortized on a straight-line basis over three years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.

Cloud Computing Costs

The Company capitalizes certain costs associated with cloud computing arrangements, including, among other items, employee compensation and related benefits and third party consulting costs that are part of the application development stage. These costs are setup as a prepaid asset on the Consolidated Statement of Financial Condition and are amortized over the period of the hosting service contract, which range from one to five years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable.

9


 

Foreign Currency Translation and Forward Contracts

Assets and liabilities denominated in foreign currencies are translated using exchange rates at the end of the period; revenues and expenses are translated at average monthly rates. Gains and losses on foreign currency translation are a component of accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. Transaction gains and losses are recorded in other, net in the Consolidated Statements of Operations.

The Company previously entered into foreign currency forward contracts to hedge its net investment in its U.K. subsidiaries. Gains and losses on these transactions are included in accumulated other comprehensive loss in the Consolidated Statements of Financial Condition.

Revenue Recognition

The Company’s classification of revenues in the Consolidated Statements of Operations represents revenues from contracts with customers disaggregated by type of revenue. The Company has four revenue streams as described below.

Commission Revenue The Company charges its broker-dealer clients variable transaction fees for trades executed on its platforms and, under certain plans, distribution fees or monthly minimum fees to use the platforms for a particular product area. Variable transaction fees are recognized on a trade date basis, are generally calculated as a percentage of the notional dollar volume of bonds traded on the platforms and vary based on the type, size, yield and maturity of the bond traded, as well as individual client incentives. Bonds that are more actively traded or that have shorter maturities generally generate lower commissions, while bonds that are less actively traded or that have longer maturities generally command higher commissions. Under the Company’s disclosed trading transaction fee plans, variable transaction fees, distribution fees and unused monthly fee commitments are invoiced and recorded on a monthly basis.

 

For Open Trading trades that the Company executes between and among institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller, the Company earns its commission through the difference in price between the two trades. The commission is collected upon settlement of the trade, which typically occurs within one to two trading days after the trade date. For U.S. Treasury matched principal trades, commissions are invoiced and recorded on a monthly basis. The following table presents commission revenue by fee type:

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

(In thousands)

 

Commission revenue by fee type

 

 

 

 

 

Variable transaction fees

 

 

 

 

 

Disclosed trading

$

87,067

 

 

$

98,818

 

Open Trading – matched principal trading

 

42,991

 

 

 

46,320

 

U.S. Treasuries – matched principal trading