MarketAxess : Q4 2021 Earnings slides

Q4 2021 Conference Call and Webcast

January 26, 2022

Strategic Update

• Rick McVey, Chairman and CEO

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Executing on the MarketAxess Growth Strategy in 20211

INCREASED PENETRATION IN CORE PRODUCTS

• Maintained substantial leadership position in the institutional client e-trading space for U.S. Credit. Clear #1 in high-grade, record estimated high-yield market share and record active clients; approximately 92% of credit trading volume on platform was executed by institutional clients.
• Strong momentum in international credit with record trading volume, record estimated market share, and a record number of active clients in emerging markets and Eurobonds.
• Unquestioned global leadership in all-to-alltrading despite benign trading conditions. Strong Open Trading momentum with 1,677 investor and dealer clients.
• Significantly enhanced Post-tradeservices offering with the addition of Regulatory Reporting Hub; combined Data and Post-trade revenue increased 43%.

EXPANDED INTO NEW PRODUCTS

• Expanded Rates protocols with the launch of all-to-all Live Markets orderbook for U.S. Treasuries; record full year trading volume of $4.1 trillion.
• Momentum continued to build in the Municipal bond offering, with a total of 320 active clients and record trading volume of $23.9 billion; integration of MuniBrokers system.
• Added 4 new local currency markets including onshore Chinese debt; emerging markets local trading volume reached a record of $201 billion, up 22%.

EXPANDED TRADING PROTOCOLS/LEVERAGED THE OPEN TRADING NETWORK

• 117 firms utilizing Auto-X functionality, up from 85 firms at the beginning of the year; record Auto-X trading volume of $167 billion, up 33% from 2020.
• Record Portfolio Trading volume of $29.1 billion across all products. Enhanced Portfolio Trading solution with integration of U.S. Treasury net spotting and hedging capabilities.
• Record Dealer RFQ trading volume of $271.7 billion in 2021, up 27% from $213.3 billion in 2020.
• Increased adoption of Live Markets and Mid-X sessions with extension to U.S. credit products.

GREW OUR BUSINESS THROUGH GEOGRAPHIC DIVERSIFICATION

• Active international clients increased by 57 to a total of 956.
• Record international trading volumes of $828.3 billion across all products.
• International volume as a % of total reached a record of 31.6%, up from 28.9%.

1. All period comparisons are full year 2021 versus 2020.	3

Full Year 2021 Results Reflect Continued Long-Term Growth

ANNUAL REVENUE AND							CAGRS
OPERATING INCOME								2-YR5-YR10-YR
			Revenue		17%	14%	15%
				Revenue		Operating Income
millions)						Operating Income	16%	12%	15%
$700																$300 ($millions)
																$400
	$600
RevenueAnnual($	$500																	IncomeOperatingAnnual
		2016		2017	2018	2019			2020	2021
$400
																$200
	$300
	$200																$100
	$100
																--
	--
$3002	YEAR NON-U.S. CORP. REVENUE GROWTH	2-YR CAGRS
							24%
$250															Total Non-U.S. Corp.:
								$39				Post-Trade Services:	57%
$200															Information Services:	11%
								$38
														U.S Treasuries:		134%
							$16			$13
$150								$19				Municipal Bonds:		87%
				$2	$31			$39
$100										Eurobonds:		15%
		$5	$30
				$104				Emerging Markets:	15%
	$50				$79
	$-
				2019			2021

COMMENTARY

• Record emerging markets trading volume of $649 billion, up 16%; record emerging markets local currency volume of $201 billion, up 22%
• Record estimated U.S. high-yield, emerging markets, Eurobond and municipal bond market share
• Estimated transaction cost savings of $573 million delivered through Open Trading solutions1
• Auto-Xvolume of $167 billion, up 33%
• Record 1,047 client firms trading 3 or more products

ACTIVE CLIENT FIRMS

Active International Clients		Clients Trading 3 or More Products
Total Active Clients

	2,100
				1721	1823	1877
				1538
	1,600
clients		1375
1,100			978	899 996		956 1047
# of		744 850
794	830

600 563

100

2017

2018

2019

2020

2021

1. Estimated liquidity taker cost savings is defined as the difference between the winning price and the best disclosed dealer cover price. Estimated liquidity provider cost savings is defined as the difference between the winning price and then current Composite+ bid or offer level (offer if the provider is buying, bid if provider is selling) at the time of the inquiry.

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Market Conditions and U.S. Credit

LIQUID U.S. CORPORATE INDEX (LUCI)

Benchmark Spreads

3 Month Rolling Volatility

scale)

210

12.8

Spreads (bps)

190

Volatility (% log

6.4

170

3.2

150

1.6

130

Benchmark

110

0.8

Month Rolling

0.4

90

70

0.2

50

0.1

3

4Q11

2Q12

4Q12

2Q13

4Q13

2Q14

4Q14

2Q15

4Q15

2Q16

4Q16

2Q17

4Q17

2Q18

4Q18

2Q19

4Q19

2Q20

4Q20

2Q21

4Q21

U.S. HIGH-GRADE & U.S HIGH-YIELD TRACE VOLUME

	U.S. High-Grade		U.S. High-Yield

	3,000
billions)$	2,500
2,000
(in	1,500
Volume	1,000
	500
	--

Q4 YoY Change

HG TRACE: -6%

HY TRACE: -5%

Source: Credit Suisse Global Credit Strategy

COMBINED ESTIMATED U.S. HIGH-GRADE AND U.S. HIGH-YIELD MARKET SHARE

	22%
Share	20%
18%
Market	16%
14%
Estimated	12%
10%
	8%

6%

4%

4Q11

2Q12

4Q12

2Q13

4Q13

2Q14

4Q14

2Q15

4Q15

2Q16

4Q16

2Q17

4Q17

2Q18

4Q18

2Q19

4Q19

2Q20

4Q20

2Q21

4Q21

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Source: BondTicker

10 YEAR & 2 YEAR TREASURY YIELD & MKTX U.S HIGH-GRADE WEIGHTED AVG. YEARS TO MATURITY

	2Y TSY	10Y TSY	Weighted Avg. Years to Maturity
TreasuryYield	3.0%		10.5
1.0%			YearsAvg.toMaturity
	2.5%		10.0
	2.0%		9.5
		9.0
	1.5%
		8.5
			8.0	Weighted
	0.5%		7.5
	--		7.0

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 Source: Federal Reserve

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