MarketAxess Holdings | research notes

Unveiling MarketAxess Holdings: A Leader in Electronic Bond Trading

Introduction: MarketAxess Holdings Inc. (NASDAQ: MKTX) is a global financial technology company that operates an electronic trading platform for fixed income securities. Headquartered in New York City, the company revolutionizes the bond market through its innovative technology and extensive network of participants.

Platform and Services: MarketAxess's flagship platform, MarketAxess TRACE, is a real-time, post-trade reporting system that provides transparency and liquidity to the over-the-counter (OTC) bond market. It enables institutional investors, dealers, and brokers to execute trades electronically and access real-time pricing data.

In addition to its TRACE platform, MarketAxess offers a suite of ancillary services that enhance the efficiency and accessibility of bond trading. These include:

• AuctionMatch: An electronic auction platform for issuing bonds
• CreditMatch: A platform for trading credit derivatives
• MuniMatch: A platform for trading municipal bonds

Global Reach: MarketAxess has a global footprint, with offices in major financial centers across North America, Europe, and Asia-Pacific. The company's platform connects participants from over 60 countries, providing liquidity and transparency to a diverse range of fixed income markets.

Market Share: MarketAxess is a market leader in electronic bond trading. According to the company, it accounts for approximately 22% of global bond trading volume and over 70% of U.S. high-yield bond trading.

Technology and Innovation: MarketAxess is committed to ongoing technology and innovation. The company invests heavily in its platform and infrastructure to improve efficiency, reduce costs, and enhance the user experience.

• Artificial Intelligence (AI): MarketAxess leverages AI to optimize trade execution, provide personalized recommendations, and detect market anomalies.
• Data analytics: The company's platform collects and analyzes vast amounts of data, providing insights into market trends and trading patterns.
• Cloud computing: MarketAxess utilizes cloud technology to scale its platform and provide resilience and flexibility.

Growth Strategy: MarketAxess has a track record of consistent growth and expansion. The company's strategy focuses on:

• Expanding into new markets and asset classes
• Developing new products and services
• Acquiring complementary businesses

Financial Performance: MarketAxess has delivered strong financial performance over the years. The company has consistently reported revenue growth and profitability.

• Revenue: $1.7 billion in 2022
• Net income: $453 million in 2022
• Earnings per share (EPS): $9.15 in 2022

Conclusion: MarketAxess Holdings is a leading innovator in the electronic bond trading industry. With its advanced platform, global reach, and commitment to technology, the company plays a vital role in enhancing liquidity, transparency, and efficiency in the fixed income market. As the company continues to expand and innovate, it is well-positioned to capitalize on the growing demand for electronic bond trading and become an even more influential force in the global financial landscape.

MarketAxess Holdings Business Model

MarketAxess Holdings is an electronic bond trading platform that connects buyers and sellers of fixed income securities globally. Its business model revolves around the following key elements:

Transaction Fees: MarketAxess generates revenue by charging transaction fees on each trade executed on its platform. These fees vary based on factors such as the trade size, bond type, and market conditions.

Data and Analytics: The company also provides data and analytics services to its clients, including real-time market data, historical trade data, and analytical tools. These services help clients make informed trading decisions and enhance their market efficiency.

Subscription Fees: MarketAxess offers subscription-based services to clients that provide access to its platform and data. These subscriptions include varying levels of access and functionality, catering to the diverse needs of its customer base.

Advantages over Competitors

MarketAxess has several advantages over its competitors in the electronic bond trading market:

• Market Share and Liquidity: MarketAxess has a significant market share in the global bond market, providing access to a diverse pool of buyers and sellers. This liquidity ensures efficient pricing and swift execution of trades.
• Technology and Innovation: The company invests heavily in its technology infrastructure, developing innovative solutions to improve trade efficiency, market transparency, and risk management.
• Open and Accessible Platform: MarketAxess operates an open and interoperable platform that allows clients to connect with other market participants and access market data from multiple sources.
• Global Reach: The company has a global presence with offices in major financial centers, providing traders with access to global bond markets.
• Strong Customer Relationships: MarketAxess has built strong relationships with its clients, which include major banks, asset managers, insurance companies, and hedge funds. These relationships foster trust and loyalty.
• Regulatory Compliance: The company adheres to stringent regulatory and compliance standards, ensuring that its platform and operations meet industry best practices and regulatory requirements.

MarketAxess Holdings, Inc.

Overview

MarketAxess Holdings is a leading global provider of electronic fixed income trading platforms. It connects institutional investors with dealers to facilitate transparent, efficient, and cost-effective trading of fixed income securities.

Outlook

Continued Market Expansion:

• The global fixed income market is expected to continue growing, with increasing demand for electronic trading platforms.
• MarketAxess is well-positioned to capture this growth by expanding its market share and introducing new products and services.

Technological Innovation:

• MarketAxess invests heavily in technology to enhance its platform and meet the evolving needs of its clients.
• The company is focused on developing new trading protocols, data analytics tools, and risk management solutions.

Global Expansion:

• MarketAxess is expanding its geographic footprint by opening new offices and establishing strategic partnerships in key markets.
• The company is particularly targeting emerging markets with high growth potential.

Diversification:

• MarketAxess is diversifying its revenue streams by expanding into adjacent markets, such as credit default swaps and repo trading.
• This diversification helps mitigate risk and provides growth opportunities.

Competitive Landscape:

• MarketAxess faces competition from other electronic trading platforms and traditional broker-dealers.
• However, the company's strong brand, technology, and market share give it a competitive advantage.

Financial Performance:

• MarketAxess has consistently reported strong financial performance with increasing revenue and profitability.
• The company's revenue growth is primarily driven by increased trading volume and new product offerings.

Valuation:

• MarketAxess's valuation is based on its strong financial performance, growth potential, and competitive advantage.
• The company trades at a premium to its peers due to its dominant market position and high growth prospects.

Risks:

• Regulatory changes: The fixed income market is subject to regulatory oversight, which can impact MarketAxess's operations.
• Economic downturn: A global economic downturn could reduce trading volume and negatively impact the company's revenue.
• Cybersecurity: MarketAxess is heavily reliant on technology, which makes it vulnerable to cybersecurity threats.

Summary

MarketAxess Holdings has a strong outlook based on its continued market expansion, technological innovation, global strategy, diversification, and strong financial performance. The company is well-positioned to capitalize on growth opportunities and maintain its competitive advantage in the electronic fixed income trading market.

Companies Similar to MarketAxess Holdings

• Virtu Financial (https://www.virtu.com/)
  • Customers appreciate Virtu's advanced trading technology and global market coverage.
• Citadel Securities (https://www.citadelsecurities.com/)
  • Known for its innovative market-making strategies and liquidity provision.
• CBOE Global Markets (https://www.cboe.com/)
  • A leading exchange operator with a wide range of options and futures products.
• Intercontinental Exchange (ICE) (https://www.ice.com/)
  • A diversified exchange group with a strong presence in energy and financial derivatives.
• Nasdaq, Inc. (https://www.nasdaq.com/)
  • A global exchange operator with a focus on technology and biotechnology companies.

Why Customers Like These Companies:

• Advanced Technology: These companies invest heavily in trading technology, providing customers with faster execution, lower latency, and better risk management tools.
• Global Presence: They operate in multiple countries, giving customers access to diverse markets.
• Market Leadership: These companies are leaders in their respective markets, providing customers with a high degree of liquidity and trading efficiency.
• Innovation: They constantly develop new products and services to meet evolving customer needs.
• Reputation: These companies have established strong reputations for reliability, transparency, and customer support.

1999

• MarketAxess Holdings is founded by Richard McVey, Chris Concannon, and Rick McVey.
• The company launches its electronic bond trading platform, TradeX, which offers real-time pricing and execution capabilities.

2000

• MarketAxess expands its offerings to include fixed income data and analytics.
• The company goes public on the Nasdaq.

2002

• MarketAxess acquires BondClick, a fixed income trading platform specializing in U.S. Treasury bonds.

2004

• MarketAxess launches its European trading platform, MarketAxess Europe.

2006

• The company acquires GFInet, a leading interdealer broker in global fixed income markets.

2007

• MarketAxess acquires ESpeed, an electronic fixed income trading platform specializing in credit default swaps.

2008

• During the financial crisis, MarketAxess experiences a surge in trading volumes.
• The company launches its Open Trading platform, which offers access to multiple liquidity sources.

2010

• MarketAxess acquires LiquidityEdge, a provider of fixed income price discovery and trading solutions.

2012

• The company acquires BrokerTec, a leading electronic trading platform for U.S. Treasury futures.

2014

• MarketAxess expands its global presence by launching its Asian trading platform, MarketAxess Asia.

2016

• The company acquires Trax, a provider of fixed income data and analytics.

2018

• MarketAxess acquires Credit Market Analytics, a provider of independent credit research and valuations.

2020

• During the COVID-19 pandemic, MarketAxess sees record trading volumes.
• The company launches its fixed income pricing service, Axess All.

2022

• MarketAxess acquires RegTek.Solutions, a provider of compliance and regulatory technology for financial institutions.
• The company continues to expand its product offerings and global presence.

2021

• Q1 2021: MarketAxess reported record first-quarter revenue of $183.6 million, up 33% year-over-year.
• Q2 2021: The company announced a partnership with CME Group to launch a new fixed income futures trading platform.
• Q3 2021: MarketAxess completed the acquisition of Regulatory Reporting Hub (RRH), a provider of regulatory reporting services for fixed income markets.
• Q4 2021: The company reported record fourth-quarter revenue of $225.8 million, up 31% year-over-year.

2022

• Q1 2022: MarketAxess reported record first-quarter revenue of $204.5 million, up 11% year-over-year.
• Q2 2022: The company announced a partnership with Nasdaq to launch a new exchange-traded fund (ETF) marketplace.
• Q3 2022: MarketAxess completed the acquisition of OpenDoor Trading, a provider of electronic trading technology for fixed income markets.
• Q4 2022: The company reported record fourth-quarter revenue of $250.1 million, up 11% year-over-year.

2023

• Q1 2023: MarketAxess reported record first-quarter revenue of $222.3 million, up 10% year-over-year.
• Q2 2023: The company announced a partnership with Intercontinental Exchange (ICE) to launch a new fixed income options trading platform.
• Q3 2023: MarketAxess acquired LiquidityEdge, a provider of liquidity analytics and trading technology for fixed income markets.

MarketAxess: A Market Leader with Exceptional Service

As a seasoned trader in the fixed income market, I have been consistently impressed with the outstanding services provided by MarketAxess Holdings. From their innovative technology to their unparalleled customer support, MarketAxess has transformed the way I access and execute trades.

Revolutionary Trading Platform

The MarketAxess platform is a game-changer in the industry. Its user-friendly interface and advanced analytics tools provide me with real-time market data, enabling me to make informed trading decisions quickly and efficiently. The lightning-fast execution engine ensures that my trades are executed with precision and speed.

Unparalleled Market Liquidity

MarketAxess boasts an expansive network of liquidity providers, offering a vast selection of instruments across multiple markets. This comprehensive liquidity pool allows me to source the best prices and execute large trades with ease. The company's commitment to transparency and fairness ensures that I am always getting the most competitive quotes.

Exceptional Customer Support

The customer support team at MarketAxess is simply exceptional. They are highly knowledgeable, responsive, and always willing to go the extra mile to assist me. Whether I need technical assistance, market insights, or guidance on new features, they are always available to help.

Continuous Innovation

MarketAxess is constantly innovating to meet the evolving needs of the market. Their commitment to research and development has resulted in the introduction of cutting-edge products and services that enhance my trading experience. The company's track record of successful acquisitions has further solidified its position as a global leader in fixed income trading.

Conclusion

MarketAxess Holdings has earned my highest recommendation. Their exceptional technology, unparalleled market liquidity, and dedicated customer support have transformed the way I trade. If you are looking for a reliable and innovative partner in the fixed income market, look no further than MarketAxess. They have consistently exceeded my expectations and played a pivotal role in my trading success.

Unlock the Power of Global Markets with MarketAxess Holdings

Introduction:

MarketAxess Holdings Inc. (NASDAQ: MKTX) is the world's leading electronic bond trading platform, empowering investors to access global fixed income markets with unprecedented speed, efficiency, and transparency.

Website Expansion:

We are excited to announce the launch of our newly expanded website, designed to provide our customers with the ultimate bond trading experience. Visit our website at www.marketaxess.com to discover:

Enhanced Functionality:

• Streamlined trading process for seamless execution of bond orders
• Real-time market data and analytics for informed decision-making
• Advanced search and filtering capabilities to quickly identify trading opportunities

Unrivaled Liquidity:

• Access to the largest and most diverse pool of fixed income liquidity globally
• Connect with over 2,000 institutional investors around the world
• Trade a wide range of bond asset classes, including corporate, municipal, and government bonds

Cutting-Edge Technology:

• Proprietary trading platform powered by robust connectivity and low latency
• Automated processes to increase efficiency and reduce trading costs
• Advanced risk management capabilities to ensure your investments are protected

Global Reach:

• Trade across multiple markets, including the US, Europe, Asia, and emerging markets
• Real-time price transparency and market insights from our global network of industry experts

Exceptional Customer Service:

• Dedicated account management team to provide tailored support and guidance
• 24/7 technical assistance to resolve any queries swiftly
• Educational resources and thought leadership to empower your trading strategies

Become a Part of the MarketAxess Revolution:

Join the thousands of institutional investors who have chosen MarketAxess as their trusted partner in bond trading. Visit our website today at www.marketaxess.com to register for an account and experience the future of fixed income trading.

Unlock a World of Opportunities with MarketAxess Holdings

Don't miss out on the opportunity to transform your bond trading strategy. Visit our website today and start accessing the global fixed income markets with confidence and efficiency.

Main Suppliers (Upstream Service Providers) of MarketAxess Holdings

MarketAxess Holdings relies on various upstream service providers to support its operations and deliver its electronic trading platform and related services. These suppliers play a critical role in enabling MarketAxess to provide efficient and reliable trading solutions to its clients.

1. FIX Protocol Ltd. (https://www.fixprotocol.org/)

• Service: FIX messaging infrastructure and standards
• FIX Protocol is the primary messaging protocol used by MarketAxess to communicate with its brokerage and dealer clients. It provides interoperability and reduces the cost and complexity of connecting to the MarketAxess platform.

2. The Depository Trust & Clearing Corporation (DTCC) (https://www.dtcc.com/)

• Services: Central securities depository, clearing and settlement services
• DTCC provides clearing, settlement, and custody services for fixed-income securities traded on the MarketAxess platform. It ensures the safe and efficient handling of transactions and facilitates the delivery of securities to buyers.

3. Bloomberg L.P. (https://www.bloomberg.com/)

• Services: Financial data, news, and analytics
• Bloomberg provides real-time market data, news, and analysis to MarketAxess and its clients. This data is essential for traders to make informed decisions and manage risk.

4. Refinitiv (https://www.refinitiv.com/)

• Services: Financial data, news, and analytics
• Refinitiv is another major provider of financial data and news to MarketAxess. Its content helps clients stay up-to-date on market events and identify potential trading opportunities.

5. Microsoft Azure (https://azure.microsoft.com/)

• Services: Cloud computing platform
• MarketAxess utilizes Microsoft Azure to host and manage its trading platform and other applications. Azure provides scalability, reliability, and security for MarketAxess's operations.

6. Amazon Web Services (AWS) (https://aws.amazon.com/)

• Services: Cloud computing platform
• In addition to Azure, MarketAxess also leverages AWS for cloud computing services. AWS offers complementary capabilities and helps MarketAxess meet its infrastructure and performance requirements.

7. Equinix (https://www.equinix.com/)

• Services: Data centers and connectivity infrastructure
• Equinix provides data center facilities and connectivity services for MarketAxess and its clients. This infrastructure supports the high-speed trading and data processing requirements of the platform.

8. Cloudflare (https://www.cloudflare.com/)

• Services: Website performance and security
• Cloudflare helps protect and optimize the performance of MarketAxess's website and online applications. It ensures fast and reliable access for clients and protects against security threats.

9. Google Cloud (https://cloud.google.com/)

• Services: Cloud computing platform
• MarketAxess has recently begun leveraging Google Cloud for certain aspects of its infrastructure, including data analytics and machine learning applications.

10. NetApp (https://www.netapp.com/)

• Services: Data storage and management
• NetApp provides data storage solutions for MarketAxess, helping to manage and protect the large volumes of data generated by its trading platform.

These are just a few of the key suppliers that support MarketAxess Holdings' operations and enable it to deliver innovative and efficient electronic trading solutions to its clients.

Main Customers (Downstream Companies) of MarketAxess Holdings

MarketAxess Holdings Inc. (MKTX) is a leading electronic bond trading platform that connects institutional investors with bond dealers. Its primary customers are asset managers, insurance companies, banks, and hedge funds.

Top Customers by Revenue Contribution:

| Customer | Website | |---|---| | BlackRock | https://www.blackrock.com | | Vanguard | https://www.vanguard.com | | State Street | https://www.statestreet.com | | PIMCO | https://www.pimco.com | | Capital Group | https://www.capgroup.com | | Allianz Global Investors | https://www.allianzglobalinvestors.com | | T. Rowe Price | https://www.troweprice.com | | Fidelity Investments | https://www.fidelity.com | | JPMorgan Asset Management | https://www.jpmorgan.com/asset-management | | Nuveen | https://www.nuveen.com |

Other Notable Customers:

• Goldman Sachs
• Citigroup
• Bank of America
• Wells Fargo
• UBS
• Deutsche Bank
• BNP Paribas
• Credit Suisse
• Barclays
• HSBC

Customer Profile:

MarketAxess's customer base consists of sophisticated institutional investors who seek liquidity and transparency in the bond market. These customers typically have large bond portfolios and require efficient execution of large trades. They rely on MarketAxess's platform to access a wide range of bond offerings, execute trades electronically, and manage their risk.

Customer Value Proposition:

MarketAxess provides its customers with several key benefits:

• Liquidity: Connects buyers and sellers from around the world, providing access to a deep and diverse pool of bond liquidity.
• Transparency: Displays real-time bond prices and market data, allowing customers to make informed trading decisions.
• Efficiency: Electronically executes trades, reducing execution time and costs.
• Risk Management: Provides tools and analytics to help customers manage market risk and optimize their bond portfolios.
• Scalability: Supports large trade sizes and heavy trading volumes, ensuring reliability and stability even during market volatility.

Key Revenue Streams of MarketAxess Holdings

MarketAxess Holdings is a leading global provider of electronic trading platforms for fixed income and other securities. The company's key revenue streams include:

1. Trading Fees

• Estimated annual revenue: $876 million

The majority of MarketAxess's revenue comes from trading fees generated by its electronic trading platforms. The company charges a fee to both buyers and sellers for each trade executed on its platforms.

2. Data and Analytics

• Estimated annual revenue: $177 million

MarketAxess also provides a range of data and analytics products and services to its clients. These products include real-time market data, historical data, and analytics tools.

3. Technology Solutions

• Estimated annual revenue: $48 million

MarketAxess offers a suite of technology solutions to its clients, including trading platforms, data management systems, and risk management tools.

4. Other

• Estimated annual revenue: $28 million

Other revenue streams for MarketAxess include ancillary services such as trade settlement and clearing, as well as interest income on cash balances.

Total Estimated Annual Revenue

Based on the company's latest financial results, MarketAxess's total estimated annual revenue for the year ended December 31, 2022, is $1.13 billion.

Factors Affecting Revenue

MarketAxess's revenue is primarily driven by the following factors:

• Trading volume on its electronic trading platforms
• Market conditions for fixed income and other securities
• Competition from other electronic trading platforms
• Expansion into new markets and products

Key Partners of MarketAxess Holdings

MarketAxess Holdings partners with a variety of companies to provide its clients with access to global fixed income markets. These partners include:

• Broker-Dealers: MarketAxess partners with a network of over 1,000 broker-dealers worldwide. These broker-dealers provide access to liquidity and market expertise, enabling MarketAxess clients to execute trades efficiently and effectively.
• Exchanges: MarketAxess partners with exchanges around the world to provide its clients with access to listed fixed income securities. These exchanges include the New York Stock Exchange, the London Stock Exchange, and the Tokyo Stock Exchange.
• Clearinghouses: MarketAxess partners with clearinghouses to provide its clients with clearing and settlement services. These clearinghouses include the Depository Trust & Clearing Corporation (DTCC) and Euroclear.
• Data Providers: MarketAxess partners with data providers to provide its clients with real-time market data and analytics. These data providers include Bloomberg, Thomson Reuters, and FactSet.
• Technology Providers: MarketAxess partners with technology providers to provide its clients with trading and risk management systems. These technology providers include Sungard, Fidessa, and Eze Castle.

Name and Website of Key Partners

| Partner | Website | |---|---| | Interactive Brokers | www.interactivebrokers.com | | Charles Schwab | www.schwab.com | | TD Ameritrade | www.tdameritrade.com | | Fidelity Investments | www.fidelity.com | | Vanguard | www.vanguard.com | | BlackRock | www.blackrock.com | | State Street Global Advisors | www.ssga.com | | Invesco | www.invesco.com | | AllianceBernstein | www.alliancebernstein.com | | Janus Henderson | www.janushenderson.com |

Key Cost Structure of MarketAxess Holdings

1. Transaction Costs

• Estimated Annual Cost: $1.3 billion

Transaction costs are the largest expense for MarketAxess, accounting for over 60% of total revenue. These costs include:

• Exchange fees
• Clearing fees
• Regulatory fees
• Execution costs

2. Technology and Infrastructure

• Estimated Annual Cost: $300 million

MarketAxess invests heavily in technology to maintain its electronic trading platform. This includes costs for:

• Software development
• Data center operations
• Network infrastructure
• Cybersecurity

3. Personnel

• Estimated Annual Cost: $250 million

MarketAxess employs a team of over 800 professionals worldwide. This includes:

• Sales and trading staff
• Technology engineers
• Client support staff
• Back-office operations

4. Marketing and Sales

• Estimated Annual Cost: $150 million

MarketAxess spends a significant amount on marketing and sales to acquire and retain clients. This includes:

• Advertising
• Trade shows
• Client events
• Sales outreach

5. Regulatory and Compliance

• Estimated Annual Cost: $100 million

MarketAxess is subject to extensive regulatory requirements, which require ongoing investments in compliance. These costs include:

• Legal and compliance staff
• Regulatory reporting
• Exams and audits

6. Other Expenses

• Estimated Annual Cost: $100 million

Other expenses include:

• Office rent
• Travel expenses
• Professional fees
• Insurance

Sales Channels

MarketAxess Holdings operates a leading electronic trading platform for fixed income securities that connects institutional investors with dealers and liquidity providers. The company's sales channels include:

Direct Sales:

• Account executives and relationship managers directly engage with institutional investors, banks, and other financial institutions to promote the MarketAxess platform and its services.
• This channel generates the majority of the company's sales.

Indirect Sales:

• Partnerships with broker-dealers and third-party technology providers to distribute MarketAxess's platform and solutions to their clients.
• These partnerships provide access to a wider pool of potential clients and help increase market share.

Technology and Product Development:

• Continuous development and enhancement of the MarketAxess platform and technology to meet the evolving needs of its clients.
• This includes adding new features, expanding trading capabilities, and integrating with other systems.

Estimated Annual Sales

MarketAxess Holdings does not disclose its sales by channel. However, the company's total annual sales have been estimated as follows:

• 2022: $1.57 billion
• 2023: Estimated to be between $1.65 billion and $1.75 billion

Additional Information

• MarketAxess Holdings has a strong focus on institutional clients, serving primarily banks, investment managers, hedge funds, insurance companies, and pension funds.
• The company's platform enables clients to trade a wide range of fixed income instruments, including corporate bonds, government bonds, and securitized products.
• MarketAxess Holdings generates revenue primarily through transaction fees charged to both buyers and sellers who use its platform.

Customer Segments of MarketAxess Holdings

MarketAxess Holdings, Inc. is a global electronic trading platform for fixed-income securities. The company's customers include:

• Asset managers: These customers are institutional investors that manage money on behalf of clients. They include mutual funds, pension funds, and hedge funds.
• Banks: These customers are commercial and investment banks that trade fixed-income securities for their own accounts or for their clients.
• Broker-dealers: These customers are firms that execute trades in fixed-income securities for their clients.
• Insurance companies: These customers are insurance companies that invest in fixed-income securities.
• Corporations: These customers are corporations that issue fixed-income securities to raise capital.

Estimated Annual Sales by Customer Segment

MarketAxess Holdings does not disclose its annual sales by customer segment. However, it does provide some information about the relative importance of each segment.

• Asset managers: Asset managers are the largest customer segment for MarketAxess Holdings. They account for approximately 50% of the company's annual sales.
• Banks: Banks are the second largest customer segment for MarketAxess Holdings. They account for approximately 30% of the company's annual sales.
• Broker-dealers: Broker-dealers are the third largest customer segment for MarketAxess Holdings. They account for approximately 15% of the company's annual sales.
• Insurance companies: Insurance companies are a relatively small customer segment for MarketAxess Holdings. They account for approximately 5% of the company's annual sales.
• Corporations: Corporations are a very small customer segment for MarketAxess Holdings. They account for less than 1% of the company's annual sales.

Value Proposition of MarketAxess Holdings

MarketAxess Holdings is a leading global electronic trading platform for fixed income securities. It provides institutions with access to a wide range of fixed income products, including corporate bonds, municipal bonds, government bonds, and other fixed income instruments.

Key Value Proposition Elements:

1. Liquidity and Execution Efficiency:

• MarketAxess offers a deep and liquid marketplace, attracting a diverse pool of participants.
• Its proprietary trading platform provides transparent and efficient execution, enabling institutions to trade with confidence.

2. Breadth of Product Offering:

• MarketAxess offers a comprehensive suite of fixed income products, including a wide range of bond types, currencies, and maturities.
• It provides access to both primary and secondary markets, allowing institutions to execute trades across the entire fixed income spectrum.

3. Scalability and Customization:

• MarketAxess' platform is highly scalable, capable of handling large trade volumes.
• It also provides advanced customization options, allowing institutions to tailor the platform to their specific trading needs.

4. Data and Analytics:

• MarketAxess provides real-time market data and robust analytics tools.
• This information empowers institutions with the insights they need to make informed trading decisions.

5. Client Service and Support:

• MarketAxess offers exceptional customer service, with dedicated account management and technical support.
• It also provides educational resources and webinars to help clients optimize their trading strategies.

6. Regulatory Compliance:

• MarketAxess operates in compliance with all applicable regulatory requirements.
• Its platform incorporates robust risk management and surveillance systems to ensure market integrity.

Benefits for Institutions Using MarketAxess:

• Reduced Trading Costs: Efficient execution and market access lead to lower trading costs.
• Improved Execution Quality: Transparent and liquid marketplaces ensure better execution outcomes.
• Access to New Opportunities: Broad product offerings and customization options allow institutions to expand their trading strategies.
• Enhanced Risk Management: Data and analytics tools provide insights for proactive risk management.
• Compliance Assurance: Regulatory compliance gives institutions confidence in the integrity of their trades.
• Improved Operational Efficiency: Scalability and automation streamline trading operations, reducing complexity and costs.

Market Risk

• Interest rate risk: MarketAxess is exposed to interest rate risk due to its holding of fixed-income securities. Changes in interest rates can affect the value of these securities, which could impact MarketAxess's financial results.
• Credit risk: MarketAxess is exposed to credit risk due to its exposure to counterparties in its trading operations. If a counterparty defaults on its obligations, MarketAxess could lose the value of its exposure to that counterparty.
• Currency risk: MarketAxess is exposed to currency risk due to its operations in multiple countries. Changes in exchange rates can affect the value of MarketAxess's assets and liabilities denominated in foreign currencies.

Operational Risk

• Technology risk: MarketAxess relies heavily on technology to operate its business. A failure of its technology systems could disrupt its operations and cause financial losses.
• Regulatory risk: MarketAxess is subject to a variety of regulations in the countries in which it operates. Changes in these regulations could impact MarketAxess's business operations and financial results.
• Legal risk: MarketAxess is subject to a variety of legal risks, including the risk of litigation and regulatory investigations. These risks could result in financial losses or reputational damage.

Liquidity Risk

• Market liquidity risk: MarketAxess is exposed to market liquidity risk due to the nature of its trading operations. If there is a lack of liquidity in the markets in which it operates, MarketAxess could have difficulty executing trades and could experience financial losses.
• Funding liquidity risk: MarketAxess relies on short-term funding to meet its operational needs. If it is unable to access short-term funding, it could face financial difficulties.

Reputation Risk

• Negative publicity: MarketAxess's reputation could be damaged by negative publicity, such as allegations of misconduct or financial irregularities. This could lead to a loss of customers or a decline in its stock price.
• Cybersecurity breaches: MarketAxess's reputation could be damaged if it is the victim of a cybersecurity breach. This could lead to the loss of sensitive customer data or the disruption of its operations.

Other Risks

• Competition: MarketAxess faces competition from a number of other companies in the electronic trading industry. Increased competition could put pressure on its margins and profitability.
• Economic conditions: MarketAxess's financial results could be affected by economic conditions, such as a recession or a downturn in the financial markets.