Marketaxess Holdings Inc at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Benjamin Budish - Barclays - Analyst : Maybe just to start out, can you talk a bit about the broader shift from over the phone to electronic trading. Where are we in the major asset classes? How do you think about the ceiling? How do you think about how long it may take to get there?

Question: Benjamin Budish - Barclays - Analyst : And how do you think about the ceiling there? 50% IG. How high does that go? And can that look like other markets?

Question: Benjamin Budish - Barclays - Analyst : Got it. I want to ask you a little bit more about kind of the path there, your near and medium-term outlook, but maybe just even more recently, can you talk about how the current macro environment impacting electronic bond trading. We clearly saw a turnaround in your results in August, maybe unpack what you saw there? And any update you can give us on how September is shaping out so far?

Question: Benjamin Budish - Barclays - Analyst : So maybe thinking about some of these other macro factors, if we just extend out a little bit longer past September. I mean how do you see like overall bond activity evolving, how it declining short-term rates and potentially normalizing yield curve and maybe other factors, recent elevated new issuance, but perhaps translating into other secondary market activity. How could things shake out over the next 6, 12 months if things kind of look that way?

Question: Benjamin Budish - Barclays - Analyst : Chris, you talked a little bit earlier about X-Pro which one of your more recent initiatives. Maybe talk about the experience improvement for traders and maybe portfolio trading. Portfolio trading in general, how does the trader decision process work between competing platforms how does X-Pro kind of give you a leg up here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 6:45PM, MKTX.OQ - Marketaxess Holdings Inc at Barclays Global Financial Services Conference

Question: Benjamin Budish - Barclays - Analyst : So what else can you do, in your view, to make the protocol more competitive? Last quarter, you talked about a global multiproduct portfolio trading solution, AI Dealer Select. Can you unpack some of the newer developments on the innovation front?

Question: Benjamin Budish - Barclays - Analyst : Interesting, there's this question of like how big can portfolio trading be as a percentage of the market? Is it high single-digit 10%, will we kind of been lately? Or is it much bigger? Is it smaller? It almost sounds like you think the -- or it does sound like you think there's an opportunity to maybe REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 6:45PM, MKTX.OQ - Marketaxess Holdings Inc at Barclays Global Financial Services Conference grow the protocol, but also find ways to take certain line items out in order to provide ultimately better execution. So maybe the question to you, how much market activity do you think eventually could be handled through like these larger risk trade transfers, and then what are the P&L implications for MarketAxess?

Question: Benjamin Budish - Barclays - Analyst : Very interesting. What about larger block trades. So you've talked before about the sort of $5 million-plus trade size being more difficult to move electronically. We also talked publicly about your automation suite and how you're kind of breaking to this. So talk a little bit about some of the frictions there and kind of what you're doing to try to crack into that opportunity.

Question: Benjamin Budish - Barclays - Analyst : Got it. And then can you remind us -- I think we talked about this with portfolio trades and X-Pro, but how is the user experience changing such that before a client might have said, I don't want to put this trade into all, so I'm going to pick up the phone. What's changing such that now they'll press the button on MarketAxess and trust that the trade goes to the right place.

Question: Benjamin Budish - Barclays - Analyst : Very interesting. Maybe last question here. I think on the last earnings call, you talked about 40 clients using Adaptive Auto-X. So can you talk about engagement, the pace of rollout and maybe kind of tie in the pace of rollout more broadly X-Pro these platform enhancements. At what point is this sort of broadly disseminated across your client base?

Question: Benjamin Budish - Barclays - Analyst : I wanted to ask about open trading, but just kind of thinking about what you're talking about here, can you maybe remind us how does Pragma fit in an asset you acquired recently. How is that technology being kind of deployed across the firm. It sounds like a lot of what you're talking about is related to the use of automation to kind of facilitate these trades. So you -- is there update on sort of the Pragma integration and how you're utilizing the asset.

Question: Benjamin Budish - Barclays - Analyst : Interesting. So where does Open Trading fit in. I think the sort of share of credit trading has been somewhat range bound like the mid-30s. It almost sounds like from what you're talking about BT, block trading, it should probably go down over time. Not in terms of absolute, but in terms of share. So maybe just how do you think about the relative importance of this protocol relative to some of your other initiatives? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 6:45PM, MKTX.OQ - Marketaxess Holdings Inc at Barclays Global Financial Services Conference

Question: Benjamin Budish - Barclays - Analyst : Got it. Maybe switching gears a little bit to emerging markets. It's been definitely more of a bright spot of the company recently. Maybe just to level set, I think investors generally understand the sort of US investment grade, high-yield kind of business. But give us just a bit of recent overview of what you're doing? What are the key products you're trading? Who are the key customers?

Question: Benjamin Budish - Barclays - Analyst : Got it. And then maybe similar to level set, so how do emerging markets different from the traditional investment-grade and high-yield markets in the US. So how does competition manifest? Are there different protocol preferences and how electronified these markets? And what does the runway look like relative to that in the US?

Question: Benjamin Budish - Barclays - Analyst : Maybe switching gears. One of the newer talking points on your recent earnings presentation has been the dealer-to-dealer or dealer-initiated channel. Historically, I think this was less of a focus for you, but you kind of recently called that this was a pretty sizable chunk of the market like 30%, market revenue TAM. So perhaps just to level set, what's your current exposure? And what are you doing to go after this opportunity more aggressively than you've had in the past?

Question: Benjamin Budish - Barclays - Analyst : Understood. Maybe moving ahead to ICE, the partnership with TMC Bond announced recently. So maybe unpack this a little bit. How does it work with regards to your respective customer bases? And then how do you think more broadly about kind of opening platform to more of these partners over time.

Question: Benjamin Budish - Barclays - Analyst : And maybe just at the last minute we have, I want to ask you a very high-level question. So we made a number of changes recently on the employee side, a new head of US sales, Global Emerging Markets, Client Solutions, Ilene, new CFO. A lot of talk about new client types, automation. So just high level, maybe macro aside, how do the next five years look like -- look different from the last five years? What are all these kinds of changes leading to?

Question: Benjamin Budish - Barclays - Analyst : Got it. Well, unfortunately, we're out of time. But thank you so much. Thank you for being line. Ilene, we pleasure to have you. Right.