MARKETAXESS HOLDINGS INC - Quarter Report: 2024 June (Form 10-Q)

MARKETAXESS HOLDINGS INC - Quarter Report: 2024 June (Form 10-Q)

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

(Mark One)


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

For the quarterly period ended


	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

(Exact name of registrant as specified in its charter)



(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

, ,
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: ()

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

Title of each class

Trading

Symbol

Name of each exchange on which registered

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. ☑ 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). ☑ 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.

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 August 2, 2024, the number of shares of the Registrant’s voting common stock outstanding was .

MARKETAXESS HOLDINGS INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

TABLE OF CONTENTS


		Page
PART I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Financial Condition as of June 30, 2024 and December 31, 2023	3
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	47
PART II — Other Information
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50

PART I — Financial Information

Item 1. Financial Statements

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


	As of
	June 30, 2024			December 31, 2023
	(In thousands, except share and per share amounts)
ASSETS
Cash and cash equivalents	$			$
Cash segregated under federal regulations
Investments, at fair value
Accounts receivable, net of allowance of $ and $ as of June 30, 2024 and December 31, 2023, respectively
Receivables from broker-dealers, clearing organizations and customers
Goodwill
Intangible assets, net of accumulated amortization
Furniture, equipment, leasehold improvements and capitalized software, net of accumulated depreciation and amortization
Operating lease right-of-use assets
Prepaid expenses and other assets
Total assets	$			$

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued employee compensation
Payables to broker-dealers, clearing organizations and customers
Securities sold, not yet purchased, at fair value
Income and other tax liabilities
Accounts payable, accrued expenses and other liabilities
Operating lease liabilities
Total liabilities	$			$

Commitments and Contingencies (Note 13)

Stockholders' equity
Preferred stock, $ par value, shares authorized, shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
Series A Preferred Stock, $ par value, shares authorized, shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively
Common stock voting, $ par value, shares authorized, shares and shares issued and shares and shares outstanding as of June 30, 2024 and December 31, 2023, respectively
Common stock non-voting, $ par value, shares authorized, shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		—			—
Additional paid-in capital
Treasury stock – Common stock voting, at cost, shares and shares as of June 30, 2024 and December 31, 2023, respectively		(	)		(	)
Retained earnings
Accumulated other comprehensive loss		(	)		(	)
Total stockholders' equity
Total liabilities and stockholders' equity	$			$

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

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023			2024	2023
	(In thousands, except per share amounts)
Revenues
Commissions	$		$		$		$
Information services
Post-trade services
Technology services
Total revenues

Expenses
Employee compensation and benefits
Depreciation and amortization
Technology and communications
Professional and consulting fees
Occupancy
Marketing and advertising
Clearing costs
General and administrative
Total expenses
Operating income
Other income (expense)
Interest income
Interest expense		()		()		()		()
Equity in earnings of unconsolidated affiliate
Other, net		()		()		()		()
Total other income (expense)
Income before income taxes
Provision for income taxes
Net income	$		$		$		$

Net income per common share
Basic	$		$		$		$
Diluted	$		$		$		$

Cash dividends declared per common share	$		$		$		$

Weighted average shares outstanding
Basic
Diluted

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

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	(In thousands)
Net income	$			$			$			$
Cumulative translation adjustment		(	)					(	)
Net unrealized (loss) on securities available-for-sale, net of tax of $, $, $, and $, respectively		(	)		(	)		(	)		(	)
Comprehensive income	$			$			$			$

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

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, 2024

()

Net income

—

Cumulative translation adjustment

—

()

Unrealized net gain (loss) on
securities available-for-sale,
net of tax

—

()

Stock-based compensation

—

Exercise of stock options

—

Withholding tax payments on
full value awards vesting and
stock option exercises

—

()

—

()

Reissuance of treasury stock

—

()

—

Repurchases of common stock

—

()

—

()

Cash dividend on common stock
($ per share)

—

()

—

()

Balance at March 31, 2024

()

Net income

—

Cumulative translation adjustment

—

()

Unrealized net gain (loss) on
securities available-for-sale,
net of tax

—

()

Stock-based compensation

—

Exercise of stock options

—

Withholding tax payments on
full value awards vesting and
stock option exercises

—

()

—

()

Repurchases of common stock

—

()

—

()

Cash dividend on common stock
($ per share)

—

()

—

()

Balance at June 30, 2024

()

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

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

(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, 2023

()

Net income

—

Cumulative translation adjustment

—

Unrealized net gain (loss) on
securities available-for-sale,
net of tax

—

()

Stock-based compensation

—

Reissuance of treasury stock

—

()

—

Exercise of stock options

—

Withholding tax payments on
full value awards vesting and
stock option exercises

—

()

—

()

Cash dividend on common stock
($ per share)

—

()

—

()

Balance at March 31, 2023

()

Net income

—

Cumulative translation adjustment

—

Unrealized net gain (loss) on
securities available-for-sale,
net of tax

—

()

Stock-based compensation

—

Exercise of stock options

—

Withholding tax payments on
full value awards vesting and
stock option exercises

—

()

—

()

Cash dividend on common stock
($ per share)

—

()

—

()

Balance at June 30, 2023

()

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

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2024			2023
	(In thousands)
Cash flows from operating activities
Net income	$			$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of operating lease right-of-use assets
Stock-based compensation expense
Deferred taxes		(	)		(	)
Foreign currency transaction (gains) losses
Other					(	)
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(	)		(	)
Decrease in receivables from broker-dealers, clearing organizations and customers
(Increase) in prepaid expenses and other assets		(	)		(	)
Decrease in trading investments
(Increase) in mutual funds held in rabbi trust		(	)		(	)
(Decrease) in accrued employee compensation		(	)		(	)
(Decrease) in payables to broker-dealers, clearing organizations and customers		(	)		(	)
Increase in securities sold, not yet purchased
(Decrease) in income and other tax liabilities		(	)		(	)
Increase/(decrease) in accounts payable, accrued expenses and other liabilities					(	)
(Decrease) in operating lease liabilities		(	)		(	)
Net cash provided by operating activities
Cash flows from investing activities
Available-for-sale investments
Proceeds from maturities and sales
Purchases		(	)		(	)
Purchases of furniture, equipment and leasehold improvements		(	)		(	)
Capitalization of software development costs		(	)		(	)
Net cash (used in) investing activities		(	)		(	)
Cash flows from financing activities
Cash dividends on common stock		(	)		(	)
Exercise of stock options
Withholding tax payments on full value awards vesting and stock option exercises		(	)		(	)
Repurchases of common stock		(	)
Payment of contingent consideration					(	)
Proceeds from short-term borrowings
Repayments of short-term borrowings		(	)		(	)
Net cash (used in) financing activities		(	)		(	)
Effect of exchange rate changes on cash and cash equivalents		(	)
Cash and cash equivalents including restricted cash
Net decrease for the period		(	)		(	)
Beginning of period
End of period	$			$

Supplemental cash flow information
Cash paid for income taxes	$			$
Cash paid for interest
Non-cash investing and financing activity
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
Furniture, equipment, software and leasehold improvement additions included in accounts payable
Stock-based and accrued incentive compensation relating to capitalized software development costs
Exercise of stock options - cashless

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

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

. 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 institutional investor and broker-dealer firms are active users of MarketAxess’ patented trading technology, accessing global liquidity on its platforms in U.S. high-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: CP+™ 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 post-trade matching, trade publication, regulatory transaction reporting and market and reference data across a range of fixed-income and other products.

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

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 the estimated expected credit losses in 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 $ million as of each of June 30, 2024 and December 31, 2023. The provision for bad debts for each of the three and six months ended June 30, 2024 and 2023 was $ million. Write-offs and other charges against the allowance for credit losses were immaterial for each of the three and six months ended June 30, 2024 and 2023.

. 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.

. 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.

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 the majority of the Company’s U.S. Treasury matched principal trades, commissions are invoiced and recorded on a monthly basis.

Following its acquisition of Pragma LLC and Pragma Financial Systems LLC (collectively, “Pragma”) in the fourth quarter of 2023, the Company also earns other commissions on equities and foreign exchange products for algorithmic trading services. These fees incorporate variable transaction fees, which are calculated as a percentage of the notional dollar volume traded and are billed on a monthly basis.

Open Trading – matched principal trading

U.S. government bonds - matched principal trading

Other

Total variable transaction fees

Distribution fees and unused minimum fees

Total commissions

Information services – Information services includes data licensed to the Company’s broker-dealer clients, institutional investor clients and data-only subscribers; professional and consulting services; technology software licenses; and maintenance and support services. The nature and timing of each performance obligation may vary as these contracts are either subscription-based services transferred over time, and may be net of volume-based discounts, or one-time services that are transferred at a point in time. Revenues for services transferred over time are recognized ratably over the contract period as the Company’s performance obligation is met, whereas revenues for services transferred at a point in time are recognized in the period the services are provided. Customers are generally billed monthly, quarterly, or annually; revenues billed in advance are deferred and recognized ratably over the contract period.

Services transferred at a point in time

Total information services revenues

Post-trade services – Post-trade services revenue is generated from regulatory transaction reporting, trade publication and post-trade matching services. Customers are generally billed monthly in arrears, and revenue is recognized in the period transactions are processed. Revenues billed in advance are deferred and recognized ratably over the contract period. The Company also generates one-time implementation fees for onboarding clients, which are invoiced and recognized in the period the implementation is completed.

Services transferred at a point in time

Total post-trade services revenues

Technology services – Technology services revenue primarily includes technology services revenue generated by Pragma and revenue from telecommunications line charges to broker-dealer clients. Customers may be billed monthly or quarterly in arrears or in advance, and revenue is recognized in the period transactions are processed. Revenues billed in advance are deferred and recognized ratably over the contract period.

Services transferred at a point in time

Total technology services revenues

Contract liabilities consist of deferred revenues that the Company records when cash payments are received or due in advance of services to be performed. Deferred revenues are included in accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

(

)

—

Post-trade services

(

)

(

)

Technology services

(

)

—

Total deferred revenue

(

)

(

)

million as of June 30, 2024. The Company expects to recognize revenue associated with the remaining performance obligations over the next months.

using either a straight-line or accelerated amortization method based on the pattern of economic benefit the Company expects to realize from such assets. Intangible assets are assessed for impairment when events or circumstances indicate the existence of a possible impairment.

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

million in excess of the required levels of $ million.

One of the Company’s U.S. broker-dealer subsidiaries is required to segregate funds in a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As of June 30, 2024, this U.S. broker-dealer subsidiary had a balance of $ million in its special reserve bank account. This U.S. broker-dealer subsidiary also maintained net capital that was $ million in excess of the required level of $ million.

Each of the Company’s U.S. and foreign regulated subsidiaries are subject to local regulations which generally limit, or require the prior notification to or approval from such regulated entity’s principal regulator before, the repayment of borrowings from the Company or affiliates, paying cash dividends, making loans to the Company or affiliates or otherwise entering into transactions that result in a significant reduction in regulatory net capital or financial resources.

—

Securities available-for-sale

Corporate debt

—

Trading securities

U.S. Treasuries

—

Mutual funds held in rabbi trust

—

Foreign currency forward position

—

Total assets

—

Liabilities

Securities sold, not yet purchased

—

Total liabilities

—

As of December 31, 2023

Assets

Money market funds

—

Securities available-for-sale

Corporate debt

—

Trading securities

U.S. Treasuries

—

Mutual funds held in rabbi trust

—

Foreign currency forward position

—

Total assets

—

Money market funds are included in cash and cash equivalents on the Consolidated Statements of Financial Condition. Securities available-for-sale and trading securities are included in investments, at fair value on the Consolidated Statements of Financial Condition. Securities classified within Level 2 were valued using a market approach utilizing prices and other relevant information generated by market transactions involving comparable assets. The foreign currency forward contracts are included in either other assets or accounts payable, accrued expenses and other liabilities on the Consolidated Statements of Financial Condition, and are classified within Level 2 as the valuation inputs are based on quoted market prices. The mutual funds held in a rabbi trust represent investments associated with the Company’s deferred cash incentive plan. Securities sold, not yet purchased reflects a short U.S. Treasury inventory position held overnight in relation to the Company’s U.S. broker dealer subsidiary’s self-clearing operations.

—

Cash segregated under federal regulations

—

Accounts receivable, net of allowance

—

Receivables from broker-dealers, clearing
organizations and customers

—

Total

—

Financial liabilities not measured at fair value:

Payables to broker-dealers, clearing
organizations and customers

—

As of December 31, 2023

Financial assets not measured at fair value:

Cash

—

Cash segregated under federal regulations

—

Accounts receivable, net of allowance

—

Receivables from broker-dealers, clearing
organizations and customers

—

Total

—

Financial liabilities not measured at fair value:

Payables to broker-dealers, clearing
organizations and customers

—

During the three and six months ended June 30, 2024 and 2023, there were transfers of securities between Level 1, Level 2 and Level 3.

The Company enters into foreign currency forward contracts as an economic hedge against certain foreign currency transaction gains and losses in the Consolidated Statements of Operations. These forward contracts are for three-month periods and are used to limit exposure to foreign currency exchange rate fluctuations. The Company records the fair value of the asset in prepaid expenses and other assets or the fair value of the liability in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.

Fair value of notional

Fair value of the asset

Realized and unrealized gains and losses on foreign currency forward contracts are included in other, net in the Consolidated Statements of Operations. The Company recorded a net realized loss of $ million and a net realized gain of $ million for the three months ended June 30, 2024 and 2023, respectively, and a net realized gain of $ million and a net realized loss of $ million for the six months ended June 30, 2024 and 2023, respectively. The Company recorded a net unrealized gain of $ million and a net unrealized loss of $ million for the three months ended June 30, 2024 and 2023, respectively, and a net unrealized loss of $ million and net unrealized gain $ million for the six months ended June 30, 2024 and 2023, respectively. The Company records collateral deposits with its counterparty bank in prepaid expenses and other assets on the Consolidated Statements of Financial Condition. As of June 30, 2024, the Company did not maintain a collateral deposit with its counterparty bank.

(

)

Trading securities

U.S. Treasuries

—

(

)

Mutual funds held in rabbi trust

(

)

Total investments

(

)

Securities sold, not yet purchased

U.S. Treasuries

As of December 31, 2023

Securities available-for-sale

Corporate debt

(

)

Trading securities

U.S. Treasuries

—

Mutual funds held in rabbi trust

(

)

Total investments

(

)

Purchases of investments during the six months ended June 30, 2024 and 2023 were $ million and $ million, respectively. Proceeds from the sales and maturities of investments during the six months ended June 30, 2024 and 2023 were $ million and $ million, respectively.

)

(

)

(

)

(

)

Trading securities

U.S. Treasuries

(

)

(

)

Mutual funds held in rabbi trust

Total investments

(

)

Liabilities:

Securities sold, not yet purchased

Realized gains/(losses)

Securities available-for-sale

Corporate debt

(

)

Trading securities

Mutual funds held in rabbi trust

(

)

(

)

(

)

(

)

Total investments

(

)

(

)

(

)

(

)

Unrealized gains and losses on securities available-for-sale are included in accumulated other comprehensive loss on the Consolidated Statements of Financial Condition. Realized gains and losses on securities available-for-sale and realized and unrealized gains and losses on trading securities are included in other, net on the Consolidated Statements of Operations.

Trading securities

U.S. Treasuries

Mutual funds held in rabbi trust

—

Total

As of December 31, 2023

Securities available-for-sale

Corporate debt

Trading securities

U.S. Treasuries

Mutual funds held in rabbi trust

—

Total

(

)

(

)

(

)

As of December 31, 2023

Corporate debt

(

)

(

)

During the three and six months ended June 30, 2024 and 2023, the Company did t recognize any credit losses on its available-for-sale securities. The unrealized losses on securities are due to changes in interest rates and market liquidity.

Securities failed-to-deliver – customers

Cash deposits with clearing organizations and broker-dealers

Other

Total

Payables to broker-dealers, clearing organizations and customers:

Securities failed-to-receive – broker-dealers and clearing organizations

Securities failed-to-receive – customers

Other

Total

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

million, comprised of approximately $ million in cash and shares of common stock of the Company, valued at approximately $ million as of the closing date of the Pragma Acquisition, as described below. A portion of the stock consideration, amounting to shares of common stock, was placed in escrow for to secure the sellers’ indemnification obligations under the Purchase Agreement. In addition, pursuant to the Purchase Agreement and subject to certain exceptions, the sellers and their affiliates were prohibited from transferring any of the Company common stock received in the Pragma Acquisition for a period of following the October 2, 2023 closing date. The value ascribed to the shares by the Company was discounted from the market value on the date of closing to reflect the non-marketability of such shares during the restriction period.

Pragma is a quantitative trading technology provider specializing in algorithmic and analytical services. Pragma LLC is a registered broker-dealer. The Company has performed an allocation of the purchase price to the fair value of assets acquired and liabilities assumed at the date of acquisition. The Company utilized an independent third-party to assist in determining the fair value of the acquired intangible assets.

Less: acquired cash

(

)

Purchase price, net of acquired cash

Intangible assets

(

)

Accounts receivable

(

)

Prepaid expenses and other assets

(

)

Accounts payable, accrued expenses and other liabilities

Goodwill

The acquired developed technology and customer relationships intangible assets were valued using the relief-from-royalty method and multi-period excess earnings method, respectively.

years

Customer relationships

years

Tradename - finite life

years

Total

The goodwill recognized in connection with the Pragma Acquisition is primarily attributable to the acquisition of an assembled workforce and expected future technology and synergies from the integration of the operations of Pragma into the Company’s operations. All of the goodwill recognized in connection with the Pragma Acquisition is expected to be deductible for income tax purposes.

Pro forma financial information and current period results for the Pragma Acquisition were not material to the Company’s consolidated financial statements and therefore have not been presented.

RFQ Hub LLC Equity Investment

In May 2022, the Company invested $ million to acquire a minority ownership stake in RFQ–hub Holdings LLC, an entity formed with a consortium of market participants to support the growth of RFQ-hub, a multi-asset request for quote platform. The Company possesses significant influence over RFQ–hub Holdings LLC and is accounting for its investment under the equity method of accounting. As of June 30, 2024, the Company’s investment is recorded at carrying value of $ million within prepaid expenses and other assets on the Consolidated Statements of Financial Condition. The Company’s proportionate share of RFQ–hub Holdings LLC’s net earnings is recorded within equity in earnings of unconsolidated affiliate on the Consolidated Statements of Operations and was $ million and $ million for the three months ended June 30, 2024 and 2023, respectively, and $ million and $ million for the six months ended June 30, 2024 and 2023, respectively.

Under a services agreement, the Company charges its equity method investee for certain reimbursable support costs incurred by the Company, including personnel compensation, and certain operational overhead costs. The amounts billed for the three and six months ended June 30, 2024 were $ million and $ million, respectively, and are included within other, net on the Consolidated Statements of Operations. The receivable from the equity method investee was $ million as of June 30, 2024 and is included within accounts receivable, net on the Consolidated Statements of Financial Condition.

On April 19, 2024, the Company entered into an agreement to acquire an additional % interest in RFQ–hub Holdings LLC for approximately $ million of cash consideration. The acquisition is subject to various closing conditions, including the receipt of certain regulatory approvals. The acquisition is expected to close during the second half of 2024. Upon the closing of the acquisition, the Company will hold a % controlling stake in RFQ-hub Holdings LLC.

million as of each of June 30, 2024 and December 31, 2023.

(

)

(

)

Technology and other intangibles

(

)

(

)

Total

(

)

(

)

Amortization expense associated with identifiable intangible assets was $ million and $ million for the three months ended June 30, 2024 and 2023, respectively, and $ million and $ million for the six months ended June 30, 2024 and 2023. Annual estimated total amortization expense is $ million, $ million, $ million, $ million and $ million for the years ended December 31, 2024 through 2028, respectively.

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

% and % for the three months ended June 30, 2024 and 2023, respectively, and % and % for the six months ended June 30, 2024 and 2023, respectively. The Company’s effective tax rate can vary from period to period depending on geographic mix of our earnings, changes in tax legislation and tax rates and the amount and timing of excess tax benefits related to share-based payments, among other factors.

The Company or one of its subsidiaries files U.S. federal, state and foreign income tax returns. The Company is currently under a New York State income tax examination for tax years 2015 through 2020 and a New York City income tax examination for the tax years 2016 through 2018. At this time, the Company cannot estimate when the examinations will conclude or the impact such examinations will have on the Company’s Consolidated Financial Statements, if any. Generally, other than the New York City and New York State audits, the Company is no longer subject to tax examinations by tax authorities for years prior to 2020.

shares available for grant under the 2020 Plan.

Non-employee directors

Total stock-based compensation

The Company records stock-based compensation expense for employees in employee compensation and benefits and for non-employee directors in general and administrative expenses in the Consolidated Statements of Operations. Total stock-based compensation for employees includes $ million and $ million of capitalized software development costs for the three months ended June 30, 2024 and 2023, respectively, and $ million and $ million of capitalized software development costs for the six months ended June 30, 2024 and 2023, respectively.

During the six months ended June 30, 2024, the Company granted (i) restricted stock units, (ii) stock options and (iii) performance stock units with an expected pay-out at target of shares of common stock. The fair values of the restricted stock units and performance stock units were based on a weighted-average fair value per unit at the grant date of $ and $, respectively. The weighted-average fair value for stock options of $ per share was based on the Black-Scholes option pricing model.

As of June 30, 2024, the total unrecognized compensation cost related to all non-vested awards was $ million. That cost is expected to be recognized over a weighted-average period of years.

Employee Stock Purchase Plan

The Company maintains the MarketAxess Holdings Inc. 2022 Employee Stock Purchase Plan (the “ESPP”), pursuant to which a total of shares of the Company’s common stock is available for purchase by employees. The Company issued shares of common stock on February 15, 2024 under the ESPP. As of June 30, 2024, there were shares available for purchase under the ESPP.

Dilutive effect of stock options and full value awards

Diluted weighted average shares outstanding

Basic earnings per share

Diluted earnings per share

Stock options and full value awards totaling shares and shares for the three months ended June 30, 2024 and 2023, respectively, and shares and shares for the six months ended June 30, 2024 and 2023, respectively, were excluded from the computation of diluted earnings per share because their effect would have been antidilutive. The computation of diluted shares can vary among periods due, in part, to the change in the average price of the Company’s common stock.

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

revolving credit facility (the “2021 Credit Agreement”) provided by a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent, which provided aggregate commitments totaling $ million, including a revolving credit facility, a $ million letter of credit sub-limit for standby letters of credit and a $ million sub-limit for swingline loans. The 2021 Credit Agreement was scheduled to mature on , but was replaced by the 2023 Credit Agreement (as defined below).

The 2021 Credit Agreement required that the Company satisfy certain covenants, including a requirement to not exceed a maximum consolidated total leverage ratio. The Company incurred $ million of interest expense under the 2021 Credit Agreement for each of the three and six months ended June 30, 2023.

2023 Credit Agreement

revolving credit facility (the “2023 Credit Agreement”) provided by a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent, which provides aggregate commitments totaling $ million, including a revolving credit facility, a $ million letter of credit sub-limit for standby letters of credit and a $ million sub-limit for swingline loans. The 2023 Credit Agreement will mature on , with the Company’s option to request up to two additional -day extensions at the discretion of each lender and subject to customary conditions. Subject to satisfaction of certain specified conditions, the Company is permitted to upsize the 2023 Credit Agreement by up to $ million in total. As of June 30, 2024, the Company had $ million in letters of credit outstanding and $ million in available borrowing capacity under the 2023 Credit Agreement.

Borrowings under the 2023 Credit Agreement will bear interest at a rate per annum equal to the alternate base rate or the adjusted term Secured Overnight Financing Rate (“SOFR”) rate, plus an applicable margin that varies with the Company’s consolidated total leverage ratio. The 2023 Credit Agreement requires that the Company satisfy certain covenants, including a requirement not to exceed a maximum consolidated total leverage ratio. The Company incurred $ million of interest expense under the 2023 Credit Agreement for each of the three and six months ended June 30, 2024.

Uncommitted Collateralized Agreements

In connection with their self-clearing operations, certain of the Company’s U.S. and U.K. operating subsidiaries maintain agreements with a settlement bank to allow the subsidiaries to borrow in the aggregate of up to $ million on an uncommitted basis, collateralized by eligible securities pledged by the subsidiaries to the settlement bank, subject to certain haircuts. Borrowings under these agreements will bear interest at a base rate per annum equal to the higher of the upper range of the Federal Funds Rate, 0.25% or one-month SOFR, plus %.

The Company did t incur any interest expense on borrowings under such agreements during the three months ended June 30, 2024 and 2023, and the six months ended June 30, 2024. The Company incurred $ million of interest expense during the six months ended June 30, 2023. As of June 30, 2024, the Company had borrowings outstanding and up to $ million in available uncommitted borrowing capacity under such agreements.

Short-term Financing

Under arrangements with their settlement banks, certain of the Company’s U.S. and U.K. operating subsidiaries may receive overnight financing in the form of bank overdrafts. The Company incurred interest expense on such overnight financing of $ million and $ million during the three months ended June 30, 2024 and 2023, respectively, and $ million and $ million during the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, the Company had overdrafts payable outstanding.

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

to years. . The Company accounts for the when it is reasonably certain of being exercised. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants. The Company also has operating and finance leases for equipment with initial lease terms ranging from one-year to years.

Operating lease cost - equipment

Technology and communications

Variable lease costs

Occupancy

Total operating lease cost

Finance lease expense was $ million for each of the three and six months ended June 30, 2024.

The Company determines whether an arrangement is, or includes, a lease at contract inception. Operating lease right-of-use assets and liabilities are recognized at commencement date and are initially measured based on the present value of lease payments over the defined lease term. As the Company's leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments.

Weighted average discount rate - operating leases

Weighted average remaining lease term (in years) - finance leases

Weighted average discount rate - finance leases

2025

2026

2027

2028

2029 and thereafter

Total lease payments

Less: imputed interest

Present value of lease liabilities

MARKETAXESS HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. Under both the self-clearing and the third-party clearing models, the Company may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is an error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge the Company for any losses they suffer resulting from a counterparty’s failure on any of the Company’s trades. The Company did not record any liabilities or losses with regard to counterparty failures for the six months ended June 30, 2024 and 2023.

In the normal course of business, the Company enters into contracts that contain a variety of representations, warranties and indemnification provisions. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects the risk of loss to be remote.

million that commenced in (the “2022 Repurchase Program”). During the six months ended June 30, 2024, the Company repurchased shares of common stock under the 2022 Repurchase Program at a cost of $ million. In August 2024, the Board of Directors authorized a new share repurchase program for up to $ million (the “2024 Repurchase Program and, together with the 2022 Repurchase Program, the “Repurchase Programs”), in addition to the $ million currently remaining under the 2022 Repurchase Program. Shares repurchased under the Repurchase Programs will be held in treasury for future use.

For the six months ended June 30, 2024 and 2023, the U.K. was the only individual foreign country in which the Company had a subsidiary that accounted for % or more of the total revenues or total long-lived assets. Revenues and long-lived assets are attributed to a geographic area based on the location of the particular subsidiary. Long-lived assets are defined as furniture, equipment, leasehold improvements and capitalized software.

Europe

Asia

Total


	As of
	June 30, 2024		December 31, 2023
		(In thousands)
Long-lived assets, as defined
Americas	$		$
Europe
Asia
Total	$		$

Cash segregated for regulatory
purposes

Cash segregated under federal
regulations

Cash deposits with clearing organizations
and broker-dealers

Receivables from broker-dealers,
clearing organizations
and customers

Other cash deposits

Prepaid expenses and other assets

Total

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for our future business and financial performance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we undertake no obligation to revise or update any forward-looking statements contained in this report, except to the extent required by applicable law. Our Company’s policy is generally to provide our expectations only once per quarter, and not to update that information until the next quarter. Actual future events or results may differ, perhaps materially from those contained in the projections or forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this report, particularly in the section captioned Part II, Item 1A, “Risk Factors,” and in our Form 10-K for the year ended December 31, 2023, including in Part I, Item 1A, “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Executive Overview

MarketAxess operates leading electronic trading platforms delivering greater trading efficiency, a diversified pool of liquidity and significant cost savings to our clients across the global fixed-income markets. Over 2,000 institutional investor and broker-dealer firms use our patented trading technology to efficiently trade U.S. high-grade bonds, U.S. high-yield bonds, emerging market debt, Eurobonds, municipal bonds, U.S. government bonds and other fixed-income securities. Our award-winning Open Trading marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets, creating a unique liquidity pool for a broad range of credit market participants. We leverage our diverse set of trading protocols, automated and algorithmic trading solutions, intelligent data and index products and a range of post-trade services to provide an end-to-end trading solution to our robust network of platform participants.

We provide automated and algorithmic trading solutions that we believe, when combined with our integrated and actionable data offerings, will help our clients make faster, better-informed decisions on when and how to trade on our platforms. In 2023, we introduced X-Pro, our newest trading platform, to more seamlessly combine our trading protocols with our proprietary data and pre-trade analytics. We expect that our recent acquisition of Pragma, a quantitative trading technology provider specializing in algorithmic and analytical trading services, will accelerate our development of artificial intelligence driven execution algorithms across many of our key product areas.

We operate in a large and growing market that provides us with a significant opportunity for future growth, due, in part, to the relatively low levels of electronic trading in many of our largest current product areas. We offer Open Trading for most of our products in order to capitalize on this addressable market by increasing the number of potential trading counterparties and providing our clients with a menu of solutions at each step in the trading process. We believe that Open Trading drives meaningful price improvement for our clients and reduces risk in fixed-income markets by creating a global, diversified pool of liquidity whereby our institutional investor, dealer and alternative liquidity provider clients can all interact on an anonymous basis. Institutional investors can also send trading inquiries directly to their traditional broker-dealer counterparties on a disclosed basis, while simultaneously accessing additional counterparties through our anonymous Open Trading solutions.

We also provide a number of integrated and actionable data offerings, including CP+™ and Axess All®, to assist clients with real-time pricing and trading decisions and transaction cost analysis. We have a range of post-trade services, including straight-through processing, post-trade matching, trade publication, regulatory transaction reporting and market and reference data across fixed-income and other products.

We derive revenue from commissions for transactions executed on our platforms, information services, post-trade services and technology services. Our expenses consist of employee compensation and benefits, depreciation and amortization, technology and communication expenses, professional and consulting fees, occupancy, marketing and advertising, clearing costs and general and administrative expenses.

Our objective is to provide the leading global electronic trading platforms for fixed-income securities, connecting broker-dealers and institutional investors more easily and efficiently, while offering a broad array of trading information and technology services to market participants across the trading cycle. The key elements of our strategy are discussed in Part I, Item 1. “Business – Our Strategy” of our Form 10-K for the year ended December 31, 2023.

Critical Factors Affecting Our Industry and Our Company

Economic, Political and Market Factors

The global fixed-income securities industry is risky and volatile and is directly affected by a number of economic, political and market factors that may impact trading volume. These factors could have a material adverse or positive effect on our business, financial condition and results of operations. These factors include, among others, credit market conditions, the current interest rate environment, including the volatility of interest rates and investors’ forecasts of future interest rates, the duration of bonds traded, economic and political conditions in the United States, Europe and elsewhere, and the consolidation or contraction of our broker-dealer and institutional investor clients.

In the second quarter of 2024, the new issue calendar continued to be strong across U.S. credit, but not as robust as in the first quarter of the year. U.S. high-grade and U.S. high-yield new issuance increased 8.9% and 43.9% to $344.3 billion and $77.9 billion, respectively. In addition, credit spread volatility remained low in the second quarter of 2024. A strong new issue calendar and low levels of credit spread volatility can contribute to a decrease in exchange-trade fund (“ETF”) market maker activity on our platforms, as the increased availability of new issues may lead to reduction in secondary market trading, especially in U.S. high-yield. A strong new issue calendar can also negatively impact our market share in the short-term, but is expected to positively impact secondary trading volumes over the long term. The decrease in U.S. high-yield activity during the quarter negatively impacted our total credit average variable fee per million.

There has been increased demand for green bonds in the fixed-income markets in which we operate.

Because the majority of our assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation impacts our expenses, such as employee compensation, technology and communications expenses, which may not be readily recoverable in the prices of our services. To the extent inflation continues to result in high interest rates or has other adverse effects on the securities markets or the economy, it may adversely affect our financial position and results of operations.

We expect that current cash and investment balances, in combination with cash flows that are generated from operations and the ability to borrow under our 2023 Credit Agreement, will be sufficient to meet our liquidity needs and planned capital expenditure requirements for at least the next twelve months. We ended the quarter with $749.9 million in available borrowing capacity under the 2023 Credit Agreement and capital significantly in excess of our regulatory requirements.

Competitive Landscape

The global fixed-income securities industry generally, and the electronic financial services markets in which we engage, in particular, are highly competitive, and we expect competition to intensify in the future. Sources of competition for us will continue to include, among others, bond trading conducted directly between broker-dealers and their institutional investor clients over the telephone or electronically and other multi-dealer or all-to-all trading platforms. Competitors, including companies in which some of our broker-dealer clients have invested, have developed or acquired electronic trading platforms or have announced their intention to explore the development of electronic platforms or information networks that may compete with us.

We primarily compete on the basis of our client network, the liquidity provided by our dealer, and, to a lesser extent, institutional investor clients, the total transaction costs and fees associated with our services, the breadth of products, protocols and services offered, as well as the quality, reliability, security and ease of use of our platforms. We believe that our ability to grow volumes and revenues will largely depend on our performance with respect to these factors.

There has been increased demand for portfolio trading workflows over the last few years, which has resulted in heightened competition among trading platforms to enhance their portfolio trading offerings and expand them across different geographies and products. During periods of relatively lower credit spread volatility, clients are beginning to use portfolio trading workflows in lieu of more established trading protocols designed to generate price competition on individual bonds. Our dealer clients have also increased their usage of matching sessions offered by competing platforms in recent periods. To the extent that our clients increase their use of portfolio trading and matching session protocols offered by other platforms, our market share in those products could decrease.

Our competitive position is enhanced by the unique liquidity provided by our Open Trading functionalities and the integration of our broker-dealer and institutional investor clients with our electronic trading platforms and other systems. We have focused on the unique aspects of the credit markets we serve in the development of our platforms, working closely with our clients to provide a system that is suited to their needs.

Regulatory Environment

Our business is subject to extensive regulations in the United States and internationally, which may expose us to significant regulatory risk and cause additional legal costs to ensure compliance. The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in the enactment and enforcement of new laws and regulations that apply to our business. In January 2022, the SEC proposed rules that will expand Regulation ATS and Regulation SCI to alternative trading systems (ATS) that trade government securities and amend the SEC rule regarding the definition of an “exchange” to include Communication Protocol Systems, such as our request-for-quote protocols. Based on these proposed rules, we expect that we will have to operate all of our trading protocols in compliance with Regulation ATS and we could become subject to Regulation SCI for certain parts of our business in the future. The SEC has also adopted final rule amendments that became effective in May 2024 and shortened the standard settlement cycle for most broker-dealer securities transactions from two business days after the trade date (T+2) to one business day after the trade date (T+1). The shortening of the settlement cycle has led to a reduction in the length of exposure to trading counterparties and lower margin requirements for our clearing operations. The SEC also recently adopted final rules regarding the central clearing of certain secondary market transactions involving U.S. Treasury securities, which will become effective for certain cash market transactions on December 31, 2025 and repurchase and reverse repurchase transactions on June 30, 2026. This central clearing mandate will impact certain of our participants who do not centrally clear such trades today, and some have expressed concerns about the potential impact of additional clearing costs. The impact of any of these reform efforts on us and our operations remains uncertain.

As a result of the U.K.’s departure from the E.U. in 2020 (commonly referred to as “Brexit”), we obtained authorizations from the AFM for our subsidiaries in the Netherlands in 2019. We now provide regulated services to our clients within the E.U. in reliance on the cross-border services passport held by our Dutch subsidiaries. Brexit has led to an ongoing divergence between the U.K. and E.U. financial regulations, which has made it more difficult and costly to comply with the extensive government regulation to which we are subject. The cost and complexity of operating across increasingly divergent regulatory regimes has increased and is likely to continue to increase in the future.

Compliance with regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. For example, the E.U.’s Digital Operational Resilience Act (DORA), which will become applicable to portions of our business in 2025, will require us to dedicate additional financial and operational resources to meet the significant additional information communication technologies services-related governance, risk management, resilience testing and sub-contracting requirements created by the legislation. However, we also believe new regulations may increase demand for our platforms and we believe we are well positioned to benefit from those regulatory changes that cause market participants to seek electronic trading platforms that meet the various regulatory requirements.

For further description of the regulations which govern our business, see Part1, Item I. “Business – Government Regulation” of our Form 10-K for the year ended December 31, 2023.

Technology Environment

We must continue to enhance and improve our electronic trading platforms. The markets in which we compete are characterized by increasingly complex protocols, systems and technology infrastructure requirements. Our future success will depend on our ability to enhance our existing products and services, develop and/or license new products and technologies that address the increasingly sophisticated and varied needs of our existing and prospective broker-dealer and institutional investor clients and respond to technological advances and emerging industry and regulatory standards and practices on a cost-effective and timely basis. For example, in 2023, we introduced MarketAxess X-Pro, our new trading platform, which provides traders with a flexible user experience, intuitive workflows and access to our proprietary data and pre-trade analytics. We plan to continue to focus on technology infrastructure initiatives and improving our platforms with the goal of further enhancing our leading market position.

As the overall share of electronic trading grows in global credit products, we are experiencing continued demand for, and growth in, our automated and algorithmic trading solutions. We also support a large and growing base of dealer market making algorithms. In the second quarter of 2024, trading volumes in Auto-X, one of our automated trading protocols, rose to $88.3 billion, an increase of 20.9% from $73.1 billion in the second quarter of 2023. Trade count on Auto-X increased 37.3% to approximately 580,000 from approximately 423,000 in the second quarter of 2023. There were 248 active client firms using Auto-X in the second quarter of 2024, an increase of 69.9% from the prior year. In the second quarter of 2024, dealer algorithmic responses on our platforms increased 37.9% from the second quarter of 2023 to 10.2 million.

We experience cybersecurity threats and incidents from time to time. However, as of the date of this report, MarketAxess has not experienced a cybersecurity threat or incident that has materially affected the Company in at least the past three years. Cybersecurity incidents could impact revenue and operating income and increase costs. We therefore continue to make investments in our cybersecurity infrastructure and training of employees, which may result in increased costs, to strengthen our cybersecurity measures.

See also Part I, Item 1A. - “Risk Factors, Technology, IT Systems and Cybersecurity Risks” and Part I, Item 1C – “Cybersecurity.” of our Form 10-K for the year ended December 31, 2023.

Trends in Our Business

The majority of our revenue is derived from commissions for transactions executed on our platforms between and among our institutional investor and broker-dealer clients and monthly distribution fees. We believe that the following are the key variables that impact the notional value of such transactions on our platforms and the amount of commissions and distribution fees earned by us:


	•	the number of participants on our platforms and their willingness to use our platforms instead of competitors' platforms or other execution methods;
	•	the frequency and competitiveness of the price responses by participants on our platforms;
	•	the number of markets that are available for our clients to trade on our platforms;
	•	the overall level of activity in these markets;
	•	the duration of the bonds trading on our platforms; and
	•	the particular fee plan and protocol under which we earn commissions and distribution fees.

We believe that overall corporate bond market trading volume is affected by various factors including the absolute levels of interest rates, the direction of interest rate movements, the level of new issues of corporate bonds and the volatility of corporate bond spreads versus U.S. Treasury securities. Because a significant percentage of our revenue is tied directly to the volume of securities traded on our platforms, it is likely that a general decline in trading volumes, regardless of the cause of such decline, would reduce our revenues and have a significant negative impact on profitability.

As further described under “— Critical Factors Affecting our Industry and our Company — Economic, Political and Market Factors,” “— Results of Operations — Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023” and “— Results of Operations — Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023,” our trading volumes increased and our average variable transaction fee per million decreased compared to the three and six months ended June 30, 2023.

Components of Our Results of Operations

Commission Revenue

Commissions are recognized on a trade date basis, are generally calculated as a percentage of the notional dollar volume of bonds traded on our 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 are generally charged lower commissions, while bonds that are less actively traded or that have longer maturities generally command higher commissions.

For Open Trading trades that we execute 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, we earn our commission through the difference in price between the two trades. For the majority of U.S. Treasury matched principal trades, commissions are invoiced and recorded on a monthly basis.

Credit Commissions. Credit includes U.S. high-grade corporate bonds, high-yield bonds, emerging markets bonds, Eurobonds, municipal bonds and leveraged loans. Our U.S. high-grade corporate bond fee plans generally incorporate variable transaction fees and fixed distribution fees billed to our broker-dealer clients on a monthly basis. Certain broker-dealers participate in fee programs that do not contain monthly distribution fees and instead incorporate additional per transaction execution fees and minimum monthly fee commitments. Under these fee plans, we electronically add the transaction fee to the spread quoted by the broker-dealer client. The U.S. high-grade transaction fee is generally designated in basis points in yield and, as a result, is subject to fluctuation depending on the duration of the bond traded.

Commissions for high-yield bonds, emerging markets bonds, Eurobonds, municipal bonds and leveraged loans generally vary based on the type of the instrument traded using standard fee schedules. Our high-yield fee plan structure is similar to our U.S. high-grade fee plans. Certain dealers participate in a high-yield fee plan that incorporates a variable transaction fee and a fixed distribution fee, while other dealers participate in a plan that does not contain monthly distribution fees and instead incorporates additional per transaction execution fees and minimum monthly fee commitments.

The average credit fees per million may vary in the future due to changes in yield, years-to-maturity and nominal size of high-grade bonds traded on our platforms and changes in product mix or trading protocols.

Credit distribution fees include any unused monthly fee commitments under our variable fee plans.

Rates Commissions. Rates includes U.S. Treasury, U.S. agency and European government bonds. Commissions for rates products generally vary based on the type of the instrument traded. U.S. Treasury fee plans are typically volume tiered and can vary based on the trading protocol. The average rates fee per million may vary in the future due to changes in product mix or trading protocols.

We anticipate that average fees per million may change in the future. Consequently, past trends in commissions are not necessarily indicative of future commissions.

Other Commissions. Other commissions include equities and foreign exchange commissions for Pragma's algorithmic trading services. Commissions for equities and foreign exchange are volume-tiered and consist of variable transaction fees that are billed monthly.

Information Services

We generate revenue from data licensed to our broker-dealer clients, institutional investor clients and data-only subscribers; professional and consulting services; technology software licenses; and maintenance and support services. These revenues are either for subscription-based services transferred over time, and may be net of volume-based discounts, or one-time services. Revenues for services transferred over time are recognized ratably over the contract period while revenues for services transferred at a point in time are recognized in the period the services are provided. Customers are generally billed monthly, quarterly, or annually; revenues billed in advance are deferred and recognized ratably over the contract period.

Post-trade Services

We generate revenue from regulatory transaction reporting, trade publication and post-trade matching services. Customers are generally billed in the current month or monthly in arrears and revenue is recognized in the period that the transactions are processed. Revenues billed in advance are deferred and recognized ratably over the contract period. We also generate one-time implementation fees for onboarding clients, which are invoiced and recognized in the period the implementation is complete.

Technology Services

Technology services includes technology services revenue generated by Pragma and revenue generated from telecommunications line charges to broker-dealer clients.

Expenses

In the normal course of business, we incur the following expenses:

Employee Compensation and Benefits. Employee compensation and benefits is our most significant expense and includes employee salaries, stock-based compensation costs, other incentive compensation, employee benefits and payroll taxes.

Depreciation and Amortization. We depreciate our computer hardware and related software, office hardware and furniture and fixtures and amortize our capitalized software development costs on a straight-line basis over three to five years. We amortize leasehold improvements on a straight-line basis over the lesser of the life of the improvement or the remaining term of the lease. Intangible assets with definite lives, including purchased technologies, customer relationships and other intangible assets, are amortized over their estimated useful lives, which range from one to 15 years, using either a straight-line or accelerated amortization method based on the pattern of economic benefit that we expect to realize from such assets. Intangible assets are assessed for impairment when events or circumstances indicate a possible impairment.

Technology and Communications. Technology and communications expense consists primarily of costs relating to software and licenses, maintenance on software and hardware, cloud hosting costs, data feeds provided by outside vendors, U.S. government bonds technology platform licensing fees, data center hosting costs and our internal network connections. The majority of our broker-dealer clients have dedicated high-speed communication lines to our network in order to provide fast data transfer. We charge our broker-dealer clients a monthly fee for these connections, which is recovered against the relevant expenses we incur.

Professional and Consulting Fees. Professional and consulting fees consist primarily of accounting fees, legal fees and fees paid to information technology and other consultants for services provided for the maintenance of our trading platforms, information and post-trade services products and other services.

Occupancy. Occupancy costs consist primarily of office and equipment rent, utilities and commercial rent tax.

Marketing and Advertising. Marketing and advertising expense consists primarily of branding and other advertising expenses we incur to promote our products and services. This expense also includes costs associated with attending or exhibiting at industry-sponsored seminars, conferences and conventions, and travel and entertainment expenses incurred by our sales force to promote our trading platforms, information services and post-trade services.

Clearing Costs. Clearing costs consist of fees that we are charged by third-party clearing brokers and depositories for the clearing and settlement of matched principal trades, regulatory reporting fees and variable transaction fees assessed by the provider of our third-party middle office system.

General and Administrative. General and administrative expense consists primarily of general travel and entertainment, board of directors’ expenses, regulatory fees, media subscription costs, charitable contributions, provision for doubtful accounts, various state franchise and U.K. value-added taxes and other miscellaneous expenses.

Expenses may continue to grow in the future, notably in employee compensation and benefits as we increase headcount to support investment in new products, operational support and geographic expansion, depreciation and amortization due to increased investment in new products and enhancements to our trading platforms, and technology and communication costs. Expenses may also grow due to increased regulatory complexity, acquisitions or the continued effects of inflation.

Other Income (Expense)

Interest Income. Interest income consists of interest income earned on our cash and cash equivalents, restricted cash, deposits and investments.

Interest Expense. Interest expense consists of financing charges incurred on short-term borrowings.

Equity in Earnings of Unconsolidated Affiliate. Equity in earnings of unconsolidated affiliate represents the proportionate share of our equity method investee's net income.

Other, Net. Other, net consists of realized and unrealized gains and losses on trading security investments and foreign currency forward contracts, foreign currency transaction gains or losses, investment advisory fees, credit facility administrative fees, gains or losses on revaluations of contingent consideration payable and other miscellaneous revenues and expenses.

Critical Accounting Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of income and expenses during the reporting periods. We base our estimates and judgments on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under varying assumptions or conditions. Critical accounting estimates for us include stock-based compensation.

Stock-based compensation

We maintain the 2020 Plan, which provides for the grant of full value awards, stock options and other stock-based awards to encourage employees, consultants and non-employee directors to participate in our long-term success. We make critical accounting estimates related to performance stock units granted under the 2020 Plan (the “PSUs”).

In 2022, 2023 and 2024, the PSUs were granted to the executive officers and certain senior managers. Each PSU is earned or forfeited based on our level of achievement of certain predetermined metrics, including pre-tax adjusted operating margin, U.S. credit market share and revenue growth excluding U.S. credit. The vested share pay-out ranges from zero to 200% of the PSU target. The number of PSUs that vest, if any, is determined by the level of achievement of the performance metrics during the three-year performance periods, as certified by the Compensation and Talent Committee following the conclusion of the performance period. In addition, participants must provide continued service through the vesting date, subject to death, disability and qualified retirement exceptions, as applicable. Compensation expense for the PSUs is measured using the fair value of our stock at the grant date and estimates of future performance and actual share payouts. Each period, we make estimates of the current expected share payouts and adjust the life-to-date compensation expense recognized since the grant date. As of June 30, 2024, a 10.0% change in the expected final share payouts would increase or decrease the life-to-date compensation expense by $1.5 million. The estimated final share payouts for the 2022 and 2023 awards as of June 30, 2024 decreased 20.7% compared to December 31, 2023.

Recent Accounting Pronouncements

See Note 2 for a discussion of any recent accounting pronouncements relevant to our Consolidated Financial Statements.

Segment Results

We operate electronic platforms for the trading of fixed-income securities and provide related data, analytics, compliance tools and post-trade services. We consider our operations to constitute a single business segment because of the highly integrated nature of these products and services, the financial markets in which we compete and our worldwide business activities. We believe that results by geographic region or client sector are not necessarily meaningful in understanding our business. See Note 15 to the Consolidated Financial Statements for certain geographic information about our business required by GAAP.

Results of Operations

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

The following table summarizes our financial results for the three months ended June 30, 2024 and 2023:


	Three Months Ended June 30,
	2024		2023		$ Change		% Change
	($ in thousands, except per share amounts)
Revenues	$	197,660	$	179,846	$	17,814		9.9	%
Expenses		116,321		104,119		12,202		11.7
Operating income		81,339		75,727		5,612		7.4
Other income (expense)		4,998		3,223		1,775		55.1
Income before income taxes		86,337		78,950		7,387		9.4
Provision for income taxes		21,399		19,091		2,308		12.1
Net income	$	64,938	$	59,859	$	5,079		8.5	%

Net income per common share – Diluted	$	1.72	$	1.59	$	0.13		8.2	%

Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $0.3 million and $0.2 million, respectively, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Revenues

Our revenues for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:


	Three Months Ended June 30,
	2024					2023
	($ in thousands)
			% of Revenues					% of Revenues			$ Change		% Change
Commissions	$	171,679		86.9	%	$	158,586		88.2	%	$	13,093		8.3	%
Information services		12,544		6.3			11,655		6.5			889		7.6
Post-trade services		10,400		5.3			9,415		5.2			985		10.5
Technology services		3,037		1.5			190		0.1			2,847	NM
Total revenues	$	197,660		100.0	%	$	179,846		100.0	%	$	17,814		9.9
NM - not meaningful

Total revenues for the three months ended June 30, 2024 include Pragma revenues of $7.9 million.

Commissions. Our commission revenues for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:


	Three Months Ended June 30,
	2024		2023		$ Change			% Change
	($ in thousands)
Variable transaction fees
Credit	$	127,645	$	118,710	$	8,935			7.5		%
Rates		5,719		4,547		1,172			25.8
Other		5,076		—		5,076		NM
Total variable transaction fees		138,440		123,257		15,183			12.3

Fixed distribution fees
Credit		33,177		35,268		(2,091	)		(5.9	)
Rates		62		61		1			1.6
Total fixed distribution fees		33,239		35,329		(2,090	)		(5.9	)
Total commissions	$	171,679	$	158,586	$	13,093			8.3		%
NM - not meaningful

Credit variable transaction fees increased $8.9 million driven by a 14.2% increase in total credit trading volume, partially offset by a 5.9% decrease in total credit average variable transaction fee per million. Open Trading credit volume totaled $247.4 billion during the three months ended June 30, 2024, an increase of 9.7%, and Open Trading credit variable transaction fees represented 30.2% and 33.4% of total variable transaction fees for the three months ended June 30, 2024 and 2023, respectively. Rates variable transaction fees increased $1.2 million driven principally by a 32.9% increase in trading volumes, partially offset by a 5.3% decrease in average variable transaction fee per million. Other variable transaction fees include equities and foreign exchange commissions earned by Pragma.

Credit fixed distribution fees decreased $2.0 million mainly due to the consolidation of two global dealers and migrations to variable fee plans, partially offset by the addition of new dealer fixed fee plans.

Our trading volumes for the three months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30,
	2024		2023		$ Change			% Change
	($ in millions)
Trading volume data
Credit
High-grade	$	405,440	$	353,239	$	52,201			14.8		%
High-yield		84,248		91,390		(7,142	)		(7.8	)
Emerging markets		210,205		168,257		41,948			24.9
Eurobonds		128,266		116,495		11,771			10.1
Other credit		33,376		24,729		8,647			35.0
Total credit		861,535		754,110		107,425			14.2

Rates
U.S. government bonds		1,236,917		940,127		296,790			31.6
Agency and other government bonds		48,506		26,721		21,785			81.5
Total rates		1,285,423		966,848		318,575			32.9

Total trading volume	$	2,146,958	$	1,720,958	$	426,000			24.8		%

Number of U.S. Trading Days		63		62
Number of U.K. Trading Days		61		60

For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates.

The 14.8% increase in our U.S. high-grade volume was principally due to an increase in estimated market volumes, partially offset by a decrease in our estimated market share. Estimated U.S. high-grade market volume as reported by FINRA’s Trade Reporting and Compliance Engine (“TRACE”) increased by 27.0% to $2.2 trillion for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 18.7% for the three months ended June 30, 2024 from 20.7% for the three months ended June 30, 2023.

U.S. high-yield volume decreased by 7.8% mainly due to a decrease in our estimated market share. Emerging markets volumes increased by 24.9%, mainly due to an increase in local markets trading volumes. Eurobond volumes increased by 10.1%. Other credit volumes increased by 35.0% due to higher municipal bond volumes on higher estimated market share. Rates trading volume increased 32.9%, primarily due to higher estimated market volumes and an increase in our estimated market share.

Our average variable transaction fee per million for the three months ended June 30, 2024 and 2023 was as follows:


	Three Months Ended June 30,
	2024		2023		$ Change			% Change
Average variable transaction fee per million
Credit	$	148.16	$	157.42	$	(9.26	)		(5.9	)	%
Rates		4.45		4.70		(0.25	)		(5.3	)

Credit average variable transaction fee per million decreased by 5.9% to $148.16 per million for the three months ended June 30, 2024, mainly due to a decrease in the duration of U.S. high-grade bonds traded on our platforms and product mix-shift in other credit products.

Information Services. Information services revenue increased by $0.9 million for the three months ended June 30, 2024, mainly due to net new data contract revenue.

Post-Trade Services. Post-trade services revenue increased by $1.0 million for the three months ended June 30, 2024, principally due to price increases and net new contract revenue.

Technology Services. Technology services revenue increased by $2.8 million for the three months ended June 30, 2024 due to technology services revenue generated by Pragma.

Expenses

The following table summarizes our expenses for the three months ended June 30, 2024 and 2023:


	Three Months Ended June 30,
	2024				2023		$ Change			% Change
		($ in thousands)
Expenses
Employee compensation and benefits	$		56,790	$		48,383	$	8,407			17.4		%
Depreciation and amortization			18,356			17,005		1,351			7.9
Technology and communications			17,771			15,235		2,536			16.6
Professional and consulting fees			7,669			8,023		(354	)		(4.4	)
Occupancy			3,714			3,199		515			16.1
Marketing and advertising			3,010			3,308		(298	)		(9.0	)
Clearing costs			4,122			4,182		(60	)		(1.4	)
General and administrative			4,889			4,784		105			2.2
Total expenses	$		116,321	$		104,119	$	12,202			11.7		%

Total expenses for the three months ended June 30, 2024 include Pragma expenses of $7.8 million.

Employee compensation and benefits increased by $8.4 million, primarily due to an increase in salaries, taxes and benefits of $5.0 million on higher employee headcount, largely driven by the Pragma Acquisition, higher employee incentive compensation of $2.3 million and higher stock compensation expense of $1.2 million.

Depreciation and amortization increased by $1.4 million, primarily due to higher amortization of software development costs of $0.8 million and higher amortization of intangibles of $0.5 million.

Technology and communications expenses increased by $2.5 million, primarily due to higher software subscription costs of $0.8 million, higher connectivity costs of $0.7 million, higher production data costs of $0.3 million, higher market data costs of $0.2 million, higher data center hosting costs of $0.2 million and higher U.S. Treasury platform licensing fees of $0.2 million.

Professional and consulting fees decreased by $0.4 million, primarily due to lower IT consulting costs of $0.4 million, lower acquisition-related integration consulting fees of $0.4 million and lower recruiting fees of $0.3 million, offset by higher legal expenses of $0.6 million and higher audit and tax costs of $0.2 million.

Marketing expenses decreased by $0.3 million, primarily due to lower advertising and promotional costs.

Other Income (Expense)

Our other income (expense) for the three months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:


	Three Months Ended June 30,
	2024					2023			$ Change			% Change
		($ in thousands)
Interest income	$		6,401		$		5,312		$	1,089				20.5		%
Interest expense			(621	)			(53	)		(568	)		NM
Equity in earnings of unconsolidated affiliate			354				250			104				41.6
Other, net			(1,136	)			(2,286	)		1,150				(50.3	)
Total other income (expense)	$		4,998		$		3,223		$	1,775				55.1		%
NM - not meaningful

Interest income increased by $1.1 million driven by higher interest rates.

Interest expense increased by $0.6 million primarily due to higher financing charges incurred under our short-term borrowings.

Other, net increased by $1.2 million primarily due to unrealized gains of $0.3 million on our U.S. Treasury investments in the current period compared to unrealized losses of $0.8 million in the prior period.

Provision for Income Taxes

The provision for income taxes and effective tax rate for the three months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30,
	2024					2023			$ Change		% Change
		($ in thousands)
Provision for income taxes	$		21,399		$		19,091		$	2,308		12.1	%

Effective tax rate			24.8	%			24.2	%

Our consolidated effective tax rate can vary from period to period depending on the geographic mix of our earnings, changes in tax legislation and tax rates and the amount and timing of excess tax benefits related to share-based payments, among other factors.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

The following table summarizes our financial results for the six months ended June 30, 2024 and 2023:


	Six Months Ended June 30,
	2024		2023		$ Change		% Change
	($ in thousands, except per share amounts)
Revenues	$	407,978	$	383,015	$	24,963		6.5	%
Expenses		234,139		211,932		22,207		10.5
Operating income		173,839		171,083		2,756		1.6
Other income (expense)		9,215		6,062		3,153		52.0
Income before income taxes		183,054		177,145		5,909		3.3
Provision for income taxes		45,501		43,658		1,843		4.2
Net income	$	137,553	$	133,487	$	4,066		3.0	%

Net income per common share – Diluted	$	3.64	$	3.55	$	0.09		2.5	%

Changes in average foreign currency exchange rates compared to the U.S. dollar had the effect of increasing revenues and expenses by $1.2 million and $0.8 million, respectively, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Revenues

Our revenues for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:


	Six Months Ended June 30,
	2024					2023
	($ in thousands)
			% of Revenues					% of Revenues			$ Change		% Change
Commissions	$	356,552		87.4	%	$	340,577		88.9	%	$	15,975		4.7	%
Information services		24,425		6.0			22,665		5.9			1,760		7.8
Post-trade services		21,130		5.2			19,395		5.1			1,735		8.9
Technology services		5,871		1.4			378		0.1			5,493	NM
Total revenues	$	407,978		100.0	%	$	383,015		100.0	%		24,963		6.5	%
NM - not meaningful

Total revenues for the six months ended June 30, 2024 include Pragma revenues of $15.5 million.

Commissions. Our commission revenues for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:


	Six Months Ended June 30,
	2024		2023		$ Change			% Change
	($ in thousands)
Variable transaction fees
Credit	$	269,149	$	259,680	$	9,469			3.6		%
Rates		10,885		10,805		80			0.7
Other		9,925		—		9,925		NM
Total variable transaction fees		289,959		270,485		19,474			7.2

Fixed distribution fees
Credit		66,465		69,952		(3,487	)		(5.0	)
Rates		128		140		(12	)		(8.6	)
Total fixed distribution fees		66,593		70,092		(3,499	)		(5.0	)
Total commissions	$	356,552	$	340,577	$	15,975			4.7		%
NM - not meaningful

Credit variable transaction fees increased $9.5 million driven by a 10.6% increase in trading volume, partially offset by a 6.3% decrease in average variable transaction fee per million. Open Trading credit volume totaled $516.8 billion during the six months ended June 30, 2024, an increase of 2.4%, and Open Trading credit variable transaction fees represented 30.9% and 35.1% of total variable transaction fees for the six months ended June 30, 2024 and 2023, respectively.

Credit fixed distribution fees decreased $3.5 million mainly due to the consolidation of two global dealers and migrations to variable fee plans, partially offset by the addition of new dealer fixed fee plans.

Our trading volumes for the six months ended June 30, 2024 and 2023 were as follows:


	Six Months Ended June 30,
	2024		2023		$ Change			% Change
	($ in millions)
Trading volume data
Credit
High-grade	$	861,438	$	745,954	$	115,484			15.5		%
High-yield		169,627		214,263		(44,636	)		(20.8	)
Emerging markets		431,632		360,098		71,534			19.9
Eurobonds		257,115		234,861		22,254			9.5
Other credit		59,705		53,412		6,293			11.8
Total credit		1,779,517		1,608,588		170,929			10.6

Rates
U.S. government bonds		2,282,713		2,431,419		(148,706	)		(6.1	)
Agency and other government bonds		80,132		53,782		26,350			49.0
Total rates		2,362,845		2,485,201		(122,356	)		(4.9	)

Total trading volume	$	4,142,362	$	4,093,789	$	48,573			1.2		%

Number of U.S. Trading Days		124		124
Number of U.K. Trading Days		124		124

For volume reporting purposes, transactions in foreign currencies are converted to U.S. dollars at average monthly rates.

The 15.5% increase in our U.S. high-grade volume was principally due to an increase in overall market volume, partially offset by a decrease in our estimated market share. Estimated U.S. high-grade market volume as reported by TRACE increased by 22.8% to $4.5 trillion for the six months ended June 30, 2024. Our estimated market share of total U.S. high-grade corporate bond volume decreased to 19.1% for the six months ended June 30, 2024 from 20.3% for the six months ended June 30, 2023.

U.S. high-yield volume decreased by 20.8%, mainly due to a decrease in our estimated market share. Emerging markets volumes increased by 19.9%, mainly due to an increase in local markets trading volumes. Eurobonds volume increased by 9.5%. Other credit volumes increased 11.8%, driven by higher municipal bonds volume on higher estimated market share. Rates trading volume decreased 4.9%, primarily due to a decrease in our estimated market share.

Our average variable transaction fee per million for the six months ended June 30, 2024 and 2023 was as follows:


	Six Months Ended June 30,
	2024		2023		$ Change			% Change
Average variable transaction fee per million
Credit	$	151.25	$	161.43	$	(10.18	)		(6.3	)	%
Rates		4.61		4.35		0.26			6.0

Credit average variable transaction fee per million decreased by 6.3% to $151.25 per million for the six months ended June 30, 2024, mainly due to a decrease in the duration of U.S. high-grade bonds traded on our platforms and product mix-shift in other credit products.

Information Services. Information services revenue increased by $1.8 million for the six months ended June 30, 2024, mainly due to net new data contract revenue of $1.5 million and the positive impact of foreign currency fluctuations of $0.3 million.

Post-Trade Services. Post-trade services revenue increased by $1.7 million for the six months ended June 30, 2024, principally due to price increases and net new contract revenue of $1.5 million and the positive impact of foreign currency fluctuations of $0.2 million.

Technology Services. Technology services revenue increased by $5.5 million for the six months ended June 30, 2024 due to technology services revenue generated by Pragma.

Expenses

The following table summarizes our expenses for the six months ended June 30, 2024 and 2023:


	Six Months Ended June 30,
	2024				2023		$ Change				% Change
		($ in thousands)
Expenses
Employee compensation and benefits	$		118,054	$		100,698		$	17,356			17.2		%
Depreciation and amortization			36,556			33,466			3,090			9.2
Technology and communications			34,822			30,234			4,588			15.2
Professional and consulting fees			14,064			15,150			(1,086	)		(7.2	)
Occupancy			7,139			6,810			329			4.8
Marketing and advertising			4,843			6,303			(1,460	)		(23.2	)
Clearing costs			9,033			8,727			306			3.5
General and administrative			9,628			10,544			(916	)		(8.7	)
Total expenses	$		234,139	$		211,932			22,207			10.5		%

Total expenses for the six months ended June 30, 2024 include Pragma expenses of $15.6 million.

Employee compensation and benefits increased by $17.4 million, primarily due to an increase in salaries, taxes and benefits of $12.1 million on higher employee headcount, largely driven by the Pragma Acquisition, higher employee incentive compensation of $4.3 million and higher stock compensation expense of $0.9 million.

Depreciation and amortization increased by $3.1 million, primarily due to higher amortization of software development costs of $1.8 million and higher amortization of intangibles of $1.4 million.

Technology and communications expenses increased by $4.6 million, primarily due to higher software subscription costs of $1.4 million, higher connectivity costs of $1.4 million, higher market data costs of $0.5 million, higher production data costs of $0.3 million, higher data center hosting costs of $0.3 million, higher IT support costs of $0.3 million and higher U.S. treasury platform licensing fees of $0.2 million.

Professional and consulting fees decreased by $1.1 million, primarily due to lower IT consulting costs of $2.3 million, offset by higher audit and tax costs of $0.9 million and higher acquisition-related integration consulting fees of $0.2 million.

Marketing expenses decreased by $1.5 million, primarily due to lower advertising and promotional expenses of $2.0 million, offset by higher sales-related travel and entertainment costs of $0.5 million.

General and administrative expenses decreased by $0.9 million, primarily due to lower reserves related to a dispute with a vendor of $0.5 million and lower employee relocation expense of $0.2 million.

Other Income (Expense)

Our other income (expense) for the six months ended June 30, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:


	Six Months Ended June 30,
	2024					2023			$ Change			% Change
		($ in thousands)
Interest income	$		12,374		$		9,561		$	2,813		NM
Interest expense			(937	)			(183	)		(754	)		412.0	%
Equity in earnings of unconsolidated affiliate			724				454			270			59.5
Other, net			(2,946	)			(3,770	)		824		NM
Total other income (expense)	$		9,215		$		6,062		$	3,153			52.0	%
NM - not meaningful

Interest income increased by $2.8 million driven by higher interest rates.

Interest expense increased by $0.8 million due to higher financing charges incurred under our short-term borrowing arrangements.

Other, net increased by $0.8 million primarily driven by lower foreign currency transaction losses compared to the prior period.

Provision for Income Taxes

The provision for income taxes and effective tax rate for the six months ended June 30, 2024 and 2023 were as follows:


	Six Months Ended June 30,
	2024				2023			$ Change		% Change
		($ in thousands)
Provision for income taxes	$		45,501		$	43,658		$	1,843		4.2	%

Effective tax rate			24.9	%		24.6	%

Liquidity and Capital Resources

During the six months ended June 30, 2024, we have met our funding requirements through cash on hand, internally generated funds and short-term borrowings. Cash and cash equivalents and corporate bond and U.S. Treasury investments totaled $558.8 million as of June 30, 2024. Our investments generally consist of investment-grade corporate bonds and U.S. Treasury securities. We limit the amounts that can be invested in any single issuer and invest in short- to intermediate-term instruments whose fair values are less sensitive to interest rate changes.

In August 2023, we entered into the 2023 Credit Agreement, which provides aggregate commitments totaling $750.0 million, including a revolving credit facility, a $5.0 million letter of credit sub-limit for standby letters of credit and a $380.0 million sub-limit for swingline loans. The 2023 Credit Agreement will mature on August 9, 2026, with our option to request up to two additional 364-day extensions at the discretion of each lender and subject to customary conditions. As of June 30, 2024, we had $0.1 million in letters of credit outstanding and $749.9 million in available borrowing capacity under the 2023 Credit Agreement. Borrowings under the 2023 Credit Agreement will bear interest at a rate per annum equal to the alternate base rate or the adjusted term SOFR rate, plus an applicable margin that varies with our consolidated total leverage ratio. The 2023 Credit Agreement requires that we satisfy certain covenants, including a requirement to not exceed a maximum consolidated total leverage ratio. We were in compliance with all applicable covenants at June 30, 2024. See Note 11 to the Consolidated Financial Statements for a discussion of the 2023 Credit Agreement.

In connection with their self-clearing operations, certain of our operating subsidiaries maintain agreements with a settlement bank to allow the subsidiaries to borrow an aggregate of up to $500.0 million on an uncommitted basis, collateralized by eligible securities pledged by the subsidiaries to the settlement bank, subject to certain haircuts. Borrowings under these agreements will bear interest at a base rate per annum equal to the higher of the upper range of the Federal Funds Rate, 0.25% or one-month SOFR, plus 1.00%. As of June 30, 2024, the subsidiaries had no borrowings outstanding and up to $500.0 million in available uncommitted borrowing capacity under such agreements. See Note 11 to the Consolidated Financial Statements for a discussion of these agreements.

Under arrangements with their settlement banks, certain of our operating subsidiaries may receive overnight financing in the form of bank overdrafts. As of June 30, 2024, we had no overdrafts payable outstanding.

As a result of our self-clearing and settlement activities, we are required to finance certain transactions, maintain deposits with various clearing organizations and clearing broker-dealers and maintain a special reserve bank account for the benefit of customers pursuant to Rule 15c3-3 of the Exchange Act. As of June 30, 2024, the aggregate amount of the positions financed, cash deposits and customer reserve balances associated with our self-clearing and settlement activities was $223.0 million. These requirements can fluctuate based on trading activity, market volatility or other factors which may impact our liquidity or require us to use our capital resources.

Cash Flows for the Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Our cash flows were as follows:


	Six Months Ended June 30,
	2024			2023			$ Change			% Change
	($ in thousands)
Net cash provided by operating activities	$	113,900		$	112,921		$	979			0.9		%
Net cash (used in) investing activities		(33,753	)		(47,767	)		14,014			(29.3	)
Net cash (used in) financing activities		(114,015	)		(87,670	)		(26,345	)		30.1
Effect of exchange rate changes on cash and cash equivalents		(3,674	)		7,181			(10,855	)	NM
Net decrease for the period	$	(37,542	)	$	(15,335	)	$	(22,207	)		144.8		%
NM - not meaningful

The $1.0 million increase in net cash provided by operating activities was primarily due to higher net income of $4.1 million, higher depreciation and amortization of $3.1 million, lower accounts receivable of $10.2 million, lower prepaid expenses and other assets of $12.2 million and an increase in accrued compensation, income and other tax liabilities, and accounts payable, accrued expenses and other liabilities of $16.3 million, partially offset by higher net receivables from broker-dealers, clearing organizations and customers and securities sold, not yet purchased associated with our clearing activities of $45.3 million.

The $14.0 million decrease in net cash used in investing activities was primarily due to lower net purchases of available-for-sale investments of $24.4 million, offset by higher capital expenditures of $10.4 million.

The $26.3 million increase in net cash used in financing activities was principally due to higher repurchases of common stock of $43.6 million and higher cash dividends of $2.0 million, offset by lower withholding tax payments on full value awards vesting of $5.5 million, lower payments of contingent consideration of $12.5 million and higher exercises of stock options of $1.3 million.

The $10.9 million change in the effect of exchange rate changes on cash and cash equivalents was driven by changes in the cumulative translation adjustment.

Past trends of cash flows are not necessarily indicative of future cash flow levels. A decrease in cash flows may have a material adverse effect on our liquidity, business and financial condition.

Other Factors Influencing Liquidity and Capital Resources

We believe that our current resources are adequate to meet our liquidity needs and requirements, including commitments for capital expenditures, in the short-term (during the next 12 months). However, our future liquidity and capital requirements will depend on a number of factors, including liquidity requirements associated with our self-clearing operations and expenses associated with product development and expansion and new business opportunities that are intended to further diversify our revenue streams. We may also acquire or invest in technologies, business ventures or products that are complementary to our business. In the event we require any additional financing, it will take the form of equity or debt financing. Any additional equity offerings may result in dilution to our stockholders. Any debt financings, if available at all, may involve restrictive covenants with respect to dividends, issuances of additional capital and other financial and operational matters related to our business. In addition, in the long-term (beyond 12 months), we believe our liquidity needs and requirements will be affected by the factors discussed above.

Certain of our U.S. subsidiaries are registered as broker-dealers and therefore are subject to the applicable rules and regulations of the SEC and FINRA. These rules contain minimum net capital requirements, as defined in the applicable regulations. Certain of our foreign subsidiaries are regulated by the FCA in the U.K. or other foreign regulators and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of June 30, 2024, each of our subsidiaries that are subject to these regulations had net capital or financial resources in excess of their minimum requirements. As of June 30, 2024, our subsidiaries maintained aggregate net capital and financial resources that were $565.6 million in excess of the required levels of $35.8 million.

Each of our U.S. and foreign regulated subsidiaries are subject to local regulations which generally limit, or require the prior notification to or approval from such regulated entity’s principal regulator before, the repayment of borrowings from our affiliates, paying cash dividends, making loans to our affiliates or otherwise entering into transactions that result in a significant reduction in regulatory net capital or financial resources.

We execute securities transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. Our operating subsidiaries settle such transactions using their self-clearing operations or through the use of third-party clearing brokers or settlement agents. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded. Under both the self-clearing and the third-party clearing models, we may be exposed to credit risk in the event a counterparty does not fulfill its obligation to complete a transaction or if there is an error in executing a matched principal transaction. Pursuant to the terms of the securities clearing agreements, each third-party clearing broker has the right to charge us for any losses they suffer resulting from a counterparty’s failure on any of our trades. We did not record any liabilities or losses with regard to counterparty failures for the six months ended June 30, 2024 and 2023. Substantially all of our open securities failed-to-deliver and securities failed-to-receive transactions as of June 30, 2024 have subsequently settled at the contractual amounts.

In the normal course of business, we enter into contracts that contain a variety of representations, warranties and indemnification provisions. Our maximum exposure from any claims under these arrangements is unknown, as this would involve claims that have not yet occurred.

We have leases for corporate offices and equipment with initial lease terms ranging from one year to 15 years. We have total future contractual rent payments on these leases of $99.7 million, with $12.8 million due within the next 12 months and $86.9 million due beyond 12 months.

We enter into foreign currency forward contracts to economically hedge our exposure to variability in certain foreign currency transaction gains and losses. As of June 30, 2024, the notional value of our foreign currency forward contract outstanding was $62.7 million and the fair value of the asset was $0.5 million.

In January 2022, our Board of Directors authorized the 2022 Repurchase Program for up to $150.0 million. As of June 30, 2024, we had $56.4 million of remaining capacity under the 2022 Repurchase Program. In August 2024, the Board of Directors authorized the 2024 Repurchase Program for up to $200.0 million, in addition to the $50.0 million remaining under the 2022 Repurchase Program. Shares repurchased under the Repurchase Programs will be held in treasury for future use.

In July 2024, our Board of Directors approved a quarterly cash dividend of $0.74 per share payable on September 4, 2024 to stockholders of record as of the close of business on August 21, 2024. Any future declaration and payment of dividends will be at the sole discretion of our Board of Directors.

On April 19, 2024, we entered into an agreement to acquire an additional 49.0% interest in RFQ–hub Holdings LLC for approximately $37.9 million of cash consideration. The acquisition is subject to various closing conditions, including the receipt of certain regulatory approvals. The acquisition is expected to close during the second half of 2024. Upon the closing of the acquisition, we will hold a 92.0% controlling stake in RFQ-hub Holdings LLC.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, we use certain non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and free cash flow. We define EBITDA margin as EBITDA divided by revenues. We define free cash flow as net cash provided by/(used in) operating activities excluding the net change in trading investments and net change in securities failed-to-deliver and securities failed-to-receive from broker-dealers, clearing organizations and customers, less expenditures for furniture, equipment and leasehold improvements and capitalized software development costs. We believe these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in understanding our operating results. EBITDA, EBITDA margin and free cash flow are not measures of financial performance or liquidity under GAAP and therefore should not be considered an alternative to net income or cash flow from operating activities as an indicator of operating performance or liquidity. We believe that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, provide additional information regarding our operating results because they assist both investors and management in analyzing and evaluating the performance of our business.

The table set forth below presents a reconciliation of our net income to EBITDA and net income margin to EBITDA margin, as defined above, for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	($ in thousands)
Net income	$	64,938		$	59,859		$	137,553		$	133,487
Interest income		(6,401	)		(5,312	)		(12,374	)		(9,561	)
Interest expense		621			53			937			183
Provision for income taxes		21,399			19,091			45,501			43,658
Depreciation and amortization		18,356			17,005			36,556			33,466
EBITDA	$	98,913		$	90,696		$	208,173		$	201,233

Net income margin		32.9	%		33.3	%		33.7	%		34.9	%
Interest income		(3.2	)		(3.0	)		(3.0	)		(2.5	)
Interest expense		0.3			—			0.2			—
Provision for income taxes		10.7			10.6			11.1			11.4
Depreciation and amortization		9.3			9.5			9.0			8.7
EBITDA margin		50.0	%		50.4	%		51.0	%		52.5	%

The table set forth below presents a reconciliation of our net cash provided by operating activities to free cash flow, as defined above, for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	($ in thousands)
Net cash provided by operating activities	$	118,849		$	105,394		$	113,900		$	112,921
Exclude: Net change in trading investments		100			(890	)		(155	)		(471	)
Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers		(3,151	)		(46,010	)		48,137			757
Less: Purchases of furniture, equipment and leasehold improvements		(7,695	)		(1,055	)		(8,892	)		(1,272	)
Less: Capitalization of software development costs		(10,496	)		(11,025	)		(24,459	)		(21,715	)
Free Cash Flow	$	97,607		$	46,414		$	128,531		$	90,220

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of the loss resulting from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates.

Market Risk

The global financial services business is, by its nature, risky and volatile and is directly affected by many national and international factors that are beyond our control. Any one of these factors may cause a substantial decline in the U.S. and global financial services markets, resulting in reduced trading volume and revenues. These events could have a material adverse effect on our business, financial condition and results of operations.

As of June 30, 2024, we had $99.5 million of investments in U.S. Treasuries that were classified as trading securities and $25.2 million of investments in corporate bonds that were classified as available-for-sale. Adverse movements, such as a decrease in the value of these securities or a downturn or disruption in the markets for these securities, could result in a substantial loss. A 10.0% decrease in the market value of our U.S Treasuries or available-for-sale investments would result in losses of approximately $10.0 million and $2.5 million, respectively. In addition, principal gains and losses resulting from these securities could on occasion have a disproportionate effect, positive or negative, on our financial condition and results of operations for any particular reporting period.

Interest Rate Risk

Interest rate risk represents our exposure to interest rate changes with respect to our cash and cash equivalents, restricted cash and cash deposits. As of June 30, 2024, our cash and cash equivalents, restricted cash and cash deposits amounted to $574.1 million. A hypothetical 100 basis point change in interest rates would increase or decrease our annual interest income by approximately $5.7 million, assuming no change in the amount or composition of our cash and cash equivalents, restricted cash and cash deposits.

As of June 30, 2024, a hypothetical 100 basis point increase or decrease in interest rates would decrease or increase the fair value of the available-for-sale investment portfolio by approximately $0.3 million, assuming no change in the amount or composition of the investments. The hypothetical unrealized gain (loss) of $0.3 million would be recognized in accumulated other comprehensive loss on the Consolidated Statements of Financial Condition.

A similar hypothetical 100 basis point increase or decrease in interest rates would decrease or increase the fair value of the trading securities portfolio by approximately $0.6 million. The hypothetical unrealized gain (loss) of $0.6 million would be recognized in other, net in the Consolidated Statements of Operations.

We do not maintain an inventory of bonds that are traded on our platform.

Foreign Currency Exchange Rate Risk

We conduct operations in several different countries outside of the U.S., most notably the U.K., and substantial portions of our revenues, expenses, assets and liabilities are generated and denominated in non U.S. dollar currencies. Since our consolidated financial statements are presented in U.S. dollars, we must translate revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Accordingly, increases or decreases in the value of the U.S. dollar against the other currencies will affect our net operating revenues, operating expenses, operating income and the value of balance sheet items denominated in foreign currencies.

During the twelve months ended June 30, 2024, approximately 15.9% of our revenues and 24.7% of our expenses were denominated in currencies other than the U.S. dollar, most notably the British Pound Sterling. Based on actual results over the past year, a hypothetical 10.0% increase or decrease in the U.S. dollar against all other currencies would have increased or decreased revenue by approximately $12.4 million and operating expenses by approximately $11.4 million.

Credit Risk

Through certain of our subsidiaries, we execute securities transactions between our institutional investor and broker-dealer clients on a matched principal basis by serving as counterparty to both the buyer and the seller in trades. Our operating subsidiaries settle such transactions using their self-clearing operations or through the use of third-party clearing brokers or settlement agents. Settlement typically occurs within one to two trading days after the trade date. Cash settlement of the transaction occurs upon receipt or delivery of the underlying instrument that was traded.

We are exposed to credit and performance risks in our role as matched principal trading counterparty to our clients executing bond trades on our platform, including the risk that counterparties that owe us money or securities will not perform their obligations. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. Adverse movements in the prices of securities that are the subject of these transactions can increase our risk. In connection with Open Trading or other anonymous protocols, we expect that the number of transactions in which we act as a matched principal will increase.

We have policies, procedures and automated controls in place to identify and manage our credit risk. There can be no assurance that these policies, procedures and automated controls will effectively mitigate our credit risk exposure. Some of our risk management procedures are reliant upon the evaluation of information regarding the fixed-income markets, our clients or other relevant matters that are publicly available or otherwise acquired from third party sources. Such information may not be accurate, complete, up-to-date or properly assessed and interpreted by us. If our risk management procedures fail, our business, financial condition and results of operations may be adversely affected. Furthermore, our insurance policies are unlikely to provide coverage for such risks.

Cash and cash equivalents include cash and money market instruments that are primarily maintained at three major global banks. Given this concentration, we are exposed to certain credit risk in relation to our deposits at these banks.

Derivative Risk

Our limited derivative risk stems from our activities in the foreign currency forward contract market. We use this market to economically hedge our foreign exchange gains and losses on the Consolidated Statements of Operations that arise from our U.S. dollar versus British Pound Sterling exposure from the activities of our U.K. subsidiaries. As of June 30, 2024, the notional amount of our foreign currency forward contract was $62.7 million. We do not hold derivative instruments for purposes other than economically hedging foreign currency risk.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. Our management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act, as of June 30, 2024. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by MarketAxess in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2024 identified in connection with the evaluation thereof by our management, including the Chief Executive Officer and the Chief Financial Officer, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — Other Information

Item 1. Legal Proceedings

In the normal course of business, we and our subsidiaries included in the consolidated financial statements may be involved in various lawsuits, proceedings and regulatory examinations. We assess liabilities and contingencies in connection with outstanding legal proceedings, if any, utilizing the latest information available. Based on currently available information, the outcome of our outstanding matters is not expected to have a material adverse impact on our financial position. It is not presently possible to determine our ultimate exposure to these matters and there is no assurance that the resolution of the outstanding matters will not significantly exceed any reserves accrued by us. See Note 13 to the Consolidated Financial Statements for a discussion of our commitments and contingencies.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our most recent Form 10-K for the year ended December 31, 2023. For a discussion of the risk factors affecting the Company, see “Risk Factors” in Part I, Item 1A of our 2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

During the quarter ended June 30, 2024, we repurchased the following shares of common stock:


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
							(In thousands)
April 1, 2024 - April 30, 2024		37,223	$	212.35		36,279	$	82,172
May 1, 2024 - May 31, 2024		41,927		207.48		41,927		73,473
June 1, 2024 - June 30, 2024		86,205		197.83		86,205		56,419
Total		165,355	$	203.55		164,411

During the three months ended June 30, 2024, we repurchased 165,355 shares of common stock. The repurchases included 164,411 shares repurchased in connection with our share repurchase program and 944 shares surrendered by employees to satisfy the withholding tax obligations upon the vesting of full value awards and upon the exercise of stock options.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

In the second quarter of 2024, no director or officer (as defined in Exchange Act Rule 16a-1(f)) of the Company or a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement for the purchase or sale of securities of the Company, within the meaning of Item 408 of Regulation S-K.

Item 6. Exhibits

Exhibit Index:


Number		Description

3.1		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of MarketAxess Holdings Inc. (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated June 5, 2024).
3.2		Amended and Restated Bylaws of MarketAxess Holdings Inc. (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K dated July 17, 2024).
10.1		Letter Agreement dated as of May 27, 2024, by and between Ilene Fiszel Bieler and MarketAxess Holdings Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s Amended Current Report in Form 8-K/A dated February 21, 2024 and filed on May 30, 2024).#
31.1*		Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
104		The cover page from the Company’s Quarterly report on Form 10-Q for the quarter ended June 30, 2024 has been formatted in Inline XBRL and is included in Exhibits 101.


*		Filed herewith.
#		Certain confidential information, identified by bracketed asterisks “[*****]” has been omitted from this exhibit pursuant to Item 601(b)(10) of Regulation S-K because it is both (i) not material and (ii) is the type that the registrant treats as private or confidential.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MARKETAXESS HOLDINGS INC.

Date: August 6, 2024	By:	/s/ CHRISTOPHER R. CONCANNON
		Christopher R. Concannon
		Chief Executive Officer
		(principal executive officer)




Date: August 6, 2024	By:	/s/ ILENE FISZEL BIELER
		Ilene Fiszel Bieler
		Chief Financial Officer
		(principal financial officer)

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