MarketAxess Revenues Fall in Second Quarter

HFT and FX: A Volatile Mix
  • Revenues of $176.3 million, down 5%
  • Operating income of $87.2 million, down 16%
  • Operating margin of 49.4%
  • Diluted EPS of $1.77, down 20% from $2.20
  • 2-year compound annual growth rates of 19% for revenue and 20% for operating income compared to second quarter of 2019
  • Estimated U.S. high-grade market share of 21.1%
  • Record municipal bond trading volume; closed MuniBrokers transaction in April 2021
  • Emerging market trading volume up 11%; estimated market volumes down 17%
  • Record active total client firms of 1,842 and international client firms of 930

*All comparisons versus second quarter 2020 unless otherwise stated.

MarketAxess Holdings, the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, announced results for the quarter ended June 30, 2021.

“Second quarter results were heavily impacted by low levels of credit market volatility in a very tough year over year comparison for MarketAxess,” said Chairman and CEO Rick McVey. “We are proud of the Company’s record results achieved last Spring during elevated credit spread volatility and high market volume caused by the Pandemic and, though we were not able to duplicate those results, we believe the Company’s long-term revenue and earnings growth rates remain on track. In addition to consistent long-term growth in our core business, we are excited about the progress we are making in our international business, emerging markets, municipal bonds, and new trading protocols. We believe our investments are creating a much broader foundation for future growth that will be evident when more normal levels of volatility return to fixed income markets.”

Second Quarter Results

Total revenues for the second quarter of 2021 decreased 4.6% to $176.3 million, compared to $184.8 million for the second quarter of 2020. Operating income was $87.2 million, compared to $104.1 million for the second quarter of 2020, a decrease of 16.3%. Operating margin was 49.4%, compared to 56.4% for the second quarter of 2020. Net income totaled $67.3 million, or $1.77 per share on a diluted basis, compared to $83.9 million, or $2.20 per share, for the second quarter of 2020.

Commission revenue for the second quarter of 2021 decreased 9.1% to $156.4 million, compared to $172.1 million for the second quarter of 2020. Variable transaction fees decreased 13.0% to $127.1 million for the second quarter of 2021, compared to variable transaction fees of $146.0 million for the second quarter of 2020. Commission revenue includes $1.1 million generated by MuniBrokers, which was acquired in April 2021. U.S. high-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume was an estimated 21.1% for the second quarter of 2021, compared to an estimated 21.5% for the second quarter of 2020. Estimated U.S. credit TRACE trading volume decreased by 18.7% year-over-year.

All other revenue, which consists of information services, post-trade services and other revenue, increased to $19.9 million, compared to $12.7 million for the second quarter of 2020. The increase in all other revenue was principally due to $3.8 million of regulatory trade reporting revenue generated by Regulatory Reporting Hub, which was acquired from Deutsche Börse Group in November 2020, and $1.3 million of revenue due to the weaker U.S. dollar to U.K. pound sterling exchange rate.

Total expenses for the second quarter of 2021 increased 10.5% to $89.2 million, compared to $80.7 million for the second quarter of 2020. The increase in total expenses was largely due to higher depreciation and amortization of $4.8 million, which includes $2.8 million of acquired intangibles expense; higher professional and consulting fees of $2.6 million, mainly attributable to non-recurring integration costs associated with the Regulatory Reporting Hub transaction of $1.3 million and self-clearing consulting fees of $0.7 million; and higher technology and communication costs of $2.0 million which was partially offset by a decrease in clearing costs of $1.3 million. Expenses in the second quarter of 2021 reflect operating expenses and costs associated with the MuniBrokers and Regulatory Reporting Hub businessess totaling $5.1 million. Excluding the MuniBrokers and Regulatory Reporting Hub expenses, total expenses for the quarter were up 4.2%.

The effective tax rate for the second quarter of 2021 was 21.8%, compared to 19.7% for the second quarter of 2020. The income tax provision for the second quarter of 2021 and 2020 reflected $5.6 million and $5.7 million, respectively, of excess tax benefits related to share-based compensation awards.

Employee headcount was 637 as of June 30, 2021 compared to 561 as of June 30, 2020. The increase in headcount was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation, new trading protocols and the transition to self-clearing.


The Company’s board of directors declared a quarterly cash dividend to $0.66 per share of common stock outstanding, to be paid on August 18, 2021 to stockholders of record as of the close of business on August 4, 2021.

Share Repurchases

A total of 28,701 shares were repurchased in the second quarter of 2021 at a cost of $13.4 million.

Balance Sheet Data

As of June 30, 2021, total assets were $1.5 billion and included $449.5 million in cash, cash equivalents and investments. Total stockholders’ equity as of June 30, 2021 was $1.0 billion.

Source: MarketAxess

Related articles

  1. Trading Europe From ‘Across the Pond’

    The faster set up of new bonds means clients can service early secondary execution more quickly.

  2. Tokenization of bonds is one of the initiatives financial institutions are most eager to pursue.

  3. BlackRock estimates bond ETFs will reach $5 trillion in assets by the end of the decade.

  4. Clearinghouses Ease Transition to Basel III

    Responsibility for initiating this process lies with the bond issuer.

  5. ISDA survey shows variety of views on whether increased clearing would improve resilience and efficiency.