MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listening mode. Later, we will conduct a question and answer session. At that time, if you have a question, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key at any time. Please note, each person is limited to one question before being asked to rejoin the queue. As a reminder, this conference call is being recorded on October 27, 2020. I would now like to turn the call over to Dave Cressy, Investor Relations Manager at Market Access. Please go ahead, sir.

Good morning, and welcome to the Market Access third quarter 2020 conference call. For the call, Rick McVeigh, Chairman and Chief Executive Officer, will review the highlights for the quarter. Chris Kincannon, President and COO, will discuss automation and new initiatives. And then Tony DeLese, Chief Financial Officer, will review the financial results Before I turn the call over to Rick, let me remind you that today's call may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain. The company's actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For discussion of some of the risks and factors that could affect the company's future results, please see the description of risk factors in our annual report on Form 10-K for the year ended December 31st, 2019, and our quarterly report on Form 10-Q for the second quarter. I would also direct you to read the forward-looking statement disclaimer in our quarterly earnings release, which was issued earlier this morning and is now available on our website. Now let me turn the call over to Rick.

Good morning, and thank you for joining us to review our third quarter results. Sustained growth in electronic trading adoption by a diverse range of market participants drove trading volumes higher during the quarter. Revenue of $164 million was up 25% year over year. Operating income of $88 million was up 33%, and operating margins grew to 53.5%. Diluted earnings per share of $1.78 are up 25% from a year ago. Market share gains fueled the revenue and earnings growth with fully electronic high-grade share up two percentage points to a record 22.2% and high-yield share up over four percentage points to a record 16%. Open trading volume was up 41% year-over-year driving estimated client transaction cost savings of over $250 million for the quarter. Trailing 12 months EPS growth of 37% and revenue growth of 31% show an acceleration of growth rates over the last four quarters. Slide four provides an update on market conditions. Credit market trading conditions were mixed for our business during the quarter. Credit spreads, and spread volatility both trended lower versus the elevated levels earlier this year. New issue volume dropped substantially from Q2 but was 30% higher than Q3 last year. Corporate debt outstanding is up approximately 9% this year to $10.4 trillion. Trace high-grade and high-yield market volumes declined approximately 28% from Q2 levels but show high single-digit growth from last year. We are pleased to see the positive trend in average years to maturity for our high-grade volume. This demonstrates growing client confidence, trading high-quality, long-maturity bond volume on our system. It is also one of the factors driving our average fee capture higher. Slide 5 provides an update on open trading. Open trading continues to show strong year-over-year growth in spite of the return to more normal market conditions with lower volatility in Q3. Our unique all-to-all marketplace delivered a volume increase of 41% and revenue growth of 53% versus last year. For the third quarter in a row, estimated transaction cost savings of $252 million increased delivered to our clients exceed company revenues. We are adding value to liquidity takers and liquidity providers by delivering over 25,000 credit trading opportunities per day and over $14 billion in daily notional volume. For the quarter, open trading represented approximately 33% of our trading volume and 27% of our commission revenue. Dealer-initiated open trading volume grew 37% year over year. Nearly 1,600 unique client firms completed at least one trade in open trading, and nearly 1,000 firms provided liquidity on the system during the third quarter. We believe our large and growing lead in institutional customer order flow, substantial investor and dealer network, and unique technology solutions create a sustainable competitive advantage in electronic credit trading. We are also excited about the new trading protocols and product areas we are adding to open trading. Now let me turn the call over to Chris to provide an update on automation and new initiatives.