MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only 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'd 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 January 27, 2021. 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 fourth quarter 2020 conference call. For the call, Rick McVeigh, Chairman and Chief Executive Officer, will review the highlights for the quarter and full year 2020. Chris Kincannon, President and Chief Operating Officer, will discuss automation and growth initiatives. and then Tony DeLee's 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 a 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 31, 2019, and our quarterly report on Form 10-Q for the third 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 fourth quarter and full year 2020 results. We finished the year strong with significant business momentum in the fourth quarter. Market share gains and core products fueled a 32% year-over-year increase in revenue and a 51% increase in operating income. Revenue for the quarter was $171 million and EPS of $1.91 was up 45% versus last year. High-grade market share reached a new high of 22.8%, and high-yield share surged to a new record of 17.1%, up from 10.6%. Open trading volume grew 63% to $218 billion in the fourth quarter, driving estimated transaction cost savings of $225 million to our clients. We closed on the acquisition of Deutsche Börse's regulatory reporting hub during the quarter, and client onboarding and integration is underway. On the back of the strong results, our board of directors approved an increase in our quarterly dividend to 66 cents per share, up from 60 cents. Slide four highlights our record full-year results. Our long-term results show consistent execution of our growth agenda with strong five-year and 10-year compound revenue growth of 18% and compound EPS growth of 25%. For full year 2020, revenue growth was 35% and EPS growth was 45%. The results this year reflect strength in all of our core credit products with record volume in revenue in U.S. high-grade, high-yield, global EM, Eurobonds, and munis. Total credit trading volume was up 29% in 2020 to $2.6 trillion. Active trading client firms during 2020 surpassed 1,800, about half of which are outside of the U.S. Open trading grew to 33% of our traded volume, up from 26% in 2019. Estimated transaction cost savings from open trading skyrocketed to $1.1 billion for the full year. Investors and dealers both initiated record order flow into our open trading liquidity pool in 2020. Slide five provides an update on market conditions. As of year end, high-grade credit spreads have recovered to pre-pandemic levels. credit spread volatility has also been declining over the last several quarters. High-grade and high-yield bond issuance peaked in Q2 and fell back to more normal levels in Q4. As a result of the combination of lower volatility and more normal new issue activity, trace volume was up just 9% year-over-year in the fourth quarter. Average years to maturity for corporate bonds traded on the system remained at the high end of the historical range at 9.4 years. This is one of the factors contributing to our increase in fee capture per million in high grade. These market conditions are normally not favorable for volume growth. However, market share grew strongly during the second half of the year, driving superior revenue and earnings growth. Slide six provides an update on open trading. Open trading saw sustained growth even though market conditions normalized in the second half of the year, demonstrating the central role of our marketplace in today's credit market. Open trading credit volume in the fourth quarter increased 63% and overall credit trading revenue grew 34% versus last year. For the quarter, open trading represented approximately 34% of our global credit trading volume up from 27% in the fourth quarter of 2019. Dealer-initiated open trading volume grew 70% year over year, and over 1,600 unique client firms completed at least one trade in open trading during the quarter. Open trading volume shows strong growth trends in each of our core products. We are creating new trading and portfolio opportunities for our clients, by delivering over 28,000 open trading orders per day, totaling $15 billion in daily notional value. During the year, we also delivered important protocol enhancements, including live markets, our order book for actively traded corporate bonds, as well as Midex, our sessions-based matching platform that utilizes our CompositePlus mid-market data. Now let me turn the call over to Chris to provide an update on automation, information services, and post-trade.