MarketAxess Holdings, Inc.

Ladies and gentlemen, please stand by. Your conference call will begin momentarily. Once again, ladies and gentlemen, thank you for your patience and please stand by. Thank you. 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 would like to withdraw your question, press the pound key at any time. As a reminder, this conference is being recorded on July 21, 2021. I would now like to turn the call over to Dave Cressy, Investor Relations Manager at Markets Access. Please go ahead.

Good morning, and welcome to the Market Access second quarter 2021 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 product expansion. 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 end, December 31, 2020. 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 second quarter results. Quiet market conditions in global credit markets led to a soft quarter with revenue of $176 million, down 5%. Operating income was $87 million, and operating margin was 49%. Diluted EPS of $1.77, down 20% year over year. Year over year comparisons were challenging when looking at Q2 last year. when our revenue was up 47 percent and EPS was up 73 percent. However, two-year compound annual growth rates show strong revenue growth of 19 percent and operating income growth of 20 percent this quarter versus the second quarter of 2019, consistent with our long-term growth rates. Market share levels this quarter in high-grade and high-yield were similar to last year. FINRA has also announced that they will revise their historical trace market volumes on July 26th to adjust for the rapid increase in double counting for fixed income ATS volume. We will revisit our market share estimates once we see the adjustments from FINRA. We continue to add active clients to our network, and for the quarter we set new records with 1,840 firms active globally. Emerging markets growth was a highlight for the quarter, with volume up 11% year over year, while total EM market volumes were down an estimated 17%. Our estimated EM market share set new highs for the quarter. We are encouraged by the ongoing progress in municipal bond trading, with record volume during the quarter. International clients represented 32% of our global volume in the second quarter, a new record for geographic client diversification. Earlier this week, we announced that Charles Lee, the former chief executive of the Hong Kong Exchanges and Clearing Limited, has joined the Market Access Board of Directors. Charles brings extensive experience in market structure, exchanges, and electronic trading, and will add important experience to our board, especially in the Asia region. Slide four provides an update on market conditions. Subdued market conditions led to much lower credit market volumes in the second quarter. Institutional investors report lower fixed income trading activity, and ETF market participants were much quieter than normal, especially in high yield. For the quarter, high grade corporate bond indices were locked in an eight basis point trading range, following a range of 138 basis points one year ago. Trace high-grade volume was down 20% and trace high-yield volume down 14% versus last year. Fixed income ETF share trading was down 31% in the second quarter versus last year. The lower left chart shows the normal deviations in high-grade and high-yield share gains versus a multi-year linear regression. We have been through quiet trading periods before and fully expect a mean reversion for market volatility and trading volumes. We remain optimistic that the increase in fixed income trading automation and all-to-all trading will lead to an increase in trading velocity. Treasury yields ticked up during the second quarter, but have since moved lower once again. Treasury yields impact corporate bond duration and also our high-grade fee capture. Slide five provides an update on open trading. Our unique open trading liquidity pool continues to drive important transaction cost savings to our clients in spite of the low volatility environment. Clients saved an estimated $127 million in transaction costs during the quarter due to price improvements in open trading. The vast majority of investor and dealer initiated orders on market access are available in one single liquidity pool. On average, our network delivered 29,000 orders per day and over $15 billion in notional value into the open trading central marketplace. We believe that our unique global institutional network with over 1,800 active firms in open trading, increases trading opportunities, reduces transaction costs, and reduces market risk during high volatility periods. Our dealer-initiated open trading volume was up 28% year over year. Dealers are finding great value in both making markets and taking liquidity on the market access system. The D2D client segment is moving rapidly to embrace electronic trading solutions. We are also pleased with the early success in our diversity dealer initiative. We have now onboarded 12 minority and women owned dealers for the new program and diversity dealer volume with investors is up 90% year over year in early days. This is a great example of using open trading to expand important trading relationships for investors and dealers. Now let me turn the call over to Chris to provide an update on new products and trading automation.