MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. At this time, all participants are in 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 call is being recorded on October the 20th, 2021. I would now like to turn the call over to David Cressy, investor relations manager at Market Access. Please go ahead, sir.

Good morning, and welcome to the Market Access third quarter 2021 conference call. For the call, Rick McVeigh, chairman and chief executive officer, will review the highlights for the quarter and international growth. Chris Kincannon, president and COO, will discuss product expansion and automation. And then Chris DeRosa, 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, 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 third quarter 2021 results. Q3 total revenue was $162 million, down 1% year over year. Operating income was $74 million and operating margin was 46%. EPS of $1.52 was down 15%, reflecting our ongoing investments in new data, trading, and post-trade solutions. Credit market trading faces headwinds currently with a combination of historically low credit spreads and credit spread volatilities. These conditions have persisted over the last three quarters, and history suggests they will revert to the mean over time. Our international business is showing strong growth through volume and market share gains in euro bonds and emerging markets, post-trade services, and product expansion. We are pleased to add Chinese government bonds to our offering through China Bond Connect and CIBM Direct. Slide three provides an update on market conditions. Market volumes have been negatively impacted by the current low levels of bond yields, credit spreads, and volatility. During these periods, price dispersion of bids and offers shrinks temporarily. Our liquidity and pricing advantage comes through most clearly at times of normal to high spreads and volatility. and we believe that there are many factors that could positively impact bond volatility in the periods ahead. As yields have started to increase from historically low levels, average years to maturity traded on our system has come down about 6%. Average years to maturity is one of the factors that causes fluctuations in our high-grade fee capture. We are watching the emerging news on inflation, supply chain disruptions, labor shortages, and the China real estate market closely. We believe that it is likely that we will see tapering of central bank bond buying in the periods ahead, which is likely to lead to more normalized yield levels and volatility in bond markets around the world. Slide four highlights our growth in international markets. In spite of the low levels of yields around the world, we are showing strong growth in our emerging market and Eurobond product areas. Eurobond volumes are up 22% year-over-year against a backdrop of lower market volumes. Our estimated market share reached new highs in Eurobonds during the quarter. Emerging market volumes are up 19%, with estimated market volumes up 1%, reflecting share gains in global EM debt trading. We are seeing strong growth rates in both hard currency EM bonds, denominated in dollars, euros, and yen, as well as local market trading. The addition of China increases our local market coverage to 28 local markets across Latin America, Samia, and APAC regions. This quarter, we set new records in global active trading clients and international client firms. This expands our broad client network and creates additional cross-selling opportunities. We are underway with client onboarding for China Bond Connect and expect an active quarter ahead. As the second largest government bond market in the world, China provides a meaningful increase in our total market opportunity. Now let me turn the call over to Chris to provide an update on product expansion and automation.