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 january 26 2022. 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 2021 conference call. For the call, Rick McVeigh, Chairman and Chief Executive Officer, will provide a strategic update for the company. Chris Kincannon, President and COO, will review the progress we are making on our growth initiatives. And then Chris DeRosa, Chief Financial Officer, We'll walk you through the financial results and our full year 2022 guidance. 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 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 fourth quarter and full year results. 2021 was an important year of investment and execution on the long-term growth strategy we outlined at our recent investor day. Importantly, we maintained a strong leadership position in the U.S. credit institutional client e-trading space. The institutional client segment is the largest segment in global credit markets, and the highest quality order flow for banks and other market makers. Our international credit business shows strong momentum, reaching new highs in estimated market share for global emerging markets and euro bonds. Large banks report that market access is now the largest e-trading venue in emerging market debt trading in all regions around the world. Open trading continues to be a key differentiator in our liquidity offering, and we have added new and valuable trading protocols in both credit and rates. Approximately 1,700 counterparty firms were active in open trading during the year, driving over $500 million in transaction cost savings. We are the only major fixed income marketplace fully promoting all-to-all trading across all products and regions. Beyond our leadership in our core business, we made significant progress expanding our foundation for growth in new product areas. Our portfolio trading launch in May led to rapid adoption among approximately 68 large investor firms and 14 dealers. Portfolio trading is a natural complement to our leadership in bid and offer list trading which sees over 1,000 bond basket inquiries per day. Our goal is to be the number one portfolio trading provider this year. U.S. government bond volume on market access reached a new record of $4.1 trillion in 2021. Importantly, we are seeing growing large dealer and investor participation due to the launch of our all-to-all U.S. Treasury live markets order book. Client onboarding is expected to accelerate this quarter. In municipal bond trading, the combination of our organic growth this year and the integration of fully electronic volume from muni brokers creates the largest e-trading platform in the muni market with plenty of runway ahead for growth. As we start 2022, our foundation for growth with global clients, a diversified product base, and a wide range of trading protocols is stronger than ever. Slide four highlights our full-year results. For the full year, Market Access reported our 13th straight year of record revenues. 2021 credit trading conditions were unusually quiet following a robust year in 2020. Taken in the aggregate, our two-year compound growth rate for revenue was 17 percent, consistent with long-term averages. Operating income compound growth was 16 percent during the same period. Importantly, our investments in geographic and product diversification are paying off with 24 percent two-year compound revenue growth in product areas outside of our core U.S. corporate bond business. Full-year records in estimated market share were set in 2021 in U.S. high yield, emerging markets, euro bonds, and municipal bonds. The health of our business also comes through with a new record for active trading firms, as well as client firms trading three or more products. Slide five provides an update on market conditions. Market conditions in 2021 were challenging due to historically low credit spreads and low credit spread volatility. Low volatility reduces price dispersion and compresses bid-offer spreads. Total credit market volumes reported by Trace and market access post-trade were down in all major product areas year over year as a result of the low volatility. Volatility in rates markets is showing improvement, driving increased activity in our open trading U.S. Treasury marketplace. I believe that the extended period of central bank quantitative easing led to historically low interest rates and depressed volatility. The combination of strong economic growth and much higher inflation is causing central banks to reduce bond purchases and prepare for rate increases. I believe this will lead to more normal levels of interest rates and bond market volatility in the quarters ahead. With four important trading days remaining in January, high-grade and high-yield estimated market share is running similar to Q1 last year, while trace market volumes are down about 17%. EM market share is running well above last year, with estimated market volumes down about 7%. Our U.S. Treasury average daily volume is up approximately 35 percent from last January. Slide six illustrates the tremendous growth opportunity that is driving our approach to investing. All of the major product areas trading on market access are in early stages of electronification. We believe that the trading efficiency and transaction cost savings available to dealers and investors will ultimately lead to electronic market share of over 50% in global fixed income. We have established a strong leadership position in U.S. high-grade, high-yield, and global emerging markets. We believe our competitive position is stronger than ever in euro bonds and municipal bonds, and we now have a unique offering with compelling liquidity in U.S. treasuries. Open trading delivers additional all-to-all liquidity in global fixed income trading and expands market participation. Trading automation and open trading provide the ingredients for higher trading velocity in the years ahead. We will continue to invest to capture this large opportunity for our shareholders. Now let me turn the call over to Chris to provide more detail on the significant progress we are making with our investments in new initiatives.