MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Market Access Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question during that time, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star one. And we ask that you ask that you limit yourself to one question and then requeue. As a reminder, this conference call is being recorded on October 25th, 2023. I would now like to turn the call over to Steve Davidson, head of investor relations at Market Access. Please go ahead, sir.

Thank you, Krista. Good morning and welcome to the Market Access third quarter 2023 earnings conference call. For the call, Chris Concannon, Chief Executive Officer, will provide you with a strategic update on the company. Rich Schiffman, Global Head of Trading Solutions, will update you on how we executed this quarter. And then Chris DeRosa, Chief Financial Officer, will walk you through the financial results for the quarter. Before I turn the call over to Chris Concannon, 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, 2022. 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 Chris Concannon.

Good morning. I'm very pleased to update you on the significant progress we made in the third quarter to enhance our franchise and drive long-term growth. First, in terms of the quarter, we generated revenue of $172 million. Earnings per share was $1.46 on net income of $55 million. Our quarterly results were impacted by unusually low levels of credit spread volatility during this seasonally slower summer period. But we are seeing some early positive signs of higher volatility in October. We are not happy with our growth rates in U.S. credit, but we believe we are taking the right steps to improve our growth rates in our business in the years ahead. Turning to my strategic update on slide three. We continue to innovate through the launch of our new trading platform, X-Pro. X-Pro delivers our proprietary data for pre-trade analytics and protocol selection. We specifically targeted portfolio trading solutions in X-Pro to address our US high-grade market share challenges. In low volatility market environments, protocols like portfolio trading become more prevalent, with portfolio trading rising to 7% of trace during the quarter. Activity on dealer-centric protocols also increases in low volatility markets, and we are continuing to focus on growing our mid-X and dealer ARPQ protocols. We believe that we have a superior dealer ARPQ solution because of our comprehensive open trading liquidity. We are pleased to see our portfolio trading clients increasingly leveraging our unique pre-trade analytics like tradability, only available through Expro. 35% of our portfolio trades were executed on ExPro in October month to date, up from 18% in the third quarter. We continue to deliver unique data and functionality enhancements to our portfolio trading offering in ExPro. ExPro integrates our real-time data, our pre-trade analytics, and our trading protocols into a simple trader cockpit that allows a user to seamlessly manage more line items and be more productive. Adaptive AutoX, a fully automated trader solution, provides a suite of sophisticated AI-driven trading algorithms that integrate all of our trading protocols to programmatically improve execution outcomes while reducing market impact. Execution solutions like XPRO and Adaptive AutoX allow traders to fully leverage the power of market access, operating in a far more efficient manner while accessing the best possible liquidity, and pricing available in the market. These products answer our clients' growing demand to help them do more with less. Although Adaptive Auto X was still in pilot phase during the quarter, early results show promising transaction cost savings and reduced market impact in U.S. high grade. Our client franchise has never been stronger with a record of over 2,000 active clients across 67 countries. We delivered strong growth in our international businesses and in municipals, as well as record data revenue as our investments to broaden our geographical and product footprint payoff. We closed the acquisition of Pragma, we integrated the MuniBroker platform, and we rolled out open trading to several emerging local markets, further solidifying our global leadership in emerging markets e-trading. Slide four illustrates how we are integrating our next-gen proprietary data with X-Pro to help traders do more with less. Our unique proprietary data helps clients with their portfolio construction objectives by leveraging liquidity scores, tradability data, and our soon-to-be-launched matchability data. These data tools can help clients predict the price of a bond, the depth of the market, and the likelihood of finding another matching buyer or seller on the platform. Our data tools also help clients optimize their protocol selection across RFQ, open trading, portfolio trading, or automation. Last, with the launch of our AI dealer select data, we can now help inform our clients about their optimal dealer selection based on the bond they are trading. Slide five highlights the expansion of our addressable market. Acquisitions totaling approximately $360 million, and significant organic investments in new products and protocols over the past several years have expanded our addressable market by an estimated $3 billion across credit, rates, data, and post-trade. We believe that our acquisition of Pragma will be a key accelerant of our ability to capture this opportunity while enhancing our technology footprint. An expanding market, higher trading velocity, New product expansion and new protocols and workflows are all additional levers of growth that could enhance our addressable markets. Slide six provides an update on market conditions. Since the end of the third quarter, volatility has continued to move higher, which has benefited ETF market maker activity and US high yield estimated share. High yield ETF market maker ADD on our platform is up 94% from the third quarter. With over $7 trillion in global corporate debt set to mature in the next three years, borrowers will have to refinance their debt at much higher rates, creating the potential for higher levels of turnover in the secondary markets. Proposed new additional bank capital requirements could lead to further constraints on bank balance sheets for market making, highlighting the importance of a diverse liquidity pool like open trading. Before I turn the call over to Rich Schiffman, I wanted to provide an update on October. Current October trends show high-grade estimated market share and market volumes slightly above September levels, while high-yield estimated share and market volumes are both above September levels. We have five important trading days remaining in the month, and both high-grade and high-yield market share normally show increases in the last week of the month. Additionally, global portfolio trading ADD in October is approximately $770 million, up 77% from Q3 levels. Now let me turn the call over to Rich to provide you with an update on our market.