Marketaxess Holdings Inc (MKTX) 2023 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess Third Quarter 2023 Earnings Conference Call. (Operator Instructions). As a reminder, this conference call is being recorded on October 25, 2023.

女士們先生們，謝謝你們的支持。歡迎參加 MarketAxess 2023 年第三季財報電話會議。 （操作員說明）。謹此提醒，本次電話會議於 2023 年 10 月 25 日錄製。

I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

我現在想將電話轉給 MarketAxess 投資者關係主管 Steve Davidson。請繼續，先生。

Thank you, Christa. Good morning, and welcome to the MarketAxess 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 Gerosa, Chief Financial Officer, will walk you through the financial results for the quarter.

謝謝你，克里斯塔。早安，歡迎參加 MarketAxess 2023 年第三季財報電話會議。在電話會議中，執行長 Chris Concannon 將為您提供公司的最新策略資訊。交易解決方案全球主管 Rich Schiffman 將向您介紹我們本季的執行情況，然後財務長 Chris Gerosa 將向您介紹本季的財務表現。

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 beliefs 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.

在我將電話轉給克里斯康坎農之前，請允許我提醒您，今天的電話會議可能包含前瞻性陳述。這些陳述代表了公司對未來事件的信念，這些事件本質上是不確定的。本公司的實際業績和財務狀況可能與這些前瞻性陳述中的內容有重大差異。

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.

有關可能影響公司未來業績的一些風險和因素的討論，請參閱我們截至 2022 年 12 月 31 日止年度的 10-K 表格年度報告中的風險因素描述。我還建議您閱讀我們的季度收益報告中的前瞻性聲明免責聲明已於今天早上早些時候發布，現已在我們的網站上發布。

Now let me turn the call over to Chris Concannon.

現在讓我把電話轉給克里斯康坎農。

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 the 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.

早安.我很高興向您介紹我們在第三季在增強我們的特許經營權和推動長期成長方面取得的重大進展的最新情況。首先，就本季而言，我們的營收為 1.72 億美元，每股收益為 1.46 美元，淨利為 5,500 萬美元。我們的季度業績受到季節性放緩的夏季期間信用利差波動性異常低的影響。但我們看到了 10 月波動性上升的一些早期積極跡象。我們對美國信貸的成長率並不滿意，但我們相信我們正在採取正確的措施來提高未來幾年業務的成長率。

Turning to my strategic update on Slide 3. 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 U.S. high-grade market share challenges. In low volatility market environments, protocols like portfolio trading become more prevalent with portfolio trading rising to 7% of trades during the quarter.

轉向我在投影片 3 上的策略更新。我們透過推出新的交易平台 X Pro 繼續創新。 X Pro 提供我們的專有數據用於交易前分析和協議選擇。我們專門針對 X Pro 中的投資組合交易解決方案來解決我們在美國高級市場份額的挑戰。在低波動性市場環境中，投資組合交易等協議變得更加普遍，本季投資組合交易佔交易的比例上升至 7%。

Activity on dealer-centric protocols also increases in low volatility markets, and we are continuing to focus on growing our Mid-X and dealer RFQ protocols. We believe that we have a superior dealer RFQ solution because of our comprehensive Open Trading liquidity. We are pleased to see our portfolio trading costs increasingly leveraging, our unique pre-trade analytics like tradability, only available through X Pro. 35% of our portfolio trades were executed on X Pro 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 X Pro.

在低波動性市場中，以經銷商為中心的協議活動也有所增加，我們將繼續專注於發展 Mid-X 和經銷商詢價協議。我們相信，由於我們全面的開放交易流動性，我們擁有卓越的經銷商詢價解決方案。我們很高興看到我們的投資組合交易成本越來越多地利用我們獨特的交易前分析（例如可交易性），這些分析只能透過 X Pro 獲得。 10 月至今，我們的投資組合交易中有 35% 是在 X Pro 上執行的，高於第三季的 18%。我們繼續為 X Pro 中的投資組合交易產品提供獨特的數據和功能增強。

X Pro integrates our real-time data, our pre-trade analytics, and our trading protocols into a simple trader cockpit that allows the user to seamlessly manage more line items and being productive. Adaptive Auto-X, 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 X Pro and Adaptive Auto-X allow traders to fully leverage the power of MarketAxess, 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.

X Pro 將我們的即時數據、交易前分析和交易協議整合到簡單的交易者駕駛艙中，使用戶能夠無縫管理更多訂單項目並提高工作效率。 Adaptive Auto-X 是一種全自動交易者解決方案，提供一套複雜的人工智慧驅動的交易演算法，該演算法整合了我們所有的交易協議，以編程方式改善執行結果，同時減少市場影響。 X Pro 和 Adaptive Auto-X 等執行解決方案使交易者能夠充分利用 MarketAxess 的強大功能，以更有效率的方式進行操作，同時獲得市場上最佳的流動性和定價。這些產品滿足了客戶不斷增長的需求，幫助他們事半功倍。

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 pay off. 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.

儘管 Adaptive Auto-X 在本季仍處於試點階段，但早期結果顯示，交易成本有望節省，並減少了對美國高品位市場的影響。我們的客戶群從未如此強大，在 67 個國家/地區擁有超過 2,000 名活躍客戶。我們在國際業務和市政領域實現了強勁增長，並創紀錄的數據收入作為我們擴大地理和產品足蹟的投資的回報。我們完成了對 Pragma 的收購，整合了 MuniBroker 平台，並向多個新興本地市場推出了 Open Trading，進一步鞏固了我們在新興市場電子交易領域的全球領導地位。

Slide 4 illustrates how we are integrating our next-gen proprietary 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/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.

幻燈片 4 說明了我們如何將下一代專有技術與 X Pro 集成，以幫助交易者事半功倍。我們獨特的專有數據利用流動性評分、可交易性數據和我們即將推出的匹配性數據，幫助客戶實現投資組合建立目標。這些數據工具可以幫助客戶預測債券的價格、市場深度以及在平台上找到另一個匹配的買家/賣家的可能性。我們的數據工具還幫助客戶優化詢價、開放交易、投資組合交易或自動化的協議選擇。最後，隨著我們的人工智慧交易商選擇數據的推出，我們現在可以幫助客戶根據他們正在交易的債券來了解他們的最佳交易商選擇。

Slide 5 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 market.

幻燈片 5 強調了我們潛在市場的擴張。過去幾年，總計約 3.6 億美元的收購以及對新產品和協議的重大有機投資，使我們在信貸、利率、數據和交易後領域的潛在市場擴大了約 30 億美元。我們相信，對 Pragma 的收購將成為我們抓住這一機會、同時增強我們技術足蹟的關鍵促進劑。不斷擴大的市場、更高的交易速度、新產品的擴展以及新的協議和工作流程都是可以增強我們的潛在市場的額外成長槓桿。

Slide 6 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 U.S. high-yield estimated share. High-yield ETF market maker ADV on our platform is up 94% from the third quarter. With over $7 trillion in global corporate debt that to mature in the next 3 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.

幻燈片 6 提供了市場狀況的最新情況。自第三季末以來，波動性持續走高，有利於ETF做市商活動和美國高收益預估份額。我們平台上的高收益ETF做市商ADV較第三季上漲94%。全球超過 7 兆美元的企業債務將在未來 3 年內到期，借款人將不得不以更高的利率為其債務再融資，創造了二級市場更高交易量的潛力。擬議的新的額外銀行資本要求可能會導致做市的銀行資產負債表進一步受到限制，凸顯開放交易等多元化流動性池的重要性。

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 5 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 ADV in October is approximately $770 million, up 77% from Q3 levels.

在將電話轉給 Rich Schiffman 之前，我想提供 10 月的最新情況。目前 10 月的趨勢顯示，高級估計市場份額和市場成交量略高於 9 月份的水平。而高收益債券的預估份額和市場成交量均高於 9 月的水平。本月還剩 5 個重要交易日，高等級和高收益市佔率通常都會在本月最後一週出現成長。此外，10 月份全球投資組合交易 ADV 約為 7.7 億美元，較第三季水準成長 77%。

Now let me turn the call over to Rich to provide you with an update on our market.

現在讓我把電話轉給 Rich，為您提供我們市場的最新情況。

Thanks, Chris. We made significant progress this quarter advancing our trading business. Slide 8 highlights the strong expansion of our client network. We had a record 2,093 active client firms trading on our platforms in the third quarter, which included a record 1,625 client firms active in U.S. credit. Trading volume from hedge fund and private bank clients increased 35% year-over-year and represented 17% of total credit market volume in the quarter, up from 13% in the prior year period. A record 1,151 active client firms are trading 3 or more products on our platforms, reflecting the deep partnership that we have with our clients and the power of our liquidity. We had a record 366 active firms on our municipal bond platform, and we are continuing to integrate MuniBrokers with Open Trading to expand sources of liquidity for investors and dealers.

謝謝，克里斯。本季我們的貿易業務取得了重大進展。投影片 8 強調了我們客戶網路的強勁擴張。第三季度，我們的平台上有創紀錄的 2,093 家活躍客戶公司進行交易，其中包括創紀錄的 1,625 家活躍於美國信貸領域的客戶公司。來自對沖基金和私人銀行客戶的交易量年增 35%，佔本季信貸市場總交易量的 17%，高於去年同期的 13%。創紀錄的 1,151 家活躍客戶公司在我們的平台上交易 3 種或更多產品，這反映了我們與客戶的深厚合作關係以及我們的流動性力量。我們的市政債券平台上有創紀錄的 366 家活躍公司，我們正在繼續將 MuniBrokers 與 Open Trading 整合，以擴大投資者和交易商的流動性來源。

On Slide 9, we highlight the growing international diversification of our trading business. Third quarter growth in international average daily trade volume and trade count was 15% and 21%, respectively. This was driven by strong Eurobond trading volume up 18% and emerging local markets trading volume up 27%. The launch of enhancements like U.S. high-grade trading on price has been very well received by our private bank clients, particularly in Europe. Trading volume on Axess IQ, our front end for private banking clients increased 130% in Q3 compared to the prior year.

在投影片 9 中，我們強調了我們貿易業務日益增長的國際多元化。第三季國際日均貿易量和貿易數量分別成長15%和21%。這是由強勁的歐洲債券交易量成長 18% 和新興本地市場交易量成長 27% 所推動的。美國高級價格交易等增強功能的推出受到了我們私人銀行客戶（尤其是歐洲客戶）的好評。第三季度，我們針對私人銀行客戶的前端 Axess IQ 的交易量比去年同期成長了 130%。

Adoption of our automation suite of products continues to grow, as shown on Slide 10. In the third quarter, there were a record 8 million algo responses from dealers, an increase of 41% year-over-year with a 3-year CAGR of 30%. Adoption of automated tools continues to increase with our investor clients. We experienced record Auto-X trade volume and count in the quarter with 3-year CAGRs of 35% and 41%, respectively, and a record 167 active client firms.

我們的自動化產品套件的採用持續成長，如投影片 10 所示。第三季度，經銷商收到創紀錄的 800 萬個演算法回應，年成長 41%，3 年複合年增長率為30%。我們的投資者客戶對自動化工具的採用不斷增加。我們在本季經歷了創紀錄的 Auto-X 交易量和數量，三年複合成長率分別為 35% 和 41%，活躍客戶公司達到創紀錄的 167 家。

Auto-X trade volume now represents a record 11% of total credit volume, and trade count was a record 24% of total credit rates. With Adaptive Auto-X, our new suite of client algorithms, we are leveraging our new Open Trading protocols like live markets and auto responder to reduce execution costs while increasing the liquidity across our platforms. Historically, traders are responsible for selecting how to engage our comprehensive trading ecosystem. Now they have the ability to use a sophisticated AI-driven algorithm that helps make the decision on the size of the order, the protocol, the counterparty and when to trade.

Auto-X 交易量目前佔總信貸量的 11%，創歷史新高，交易數量佔總信貸率的 24%，創歷史新高。借助我們新的客戶端演算法套件 Adaptive Auto-X，我們正在利用即時市場和自動應答器等新的開放交易協議來降低執行成本，同時增加我們平台上的流動性。從歷史上看，交易者負責選擇如何參與我們全面的交易生態系統。現在，他們能夠使用複雜的人工智慧驅動演算法來幫助決定訂單大小、協議、交易對手以及交易時間。

Slide 11 provides an update on Open Trading, our market-leading all-to-all liquidity pool. Open Trading ADV is running at $3.8 billion compared to $3.2 billion in Q3, up 19%, reflecting some early positive signs of an increase in volatility. Open Trading share of total credit volume is running well above the 33% reported in the third quarter of 2023.

投影片 11 提供了 Open Trading（我們市場領先的全方位流動性池）的最新情況。 Open Trading ADV 的運作價格為 38 億美元，較第三季的 32 億美元成長 19%，反映出波動性增加的一些早期正面跡象。開放交易佔信貸總量的份額遠高於 2023 年第三季報告的 33%。

We continue to expand available liquidity by increasing the number of alternative providers. A record 201 hedge funds provided liquidity on Open Trading in the quarter. A 13% increase from the prior year. Open Trading is consistently the largest single source of secondary liquidity in the U.S. credit markets. While price improvement has ticked lower, we have delivered approximately $530 million in cost savings year-to-date.

我們繼續透過增加替代提供者的數量來擴大可用流動性。本季有 201 家對沖基金在公開交易中提供了流動性，創歷史新高。比上年增長13%。開放交易一直是美國信貸市場二級流動性的最大單一來源。儘管價格改善幅度有所放緩，但我們今年迄今已節省了約 5.3 億美元的成本。

In U.S. high grade, no touch trades executed between Auto-X and a dealer algo represented 21% of trade count on Open Trading. We recently announced the expansion of Open Trading to select emerging local markets, including Poland, Czech Republic, Hungary and South Africa. This is a powerful next step in the evolution of our EM franchise, providing global dealers and institutional investors with Axess to unique onshore liquidity providers.

在美國高等級中，Auto-X 和經銷商演算法之間執行的非接觸性交易佔 Open Trading 交易數量的 21%。我們最近宣布將開放交易擴展到選定的新興本地市場，包括波蘭、捷克共和國、匈牙利和南非。這是我們新興市場特許經營權發展的強大下一步，為全球交易商和機構投資者提供 Axess 以及獨特的境內流動性提供者。

Now let me turn the call over to Chris Gerosa to review our financial performance.

現在讓我將電話轉給克里斯·格羅薩（Chris Gerosa），以審查我們的財務表現。

Thank you, Rich. On Slide 13, we provide a summary of our quarterly financials. For the quarter, we delivered revenue of $172 million, in line with prior year. Record Information services revenue of $12 million was up 22%, this strong performance was driven by the healthy pipeline of new contracts as we continue to experience strong adoption across our data product suite. The favorable interest rate environment contributed to $6.6 million of interest income, up from $1.4 million. The effective tax rate was 23.4%, and we reported diluted EPS of $1.46 per share.

謝謝你，里奇。在投影片 13 上，我們提供了季度財務摘要。本季度，我們實現了 1.72 億美元的收入，與去年同期持平。記錄資訊服務收入達到 1,200 萬美元，成長了 22%，這一強勁業績是由健康的新合約管道推動的，因為我們的數據產品套件繼續被廣泛採用。有利的利率環境帶來了 660 萬美元的利息收入，高於 140 萬美元。有效稅率為 23.4%，稀釋後每股收益為 1.46 美元。

On Slide 14, we provide more detail on our commission revenue and our fee capture. Total commission revenue decreased 2% in the quarter, but year-to-date is running 2% above prior year. The decline in credit commission revenue was due to lower estimated U.S. credit market share and lower total credit fee capture partially offset by revenue generated from strong international trading volumes.

在幻燈片 14 上，我們提供了有關佣金收入和費用獲取的更多詳細資訊。本季佣金總收入下降 2%，但年初至今比去年同期成長 2%。信貸佣金收入下降的原因是美國信貸市場份額預估下降以及信貸費用總額下降，但部分被強勁的國際交易量產生的收入所抵消。

The lower levels of credit spread volatility during the quarter contributed to a decrease in ETF market making maker activity, which had a negative impact on our U.S. high-yield market share. The reduction in total credit fee capture from prior year was driven principally by the lower duration of U.S. high-grade bonds traded over our platforms and a product mix shift in other credit products, primarily in U.S. high yield.

本季信用利差波動性較低導致 ETF 做市商活動減少，這對我們的美國高收益市佔率產生了負面影響。信貸費用總額較上年減少的主要原因是我們平台上交易的美國高等級債券久期縮短以及其他信貸產品（主要是美國高收益債券）的產品組合轉變。

On Slide 15, we provide a summary of our operating expenses. Third quarter operating expenses increased 10%, mainly driven by the continued investments in trading system enhancements and our data product offering. Approximately 42% of the increase in operating expenses is due to employee compensation and benefits as we increased headcount 17% to support our revenue growth initiatives. The 15% increase in depreciation and amortization expense was due to higher software development costs and acquired intangible amortization expense. Professional and consulting expenses related to M&A were $1.1 million during the quarter and $2.1 million year-to-date. Our operating expense growth rate would have been 7% if you exclude the impact of foreign exchange and M&A.

在投影片 15 上，我們提供了營運費用摘要。第三季營運費用成長 10%，主要是由於對交易系統增強和我們的數據產品提供的持續投資。營運費用增加中約 42% 是由於員工薪資和福利所致，因為我們增加了 17% 的員工人數以支持我們的收入成長計劃。折舊和攤銷費用增加15%是由於軟體開發成本和獲得的無形攤銷費用增加。本季與併購相關的專業和諮詢費用為 110 萬美元，年初至今為 210 萬美元。如果排除外匯和併購的影響，我們的營業費用成長率將為7%。

On Slide 16, we provide you with our updated full year 2023 expense guidance. Based on the progress operating expenses and the acquisition of Pragma, the company is refining its previously stated full year 2023 expense guidance range of $418 million to $446 million to a new range of $432 million to $438 million. Lower variable cost savings from incentive compensation expense and clearing costs was mostly offset by $12.5 million of incremental M&A-related expenses.

在投影片 16 上，我們為您提供了更新的 2023 年全年費用指南。根據營運費用進展和 Pragma 的收購，該公司正在將先前規定的 2023 年全年費用指引範圍從 4.18 億美元至 4.46 億美元調整為 4.32 億美元至 4.38 億美元的新範圍。激勵補償費用和清算成本帶來的變動成本節省減少，大部分被 1,250 萬美元的增量併購相關費用所抵銷。

Excluding M&A-related expenses, our core expense growth rate is expected to be approximately 8%. Our estimated Q4 direct operating expense for Pragma is $8.5 million, which includes acquired intangible amortization expense. For modeling purposes, Pragma's third quarter 2023 total revenue was $6.9 million.

剔除併購相關費用，我們的核心費用成長率預計約為8%。我們估計 Pragma 第四季的直接營運費用為 850 萬美元，其中包括收購的無形攤銷費用。出於建模目的，Pragma 2023 年第三季的總收入為 690 萬美元。

On Slide 17, we provide an update on our balance sheet, cash flow and capital management. Our balance sheet continues to be solid with cash and investments totaling $553 million as of September 30 and we had no outstanding borrowings under the credit facilities. On October 2, we purchased Pragma for approximately $129 million, consisting of $81 million in cash and $48 million of stock. We continue to actively invest our cash to take advantage of the favorable interest rate environment to continue to deliver strong net interest income in the coming quarters.

在投影片 17 中，我們提供了資產負債表、現金流量和資本管理的最新資訊。截至 9 月 30 日，我們的資產負債表依然穩健，現金和投資總額達 5.53 億美元，且我們在信貸安排下沒有未償還的借款。 10 月 2 日，我們以約 1.29 億美元收購了 Pragma，其中包括 8,100 萬美元現金和 4,800 萬美元股票。我們持續積極投資現金，利用有利的利率環境，在未來幾季繼續提供強勁的淨利息收入。

During the past 12 months, we paid out approximately $108 million in quarterly dividends to our shareholders, and our Board of Directors declared a regular quarterly cash dividend of $0.72 based on the financial performance of the company.

在過去 12 個月中，我們向股東支付了約 1.08 億美元的季度股息，董事會根據公司的財務表現宣布定期派發 0.72 美元的季度現金股息。

Now let me turn the call back to Chris for his closing comments.

現在讓我把電話轉回給克里斯，聽聽他的結束語。

Thanks, Chris. In summary, on Slide 18, we continue to execute very well against our growth strategy. We are pleased to see some early positive signs of increased volatility, driving higher levels of ETF market maker activity in U.S. high yield and higher levels of Open Trading activity month-to-date. Our client franchise and network has never been stronger with continued diversification across client segments, regions and products.

謝謝，克里斯。總而言之，在投影片 18 上，我們繼續很好地執行我們的成長策略。我們很高興看到波動性增加的一些早期正面跡象，推動美國高收益 ETF 做市商活動的增加，以及本月迄今公開交易活動的增加。隨著客戶群、地區和產品的持續多元化，我們的客戶特許經營權和網路從未如此強大。

We are making excellent progress with the rollout of X Pro, powered by our proprietary data, which is increasing trader efficiency while driving better trading outcomes. Portfolio trading on X Pro is increasing as more clients leverage our enhanced functionality and tradability data. We are not happy with current growth rates in U.S. credit. But as we continue to execute our strategy and the macro backdrop improves, we believe we will be well positioned to deliver higher levels of growth in the quarters ahead.

在我們專有數據的支援下，我們透過推出 X Pro 取得了巨大進展，這提高了交易者的效率，同時帶來了更好的交易結果。隨著越來越多的客戶利用我們增強的功能和可交易性數據，X Pro 上的投資組合交易正在增加。我們對美國信貸目前的成長率並不滿意。但隨著我們繼續執行我們的策略並且宏觀背景有所改善，我們相信我們將處於有利位置，可以在未來幾季實現更高水準的成長。

Finally, I would like to welcome Carlos Hernandez back to our Board of Directors. Throughout his career at JPMorgan, Carlos has been forward-thinking about electronic trading and market structure, and we are delighted to have them back on the board.

最後，我謹歡迎卡洛斯·埃爾南德斯回到我們的董事會。在摩根大通的整個職業生涯中，卡洛斯一直對電子交易和市場結構具有前瞻性思考，我們很高興他們重新加入董事會。

Now we would be happy to open the line for your questions.

現在我們很高興開通您的提問專線。

(Operator Instructions). Your first question comes from the line of Chris Allen from Citi.

（操作員說明）。你的第一個問題來自花旗銀行的克里斯艾倫。

Getting a lot of questions myself, just on kind of the October update. Maybe you can help clarify a couple of things. Can you give us some color just in terms of how much of high-yield activities has historically been driven by ETFs? And then from a portfolio trading perspective, it sounds like you're making nice advancements there, particularly into October. But from an overall industry perspective, how is portfolio trading tracking? And what is clearly a more volatile environment?

我自己也收到了很多問題，只是關於十月的更新。也許你可以幫助澄清一些事情。您能為我們介紹一下歷史上有多少高收益活動是由 ETF 推動的嗎？然後從投資組合交易的角度來看，聽起來您在這方面取得了不錯的進步，特別是進入十月。但從整個產業的角度來看，投資組合交易的追蹤情況如何？更不穩定的環境是什麼？

Great. Chris, thanks for the questions. Just with regard to the current activity, I think it's important to look at credit spread volatility Obviously, we do see higher levels of VIX volatility in the market, which has been driving high-yield ETF activity. But when it comes to the credit spread volatility, it remains fairly unchanged from September high-yield credit volatility is only slightly up. So we're encouraged by the increase in volatility, as I mentioned, high-grade market share is running just slightly above September. Obviously, we have the 5 remaining days in the month, which is a critical part of the month where volumes do increase. And high yield, given that slight increase in volatility is above September levels.

偉大的。克里斯，謝謝你的提問。就目前的活動而言，我認為關注信用利差波動性很重要。顯然，我們確實看到市場上 VIX 波動性較高，這一直在推動高收益 ETF 活動。但就信用利差波動而言，與 9 月高收益信用波動相比基本沒有變化，僅小幅上升。因此，正如我所提到的，波動性的增加令我們感到鼓舞，高檔市場佔有率僅略高於 9 月。顯然，這個月還剩下 5 天，這是這個月交易量確實增加的關鍵部分。鑑於波動性略高於 9 月的水平，收益率也較高。

And then with regard to portfolio trading, we are seeing our clients leveraging portfolio trading as a protocol. We've seen that grow this year, certainly in the lower ball months that we saw in Q3. We continue to see demand for portfolio trading solutions. And we're continuing to enhance our X Pro as we roll it out to users.

然後就投資組合交易而言，我們看到我們的客戶利用投資組合交易作為協議。我們今年已經看到這種成長，尤其是在第三季的低迷月份。我們繼續看到對投資組合交易解決方案的需求。當我們向用戶推出 X Pro 時，我們將繼續增強它。

We specifically built X Pro to target portfolio trading and rolled that out in August. So it's still very early days of our X Pro for portfolio trading, and we're encouraged by where we stand today. And as I mentioned in the month of October, 35% of our global PTs have been on X Pro, and that's up from just Q3. But again X Pro right now it's still early days as we roll out additional enhancements.

我們專門針對投資組合交易建立了 X Pro，並於 8 月推出。因此，我們的 X Pro 投資組合交易仍處於早期階段，我們對今天的狀況感到鼓舞。正如我在 10 月提到的，我們的全球 PT 中有 35% 使用 X Pro，這一數字比第三季度有所上升。但 X Pro 現在還處於早期階段，我們還需要推出更多增強功能。

Your next question comes from the line of Patrick Moley from Piper Sandler.

您的下一個問題來自派珀·桑德勒 (Piper Sandler) 的帕特里克·莫利 (Patrick Moley)。

I just had one on expenses. You mentioned in the guide, the $8.5 million of that was related to Pragma. So just wondering if that is maybe a good quarterly run rate to assume in '24? Or whether there could potentially be some opportunity for expense synergies or reductions there going forward?

我只有一份費用。您在指南中提到，其中 850 萬美元與 Pragma 有關。所以只是想知道這是否是 24 年假設的一個好的季度運行率？或者未來可能存在一些費用綜效或減少的機會？

Yes. This is Chris. It's a good run rate for 2024. We're still finalizing the purchase price accounting around that. But -- the current estimate is roughly $1.5 million of that $8.5 million, represents the acquired intangible amortization expense. And so I would expect that to be a decent run rate with modest growth consistent with our core growth for planning a 2024 budget. We're still working through our budget process for '24. But in terms of layering on top of your models, I would assume that's a good run rate for you.

是的。這是克里斯。對於 2024 年來說，這是一個不錯的運行率。我們仍在圍繞這一點最終確定購買價格核算。但是，目前估計這 850 萬美元中的約 150 萬美元代表了收購的無形攤銷費用。因此，我預計這將是一個不錯的運行率，適度增長，與我們規劃 2024 年預算的核心增長一致。我們仍在製定 24 年的預算流程。但就模型之上的分層而言，我認為這對您來說是一個很好的運行率。

Your next question comes from the line of Alex Kramm from UBS.

您的下一個問題來自瑞銀集團 (UBS) 的 Alex Kramm。

Just following up on the discussion about the operating environment. You made that comment in your September volume release and you've repeated it today that the last week of September was the second best week ever for the company. So maybe you can just remind us what was so good in that week? And how that environment has changed so far in October? So we can kind of compare and contrast a little bit here.

繼續討論運作環境。您在 9 月的發布中發表了這一評論，並且今天又重申了 9 月的最後一周是該公司有史以來第二好的一周。那麼也許您可以提醒我們那一週發生了什麼好事？十月份到目前為止，環境發生了什麼樣的變化？所以我們可以在這裡進行一些比較和對比。

Sure, Alex. Well, obviously, we were pretty excited about that last week of September, because we were coming off a quarter of fairly low vol and low volumes. The month was, if you recall, a very large new issue month both in high grade and high yield, and we typically see higher closing monthly -- month end closing activity with regard to the new issue. So there's a higher level of turnover going into that month end of people repositioning some of that new issue bond activity.

當然，亞歷克斯。嗯，顯然，我們對 9 月的最後一周感到非常興奮，因為我們經歷了四分之一的相當低的成交量和成交量。如果你還記得的話，這個月是高等級和高收益的非常大的新發行月，我們通常會看到與新發行有關的月度收盤-月末收盤活動較高。因此，當月末人們重新配置一些新發行的債券活動時，成交量會更高。

So there was -- we did see that in September and October, obviously, new issue is slightly lower. But we typically, in the last 5 days of the month, the last 4 days of the month around month end, see higher levels of volume in the market, but also MarketAxess experiences slightly higher market share during those periods as well.

所以，我們確實看到，在 9 月和 10 月，新股發行量明顯略低。但我們通常會在每個月的最後 5 天、月底前後的最後 4 天看到市場交易量的增加，而且 MarketAxess 在此期間的市佔率也會略有上升。

And I'll just add to that, if you go to the market condition slides, you track the VIX in the upper right. The VIX was really suppressed for most of Q3, and we saw that return of volatility that Chris alluded to, which was a good tailwind for the high-yield volume coming through the platform, and we continue to see that into October. And from a credit fee capture perspective, just reminding everybody that high yield is our highest fee capture product. So the more high-yield volume that comes through, it will naturally elevate our fee capture the bottoms that we experienced in the month of September, where that was trading at roughly $150 per million. And what we're seeing so far in the month of October is closer to the $155 that we had seen for the entirety of Q3.

我想補充一點，如果你查看市場狀況幻燈片，你會追蹤右上角的 VIX。 VIX 在第三季度的大部分時間裡確實受到壓制，我們看到克里斯提到的波動性回歸，這對通過該平台的高收益債券交易量來說是一個很好的推動力，我們在10月繼續看到這種情況。從信貸費用捕捉的角度來看，只是提醒大家，高收益是我們最高的費用捕獲產品。因此，高收益交易量越大，我們的費用自然會提高到 9 月的底部，當時的交易價格約為每百萬美元 150 美元。到目前為止，我們在 10 月看到的價格更接近我們在整個第三季度看到的 155 美元。

Your next question is from the line of Benjamin Budish from Barclays Capital.

您的下一個問題來自巴克萊資本 (Barclays Capital) 的本傑明·布迪什 (Benjamin Budish)。

I wanted to follow up on the prior question on Pragma. Chris, you said in your prepared remarks, you think it's going to be a key accelerant of your ability to capture the expanded TAM. I wonder if you could expand on that? And then maybe for Christie, just on terms for next year, where are the revenue is going to be reported? And how should we think about sort of the growth rate of the Q3 number you alluded to earlier?

我想跟進之前關於 Pragma 的問題。 Chris，您在準備好的發言中說過，您認為這將成為您捕捉擴展 TAM 能力的關鍵促進劑。我想知道你是否可以對此進行擴展？然後也許對於科視來說，就明年的條款而言，收入將在哪裡報告？我們應該如何看待您之前提到的第三季數字的成長率？

Great. Thanks, Ben. And obviously, we're pretty excited about the addition of Pragma. We were able to announce and close quite quickly. Pragma is a technology company. That's how most people should think about it. So we are enhancing our tech footprint with very new technology and obviously an algo-driven solution that Pragma brings to us. They have an equity business as well as an FX algo business. So 2 areas of interest. More importantly, there, we're helping -- they're helping us to enhance our algo offering, Adaptive Auto-X, which we launched this year. So that technology is quite helpful.

偉大的。謝謝，本。顯然，我們對 Pragma 的添加感到非常興奮。我們能夠很快地宣布並關閉。 Pragma 是一家科技公司。大多數人應該這樣思考。因此，我們正在利用非常新技術以及 Pragma 為我們帶來的演算法驅動解決方案來增強我們的技術足跡。他們擁有股票業務和外匯演算法業務。所以有兩個有興趣的領域。更重要的是，我們正在提供幫助——他們正在幫助我們增強我們今年推出的演算法產品 Adaptive Auto-X。所以這項技術非常有幫助。

The other piece of Pragma that we are exploring, we find could be synergistic is their EMS functionality. They have an EMS platform that they license to the NYC and it's quite attractive across multi assets solution. So we are looking to leverage that EMS platform as well. And then we do see, given the excitement that we see from our clients around Adaptive Auto-X, and then given some of the excitement from our clients on unique order types that we've been rolling out in our rates platform.

我們正在探索的 Pragma 的另一部分是它們的 EMS 功能，我們發現它們可能具有協同作用。他們擁有一個向紐約市授權的 EMS 平台，該平台在多元資產解決方案中非常有吸引力。因此，我們也希望利用該 EMS 平台。然後我們確實看到了，考慮到我們的客戶對 Adaptive Auto-X 的興奮，以及我們的客戶對我們在費率平台上推出的獨特訂單類型的一些興奮。

We do anticipate higher levels of demand for both automation and algo solutions in both credit and rates growing in the years ahead. So we're excited to have kind of technology, that kind of expertise in-house at MarketAxess as we see just the excitement around our first-ever algo in credit. And obviously, we're seeing levels of demand for algos in rates as well.

我們確實預計未來幾年信貸和利率方面對自動化和演算法解決方案的需求將會更高。因此，我們很高興能夠在 MarketAxess 內部擁有這種技術和專業知識，因為我們看到了我們的第一個信貸演算法帶來的興奮。顯然，我們也看到了對利率演算法的需求水準。

And then on the revenue projections, we're still working through, as I mentioned earlier, the budgeting process for '24. But I called out, the quarterly revenue is roughly around $7 million. So there is that slight drag when you layer in the intangible amortization expense on the total $8.5 million. But I think those 2 numbers are good numbers used for run rate with a modest growth rate in each line item.

然後，在收入預測方面，正如我之前提到的，我們仍在製定 24 年的預算流程。但我指出，季度收入大約在 700 萬美元左右。因此，當您將無形攤銷費用計入 850 萬美元總額時，會出現輕微的拖累。但我認為這兩個數字是用來衡量營運率的好數字，每個訂單項目的成長率都適中。

Your next question comes from the line of Dan Fannon from Jefferies.

您的下一個問題來自 Jefferies 的 Dan Fannon。

You mentioned several times the ETF market maker being increased in activity. Can you disclose what percentage of volume they have historically been for you? And then more broadly, are you seeing other parts of the market or other participants starting to pick up in terms of activity as well? You've mentioned volatility, you've mentioned ETF market makers, but I was curious about the breadth of activity beyond those -- or more specifics around that.

您多次提到 ETF 做市商的活動正在增加。您能透露一下它們在歷史上為您帶來的銷售百分比是多少嗎？更廣泛地說，您是否看到市場的其他部分或其他參與者的活動也開始回升？你提到了波動性，提到了 ETF 做市商，但我對這些以外的活動廣度或與之相關的更多細節感到好奇。

Sure, Dan. First, our ETF market makers make up about 20% to 25% of that volume. More importantly, we've certainly seen systematic hedge funds that have been entering the credit market pickup in activity across both high grade and high yield, but particularly large presence in the U.S. credit market. The overall activity, while volumes are slightly up, the overall activity is across all shapes and sizes of firms, both large investment managers as well as ETF market makers and the hedge fund community. So we are seeing a pickup across all firms. We continue to see portfolio trading used as a solution across our largest clients. We're seeing more and more international clients using portfolio trading solutions as well. So again, multiprotocol selection is definitely the theme.

當然，丹。首先，我們的 ETF 做市商約佔交易量的 20% 至 25%。更重要的是，我們確實看到進入信貸市場的系統性對沖基金在高等級和高收益領域的活動增加，但在美國信貸市場的影響力尤其大。整體活動雖然交易量略有上升，但整體活動涉及各種類型和規模的公司，包括大型投資管理公司、ETF 做市商和對沖基金界。因此，我們看到所有公司都在回升。我們繼續看到投資組合交易被我們最大的客戶用作解決方案。我們看到越來越多的國際客戶也使用投資組合交易解決方案。再說一遍，多協議選擇絕對是主題。

The other theme that's critically important is our clients are not adding traders. They are consistently asking us to deliver technology solutions that solve workflow efficiencies for them, because they are not adding traders. And so all of it if you look at the theme of what we're rolling out from a technology perspective, it's really allowing traders to do more with less, consistently more with less and that's the feedback that we're getting from our clients.

另一個至關重要的主題是我們的客戶沒有增加交易員。他們一直要求我們提供技術解決方案，為他們解決工作流程效率問題，因為他們不會增加交易員。因此，如果您從技術角度來看我們推出的主題，您會發現它確實讓交易者能夠用更少的資源做更多的事情，持續地用更少的資源做更多的事情，這就是我們從客戶那裡得到的回饋。

Your next question comes from the line of Brian Bedell from Deutsche Bank.

您的下一個問題來自德意志銀行的 Brian Bedell。

Maybe just on X Pro. I mean if you can talk a little bit about the timing of the rollout, I think -- I want to say the last data point was 30 or so clients, I believe, are using it, if that's still a valid number or if you can talk about how that -- how you expect that to grow?

也許只是在 X Pro 上。我的意思是，如果你能談談推出的時間，我想- 我想說的是，最後一個數據點是30 個左右的客戶，我相信，正在使用它，如果這仍然是一個有效的數字，或者如果你可以談談你預計它會如何成長嗎？

And then in terms of the portfolio trading, I think you said 7%, Chris, was the share of TRACE, and then I missed the comment on October. I know that increased a lot. But if you could just talk about -- reiterate that and what portion of portfolio trading share you have of that 7% now and how you expect that to improve from X Pro?

然後就投資組合交易而言，克里斯，我想你說過 7% 是 TRACE 的份額，然後我錯過了 10 月的評論。我知道增加了很多。但是，如果您能談談 — 重申一下這一點，以及您現在在這 7% 的投資組合交易份額中所佔的比例，以及您預計 X Pro 將如何改善這一情況？

Yes. Brian, it's Rich here. You can talk about the X Pro adoption and it's been going great. We've got it up now over 100 firms active and 180 traders on it. As Chris noted earlier, we've been focused quite a bit on our most active PT or portfolio trading users, because the productivity gains for them are particularly pronounced. It's also out there for those doing large lists tending to trade with a lot of small trades, X Pro really is outstand that way, because it's easier to manipulate large numbers, in large list, in large portfolios things of that sort.

是的。布萊恩，我是里奇。您可以談論 X Pro 的採用情況，進展非常順利。我們現在已經擁有超過 100 家活躍公司和 180 名交易員。正如克里斯之前指出的，我們一直非常關注最活躍的 PT 或投資組合交易用戶，因為他們的生產力提升尤其明顯。對於那些傾向於進行大量小額交易的大型清單的人來說，X Pro 在這方面確實很出色，因為它更容易在大型清單、大型投資組合中操縱大量數字。

So we're going to continue with that emphasis. It's the big push on PT, at our most active users with lots -- large numbers of tickets. And we expect this type of adoption to continue at this kind of pace, it should be growing pretty rapidly.

所以我們將繼續強調這一點。這是對 PT 的大力推動，我們最活躍的用戶擁有大量的門票。我們預計這種類型的採用將以這種速度繼續下去，它應該會成長得相當快。

And just on the portfolio trading overall market, obviously, 7% of trades for portfolio trading is above historical averages of closer to 5%. So we are seeing higher levels of portfolio trading, but that's typical in lower volatility environment. We did, what I mentioned in my opening remarks, portfolio trading ADV -- global portfolio trading ADV for us in October was up 77%. Within the U.S., our market share is now just over 20% of the PT market. And then our U.S. portfolio volumes -- portfolio trading volumes are up over 20% from our Q3 level. So we continue to see more penetration. We are -- as Rich mentioned, we're leading with the X Pro platform. It is a convenient tool for our portfolio trader given the number of line items you can manage and all the pre-trading analytics that it delivers.

就投資組合交易整體市場而言，顯然，7% 的投資組合交易交易高於接近 5% 的歷史平均值。因此，我們看到投資組合交易水平更高，但這在波動性較低的環境中是典型的。我們做到了，正如我在開場白中提到的，投資組合交易日均交易量——10 月份我們的全球投資組合交易日均交易量增長了 77%。在美國，我們的市佔率目前剛超過 PT 市場的 20%。然後我們的美國投資組合交易量比第三季的水平增長了 20% 以上。因此，我們繼續看到更多的滲透。正如 Rich 所提到的，我們在 X Pro 平台上處於領先地位。考慮到您可以管理的行項目數量以及它提供的所有交易前分析，對於我們的投資組合交易者來說，這是一個方便的工具。

And then overall, on X Pro, the rollout -- we're rolling out slowly and carefully, because there's a great deal of training that we do with traders. We're only at 183 traders of over 10,000 traders. So it's still early days, only 4% of our credit volume in the U.S. is coming through X Pro today. So still early days. One important trend that we've seen, we've targeted both portfolio of traders as well as what we call our power users. And we've actually -- among our power users, we've seen a 20% increase in volume from those power users when comparing them on the old platform. So it does deliver higher efficiencies to the individual trader when they are sitting in that trading tool.

總的來說，在 X Pro 上，我們正​​在緩慢而謹慎地推出，因為我們對交易者進行了大量培訓。我們僅擁有超過 10,000 名交易者中的 183 名交易者。所以現在還為時過早，今天我們在美國的信貸量只有 4% 是透過 X Pro 獲得的。所以現在還為時過早。我們看到的一個重要趨勢是，我們既瞄準了交易者組合，也瞄準了我們所說的高級用戶。實際上，在我們的高級用戶中，與舊平台上的用戶進行比較時，我們發現這些高級用戶的使用量增加了 20%。因此，當個體交易者使用該交易工具時，它確實為他們帶來了更高的效率。

Your next question comes from the line of Simon Clinch from Redburn Atlantic.

您的下一個問題來自 Redburn Atlantic 的 Simon Clinch。

I just wanted to take a step back again and just look at the broader environment. And I was just pondering over the idea of the credit spread volatility being low. But when you look back historically, it looks like it's actually now quite a lot of the time and you get these periods of significant spike. And given that auto trading really delivers value during those periods of elevated credit grade volumes. I was just wondering if there's -- how you think about the progression of auto trading and Open Trading penetration? And where the portfolio trading -- because volatility tends to be below average for more of the time, where the portfolio trading could actually be quite a bit larger than 7% of the volumes that we see today?

我只是想再退一步，看看更廣闊的環境。我只是在思考信用利差波動性較低的想法。但當你回顧歷史時，看起來現在實際上在很多時候你都會經歷這些顯著的峰值時期。考慮到汽車交易在信用等級交易量提高的時期確實創造了價值。我只是想知道您如何看待汽車交易和開放交易滲透率的進展？投資組合交易在哪裡——因為波動性在更多時間裡往往低於平均水平，投資組合交易實際上可能比我們今天看到的交易量的 7% 大得多？

Sure. Great question. Well, first, when it comes to all-to-all trading and Open Trading, there's a very important dynamic called the network effect that Open Trading delivers. And we are seeing alternative liquidity providers entering the market globally across U.S. credit, Eurobonds as well as EM. So we continue to see new alternative liquidity providers entering the market. We also -- If you think about the dynamics and the enhancements that we're adding to our marketplace, we're allowing our clients to be providers of liquidity.

當然。很好的問題。好吧，首先，當涉及全方位交易和開放式交易時，開放式交易帶來了一個非常重要的動態，稱為網路效應。我們看到另類流動性提供者透過美國信貸、歐洲債券以及新興市場進入全球市場。因此，我們繼續看到新的替代流動性提供者進入市場。如果您考慮我們為市場添加的動態和增強功能，我們還允許我們的客戶成為流動性提供者。

Adaptive Auto-X, our algo solution and a key ingredient to that is allowing clients to quietly enter the market, both on the passive side, meaning being a liquidity provider as well as on the aggressive side. So we are growing the all-to-all network across all our products. So you can't look at it as a static offering today. It continues to expand globally. It does have spikes of activity during higher vol, obviously. And those -- we have seen those in the past.

Adaptive Auto-X 是我們的演算法解決方案，也是其關鍵要素，它允許客戶悄悄進入市場，無論是被動一方（即成為流動性提供者）還是積極一方。因此，我們正在發展涵蓋所有產品的全方位網路。因此，今天您不能將其視為靜態產品。它繼續在全球擴張。顯然，它在較高的交易量期間確實有活動高峰。這些——我們過去已經見過了。

The one other important thing to mention when we're thinking out longer term, the regulatory landscape is constantly changing. And right now, we continue to hear from regulators globally on enhancing bank capital rules. And those proposals that are out there are tightening bank capital rules, and we heard from one very large bank recently in their earnings call, mentioned that it could tighten capital rules by as much as 20%, which would obviously impact dealer liquidity in the U.S. in credit globally. And so those -- the importance of all the liquidity solutions will gain over time if those bank capital rules continue to tighten. Rich, do you want to add?

當我們進行長遠考慮時，需要提及的另一件重要的事情是，監管環境正在不斷變化。目前，我們持續收到全球監理機構關於加強銀行資本規則的意見。這些提議是收緊銀行資本規則，我們最近從一家大型銀行的財報電話會議上聽到，它提到可能將資本規則收緊高達 20%，這顯然會影響美國經銷商的流動性。在全球信貸領域。因此，如果銀行資本規則繼續收緊，所有流動性解決方案的重要性將隨著時間的推移而增加。豐富，要補充嗎？

Yes, Simon, I was just going add to that. It's about 2 things that our clients are looking for and what PT delivers in particular, is workflow efficiencies. And it's quite similar to the workflow gains that came when list trading was first introduced over 20 years ago. It's much easier to do that collection of bonds all at one time. And now add to that the guaranteed execution that typically comes with the PT to have it all done in one shot.

是的，西蒙，我只是想補充一下。我們的客戶正在尋找兩件事，而 PT 特別提供的是工作流程效率。這與 20 多年前首次引入清單交易時所帶來的工作流程收益非常相似。一次收集所有債券要容易得多。現在，再加上 PT 通常附帶的保證執行功能，可以一次完成所有工作。

What is missing is the other part that the investor clients are typically looking for, which is execution cost reduction and getting high-quality execution from that. That's where the Open Trading comes in. And it is on us to work and come up with the solutions that combine those 2 things. Just having PT, which works great in the low volatility environment. But when the market gets a lot choppier, it becomes a much more expensive trade. And we know that our clients are looking for both of those characteristics from us. So the focus is on trying to deliver both of those things simultaneously. And with that, we think that's going to build our business and grow our market share.

缺少的是投資者客戶通常尋求的另一部分，即降低執行成本並從中獲得高品質的執行。這就是開放交易的用武之地。我們有責任努力提出將這兩件事結合起來的解決方案。只要有 PT，這在低波動性環境中效果很好。但當市場變得更加波動時，交易就會變得更加昂貴。我們知道，我們的客戶正在尋找我們的這兩種特質。因此，重點是嘗試同時提供這兩件事。這樣，我們認為這將建立我們的業務並增加我們的市場份額。

Your next question comes from the line of Kyle Voigt from KBW.

您的下一個問題來自 KBW 的 Kyle Voigt。

I'm going to try to squeeze in a 2-part question on pricing. Historically, there hasn't been much or any transaction pricing pressure in the industry. And it seems like there's still a really wide and unique moat around Open Trading due to your liquidity pool and that network effect you just mentioned in the prior question. But with respect to protocols where there may be somewhat less differentiation on liquidity, is pricing becoming even a small part of client decisions on where to trade for protocols like PT or standard RFQ trading? So that's the first part of the question.

我將嘗試提出一個由兩部分組成的關於定價的問題。從歷史上看，該行業並沒有太大或任何交易定價壓力。由於您的流動性池以及您在上一個問題中剛剛提到的網路效應，開放交易周圍似乎仍然存在一條非常廣泛且獨特的護城河。但對於流動性差異可能較小的協議而言，定價是否已成為客戶決定在何處進行 PT 或標準 RFQ 交易等協議交易的一小部分？這是問題的第一部分。

Second part of that question is really has to do with, do you think any of your clients are becoming sophisticated enough to RFQ out to all platforms where pricing may be already impacting where they execute orders if the copper price is the same across those platforms?

這個問題的第二部分確實與以下問題有關：您是否認為您的客戶已經變得足夠成熟，可以向所有平台進行詢價，如果這些平台上的銅價相同，定價可能已經影響他們執行訂單的位置？

Great. On pricing, obviously, we don't see a lot of pricing pressure across our market globally. In fact, we've seen competitors like Bloomberg introducing pricing where they were free in the past. So we have seen unique price increases across the competitive landscape in certain protocols, pricing, as you mentioned, certain protocols that are more workflow functionality and less unique to the liquidity that you're bringing together. We've seen fairly static pricing. So we haven't seen price competition hit there.

偉大的。在定價方面，顯然，我們在全球市場上沒有看到很大的定價壓力。事實上，我們已經看到像彭博社這樣的競爭對手在過去免費的地方引入了定價。因此，我們已經看到某些協議、定價在競爭格局中出現了獨特的價格上漲，正如您所提到的，某些協議更多的是工作流程功能，而對於您所匯集的流動性來說則不那麼獨特。我們看到了相當靜態的定價。所以我們還沒有看到價格競爭的發生。

Again, clients, if you think about this universe we operate in, it's largely a dealer pay model. So the clients are less price sensitive and more focused on workflow solution, ultimately getting execution at higher levels, better pricing, better liquidity. We do not see clients are RFQing across multiple platforms with the same RFQ. In fact, that's problematic. And we -- if we see that type of behavior, we obviously need to control for that behavior because it creates really a request for price that ultimately fails on one platform and is not honored. So we do regulate that. We are -- we do pay attention to that. And I think our clients have been quite professional about that type of behavior. Rich, anything to add?

再說一次，客戶們，如果你想想我們所處的這個世界，你會發現這很大程度上是經銷商付費模式。因此，客戶對價格的敏感度較低，更關注工作流程解決方案，最終獲得更高水準的執行、更好的定價和更好的流動性。我們沒有看到客戶在多個平台上使用相同的詢價進行詢價。事實上，這是有問題的。如果我們看到這種類型的行為，我們顯然需要控制這種行為，因為它確實產生了最終在一個平台上失敗並且不被尊重的價格請求。所以我們確實對此進行了監管。我們確實關注這一點。我認為我們的客戶對這種行為非常專業。豐富，還有什麼要補充的嗎？

Yes. Kyle, I'll just add to Chris' comments on the fees and things that come up there. We price our service commensurate with the value that's delivered with it. And you're aware of that in the fee schedule, there's -- for example, high yield, where it's $0.03 to $0.06 or Open Trading, where we have our highest fees that we're charging where we think we're delivering the most value to our clients. The individual performance to what we call price improvement from Open Trading that comes, right now, we're at lows where it's just shy of 2 basis points in high grade, and it's about $0.28 in the last quarter in high yield. Those price improvements or execution cost savings, that's net of the fees that we charge.

是的。凱爾，我將補充克里斯對費用和其中出現的事情的評論。我們的服務定價與其所帶來的價值相稱。你知道在費用表中，有 - 例如，高收益，它是 0.03 美元到 0.06 美元或開放交易，我們收取最高的費用，我們認為我們提供了最多的服務對我們的客戶的價值。我們所說的開放交易帶來的價格改善的個人表現，目前，我們正處於低點，在高收益中僅差 2 個基點，在上個季度的高收益中約為 0.28 美元。這些價格改進或執行成本節省是扣除我們收取的費用後的。

So when it comes to the decision for where someone is going to trade, where you can get that type of performance, additional quality of execution, net of the fees that we're charging, it's a pretty easy decision about where to send the inquiries. So if there's a competing platform where the actual transaction fee is a little bit smaller, we're talking about tens of basis points or a couple of cents, compared to the performance that gets delivered when Open Trading wins. And as I noted before, we're the largest liquidity provider on the platform in these products, then the decision is pretty straightforward for the investors. And that's a message that we're continually reminding our clients about.

因此，當決定某人要在哪裡進行交易時，在哪裡可以獲得這種類型的性能、額外的執行質量，扣除我們收取的費用後，就可以輕鬆地決定將查詢發送到哪裡。因此，如果有一個競爭平台的實際交易費用稍微小一些，那麼與開放交易獲勝時所提供的性能相比，我們談論的是幾十個基點或幾美分。正如我之前指出的，我們是這些產品平台上最大的流動性提供者，那麼對於投資者來說，決定就非常簡單了。這是我們不斷提醒客戶的訊息。

Your next question comes from the line of Michael Cyprys from Morgan Stanley.

您的下一個問題來自摩根士丹利的 Michael Cyprys。

I wanted to ask on portfolio trading. You guys continue to show momentum there, growing volumes meaningfully. I was hoping you might be able to unpack how much of the portfolio trading volume is coming across in IG versus in high yield? Any notable differences that you're seeing? And as you look out, is there one area where you see a bigger opportunity with portfolio trading?

我想問一下關於投資組合交易的問題。你們繼續在那裡表現出勢頭，銷量顯著增長。我希望您能夠了解 IG 投資組合交易量與高收益投資組合交易量的比例是多少？您看到任何顯著差異嗎？當您觀察時，您是否在某個領域看到了投資組合交易的更大機會？

Sure. First of all, we're seeing growing demand for portfolio trading. It's such a convenient workflow solution particularly when our clients are getting large inflows, it's obviously a very easy way to get exposure quite quickly. The other method that we have seen clients use are just using outright fixed income ETFs to get that exposure and then unwinding the ETF and going into the underlying. We do see portfolio trading globally.

當然。首先，我們看到投資組合交易的需求不斷成長。這是一個非常方便的工作流程解決方案，特別是當我們的客戶獲得大量資金流入時，這顯然是一種非常快速獲得曝光的非常簡單的方法。我們看到客戶使用的另一種方法是使用直接固定收益 ETF 來獲得風險敞口，然後平倉 ETF 並進入標的資產。我們確實看到全球範圍內的投資組合交易。

As I mentioned, we're seeing some of our global clients using portfolio trading. And many times, they're trading a global list, not just a U.S. high-grade or U.S. high-yield credit list. So we do see that offering growing over time. And obviously, the tools that our clients are using, remember this -- when this portfolio trading was born, it was born on Excel spreadsheet. So we've come a long way.

正如我所提到的，我們看到一些全球客戶使用投資組合交易。很多時候，他們交易的是全球名單，而不僅僅是美國高等級或美國高收益信貸名單。所以我們確實看到這種產品隨著時間的推移而不斷增長。顯然，我們的客戶使用的工具，請記住這一點——當這個投資組合交易誕生時，它是在 Excel 電子表格上誕生的。所以我們已經走了很長一段路。

The real -- we think the real solution that our clients now are looking for is once they think they have a portfolio trade, so either they're buying a very large portfolio where they're selling a portfolio or they're switching, they need to optimize that portfolio once they construct it, meaning they can truly impact the price of the portfolio by picking certain bonds in the portfolio, deselecting or adding bonds. And our tool helps them with that portfolio construction and it does, in fact, optimize their pricing, which is quite helpful. And it's really the pre-trade analytics that drives that portfolio construction and that bond selection once you load the overall portfolio trade that you intend on using.

真正的——我們認為我們的客戶現在正在尋找的真正解決方案是，一旦他們認為自己進行了投資組合交易，那麼他們要么購買一個非常大的投資組合，然後出售投資組合，要么進行轉換，他們需要在建立投資組合後對其進行最佳化，這意味著他們可以透過選擇投資組合中的某些債券、取消選擇或添加債券來真正影響投資組合的價格。我們的工具可以幫助他們建立投資組合，事實上，它確實優化了他們的定價，這非常有幫助。一旦您加載了您打算使用的整體投資組合交易，真正推動投資組合建構和債券選擇的就是交易前分析。

But to answer your question, the PT volumes, it's largely weighted towards investment grade with about 70% in investment grade and only about 15% in high yield. And many times, we see portfolios across both high-grade and high-yield. We would expect to see growing portfolios in Europe and in Asia as well, again, using EM or across global bond list as well. And that's an offering that we recently put out our global PT offering, because traders were asking for really a global list of bonds to trade as a portfolio.

但要回答你的問題，PT 交易量主要偏重於投資級別，投資級別約佔 70%，高收益級別僅約 15%。很多時候，我們會看到高等級和高收益的投資組合。我們預期歐洲和亞洲的投資組合也會持續成長，使用新興市場或全球債券名單。這是我們最近推出的全球 PT 產品，因為交易者要求真正的全球債券清單作為投資組合進行交易。

Your next question comes from the line of Alex Blostein from Goldman Sachs.

您的下一個問題來自高盛的 Alex Blostein。

I wanted to ask you guys a question around just the expense management philosophy and margin trajectory. When you look at the revenue backdrop, obviously, has been challenged. And Chris, you mentioned you guys have been disappointed with how U.S. credit has performed and part of that environmental part of it is, I guess, the mix. But as you look at the expense growth, I think you suggested 8% core expense growth in 2023 ex kind of some of the deal noise. Is that sort of the appropriate run rate for the business if revenue growth will improve maybe somewhat but doesn't necessarily get back to the levels it used to be? And are there levers you could pull to get the company back to positive operating leverage or that's really just going to be a function of mostly revenues and less selling expenses?

我想問你們一個關於費用管理理念和利潤軌跡的問題。當你觀察收入背景時，顯然，它受到了挑戰。克里斯，你提到你們對美國信貸的表現感到失望，我想其中的環境部分是混合的。但當你看看費用成長時，我認為你建議 2023 年核心費用成長 8%，排除一些交易噪音。如果收入成長可能有所改善但不一定回到以前的水平，那麼這種業務運作率是否合適？您可以利用一些槓桿來使公司恢復正營運槓桿，或者這實際上只是主要收入和較少銷售費用的函數？

Yes. So Alex, as you know, we've made a lot of investments over the last 3 years. Chris alluded to the number of M&A activity, which contributed to the elevated levels of acquired intangibles amortization expense. So that provides for a little bit of noise, and we've built the teams out where it's all come together this year from a core perspective where we're rolling out X Pro, we're rolling out the final suite of our automation tools with the Adaptive Auto-X solution.

是的。亞歷克斯，如你所知，我們在過去三年裡進行了大量投資。克里斯提到併購活動的數量，這導致了收購的無形資產攤銷費用水準的增加。因此，這帶來了一些噪音，我們已經建立了團隊，今年從核心角度來看，我們正在推出 X Pro，我們正在推出最後一套自動化工具來使用自適應 Auto-X 解決方案。

So where we stand today, we're thinking of -- the future is that high single-digit expense growth rate for the core business, recognizing that roughly 17% to 18% of our operating expenses are variable. And we've experienced some savings due to the underperformance that we have seen this year, where our variable expenses were more or less down roughly $12 million to $13 million from what we were planning for in the beginning of the year, and that more or less was offset by the $12.5 million of M&A-related expenses.

因此，我們今天的立場是，我們正在考慮——未來核心業務的費用將以個位數的高成長率成長，並認識到我們大約 17% 至 18% 的營運費用是可變的。由於今年表現不佳，我們節省了一些費用，我們的可變費用比我們年初的計劃或多或少減少了約 1200 萬至 1300 萬美元，而且或多或少1250 萬美元的併購相關費用抵消了這一損失。

So I would say that the levers are built into the model through the variable expenses. But as we think about our expense philosophy internally, we're redirecting and reallocating resources to the top priorities where we think we're going to get near-term revenue growth prospects.

所以我想說，槓桿是透過變動費用內建到模型中的。但當我們在內部思考我們的支出理念時，我們正在將資源重新定向和重新分配到我們認為將獲得近期收入成長前景的首要任務。

And Alex, I would just mention we're laser-focused on expenses right now. We're also in a critical period for the company where we are introducing new technology across our tech stack. So that requires higher levels of investment, and that's what we've been doing. So when you look at that expense growth, we are covering both the legacy platform and the new platform at the same time. And obviously, acquisitions like Pragma enhance that technology footprint as well. So -- but these models are designed to be highly leveraged. And I think, Alex, you cover a number of companies that have great operating leverage in their system, and we look to grow that over time.

亞歷克斯，我只想提一下，我們現在非常關注支出。我們還處於公司的關鍵時期，我們正在整個技術堆疊中引入新技術。因此，這需要更高水準的投資，而這正是我們一直在做的事情。因此，當你看到費用成長時，我們同時涵蓋了舊平台和新平台。顯然，像 Pragma 這樣的收購也增強了技術足跡。所以——但這些模型的設計目的是提高槓桿。我認為，亞歷克斯，你涵蓋了許多在其係統中擁有巨大營運槓桿的公司，我們希望隨著時間的推移不斷發展。

One important point is that market data revenue. Remember, data is just an output. It doesn't really cost anything more to produce other than the sophistication of the data that you're producing. And we see that data, our market data, as you saw in the quarter, grew over 20%, and that will help us grow our operating margin as that data revenue piece continues to grow. And again, the data that we're rolling out now on X Pro is not data for sale today, but could be for sale in the future. It's really designed to grow our market share across the various products that we are trading. And so we're going to be leveraging that data as a way to collect orders in the bond market. And over time, we'll be able to leverage that data into hard dollars as well.

重要的一點是市場數據收入。請記住，數據只是輸出。除了所產生的數據的複雜性之外，實際上並沒有花費更多的成本。我們看到這些數據，我們的市場數據，正如您在本季度看到的那樣，增長了 20% 以上，隨著數據收入部分的持續增長，這將有助於我們提高營業利潤。再次強調，我們現在在 X Pro 上推出的數據不是今天出售的數據，但將來可能會出售。它的真正目的是增加我們所交易的各種產品的市場份額。因此，我們將利用這些數據來收集債券市場的訂單。隨著時間的推移，我們也將能夠將這些數據轉化為實際貨幣。

Your next question comes from the line of Patrick O'Shaughnessy from Raymond James.

您的下一個問題來自雷蒙德詹姆斯 (Raymond James) 的帕特里克奧肖內西 (Patrick O'Shaughnessy)。

Innovations that you've been speaking to today potentially allow MarketAxess to (inaudible) trade market.

您今天談到的創新可能允許 MarketAxess 進行（聽不清楚）市場交易。

I'm sorry, Patrick, you broke up a little bit. What was the last part of that question?

對不起，派崔克，你們分手了一點。這個問題的最後一部分是什麼？

What's the (inaudible) help you better penetrate the block trade market?

什麼（聽不清楚）可以幫助您更好地滲透大宗交易市場？

Okay, Patrick. So first, in EM, particularly around our local market growth, we are seeing higher levels of block activity. We have been growing our block market share there. We have rolled out a request for market, which is an important protocol that a number of clients have requested that tends to introduce the opportunity for a higher block activity. And then with the rollout of our X Pro platform, we are introducing what we call high touch solutions in November in this quarter in the fourth quarter. And obviously, hopefully see an uptake in 2024, but that high-touch offering is really designed to attract larger order sizes that need to use pre-trade analytics to decide on protocol selection.

好吧，派崔克。首先，在新興市場，特別是在本地市場成長方面，我們看到區塊活動水準更高。我們在那裡的大宗市場份額一直在增長。我們推出了市場請求，這是許多客戶要求的重要協議，往往會帶來更高區塊活動的機會。然後，隨著 X Pro 平台的推出，我們將在 11 月、本季和第四季推出所謂的高觸控解決方案。顯然，希望在 2024 年看到成長，但這種高接觸性產品的真正目的是吸引更大的訂單規模，這些訂單規模需要使用交易前分析來決定協議選擇。

One key ingredient to that is our AI Dealer Select data, which helps you select one, however many dealers you would choose. When you're managing a larger size order, you obviously want to reduce the market impact and the information leakage of that order. So our new offering in X Pro would help you decide, number one, what protocol can -- is there levels of liquidity using things like tradability to go into an all-to-all market where you're requesting price from the entire market, or if you're looking at lower levels of tradability, you may want to use a number of dealers, discrete dealers, and then if you choose to only use dealers, you would want to know, which dealers you should select from. So that offering is really targeted launch in November, but really hopeful to see it on client desktops across the first quarter of '24.

其中一個關鍵因素是我們的人工智慧經銷商選擇數據，它可以幫助您選擇一個經銷商，無論您選擇多少經銷商。當您管理較大規模的訂單時，您顯然希望減少該訂單的市場影響和資訊外洩。因此，我們在 X Pro 中的新產品將幫助您決定，第一，什麼協議可以 - 是否有使用可交易性等手段進入全面市場的流動性水平，您可以在其中向整個市場請求價格，或者，如果您正在考慮較低的可交易性，您可能想要使用多個經銷商、離散經銷商，然後如果您選擇只使用經銷商，您會想知道應該選擇哪些經銷商。因此，該產品的目標確實是在 11 月推出，但確實希望在 2024 年第一季在客戶端桌面上看到它。

Patrick, it's Rich. And one other thing, we're talking about adaptive and Adaptive Auto-X in it's, again, still early days just coming out of the pilot phase, but even from the small number of clients that we have in this initial phase, we're seeing larger orders coming from it. So remember, it gives the ability to tap into the different protocols that we have available. So a common type of operation in the algo is to leave part of a block order resting in the order book. And then when other parties engage being able to then work that order up to a larger size that gets completed, we call that multiparty workup.

派崔克，我是里奇。另一件事，我們談論自適應和自適應 Auto-X，同樣，它還處於剛剛結束試點階段的早期階段，但即使從我們在這個初始階段擁有的少量客戶來看，我們看到更大的訂單來自它。因此請記住，它使我們能夠利用我們可用的不同協議。因此，演算法中常見的操作類型是將部分大宗訂單保留在訂單簿中。然後，當其他方參與處理該訂單直至完成更大的訂單時，我們稱之為多方處理。

And we've seen some really encouraging early examples of that being used where the initial trade starts out at [$500,000] or $1 million or a couple of million and we've had cases where it gets worked up to $15 million or $20 million. And that's all done quietly without showing full size initially. People are concerned about that information leakage and then quietly working that up to a larger size without the information leakage. So we expect to see greater adoption of that as the Adaptive Auto-X rollout expands.

我們已經看到了一些非常令人鼓舞的早期例子，初始交易從 [500,000 美元] 或 100 萬美元或幾百萬美元開始，我們也有過交易金額高達 1500 萬美元或 2000 萬美元的案例。這一切都是悄悄完成的，原本沒有顯示完整尺寸。人們擔心資訊洩露，然後悄悄地在不洩露資訊的情況下將其擴大到更大的規模。因此，隨著 Adaptive Auto-X 的推出，我們預計會看到更多的應用程式。

Your next question comes from the line of Chris Allen from Citi.

您的下一個問題來自花旗銀行的克里斯艾倫。

Sorry, guys. I had to unmute. Just wanted to ask where you guys in the hiring cycle with FTEs up 17% year-over-year, you're kind of at the end of that cycle. Do you expect the Pragma to basically afford any expense efficiency opportunities longer term?

對不起大家。我不得不取消靜音。只是想問一下，你們處於招募週期的哪個階段，FTE 年比成長 17%，你們已經處於該週期的結束了。您是否預期 Pragma 基本上能夠長期提供任何費用效率機會？

Sure. Obviously, the hiring cycle was quite high over the last few years, quite a competitive market that we entered into in '22 and into the first quarter of '23. With the layoffs among the large investment banks and across the technology companies that market dynamic has reduced. So it's a much more friendly hiring environment. We are obviously focused on rolling out products and rolling out solutions and Pragma brings with us probably around 50 technologists, which is a great add to the overall footprint of MarketAxess. And we just see going into 2024, we're quite comfortable with the hiring marketplace. And obviously, the addition of heads that we've already added to the overall footprint of MarketAxess.

當然。顯然，過去幾年的招募週期相當高，我們在 22 年和 23 年第一季進入了一個競爭相當激烈的市場。隨著大型投資銀行和科技公司的裁員，市場活力減弱。所以這是一個更友善的招募環境。顯然，我們專注於推出產品和推出解決方案，Pragma 為我們帶來了約 50 位技術專家，這對 MarketAxess 的整體足跡來說是一個巨大的補充。進入 2024 年，我們對招聘市場感到非常滿意。顯然，我們已經將頭部添加到 MarketAxess 的整體足跡中。

And then more importantly, we have a number of things that we're doing on the tech side of replatforming our platform, rolling out X Pro and continuing to grow the overall automation solutions. So we continue to see sizable investments in all of those tech plants and all of those opportunities.

更重要的是，我們在技術方面正在做許多事情，例如重新建立我們的平台、推出 X Pro 並繼續發展整體自動化解決方案。因此，我們繼續看到對所有這些科技工廠和所有這些機會的大量投資。

We have no further questions in the queue at this time. Chris Concannon, I will turn the call to you for closing remarks.

目前我們隊列中沒有其他問題。克里斯康坎農 (Chris Concannon)，我將請您做結束語。

Great. Well, thank you for joining us today. Obviously, we have a very important quarter ahead and are pretty excited about the levels of activity and the number of things that we're rolling out in this quarter and the quarters ahead. So thank you for joining us, and we'll talk to you in another quarter.

偉大的。好的，謝謝您今天加入我們。顯然，我們即將迎來一個非常重要的季度，我們對本季和未來幾季的活動水準和推出的產品數量感到非常興奮。感謝您加入我們，我們將在下一個季度與您交談。

And this concludes today's conference call. Thank you for your participation, and you may now disconnect.

今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。