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MarketAxess (MKTX) Reports Y/Y Rise in November Trading Volume

Zacks Equity Research
·4 min read

MarketAxess Holdings Inc. MKTX reported total monthly trading volume of $653.4 billion during the 20 trading days in November of this year. The figure improved 29.7% year over year.

The upside can primarily be attributed to strength in rates and other credit volume. Rates volume was driven by solid contributions from U.S. Treasury bonds while other credit volume gained on the back of well-performing Emerging markets, Eurobonds and other credit products. However, the improvement was partly offset by year-over-year decline in volume reported in MKTX’s U.S. high-grade product line.

Rates trading volume of $440.9 billion climbed 54.9% year over year. While MarketAxess’ U.S. high-grade trading volume slumped 9.7% year over year to $95 billion, other credit volume rose 3% year over year to $117.4 billion.

This Zacks Rank #3 (Hold) operator of a leading electronic trading platform for fixed-income securities, and market data and post-trade services provider, reported average daily volume (“ADV”) of $32.5 billion. The figure reflected growth of 23.1% year over year.

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In November, ADV of the U.S. high-grade and total other credit products of MarketAxess fell 14.2% and 2%, respectively, year over year. Meanwhile, for rates, MKTX reported a 47% surge in ADV.

Within the other credit product line, U.S. high-yield ADV plunged 19.8% year over year, while overall trading volume slid 15.6% year over year.

Eurobonds' ADV fell 2% year over year but total trading volume increased 2.7% year over year in November. Both ADV and overall trading volume of Emerging markets witnessed growth of 8.1% and 13.8%, respectively.

It is worth mentioning that the business of MarketAxess performs well with credit spread fluctuations, which gives rise to increased trading volumes. Credit spreads widen amid periods of financial stress and reflect prevalence of various market risks. As a result, investments in government bonds seem prudent in such a period over purchasing corporate bonds containing a relatively greater risk. This ultimately leads to higher bond trading.

Exactly the same thing happened in the second half of this November, wherein there were wider credit spreads and higher volatility. Consequently, MarketAxess is expected to benefit on the back of a rise in trading volumes, which in turn will provide a boost to commissions — the major driver of MKTX’s top-line growth. In the first nine months of 2021, commissions contributed roughly 89% to the company’s revenues.

Apart from consistent top-line growth since 2010, MarketAxess is well-poised for growth attributable to a diversified product suite undergoing constant enhancements and technological upgradations.

Zacks Rank & Price Performance

Shares of MarketAxess have lost 36.1% in the past year against the industry’s rally of 26.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Zacks Investment Research

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November Volumes of Other Securities and Exchanges Stocks

Similar to MarketAxess, other companies in the same space including CME Group Inc. CME, Nasdaq, Inc. NDAQ and Intercontinental Exchange, Inc. ICE also reported their respective November volumes.

CME Group’s ADV of 23.1 million contracts per day was up 20% year over year due to higher volumes in four of the six product lines. Interest rate, Energy, Equity index and foreign exchange volumes increased 40%, 15%, 4% and 6%, respectively.

Nasdaq’s U.S. equity options volume increased 24.4% year over year to 301 million contracts. European options and futures volume remained flat year over year at 5.9 million contracts.

Intercontinental Exchange’s ADV of 6.1 million contracts per day was up 11.3% year over year, driven by higher Commodities and Financials volumes. Commodities ADV increased 13.6%, while Financials ADV improved 7.6%.

Shares of CME Group, Nasdaq and Intercontinental Exchange have gained 22.4%, 53.9% and 18.9%, respectively, in a year.


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