Fixed-income trading platform operator MarketAxess Holdings, which went public in 2004, set records in this years first quarter for revenue ($88.6 million) and pretax income ($44.4 million), both up 15 percent from the 2015 period. Total trading volume was 27 percent higher, at $310 billion, and the companys market capitalization now exceeds $5 billion. Chairman and CEO Richard McVey, who has led the 357-employee company since it emerged from J.P. Morgan & Co.s LabMorgan incubator in 2000, attributes recent successes to volume and market-share growth. New Yorkbased MarketAxesss share of reported U.S. high-grade corporate-bond trading was 14.9 percent in the first quarter, compared with 13.7 percent a year earlier. And a risk taken in 2012 on Open Trading protocols is paying off handsomely. In contrast to the dealer-to-client model, Open Trading brings dealers, asset managers, hedge funds and others together in a single all-to-all liquidity pool. With banks in the postcrisis years pulling back from traditional market making, Open Trading has attracted investors and money managers looking for liquidity solutions. In a more fragmented credit market, were helping our participants electronically find trade matches, says McVey, 56. If were consistently delivering better prices on lots of orders and those are prices they cant get anywhere else, then the buy side has to put more orders in. First-quarter Open Trading volume more than doubled year-over-year, to $37 billion, from $17 billion. In Europe, where Open Trading was introduced in January 2015, clients traded $4.8 billion in European and U.S. credit products in the first quarter, 73 percent more than in the fourth quarter of 2015. With more than 1,000 market participants connected to MarketAxess and 600-plus buy-side firms using three or more products, network effect momentum is building, McVey says: Total bond volume through 2015 has grown at a 19 percent compound annual rate, with emerging markets at 27 percent and high yield at 49 percent. The company has launched client-to-dealer trading and Open Trading for municipal bonds, with 200 investment firms and 65 dealers. We think this is a growing trend where both dealers and investors need a new model, McVey says. Weve never invested more, and our investment budget is wildly high. We have an opportunity and responsibility to clients to invest back into the business.
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