MarketAxess Holdings is in the vortex of change in bond markets as they shift from voice-initiated to electronic trading amid major regulatory and structural upheavals. The trend has been building since Richard McVey, former head of North American fixed-income sales at J.P. Morgan & Co., led MarketAxess out of the banks LabMorgan incubator in 2000. He has been chairman and CEO of the now-$200 million-in-revenue company from the start and took it public in 2004 (current valuation: $1.7 billion); today his oft-repeated prophecy that markets will be moving in our direction is coming true in spades. May was a record month, with $62.5 billion in total volume, up 36 percent from a year earlier, pushing New Yorkbased MarketAxess market share up 1.5 points, to 12.9 percent. With liquidity scarce, the buy-side firms where fixed-income assets are concentrated are trying to move trades through a smaller pipe of dealers, McVey, 53, notes. In a response to that squeeze, BlackRock (see Robert Goldstein, No. 11), which had been developing an alternative bond-trading platform, decided in April to partner with MarketAxess. This will allow investors to post live orders in an anonymous open order book, and any participant can respond to it, says McVey. Thats an enormous behavioral change for investors, who have always been price takers.
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