MarketAxess tops $1.04T in Q2 credit volume as ADV slips 11%

MarketAxess Holdings Inc. facilitated $1.04 trillion in Q2 credit trading volume, up 1% from a year earlier, while total average daily volume fell 11%.

"We continued to make progress with block trading, portfolio trading and dealer-initiated protocols across the platform," the company said in its July 7 release, citing record levels in portfolio trading and Mid-X volumes.

Total credit ADV excluding single-dealer portfolio trading came in at $16.95 billion, down 10% year over year. U.S. high-grade estimated market share reached 17.9% in June, up about 10 basis points, while high-yield share rose 190 basis points to 14.9%. Adjusting for duplicate trade reports that the company estimates inflated TRACE volumes by up to 8%, adjusted high-grade market share would have been approximately 19.4%.

The Zacks consensus estimate calls for Q2 earnings of $1.90 per share, a 5% decline from a year ago, on revenue of $220.43 million. MarketAxess has beaten earnings estimates in each of the past four quarters, with an average surprise of 4.5%.

Portfolio Trading Drives Growth

Total portfolio trading ADV rose 33% to a record $2 billion, with U.S. high-grade ADV of $1.2 billion up 41% and U.S. high-yield ADV of $459 million up 93%. The company's estimated market share of U.S. credit portfolio trading reached 20.6%, up from 17.5% a year ago.

Client-initiated block trading ADV increased 11% to $5.9 billion, with U.S. credit block ADV of $3.4 billion up 8%. Emerging markets block ADV of $2 billion rose 24%, while eurobonds block ADV of $503 million declined 5%.

Dealer-initiated ADV fell 3% to $1.7 billion, with record levels in eurobonds, municipal bonds and emerging markets partially offset by declines in U.S. high-grade and high-yield. Total Mid-X trading volume hit a record $23.6 billion, surging 156%.

Fee Trends and Market Share

Total credit average variable transaction fees per million declined 7% year over year to $127, driven by protocol mix, product mix and lower duration in U.S. high-grade bonds. Total rates FPM rose 24% to $4.88, driven by protocol mix.

The company's estimated U.S. high-grade market share on an all-in basis was 17.9% in June, while high-yield share reached 14.9%. Municipal bonds market share stood at 6.9%, and U.S. government bonds share was 2%.

The strong portfolio trading and block trading performance signals that MarketAxess is capturing a larger share of institutional flow even as overall industry ADV declines. Investors will watch the official Q2 earnings release for updated guidance on fee trends and market share trajectory.

This article is for informational purposes only and does not constitute investment advice.