MarketAxess Holdings Inc. (NASDAQ:MKTX) Q4 2022 Earnings Call Transcript

Chris Gerosa: Well, I’ll start by thinking about the velocity first. I mean when you think about ETF activities on the equity markets, fixed income ETF activities on the equity markets, there is a direct correlation to activity in open trading, but across the overall fixed income market. And so, as you mentioned, velocity does increase with the level of inflows into fixed income ETFs. The other important point is, and it goes back to the levels of electronic trading in the fixed income market, as ETFs become a dominant product of choice by investors, the demand for electronic trading goes up because those ETF market makers need to hedge in an electronic capacity. They are executing electronically in the equity market, the transfer of that risk is best done in electronic form in the fixed income or the underlying market.

So we do see a very strong connection between velocity and ETFs and velocity in electronic trading in the fixed income market. We also see a number of new participants in the ETF market that are leveraging our open trading solution from systematic hedge funds, alternative hedge funds, and the ETF market makers see huge benefits of leveraging a broader network in the fixed income market, a broader network than they are they typically have access to. So again, Open Trading is certainly a wonderful tool for the average ETF market maker and any systematic hedge fund that’s using ETFs as an investment vehicle.

Brian Bedell: That’s super helpful and congrats to you, Chris and Rick as well.

Chris Gerosa: Thanks.

Operator: That concludes our question-and-answer session. I’ll turn it over to Mr. McVey for any closing remarks.

Richard McVey: Thanks for joining us this morning and we look forward to updating you on business trends next quarter.

Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.