MarketAxess Holdings Inc. MKTX, which is one of the leading operators of electronic fixed income trading platform for institutional investors, is poised for long-term growth as the bond trading is taking a digital route, especially after the COVID-19 outbreak.
Bond traders are adopting the digital method of trading, moving away from the existing practice of “voice trade” wherein dealers and clients speak to one another for trade settlement.
The company is uniquely positioned to grow because of its automated trading platform, which provides auto execution functionality, giving it an edge to gain from the $100-trillion plus world of government and corporate debt.
Trading volumes witnessed a surge in recent months and the company gained in market share amid increased market volatility. The company’s May trading volumes were reported at $519.7 billion, up 197% year over year. It also saw a record volume in the first quarter of 2020.
The sharp rise in the credit market of late led to expanded business volumes. The company is experiencing record growth in volumes for all its core products, U.S. high-grade, high-yield, emerging markets, Eurobonds, municipal bonds and U.S. treasuries.
As corporations rushed to issue more debt to take advantage of the low interest rates, the company saw a surge in high-grade debt-trading volumes. It is likely that debt issuance will continue to grow in both the private and public sectors, leading to even greater secondary trading opportunities for the company.
The company has also gained from Open Trading, which was utilized by 1500 institutional firms. Open Trading's efforts led to huge savings in transaction costs for clients, which in turn, bumped up open trading average daily volume. The company is going to extend Open Trading to some markets in Latin America and Asia this year.
The firm is already strengthening its position by acquiring once-peer LiquidityEdge to gain access to the giant US Treasury market and similarly, penetrating the Eurobonds, emerging markets and muni bonds space.
The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In three months’ time, the same has gained a whopping 85% compared with the industry’s growth of 41%. The stellar price performance has also surpassed the stock returns of some other companies in the same space, such as Cboe Global Markets Inc. (CBOE ), Deutsche Boerse AG (DBOEY ) and Intercontinental Exchange Inc. (ICE ), which have rallied 29%, 58% and 41.4%, respectively, over the same time frame.
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Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report
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