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MarketAxess (MKTX) Partners Tradeweb & Bloomberg in Europe

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·3 min read
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MarketAxess Holdings Inc. MKTX recently joined forces with Tradeweb Markets Inc. TW and Bloomberg to develop a consolidated tape for fixed income in the European Union. The companies are expected to apply to become the provider of single-price feed for corporate and government bonds through the public procurement process organized by the European Securities and Markets Authority.

The consolidated tape is expected to act as an efficient pool of organized data from multiple exchanges and market makers to provide a uniform data system. As Europe has different platforms and diverse regulatory jurisdictions, it leads to higher bond data costs. In the past five years, bond data costs have increased 50%. The move from MarketAxess, Tradeweb and Bloomberg is likely to reduce costs and make the process more efficient.

The companies are the biggest providers of fixed-income data in the European Union. The latest endeavor can make them the bloc’s main provider. The move comes at a time when economic volatility is pushing investors toward safe haven in bonds. However, the ongoing inflation is dampening the returns. Rising interest rates can somewhat tackle the situation though.

Upon winning the mandate, a joint venture (JV) of the companies — independent from their respective businesses — will provide transparency to the fixed-income markets. The JV will be authorized and supervised by the European Securities and Markets Authority. This will help take control of the fragmented nature of the fixed-income market.

MarketAxess supplements its organic growth by forging strategic alliances that aid in tapping new markets and offering new products or services. Some of the notable deal wins to this end are the strategic partnership with BlackRock, which improved the range of trading connections available to global credit market participants, and an agreement with the S&P Dow Jones Indices to jointly develop indices to track the most liquid segments of the U.S. corporate bond market. MKTX also partnered with the China Foreign Exchange Trade System to enable its global investors to better access China’s onshore bond market.

If the collaboration with Tradeweb and Bloomberg to develop the consolidated tape comes through, it will add another feather in MarketAxess’ cap. MKTX introduces new products and modifies the existing ones to expand its product portfolio, leading to higher bond trading volumes and fueling growth in turn.

Price Performance

MarketAxess’ shares have declined 41.6% in the past year compared with the 25% fall of the industry it belongs to.

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Zacks Rank & Key Picks

MarketAxess currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Finance space are Alerus Financial Corporation ALRS and PhenixFIN Corporation PFX, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alerus Financial delivers financial products and services to businesses and consumers. Based in Grand Forks, ND, ALRS’ bottom line for 2022 has witnessed three upward revisions and no movement in the opposite direction in the past 60 days. ALRS’ earnings beat estimates in each of the last four quarters, the average being 34.6%.

PhenixFIN invests in debt and equity securities of small and middle-market companies. The consensus mark for PFX’s 2022 earnings has improved 132.8% in the past 60 days. Headquartered in New York, PFX beat on earnings in each of the last four quarters.


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