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MarketAxess Holdings Inc. MKTX reported total monthly trading volume of $689.6 billion for March 2021, which declined 24.8% year over year. Nevertheless, the same improved 13% sequentially.
This operator of a leading electronic trading platform for fixed-income securities and provider of market data and post-trade services reported average daily volume (ADV) of $30 billion, which fell 28.1% year over year.
The company’s March volumes were impacted by lower rates volume, partly offset by higher volumes in U.S. high-grade and other credit bonds. Last month, MarketAxess reported $397 billion in rates volume, which plunged 38.7% from March 2020. Nevertheless, the company’s total credit volume of $292.6 billion improved 8.6% year over year while U.S. high-grade trading volume of $145.7 billion grew 3.3% year over year.
Q1 Volumes Decline
Concurrently, MarketAxess also reported first-quarter 2021 volumes. During the quarter, the company’s total trading volume slid 9.5% from first-quarter 2020 figure to $1.9 trillion. Also, the quarter’s ADV of $30.7 billion fell 9.4% from the year-ago comparable period.
The downside was due to 22.4% fall in trading volumes pertaining to rates products. However, the company’s quarterly volumes were partly driven by 18.6% and 10.1% rise in trading volumes pertaining to other credit and U.S. high-grade products, respectively.
Shares of this Zacks Rank #3 (Hold) company have gained 36.3% in the past year compared with the industry’s growth of 29.2%.
The company’s trading volumes have been benefiting from several initiatives undertaken by MarketAxess as part of its organic growth strategies. It has been collaborating or acquiring businesses or technologies that empower the company to not only roll out new products and services but also enable it to foray into newer markets.
Higher trading volumes have resulted in improved commissions, which usually accounts for a substantial portion of MarketAxess’ revenues. This has been consistently driving revenues for quite some time now. The momentum sustained during 2020 wherein trading volumes more than doubled from the 2019 figure. As a result, commissions increased 36.8% during the same time frame. The figure contributed 92.1% to the top line, which improved 34.8% year over year.
Furthermore, MarketAxess has been expanding its presence in the U.S. credit market on the back of its Open Trading platform. The platform makes way for hassle-free trading by connecting worldwide market participants with more than 1,700 active institutional investor and dealer firms, thereby, delivering cost savings through accelerating trading efficiencies. The company also keeps emphasizing on the increased adoption of electronic trading for fixed-income participants.
Another company in the same space, namely, CME Group Inc. CME have reported ADV of 21.7 million contracts in March, which plunged 32% year over year due to lower volumes in its six product lines.
Stocks to Consider
Some better-ranked stocks in the same space are OTC Markets Group Inc. OTCM and Intercontinental Exchange, Inc. ICE. While OTC Markets Group sports a Zacks Rank #1 (Strong Buy), Intercontinental Exchange carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
OTC Markets Group and Intercontinental Exchange have a trailing four-quarter earnings surprise of 22.71% and 3.67%, on average, respectively.
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Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report
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