Chris O'Brien

Chris O'Brien asked about MarketAxess's strategy for growing in a persistent environment of lower credit spreads and lower volatility, and what factors could meaningfully shift this environment.

Answer

CEO Chris Concannon acknowledged the challenging environment of low volatility and tight spreads but noted recent increases in volatility in October and November, leading to wider spreads and increased TRACE volumes (up 46% in IG, 25% in high yield). CFO Ilene Fiszel Bieler added that market expectations for Fed rate cuts and a gentle steepening of the curve could positively impact liquidity and secondary turnover, leading to more willingness to buy longer-duration bonds, as evidenced by the weighted average years to maturity increasing on the platform.

Speaking on behalf of Ben Budish, Christopher O'Brien asked a broad question about fee capture, focusing on how MarketAxess positions its pricing competitively and whether price could be used as a lever to gain market share.

Answer

CEO Christopher Concannon and CFO Ilene Sazel Bieler responded that pricing is protocol-specific. While price-sensitive areas like dealer-to-dealer will be priced competitively, the core client-to-dealer RFQ business has stable pricing and does not face significant pressure. Concannon emphasized that competition is centered on workflow, data, and analytics, not price. Bieler added that the ultimate goal is driving incremental revenue, even if new protocols have lower capture rates.

Chris O'Brien, on behalf of Benjamin Budish at Barclays, asked about the strong performance in annuity sales, inquiring about the key drivers and the contribution from recent acquisitions.

Answer

Executive Matthew Audette explained that the strength in annuity sales was driven by two main factors. He attributed approximately three-quarters of the recent growth to the full onboarding of Prudential, a firm with a significant insurance and annuity business. The remaining quarter of the growth came from LPL's core business, reflecting adviser and client demand in the current rate environment. However, he cautioned that sales commissions from these products might moderate in future quarters if market volatility and interest rates change.