Dave Cresci - Investor Relations Manager Rick McVey - Chairman and CEO Tony DeLise - Chief Financial Officer.

Mike Adams - Sandler O’Neill Niamh Alexander - KBW Patrick O’Shaughnessy - Raymond James Jillian Miller - BMO Capital Markets Ashley Serrao - Credit Suisse Michael Wong - Morningstar.

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded October 22, 2014. I would now like to turn the call over to Dave Cresci, Investor Relations Manager at MarketAxess.

Please go ahead, sir..

Good morning. And welcome to the MarketAxess Third Quarter 2014 Conference Call. For the call, Rick McVey, Chairman and Chief Executive Officer will review the highlights for the quarter and will provide an update on trends in our businesses; and then Tony DeLise, Chief Financial Officer, will review the financial results.

Before I turn the call over to Rick, let me remind you that today’s call may include forward-looking statements. These statements represent the company’s belief regarding future events that by their nature are uncertain. Company’s actual results and financial condition may differ materially from what is indicated in those forward-looking statements.

For a discussion of some of the risks and factors that could affect the company’s future results, please see the description of Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2013.

I would also direct you to read the forward-looking disclaimer statement in our quarterly earnings release, which was issued earlier this morning and is now available on our website. Now, let me turn the call over to Rick..

Good morning. And thank you for joining us to discuss our third quarter 2014 results. This morning we reported solid third quarter financial results with revenues of $64.2 million, up 5.1% from the previous year. Expenses for the quarter were up 3.5% to $36 million and pretax income was up 7.1% to $28.3 million compared to a year ago.

Diluted earnings per share from continuing operations were $0.46 for the quarter, up from $0.43 a year ago on an as adjusted basis. Our adjusted estimated share of U.S. high-grade TRACE in Q3 was 14.6%, up from 14% in Q2. Market conditions in the third quarter remained benign and were similar to prior quarters.

Despite these conditions, product diversification continues to grow with a record quarter in other credit trading volumes. Volumes from European clients were up 59% during the quarter. Open Trading adoption rates continued to improve with increases in both completed trades and notional volume traded.

Based on our strong cash flow and third quarter results, our Board has approved a $0.16 regular quarterly dividend. Slide four provides an update on market conditions. Third quarter combined U.S. high-grade and high-yield TRACE volumes increased moderately by 5% compared to a year ago.

Credit spreads and yields remained low and credit spread volatility was modest during the quarter. Investor demand for corporate bonds was primarily focused on the active new issue calendar during the quarter. Year-to-date U.S. high-grade new issuance totaled $758 billion, up 5% from last year’s robust level.

Taxable bond funds experienced monthly net inflows throughout the first three quarters of 2014. The market environment began to shift at the end of September, resulting in our highest volume trading day ever with 6.5 billion in bond volume on month end.

So far in October, we’ve seen increased volatility, bond fund outflows and a much wider new issue calendar. With greater focus on secondary trading, average daily TRACE high-grade and high-yield volume in October is approximately 10% higher than last October.

While, the fourth quarter tends to be seasonally slow due to holiday periods, the first few weeks representing meaningful pick-up in secondary activity. Slide 5 provides an update on our key investment areas. We see significant progress in the adoption of our Open Trading protocols by both industrial clients and dealers.

Since the beginning of 2014, over 25,000 Open Trading transactions have been completed on MarketAxess including almost 10,000 trades in the third quarter alone. The number of firms completing open trades continues to grow representing an important step towards the development of a valuable new source of liquidity for secondary credit markets.

We believe that one of the distinguishing factors in our Open Trading success is the inclusion of a large base of dealers, investment managers and alternative market participants in the same trading pool. We are bringing a diverse set of clients into Open Trading to create new trading connections and improve market liquidity.

In the alternative client category, we see growing activity from hedge funds and ETF market participants. During the quarter, we saw continued improvement in our European business. Trading volumes from European clients increased 59% during the third quarter compared to a year ago.

We are focused on expanding our liquidity pool in Europe through a combination of adding market making dealers and advancing new trading protocols. Our European infrastructure is now in place and we expect to see continued expansion in operating margins.

In CDS, we saw an uptick in our CDS sales volumes during Q3, even though short-term revenue opportunities remained modest. Now I would like to hand the call over to Tony for additional detail on our volumes and financial results..

Thank you, Rick. Please turn to slide 6 for a summary of our trading volume across product categories. Our overall global trading volumes were $182 billion for the third quarter, up 4% year-over-year. U.S.

high-grade volumes were $110 billion for the quarter, down 4% year-over-year on a combination of a 2% decline in estimated high-grade trades volume and slightly lower market share.

Volumes in the other credit category were up 33% compared to the third quarter of 2013, led by record quarterly high-yields volume and an 80% increase in European credit volume. Our liquid products trading volumes were down 11% on softer U.S. agency trading.

On the second quarter earnings call, we provided some color on FINRA TRACE reporting of 144A securities and duplicate reporting of affiliate back-to-back trades. We realized that the noise around TRACE reported volumes create some challenges in estimating market share.

FINRA recently determined to adding new reporting field to capture affiliate back-to-back trades, but we understand that the reporting will not begin production until sometime in the first half of 2015.

So we’ll continue to report estimated trade volume and market share on a basis consistent with the prior years and have posted a file on our website displaying TRACE volume with and without 144A securities and adjusted for the estimated duplicate trade reporting. Slide seven displays our quarterly earnings performance.

Revenues of $64.2 million were up 5% from a year ago, mainly on record commission revenue. The sequential drop in information and post-trade service revenue was largely due to a decline in market volumes reported through Trax.

A tapering of revenue on a professional service engagement caused a sequential decline in technology products and services revenue. Total expenses were $36 million, up 3.5% in the third quarter of 2013. The operating margin percentage, and compensation and benefits ratio were consistent with the year ago levels.

The effective tax rate was 38% for the third quarter and 37.5% for September year-to-date. We continue to track at the lower end of the 2014 effective tax rate guidance range of 37% to 40%. Our diluted EPS was $0.46 on a diluted share count of 37.8 million shares.

The sequential decline in our diluted share count was principally due to share repurchases. On slide eight, we’ve laid out our commission revenue, trading volumes and fees per million.

Total variable transaction fees were up 5% year-over-year as the growth in other credit trading volumes offset high-grade fee compression and lower estimated market volumes. U.S. high-grade fees per million of $177 was similar to the second quarter.

The year-over-year decline in high-grade fees per million was due to a combination of lower duration, a shift to larger trade sizes and dealer fee plan migrations. The average years to maturity of bonds traded was 7.8 years, down from 8.7 years in the third quarter of 2013, but within the post-crisis range experienced on the platform.

Fees per million in the other credit category were $316, up from $308 in the second quarter and nearly identical to the year ago level. The sequential increase in fee capture was due to a mix shift within this category with the heavier weighting to high-yield volume. U.S.

high-grade distribution fees were up $700,000 compared to the second quarter of 2014, due principally to one dealer migrating to the major U.S. high-grade plan.

During 2014, several euro bond dealers transitioned to fee plans and incorporate a higher level of variable fees and lower level of monthly distribution fees, resulting in a decline in the other credit category distribution fees. We expect fourth quarter total distribution fees will be similar to the third quarter level.

Slide nine provides you with the expense detail. Third quarter 2014 expenses of $36 million were up 3.5% year-over-year and less than 1% sequentially. All of the expense categories were in line with the second quarter figures. September year-to-date expenses were up 12% over 2013.

However, when we normalize 2013 expenses for the Xtrakter acquisition, the year-to-date expenses were up closer to our long-term expense growth rate of around 8%. The year-over-year increase in employee compensation and benefits was almost entirely attributable to higher headcount.

Employee headcount was 305 at September month-end, up from 295 one year ago. As an attrition, we are expecting some headcount expansion through year-end to support our core initiatives. The year-over-year increase in depreciation and amortization reflects the significant investment and product enhancements and technology over the past several years.

We expect capital expenditures for full year 2014 will be within the guidance range of $15 million to $17 million. Professional and consulting fees have trended down versus prior year levels for the past three quarters. Lower technology consulting spend and legal fees were the driver behind the year-over-year decline.

We expect full year 2014 operating expenses will be within the guidance range of $144 million to $148 million. On slide 10, we provide balance sheet information. Cash and securities available for sale as of September 30th were $312 million, compared to $200 million at year-end 2013.

During the third quarter, we repurchased 211,000 shares at a cost of $11.7 million under the upside $100 million share buyback program. As of September 30th approximately $75 million was available for future repurchases under the program.

There was no change in our capital structure during the third quarter; we have no bank debt outstanding; and we didn’t borrow against our revolving credit facility. Now, let me turn the call back to Rick for some closing comments..

Thanks Tony. Our third quarter results reflect continued momentum and a stronger competitive position across our core credit products with record volumes in our other credit category. Our Open Trading adoption rates are accelerating and represent growing interest in our all-to-all trading solutions.

European results are improving and incoming European regulations will create new opportunities for trading and market data solutions. Now I will be happy to open the line for your questions..

Thank you. (Operator Instructions). Our first question comes from Mike Adams with Sandler O’Neill. Your line is open..

Good morning gentlemen..

Hey Mike..

Hey Mike..

So let me kick off with a couple of questions specific to the quarter here. Tony, to follow-up on some of your commentary on the non-commission businesses, the post-trade services, I think you said that there was just lower trade reporting at Xtrakter that accounted for the weakness this quarter.

And I’m curious is that just lower overall industry volume or are you seeing certain market participants maybe shifting the reporting to other venues.

What’s driving that?.

Yes Mike, the sequential decline almost all of that was Trax volume related business. And when you look at that line item, around 55% of that line item is data related. So it’s both U.S. and European data product and 45% of it is Trax related. That 45% Trax related really is volume dependent.

And we look at the sequential period; there was a slowdown in overall market volumes that does end up translating into reported volumes and trade matching on our platform as well.

And we look over that period; the data piece of that line item was a slight uptick over the second quarter, but that decline in Trax volumes decline in market volumes was what attributed to the decline quarter-to-quarter..

Got it. And then and Tony another one for you, just I noticed the headcount slipped as of September 30, it was down like 4% or so and a little surprising just because you’ve talked about adding headcount to support some growth initiatives.

So, where did those reductions occur? And I guess there was just natural attrition or was there some minor restructuring that you still get 325 to 330 by year-end?.

Right, right. There was a decline end of Q2 to end of Q3 and quite frankly I probably should have done a better job explaining the increase at the end of the second quarter, but we look at the decline in the third quarter there were 9 or 10 in-turns that we had that rolled off during the quarter.

There were also some terminations during the quarter and it was the combination of both management initiated terminations and some voluntary terminations. The combination of the in-turns rolling off and the terminations, there was about 20 altogether and then we did have hire. So, we did have a half of dozen or some new hires during the period.

The second part of the question, what does that mean for year-end and what are we projecting right now; we still have 15 or 16 or 17 open positions, we’re actively engaged in recruiting and trying to get those positions filled then on boarded. Some of those positions are already filled and committed to.

I think at this stage if we were targeting 325 which was our original budget, it’s going to be tough to get to that 325 number. So, we’ll probably fall little bit short of that goal. And not for lack of trying we just want to make sure we get the right people in there with the right ability to fill the position.

But we’ll probably fall a little bit short to that year-end target..

Got it. Thanks Tony. And then Rick just shifting gears talking about some of the market conditions. Some of the recent weakness in the credit markets, I think it’s broad liquidity concerns in the corporate bond market to the forefront again.

Just curious what the immediate impact on businesses you see elevated inbound call volume or clients more engaged on the platform testing Open Trading protocols, any color would be appreciated?.

All the above. I think the most immediate change has been the increase in TRACE volume. And I personally think that volatility has the potential to bring higher TRACE activity because the base of corporate debt is up about 60% since ‘08.

And we are seeing that early on in the fourth quarter, most importantly in high-yield where volatility has been the greatest and spread levels now have moved wider and are almost back to where we were in the taper tantrum in the second quarter of ‘13.

And if you look at high-yield TRACE so far in October, it’s up about 30% versus last October’s average daily volume. So, the secondary market activity is up. We continue to believe that the adoption rates for Open Trading will accelerate with more volatility and more focus on secondary trading. In the early days that seems to be the case.

So, this is another environment where we’re getting greater volatility and greater interest in electronic trading..

Got it. And then October, I don’t think you commented on market share.

Do you mind giving us an update there and how things have been trending?.

Yes. Similar to last quarter, we still have eight trading days left in October, so hesitate to give guidance on where the full month will come out with so many important trading days still in front of us. But based on the trend that we’re seeing so far this month, we would expect a modest increase in market share versus the third quarter average..

Got it. Thank you guys. I appreciate it..

Our next question comes from Niamh Alexander with KBW. Your line is open..

Hi. Thanks, good morning and thanks for taking my questions..

Hi Niamh..

Hi. And if I could just go back to Europe for a bit, Rick. You’ve done the Xtrakter deal last year, you’ve had quite a few quarters of integration. Now I know, we get some seasonality over there, you get a lot of seasonality over there typically.

But help me think about where you are versus where you were hoping to be and do you still feel as good about the market data, revenue opportunities, the potential to integrate there, maybe to build into the commissions on that and has a timing shifted a little bit there at all or just where do we go from here?.

Yes. No change, right. I think that we view the European business holistically and feel good about the expanded product capabilities we have with trading data and post-trade services. We as you know are closing in on the completion of a major technology project to rewrite the infrastructure at Trax, feel good about that.

And we’re getting great encouragement in the early days of some of the new data products that are just rolling out. So, this is all the matter of timing, but there is a lack of quality, turnover volume, liquidity information in Europe and even pricing information and we’re working with the industry there on delivering more data to fill that gap.

And we remain optimistic that this will be a growth area for us into the end of the year and into next year. And I do think that some of the progress that we’ve made on the trading side is attributable to the broader product offering that we now have in Europe.

So really encouraged by the growth in number of clients trading and the significant pick up in year-over-year volume that we’re seeing in Europe..

Okay, fair enough. So I guess the 59% growth from the European clients you’ve seen that come through in the existing U.S. product as well high-yield on EM maybe more so than Eurobond.

But for us to think about the market data side of it as well and which is where you’re very strong typically, I mean is that more of a maybe second half 2015 that we should start to build in some additional revenue for that particular part of it?.

Yes. I think throughout 2015, we’re optimistic we will see growth in the data revenue line. Tony made some comments specific to Eurobond. So a significant part of our growth during the quarter from European clients was in Eurobonds within the region.

There is a lot of emerging market trading that takes place with European clients as well; and that’s been an important component of our growth..

Okay, fair enough. That’s helpful. Thanks Rick. And then I imagine this time of the year a lot of companies and yours included are probably going through your budgeting for next year.

Can you help me think about what - right now you’ve got through big initiatives and you’ve continued to invest in those initiatives, Europe, the Open Trading and then the Trax.

Are those three kind of still the big priority for the next year ahead and should we help -- is it kind of spend rate likely to be the same in the investment?.

You’re right. We’ve had those three big initiatives for a couple of years now around Europe and the Trax business, around Open Trading and around CDS. Sitting here today, it’s still three big initiatives.

Although I’ll tell you on the CDS side and this is absent having a rule set from the SEC on the CDS side, we’re largely through the technology build, the big legal spend around responding to the CFTC rules, are largely behind us and that spend has come down for CDS, so where the run rate the last couple of years had been closer to $6 million, we look at the current run rate and it’s probably not quite past that number but it’s around the $4 million level.

And again absent a rule set from the SEC and having to respond to that that’s probably a better run rate around CDS. Let’s say on the Europe side, and Rick has made some comments on Europe, I mean we are largely through a technology rebuild on the Trax side.

We’re in the midst of some data center moves out of some euro cleared data centers into our existing data centers. We think we have the infrastructure in place; and I am talking about people and technology.

And that’s not to say we won’t continue to invest, but we are -- at this point in Europe it’s all about leverage and it’s all about driving the top-line revenue number forward, still obviously a very big focus, but those big sort of chunky spends will largely be behind us.

And I think anything around Open Trading, it’s still -- we are still testing protocols. We’re still launching new functionality. There is still a big investment there; it’s a big part of our focus. It’s a little early to talk about guidance right now for next year but you’ve seen what our long-term expense rate looks like.

We’ve been in that 6% or 8% range. You’ve seen what CapEx looks like in a more normalized environment; we’ve responded to that in the past, it’s probably the $12 million to $15 million range and the normal run rate, most of that product enhancements.

And the effective tax rates, while there is some one-time items in there, it’s been very consistent the past three years..

Okay. I think that’s very helpful. Thank you, Tony. I appreciate it you’re pointing us to there. And then if I could on maybe back to Rick on the industry environment, I mean you’ve been very helpful in talking about October so far and the hike in volatility.

But there is a kind of bigger scene developing in terms of there is a lot of concern about lack of liquidity especially if there is lot of bonds moving one way. How -- and we’ve seen one big industry participant on the buying side kind of publish resource the regulators are paying attention.

Do you think we’re closer to getting some change like maybe towards standardized products to assess the situation, is MarketAxess in a good position to have a [center in] order book to kind of be one of the venues at the front of the line there?.

With respect to standardized product it makes all the sense in the world to us. They have more standardization and a fewer bond issues in the credit space, but that’s going to be a long-term change. In the early days, there is no sign that issuers have changed their issuance patterns yet.

So, we still have a highly fragmented secondary corporate bond market. But greater standardization and fewer issues, we think would be one of the solutions to increase overall market turnover and liquidity.

I think what we’re seeing now is that the adoption rates are picking up, we’re seeing nice sequential growth in Open Trading and you kind of see 20% to 30% increases in clients that are getting involved in trading volume.

I think where you’ll see an acceleration of that is when clients needed the most, which is when the focus is on the secondary trading market. And in the early part of the fourth quarter, we’ve had two or three weeks of that.

But the market hasn’t been tested because the investment industry has that inflows over the last three to four years and most of that money has gone to work in the new issue calendar. And I think if you look at high-yield now this is the beginning of the test on the secondary market.

And I’d say, it’s our believe that we will see the story of necessity being the mother of invention coming through where clients realize that given a much large credit market and smaller balance sheet capacity within the dealer community, they do need to change their behavior in order to facilitate efficient secondary trading.

And that’s the reason for the massive investment that we’re making in protocols. And we get to a center in their order book maybe for a small slice of that corporate bond market. It’s hard and given the amount of turnover today to see a broad base of the activity.

But remember, we have a menu of protocols already available for investors and dealers in Open Trading. And arguably, the protocols are out ahead of the shift that we’ve seen so far in industrial behavior. We have much more available than people are using today including a central limit order book, which is live today for single name CDS Trading.

So that -- we are continuing to invest and enhance those protocols, but there is a lot of work going on with respect to changing investor behavior and getting more people participating and using the Open Trading protocols that are available..

Okay. Fair enough. Thanks so much..

Our next question comes from Patrick O’Shaughnessy with Raymond James. Your line is open..

Hey, good morning guys..

Hello Patrick..

Good morning, Patrick..

I want to follow-up on the information services -- information posted services line. So, obviously a little bit of seasonality there in the third quarter with lower volumes.

I guess I was maybe expecting that some of your growth initiatives that you have in terms of broadening the distribution of that data and selling more data products would offset some of that seasonality.

So, as we think about that line going forward, what sort of growth do you think is ahead of you in terms of broadening the distribution on those Trax data products?.

Patrick, Rick responded before to one of the earlier questions around that .It is -- we’re still very bullish on the data outlook. We are in the midst of rolling out new data product. The sales cycle does take a little bit longer here. And it’s something in the fourth quarter and beyond.

Now in terms of sizing it up, a lot of what we’re doing is also around promoting more flow onto our platform. In some cases, the data products will be just to do that will be to put more eye balls and draw more flow onto our platform.

It’s difficult to circle the number right now and tell you what we’re expecting in terms of growth out of that, but it is one of our focus areas. It’s one of the areas that we expect to improve the margin fixture of our European franchise overall. It’s one of those areas we’re expecting revenue growth from..

Got you. And then I guess to push a little bit further on Europe. I know that you guys have been trying to get the buy-side to push beyond that fix dealer cap for some of the smaller I think some $5,000 trade, the 5,000 euro.

Can you just talk about how that is going and what the opportunity or the potential to see to try to push the buy-side to going beyond the fix dealer cap for all of their trades in Europe?.

We’ve mentioned in the past, we have provided more investor choice in terms of how they use this system. It’s always up to them to determine how they would like to use the protocols and how broadly they’d like to send their electronic orders.

But what we’ve seen in the odd lots in Europe is that they have embraced more dealer choice and more competition in those kind of orders.

And we also, we get mixed reviews from dealers, but some of them quite like it because dealers today don’t necessarily want to take on more inventory in odd lots that come with higher capital requirements than they used to. So investors are going broadly; they’re having good success with that, it’s attracting new dealers to our European system.

We believe that over time Europe is going to need an open architecture, at least as much as the U.S., based on everything we can see on transaction cost and liquidity and capital requirements for the key participants there, but it’s likely to be a gradual evolutionary process to get there..

Got you. It makes sense, thanks. And I guess lastly from me, so certainly we keep hearing about all these different new corporate bond, electronic corporate bond trading that are coming on.

Are there any trading protocols that you have seen and it is new venues proposed that you say hey this is interesting, this is something that we think we should pursue or by and large do you guys have kind of the complete set of protocols already in place?.

Well we don’t have any good ideas but we spend a lot of time and energy everyday thinking about this and talking to every major client and dealer about it. And as a result of all that work with clients, everything that we know they could add value to improve liquidity, we’ve either built and it’s available now or it will be available soon.

So it won’t be a gap in protocols here. We’re spending a lot of time with our clients and we are very focused on this topic, because we think the industry needs it. And there is no shortage here of technology investment going into offer those protocols.

And as I said right now, the only thing keeping us from having a much stronger open trading offering is investor behavior, it’s not shortage of technology or any gaps in protocols.

And we have a huge start, we have approximately 150 or so institutional investors; they are active on the system and nearly a 100 dealers connected and integrated into the trading platform. We have a lot of content with the base of orders that are already in the system.

And we think we have a head start and are making bigger investments than anyone in the industry in enhancing and adding protocol.

So, there is a big start there and what we’re really working on with investors is altering their trading process, so that they can more actively participate and utilize these new tools in order to take control of their own destiny and be better prepared for the future..

Got it. Thanks for the commentary..

Our next question comes from Jillian Miller with BMO Capital Markets. Your line is open. .

Hey guys, thanks. So, I was trying to go back to Open Trading and your trade count has been growing really amazing for the past couple of quarters.

I was wondering if you could give us an idea for like what percentage of your high-grade value traded and that trade count represents? And then maybe also if you could just give us an idea for what percentage of your Open Trading trade count is actually being done between two clients versus like a client to dealer or dealer to dealer that’s run through the Open Trading protocol?.

Yes, two good questions, Jillian. First, it’s grown to about 4% or so of our trade count and trade volume, so a nice increase. And I think when that approaches 10% or more, it will start to become a more visible and relevant source of liquidity for both dealers and investors on the platform.

And we did provide in the pie chart in the prepared remarks some guidance on where prices are coming from when orders go into market list in our Open Trading protocols. And roughly speaking, it’s kind of interesting because most people jump to this conclusion that it’s all client-to-client.

That’s just not the case and the interesting thing is how we’re bringing many different and some new market participants into that pool of orders.

So about 40% of the prices back come from investment managers, about 40% comes from a community of alternative market makers and I highlighted in my comments two segments; ETF market makers and hedge funds.

And about 20% come from dealers that in most cases did not see the order on a disclosed basis and are responding instead through the Open Trading protocols. I think this is really important. This is not just client-to-client; we have dealers, investors, ETF market markers, hedge funds all in that same pool.

And ultimately we think that this is the right path to the solution for the new model in secondary trading..

Okay, thanks. That’s helpful. And then I think Patrick’s question kind of getting it, but with Tradeweb now having I guess at least soft line to their platform.

Just wanted to get kind of an update from you on what you’re hearing from your clients and what if any competitive advantages that platform might have or if basically there is very little information out there on it, so I’m just wondering if you have heard anything that we haven’t?.

Yes. We talked extensively with all of you in the last call because it was right in the midst of what we are hearing with the Tradeweb corporate bond launch. Early days for them, and as I mentioned in the last call, this is not the first launch in corporate bonds; we believe it’s the fourth. And so they have been down this road before.

But what we’re hearing is that there is not much change in the outcome. Again we respect them as a competitor. We expect them to invest in credit and all the other areas that they have been recently.

And it is early days, but in the first three months of trading, we have not heard much about trading activity from dealers or investors on the Tradeweb platform.

And also I’d point you to one other external data point on competitive position and market share that came out during the quarter which was the Greenwich Associates’ e-trading survey for credit on the over 1,000 institutional investor interviews that they conducted during their spring survey period.

And I think all of you started asking a lot more about competition a little over a year ago. And we probably all have a hard time coming up with all the names that have been in and out of the market already over the last five quarters.

But what I found interesting about Greenwich is over the last year they actually show that MarketAxess increased our percentage of the e-share. So they show us going from strength-to-strength based on what they’ve heard from 1,000 investors in their survey. And as I mentioned that summary came out from Greenwich about a month ago..

Okay. That’s very helpful. Thank you. And then just one more question for me; you guys have been retaining some excess capital on the balance sheet around the past year, so I think because you’ve been enacting at that and the demand for the Open Trading.

And I think last time we spoke you said you were still trying to determine whether longer term you’d outsource that or whether you will continue to perform it in-house.

So, I want to get an update on where you are in that decision process and how it’s kind of influencing your decisions in capital deployment?.

Sort of happy to respond to that, we were acting as a riskless principal with electronically matched trades. So, based on what we’re doing today, we’re scratching the surface of the available capital that we currently have.

So, we really don’t see a scenario any time soon where there we would need to think differently about capital management because of what we’re clearing in Open Trading. And it’s my belief, Julian that as this grows; our percentage of clearing will go down.

And the reason for that is we already see positive signs from major dealers that they are embracing Open Trading in a different way than they did six months ago.

We’ve been working very closely with major dealers individually and as groups on our ways for them to stay involved in Open Trading to support it to utilize that liquidity pool for their own purposes and needs. And we’re making great progress there.

And I think the next step of that is that they will offer a similar clearing service to their large investor clients, which we actively embrace. And when they do that I believe that our percentage of clearing will go down.

So, I really don’t think it’s relevant currently to think too much about any capital changes on the back of Open Trading clearing..

Okay, got it. Thank you..

Our next question comes from Ashley Serrao with Credit Suisse. Your line is open..

Good morning guys.

Rick, can you talk about the sense of urgency that the red leaders have in reforming the market? It feels like the retro is picking up, but from the discussions with them, do you feel that they are working to the time line of sorts? And I ask, because a lot of the ideas put forward by BlackRock are really not knew, they’ve been talked about for well over a year.

What’s stopping the reg leaders from listening to such large influential participant?.

I think they are listening. We’ve had a series of meetings with the SEC recently and I can confirm that their attention and focus on the credit markets has increased.

And I do think they are rightly concerned about the market structure issues and well aware that the market has gotten a lot larger and the regulatory changes have caused significant shift in market making capacity. It’s a big topic. And the regulators don’t move forward with changes in a short period of time.

So, I think it’s early stages, but I can categorically tell you that they are concerned about the issue and they are talking to influential participants in the market to try and get a sense of what they might do in order to be a constructive part of the solution and the new market structure..

Got it. Thanks for the color there. And just a follow-up question on your thoughts on market share so far this quarter. I was surprised that you said that you expected to be modestly higher. Just given that issuance is meaningfully down, we’re hearing there are liquidating challenges in the market.

What, is there something missing in that picture, or why don’t you more meaningfully hire?.

I think you’re worried, this may take a little bit actually. We’ve got eight trading days left and on the tenth day from now, you’ll have our results. And all I can tell you is we’re seeing the same theme that when volatility picks up in the credit markets, TRACE volumes go up and electronic share goes up. So we feel really good about it.

And we’ve never had in my opinion quite as much momentum across every product area as we have now where product diversification is really improving. And it’s rare to see the arrows all pointing in the same direction when you look at European activity, high-yield EM, the high-grade market starting to shift, TRACE volumes moving up.

So again, this is only a two or third week period and it’s hard to know whether it will be sustained in the short-term, but I think we would all bet on more volatility in the future than we’ve seen over the last three to four years and that looks to us like it’s very healthy for our business..

Thanks for the color there. And I guess final one for Tony. No real change to expense guidance this quarter.

But can you walk us through the puts and takes as we head into 4Q; what gets to the middle or top of your expense guidance?.

Actually it’s probably, in fairness, this is probably going to be tough to get to that middle or high-end of the expense guidance. And you look at it today and substantial base of the expenses going into the fourth quarter, you can call them fixed at this point in time. And quite frankly, the biggest variable is what Rick has been talking about.

The biggest variable we have are market conditions. And it’s the impact on what that means to our business to our commission revenue. And where that flows through is on our incentive compensation accruals.

And that’s really the biggest variable at this point in time and to a lesser extent, some of the comments I made around headcount, some of the movements there could influence the expense run rate a little bit. But again, it’s mostly market conditions commission revenue and how that flows to the incentive comp.

But I do think given where we are through the first nine months looking at where we were in the third quarter getting to the sort of middle or upper-end, I’m not sure that we have that in the equation right now.

Although, listen if we have what’s occurred in the first couple of weeks here, again we’re not suggesting that’s the case for the remainder of the quarter, but the first couple of weeks gives us some optimism on market condition..

All right. Thanks for taking my questions guys..

Our next quarter comes from Michael Wong with Morningstar. Your line is open..

Good morning Michael. .

So talk about decreased liquidity in the capital markets due to higher banking regulations has resurfaced lately.

Overall do you see less liquidity in the overall market or would you say the liquidity has migrated from large banks to regional broker-dealers and buy-side firms?.

Yes. Based on our [interim] numbers and others, you don’t really see overall that there is a change in dealer concentration, still a substantial amount of the share are in the hands of the top 10 dealers. When we think about market liquidity, we look at overall credit market turnover and transaction costs.

And turnover is down substantially over the last three years. The base of outstanding debt is much larger and TRACE volumes have been broadly flat.

And I think that’s partly because market conditions have been so benign overall and partly it’s because investors have a harder time moving large trades through the markets than they used to and transaction costs are higher than they used to be pre-crisis.

So this, I believe that this will become even more relevant when we have a sustained period of higher market volatility and investors need to move more positions..

Okay.

And with long-term rates generally declining this year, have you seen a change in trading patterns that was different than you were expecting at the beginning of the year and did that change your strategy or thoughts during the year at all?.

Not really. I think it has extended the period in which investors have had inflows and have had money put to work, it’s facilitated another big year in new issuance. So, more of what we’ve seen over the last two or three years, but we’re investing for the long-term.

We think that there is a seismic shift going on in market structure and we need to be a constructive part of that with the industry and with our dealer-investor clients. And we are ramping up the investment budget to provide those solutions..

Okay. Thank you..

Thank you..

(Operator Instructions). Our next question comes from (inaudible) with Parameter Capital. Your line is open..

Good morning. Thank you for taking the call..

Good morning..

I’d like to talk just briefly to what about share buybacks and if that’s a great use of your capital at this point in time?.

Jimmie I think capital management it’s an ongoing topic with our Board. And in terms of the repurchase plan, we like having the program in place. We had adapted that plan earlier in 2014 mainly to offset the impact of equity grants. We did expand that plan in the second quarter. And we’ve been sort of consistent with how we’ve acted in the past.

We’ve tended to be more aggressive around repurchases when we think we’re trading at a significant discount to fair value. And the new grid that we’ve set up is set up to perform in the manner where it is more aggressive at lower prices and it’s less aggressive in higher prices.

The Board has been thoughtful around capital management and repurchases and dividends overall. We’ve made use of both repurchase and dividends in the past. And considering things like cash flow our cash balance, our share price, future projection, it’s an ongoing topic. And again we’d like to have the existing program in place right now..

Thank you very much. Appreciate it..

Our next question comes from Jillian Miller with BMO Capital Markets. Your line is open..

I just have two quick things. I think Tony you might have said this in your prepared remarks, but I missed it.

So, did you say what the CapEx was on for the quarter?.

The year-to-date CapEx is a shade over $11 million..

Okay..

I don’t have the quarterly number in front of me, but the shade over $11 million. Our full year guidance range is $15 million to $17 million. And right now what we’re projecting is we’ve come in at the low-end of that range. So, think about it as around $4 million per quarter..

Okay, got it.

And then you mentioned something about the technology products revenue like there are some reason why it declined in the quarter, I know you said it, but I just couldn’t catch it?.

Yes. It’s -- when you look at that line item, it’s technology products and services about 75% of that of the revenue there is project management related, it’s for companies in the technology space.

But it’s not a big part of our revenue or revenue plan and it’s not -- these types projects, they’re not core to our business, it’s not really an area of emphasis, we’re not out promoting or soliciting engagements like that. And we did have this one large engagement, which at this point is winding down, it’s tapering down.

And we would expect the revenue on that one line item, the technology products and services revenue, if you were building out the model, I’d expect that line to decline over time.

Again, it’s not a big piece of what we’re doing, it’s not really an area of emphasis, it was -- the particular engagement was an important one, but it is tapering down right now..

Okay. Got it. Thank you..

Our next question comes from Mike Adams with Sandler O’Neill. Your line is open.

Mike, if your line is on mute, can you please unmute it?.

Can you hear me now?.

Now, we can..

Okay, great. Just two housekeeping items.

First, what was the percentage of high-yield EM in terms of the overall credit, other credit volume?.

It was in -- just bear with me a second Mike. It was right around 81% or 82%. It’s still sort of dominated by high-yield and EM. But you look at the growth in that category, clearly year-over-year Eurobond outpaced EM and high-yield but still a larger percentage, still -- the bulk of it coming from EM and high-yield..

Got it. And then I apologies if I missed this.

But Xtrakter, what was the revenue and pretax contribution this quarter?.

Mike, we’re really not breaking out those figures anymore. I’ll tell you that on -- and the reason why, I mean this is really -- we’re looking at this business in totality. The European franchise, it’s a cross-trading post-trading data. It’s an integrated business.

And if you just sort of pull the statutory accounts for this legal entity, what you’re going to see is operating margins around 10% or 12% right now. We do expect those margins to expand. There has not been significant revenue growth to-date. If you think about that, we said in the past it was running at about $24 million to $25 million in revenue.

So, you’ve got all the pieces there, but in terms of breaking it out separately, it’s really not how we’re necessarily looking at it. This European franchise we have integrated business and sort of losing it some -- losing its singularity in that way. So, but the margins look like the historical margins there if we were to break it out separately..

Okay. So I mean -- the reason I asked is because you talked about it being accretive in the back half of the year.

And just given some of the commentary around the post trade services revenue declining, but I was just curious was it -- did you see some accretion in that business in 3Q?.

Yes, through the first nine months it’s been fairly consistent. It’s been running at about 10% or 12% operating margin before deal cost and that’s before amortization of intangibles. You [fill] in the amortization, it’s around breakeven. And we still do expect it to be mildly accretive in the second half of the year..

Okay. Thanks Tony..

I’m showing no further questions. I will now turn the call back to Rick McVey for closing remarks..

Thank you for joining us this morning. And we look forward to catching up with you next quarter..

Thank you, ladies and gentlemen. That does conclude today’s conference. You may all disconnect. And everyone have a great day..