##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _______ to _______
 Commission File Number 001-34091
 MARKETAXESS HOLDINGS INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    52-2230784(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)299 Park Avenue, 10th Floor New York, New York
    
    10171(Address of principal executive offices)
    
    (Zip Code)
 (212) 813-6000  (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



MARKETAXESS HOLDINGS INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010
TABLE OF CONTENTS
 PagePART I  Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Statements of Financial Condition as of September 30, 2010 and December 31, 2009
    
    
    3Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009
    
    
    4Consolidated Statement of Changes in Stockholders Equity and Accumulated Other Comprehensive Loss
for the Nine Months Ended September 30, 2010
    
    
    5Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II  Other InformationItem 1. Legal Proceedings
    
    
    36Item 1A. Risk Factors
    
    
    36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3. Defaults Upon Senior Securities
    
    
    37Item 4. (Removed and Reserved)
    
    
    37Item 5. Other Information
    
    
    37Item 6. Exhibits
    
    
    37Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I  Financial Information
 
 Item 1. Financial Statements
 MARKETAXESS HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 (Unaudited)
 As ofSeptember 30,
    
    
    December 31,2010
    
    
    2009(In thousands, except shareand per share amounts)ASSETSCash and cash equivalents
    
    $
    108,745
    
    
    $
    103,341Securities available-for-sale, at fair value
    
    
    74,218
    
    
    
    70,997Securities and cash provided as collateral
    
    
    4,943
    
    
    
    4,971Accounts receivable, including receivables from related parties of $2,840 and $3,431, respectively, net
of allowance of $663 and $859 as of September 30, 2010 and December 31, 2009, respectively
    
    
    27,320
    
    
    
    23,150Furniture, equipment and leasehold improvements, net of accumulated depreciation and amortization
    
    
    9,595
    
    
    
    6,856Software development costs, net of accumulated amortization
    
    
    3,027
    
    
    
    3,420Goodwill and intangible assets, net of accumulated amortization
    
    
    36,392
    
    
    
    37,530Prepaid expenses and other assets
    
    
    2,591
    
    
    
    3,041Deferred tax assets, net
    
    
    20,338
    
    
    
    23,980Total assets
    
    $
    287,169
    
    
    $
    277,286LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesAccrued employee compensation
    
    $
    13,551
    
    
    $
    15,157Deferred revenue
    
    
    4,878
    
    
    
    4,262Accounts payable, accrued expenses and other liabilities, including payables to related
parties of $68 and $29 as of September 30, 2010 and December 31, 2009, respectively
    
    
    12,674
    
    
    
    11,050Total liabilities
    
    
    31,103
    
    
    
    30,469Commitments and Contingencies(Note 10)
    
    
    
    
    
    
    Series B Preferred Stock,$0.001 par value, 35,000 shares authorized, issued and outstanding
as of September 30, 2010 and December 31, 2009, liquidation preference of $1,000 per share
    
    
    30,315
    
    
    
    30,315Stockholders equityPreferred stock, $0.001 par value, 4,855,000 shares authorized, no shares issued and
outstanding as of September 30, 2010 and December 31, 2009
    
    
    
    
    
    
    Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, no shares issued
and outstanding as of September 30, 2010 and December 31, 2009
    
    
    
    
    
    
    Common stock voting, $0.003 par value, 110,000,000 shares authorized, 35,597,220 shares and
34,654,957 shares issued as of September 30, 2010 and December 31, 2009, respectively
    
    
    107
    
    
    
    104Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, 2,585,654 shares
issued and outstanding as of September 30, 2010 and December 31, 2009
    
    
    9
    
    
    
    9Additional paid-in capital
    
    
    330,956
    
    
    
    313,896Receivable for common stock subscribed
    
    
    
    
    
    
    (713
    )Treasury stock  Common stock voting, at cost, 4,419,296 and 2,864,120 shares as of
September 30, 2010 and December 31, 2009, respectively
    
    
    (63,258
    )
    
    
    (40,000
    )Accumulated deficit
    
    
    (40,961
    )
    
    
    (55,403
    )Accumulated other comprehensive loss
    
    
    (1,102
    )
    
    
    (1,391
    )Total stockholders equity
    
    
    225,751
    
    
    
    216,502Total liabilities and stockholders equity
    
    $
    287,169
    
    
    $
    277,286
   3




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except share and per share amounts)RevenuesCommissionsU.S. high-grade
    
    $
    21,537
    
    
    $
    16,306
    
    
    $
    61,562
    
    
    $
    43,629Eurobond
    
    
    4,075
    
    
    
    5,497
    
    
    
    14,236
    
    
    
    14,351Other
    
    
    5,540
    
    
    
    3,486
    
    
    
    14,121
    
    
    
    9,585Total commissions
    
    
    31,152
    
    
    
    25,289
    
    
    
    89,919
    
    
    
    67,565Technology products and services
    
    
    3,455
    
    
    
    2,601
    
    
    
    9,870
    
    
    
    6,720Information and user access fees
    
    
    1,603
    
    
    
    1,519
    
    
    
    4,959
    
    
    
    4,678Investment income
    
    
    301
    
    
    
    314
    
    
    
    907
    
    
    
    880Other
    
    
    902
    
    
    
    286
    
    
    
    1,968
    
    
    
    637Total revenues
    
    
    37,413
    
    
    
    30,009
    
    
    
    107,623
    
    
    
    80,480ExpensesEmployee compensation and benefits
    
    
    14,326
    
    
    
    13,127
    
    
    
    42,448
    
    
    
    36,486Depreciation and amortization
    
    
    1,560
    
    
    
    1,654
    
    
    
    4,798
    
    
    
    5,124Technology and communications
    
    
    2,543
    
    
    
    2,029
    
    
    
    7,313
    
    
    
    6,391Professional and consulting fees
    
    
    2,241
    
    
    
    1,645
    
    
    
    6,369
    
    
    
    5,137Occupancy
    
    
    706
    
    
    
    706
    
    
    
    2,351
    
    
    
    2,075Marketing and advertising
    
    
    679
    
    
    
    651
    
    
    
    2,066
    
    
    
    2,004General and administrative
    
    
    1,834
    
    
    
    1,654
    
    
    
    5,813
    
    
    
    4,253Total expenses
    
    
    23,889
    
    
    
    21,466
    
    
    
    71,158
    
    
    
    61,470Income before income taxes
    
    
    13,524
    
    
    
    8,543
    
    
    
    36,465
    
    
    
    19,010Provision for income taxes
    
    
    4,913
    
    
    
    3,903
    
    
    
    13,984
    
    
    
    8,344Net income
    
    $
    8,611
    
    
    $
    4,640
    
    
    $
    22,481
    
    
    $
    10,666Net income per common shareBasic
    
    $
    0.24
    
    
    $
    0.13
    
    
    $
    0.61
    
    
    $
    0.29Diluted
    
    $
    0.22
    
    
    $
    0.12
    
    
    $
    0.57
    
    
    $
    0.28Cash dividends declared per common share
    
    $
    0.07
    
    
    $
    
    
    
    $
    0.21
    
    
    $
    Weighted average common sharesBasic
    
    
    32,944,706
    
    
    
    33,287,464
    
    
    
    33,434,374
    
    
    
    33,242,280Diluted
    
    
    38,743,590
    
    
    
    38,196,823
    
    
    
    39,187,558
    
    
    
    37,855,864
   4




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MARKETAXESS HOLDINGS INC.
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 AND ACCUMULATED OTHER COMPREHENSIVE LOSS
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
 (Unaudited)
 TreasuryCommon
    
    
    
    
    
    
    Receivable
    
    
    Stock -
    
    
    
    
    
    
    Accumu-
    
    
    TotalCommon
    
    
    Stock
    
    
    Additional
    
    
    for Common
    
    
    Common
    
    
    Accumu-
    
    
    lated Other
    
    
    Stock-Stock
    
    
    Non-
    
    
    Paid-In
    
    
    Stock
    
    
    Stock
    
    
    lated
    
    
    Comprehen-
    
    
    holdersVoting
    
    
    Voting
    
    
    Capital
    
    
    Subscribed
    
    
    Voting
    
    
    Deficit
    
    
    sive Loss
    
    
    Equity(In thousands)Balance at December 31, 2009
    
    $
    104
    
    
    $
    9
    
    
    $
    313,896
    
    
    $
    (713
    )
    
    $
    (40,000
    )
    
    $
    (55,403
    )
    
    $
    (1,391
    )
    
    $
    216,502Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,481
    
    
    
    
    
    
    
    22,481Cumulative translation adjustment
and foreign currency exchange
hedge, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (380
    )
    
    
    (380
    )Unrealized net gain on securities
available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    669
    
    
    
    669Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,770Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    6,628
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,628Exercise of stock options and grants of
restricted stock, net of withholding
tax on stock vesting
    
    
    3
    
    
    
    
    
    
    
    1,955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,958Cash dividend on common stock and
Series B Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,039
    )
    
    
    
    
    
    
    (8,039
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,258
    )
    
    
    
    
    
    
    
    
    
    
    (23,258
    )Repayment of promissory notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    713
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    713Tax benefit from the exercise of
warrants in prior years
    
    
    
    
    
    
    
    
    
    
    7,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,571Windfall tax benefits from
stock-based compensation
    
    
    
    
    
    
    
    
    
    
    906
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    906Balance at September 30, 2010
    
    $
    107
    
    
    $
    9
    
    
    $
    330,956
    
    
    $
    
    
    
    $
    (63,258
    )
    
    $
    (40,961
    )
    
    $
    (1,102
    )
    
    $
    225,751
   5




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Nine Months Ended September 30,2010
    
    
    2009(In thousands)Cash flows from operating activitiesNet income
    
    $
    22,481
    
    
    $
    10,666Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    4,798
    
    
    
    5,124Stock-based compensation expense
    
    
    6,628
    
    
    
    6,304Deferred taxes
    
    
    10,982
    
    
    
    7,153Provision for bad debts
    
    
    389
    
    
    
    673Gain on sale of securities
    
    
    (411
    )
    
    
    Changes in operating assets and liabilities(Increase) in accounts receivable
    
    
    (4,559
    )
    
    
    (11,043
    )Decrease in prepaid expenses and other assets
    
    
    450
    
    
    
    798Decrease in accrued employee compensation
    
    
    (1,606
    )
    
    
    (225
    )Increase in deferred revenue
    
    
    616
    
    
    
    2,122Increase in accounts payable, accrued expenses and other liabilities
    
    
    1,815
    
    
    
    2,441Net cash provided by operating activities
    
    
    41,583
    
    
    
    24,013Cash flows from investing activitiesAcquisition of business
    
    
    
    
    
    
    (1,368
    )Securities available-for-sale:Proceeds from maturities and sales
    
    
    55,480
    
    
    
    15,740Purchases
    
    
    (57,194
    )
    
    
    (35,985
    )Securities and cash provided as collateral
    
    
    28
    
    
    
    (240
    )Purchases of furniture, equipment and leasehold improvements
    
    
    (4,684
    )
    
    
    (1,560
    )Capitalization of software development costs
    
    
    (1,331
    )
    
    
    (1,421
    )Net cash used in investing activities
    
    
    (7,701
    )
    
    
    (24,834
    )Cash flows from financing activitiesCash dividend on common stock and Series B Preferred Stock
    
    
    (8,039
    )
    
    
    Purchase of treasury stock
    
    
    (23,258
    )
    
    
    Proceeds from exercise of stock options and grants of restricted stock,
net of withholding tax
    
    
    1,958
    
    
    
    211Windfall tax benefits from stock-based compensation
    
    
    906
    
    
    
    (319
    )Other
    
    
    522
    
    
    
    90Net cash used in financing activities
    
    
    (27,911
    )
    
    
    (18
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (567
    )
    
    
    (351
    )Cash and cash equivalentsNet increase (decrease) for the period
    
    
    5,404
    
    
    
    (1,190
    )Beginning of year
    
    
    103,341
    
    
    
    107,323End of period
    
    $
    108,745
    
    
    $
    106,133Supplemental cash flow information:Cash paid during the year:Income taxes paid
    
    $
    1,638
    
    
    $
    213Non-cash activity:Capital lease obligation
    
    $
    
    
    
    $
    723
   6




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited
 1. Organization and Principal Business Activity
   2. Significant Accounting Policies
 Basis of Presentation
   Cash and Cash Equivalents
  Securities Available-for-Sale
   7




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  Fair Value Financial Instruments
  Securities and Cash Provided as Collateral
  Allowance for Doubtful Accounts
  Depreciation and Amortization
  Software Development Costs
  Foreign Currency Translation and Forward Contracts
    8




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 Revenue Recognition
  Commission revenue.
 Technology products and services.
    Initial set-up fees.
  9




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 Stock-Based Compensation
  Income Taxes
  Business Combinations, Goodwill and Intangible Assets
   Earnings Per Share
   Use of Estimates
   10




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 Recent Accounting Pronouncements
  3. Net Capital Requirements and Customer Protection Requirements
  MarketAxess
    
    
    MarketAxess
    
    
    MarketAxessCorporation
    
    
    Europe Limited
    
    
    Canada Limited(In thousands)Net capital
    
    $
    37,811
    
    
    $
    25,204
    
    
    $
    393Minimum net capital required
    
    
    1,685
    
    
    
    3,759
    
    
    
    267Excess net capital
    
    $
    36,126
    
    
    $
    21,445
    
    
    $
    125
   11




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 4. Fair Value Measurements
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)As of September 30, 2010Securities available-for-saleU.S. government obligations
    
    $
    
    
    
    $
    41,961
    
    
    $
    
    
    
    $
    41,961Municipal securities
    
    
    
    
    
    
    30,230
    
    
    
    
    
    
    
    30,230Corporate bonds
    
    
    
    
    
    
    2,027
    
    
    
    
    
    
    
    2,027Foreign currency forward position
    
    
    
    
    
    
    (185
    )
    
    
    
    
    
    
    (185
    )$
    
    
    
    $
    74,033
    
    
    $
    
    
    
    $
    74,033As of December 31, 2009Securities available-for-saleU.S. government obligations
    
    $
    
    
    
    $
    40,078
    
    
    $
    
    
    
    $
    40,078Municipal securities
    
    
    
    
    
    
    28,873
    
    
    
    
    
    
    
    28,873Corporate bonds
    
    
    
    
    
    
    2,046
    
    
    
    
    
    
    
    2,046Foreign currency forward position
    
    
    
    
    
    
    (259
    )
    
    
    
    
    
    
    (259
    )$
    
    
    
    $
    70,738
    
    
    $
    
    
    
    $
    70,738
   As ofSeptember 30, 2010
    
    
    December 31, 2009(In thousands)Notional value
    
    $
    28,634
    
    
    $
    28,040Fair value of notional
    
    
    28,819
    
    
    
    28,299Gross and net fair value liability
    
    $
    (185
    )
    
    $
    (259
    )
  12




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    faircost
    
    
    gains
    
    
    losses
    
    
    value(In thousands)As of September 30, 2010U.S. government obligations
    
    $
    40,423
    
    
    $
    1,538
    
    
    $
    
    
    
    $
    41,961Municipal securities
    
    
    30,214
    
    
    
    28
    
    
    
    (12
    )
    
    
    30,230Corporate bonds
    
    
    2,023
    
    
    
    4
    
    
    
    
    
    
    
    2,027Total securities available-for-sale
    
    $
    72,660
    
    
    $
    1,570
    
    
    $
    (12
    )
    
    $
    74,218As of December 31, 2009U.S. government obligations
    
    $
    39,629
    
    
    $
    469
    
    
    $
    (20
    )
    
    $
    40,078Municipal securities
    
    
    28,878
    
    
    
    4
    
    
    
    (9
    )
    
    
    28,873Corporate bonds
    
    
    2,028
    
    
    
    18
    
    
    
    
    
    
    
    2,046Total securities available-for-sale
    
    $
    70,535
    
    
    $
    491
    
    
    $
    (29
    )
    
    $
    70,997
  As ofSeptember 30, 2010
    
    
    December 31, 2009(In thousands)Less than one year
    
    $
    26,272
    
    
    $
    30,919Due in 1 - 5 years
    
    
    47,946
    
    
    
    40,078Total securities available-for-sale
    
    $
    74,218
    
    
    $
    70,997
   Less than Twelve Months
    
    
    Twelve Months or More
    
    
    TotalEstimated
    
    
    Gross
    
    
    Estimated
    
    
    Gross
    
    
    Estimated
    
    
    Grossfair
    
    
    unrealized
    
    
    fair
    
    
    unrealized
    
    
    fair
    
    
    unrealizedvalue
    
    
    losses
    
    
    value
    
    
    losses
    
    
    value
    
    
    losses(In thousands)As of September 30, 2010U.S. government obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Municipal securities
    
    
    16,949
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    16,949
    
    
    
    (12
    )Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total securities
available-for-sale
    
    $
    16,949
    
    
    $
    (12
    )
    
    $
    
    
    
    $
    
    
    
    $
    16,949
    
    
    $
    (12
    )As of December 31, 2009U.S. government obligations
    
    $
    9,944
    
    
    $
    (20
    )
    
    $
    
    
    
    $
    
    
    
    $
    9,944
    
    
    $
    (20
    )Municipal securities
    
    
    13,644
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    13,644
    
    
    
    (9
    )Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total securities
available-for-sale
    
    $
    23,588
    
    
    $
    (29
    )
    
    $
    
    
    
    $
    
    
    
    $
    23,588
    
    
    $
    (29
    )
  13




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 5. Goodwill and Intangible Assets
   September 30, 2010
    
    
    December 31, 2009Accumulated
    
    
    Net Carrying
    
    
    
    
    
    
    Accumulated
    
    
    Net CarryingCost
    
    
    Amortization
    
    
    Amount
    
    
    Cost
    
    
    Amortization
    
    
    Amount(In thousands)Technology
    
    $
    4,010
    
    
    $
    (2,331
    )
    
    $
    1,679
    
    
    $
    4,010
    
    
    $
    (1,807
    )
    
    $
    2,203Customer relationships
    
    
    3,530
    
    
    
    (1,467
    )
    
    
    2,063
    
    
    
    3,530
    
    
    
    (1,119
    )
    
    
    2,411Non-competition
agreements
    
    
    1,260
    
    
    
    (647
    )
    
    
    613
    
    
    
    1,260
    
    
    
    (459
    )
    
    
    801Tradenames
    
    
    590
    
    
    
    (338
    )
    
    
    252
    
    
    
    590
    
    
    
    (259
    )
    
    
    331Total
    
    $
    9,390
    
    
    $
    (4,783
    )
    
    $
    4,607
    
    
    $
    9,390
    
    
    $
    (3,644
    )
    
    $
    5,746
  6. Income Taxes
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Current:Federal
    
    $
    291
    
    
    $
    25
    
    
    $
    697
    
    
    $
    25State and local
    
    
    
    
    
    
    8
    
    
    
    (32
    )
    
    
    (4
    )Foreign
    
    
    391
    
    
    
    739
    
    
    
    1,401
    
    
    
    1,391Total current provision
    
    
    682
    
    
    
    772
    
    
    
    2,066
    
    
    
    1,412Deferred:Federal
    
    
    3,307
    
    
    
    1,641
    
    
    
    9,476
    
    
    
    3,907State and local
    
    
    922
    
    
    
    1,498
    
    
    
    2,407
    
    
    
    2,605Foreign
    
    
    2
    
    
    
    (8
    )
    
    
    35
    
    
    
    420Total deferred provision
    
    
    4,231
    
    
    
    3,131
    
    
    
    11,918
    
    
    
    6,932Provision for income
taxes
    
    $
    4,913
    
    
    $
    3,903
    
    
    $
    13,984
    
    
    $
    8,344
  As ofSeptember 30, 2010
    
    
    December 31, 2009(In thousands)Deferred tax assets and liabilities
    
    $
    21,034
    
    
    $
    24,646Valuation allowance
    
    
    (696
    )
    
    
    (666
    )Deferred tax assets, net
    
    $
    20,338
    
    
    $
    23,980
  14




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
    7. Related Parties
  As ofSeptember 30, 2010
    
    
    December 31, 2009(In thousands)Cash and cash equivalents
    
    $
    96,103
    
    
    $
    101,273Securities and cash provided as collateral
    
    
    4,050
    
    
    
    4,067Accounts receivable
    
    
    2,840
    
    
    
    3,431Accounts payable
    
    
    68
    
    
    
    29
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Commissions
    
    $
    4,336
    
    
    $
    3,688
    
    
    $
    12,233
    
    
    $
    10,107Technology products and services
    
    
    5
    
    
    
    9
    
    
    
    17
    
    
    
    28Information and user access fees
    
    
    107
    
    
    
    60
    
    
    
    255
    
    
    
    185Investment income
    
    
    35
    
    
    
    36
    
    
    
    90
    
    
    
    184Other income
    
    
    49
    
    
    
    37
    
    
    
    154
    
    
    
    117General and administrative
    
    
    3
    
    
    
    49
    
    
    
    47
    
    
    
    98
  15




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  8. Stock-Based Compensation Plans
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Employee:Stock options
    
    $
    436
    
    
    $
    708
    
    
    $
    1,307
    
    
    $
    2,228Restricted stock and performance shares
    
    
    1,517
    
    
    
    1,299
    
    
    
    4,895
    
    
    
    3,7401,953
    
    
    
    2,007
    
    
    
    6,202
    
    
    
    5,968Non-employee directors:Stock options
    
    
    
    
    
    
    42
    
    
    
    83
    
    
    
    97Restricted stock
    
    
    175
    
    
    
    103
    
    
    
    343
    
    
    
    239175
    
    
    
    145
    
    
    
    426
    
    
    
    336Total stock-based compensation
    
    $
    2,128
    
    
    $
    2,152
    
    
    $
    6,628
    
    
    $
    6,304
    16




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##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 9. Earnings Per Share
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except share and per share amounts)Basic EPSNet income
    
    $
    8,611
    
    
    $
    4,640
    
    
    $
    22,481
    
    
    $
    10,666Amount allocable to common shareholders
    
    
    90.4
    %
    
    
    90.5
    %
    
    
    90.5
    %
    
    
    90.5
    %Net income applicable to common stock
    
    $
    7,784
    
    
    $
    4,199
    
    
    $
    20,351
    
    
    $
    9,650Common stock  voting
    
    
    30,359,052
    
    
    
    30,701,810
    
    
    
    30,848,720
    
    
    
    30,656,626Common stock  non-voting
    
    
    2,585,654
    
    
    
    2,585,654
    
    
    
    2,585,654
    
    
    
    2,585,654Basic weighted average shares outstanding
    
    
    32,944,706
    
    
    
    33,287,464
    
    
    
    33,434,374
    
    
    
    33,242,280Basic earnings per share
    
    $
    0.24
    
    
    $
    0.13
    
    
    $
    0.61
    
    
    $
    0.29Diluted EPSNet income
    
    $
    8,611
    
    
    $
    4,640
    
    
    $
    22,481
    
    
    $
    10,666Basic weighted average shares outstanding
    
    
    32,944,706
    
    
    
    33,287,464
    
    
    
    33,434,374
    
    
    
    33,242,280Effect of dilutive shares:Series B Preferred Stock
    
    
    3,500,000
    
    
    
    3,500,000
    
    
    
    3,500,000
    
    
    
    3,500,000Stock options, restricted stock and warrants
    
    
    2,298,884
    
    
    
    1,409,359
    
    
    
    2,253,184
    
    
    
    1,113,584Diluted weighted average shares outstanding
    
    
    38,743,590
    
    
    
    38,196,823
    
    
    
    39,187,558
    
    
    
    37,855,864Diluted earnings per share
    
    $
    0.22
    
    
    $
    0.12
    
    
    $
    0.57
    
    
    $
    0.28
  10. Commitments and Contingencies
  Operating
    
    
    CapitalLeases
    
    
    Leases(In thousands)Remainder of 2010
    
    $
    528
    
    
    $
    842011
    
    
    1,844
    
    
    
    3362012
    
    
    1,807
    
    
    
    3362013
    
    
    1,791
    
    
    
    3222014
    
    
    1,757
    
    
    
    422015
    
    
    1,991
    
    
    
    Thereafter
    
    
    12,147
    
    
    
    Minimum lease payments
    
    
    21,865
    
    
    
    1,120Less amount representing interest
    
    
    
    
    
    
    128$
    21,865
    
    
    $
    992
  17




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
        18




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MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 11. Comprehensive Income
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Net income
    
    $
    8,611
    
    
    $
    4,640
    
    
    $
    22,481
    
    
    $
    10,666Cumulative translation adjustment and foreign
currency exchange hedge, net of taxes
    
    
    (63
    )
    
    
    (54
    )
    
    
    (380
    )
    
    
    (186
    )Unrealized net gain on securities available-
for-sale, net of taxes
    
    
    95
    
    
    
    171
    
    
    
    669
    
    
    
    404Total comprehensive income
    
    $
    8,643
    
    
    $
    4,757
    
    
    $
    22,770
    
    
    $
    10,884
 12. Customer Concentration
  13. Share Repurchase Program
   19




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
 This report contains certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words
such as expects, intends, anticipates, plans, believes, seeks, estimates, will, or
words of similar meaning and include, but are not limited to, statements regarding the outlook for
our future business and financial performance. Forward-looking statements are based on managements
current expectations and assumptions, which are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict. It is routine for our internal projections
and expectations to change as the year or each quarter in the year progresses, and therefore it
should be clearly understood that the internal projections and beliefs upon which we base our
expectations may change prior to the end of each quarter or the year. Although these expectations
may change, we are under no obligation to revise or update any forward-looking statements contained
in this report. Our company policy is generally to provide our expectations only once per quarter,
and not to update that information until the next quarter. Actual future events or results may
differ materially from those contained in the projections or forward-looking statements. Factors
that could cause or contribute to such differences include those discussed below and elsewhere in
this report, particularly in the section captioned Part II, Item 1A, Risk Factors.
 Executive Overview
     
    
    to innovate and efficiently add new functionality and product offerings to the
MarketAxess platform that we believe will help to increase our market share with existing
clients, as well as expand our client base;
 
    
    to leverage our technology, as well as our strong broker-dealer and institutional
investor relationships, to deploy our electronic trading platform into additional product
segments within the fixed-income securities markets, deliver fixed-income
securities-related technical services and products and deploy our electronic trading
platform into new client segments;
  20




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##### Table of Contents




    
    to continue building our existing service offerings so that our electronic trading
platform is fully integrated into the workflow of our broker-dealer and institutional
investor clients and to continue to add functionality to allow our clients to achieve a
fully automated end-to-end straight-through processing solution (automation from trade
initiation to settlement);
 
    
    to add new content and analytical capabilities to Corporate BondTicker in order to
improve the value of the information we provide to our clients; and
 
    
    to continue to supplement our internal growth by entering into strategic alliances, or
acquiring businesses or technologies that will enable us to enter new markets, provide new
products or services, or otherwise enhance the value of our platform to our clients.
 Critical Factors Affecting Our Industry and Our Company
 Economic, Political and Market Factors
  Competitive Landscape
    Regulatory Environment
     21




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##### Table of Contents



Rapid Technological Changes
  Trends in Our Business
  
    
    the number of institutional investor clients that participate on the platform and their
willingness to originate transactions through the platform;
 
    
    the number of broker-dealer clients on the platform and the frequency and
competitiveness of the price responses they provide to the institutional investor clients;
 
    
    the number of markets for which we make trading available to our clients;
 
    
    the overall level of activity in these markets; and
 
    
    the level of commissions that we collect for trades executed through the platform.
  Commission Revenue
   22




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##### Table of Contents



U.S. High-Grade Corporate Bond Commissions.
 Eurobond Commissions.
 Other Commissions.
  Other Revenue
  Technology Products and Services.
 Information and User Access Fees. TM
 Investment Income.
 Other.
 Expenses
  Employee Compensation and Benefits.
 Depreciation and Amortization.
  23




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##### Table of Contents



Technology and Communications.
 Professional and Consulting Fees.
 Occupancy.
 Marketing and Advertising.
 General and Administrative.
  Critical Accounting Estimates
  Segment Results
   24




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##### Table of Contents



Results of Operations
 Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009
 Overview
    Revenues
  Three Months Ended September 30,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Commissions
    
    $
    31,152
    
    
    
    83.3
    %
    
    $
    25,289
    
    
    
    84.3
    %
    
    $
    5,863
    
    
    
    23.2
    %Technology products and services
    
    
    3,455
    
    
    
    9.2
    
    
    
    2,601
    
    
    
    8.7
    
    
    
    854
    
    
    
    32.8Information and user access fees
    
    
    1,603
    
    
    
    4.3
    
    
    
    1,519
    
    
    
    5.1
    
    
    
    84
    
    
    
    5.5Investment income
    
    
    301
    
    
    
    0.8
    
    
    
    314
    
    
    
    1.0
    
    
    
    (13
    )
    
    
    (4.1
    )Other
    
    
    902
    
    
    
    2.4
    
    
    
    286
    
    
    
    1.0
    
    
    
    616
    
    
    
    215.4Total revenues
    
    $
    37,413
    
    
    
    100.0
    %
    
    $
    30,009
    
    
    
    100.0
    %
    
    $
    7,404
    
    
    
    24.7
    %
 Commissions.
 Three Months Ended September 30,$
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    Change($ in thousands)Distribution feesU.S. high-grade
    
    $
    9,178
    
    
    $
    7,539
    
    
    $
    1,639
    
    
    
    21.7
    %Eurobond
    
    
    3,077
    
    
    
    3,099
    
    
    
    (22
    )
    
    
    (0.7
    )Total distribution fees
    
    
    12,255
    
    
    
    10,638
    
    
    
    1,617
    
    
    
    15.2Variable transaction feesU.S. high-grade
    
    
    12,359
    
    
    
    8,767
    
    
    
    3,592
    
    
    
    41.0Eurobond
    
    
    998
    
    
    
    2,398
    
    
    
    (1,400
    )
    
    
    (58.4
    )Other
    
    
    5,540
    
    
    
    3,486
    
    
    
    2,054
    
    
    
    58.9Total variable transaction fees
    
    
    18,897
    
    
    
    14,651
    
    
    
    4,246
    
    
    
    29.0Total commissions
    
    $
    31,152
    
    
    $
    25,289
    
    
    $
    5,863
    
    
    
    23.2
    %
   25




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##### Table of Contents



Change from Three Months Ended September 30, 2009U.S.High-Grade
    
    
    Eurobond
    
    
    Other
    
    
    Total(In thousands)Volume increase (decrease)
    
    $
    2,493
    
    
    $
    (849
    )
    
    $
    2,606
    
    
    $
    4,250Variable transaction fee per million increase (decrease)
    
    
    1,099
    
    
    
    (551
    )
    
    
    (552
    )
    
    
    (4
    )Monthly distribution fees increase (decrease)
    
    
    1,639
    
    
    
    (22
    )
    
    
    
    
    
    
    1,617Total commissions increase (decrease)
    
    $
    5,231
    
    
    $
    (1,422
    )
    
    $
    2,054
    
    
    $
    5,863
  Three Months Ended September 30,$
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    ChangeTrading Volume Data (in millions)U.S. high-grade  fixed rate
    
    $
    59,222
    
    
    $
    45,432
    
    
    $
    13,790
    
    
    
    30.4
    %U.S. high-grade  floating rate
    
    
    1,165
    
    
    
    1,587
    
    
    
    (422
    )
    
    
    (26.6
    )Total U.S. high-grade
    
    
    60,387
    
    
    
    47,019
    
    
    
    13,368
    
    
    
    28.4Eurobond
    
    
    10,712
    
    
    
    16,580
    
    
    
    (5,868
    )
    
    
    (35.4
    )Other
    
    
    29,351
    
    
    
    16,795
    
    
    
    12,556
    
    
    
    74.8Total
    
    $
    100,450
    
    
    $
    80,394
    
    
    $
    20,056
    
    
    
    24.9
    %Number of U.S. Trading Days
    
    
    64
    
    
    
    64Number of U.K. Trading Days
    
    
    65
    
    
    
    65
   Three Months Ended September 30,2010
    
    
    2009Average Variable Transaction Fee Per MillionU.S. high-grade  fixed rate
    
    $
    208
    
    
    $
    192U.S. high-grade  floating rate
    
    $
    32
    
    
    $
    27Total U.S. high-grade
    
    $
    205
    
    
    $
    186Eurobond
    
    $
    93
    
    
    $
    145Other
    
    $
    189
    
    
    $
    208All Products
    
    $
    188
    
    
    $
    182
  26




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Technology Products and Services.
 Information and User Access Fees.
 Investment Income.
 Other.
 Expenses
  Three Months Ended September 30,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Employee compensation and benefits
    
    $
    14,326
    
    
    
    38.3
    %
    
    $
    13,127
    
    
    
    43.7
    %
    
    $
    1,199
    
    
    
    9.1
    %Depreciation and amortization
    
    
    1,560
    
    
    
    4.2
    
    
    
    1,654
    
    
    
    5.5
    
    
    
    (94
    )
    
    
    (5.7
    )Technology and communications
    
    
    2,543
    
    
    
    6.8
    
    
    
    2,029
    
    
    
    6.8
    
    
    
    514
    
    
    
    25.3Professional and consulting fees
    
    
    2,241
    
    
    
    6.0
    
    
    
    1,645
    
    
    
    5.5
    
    
    
    596
    
    
    
    36.2Occupancy
    
    
    706
    
    
    
    1.9
    
    
    
    706
    
    
    
    2.4
    
    
    
    
    
    
    
    Marketing and advertising
    
    
    679
    
    
    
    1.8
    
    
    
    651
    
    
    
    2.2
    
    
    
    28
    
    
    
    4.3General and administrative
    
    
    1,834
    
    
    
    4.9
    
    
    
    1,654
    
    
    
    5.5
    
    
    
    180
    
    
    
    10.9Total expenses
    
    $
    23,889
    
    
    
    63.9
    %
    
    $
    21,466
    
    
    
    71.5
    %
    
    $
    2,423
    
    
    
    11.3
    %
 Employee Compensation and Benefits.
 Depreciation and Amortization.
  27




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##### Table of Contents



Technology and Communications.
 Professional and Consulting Fees.
 Occupancy.
 Marketing and Advertising.
 General and Administrative.
 Provision for Income Tax
  Nine months Ended September 30, 2010 Compared to Nine months Ended September 30, 2009
 Overview
     28




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##### Table of Contents



Revenues
  Nine Months Ended September 30,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Commissions
    
    $
    89,919
    
    
    
    83.5
    %
    
    $
    67,565
    
    
    
    84.0
    %
    
    $
    22,354
    
    
    
    33.1
    %Technology products and services
    
    
    9,870
    
    
    
    9.2
    
    
    
    6,720
    
    
    
    8.3
    
    
    
    3,150
    
    
    
    46.9Information and user access fees
    
    
    4,959
    
    
    
    4.6
    
    
    
    4,678
    
    
    
    5.8
    
    
    
    281
    
    
    
    6.0Investment income
    
    
    907
    
    
    
    0.8
    
    
    
    880
    
    
    
    1.1
    
    
    
    27
    
    
    
    3.1Other
    
    
    1,968
    
    
    
    1.8
    
    
    
    637
    
    
    
    0.8
    
    
    
    1,331
    
    
    
    208.9Total revenues
    
    $
    107,623
    
    
    
    100.0
    %
    
    $
    80,480
    
    
    
    100.0
    %
    
    $
    27,143
    
    
    
    33.7
    %
 Commissions.
 Nine Months Ended September 30,$
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    Change($ in thousands)Distribution feesU.S. high-grade
    
    $
    27,416
    
    
    $
    22,249
    
    
    $
    5,167
    
    
    
    23.2
    %Eurobond
    
    
    9,359
    
    
    
    9,057
    
    
    
    302
    
    
    
    3.3Total distribution fees
    
    
    36,775
    
    
    
    31,306
    
    
    
    5,469
    
    
    
    17.5Variable transaction feesU.S. high-grade
    
    
    34,146
    
    
    
    21,380
    
    
    
    12,766
    
    
    
    59.7Eurobond
    
    
    4,877
    
    
    
    5,294
    
    
    
    (417
    )
    
    
    (7.9
    )Other
    
    
    14,121
    
    
    
    9,585
    
    
    
    4,536
    
    
    
    47.3Total variable transaction fees
    
    
    53,144
    
    
    
    36,259
    
    
    
    16,885
    
    
    
    46.6Total commissions
    
    $
    89,919
    
    
    $
    67,565
    
    
    $
    22,354
    
    
    
    33.1
    %
   Change from Nine Months Ended September 30, 2009U.S.High-Grade
    
    
    Eurobond
    
    
    Other
    
    
    Total(In thousands)Volume increase
    
    $
    10,236
    
    
    $
    86
    
    
    $
    6,513
    
    
    $
    16,835Variable transaction fee per million increase (decrease)
    
    
    2,530
    
    
    
    (503
    )
    
    
    (1,977
    )
    
    
    50Monthly distribution fees increase
    
    
    5,167
    
    
    
    302
    
    
    
    
    
    
    
    5,469Total commissions increase
    
    $
    17,933
    
    
    $
    (115
    )
    
    $
    4,536
    
    
    $
    22,354
  29




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##### Table of Contents



Nine Months Ended September 30,$
    
    
    %2010
    
    
    2009
    
    
    Change
    
    
    ChangeTrading Volume Data (in millions)U.S. high-grade  fixed rate
    
    $
    173,716
    
    
    $
    117,766
    
    
    $
    55,950
    
    
    
    47.5
    %U.S. high-grade  floating rate
    
    
    6,352
    
    
    
    4,002
    
    
    
    2,350
    
    
    
    58.7Total U.S. high-grade
    
    
    180,068
    
    
    
    121,768
    
    
    
    58,300
    
    
    
    47.9Eurobond
    
    
    39,470
    
    
    
    38,841
    
    
    
    629
    
    
    
    1.6Other
    
    
    78,395
    
    
    
    46,677
    
    
    
    31,718
    
    
    
    68.0Total
    
    $
    297,933
    
    
    $
    207,286
    
    
    $
    90,647
    
    
    
    43.7
    %Number of U.S. Trading Days
    
    
    188
    
    
    
    188Number of U.K. Trading Days
    
    
    189
    
    
    
    189
   Nine Months Ended September 30,2010
    
    
    2009Average Variable Transaction Fee Per MillionU.S. high-grade  fixed rate
    
    $
    196
    
    
    $
    181U.S. high-grade  floating rate
    
    $
    27
    
    
    $
    24Total U.S. high-grade
    
    $
    190
    
    
    $
    176Eurobond
    
    $
    124
    
    
    $
    136Other
    
    $
    180
    
    
    $
    205All Products
    
    $
    178
    
    
    $
    175
   30




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##### Table of Contents



Technology Products and Services.
 Information and User Access Fees.
 Investment Income.
 Other.
 Expenses
  Nine Months Ended September 30,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Employee compensation and benefits
    
    $
    42,448
    
    
    
    39.4
    %
    
    $
    36,486
    
    
    
    45.3
    %
    
    $
    5,962
    
    
    
    16.3
    %Depreciation and amortization
    
    
    4,798
    
    
    
    4.5
    
    
    
    5,124
    
    
    
    6.4
    
    
    
    (326
    )
    
    
    (6.4
    )Technology and communications
    
    
    7,313
    
    
    
    6.8
    
    
    
    6,391
    
    
    
    7.9
    
    
    
    922
    
    
    
    14.4Professional and consulting fees
    
    
    6,369
    
    
    
    5.9
    
    
    
    5,137
    
    
    
    6.4
    
    
    
    1,232
    
    
    
    24.0Occupancy
    
    
    2,351
    
    
    
    2.2
    
    
    
    2,075
    
    
    
    2.6
    
    
    
    276
    
    
    
    13.3Marketing and advertising
    
    
    2,066
    
    
    
    1.9
    
    
    
    2,004
    
    
    
    2.5
    
    
    
    62
    
    
    
    3.1General and administrative
    
    
    5,813
    
    
    
    5.4
    
    
    
    4,253
    
    
    
    5.3
    
    
    
    1,560
    
    
    
    36.7Total expenses
    
    $
    71,158
    
    
    
    66.1
    %
    
    $
    61,470
    
    
    
    76.4
    %
    
    $
    9,688
    
    
    
    15.8
    %
 Employee Compensation and Benefits.
 Depreciation and Amortization.
 Technology and Communications.
 Professional and Consulting Fees.
  31




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Occupancy.
 Marketing and Advertising.
 General and Administrative.
 Provision for Income Tax
  Liquidity and Capital Resources
   Nine Months Ended September 30,2010
    
    
    2009(In thousands)Net cash provided by operating activities
    
    $
    41,583
    
    
    $
    24,013Net cash used in investing activities
    
    
    (7,701
    )
    
    
    (24,834
    )Net cash used in financing activities
    
    
    (27,911
    )
    
    
    (18
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (567
    )
    
    
    (351
    )Net increase (decrease) for the period
    
    $
    5,404
    
    
    $
    (1,190
    )
    32




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##### Table of Contents



Other Factors Influencing Liquidity and Capital Resources
    MarketAxess
    
    
    MarketAxess
    
    
    MarketAxessCorporation
    
    
    Europe Limited
    
    
    Canada Limited(In thousands)Net capital
    
    $
    37,811
    
    
    $
    25,204
    
    
    $
    393Minimum net capital required
    
    
    1,685
    
    
    
    3,759
    
    
    
    267Excess net capital
    
    $
    36,126
    
    
    $
    21,445
    
    
    $
    125
  33




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##### Table of Contents



Effects of Inflation
  Contractual Obligations and Commitments
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Market Risk
    34




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##### Table of Contents



Interest Rate Risk
  Derivative Risk
  Credit Risk
   
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control Over Financial Reporting.
  35




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##### Table of Contents



PART II  Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Recent Sales of Unregistered Securities
  Issuer Purchases of Equity Securities
  Total Number of
    
    
    Dollar Value ofShares Purchased
    
    
    Shares That MayTotal Number of
    
    
    Average Price
    
    
    as Part of Publicly
    
    
    Yet Be PurchasedPeriod
    
    Shares Purchased
    
    
    Paid per Share
    
    
    Announced Plans
    
    
    Under the Plans(In thousands)July 1, 2010  July 31, 2010
    
    
    313,100
    
    
    $
    13.22
    
    
    
    313,100
    
    
    $
    25,862August 1, 2010  August 31, 2010
    
    
    773,115
    
    
    
    13.79
    
    
    
    715,356
    
    
    
    15,245September 1, 2010  September 30, 2010
    
    
    528,180
    
    
    
    16.10
    
    
    
    526,720
    
    
    
    6,7431,614,395
    
    
    $
    14.44
    
    
    
    1,555,176
   36




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##### Table of Contents



Item 3. Defaults upon Senior Securities
  
 Item 4. (Removed and Reserved)
 
 Item 5. Other Information
  
 Item 6. Exhibits
  Number
    
    Description31.1
    
    
    Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    
    Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  37




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##### Table of Contents



SIGNATURES
  MARKETAXESS HOLDINGS INC.Date: October 28, 2010
    By:
    /s/ RICHARD M. MCVEYRichard M. McVeyChief Executive Officer
(principal executive officer)Date: October 28, 2010
    By:
    /s/ ANTONIO L. DELISEAntonio L. DeLiseChief Financial Officer
(principal financial and accounting officer)  38