##### 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, 2009
 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(State or other jurisdiction of incorporation or organization)
    
    52-2230784(IRS Employer Identification No.)140 Broadway, 42nd Floor New York, New York(Address of principal executive offices)
    
    10005(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(Do not check if a smaller reporting company)
Smaller reporting company o o þ




---



##### 



MARKETAXESS HOLDINGS INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
TABLE OF CONTENTS
 PagePART I  Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Statements of Financial Condition as of September 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2008
    
    
    4Consolidated Statement of Changes in Stockholders Equity and Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2009
    
    
    5Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    39PART II  Other InformationItem 1. Legal Proceedings
    
    
    41Item 1A. Risk Factors
    
    
    41Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    41Item 3. Defaults Upon Senior Securities
    
    
    42Item 4. Submission of Matters to a Vote of Security Holders
    
    
    42Item 5. Other Information
    
    
    42Item 6. Exhibits
    
    
    42EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



PART I  Financial Information
 
 Item 1. Financial Statements
 
 MARKETAXESS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
 As ofSeptember 30,
    
    
    December 31,2009
    
    
    2008(In thousands, except share andper share amounts)ASSETSCash and cash equivalents
    
    $
    106,133
    
    
    $
    107,323Securities available-for-sale
    
    
    56,194
    
    
    
    35,227Securities and cash provided as collateral
    
    
    4,556
    
    
    
    4,316Accounts receivable, including receivables from related parties of $2,549 and $1,930,
respectively, net
of allowance of $1,093 and $1,012 as of September 30, 2009 and December 31, 2008,
respectively
    
    
    23,653
    
    
    
    13,283Furniture, equipment and leasehold improvements, net of accumulated depreciation and
amortization
    
    
    4,010
    
    
    
    3,369Software development costs, net of accumulated amortization
    
    
    3,665
    
    
    
    4,521Goodwill and intangible assets, net of accumulated amortization
    
    
    37,922
    
    
    
    39,546Prepaid expenses and other assets
    
    
    2,379
    
    
    
    3,177Deferred tax assets, net
    
    
    28,988
    
    
    
    35,666Total assets
    
    $
    267,500
    
    
    $
    246,428LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesAccrued employee compensation
    
    $
    10,214
    
    
    $
    10,439Deferred revenue
    
    
    4,425
    
    
    
    2,303Accounts payable, accrued expenses and other liabilities, including payables to related
parties of $20 and $11 as of September 30, 2009 and December 31, 2008, respectively
    
    
    10,735
    
    
    
    8,878Total liabilities
    
    
    25,374
    
    
    
    21,620Commitments and Contingencies (Note 14)
    
    
    
    
    
    
    Series B Preferred Stock,$0.001 par value, 35,000 shares authorized, issued and outstanding
as of September 30, 2009 and December 31, 2008, 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, 2009 and December 31, 2008
    
    
    
    
    
    
    Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, no shares issued
and outstanding as of September 30, 2009 and December 31, 2008
    
    
    
    
    
    
    Common stock voting, $0.003 par value, 110,000,000 shares authorized, 34,649,233 shares
and
33,971,309 shares issued as of September 30, 2009 and December 31, 2008, respectively
    
    
    104
    
    
    
    102Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, 2,585,654 shares
issued and outstanding as of September 30, 2009 and December 31, 2008
    
    
    9
    
    
    
    9Additional paid-in capital
    
    
    311,702
    
    
    
    305,508Receivable for common stock subscribed
    
    
    (713
    )
    
    
    (951
    )Treasury stock  Common stock voting, at cost, 2,864,120 shares as of September 30, 2009
and December 31, 2008
    
    
    (40,000
    )
    
    
    (40,000
    )Accumulated deficit
    
    
    (58,189
    )
    
    
    (68,855
    )Accumulated other comprehensive loss
    
    
    (1,102
    )
    
    
    (1,320
    )Total stockholders equity
    
    
    211,811
    
    
    
    194,493Total liabilities and stockholders equity
    
    $
    267,500
    
    
    $
    246,428
  3




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except share and per share amounts)RevenuesCommissionsU.S. high-grade, including $2,276, $1,928,
$6,300 and
$5,985 from related parties for the
three and nine months
ended September 30, 2009 and 2008,
respectively
    
    $
    16,306
    
    
    $
    10,777
    
    
    $
    43,629
    
    
    $
    35,733Eurobond, including $1,049, $788, $2,764
and $2,465 from
related parties for the three and nine
months ended
September 30, 2009 and 2008, respectively
    
    
    5,497
    
    
    
    4,427
    
    
    
    14,351
    
    
    
    14,136Other, including $363, $378, $1,043 and
$1,244 from
related parties for the three and nine
months ended
September 30, 2009 and 2008, respectively
    
    
    3,486
    
    
    
    2,015
    
    
    
    9,585
    
    
    
    6,783Total commissions
    
    
    25,289
    
    
    
    17,219
    
    
    
    67,565
    
    
    
    56,652Technology products and services, including
$9, $3, $28 and
$25 from related parties for the three
and nine months
ended September 30, 2009 and 2008,
respectively
    
    
    2,601
    
    
    
    2,646
    
    
    
    6,720
    
    
    
    6,089Information and user access fees, including
$60, $81, $185 and
$207 from related parties for the three
and nine months
ended September 30, 2009 and 2008,
respectively
    
    
    1,519
    
    
    
    1,562
    
    
    
    4,678
    
    
    
    4,485Investment income, including $36, $310, $184
and $786 from
related parties for the three and nine
months ended
September 30, 2009 and 2008, respectively
    
    
    314
    
    
    
    963
    
    
    
    880
    
    
    
    2,715Other, including $37, $45, $117 and $132 from
related parties
for the three and nine months ended
September 30, 2009
and 2008, respectively
    
    
    286
    
    
    
    291
    
    
    
    637
    
    
    
    1,316Total revenues
    
    
    30,009
    
    
    
    22,681
    
    
    
    80,480
    
    
    
    71,257ExpensesEmployee compensation and benefits
    
    
    13,127
    
    
    
    11,173
    
    
    
    36,486
    
    
    
    33,767Depreciation and amortization
    
    
    1,654
    
    
    
    2,494
    
    
    
    5,124
    
    
    
    6,090Technology and communications
    
    
    2,029
    
    
    
    2,007
    
    
    
    6,391
    
    
    
    6,160Professional and consulting fees
    
    
    1,645
    
    
    
    1,822
    
    
    
    5,137
    
    
    
    6,496Occupancy
    
    
    706
    
    
    
    660
    
    
    
    2,075
    
    
    
    2,166Marketing and advertising
    
    
    651
    
    
    
    708
    
    
    
    2,004
    
    
    
    2,077General and administrative, including $49,
$17, $98 and $35
from related parties for the three and
nine months ended
September 30, 2009 and 2008, respectively
    
    
    1,654
    
    
    
    1,719
    
    
    
    4,253
    
    
    
    4,679Total expenses
    
    
    21,466
    
    
    
    20,583
    
    
    
    61,470
    
    
    
    61,435Income before income taxes
    
    
    8,543
    
    
    
    2,098
    
    
    
    19,010
    
    
    
    9,822Provision for income taxes
    
    
    3,903
    
    
    
    579
    
    
    
    8,344
    
    
    
    3,859Net income
    
    $
    4,640
    
    
    $
    1,519
    
    
    $
    10,666
    
    
    $
    5,963Net income per common shareBasic
    
    $
    0.13
    
    
    $
    0.04
    
    
    $
    0.29
    
    
    $
    0.17Diluted
    
    $
    0.12
    
    
    $
    0.04
    
    
    $
    0.28
    
    
    $
    0.17Weighted average shares used to compute net income
per common shareBasic
    
    
    33,287,464
    
    
    
    32,952,012
    
    
    
    33,242,280
    
    
    
    32,765,660Diluted
    
    
    38,196,823
    
    
    
    37,438,054
    
    
    
    37,855,864
    
    
    
    35,187,653
  4




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
AND ACCUMULATED OTHER COMPREHENSIVE LOSS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
(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, 2008
    
    $
    102
    
    
    $
    9
    
    
    $
    305,508
    
    
    $
    (951
    )
    
    $
    (40,000
    )
    
    $
    (68,855
    )
    
    $
    (1,320
    )
    
    $
    194,493Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,666
    
    
    
    
    
    
    
    10,666Cumulative translation adjustment
and foreign currency exchange
hedge, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (186
    )
    
    
    (186
    )Unrealized net gain on securities
available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    404
    
    
    
    404Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,884Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    6,304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,304Exercise of stock options and grants of
restricted stock, net of withholding
tax on stock vesting
    
    
    2
    
    
    
    
    
    
    
    209
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211Repayment of promissory notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    238
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    238Decrement in windfall tax benefits
from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (319
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319
    )Balance at September 30, 2009
    
    $
    104
    
    
    $
    9
    
    
    $
    311,702
    
    
    $
    (713
    )
    
    $
    (40,000
    )
    
    $
    (58,189
    )
    
    $
    (1,102
    )
    
    $
    211,811
  5




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended September 30,2009
    
    
    2008(In thousands)Cash flows from operating activitiesNet income
    
    $
    10,666
    
    
    $
    5,963Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    5,124
    
    
    
    6,090Stock-based compensation expense
    
    
    6,304
    
    
    
    5,296Deferred taxes
    
    
    7,153
    
    
    
    3,853Provision for bad debts
    
    
    673
    
    
    
    928Changes in operating assets and liabilities, net of business acquired:(Increase) decrease in accounts receivable, including an
(increase) decrease of ($619)
and $2,486 from related parties for the nine months ended
September 30, 2009 and 2008, respectively
    
    
    (11,043
    )
    
    
    2,646Decrease in prepaid expenses and other assets
    
    
    798
    
    
    
    814(Decrease) in accrued employee compensation
    
    
    (225
    )
    
    
    (6,025
    )Increase in deferred revenue
    
    
    2,122
    
    
    
    883Increase (decrease) in accounts payable, accrued expenses and
other liabilities,
including an increase (decrease) of $9 and ($145) to related
parties for the nine
months ended September 30, 2009 and 2008, respectively
    
    
    2,441
    
    
    
    (2,599
    )Net cash provided by operating activities
    
    
    24,013
    
    
    
    17,849Cash flows from investing activitiesAcquisition of businesses, net of cash acquired (Note 3)
    
    
    (1,368
    )
    
    
    (34,918
    )Securities available-for-sale:Proceeds from maturities
    
    
    15,740
    
    
    
    37,669Purchases
    
    
    (35,985
    )
    
    
    (4,832
    )Securities and cash provided as collateral
    
    
    (240
    )
    
    
    39Purchases of furniture, equipment and leasehold improvements
    
    
    (1,560
    )
    
    
    (1,315
    )Capitalization of software development costs
    
    
    (1,421
    )
    
    
    (1,882
    )Net cash (used in) investing activities
    
    
    (24,834
    )
    
    
    (5,239
    )Cash flows from financing activitiesIssuance of Series B Preferred Stock and common stock purchase warrants
    
    
    
    
    
    
    33,510Proceeds from exercise of stock options and grants of restricted stock,
net of withholding tax
    
    
    211
    
    
    
    (339
    )Decrement in windfall tax benefits from stock-based compensation
    
    
    (319
    )
    
    
    (137
    )Purchase of treasury stock  common stock voting
    
    
    
    
    
    
    (2,773
    )Other
    
    
    90
    
    
    
    91Net cash (used in) provided by financing activities
    
    
    (18
    )
    
    
    30,352Effect of exchange rate changes on cash
    
    
    (351
    )
    
    
    (711
    )Cash and cash equivalentsNet (decrease) increase for the period
    
    
    (1,190
    )
    
    
    42,251Beginning of year
    
    
    107,323
    
    
    
    72,711End of period
    
    $
    106,133
    
    
    $
    114,962Supplemental cash flow information:Cash paid during the year:Income taxes paid
    
    $
    213
    
    
    $
    51Non-cash activity:Issuance of common stock in connection with business acquisition
    
    $
    
    
    
    $
    5,775Capital lease obligation
    
    $
    723
    
    
    $
    645
  6




---



##### 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




---



##### Table of Contents



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
   Revenue Recognition
  8




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 Commission revenue.
 Technology products and services.
    Initial set-up fees.
 Stock-Based Compensation
  Income Taxes
  9




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  Business Combinations, Goodwill and Intangible Assets
   Earnings Per Share
   Use of Estimates
  Recent Accounting Pronouncements
 TM
  10




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
   Reclassifications
  3. Acquisition
   Cash
    
    $
    6,406Accounts receivable
    
    
    2,139Amortizable intangibles
    
    
    8,330Goodwill
    
    
    29,405Deferred tax assets, net
    
    
    3,410Other assets, including investment in TradeHelm
    
    
    1,429Accounts payable, accrued expenses and deferred revenue
    
    
    (8,701
    )Total purchase price
    
    $
    42,418
   11




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  Pro formaNine Months EndedSept. 30, 2008Revenues
    
    $
    72,848Income before income taxes
    
    $
    10,147Net income
    
    $
    6,169Basic net income per common share
    
    $
    0.18Diluted net income per common share
    
    $
    0.17
 4. Net Capital Requirements and Customer Protection Requirements
  MarketAxess
    
    
    MarketAxess
    
    
    MarketAxessCorporation
    
    
    Europe Limited
    
    
    Canada Limited(In thousands)Net capital
    
    $
    38,187
    
    
    $
    21,599
    
    
    $
    388Minimum net capital required
    
    
    1,217
    
    
    
    2,753
    
    
    
    257Excess net capital
    
    $
    36,970
    
    
    $
    18,846
    
    
    $
    131
  12




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 5. Fair Value Measurements
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)As of September 30, 2009Securities available-for-saleU.S. government obligations
    
    $
    
    
    
    $
    30,476
    
    
    $
    
    
    
    $
    30,476Municipal securities
    
    
    
    
    
    
    23,651
    
    
    
    
    
    
    
    23,651Corporate bonds
    
    
    
    
    
    
    2,067
    
    
    
    
    
    
    
    2,067Foreign currency forward position
    
    
    
    
    
    
    609
    
    
    
    
    
    
    
    609$
    
    
    
    $
    56,803
    
    
    $
    
    
    
    $
    56,803As of December 31, 2008Securities available-for-saleMunicipal securities
    
    $
    
    
    
    $
    33,177
    
    
    $
    
    
    
    $
    33,177Corporate bonds
    
    
    
    
    
    
    2,050
    
    
    
    
    
    
    
    2,050Foreign currency forward position
    
    
    
    
    
    
    264
    
    
    
    
    
    
    
    264$
    
    
    
    $
    35,491
    
    
    $
    
    
    
    $
    35,491
   As ofSeptember 30, 2009
    
    
    December 31, 2008(In thousands)Notional value
    
    $
    26,375
    
    
    $
    20,041Fair value of notional
    
    
    25,766
    
    
    
    19,777Gross and net fair value asset
    
    $
    609
    
    
    $
    264
 13




---



##### 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, 2009U.S. government obligations
    
    $
    29,766
    
    
    $
    710
    
    
    $
    
    
    
    $
    30,476Municipal securities
    
    
    23,621
    
    
    
    36
    
    
    
    (6
    )
    
    
    23,651Corporate bonds
    
    
    2,050
    
    
    
    17
    
    
    
    
    
    
    
    2,067Total securities
available-for-sale
    
    $
    55,437
    
    
    $
    763
    
    
    $
    (6
    )
    
    $
    56,194As of December 31, 2008Municipal securities
    
    $
    33,138
    
    
    $
    55
    
    
    $
    (16
    )
    
    $
    33,177Corporate bonds
    
    
    2,054
    
    
    
    
    
    
    
    (4
    )
    
    
    2,050Total securities
available-for-sale
    
    $
    35,192
    
    
    $
    55
    
    
    $
    (20
    )
    
    $
    35,227
  As ofSeptember 30, 2009
    
    
    December 31, 2008(In thousands)Less than one year
    
    $
    15,151
    
    
    $
    18,702Due in 1 - 5 years
    
    
    41,043
    
    
    
    16,525Total securities
available-for-sale
    
    $
    56,194
    
    
    $
    35,227
   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, 2009U.S. government obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Municipal securities
    
    
    5,624
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    5,624
    
    
    
    (6
    )Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total securities
available-for-sale
    
    $
    5,624
    
    
    $
    (6
    )
    
    $
    
    
    
    $
    
    
    
    $
    5,624
    
    
    $
    (6
    )As of December 31, 2008Municipal securities
    
    $
    7,222
    
    
    $
    (16
    )
    
    $
    
    
    
    $
    
    
    
    $
    7,222
    
    
    $
    (16
    )Corporate bonds
    
    
    2,050
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    2,050
    
    
    
    (4
    )Total securities
available-for-sale
    
    $
    9,272
    
    
    $
    (20
    )
    
    $
    
    
    
    $
    
    
    
    $
    9,272
    
    
    $
    (20
    )
 14




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 6. Furniture, Equipment and Leasehold Improvements
  As ofSeptember 30, 2009
    
    
    December 31, 2008(In thousands)Computer hardware and related software
    
    $
    13,838
    
    
    $
    18,015Office hardware
    
    
    1,217
    
    
    
    3,574Furniture and fixtures
    
    
    1,975
    
    
    
    1,791Leasehold improvements
    
    
    2,217
    
    
    
    2,074Computer hardware under capital lease
    
    
    1,419
    
    
    
    696Accumulated depreciation and amortization
    
    
    (16,656
    )
    
    
    (22,781
    )Total furniture, equipment and leasehold improvements, net
    
    $
    4,010
    
    
    $
    3,369
 7. Software Development Costs
  As ofSeptember 30, 2009
    
    
    December 31, 2008(In thousands)Software development costs
    
    $
    18,830
    
    
    $
    19,607Accumulated amortization
    
    
    (15,165
    )
    
    
    (15,086
    )Total software development costs, net
    
    $
    3,665
    
    
    $
    4,521
 8. Goodwill and Intangible Assets
  As ofSeptember 30, 2009
    
    
    December 31, 2008(In thousands)Goodwill from Greenline acquisition
    
    $
    29,405
    
    
    $
    29,853Goodwill from TWS acquisition
    
    
    2,177
    
    
    
    2,177Other goodwill
    
    
    202
    
    
    
    202Total
    
    $
    31,784
    
    
    $
    32,232
 15




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  September 30, 2009
    
    
    December 31, 2008Accumulated
    
    

    Net Carrying
    
    
    
    
    
    
    Accumulated
    
    
    Net CarryingCost
    
    
    Amortization
    
    
    Amount
    
    
    Cost
    
    
    Amortization
    
    
    Amount(In thousands)Technology
    
    $
    4,010
    
    
    $
    (1,633
    )
    
    $
    2,377
    
    
    $
    4,010
    
    
    $
    (1,110
    )
    
    $
    2,900Customer relationships
    
    
    3,530
    
    
    
    (990
    )
    
    
    2,540
    
    
    
    3,530
    
    
    
    (604
    )
    
    
    2,926Non-competition
agreements
    
    
    1,260
    
    
    
    (396
    )
    
    
    864
    
    
    
    1,260
    
    
    
    (207
    )
    
    
    1,053Tradenames
    
    
    590
    
    
    
    (233
    )
    
    
    357
    
    
    
    590
    
    
    
    (155
    )
    
    
    435Total
    
    $
    9,390
    
    
    $
    (3,252
    )
    
    $
    6,138
    
    
    $
    9,390
    
    
    $
    (2,076
    )
    
    $
    7,314
   9. Income Taxes
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Current:Federal
    
    $
    25
    
    
    $
    
    
    
    $
    25
    
    
    $
    State and local
    
    
    8
    
    
    
    
    
    
    
    (4
    )
    
    
    Foreign
    
    
    739
    
    
    
    78
    
    
    
    1,391
    
    
    
    193Total current provision
    
    
    772
    
    
    
    78
    
    
    
    1,412
    
    
    
    193Deferred:Federal
    
    
    1,641
    
    
    
    9
    
    
    
    3,907
    
    
    
    1,717State and local
    
    
    1,498
    
    
    
    (38
    )
    
    
    2,605
    
    
    
    685Foreign
    
    
    (8
    )
    
    
    530
    
    
    
    420
    
    
    
    1,264Total deferred provision
    
    
    3,131
    
    
    
    501
    
    
    
    6,932
    
    
    
    3,666Provision for income taxes
    
    $
    3,903
    
    
    $
    579
    
    
    $
    8,344
    
    
    $
    3,859
 T
 As ofSeptember 30, 2009
    
    
    December 31, 2008(In thousands)Deferred tax assets
and liabilities
    
    $
    29,583
    
    
    $
    36,233Valuation allowance
    
    
    (595
    )
    
    
    (567
    )Deferred tax assets, net
    
    $
    28,988
    
    
    $
    35,666
  16




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
    10. Related Parties
  As ofSeptember 30, 2009
    
    December 31, 2008(In thousands)Cash and cash equivalents
    
    $
    105,522
    
    
    $
    106,649Securities and cash provided
as collateral
    
    
    4,056
    
    
    
    3,816Accounts receivable
    
    
    2,549
    
    
    
    1,930Accounts payable
    
    
    20
    
    
    
    11
 Three Months Ended September 30,
    
    Nine Months Ended September 30,2009
    
    2008
    
    2009
    
    2008(In thousands)Commissions
    
    $
    3,688
    
    
    $
    3,094
    
    
    $
    10,107
    
    
    $
    9,695Technology products and services
    
    
    9
    
    
    
    3
    
    
    
    28
    
    
    
    25Information and user access fees
    
    
    60
    
    
    
    81
    
    
    
    185
    
    
    
    207Investment income
    
    
    36
    
    
    
    310
    
    
    
    184
    
    
    
    786Other income
    
    
    37
    
    
    
    45
    
    
    
    117
    
    
    
    132General and administrative
    
    
    49
    
    
    
    17
    
    
    
    98
    
    
    
    35
 11. Stockholders Equity and Preferred Stock
 Common Stock
  17




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 Series B Preferred Stock and Warrants
        18




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 Stockholders Rights Agreement
  12. Stock-Based Compensation Plans
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Employee:Stock options
    
    $
    708
    
    
    $
    964
    
    
    $
    2,228
    
    
    $
    2,872Restricted stock
    
    
    1,299
    
    
    
    707
    
    
    
    3,740
    
    
    
    2,1072,007
    
    
    
    1,671
    
    
    
    5,968
    
    
    
    4,979Non-employee directors:Stock options
    
    
    42
    
    
    
    32
    
    
    
    97
    
    
    
    94Restricted stock
    
    
    103
    
    
    
    82
    
    
    
    239
    
    
    
    223145
    
    
    
    114
    
    
    
    336
    
    
    
    317Total stock-based compensation
    
    $
    2,152
    
    
    $
    1,785
    
    
    $
    6,304
    
    
    $
    5,296
   19




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 13. Earnings Per Share
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except share andper share amounts)Basic EPSNet income
    
    $
    4,640
    
    
    $
    1,519
    
    
    $
    10,666
    
    
    $
    5,963Amount allocable to common shareholders
    
    
    90.5
    %
    
    
    90.4
    %
    
    
    90.5
    %
    
    
    95.7
    %Net income applicable to common stock
    
    $
    4,199
    
    
    $
    1,373
    
    
    $
    9,650
    
    
    $
    5,706Common stock  voting
    
    
    30,701,810
    
    
    
    30,366,358
    
    
    
    30,656,626
    
    
    
    30,180,006Common stock  non-voting
    
    
    2,585,654
    
    
    
    2,585,654
    
    
    
    2,585,654
    
    
    
    2,585,654Basic weighted average shares outstanding
    
    
    33,287,464
    
    
    
    32,952,012
    
    
    
    33,242,280
    
    
    
    32,765,660Basic earnings per share
    
    $
    0.13
    
    
    $
    0.04
    
    
    $
    0.29
    
    
    $
    0.17Diluted EPSNet income
    
    $
    4,640
    
    
    $
    1,519
    
    
    $
    10,666
    
    
    $
    5,963Basic weighted average shares outstanding
    
    
    33,287,464
    
    
    
    32,952,012
    
    
    
    33,242,280
    
    
    
    32,765,660Effect of dilutive shares:Series B Preferred Stock
    
    
    3,500,000
    
    
    
    3,500,000
    
    
    
    3,500,000
    
    
    
    1,477,778Stock options, restricted stock and warrants
    
    
    1,409,359
    
    
    
    986,042
    
    
    
    1,113,584
    
    
    
    944,215Diluted weighted average shares
outstanding
    
    
    38,196,823
    
    
    
    37,438,054
    
    
    
    37,855,864
    
    
    
    35,187,653Diluted earnings per share
    
    $
    0.12
    
    
    $
    0.04
    
    
    $
    0.28
    
    
    $
    0.17
  20




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
 14. Commitments and Contingencies
  Operating Leases
    
    

Capital Leases(In thousands)Remainder of 2009
    
    $
    584
    
    
    $
    842010
    
    
    1,784
    
    
    
    3362011
    
    
    2,002
    
    
    
    3362012
    
    
    1,946
    
    
    
    3362013
    
    
    1,987
    
    
    
    3222014
    
    
    2,099
    
    
    
    42Thereafter
    
    
    12,768
    
    
    
    Minimum lease payments
    
    
    23,170
    
    
    
    1,456Less amount representing interest
    
    
    
    
    
    
    210$
    23,170
    
    
    $
    1,246
       21




---



##### Table of Contents



MARKETAXESS HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Unaudited (Continued)
  i.e.
  15. Comprehensive Income
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Net income
    
    $
    4,640
    
    
    $
    1,519
    
    
    $
    10,666
    
    
    $
    5,963Cumulative translation adjustment and foreign currency exchange hedge, net of taxes
    
    
    (54
    )
    
    
    (123
    )
    
    
    (186
    )
    
    
    (420
    )Unrealized net gain (loss) on securities
available-
for-sale, net of taxes
    
    
    171
    
    
    
    (178
    )
    
    
    404
    
    
    
    (417
    )Total comprehensive income
    
    $
    4,757
    
    
    $
    1,218
    
    
    $
    10,884
    
    
    $
    5,126
 22




---



##### 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;
 23




---



##### 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
    24




---



##### 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
  25




---



##### 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.
 26




---



##### Table of Contents



Technology and Communications.
 Professional and Consulting Fees.
 Occupancy.
 Marketing and Advertising.
 General and Administrative.
  Critical Accounting Policies
  Segment Results
  27




---



##### Table of Contents



Results of Operations
 Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008
 Overview
    Revenues
  Three Months Ended September 30,2009
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Commissions
    
    $
    25,289
    
    
    
    84.3
    %
    
    $
    17,219
    
    
    
    75.9
    %
    
    $
    8,070
    
    
    
    46.9
    %Technology products and services
    
    
    2,601
    
    
    
    8.7
    
    
    
    2,646
    
    
    
    11.7
    
    
    
    (45
    )
    
    
    (1.7
    )Information and user access fees
    
    
    1,519
    
    
    
    5.1
    
    
    
    1,562
    
    
    
    6.9
    
    
    
    (43
    )
    
    
    (2.8
    )Investment income
    
    
    314
    
    
    
    1.0
    
    
    
    963
    
    
    
    4.2
    
    
    
    (649
    )
    
    
    (67.4
    )Other
    
    
    286
    
    
    
    1.0
    
    
    
    291
    
    
    
    1.3
    
    
    
    (5
    )
    
    
    (1.7
    )Total revenues
    
    $
    30,009
    
    
    
    100.0
    %
    
    $
    22,681
    
    
    
    100.0
    %
    
    $
    7,328
    
    
    
    32.3
    %
 28




---



##### Table of Contents



Commissions.
 Three Months Ended September 30,$
    
    
    %2009
    
    
    2008
    
    
    Change
    
    
    Change($ in thousands)Distribution feesU.S. high-grade
    
    $
    7,551
    
    
    $
    7,457
    
    
    $
    94
    
    
    
    1.3
    %Eurobond
    
    
    3,099
    
    
    
    3,567
    
    
    
    (468
    )
    
    
    (13.1
    )Total distribution fees
    
    
    10,650
    
    
    
    11,024
    
    
    
    (374
    )
    
    
    (3.4
    )Variable transaction feesU.S. high-grade
    
    
    8,755
    
    
    
    3,320
    
    
    
    5,435
    
    
    
    163.7Eurobond
    
    
    2,398
    
    
    
    860
    
    
    
    1,538
    
    
    
    178.8Other
    
    
    3,486
    
    
    
    2,015
    
    
    
    1,471
    
    
    
    73.0Total variable transaction fees
    
    
    14,639
    
    
    
    6,195
    
    
    
    8,444
    
    
    
    136.3Total commissions
    
    $
    25,289
    
    
    $
    17,219
    
    
    $
    8,070
    
    
    
    46.9
    %
   Change from Three Months Ended September 30, 2008U.S.High-Grade
    
    
    Eurobond
    
    
    Other
    
    
    Total(In thousands)Volume increase
    
    $
    2,347
    
    
    $
    803
    
    
    $
    610
    
    
    $
    3,760Variable transaction fee per million increase
    
    
    3,088
    
    
    
    735
    
    
    
    861
    
    
    
    4,684Monthly distribution fees increase (decrease)
    
    
    94
    
    
    
    (468
    )
    
    
    
    
    
    
    (374
    )Total commissions increase
    
    $
    5,529
    
    
    $
    1,070
    
    
    $
    1,471
    
    
    $
    8,070
  Three Months Ended September 30,$
    
    
    %2009
    
    
    2008
    
    
    Change
    
    
    ChangeTrading Volume Data (in millions)U.S. high-grade
    
    $
    47,019
    
    
    $
    27,548
    
    
    $
    19,471
    
    
    
    70.7
    %Eurobond
    
    
    16,580
    
    
    
    8,576
    
    
    
    8,004
    
    
    
    93.3Other
    
    
    16,795
    
    
    
    12,892
    
    
    
    3,903
    
    
    
    30.3Total
    
    $
    80,394
    
    
    $
    49,016
    
    
    $
    31,378
    
    
    
    64.0
    %Number of U.S. Trading Days
    
    
    64
    
    
    
    64Number of U.K. Trading Days
    
    
    65
    
    
    
    65
 ®
 29




---



##### Table of Contents



Three Months Ended September 30,2009
    
    2008Average Variable Transaction Fee Per MillionU.S. high-grade
    
    $
    186
    
    
    $
    121Eurobond
    
    $
    145
    
    
    $
    100Other
    
    $
    208
    
    
    $
    156All Products
    
    $
    182
    
    
    $
    126
  Technology Products and Services.
 Information and User Access Fees.
 Investment Income.
 Other.
 30




---



##### Table of Contents



Expenses
  Three Months Ended September 30,2009
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Employee compensation and benefits
    
    $
    13,127
    
    
    
    43.7
    %
    
    $
    11,173
    
    
    
    49.3
    %
    
    $
    1,954
    
    
    
    17.5
    %Depreciation and amortization
    
    
    1,654
    
    
    
    5.5
    
    
    
    2,494
    
    
    
    11.0
    
    
    
    (840
    )
    
    
    (33.7
    )Technology and communications
    
    
    2,029
    
    
    
    6.8
    
    
    
    2,007
    
    
    
    8.8
    
    
    
    22
    
    
    
    1.1Professional and consulting fees
    
    
    1,645
    
    
    
    5.5
    
    
    
    1,822
    
    
    
    8.0
    
    
    
    (177
    )
    
    
    (9.7
    )Occupancy
    
    
    706
    
    
    
    2.4
    
    
    
    660
    
    
    
    2.9
    
    
    
    46
    
    
    
    7.0Marketing and advertising
    
    
    651
    
    
    
    2.2
    
    
    
    708
    
    
    
    3.1
    
    
    
    (57
    )
    
    
    (8.1
    )General and administrative
    
    
    1,654
    
    
    
    5.5
    
    
    
    1,719
    
    
    
    7.6
    
    
    
    (65
    )
    
    
    (3.8
    )Total expenses
    
    $
    21,466
    
    
    
    71.5
    %
    
    $
    20,583
    
    
    
    90.7
    %
    
    $
    883
    
    
    
    4.3
    %
 Employee Compensation and Benefits.
 Depreciation and Amortization.
 Technology and Communications.
 Professional and Consulting Fees.
 Occupancy.
 Marketing and Advertising.
 General and Administrative.
 Provision for Income Tax
  31




---



##### Table of Contents



Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008
 Overview
    Revenues
  Nine Months Ended September 30,2009
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Commissions
    
    $
    67,565
    
    
    
    84.0
    %
    
    $
    56,652
    
    
    
    79.5
    %
    
    $
    10,913
    
    
    
    19.3
    %Technology products and services
    
    
    6,720
    
    
    
    8.3
    
    
    
    6,089
    
    
    
    8.5
    
    
    
    631
    
    
    
    10.4Information and user access fees
    
    
    4,678
    
    
    
    5.8
    
    
    
    4,485
    
    
    
    6.3
    
    
    
    193
    
    
    
    4.3Investment income
    
    
    880
    
    
    
    1.1
    
    
    
    2,715
    
    
    
    3.8
    
    
    
    (1,835
    )
    
    
    (67.6
    )Other
    
    
    637
    
    
    
    0.8
    
    
    
    1,316
    
    
    
    1.8
    
    
    
    (679
    )
    
    
    (51.6
    )Total revenues
    
    $
    80,480
    
    
    
    100.0
    %
    
    $
    71,257
    
    
    
    100.0
    %
    
    $
    9,223
    
    
    
    12.9
    %
 32




---



##### Table of Contents



Commissions.
 Nine Months Ended September 30,$
    
    
    %2009
    
    
    2008
    
    
    Change
    
    
    Change($ in thousands)Distribution feesU.S. high-grade
    
    $
    22,293
    
    
    $
    23,312
    
    
    $
    (1,019
    )
    
    
    (4.4
    )%Eurobond
    
    
    9,057
    
    
    
    11,130
    
    
    
    (2,073
    )
    
    
    (18.6
    )Total distribution fees
    
    
    31,350
    
    
    
    34,442
    
    
    
    (3,092
    )
    
    
    (9.0
    )Variable transaction feesU.S. high-grade
    
    
    21,336
    
    
    
    12,421
    
    
    
    8,915
    
    
    
    71.8Eurobond
    
    
    5,294
    
    
    
    3,006
    
    
    
    2,288
    
    
    
    76.1Other
    
    
    9,585
    
    
    
    6,783
    
    
    
    2,802
    
    
    
    41.3Total
variable transaction fees
    
    
    36,215
    
    
    
    22,210
    
    
    
    14,005
    
    
    
    63.1Total commissions
    
    $
    67,565
    
    
    $
    56,652
    
    
    $
    10,913
    
    
    
    19.3
    %
   Change from Nine Months Ended September 30, 2008U.S.High-Grade
    
    
    Eurobond
    
    
    Other
    
    
    Total(In thousands)Volume increase
    
    $
    1,455
    
    
    $
    1,098
    
    
    $
    123
    
    
    $
    2,676Variable transaction fee per million increase
    
    
    7,460
    
    
    
    1,190
    
    
    
    2,679
    
    
    
    11,329Monthly distribution fees (decrease)
    
    
    (1,019
    )
    
    
    (2,073
    )
    
    
    
    
    
    
    (3,092
    )Total commissions
increase (decrease)
    
    $
    7,896
    
    
    $
    215
    
    
    $
    2,802
    
    
    $
    10,913
  Nine Months Ended September 30,$
    
    
    %2009
    
    
    2008
    
    
    Change
    
    
    ChangeTrading Volume Data (in millions)U.S. high-grade
    
    $
    121,768
    
    
    $
    108,999
    
    
    $
    12,769
    
    
    
    11.7
    %Eurobond
    
    
    38,841
    
    
    
    28,447
    
    
    
    10,394
    
    
    
    36.5Other
    
    
    46,677
    
    
    
    45,846
    
    
    
    831
    
    
    
    1.8Total
    
    $
    207,286
    
    
    $
    183,292
    
    
    $
    23,994
    
    
    
    13.1
    %Number of U.S. Trading Days
    
    
    188
    
    
    
    189Number of U.K. Trading Days
    
    
    189
    
    
    
    190
  33




---



##### Table of Contents



Nine Months Ended September 30,2009
    
    2008Average Variable Transaction
Fee Per MillionU.S. high-grade
    
    $
    175
    
    
    $
    114Eurobond
    
    $
    136
    
    
    $
    106Other
    
    $
    205
    
    
    $
    148All Products
    
    $
    175
    
    
    $
    121
  Technology Products and Services.
 Information and User Access Fees.
 Investment Income.
 Other.
 34




---



##### Table of Contents



Expenses
  Nine Months Ended September 30,2009
    
    
    2008% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %$
    
    
    Revenues
    
    
    $
    
    
    Revenues
    
    
    Change
    
    
    Change($ in thousands)Employee compensation and
benefits
    
    $
    36,486
    
    
    
    45.3
    %
    
    $
    33,767
    
    
    
    47.4
    %
    
    $
    2,719
    
    
    
    8.1
    %Depreciation and amortization
    
    
    5,124
    
    
    
    6.4
    
    
    
    6,090
    
    
    
    8.5
    
    
    
    (966
    )
    
    
    (15.9
    )Technology and communications
    
    
    6,391
    
    
    
    7.9
    
    
    
    6,160
    
    
    
    8.6
    
    
    
    231
    
    
    
    3.8Professional and consulting
fees
    
    
    5,137
    
    
    
    6.4
    
    
    
    6,496
    
    
    
    9.1
    
    
    
    (1,359
    )
    
    
    (20.9
    )Occupancy
    
    
    2,075
    
    
    
    2.6
    
    
    
    2,166
    
    
    
    3.0
    
    
    
    (91
    )
    
    
    (4.2
    )Marketing and advertising
    
    
    2,004
    
    
    
    2.5
    
    
    
    2,077
    
    
    
    2.9
    
    
    
    (73
    )
    
    
    (3.5
    )General and administrative
    
    
    4,253
    
    
    
    5.3
    
    
    
    4,679
    
    
    
    6.6
    
    
    
    (426
    )
    
    
    (9.1
    )Total expenses
    
    $
    61,470
    
    
    
    76.4
    %
    
    $
    61,435
    
    
    
    86.2
    %
    
    $
    35
    
    
    
    0.1
    %
 Employee Compensation and Benefits.
 Depreciation and Amortization.
 Technology and Communications.
 Professional and Consulting Fees.
 Occupancy.
 Marketing and Advertising.
 General and Administrative.
 Provision for Income Tax
 35




---



##### Table of Contents



Liquidity and Capital Resources
    Nine Months Ended September 30,2009
    
    
    2008(In thousands)Net cash provided by operating activities
    
    $
    24,013
    
    
    $
    17,849Net cash (used in) investing activities
    
    
    (24,834
    )
    
    
    (5,239
    )Net cash (used in) provided by financing activities
    
    
    (18
    )
    
    
    30,352Effect of exchange rate changes on cash
    
    
    (351
    )
    
    
    (711
    )Net (decrease) increase for the period
    
    $
    (1,190
    )
    
    $
    42,251
 Operating Activities
   Investing Activities
  36




---



##### Table of Contents



Financing Activities
    Other Factors Influencing Liquidity and Capital Resources
    MarketAxess
    
    
    MarketAxess
    
    
    MarketAxessCorporation
    
    
    Europe Limited
    
    
    Canada Limited(In thousands)Net capital
    
    $
    38,187
    
    
    $
    21,599
    
    
    $
    $388Minimum net capital required
    
    
    1,217
    
    
    
    2,753
    
    
    
    257Excess net capital
    
    $
    36,970
    
    
    $
    18,846
    
    
    $
    $131
  37




---



##### Table of Contents



Effects of Inflation
  Contractual Obligations and Commitments
  Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    5 years(In thousands)Operating leases
    
    $
    23,170
    
    
    $
    584
    
    
    $
    3,786
    
    
    $
    3,933
    
    
    $
    14,867Capital leases
    
    
    1,456
    
    
    
    84
    
    
    
    672
    
    
    
    658
    
    
    
    42Foreign currency forward contract
    
    
    25,766
    
    
    
    25,766
    
    
    
    
    
    
    
    
    
    
    
    $
    50,392
    
    
    $
    26,434
    
    
    $
    4,458
    
    
    $
    4,591
    
    
    $
    14,909
    38




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Market Risk
   Interest Rate Risk
  Derivative Risk
  Credit Risk
   
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 39




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting.
 40




---



##### Table of Contents



PART II  Other Information
 
 Item 1. Legal Proceedings
  i.e.
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Recent Sales of Unregistered Securities
  41




---



##### Table of Contents



Issuer Purchases of Equity Securities
  Total Number of Shares
    
    
    Dollar Value of SharesPurchased as Part of
    
    
    That May Yet BeTotal Number of
    
    
    Average Price Paid
    
    
    Publicly Announced
    
    
    Purchased Under thePeriod
    
    Shares Purchased
    
    
    per Share
    
    
    Plans
    
    
    Plans(In thousands)July 1, 2009  July 31, 2009
    
    
    3,405
    
    
    $
    10.04
    
    
    
    
    
    
    $
    August 1, 2009  August 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    September 1, 2009  September
30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,405
    
    
    $
    10.04
    
    
    
    
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 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
 42




---



##### Table of Contents



SIGNATURES
  MARKETAXESS HOLDINGS INC.Date: October 30, 2009
    By:
    /s/ RICHARD M. MCVEYRichard M. McVeyChief Executive Officer
(principal executive officer)Date: October 30, 2009
    By:
    /s/ JAMES N.B. RUCKERJames N. B. RuckerChief Financial Officer
(principal financial and accounting officer) 43