MarketAxess (MKTX) Offers Global Investors Access to CIBM

MarketAxess Holdings Inc. MKTX recently introduced a trading channel, which enables its investors numbering more than 1,800 worldwide to trade onshore Chinese bonds across the China Interbank Bond Market (CIBM).

The latest move further strengthens the strong partnership shared by MarketAxess and China Foreign Exchange Trade System (CFETS) under the Bond Connect and CIBM Direct schemes. Besides, the new channel offers a seamless and integrated trading platform to investors, who can utilize the trading protocols of MarketAxess and trade directly with onshore market makers through CFETS.

Consequently, rise in trading volumes is expected to take place amid the China interbank bond market, which in turn, will lead to workflow efficiency gains and enhanced market liquidity. A sound liquidity position is of great help to investors while making investment decisions. Concurrently, MarketAxess aims to fetch increased and diversified global participation of investors across CIBM with the new trading channel.

MarketAxess has a clear goal of capitalizing on ample growth prospects prevailing across the second largest bond market (CIBM), which is valued at $15 trillion. The company’s step to offer an integrated platform to trade onshore Chinese bonds is surely a time opportune one.

The bond market of the Asia-Pacific country continues to trigger interest of investors worldwide, courtesy of factors such as comparatively attractive returns, ample liquidity and its continued insertion in global bond indices. Also, China’s steadfast efforts to keep its capital markets open for overseas investments is expected to provide a boost to the investment activity particularly in the bond market. All these factors cumulatively play a crucial role in increasing demand of Chinese corporate and government bonds.

By harnessing potential of China’s onshore bond market, MarketAxess intends to expand its footprint across the Asia Pacific region. Time and again, the company has undertaken substantial investments aimed at evolving the region’s bond market, enhancing workflow efficiency and fetching increased global client engagement. Buoyed by the initiatives, the company's trading volume in Asia Pacific witnessed a 74% year-over-year surge last year.

The latest move is also testament to the company’s efforts to boost its international business, which boasts of a strong client base. At the second-quarter 2021 end, the count of international client firms totaled 930, which indicates a rise of 3.3% from the 2020-end figure. Robust performance of the international business is expected to contribute to the company’s top-line growth in the days ahead.

Further, inclusion of the China interbank market is expected to bolster the consistently growing global fixed income trading network of MarketAxess. The company operates an electronic trading platform in a bid to enable underserved regions of the international bond market to efficiently trade bonds. Rise in trading volumes will lead to improved commissions, which usually contributes the most to the company’s revenues.

The Open Trading marketplace of MarketAxess has positioned it well to gain a solid presence in the global credit markets considering uptick in demand for credit assets among international investors. The centralized marketplace permits all participants to engage in trading activities under a single platform, thereby accelerating transaction speed, reducing trading costs and bolstering the liquidity pool while pursuing global credit trading.

Zacks Rank & Price Performance

Shares of MarketAxess lost 14.1% in the past year against the industry’s growth of 28.4%.

Zacks Investment ResearchImage Source: Zacks Investment Research

The company has a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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