Ladies and gentlemen, thank you for standing by and welcome to the MarketAxess Third Quarter 2007 Earnings Conference call. I would now like to turn the call over to Stephen Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Good morning and welcome to the MarketAxess Third Quarter 2007 Conference Call. For the call this morning, Rick McVey, Chairman and Chief Executive Officer of MarketAxess will provide a strategic update for the company. Kelly Killet, President of MarketAxess will provide an update on our North America businesses and then Jim Rucker, our Chief Financial Officer will review the financial results for the quarter. We will then go back to Rick for closing comments before the Q&A session. Before I turn the call over to Rick, let me remind you that today’s call may include forward-looking statements. These statements represent the company’s belief regarding future events that by their nature are uncertain. The company’s actual results and financial condition may differ possibly materially from what is indicated in those forward-looking statements. For discussion of some of the risks and factors that could affect the company’s future results, please see the description of risk factors in our annual report on Form 10-K for the year ended December 31, 2006. I would also direct you to read the forward-looking disclaimers in our quarterly earnings release that was issued earlier this morning available on our website. I would now like to turn the call over to Rick McVey.

Good morning and Happy Halloween. The third quarter of 2007 was one of the most challenging quarters ever for the credit markets as the sub prime contingent rippled through the market causing a severe drop in credit market liquidity. Despite these difficult markets, MarketAxess reported solid results for the third quarter of 2007 helped by an expanding base of fixed commission revenue, a more favorable mix of business and continued strong expense management. For the third quarter of 2007, MarketAxess reported net income of $2.4 million or $0.07 per share compared to $1.3 million or $0.04 per share in the prior year period. Our pre-tax margin was 16%, well above the 11% reported during the prior year period, but down from the second quarter level. The drop in market liquidity clearly had an impact on electronic trading with our estimated share of US NASD high-grade TRACE falling to 7.8% from 9.3% in the third quarter of ’06. We believe this was caused by extreme ill liquidity in the short end of the corporate bond market and a shift in the client mix within TRACE away from traditional asset managers. Kelly will further address market conditions in his comments. On the expense front, third quarter 2007 expenses were flat compared to the third quarter of 2006 reflecting continued expense discipline. Our financial position and strong cash generation continue to be sources of strength. Since the end of the third quarter of 2006, when our cash balances were $124 million, we have repurchased $30 million in MarketAxess shares. We ended the third quarter of 2007 with $128 million in cash and securities demonstrating that our operating cash flow has fully funded our share buy-back program. In summary, we recorded $0.07 earnings per share in the extremely challenging market environment. Our higher base…

Thank you, Rick. For my North America update this morning, I will address the difficult market conditions we experienced in the third quarter. In addition, I will review the market impact on our estimated share of NASD high-grade TRACE as well as on our volumes and mix of business. On slide ten, you can clearly see the drop off in trading volumes in our core US high-grade business. Third quarter performance was degraded by the significant market dislocation we saw in August and September. The rapid repricing of credit which began in July led to a severe liquidity squeeze in August for our dealers. Reduced dealer liquidity and risk appetite decreased the number and quality of the levels quoted by dealers and dampened investor inquiry volume over the system. The ensuing liquidity by appointment environment pushed Client Flow business back to the phone resulting in a decline of our estimated share during the quarter falling from 9.3% of NASD high-grade TRACE in the third quarter of last year to 7.8% in the third quarter of this year. FRN trading volume, normally the most liquid short-duration segment of the client’s slow business that we address and the majority of which is issued by banks and brokers declined 53% to $7.3 billion during this quarter. upper end: The average weighted years to maturity pertains to maturity trade increased to 8.3 years in the third quarter of this year, up from 7.8 years in the second quarter of this year and 6.7 years in the prior year of third quarter. This positively impacted our fees per million. In October month-to-date of this year, we are seeing a moderate increase in our average daily volume of inquiry and a return of larger size trades to the system, especially in FRN. One quick note on…

Thank you, Kelley. On slide 13, we have outlined our volumes from the 2006 and 2007 third quarters. Trading volume from the third quarter of 2007 was clearly impacted by the seizing up of liquidity in the credit markets, with total trading volume down 32% compared to the second quarter. Trading volume of $76 billion was down 10% over the third quarter of 2006 impacted by a 20% decline in US high grade, a 21% decline in European high grade, offset by a 38% increase in the other volume category. The increase in the other volume category was primarily driven by an increase in CDS trading volume. Please turn to slide 14 for our earnings performance. Despite the low trading volumes in the third quarter, our earnings per share of $0.07 were above the third quarter of 2006 and only $0.03 below our strong second quarter result. In short, we were able to generate $0.07 in earnings for our shareholders during some of the most challenging credit marketing conditions in recent memory. Three factors contributed to this, a full quarter’s impact to the new European fee plan that we introduced in June, variable employee compensation expense that was below the second quarter level and an increase in the high-grade variable transaction fees that Kelly referred to earlier. Our tax provision in Q3 ’07 reflected an effective tax rate of the quarter of 34% compared to 42% in the third quarter of 2006. The primary reason for this was a higher percentage of our earnings coming from our UK subsidiary which is currently subject to a lower tax rate than our US operations. I anticipate the effective tax rate to the fourth quarter to be between 36% and 39%. But in the longer term, expect the rate to revert to approximately…

Thank you, Jim. In summary, no one could have expected the severity of the credit market downturn in the third quarter. We feel good about our financial results in light of the market environment. Our hard work on fee models and expense management served our shareholders well during the quarter. We believe that as the market stabilizes, the trading environment will show improvement versus the benign conditions of the last few years. We remain optimistic about the growth we had in our core corporate bond business and a large opportunity in new products and services. Now, I would like to open the call up to your questions.

Your first question comes from the line of Howard Chen with Credit Suisse. Please proceed. Howard Chen – Credit Suisse: Good morning everyone.

Good morning, Howard. Howard Chen – Credit Suisse: Rick, I guess the first one is for you. I was hoping to get an update on the competitive landscape during the quarter. Here in the U.S. we saw an up announcement by the broker dealers to reinvest in TradeWeb, and in Europe, we saw the launch of Liquidity Hub. So, I guess could you touch on both of these and give your overall sense of the competitive environment now compared to where we were a year ago, et cetera?

Sure and I would be happy to do so, and the reality is within the credit space, I do not think much has changed. TradeWeb in particular has been a strong competitor of MarketAxess really since our existence, and during that period of time, at one point, there were 100% owned by dealers and at another point, 100% owned by Thompson. So we’ve been competing in various ownership structures and the investment that was made during the quarter that you point out brings the level of dealer ownership in TradeWeb back to about the same level as dealer ownership at MarketAxess. So we don’t view this as any significant change on the competitive front, and the reality is given the size of the organizations that are involved, whether it is in TradeWeb or MarketAxess, the ownership in equity in the e-trading platforms is small relative to the focus on their own business and their own P&L. So as much as we might like to think differently, we do not believe that dealer equity is the most important component that drives their trading behaviour. And we believe that we’ve proven to have sustainable competitive advantages in the credit space based on the technology that we’ve worked over the last seven years to build, the network that is now more entrenched in our platform than ever and the fee model which is considered by all to be fair and equitable and those advantages continue to serve us well. It is interesting that you point out Liquidity Hub because based on the public record following the TradeWeb deal, it would certainly appear to all involved that the primary focus in terms of growth for TradeWeb is the interest rate swap market, and arguably trying to recapture dealer support and dealer alignment that was…

First, I think, I would preface my remarks by again repeating that client to dealer trading in CDS is in its very, very early days. We continue to think our opportunity is to focus on two clear needs as we have seen and discovered across our customer base. First is a more efficient means of execution, and the second is a more efficient post trade processing and settlement aspect to the trade. We are making solid progress in the client to dealer space, especially in the index product within the inter-dealer space. We are reasonably pleased with our progress to date in CDS especially in EM. And again, as Rick said earlier, we are strong believers in our value proposition that we deliver to our customer base, and I continue to believe that the pace of client to dealer trading will accelerate in CDS. It was a more liquid market in certain parts of the CDS market, as you point out, versus the cash market. Well, quite frankly, Howard that has been the case even in a more normal market. So I think in summary, we’re pleased to date, but I’d like to preface that with the fact that we’re in the very, very early days in the trading of CDS electronically, especially client to dealer. Howard Chen – Credit Suisse: Okay, great, thanks. And while I have you on the line, Kelley, last quarter, the company benefited from something of a development contract with one of the broker dealers, I think you mentioned in last quarter’s results. Any color on the pipeline? Is that a business that you continue to want to be in and grow over time, or should we think of that contribution last quarter as somewhat of a one-off?

We continue to believe that we deliver world-class technology and connectivity to our customer base. We have invested substantially over the years in that. And in addition to the technology itself, we also believe strongly we have world-class talent as well. Not surprisingly in the third quarter, Howard, a lot of the technology and business focus churned internally. We are very pleased with the portfolio of opportunities, however, that we currently have on our plate. And we continue to strongly believe the tech services will provide a modest diversification and even further integrate us into the infrastructure and the technology of our most important customers. Howard Chen – Credit Suisse: Great, thanks. And then, Jim, maybe a final one for you. At the revised midpoint of your expense guidance, it looks like expenses will be up 2% year-over-year. Maybe this is jumping ahead a quarter to next quarter’s results in your guidance there, but any thoughts? With the $76.5 million expense base on a full year basis, does that provide you enough to both kind of run the business, invest in the places that you want to invest? Given the current environment and maybe even a potential improvement in terms of volumes, is this is a good operating expense level that we are at now?

I think if you look back over a little bit of a longer term rather than just over the past nine months and look back over two or three years, what you’ll see is a growth in operating expenses has been somewhere in the high single digits. And that’s during a period when we built up two significant new products, namely, CDS and DealerAxess. So I think, we continue to believe the expense growth rates somewhere in that range either high single digit, is what we need to continue to fuel growth in our products. Howard Chen – Credit Suisse: Great, that’s helpful. Thank so much, everyone.

Thank you.

Your next question comes from the line of Daniel Harris with Goldman Sachs. Please proceed.

I appreciate the commentary on the long-term potential TRACE volumes next year or maybe further out than that, but more near term, given that volatility has somewhat stabilized even though the spreads are still wide, how do you guys think about industry volumes over the next quarter or two, especially as I sit here and look at October volumes, looking like they are down somewhere between 10% and 15% year over year?

Just quickly on the TRACE front, Daniel, the October average daily volume is off a little bit further from September, but not materially so. We obviously have more trading days, so there is not a significant change in the current market environment as we start the fourth quarter. Kelley has few comments with respect to the outlook going forward.

We are, as I said in my prepared remarks, seeing modest improvement increase in average daily volume of inquiry on the system. We are seeing the quality and quantity of dealer responses improve as well. And we are also seeing the return of large size trade, i.e. in excess of $100 million return back to the platform as well, really concentrated not surprisingly in FRN. That being said, we continue to monitor and work closely with our customers and it’s been a challenging three or four months and there are weeks like this week where their attention turns away from e-trading market to critical risk management issues, the Fed today, the Payroll numbers on Friday. I spent 24 years in the dealer community and I have gone through a number of these cycles. One of the first order of business is as you go through this cycle as things begin to stabilize is that you critically assess your staff, which at times can be more than half your expense base, you critically assess your efficiency and that is mid office and back office. As a result of that, I am more convinced about our value preposition and not just in the long term but as people look at their budget process in their own prospects for ‘08, I think we can be an important part to contributing to a more efficient low cost execution of trade as the dealer community serves their most important customers.

Thanks, that is really an interesting point, as we have obviously seen the dislocation, the credit market having an impact potential on staffing at the investment banks and the dealers. How do you see that changing in terms of how clients interact with the system, do you think that the dealers are doing more automated quotes back to clients as potentially they’ve moved people off the desk for these low margin products?

As I said in my prepared remarks, we do believe that some 57% of trades year-to-date is in that sort of flow category and low margin business and in our connectivity which I highlighted on the client buy-side, there is also significant work going on with the dealers via their communication and transactions with us through the APIs. I do believe that this market environment will pressure dealers to critically assess their business model and our job is to provide those a fee plan in the US and Europe which is fixed to the dealers which we think is attractive in reducing their average trade cost as they increase their volumes through the system and ensure that we’re providing the right technology. Each dealer has a different interaction model with their various segments of clients, some traditional, some automated with some intervention and then some quite frankly fully automated. We think the trend towards interaction via APIs will continue and we are optimistic that as the community assesses their expenses, their overall level of margin that there will be a continued move especially in the flow business to the platform.

I think by way of reminder Daniel, those trends were clearly evident in the first half of this year and I think we felt better than ever before in our business history with the acceleration of share gains taking place electronically on MarketAxess during the first six months of 2007. And as you look at the detailed numbers from the third quarter that we provided this morning, it’s clear that the extreme dislocation in the short-end of the market was primarily responsible for the drop that we had in market share. We believe that this will be a temporary change in the electronic market and the long-term trends that we are observing in the first half of this year will return on a medium to long-term basis.

Thanks for that Rick and Kelly. I just actually want to turn over to the other side of the business from the client perspective. You guys, thanks for the disclosure. You talked about the OMS impact from volumes and so if you guys are currently getting around 20% of your total trade through an OMS, can you give us more color what percent of clients are actively using an OMS with you guys? What I am trying to get at is, of the clients using the OMS trading more than those that don’t today? And how long does it take to get slotted into a client’s OMS platform?

An important thing to remember is that the clients that we have integrated under Order Management Systems tend to be the larger fixed income investors and as we’ve said before, we think given the concentration of assets and the fixed income investment management industry, the top 200 or 250 investors in each region account for a large majority in the institutional trading volume. So we are pleased with the progress that we are making because most of those connections are going in to large investors. The time that it takes really depends on what type of Order Management Systems that they have used. We have partnership deals with five or six of the leading Order Management System providers and once the client upgrades to the latest version that includes the connectivity to MarketAxess, then the work is done for them and their electronic access to the system is immediate. We think almost half of the US investors are operating on their own Order Management solution and that can take us a little bit more time to complete the connectivity work, but we have been successful in virtually every case where the client has been ready to make the investment in connecting to us.

Okay, great. That’s helpful. Then Jim just lastly, a little bit of clean-up here, I think you mentioned that you see the tax rate moving back to 40% longer term, I mean, obviously we saw big changes this quarter given Europe’s strength versus the US, do you think that that change back to 40% happens because the US will grow faster than Europe or for other reasons?

There are really two factors driving my view on a long term tax rate, Daniel, just to be clear, this quarter the issue, what it is all about the percentage about net income that came from the European business as compared to the US business. Part of my view is that mix is changing to a slightly more normal level and without going into too much detail, some issues with the UK taxes, that means that the all-in rate that we pay on net income in the UK will increase a little bit. So, it is the combination of those two factors that drives my view that next year we will revert to a more normal tax rate of somewhere around 40%.

I appreciate the color Jim, thanks a lot.

Thank you, Daniel.

There are no additional questions at this time. I would now like to turn the call back over to management for closing remarks.

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

Thank you for joining in today’s conference, you may now disconnect and have a wonderful day. Happy Halloween.