11:09 AM EDT, 04/10/2024 (MT Newswires) -- MarketAxess Holdings ( MKTX ) needs more creativity when it comes to protocols and data to retain its US credit growth trajectory, BofA Securities said in a note to clients Wednesday.

The company has a "spotty" track record with innovation given its "last big breakthrough" was in 2012, the note said.

In electronic credit trading, the company faced challenges in implementing innovative policies and adopting new protocols, resulting in declining market share, the brokerage added.

"[MarketAxess ( MKTX )] has often attempted to clone successful competitor innovations. However, the replica protocols have consistently met less success than the original due to the large first mover advantages inherent to the exchange vertical, " BofA added.

The slower pace of innovation is also due to low investments in human capital and technology, according to the report.

Additionally, MarketAxess ( MKTX ) does not have key capabilities to tap opportunities in total addressable markets in municipal bonds, BofA Securities said. "Specifically, retail is the largest segment of the municipal bond market, but [MarketAxess ( MKTX )] does not have a foothold in that channel," according to the note.

In emerging markets, MarketAxess' ( MKTX ) share has also not jumped in three years and thus peers are better-positioned to succeed there, the note said.

BofA Securities initiated coverage on MarketAxess ( MKTX ) with an underperform rating and a $199 price target.

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