ICAP, an inter-dealer broker, says its revenues exceeded GBP1.5bn for the first time during the year ending 31 March 2009 despite the more challenging market conditions.
ICAP, an inter-dealer broker, says its revenues exceeded GBP1.5bn for the first time during the year ending 31 March 2009 despite the more challenging market conditions.
Michael Spencer, group chief executive of ICAP (pictured), says: ‘We expect to take full advantage of the restructuring of the financial markets and remain very positive about the medium term outlook for the business. There are significant opportunities to build our business by attracting high quality people and acquiring some assets at attractive prices.
‘In line with our strategy, we have maintained our commitment to the future growth of the business by investing an additional GBP40m in new initiatives this year, in addition to our acquisitions. We will continue to invest in these and other opportunities in the coming year to support the long term growth of the business.’
ICAP has taken advantage of a number of opportunities in both voice and electronic broking to reduce costs by GBP38m. This reduced costs this year by GBP15m and in 2009/2010 it says costs will be reduced by a further GBP23m.
The firm has increased market share in both voice and electronic broking.
It says low short term interest rates, steep yield curves and substantially increased bond issuance have kept interest rate derivatives busy, particularly in longer maturity interest rate swaps in Europe. Corporate bonds have been strong performers though credit derivative volumes have been lower. In commodities, the markets continue their good performance, with oil and emissions particularly active.
Cash equities and equity derivatives have continued to experience tougher conditions. Many emerging markets have seen patchy liquidity and lower volumes but with an increase in activity in recent weeks.
Volumes in electronic broking began to slow in November but overall have steadied in the last three months. Average daily volume in March, until last Friday, was USD147bn in spot FX and USD420bn in the fixed income markets.
ICAP says its market position in both foreign exchange and fixed income remains very strong and there is potential for volumes to grow with increased government bond issuance and buy-backs.
It adds that demand for improvements in the efficiency of post-trade processing and for reductions in the capital allocated to existing positions are continuing to provide opportunities for its range of post-trade processing, portfolio compression and reconciliation and risk management services – Traiana, TriOptima and Reset.
The current environment is creating pressure from regulatory authorities to ensure that the infrastructure behind the OTC markets is as robust as possible and the banks have responded positively to that pressure.
As previously announced, ICAP is an equal member of a consortium of a number of financial institutions that is collectively considering a possible cash offer for LCH.Clearnet Group. Discussions are continuing.
