TIDMIAP
RNS Number : 4716O
ICAP PLC
09 February 2016
ICAP plc - Trading Statement
- Transaction with Tullett Prebon on track
- Solid growth in the Post Trade division
- Continued investment in new product initiatives
- Market conditions remain challenging
London, 9 February 2016 - ICAP plc (IAP.L), a leading markets
operator and provider of post trade risk mitigation and information
services, announces today its trading statement for the period from
1 October 2015 to 31 December 2015. Results for the year ended 31
March 2016 will be announced on 16 May 2016.
Group revenue from continuing businesses for the third quarter
to 31 December 2015 was 5% lower than the same period last year on
a constant currency and on a reported basis.
Overall market conditions have remained challenging. Risk
appetite remains subdued amongst our clients as they continue to
deleverage their balance sheets. The first step in the
normalisation of the US interest rate environment was taken as the
US Federal Reserve raised interest rates by a quarter percentage
point. However, volatility remained relatively benign through the
quarter before picking up at the start of the new calendar
year.
Michael Spencer, Group Chief Executive Officer of ICAP, said:
"Against the backdrop of a difficult market, our business continues
to perform well, particularly the Post Trade division which goes
from strength to strength. The decision by the Fed to raise
interest rates was very welcome, but we are still operating in an
environment of ultra-low interest rates and we have some way to go
before we return to more normal market conditions. Risk appetite
remains subdued and I see few signs that this will pick up any time
soon, even after markets began the year with a short burst of
extreme volatility.
"The transaction to combine our global hybrid voice broking
business with Tullett Prebon is proceeding well, and marks a
defining moment in the transformation of the Group into a financial
technology business. We have laid the foundations for our
electronic and post trade businesses to deliver strong, cash
generative returns for the future. I remain confident and excited
about the range of opportunities ahead of us and our ability to
execute our strategy successfully and provide long-term profitable
growth."
Electronic Markets
Revenue decreased by 10% on a constant currency basis (7% on a
reported basis) during the third quarter compared to the same
period last year. Despite maintaining its leading market position
average daily volumes in US Treasuries on the BrokerTec platform
were down 11% to $147 billion. This was against demanding
comparables in the previous year, which saw an unusually high level
of volatility and one of the biggest intraday moves ever. In US
repo average daily volumes decreased by 1% to $219 billion and
decreased in European repo by 3% to EUR168 billion.
A tough comparable period for EBS resulted in average daily
volume decreasing by 35% to $78 billion for the third quarter as FX
volatility did not have the same central bank interventions from
the ECB and Bank of Japan witnessed in the same period last year.
Since the start of the calendar year, FX volatility has increased
as Chinese equity markets sparked a global market sell off. The
inauspicious start for global equity markets led to somewhat
increased volatility especially in emerging market currencies such
as CNH and Asian NDFs albeit comparables for the final quarter of
the year remain challenging as they benefitted from the Swiss
National Bank action. Strong demand for e-Fix Matching, an
electronic FX Benchmark Service, resulted in an increase of more
than 300% in average daily volumes in the period compared to the
same period last year.
During the period there was ongoing investment in EBS Direct
which continues to expand its customer base and product offering.
In December, it beta launched FX outrights and swaps, a significant
part of the FX market in which EBS has never previously
participated. Demand for EBS Direct continues to grow with a record
month in January with average daily volumes more than U$20
billion.
Post Trade Risk and Information
Revenues increased 8% on a constant currency basis and on a
reported basis during the third quarter compared to the same period
last year, driven by continued demand for TriOptima's compression
and reconciliation services. In October, TriOptima launched the
triReduce CLS Forward FX Compression Service completing the first
successful compression cycle for FX forwards and swaps
transactions. Following the introduction of new margining rules for
uncleared swaps, TriOptima has integrated with AcadiaSoft to
deliver an end-to-end solution fulfilling all related regulatory
requirements.
As part of Traiana's strategy to innovate, grow and diversify
its business into other asset classes, it recently announced that
it has entered into an alliance to offer a repo matching service to
deliver efficient, automated processes ahead of significant
regulatory change. Activity at Reset remains challenged as revenue
is largely correlated to the movement in both actual and forecast
short-term interest rates. However, the recent change in the US
interest rate has had a positive impact, offsetting the ongoing
negative trend.
Euclid Opportunities, ICAP's early stage fintech investment
incubator, recently invested in Digital Asset Holdings LLC, a
developer of Distributed Ledger Technology ("DLT"). Digital Asset
Holdings is at the forefront of developments in this field and ICAP
will continue to explore options to use DLT to build next
generation products and identify further opportunities for
innovation.
Global Broking
Revenue from continuing businesses decreased by 7% on a constant
currency basis and on a reported basis during the third quarter
compared to the same period last year. Year-on-year revenue
performance in November and December was much improved on October.
The ongoing structural and cyclical factors affecting the division
persist, including further deleveraging by the investment banks.
Strong revenue growth from electronic matching sessions continues
to develop especially in the Asia Pacific region and the
Americas.
The transaction to merge the global hybrid voice broking
business with Tullett Prebon is proceeding as expected and it is
anticipated that it will take place during 2016. Currently both
companies are in the process of obtaining regulatory and
competition approval from various authorities. The Circular will be
issued in March 2016 followed by a shareholder vote.
Notes:
ICAP plc announced on 11 November 2015 that the Board of ICAP
plc has agreed terms with Tullett Prebon for the disposal by ICAP
of its global hybrid voice broking and information business to
Tullett Prebon, including ICAP's associated technology and broking
platforms (including iSwap and Fusion) and certain of ICAP's joint
ventures and associates ("ICAP's Global Broking Business" or
"IGBB"). Revenue from IGBB decreased by 5% on a constant currency
basis and on a reported basis during the third quarter compared to
the same period last year, in line with the decline in revenue in
Global Broking partly offset by an increase in information
revenue.
Investors & Analysts Conference Call:
This will be hosted by Michael Spencer at 08:15am on Tuesday 9
February 2016
Dial in number: +44 (0)20 3003 2666
Access Code: ICAP
A recording of this call will be available at www.icap.com
Contacts
+44 (0) 20 7050
Serra Balls Group Head of Communications 7103
Head of Investor +44 (0) 20 7050
Alex Dee Relations 7123
Neil Bennett/Rebecca +44 (0) 20 7379
Mitchell Maitland 5151
About ICAP
ICAP is a leading markets operator and provider of post trade
risk mitigation and information services. The Group matches buyers
and sellers in the wholesale markets in interest rates, credit,
commodities, FX, emerging markets and equity derivatives through
voice and electronic networks. Through our post trade risk and
information services we help our customers manage and mitigate
risks in their portfolios. For more information, please go to
www.icap.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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