ICAP continued to focus on the delivery of new solutions for its customer base over the past quarter, according to the company’s interim management statement for the period from 1 October 2013 to 4 February 2014.
In October, ICAP launched its Swap Execution Facility (SEF) for trading interest rate derivatives.
In November, EBS Direct, ICAP’s relationship-based disclosed liquidity service, moved from its pilot phase to commercial launch.
Average daily volume has grown from USD549m in November to USD2bn in January.
In December, TriOptima resumed compressions at LCH and has since eliminated USD41trn in gross notional outstanding.
Reduced activity by investment banks as well as the initially disruptive consequence of the new SEF regulatory environment impacted the performance of global broking. In electronic markets, the performance of BrokerTec, particularly in US Treasuries, was robust as the US Federal Reserve started to taper its quantitative easing programme. Trading volumes in major G7 pairs remained depressed on EBS Market, however, there was record activity levels in emerging markets and NDF pairs in January.
The post trade risk and information business benefited from increased demand for TriOptima’s subscription based portfolio reconciliation service, triResolve, which now has over 800 customers. While Reset’s performance was held back by low interest rate volatility during the period, there has been a recent substantial improvement in activity.
As a result of the challenging market conditions, group revenue for the third quarter to 31 December 2013 was six per cent lower than the same period last year and five per cent lower on a constant currency basis. The ongoing cost savings programme remains on track.
Michael Spencer (pictured), group chief executive officer, says: “Trading activity across many markets was down in the third quarter, compared to the prior year, with a slower December than we anticipated. Although market conditions remain difficult, we saw a modest improvement in activity in January as the ongoing debate about the Federal Reserve quantitative easing programme continued.
“Innovation is vital for our success and our strong cash generation allows us to continue to invest in our future growth. The launch of the ICAP SEF was a very important project. We have had tremendous feedback from customers to our SEF and I am pleased that it is the market leader in interest rate swaps. We are also seeing the tangible benefits of our investments in post trade, as the regulatory push for risk mitigation drives demand for our solutions.”