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Icap and EBS Profits Surge

Icap, the world’s largest inter-dealer broker, saw a 22% surge in first-half revenues due largely to an increase in business on world markets.

Profits at the group, which earlier this year held merger talks with the London Stock Exchange, rose 23% to 120.8 million while revenues stood at 542.8 million.

Chief executive Michael Spencer says activity in the second half continues to be “well ahead” with growth in Europe particularly strong. Overall, he expects the group to match market expectations for the full year.

Revenues in its electronic broking arm saw a 75% surge to 86.2 million, boosted by the $825m acquisition of currency trading platform EBS, which significantly increased Icap’s foreign exchange revenues. Good progress is being made in the integration of EBS and the business is performing well, Spencer says.

“The combination of the Icap and EBS networks provides Icap with a distinctive capability – a high-speed global network for distribution of products that are increasingly traded around the clock. Almost all other businesses, the inter-dealer brokers and the exchanges, lack this global capability. Consolidation in these markets continues and Icap remains in a very strong position,” he says.

Icap says operating profit from its voice division rose 20% to 85.9 million due to robust growth in trading of more complex products, though this was partly offset by a continued low level of activity in interest rate products, including government and corporate bonds.

There had also been a “very significant slowdown” in US repo volumes due to historically low levels of volatility.

The group says it is focused on developing its business in the faster-growing products, which include energy, transport, credit derivatives, equity derivatives and emerging markets.

Spencer also said last week that Icap has no plans to re-enter discussions with the London Stock Exchange following exploratory talks in September. He told Bloomberg that talks “are out of the question. The LSE has fought a very impressive defensive game, but I think they are coming to the end of it”.

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