Icap is applying to the UK's Financial Services Authority to become a regulated exchange, a move that would enable it to increase its client base and launch into new markets.
In its half year results statement released last week, Icap said: “In addition to operating multilateral trading facilities under MiFiD [Markets in Financial Instruments Directive] we believe that there are opportunities in markets to offer trading on an “Icap Exchange”.
“As a result we intend to apply to the FSA for the additional status of a regulated market under MiFiD so that we can launch new products in markets like emissions, energy and transport.”
Icap's group chief executive Michael Spencer told journalists last week that it could take several months to get the go ahead from the FSA. He says the regulated markets would not include the range of OTC products that Icap provides through its dealing facilities, including foreign exchange products, bonds and derivatives, but he wanted the option to launch new products either over the counter or on an exchange.
“You don't get the same economic value extraction from some OTC products that you can from an exchange,” he said.
Along with exchanges, interdealer brokers have benefited from the global market volatility that has hit financial services companies these past few months. Last week Icap reported record revenues and profits in the six months to the end of September as a result of busy markets including foreign exchange and interest rates (see story, this issue).
It is one of the few companies to profit from the credit slump and resulting turbulent market conditions. Over the summer it announced a string of record monthly trading volumes and revenues (see Squawkbox, 5 August).