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Volatile Markets Boost Icap Earnings

Interdealer broker Icap expects to beat analysts’ estimates with its yearly profits for its financial year ended 31 March, 2008 based on a strong third quarter – from 1 October, 2007 to 24 January, 2008.

Icap says the analysts’ consensus is £307 million for this year, compared with the year to March 2007 when Icap’s profit was £252 million. One of the beneficiaries of the market’s recent volatility was its currency trading platform EBS: spot FX trading on EBS was up 42% from the previous year, reaching an average daily volume of $200 billion in the last quarter of 2007.

The activity was due to volatility in the currency markets and increased algorithmic trading activity, the firm says. 

Electronic trading of fixed income on Icap’s BrokerTec platform also hit record levels with average daily volume of US Treasury products, European repos and US repos at $610 billion in the last quarter of 2007 – a 26% increase year-on-year.

CEO Michael Spencer says: “As a result of continuing volatility in interest rates, foreign exchange, energy and parts of the credit markets over the period we saw increased volumes in both electronic and voice broking, boosting Icap’s revenues.”

He adds that Icap is continuing to make significant investments in its electronic systems enabling it to handle record volumes: “Steeper yield curves, volatility in foreign exchange and continuing activity in the credit markets suggest that this period of increased activity may continue for some time.”

Icap completed the acquisition of Traiana, a provider of automated post-trade processing services, on 4 December 2007.

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