With its proposed acquisition of ICAP’s hybrid voice brokering business, Tullet Prebon showed that it is willing to double down in non-electronic brokering. With greater percentages of trades moving completely to electronic trading platforms and bypassing human assisted brokering, margins in traditional voice brokering are being negatively affected.
Nonetheless, with the deal, Tullet Prebon is set to become by far the largest interdealer voice broker in the world and the potential of cost effective synergies to handle profit contraction taking place. Even as electronic trading has increased, voice brokering remains an integral part of the trading world as broker relationships are important for liquidity discovery of illiquid instruments and large orders.
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Set to be completed sometime in 2016 following approval from shareholders of both companies, Tullet Prebon has announced today an expected delay to the merger proceedings. Having submitted clearance of the deal from the US Department of Justice (DOJ) along with other regulatory bodies, Tullet Prebon related that the DOJ has made a request for “additional information and documentary material” in relation to the transaction.
Called a “Second Request”, the request is part of the regulatory process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Second Request extends the waiting period by 30 days related to complying with the due diligence process of the antitrust act. According to Tullet Prebon, the firms continues to expect to close the deal this year following shareholder votes and receiving clearance from an array of global regulators.