ICAP Plc Highlights Sterling ‘Windfall’, $200b Brexit FX Turnover

ICAP’s trading statement confirms the information sourced by Finance Magnates that the BrokerTec unit handles massive volumes.

If Brexit has been a positive event for any industry, ICAP Plc (LON:IAP) has just certified that one such industry is the financial intermediary sector. The firm’s electronic brokerage unit realized a massive spike in trading volumes due to the event. The massive spike in trading volumes across multiple asset classes has resulted in a positive momentum for the firm.

Commenting in a statement, the Chief Executive Officer of ICAP, Michael Spencer, said: “We have made a good start to the year and remain cautiously confident looking ahead despite a more uncertain macroeconomic outlook for the UK and the global economy since the Brexit vote in the UK on 23 June.”

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“The referendum result was a tremendous shock to global financial markets but our platforms demonstrated resilience. We handled more than $200 billion of FX volume on 24 June on our EBS platform demonstrating deep and reliable liquidity throughout a period of extreme volatility,” Spencer elaborated.

Sterling “Windfall” to Impact ICAP’s Results

With the referendum resulting in uncertainty about the prospects for the global economy, the CEO of ICAP continued: “Prior to the UK referendum, we were looking towards a long and slow journey on the road to more normal market conditions following the decision by the Fed to raise interest rates back in December. This journey looks more uncertain now although the subsequent decline in sterling in the FX markets does provide us with a significant windfall benefit.”

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EBS Revenues Stable Despite Lower Volumes in Q1

The average daily volume on ICAP’s EBS FX platform has decreased by 15 per cent to $83 billion throughout the quarter as volatility remained low in the first quarter of 2016. Despite this, ICAP has highlighted that the revenues did not decrease in line with volume due to changes in the product mix and the effect of the volume-based tiered tariff structure.

The disclosed, relationship-based liquidity service, EBS Direct, continued growing with over 400 customers on the platform. The average daily volume increased to $21 billion when compared to $17 billion a year ago. The interest in forwards and swaps on EBS Direct has been growing steadily.

ICAP and BrokerTec Performance Metrics

The revenues of the company in the first quarter have increased by 2 per cent on a constant currency basis and by 7 per cent on a reported basis compared to a year ago. The Electronic Markets division’s revenue decreased by 2 per cent on a constant currency basis and increased 3 per cent on a reported basis when compared to a year ago.

During the first quarter, the average daily volume on the BrokerTec platform decreased in US Treasuries by 17 per cent to $142 billion, in US repos by 7 per cent to $202 billion and in European repos by 2 per cent to €175 billion.

The recently launched relationship-based liquidity service in the US Treasury market, BrokerTec Direct, has continued on-boarding new clients.

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