The evolving nature of financial markets trading is having a direct impact on the way firms operate. According to a report published in Bloomberg, one of the world’s largest inter-dealer brokers, ICAP, is planning to amend its e-trading solution, EBS-BrokerTec. The firm is believed to be looking at a de-merger between the FX and Fixed Income platform as trading costs rise in uncertain market conditions.
ICAP has thee business segments, its Global Broking, EBS and BrokerTec units. The migration of financial instruments to electronic trading has impacted the traditional voice and phone broking products, a core business for ICAP that is part of its Global Broking segment that contributes 66% of revenues, according to the firm’s last annual report.
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ICAP is believed to be in discussion with existing clients and potential financial advisers, as per the media report. BrokerTec and EBS joined forces in December after the listed provider aligned the two portals to leverage off from best practises and client relationships.
Declining Voice Trading Volumes
Voice trading is on a gradual downtrend with limited client trading though the traditional method. Furthermore, through the introduction of SEFs, new executing revenues under the Dodd-Frank rulings, ICAP has seen a shift in its US voice business migrating to the new venues. The firm commented in its annual repor: “From ICAP’s perspective, approximately 25% of our US voice business, as well as derivatives trading involving US counterparties from around the world, must now be concluded on SEFs.”
ICAP’s FX business saw volumes decline on a month-on-month basis in February. The dealer-to-dealer provider saw average daily trading volumes on the benchmark platform drop to $94.1 billion during the month, decreasing by 27% from figures reported a month earlier, however volumes in 2015 have been better than those reported in 2014.