As an interdealer broker, ICAP’s bread and butter is matching liquidity providers and takers through its voice brokering trading desks and array of electronic trading platforms. For the year ended March 2014, revenues from the firm’s Global Brokering and Electronic Trading divisions accounted for 84.8% of ICAP’s total. Even with the focus on transactional services, ICAP has been diversifying its products to include advisory and pre/post trade analytics through various acquisitions.
The advisory products can be considered a natural extension of their offering given ICAP’s existing relationships with buy-side clients. Among notable deals was its purchase of FX liquidity optimization firm, Client Knowledge. Operating consulting services to assist firms in optimizing their handling of liquidity, Client Knowledge was acquired as ICAP’s EBS unit was preparing to enter the FX aggregation sector with its release of EBS Direct.
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Along a similar theme, ICAP announced today that it is to further its investment in ENSO LP, provider of portfolio analytics to asset managers and hedge funds. The funding follows ICAP’s initial investment made in May 2013 in ENSO. Since then, assets reported to ENSO’s platform has tripled to $300B. Among its added value to customers, ENSO’s analytics provides reports on counter-party performance such as fill ratios and costs. A type of crowd-sourced application, ENSO uses shared data to also offer insights as to which prime brokers and counter-parties could be optimal for each of their asset manager and hedge fund clients. Overall, the data is meant to provide customers with key information to form optimized relationships with their counter-parties and brokers.
Like their initial investment, funding was through ICAP’s early stage funding program, Euclid Opportunities. Speaking about the investment, Michael Gentile, Partner at ENSO stated that, “ENSO will use this investment to expand heavily in both client delivery and product development. This investment further provides the fuel to connect our managers through innovative solutions, giving control to our expanding community as they manage a rapidly changing regulatory framework”.
Also commenting in the public statement was Michael Spencer, ICAP CEO who said, “We have been greatly impressed by ENSO’s progress and are delighted to continue our support for the company. Our investment will enable ENSO to deepen its product offering while maintaining strong client growth”.