TP ICAP Sees Profits Dip as it Makes Final Brexit Preparations

The interdealer broker took a £65 million hit across its US and APAC operations

Interdealer broker TP ICAP released its annual financial report for 2018 this Tuesday.

The firm saw a 3 percent year-on-year increase in its revenue, which grew to £1.76 billion ($2.34 billion) in 2018.

That growth was largely driven by an uptick in the company’s equities business.

The group reported revenue from its equities division of £210 million ($279 million) last year, a 15 percent increase on 2017.

In its foreign exchange and money markets division, TP ICAP reported a decline in revenues.

The company reported FX revenues of £218 million ($289 million) in 2017, a figure which dropped to £207 million ($275 million) last year.

Profits down

Despite an increase in revenue, TP ICAP also reported a decline in profits.

Pre-tax profits dropped from £72 million to £62 million, and post-tax profit was £23 million, down from £75 million in 2017.

That decline was in part down to a £65 million non-cash charge that the company incurred.

In its report, TP ICAP said that it had reduced the carrying value of its US business by £58 million. Similarly, the London-based firm reduced the carrying value of its Asia-Pacific operations by £7 million.

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Things could improve for the interdealer broker next year as it looks to complete its integration of ICAP.

Completing the TP ICAP integration

Tullet Prebon acquired ICAP – its voice broker rival – back in 2016 for £1.3 billion.

Completing the mammoth task of merging the two firms has taken time and Nicolas Breteau, who was appointed TP ICAP Chief Executive Officer last July, has said the integration should be complete next year.

“Since I took over as [CEO], a key priority has been successfully completing the Tullett Prebon and ICAP Global Broking business integration to secure the enlarged platform from which to grow our business,” said Breteau.

“Whilst there is more work to do, real progress has been made with the integration in the past year. When this is complete, I am confident we will be in a position to enhance that value as we aggregate liquidity and the data it provides across all our brands and regions.”

Brexit prep

Alongside its integration plans, TP ICAP’s report also shows that the company has, like so many other financial services firms, been taking steps to prevent any fallout from Brexit.

The interdealer broker noted that 90 percent of its business would be unaffected by the UK’s withdrawal from the European Union.

Nonetheless, the company is still going to be moving iSwap, its electronic rates multilateral trading facility (MTF), to Amsterdam.

In its report, TP ICAP said that it plans to open another MTF and two organized trading facilities in the EU.

The group is also seeking regulatory approval from French authorities to open a subsidiary in Paris. This new company will ensure that the interdealer broker can still do business in the EU after Brexit occurs.

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