Interdealer broker Icap reports that it was forced to take out a temporary overdraft of £879.3 million to cover unmatched trades which failed to settle in the weeks following the 11 September attacks on New York.
The credit line was extended on 30 September after the group experienced an unusually large incidence of counterparties that were unable to accept the delivery of stock on the contracted date. In its six-month interim results statement, Icap is reporting an exceptional charge of £2.3 million relating to overdraft interest payments. Substantially all of these trades settled after the period end, says Icap, and the temporary borrowing has been repaid.
In addition to these unmatched trades, settlement difficulties in US markets also resulted in an unusually large number of initially unsettled transactions at 30 September 2001, reports the firm, where neither receipt nor delivery of stock took place on the settlement date.
For the year to 31 March 2002 exceptional costs relating to the WTC are estimated to be in the region of £30 million, of which £10 million relates to the destruction of the company's offices. Icap says that the full-year impact of these costs will be more than offset by exceptional gains from insurance receipts and proceeds from the disposal of shares in the London Stock Exchange, Deutsche Borse and Liffe. Proceeds from insurance cover alone are expected to run to $50 million.
The interdealer broker says it expects to sign a lease on a 112,000 square foot site for its new North American headquarters by the end of the year, and plans to occupy the new building by the middle of 2002. In the interim, brokers and support staff will soon be rehoused at a building on the west side of Manhattan which has been kitted out with a new telecoms and data infrastructure, complete with direct lines to customers.
The firm's electronic trading platform, ETC, has been restored to full operational status and has become the single distribution network for screen based prices for all Icap fixed income businesses in North America.
In electronic broking, Icap reports that 35% of US treasuries are now transacted via the screen - the majority of this is 'off the run' non-benchmark treasuries - and in Tokyo the figure is up to 15% following the launch of the platform in January. The group says it is planning several European initiatives, including some derivatives related projects. However, electronic broking continues to be loss making, losing £7.5 million (2000 - £3.1 million).