Volatility boosts Icap

Source: Icap

Icap (IAP.L), the world's premier interdealer broker, is making this trading statement in relation to Icap's financial year ending 31 March 2008 and particularly to the three month period from 1 January 2008 to 31 March 2008.

ICAP expects to announce its interim results for the year ending 31 March 2008 on 20 May 2008.

Trading across the group in the second half of ICAP's financial year has been very strong and profit (before tax, amortisation and impairment of intangibles arising on consolidation and exceptional items) for the financial year ended 31 March 2008 is anticipated to be above the current consensus of analysts' forecasts.

  • Electronic broking has had an outstanding year with record volumes. Average daily electronic broking volumes in fixed-income products reached record levels in February.
    • Spot FX traded on ICAP's electronic platform EBS increased 34 percent year on year in February to an average daily volume of $217.2 billion (February 2007: $162.6 billion). Average daily spot FX trading on EBS was also up 32 percent for the 12 months ending 29 February 2008.
    • Average daily electronic broking volumes in U.S. Treasury products increased 38 percent year on year to $187.7 billion in February, and 32 percent for the 12 months ending 29 February 2008. Average daily electronic broking volumes of U.S. and EU repo products reached $505.1 billion in February, an increase of 19 percent on February 2007.
    • Non Deliverable Forward Foreign Exchange trading in seven Asian currencies and the Russian rouble was launched on the EBS platform
    • ICAP completed the most recent phase of enhancements to its market leading EBS Spot FX electronic trading platform. These enhancements significantly improve functionality, increase the frequency of market view updates and speed of data delivery, and provide greater order book transparency for all EBS customers.
    • The Belgian Debt Agency selected ICAP's BrokerTec platform for Euro government bond trading. This will enable European primary dealers to fulfil their secondary market quoting obligations in the wholesale government bond market on BrokerTec, opening this market to competing electronic platforms for the first time.
  • Voice broking volumes have continued to benefit from the higher activity level created by increased volatility and continuing disruption in the money markets. Steeper yield curves have provided a significant boost to interest rate derivatives activity in many markets. The higher price of credit risk has kept the credit derivatives very active, notably in single name credit default swap (CDS) and index products. ICAP benefits from having its activities spread over a wide range of markets and geographies with a variety of drivers of growth in those markets.
  • ICAP Hyde, ICAP's global shipbroking firm, acquired Capital Shipbrokers Ltd, a privately owned shipbroker with 37 staff based in London. Capital Shipbrokers' extensive experience in the tanker market complements ICAP Hyde's strong position in dry cargo. Combined, their services cover chartering, sale and purchase, freight derivatives and research in the tanker sector as well as in dry cargo.
  • ICAP acquired a 15 percent stake in the Bolsa de Productos de Chile (BPC), a commodity exchange in Chile, to become the first international investor to have an ownership stake in a Chilean exchange.
  • Capital position - ICAP has access to sufficient capital to continue to develop its businesses under its already announced strategy of organic and acquisition driven growth. The Group has recently completed the refinancing of its existing debt with a new three year revolving agreement for £520m of senior bank debt, of which £170m was from new lenders.

Commenting on the year, recent events and outlook, Michael Spencer, Group Chief Executive of ICAP said, "ICAP has enjoyed a very successful year; benefiting from higher volatility in the interest rate, foreign exchange, equity, energy and parts of the credit and emerging markets. The last three months saw a continuation of the increased activity levels in the financial markets that began in June 2007. Both our electronic and voice broking businesses felt the positive impact of these higher levels of activity and we benefited from the substantial leverage in this business. Our market share grew again during the year - further growth will come from our focus on expanding our electronic, energy, credit derivatives, emerging markets, equity and transport businesses.

We remain positive about the outlook for the business. Steeper yield curves, the higher price of credit risk and continuing disruption in the money markets suggest that this period of increased activity may continue for some time though not necessarily at the very high levels of the last few months."

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