Group revenue in the quarter ended 30 June 2010 grew by 8% compared with revenue from continuing operations in the same period the previous year. On the same basis the Group's profit grew by 5%.

Commenting on the first quarter, Michael Spencer, Chief Executive of ICAP, said "ICAP had a good start to the year with buoyant levels of trading activity in most financial markets during the first two months. The particularly volatile conditions in May produced active high frequency markets which benefited electronic broking and post trade processing and also boosted our interest rate derivatives, commodities and emerging markets businesses. The very low levels of new corporate debt issuance and volatile conditions in equity markets produced more difficult conditions in credit and equity derivatives. Volumes slowed significantly in June as our customers' and end investors' risk appetites reduced.

We have invested heavily in recent years to create a broadly diversified business. This year we are concentrating on growing our business organically and extracting value from our investments. Furthermore, we are working closely with our customers to expand their use of the market infrastructure we have developed following this investment programme. As a result, our business is well positioned to take advantage of the potential changes in the structure and regulation of the financial services industry which are now becoming clearer.

If the mixed pattern of business we have seen during the first quarter continues for the rest of financial year, then the current range of analysts' forecasts for ICAP's profit1 appears reasonable. This assumes that exchange rates remain around today's levels for the remainder of the financial year."

Recent developments
After a good start to the year, May's voice broking revenues were particularly boosted by good performances in the volatile interest rate and foreign exchange markets and a continuing good run in our commodities and emergingg markets businesses. June saw reduced revenues in almost all asset classes other than commodities and emerging markets. After a good performance at the beginning of the year, credit markets have been quieter and spreads narrower than last year.

We are continuing the development of our businesses in Brazil with a focus on expansion and recruitment, improving our market share and market rankings.

In electronic broking total average daily volumes for the quarter to the end of June on the EBS and BrokerTec platforms reached US$798 billion (bn), an increase of 37% year on year. In fixed income products total average daily volumes on the BrokerTec platform were $626bn, an increase of 40% on the previous year. European repo volumes reached $269bn, up 36% year on year. US Treasury electronic broking volumes increased 46% year on year to $147bn, and US repo volumes were up 36% year on year to $269 bn. For the quarter ended 30 June 2010, average daily volumes on EBS increased 28% year on year to $172bn. Electronic broking revenue increased, but at a lower rate than the volume increases, due to volume discounting.

In Post Trade Risk and Information, Traiana has continued to build out its offering to both the buy and sell side and to invest in new product development outside FX. The CLSAS trade aggregation service is now live and the Harmony network experienced new record ticket volumes in May. TriOptima's portfolio reconciliation service, TriResolve, continued to grow but the TriReduce service saw slower volumes as dealers focussed on sending trades to clearing houses ahead of trade compression. ReMatch saw good volumes in emerging markets credit derivatives but Reset experienced slower volumes as a result of the low level of volatility in short term interest rates.

Changing landscape
Significant progress is being made in the plans to strengthen financial regulation, supervision and market infrastructure and ensure efficient, safe and sound OTC markets. It is still too early to conclude exactly what impact the proposed changes in the United States and Europe will have on the operations of banks and their customers. The timetables to implement all these changes have yet to be confirmed but they appear to allow for a phased approach.

We continue to expect that our electronic broking business will be a substantial beneficiary of a shift to more transparent markets arising from increased electronic transaction. Voice broking will continue to be required for more complex, less liquid products which are unsuitable for electronic broking. We anticipate the introduction of electronic broking in parts of the interest rate derivatives markets this year.

We believe that the proposed legislation in the United States recognises that there are alternative methods of trading, both exchange and OTC, and have written into the law a vehicle for OTC trading of swaps through Swap Execution Facilities (SEFs) and we believe we would meet the statutory requirements for SEFs.

Since clearable swaps must be intermediated and cleared, we welcomed the provision that non-discriminatory access to clearing must be preserved for all trading venues. There will be continuing demand for bilateral clearing of those many OTC derivatives that are not suitable for CCP clearing. A clear strategy is needed to build resilience in these markets and ICAP supports the development of automated collateral management networks to streamline the process for both banks and their customers; reducing cost and mitigating risk.