5th Feb 2014 08:19
LONDON (Alliance News) - ICAP PLC Wednesday said its third quarter revenue has fallen by 6% on the previous year, blaming reduced investment banking activity and new regulations in the swaps market.
In a statement, the interdealer broker said the new regulatory framework for swaps, under which the derivatives are being driven to swap execution facilities, or SEFs, has been "initially disruptive", but said its expectations for full-year pretax profit on a constant currency basis, excluding acquisition and disposal costs and exceptional items, remain unchanged.
Third quarter revenue fell by 5% on a constant currency basis.
ICAP's electronic markets, however, showed a "robust" performance, particularly in US Treasuries, as the US Federal Reserve started to taper its quantitative easing programme.
However, it warned that continued bank de-leveraging, as well as continuing developments in the regulatory framework for swaps, could affect performance in the final quarter in Global Broking.
ICAP said its ongoing cost-savings programme remains on track.
"Trading activity across many markets was down in the third quarter, compared to the prior year, with a slower December than we anticipated. Although market conditions remain difficult, we saw a modest improvement in activity in January as the on-going debate about the Federal Reserve quantitative easing programme continued," Michael Spencer, chief executive, said in a statement.
ICAP, which in October 2013 launched its SEF, said its SEF is now the market leader in interest rate swaps.
"We are also seeing the tangible benefits of our investments in post trade, as the regulatory push for risk mitigation drives demand for our solutions," Spencer added.
ICAP shares are up 1.1% at 393.70 pence in early trade Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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