12 February 2009 News

 

ICAP: Electronic volumes down but market position strong

In an interim statement ICAP has stated that volumes in electronic broking have fallen recently, but stated that its market position in both foreign exchange and fixed income remains strong and has the potential to grow as the banks focus more on "flow" businesses.

Total average daily electronic broking volume on ICAP's OTC electronic broking platforms EBS and BrokerTec in the 12 months to January 2009 was $780bn, down four percent on the corresponding period 12 months earlier. The interdealer broker said: "We continue to invest in the expansion and development of the Group's electronic systems to keep pace with customer demand."

In the back office, ICAP says that it sees: "Significant demand both within and beyond ICAP's existing customer base to improve the efficiency of post-trade processing and to reduce the capital allocated to existing positions. The regulatory authorities are also keen that the infrastructure behind the OTC markets is as robust as possible and the banks have made a series of commitments to improve post trade processing in the OTC derivatives markets."

The statement continues, "ICAP is building a range of other post-trade processing, portfolio compression and reconciliation and risk management services - Traiana, TriOptima and Reset. All three are experiencing significant growth in the volumes that they process."

ICAP acknowledged that in electronic markets, algorithmic trading is accounting for an increasing share of trading volumes wehich it sees as an opportunity in areas such as equities and futures. It concluded noting that, "There is potential for further consolidation of market share among interdealer brokers as traders concentrate their business in the largest, deepest and most reliable liquidity pools."