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ICAP results: EBS volumes down, post-trade up

ICAP, the London-based interdealer broker, has seen its quarterly revenues decline 4% year on year amid weaker trading on its EBS platform.

In an interim management statement released today (July 13) ahead of its annual general meeting, the firm blames the dip on a larger number of UK public holidays than usual during the quarter. It adds that a comparison with last year’s quarterly revenue was skewed by the heavy volume of trading across asset classes during the May 2010 flash crash.

Average daily volumes on EBS, the group’s major FX and commodities platform, have decreased 3% year on year to $166 billion. The firm has not disclosed EBS revenue figures.

The group highlights robust volumes in its post-trade division, led by Traiana, operator of the Harmony FX network. Last month, Harmony processed an average $800 billion of foreign-exchange transactions daily, compared with $475 billion in June 2010.

Long-term investment in post-trade infrastructure should stand ICAP in good stead to capitalise on regulatory change, the group says. It expects its platforms to meet US Dodd-Frank specifications for swap-execution facilities, meaning that US dealers can execute all products deemed swaps on its platforms.

In a research note released this morning, Barclays Capital calls the small revenue decline disappointing, though it says year-to-date performance is in line with analysts’ expectations.

“ICAP has made a good start to the year despite quieter and more cautious markets in April and May,” the group’s chief executive, Michael Spencer, says. “We will continue to concentrate on growing our business organically [and] work to reduce our costs. The strong market positions we have built underpin our long-term growth.

“For the remainder of the year, we anticipate an uptick in trading as central banks’ inflation and interest-rate strategies start to diverge. We remain comfortable with the current range of analysts’ forecasts for ICAP’s profit for the full year.”

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