Icap shuts London weather desk

UK inter-dealer broker Icap has exited the European weather and environmental derivatives market, an Icap spokesman told RiskNews ' sister publication EPRM today. “The European markets for these products are not developing at a large enough rate to warrant commitment,” he said.

Icap’s London-based desk comprised Clive Murray, Katleen de Cock and James Emanuel. Icap is presently “consulting” with the team of brokers, the spokesman said.

Although Icap has left the markets in Europe, the broker still offers US weather and environmental products through its subsidiary APB Energy. In October 2002 Icap bought Kentucky-based APB for an initial cash payment of $15.5 million, with further payment contingent on the future earnings of the business. APB offers gas, electricity, weather, environmental and coal derivatives on its online platform, True Quote, and through traditional voice brokering.

Other desks within Icap’s energy business, particularly UK electricity, oil and oil products, have witnessed increasing business over the past year, the spokesman said, adding that the APB integration has proved successful since there were no overlaps of businesses.

Earlier this week Icap reported a 39% rise in profits to £123.7 million for the year ended March 31. The firm’s turnover rose 26% to £664.3 million as the firm thrived on market volatility, especially in medium-term interest rate markets. Deteriorating credit also boosted Icap’s credit derivatives dealing business.

The broker also estimated the global inter-dealer market for over-the-counter derivatives, fixed income, money market products, foreign exchange, energy, credit and equity derivatives grew by around 10% last year, generating revenues of $4.3 billion. Icap claims a 23% share of that business.