Smith said Tullett was likely to hire staff from rival brokers as the best route to building the swaps business, since it already has a strong swaps platform in Europe. But he stressed that this did not necessarily mean a raid on Icap, as there were many other brokers in the market with talented staff.
But acquisition appears the more likely route to expanding Tullett’s relatively small energy business. Smith declined to name specific brokers Tullett would target, but said the deal earlier this month between Tullett and Starsupply Energy to merge their oil businesses was still intact. The pair formed two new companies, known as Starsupply Tullett Energy in both London and Singapore. Starsupply Energy’s managing director David Kerr will head the global operation from London, and will be assisted in Singapore by Tullett managing director Peter Harvey. Starsupply will own 80% of the joint venture operation in London, and each company will own approximately 50% of the Singapore business.
Smith said expansion in Collins Stewart’s core equities business was also likely outside Europe. Collins Stewart will go live within the next few weeks with its online stock evaluation service, Quest, which is already live in Europe. “We don’t have any execution in Asian stocks or North American stocks, but Tullett does,” Smith said. “So there is a reasonable likelihood that we might be expanding rather than contracting [in equities].”
While there has been speculation that Collins Stewart/ Tullett is likely to make a move for one of the other top-six inter-dealer brokers, industry participants believe Tullett would be better off picking off smaller competitors first.
“Tullett is in the position Icap is in, which is to become a consolidator,” said Smith, implying that other big brokers are not.