Icap thrives on market volatility

Icap, the largest inter-dealer broker of over-the-counter derivatives, has 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.

UK-based Icap estimated that the global inter-dealer market for OTC 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.

Icap chairman Michael Spencer highlighted the integration of BrokerTec, the electronic bond-trading platform, as a priority for 2003. Icap’s acquisition of BrokerTec was completed on May 7. Icap’s combined daily transaction volumes exceed $500 billion, of which 40% is electronically traded, said Spencer.