ICAP
 |
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| ICAP plc | |
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| Founded | 1999 by merger |
|---|---|
| Headquarters | London, UK |
| Key People | Group CEO Michael Spencer |
| Products | Interdealer brokerage |
| Corporate Website | http://www.icap.com/ |
ICAP is the world largest interdealer broker for over-the-counter (OTC) trading with daily transaction volume of more than $2.3 trillion at 50 locations in 32 countries. The firm offers both voice-driven and electronic brokerage systems plus post-trade services. It provides wholesale brokerage on a range of interest rates, credit derivatives, commodities, foreign exchange, emerging markets, equities and equity derivatives. More than 40 percent of its trading occurs on its two electronic trading platforms, BrokerTec and EBS. [1]
On May 19, 2011, ICAP exceeded $300 billion in electronically traded U.S. credit default swaps.[2] ICAP used their BrokerTec platform for these trades.
On March 22, 2010, ICAP said it would drop its full-service stock-trading business in Europe and Asia after it failed to perform as hoped. The company said it would continue to develop its execution-only business in London and remains committed to expanding its Brazilian and U.S. cash-equities execution-only businesses.[3]
ICAP also provides research and information on global markets for professionals.
History
ICAP, formerly Garban-Intercapital plc, was formed in September 1999 by the merger of Garban plc and Intercapital plc. Exco plc acquired the wholesale broking operations of IPGL in a reverse takeover in October 1998 and changed its name to Intercapital plc. In November 1998, Garban was demerged from United Business Media plc. The Garban-Intercapital merger brought together Garban's government and corporate bonds, interest rate products and money market instruments with Intercapital's interest rate swaps and options, commodity swaps, illiquid securities and foreign exchange options. Garban-Intercapital plc was changed to ICAP plc in July 2001.
Michael Spencer set up Intercapital in May 1986, initially to concentrate on the new interest rate swaps market. As a specialist financial derivatives broking firm, Intercapital grew from the original four people to more than three hundred worldwide, with offices in London, New York, Sydney, Singapore and a joint venture in Tokyo.[4] ICAP uses the BrokerTec platform, which it acquired in 2003, for its electronic trading. In June 2006 ICAP acquired the bank-owned electronic OTC currency trading platform EBS for $775 million in cash and in the same month ICAP plc was added to the FTSE 100 Index.
ICAP's platforms and market experience would be used to help the BPC develop new markets such as energy and new products including wine repos (exportable to European and Californian markets) and receivables that give access to the capital markets for small-sized businesses. In mid-January 2008 ICAP acquired a 15 percent stake in a commodity exchange in Chile, the Bolsa de Productos de Chile (BPC). This stake is valued at CLP$400m ($800,000).[5] With this stake, ICAP becomes the first international investor to have an ownership stake in a Chilean exchange.
ICAP purchased currency trading platform EBS in June 2006.[6]
In 2006, ICAP reported that it had an average daily transaction volume valued at more than $1.5 trillion, the majority of which is electronic. In 2007, average daily electronic broking volume on ICAP exceeded $806 billion, a 27 percent increase year-on-year.[7] In August 2009 ICAP reported that average daily volume on its electronic broking platforms, EBS and BrokerTec, had fallen to $639.9bn in the twelve months ended July 31, 2009.
On Nov. 14, 2008 ICAP and Prism Valuation announced an OTC data deal that would allow Prism Valuation to use Icap data as the main underlying source of OTC information for its services. ICAP also took an equity stake in Prism.[8]
In 2008, ICAP doubled its New York-area stock trading desk to about 40 traders to focus more on equities.[9]
ICAP and Jardine Lloyd Thompson announced in early March 2009 that they would form a joint venture to develop derivatives that insurance companies could use to protect themselves from unpredictable risks such as catastrophes. The venture, to be called ICAP-JLT and equally owned, would initially focus on four types of risks faced by insurers: catastrophe, property, longevity and political.[10]
Bloomberg reported in April 2009 that ICAP Plc had lost 85 percent of its mortgage bond business over six weeks earlier in 2009 in the most active part of the market as Wall Street firms shifted trades to their own electronic network, called Dealerweb.[11]
On June 16, 2009, ICAP announced an agreement to acquire the transactions division of Ocean Tomo. The agreement also provides for a long-term license to the Ocean Tomo brand and mutual referral. The Ocean Tomo transactions business includes the Intellectual Property Live Auction venue, a Private Sale Brokerage unit, the Patent Bid/Ask Platform and “The Deans List”. Ocean Tomo’s Vice Chairman, Dean Becker, and nine employees would be joining ICAP.[12]
ICAP CEO and founder Michael Spencer (see Key People above) was reported by London's Daily Mail newspaper to have collected a 2009 windfall payment of £23m in dividends from his £602m worth of ICAP shareholdings following the release of ICAP's 2008-09 financial statement.[13] The dividend payments would go to Spencer's company IPGL, the paper reported, which owns the ICAP shares plus London-based brokerage Exotix and spread betting firm City Index.
On Aug. 31, 2010, ICAP announced that they will launch an electronic market for Euro interest rate swaps in an effort to reduce operational and system risk in the OTC derivatives markets. The platform will go live on September 6 and will be open to market making banks that have access to a clearing house for interest rate derivatives. [14]
On May 19, 2011, ICAP exceeded $300 billion in electronically traded U.S. credit default swaps. ICAP used their BrokerTec platform for these trades.
In September 2011, it was reported that ICAP was considering a bid for the London Metals Exchange (LME).[15]
In November 2011, ICAP reported in its half-year results to September 2011 that revenue was constant at £867 million and revenue on an underlying basis increased by 3 percent. Electronic revenue increased by 5 percent to a record £160 million (from £152 million in Sept. 2010). Group operating profit was £193 million.[16] ICAP is a Category Two member of the London Metal Exchange. [17]
On Dec. 1, 2011, ICAP announced the appointment of Gary Pettit, formerly of MF Global, as Global Head of Financial Futures and Options. The company also announced it had recruited an additional 25 former MF Global staff across London, New York, Chicago and Sydney.
Electronic Division
In March of 2012, ICAP announced it would restructure its electronic division to separate the reporting lines for the FX and fixed income businesses. Gil Mandelzis was appointed CEO of EBS.
Products and Services
ICAP offers a range of OTC (over-the-counter) financial products and services in energy, foreign exchange, interest rates, credit and equity markets and indices.[18] The firm's self-stated goal is to have a 35 percent share of the overall market revenues and 50 percent of its profit driven by electronic brokerage and its foreign exchange business, according to its 2009 Annual Report.[19]
ICAP Charitable Giving
ICAP is also well known for its ICAP Charity Day, which raises money by donating all revenues and broker's commissions from that day's business. Donations go to a few charities, which increases the impact they may have on those organizations. Since, ICAP's Charity Day began in 1993, the event has raised $119 million (£64.5 million) for more than 820 charities around the world.[20]
On Dec. 9, 2009, the 17th annual Charity Day raised $18.7 million (£11.5 million). [21]
Key People
ICAP Group CEO Michael Spencer began ICAP's main predecessor, Intercapital, to capitalize on the recently established interest rate swaps market, growing the firm from an original four to more than 300 employees globally. He also serves as a director on several other financial firms, including The Engine Group, City Index Holdings and Charles Fulton. Other important personnel include:
- Charles Gregson - Non-Executive Chairman
- John Nixon - Executive Director
- Mark Price - Group Chief Operating Officer
- Iain Torrens - Group Finance Director
- David Casterton - CEO, ICAP London and EMEA
- Douglas Rhoten - CEO, ICAP Americas
- David Rutter - CEO of ICAP Electronic Broking
- Gil Mandelzis - Co-Founder and CEO of Traiana
- Mark Beeston - CEO of ICAP Post Trade Risk Business
- Duncan Wales - Group General Counsel
- Gary Pettit - Global Head of Financial Futures and Options
Research & Published Works
Latest results
ICAP's 2010 annual report revealed that group revenue from continuing operations rose to £1,605 million for the 12-month earning period ended July 31, 2010. Other highlights can be found on the company website. [22]
References
- ↑ History-About the Group. ICAP.
- ↑ {{{name}}}. Fox Business.
- ↑ ICAP Drop Full-Service Stock Trading. The Wall Street Journal.
- ↑ History-About the Group. ICAP.
- ↑ "ICAP Acquires 15 percent of Bolsa De Productos de Chili”. ICAP/BDP.
- ↑ Spot FX. ICAP.
- ↑ "ICAP Broking Volumes Reach Record Levels in 2007”. ICAP.
- ↑ Icap and Prism Valuation strike OTC data deal. Finextra.
- ↑ Big Fixed-Income Interdealer Broker Builds Equities Desk. Traders Magazine.
- ↑ Icap And JLT Plan Derivative Venture. FT.com.
- ↑ ICAP Loses 85% of Mortgage Bond Trading to Dealerweb. Bloomberg.com.
- ↑ ICAP Latest News. ICAP.
- ↑ Spencer to pocket £23m in Icap payout. Daily Mail.
- ↑ ICAP To Launch Electronic Markets For Euro Interest Rate Swaps. Wall Street Journal.
- ↑ Icap ‘considering’ bid for LME. Financial Times.
- ↑ ICAP plc half Year Results to 30 September 2011. ICAP.
- ↑ LME Base Metals. ICAP.
- ↑ ICAP in Ten. ICAP.
- ↑ ICAP in Ten. ICAP.
- ↑ About Charity Day. ICAP.
- ↑ $18.7 Million Raised on ICAP's 17th Annual Charity Day. RTT News/press release.
- ↑ Annual Report 2010 Highlights. ICAP.
