(Adds details, background)
By Alex Chambers
LONDON, June 23 (IFR) - British interdealer broker ICAP Plc
has begun staff cuts which could involve the departure
of 100 brokers in its Global Broking business, market sources
said on Monday.
In its full-year results announced in May, the company said
the performance of Global Broking was being hit by structural
and cyclical factors, highlighting a decline in investment
banks' fixed income, currencies and commodities (FICC)
ICAP's global head of communications Serra Balls confirmed
the company was seeking savings but declined to give any figures
for staff reductions.
"Market conditions remain challenging and, as we have
previously stated, we are looking to achieve 60 million pounds
($102 million) of cost savings across our business," Balls said.
"As part of this we are reviewing our Global Broking
business to ensure it is properly aligned to the new market
structure and operates in the most efficient manner."
Interdealer brokers, which match buyers and sellers of
currencies, bonds and other tradable instruments, have been hit
hard in recent years, as new regulations led their traditional
investment bank clients to cut back on risky trading activities.
Many banks reported falling trading revenue at their
investment banking divisions in the first quarter of 2014, with
fixed income, commodities and currencies taking the brunt of the
Interdealer brokers have also faced sweeping reforms to
their own industry, as regulators push more derivatives trading
onto electronic platforms in a bid to make the market more open
and safer - eroding the need for traditional "voice" brokers of
the sort being affected by ICAP's cuts.
One broker said of voice broking: "It's a dying industry,
volumes are dying. Its being regulated out of existence ...
Everything is moving electronic."
In recent years ICAP has been trying to reposition its
business towards electronic broking and post-trade services,
which now account for two-thirds of operating profit.
The Global Broking division is active in the wholesale
markets in interest rate products, credit, commodities, foreign
exchange, emerging markets and equity derivatives. It employs
around 2,000 brokers.
Revenue at the division dropped by 8 percent to 920 million
pounds in the year to March 31. ICAP's total revenue fell by 5
percent to just under 1.4 billion pounds.
($1 = 0.5876 British Pounds)
(Additional reporting by Clare Hutchison; Editing by Helene
Durand and David Holmes)