* Succession planning is "well-advanced" -company statement
* Nomura banker frontrunner to replace Smith -report
* Tullett shares rise almost 5 percent
(Adds Tullett statement, background on likely replacement)
LONDON, June 3 **Corro on 07766367917/email if
Terry Smith, the chief executive of Tullett Prebon and
a prominent figure in London's financial circles, could leave
the interdealer broker as early as the end of June, a source
familiar with situation told Reuters on Tuesday.
Smith, who has led Tullett since 2006, is stepping away from
the London-based brokerage to focus on Fundsmith, the asset
management firm he founded in 2010, the source added.
Tullett, whose staff match buyers and sellers of currencies,
bonds and other tradeable instruments, confirmed late on Tuesday
that the firm was engaged in a succession planning process.
In a statement prompted by media speculation, Tullett said
the search for Smith's replacement was "well-advanced". The
company's board has agreed that Smith will step down once a
successor has been appointed, it added.
"Further announcements will be made when appropriate,"
The Financial Times newspaper earlier said former Nomura
and Lehman Brothers executive John Phizackerley was the
frontrunner to fill the role.
Smith did not immediately respond to requests for comment
and Phizackerley could not immediately be reached.
Shares in Tullett closed up almost 5 percent at 304 pence,
against a slightly lower FTSE 250 index of small- and
Analysts said the share price rise stemmed from hope that
without Smith, known for his outspoken nature and fierce
rivalry, particularly with Michael Spencer, the head of
interdealer broker ICAP, Tullett may attract a bidder.
Interdealer brokers have been hit hard in recent years, as
new regulations led their traditional investment bank clients to
cut back on risky trading activities.
They 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.
Their troubles have been deepened by the static interest
rate environment, which has dampened volatility and led to a
drop in revenue from products like interest rate swaps.
Tullett said last month that revenue in the first four
months of the year were down 12 percent and it would cut jobs to
save around 20 million pounds a year.
With less business to go round, analysts have said it makes
sense for two or two of the three interdealer brokers below
market leader ICAP - Tullett, U.S.-based GFI and Swiss
firm Tradition - to merge.
A tie-up with BGC Partners, the fifth major
interdealer broker, is unlikely because of a history of legal
disputes between the two.
Smith, aged 61 and raised in London's east end, has worked
in financial services for 40 years, first at Barclays
and later as an analyst at UBS Philips & Drew.
He was fired from his role at UBS after he wrote a
book, "Accounting for Growth", that looked into the accounting
practices of companies, including some of the Swiss bank's
clients. He joined Collins Stewart, part of the firm that would
eventually become Tullett Prebon, in 1996.
Fundsmith, which is owned and controlled by its partners,
had over 2 billion pounds ($3.4 billion) in assets under
management in its Fundsmith Equity Fund as of May 30. It
launched an Emerging Equities Trust last month.
Potential successor Phizackerley left Nomura in 2013. The
investment banking veteran was chief executive of Europe, Middle
East and Africa at the Japanese bank.
($1=0.5968 British pounds)
(Reporting by Clare Hutchison; Editing by Greg Mahlich and