ICAP hit by slow progress of reforms

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ICAP, the world’s largest interdealer broker, said it was cutting both jobs and its forecast for full-year profit because of weaker trading linked to the eurozone crisis.

Chief executive Michael Spencer also said yesterday that regulators were making slow progress on reforms that could boost earnings at ICAP and rival firms.

ICAP said profit for its year to end-March should be toward the upper end of analyst forecasts in a £336-£358m range, down from its prediction in November of a profit of £358-£390m.

“The continued uncertainty in the eurozone and constraints on market liquidity, together with customers reducing risk before the year-end, led to more subdued volumes,” the bond, currency and swaps broker said.

ICAP said while it was investing and hiring in growth areas such as financial futures and commodities, it had cuts costs elsewhere by £20m so far in its 2011/12 year.

A month ago, British rival Tullett Prebon said it was to take new cost-cutting measures and that previous steps to reduce costs would lead to a £10m charge for its 2011 results.

With ICAP having been widely expected to cut profit guidance, investors cheered the news it expected an outcome toward the top end of market forecasts.

In September 2010, ICAP launched iSwap, an electronic swap system, in anticipation of Dodd-Frank reforms in the United States that will force swaps to be traded electronically.

Implementation of the bill is taking longer than expected.

Mr Spencer said the lack of clarity was holding back his business.