ICAP in November entered into an £1.1 billion ($1.63 USD) agreement to sell its brokerage business to Tullett Prebon. Although ICAP will retain some ownership of the combined company, the move marks a decisive shift away from ICAP's origins as a voice broker. Going forward, the company will focus primarily on two main lines of business: post-trade services and electronic markets.
The new ICAP will look more like a markets infrastructure company like CME Group or Deutsche Boerse than a conventional inter-dealer broker. The company will operate two large electronic markets, EBS and BrokerTec, and will provide various post trade processing and risk management services through subsidiaries such as Traiana, TriOptima and Reset. The new ICAP also will retain Euclid Opportunities, which functions like an internal venture capital fund and owns small stakes in several emerging financial technology companies.
“ICAP NewCo will emerge from this Transaction as a pure post-trade services and electronic trading group," commented Michael Spencer, ICAP's chief executive. Spencer added that this deal is the "next natural step" in the company's evolution, and will position the company "to capitalize on the increasing demand for electronic and post trade products and services.”
The merged brokerage business will rank as the largest player in the broking of derivatives and other financial products, with more than 5,000 staff and leading positions in a wide range of financial products. John Phizackerley, CEO of Tullett Prebon, said the deal will deliver "significant cost synergies" and gives the company "greater client and product coverage and a stronger global footprint."
