TP ICAP marks drop in Global Broking revenues in Q3 2020
Interdealer broker TP ICAP PLC (LON:TCAP) today published a trading statement for the third quarter of 2020, with Global Broking revenues down markedly from a year earlier.
- During the three months to end-September 2020, Global Broking revenue amounted to £260 million, down 19% from the year-ago quarter.
- Total Energy & Commodities revenues fell 15% year-on-year, whereas Institutional Services revenues for the third quarter of 2020 were 16% lower than a year ago.
- On the brighter side, Data & Analytics revenues for the third quarter of 2020 were 9% higher than a year ago, at £36 million.
- Across all segments, revenues for the quarter to end-September 2020 amounted to £388 million, down 19% from the third quarter of 2019.
TP ICAP reported revenue for the first nine months of £1,378m and only 1% lower than the prior year on a constant currency basis (2% lower as reported).
During the first nine months of 2020, Global Broking revenue was 5% lower than the prior year on a constant currency basis (6% lower as reported). This reflected weaker trading volumes in the third quarter compared with the strong prior year comparative and followed the strong H1 performance dominated by the macroeconomic backdrop that was characterised by the emergence of the COVID-19 pandemic.
The company continued to invest in the electronification of its Global Broking business, and the aggregation of liquidity across its brands. In particular, it has made strong progress with its hub strategy.
FXO Hub, the division’s FX options platform launched earlier this year, has gained rapid traction, boosting its estimated market share in this segment by approximately 5 percentage points (an increase of c.30%). TP ICAP has also progressed on its Rates Hub strategy, by extending the ICAP brand’s market-leading interest rates options (“IRO”) platform to the Tullett Prebon brand.
Other electronic solutions within the division have also performed well in 2020, notably TP ICAP’s eRepo platform (electronic repurchase agreements for EUR and GBP), CrossTrade (intra-fund crossing tool for asset managers) and its suite of Risk Management Services (“RMS”), designed to support post-trade portfolio optimisation.
TP ICAP has also commented on its proposed acquisition of Liquidnet noting that the deal remains a unique opportunity for TP ICAP. The acquisition accelerates delivery of the three pillars of TP ICAP’s strategy – electronification, liquidity aggregation and diversification, and is expected to transform TP ICAP’s earnings profile and growth trajectory.
The enlarged group’s earnings mix will progressively reflect the contribution from higher growth and higher margin businesses, including electronic D2C Credit and Rates trading and Data & Analytics.
In terms of outlook, TP ICAP says:
“Together with market volatility that we anticipate resulting from the US elections and Brexit we expect our full year revenue guidance to be in line with 2019 on a constant currency basis”.