The deal with Tullet hangs on the decision of global regulators and is likely to be approved by the end of the year. If given the green light, ICAP will transform into NEX Group, and have the bulk of its business devoted to electronic trading and markets infrastructure.
ICAP claims that under current circumstances; low interest rates, high fixed costs, market volatility and regulation tightening on its banking customers, profits are being eroded. The group trusts that the prospective deal will bring a much needed dynamic element to its operations and enable it to adapt to a market that's swiftly evolving.
"Trading activity since the start of the new financial year continues to be challenging", the global broker said in the Financial Times online. The group's revenue dropped by 6 per cent down to £1.3bn for the 12 months to March, and pre-tax profits took a 6 per cent hit, falling to £89m.
The new deal with Tullet will also enable ICAP to escape its division that accommodates large trades leveraged by traders over the phone. It will become a blend of venture capital investments, post-trade services and electronic trading.
Chief Executive of ICAP, Michael Spencer, calls the development "one of the most exciting eras of the company's 30-year history." Mr Spencer underlined the re-brand as a way to re-assert the group's status as a "fast moving, entrepreneurial pure electronic and post trade leader, well positioned for growth."
While making new investments into technology and services, ICAP reported a 16 per cent fall in profits to £78m in operating profits through its electronic trading arms. This was balanced by more encouraging reports coming out of its post-trade services. Further investment was also made throughout the year into new ventures for ICAP's current operational structures.