November 13, 2013 / 10:38 AM / 5 years ago

ICAP says no reason to believe its brokers linked to forex probes

LONDON (Reuters) - ICAP, the world’s largest interdealer broker, said on Wednesday it had no reason to believe any of its brokers are linked to an alleged manipulation of foreign exchange markets under investigation by financial watchdogs.

A sign is seen on an ICAP office in the City of London September 25, 2013. REUTERS/Toby Melville

Regulators in the United States, Asia and Europe are looking into possible manipulation of foreign exchange benchmarks, used to price trillions of dollars worth of investments and deals and relied upon by companies, investors and central banks.

The company, which makes money by matching buyers and sellers of bonds, swaps and currencies, said the bulk of its business in foreign exchange is conducted on electronic platforms rather than through brokers on the telephone.

On a conference call following publication of its half-year financial results, the company was asked whether it believed any staff could be connected to the alleged currency rate fixing.

Group General Counsel Duncan Wales said: “We have no current reason to believe that.”

The foreign exchange allegations have echoes of the Libor rate rigging scandal, where six institutions have been punished, including five banks and ICAP. In the Libor case, prosecutors and regulators have said some of ICAP’s brokers acted as conduits for information at the center of the scheme.

ICAP was fined $87 million by British and U.S. authorities in September over the role of its brokers in Libor-rigging. Criminal charges were also filed against three of its former employees.

ICAP’s foreign exchange and money markets business includes dealing in spot and forwards, cash products and a joint venture in FX options, as well as its electronic trading platform EBS.

The firm made about a fifth of its revenues from foreign exchange and money markets in the six months to September 30, with the largest portion coming from trading on EBS.


Across its businesses, ICAP reported a 1 percent fall in half-year revenue on Wednesday, slightly behind analyst expectations, as lower volumes in euro markets offset increased volatility in U.S. interest rates.

The broker said revenue for the six months to end September was 736 million pounds, compared to 746 million pounds a year earlier. Analysts had expected first half revenue of 742.5 million pounds, according to Thomson Reuters data.

Despite the revenue fall investors greeted the results positively, sending shares in ICAP up 5.7 percent by 4.15 a.m. ET, ahead of a 0.5 percent fall in the FTSE 250.

Last week, rival Tullett Prebon said its revenues had fallen 9 percent in the third-quarter.

ICAP’s pretax profits came in at 139 million pounds, up 1 percent from 2012. Chief executive Michael Spencer said the numbers were boosted by cost-cutting.

Statutory pre-tax profits fell 41 percent to 40 million pounds for the period, dragged down by settlement payments and legal fees connected to Libor-related investigations.

The firm continues to cooperate with the U.S. Commodity Futures Trading Commission’s inquiries into the setting of the ISDAfix benchmark, ICAP also said.

ICAP also said it has been added as a named defendant to three civil litigations against Libor and Tibor setting banks in the United States. ICAP’s name was added earlier this year, and the company intends to defend the claims vigorously, it said.

additional reporting by Clare Hutchison; editing by Sinead Cruise and Jane Merriman

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