Nex Group, the trading technology firm run by City grandee Michael Spencer, said today profitability at its Optimisation business will be hit as it prepares for Mifid II rules to come into effect.
The company, which was formed out of a merger of the voice-broking arm of Nex and Icap last year, said its Nex Optimisation arm will increase investment in sales activities and marketing campaigns in relation to the incoming Mifid II rules, which will hit profit margins.
"The combined effect of these investments, together with the ongoing low volatility impacting the Reset business, will have a temporary impact on Nex Optimisations' operating profit margin in the first half, which is now expected to be approximately 20 per cent," it said.
"The division's operating profit margin is expected to normalise in the second half of the year."
However, it added that its so-called transformation programme is on track, with more than £25m of cost savings identified.
"These investments will enhance the potential for Nex Optimisation," added Spencer.
"We remain committed to the financial aspirations we set out earlier in the year to achieve compound revenue growth of seven per cent to 10 per cent and divisional operating margin for Nex Optimisation and Nex Markets of more than 40 per cent by 2019/2020."