ICAP reviews cash equities

ICAP has confirmed it is conducting a strategic review of its agency broking business having announced a profit warning earlier this month.

Michael Spencer, Icap’s founder and chief executive, decided in the wake of Lehman Brothers’ collapse that he wanted to take advantage of a downturn in the cash equities market.

Icap recruited vigorously at the time and hired Glenn Poulter, previously head of European equities trading sales at Citi, and Daryl Bowden, of UK broker Execution.

But cash equity volumes have remained low, 38 per cent down in Europe and 24 per cent in the America’s for 2009, and the operation failed to grow.

The performance has been a blow for Michael Spencer who prides himself on developing growth opportunities. Analysts believe he will wind the business down and have given him credit for pulling the plug instead of waiting for the markets to turn.

Vivek Raja analyst at Panmure said: “Michael Spencer is not afraid to spend money to expand into new areas but it probably hasn’t worked this time. It’s neither a core nor a strategically important part of Icap’s business.”