ref="http://www.cityam.com/company/icap">ICAP chief executive Michael Spencer slammed Eurozone politicians as “deluded” for their “red herring” plans to tax financial transactions yesterday, as he said trading had stayed strong over the past six months.
The interdealer broker said its electronic platforms trading foreign exchange and interest rate swaps continued to grow fast while its Singapore team had been rebuilt after a rival poached its staff.
Icap offered a buoyant trading update for the half year to September, saying revenues were “marginally ahead” of last year’s £867m as its electronic platforms saw 18 per cent growth.
Its one-year-old euro interest rate swap trading platform i-Swap had “beaten our early expectations,” Spencer said, attracting trades worth more than €590bn (£530bn) to date.
But Icap said that as market volatility spiked in August, its customers deserted the new electronic technology, reverting to the more familiar voice broking platform.
However, it said clients were now starting to return to the platform.
It added that i-Swap had secured equity stakes from four of the major investment banks – Barclays Capital, JP Morgan, Deutsche Bank and Bank of America Merrill Lynch – in a move Barclays Capital analysts said would incentivise the banks to put volume through the platform.
Spencer said he had made no plans to change or move Icap away from the UK in light of the growing risk that Europe may impose a tax on all financial transactions.
He blasted the move as “another genuine piece of Eurozone delusion”.
“If they genuinely think they can extract €50bn out of a financial tax they are genuinely totally mistaken,” he said, arguing that it was virtually impossible to raise such a sum from the financial markets.
“I haven’t made any contingent plans as I simply don’t see it happening. It is a red herring. It is borderline laughable,” he added.
Analysts said Icap’s growth into Brazil, where it expects to make a second £11-12m full-year loss this year, was worse than expected, but said it remained a small part of Icap’s overall business.