January 6, 2017 / 9:42 AM / 7 months ago

UPDATE 1-TP ICAP gets trading boost from U.S. election

(Adds details, background, shares)

Jan 6 (Reuters) - Financial broker TP ICAP Plc said on Friday Donald Trump's victory in the U.S. presidential election and speculation over higher interest rates led to a surge in trading volumes in the final months of last year.

Shares in the company, formed after Tullett Prebon bought ICAP's hybrid voice broking unit late last year, leapt more than 10 percent in early trading.

TP ICAP said its 2016 revenue was likely to be around 12 percent higher than the 796 million pounds ($986 million) reported in 2015, helped also by the sharp fall in sterling. At least three analysts said the forecast beat their estimates.

TP ICAP said volatility and market activity increased after the U.S. presidential election in November and due to expectations central banks will start raising interest rates, boosting fourth-quarter revenue across all its product lines.

Interest rate derivatives, fixed income and treasury trading saw the biggest boosts, the British interdealer broker added.

Trump's surprise victory has fuelled speculation his plans to boost growth could stoke inflation and push the Federal Reserve to raise interest rates more rapidly than anticipated.

Interdealer brokers have benefited from higher volatility following several unexpected events, including Britain's vote to leave the European Union, in 2016.

This marks an improvement for a sector where trading volumes had shrunk - the underlying reason for Tullett Prebon-ICAP to strike a 1.11 billion pound deal in 2015 to create the world's largest voice broker.

Interdealer brokers, which match buyers and sellers of currencies, bonds and other tradeable instruments, have been hit in recent years by regulation designed to rein in the riskier trading activities of their traditional investment bank clients.

Some products, such as interest rate derivatives, have also been weak since the financial crisis as yield curves in developed markets have progressively become lower and flatter.

TP ICAP did not break down how much revenue it gets in dollars. Tullett Prebon used to earn about 60 percent of its revenue in dollars, leaving it well placed to gain from the slide in the pound following the Brexit vote.

Excluding benefits from currency movements, 2016 revenue would be up 4 percent, TP ICAP estimated.

TP ICAP said Tullett's acquisition of the business from ICAP, which recently renamed itself NEX Group Plc, completed on Dec. 30 and it was working to integrate the units.

It said it would provide performance guidance for the combined business when it releases results in March.

$1 = 0.8078 pounds Reporting by Esha Vaish in Bengaluru; Editing by Rachel Armstrong and Mark Potter

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