(Adds details, background, shares)
Jan 6 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)