IAP.L Regulatory News (IAP)

ICAP plc Trading Statement

London, 25 September 2013 - ICAP plc (IAP.L), a leading markets operator and provider of post trade risk mitigation and information services, announces its trading update ahead of the close period for the half year ending 30 September 2013.

Activity levels in global financial markets were encouraging at the start of the financial year driven by a number of macroeconomic developments and greater clarity around financial regulatory reform. However, trading began to ease off in July followed by a more significant decline in August. Whilst there has been a modest improvement in September overall volumes remain relatively subdued.

During the first half, increased volatility in US dollar markets stimulated trading activity in US Treasuries and interest rate swaps. In contrast, more muted volatility in euro markets negatively impacted euro/USD activity on EBS, its largest currency pair, as well as euro interest rate volumes in Global Broking. Group revenue for the six months ending 30 September 2013 is expected to be around 1% lower than the previous year.

ICAP continues to benefit from its ongoing cost reduction programme and given the uncertain market environment plans to accelerate a number of initiatives. Management expects profit before tax1 for the first half to be in line with the previous year.

In a separate press release today, it was announced that ICAP Europe Limited, has reached settlement agreements with the Financial Conduct Authority (FCA) and the U.S. Commodity Futures Trading Commission (CFTC).

Michael Spencer, Group Chief Executive Officer, said: "During the first half we have seen some improvement in the global financial environment benefiting activity in certain markets. This has been offset, however, by a steeper than expected slowdown over the summer months. We remain focused on delivering our ongoing cost savings programme as well as continuing to invest in new platforms, products and services which will drive our growth over the coming years.

"Earlier this month we filed our Swap Execution Facility (SEF) application, a major milestone for ICAP. While the introduction of SEFs may give rise to short term market uncertainty, I believe that with our expertise and experience in operating regulated markets, the quality of our technology, and the depth of our customer relationships, we look forward to our SEF becoming a leading facility for trading in the new regulated landscape."

Business Performance

US Treasury volumes traded on the BrokerTec platform reached an all-time high of $215 billion per day in June prompted by the quantitative easing tapering debate in the US. The prospect that the Fed will begin tapering later this financial year and the reduction in internalisation of government debt is expected to support future activity levels on BrokerTec. Trading on the EBS platform has been negatively impacted by the extremely tight range in the euro/USD pair in contrast to the higher volatility seen in previous years. In addition, in the second quarter there has been reduced activity in yen as the financial markets absorb the significant changes to Japanese monetary policy announced earlier in the year. The EBS Direct pilot programme, ICAP's new relationship based disclosed liquidity service, is progressing well with more than 275 customers signed up.

The performance of the Global Broking division has been mixed. Trading activity in US interest rate derivatives business benefited from the steepening of the US Treasury yield curve. The equity derivatives business and the financial futures and options businesses also continued to deliver strong growth. Activity in credit products remains depressed in line with lower industry volumes as higher rates have impacted new issuance. In addition, market volumes in commodity products suffered from lower volatility in certain markets and the withdrawal of some investment banks from this area.

The performance of the Post Trade Risk and Information business benefited from further growth at Traiana as it increased its market share. Revenue at TriOptima has been broadly in-line with last year as banks have focused their resources on preparing for operating in a new SEF environment. The performance of Reset was held back by the lack of volatility at the very short end of the yield curve, which as previously highlighted, restrains demand for this risk mitigation service.

In September, ICAP filed its application to be a SEF with the CFTC in compliance with the Dodd-Frank Act. The ICAP SEF plans to operate markets across multiple asset classes, including interest rate swaps, credit default swaps, equity derivatives, commodities and NDFs. It is too early to forecast the impact that the introduction of SEFs will have on activity in the short term as the new rules take effect and customers determine how to operate in the new environment. ICAP will offer trading in cleared and uncleared swaps and intends to operate central limit order books via iSwap and request for quote systems, as well as offering block trade capabilities, electronic crossing and execution via brokers.

Other items

ICAP's business model continues to convert profits into cash efficiently. In June, the Group refinanced its previous core bank facility into a new three year, £425m committed revolving credit facility with eight banks and more recently the Group entered into a £50m 364-day term loan facility. ICAP anticipates that at 30 September 2013, its gross debt:ebitda leverage will be approximately 1.7x.

The FCA and CFTC settlement costs and the related legal and professional fees incurred by the Group will be treated as exceptional items. To date, ICAP has not provided for any penalty or settlement costs payable to the US Department of Justice in respect of the on-going discussions in respect of yen Libor.

ICAP expects to publish its results for the half year to 30 September 2013 on 13 November 2013.

Conference call

A conference call for analysts and investors will be held at 2.15pm (BST) today.

To dial in, please call +44 (0)808 1090700 or +1 (212) 9996659

The access password is ICAP 2:15

Contacts

Notes:

1. Profit before tax is defined as profit before tax from continuing operations before acquisition and disposal costs and exceptional items.

2. This document contains forward-looking statements with respect to the financial condition, results and business of ICAP plc. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. ICAP plc's actual future results may differ materially from the results expressed or implied in these forward-looking statements.