TP ICAP Regulatory News (TCAP)

18 Nov 2011 07:00

18 November 2011Tullett Prebon plcInterim Management Statement

Tullett Prebon plc (the "Company") is today issuing its Interim Management Statement in relation to the period from 1 July 2011.

Business Update

The world's financial markets have remained unsettled, and since the half year there have been periods of market volatility and heightened activity, particularly in the first two weeks of August, although there have also been periods of more subdued activity.

Revenue in the four months July to October of £315m was 8% higher than reported for the same period last year. Using constant exchange rates, and adjusting for the impact of the closure in 2010 of the satellite offices in North America and for the recent acquisition of Conven§£o, revenue was 9% higher. Market activity slowed towards the end of the period, and revenue in the month of October was 3% lower than in October 2010. The trend seen in October has continued into November.

Year to date (January to October) revenue of £769m is unchanged from that reported for the same period last year. Using constant exchange rates, and adjusting for the impact of the closure of the satellite offices and the acquisition of Conven§£o, revenue was 2% higher.

The acquisition of Conven§£o completed on 9 August 2011. The business is focused on providing a traditional inter-dealer broking service to clients from a single location in Sao Paolo, Brazil, and has performed in line with our expectations since the completion of the acquisition.

The Company has reached agreement to acquire Chapdelaine & Co., a leading municipal bonds broker based in New York, for a consideration of $10.2m to be settled in cash on completion. The sellers of the business are Chapdelaine Municipal Brokers Inc. and Chapdelaine & Co. Municipal Securities Inc. The acquisition is expected to complete before the end of the year.

Since 30 June, £5.5m of costs have been incurred in relation to the ongoing major legal actions between the Company and BGC. Year to date, the net charge from the costs and income relating to these major legal actions is £4.7m (H1 2011: net credit £0.8m, Full Year 2010: net charge £7.7m). We expect to know the outcome of the arbitration on the claim by BGC Market Data alleging that the Company misappropriated data supplied to its information sales subsidiary, before the announcement of the preliminary results for 2011.

On 20 October the European Commission (EC) tabled proposals aimed at making financial markets in Europe more efficient, resilient and transparent. These proposals, which consist of a regulation (MiFIR) and a directive (MiFID II), are broadly consistent with the proposals issued in September last year, and contain provisions, amongst others, on mandatory clearing requirements, trade reporting, and permissible trade execution venues for financial instruments including derivatives. The proposals now pass to the European Parliament and the Council for negotiation and adoption. The detailed technical rules will be finalised by the European Securities and Markets Authority, and it is envisaged that MiFIR and MiFID II will come into force during 2014.

In the United States, we now expect the final detailed rules and regulations to apply the principles of the Dodd-Frank Wall Street Reform and Consumer Protection Act to be issued at the end of the first quarter next year, with implementation likely to be phased in starting in the second half of next year.

As we have previously commented, we agree with the objectives and support the direction of these proposed reforms. We believe their introduction will be positive for our business as the proposals formalise the role of the intermediary in the OTC markets.

We have continued to develop our electronic broking capabilities and we are developing platforms to provide clients with the flexibility to transact either entirely electronically or via the business' comprehensive voice execution broker network, within both the current trading landscape and under all currently anticipated regional regulatory environments.

In September, we announced the early support from clients for the forthcoming launch of tpSWAPDEAL, our hybrid interest rate swap trading platform, which in addition to standard electronic platform functionality, has a number of features designed to replicate and enhance the advantages of the current voice market. We are now in the process of connecting clients to the platform.

The Company's financial position remains strong.

Enquiries:

Nigel Szembel, Head of Communications, Tullett Prebon plc

Direct: +44 (0)20 7200 7722

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