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TP ICAP looks to buy trading software platform Trayport – Financial Times

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TP ICAP, the world’s largest interdealer broker, has confirmed it is interested in purchasing Trayport, the UK commodity trading software platform put up for sale by its owner Intercontinental Exchange.

It came as TP ICAP announced it had cut 175 jobs, mainly support staff, in the first six months of the year from the first moves to integrate the ICAP broking business it bought for £1.3bn.

Trayport has drawn interest from some of the world’s largest exchanges and trading venues after ICE said it was for sale last month. It is the pre-eminent platform connecting commodities traders, brokers, utilities and resource companies to the market’s electronic trading and clearing systems.

John Phizackerley, TP ICAP chief executive, said: “We’re always interested in assets that come on to the market. Like many participants, we’ve had a look and we shall wait and see. While we’re busy on integration, we have to carry on running business as usual . . . that includes eyeing up assets that come available in the market.” He would not comment further. 

ICE, the US exchanges operator, was forced to sell the unit by UK antitrust regulators after rivals complained its ownership was anti-competitive. ICE had bought it from BGC Partners, the US interdealer broker, in late 2015 for $650m. Nex Group has also eyed the asset but Michael Spencer, its chief executive, doubted he would buy it.

Revenues for the six months at TP ICAP to June 30 rose 3 per cent on a constant currency basis, to £925m. Underlying operating profits rose 23 per cent to £144m. Pre-tax profits, after acquisition and disposal costs, fell from £86m to £71m on a pro forma basis. Underlying operating profit margins rose to 15.6 per cent from 14.1 per cent.

TP ICAP described the trading conditions on which it depends as “mixed”, with subdued periods interspersed with bouts of volatility in March and June. Analysts at Citi said the results were “a touch ahead” of the consensus for the group’s full-year earnings.

“Our energy and commodities business was basically flat. That was an outperformance compared to some of our peers, certainly compared to the banks, some of whom have had tough trading conditions,” said Mr Phizackerley.

The interdealer broker said it had already made £8m out of the savings of £10m it had targeted in 2017 from the deal integration. The group acquired more than 1,500 brokers, data and trading venues when it bought ICAP’s global broking business in December.

More jobs cuts are likely to come next year, it added. It is running two IT systems to meet January’s introduction of Mifid II, Europe’s new markets legislation, and it will move to one platform once the rules are in force. “We’re off to a good start but we’re not done yet,” Mr Phizackerley said.

It is also moving out of unwanted properties around the world and decommissioning the ICAP technology it inherited. It incurred a further £15m in costs in the period, spending to meet requirements for Mifid II, as well as developing a new IT centre in Belfast.