(Clarifies shareholdings in para 5)
By Helen Bartholomew
LONDON, Dec 30 (IFR) - ICAP has completed the sale of its
global hybrid broking operations and began trading as a more
streamlined company called NEX Group on Friday. Tullett Prebon,
which acquired the operations in an all-share deal worth
£1.28bn, started trading as TP ICAP.
The deal saw Tullett issue 310m new shares to NEX Group
shareholders in exchange for the broker's hybrid voice broking
operations including iSwap, Fusion and the ICAP swap execution
It creates one of the world's largest brokers by market
value and puts Tullett on a firm footing to compete with global
broking firm BGC Partners.
TP ICAP shares rose 3% to 425p on Friday morning following
completion of the deal, giving it a market capitalisation of
£2.35bn (US$2.89bn). BGC Partners, which acquired GFI in early
2015, was valued on Thursday at US$2.86bn.
Following completion of the deal, shareholders of NEX Group
own 56% of TP ICAP's enlarged share capital.
For NEX Group, the deal is transformational in moving
operations away from ICAP's traditional broking roots and
towards financial technology.
"Today we complete our transformation as we officially
launch NEX Group, a technology services company ready to
capitalise on the enormous opportunities that technology affords
to financial markets in the 21st century," said Michael Spencer,
CEO of NEX Group.
From its roots as a four-person start-up 30 years ago, ICAP
rose to become one of the leading global brokers. A widespread
shift to electronic trading and a reduction in global broking
activity, however, hit revenues in traditional businesses.
ICAP's global broking revenue fell 12% to £694m for the year
ended March 2016, while electronic markets revenue was flat at
£262m and post trade risk and information revenue was up 7% at
In its new guise, NEX Group aims to offer services
underpinning the entire lifecycle of trades and has structured
its operations along four key business lines.
NEX Markets will operate established electronic trading
platforms under the EBS Brokertec brand for clients to access
liquidity across fixed income and foreign exchange markets. Seth
Johnson, former head of strategy at ICAP, has been appointed CEO
of the markets business.
NEX Optimisation, headed by Jenny Knott, offers cloud-hosted
services for clients to optimise resources and mitigate risk.
The portfolio includes post-trade derivatives infrastructure
provider, TriOptima, which has compressed more than US$890trn of
over-the-counter derivatives notional through its triReduce
service, and pre-trade credit checking business, Traiana.
NEX Opportunities incorporates the Euclid Opportunities
business that invest in financial technology. The fund recently
participated in a US$13m funding round for OpenGamma, which
provides tools for derivatives participants to compare margin
requirements across cleared and uncleared contracts. Other
financial interests include AcadiaSoft, Digital Asset Holdings
and Abide Financial.
ICAP's FCA-registered exchange, ISDX, will be rebranded as
NEX Exchange, and will continue to compete with AIM for small
and mid-cap UK listings. The exchange is currently home to
Arsenal Holdings as well as brewing companies Adnams and
Shepherd Neame and Kent-based winery Chapel Down.
NEX will continue to operate its FX options joint venture
with Tradition following the transaction. VolCall, which was
launched in 2013, provides hybrid trading across G10 options and
will go head-to-head with Tullett's new service.
Tullett has teamed up with exchange technology group GMEX to
develop a hybrid voice and electronic platform. The service
integrates GMEX's request for quote technology with Tullett's
existing central limit order book capabilities.
Shares of NEX Group traded up almost 2% in morning trading
(Reporting by Helen Bartholomew; Editing by Steve Slater)