ICAP’s Spencer Says Trump Is ‘Undoubtedly’ Good for BusinessBy
Revenue from post-trade risk and information business rose 19%
Dismantling Dodd-Frank will be good for marketplace: Spencer
ICAP Plc’s chief Michael Spencer says a Donald Trump presidency will boost U.S. spending while dismantling what he calls counterproductive regulations, moves that will “undoubtedly” be good for business.
ICAP, soon to transform into market operator and trading services firm NEX Group Plc, benefits from rising volatility that leads to higher trading volume. That would be a change from recent years, when tepid economic growth and muscular central bank policies subdued interest rates and price fluctuations.
“Trump’s arrival, unexpected to many, has certainly triggered an increase in volatility and trading activity across the financial spectrum,” Spencer said today in a conference call. “He is undoubtedly a high-spending, low-taxing aspirant president, and that bodes for a period considerable volatility across the foreign-exchange, interest-rate and equity market.”
More spending from the federal government could drive up interest-rates and spur a realignment of prices across asset classes, and Trump has vowed to tear down six years of financial regulation put in place after the 2008 financial crisis. While the rules clamped down on banks’ riskier trading activities, they were seen as taming buying and selling overall.
“A repeal of Dodd-Frank would be absolutely a good thing for the marketplace as a whole,” Spencer said. Trump’s outlook on regulatory issues “may be much more favorable for the banking sector and that clearly would be good news for us. Anything that is good for our clients is good for us.”
Subdued trading volumes have weighed on ICAP in recent years. The company said in a statement that revenue from what will soon be known as NEX Group rose 11 percent, giving investors a peek at the technology business that will emerge after Spencer finishes selling the company’s voice brokers.
ICAP got the nod from U.K. regulators on Tuesday to sell its voice-broking business to Tullett Prebon Plc, taking the brokerage that Spencer founded 30 years ago a step further in its transformation. Spencer said he remained optimistic that the deal will complete by the end of the year.
The shares fell in London after Trump’s win helped ICAP rally to a 16-month high through yesterday. ICAP said profit before tax at what will become NEX almost doubled in the six months that ended in September to 66 million pounds. Revenue from a key business, post-trade risk and information, increased 19 percent.
ICAP also benefited from Brexit’s jolt to the markets. ICAP has said its voice-broking unit benefited from the volatility triggered by Britain’s vote to leave the European Union in June, despite low interest rates and reduced trading by banks.
— With assistance by Will Hadfield