TP ICAP Said to Report Broker Patel to the FCA Over ExpensesBy , , and
Rupesh Patel listed as ‘inactive’ on the U.K. FCA’s register
Brokerage firms have tightened expense policies recently
TP ICAP Plc has removed equities broker Rupesh Patel from his role and reported him to the U.K. regulator after issues arose surrounding his claims for business expenses, according to people with knowledge of the matter.
Patel, a director at the ICAP division of TP ICAP, stopped working in the last few weeks, according to one of the people, who declined to be identified because the matter is private. Patel is listed as “inactive” on the Financial Conduct Authority’s list of people authorized to work in the industry with effect from Feb. 2. TP ICAP has reported Patel to the FCA over the expenses claims, one of the people said.
Patel declined to comment when reached by telephone. Spokesmen for TP ICAP and the FCA also declined to comment.
The equities broker was one of the 1,500 or so people who joined TP ICAP when Tullett Prebon Plc completed its 1.28-billion-pound ($1.6 billion) acquisition of ICAP Plc’s voice-broking division at the end of last year. Since then, TP ICAP has closed ICAP’s European government bond and repo desks, with the loss of 18 brokers. A person with knowledge of the matter said the desks failed to make a profit for the company.
Most financial firms have curbed their expense policies since the U.K. Bribery Act came into force in 2011, leading to greater scrutiny of corporate hospitality and its potential to mask bribery. The high amounts spent on clients by brokers was one of the features of the recent Libor investigations, where it emerged in one case that a broker at RP Martin Holdings Ltd. spent 400 pounds on average every week for a year to entertain a single trader.
Although they all work for the same company, the ICAP and Tullett brokers continue to trade under their old names, competing for business both with each other and TP ICAP’s two main competitors: BGC Partners Inc. and Cie. Financiere Tradition SA.
Patel joined ICAP in Oct. 2013, according to his LinkedIn profile. Before then, he worked at GFI Group Inc. in London for six years as an equities broker. GFI is now a part of BGC.
Voice brokers are totally reliant on their relationships with clients -- banks, hedge funds and conventional asset managers -- to keep making money. Expenses play a part in maintaining those relationships. For many brokers, the cost of entertaining clients comes out of their share of the revenue from matching or executing trades. As long as brokers pay for their own expenses (assuming they do not exceed certain limits), their employers are able to benefit from the increased revenue without seeing their profit margin decline.
The average wage -- or broker-compensation ratio as the firms call it -- stood at about 50 percent for both ICAP and Tullett while they were still separate companies. Tullett paid 237,000 pounds in salaries and bonuses per broker in 2015, an average that conceals enormous differences in pay. New graduates earning some 35,000 pounds a year often sit on the same desk as someone earning a seven-figure sum.
— With assistance by Liam Vaughan