TP ICAP posts higher Q3 revenue but Liquidnet disappoints

TP ICAP Plc, the world’s largest interdealer broker, reported a 14 percent increase in Q3 2022 revenue, to £508 million from £447 million a year earlier.


Taking a year-to-date perspective, the group reported of £1.58 billion in revenue for the first nine months of 2022, up 15 percent compared with the same period in 2021. Stripping out Liquidnet, an institutional trading and equities network that TP ICAP acquired last year, revenues were up 7 percent over a yearly basis.

The increase came despite an extremely volatile market and as trading activity this year had returned to normal levels.

“The Group benefitted from favourable market conditions in Global Broking, particularly in Rates, our largest, and most profitable, asset class. The ongoing strengthening of the US Dollar has been a meaningful tailwind: approximately 60% of the Group’s revenue (and approximately 40% of costs) are US Dollar denominated,” TP ICAP said.

The London-listed interdealer brokerage posted higher Global Broking revenues, up 20 percent from the Q3 2021. Revenue grew in cates, credit, FX & money markets and emerging markets, but was flat in equities, resulting in an improved mix. Rates activity increased most notably in short-dated contracts, which have lower transaction values compared with longer-dated contracts.

Other business highlights show that Energy & Commodities revenue declined 3% even as high prices and significant volatility led to higher volumes. Meanwhile, agency execution revenue rose six percent, but was lower in constant currency terms. Liquidnet revenue of was in line with the group’s forecast as market share increased marginally in the US and was stable in Europe.

In addition, US Agency Alternative Trading System (ATS) volumes, a key contributor for Liquidnet, were subdued, compared with exchanges and OTC venues.

Market conditions shifted activity to lower margin assets

Participants in Liquidnet’s EM business nearly doubled in less than four years, from 90 asset managers in 2018 to over 500. The company’s coverage also extended to six local debt markets including Mexico, Turkey, South Africa, Czech Republic, Hungary, and Poland.

TP ICAP, which earns its bread from making markets in different asset classes, employs thousands of brokers who negotiate trades in markets such as FX and commodities. The company’s broking customer base comprises mainly larger dealers, whereas exchange-traded volume reflects a more diverse participant mix.

TP ICAP was formed five years ago following Tullett Prebon’s acquisition of the voice-broking business from its former rival interdealer broker ICAP. TP ICAP’s data and analytics division is a provider of real-time price information from the global OTC financial and commodity markets, covering data from the wholesale inter-dealer brokered financial markets.

Most recently, TP ICAP launched its first roster of cryptocurrency exchange-traded products (ETPs) with fresh digital asset exposures to its European clients. The expansion of TP ICAP’s crypto offering is intended to appeal to a wider range of investors and comes at a time when interest in cryptocurrencies is growing.