How we create value
ICAP plays a pivotal role in bringing together buyers and sellers in the global wholesale financial markets.
As a key participant in the wholesale financial markets, we believe that ICAP’s success contributes to the economies in which we operate, by helping companies and organisations to manage and mitigate their business risks.
We provide our customers with a choice of trading venues and methods ranging from fully electronic to broker-assisted trades. This way, they can select the most appropriate execution method depending on the liquidity of the product and their specific needs. They also have access to an unrivalled source of financial markets data.
We continue to innovate and develop new products and services as the markets and our customers’ needs evolve.
We help customers execute trades and access clearing
ICAP executes or arranges trades on behalf of its customers in a number of ways depending on the asset class and market involved. These methods exist in both the hybrid electronic and traditional voice broking businesses.
ICAP also frequently helps market users to execute multiple transactions simultaneously, which means that more than one of these methods may be involved in providing customers with their desired outcome.
Name give-up broking
ICAP identifies and introduces counterparties who have indicated their willingness to trade with each other, and who have reciprocal credit or clearing, and/or where two or more customers’ orders match. These counterparties contract directly with each other and/or the relevant clearing house bearing the settlement obligation, and bear the counterparty credit risk themselves. Increasingly these trades are novated into clearing and ICAP aims to automate the messaging process where possible.
Matched principal broking
ICAP enters into simultaneous or near-simultaneous purchase and sale transactions on behalf of customers and is responsible for settlement. Primarily this is to provide access to clearing and/or maintain post-trade anonymity. Settlement risk to ICAP is minimised with a ‘delivery versus payment’ settlement model (where delivery of the traded instruments, i.e. the change in their ownership, occurs at the same time and is dependent on payment).
Exchange broking – give-up
ICAP executes a trade on an exchange in the capacity of executing broker on behalf of a customer. The customer’s clearing member accepts the trade for settlement, at which point ICAP ceases to be party to the transaction and settlement risk transfers. This model is used to broker financial, commodity, equity derivatives and cash equities instruments. ICAP is a member of the world’s largest derivatives exchanges.