Icap's Spencer says big-spending Trump will be good for the City
Trading houses have seen business surge since Donald Trump was elected president, setting up a bumper City bonus season, Icap said today.
City grandee Michael Spencer, Icap’s chief executive, said Trump is “undoubtedly good for our business”, citing a surge in dealing volumes since the vote.
“His arrival has created a significant increase in volatility and trading. We are still waiting to see which of his policies he follows through, but he is undoubtedly a high-spending, low-taxing president,” Spencer added.
“He brings a lot of positives to our industry that Hillary Clinton would not have done. I am very pleased to have him here.”
That spike in volatility isn’t just a short-term effect, says Spencer, the former Conservative party Treasurer who is one of the most influential City voices. “Trump is a harbinger of change,” he told the Standard. “He is good for markets.”
After 30 years, Icap in its present form is transforming.
The voice-broking arm is being sold to Tullett Prebon, taking 3000 staff with it.
Icap shareholders will own 56% of this new venture, and Icap itself will become NEX — an IT firm that will specialise in post-trading administration and electronic dealing.
Icap’s last ever results saw it report a 78% jump in half-year pre-tax profits to £66 million. The interim dividend is held at 6.6p — good news for Spencer’s own finances since he owns 16.5% of Icap.
The sudden drop in the bond markets and the widening of the yield curve after years of stagnation is a result for Icap, the biggest trader of US government debt.
Spencer hopes it will later become the biggest dealer in Chinese currency around the world.
Icap’s trading boom is likely to have been replicated across the Square Mile, which means soaring profits for City firms — and high bonuses for traders this year, bond traders in particular.
In turn, that should be a boost to London house prices, high-end car dealers and makers of luxury-goods.
Spencer says he wishes the Tullett voice-broking arm well.
“I know I should be in tears, but I am relieved,” he said. “I have been working on this deal for two years.”
Spencer thinks Trump will be good for banks, especially if he ditches or dilutes the hated Dodd-Frank regulations from 2010.
“It is possible that his outlook on regulatory issues will be more favourable for the banking sector. Anything that is good for our clients is good for us.”
He adds that European regulators might have to adjust their stance if Wall Street starts stealing business.
