UK
Interdealer brokers profit from volatility
23 June 2006
Anonymous
Oscillating equity markets appear to be working wonders for interdealer brokers’ pay.
Michael Spencer, group chief executive of Icap, the world’s largest interdealer broker, saw his bonus soar more than 25% last year to £5.05m (€7.4m) reports Financial News. Spencer’s generous payout follows a 16% rise in profits at Icap.
ICAP put the rise in its profits partly down to increased stock market volatility, and to increased trading as a result. Trading volume on the London Stock Exchange rose 91% in May, for example.
Damien Lee, managing director of recruitment firm Search Partners, which specializes in placing staff at the likes of Icap and its rivals, says interdealer brokers are like solicitors in their ability to profit from others’ misfortune.
“Win or lose, brokers get paid for what they do,” says Lee. “In times of volatility banks made more trades and brokers earn more fees. And because pay is commission driven, higher fees mean higher bonuses.”
