TP Icap, world's biggest interdealer broker, picks Paris post-Brexit

Investment banks' largest middleman decides French capital will be its European Union hub after UK leaves the bloc

French capital will host interdealer broker TP Icap after Britain leaves the EU. 

TP Icap has chosen Paris as its European Union hub once Britain leaves the bloc, attracted by the city's focus on banking and asset management, its new CEO said on Tuesday, as the world's largest interdealer broker, headquartered in London, posted lower first-half profit.

An interdealer broker is a company that sits between investment banks helping find buyers and sellers of large, usually illiquid, blocks of securities at other investment banks or dealers

Nicolas Breteau, who took over as CEO TP Icap last month after his predecessor was fired, said TP Icap had spoken to regulators in Frankfurt, Amsterdam and Paris before picking the French capital as its EU headquarters post-Brexit.

Paris is competing with Frankfurt, Dublin and Luxembourg to win finance jobs in the wake of Britain's departure from the EU next March.

London will remain the company's HQ, said Mr Breteau, a Frenchman who also holds a British passport. The company did not plan to "move many jobs out of London", he said.

Lower volatility in financial markets has hurt the company as investors reined in risk-taking and stock markets racked up a decade of gains. TP Icap said pre-tax profit fell 52 per cent to £34 million (Dh161.9m) in the six months ended June.

TP Icap, however, said conditions in financial markets had been "supportive" in the first half, with an increase in equity volatility at the start of the year, helped by rises in the US federal fund rate.

The company's shares were down 1.8 per cent at 287.2 pence at 08.28 GMT.

The firm fired its previous chief executive, John Phizackerley, last month and warned rising costs related to Britain's EU exit and the EU's new rules on market transparency, MiFID II, would see profit fall short of expectations this year.

TP Icap said on Tuesday it expects 2018 results to be in line with current market expectations.

"Today's interim results were broadly as expected and is the first stage in rebuilding confidence after the shock warning in July," Peel Hunt analyst Stuart Duncan said.

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France has decided to pare back financial regulations to EU minimums and introduce new tax incentives to make Paris a more attractive finance hub.

Most of these changes are planned for the end 2018, as countries across the EU battle to attract bankers from London amid uncertainty over the impact of Brexit on the region's biggest financial centre.

TP Icap operates in Frankfurt, Paris, Amsterdam, Madrid and other locations in Europe. The company has been in Paris for over 20 years.

The company also said iSwap, a London-based electronic trading platform for over-the-counter interest rate derivatives, was expected to choose Amsterdam as its EU hub. TP Icap is a major shareholder in iSwap.

TP Icap was formed by Tullett Prebon's buyout of its main rival Icap's voice broking business, and the deal reflected the growing strains on one of the City of London's trademark industries - the phone-toting brokers who acted as go-betweens for major banks and financial firms in currency, energy and interest rate markets.