June 2006 1 Analyst/Investor Day
These materials do not constitute an offer to sell or the solicitation of an offer to purchase any security. These materials contain "forward-looking statements" as defined in the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to: fluctuations in interest rates and foreign currency exchange rates; market acceptance of new trading technologies; global and regional economic conditions and legislative, regulatory and political developments; and domestic and international competition in the Company's global markets. Additional information regarding these and other factors is available in the Company's reports available on request from the Company. This document may not be distributed where to do so would be unlawful. This document may not be distributed in the UK except to persons falling within article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. 2
Ron Purpora - COO Doug Rhoten - CEO 3 ICAP Americas
Securities Division – Voice and Hybrid • Core Divisions – Treasury Products – Mortgage Securities – Federal Agency Issues – Repurchase Agreements – Corporate Products including • Corporate Bonds • CDS • Emerging Markets • Equity and Related 4
Treasuries – Off-the-Run Products Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights • Market Share – 59% 12% – Rank #1 6% • Hybrid Brokerage Service – 50% conducted electronically with Brokertec – Enhanced group margins • ICAP accounts for all 20% 59% electronic trading in this product group • Dominant market shares in Bills, Short Coupons, TIP’s ICAP Tullett-Prebon Hill Farber BGC/Cantor 5
Mortgage Securities Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights 5% 3% • Market Share – 32% 5% – Rank: Co-Leader 32% • Technology Deployed – Voice Service with proprietary screens – Separate liquidity pools for e- 31% trading • ICAP accounts for all electronic trading in this product group • 36 brokers, 29% margin on ICAP 24% Tullett-Prebon Net Brokerage Hill Farber Tradition • Developing products Chapdelaine BGC – Derivatives – CMBS, ABS 6
Agency Issues Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights 1% 4% • Market Share – 75% – Rank #1 20% • Technology Deployed – Voice service with proprietary market screens – Separate liquidity pools for e- trading • ICAP accounts for all electronic trading in this product group 75% ICAP Tullett-Prebon BGC Tradition 7
Repurchase Agreements Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights • Market Share – 59% 3% 3% 6% – Rank #1 • Franchise approach – Scale • Technology Deployed – Separate liquidity pools for 29% exclusive e-trading 59% – Hybrid capabilities among franchises ICAP Tullett-Prebon BGC Tradition Hill Farber 8
Corporate Products – Corporate Bonds Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights 5% • Market Share – 34% 10% – Rank #1 • Technology 34% – Developing STP capabilities 14% – Voice brokered markets – Lower liquidity • Drivers – Transparency initiatives – CDS migration 12% 25% ICAP Tullett-Prebon Chapdelaine FIMAT BGC Others 9
Corporate Products – CDS Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights • Market Share – 17% 11% 17% – Rank #2 • Established Single Name, 12% EMK, Hi-Yield Index • Growth in Structured, CMBS • Technology 26% – AffirmXpress 16% Automated confirmation • process offering significant efficiencies ICAP One of 3 participating • 10% GFI 8% brokers Tullett-Prebon CreditEx – Hybrid Market development CreditTrade • Drivers Chapdelaine Others • Market take-up at expense of cash credit • Consolidation 10
Capital Markets Introduction • Divisions covered – Emerging Products – Structured Products – Equity Derivatives – Emerging Markets – Energy – Interest Rate Derivatives – Money Market – Foreign Exchange 11
Product sectors Commoditized – low margin, slow growth AREA PROFIT MARGIN MARKET GROWTH Repo Low Low • Hybrid model Cash Medium Low • i-Depo Forward FX Medium Low • e-trading needed for higher margins Emerging Spot FX Low Low • STP High Margin Voice AREA PROFIT MARGIN MARKET GROWTH $ IR Derivatives High Medium IR Options High Medium • Specialization NDF’s High Medium • Consolidation Energy High High • Volbroker e-trading FX Options High High Emerging Products AREA PROFIT MARGIN MARKET GROWTH All Products High High 12
Build Verbal Liquidity • Market Share Goal: 35% • Production Specialization • Displace Customer Sales force • Invest in Emerging Products • Customers Help Drive Process 13
Creating Indices • 19900 Telerate • CMM on Telerate 19944 • ISDA Swapfix • Fed Funds (Telerate page 5) • SwapPX • GovPX • LatAm markets through Bloomberg • Mexico markets through Bloomberg • ICAP Markets Blog 14
Foreign Exchange – Voice market Spot Spot 35% 65% ICAP Tullett-Prebon Forwards NDF’s Forwards NDF’s 10% 10% 15% 15% 40% 45% ICAP ICAP Tullett-Prebon Tullett-Prebon 30% GFI Tradition Other Other 35% 15
Money Market Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights • Market Share – 38% 17% – Rank #1 • Technology 38% – iFeds – Financial Oxygen STP 17% • Benchmark Index – Telerate Page 5 • Partnership 28% – Financial Oxygen – (JP Morgan & BOA) ICAP • Future Drivers Tullett-Prebon – iFeds Eurobrokers – Whole Loans Tradition – GSE’s 16
ICAP Voted Top Broker in… • …22 Interest Rate and 11 Currency Derivatives groupings. • Summary of 2005 Risk Survey Rankings: ICAP #1 in: – Interest Rate Swaps – Interest Rate Options – OIS – Cross Currency Swaps – FX Forwards – Credit Derivatives 17
$ Interest Rate Derivatives Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights 5% • Market Share – 40% 12% – Rank #1 • Technology – FRACross 40% – Swapswire STP 13% – iSwap & Datatec • Benchmark Index – Telerate 19900 & SwapPX 30% – ISDA Swapfix • Partnership – Swapswire – ISDA ICAP Tullett-Prebon • Drivers Other – FRACross GFI Tradition – Short Swap push – Hybrid trading – Structured Products 18
Emerging Market Derivatives Estimated Market Share – North America Highlights Estimated Market Share – North America Highlights • Market Share – 50% 18% – Rank #1 • Technology – Datatec 20% – Sipo • Benchmark Index 12% 50% – 12 Bloomberg pages – LatAm PX • Partnership – LatAm Stock Exchanges • Drivers – FRACross ICAP – Chilean IRS Tullett-Prebon – Colombian IRS Local Brokers – Asian IRS GFI – Mexican CPI 19
Non-Securities Growth Highlights Highlights – Operating Profit Increased by 265% – Net Revenue Increases by 130% – Profit Margin Increased from 15% to 24% 01/02 02/03 03/04 04/05 05/06 01/02 02/03 03/04 04/05 05/06 Net Revenue Operating Profit 20
Macro Market Trends Key Environmental Factors Impact on ICAP Macroeconomic imbalances in Price volatility. Growth in CDS, FX, Energy, commodities and credit Derivatives, Futures. Search for Yield Growth in structured credit, equity, commodity and ……………………. interest rate products. Commoditisation of “flow” Higher volumes, polarized risk, e-trading opportunities markets….. and expanded customer base. Agency to principle model Supplement reduction in dealer sales forces. equity markets ….. Liberalization of emerging Growth in local currency derivatives, fixed income and markets credit markets. 21
ICAP’s biggest opportunity Growth Products • Structured products • Equity derivatives • Emerging markets • Energy Consolidation Opportunities • Equity Derivatives • Equities 22
ICAP Voted ‘Best of the Best’… • …within energy commodity markets • The highest honor within the brokerage category … 2 nd year running 23
Energy Positioning Opportunity - Consolidation Opportunity - Consolidation – Operating Profit Increased by 290% – Net Revenue Increases by 270% Operating Profit Net Revenue 01/02 02/03 03/04 04/05 05/06 24
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