ICAP: Q1 2006 trading update

7:35 a.m. Fri 21 Jul 2006

ICAP, the world's largest voice and electronic interdealer broker, said it had enjoyed a good start to the financial year.

In the first quarter to June 2006 the company said markets had been very active, particularly in the month of May. Many major markets faced sharp dips in the month of May and have remained volatile since then, with uncertainty over oil prices and interest rates contributing to the volatility.

Brokers and interdealer brokers (such as ICAP) tend to make more money as the number of trades increases and in the short-term volatility generally contributes to better overall volumes. However, in the longer term, weaker marketswill have knock on effects on brokers, hence a les certain outlook for the company.

Not a lot has changedsince we last looked the company. Last years earnings were driven by strong markets and tight cost control. The company says it is on track to achieve current year forecasts.

The share trades at 484p, on a prospective PE (2007 earnings) of 16.3x, not particularly cheap. The yield is 2.8%.