Interdealer broker BGC Partners to buy rival RP Martin (updated)

Compagnie Financiere Tradition SA

15/12/2014 12:25

* BGC Partners acquires RP Martin's UK assets 
    * To acquire Swedish, Dutch businesses next year 
    * More deals seen in tough market 
 
 (Recasts, adds details, background, analyst comment) 
    By Clare Hutchison 
    LONDON, Dec 15 (Reuters) - U.S. brokerage BGC Partners 
 BGCP.O  has agreed to buy London rival RP Martin, the latest 
step towards the consolidation of an industry under pressure 
from tough new rules for its traditional banking clients, low 
volatility and rock-bottom interest rates. 
    BGC said on Monday that it had acquired the UK assets of 
smaller, unlisted rival RP Martin and would take over its other 
businesses based in Sweden and the Netherlands in 2015. It gave 
no financial details. 
    RP Martin declined to comment on the sale. 
    Interdealer brokers -- which make money by matching buyers 
and sellers of bonds, swaps and currencies -- are battling major 
changes. These include new, more conservative capital rules that 
have prompted investment banking clients to cut back certain 
trading activities, and efforts to push more derivatives trading 
onto electronic platforms. 
    Their troubles have been deepened by years of very low 
interest rates, which have reduced revenue from trading products 
such as interest-rate swaps. 
    Many interdealer brokers, including RP Martin and market 
leader ICAP  IAP.L , have axed jobs, cut costs and repositioned 
into faster-growing areas like electronic trading and post-trade 
services to cope. 
    Analysts have said that in this environment, the number of 
major players in the industry, currently at five -- ICAP, 
Tullett  TLPR.L , BGC, GFI Group  GFIG.N  and Tradition  CFT.S  
-- should be reduced to three or even two. 
    And there are signs of consolidation. BGC is pursuing a 
takeover of GFI and Tullett bought oil broker PVM earlier this 
year.  ID:nL6N0NV1B7  ID:nL3N0TN073  
    "If there's a time that it (consolidation) is going to 
happen, it has got to be approaching rather rapidly as they are 
all suffering the pain at the moment," Societe Generale analyst 
Michael Sanderson said. 
    RP Martin, the world's oldest money broker, is known for its 
strength in broking derivatives based on European interest rates 
and foreign exchange, but has seen revenue slide in recent 
years. Analysts said that could improve as rivals forecast 
increased activity, and some central banks eye higher rates. 
    BGC said RP Martin's unaudited revenues for the financial 
year ending Sept. 30 were over $50 million. Turnover was 56.7 
million pounds ($88.8 million) in 2013.  
($1 = 0.6382 British pounds) 
 
 (Reporting by Clare Hutchison; Editing by Mark Potter and Clara 
Ferreira Marques) 
 ((Clare.Hutchison@thomsonreuters.com; +44)(0)(20 7 542 3346; 
Reuters Messaging: 
clare.hutchison.thomsonreuters.com@reuters.net)) 
 
Keywords: RP MARTIN M&A/BGC PARTNERS