LONDON (Reuters) - ICAP, the world's largest interdealer broker, on Wednesday reported a 9 percent fall in first-half revenue on a constant currency basis amid fragile market conditions, falling short of expectations.
Its shares fell 2.7 percent in early trade.
Adjusted for currency fluctuations, revenue in the six months to Sept. 30 was 620 million pounds, down 15 percent from 726 million a year earlier.
Worst hit was its global broking division, where brokers negotiate deals over the phone, which saw revenue fall 15 percent. Revenue from electronic markets was down 5 percent, while its post-trade division reported a 12 percent increase.
The company, which matches buyers and sellers of bonds, swaps and currencies, said profit before tax fell by 38 percent to 86 million pounds.
Analysts had expected ICAP to report first-half revenue of 627.1 million pounds and pretax profit of 88 million, according to Thomson Reuters data.
Interdealer brokers have seen revenues plunge as banks pull back from risky trading activities to comply with new rules brought in after the financial crisis.
Their troubles have been deepened by years of low interest rates, which have damped market volatility and reduced revenue from trading products such as interest-rate swaps.
Chief Executive Michael Spencer said the company was "cautiously optimistic" about recent signs of a pickup in activity, amid greater volatility brought on by the Scottish independence referendum and the recent European Central Bank rate cut - a trend that had continued into October.
However, the company said it had not changed its expectations for the full year as it was too early to predict whether current activity levels would persist. It did not provide guidance figures.
ICAP has been trying to reposition towards faster-growing areas like electronic trading and post-trade services to offset the slump and those two divisions now account for 83 percent of operating profit, up from almost 70 percent.
It is also restructuring the business and said it was on target to deliver 60 million pounds in annual savings.
It has cut 261 broking jobs, shut 21 underperforming desks and reduced its presence in credit. Infrastructure headcount also fell by 149 after a review of operations.
The brokerage also confirmed that its shipping arm, ICAP Shipping, is in merger talks with rival Howe Robinson. A newly formed ship-broking company is expected to be operational in the second quarter of 2015, ICAP said.
(Reporting by Clare Hutchison; Editing by Jason Neely and David Holmes)