The Financial Times is reporting that new CEO of Tullett Prebon John Phizackerley told his staff the UK was “in a great position to be one of the winners” of the market as he took over as head of the group on Monday, following the long-serving Terry Smith. Phizackerley is referring to the strong emergence of electronic trading across asset classes traditionally handled by voice broking, which is now turning into a hybrid model for many institutional firms.
FT is concluding his aggressive stance suggests that Tullett will maintain dominant voice business where deals are conducted over the phone, but look to expedite pushing its electronic operations, which have lagged behind those of rivals in recent years such as ICAP, Thomson Reuters, Bloomberg, GFI Group, and Switzerland’s Tradition.
In a memo, Mr Phizackerley acknowledged former CEO Mr. Terry Smith’s role in creating the company out of the merger of Tullett and Prebon but said: “I have every confidence that Tullett Prebon will emerge from these uncertain times as the number one hybrid voice brokerage firm in the world utilising the best technologies available.”
Inter-dealer brokers such as Tullet act as intermediaries between banks and other counter-parties in the trading of OTC interest rate derivatives. However, firms have been stymied by low market volatility and volumes, which have tempered investor appetite for hedging instruments such as swaps.
Post-financial crisis regulation such as EMIR and Dodd-Frank is also reshaping the industry and that of its main customers, the big investment banks. Regulators want more transparency and electronic trading, while the banks are being forced to deleverage their balance sheets.
Amid the upheaval firms have not been complacent…rival BGC sold its eSpeed trading business to Nasdaq OMX, while CME Group last month agreed to buy the electronic assets from GFI in a deal worth $655m including debt, offloading the voice business to management as part of the transaction.
Nearly 70% of the revenue at ICAP, Tullett’s main rival, is achieved from electronic trading. Tullet is conscious of this and will no doubt look to step up its electronic trading reach to position for the future.
Under Mr Smith, Tullett had been focused on controlling costs and retaining dividend payments, which Mr Phizackerley wants to continue. The group has nearly £32m in cash and earlier this year agreed to buy PVM Oil Associates, an oil broker, for a total consideration of $160m.
However, he warned his traders: “We cannot though become complacent. Regulators are under enormous pressure to show they are holding the financial industry to account and have developed an appetite for handing out punitive fines. So I urge you all to remain vigilant and be scrupulous in ensuring that we comply with all relevant regulations.”
Mr Phizackerley added that Tullett’s “reputation has been enhanced by the clean sheet we have kept with regulators around the world” following global investigations into allegations of manipulating benchmarks used in markets.
John Phizackerley’s Background
John Phizackerley began his career with Anglo American Corporation in South Africa in 1980 as an underground mining engineer. He joined Lehman Brothers in 1986 where he worked in both Europe and New York becoming Head of Equity Research in 1995. He was appointed Head of Equity Sales in Europe in 2000, Global Head of Pan-European Cash Equities in 2003, Co-Head of European Equities in 2004, and from 2006 until 2008 was Chief Administrative Officer, Europe and Middle East. He remained with the firm post the Nomura acquisition in 2009, first as Co-Chief Administration Officer for Nomura International, then in 2010 as Chief Operating Officer for Nomura International, and in 2010 he was also appointed Chief Executive Officer for Nomura Bank International (NBI). Between 2011 and 2013 he was Chief Executive Officer of Nomura International plc. John was an Associate Non-Executive Director of Barts and The London NHS Trust from 2010 to 2012, and since 2013 has been Chairman of the Barts and the London NHS Trust External Advisory Board.
Tullet Prebon’s Electronic Dealing Platforms
US Federal Agency Securities – tpAGENCY
Credit Electronic Trading Platfrom – tpCREDITDEAL
Energy Electronic Trading Platform – tpENERGYTRADE
Ireland Power Auction Platform – tpENERGYTRADE – Ireland Power
Auction Trade Matching Platform – tpQUICKDEAL
REPO Electronic Trading Platform – tpREPO
Spot FX Trading Platform – tpSPOTDEAL
Swap Trading Platform – tpSWAPDEAL
FX Options Electronic Trading Platform – tpTRADEBLADE FXO
*The firm also operates tpMOBILE – which allows trading professionals to view wholesale market information.
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