Interdealer broker ICAP believes significant opportunities exist to grow its business in the market data and benchmarking space.
To take advantage of an increased focus on market data required by incoming regulation and new global principles on independent benchmarking, it will next month legally separate its ICAP Information Services (IIS) business from the rest of the group.
The firm said a heavier emphasis on use of market data and reforms to open up competition in the market as part of MiFID II offer the group several opportunities.
Branching into information services, and in particular benchmarks, has been popular among capital markets operators looking for new revenue streams amid lower volumes and volatility. Last month, the London Stock Exchange Group (LSEG) confirmed months of speculation that it would make a bid for index provider Russell Investments.
While LSEG joins a multitude of firms looking to grow their indexing business, including Thomson Reuters, Dow Jones and Stoxx, among others, ICAP believes its targeting of specific niches will give it an advantage as it is not moving into a field that may already be oversaturated.
While many benchmark operators have focused on equities and commodities, ICAP said it will build upon its existing strengths in rates, repo, fixed income and derivatives, utilising the data it already holds internally based on its trading platforms.
It has also announced the creation of a new benchmark for the European repo market. It already operates repo indices under the RepoFunds Rate (RFR) brand, and is adding RFR Euro to it range, providing a daily repo index for Eurozone sovereign bonds.
The index derives from eligible repo transactions involving sovereign bonds issues in any Eurozone country as collateral. It is based on transactions taking place on its BrokerTec electronic fixed income trading platform and MTS’s interdealer marketplace, with a typical traded volume of €230 billion per day.
Robert Walton, director of index services at IIS, said: “RFR Euro is an important addition to the RFR index family. By providing a broader measure of the cost of financing sovereign bonds from issuers in the Eurozone, it complements the existing country-specific RFR indices.”