The summer stagnation of financial markets was laid bare yesterday as the London Stock Exchange, one of the world's largest brokers, Icap, and a swathe of smaller City firms revealed sharp falls in trading.
The London Stock Exchange said the value of UK shares traded had fallen by a fifth in the past 12 months from an average of £5bn a day to £4bn a day. It also said the number of companies that had floated on its main and junior market had almost halved, falling from 86 to 45.
City grandee Michael Spencer's Icap reflected similar trends not just in London but across the world. The former FTSE 100 interdealer broker said both voice and electronic broking "has remained more muted than anticipated" and that revenues for the half-year which ends this months are likely to be down by 14 per cent. Spencer, pictured, hinted at further likely job cuts, saying: "We will continue to take the necessary action to constrain our cost base." Icap cut about 100 jobs in London and New York early in the summer as part of its target to save £50m a year by 2014. Spencer said: "It's too early to judge if recent actions by the Federal Reserve and the European Central Bank will result in a sustained improvement in market confidence." Icap said its profit for the year to next March is set to fall to anything from £307m to £346m, down from £354m last year.
While the London Stock Exchange admitted that "trading remained subdued", its chief executive, Xavier Rolet, said it had benefited through diversifying outside its core equity markets business. He added: "We continue to make good progress, with our diversified business delivering good revenue growth against the same period last year. This is particularly pleasing, given that some parts of our business have experienced difficult market conditions."
Three stockbrokers – Panmure Gordon, Numis and Cenkos – also reported a sharp downturn in trading volumes leading to lower commissions and trading profits.
Panmure's profits dropped from £2.7m to £1.7m in the six months to June. It has cut costs through lower bonuses plus job losses.