Since his mid-2018 appointment as chief executive officer of TP ICAP, Nicolas Breteau has pursued a strategy that includes the diversification of the London-based inter-dealer broker’s business through investment in some smaller parts of the TP ICAP portfolio.

One of the main opportunities identified by Breteau and his new management team is the Data and Analytics business run by Eric Sinclair, a relative newcomer to the firm himself who joined in late 2017, just a few months before Breteau took over.

Breteau said in August 2019: “Diversification has been a key priority for the business. This will continue as we look to serve the buy-side in all to-all markets, maximise the value of our data and analytics and grow other non-broking revenue such as risk management and post-trade services.”

A little over two years into Sinclair’s tenure in charge of the data arm of TP ICAP, the business is already growing in response to the increased impetus from Breteau and his team.

TP ICAP Data & Analytics grew revenues on a constant currency basis by 8% to £117 million in 2018, the last full year of data available.

The TP ICAP annual report said this was down to “executing a number of targeted organic growth opportunities during the year that have enabled it to monetise more proprietary data by releasing new products with a restructured salesforce”.

The London-based firm continued the theme in the first half of 2019 when data earnings rose 12% on a constant currency basis to £64 million.

Breteau said at the time of the interim report in August: “Data & Analytics continues to exhibit a strong growth trajectory coupled with attractive margins and recurring revenues underpinned by customer loyalty. While we have seen good organic growth within the D&A business, we see selective opportunities to accelerate that development.”

Sinclair said the Data and Analytics unit is growing solidly under the new regime but there is a long way to go.

“TP ICAP Data and Analytics is currently an undeveloped asset in that it is not living up to its full potential but it is an important part of the firm’s diversification strategy going forward,” said Sinclair.

Eric Sinclair, chief executive officer of TP ICAP data & Analytics

Sinclair accepts that TP ICAP is not alone in exploring growth opportunities in data, citing the LSE Group’s proposed £27bn acquisition of data firm Refinitiv and Intercontinental Exchange’s $5.2bn (£3.45bn) takeover of Interactive Data Corporation in late 2015.

But Sinclair said TP ICAP has a unique angle. As the world’s largest inter-dealer broker, TP ICAP is already quoting prices in thousands of small, illiquid markets that are typically overlooked by the data giants. 

“If we look specifically at our business, we are currently only offering a sub-set of what is available. Our strategy is to monetise the price discovery function that sits within our brokerage business to offer data that hasn’t been available in the market previously,” he said.

Sinclair added: “If you look at the over-the-counter (OTC) markets, there are live prices available for maybe only as little as 10% of the entire marketplace so we are working hard to develop indicative rates for more of the OTC market including the most illiquid markets.”

The chief executive also said European regulation Mifid II, which took effect in early 2018, has mandated the publication of order and trade data so “so there are also some strong regulatory tail-winds behind the investment into our data business”.

Last year, TP ICAP launched two data sets for Euro interest rate options in May, an Indian OTC data service in July and an African OTC data package in October.

The Indian service taps data from I-Stream, India’s top electronic swaps brokerage platform, and five TP ICAP Indian brokerage desks.

Smita Gupta, the head of credit and interest rate derivatives, said in July: “Since its launch a decade ago, I-Stream has emerged head-and-shoulders as the primary hub for price discovery and execution in India’s OTC market. While the growth of this market to date has been staggering, there is still a long way to go - India is the world’s fastest growing economy and its appeal to offshore participants will only increase.”

Sinclair said: “We provide global products but in some regions we are also delivering cross-asset solutions. We have developed solutions for Africa and India for example and we are also looking at some of the other regions of the world. We also have a strong energy and commodities brokerage business which we can draw upon to offer data that is not already available.”

With this strategy in mind, Sinclair has also restructured the business and brought in new sales people who have already delivered results. “In the past year we have hired 20 new staff and we have also welcomed Jamie Bailey who has brought to our board expertise of taking raw data and turning it into new products. In my first year on board, we delivered four new data products, in my second year we delivered sixteen.”

Bailey is a senior market analyst at TP ICAP who joined Tullett Prebon in December 2016 after a decade working in computer games including six years as a producer with SEGA Europe.

Another key hire was the April 2019 appointment of Roland Anderson as chief technology officer of Data and Analytics. He joined the firm from CME Group, the US exchange that bought NEX Group after that business sold its voice brokers to Tullett Prebon to form TP ICAP.

Anuj Mital, formerly a TP ICAP Global Finance Business Partner, was promoted in April to the role of chief administration officer within the D&A business.

The TP ICAP data arm is also interesting in that it is spear-heading another aspect of the broader diversification agenda - making the group more relevant to a broader range of customers.

Sinclair said: “As an inter-dealer broker, our typical clients are the large dealers and these will continue to be very important to TP ICAP but increasingly we are selling into non-bank institutions such as high-frequency trading firms, hedge funds, sovereign wealth funds and asset owners for example, and they are proving a great source of growth.”

Looking ahead, Sinclair feels the highly-anticipated cessation of the much-maligned Libor, slated to take place as soon as the end of 2021, will create demand for new types of products and data services.

He said: “We are also responding to new opportunities presented by emergence of trading products linked to the transition away from Libor to risk-free-rates such as SOFR and €STR.”

The Secured Overnight Financing Rate (SOFR) and the Euro Short-Term Rate (€STR) are the preferred alternatives to Libor as chosen by the US and Europeans. They are set to be phased in to replace Libor over the next two years alongside the Sterling Overnight Index Average (SONIA) in the UK, the Swiss Average Overnight Rate (SARON) in Switzerland and the Tokyo Overnight Average Rate (TONA) in Japan.

Futures on these rates are already coming to market and these will likely be followed by options and OTC products such as swaps.

Sinclair continued: “We are not taking a position on the transition away from Libor rather we are delivering the appropriate products to help clients as they move to new risk-free-rates.”

The TP ICAP D&A chief continued that his team may partner with other types of firms to supply data: “Over the medium term, we will look to develop more information products to help meet unmet needs, possibly in partnership with third parties such as analytics provider, benchmark administrator, real-time risk manager, transaction cost analysis provider or a technology firm based in the cloud.”

Sinclair believes there are many opportunities open to the TP ICAP data business over the coming months and years.

He said: “I am determined to keep the optionality broad within the D&A division over the next 12 months. Undoubtedly there is a huge amount of value that can be derived beyond delivering the raw data. The issue is that previously we were unable to consolidate this data in one place but with the combination of TP ICAP we are able to offer data that is so valuable because it is so scarce.”

Sinclair concluded: “In the OTC market, no-one is better positioned than the world’s largest inter-dealer broker.”