Analyst/Investor Day These materials do not constitute an offer to - - PDF document

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Analyst/Investor Day

June 2006

2 These materials do not constitute an offer to sell or the solicitation of an offer to purchase any

• security. These materials contain "forward-looking statements" as defined in the U.S. Private

Securities Litigation Reform Act of 1995. These statements are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to: fluctuations in interest rates and foreign currency exchange rates; market acceptance of new trading technologies; global and regional economic conditions and legislative, regulatory and political developments; and domestic and international competition in the Company's global markets. Additional information regarding these and other factors is available in the Company's reports available on request from the Company. This document may not be distributed where to do so would be unlawful. This document may not be distributed in the UK except to persons falling within article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001.

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ICAP Americas

Ron Purpora - COO Doug Rhoten - CEO

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Securities Division – Voice and Hybrid

• Core Divisions

– Treasury Products – Mortgage Securities – Federal Agency Issues – Repurchase Agreements – Corporate Products including

• Corporate Bonds
• CDS
• Emerging Markets
• Equity and Related

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Treasuries – Off-the-Run Products

12% 59% 20% 6%

ICAP Tullett-Prebon Hill Farber BGC/Cantor

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 59%

– Rank #1

• Hybrid Brokerage Service

– 50% conducted electronically with Brokertec – Enhanced group margins

• ICAP accounts for all

electronic trading in this product group

• Dominant market shares in

Bills, Short Coupons, TIP’s

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Mortgage Securities

32% 31% 5% 3% 5% 24%

ICAP Tullett-Prebon Hill Farber Tradition Chapdelaine BGC

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 32%

– Rank: Co-Leader

• Technology Deployed

– Voice Service with proprietary screens – Separate liquidity pools for e- trading

• ICAP accounts for all

electronic trading in this product group

• 36 brokers, 29% margin on

Net Brokerage

• Developing products

– Derivatives – CMBS, ABS

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Agency Issues

75% 4% 20% 1%

ICAP Tullett-Prebon BGC Tradition

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 75%

– Rank #1

• Technology Deployed

– Voice service with proprietary market screens – Separate liquidity pools for e- trading

• ICAP accounts for all

electronic trading in this product group

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Repurchase Agreements

59% 6% 3% 3% 29%

ICAP Tullett-Prebon BGC Tradition Hill Farber

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 59%

– Rank #1

• Franchise approach

– Scale

• Technology Deployed

– Separate liquidity pools for exclusive e-trading – Hybrid capabilities among franchises

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Corporate Products – Corporate Bonds

34% 25% 14% 10% 5% 12%

ICAP Tullett-Prebon Chapdelaine FIMAT BGC Others

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 34%

– Rank #1

• Technology

– Developing STP capabilities – Voice brokered markets – Lower liquidity

• Drivers

– Transparency initiatives – CDS migration

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Corporate Products – CDS

17% 8% 10% 16% 12% 26% 11%

ICAP GFI Tullett-Prebon CreditEx CreditTrade Chapdelaine Others

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 17%

– Rank #2

• Established Single Name,

EMK, Hi-Yield Index

• Growth in Structured, CMBS
• Technology

– AffirmXpress

• Automated confirmation

process offering significant efficiencies

• One of 3 participating

brokers

– Hybrid Market development

• Drivers
• Market take-up at expense of

cash credit

• Consolidation

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Capital Markets Introduction

• Divisions covered

– Emerging Products – Structured Products – Equity Derivatives – Emerging Markets – Energy – Interest Rate Derivatives – Money Market – Foreign Exchange

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Product sectors

Commoditized – low margin, slow growth

AREA PROFIT MARGIN MARKET GROWTH

Repo Low Low Cash Medium Low Forward FX Medium Low Emerging Spot FX Low Low

• Hybrid model
• i-Depo
• e-trading needed for higher margins
• STP

High Margin Voice

AREA PROFIT MARGIN MARKET GROWTH

$ IR Derivatives High Medium IR Options High Medium NDF’s High Medium Energy High High FX Options High High

• Specialization
• Consolidation
• Volbroker e-trading

Emerging Products

AREA PROFIT MARGIN MARKET GROWTH

All Products High High

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Build Verbal Liquidity

• Market Share Goal: 35%
• Production Specialization
• Displace Customer Sales force
• Invest in Emerging Products
• Customers Help Drive Process

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Creating Indices

• 19900 Telerate
• CMM on Telerate 19944
• ISDA Swapfix
• Fed Funds (Telerate page 5)
• SwapPX
• GovPX
• LatAm markets through Bloomberg
• Mexico markets through Bloomberg
• ICAP Markets Blog

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Foreign Exchange – Voice market

65% 35%

ICAP Tullett-Prebon

Spot Spot Forwards Forwards

45% 15% 10% 30% ICAP Tullett-Prebon GFI Other

NDF’s NDF’s

40% 15% 10% 35%

ICAP Tullett-Prebon Tradition Other

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Money Market

38% 17% 17% 28%

ICAP Tullett-Prebon Eurobrokers Tradition

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 38%

– Rank #1

• Technology

– iFeds – Financial Oxygen STP

• Benchmark Index

– Telerate Page 5

• Partnership

– Financial Oxygen – (JP Morgan & BOA)

• Future Drivers

– iFeds – Whole Loans – GSE’s

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ICAP Voted Top Broker in…

• …22 Interest Rate and

11 Currency Derivatives groupings.

• Summary of 2005 Risk

Survey Rankings:

ICAP #1 in: – Interest Rate Swaps – Interest Rate Options – OIS – Cross Currency Swaps – FX Forwards – Credit Derivatives

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$ Interest Rate Derivatives

40% 13% 12% 5% 30%

ICAP Tullett-Prebon Other GFI Tradition

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 40%

– Rank #1

• Technology

– FRACross – Swapswire STP – iSwap & Datatec

• Benchmark Index

– Telerate 19900 & SwapPX – ISDA Swapfix

• Partnership

– Swapswire – ISDA

• Drivers

– FRACross – Short Swap push – Hybrid trading – Structured Products

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Emerging Market Derivatives

50% 12% 18% 20%

ICAP Tullett-Prebon Local Brokers GFI

Estimated Market Share – North America Estimated Market Share – North America Highlights Highlights

• Market Share – 50%

– Rank #1

• Technology

– Datatec – Sipo

• Benchmark Index

– 12 Bloomberg pages – LatAm PX

• Partnership

– LatAm Stock Exchanges

• Drivers

– FRACross – Chilean IRS – Colombian IRS – Asian IRS – Mexican CPI

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Non-Securities Growth

Highlights Highlights 01/02 02/03 03/04 04/05 05/06 Operating Profit

– Operating Profit Increased by 265% – Net Revenue Increases by 130% – Profit Margin Increased from 15% to 24%

01/02 02/03 03/04 04/05 05/06 Net Revenue

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Macro Market Trends

Key Environmental Factors Impact on ICAP Macroeconomic imbalances in commodities and credit Price volatility. Growth in CDS, FX, Energy, Derivatives, Futures. Search for Yield ……………………. Growth in structured credit, equity, commodity and interest rate products. Commoditisation of “flow” markets….. Higher volumes, polarized risk, e-trading opportunities and expanded customer base. Agency to principle model equity markets ….. Supplement reduction in dealer sales forces. Liberalization of emerging markets Growth in local currency derivatives, fixed income and credit markets.

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ICAP’s biggest opportunity

• Structured products
• Equity derivatives
• Emerging markets

Growth Products Consolidation Opportunities

• Energy
• Equity Derivatives
• Equities

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ICAP Voted ‘Best of the Best’…

• …within energy

commodity markets

• The highest honor

within the brokerage category … 2nd year running

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Energy Positioning

Opportunity - Consolidation Opportunity - Consolidation

– Operating Profit Increased by 290% – Net Revenue Increases by 270%

01/02 02/03 03/04 04/05 05/06

Operating Profit Net Revenue

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LatAm Strategy

Opportunity – Grow footprint Opportunity – Grow footprint

Drivers for Growth in the Market

• Continued liberalization of local LatAm

markets

• NDF sectorization
• Derivative sectorization
• International distribution of local products
• SIF/Garban Mexico
• Technology

– Datatec & Sipo

• LatAm Expansion

– 5 Stock Exchange Joint Ventures – Purchase and merge 2 largest Colombian voice brokers – Open Brazil branch

Our Positioning

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Structured Products Division

Products Status

• Hired 10 broker Structured CDS

team in 2005

• Hired 5 broker Index team
• #1 broker in FX Options
• Restructuring to combine with

derivatives

• Structured CDS
• Structured Interest Rate
• FX Options
• Structured Notes
• Commodities
• Equity Derivatives/Exotics

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Equity Derivatives

• Hyper growth in index products
• Dealer move from agency to principle

model

• Reduction of dealer sales forces
• Expansion of customer base
• Need for bilateral block trade negotiation
• Sectorization of single names
• Structured and exotic desk
• Expand variance and correlation desk

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Structured Interest Rate Products

Opportunity – Pursue emerging sectors Opportunity – Pursue emerging sectors

• Libor digital caps/floors
• CMS spread caps/floors
• Callable range accrual swaps
• Capped callable floaters
• Constant Maturity Mortgage
• US CPI swaps/options
• Other structured swaps

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Opportunities

Emerging Products Growth

• Energy Consolidation (Oil)
• Equity Derivatives
• Whole Loan Brokering
• Logistic Derivatives
• Electronic Trading
• Exotic Derivatives
• Structured CDS
• Structured Equities
• Real Estate Derivatives

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Product evolution

Build Market Share Commoditization Foster Bank Interest

Developing Products Migration to electronic

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A Global E-broking Business

Jack Jeffery CEO of ICAP Electronic Broking

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A strategy for growth

“ICAP’s e-strategy will create the largest global electronic broker in liquid, commoditised OTC markets”

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Foreign Exchange

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Spot FX volumes

Global FX Average Daily Volume - Single Count

20 40 60 80 100 120 140 160 180 200 J a n

• 9

6 J u l

• 9

6 J a n

• 9

7 J u l

• 9

7 J a n

• 9

8 J u l

• 9

8 J a n

• 9

9 J u l

• 9

9 J a n

• J

u l

• J

a n

• 1

J u l

• 1

J a n

• 2

J u l

• 2

J a n

• 3

J u l

• 3

J a n

• 4

J u l

• 4

J a n

• 5

J u l

• 5

J a n

• 6

US$ Billions

J u n

• 6

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Foreign Exchange

• EBS Spot

– Average daily volumes - USD 145 billion – Record trading of USD 259 billion on 17 May 06 – Top five trading days all recorded in 2006 – >2,000 traders on >820 dealing floors across the globe

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EBS Prime volumes

EBS Prime Average Daily Volume (US$bn)

5 10 15 20 25 30 35 40 45 50 J a n

• 2

4 M a r

• 2

4 M a y

• 2

4 J u l

• 2

4 S e p

• 2

4 N

• v
• 2

4 J a n

• 2

5 M a r

• 2

5 M a y

• 2

5 J u l

• 2

5 S e p

• 2

5 N

• v
• 2

5 J a n

• 2

6 M a r

• 2

6 M a y

• 2

6

US$ Billions

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Foreign Exchange

• EBS Spot

– Average daily volumes - USD 145 billion – Record trading of USD 259 billion on 17 May 06 – Top five trading days all recorded in 2006 – >2,000 traders on >820 dealing floors across the globe

• EBS Prime

– 149 users now live

• 37 non-bank customers including hedge funds
• 112 bank customers

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EBS Spot Ai - algorithmic trading volumes

EBS Ai Volume Trend Analysis 5 10 15 20 25 30 35 40 45

M a y

• 2

3 S e p

• 2

3 J a n

• 2

4 M a y

• 2

4 S e p

• 2

4 J a n

• 2

5 M a y

• 2

5 S e p

• 2

5 J a n

• 2

6 M a y

• 2

6

0 % 5 % 10 % 15 % 20 % 25 %

Ai Average Daily Volume ($ bil) Ai Market Share % J u n e

• 2

6

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Foreign Exchange

• EBS Spot

– Average daily volumes - USD 145 billion – Record trading of USD 259 billion on 17 May 06 – Top five trading days all recorded in 2006 – >2,000 traders on >820 dealing floors across the globe

• EBS Prime

– 149 users now live

• 37 non-bank customers including hedge funds
• 112 bank customers
• EBS Spot Ai

– API or ‘black-box’ FX trading – Average daily volumes - USD 30 billion – Record day – 24 May 06 – USD 59.3 billion – 20% of EBS volumes from API-based trading

• EBS Market Data

– The source of global spot FX pricing – Premium live feed and historical data commercialised

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Fixed Income

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Fixed income volumes

Average Daily Volume - Single Count

1 2 3 4 5 A p r

• 3

J u l

• 3

O c t

• 3

J a n

• 4

A p r

• 4

J u l

• 4

O c t

• 4

J a n

• 5

A p r

• 5

J u l

• 5

O c t

• 5

J a n

• 6

A p r

• 6

US$ Billions

Agency Mortgages Canadian Govt Euro GB Eurobonds

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Fixed income

Average Daily Volume - Single Count

50 100 150 200 250 A p r

• 3

J u l

• 3

O c t

• 3

J a n

• 4

A p r

• 4

J u l

• 4

O c t

• 4

J a n

• 5

A p r

• 5

J u l

• 5

O c t

• 5

J a n

• 6

A p r

• 6

US$ Billions

UST US Repo EU Repo

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Fixed income:US treasuries

• Asia – US treasuries

– 65% market share for the past year

• London EU US Treasury Actives

– Volume totalled a record $365 billion in May ‘06 – Volumes continue to break records month over month – Volumes increasing each month in 06 – 65% increase in volume from May 05 – London market share ~ 60%

• US treasury volumes

– volumes consistently above forecast in 06

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Fixed Income US - Repo and Mortgages

• US Repo

– Volumes remain healthy in face of new competition – Customer benefits

• Total Anonymity
• STP
• Significant cost saving benefits
• Mortgages

– ICAP offers the only e-broking platform for Mortgage-Backed Securities (MBS)

• Continued growth in e-traded volumes
• Customers seeing cost and STP benefits of e-broking
• New functionality added

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Fixed income: Eurobonds

• Launched in Feb 2006 across:

– Bank capital – Industrials – Autos and Telecoms

• First electronic trading in CDS and Euro Credit bonds on the same

front end

• Eurobonds

– Volume of €959m in May 06 - up from €373m in April 06 – June 06 volume so far €737m – 8% of business electronically traded (4.5% in April) – 11% so far in June

• Averaging 25 trades per day
• 18 firms have so far traded Eurobonds with two further firms

enabled.

• 38 traders have so far executed e-trades

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EU Repo

• Repo daily volumes - €159 billion nominal single count daily
• 24% increase on June 05 (ICMA Repo survey saw 15-18%

increase in outstanding Repo)

• Record volume day of €200 billion on 7 March 06
• Daily average Repo transactions is now at 5,000

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Global trends in spot FX

• Increasing cross-border trading activity
• Increasing proprietary risk taking at banks
• Growth of single and multi-dealer bank portals
• Growth of leveraged investors/hedge funds
• Growth of prime broking
• Continued development of algorithmic trading engines
• Liberalisation of emerging markets

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Global trends in Fixed Income

• Emerging markets offer opportunities for growth
• Algorithmic trading will force differentiation in trading models
• Integration of third party front, middle, and back office systems into

trading platforms

• Increased competition among prime broking firms
• Migration towards e-execution for less liquid products

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Foreign Exchange: New products

• Non–Deliverable Forwards

– Estimated USD 1 trillion market (BIS 2003) – Provisional launch in Q4 2006

• Enhanced EBS Spot dealing screens

– Offering up to 22 currency panels on one screen – Designed to facilitate:

• trading in multiple currencies
• high frequency trading
• placing more orders into the EBS market

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Fixed income: New products

• North America

– Canadian Government bonds – launched Q4 05 – Credit Default Swaps – Q1 06 – Yield Curve Swaps – In pilot – RP Cross

• Europe

– Euro Eurobond sector – Euro-Sterling - roll-out Q4 06 – Euro-Financials – in pilot phase

• Eurobonds issued by a financial corporate

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Key drivers for success

Superior customer relationships

1

Customer satisfaction

2

A trusted global brand

3

Focus on customer needs and market competition

4

Maintaining and building the liquidity pool

5

Unique product selling points

6

Solid and scaleable business model

8

Leading technology

7

Talented and dedicated people

9

Robust analysis

10

52

ICAP Technology Briefing

Business value creation through technology Jay Spencer Global Chief Information Officer

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ICAP IT Profile

TOTAL STAFF = 341 PRODUCT MANAGEMENT & DESIGN PRODUCT DEVELOPMENT CORE IT

DERIVATIVES FINANCING Application Development & Architecture Infrastructure & Architecture Market Data & Analytics Development Production Support & Quality Assurance Networks Operations Support Internal Systems REPO GOVERNMENTS AGENCIES JGBs MORTGAGES CORPORATES

Equities Commodities Market Information / Analytics Fixed Income

SPOT

FORWARDS CREDIT DERIVATIVES IRS / I-SWAP EXCHANGE TRADED CLEARING STRUCTURED PRODUCTS

Emerging Markets Derivatives FX Futures

54

EBS IT Profile

DERIVATIVES FINANCING REPO GOVERNMENTS AGENCIES JGBs MORTGAGES CORPORATES

SPOT

FORWARDS CREDIT DERIVATIVES IRS / I-SWAP EXCHANGE TRADED CLEARING STRUCTURED PRODUCTS

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Key Management Drivers

• Ensure delivery commitments are met to support:

– organic growth – balanced voice and electronic needs – product opportunities defined in corporate strategy

• Operation efficiency

– execution on defined plans – cost savings and cost leverage

• IT business control
• “Legacy” synergies
• EBS integration

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Keys to successful EBS Integration

• Minimize distraction to existing ICAP and EBS delivery

schedules

• Retain critical players
• Get to steady state organization over next 12 months
• Apply “insourcing” options and flexibility built into EDS

agreement

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We know how to manage it; we’ve been here before

• Project funding
• Product plans; business-as-usual
• Most experienced players assigned to EBS Integration

steering and delivery teams

• Protection key players with agreements
• Timely organisational changes

58

Leverage from the EBS acquisition

• Product knowledge
• Development resources and capacity with similar skills
• IT Infrastructure expertise
• Globally based solutions team and operations support
• Major conversion to new infrastructure completed by

EBS

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Primary Synergy Opportunities

• Redundant capex spend
• Overlapping networks and costs to support
• Consolidated System Command Center and operations

staff

• Consolidated IT facilities and centers
• Duplicated Telecoms
• EDS contract savings
• Overlapping organisation functions

60

Future Opportunities

• New revenue opportunity – leverage trading

architectures

• Front end consolidation – “application container”

architecture

• Diverse matching technology

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Summary Slide

• We have the resources
• We have the capability
• We make efficient use of capital
• Above all, we have a unique blend, range and distinct

combination of product and technical skill

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Steve McDermott Executive Director, ICAP

Integration of EBS and ICAP

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Introduction

• Maintaining momentum in the business
• Clarity of overall business objectives
• A dedicated project management office to
• versee the process of integration
• Impressive people and the technology
• Prioritising the immediate decisions

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Transaction synergies (21 April 2006)

IT Network: $9m IT Infrastructure: $10m Other IT: $2m Property and other: $11m

5 10 15 20 25 30 35 2006/7 2007/8 2008/9 Full Impact

Projected Transaction Synergies US$ millions Projected Transaction Synergies US$ millions Sources of Synergies US$ millions Sources of Synergies US$ millions

Technology Non-Technology $m

$24m

Cost to Achieve

Note: The costs to achieve the synergies of $24 million will be treated as an “exceptional” item in the income statement in 2006/7 and 2007/8

$32m

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Integration

• IT
• People, Network and Hardware
• ICAP Electronic Broking
• Sales, Product, Marketing
• Support
• Property, HR, Finance, Legal and Compliance
• Combining the cultures

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Challenges

• e-broking now substantial business
• Recognition of the power of e-

broking and greater understanding in voice business of benefits

• Committed to investing to building

the e-business further

• Potential revenue synergies
• Staying ahead of the curve

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Investor Relations queries to :

Mike Sheard Director of Corporate Affairs ICAP plc 2 Broadgate London EC2M 7UR (44) 207 050 7103 mike.sheard@icap.com