By Luke Jeffs
LONDON, Nov 9 (Reuters) - Broker Tullett Prebon said on Friday its revenue for the four months to the end of October fell 12 percent due to “challenging” market conditions, sending its shares down more than five percent.
The broker said in a trading update that revenue of 276 million pounds ($440.8 million) for the period reflected a particularly slow July and August in which its income was down 19 percent on last year.
“Market conditions have continued to be challenging and the overall level of activity has remained subdued,” the broker said in a statement.
Tullett and rival ICAP, the world’s biggest broker, make money by matching buyers and sellers of bonds, currencies and swaps in the financial markets. But since the financial crisis they have struggled because trading volumes have dropped as investment banks have cut back.
“This [the revenue] was not surprising given subdued absolute market levels this summer versus tough comparisons for the same period last year which benefited from heightened volatility’” said Daniel Garrod, an analyst at Barclays.
In July, Tullett had reported a 7 percent fall in first half profits and said it did not expect much improvement in the market in the next six months due to the sluggish economy and euro zone debt crisis.
Analyst forecasts compiled by Thomson Reuters predict Tullett revenues for the second half of the year falling 3.5 percent to 439.6 million pounds.
Analysts expect ICAP’s revenue for the six month to the end of September to fall 13 percent to 751.8 million pounds when it reports half-year results on November 14.
Tullett shares were down 5.4 percent at 247.8 pence by 0920 GMT.
Tullett also said on Friday it had incurred 7 million pounds of costs in relation to a legal action against broker BGC over claims of staff poaching in 2009.