INTRODUCTION. Management team. US Businesses. Migration to electronic broking Strategic issues. Ron Purpora Doug Rhoten David Rutter

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1 Investing in ICAP August

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 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

3 INTRODUCTION Management team Ron Purpora Doug Rhoten David Rutter US Businesses Market drivers Competition/Building market share Migration to electronic broking Strategic issues 3

4 ICAP Highlights Highlights ICAP has created a powerful combination: the world s largest voice and electronic interdealer broker. There is growing demand for electronic broking of liquid products, which is totally complementary to voice broking of more bespoke, less liquid products ICAP is active in the wholesale market for OTC derivatives, fixed income securities, money market products, foreign exchange, energy, credit and equity derivatives ICAP Revenue ( m) ICAP Revenue ( m) /0 2000/1 2001/2 2002/3 2003/4 2004/5 Source: ICAP Diversification of revenues, FY ended 3/31/05 Diversification of revenues, FY ended 3/31/05 Securities broking 41% ICAP is a growth business in a growth market. Our strategy remains to grow both organically and through selective acquisition Information services 3% Electronic broking 11% Energy broking 6% Source: ICAP Derivatives and money broking 39% 4

5 MARKET DEVELOPMENTS Highlights Highlights ICAP estimates that the global interdealer broker market for OTC derivatives, fixed income securities, money market products, foreign exchange, energy, credit and equity derivatives increased in 2003 by approximately 4%, after adjusting for the impact of exchange rate movements and is worth approximately $5.1billion With an estimated 28% share of the market ICAP continues to be the global leader. ICAP has demonstrated an ability to successfully complete numerous transactions including, Garban, BrokerTec, First Brokers and APB Energy, by using our global infrastructure and capabilities to add diversification while still maintaining significant management input from all acquisition partners Increasing concentration of liquidity Voice & Electronic brokers: ICAP/BrokerTec and espeed/cantor Fitzgerald/BGC/Maxcor Voice only brokers: Collins Stewart Tullett/Prebon Yamane, GFI and Tradition/Viel Electronic only brokers: MTS, EBS, Tradeweb, Reuters, Bloomberg and FxAll Market Revenues Market Revenues # # Global Interdealer Broking 2004/05 - $5.1Billion Global Interdealer Broking 2004/05 $5.1Billion ICAP Collins Stewart Tullett/Prebon* Tradition Cantor/eSpeed /BGC/Maxcor* Other e-brokers GFI Others Other Energy brokers $ m # Where no public information is available, estimates have been used at the prevailing average exchange rates * Combined businesses on a proforma basis Voice Broking Voice Broking Voice volumes grew by 3% in constant terms in 2004/5 CDS markets active, indices Medium term derivatives had a slow period then rebounded 2004/5 2003/4 Development of new markets e.g. China, Korea & Latin America Introduction of new products e.g. carbon emissions, coal and freight 5

6 ICAP ELECTRONIC BROKING Highlights Highlights ICAP is committed to the application of technology to provide improved price discovery, deal execution and straight through processing in the rapidly evolving OTC derivative and bond markets. By creating a hybrid of electronic and voice broking we cover the entire spectrum from highly liquid to highly illiquid markets Global interdealer electronic broking revenues grew by 14% in 2004/5 to $730 million ICAP is now the leading IDB globally with an average of $460 billion/day in 1st quarter 2005, up 48% on the previous year. Estimated market share in US Treasuries of more than 60% In the more liquid and commoditised markets, electronic broking creates additional growth opportunities through: the efficiency of electronic broking increasing trading volumes and attracting business previously traded directly between banks increased market concentration and higher barriers to entry resulting in fewer players with larger market shares increased integration with the banks client trading systems and black box automated trading systems. Electronic Broking Volumes Electronic Broking Volumes All Fixed Income Products ($billion/day) All Fixed Income Products ($billion/day) MTS Group espeed ICAP/Brokertec Product coverage Product coverage 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 Sources: BrokerTec, ICAP, estimates from espeed and MTS including some actual data from websites - counting only trades executed electronically. B to B only. ICAP s electronic broking footprint is much more extensive than any other broker and currently includes active and off-the-run US Treasuries, Bills, Notes, Bonds, Strips, TIPS and Basis trading as well as Agencies and Mortgages; European, UK, Australian, Japanese and South African government bonds; US$ and euro repurchase agreements; Eurobonds and credit derivatives; EONIAS and forward foreign exchange. 6

7 Investing in ICAP Securities Division Americas Ron Purpora 7

8 SECURITIES MARKETS Core Divisions Treasury Products Mortgage Securities Federal Agency Issues Corporate Products including Corporate Bonds Emerging Markets Credit Derivatives Equity and related 8

9 SECURITIES MARKETS OVERVIEW 317 Brokers servicing 500+ accounts Voice and Electronic Capabilities Market Leading Positions in all core divisions 62% Revenue growth Fiscal 01 to Fiscal 05 68% Operating Profit growth Fiscal 01 to Fiscal 05 9

10 SECURITIES MARKETS Success Stories Cemented leading position in Corporate Bonds with acquisition of First Brokers 10 fold increase in CDS revenues in three years Rolled out new technologies to exploit STP capabilities across products Historically strong performance related to overall growth in Fixed Income arena 10

11 TREASURIES HYBRID BROKERAGE Estimated Market Share - US Treasury Trading 28% 9% 3% ICAP-BTEC E-Speed TTL Hill 60% Source: Federal Reserve Bank of NY Data, internal estimates 11

12 TREASURIES HYBRID BROKERAGE 600,000 Average Daily Volume US Treasury Securities 500, ,000 $ millions 300, , , (july) source: Federal Reserve Bank of New York 12

13 MORTGAGE SECURITIES Highlights Highlights ICAP has strongest presence across product base Estimated Market Share Trading All Products Estimated Market Share Trading All Products 3% 5% TBA Collateral Market 34% Specified Pools 33% CMO s ARM s, ABS, Commercial and Derivatives 33 Brokers servicing these products 25% ICAP-BTEC TTL Hill Farber Chapdelaine Tradition Strong operating margins Source: ICAP 13

14 MORTGAGE SECURITIES - FUNDAMENTALS Long Term Issuance - US Bond Markets 1,200 $Billions 1, First half 2004 First half Mortgage Related Federal Agency Corporate Treasury source: Bond Market Association 14

15 MORTGAGE SECURITIES Electronic Participation Minimal in IDB space Historically strong trading volumes Refinancing activity Market volatility Offer full suite of mortgage products 15

16 AGENCY ISSUES Government Sponsored Enterprises: FNMA and FHLMC Notes and Bonds Callables Staff of 21 brokers offering screenbased voice execution ICAP is by far the leading broker Voice capabilities Electronic capabilities 16

17 AGENCY ISSUES Estimated Market Share - Agency Trading 4% 1% 20% ICAP-BTEC TTL E-speed Tradition 75% Source: Federal Reserve Bank of New York data, internal estimates 17

18 CORPORATE PRODUCTS First Brokers acquisition established leadership in this sector Traded in a Voice environment Staff of 178 Brokers High technology deployment Straight Through Processing Initiatives Regulatory Requirements Market data dissemination 18

19 CORPORATE PRODUCTS Corporate Bonds 7% 14% 20% Estimated Market Share - Corporate Bonds 5% 20% Source: ICAP 34% ICAP-BTEC TTL Chapdelaine Murphy FIMAT Others Corporate Bonds primary component Growth through acquisition and extension Market growth Characterized by lower level of liquidity No electronic players in IDB Market 19

20 CORPORATE PRODUCTS Market Extension Developments Credit Derivatives High growth area Attained a leading position Strong Margins Equities Direct Access Unit NYSE Seat holder Stock Loan 20

21 SUMMARY Treasury Products A market leader 60% market share Hybrid Brokerage Agency Issues Leading share in voice and electronic brokerage 75% market share Mortgage Securities Market leader - 35% share Full suite of mortgage products Corporate Products Leading broker of corporate bonds 35% market share 21

22 Investing in ICAP Capital Markets - Americas Doug Rhoten 22

23 CAPITAL MARKETS INTRODUCTION Products/Markets covered Foreign Exchange Money Market Repurchase Agreements $ Derivatives Energy Latin America Emerging Markets Emerging Products 23

24 ICAP VOTED TOP BROKER IN Summary of 2004 Risk Survey Rankings: Interest Rate Products ICAP #1 in 42 FX Options Products ICAP #1 in 13 24

25 POST MERGER GROWTH Highlights Highlights Operating Profit Increased by 325% Net Revenue Increases by 155% Profit Margin Increased from 15% to 23% 300, , , ,000 Operating Profit Net Revenue 100,000 50, Source: ICAP 25

26 ICAP BUSINESS MODEL Production Management Consolidate Voice Liquidity Premiere Brokers Integrate Technology Create Indices & Distribute Data Partnership With Industry Leaders 26

27 MANAGEMENT Flat Management Structure Product Knowledge Long Term Tenure Broker Loyalty Customer-centric Approach 27

28 BUILD VERBAL LIQUIDITY Market Share Goal: 35% Production Specialization Displace Customer Sales force Invest in Emerging Products Customers Help Drive Process 28

29 COMPLEMENTARY TECHNOLOGY Straight Through Processing Connectivity Electronic trading integration Customers choice 29

30 CREATING INDICES Telerate CMM on Telerate ISDA Swapfix Fed Funds (Telerate page 5) SwapPX GovPX LatAm markets through Bloomberg Mexico markets through Bloomberg 30

31 FOREIGN EXCHANGE VOICE MARKET Spot Spot Tullett-Prebon 35% ICAP 65% Source: ICAP Others 10% Forwards Forwards Others 10% NDF s NDF s ICAP 35% Tradition 20% GFI 15% ICAP 45% Source: ICAP Tullett-Prebon 35% Tullett-Prebon 30% Source: ICAP 31

32 MONEY MARKET Highlights Highlights Market Share 37% Rank #1 Market Share Market Share Eurobrokers 18% Technology idepos Financial Oxygen STP ICAP 37% Benchmark Index Telerate Page 5 Partnership Financial Oxygen (JP Morgan & BOA) Future Drivers idepos Whole Loans CMCD Tradition 20% Source: ICAP Tullett-Prebon 25% 32

33 REPURCHASE AGREEMENTS Highlights Highlights Market Share Market Share Market Share 65% Rank #1 $750+ Billion per day turnover Technology BrokerTec ETC Franchise approach Extend capital and technology infrastructure 3 Voice Brokerage Desks Maxcor-Cantor 6% Tullett-Prebon 20% Tradition 6% Hill 3% ICAP-BTEC 65% Source: ICAP 33

34 $ INTEREST RATE DERIVATIVES Highlights Highlights Market Share Market Share Market Share 40% Rank #1 Tradition 5% Technology FRACross Swapswire STP iswap & Datatec Benchmark Index Telerate & SwapPX ISDA Swapfix Partnership Swapswire ISDA Drivers FRACross Short Swap push Hybrid trading Structured products Others 13% GFI 12% Tullett-Prebon 30% Source: ICAP ICAP 40% 34

35 EMERGING MARKET DERIVATIVES Highlights Highlights Market Share Market Share Market Share 50% Rank #1 Technology Datatec Benchmark Index 12 Bloomberg pages Partnership LatAm Stock Exchanges Drivers Chilean IRS Colombian IRS Asian IRS GFI 18% Local Brokers 12% Tullett-Prebon 20% ICAP 50% Source: ICAP 35

36 ENERGY Market Share Electricity Market Share Electricity Market Share Natural Gas Market Share Natural Gas Others 28% ICAP 23% Others 30% ICAP 20% Tullett-Prebon 17% Tullett-Prebon 14% GFI 12% ICE 15% Source: ICAP Amerex 20% Source: ICAP Amerex 21% Drivers & Opportunities Drivers Opportunities NA Power & NA Natural Gas Basis NYMEX Fixed Price & Options Areas Consolidate US Oil Deliver our hybrid electronic trading solution 36

37 LATAM PRESENCE SIF/Garban Mexico Technology Datatec & Sipo LatAm Expansion Stock Exchange Joint Ventures CIMD Purchase Enter Brazil 37

38 OPPORTUNITIES Emerging Products Growth Exotic Derivatives Structured CDS CMCD Real Estate Derivatives Energy Consolidation (Oil) Equity Derivatives Whole Loan Brokering Logistic Derivatives Electronic Trading 38

39 CLOSING Keys to Growth: Extending Market Share Expanding Hybrid Technology Creating New Markets 39

40 Investing in ICAP Capital Markets - Americas Doug Rhoten 40