Trading: a cheap broker set to bounce

Interdealer broker TP ICAP is cheap, expanding steadily and restoring its dividend. Matthew Partridge explains the best way to play it.

Trader working online
TP ICAP provides financial companies with the electronic infrastructure to trade with each other
(Image credit: © Getty Images/iStockphoto)

Interdealer brokers make up one of the less glamorous subsectors of financial services; you will rarely see them appear in the news. They provide the electronic infrastructure to allow big financial institutions to trade with each other in cases where there is no centralised exchange, such as a stockmarket.

This usually means bonds or complex products, such as financial swaps and some commodities (notably energy). One such broker is TP ICAP (LSE: TCAP), which has seen it shares fall by nearly 50% over the past year thanks to a dividend cut, the fall in trading volumes induced by the pandemic and the disruption caused by the UK leaving the EU’s single market.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri