ICAP plc, headquartered in London, England, is the largest interdealer broker in the The revised RCAs also eliminate the non-compete and most-favored-nation provisions.įinally, BrokerTec's shareholders will not be able to appoint an ICAP Board member. The remaining products covered by the RCAs, the term of the RCAs has been limited to three Maximum cap on commissions has been reduced to $71.5 million. The minimum RCA commitment has been reduced to $40.6 million, and the Treasury bills, off-the-run Treasury coupons, and agency securities were removed entirely from Given the right to appoint one member to ICAP's Board of Directors.Īs a result of the Antitrust Division's objections, the RCAs have been revised so that In addition, BrokerTec's shareholders were (2) a non-compete provision that prevented any group of three or more BrokerTec shareholdersįrom taking an equity interest in a new electronic trading platform that anonymously matchedĪgencies, Treasuries, and certain other fixed income securities for three years and (3) a most-favored-nation clause requiring ICAP to offer BrokerTec's shareholders the lowest per-unitĬommission cost available to any ICAP customer. The RCAs also included: (1) a maximum cap onĬommissions of $97.6 million, which BrokerTec's shareholders could extend for up to five years Three years in essentially pre-paid commissions. That would have obligated BrokerTec's shareholders to pay at least $61.3 million annually for Hewitt Pate, Acting Assistant Attorney General inĬharge of the Department's Antitrust Division.Īs originally structured, BrokerTec's institutional shareholders agreed to enter into RCAs Their interdealer brokerage needs," said R.
"The restructuring of the RCAs will permit other interdealer brokers to compete for theīusiness of the BrokerTec shareholders and will preserve for all dealers adequate choices for Interdealer brokers facilitate trading in a way that allows dealers to hedge risks and adjust their inventory positions more quickly, efficiently, and at lower prices, than other trading venues. Interdealer brokers serve as conduits between dealers of Treasury and agency securities in the secondary market for these instruments. ICAP and BrokerTec are two of a small number of companies providing interdealer brokerage services for U.S.
The Department said the transaction as originally proposed would have reduced competition for interdealer brokerage services in the trading of U.S.
Justice, ICAP plc and BrokerTec LLCtwo of the world's largest interdealer brokers-restructured their planned acquisition to alter Revenue Commission Agreements (RCAs) and other terms entered into by BrokerTec's institutional shareholders in connection with the deal. In response to antitrust objections raised by the Department of Restructured Deal Preserves Competition in Interdealer Broker Markets JUSTICE DEPARTMENT RAISES ANTITRUST OBJECTIONS ICAP PLC AND BROKERTEC LLC RESTRUCTURE DEAL AFTER For an official signed copy, please contact the
To view the PDF you will need Acrobat Reader, which may be downloaded from the Adobe site. ICAP plc and BrokerTec LLC Restructure Deal After Justice Department Raises Antitrust Objections This document is available in two formats: this web page (for browsing content) andįormatting).