Nobody will accuse them of marrying in haste û the two parties first put pen to paper four years ago and have been crawling towards an agreement ever since. In the meantime, Icap's biggest rival, Tullett Prebon, signed up with Shanghai International and has been broking in China for more than eight months.
"It's taken an incredibly long time," says Mark Yallop, chief operating officer of Icap, which is the world's biggest inter-dealer broker. "Partly because the regulatory approval process has been very careful and deliberate û slower than we'd like at times û but also because we wanted to get the architecture in place correctly. We're not doing this because we see an incredible opportunity in six months time û it's a slower burn than that."
The wait has been worthwhile. CFETS, also known as the National Interbank Funding Centre, is owned by the People's Bank of China and is the biggest renminbi broker in the market. Combined with Icap's management expertise and understanding, Yallop is confident that the joint venture will grow into a formidable competitor despite the late start.
"Sometimes in our business there is a first-mover advantage," he says. "But that tends to be in electronic broking mainly. In voice-broking the barriers to entry are much lower û the skill is all in the people you have."
The partnership, known as Shanghai CFETS-Icap, will be two-thirds owned by CFETS and one-third owned by Icap. It will provide voice-broking services to the money, bond and derivative markets for both local and international clients.
Danny Cheung, previously responsible for Icap's interest-rate derivatives business in Hong Kong, is being seconded to the joint venture as general manager, with Pan Sizhong from CFETS as deputy general manager. To start with, the joint venture will be staffed with 30 people based in a new office in the Pudong financial district. Icap will be rolling out its graduate recruitment programme to Asia next year.
There is currently no agreement between the two parties to cooperate in China's electronic broking business, which is dominated by CFETS, but Yallop doesn't rule out the possibility of discussions further down the line.
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