Cantor Fitzgerald Ireland sees profit rebound in 2017

Stockbroking and investment firm intends to be ‘a driver’ of industry consolidation

MiFID II, which becomes effective in January, will force brokers in the EU to charge clients separately for investment research rather than bundling the cost with trading services. Photograph: Getty Images

MiFID II, which becomes effective in January, will force brokers in the EU to charge clients separately for investment research rather than bundling the cost with trading services. Photograph: Getty Images

 

Stockbroking and wealth management firm Cantor Fitzgerald Ireland has seen a “significant return to profitability” this year after dipping into a loss in 2016. However, the company’s chief executive warns that the industry faces challenges from Brexit and rising regulatory costs.

The comments from Cantor Fitzgerald Ireland’s chief executive Ronan Reid come after Cantor Fitzgerald Ireland issued results which showed that it fell into a €825,630 loss on ordinary activities before tax compared with a profit of €506,096 for the previous year. The performance in 2016 was impacted by challenges faced by the sector amid political uncertainty from the Irish general election, Brexit and the US presidential vote, according to Mr Reid.

Cantor Fitzgerald Ireland has since seen a rebound to profitability in 2017, arising from a 25 per cent increase in revenues so far this year, according to the company, which entered the Irish market in 2012 through its purchase of Dolmen Securities.

This comes amid a “general upturn in business”, its acquisition in June of L&P Group which provides advisory services to charities, trusts, not-for-profit organisations and religious orders, the transfer of former RaboDirect accounts to Cantor, and the company’s role as lead manager on an Irish government bond sale in January.

“Diversification of revenue streams and laying the groundwork for a better 2017 were a key focus for Cantor Fitzgerald during 2016,” said Mr Reid, adding, however, that “the underlying costs of doing business in Ireland remain a pressure point”.

Regulations

Meanwhile, investment firms in Ireland, as elsewhere in the EU, are grappling with incoming regulations known as the Markets in Financial Instruments Directive II (MiFID II), which Mr Reid called “the most pervasive financial services policy changes in the last decade”, and uncertainty caused by Brexit.

“Such trends and challenges are expected to drive further industry consolidation, and Cantor Fitzgerald Ireland intends to be a driver of this consolidation,” Mr Reid said.

MiFID II, which becomes effective in January, will force brokers in the EU to charge clients separately for investment research rather than bundling the cost with trading services. While the rule changes are designed to make the European securities market more transparent and better value for money, it has left investment managers grappling with issue of whether to absorb the additional costs or pass them on to clients.