Working from home hurts risk-taking and has led to 'uncommonly quiet' markets, says the world's largest interdealer broker

• Working from home hampers risk-taking and has led to "uncommonly quiet" markets, said TP ICAP.
• The interdealer broker blamed its declining revenue in the first half of 2021 partially on closed offices.
• "When asset managers come back to the office and start taking more views on the markets and on their funds, then that translates into more dealer activity," the firm's strategy head told Bloomberg.

Working from home hampers risk-taking and has led to "uncommonly quiet" markets, said the world's largest interdealer broker.

TP ICAP said in its interim results that revenue slid in the first half of 2021 in part because traders were working from home and "effectively having to limit their risk appetites." The London-based company's revenue declined 5% on a reported basis.

TP ICAP also said it experienced subdued wholesale trading activity across most financial asset classes. However, it anticipates that market activity may pick up as clients return to the office.

"Government and central bank stimulus packages in response to COVID have flattened yields slowing activity in the secondary markets," the company said. "Additionally, the pandemic has forced many of our clients to work remotely with reduced risk limits. With TP ICAP's revenues driven by transaction volumes, these factors have therefore had an adverse impact on our financial results for the six months."

"The traders that generally would be taking more risk have not been really able to take as much risk," Joanna Nader, TP ICAP's global head of strategy, told Bloomberg. "They're working from home, it's not as easy to supervise them -- and so banks have generally taken the view that they want them to have lower risk limits."

TP ICAP has told its brokers to come back to the office full time in places where it's safe to do so, according to Bloomberg.

"Hopefully, when people start returning to the office we start to have a more normal type of environment," said Nader. "When asset managers come back to the office and start taking more views on the markets and on their funds, then that translates into more dealer activity."

TP ICAP stock slid 8.41% to $180 a share on Tuesday.