The broker has teamed up with CLS Group, a specialist in foreign exchange settlement services, to create the service which has already secured the heavyweight backing of Citigroup, Deutsche Bank, JP Morgan and Royal Bank of Scotland.
The foreign exchange market has been identified as an area of concern by global regulators scrutinizing the risks taken by banks.
In recent years, the volumes in the foreign exchange market have soared as a result of participation by hedge funds, algorithmic traders, retail and institutional market investors. Many of these are prime brokerage clients of the banks. There are an estimated two million individual foreign exchange trades between the banks every day, together worth an estimated $3.2 trillion. Regulators have criticised the settlement system for being overburdened and too outdated to deal with the expanding market.
The new joint venture, which will be 51pc owned by CLS and 49pc by Icap, will target smaller trades and aggregate them into groups to radically reduce risks. The companies both said they expect the costs of settlement to be "significantly reduced".
Mark Yallop, Icap's chief operating officer, said: "We have a real opportunity to strengthen the foreign exchange market infrastructure with this joint venture with CLS. By bringing together the leading players in the industry and a sound technology platform, we can reduce risk and increase industry capacity to create the opportunity for very material further growth."
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