Michael Spencer's interdealer broker Icap, which recently considered making a bid for the London Stock Exchange, declared today that it was hutning more acquisitions after being given the go-ahead by the City watchdog to free up £300 million of its capital.

The world's largest inter-dealer broker, which handles confidential trades in bonds and other securities between banks, boasted that it was doing so well out of the recent market turmoil that it had handled $1 trillion (£500 billion) of electronic trades on two successive days this month for the first time.

Icap said today that its volume of trades had soared as clients had been bailing out of emerging markets bonds and the mortgage-backed securities, which have been hit by fears over the plunging US sub-prime mortgage market, and switching their money into safer government bonds and interest rate swaps.

The brokerage, in which Michael Spencer, the founding chief executive and now Conservative Party treasurer, holds a 21 per cent stake, said that £300 million would be freed up because it had been granted a waiver by the Financial Services Authority to a new directive on capital requirements.

It added: "There continue to be a number of opportunities for further consolidation of both voice and electronic broking businesses. Icap is very well placed to make further acquisitions."

Mr Spencer had approached the London Stock Exchange last year but talks broke down over price.

A new acquisition could far exceed £300 million because Icap said that it could raise more through borrowing.

The company also said that the integration of EBS, its US-based foreign exchange broker, which it bought for £464 million a year ago, was on track and doing well with at least $45 million of savings by the end of March 2009.

Icap also said that it expected full-year profits to be line with market forecasts of £250 million.

The shares edged off their recent highs in early trading, perhaps in disappointment that there was no talk of a takeover bid.

There have been rumours that Mr Spencer might be willing to sell now he has taken new responsibilities in the Conservative Party.

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