Icap, Michael Spencer's interdealer broker, boasted that its expansion opportunities were on the increase as last year's deal to acquire the electronic currency trader EBS helped to boost annual pre-tax profits before one-off items by almost a quarter to a record topping £250 million.

Mr Spencer forecast that bond, currency and derivative markets would grow by between 7 per cent and 9 per cent over the "medium term", typically three to five years.

He had pledged last month to expand the group both organically and by acquisition. This came as competition among interdealer brokers grew more intense after Terry Smith's Tullett unit was spun out of Collins Stewart. Icap and Tullett also compete with GFI.

Mr Spencer told journalists today that Icap had the capacity to make a "substantial acquisition, if one becomes available". He said Icap could buy an electronic or voice-broking company, adding: "There's nothing in the crosswires at the moment. Valuations are very high right now. Nothing is off the agenda, but equally nothing is imminent."

Icap emerged last year as a credible buyer for the London Stock Exchange, although it is currently keen to work with a rival trading platform put together by investment banks and called Project Turquoise.

Pre-tax profits before exceptional items rose 23 per cent to £251.6 million. Once one-off items such as acquisition costs were removed, Icap posted pre-tax profits of £213.8 million, a gain of 11 per cent. Operating margins improved to 22 per cent.

But Mr Spencer was forced to admit that falls in the value of the dollar last year had reduced Icap's profits by £11 million, some £2 million of this from EBS, which was bought by his broker last year for $517 million in cash and 36.1 million shares.

"This was a year when the dollar significantly weakened against principal currencies. Had the dollar remained unchanged last year, our headline figure would have been about £11m higher," he said.

Strong growth last year across Icap, which benefits from volatility in bond and share markets, brought a 20 per cent rise in revenues to a record £1.1 billion.

Income from electronic broking rose 103 per cent to £199.1 million as the benefits of buying EBS began to show through.

Icap is increasingly active in energy trading and the emerging markets and is exploring an insurance joint venture with Jardine Lloyd Thompson, a broker.

Icap shares, which value the FTSE 100 group at £3.4 billion, slipped 2p to 528p.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive