ICAP to close LME base metals broking business -sources

(Updates with quote from source, adds details)

By Clara Denina and Eric Onstad

LONDON, Dec 11 (Reuters) - Major broker ICAP (LSE: IAP.L - news) will exit its base metals broking business on the London Metal Exchange (LME) at the end of December, as part of wider restructuring, industry sources said on Thursday.

Interdealer broker revenues have plunged as banks retreat from risky trading to comply with new rules brought in after the 2008 financial crisis, and ICAP has been trying to offset a slump in trading volumes by cutting costs.

The company reported a 38 percent fall in first-half profit last month and gave a cautious outlook for the rest of the year.

It also said last month a wider restructuring was expected to result in 260 broker job losses - more than 10 percent of its broking unit work force.

"ICAP are exiting from LME broking, it looks like it's part of their restructuring," one of the sources said.

ICAP and the LME declined to comment.

ICAP, the world's largest interdealer broker, has been a Category 2 member of the LME since January 2009, which comes with electronic and telephone trading rights but not open-outcry "ring" trading.

ICAP, which has offered LME options and futures trading plus clearing services, also expanded the business with a New York LME desk in 2009.

Banks have withdrawn or slashed exposure to base metals as well as the wider commodities markets, under heavy pressure from regulators and requirements to hold more capital.

ICAP said last week it would combine its foreign exchange and fixed income trading platforms. (Reporting by Clara Denina and Eric Onstad; Editing by Veronica Brown and Susan Thomas)