ICAP looks to U.S. Fed rate hike to boost trading in 2015

(Corrects dateline to May 19 from May 18)

* ICAP (LSE: IAP.L - news) says "mildly optimistic" for 2015

* FY 2014 trading profit down 15.5 pct, rev down 7 pct

* Trading picks up in 2015 start; subdued in April, May

* Shares (Frankfurt: DI6.F - news) fall nearly 3 pct in early trading

By Aashika Jain

May 19 (Reuters) - ICAP Plc, which matches buyers and sellers of bonds, swaps and currencies, said it was "mildly optimistic" for 2015 as traders worldwide wait for the U.S. Federal Reserve to hike interest rates, which would boost trading volumes.

The 29-year old company reported a 15.5 percent fall in fiscal 2014 trading profit and said volumes remained slightly subdued in April and May, the first two months of fiscal 2015.

"But, I think the broader backdrop is an interesting one because we are now coming towards the end of quantitative easing in the United States," ICAP founder and Chief Executive Michael Spencer said on a media call on Tuesday.

"We are expecting that at some point the U.S. Federal Reserve will have to start moving rates upwards and I would hope that it would result in an increase in volume activity levels around the world."

While the Fed is broadly expected to raise rates this year, the timing of the move has kept the market on tenterhooks with expectations ranging from June to December.

ICAP, which is nearly done with an extensive corporate restructuring, has been hit as stricter capital requirements have forced banks, its main clients, to pull back from risky trading activities.

"Structural changes impacting bank capital costs are likely to structurally lower the trading revenue base, in our view," Canaccord Genuity (Other OTC: CCORF - news) analyst Arun Melmane said in a note.

Melmane said current growth in ICAP's post-trade services, electronic forex business (EBS) and fixed income business, BrokerTec, was unlikely to offset the impact of the cutback from banks.

ICAP has pinned its hopes of growth on post-trade services and its electronic trading platforms, such as EBS and BrokerTec, which together account for three-quarters of its profit.

The moves by the European Central Bank and the Bank of Japan late last year and by the Swiss National Bank in January, drove an increase in forex volatility, ICAP said. That helped trading pick up at the start of 2015.

Still, ICAP's group revenue fell 7 percent to 1.27 billion pounds ($1.97 billion) for the year ended March 31.

Trading pretax profit fell to 229 million pounds from 271 million pounds.

ICAP said it would pay a final dividend of 15.4 pence, bringing its full-year dividend to 22 pence.

The FTSE-250 company's shares were flat at 564 pence at 1130 GMT. They had fallen nearly 3 percent in morning trading. ($1 = 0.6451 pounds) (Editing by Gopakumar Warrier and Savio D'Souza)