Tullett's revenue hit by crackdown on risky trading

(Adds details, share movement, analyst comments)

March 3 (Reuters) - British interdealer broker Tullett Prebon Plc reported lower-than-expected full-year revenue, hurt by low interest rates and a regulatory crackdown on risky trading.

The company said it would not return to shareholders the $100 million settlement it received for the alleged poaching of its staff by U.S. rival BGC Partners (NYSE: BGCA - news) .

Tullett, whose brokers match buyers and sellers of currencies, bonds and swaps, said it would use the funds for investments, including acquisitions.

Tullett's stock fell as much as 5.2 percent, making it the biggest percentage loser on the FTSE-250 index on Tuesday morning.

Some investors might be disappointed that the award of $100 million is not finding its way back to investors via a special return, Liberum analyst Justin Bates wrote in a note.

The company's revenue fell 12.5 percent to 703.5 million pounds ($1.1 billion) in the year ended Dec. 31, missing analysts' average estimate of 708.4 million pounds, according to Thomson Reuters SmartEstimates, which is weighted to forecasts by top-rated analysts.

Interdealer brokers' revenues have slumped in recent years as their investment banking clients are being forced by regulators to reduce risky trading activities.

They have also been hit by regulators pushing to make markets more transparent by getting more derivatives trading onto electronic platforms.

To combat this, and low interest rates, Tullett kept a tight hold on costs last year, which helped it report only a 13 percent decline in pretax profit to 86.6 million pounds, instead of the 75.33 million pounds that analysts were expecting.

Liberum's Bates said underlying trading remained tough but the company would benefit in 2015 from making "exceptional" cost cuts.

However, Bates maintained his 'sell' rating on the stock as Tullett said revenue in the first two months of 2015 had been flat, missing his forecast of a 4 percent increase.

Shares (Berlin: DI6.BE - news) in Tullett were down 3.3 percent at 340.4 pence at 0932 GMT. ($1 = 0.6505 pounds) (Reporting by Richa Naidu in Bengaluru; Editing by Anupama Dwivedi)