Correction ‘not over by good distance’: ICAPs Spencer

The world's markets are going through a "very major, very significant correction" and the level of regulatory reform imposed on banks could make this a difficult year for investors, Michael Spencer, chief executive of dealer broker ICAP told CNBC.

The world's equity markets have got off to the worst start of the year ever with the Frankfurt and Tokyo exchanges falling by double-digit percentages, New York by 9 percent and London 8 percent.


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"We're seeing a very major, very significant correction in the markets at the moment," Spencer told CNBC at the World Economic Forum's meeting in Davos, Switzerland.

"And I think it's not over by a good distance. But with this correction at points will come some magnificent buying opportunities for those who've kept their powder dry and have got a long-term view."

However, Spencer warned the increased levels of banking regulations, introduced to ensure that lenders reduce the amount of high-risk capital on their books, could also mean that the current market turmoil could last a long time.

With the increased level of regulatory reform, Spencer said, there has been a "dramatic reduction" in banks' risk capital.

"When asset prices start going down, this can be a big problem and I think undoubtedly that lack of risk capital buffers will contribute to a very very challenging year."


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