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Do androids dream of 40 per cent margins? Or just fintech company bosses? Michael Spencer, the ebullient chief executive of electronic trading group Nex Group has carried investors along with his heady vision of profits since Nex was carved out of ICAP last year. Now, they are starting to wake up.

Before throwing in his lot with the machines, Mr Spencer made ICAP into the world’s largest interdealer broker. His name confers good faith — even after limp half year profits. But its chances of achieving a targeted 40 per cent operating margin by 2020 are fading. In the six months to September 30 the margin was 22 per cent, from 30 per cent last year.

Nex is a company full of useful parts that global banks rely on. Its problem is knitting those parts together. The former head of the post-trade unit, which processes millions of deals in fixed income, derivatives, swaps and equities, had a bold idea for reorganisation that cost money and eroded operating margins. She has been replaced by a cost-cutter, and NEX has increased its cost saving target from £25m to £40m by 2020.

The switch from spend to cut feels like mixed messaging but is the right move. Nex needs to prove it can make money from is main business. Much rests on the introduction of Europe’s new markets legislation, Mifid II, in January. This should boost demand for Nex’s detailed post-trade services.

Even if it does not, the share price — up 26 per cent this year — has reason to hold up. A dip in revenues will boost takeover speculation. Exchanges such as LSE and Deutsche Börse have been mooted, though both have personnel problems at the moment. MarketAxess or IHS Markit seem a more likely bet.

It all depends on how possessive Nex’s biggest shareholder feels. Last year, Mr Spencer ditched ICAP’s lower margin voice-broker business to Tullett Prebon for £1.3bn, a deal that made him over £200m. A second payday from the business he founded could be the real dream scenario.

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