TP ICAP warned underlying operating profit would be hurt by costs of about 10 million pounds ($13.2 million) related to Britain's EU exit and new rules on market transparency.

Earnings per share (EPS) would be below the bottom end of the range of analysts' expectations of 34.9 pence to 39 pence, the company added.

In Tuesday's trading update, the company also cut its cost savings target to 75 million pounds from 100 million pounds annually by the end of 2019, blaming investment needs to deal with changes in the industry.

Phizackerley is replaced by Nicolas Breteau, who currently leads TP ICAP's largest business - global broking.

Tullett Prebon's buyout of its main rival ICAP's voice broking business in 2015 reflected the growing strains on one of the City of London's trademark industries - the phone-toting brokers who acted as go-betweens for major banks and financial firms in currency, energy and interest rate markets.

Lower volatility on financial markets has hurt the firm as investors reined in risk-taking and stock markets racked up a decade of gains and the costs of Brexit and the European Union's MiFID II regulatory reform have compounded those problems.

"The evolving landscape is driving up costs across our industry. The acquisition of ICAP has given us greater scale to withstand this pressure," Chairman Rupert Robson said in a statement.

"However, it has become clear that a change of leadership is required to execute our medium-term growth strategy and deliver the detail of the integration process."

DEFENDING HIS RECORD

One criticism against Phizackerley was that he focused solely on the integration of ICAP's voice broking business and was not able to juggle day to day operations, leading to poor results and creeping costs.

"The board did take a swift and decisive decision and he (Phizackerley) was told last night ... there was under investment in the business with expected headwinds like MiFID II and Brexit," a source with knowledge of the matter told Reuters.

Phizackerley, who joined Lehman Brothers in 1986, had been in charge of first Tullett Prebon and later TP ICAP since 2014, defended his record.

"We created the world's biggest inter dealer TP ICAP. I'm very proud of that," he told Reuters in a message on LinkedIn.

"I'm disappointed about the events of the last 24 hours. TP ICAP has a bright future. I wish my friends and colleagues the best of luck," he added.

Shares in TP ICAP were already down 20 percent this year as of Monday's close. Tuesday's fall to 265 pence in meant they have halved in value since mid-February.

While TP ICAP has struggled, the electronically-focussed remainder of the ICAP business founded by Conservative party grandee Michael Spencer - now named NEX Group - has flourished.

NEX reported a 9 percent rise in full-year core trading profit in May and U.S. exchange operator CME Group agreed to pay $5.5 billion for the company in a deal due to close later this year.

($1 = 0.7557 pounds)

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri/Keith Weir)

By Noor Zainab Hussain