IntercontinentalExchange
 |
|
| Type | Public |
|---|---|
| Traded as | NYSE: ICE S&P 500 Component |
| Industry | Business services |
| Founded | 2000 |
| Headquarters | Atlanta, Georgia |
| Key people | Jeffrey C. Sprecher, Founder/Chairman/CEO Charles A. Vice, President/COO |
| Products | Options/futures exchange |
| Revenue | US$995 million (2009)[1] |
| Website | www.theice.com |
IntercontinentalExchange, Inc., known as ICE, (NYSE: ICE) is an American financial company that operates Internet-based marketplaces which trade futures and over-the-counter (OTC) energy and commodity contracts as well as derivative financial products. While the company's original focus was energy products (crude and refined oil, natural gas, power, and emissions), recent acquisitions have expanded its activity into the "soft" commodities (sugar, cotton and coffee), foreign exchange and equity index futures.
In 2011, ICE and Nasdaq joined forces to bid against Deutsche Borse after the latter announced a $9.5 billion deal to merge with NYSE Euronext. The two U.S. bidders ultimately withdrew after their bid encountered regulatory antitrust resistance.
ICE is organized into three business lines:
- ICE Markets — futures, options, and OTC markets. Energy futures are traded via ICE Futures Europe; soft commodity futures/options are handled by ICE Futures U.S.
- ICE Services — electronic trade confirmations and education.
- ICE Data — electronic delivery of market data, including real-time trades, historical prices and daily indices.
Contracts sold through ICE Futures U.S. are processed through a subsidiary, ICE Clear U.S. (ICEUS). In May 2008, ICE launched its own Clearing House, ICE Clear, with divisions for Europe, US, Canada & Trust (ICEU), [2]
Headquartered in Atlanta, ICE also has offices in Calgary, Chicago, Houston, London, New York and Singapore, with regional telecommunications hubs in Chicago, New York, London and Singapore.
Contents |
[edit] Company history
In the late 1990s, Jeffrey Sprecher, ICE's founder, chairman, and Chief Executive Officer, acquired Continental Power Exchange, Inc. with the objective of developing an Internet-based platform to provide a more transparent and efficient market structure for OTC energy commodity trading. In May 2000, IntercontinentalExchange (ICE) was established, with its founding shareholders representing some of the world's largest energy traders. The company's stated mission was to transform OTC trading by providing an open, accessible, multi-dealer, around-the-clock electronic energy exchange. The new exchange offered the trading community better price transparency, more efficiency, greater liquidity and lower costs than manual trading.
In June 2001, ICE expanded its business into futures trading by acquiring the International Petroleum Exchange (IPE), now ICE Futures Europe, which operated Europe's leading open-outcry energy futures exchange. Since 2003, ICE has partnered with the Chicago Climate Exchange (CCX) to host its electronic marketplaces. In April 2005, the entire ICE portfolio of energy futures became fully electronic. In April 2010 ICE bought CCX's owner Climate Exchange PLC for 395 million pounds ($622 million). Climate Exchange PLC also owns the European Climate Exchange (ECX).[3]
ICE became a publicly traded company on November 16, 2005, and was added to the Russell 1000 Index on June 30, 2006. The company expanded rapidly in 2007, acquiring the New York Board of Trade (NYBOT),[4] ChemConnect (a chemical commodity market), and the Winnipeg Commodity Exchange. In March 2007 ICE made an unsuccessful $9.9 billion bid for the Chicago Board of Trade, which was instead acquired by the Chicago Mercantile Exchange.[5]
In January 2008, ICE partnered with TSX Group's Natural Gas Exchange, expanding their offering to clearing and settlement services for physical OTC natural gas contracts.[6]
On March 4, 2009, ICE announced that ICE US Trust, LLC (ICE Trust), a New York limited liability trust company, received regulatory approval from the Board of Governors of the Federal Reserve System to become a member of the Federal Reserve System and to serve as a clearing house and central counterparty for credit default swap (CDS) transactions, initially for North American CDS indexes and later adding liquid single-name swaps. Now known as ICE Clear Credit LLC it is subject to direct regulation and supervision by the CFTC and the SEC.
In December, 2010, The New York Times fielded a substantial examination of the Trust and its members, saying in part "the details of their meetings, even their identities, have been strictly confidential. Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives ... [and also] share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance," a system with "costly implications" for customers and smaller banks. "The marketplace as it functions now 'adds up to higher costs to all Americans,' said Gary Gensler, the chairman of the Commodity Futures Trading Commission, which regulates most derivatives. More oversight of the banks in this market is needed, he said."[7] In the same month, ICE said it was "well positioned" to establish a swap execution facility (SEF), having met with Commissioner Gensler or his staff four times in the past year to discuss SEF registration. An SEF or multiple SEFs will be the derivatives-trading platform(s) newly required under Dodd-Frank financial-markets reform. Other firms said to be looking at becoming SEFs were Bloomberg LP, Thomson TradeWeb, Parity Energy [8], and MarketAxess.[9] In a call with investors on November 1, CEO Sprecher had discussed the company's position in and preparation across its numerous markets, including the prospects for SEFs.[10]
In February, 2011, in the wake of an announced merger of NYSE Euronext with Deutsche Borse, speculation developed that ICE and Nasdaq could mount a counter-bid of their own for NYSE Euronext. ICE was thought to be looking to acquire the American exchange's derivatives business, Nasdaq its cash equities business. As of the time of the speculation, "NYSE Euronext’s market value was $9.75 billion. Nasdaq was valued at $5.78 billion, while ICE was valued at $9.45 billion."[11] Late in the month, Nasdaq was reported to be considering asking either ICE or the Chicago Merc (CME) to join in what would be probably be an $11-12 billion counterbid for NYSE.[12] On April 1, ICE and Nasdaq made an $11.3 billion offer which was rejected April 10 by NYSE. Another week later, ICE and Nasdaq sweetened their offer, including a $.17 increase per share to $42.67 and a $350 million breakup fee if the deal were to encounter regulatory trouble. The two said the offer was a $2 billion (21%) premium over the Deutsche offer and that they had fully committed financing of $3.8 billion from lenders to finance the deal.[13] The Justice Department, also in April, "initiated an antitrust review of the proposal, which would have brought nearly all U.S. stock listings under a merged Nasdaq-NYSE." In May, saying it "became clear that we would not be successful in securing regulatory approval," the Nasdaq and ICE withdrew their bid.[14]
[edit] Commodities traded on the exchange
- Coal
- Crude and Refined products
- Emissions
- Natural Gas
- Power
- Cocoa
- Coffee C
- Cotton No. 2
- FCOJ A
- Orange juice concentrate
- Sugar No. 11
- Russell Indices
- US Dollar Index
- Iron Ore Swaps
[edit] References
- ^ ICE 2009 Annual Report, p. 2.
- ^ "ICE Clear Europe Named as a Recognised Clearing House by FSA", ICE Clear Europe Circular C08/001, May 13 2008.
- ^ Szabo, Michael, "ICE cuts staff at Chicago Climate Exchange: sources", Reuters, August 11, 2010 12:29pm EDT. Retrieved 2011-05-18.
- ^ ICE Press Release (1/12/2007). "IntercontinentalExchange and New York Board of Trade Complete Merger"
- ^ Robert Manor (7/11/2007). "CBOT loss won't alter ICE agenda", Chicago Tribune.
- ^ ICE NGX "NGX Physical Gas and Power Products Coming to ICE"
- ^ Story, Louise, "A Secretive Banking Elite Rules Trading in Derivatives", The New York Times, December 11, 2010 (December 12, 2010 p. A1 NY ed.). Retrieved 2010-12-12.
- ^ CFTC Agenda, "Commissioner O’Malia’s SEF Showcase: Current Technology & Market Direction", March 31, 2011.
- ^ Protess, Ben, "Swap Execution Facility: The New Term on Wall Street", December 17, 2010, 9:47 am. Retrieved 2010-12-22.
- ^ "IntercontinentalExchange CEO Discusses Q3 2010 Results - Earnings Call Transcript", Seeking Alpha, November 01, 2010. Retrieved 2010-12-22.
- ^ De la Merced, Michael J., "Nasdaq and ICE Hold Talks Over Potential N.Y.S.E. Bid", The New York Times Dealbook, February 18, 2011, 12:46 pm. Retrieved 2011-02-18.
- ^ Fraser, Michelle E., "Nasdaq May Ask CME or ICE for Help in NYSE Counterbid, WSJ Says", Bloomberg, February 26, 2011 9:30 AM ET. Retrieved 2011-03-01.
- ^ Morcroft, Greg, "Nasdaq and ICE sweeten the pot for NYSE", MarketWatch, April 19, 2011 10:05 a.m. EDT. Retrieved 2011-04-19.
- ^ Pollock, Lauren, "Nasdaq, ICE withdraw bid for NYSE after DOJ talks", MarketWatch, May 16, 2011, 8:09 a.m. EDT. Retrieved 2011-05-16.
[edit] External links
- Official ICE site
- Davis, Philip, "The Global Oil Scam: 50 Times Bigger than Madoff", Seeking Alpha, November 11, 2009.
