Intercontinental Exchange is an American business and finance company founded on May 11, 2000 by Jeffrey Sprecher, headquartered in Atlanta, Georgia. It owns exchanges for financial and commodity markets, and operates 23 regulated exchanges and marketplaces including: ICE futures exchanges in the United States, Canada and Europe; Liffe futures exchanges in the US and Europe; the New York Stock Exchange; equity options exchanges; and OTC energy, credit and equity markets. ICE also owns and operates 6 central clearing houses; ICE Clear Europe, ICE Clear U.S., ICE Clear Canada, ICE Clear Singapore, ICE Clear Netherlands, ICE Clear Credit and The Clearing Corporation. ICE has offices in New York, London, Chicago, Houston, Winnipeg, Amsterdam, Calgary, Washington, D.C., San Francisco and Singapore.
Jeffrey C. Sprecher, founder, chairman, and Chief Executive Officer, was a power plant developer who spotted a need for a seamless market in natural gas used to power generators. In the late 1990s, Sprecher 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.(Popper 2013)
In May 2000, ICE was founded by Sprecher and backed by Goldman Sachs, Morgan Stanley, BP, Total, Shell, Deutsche Bank and Société Générale who represent some of the world's largest energy traders.
The new exchange offered the trading community better price transparency, more efficiency, greater liquidity and lower costs than manual trading. While the company's original focus was energy products (crude and refined oil, natural gas, power, and emissions), acquisitions have expanded its activity into soft commodities (sugar, cotton and coffee), foreign exchange and equity index futures.
In a response to US financial crisis in 2008, Sprecher formed ICE US Trust based in New York, now called ICE Clear Credit LLC, to serve as a limited-purpose bank, a clearing house for credit default swaps. Sprecher worked closely with the Federal Reserve to serve as its over-the-counter (OTC) derivatives clearing house. "US regulators were keen on the kind of clearing house for opaque over-the-counter (OTC) derivatives as a risk management device. In the absence of a central counterparty - which would guarantee pay-outs should a trading party be unable to do so - there was a high risk of massive market disruption".
The principal backers for ICE US Trust were the same financial institutions most affected by the crisis, the top ten of the world's largest banks (Goldman Sachs, Bank of America, Citi, Credit Suisse, Deutsche Bank, JPMorgan, Merrill Lynch, Morgan Stanley and UBS). Sprecher's clearing house cleared their global credit default swaps (CDS) in exchange for sharing profits with these banks. By 30 September 2008 the Financial Post warned that the "$54000bn credit derivatives market faced its biggest test in October 2008 as billions of dollars worth of contracts on now-defaulted derivatives would be auctioned by the International Swaps and Derivatives Association . In his article in the Financial Post, he described ICE as a "US-based electronic futures exchange" which raised the stakes on October 30, 2008 in its effort to expand in the $54000 bn credit derivatives market.(Weitzman 2008)
By 2010, Intercontinental Exchange had cleared more than $10 trillion in credit default swaps (CDS) through its subsidiaries, ICE Trust CDS (now ICE Clear Credit).(Terhune 2010)
By 2017 Intercontinental Exchange had been named to the Fortune Future 50 determining the top 50 companies that are best positioned to adapt and deliver growth in a complex environment. ICE was also named to the Fortune 500 in June 2017 and is the only exchange operator included in the ranking.
The Intercontinental Exchange has had a policy to grow through the acquisition of other exchanges, a number of these have been successful while others have failed due to concerns by regulators or others that the new company would have created a monopoly situation. The major acquisition and attempted acquisitions have included:
In June 2001, ICE expanded its business into futures trading by acquiring the London-based 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 and ICE closed International Petroleum Exchange's high profile and historic trading floor.
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), and ChemConnect (a chemical commodity market).
In March 2007 ICE made an unsuccessful $9.9 billion bid for the Chicago Board of Trade, which was instead acquired by the CME Group.
IntercontinentalExchange Inc., the "upstart Atlanta-based energy bourse" purchased the privately held 120-year-old Winnipeg Commodity Exchange, known for its canola futures contract, for $40 million.
The Winnipeg Commodity Exchange (WCE) was renamed ICE Futures Canada as of January 1, 2008. In 2004, the Winnipeg Commodity Exchange had "closed its open-outcry trading floor" becoming "the first North American agricultural futures exchange to trade exclusively on an electronic platform" by trading via the "Chicago Board of Trade's electronic platform, and [using] clearing services from the Kansas City Board of Trade. IntercontinentalExchange converted Winnipeg Commodity Exchange contracts to the IntercontinentalExchange platform. IntercontinentalExchange maintained an office and "small core staff" in Winnipeg, Manitoba. The Manitoba Securities Commission oversee its operations.
In January 2008, ICE partnered with Canada's TSX Group's Natural Gas Exchange, expanding their offering to clearing and settlement services for physical OTC natural gas contracts.
In April 2010, ICE acquired Climate Exchange PLC for 395 million pounds ($622 million) and European Climate Exchange (ECX) as part of its purchase. Exchange-traded emissions products were first offered by the European Climate Exchange (ECX), which was established in 2005, by listing products on the ICE Futures Europe's trading platform. ICE Futures Europe is the leading market for carbon dioxide (CO2) emissions. ICE's ECX products comply with the requirements of the European Union Emission Trading Scheme.
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." Late in the month, Nasdaq was reported to be considering asking either ICE or the Chicago Mercantile Exchange (CME) to join in what would be probably be an $11–12 billion counterbid for NYSE. 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.
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. The European Commission then blocked the Deutsche merger on 1 February 2012, citing the fact that the merged company would have a near monopoly.
In December 2012, ICE announced it would buy NYSE Euronext (this time without the involvement of Nasdaq) for $8.2 billion, pending regulatory approval. Jeffrey Sprecher will retain his position as Chairman and CEO. The boards of directors of both ICE and NYSE Euronext approved the acquisition.
In September 2014, ICE announced that it had entered into a definitive agreement to acquire SuperDerivatives, a leading provider of risk management analytics, financial market data and valuation services. The acquisition was said to accelerate the expansion of ICE’s comprehensive multi-asset class clearing strategy. Terms of the all-cash transaction included a purchase price of approximately $350 million. Completion of the transaction was subject to regulatory approval and other customary closing conditions. The transaction successfully completed on 7 October 2014.
In October 2015, ICE announced that it had entered into a definitive agreement to acquire Interactive Data Corporation (IDC), a leading provider of financial market data, analytics and related trading solutions, from Silver Lake, the global leader in technology investing, and Warburg Pincus, a leading global private equity firm focused on growth investing. The acquisition was valued at approximately $5.2 billion, including $3.65 billion in cash and $1.55 billion in ICE common stock, and builds on ICE’s global market data growth strategy by expanding the markets served, adding technology platforms and increasing new data and valuation services. Completion of the transaction was subject to regulatory approval and other customary closing conditions. The transaction successfully completed on December 14, 2015.
In December 2015, ICE acquired Trayport, a subsidiary of GFI Group, for $650 million. Trayport licenses its technology platform to serve brokers for electronic and hybrid trade execution primarily in the European over-the-counter (OTC) utility markets. The Competition and Markets Authority (CMA) subsequently called in the merger for review, and in October 2016 announced its decision to require ICE to sell Trayport, having ruled that the merger could lead to a substantial lessening of competition. On March 6, 2017, the Competition Appeal Tribunal (CAT) upheld the Competition and Markets Authority (CMA) decision that ICE should divest Trayport. Following careful consideration of the CAT's judgment, ICE requested permission from the CAT to appeal to the Court of Appeal. In the interim, Trayport will continue to be operated separately as it is today, and ICE will continue to engage with the CMA on the remitted issues regarding the new agreement between ICE and Trayport. In July 2017 ICE notes the decision of the Competition and Markets Authority (CMA) with respect to ICE’s agreement with Trayport, an issue which was remitted to the CMA for reconsideration following ICE's appeal to the Competition Appeal Tribunal (CAT). ICE were disappointed by the CMA’s decision that the agreement for additional connectivity between ICE and Trayport signed in May 2016 should be terminated, thereby delaying when customers can benefit from the additional Trayport connectivity and greater access to ICE markets delivered by the suspended agreement. Nonetheless, they will now complete the CMA process, terminate the agreement as instructed and move forward with the divestment of Trayport expeditiously so that Trayport’s future ownership is resolved. In the interim, Trayport will continue to be operated separately and independently as it has been throughout the process.
In October 2017 ICE announced it had agreed to sell Trayport to TMX Group Limited (TMX Group) in exchange for certain TMX Group assets and cash of £350 million. In addition to cash, ICE will receive NGX and Shorcan Energy Brokers Inc. upon the completion of the transaction. In connection with the execution of the Agreements, ICE and TMX Group have also entered into a non-binding memorandum of understanding agreeing to explore in the future further avenues for possible collaboration. The U.K.'s Competition and Markets Authority (CMA) has approved the sale of Trayport to TMX Group. The sale of NGX and Shorcan Energy to ICE is subject to regulatory approvals and notifications, and is anticipated to close in late 2017 or early 2018.
In March 2016, ICE announced that it had entered into a definitive agreement to acquire Standard & Poor's Securities Evaluations, Inc. (SPSE), a leading provider of fixed income evaluated pricing, and Credit Market Analysis (CMA), a leading provider of independent data for the over-the-counter (OTC) markets, two assets under the S&P Global Market Intelligence business unit, from McGraw Hill Financial (NYSE: MHFI). When completed, the acquisition will enable ICE to offer customers new data and valuation services. Under the terms of the agreement, ICE can elect to satisfy its payment of the purchase price due at the close of the transaction in either cash or shares of ICE’s common stock. All other terms of the agreement were not disclosed. In October 2016 it had completed its all-cash acquisition of S&P Global’s (NYSE: SPGI) Standard & Poor’s Securities Evaluations (SPSE) and Credit Market Analysis (CMA).
In February 2017, ICE announced it had entered an agreement to acquire TMX Atrium, a global extranet and wireless services business from TMX Group. Terms of the agreement were not disclosed, and the transaction is expected to close within 90 days, subject to regulatory approvals. The financial impact of the transaction will be immaterial and was included in ICE’s financial guidance for 2017.
In February 2017, ICE announced that it had entered into a definitive agreement to acquire the Global Research division’s index platform from Bank of America Merrill Lynch. The BofAML indices are the second most used fixed income indices by assets under management (AUM) globally, and upon closing, the AUM benchmarked against the combined fixed income index business of ICE will be nearly $1 trillion. Upon closing, the indices will be re-branded as the ICE BofAML indices. The terms of the agreement were not disclosed, and the transaction is expected to be completed in the second half of 2017. The financial impact of the transaction is expected to be immaterial in 2017. In October 2017 ICE announced it has completed its acquisition.
In October 2017, ICE announced it had acquired a 4.7% stake in Euroclear for EUR 275 million. ICE anticipates having one representative join the Board of Euroclear. Euroclear is a leading provider of post-trade services, including settlement, central securities depositories and related services for cross-border transactions across asset classes.
In October 2017, ICE announced it had entered into an agreement to acquire Virtu BondPoint from Virtu Financial for $400 million in cash. The transaction is expected to close in the first quarter of 2018, and the closing is subject to applicable regulatory reviews and approvals. ICE will provide further details on its third quarter earnings call on November 2, 2017.
ICE provides exchange trading and clearing services in a number of different markets. Its main products include:
The company is split into the following subsidiaries:
In 2016 Intercontinental Exchange introduced the expanded ICE Data Services, bringing together proprietary exchange data, valuations, analytics, desktop tools and connectivity solutions from across ICE, New York Stock Exchange (NYSE), SuperDerivatives and Interactive Data (IDC).
ICE originally formed its ICE Data subsidiary in 2003, recognizing the rising demand for exchange data as markets became increasingly automated. ICE continues to invest in its data services to address evolving customer needs driven by regulatory reform, market fragmentation, passive investing and indexation, along with increased demand for data capacity and security, and independent valuations. Their customers include global financial institutions, asset managers, commercial hedging firms, risk managers, corporate issuers and individual investors.
ICE Data Services offers a range of proprietary data, valuations, analytics and tools for global markets across asset classes, including; proprietary data from ICE and NYSE’s 11 global exchanges, continuous and end-of-day evaluated pricing for 2.7 million securities (including hard-to-value and thinly-traded securities), complex derivatives, and reference data on over 10 million instruments. Additionally they also offer desktop and trading tools designed to match the workflow requirements of a broad range of customers, as well as connectivity solutions that include the low-latency, Secure Financial Transaction Infrastructure® (SFTI) network.
ICE Data Services has offices in New York, Chicago, Bedford MA, London, Dublin, Tel Aviv, Hong Kong, Singapore, Tokyo and Melbourne.