Intercontinental Exchange Group Inc.

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Intercontinental Exchange Group
ICE logo Rmark rgb.png
Founded 2000
Headquarters 5660 New Northside Drive NW, 3rd Floor, Atlanta, GA 30328, with offices in New York, London, Chicago, Singapore, Winnipeg, Amsterdam

Image: 200 pixels

Key People Jeffrey Sprecher, Chairman, CEO, Benjamin Jackson, President
Employees 5,549
Products Futures, Options, Securities and OTC markets
Twitter @ICE_Markets
LinkedIn Profile
Facebook Exchange Page
Website www.theice.com
Releases Company News

Atlanta-based Intercontinental Exchange Group (ICE) is a global exchange, clearing, financial data and technology company, operating multiple markets and services across nine different asset classes.

ICE operates 13 regulated exchanges, including ICE futures and OTC exchanges in the US, Canada, Europe and Singapore. It is also the parent company of the New York Stock Exchange and related securities exchanges. Today, the company is among the largest exchange groups in the world and has grown dramatically via a succession of acquisitions of other exchanges, technology firms and data service providers.

A publicly traded company since 2005, ICE (NYSE: ICE) lists more than 12,000 derivatives and securities contracts on its markets. Its derivatives exchange properties include five regulated futures exchanges: ICE Futures US, ICE Futures Europe, ICE Futures Canada, ICE Futures Singapore and ICE Endex.

On the securities side, ICE operates five stock exchanges under the NYSE Group: New York Stock Exchange, NYSE Arca, NYSE American, (formerly NYSE MKT, and AMEX), NYSE National (formerly National Stock Exchange) and Chicago Stock Exchange, plus two US equity options exchanges - NYSE Arca Options and NYSE American Options (formerly NYSE AMEX Options) - and a corporate bond platform, NYSE Bonds.

In the OTC space, ICE operates the energy platform ICE OTC Commodity Markets as well as credit and swaps markets such as ICE Swap Trade, Creditex and ICE BondPoint.[1]

On its derivatives exchanges, ICE offers futures and OTC contracts on: energies, softs, grains, currencies, emissions, precious metals, interest rates and bonds as well as credit and equity indexes. With its stock and options exchanges, it offers traditional stock, equity options and exchange traded products.

ICE exchanges are supported by six clearing houses, which handle the clearing and settlement functions for more than 6 million daily derivatives transactions on its markets. Included on its roster of clearinghouses are: ICE Clear US, ICE Clear Europe, ICE Clear Singapore, ICE Clear Netherlands, ICE Clear Credit and ICE NGX.[2] ICE is a Primary Member of CCP Global, the global association of Central Counterparties (CCP), which represents 42 members who operate more than 60 individual CCPs across EMEA, the Americas and the Asia-Pacific region. [3]

It offers futures and OTC contracts on a single electronic ICE Trading Platform, while equity trading is done on NYSE Pillar, a matching engine for its equity and options markets. Traders can access the platform via WebICE, an internet-based service for exchange members that provides data such as: live market quotes, depth of market, portfolio creation and other key trading information. [4] [5][6] [7]

One of its largest divisions is called ICE Data Services, which handles everything from pricing and analytics services, desktop and connectivity, listings and exchange data.

ICE is also in the digital asset space, forming a new company called Bakkt, which intends to use the Microsoft cloud to handle trading, storage and spending of crypto assets. [8]

In 2021, ICE ranked as the world's 4th largest derivatives exchange by volume, with 3.3 billion contracts traded, up 18.9% from 2.79 billion traded the previous year, according to the Futures Industry Association annual volume survey.[9] That volume is composed of trading from ICE Futures Europe, ICE Futures US, ICE Futures Endex, ICE Futures Abu Dhabi and ICE Futures Singapore, formerly the Singapore Mercantile Exchange on the futures side, and NYSE AMEX and NYSE Arca equity options volumes.

Its NYSE subsidiary was the top exchange in 2017 for the seventh consecutive year in terms of capital raising through IPOs proceeds of $128 billion, from 454 transactions.[10][11]

As of December 31, 2017, ICE had 4,952 employees in its offices in Atlanta, New York, UK, Chicago and other locations around the world, down from 5,631 employees a year earlier.[12]

ICE reported $5.2 billion in revenue in 2019, up 4 percent from the previous year. From that, the company generated $2.66 billion from its data and listings business and $2.54 billion from its trading and clearing business.[13]

The company also ranks among the leading exchanges in market capitalization, which was $42.2 billion in April 2018, a dramatic rise from around $2 billion after its public offering in 2005.[14]

In February 2022, Risk.net named Intercontinental Exchange as its Exchange of the Year in part for its handling of the end of Libor.[15]

Background[edit]

Early Years[edit]

ICE's roots go back to the 1997 acquisition of the Continental Power Exchange (CPEX) by Jeffrey C. Sprecher.

With CPEX in poor financial health at the time, Sprecher purchased the company with a goal of building a trading platform for over-the-counter energy markets. The company's technology team then wanted to scrap everything it had been working on under CPEX's prior management and rebuild the system as an internet-based platform using software and coding from Oracle and Java. Sprecher approved the move and the system became the foundation for ICE's globally distributed, high-speed, high-capacity trading platform it uses today. But it was a difficult period for the company. During the technology rebuild, the company lost every one of its customers and its staff of 30 shrank to just six people.[16]

In 1999, ICE faced another challenge as Enron was pushing its own electronic trading platform called EnronOnline with large energy companies. Meanwhile, Sprecher and CPEX vice president Charles Vice moved to partner with large Wall Street and energy firms. With the company struggling financially and battling a much larger competitor in Enron, Sprecher granted firms an 80 percent equity stake in the company in return for their commitment to trade on the platform. Companies such as Goldman Sachs, Morgan Stanley, British Petroleum, Shell and Total and others were among those early investors. [17][18]

In 2000, the company was renamed the IntercontinentalExchange, or ICE, with a goal of becoming the largest OTC energy market. When Enron collapsed under a massive fraud and accounting scandal in 2001, ICE was perfectly positioned to take on those customers and grow quickly through a series of acquisitions that helped it achieve its global ambitions.

In 2001, ICE made one of its earliest and arguably most significant acquisitions, the London-based International Petroleum Exchange, or IPE. That provided ICE with an entry into the futures exchange space with European energy futures. ICE shut down the IPE's trading floor and migrated all of the trading onto its electronic trading platform by 2005, making it the first fully electronic energy futures exchange.[19]

The move made ICE a direct competitor to the New York Mercantile Exchange. NYMEX then attempted to compete with ICE in Europe, opening a new floor-based exchange in Dublin in November 2004. But as electronic trading continued its rapid growth and acceptance in the financial markets, NYMEX's plan to lure London IPE floor traders and trading away was a complete failure. NYMEX's resistance to full-time electronic trading cost the exchange marketshare in crude oil trading to ICE, and eventually forced it to adopt the CME Group's trading platform, CME Globex in 2006, to compete. ICE later renamed the IPE as ICE Futures Europe, and has since expanded its product offering well beyond energies, into equity index and fixed income markets. NYMEX was bought by CME Group in 2008. [20]

Also, in 2002, ICE created ICE Data, a service that provides futures and OTC market data globally to end-users. That segment of its business would be massively expanded in subsequent acquisitions and today is called ICE Data Services.

ICE also partnered with the Chicago Climate Exchange, or CCX, hosting its emissions contracts in conjunction with CCX's subsidiary, the European Climate Exchange. ICE would later buy that exchange in 2010 and fold it into ICE Futures US and ICE Futures Europe.[21][22]

Going Public, Bidding on CBOT, and more Exchange and Clearing Acquisitions: 2005 to 2010[edit]

On November 16, 2005, ICE went public on the New York Stock Exchange. The IPO was priced at $26 per share for 16 million shares. The opening day share price valued the company at over $2 billion, and was up 50.9 percent on day one, closing at $39.25. [23][24][25]

The ICE IPO was part of a trend at the time of traditional member-owned and newer exchanges going through demutualization and then going public. The Chicago Mercantile Exchange had gone public in 2002, while the International Securities Exchange listed in March 2005, followed by the Chicago Board of Trade's IPO in October 2005, followed by the November 2005 ICE public offering. On Sept. 25, 2007, ICE was added to the S&P 500 Index.

ICE made another key acquisition in January 2007, the New York Board of Trade, for approximately $1 billion, which not only helped move ICE beyond energy products and into commodities such as coffee, sugar, cocoa, orange juice and currencies, but also brought them another critical piece of infrastructure, a US-based clearinghouse. ICE quickly moved to shutter the NYBOT trading floor, migrating those contracts onto its electronic trading platform and upgrading its clearing house to handle all ICE Futures US volume.[26] Having its own clearing house meant ICE would no longer depend on an outside clearing facility to handle clearing and settlement for US business, not to mention it provided new revenues for the company.

ICE was still considered a smaller player among established futures markets, but grabbed everyone's attention in March 2007, when it made an unsolicited $9.9 billion bid to buy the Chicago Board of Trade during the FIA Boca International Futures Industry Conference. CBOT then was in merger negotiations with the Chicago Mercantile Exchange. The bid topped the CME's offer of $8.9 billion for the CBOT, and threw the long-expected Chicago tie-up into question. CME eventually upped its bid for the CBOT, largely due to the competing counter-offers from ICE, closing the deal for $11.6 billion in July 2007.

Even though it lost that bid, ICE continued to push forward with new acquisitions, purchasing the Winnipeg Commodity Exchange in July 2007. The exchange, best known for its canola futures, was renamed ICE Futures Canada also included a Canadian regulated clearinghouse, which was renamed ICE Clear Canada.

The company made three more key acquisitions in 2008. In February 2008, ICE purchased YellowJacket Software, a peer-to-peer messaging platform used to trade on OTC options markets. This software, used extensively in the OTC trading space, was renamed ICE Chat.

In September 2008, ICE moved into the burgeoning credit derivatives space with the purchase of an interdealer market called Creditex for $625 million in cash and stock. That purchase, which provided ICE with the technology to handle trade execution and processing of credit default swaps in the US, Europe and Asia, would serve as one of the core pieces of ICE's credit derivatives business. ICE later sold off certain US Creditex voice brokerage services to Tullett Prebon in July 2016. [27][28][29]

In October 2008, ICE moved to bolster that business with a clearing house acquisition. ICE purchased The Clearing Corporation, formerly known as the Board of Trade Clearing Corporation, with the support of that clearing facility's main member firms: Bank of America, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, Morgan Stanley and UBS. The clearing house was then designated to serve as a comprehensive clearing facility for the CDS market. Initially the clearing house was called ICE Trust but later was renamed ICE Clear Credit and launched in March 2009 as the world's first credit default swap clearinghouse. It is regulated by the SEC and CFTC and is designated as a Systemically Important Financial Market Utility.[30] [31] [32]

In November 2008, ICE launched its second credit default swap clearing house, ICE Clear Europe giving it an early lead in the global CDS clearing space. ICE Clear Europe operates in a dual and separate fashion. One one side of the clearinghouse, ICE Clear Europe's CDS clearing operations, launched in July 2009, serves its European CDS markets. On the other side, ICE Clear Europe handles all of its European futures trading ranging from energies to interest rate futures. [33][34] By September 2012, ICE had cleared more than 1 million CDS trades to date.

The creation of ICE Clear Europe was another critical piece of its global clearing strategy. Before launching its own European clearing house, it had used LCH.Clearnet to handle its European futures trades. ICE completed the transition of cleared trades from LCH.Clearnet to ICE Clear Europe in November 2008.

ICE's Biggest Deal, NYSE Euronext: 2011 to 2013[edit]

With US, Canadian and European exchanges and clearinghouses intact, ICE set its sights on its largest acquisition. In April 2011, ICE and Nasdaq OMX partnered to make an offer of $11.3 billion in stock and cash for NYSE Euronext, which operated the New York Stock Exchange, NYSE Arca, NYSE Arca Options, Amex options as well as the stock and derivatives markets in the Euronext group, which included Euronext LIFFE, one of the main futures markets for European interest rate futures. [35]

Under the proposed deal, ICE would have acquired NYSE Euronext's derivatives businesses and Nasdaq would have received Euronext's stock exchanges, the NYSE and its cash markets, the US options exchanges as well as Euronext's stock markets in Paris, Brussels, Amsterdam and Lisbon.

That offer and two subsequent offers were rejected by the NYSE Euronext board and the offer was finally dropped in May 2011, citing opposition to the deal from US antitrust regulators. It also opened the door to a prior bid in February 2011 from Deutsche Boerse for NYSE Euronext. But that bid also was killed by European Union anti-competition agencies in February 2012. [36] [37][38]

ICE came back with its own solo offer for NYSE Euronext in December 2012 for $8.2 billion. The combination stock and cash deal closed on November 13, 2013 for approximately $11 billion. "This is a game-changing transaction," Sprecher said at the time, as the deal provided ICE with new asset classes in stocks, equity options and additional European financial futures. The acquisition pushed ICE's market cap valuation to about $23 billion.

The big win for ICE in the deal was the LIFFE exchange (formerly the London International Financial Futures Exchange or NYSE LIFFE, the London-based futures market which offers key benchmark indexes, interest rate contracts and agriculture futures. Liffe futures were migrated over to ICE Futures Europe including: Sterling futures, Euribor futures and Long Gilt futures among others. It also acquired commodities such as cocoa, robusta coffee and sugar, giving ICE softs futures in both the US and Europe. It completed the migration in November 2014[39]

The new holding company formed in the acquisition retained ICE's ticker symbol and the enlarged entity is called ICE Group. [40] Sprecher remained chairman and CEO of the combined company; NYSE Euronext CEO Duncan Niederauer became the president of ICE but stepped down in May 2014.[41][42]

As part of the plan, ICE spun off Euronext in an initial public announced on June 19, 2014, with the stock trading the next day. Before the IPO, ICE sold a stake of 33.36 percent to a group that included Banco Espirito Santo SA, BNP Paribas SA (BNP), ABN Amro Group NV, Societe Generale SA (GLE) and Euroclear SA/NV, at a price of €19.20 per share. [43]

Other notable moves by ICE included taking a majority stake of 79.12 percent in APX Endex in September 2012, taking control of the Amsterdam-based company's Dutch gas and power derivatives business. It was renamed ICE Endex and is a joint initiative with Gasunie, a European gas infrastructure company. [44] [45]

ICE took steps to gain a foothold in Brazil with two investments. In June 2011, it launched BRIX, a Brazilian market for electric power, using ICE's electronic trading platform. It's partner firms included: Agroenergia Comercializadora, Bunge, CESP, Clealco, Compass, Coteminas, EletroNorte, Eucatex, Ibrame Laminacao, MPX, Quanta, Rexam, Seal Energy and White Martins.

ICE also took a 12.4 percent stake in Cetip, Brazil's largest clearinghouse in July 14, 2011. Under the deal, ICE paid $512 million in cash, or R$25.50 for its shares in Cetip. ICE sold its equity stake in Cetip in 2017, noting a profit of $167 million on the venture.[46][47]


ICE Moves Into Data, Creates ICE Data Services[edit]

ICE looked to further diversify after the NYSE Euronext deal with a series of strategic investments, particularly in data services and technology, power and energy markets as well as in exchanges and clearing houses in Europe and Asia.

In October 2014, ICE purchased SuperDerivatives, a market data and analytics provider specializing in derivatives pricing models across all asset classes, risk analysis and cloud-based market technology, as well as a chat platform that is similar to competitors such as Bloomberg. The deal was priced at $350 million in cash.[48][49][50]

That was followed by another bold move in the data space in December 2015 with a $5.2 billion cash and stock acquisition of Interactive Data Holdings Corp., a subsidiary of Silver Lake and Warburg Pincus. The firm provides pricing data to more than 5,000 customers including many of the firms that use ICE's markets and services, such as asset managers, hedge funds, banks and insurance companies. [51][52] [53]

It complemented those services in March 2016, announcing the acquisition of two business data units from McGraw Hill Financial: Standard & Poor's Evaluations, a fixed income evaluation pricing service; and Credit Market Analysis, a data provider for OTC markets.

All of these units and ICE's existing data services group were folded into one division that was renamed ICE Data Services in June 2016. The division offers data services for information, analytics and connectivity, as well as proprietary data and tools in fixed income, equities, commodities, FX and options. It offers real-time pricing, data from its 11 exchanges, desktops and tools and connectivity and hosting services.

In May 2019, ICE Data Services received approval from the UK's Financial Conduct Authority (FCA) as a third country benchmark administrator under the European Benchmark Regulation, meaning that market participants could reference its indices in compliance with the rules. Also in May, ICE Data Services announced the launch of a new data management platform for historical tick data known as the ICE DataVault. The cloud-based platform provides users with aggregated real-time tick data via programmatic, cloud, or click-thru access.[54]

More OTC and Clearing, plus Asia, and Smaller US Stock Exchanges: 2013 to 2018[edit]

In the exchange and clearing space, ICE made three key acquisitions from 2013 to 2016, helping the company expand in European energies and clearing, as well as launching its first exchange in Asia.

ICE expanded into Asia with the purchase of the Singapore Mercantile Exchange and its clearing house SMX Clearing Corporation in November 2013 for $200 million. The exchange was essentially shut down, revamped and renamed ICE Futures Singapore, and was launched in November 2015 with five contracts in brent crude, gasoil, gold and Renminbi futures, cleared at the exchange's renamed clearinghouse ICE Clear Singapore. ICE Futures Singapore represents another step in the global expansion for ICE, and an effort to address more Asian clients. It also is the first exchange, among non-domestic markets such as CME Group and Eurex, to launch a Singapore-based exchange and is considered a challenger to the domestic market, Singapore Exchange, or SGX. [55]

ICE also completed a majority stake purchase in December 2014 of the Holland Clearing House, which is the central counterparty clearing facility for equity and index derivatives contracts listed on The Order Machine, or TOM in the Netherlands. The facility was renamed ICE Clear Netherlands in July 2015, as the sixth clearing house under the ICE Group umbrella and the first continental European clearing facility for ICE.[56] [57]

ICE completed another key acquisition in the European energy space in December 2015 with the purchase of Trayport, a London-based OTC energy market. ICE purchased the company from BGC Partners and GFI, a subsidiary of BGC, for approximately $650 million in ICE shares, and in the process, beat out competitor CME Group, which also had bid for Trayport. Trayport helped bolster ICE's strong position in European energy futures and OTC markets, as a key market used by many in the power, natural gas and coal trading space. [58] [59][60] [61]

However, in October 2016 the UK Competition and Markets Authority said the acquisition violated antitrust laws, and that was reaffirmed by a UK appeals court in March 2017. The UK agency demanded that ICE sell Trayport.[62] ICE appealed the decision but lost. It ended up selling Trayport to TMX Group for £350 million cash, plus NGX, Shorcan Energy, in a deal closed in December 2017.[63][64]

ICE launched a new OTC platform called ICE Swap in August 2016, which offers trading on single-name credit default swaps in a central limit order book. The platform offers anonymous and so-called "name give-up" execution, allowing participants to reveal their identity after a trade is finished. ICE also launched a CFTC-registered swap execution facility (SEF), on October 2, 2013. The SEF was granted permanent registration status, along with 18 other SEFs, in January 2016. [65][66][67]

In May 2016, NYSE Group announced it had completed the rollout of its new trading platform for NYSE Arca. The new equities and options platform is designed to reduce complexity and improve on performance.

In early 2017, it announced the trading floor of the NYSE American exchange, (formerly known as NYSE MKT and American Stock Exchange (AMEX), would shut down in the second quarter of 2017. On July 24, 2017, it launched a new market model on the Pillar platform for NYSE American and on August 24, 2017, NYSE Arca introduced new gateways that "harmonize" NYSE American and NYSE Arca platforms. [68][69][70]

On January 31, 2017, ICE's NYSE completed the acquisition of the National Stock Exchange and renamed it NYSE National. The exchange relaunched on April 30, 2018, as an all-electronic equity market with a maker-taker pricing model. The strategy is to offer complementary pricing structures to its other equities markets.[71][72]

ICE continued its consolidation of smaller US equity markets with the acquisition of the Chicago Stock Exchange (CHX) for an undisclosed amount in July 2018. The plan was to move the exchange onto the NYSE Pillar trading technology.[73][74][75]

Push Into Fixed Income And Cryptocurrencies[edit]

In late 2017 and into 2018, ICE pushed further into the fixed income space with three acquisitions. The first, closed in October 2017, was the acquisition of the Bank of America Merrill Lynch Global Research Index platform, which features more than 5,000 fixed income indices with nearly $1 trillion of investments benchmarked to them. The deal made ICE the second largest fixed income index provider by benchmarked assets.[76]

The second, a $400 million cash acquisition of Virtu BondPoint, an electronic fixed income trading platform, was closed in January 2018. This dealer-to-client platform was integrated with ICE's continuous evaluated pricing serves from ICE Data Services and its SFTI network, a private network that connects to exchanges and content providers.

On July 23, 2018, the company completed the purchase of TMC Bonds LLC, a fixed income market that offers cash treasury, municipal, corporate, agency bonds and certificates of deposit, for $685 million in cash.[77]

On August 3, 2018, ICE announced plans for a new company called Bakkt, which was working with BGC, Microsoft, Starbucks and others to build a platform for consumers to buy, sell, store and spend digital assets on a global network. It's initial use case is focused on trading and conversion of bitcoin against fiat currencies. ICE, for its part, plans to offer a 1-day physically delivered Bitcoin contract and physical warehousing in November 2018. It also plans to create a separate guarantee fund, funded by Bakkt.[78]

In February 2019, ICE moved to wrap its fixed income businesses - ICE BondPoint, TMC Bonds and ICE Credit Trade - into one entity it named ICE Bonds. ICE Bonds also will add on ICE Data Service's pricing and analytics tools. The three trading platforms were combined under a single broker-dealer entity in 2019.[79] In November 2022, ICE Bonds received approval for expansion into Canada.[80]

The company pushed into the mortgage space in May 2019 with the announced $335 million acquisition of Simplifile, which provides electronic processing of mortgage records. The deal followed the 2018 acquisition of Mortgage Electronic Registrations, a national registry for tracking servicing rights and ownership of US mortgage loans.[81][82]

ICE closed the purchase of the Merrill Lynch Option Volatility Estimate (MOVE) index and the accompanying fixed income volatility indices from Bank of America Merrill Lynch in October 2019. The indices were renamed ICE Data Indices and are part of the ICE Data Services business.[83] The deal was motivated in part by ICE's decision to target the growth of fixed income ETFs, which surpassed $1 trillion in assets in 2019, according to ICE Data Services President and COO Lynn Martin.[84][85]

In March 2021, the exchange announced launched a new exchange and new crude oil futures contract on the Abu Dhabi National Oil Company's Muban crude oil.[86] The new entity, called ICE Futures Abu Dhabi, was set up in that country's free trade zone, called the Abu Dhabi Global Market. ICE lists the physically delivered contract, which is cleared on ICE Clear Europe. The move is considered a big one in the energy markets, as it represents a major change in Middle East crude oil pricing. ICE partnered with Abu Dhabi National Oil Company (ADNOC), BP, Total, Inpex, Vitol, Shell, Petrochina, Korea’s GS Caltex, Japan’s JXTG and Thailand’s PTT in the new exchange.[87][88]

Company Overview: Exchanges, Clearing Houses, Technology, Data Services[edit]