Intercontinental Exchange Group Inc.

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IntercontinentalExchange
ICEnewlogocolor.jpg
Founded 2000
Headquarters Atlanta
Key People Jeffrey Sprecher, Chairman, CEO; Charles Vice, President, COO; Scott Hill, CFO
Products Futures and OTC markets for energy and agricultural commodities, foreign currency and equity index products; market data; clearing services
Website www.theice.com

Atlanta-based IntercontinentalExchange (NYSE: ICE) is an operator of global exchanges and over-the-counter markets, offering futures and OTC markets on a single electronic trading platform. Its markets include energy, agricultural commodities, foreign currency and equity index futures. ICE conducts its energy futures markets, including its oil benchmark contracts, through its London-based futures exchange, ICE Futures Europe. Its global agricultural commodity, foreign exchange and equity index futures markets are conducted through ICE Futures U.S. and ICE Futures Canada. Clearing services are also offered through ICE Clear U.S., ICE Clear Canada and ICE Clear Europe.

With over 15,200 unique contracts, ICE’s OTC markets offer swaps, spreads, basis, options and differentials on products.

Beyond its Atlanta headquarters, ICE has offices in Calgary, Chicago, Houston, London, New York, Singapore and Winnipeg.

Company Overview[edit]

The ICE Trading Platform, which serves market participants in over 55 countries, provides trade execution to participants via direct connections, telecom hubs, the Internet and a number of front-end providers. ICE offers a 3-millisecond transaction time in its futures markets, and its platform is scalable and flexible, allowing new products and functions to be added without market disruption.

ICE’s three business lines, Futures, OTC and Market Data, provide trading access for a wide range of products. The exchange lists hundreds of physical and derivative products, including crude and refined oil based products such as heating oil and jet fuel; other energy products like natural gas and electric power; and a suite of soft commodities contracts that include cocoa, coffee, cotton, frozen concentrated orange juice and sugar.

ICE also offers a range of futures and options products based on the Russell Indexes and currency pairs and the benchmark US Dollar Index. In September 2008, ICE will become the exclusive trading venue for Russell index futures contracts, including the Russell 2000 and 1000.

Other ICE services include:

  • ICE Data, which compiles and repackages trading data derived from trade activity into information products that are sold to a customer base extending beyond its main trading community.
  • ICE Clear, which provides risk management, capital efficiency and maximum financial safeguards to participants. The clearing platform supports all aspects of trade registration and contract settlement, while guaranteeing traded contracts registered for clearing.
  • ICE Risk, which provides a way to access real-time markets and trade execution, trade processing and risk management in one integrated application.
  • ICE eConfirm, which provides a fast, accurate and legally binding alternative to manual, paper confirmations that confirms trades within seconds or minutes.

Given recent attention and concerns about the regulation of oil markets and prices, ICE developed a website that offers detailed information on its regulated energy markets, as well as independent commentary on the role that fundamentals, such as the increasing imbalance between supply and demand growth, play in the global oil markets. The web site can be accessed at www.oilfuturesmarketfacts.com.

Annual Volume and Financials[edit]

For the first quarter of 2008, ICE reported record revenues and net income. Consolidated net income increased 66% to $92.3 million. Average daily volume exceeded 1 million contracts and average daily ocmmissions for the ICE’s global OTC segment rose 70% to a record $1,280,223. ICE reported record annual volume in all of its business segments in 2007, including record OTC commissions. ICE Futures Europe achieved record annual volume for the tenth consecutive year, with an increase of 49% in 2007 over annual volume in 2006. In 2007, volume at ICE Futures U.S. exceeded 2006 volume totals by 22%. Also for the year ended Dec. 31, 2007, average daily commissions in the OTC segment increased by 39% to $819,739, representing the fourth consecutive year of record commissions.[2]

For the year ended Dec. 31, 2007, ICE achieved record revenues for the fourth consecutive year, with an 83% rise in consolidated revenues to nearly $575 million compared with $314 million in the prior year. Consolidated net income increased 68% to a record $240+ million in 2007 from just over $143 million in 2006. The 2007 results include expenses related to ICE's proposed merger with the Chicago Board of Trade of $11.1 million, or $7.2 million after tax. Record consolidated cash flow from operations grew 91% to $287.8 million in 2007.

ICE's European and North American futures exchanges achieved record annual volume in 2007, with increases of 49% and 22%, respectively, totaling 192.0 million contracts combined. In 2007, average daily volume (ADV) for ICE Futures Europe(TM) was 539,044; ADV for ICE Futures U.S.(TM) and ICE Futures Canada(TM) was 232,566 contracts. Average daily commissions for ICE's OTC segment during 2007 increased to a record $845,572, a 44% increase over 2006.

Annual Reports[edit]

Corporate Governance[edit]

The following individuals are members of ICE's board of directors:

History[edit]

Chairman and Chief Executive Officer Jeffrey Sprecher acquired ICE's predecessor company, the Continental Power Exchange (CPEX) in 1997 and began developing the ICE platform with a small team of developers, using the internet to create a globally distributed, high speed, high capacity platform.

Upon gaining support for a transparent and accessible energy market place, ICE was officially established in May 2000, with founding shareholders representing some of the world’s largest energy market participants. The company’s mission was to transform OTC trading by providing an open, around-the-clock electronic energy exchange.[1]

Acquisitions[edit]

  • January 2007: ICE acquired the New York Board of Trade. While the acquired futures contracts were moved to trade only on the ICE electronic platform, the option products continue to be traded both electronically and via its traditional open outcry mode. On September 3, 2007, the exchange was renamed ICE Futures U.S.
  • March 2007: ICE launched a takeover bid of $191.49 a share, or $10.12 billion, for the Chicago Board of Trade (CBOT). The offer surprised executives at both the CBOT and Chicago Mercantile Exchange (CME), who had been working to close an $8 billion merger. [2] CME, however, raised its bid three times and closed on its acquisition of the CBOT on July 12, 2007.[3]
  • July 2007: ICE acquired and integrated ChemConnect's markets to its over the counter business, adding a marketplace for natural gas liquids (NGL’s), propane and other chemicals.
  • October 2007: ICE acquired Chatham Energy, an OTC energy brokerage firm specializing in structuring and facilitating transactions in the energy options markets.
  • June 2008: ICE announced its acquisition of Creditex Group, Inc., a credit default swaps processor in the U.S., Europe and Asia. The transaction, totaling $625 million, is expected to close in the third quarter of 2008. Upon the closing of the transaction, Creditex Group will be a wholly-owned subsidiary of ICE, operating under the Creditex name.[6]
  • October 2008: ICE announced its agreement to acquire The Clearing Corporation (TCC or CCorp). Following its Creditex acquisition, ICE advanced its global credit default swap (CDS) clearing initiative through an agreement to acquire TCC as a joint global clearing solution, as well as MOU’s with nine major dealers to support its CDS clearing initiative.[7]


Product Milestones[edit]

  • In October 2007, ICE Futures U.S. announced that it would begin offering 11 electronically traded foreign exchange ICE Currency Pairs 22 hours per day, beginning on Nov. 9, 2007. Listing of the foreign exchange futures contracts were set to occur in phases.
  • On Feb. 27, 2008 ICE and Natural Gas Exchange Inc. (NGX) energy exchange and clearinghouse said they would offer clearing and settlement services for physical OTC natural gas contracts beginning March 3, 2008. Physical clearing on select U.S. trading hubs would be available as part of a previously announced alliance between ICE and NGX.[9]
  • On March 24, 2008, ICE and Natural Gas Exchange Inc. (NGX), an energy exchange and clearinghouse, said they would offer clearing and settlement services for physical OTC natural gas contracts at the Henry Hub delivery point beginning Monday, Apr. 7, 2008, pursuant to a previously announced alliance. As with physical clearing services successfully introduced on March 3 at PG&E Citygate and GTN Malin, NGX's clearing organization would serve as the central counterparty for the physical delivery and financial performance.[10]
  • ICE and globalCOAL, an electronic marketplace for thermal coal, announced on Apr. 2, 2008 a cooperation agreement to develop and launch two new coal futures contracts at ICE Futures Europe. The contracts consist of financially settled NEWC coal futures to be launched mid-2008, and physically settled ARA coal futures to be launched later in the year.[11]

Company Highlights[edit]

  • In April 2005, the entire ICE portfolio of energy futures became fully electronic with the closure of the IPE’s open outcry trading floor.
  • On November 16, 2005 ICE became a publicly traded company, listing on the NYSE.
  • In January 2007, ICE was named as the 2007 Energy Exchange of the Year by votes cast for the annual Energy Business Awards.[12]Among the factors considered by the magazine were strengths in innovation, infrastructure, systems and organization, client service and risk management.
  • On September 25, 2007, ICE was added to the S&P 500 Index.
  • In January 2008, ICE's primary trade matching engine for all OTC and futures products migrated permanently from Atlanta to the company's Chicago data center location. The new hosting facility includes expanded co-location capabilities and provides the physical space, electric power, and bandwidth necessary to accommodate continued growth in ICE's messaging traffic, trading volume and customer base. The Atlanta-based data center will become the disaster recovery site for the ICE trade matching engine.[13]
  • In May 2008, ICE was granted approval to launch its wholly-owned, Europe-based clearing house, ICE Clear Europe. ICE Clear Europe will provide secure clearing services for ICE’s futures and cleared over-the counter energy contracts.[15]
  • In November 2008, ICE successfully launched London’s first major clearing house in more than a century. All ICE Futures Europe and ICE OTC trading positions were fully transferred from LCH.Clearnet to ICE Clear Europe, ICE's wholly-owned Europe-base clearing house as of November 3.


Futures and Options Products[edit]

Agricultural[edit]

Agricultural contracts traded include ICE Western Barley, ICE Canola, ICE U.S. Coffee "C" Arabica, which is the world's largest coffee futures contract, ICE Cotton No. 2, ICE Cocoa, ICE Feed Wheat, ICE Frozen Concentrated Orange Juice, ICE Sugar No. 11, and ICE Sugar No. 14.

On Dec. 13, 2007, the exchange announced the temporary delisting of the July 2009 expiry and all subsequent months and instituted a temporary moratorium on listing new contract months while changes to the futures contract terms were being considered.

On Dec. 18, 2007, ICE Futures U.S. announced that effective with the start of trading on Wednesday, Dec. 19, the exchange would delist all contract months for its NFC Orange Juice and Ethanol futures and options contracts and for the ICE Mini Coffee “C” futures contract. The contracts had no outstanding open interest.

On March 14, 2008, ICE Futures U.S. said that it would implement changes in the OJ contract and would resume trading of the months that were temporarily delisted, in addition to resuming the regular listing of additional contract months.[16]

Fossil Fuels and Power[edit]

Nearly half of the world's global crude futures by volume of commodity traded is transacted on the ICE exchange.

In addition to ICE Brent Crude Oil futures and options, ICE energy contracts include ICE Rotterdam & Richards Bay Coal, ICE Emmissions, ICE Gas Oil, ICE Heating Oil Futures, ICE Middle East Sour Crude Oil, ICE Unleaded Gasoline, ICE UK Electricity Futures, ICE UK Natural Gas, and ICE West Texas Intermediate Light Sweet Crude Oil.

The ICE-ECX CFI futures contract is the result of a cooperative relationship between ICE Futures Europe and the Chicago Climate Exchange, Inc. and its subsidiary, the European Climate Exchange. ICE Futures Europe shares in the revenue derived from the ECX CFI Futures contract.

Financial[edit]

Financial contracts traded include the ICE Reuters Jefferies CRB Index (to begin Feb. 1, 2008)[17] ICE Russell 2000 Futures and the ICE U.S. Dollar Index Futures.

In October of 2008, it was announced that ICE Futures U.S. would launch a suite of million-currency-unit foreign exchange (FX) futures contracts on Nov. 6, 2008. The new futures contracts, known as ICE Millions and first announced on Sept. 24, combine the benefits of futures and OTC products, bringing additional transactional efficiencies and risk management tools to the FX marketplace. ICE Millions are 10 times the notional value of the existing suite of ICE FX futures and options contracts. ICE Futures U.S. also lists the ICE U.S. Dollar Index futures, which would remain the existing notional size of $1000 times the index value.[18]

OTC Markets[edit]

The ICE OTC markets include Financial Gas, Financial Power, Olefins and Aromatics, Oil and Refined Products, Natural Gas Liquids, Physical Gas and Physical Power.

Clearing Services[edit]

Clearing for ICE trades is handled by ICE Clear U.S., ICE Clear Europe and ICE Clear Canada.

News[edit]

  • ICE said that on Jan. 8, 2008 its ICE Futures subsidiary posted a new high in exchange-wide electronic trading volume for a single day. The exchange reported record electronic volume of 234,120 contracts on Tuesday. The new record surpassed the previous electronic volume record set on June 13, 2007.[19]
  • On Jan. 10, 2008 ICE Futures U.S. set a new daily electronic trading volume record. Electronic futures volume on Jan. 10, 2008 totaled 247,040 contracts. ICE Sugar No. 11 futures also reached a new daily electronic volume record of 177,271 contracts. Electronic trading at ICE Futures U.S. represented 89 percent of total futures volume. Also on Jan. 10, open interest in the Sugar No. 11 futures contract surpassed the one-million contract mark for the first time, with 1.021 million open contracts. Open interest in ICE Cotton futures also set a new all-time high at 261,151 contracts.[20]
  • On Jan. 17, 2008 ICE set new daily electronic and exchange-wide trading volume records. Electronic futures volume on Jan. 17 totaled 363,441 contracts, surpassing by 33 percent the previous record of 273,670 contracts set on Jan. 16, 2008.[21]ICE Sugar No. 11 futures established a new daily electronic volume record of 306,728 contracts.[22]
  • On Jan. 18, 2008 ICE said that due to market conditions impacting the price of ICE's common stock, Chairman and Chief Executive Officer Jeffrey Sprecher would cancel a previously announced, pre-arranged stock trading plan established in November 2007 and scheduled to commence in January 2008. The plan was adopted pursuant to guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934 and disclosed by ICE in a press release dated Dec. 24, 2007.[23]The exchange said Sprecher did not make any trades under the plan, which would have accounted for approximately 10 percent of his combined holdings of stock, restricted stock and stock options and was intended to diversify his personal investment portfolio, implement certain tax planning measures, and pay income taxes incurred in connection with the awards.[24]
  • On Feb. 13, 2008 ICE set a new daily volume record in its ICE Gas Oil futures contract. Gas Oil futures volume reached 200,908, surpassing by 8 percent the previous record of 186,124 contracts established on Nov. 6, 2007.[25]
  • On Apr. 2, 2008, ICE reported announced that March average daily volume(ADV) in futures exceeded one million contracts for the first time in exchange history, and OTC commissions more than doubled. In the first quarter of 2008, ICE achieved record ADV and record average daily commissions.[26]
  • On May 29, 2008, ICE announced that in cooperation with the U.S. Commodity Futures Trading Commission (CFTC) and the U.K. Financial Services Authority (FSA), it has facilitated the development of a cross-border program to provide enhancements to its energy market data reporting, including the large trader reports already in place on its West Texas Intermediate (WTI) crude oil futures contract. The expanded information sharing agreement, initiated by ICE and detailed below, will be subject to the existing memorandum of understanding (MOU) between the FSA and the CFTC. As a result of these proactive enhancements, ICE Futures Europe hopes to provide greater transparency in its markets.[27]
  • On June 3, ICE reported that average daily volume for all ICE Futures contracts reached 872,555 in May 2008 compared to 724,991 in May 2007. In May 2008, ICE's average daily commissions were $1,193,325, an increase of 68 percent compared to $711,074 in May 2007. Average daily commissions reflect daily trading activity in ICE's global OTC energy markets.[28]
  • On June 17, 2008 and May 29, 2008, the CFTC announced further enhancements to the level of information that ICE has supplied since 2006 on its West Texas Intermediate (WTI) Crude Oil contract. The initiatives placed ICE Futures Europe under the same regulations as those applicable to U.S.-based exchanges.[29]

ICE Stock Quote Information[edit]

ICE's web site contains detailed information about ICE's stock price.

Key People[edit]

References[edit]

  1. "ICE Futures U.S. Board Approves Transition to Fully Electronic Trading for Futures". Reuters.com.
  2. Chilling Effect? ICE Makes CBOT Merger Offer. redOrbit.
  3. CBOT Holders Choose To Merge With CME. Forbes.com.
  4. Press Release. WCE.
  5. Press Release. IntercontinentalExchange.
  6. Press Release. ICE.
  7. ICE in takeover of Clearing Corporation. Financical Times.
  8. Press Release. ICE.
  9. Press Release. ICE.
  10. Press Release. IntercontinentalExchange.
  11. Press Release. IntercontinentalExchange.
  12. Press Release. ICE.
  13. "ICE makes some moves to Chicago”. charlotte.bizjournals.com/.
  14. Press Release. ICE.
  15. ICE Clear Europe. IntercontinentalExchange.
  16. Press Release. IntercontinentalExchange.
  17. "ICE Futures U.S. to List CRB Index on the Screen”. Reuters.
  18. Press Release. ICE.
  19. Press Release. IntercontinentalExchange.
  20. Press Release. IntercontinentalExchange.
  21. Press Release. IntercontinentalExchange.
  22. Press Release. IntercontinentalExchange.
  23. Press Release. IntercontinentalExchange.
  24. Press Release. IntercontinentalExchange.
  25. Press Release. IntercontinentalExchange.
  26. Press Release. ICE.
  27. Press Release. ICE.
  28. Press Release. ICE.
  29. 2nd UPDATE:CFTC:Seeks ICE Europe WTI Front Mo Contract Limits. Dow Jones Newswires and Morningstar.

Resources[edit]