Intercontinental Exchange
Intercontinental Exchange, Inc. is an American multinational financial services company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the Fortune 500, S&P 500, and Russell 1000, the company owns exchanges for financial and commodity markets, and operates 12 regulated exchanges and marketplaces. This includes ICE futures exchanges in the United States, Canada, and Europe; the Liffe futures exchanges in Europe; the New York Stock Exchange, the world's largest stock exchange in terms of total market capitalization of its listed companies; equity options exchanges; and OTC energy, credit, and equity markets.
ICE also owns and operates six central clearing houses: ICE Clear U.S., ICE Clear Europe, ICE Clear Singapore, ICE Clear Credit, ICE Clear Netherlands, and ICE NGX. ICE has offices in Atlanta; New York; London; Chicago; Bedford; Houston; Winnipeg; Amsterdam; Calgary; Washington, D.C.; San Francisco; Pleasanton; Tel Aviv; Rome; Hyderabad; Singapore; and Melbourne.
History
was a power plant developer who spotted a need for a seamless market in natural gas used to fuel power stations. 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 over-the-counter energy commodity trading.In May 2000, ICE was founded by Sprecher and backed by Goldman Sachs, Morgan Stanley, BP, Total, UniCredit, Shell, Deutsche Bank and Société Générale.
The new exchange increased price transparency, efficiency, liquidity, and had lower costs than manual trading. While the company's original focus was energy products, acquisitions subsequently expanded its activity into soft commodities, foreign exchange and equity index futures.
In a response to the 2008 financial crisis, Sprecher formed ICE US Trust, based in New York and 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 derivatives clearing house. "US regulators were keen on the kind of clearing house for opaque over-the-counter 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 nine of the world's largest banks. Sprecher's clearing house cleared their global credit default swaps in exchange for sharing profits with these banks. By September 30, 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, Weitzman 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.
By 2010, Intercontinental Exchange had cleared more than $10 trillion in credit default swaps through its subsidiaries, ICE Trust CDS. 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 as the only exchange operator included in the ranking.
On September 6, 2019, Bloomberg reported that ICE was growing closer to offering Bitcoin futures trading, as "its Bakkt unit opens its digital-asset custody warehouse today to customers." On September 23, 2019, Bitcoin will be able to be acquired.
Mergers and acquisitions
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:2001: International Petroleum Exchange (IPE)
In June 2001, ICE expanded its business into futures trading by acquiring the London-based International Petroleum Exchange, now ICE Futures Europe, which operated Europe's leading open-outcry energy futures exchange. Since 2003, ICE has partnered with the Chicago Climate Exchange 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.2007: New York Board of Trade (NYBOT)
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, and ChemConnect.2007: Chicago Board of Trade – (unsuccessful bid)
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.2007: Winnipeg Commodity Exchange (WCE)
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 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 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.
2008: Creditex
In June 2008, ICE announced that it had entered into a definitive merger agreement to acquire Creditex Group Inc.. The transaction consideration totaled $625 million comprising approximately $565 million in ICE common stock and $60 million in cash, as well as a working capital adjustment to be finalized at closing. Upon the closing of the transaction, Creditex Group became a wholly owned subsidiary of ICE, operating under the Creditex name.2008: TSX Group's Natural Gas Exchange Partnership
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.2010: Climate Exchange
In April 2010, ICE acquired Climate Exchange PLC for 395 million pounds and European Climate Exchange as part of its purchase. Exchange-traded emissions products were first offered by the European Climate Exchange, 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 emissions. ICE's ECX products comply with the requirements of the European Union Emission Trading Scheme.2013: NYSE Euronext
In February 2011, in the wake of an announced merger of NYSE Euronext with Deutsche Börse, 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 to join in what would 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 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 February 1, 2012, citing the fact that the merged company would have a near monopoly.
In December 2012, ICE announced it would buy NYSE Euronext for $8.2 billion, pending regulatory approval. Jeffrey Sprecher would retain his position as chairman and CEO. The boards of directors of both ICE and NYSE Euronext approved the acquisition, which took place in 2013.
In 2014, ICE spun off Euronext, keeping NYSE and LIFFE, renaming it ICE Futures Europe.