For the Intercontinental Exchange (ICE), 2015 was about major investments in data and analytics services. Now in 2016, the exchange is looking to integrate recent data acquisitions into its business and grow well beyond traditional exchange trading and clearing services.
ICE CEO Jeff Sprecher spoke with John Lothian News at the FIA Boca Conference about how its purchases of SuperDerivatives, Interactive Data and S&P Analytics fit into its business model. ICE is also working with Blackrock, on exchange traded funds, to become its benchmark index provider..
“We started to pivot the company to get deeper into the data space,” Sprecher said. “We want to articulate a vision on how exchanges and data can come together into one holistic business that can serve customers.”
Sprecher is also focused on the clearing aspect of the business. The exchange currently operates six different clearing houses in the US, Canada, Europe and Singapore.
“We and our peers are investing more money in clearing,” he said. “We need more people. We need more processes and systems that are auditable. Part of that just comes from dealing with regulators and part of it comes with the fact that these are systemically important and they need to have the proper checks and balances.”
In addition, Sprecher said the priority going forward is to “minimize risk in a clearing house but also optimize, for our customers, the amount of capital they have to put up.”
The exchange, like most others, is examining the possibilities of blockchain technology, the digital ledger solution. Sprecher said the initiatives that are being pursued are creating “a context for better standards.”
“While (clearing) has been cobbled together over many years, the reality is there is a pretty broad base of communication and standards that are there. Whether blockchain can rise to the level that it can obliviate all of that because it is better, faster, cheaper, is yet to be seen,” he said. “But I do think there will be a spillover benefit to just getting better standards and a more common interface.”
Looking ahead, Sprecher said that the exchange is well positioned for more growth, especially as firms look to exchanges for services that provide better capital efficiencies, but also as customers look to exchanges to offset risk.
“There is a lot of risk management being consumed right now,” he said. “We have an election coming up in the US, Brexit vote in the UK. As you look forward at our calendar, there is a lot of man-made volatility that is built into that calendar.”