The Intercontinental Exchange Group had a record 2014, but for CEO Jeff Sprecher “boy, it was a chaotic year.”
ICE posted revenues of $3.01 billion last year from transaction and clearing fees, as it consolidated operations from the 2013 NYSE Euronext acquisition, navigated changing regulations, handled energy market volatility and eyed its Asian expansion.
Sprecher, who spoke with JLN editor-in-chief Jim Kharouf at the FIA Boca conference, said regulation will continue to be a strong influence on the marketplace in 2015. But ICE is not waiting for the US and European rulemaking process to reach its conclusion. The exchange plans to launch a new Singapore-based exchange and clearinghouse to complement its US and European operations.
“It’s a big lift for the industry,” Sprecher said. “You’re talking about new connectivity to a new clearinghouse, funding a new clearinghouse, getting new rulebooks and rule sets. But a lot of our customers are concerned that business they had in Asia may not come to the US or to Europe where it did before, and we may have to as a Western industry, reach out to Asia.”
ICE also purchased SuperDerivatives, a data and analytics company, which is now being integrated into the exchange platform. The move is designed to help exchange participants analyze their trades and potential risk as well.
But regulation continues to weigh heavily on the industry in terms of cost and compliance resources. Sprecher said the mismatch of rules and regulations between US and European regulatory agencies has made trading in the derivatives space challenging. His hope is that those differences will be smoothed out in the months to come.
“For the longest time, our industry enjoyed the ability to do business around the world 24-hours a day, through technology and working out the currency and clearing and collateral issues,” Sprecher said. “But now we have regulation that is somewhat balkanizing our business. And our customers are going to be impacted by that.”
In terms of technology, ICE is continuing to invest in clearing technology.
“The model for clearing continues to evolve,” Sprecher said. “And the data that is needed, and the risk tools that are needed to look at what’s going into these clearinghouses continues to evolve.”
Going forward, Sprecher said the exchange is well positioned to take advantage of the new regulatory environment and geographic shifts in participation. With another clearinghouse acquisition in Amsterdam and the new exchange coming online in Singapore, ICE now has a fleet of exchanges and clearinghouses that span the time zones.
“We feel good in that we have a lot of options for customers but we don’t know what options customers are going to take,” he said. “We sort of look at 2015 as a transition year for the industry and we’ll let it play out.”