Intercontinental Exchange (ICE): What It Is and What It Does

What Is the Intercontinental Exchange (ICE)?

The Intercontinental Exchange (ICE) is an American company that owns and operates financial and commodity marketplaces and exchanges. It was founded in May 2000 in Atlanta, Georgia. ICE operations include futures exchanges, cash exchanges, central clearing houses, and market services for off-exchange trading.

ICE operates futures exchanges in the U.S., U.K., EU, Canada, Singapore and Abu Dhabi. Its cash exchanges include the New York Stock Exchange (NYSE), NYSE ARCA, NYSE National, NYSE AMEX Options, NYSE ARCA Options, and NYSE Chicago. ICE also operates six central clearing houses: ICE Clear Europe, ICE Clear U.S., ICE Clear Credit, ICE Clear Netherlands, ICE Clear Singapore, and ICE NGX.

ICE became a publicly traded company on November 16, 2005, and was added to the Russell 1000 Index on June 30, 2006.

Understanding the Intercontinental Exchange (ICE)

In May 2000, ICE was founded by Jeffrey C. Sprecher, a power plant developer who wanted to create a more transparent and efficient platform for over-the-counter (OTC) energy commodity trading. Compared with manual trading, the new platform provided greater price transparency, efficiency, liquidity, and had lower costs.

When it was founded, the company's primary focus was on energy products, specifically crude and refined oil, natural gas, power, and emissions. Through various acquisitions, the company's activities broadened to include other commodities—such as sugar, cotton, and coffee—in addition to foreign cash exchanges and equity index futures.

In response to the 2007–08 Financial Crisis, Sprecher formed ICE Clear Credit, which would serve as a clearing house for credit default swaps, over-the-counter (OTC) derivatives, and provide crucial risk management services for the market. In March 2009, ICE Clear Credit was created and approved by the Federal Reserve as a bank and two years later, was designated as a clearing house and regulated by the CFTC and SEC. ICE was the first to offer clearing services in the OTC energy and credit derivatives markets. According to ICE's Q1 2022 report, ICE had cleared more than $16.4 trillion in credit default swaps, up YOY by 9.7%.

Since its founding in 2000, ICE's company growth has primarily been achieved through the acquisition of other exchanges. It's first acquisition was the International Petroleum Exchange (IPE), now ICE Futures Europe, in 2001. In the following decade, the company expanded by acquiring the New York Board of Trade (NYBOT) in 2005, Winnipeg Commodity Exchange, which is now ICE Futures Canada in 2007, Creditex Group in 2008, and Climate Exchange in 2010. Several more acquisitions occurred the next ten years: NYSE Euronext in 2013, Interactive Data Corporation (IDC) in 2015, Standard & Poor's Securities Evaluations, Inc.in 2016, Virtu BondPoint in 2017, Chicago Stock Exchange (CHX) in 2018, and Simplifile, LC in 2019. ICE's most recent expansion has continued with the acquisitions of Ellie Mae in 2020 and Black Knight in 2022.

In June 2016, ICE launched a new suite of data services and software, called ICE Data Services. The proprietary real-time data, valuations, analytics, reference data, evaluated pricing, and connectivity solutions employed by ICE Data Services are used by NYSE, SuperDerivatives, Interactive Data (IDC), and other ICE customers, including financial institutions, asset managers, and individual investors. ICE Data Services also provides its customers with unique data from global exchanges and fixed income markets.

According the 2021 FIA report, ICE is the fourth-largest exchange group in the world, behind CME Group, Brazil's B3, and the National Stock Exchange of India, ranked at the top spot. As of July 2022, the company has a market capitalization of $53.88 billion.