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Read through enough investing material, watch your fair share of CNBC, and you will eventually hear about the Intercontinental Exchange, also referred to as ICE.
This article provides an in-depth analysis of ICE to help investors understand what it is and the important purpose it serves.
What Is the Intercontinental Exchange (ICE)?
ICE owns and operates both financial and commodity exchanges and marketplaces. Founded in Atlanta, Georgia back in the spring of 2000, ICE’s operations are quite expansive, including futures exchanges, cash exchanges, market-related services for trading off-exchange, central clearinghouses, and more.
ICE operates futures exchanges in the United States, Singapore, and parts of Europe. ICE’s cash exchanges encompass the New York Stock Exchange along with NYSE Chicago, NYSE ARCA Options, NYSE AMEX Options, and NYSE National.
The company also operates half a dozen central clearinghouses.
Understanding the Intercontinental Exchange (ICE)
ICE’s platform for trading is widely lauded as it provides superior price transparency, heightened efficiency, reduced costs, and the liquidity every investor craves.
The company was originally formed with the backing of some of the financial sector’s top players including Deutsche Bank, Morgan Stanley, and Goldman Sachs.
When ICE first started, its main purpose was perfecting energy products with a specific focus on natural gas, crude oil, and refined oil.
ICE went on to acquire several businesses, expanding its activities to additional commodities along with equity index futures and even foreign cash exchanges.
ICE Clear Credit was formed in response to the financial crisis of ’07. This organization functioned as a credit default swap clearinghouse and the over-the-counter clearinghouse for Federal Reserve derivatives.
ICE Data Services, a suite of software and data services, launched in the summer of ’16, serving the NYSE, Interactive Data, SuperDerivatives, and other clients.
What Exchanges Does the Intercontinental Exchange Operate?
The company’s prominence is largely the result of its acquisition of exchanges. ICE has acquired ICE Futures Europe, which was originally the International Petroleum Exchange.
The company also acquired Ice Futures Canada, previously known as the Winnipeg Commodity Exchange.
ICE also acquired the European Climate Exchange, Interactive Data Corporation, NYSE Euronext, Virtu BondPoint, Standard & Poors Securities Evaluations, and the Chicago Stock Exchange.
Additional exchanges operated by Ice include the New York Stock Exchange along with NYSE Chicago, NYSE ARCA Options, NYSE AMEX Options, and NYSE National.
ICE is the world’s third-largest exchange operator. Only the CME Group and Hong Kong Exchanges are larger.
When Was the Intercontinental Exchange Founded?
ICE was founded in the spring of 2000. As noted above, the company has significantly expanded in the preceding two decades.
History of the Intercontinental Exchange (ICE)
Jeffrey C. Sprecher founded ICE. Sprecher, a power plant development specialist, was motivated to create a highly efficient and transparent platform that facilitated energy commodity trades over-the-counter.
How Does the Intercontinental Exchange (ICE) Compare to Other Exchanges?
ICE is revered for its elite price transparency, real-time data, efficient liquidity, and minimal costs.
While many other exchanges have frustrating and unnecessary barriers to entry, ICE makes it easy to buy and sell commodities and additional investment vehicles.
Contrast ICE’s depth, trade speed, reliability, tech capabilities, innovation, and transaction costs to those of the competition, and you will find it compares quite favorably.
NYSE vs. ICE
As noted above, ICE’s cash exchanges encompass the New York Stock Exchange along with NYSE Chicago, NYSE ARCA Options, NYSE AMEX Options, and NYSE National.
ICE finalized its takeover of NYSE in December of 2012.
ICE vs. NASDAQ
Though ICE and the NASDAQ have been solid performers during the recent economic recession as the bull market resulted in higher trading volume along with additional fees, these two exchanges are not exactly the same.
The NASDAQ is different in that it is an exchange for trading technology stocks. As noted above, ICE is much more than an exchange.
The company sells data, has a mortgage arm, and operates clearinghouses.
>> Related: Differences Between the NYSE and NASDAQ
Who Founded the Intercontinental Exchange (ICE)?
Jeffrey C. Sprecher founded ICE. Sprecher’s background as a power plant developer combined with his desire for a highly efficient and transparent over-the-counter trading platform for energy commodities set the stage for ICE’s creation and rapid progression.
ICE became a publicly-traded company in November of 2005.
Bottom Line: What Is the Intercontinental Exchange (ICE)?
In short, ICE is an exchange and marketplace owner and operator. ICE’s value offering shifted from energy products to exchanges soon after its formation.
The company’s success is largely attributable to the early support provided by financial industry titans.