Intercontinental Exchange Refutes CMA Conclusion over Trayport Acquisition

ICE ownership of Trayport`s platform could lead to worse terms offered to traders.

New York Stock Exchange operator Intercontinental Exchange Inc. (NYSE:ICE) today said it is still committed to its $650 million investment in the commodities trading software company Trayport. The US-headquartered group refused the British competition watchdog’s concerns over the deal which could discourage ICE and its rivals from launching new products and trading solutions, according to the CMA.

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ICE beat arch-rival CME Group to buy the broker-tech platform licenser just eight months ago, but the UK`s competition authority now believes a complete divestiture could be an effective remedy to the substantial lessening of competition.

Earlier this week, the Competition and Markets Authority (CMA) claimed that ICE’s $650 million investment in Trayport could hurt competition for wholesale European utilities trades, where Trayport’s software helps facilitate 85 per cent of activates. It also voiced concerns about possible worse terms for traders due to higher fees for executing and clearing trades. The CMA issued a list of possible remedies, the most drastic including a forced sale.

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Other market participants such as Nasdaq, EEX, Tradition and ICAP have told CMA that they fear OTC gas and power markets could be subject to the mandatory clearing provisions that are being applied to other commodity markets.

According to ICE’ statement, the watchdog findings are still provisional and the final decision is not expected before October. This would give the exchanges operator an opportunity to address the alleged concerns and demonstrate the manner in which Trayport will operate as an open and autonomous software provider.

Public consultation then a final ruling

In response to CMA claims, ICE expressed its disagreement with the findings as they do not align with its vision for Trayport’s business, which licenses a technology platform to serve brokers for electronic and hybrid trade execution. In addition, ICE provided further information to investors on its acquisition including the original statement of intention which reflects how the business has operated since the acquisition was completed in December 2015.

ICE said that Trayport will continue to serve its customers—energy producers and consumers, brokers, exchanges and clearing houses—with its existing technology platform as it does today. It also will ensure that all customers are “treated fairly and reasonably and are not discriminated against, including with respect to pricing, access and support.”

“In addition, Trayport will continue to invest in and enhance its existing services in response to customer and market demand. It will operate as a separate, independent business within ICE and will have a dedicated senior management team and defined processes to ensure customer feedback is received and given appropriate consideration,” ICE added.

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