On Friday, the operator of regulated future exchanges -
IntercontinentalExchange Inc. ( ICE ) announced its
plan to launch 35 fresh cleared derivative energy products. With
the announcement of these contracts, the company will now be
offering over 800 energy contracts through ICE Futures Europe.
Accordingly, the energy contracts include global crude oil and
refined petroleum products coupled with North American power and
natural gas liquids. Alongside, ICE plans to introduce
environmental, freight and iron ore derivative contracts as well as
RBOB gasoline on ICE Futures Europe.
All the new futures and options contracts will begin trading on
Apr 29, 2013, subject to regulatory approval, and would be cleared
through ICE Clear Europe. The company remains aware of the changing
market needs and attempts to evolve through its hedging strategies,
product modification and innovation, in turn supporting volumes and
top-line growth in the long run.
ICE has been growing through product novelty and expansion in
the global emerging markets over the past few quarters. Strong
trading volumes in ICE's crude oil and energy futures and
over-the-counter (OTC) markets, new product introduction along with
increase in clearing revenues drove the top- and bottom-line in the
previous years. The strengthening of this portfolio is further
expected to drive growth in the future.
Additionally, the launch of contracts by ICE in the rapidly
expanding energy sphere further boosts the company's competitive
leverage in the derivatives and OTC areas, where the presence of
archrivals, CME Group Inc . ( CME ) and CBOE
Holdings Inc. ( CBOE ), provide a
challenging operating environment. Particularly, ICE's latest
launch of futures includes three renewable fuel credits under
environmental futures in North America, a product suite that CME
Group also plans to commence next month.
Overall, we believe that based on the current volatile macro
environment, ICE has a strong revenue-generating product portfolio,
high earnings visibility, consistent cash generation, disciplined
investment and limited balance-sheet risk. The prospective
acquisition of NYSE Euronext Inc. ( NYX ) will further
drive strong earnings potential in the long run.
While ICE, NYSE and CME Group carry a Zacks Rank #3 (Hold), CBOE
carries a Zacks Rank #2 (Buy).CBOE HOLDINGS (CBOE): Free Stock Analysis
ReportCME GROUP INC (CME): Free Stock Analysis ReportINTERCONTINENTL (ICE): Free Stock Analysis
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