IntercontinentalExchange Group Inc.
) announced its intention to consolidate the trading and clearing
of its global interest rate derivatives portfolio, post the
acquisition of NYSE Euronext Inc. in Nov 2013.
The company has also partnered with the post-trade service
provider - The Depository Trust & Clearing Corporation
(DTCC), which together with NYSE owns NYSE Liffe's New York
Portfolio Clearing (NYPC) - a clearing house for Treasury futures
in the US.
Upon the receipt of regulatory approval, NYPC will be
completely terminated and all the existing open positions in
futures clearing will be transited to ICE Clear Europe. The whole
process is expected to be culminated by the third quarter of
Additionally, DTCC and ICE are also planning to launch a new
cross-margin solution to tap the capital and cost efficiencies
across the global interest rate products. NYSE Liffe US has the
exclusive right to trade DTCC trademark - GCF Repo Index
products, which have been widely acclaimed by traders since its
launch in Jul 2012.
The centralization of interest rate derivative clearing is a
strategic attempt by ICE to gain efficiencies of scale, thereby
helping it reduce the cost of trading and enhance its competitive
position in the market.
On the other hand, the execution of high-quality
cross-margining is projected to escalate global demand for ICE's
clearing services. This is due to the sooner-than-expected
fruition of stringent regulations in Europe that mandate
off-exchange trades to be backed by collateral in order to avoid
Hence, cross-margining helps netting positions of the clients
within their asset portfolio within a clearinghouse, which in
turn lessens the financial burden of the clients as well. Since
its inception in Mar 2011, NYPC helped its patrons save about $40
billion via cross-margining within its fixed income and futures
portfolio. These factors further validate ICE's initiatives to
shore up its market presence in Europe through efficient
cross-margining and business consolidation.
ICE presently carries a Zacks Rank #2 (Buy). Other
better-ranked financial stocks worth considering include
Bofl Holdings Inc.
Virtus Investment Pvt. Inc.
Hilltop Holdings Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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INTERCONTNTLEXC (ICE): Free Stock Analysis
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