In an attempt to broaden the horizons of its over-the-counter
("OTC") products offering, last Friday
) announced its decision to launch a brand new liquefied natural
gas ("LNG") cleared swap contract. It is to be based on Platts, a
The McGraw-Hill Companies
), renowned for providing information related to global energy,
petrochemicals and metals.
Platts, the daily assessor for the Japan/Korea Marker ("JKM"),
was launched in 2009. It is programmed to reflect the total amount
of LNG delivered in the Japanese and South Korean market regularly.
Japan/Korea Marker LNG swap not only adds to
IntercontinentalExchange's 40 Asia-specific energy swaps but also
provides the company with a significant point of reference for
pricing trends in the Southeastern region.
The contract is expected to be settled in cash using the
American dollar on a monthly basis. This new cleared swap contract
initiated by IntercontinentalExchange will be made accessible from
August this year and will be subject to the approval of the
concerned regulatory bodies.
On a separate development, IntercontinentalExchange has revealed
its interest in revising the specifications of the heating oil
contracts starting from May next year and list extra contracts by
December 2014. This move comes just after a similar action
undertaken by its closest competitor
) beginning this year.
Pursuing the stiff competition that exists between the two
companies, CME Group entered into a strategic alliance with Japan's
foremost provider of energy price and information services - RIM
Intelligence - in order to develop clearing services for OTC risk
management products used by the Japanese energy industry.
The company is strategizing to attain a strong foothold in the
emerging markets and has achieved a competitive leverage on
demonstrating immense growth potential in its futures and OTC
market. The company is well positioned to drive its top and
bottom-line growth. Its volumes and margin are expected to
grow as more futures and OTC contracts are now exchange-traded and
We retain our long term Neutral recommendation on
IntercontinentalExchange. It also has a quantitative Zacks #3 Rank
that translates into a short-term Hold rating.
CME GROUP INC (CME): Free Stock Analysis Report
INTERCONTINENTL (ICE): Free Stock Analysis
MCGRAW-HILL COS (MHP): Free Stock Analysis
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