IntercontinentalExchange Earnings Call Insights: M&A Opportunities and the OTC Market
Richard Repetto – Sandler O’Neill & Partners: I guess the first question, similar to the question I asked last quarter is on the capital Scott and capital built and you did come through with what you described. You said there was potential M&A opportunities and obviously you announced a couple transactions. I guess the question is, are there similar opportunities going forward. Jeff mentioned that he didn’t the see the capital requirements to be immaterial in Europe. When could you expect an acceleration of sort of a capital return at some point, or are these opportunities still out there, these bolt-on acquisitions?
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Scott A. Hill – SVP and CFO: I don’t think much has changed in the three month period since the last time you asked that Rich. I think our thinking is still the same. We did increase as I mentioned in my prepared remarks our buyback authorization to $500 million and you’ll continue to see us return capital via that vehicle. We do believe that there is still a lot of growth opportunity in this space. You saw it with the WhenTech acquisition, you saw it with the announcement of our intention to acquire a controlling share in APX-ENDEX. So addition to the growth opportunities, there are still some uncertainties, the same ones that we talked about last time, there are tax policy questions that are left to be unanswered or that are left to be answered in addition to number of other questions like regulatory capital as Jeff mentioned. We don’t expect those regulatory capital requirement will materially alter the strength of our balance sheet or materially alter or P&L in any way, but as we sit here today with the items of uncertainty that we talked about last time and our view that there is a lot of growth opportunity left in this space, really hasn’t changed, but I’ll close as I did last time. This is something we spend a lot of time thinking about internally, something we talked about with our Board as recently as September and something that we feature with them each at our Board meetings during the year. So we’ll continue to look at it, but I do think that the kind of headline is lots of opportunity to grow and as long as we think we can do that and generate the kinds of returns we’ve done historically, we are going to continue to make those investments.
Richard Repetto – Sandler O’Neill & Partners: Then Jeff you talked about Creditex potentially being a SEF and I guess the question is why doesn’t ICE just – do you need to be SEF at Creditex? Your former partner that (2X), they get a DCM license and they are going to be trading swaps with just the exchange license, so I guess the question is you’ve got now the index futures products in CDS, why doesn’t ICE just itself go more aggressively on the over-the-counter side?
Jeffrey C. Sprecher – Chairman and CEO: First of all, we are being incredibly aggressive in the way we’ve been approaching the credit space. The negation to license to market indices was the negotiation that happened over many years. It’s some — it’s a vision that we had at the time we bought Creditex with our former partner that we thought that the markets would become more transparent, more standardized and ultimately cleared and you will recall that we were saying that before the collapse of Lehman Brothers which collapsed fundamentally, changed the regulatory environment that is also pushing towards those goals. We don’t know what a SEF is and so the reason that we say we intend to become one and not that we are definitely becoming one as we don’t know what SEF is. It’s a voice brokerage operation qualifies as a SEF and obviously we would register our voice operation as such. It has a separate broker dealer imbedded within it which we used for bond trading which is the underlying of credit defaults swaps and is increasingly being used by CDS market participants, so it’s really just an organizational tact. I will tell you though what we have done, Scott alluded to it in his prepared remarks, that we have transitioned our U.S. index business to exclusively electronic with no voice intermediation in it. We have convinced the major dealers to stream prices to us and do that fully electronically and that puts us in a good position for the launch of CDS futures where we think the market will be accustomed to market making in an exclusively electronic format and so all of that has been a long-term goal that we’ve been working behind the scenes to prepare for the day when we can launch credit futures, which we think will be a very well received product.
Kenneth Worthington – JPMorgan: First, I’d like to start on the OTC market. How do you think the competitive dynamics play out in the OTC energy market once new capital disclosure rules go into full effect next year. It seems to me like your and CME’s OTC models are converging and I’d just love to hear your thoughts on how the changes that you and CME are making impact where clients are trading and the growth rate of what has historically been your OTC platforms?
Jeffrey C. Sprecher – Chairman and CEO: Sure. That’s a good question and it’s complicated, so I’ll just try to hit the highlights. The market when we started ICE was completely not organized and not standardized and we put an electronic platform out there to just bring bilateral execution, and it just so happens that we designed that platform to be a central limit order book with FIFO matching. That first person in best price matches and our energy markets have become more standardized around that platform, particularly once we had a clearing and have gotten used to trading on a central limit order book. ICE over time started to publish the data that came off with that central limit order book at end of day. Obviously, there are end of day settlement prices that come out of clearing house, and we would sell a (due only) version of that central limit order book, so the people could see the take in real time. So the movement of futures is really just the final step in that process. The market has gotten used to a real-time take that’s gotten used to central limit order book, that’s gotten used to clearing and it standardized. I would just say to you that unlike other markets ICE trades for example five year deals, one year deals, quarterly deals, monthly deals, balance of month, weekly deals, balance of week, daily deals, balance of day. So we have every possible header, a contract that allows a dealer or somebody who is a building a customize swap for a unique buy-side customer to take all of these building blocks and put them together and build something that is highly tailored, and that process of creating all those tenders and liquidity in it has happened over a decade. So we believe that the market seamlessly converts on futures trading. Right now, we are in an interim period where we have lowered our block trading rules to make it very, very easy for off exchange deals to make their way in, but increasingly we think the block trading rules will be rationalized between us and government and find us a balance and we think more and more business will move on to the central limit order book. Similarly, in the brokerage community, brokers moved from year 2000 where they were interdealer brokers, they seamlessly moved over time to become not only interdealer but dealer to client brokers and under Dodd-Frank, there is requirement that brokers increased their certifications of their individual brokers, increased their data and compliance function and so the movement in the intermediary market was already moving towards becoming full-fledged futures brokers and we now see our colleagues in our brokerage community as a result of our action moving quickly to get themselves set up to trade around our futures platform. I think obviously we’re very competitive with CME in certain markets and I would expect that competition to continue and I would expect CME to take steps to organize their markets similar to ICE and then we will continue to fight each for market share.
Kenneth Worthington – JPMorgan: As a follow-up on carbon, open interest I think 1.6 million contracts, volume was up a lot September year-over-year; how do you feel about 2013? It seems like a lot of things are going well under the circumstances, but there is a number of pending rule changes and meetings that could heavily influence policy and ultimately trading volume. So are you leaning towards the optimistic in terms of volume kind of exploding or are you kind of cautious and it’s kind of a wait and see based on set aside some other rules that are being talked about?
Jeffrey C. Sprecher – Chairman and CEO: We always lean towards optimistic, Ken. I think the emissions market is not really any different. We actually are quite encouraged by what we’ve seen in volumes over the course of this year. As you know we’re heading towards the Phase III implementation next near, but even in advance of that, we’re starting to see big industrial companies move into the market. The trading activity from those industrial customers had been very strong and which helped drive the 13% volume growth that we saw in the most recent quarter. I think some of the first auctions for the emission certificates are scheduled to take place in the near future. I think those auctions will create more price volatility and price volatility tends to be good for our volume. And so as we look at it, there is no question that you’re going to see expanding participation I think with the options and you’ll see expanding volatility. There are question about what actions the government may or may not be wanting to take with regard to the pricing and trying to influence the cost of our certificate higher. And it’s never optimal for markets when the government plays a big role in it, but nonetheless on balance I think we’re very optimistic on what we’ve seen and quite optimistic about where we think that market potential is.
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