ICE to Launch Treasury Clearing Service to Increase Transparency and Enhance Resilience in the U.S. Treasury Market

Rhea-AI Summary

Intercontinental Exchange (NYSE: ICE) announced the launch of a new clearing service for U.S. Treasury securities and repurchasing agreements, leveraging its existing ICE Clear Credit platform. This initiative follows an SEC mandate aimed at enhancing transparency and resilience in the Treasury market. ICE Clear Credit, the global leader in credit default swaps (CDS) clearing, will manage this service independently from its CDS operations, with a unique rulebook and risk management framework. The launch aims to promote competition and improve risk management in the Treasury market, building on ICE's extensive experience in clearing various financial instruments. ICE Clear Credit has historically reduced counterparty risk by clearing approximately $200 trillion in two-sided notional amount.

Positive

• ICE is launching a new clearing service for U.S. Treasury securities, leveraging its proven ICE Clear Credit platform.
• The new service aligns with SEC mandates to enhance transparency and resilience in the Treasury market.
• ICE Clear Credit has a strong track record, having cleared approximately $200 trillion in two-sided notional amount.
• The new offering will be distinct from current CDS clearing services, with a separate rulebook and risk management framework.
• The initiative is expected to promote competition and standardized risk management in the Treasury market.

Negative

• None.

Insights

Financial Analyst

Intercontinental Exchange (ICE) expanding into the U.S. Treasury clearing market signifies a significant strategic move. This initiative aligns with recent SEC mandates to improve resilience and transparency in the Treasury market. With ICE's established track record in clearing services, the added Treasury clearing service could benefit from pre-existing infrastructure and expertise. ICE's ability to reduce counterparty risk, illustrated by its performance in the CDS market, suggests potential for similar impacts in the Treasury market. Over the long term, this could translate into increased market confidence and potentially higher trading volumes.

However, investors should be mindful of initial implementation costs and the time required to fully integrate and operationalize the new service. Economic conditions and regulatory changes could also affect the service's success. In addition, there’s competition from other clearing services providers that could impact ICE’s market share and profitability.

Market Research Analyst

The addition of U.S. Treasury clearing by ICE is a noteworthy development for the fixed income market. This move not only aligns with regulatory trends but also enhances ICE's product portfolio, making it more comprehensive. Such a service can attract a broader range of market participants, from institutional investors to smaller firms, looking for a reliable clearing partner.

Moreover, ICE's deep regulatory compliance experience and designation as a systemically important financial market utility provide additional assurance of stability and reliability. This could lead to increased market participation and potentially greater liquidity.

That said, market participants will need to consider how ICE's service compares with other providers in terms of cost, efficiency and reliability. There’s also the aspect of how quickly ICE can scale this service to meet market demand, which will be important for its adoption.

ATLANTA & NEW YORK--(BUSINESS WIRE)-- Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of technology and data, today announced it will leverage its proven track record and expertise in central clearing and the fixed income market to launch a clearing service for all U.S. Treasury securities and repurchasing agreements. This follows the recent announcement by the U.S. Securities and Exchange Commission (SEC) mandating for the expansion of U.S. Treasury securities clearing to enhance resilience in the market.

ICE operates many of the largest clearing houses globally and brings decades of experience in clearing products ranging from interest rates, energy, agricultural and equity derivative futures and options, as well as credit derivatives.

The new Treasury clearing service will leverage ICE’s existing clearing house, ICE Clear Credit, which is the leading global clearing house for credit default swaps (CDS). The Treasury clearing service will be established as a distinct offering from the current CDS clearing service, and will have a separate rulebook, membership, risk management framework, financial and liquidity resources, and risk committee.

“Over the last fifteen years, ICE Clear Credit has become the leading global clearing house for credit derivatives, and we believe it is strategically positioned to offer Treasury clearing services that will promote competition and help facilitate the SEC’s policy objective of bringing increased transparency and standardized risk management to the Treasury securities market,” said Stan Ivanov, President of ICE Clear Credit. “The rich experience we’ve developed creating and operating ICE Clear Credit and the work we’ve done to ensure its compliance with all U.S. and foreign regulatory regimes has created a fertile environment for adding Treasury clearing to our suite of credit clearing services.”

ICE Clear Credit was founded during the financial crisis in 2009 to bring confidence and stability to the CDS market. Since then, it has become the leading global clearing house for credit derivatives, including Single Name and Index CDS instruments, and options on index CDS. ICE Clear Credit offers clearing for more than 650 Single Name and Index CDS instruments referencing corporate and sovereign debt, and has reduced counterparty risk exposure by clearing approximately $200 trillion in two-sided notional amount, with open interest of over $1.75 trillion.

“The history of ICE Clear Credit and the way the team at ICE identified a market need that could benefit from modernization is the core of who we are as a company,” said Chris Edmonds, President of ICE’s Fixed Income and Data Services. “As we look to add Treasury clearing to the breadth of services we offer for fixed income markets, we will leverage the successful playbook we developed in the past to offer an industry-trusted clearing solution along with the front-, middle- and back-office workflows our customers rely on to manage their daily business operations.”

As an SEC-registered Securities Clearing Agency, ICE Clear Credit has years of experience navigating and complying with complex regulatory requirements. Additionally, ICE Clear Credit is designated as a systemically important financial market utility (SIFMU) by the Financial Stability Oversight Council, and deemed a qualified central counterparty (QCCP) under U.S. bank capital rules.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds, and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges -- including the New York Stock Exchange -- and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines, and automates industries to connect our customers to opportunity.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 8, 2024.

Category: Fixed Income and Data Services

SOURCE: Intercontinental Exchange

ICE-CORP

View source version on businesswire.com: https://www.businesswire.com/news/home/20240624542658/en/

ICE Media Contact:

Damon Leavell

damon.leavell@ice.com

(212) 323-8587

media@ice.com

ICE Investor Contact:

Katia Gonzalez

katia.gonzalez@ice.com

(678) 981-3882

investors@ice.com

Source: Intercontinental Exchange

FAQ

What is ICE's new service for the U.S. Treasury market?

ICE is launching a new clearing service for U.S. Treasury securities and repurchasing agreements, leveraging its ICE Clear Credit platform.

When did ICE announce the new Treasury clearing service?

ICE announced the new Treasury clearing service recently following the SEC's mandate to enhance market transparency and resilience.

What is the stock symbol for Intercontinental Exchange?

The stock symbol for Intercontinental Exchange is ICE.

How will ICE's new service impact the Treasury market?

ICE's new service is expected to promote competition and improve risk management, thereby enhancing transparency and resilience in the Treasury market.

What experience does ICE have in clearing financial instruments?

ICE has decades of experience in clearing various financial instruments, including interest rates, energy, agricultural and equity derivatives, as well as credit derivatives.