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Tuesday, December 25, 2012

Why ICE is the only deal that makes sense for NYSE

Why ICE is the only deal that makes sense for NYSE - The Term Sheet: Fortune's deals blog Term Sheet: "Thursday's announcement solves all the regulatory problems and gives ICE what it truly wants – access to the European derivatives market. The company didn't waste any time, issuing a separate statement in addition to the merger announcement noting that ICE's clearinghouse in London would begin clearing trades for NYSE Liffe. Jeff Sprecher, ICE's chief executive, said on the conference call Thursday that it was "just a happy circumstance" that Liffe is trying to develop its own clearing opportunities. Such a move would remove any "uncertainty around the completion of a potential clearinghouse" and allow the two companies to "very quickly turn [their] attention together" on the interest rate derivatives space. . . . The combination makes ICE a powerhouse in the European derivatives space as it will be able to both clear and facilitate trades, most notably interest rate swaps and credit default swaps, which will begin moving onto the exchange soon. ICE has no use for an equities platform in either the US or Europe. It paid a high price – 35% premium to where the NYSE last traded Wednesday - because it thinks it can become a major player in the growing derivatives space, not because it wants to babysit a bunch of servers in New Jersey and manage a glorified TV studio on Wall Street. . . . "

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