30 Jan 2002 – The Intercontinental Exchange (ICE), which doubled its volumes in the months following the collapse of its competitor Enron Online, is considering a floatation, according to the market’s chief executive, Jeffrey Sprecher.
Formed just over 14 months ago, ICE has quickly established itself as one of the leading energy traders in the US, with a daily trade of 12m barrels of oil, 500m cubic feet of gas and 15 TWh of electricity. ICE now has 8500 participants, having doubled the number within the last three months. In the UK, ICE accounts for a fifth of the gas market.
Sprecher said that the companies January revenues would be $15m. “I expect we will be north of $180m for 2002,” he said. With a 50 per cent pre tax margin, profits for the year could be almost $100m.
Likely shareholders would be oil companies and US investment banks who were looking for a less liquid investment, said Sprecher.
ICE operates as an intermediary in energy transactions and does not take a position or provide credit. Traders on their exchange are expected to make their own checks on counterparties.
It operates the “many-to-many” model unlike Enron, which acted as principal and, if only for a short while, owned the commodity. In this way, Enron was able to report vastly inflated turnover. Sprecher believes that the “one-to-many” trading model was a weakness. “I think many-to-many is a better model. One-to-many isn’t dead but it is wounded.”
ICE took over the International Petroleum Exchange last year on a share-for-share basis. Those former International Petroleum Exchange shareholders would be set to benefit from any floatation.