ICE Bonds recorded record revenues in 2022, up nearly 100% year-over-year.
Benjamin Jackson, chairman of ICE, said on the Feb. 2 earnings call that rising inflation and global central bank activity presented an interest rate environment that had not been seen. for a generation. This resulted in a 20% increase in volume in interest rate contracts and 15% growth in equity derivatives.
“Increased market uncertainty and interest rates are driving increased demand for credit protection, which has led to increased trading activity in our fixed income business,” he added. “Coupled with our ongoing efforts to establish institutional connectivity with our bond platforms, ICE Bonds delivered record full-year revenues.
Warren Gardiner, chief financial officer, said on the call that fixed income could very quickly become a very attractive asset class and ICE was having some very good conversations with clients.
“We are a data hypermarket. We have indices, end-of-day prices, analysis,” Gardiner added. “It’s an opportunity for us to have conversations with customers in this type of environment, and maybe find ways for them to spend more with us.”
Lynn Martin, president of NYSE and president of ICE’s fixed income and data services, said on the call that the trading segment exemplifies the all-weather nature of the ICE name.
“If you look at the execution side of the business, volatility has certainly been a tailwind, but more importantly, new products and customer acquisition have also been a driver of growth,” she added.
ICE Bonds increased its institutional market share according to Martin, particularly in municipal bonds, which rose 205% in the fourth quarter and 175% for the whole of 2022.
“In municipal bonds, we were able to earn around 650 basis points of share in 2022, thanks to the work we did with institutions to connect to their workflows,” she added.
Jackson said: “Although our European carbon markets have seen headwinds in 2022, the century-long trend towards cleaner energy continues and is a growth trend that we are uniquely positioned to capture, as evidenced by the record year in our North American environmental markets with volumes up 5% year over year in 2022.
Longer term, businesses and market players remain committed to reducing carbon emissions, Jackson said.
“This is a move we have long envisioned and we are one of the largest providers of environmental products including renewable fuel contracts, carbon allowances, nature-based solutions, environmental certificates. renewable energy and climate data and analysis,” he added. “We are excited about the many future growth opportunities available to a nascent market.”
Jackson went on to say that ICE’s environmental business benefits from a symbiotic relationship with its energy contracts because customers producing or consuming energy have to worry about the price of carbon.
“More carbon is going to have to be priced and more sectors of the economy are going to be captured,” he added. “Over the long term, it’s a tailwind of growth.”
ICE will continue to invest by launching new environmental contracts. Moreover, at the end of last year ICE has launched benchmark data for carbon credits to allow traders to price contracts.
“We collated data from a variety of sources so that what used to be hours, if not days, of work could be done instantly,” he added. “Obviously, this information can help price formation.”
For the year 2022, Intercontinental Exchange reported consolidated net income of $1.4 billion on $7.3 billion in consolidated revenue less transaction-related expenses. Revenue was up 8% year-over-year, including a 33% increase in interest rates business, a 20% increase in equity derivatives and an 8% increase in global market revenue. natural gas.
$ICE reports 17th straight year of record revenue. Learn more about our 2022 annual results ⤵️https://t.co/Fs8PamyMeT pic.twitter.com/xtr1zTE8V7
— ICE (@ICE_Markets) February 2, 2023
EPS for the period was $2.58, down 64% year-over-year, which he said was mainly due to net losses in the crypto business Bakkt and the disposal of ICE’s participation in the Coinbase crypto exchange and the deconsolidation of Bakkt in 2021.
Gardiner said ICE generated record revenue, record operating profit and record operating cash flow in 2022.
“This strong performance, including recurring revenue growth across our three business segments, demonstrates the strength of our strategically diversified business model,” added Gardiner.
Jeff Sprecher, chairman and chief executive of ICE, said on the earnings call that 2022 marked the 17th straight year of record revenue, operating income and adjusted earnings per share for the company. He pointed out that credit default swap clearing revenue was up 61% year-on-year as interest rate volatility drove increased demand for risk management and credit protection. .