Futures and options
Intercontinental Exchange (ICE) reported a 4% decline in its transaction and clearing revenue. It totaled $811 million in 4Q15 compared to $844 million in 4Q14. Global derivatives formed 47% of its total net revenue in the fourth quarter.
The quarter witnessed a rise in volatility and volumes in the broader market. Volumes rose by 9% for futures and options in 4Q15 compared to the prior-year quarter. The rise in the future and options exchange revenue was primarily due to record volume in natural gas, emissions, and power. The company’s energy revenue rose by 7%, and oil revenue rose by 14%.
The Brent commodity benchmark continues to expand its lead as the global benchmark for pricing crude and refined oil products. The growth in Brent’s volumes is mainly due to the ongoing shift of Brent and commodity indexes and longer-term secular trends.
Intercontinental Exchange generated net income of $1.3 billion in the last fiscal year compared to its peers with the following net incomes:
- NASDAQ OMX Group (NDAQ) – $0.41 billion
- CME Group (CME) – $1.1 billion
- CBOE Holdings (CBOE) – $0.19 billion
Together, these companies form 24.6% of the iShares US Broker-Dealers (IAI).
Natural gas and the interest rate
Intercontinental Exchange’s natural gas volumes rose by 21% to 2.9 million contracts compared to 2.4 million contracts in 4Q14. The European gas market continued to drive volumes although it was partially offset by muted North American natural gas volatility.
However, short interest rate revenue volumes rose by 39% to 4.3 million contracts. This was due mainly to the increase in the Fed fund rate in December 2015. The company’s revenue in all of its categories improved year-over-year except in agriculture. It provided a solid foundation for revenue growth across a diverse set of product offerings.