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FIA Expo - ICE's Jeff Sprecher details opportunity in Brent, mortgage markets

In a one-on-one with FIA, Sprecher also discusses Bakkt, sustainability and diversity issues

11 November 2020

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While the last several months have been full of obvious challenges, Intercontinental Exchange Chairman and CEO Jeff Sprecher says his business is thriving as it adapts successfully and embraces innovation in 2020.

"Almost every business line has been a winner, partly because we're heavily automated and essentially exchanges and mortgage and data operations are networks," Sprecher said in a one-on-one interview with FIA's President and CEO Walt Lukken as part of the virtual FIA Expo conference. "And operating networks in times when people need ways to connect has been a really good business."

Looking forward to new opportunities, Sprecher stressed the big potential ICE has in making its Brent oil futures contract a global benchmark and unseating the long-standing dominance of West Texas Intermediate oil futures -- particularly after the disruptions caused by WTI prices going briefly negative in April for the first time in history.

"Brent is really the oil industry's market. It's a commercial contract for the oil industry where WTI has a lot more speculative interest in it and is used by hedge funds and others that sometimes come into the trade and leave the trade," Sprecher said. He noted that ICE continues to see increased volume in a host of related products, including ICE Brent crude options, and that he sees these products as "more sophisticated hedging tools not necessarily those used by retail traders."

Sprecher also touched on opportunities presented by a flurry of recent ICE acquisitions in the mortgage arena, from origination platform Ellie Mae and digital real estate documents firm Simplifile to mortgage database provider Mortgage Electronic Registration Systems (MERS). He likened those three pieces to execution, settlement and clearing providers, respectively.

"While it is mortgages, the reality for most people in our industry is that you would recognize what we do," Sprecher said. "You log people on to a network, manage transactions, put them in a database, collect the data and disseminate the data. It's very much akin to what we all do in futures trading in terms of the underlying technology."

Sprecher also discussed opportunities ahead for Bakkt, ICE's digital assets platform, as well as efforts relating to sustainability efforts and diversity issues in the derivatives industry.

 Sprecher was just one of the exchange leaders scheduled to speak as part of FIA's virtual Expo conference. FIA also will conduct interviews with Terry Duffy of CME Group, Michael Peters of Eurex, Adena Friedman of Nasdaq and Edward Tilly of Cboe. For a full list of conference programming, visit FIA.org/expo

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