ICE Launches Bond Trading Platform - Analyst Blog

By Zacks | August 17, 2012 AAA

IntercontinentalExchange Inc. (ICE) has jointly launched Cetip | Trader, a new electronic trading platform for fixed income bonds in Brazil, with Cetip S.A. The platform offers a unique combination of electronic trading, voice confirmation and processing services along with providing real-time and historical data through a single tool. The Cetip | Trader offers five main functions apart from straight-through processing, allocations processing, and depository registration. The platform allows bilateral settlement of electronic buy and sell orders, confirmation of voice trades via Cetip | Voice and price formation during an auction process through its Limit Order Volume Clearing feature. Additionally, it enables users to securely send multiple pricing requests to dealers through the 'Request for Quote' feature and helps them to increase their trade volume after the market defines a particular level, via the Volume Clearing facility.

The combination of these features in a single tool is expected to bring transparency and workflow automation to the Brazilian fixed-income bond market. In addition, IntercontinentalExchange has the required technical proficiency to adapt a trading platform to suit the needs of the Brazilian bond market. Since its inception, the company has been developing and offering a diverse array of products and a broad range of risk management services including trade execution, market data, pre- and post-trade processing and clearing services on an integrated platform.

The launch of Cetip | Trader is expected to boost the revenues of IntercontinentalExchange's Transactions and Clearing Fees and Market Data segments. The company will also get additional benefit from the joint venture as it holds 12.4% shares in Cetip, which is Brazil's largest clearing house, as well as the leading operator of registration and custodial services for securities, fixed-income bonds and OTC derivatives. The platform will enable both the companies to gain from the record-low interest rates in Brazil, which is boosting the demand for corporate debt.

IntercontinentalExchange, which competes with CBOE Holdings Inc. (CBOE) and NASDAQ OMX Group Inc. (NDAQ), currently carries a Zacks #3 Rank, implying a short-term Hold rating. We maintain our long-term 'Neutral' recommendation on the stock.

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