ICE closes ‘game-changing’ deal for NYSE

ICE will hold a conference call next week to discuss its plans for the company, but reiterated Wednesday that it intends to conduct an initial public offering for Euronext, a group of European exchanges, next year. Euronext will continue to operate under its own name.

ICE will keep the New York Stock Exchange brand and Wall Street building, and will not close its trading floor. In the past, ICE has closed the trading floors of the exchanges it has acquired, and moved to electronic trading.

In an earlier interview, Sprecher said ICE embraces technology but is not forcing users away from trading floors. When it bought and added technology to what was then the New York Board of Trade, trading naturally moved to screens within seven months, he said.

“The velocity of trading, the amount of trading, has increased and the transaction time has decreased,” he said. “And so the market itself voted, not ICE. We ran floor and screens in parallel, and overwhelmingly, people moved to the screen.”

Sprecher has said he wants to lead reform at the stock exchange. He considers trading overly complicated, and the process opaque. As a result, he has said, individual traders are at a disadvantage compared to companies or hedge funds that are constantly in the market.

“We need to just simplify, make it easy to understand what you’re buying when you buy a stock, and how it’s being handled, and that what you’re being advertised is what you’re getting,” he said. “The reason we call Wall Street Wall Street is because of the location of the New York Stock Exchange … . I think it’s a metaphor, but I also think it’s a very good place to start that dialogue.

He said Wall Street is “the birthplace of capitalism that’s envied around the world. It should be the place that we continue to improve in our capital markets.”

While the New York Stock Exchange deal has made financial headlines, ICE is most interested in a European exchange it acquired as part of the deal, called Liffe.

The futures exchange Liffe, the largest financial product exchange in London, hosts the FTSE, London’s equivalent of the S&P 500. It also is the place where traders buy and sell bets on interest rates.

The estimate of the London Interbank Offered Rate, or Libor, is traded on that exchange. It is the risk-free interest rate banks use to make loans to one another and used as a point of reference for everything from mortgages to the U.S. dollar. ICE now owns Libor, too.

Analysts have said the Liffe acquisition is the biggest piece of the deal, and offers huge upside for ICE. The company makes money by taking commissions when there is buying or selling, and Sprecher anticipates a swell of activity as people makes bets on where interest rates will go.

With the acquisition, ICE’s market capitalization climbs to $23 billion. ICE now operates 16 global exchanges and five central clearing houses — on the exchanges, it acts like eBay, matching buyers and sellers. The clearing houses are a PayPal-like component of its business, where it makes sure that people making trades get paid.

Shares of NYSE Euronext ceased to be traded Wednesday. Stockholders received cash or stock, or a combination of both. ICE shares closed at $199.84 Wednesday, up 1.03 percent.