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IntercontinentalExchange, Inc (NYSE:ICE)

Q2 FY08 Earnings Call

August 4, 2008, 8:30 AM ET

Executives

Kelly Loeffler - VP, IR and Corporate Communications

Scott A. Hill - Sr. VP and CFO

Jeffrey C. Sprecher - Chairman of the Board and CEO

Charles A. Vice - Chief Operation Officer and President

Analysts

DanielHarris - Goldman Sachs

Kenneth Worthington - JPMorgan

Roger Freeman - Lehman Brothers

Howard Chen - Credit Suisse

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Richard H. Repetto - Sandler O'Neill & Partners L.P

Christopher J. Allen - Banc Of America Securities

Mike Carrier - UBS

Don Vendetti - Citigroup

Operator

Good morning, and welcome to the Intercontinental Exchange, Second Quarter Earnings Call. As a reminder, today's call is being recorded.

At this time, I would like to turn the call over to Kelly Loeffler. Please go ahead, ma'am

Kelly Loeffler - Vice President, Investor Relations and Corporate Communications

Good morning. To obtain a copy of the company's second quarter earnings release and presentation, please visit the Investor and Media section of our website at theice.com. These items will be archived and our call will be available for replay.

Please be aware that our comments may contain certain forward-looking statements. These statements represent our current judgment and are subject to various risks, assumptions, and uncertainties as outlined in the company's filings with the SEC. Actual results may differ materially from those that are expressed or implied in any forward-looking statements.

Please refer to our filings with the SEC, including our most recent Form 10-K and our second quarter Form 10-Q for a description of the risks that could cause our results to differ materially from those described in the forward-looking statements.

In addition, please see Annex A of our earnings release or the appendix of this presentation for a reconciliation of our non-GAAP measure.

With us today are Jeff Sprecher, Chairman and CEO; Scott Hill, Chief Financial Officer; and Chuck Vice, President and Chief Operating Officer. At the conclusion of the prepared remarks, we'll take your questions.

I'll now turn the call over to Scott.

Scott A. Hill - Senior Vice President and Chief Financial Officer

Thanks, Kelly and thank you all for joining us this morning. Before we go through some of the key metrics, I'd like to highlight a number of milestones that we achieved in the second quarter. Despite the fact that the second quarter has historically been a seasonally slower quarter for ICE, this past quarter ranked as our second best quarter ever, in terms of revenue and net income and we generated a record level of operating cash flow.

Also, for the second consecutive quarter, over 120 million contracts were traded on the ICE platform. Further ICE Futures Europe and our OTC Energy Markets delivered their highest volume quarter ever and we recorded our second highest quarterly volume at ICE Futures US.

Both the ICE Brent and ICE WTI Crude Oil Contract set new all time quarterly volume record. Our OTC business, once again recorded average daily commissions exceeding $ 1 million. And last but not least, our Market data business reached a record $25 million in revenue for the quarter. These accomplishments are particularly noteworthy, when viewed in the context of uncertainty in the credit, regulatory and economic environment.

Having worked towards the launch of three significant middle-long term growth drivers during the third quarter, our core business fundamentals remain strong.

With that introduction, I'd now ask you to flip to slide four where we can review the details of our second quarter performance, which kept up a record first half.

ICE delivered among the highest growth rates in revenue and net income in the global exchange sector. Consolidated revenues of $197 million were up 44% over last year's second quarter. Operating income was up 74% to $133 million and our operating margin was 67%. Our effective tax rate for the second quarter was 35.5%. Net income increased 58% to $85 million and diluted EPS was $1.19.

As you may recall, our 2Q 2007 net income included $7 million of after tax TDLT [ph] transaction expenses. Adjusted for this item our Q2, 2008 net income grew 40%.

Moving next to slide 5; you will see ICE continues to demonstrate a track record of significant growth across the board. Year-to-date we've already traded over 250 million contracts, resulting in record revenue and operating income.

The product diversification that we've achieved over the past 18 months has provided significant benefits to the business as we are no longer reliant on the trends or cyclicality of any one asset class. Indicators such as increased numbers of trading IDs and system connections from June end to July, as well as the ongoing build out of commodity stats, gives us confidence that our business is well positioned to further expand in the OTC in future's market.

Now let's turn to slide 6 and discuss our consolidated revenues and expenses. Transaction revenues are derived from our global future's and OTC segment. Second quarter, transaction revenue totaled $167 million, up 42% year-to-year. Market data revenues increased 61% to $25 million. Our broad and expanding portfolio of product and asset classes continues to enable solid overall revenue growth.

Moving to expenses; second quarter consolidated operating expenses were $64 million, up 7% compared to last year's second quarter. Adjusted for the CBOT related cost, expenses increased 31%. As you know, ICE has to pay for performance compensation structure. Consistent with our prior guidance, our strong first half results and our expectation that we will exceed certain full year performance targets contributed to $6 million year-to-year increase in non-cash compensation for the first half.

Also contributing to expenses during the quarter, was investment in ICE Clear Europe which increased nearly $3 million year-to-year. Our depreciation and amortization expenses also increased $3 million, due to technology investments and recent acquisitions.

So far this year, our technology staff has delivered new clearing systems in the U.S. and Europe, the fastest trade execution platform in Futures and OTC and a new primary data center in Chicago. We continue to make enhancements through the ICE trading platform to provide new functionality across asset classes.

Our expenses once again reflect targeted investments that will support our continued growth.

Turning now to slide seven, we have included some volatility data for both ICE and non-ICE contracts. Price volatility is one factor that influences volumes year-to-year and you can see that volatility increased in most commodities, compared to July of 2007.

However, volatility has dropped down, compared to first quarter of this year for most agricultural commodities. For example volatility in cotton is down dramatically from 1Q '08 and volumes declined from 1Q '08 to 2Q '08.

Natural gas volatility on the other hand increased from 1Q and is up significantly year-to-year. As a result of this and other factors, volumes are up, net productivity has been strong.

While volatility is the key factor with regard to trading volumes, market fundamental margin requirements and in some cases higher prices will also influence participants hedging strategy.

As we continue to diversify our portfolio of products, our ability to deliver consistently solid growth will increase regardless of the dynamics affecting initiating the market.

Starting with slide eight, I will touch on the results of our Futures and OTC business. Average daily volume or ADV of contracts for ICE Futures, Europe was 610,000, an increase of 19%, versus 2Q '07. Second quarter rate per contract or RPC for Energy Futures was $1.21. Growth in our Energy Future segment was driven by continued strength in our crude oil futures market.

During the second quarter, we posted a record total quarterly volume for both the ICE Brent and ICE WTI Crude Futures contract. This morning, we reported July volume. ADV of ICE Futures Europe was 541,000 contracts, roughly flat versus the prior year. The rolling three month RPC was steady at $1.21.

Slide nine shows the performance of our North American futures exchanges during 2Q. RPC for agricultural commodities Futures in the quarter averaged $2.21. ADV was 288,000 contracts per day, up 12% year-to-year. As mentioned previously, the cotton markets saw a significant quarter-to-quarter decline in volatility and was impacted by a number of other fundamental factors, excluding Cotton, which is typically our second largest stock commodity contract, volumes in 2Q across the other ICE Futures U.S. product grew nearly 20% year-to-year.

We set new volume records for Russell and U.S. Dollar Index and had the second highest volume quarter for sugar, coffee and cocoa. And in our volume release today, we reported a three month rolling average RPC by the U.S. Agricultural Futures of $2.22. Our July ADV at ICE Futures U.S. and Canada was 212,000 contracts, up slightly versus the prior year.

Now let's take a look at our OTC business on slide 10. Transaction revenues totaled $80 million in the second quarter, up 71% year-to-year. For the second quarter, average daily commission grew 69% to $1.2 million per day. And this morning, we announced July average daily commissions of $1.3 million, representing 50% growth over July 2007 and our seventh consecutive month of ADC in excess of $1 million.

We continue to see increased trading and hedging activity and deep liquidity in our OTC markets. Chatham and NGX once again contributed to record natural gas performance and the further enhancement of the value of ICE's OTC market to commercial hedgers.

I'll wrap up with a few comments on our first half performance on slide 11 and highlight two items in our earnings release this morning. Our business performed very well during the first six months of this year.

Revenues grew 54%, operating margins improved to 69% and net income grew 62%. This strong growth combined with disciplined expense management helped generate a record $192 million of operating cash flow in the first half of '08. We ended June with $374 million in unrestricted cash and short term investments. Our debt ratios remained low and we continue to add assets to our revolving line of credit. This healthy capital structure paired with strong growth and solid cash generation, gives us excellent financial flexibility.

With regards to ICE Clear Europe, as mentioned in our press release this morning, despite a two month shift to a September launch date, we continued to anticipate revenues in the range of $20 million to $25 million over the last three and half month of 2008. In addition, we now expect operating expenses for ICE Clear Europe for the last six months of 2008, to be in the range of $6 million to $8 million.

And finally our Board of Directors has authorized the repurchase of up to $500 million in ICE common stock under an open market program over the next 12 months. This authorization reflects our view that ICE shares have recently been trading in a price range that does not reflect the fundamental value of our company.

We'll utilize cash on hand, future cash flows and up to $200 million of our existing low interest rate line of credit to execute the repurchase, following the closing of the credit transaction in the next few weeks. Our strong balance sheet and cash flow enabled us to execute this program while continuing to invest for future growth.

We provided additional updates and guidance with our earnings announcement today. So please refer to the press-release or the appendix of this presentation for complete detail.

I will now turn it over Jeff.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Thank you, Scott and good morning, everyone. As you can see, ICE continues to demonstrate a solid track record of revenue and earnings growth.

We have a number of new initiatives coming online in the third quarter that will reinforce the strength of our global exchange model. We believe we have distinguished ourselves in the industry as the leading operator of both regulated futures markets and well established transparent over-the-counter markets.

There is a lot I would like to cover this morning, including an update on recent activity in Washington. I will also discuss our clearing and Russel's strategies and our core business.

As most of you know, commodity prices have become a central issue in Washington and across the globe. Given the impact of rising prices that commodities have on businesses and consumers alike, the United States Congress's focus on this issue is understandable. Those of who you have followed commodity markets over time will realize that this situation is not new. At many points in history, legislators, when faced with complex market conditions that are not easily explained have blamed speculators for rising prices.

Today, this is especially true in the case of the global crude oil markets. However, there are many contrary views emerging, that point towards basic market forces as the drivers of prices in crude oil markets. Today, the United States imports over two-third of its oil, competing with countries around the world for an increasingly scarce supply of a necessary commodity.

The interim report on crude oil which was produced by an inter-agency task force on commodity markets in the United States rejected the idea that speculation was a primary driver of today's crude oil prices, rather experts such as the Chairman of the Federal Reserve, the U.S Secretary of Energy, the U.S Secretary of the Treasury, the Commodities Futures Trading Commission and the International Energy Agency have agreed with the conclusions of the report that supply and demand are the primary drivers of crude oil prices.

Finally, it's important to note that prices of most commodities, those that are actively traded in futures markets and that are in commodity industries as well those there are not, have risen dramatically over the past year. Taken together, these facts present an inconvenient truth for those who are attempting to blame speculation as the primary driver of commodity prices.

I and many other industry participants have invested significant time and resources to provide Congress with information about the role of energy markets and our existing regulatory structures. Slide 12 for example, offers a basic outline of ICE's global market structure.

You'll note that each division or subsidiary complies with its own unique regulatory requirements. As a result to the education act that s undertaken by ICE and by our peers, we are encouraged to see that many of the extreme proposals seen earlier in the debate have not gained traction in Congress. These proposals included increased margins, dual regulation of foreign markets and other limitations on the U.S.'s participation in the global energy market.

We believe that many of these proposals fail to gain traction due to a realization that they would not lead the lower energy prices and could actual make problem worse.

As a result, on slide 13, we have been providing the CFTC with trading information regarding the WTI Future's contract since early 2006, shortly after our contracts launch.

We are in the process of establishing an enhanced reporting and position accountability regime that we expect to have in place during October. We also expect little impact from legislation in our OTC markets which, as many of you recall from previous announcements, are subject to enhanced reporting and oversight for significant price discovery contracts under the recently passed Foreign bill.

For example, our Henry Hub Natural Gas will be subject to these rules. But again, this is an instance where we've been reporting large trader information to the CFTC for this contract since 2006. We believe that these regulations are measured approach, of course to transparency and they will actually help bring regulatory certainty and enhanced components in ICE's global market.

The recent legislature proposals that were brought to the Senate & House floor, both of which failed to pass were modest proposals in terms of their direct impact on ICE's market; given that they largely codified previously announced regulatory changes that had already been required for trading in ICE's WTI Crude Futures Market or example. It appears that the debate has now turned to more practical market proposals that will attempt to address underlying energy supply and demand fundamentals.

During September, the CFTC will issue the results of an in-depth study of the energy markets which many law-makers are awaiting for before pursuing further policy initiatives. As a result of the lengthy debate that took place this summer, we anticipate that legislative efforts upon Congress's return in September will be more bipartisan in nature and will seek real solutions for long term supply and demand issues which potentially may include certain modest market proposals, seen late in the debate to ensure broad confidence in the operation of markets.

To summarize our thoughts here, we think we've made good progress in Washington towards helping provide regulatory certainty for our customers and our investors ahead of any legislative proposals.

By proactively working with our regulators and with members of Congress, we believe that ICE's businesses grow from strong fundamentals and they are not driven by excess speculation or by large positions in any one contract by any one participant.

Let me repeat this, we believe that ICE's volumes are not the result of a different regulatory regime nor are they the result of excess speculation or a large concentrated position by any one participant. Our diverse global commercially oriented customer base gives us a great deal of confidence in our business and in our future and we are backing this up with a share repurchase program that we have announced this morning.

If you turn now to slide 14, you will see three of our key growth drivers for the next several quarters. These drivers are in addition to the growth that we continue to see in our core commodity markets.

First of all, we've spoken to you about our move into the US Equity Index business through our exclusive Russell Index Futures Agreement. The final contracts will [ph] takes place towards the end of September and we anticipate a complete transition during the fourth quarter.

We worked for many months to insure participations from the buy side and the sell side, including major institutions and market makers have had the opportunity to learn about our market and make a smooth transition.

Many of our long time shareholders have witnessed our selective entrée into growth areas of the business and the equity index Futures categories is no exception. Today it is one of the fastest growing future markets. Volume in the Russell 2000 Emini contract as traded elsewhere has recently ranged between 200,000 and 300,000 contracts per day. As we move towards September and the Russell transition, we expect ICE's volume and open interest to grow substantially.

Moving on to our launch of ICE Clear Europe, we are approaching the final phase of our year long transition from LCH.Clearnet. This is a historic move for ICE and ICE Clear Europe will be the first major clearing house in UK in over a century. The launch date was moved from August to September 15 in order to accommodate the European holiday schedule, and to provide sufficient time for testing of a finally agreed to transition straight [ph] scheme, a finally agree to transition scheme. But that's a good one.

Today, a 100% of the open interest is ready and is contractually committed to make that transition. Once the existing futures and over-the-counter contracts are transitioned to ICE Clear Europe, we will begin rolling out an extensive suite of new Clear contracts. We announced our intentions to build a new clearing house back in April of 2007 and since that time, we were unable to list new Clear products through LCH.Clearnet. This has resulted in a backlog of innovative concepts for new Clear contracts that we intend to offer to our customers.

For example, this extensive new pipeline includes Energy Futures and OTC contracts based on oil, natural gas, power, and coal. We plan to introduce a significant slate of new products within in six months of the launch of ICE Clear Europe. We anticipate that this will serve as yet another growth driver for ICE.

Most of all, we look forward to regaining our ability to innovate in the area of new products.

I am pleased to note that ICE Clear Europe recently received multilateral clearing organization status from the Commodity Futures Trading Commission for the United States. This designation permits ICE Clear Europe to clear contracts in the U.S. swaps markets.

The third initiative I'll discuss today is our entry into the credit default swap or CDS market through our acquisition of Creditex. ICE will hold a call upon the closing of the transaction later this quarter, to provide you with further operating metrics and pro forma financials and to update you on how Creditex may impact any of our previous guidance.

In the mean time, we're already working closely with Creditex to support important post-trade processing initiatives that are currently underway.

Sunil Hirani, the CEO of Creditex and his team have a built a reputation for service and innovation among the CDS community, which is due in part to the diverse set of capabilities beyond the core trade execution that Creditex is known for. Sunil and I had extensive meetings in New York and London with customers, regulators and government officials to determine how we might best serve the rapidly evolving CDS market.

We see the CDS market in a similar place in this evolution, as the OTC Energy markets were just seven years ago. This was before clearing, post trade processing and other basic market structures were being adopted. Today, the over-the-counter energy markets on ICE are large, liquid and transparent and the overall market is many times larger than when the market infrastructure did not properly support its growth.

We've demonstrated our ability to bring opportunities to the dealers in energy and we look forward to supporting Creditex and doing the same in credit. In the meantime, we will continue to move forward with initiatives in trade processing which is where the industry is actively looking to improve.

In July, Creditex announced a joint initiative with market partners to launch portfolio compression for the CDS market. This process has the support of the major dealers in the CDS market as well as ISDA.

The Creditex market platform supports commitments made by market participants to the Federal Reserve Bank of New York, relating to improved operational efficiency and risk reduction. Creditex was successful in gaining the confidence of major industry participants due to its positioning with straight through processing and its history of providing well respected settlement services that are incorporated into the protocols of ISDA.

We expect that this positioning will allow Creditex to continue to grow in accordance with the OTC derivative space. These three new initiatives, our Russell transition, our launch of European Clearing and our entry into the CDS market represents the growth and diversity inherent in our balanced exchange business.

I'd like to close this morning with a discussion of customer trends and competitive metrics, that I think you'll find helpful in analyzing the fundamental strength of our business, both on a stand-alone and a relative basis.

ICE continues to outperform by virtually any measure. As you can see on slide 15, volumes in our energy market which encompass both Futures and OTC, remain strong, both on an absolute and a relative basis. Because ICE Futures Europe does not trade in U.S. Natural Gas Futures, direct comparisons with overall Nymex volume growth are not possible without adjusting for the differences in our product mix.

Adjusting ICE's OTC Henry Hub natural gas contract into Nymex Futures equivalent, you can see that ICE continues to produce sector leading growth. Many of you have asked about our customer base, given the state of the global credit markets. And while we will be gathering more detailed information in our WT ICE futures markets under the new CFTC reporting requirements, we can see that we continue to have the support from the global energy companies, who rely on both strength [ph] and WTI oil futures markets for hedging.

In fact, in the OTC Energy markets, our customer mix in the first half of 2008 was 50% commercial compared to 46% in the same period last year. This commercial expansion during a period of incredible growth in our OTC markets demonstrates a growing commitment by commercial users to our markets. We also see continued participation by proprietary traders and algorithmic customers who bring important liquidity to our commercial users.

As Scott mentioned earlier, we believe that higher margin requirements and higher commodity price levels may have reduced the levels at which some participants might otherwise transact. Margin requirements serve as an important risk management tool. And as volatility and underlying prices have increased over the past several months' commodity margins level have also increased dramatically.

It's logical that these factors can impact transaction volume in commodity markets in the short-term. But as you hopefully will come to know we worked to position our business for long term growth. We focus on strategies that will allow us to diversify in growth as we meet the needs of market participants. ICE has never been satisfied to simply sit back and merely benefit from cyclical trend.

In our focus on expanding the business, we remained thoughtful about finding and creating opportunities to benefit from cost efficiency.

And on slide 16, you can see our strong operating income results. These results in part reflect our disciplined approach to grow, such as delivering synergies ahead of expectations with the integration of ICE Futures U.S.

Our operating performance takes into account the fact that we own and maintain our own technology with a world class in house technology staff.

If you take a look at the competitive metrics on the bottom of slide 16, you'll see how we stack up against our competitors. The CME group in particular, which has a similar model of product diversification, expansion into OTC markets, in house clearing and in house technology. These metrics demonstrate that ICE is a faster growing business both in terms of volume and revenue than CME and Nymex.

As a result of our operating discipline and our unique market model, ICE's margins and operating income per employee are very strong. We built one of the most productive, efficient and global businesses in this space, while controlling our clearing and technology and while operating across the diverse futures in OTC markets. All the while we do this while executing on a strategy to support the cost overhead of operating regulated futures exchanges and regulated clearing houses in multiple countries to take advantage of opportunities on a global basis.

In closing I would like to thank all of you for joining us today and for your interest in ICE. This is a dynamic time in our business and the entire ICE team is focused on continuing to strengthen and to grow our company.

As always I would like to our customers and our employees for delivering a very strong quarter. I would like to mention that Scott, Kelley and I are joined by Chuck Vice who is our President and who is sitting next to me and he may assist us in answering your questions. And with that operator we are now ready to start the Q&A session

Question And Answer

Operator

Thank you. [Operator Instructions]. In the interests of time, please limit your self to one question and one follow-up question. [Operator Instructions]. And we'll take our first question from Daniel Harris with Goldman Sachs.

DanielHarris - Goldman Sachs

Hi, Jeff. How are you doing?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Good morning.

DanielHarris - Goldman Sachs

I was hoping you could talk a little bit about the transition from ICE Clear Europe to... I mean from LCH to ICE Clear Europe. What exactly happens there? Is there just a shift to be open interest or is there some sort of transition arrangement [ph] that has to occur?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Sure. Dan, let me ask Chuck Vice to take that one for you, since he's been intimately involved.

Charles A. Vice - Chief Operation Officer and President

Daniel, I'll try to answer that from a couple of points. One, we've talked in the past about the technology aspect of that and there we've tried to insulate the clearing members as much as possible from what has to be... from the transition itself by using the same, plus some of the back office systems, same back office systems provided by a third-party that LCH uses today.

From a legal standpoint, they are actually open interest novation agreements that each and every clearer has signed at this point. This specifies the legal rights and obligations of the LCH and ICE Clear Europe and the members themselves in terms of the timing of that transition over what we've have being calling transition weekend. When those contracts becomes resident than... excuse me, rather than LCH being the counter party on those contracts, that ICE Clear Europe becomes the counter party to those contracts.

The final step that we are working on now defines the financial aspect of it as there is about $15 billion to $17 billion worth of margin that will... that has to move from LCH to ICE Clear Europe and that's quite a challenge because you don't want to or we want... certainly want to avoid double margining members over that weekend, which we've been able to do. And negotiating all the details with LCH and the members in terms of how both the collateral and the cash itself will be held in trust on behalf of ICE and then move over to ICE on that Monday, after transition weekend.

So it's a very complicated and ambitious... I would say probably one of the most ambitious projects we've taken on at ICE. And as far as the... we had an initial date in July. We've deferred that a couple of times as Jeff mentioned in his remarks. And I think at this stage we're very confident in that weekend in September as we've now got all the finer points of the transition agreed to with all the parties.

DanielHarris - Goldman Sachs

So, then is the margin down is shifting more just a matter of there could be issue of a couple of days or is there anything else that can happen there?

Charles A. Vice - Chief Operation Officer and President

No. it will all happen over that weekend.

DanielHarris - Goldman Sachs

Okay, great.

Charles A. Vice - Chief Operation Officer and President

Nevertheless we put that margin into trust and the trustee will move the margin money with the positions.

DanielHarris - Goldman Sachs

Okay, thanks. And then Jeff just as a follow up here, I was just hoping you could comment a bit what we've been seeing in the WTI and Brent markets here, over the past few months. Certainly there is been obviously lot of noise going from a regulatory front, but can you just address how you see the market share playing out in WTI? On some days it seems like you guys have been dipping below what we've have normally expecting another days that bounces back, but certainly there is been a lower trend in some cases than we've seen in the past and yet your Brent is also are doing very well. So any more color there, would be great?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Sure. A couple of points, one is when you step back and look at crude oil to begin with, it's not a product that you I will ever consume, it's a raw material and so people there actually are the natural hedgers, are oil companies, who are both on the buy side and the sell side.

On the buy side, they are as refiners and on the sell side as producers or pumpers of oil. So what we are hearing from large integrated oil companies as well as witnessing in the market is that there is tremendous amount of hedging that's going on right now in the energy complex. But the hedging has tended to be in the actual products that people are exposed to. So natural gas for example, we mentioned has been doing quite well on ICE.

The oil companies are telling us that the crude markets are very, very choppy. They have never seen this kind of twice movement intra day. It can move $10 while somebody is at lunch and so which is a big move for the crude market. So what's happened is that people that trade crude oil have traded shorter dated positions, instead of holding longer positions.

A lot of the... in a rising price environment, a lot of the oil companies don't really need to hedge as they are the net beneficiary of rising prices and so that leads to overall lower volumes in crude oil trading and a lot of people, because of the choppy nature of the markets have instead captured those trends or hedged those trends in the options market, which is not a market that we have.

And in the options market, the options expire into the underlying, in other words, if you hold an option into expiration, you get the underlying futures contract which can shift the daily volume number that you are looking at then.

The last...two last just for of lock up [ph] points that I take, for past history and may not be representive in the future, is that there's been a significant margin requirement difference between London Clearing House and Nymex, as much as 40% more margin has been required to trade ICE's products. I think once ICE gets control of our own clearing house, we obviously have the incentive to be very... stay on top of margins and move them often down with volatility.

London Clearing Houses, a third-party provider doesn't necessarily have the same incentive to reduce them as they do to increase them overtime. And so nothing negative against LCH, it's just that, they are there to manage risks and we're here to operate the market globally.

And the last thing was the Nymex had a major customer who is not a customer of ICE, who book a very, very large position and which ultimately led to their bankruptcy, that dislocation was in the Nymex market and the resulting market share from both the accumulation of that position and then ultimately the disposition of that position which may still be there because parts of it may have been assumed by others. We'll have to roll through.

So, as I think you know, we measure our crude oil market share based on total barrels of crude oil, what we've seen is that between our WTI and Brent, we sort of held similar market share. And in fact we're amazed, given the movement into the options business by the market place, given that the Nymex had held a lot of traders moved from their outright pit into their options pit and their volumes have been... and their open interest is really doing well there.

We're amazed at how well our market share's holding up frankly. As you know, we'll have our options, but we're moving out of here pretty soon; we've got some innovative things that we're doing and that market has not yet electronified and we think that frankly, it's going to be it's going to up for grabs based on technology and other market moves that competitors do to bring that market on the street,

DanielHarris - Goldman Sachs

Thanks very much

Operator

We will go next to Ken Worthington, JPMorgan

Kenneth Worthington - JPMorgan

Hi, good morning.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Good morning.

Kenneth Worthington - JPMorgan

You had presented in expense savings road map from the acquisition of NYBOT, can you just talk about a little about where you stand right now on that savings timeline? And what has yet to be realized?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Ken, we had mentioned earlier in the year that we are actually trending ahead of where our original guidance had been with regard to synergies. In fact we had increased the synergy total for this year to the $18 million to $20 million range and we are remaining well on track to that. Frankly the synergy story at ICE Futures U.S. has been really good one for us.

If you look at the absolute operating margins for that business, in the first quarter I think I even remarked on the call that were close to 70%, an operating margin, Which was nearly double where they were in the first quarter a year before and we had similar performance in this quarter. We once again saw very solid margin inline with the rest of the company, from our ICE Futures U.S. business. So we remain well on track to the synergies that we guided this year which will increase from the original business case and the profit contributions form ICE Futures U.S. continue to be very strong.

Kenneth Worthington - JPMorgan

On that $18 million to $20 million are you most the way there already or is that back end loaded? Can you give us some more --

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

No, no, it's in our run rate now Ken.

Kenneth Worthington - JPMorgan

Okay.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Because it's 18 to 20 of the full year number, but we are on track with that through first half and then through the second half, in our run rate now.

Kenneth Worthington - JPMorgan

Okay, and I apologize fro this next question, if I've gotten this wrong, I thought on ICE Clear Europe, the original synergy or the revenue guidance was somewhere for $25 million to $30 million for the second half of '08. And I think if I read it correctly in this press release, you said $20 million to $25 million. Do I have my numbers right or did I?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

You do have them, but let me give you a little context. The $25 million to $30 million was assuming a July launch date. The $20 million to $25 million, we're holding beside a two month shift in that launch.

Kenneth Worthington - JPMorgan

Okay, so I think in your July 7th release, you wrote that you didn't expect guidance to change at all and it decreased by, call it $5 million. I want to see there was something that I needed to read in to that.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

No, what I think what we actually said was that we would be at or near the lower end of the range and we are at or near the low end of the range of $20 million to $25 million. Again, with two months less operating time in the year.

Kenneth Worthington - JPMorgan

Okay great. Thank you very much.

Operator

We will take our next question from Roger Freeman, Lehman Brothers.

Roger Freeman - Lehman Brothers

Hi, good morning. I wanted to come back to the Creditex business and your thoughts with respect to how you are going to be positioned in CDS market. So what we are seeing is the brokers are basically shooting for the year-end move on to a clearing, a centralized clearing facility. And I guess there is joint venture to do that. How do you... what do you think your opportunity around that move into a centralized platform and should ultimately there be some sort of an exchange feature or platform or some of that, maybe the more liquid indices to try?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Sure, I think it's early days here, so in making the acquisition, we thought about a couple of different roadmaps, if you will, on the how the market might unfold, and we are trying to be prepared for any one those. But at 50,000 feet, our sense is that whether we're involved in the... in solving the back office problems and clearing and credit emulation problems or not. As those are going to get solved and we believe they will, we think the market is poised for growth. So Creditex if it does nothing more than what it's doing now, we think it's very well positioned in what would be a growing market.

Given that, Creditex has really specialized in electronic trading and the electronification of the most liquid part of the credit market. And I would just say, stepping back even 100,000 feet, I think we believe that credit is an asset class and that asset class is here to stay, regardless of some of the problems that we are in now, without respect for how its going to unfold.

More specifically, the dealers and the movement towards clearing has been focused on the index business which is the easier part of the business to think about clearing, it's the most liquid, it's the most standardized, and... but the Creditex has been working and we knew this at the time that we were doing diligence on the company and got quite excited about it. They have been working on this compression system and algorithm for a single name CDS.

And under that scenario, the dealers are going to use Creditex's straight through processing and hook to their back office systems and send the trade to us and market together and we are going to do a number of things that I am not necessarily privileged to talk about right now, in terms of manipulating them and reducing the outstanding number of trades.

We think that being in that work flow process bodes well for us. We think that a... an index clearing model alone is not enough to deal with the credit problems and that in the CDS market and so we are quite hopeful because we are in a daily dialogue with the major users of the market. As the market is being redesigned and restructured that will have a lot of visibility into it and be able to be opportunistic about how we might work with the major participants.

So net-net, I think regardless of who does the back office systems and credit amelioration, Creditex is very, very well positioned. And that's the bet we're making. Of all things that ICE has bought, I suggest that this is probably the one that has the most risk, because nobody has a crystal ball for what's going to happen to these markets and exactly how they are going to unfold and when.

Roger Freeman - Lehman Brothers

Okay, that's helpful, thanks. And then my second question would just be around volumes, you showed an interesting chart here on slide 15 with aggregating your energy volumes and it just highlights how much stronger the growth rate has been in the OTC business?

And I guess, could you just maybe comment a little more around that or are we seeing sort of specific to natural gas here, volumes, or is this a sign of the OTC markets like more and more with yours or the counter parties wind up moving into a clear platform because of credit concerns or how do you sort of part the differential growth rate between that and the futures markets?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

I think it is everything you mentioned. As I said in my prepared remarks, we are seeing more commercial users in those markets. And so I think that as our OTC markets have become more regulated, more transparent and we have been able to go out and sell customers on the participation in those markets in ways that they haven't used them before, we are getting the hedging business. And the hedging business really like I mentioned earlier... answer to Dan Harris is a business that where people if you can hedge this specific commodity, you want to do that. So ICE has largely natural gas and electricity in those OTC markets. Nymex has gasoline and natural gas as futures and then both Nymex and ICE have heating oil, ours is in the form of something called gas oil and there's in U.S. heating oil, which is a middle dis-split hedge.

In many cases for example, an airline. If you were to think about an airline hedging, an airline could buy crude oil potentially to hedge, but a closer substitute would be heating oil because it's a distillated product that captures the problems that are inherent in the global refining industry right now. So what you're seeing is sort of that movement out of the benchmark crude contract in the specific products and a positioning of ICE's OTC markets with more confidence and with these reporting requirements and position requirements that were part of recent regulation,

Roger Freeman - Lehman Brothers

Okay, thank you.

Operator

We will go next to Howard Chen with Credit Suisse.

Howard Chen - Credit Suisse

Hi, good morning everyone.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Good morning Howard.

Scott A. Hill - Senior Vice President and Chief Financial Officer

Morning.

Howard Chen - Credit Suisse

Thanks for taking my questions. First on the ICE Clear revenue guidance, you spoke to achieving $20 million to $25 million in '08, but I didn't hear an update to the full year '09 guidance. Can you give any update here on a full year basis?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Howard, we are not going to project out any future revenues because it is very similar to our future's business, where we don't provide forward-looking guidance. It's very sensitive to volumes. And so anything I project for you in 2009 would by definition have to include some prediction of volatility in volumes and we just frankly don't have the data to make projection. What we did even the fourth quarter, that last three and a half month's guidance that we've provided, those have some underlying volume assumption in it, but we're not going to project as we move forward.

Scott A. Hill - Senior Vice President and Chief Financial Officer

Right.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

With regards to top line.

Howard Chen - Credit Suisse

I guess, put in other way, is it fair to say that if we assume no growth in your business from fourth quarter levels or new product traction in '09, that $80 million to $100 million in synergies is a good starting point for '09. I mean annualizing that three and a half months?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

I think that would be a reasonable approach.

Howard Chen - Credit Suisse

Okay and then, thanks. And then... my follow-up, with all that's going on in Capitol Hill, Jeff in addressing energy prices. Is all that debate and discussion helping or hurting the conversation to evolve other market structures or other over-the-counter markets like, what's going on in credit derivatives now?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Well, I guess looking at the positive of what's being going in Capitol Hill, ICE's had an opportunity to meet lots of Congressmen and Senators and have a lot of sit down conversations. And we've taken the opportunity to talk more broadly about businesses and they go beyond energy.

Similarly, the debate about energy has gotten into other parts of government, the White House, the Treasury and the Fed and so we've an opportunity to talk about the broader OTC space with the most senior people in policy making in the U.S. and in Europe. And so, I think it bodes well for us. And then we have a good dialogue, I mentioned in a recent article that was written about us that one of the things that we've concluded is that we need to get out ahead of some of these issues as it relates to credit.

We're talking privately about our vision and with the policy makers and with major market participants, so that... as those markets grow, which I am projecting that they will, they don't suddenly hit the radar screen in Washington, and there's a knee jerk reaction to them. And so that... I think it's any takeaway from what we've been going through, it's a sense that our industry as a whole and ICE, specifically, we did not do enough education on the Hill to even educate on some of the most basic matters which is why is it important to have a predictive Futures market that's open and transparent and available globally to everybody.

And so, I think at least with respect to ICE, we're putting in permanent infrastructure to continue to deal with that, with really some great people that we've been able to attract to help us with our message.

Howard Chen - Credit Suisse

Thanks. It's helpful.

Operator

We'll go next to Jonathan Casteleyn with Wachovia Securities.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Hi Good morning.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Good morning, hi, Jonathan.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Jeff, you mentioned recently, our market share calculation of near 10% in OTC nat-gas and power, just wondering how you formulated that market share and just what you think going forward, what you're target market share could be?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Sure, I mean as you know it's very, very hard to project market share in the over-the-counter market, it's very hard to know exactly where it begins and where it ends for example. Which is frankly I am going say and one of the probable reasons it's been hard to regulate those markets.

That number that I threw out there represents our best guess at the overall size of over-the-counter energy trading globally. So it would include foreign gas and power markets as well as crude oil and more importantly the products from a barrel of oil that would be included in those markets as well.

Things like Naphtha, things like... things like European and Asian jet fuel, those kinds of things which are traded also in the over-the-counter stocks market.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

And Of course, I mean the target market share, I mean customers generally don't let one venue go all the way to 100%, so just wondering what you think is achievable?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Yes I... unfortunately I agree with you on that point. But it's still really early days, I mean a lot of the... one of the things that we followed up on the Hill and you read some of the articles about it, it's one of the things that we kept pointing out is that almost 0% of the distillating [ph] crude markets trade electronically right now. Yet there are very, very large markets and the things that have caught on with electronic trading are largely gas and power slots and I think that owes itself to the fact that those are emerging markets and to a certain degree, ICE and Chuck Vice who's sitting next to me helped design the early tradable slots because we were working with the dealers to design something that had standard structures so that we could clear them.

And we helped move the market in to a standardized format, so it's really borne out of the fact that we wanted to do clearing. So that is happening in these other markets, more of these OTC slots are available for clearing, which means that overtime they will become more standardized, particularly as people have pressure on their balance sheets. And so then they'll make themselves available to electronic trading once they become standardized.

So I think that, that addressable market is big and if you look at the moves that we have been making, recently to M&A, we are trying to get deeper in to the OTC markets because it is a bigger addressable market as opposed to the buying things that foster our futures position.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Great. Thanks for that. Just quickly, I know you promised us a forward call after the potential closure of Creditex, but just wondering in the T-0 [ph] product, you talk a fee per transaction processing event, any insight as to the specific economics there?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

No, I would say that T-0 is really a small revenue producer right now but poised for big things. The T-0 connectivity is going to be used by the dealers for the compression and T-0, I think has over 200 buy side firms that are hooked up to it. So the compression that's starting right now is just an inner dealer compression. And once that gets going and proves itself out and the goal is to take $10 trillion worth of notional value out of the system by the end of the year.

So there is a lot of work to do there, but once that gets going then I think it will be opened up to the buy side potentially. And try to compress all the single named CDS that we can do. And because it's using the conductivity in T-0, it then opens up the other products that are hooked on to T-0 platform to the broader community. Things like novation which is another big area that the Fed is pushing on the CDS community to standardize around.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Does Creditex get paid for dealer compression or that's just as you're saying for initial foray?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

No, we do get paid.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Okay.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

It's... we were aggressive in terms of making it low cost to the dealers, so that it wouldn't... that the amount of money wouldn't stand in the way of them selecting our compression, but it's a good number. So I think there is a lot of hidden value and credit action. And that's really why we wanted it. There has been a lot of talk and maybe you have heard from some of your customers about the exchanges moving into the IDB space and while it's symbolic, I think that ICE has moved that way with Creditex.

It was so many of these others factors that were inherent in Creditex that really go our attention. Not the fact that it's just so reserved for dealers. And Creditex was able to do that because of the high quality people that they have working there. And we just... good businesses are about having good people. And so I think between the two of us some of the parts they have and some of the parts we have with the team it's already been working very intimately together on this compression initiative I think it poised for bigger thing.

Jonathan Casteleyn - Wachovia Capital Markets, Llc

Understood, I appreciate your time, thank you.

Operator

We will go next to Rich Repetto with Sandler O'Neill.

Richard H. Repetto - Sandler O'Neill & Partners L.P

Good morning, guys

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Good morning, Rich

Scott A. Hill - Senior Vice President and Chief Financial Officer

Hey, Rich.

Richard H. Repetto - Sandler O'Neill & Partners L.P

I guess... two most questions been asked already. First, what is is there a difference between the margin requirement that LCH is charging, requiring for WTI and Brent versus Nymex and what is it, if there is a difference

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Yes, let me have Chuck answer that for you.

Charles A. Vice - Chief Operation Officer and President

There is a difference, I don't know the exact percentages, its mainly... keep in mind margins are updated periodically based on the level of prices, the volatility in prices, LCH has historically updated those on lets just say on a less frequent basis then we planned to, keep in mind LCH has included many more market beyond ICE and have to manage margins in all of those markets. And so there are times when one market lags the others. Sometimes LTH has been higher than Nymex, sometimes it's been lower. At the moment, since the recent surge in crude prices over the last 3 4 months, as the margin prices were adjusted by both Nymex and LCH, currently our crude margin rates, LCH are... I am guessing generally are 25% higher...

Scott A. Hill - Senior Vice President and Chief Financial Officer

WTI right now is at about 14,000 and Nymex, I think it's somewhere between 11 and 12000. So that's 25-30% more.

Charles A. Vice - Chief Operation Officer and President

Right so. What we planned to do via the transition, obviously on the weakened transition we want as few things changing as possible. So we will go forward over that weekend with the existing LCH rates. And over the ensuing weeks, we will move toward our own risk analysis which we have completed and are in place. And risk scheme and processes that will go update those margin rates on a pretty frequent basis. And so we don't know what's been now and mid-September may look like, but if we were managing those margin rates today, we... our rates would show a decline in the WTI rates, as Scott just mentioned.

Richard H. Repetto - Sandler O'Neill & Partners L.P

Yes, I would imagine, it's probably very frustrating for you right now. But I imagine you don't have a lot of lobbying power either right now. Would that --

Charles A. Vice - Chief Operation Officer and President

Again, I mean the margins are very sensitive thing, as you've have seen on Capitol Hill and risk people, the people manage these rates, if not driven by, trying to get an advantage over a competitor, it's pure number crunching, based on the data and objective margin rates come out and they are where they are. You want to make sure that they are accurate and they reflect all the correlations between products and so forth but, yes at this moment in time it's the difference is may be having some effect, but these things tend to balance out over the long term, I think.

Richard H. Repetto - Sandler O'Neill & Partners L.P

Okay and my follow-up question would be for Jeff on the CDS. Don't you have a seat at the table by Creditex being a part on of the Clearing Corp.? I guess the question is if the investment banks do get their way and it looks they are well on their way to clearing... centrally cleared the indices of the most liquid products like you have mentioned. Does this essentially lock you out of... the question of funds ability now of those indices where they are trading. Does that's become... that essentially lock you out of clearing these products and it looks like you are positioning that the economic value of T plus zero and the trade compression is very material. And I guess, just trying to figure out does that lock you over that, will you be not part of and how meaningful is the economic value of that compression?

Scott A. Hill - Senior Vice President and Chief Financial Officer

Yes, couple of things. First of all, ICE's hooked to that Clearing Corp. We have an API and direct connectivity to the Clearing Corp. because that's where we clear our climate and emissions contracts. So from a technology standpoint, we have an understanding of how to get positions in and out of the Clearing Corp. And it think that the dealers are really looking to minimize the footprint of risk in the CDS market and a lot of them have, I mean a number of these mid-tier banks have almost stopped trading or really dramatically reduced their trading because they've run out of balance sheet in the CDS space.

So I think anything in unlocks that ridge, whether it's... whether we do it or whether third-party does it, I think it's going to increase the volume and velocity of CDS trading. The credit electronic platform is really very well liked and used by the either community, and so I think they will still be doing their execution and they should be doing more execution and there maybe competition for execution, because I don't think that dealers has want any one execution venue to dominate.

And how those trade get from our execution platform into the Clearing Corp. will be determined over time, but I think technologically, we'll have straight through processing in the back office on credit and understanding of how to get things into the Clearing Corp. through the API that should make it relatively easy for us to send trades there if that's what the industry wants.

In terms of the compression, the point I am trying to make is that all the talk right now and the scramble to figure our how to clear CDS has been in the industry, but the broad based business has a lot of individual CDS in the form of single names and structured deals and there is a lot of risk in there and that's a complicated clearing structure and the market may itself adapt with some new products and that's part of what going on. That's part of the dialogue and the discussion with dealers right now is the potential creation of new products that can replace some of this going forward.

So it remains to be seen what those maybe, how those may unfold and whether or not they are going to be cleared or not. And we have it seriously tabled or part of the debate we are helping to drive the decision making there. And I think that at the end of the day, we are resourceful enough that we will figure out tools that will help the industry and figure out a way to make money on those.

On giving... I don't want to give you a specific guidance on compression other than to say it's a meaningful number in the sense that our efforts would be rewarded and there would be margins against the costs we are spending on building, the compression out of it. That was a key point I was going to add. I mean it's incremental revenue against the cost space. It really doesn't increase, it's the existing technology people at Creditex that we're working to drive that.

And then just another statistic raised to support Jeff's point on the uptake of the electronic trading and Creditex's technology. Creditex during the first half of the year has seen 36% of its business traded electronically. That's nearly double what they saw just a year ago. So the uptake of electronics has continued to increase and then in the U.S. in the second quarter... U.S. has typically been about 1% electronic. That number grew to six, which is still not a huge number, but it's a huge step forward.

Richard H. Repetto - Sandler O'Neill & Partners L.P

All right, thanks.

Operator

We'll go next to Chris Allen with Banc of America Securities.

Christopher J. Allen - Banc Of America Securities

Good morning, everybody. I just have a one quick question. Just on ICE Clear Europe, when you provided the initial guidance way back when I think the rates that... we get back into for our associates [ph] worked out about $0.27 in the futures side and about $0.30 per contract and the over-the-counter side. Are those rates still applicable? Can you give us an update in terms of what kind of rate per contract you will be charging?

Scott A. Hill - Senior Vice President and Chief Financial Officer

Yes, we could get you the information after the call, but the rates were actually published... lot of rates that we are going to have post transition are equal to what the LCA trades are today. So Chris we can get you that information, as I don't have everyone of the rates right now in front of me but we can get you that list of rates and it's available to anyone who needs it.

Christopher J. Allen - Banc Of America Securities

It appears to be roughly in line with kind of in terms of bonded overall with.... originally we come back into?

Scott A. Hill - Senior Vice President and Chief Financial Officer

The clearing rates haven't really changed much till yet.

Christopher J. Allen - Banc Of America Securities

Thanks a lot.

Operator

We'll go next to Mike Carrier with UBS.

Mike Carrier - UBS

Thanks. Just actually another question on the clearing, and here we are on tough to predict tough to predict volumes. But it looks like your annual revenue should be in the $70 million, $90 million range and that was up from on the original I think $60 million guidance, So besides the growth in the business and if your fee rates are unchanged, is that really just the driver of the increase? And then Scott post the Creditex close, should we expect the buy backs to take place in like the next say three to twelve months?

Scott A. Hill - Senior Vice President and Chief Financial Officer

Let me take the first question. So with regards to the guidance, I think we had said originally, $25 million to $30 million and if you just want to do simple math, you can double that and that'll get you a full year run rate and that was on backward looking volume. So, I mean, obviously as we've gotten deeper into the year, we have seen volume growth and so that's I think what enabled us, its holding to the end of low end of the range despite the fact that we lost two months.

The other thing I'd tell you that, it's not factored in to the answer I gave earlier that we're particularly excited about. Our OTC cleared revenue, it's still about 87% of the total, that only represents about 15% of our OTC product, the one other Jeff mentioned in his remarks, is we have a great opportunity now that we're going to own the clearing to get more of the OTC products cleared that our customers have told us, they want cleared. So, that's I think a key opportunity for us to grow the OTC business, related to clearing.

And I'm sorry, what was your second question, again?

Mike Carrier - UBS

Just on the time back, or the timeline on the buybacks post the Creditex transaction, like should we be expecting the buybacks in the next three to twelve months?

Scott A. Hill - Senior Vice President and Chief Financial Officer

It will... the authorization is over the next twelve months. How that plays out will depend on market condition.

Mike Carrier - UBS

Okay and then Jeff, just one follow-up like the OTC clearing market and the focus with regulators and then based on your discussion. We know the initiative with the broker dealers with the Clearing Corp. Do you think that platform can really handle the industry? Or will there be others and then if so... so what would be the likely timing and whether it's in the CDS market or rather OTC market? Where do you guys see the potential opportunity?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Now, that's a big question because I think buried in there is the understanding that there is a lot of stress on the balance sheet of the major banks globally and there are a lot of over-the-counter markets that have become standardized enough and transparent enough that they probably are clearable. And as a minimum they are nettable or compressible. But probably clearable. So, of all the over-the-counter markets that have yet to go through clearing, credit in our mind is one of the smaller ones.

There are other OTC opportunities that all of the exchanges and ICE, particularly are looking at and talking to various market participants about.

In terms of the Clearing Corp., I mean it's got all the right pieces there. I mean it's got the right owners, it's got a commitment by the Board to make it work, it's got the systems that only, I don't know what... seven years, eight years ago, it was the largest clearing corporation in the world I think. So from that history everything is there. Business is about execution, however, not ideas and it remains to be seen how people execute on that.

I don't think that it's necessarily going to be exclusive. I think these are big markets and there's going to be a lot of opportunity for various venues to come up with various products and specialize, and we've have seen particularly in the case of ICE, versus Nymex that we have been able to provide similar, but slightly different offerings that has been able to attract various parts of the market in each one of us. Together, we have been able to grow the market, together we have been able to grow each other by the arbitrage that's created between the two things that we do. And so, I don't think that's necessarily the Clearing Corp. is going to be the exclusive post-trade service.

It will be an important one, I suspect and one that has a lot of attention right now, but we are planning for the long run, and looking at other opportunities that could exist outside of Clearing Corp., as are major market participants with us.

Mike Carrier - UBS

Okay, thanks, guys.

Operator

We will take our final question from Don Vendetti with Citigroup.

Don Vendetti - Citigroup

Hi, good morning, quick question. Jeff your over-the-counter, average daily commissions were very strong in July year-over-year. It's given on the volatility and what we see on Nymex, we are a little surprised it wasn't stronger in July on a sequential basis?

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

I know that it's a hard market in your opposition to predict. And it certainly has a correlation with what goes on in Futures markets, but coming up with that exact correlation that's the secret for us that I am not sure that anybody could... can figure out. We do have some certain market maker programs in some products. So the number that we show you is a net number.

And so you are trying to correlate volume out of Futures in the OTC and the reality as we report revenue. So you see the net. So it further complicates that. But no I think, there has been a lot of dislocations right now in the market in the Futures market there with the talk on Capitol Hill, I think people that trade Futures, there may have been some people actually exiting the Futures market or hold reducing positions in the Futures market, which will lead the volume growth. But that's not necessarily a healthy growth, when people leave your markets or when people go bankrupt. Those are not market share numbers that I think are that should be touted by people, because they are really precursors to smaller Future growth.

So, it wasn't surprising for us. We really are seeing a lot... there were lot of one-time looking impact that were going on in the market this summer. And it looks like there's a very fair sentiment right now in the crude market. So it may be that prices stay flat, as I mentioned in my prepared remarks when Congress comes back, the group of ten who were proposed were ten bipartisan senators who were proposed supply and demand and investment regulation in energy will be debated, I suspect and will also filtered into presidential politics a bit.

And, so I think some of the extreme kinds of things that happened this summer will be out of the market. That's our hope not that it would.

Don Vendetti - Citigroup

Okay, thank you.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

And the other point that I'd make is July of last year was the second best month we'd ever have in OTC and this time when we still managed to grow the total 50% on a year-over-year basis.

Don Vendetti - Citigroup

Good point. Thank you.

Operator

That concludes today's question and answer session. I would like to turn the call over to Jeff Sprecher for any additional or closing remarks.

Jeffrey C. Sprecher - Chairman of the Board and Chief Executive Officer

Well, thank you all for joining us today and we look forward to talking to you again in the near future.

Operator

Ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may disconnect at this time.

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