ICE Completes Russell Coup

The Intercontinental Exchange (ICE) has traded 2.7 million futures and options contracts on the Russell Indexes in September, the first full month in the transition to an exclusive license agreement between Russell and the Intercontinental Exchange. The move by ICE to lock up Russell index-based contracts, when first announced in July 2007, was considered a coup for the exchange, not only due to its exclusive nature, but because it came amidst the ICE's protracted battle with the Chicago Mercantile Exchange for the Chicago Board of Trade [CBOT](see story here).

At the time that the deal was first announced, ICE already listed contracts on Russell indexes, but the exclusivity contract meant that rival CME Group Inc. (CME) could not renew its contract to list Russell-based futures contracts, which served to weaken its hand during negotiations. CME would ultimately acquire CBOT, but not until after ICE CEO Jeffrey Sprecher received major kudos from the industry for making the deal as difficult as possible for the rival exchange, and for cleverly driving up the price on CME to get the deal done, raising his own firm's value in the process.

This month, the ICE hit a daily volume record of 22,129 mini Russell 2000 Index futures contracts, as well as a total volume record for all of ICE's Russell Index futures and options, which included the Russell 1000 and Russell 2000 full-size and mini contracts. ICE had a total volume of 250,000 Russell-linked contracts in the first nine months of 2007, in contrast to the 2.7 million contracts traded in September.

The deal is part of ICE's long-term plans to transition away from its image as an energy- and commodities-based exchange. Its acquisition of the New York Board of Trade was part of those plans and helped to trigger the Russell exclusivity deal. NYBOT is the leading market for Russell 1000 contracts.