ICE Sees Dip In Derivative Trading Volumes In October

+7.04%
Upside
131
Market
140
Trefis
ICE: Intercontinental Exchange logo
ICE
Intercontinental Exchange

After a solid performance in the previous three quarters, IntercontinentalExchange‘s (NYSE:ICE) derivative trading volumes saw a year-over-year decline in October. Commodity volumes slid marginally, and financial derivatives declined by 21%. Among commodities, energy derivatives were on par with the year-ago figure. This is likely due to the fact that energy derivatives had been in demand towards the end of 2016, with the surge in oil prices due to cuts in production.

Due to the rate hike in June 2016, interest rate derivative volumes registered a sharp rise over the next few months. Consequently, we saw a 21% year-over-year decline in financial derivatives in October 2017. However, we expect further growth in trading volumes with the Fed’s expectation of further hikes in the year ahead. Meanwhile, we expect that metals – despite having shown a slight decline – will likely remain in demand as a safe investment asset.

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The exchange generates around 11% of its revenues from these asset classes. With a mixed performance across this sector, we expect the company’s top line to be under pressure.

We have a $70 price estimate for Intercontinental Exchange’s stock, which is slightly ahead of the current market price.

See the full Trefis analysis for Intercontinental Exchange

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