ICE Bonds had record revenues in  2022, up nearly 100% year-over-year.

Benjamin Jackson,  president of ICE, said on the results call on 2 February that rising inflation and global central bank activity presented an interest rate environment that has not been seen in a generation. This drove a 20% increase in volume in interest rate contracts and a 15% growth in equity derivatives.

“Rising market uncertainty and interest rates are driving an increase in demand for credit protection, which led to increasing trading activity in our bonds business,” he added. “Coupled with our continued efforts to build institutional connectivity to our bonds platforms, ICE Bonds had record full year revenues.”

Warren Gardiner, chief financial officer, said on the call that fixed income could very quickly become a very attractive asset class and ICE was having really good conversations with customers.

“We are a data superstore. We have indices, end-of-day pricing, analytics,” Gardiner added. “It’s an opportunity for us to have conversations with customers in this kind of environment, and maybe find ways for them to spend more with us.”

Lynn Martin, president of NYSE and chair of ICE’s fixed income and data services, said on the call that the business segment  illustrates the all-weather nature of the ICE name.

“If you look at the execution side of the business, volatility has certainly been a tailwind, but importantly, new products and customer acquisition have also been a driver of  growth,” she added.

ICE Bonds has grown institutional market share according to Martin, especially in municipal bonds, which rose 205% in the fourth quarter and 175% for the full year in 2022..

“In municipal bonds we have been able to gain about 650 basis points of share in 2022, driven by the work we have done with institutions to plug into their workflows,” she added.

Environmental markets

Jackson said: “Although our European carbon markets experienced headwinds in 2022 , the secular trend towards cleaner energy continues and is a growth trend we are uniquely positioned to capture, as evidenced by the record year in our North American environmental markets with volumes up 5% year-over-year in 2022.”

Over the longer term, corporates and market participants remain committed to reducing carbon emissions according to Jackson.

“This is an evolution that we’ve long envisioned and we are one of the largest providers of environmental products, including renewable fuel contracts, carbon allowances, nature-based solutions, renewable energy certificates and climate data and analytics,” he added. “We are excited about the many future growth opportunities that lie ahead for a nascent market.”

Jackson continued that ICE’s environmental business benefits from a symbiotic relationship with its energy contracts as customers producing energy or consuming energy need to care about the price of carbon.

“More carbon is going to need to be priced and more sectors of the economy are going to be captured,” he added. “Over the long term that is a tailwind of growth.”

ICE will continue to invest by launching new environmental contracts. In addition, at the end of last year  ICE launched reference data for carbon credits to allow traders to price contracts.

“We pulled together data from a variety of sources to make what was hours, if not days, of work able to be done instantaneously,” he added. “Obviously that information can help with price formation.”

Financials

For the full year of 2022 Intercontinental Exchange reported consolidated net income of $1.4bn on $7.3bn of consolidated revenues less transaction-based expenses. Revenues increased 8% year-on-year including a 33% increase in the interest rate business, a 20% increase in equity derivatives, and an 8% increase in global natural gas revenues.

$ICE reports 17th consecutive year of record revenues. Learn more about our full year 2022 results ⤵️https://t.co/Fs8PamyMeT pic.twitter.com/xtr1zTE8V7

— ICE (@ICE_Markets) February 2, 2023

EPS for the period was $2.58, down 64% year-over-year, which it said was primarily due to net losses from crypto business Bakkt and the divestment of ICE’s stake in crypto exchange Coinbase and deconsolidation of Bakkt in 2021.

Gardiner said ICE generated record revenues, record operating income and record operating cash flows in 2022.

“This strong performance, including compounding recurring revenue growth across all three of our business segments, is a testament to the strength of our strategically diversified business model,” added Gardiner.

Jeff Sprecher, chair and chief executive of ICE, said on the results call that 2022 marked the firm’s 17th consecutive year of record revenues, operating income and adjusted earnings per share. He highlighted that revenues in credit default swap clearing rose 61% year-over-year as interest rate volatility drove increased demand for risk management and credit protection.