Intercontinental Exchange (ICE): Every Asset Class
1. Executive Summary
ICE is best known for owning the NYSE, but that is the "boring" part. The real thesis is their dominance in Energy trading (Brent Crude futures) and Mortgage Technology (Ellie Mae/Black Knight). ICE is effectively digitizing the two largest asset classes in the world: Housing and Energy.
Key Thesis Points
- Energy Volatility: When the world is chaotic (wars, inflation), traders hedge oil and gas. ICE takes a fee on every contract. Volatility is their friend.
- Mortgage Monopoly: By acquiring Black Knight, ICE now controls the software that processes ~65% of US mortgages. As rates fall and refi activity picks up, this division will print money.
- Data Services: Real-time fixed income pricing is mandatory for bond traders. This is high-margin recurring revenue.
2. Business Overview
- Exchanges: NYSE, ICE Futures Europe (Energy).
- Fixed Income & Data: Bond pricing and indices.
- Mortgage: Loan origination software (Encompass).
3. Risks
- Antitrust: The Black Knight deal faced heavy FTC scrutiny. Future M&A will be difficult.
- Housing Freeze: If interest rates stay at 7% forever, the Mortgage Technology division will stagnate (no refinancing).