Leigh Miller for GlobalAtlanta
Although New York and London have been traditional hubs for energy trading, Atlanta is becoming a center for electronic trading in that industry, thanks to IntercontinentalExchange Inc., which reported record contract volume and increased net income on Nov. 2.
An Atlanta-based firm, ICE operates an online marketplace for trading futures of crude oil, heating oil and natural gas and over-the-counter contracts of oil, power, natural gas and other energy products. Some 10,000 users in 34 countries, including utilities, energy companies and hedge funds, use ICE’s platform to buy and sell energy contracts.
ICE announced a 160 percent increase in third quarter net income, and its London-based subsidiary for futures trading set a record for average daily contracts for the 10th consecutive month in October.
Record growth since ICE went public last year has boded well for Atlanta as a hub for software developers wanting to get into the ongoing development of the electronic marketplace for energy trading, said Edwin Marcial, the company’s chief technology officer.
“At its core, ICE is a technology company and one nice thing about being based in Atlanta is that it is easy to find talented software people here and its more cost effective than New York for example,” Mr. Marcial told GlobalAtlanta in an interview.
He added that the company originally had trouble finding software developers that had any experience with the energy industry. But ICE has now built a team of 220 employees with industry knowledge, he said. About half of them are in software development and operations, located in Atlanta.
“The sophistication of the derivatives business we are in and that of our customer base just increases the demands to push technology to its limits. This creates an attractive career opportunity for technologists who want to be involved in leading-edge development. There is also instant gratification in that you see the results of your work in real time,” Mr. Marcial said.
Nearly all of ICE’s software is developed internally in the Atlanta office.
Oil and other energy commodities will likely continue be a volatile industry for the foreseeable future, so there will be a need for software developers in this field to keep ICE’s system as speedy and efficient as possible, he said.
ICE’s developers reengineered its trading platform and closed its United Kingdom-based futures trading pit in 2005, sharply increasing its volume of trading activity. The electronic platform supports more than 5,500 concurrent users between the hours of 10 a.m. and 2 p.m. EST, but the platform is available for trading 23 hours a day.
In just one year, the ICE platform made transactions 17 times faster than in April 2005, and its capacity increased more than 49 times.
For its successes and its “use of technology to gain competitive advantage,” ICE won the Technology Association of Georgia’s Excalibur Award on Oct. 13.
In the third quarter of this year, ICE’s platform handled the same amount of crude oil contracts by contract volume as the New York Mercantile Exchange.
ICE has regional telecommunications hubs in Chicago, New York, London and Singapore where traders can use private lines to access the platform. But users can log-on to ICE’s system anywhere in the world with an Internet connection, Mr. Marcial said.
Trading on the platform is increasing rapidly, he noted, adding that in October, monthly contract volume at ICE Futures, the company’s London-based subsidiary for futures trading, exceeded 10 million contracts for the first time in a calendar month.
Average daily commissions in October for ICE’s electronic over-the-counter business markets, which include any transaction that does not take place on a regulated futures exchange, increased 159 percent over October 2005 to $849,454.
From July-September, ICE reported consolidated net income of $43.6 million, or 73 cents per share on revenue of $94.7 million. During the same period last year, the company earned $16.8 million, or 5 cents per share, on revenue of $45.3 million.
Its recent success has prompted ICE to offer a $1 billion proposal to acquire the New York Board of Trade, which trades agricultural commodity futures.
Mr. Marcial was one of five founding team members of ICE, which originated from Continental Power Exchange, an Atlanta firm focused on the hourly trading of physical power.
Jeffrey Sprecher, ICE’s founder, chairman and CEO, was formerly a developer and operator of power plants in California. He recruited energy and financial companies like BP plc, the Goldman Sachs Group Inc. and Morgan Stanley to join ICE’s electronic system.
Enron Corp. also had an electronic trading platform, so when that company collapsed, ICE, which was rapidly growing at the time, served as a better business model and attracted many of its remaining customers, Mr. Marcial explained.
Headquartered in Atlanta, ICE also has offices in Calgary, Canada; Chicago; Houston, Texas; London, New York and Singapore.
For more information, contact ICE at (770) 857-4700 or visit www.theice.com.