Trading at The Intercontinental Exchange (ICE)

ICE : History | Membership | Types Traded | Further Reading

The Intercontinental Exchange (NYSE: ICE) is one of the world’s leading currency and commodity futures exchanges, with exchanges located in London (ICE Futures Europe), New York (ICE Futures US) and Winnipeg (ICE Futures Canada). The ICE, as it is colloquially known, deals mainly in agricultural commodities and energy commodities: indeed, ICE Futures Europe is responsible for over half of the world’s daily traded contracts for crude oil and refined oil products. [wdca_ad id=”1134″ ] Though The ICE started by using a traditional open outcry system for trading, it now uses an electronic trading system, with the opportunity for members and brokers to participate in online commodity trading should they desire.

History of the Intercontinental Exchange

The Intercontinental Exchange was founded in 2000, but has a longer history due to its acquisition of previously existing exchanges. Though it was started to provide a new option in the over the counter (OTC) markets, the ICE quickly established a presence in futures with the purchase of London’s venerable International Petroleum Exchange (IPE) in 2001, now called ICE Futures Europe. Another round of major expansion followed in 2007, with the Intercontinental Exchange first acquiring the historic New York Board of Trade (NYBOT), now called ICE Futures US, and then Canada’s largest agricultural commodities exchange the Winnipeg Commodity Exchange (WCE), now ICE Futures Canada. The purchase of these three exchanges has given the ICE a leading position in agricultural commodities and energy commodities, especially in crude oil and its derivatives.

Membership of the Intercontinental Exchange

Membership classes are different for each of the three main futures exchanges of the Intercontinental Exchange:

  • ICE Futures Canada:
    • Direct Access Trading Participants: these members may engage in commodity trading on ICE Futures Canada, and my do so via direct access to the trading system. They qualify for a reduction in trading fees, and must also be Clearing Participants of the exchange.
    • Trading Participants: these may trade commodities on ICE Futures Canada, but must engage the services of a Direct Access Trading Participant in order for their trades to be cleared.
    • Merchant Participants: these members may perform limited actions, such as such as the issue of warrants and the registration of elevators.
    • Ancillary Participants: observer members of ICE Futures Canada. They have no trading rights; participation is intended to establish connection between the participant and the exchange.
  • ICE Futures Europe:
    • General Participants: these members may trade commodities on ICE Futures Europe for themselves and on behalf of others.
    • Trade Participants: trade members may only trade on the exchange on their own behalf.
    • Individual Participants: these members have the same rights as trading members, but must be sole traders, or companies in which are 90% controlled by a single person.
    • Clearing Members: this type of membership only exists additionally to one of the three listed previously. Clearing members may also clear the trades they are permitted to make.
  • ICE Futures US:
    • Trading Member: individuals that may trade all commodities listed on ICE Futures US. Trading members may lease out their memberships.
    • Member Firm: these are firms (normally financial institutions and brokers etc that have permission to trade on the exchange. This permission is conferred by the fact that a senior figure in the firm is a reading member of the exchange. This figure should be responsible for supervising the firm’s trading on ICE Futures US.
    • Lessee: individual memberships may be leased – lessees are members that have leased their trading membership from another for the purpose of trading on ICE Futures US.
    • Permit Holder: permit holders are individuals that may trade on ICE Futures US, but this is limited to the commodities specified in their membership contract. These members may not lease their membership.
    • Floor Trading: Trading members that are also members of the National Futures Association (NFA) may upgrade their membership to become floor traders or floor brokers.

Commodities Traded on the Intercontinental Exchange

A wide range of agricultural commodities and energy commodities are traded on the three futures exchanges that go to make up the main part of the business of the Intercontinental Exchange. All commodities listed below are followed by their contract code in brackets; some commodities have more than one contract code due to the existence of different contracts for the trading of those commodities.

  • Agricultural Commodities: Barley (AB), Canola (RS), Cocoa (CC), Coffee (KC; RC – Robusta Futures), Cotton No. 2 (CT), Frozen Concentrated Orange Juice, also known as FCOJ (OJ), Sugar No. 11 (SB), Sugar No. 16 (SF).
  • Energy Commodities: Brent Crude Oil (B), Coal (AFR – Richards Bay Coal Futures; ATW – Rotterdam Coal Futures; NCF – Newcastle Coal Futures), Gasoil (G), Heating Oil (O), Natural Gas (L – UK Natural Gas Futures Daily; M – UK Natural Gas Futures Monthly; TTD – Dutch TTF Gas Daily Futures; TTF – Dutch TTF Gas Futures), UK Electricity (J – UK Base Electricity Futures Daily; Y – UK Base Electricity Futures Monthly; Z – UK Peak Electricity Futures Daily; P – UK peak Electricity Futures Monthly).

Further Reading

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