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Intercontinental Has Record 2012 After Changing Swaps to Futures

Jan. 3 (Bloomberg) -- Intercontinental Exchange Inc., which agreed last month to buy NYSE Euronext, reported record volume for 2012 after it converted energy swaps to futures contracts.

The company traded 847 million contracts last year, a 10 percent rise from 2011, after the change to energy swaps was made to avoid higher capital and margin charges mandated by the U.S. Dodd-Frank Act in October. Average daily volume at the Atlanta-based company’s exchanges dropped 1 percent in the fourth quarter compared with the year-earlier period, it said in a statement distributed by PR Newswire today.

The 12-year-old energy and commodity futures bourse, agreed on Dec. 20 to acquire NYSE Euronext for cash and stock worth about $7.9 billion, moving to take control of the world’s biggest equities market. Merging the owner of the New York Stock Exchange with the second-largest futures market in the U.S. underscores the growing importance of derivatives and the diminishing influence of the 220-year-old NYSE.

The Big Board, once the benchmark for global free markets, has seen its share of trading in stocks listed on the exchange decline to 21 percent from 82 percent.

Intercontinental saw trading in its Brent crude oil contract rise 16.5 percent year-on-year, while total energy trading jumped 12.6 percent, it said in the statement today. Brent crude is used to set oil prices outside the U.S. Financial contracts such as futures based on equity indexes and currencies fell 23.3 percent last year compared to 2011, the company said.

The Commodity Futures Trading Commission guidelines went into effect Oct. 12 that require firms holding $8 billion of swaps to register as swaps dealers and meet new performance standards such as higher capital, margin and trading requirements. Intercontinental converted more than 900 energy swaps to futures beginning Oct. 14 so that the trading wouldn’t count toward the $8 billion limit.

CME Group Inc. is the world’s largest futures exchange.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net.

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

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