NYSE-owner ICE to launch new fixed income ETF platform

(Reuters) – Intercontinental Exchange Inc is partnering with BlackRock Inc on a new fixed income exchange-traded fund execution platform to open next year, the owner of the New York Stock Exchange said on Thursday after reporting a rise in quarterly earnings.

The new platform will be a wholly-owned subsidiary of ICE and is aimed at simplifying the creation and redemption process for ETF units, which can then be split up and sold to investors in the secondary market, ICE said. BlackRock will help develop and support the system.

Much of the buying and selling of corporate and municipal bonds is still done over the phone. But fixed income is a fast-growing segment of the $3.4 trillion ETF market and the greater efficiencies and transparency that come with automation will help meet that rising demand, ICE said.

“Working closely with BlackRock, the world’s largest ETF sponsor, and leveraging ICE technology, data and trading infrastructure, we plan to establish a central trading hub that enables seamless connectivity for market participants,” Jeff Sprecher, ICE’s chief executive officer, said on a call with analysts.

ICE has invested heavily in the fixed income space in recent years and the new venture will help the Atlanta-based company bring those investments together, while potentially attracting new business.

The new platform will connect to BondPoint, the electronic corporate bond trading platform ICE bought from Virtu Financial for $400 million in January, and TMC Bonds, the municipal bond trading platform it acquired for $685 million last month, as well as to third party venues, ICE said.

It will also tap into ICE’s fixed income pricing and analytics business, which the company beefed up through its $5.2 billion acquisition of Interactive Data Corp nearly three years ago.

Participants on the platform will be connected via ICE’s instant messenger system.

The move could bolster revenues at ICE. The exchange operator on Thursday reported a 8 percent rise in second-quarter income, helped by increased revenue in its trading and clearing business as a result of higher rates per contract.

Net income at ICE rose to $455 million, or 78 cents per share, in the period, from $419 million, or 71 cents per share, a year earlier.

Not including one-time items, such as M&A expenses, ICE earned 90 cents per share, beating analysts’ average estimate by a penny, according to Thomson Reuters I/B/E/S.

Total revenue, excluding transaction-based expenses, rose 5.6 percent to $1.25 billion.