On an 11 p.m. train headed to the South side of Chicago a group of veteran bond traders could not stop talking about the amazing event they just witnessed. See, they were members of the Chicago Board of Trade and had just spent four hours peppering Intercontinental Exchange Chairman and CEO Jeff Sprecher—who had recently turned the futures industry upside down by making a counteroffer to the Chicago Mercantile Exchange’s definitive agreement to buy the Chicago Board of Trade—with questions regarding his offer for the CBOT.
While the ICE counteroffer held out the hope of increasing their payday by forcing the CME to raise its bid, very few saw themselves voting for the ICE deal going into the meeting. That changed over several hours. One trader put it simply, “Yesterday, if the Merc matches the [ICE] bid it is a no-brainer, now the Merc has to pay a premium—this is a guy with vision.”
That was the impact Sprecher had on these hard-boiled Chicago traders who went into the evening suspicious of Sprecher, who they didn’t know except for rumors he was a stalking horse for the major New York banks. And Sprecher didn’t come to the event with just a superior offer for the CBOT. He announced a solution to the convoluted mess that was the CBOT exercise right privileges to the Chicago Board Options Exchange. Looking to solve the ERP issues was a sign this was not just a move to push a competitor to pay more but a serious effort. Another CBOT member said, “Is this the next Microsoft or the next AOL? I think it is the next Microsoft. Here is a guy who is a visionary.”
Comparing ICE to Microsoft may have seemed ridiculous at the time but not now. Sprecher launched ICE in 2000 and through hard work, acquisitions, riding industry and regulatory trends and perhaps some luck grew the business to the point of being a serious bidder for the most storied futures exchange in the world. Since then, ICE’s growth was only accelerated, reaching a pinnacle with its acquisition of NYSE Euronext last year.
ICE did not succeed in its bid for the CBOT but raised eyebrows with its serious and disciplined approach to the process. When Futures decided to name a person of the year there was not a lot of debate. Sprecher took ICE from a start-up energy trading platform he purchased for $1 to a global exchange conglomerate trading all asset classes with six clearinghouses.
Strangely this was not a master plan from the beginning—in fact if the growth of ICE was planned out, Sprecher’s initial investors may have had him committed instead of writing him a check—but an evolutionary process led by a person who had a unique ability to see the opportunities from changing market and regulatory dynamics. He did this by acquiring an eclectic group of exchanges, clearinghouse and technology providers. When Sprecher started ICE he was a 100% owner and he invited 13 large market making firms to participate in the company in exchange for volume and market-making commitments. That worked very well; it is a model he continues to use.
He is not upset at the one that got away, CBOT, but did point out that ICE now owns the former Board of Trade Clearing Corporation. ICE is an amazing story of growth.