ICE to launch equity futures on ICE Endex

ICE Clear Netherlands (ICNL) is to start clearing equity derivatives traded on ICE Endex as it seeks to maintain the licence for the central counterparty (CCP) it acquired in 2014.

The contracts were due to start trading mid-July but have been delayed until later in the quarter, FOW understands.

ICE acquired what was then the Holland Clearing House in 2014, in what was widely seen as a hedge against moves to relocate Euro clearing to the Eurozone.

At the time of the acquisition, the UK was in the process of legally challenging a decision by the European Central Bank to force the clearing of Euro-denominated products in the EU.

That legal action was settled in March 2015 leaving ICE operating a CCP that only cleared for Dutch MTF The Order Machine (TOM).

TOM was wound down in 2017 and a deal was signed to clear for Euronext Amsterdam, a move which was ultimately blocked by the French government.

The open interest on TOM was transferred to LCH in Paris following the closure of TOM, leaving ICE Clear Netherlands empty.

Under European Market Infrastructure Regulation (Emir) rules, CCPs with no activity lose their licence after six months. However, ICE is understood to have gained an exemption until July 2018.

As such the launch of equity futures on Endex is believed to be intended to fulfil the Emir requirements and maintain the licence.

Last month, ICE put out a circular announcing changes to the clearing rules on ICNL that would allow it to clear equity derivatives contracts traded on ICE Endex.

Endex currently trades a range of natural gas and power contracts that clear into ICE Clear Europe.

FOW understands that the contracts listed on the ICE-owned power exchange will be single stock EU-names and there will be no overlap with contracts listed in London.

The move is understood not to be related to Brexit.

A spokesperson for ICE declined to comment.

ICE is keeping its options open for further development of ICNL.

The rule changes proposed in last month’s circular states: “[The new] ICNL Rules will contain provisions…which are relevant to markets, contract types and client categories for which ICNL will not provide services in the first instance (but may do so in the future).

“This applies in particular to provisions in the new ICNL Rule relating to Credit Default Swaps business, Clearing Members which are registered as Futures Commission Merchants with the CFTC and/or as Broker-Dealers with the SEC, Sponsors and Sponsored Principals and to collateral provision by way of pledge.”

FOW reported in September, that Cboe was considering clearing into ICE Clear Netherlands and this is believed to still be under consideration.