UK's Competition Appeal Tribunal Upholds ICE's Mandatory Sale of Trayport

The Intercontinental Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (ICE) faced renewed pressure to offload its recently acquired energy trading technology platform Trayport, which it bought for $650 million back in December 2015. A recent edict from the UK's Competition Appeal Tribunal (CAT) has upheld a ruling for ICE’s obligatory sale of Trayport.

The verdict followed on the heels of a lengthy investigation back in October in which the UK’s Competition and Markets Authority (CMA) ruled that ICE could potentially Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term its ownership of Trayport’s platform to mitigate effective levels competition, ultimately leading to increased fees.

Competition Concerns

These concerns were so tangible that a sale of the unit was seen as the only viable solution. ICE had previously appealed the decision, though the CAT has backed the CMA, all but assuring a sale will need to be consummated.

Concerns surrounding the $650 million investment in Trayport leading to an erosion of competition for wholesale European utilities trades were initially brought up following an assessment of Trayport’s software reflecting a nearly 85 percent share of activities.

Moreover, other market players such as Nasdaq, EEX, Tradition and ICAP have all voiced their opposition to the CMA, portending that over-the-counter (OTC) gas and power markets could be subject to the mandatory clearing provisions that are being applied to other commodity markets.

Citing the CMA, third party submissions universally felt that the sale of the Trayport business was the only comprehensive solution to all aspects of its competition concerns. The independent group rejected alternative remedial actions, such as forcing Trayport to offer better terms to customers, concluding that it would not be effective.

According to a recent ICE statement on the verdict: “We will review the CAT’s judgment and consider our options, including the possibility of a further appeal to the Court of Appeal."