Intercontinental Exchange at Bernstein Conference: Strategic Insights and Growth

On Wednesday, 28 May 2025, Intercontinental Exchange (NYSE:ICE) participated in the Bernstein 41st Annual Strategic Decisions Conference 2025. Jeff Sprecher, the company’s Founder, Chairman, and CEO, outlined ICE’s strategic direction, highlighting strengths in energy and mortgage sectors, while addressing challenges such as deglobalization and interest rate impacts.

Key Takeaways

• ICE sees continued growth in energy risk management, driven by global changes and energy transitions.
• Expansion into the mortgage business focuses on building a network rather than just providing software.
• ICE’s data center business benefits from increasing power demands and AI developments.
• The company prioritizes share buybacks and dividend growth, while remaining open to M&A opportunities.
• ICE emphasizes technological innovation and data expertise to empower clients.

Financial Results

• Energy Business:

- Volumes increased 18% year-over-year, maintaining strong growth despite reduced volatility.

- Revenues in the energy sector have nearly doubled over the past three years.

• Fixed Income Trading Business:

- The bond business grew 30%, outperforming competitors with stagnant growth.

• Data Business:

- Growth accelerated from around 5% to 7% in the last quarter.

• Capital Allocation:

- ICE’s leverage ratio stands at 3.2 times, close to its target of 3 times.

- The company has resumed share buybacks due to excess capital.

Operational Updates

• Energy Market:

- Increased participation in energy hedging, with Brent Crude oil contracts now incorporating U.S. West Texas Intermediate crude.

• Mortgage Business:

- Signed 20 new clients for underwriting platforms and cross-sold to 100 existing clients.

- Focus on creating a digital end-to-end ecosystem to streamline processes and reduce costs.

• Technology and AI:

- Growing demand for data center access, potentially driven by AI advancements.

- AI is used to write code with human oversight to ensure quality.

• Connectivity:

- Investments in organizing unstructured data and enhancing communication tools with AI capabilities.

Future Outlook

• Energy Market:

- Expected growth due to global changes and increased use of energy prices in asset class decisions.

• Mortgage Business:

- Aims to create a network effect, increasing the value of the mortgage network over individual components.

• Technology and AI:

- Anticipates AI models will become more integrated into data centers, requiring low latency.

• Capital Allocation:

- Plans to continue share buybacks unless M&A opportunities provide higher returns.

Q&A Highlights

• Retail Trading:

- Focus on empowering existing clients with technology rather than engaging in retail trading.

• Fixed Income Trading:

- Building an ecosystem around bond trading, focusing on value over price competition.

• M&A:

- Open to small acquisitions to enhance network capabilities, with a primary focus on organic growth.

• Mortgage:

- Anticipates increased competition and innovation in the mortgage industry.

For further details, readers are invited to refer to the full transcript below.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Chris: Hello? Okay. I think we’ll get started here in this session. So good afternoon, everyone. Thanks for joining for our next session here with Interconcentral Exchange.

I’m delighted to welcome yet again to the conference Jeff Sprecher, Founder, Chairman and CEO of ICE. I believe this is the eighth time in a row to attend the conference. So thank you. Hoping to make it 10 in a couple of years. So I appreciate you attending the conference.

Jeff Sprecher, Founder, Chairman and CEO, ICE: Thank you. It’s a really good conference. So I appreciate the invitation to be back year after year. Fantastic.

Chris: As always, as a reminder, you could ask Jeff a question through the Pigeonhole system. There should be some QR code in one of the screens that you could use, and I’ll try to get that to him towards the end of the conversation. So Jeff, let’s just start with what’s been the strength of the business over the last couple of years actually, which has been the energy business. Revenues there have almost doubled over the last three years. And there’s been a lot of tailwinds.

It feels like we’ve seen some sort of slowdown, if you like, since May as we move past the volatility around Liberation Day. Just curious what you’re seeing in that end market and what gives you confidence for continued robust growth?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Well, it may have slowed from the high volatility of the tariff conversations. But I think month to date, we’re still our volumes are up 18 year over year. So like still a very healthy double digit growth against a very good last year, as you’ve pointed out. So we feel really good about that business. It just we’re well positioned.

There’s a lot of change in the energy market right now, partly due to trade, partly due to new policy with The U. S. Wanting to drill more and export more. The Middle East somewhat getting away from the OPEC plus commitments. Europe trying to figure out its long term energy strategy.

People speculating about what may happen with the Russia conflict and whether Russia will be able to reenter the energy markets in the West. All of that is just kind of and there’s an energy transition that still exists today. I mean, as you’re hearing about all these data center constructions, the people that are it’s just almost endemic in the conversation that whatever energy powers that is going to be clean. So all of that just feels very healthy as a backdrop to risk management around the energy space.

Chris: Okay. Let’s dig into a couple of those topics. You mentioned AI, Russia, Ukraine. Maybe start with Russia, Ukraine. That was clearly a tailwind for your markets as supply chains have shifted.

To the extent we see any sort of normalization of European Russian relations, how do you think about growth in your businesses, whether it be nat gas and tailwinds around TTF or any other businesses?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Well, if you recall what happened right after the conflict started, Europe very quickly said, we want to disconnect from Russia gas and Russia energy broadly. And but they didn’t actually do it immediately. They announced they wanted to do it and they actually announced a transition. And some countries haven’t ever transitioned off. So it’s been a bit of a, I don’t know, a gradient and a mixed bag with respect to Russia.

What it caused the market to do is we had all these Western clients that were trading or hedging or taking delivery of commodity products that said, we don’t want Russia. And so the indices, the delivery specifications and what have you were all sort of reoriented to be ex Russia. And it took a while for that to happen. It actually depressed some of our trading markets while we were in that transition. But now the market today has developed infrastructure that has some that has Russia involvement and some that has no Russia involvement.

So I feel like regardless of how the war ends, hopefully ends, and the conflict ends, and determinations are made by the West on how it wants to deal with Russia, the risk management framework that exists already today can accommodate a range of outcomes to the positive. Okay, fair.

Chris: The other topic you mentioned was AI and sort of power demand there as we see a surge in electricity demand. Are you seeing that in your markets in terms of incremental user demand for your risk management products? Maybe what type of products are these players using?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Yes, absolutely. As I mentioned, it’s definitely clean. I mean, we’re all hearing these conversations about this need for more processing capacity to the point that you hear the hyperscalers saying we need to build nuclear power plants. But you don’t hear anyone saying we need to build a coal fired power plant, at least in the West, to power these. Even as a result some of the recent meetings in The Middle East, you see, okay, we’re going to build massive centers that have the hyperscalers involved, and they’re going to be in the Middle East closer to some of the Middle Eastern fuels.

So for us, it still feels like it’s a natural gas transition. There will be some renewables around that, aspirationally nuclear. I just don’t think you’re going to see coal in the West. Let me mention one other thing that we’re seeing, which is we run a massive financial services network. Like our network because probably because the New York Stock Exchange is an anchor tenant, that is widely dispersed around the world in financial services.

We have a network and a data center infrastructure that we run. We are not on the cloud. We’re hooked to the cloud so all of our customers can take our products via the cloud if they want to. But that’s kind of the last mile. We really run the network and the data centers.

And as you probably see in our data when you look at it, we’re seeing an uptick in the demand for access to our data centers, which we think is driven partly by AI. I will tell you that we sell colocation space in the data center next to the New York Stock Exchange, next to our energy markets and commodity markets. And latency sensitive traders have that colocation space. We haven’t really seen the market put the AI models in the data center. It feels to us like people that are using AI models are taking the data out of the data center, running their models, coming up with investment decisions and then bringing them back into the data center.

And so right now, we don’t see AI as being latency sensitive. And we partly and we’ve seen it in other businesses, including our own. People don’t fully trust the answers that are coming out of the AI model. So the AI model may give you an answer, but human beings are then sort of checking and calibrating that answer and not letting the model itself make the investment decisions. One would think that over time, as the models get better, as the confidence factors grow, that the models themselves will be co located and will become latency sensitive.

So we’re building out our infrastructure as if that will happen. Because we’ve had enough conversations with our clients to realize like this is a likely outcome.

Chris: One last one on energy. Clearly, ICE has been a winner both from just growth in energy risk management and relative to peers. But given just all the changes that are happening, whether it’s changing LNG trade routes, OPEC plus volatility, benchmarks moving back and forth. You mentioned AI and generally ICE’s focus around the commercial customer base. Anything you see around changes in sort of the energy ecosystem that could impact ICE’s business long term?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Yes. Two things touching on both the items that I heard you say. One is you mentioned I’m the founder of this company. When we started this company, we didn’t know how big the energy market could grow. We didn’t think it could grow.

We thought it would grow because there was an analog to digital conversion. And just giving people more information faster will make more decisions. And but we thought it would be easy to cover the entire universe of people that would hedge energy. Like, I doubt anyone in this room here that we will ever buy a barrel of WTI or Brent crude. So we kind of thought we’ll reach 100% market share quickly.

And the reality is we keep expanding like new players and participants keep wanting to hedge energy. And this is twenty years later after digitization. And so I was wrong thinking that we would hit a terminal value. I don’t know where it is. But I know every year we’re surprised by the continued growth in access to people, including many people like you now who are taking energy pricing into decisions that you may be making about correlated asset classes.

And sort of the computer power that is grabbing energy prices and using that input to make some other decision. And so the distribution keeps growing. The other thing, which is a little bit esoteric, was that the flagship product that we had in year 02/2001 is called Brent Crude Oil. Brent was an oilfield in the North Sea off of the coast of The UK. And that oilfield, both due to the geology and public policy in The U.

K, is no longer in existence. So we trade this contract called Brent, but there’s no Brent crude in Brent. And so we’ve had to evolve the contract. And we did that by adding other grades of crude, esoteric things, a thing called eco fisc and Fortes, Ossenburg. These are other oil fields that were around the North Sea that were premium grades of oil.

Most recently, as you know, Christian, we’ve added U. S. West Texas Intermediate crude into that index. And today, about 50% of the time, the Brent index price is U. S.

Crude that is largely exported, largely out of Texas, largely West Texas fracking oil that makes its way to Houston and then out to sea and is being exported. So a very interesting thing is that this contract that used to be in the North Sea has now sort of moved its center of gravity and has evolved to becoming the global price of oil. It was always used to hedge global oil, but it is truly the global price of oil. And where WTI, which we also trade that marker, is oil in pipelines in Cushing, Oklahoma. The oil pipeline system in The U.

S. Is, I don’t know, a little more stagnant in terms of its it will probably always be the marker that we’ll read about here at the news, like the Dow Jones Industrial Average gets talked about. I think we’ll always talk about WTI the oil price. But the global marker really has become Brent. And you can see its outsized performance relative to its peers.

And that’s simply because it’s been reconstituted over time by us to be something that it wasn’t when we acquired it.

Chris: Maybe just a follow-up. It’s very clear that ICE is a very global business and you’ve benefited from a lot of global trends. And I mean to your point, Brent essentially is now exported WTI. On a world where potentially there’s deglobalization, much more localization, is there a risk to sort of your business model around being global?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Let me tell you something that I’ve seen from my vantage point that I that weird to me. For whatever reason, when we started this business, commodities around the world are traded in U. S. Dollars. The price of oil, whether it came from Russia or the North Sea or anywhere else, was always in barrels per dollar per barrel.

And most commodities, corn, soybeans, and I don’t know, natural gas and you name it, most commodities are actually physical commodities are actually traded in dollars. And as I mentioned, the distribution is getting bigger, not smaller. And it’s becoming more global, not regional. And so dollar business is making its way all over the place. But what’s more interesting to me is we own the New York Stock Exchange.

And the volume of trading, particularly since COVID, has asymptotically taken off. In April, we were doing 1,300,000,000,000 transactions a day. 1,300,000,000,000 transactions a day on the New York Stock Exchange. Like the systems have scaled to places we never thought they could go. And then you say, well, why is that?

Well, something has happened. There was obviously a price war over free trading commission. There have been Reddit and Facebook groups and other people that are talking about stocks. There’s a younger generation. But there was also the explosion of crypto, which is global.

And so you have, let’s say, a young person in Korea wanted to buy Bitcoin. And in order to buy Bitcoin, they were maybe buying circled USDC or Tether, which is a dollar proxy, right? So you had young people in Korea were figuring out how to take the Korean won and convert it to some dollar equivalent. And then a lot of those crypto brokers became securities brokers because these people wanted to own the Magnificent Seven. And so you now have this kind of global equity and commodity business that is all dollar denominated and is ubiquitous around the world.

And I think about these regional exchanges around the world that are listing trying to list commodities or securities in their local currency. And it’s like, okay, that’s kind of interesting, but your addressable market is tiny compared to how we’ve dollarized U. S. Dollarized the business. And I can guarantee you after hearing me, you’re going to go read an article in the next day or two or three that says the U.

S. Dollar is at risk of losing its reserve currency status. And I hear that. And now I look at our own business and it’s like, really? Like, I don’t know anybody that wants to buy oil in Korean won or even in euro or in pounds.

I just like what is the alternative when the velocity of commerce, including during a period when we’re pulling back on trade and having these trade conversations, the financial markets have just been dollarizing the world. And I don’t see that it’s I think that all inures to our we’re fortunate we’re headquartered in The U. S. And our product suite is largely dollar based and largely globally distributed. And I just feel like that tailwind is partly what’s been driving us and will continue to drive us.

Chris: Okay. Let’s switch over to the mortgage business. It’s one way you’ve obviously made significant significant bet with the LME and the Black Knight deals. By some measures, that market is half the size it was when you did these acquisitions. Is the addressable opportunity that you thought when you bought those deals still there today?

Do you see some need to scale back ambitions?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Well, actual volume of new loans is down, is what you’re talking about, largely due to current interest rates and supply issues. But we haven’t seen the TAM we don’t think the TAM has shrunk. And in fact, we’ve probably grown our TAM because we’ve acquired Black Knight and entered deeper into the business in terms of servicing mortgages. And our business has done well. It’s outperformed the number those kind of numbers because increasing we had I think we signed up in the first quarter twenty new clients who won our underwriting platforms.

We have 100 clients that were on our systems that we cross sold to other businesses. And so we do see this adoption of a digital end to end ecosystem and moving away from wet signatures on paper documents in the mortgage space and digitizing and standardizing the data sets and storing the data in digital vaults, in transacting with the marketplace digitally as opposed to sending boxes with barcodes on them. And so that trend, if you will, is real. We see it and it’s not necessarily related to the underlying transactions. I think we’re spring loaded when we still look at the demographics of this millennial population, particularly in The U.

S. That family formation is going on and wealth has been created and people want in a work from home environment, they want to live where they can unless you work on Wall Street. They want to live where you can and have an extra room that you can use as an office, that kind of thing. So we still see the pressures that are there, that are just kind of waiting for an equilibration of mortgage rates and supply.

Chris: Okay. To your point, you’ve been you’ve gotten a couple of very marquee clients, whether it’s JPMorgan, Fifth Third and recently United Wholesale Mortgage onto the platform. Can you talk about what the adoption curve for these clients look like? What do they typically start with? Ultimately, what are they going for?

And then how do you think about timeline to scaled monetization? Are we talking about quarters, years? Kind of love your view.

Jeff Sprecher, Founder, Chairman and CEO, ICE: Yes. Well, it’s interesting because senior management says, hey, we’ve got to digitize and we’ve got to take costs out. It could cost up to $10,000 for the infrastructure to create a new mortgage. It’s probably no less than $6,000 and maybe more than $10,000 depends on the company. And so if you could automate that and largely that’s a lot of manual labor.

And so if you could automate that, you can take those costs out. So senior management is very interested in doing that. What we see, though, is it takes time these are heart and lung transplants for major lenders. And so it takes time to put the system in because it talks to a lot of other systems often in a lender. And it takes time to train people.

And it takes time what is fascinating to me is it takes time for the people that are using the new systems to feel confident in using the new system. So for example, one of the neat things about this space, mortgage, is that it’s very regulated, right? So there’s federal home regulation, there’s state regulation, there’s county regulation, there are all kinds of regulations locally about permitting and construction and what have you. And so but they’re all regulations are written down. So we’ve been able to take AI models and unlike trying to learn the English language and figure out George Washington’s race or what does a teacher look like because it depends on what country you’re in.

In this space, it’s kind of a defined language. And so the model has learned the language. So we can tell an underwriter, for example, or somebody working on a mortgage, we say to our clients, we can take an hour’s worth of work that you used to do manually and we can have that automated and do it, let’s say, in fifteen minutes. And then we go we deploy this and we go back into the company and the senior manager says, well, wait a minute, we thought we were going to be doing this in fifteen minutes down from an hour and it’s actually taken an hour and fifteen minutes. And why is that?

Well, they do the fifteen minute AI model and then people don’t trust AI models, just like I was saying before. So then they go do all the manual work and then they compare the manual work to the AI model. And I feel like one of the things that’s happening, and maybe this is the use of AI broadly, is it’s going to take a while before you have enough use cases that you build confidence that you’re going to actually let that make a decision where you have your own money at risk. I feel like you guys all pick stocks and research stocks and what have you. And I’ve heard people say, oh, you’re all going to be out of business.

But the reality is, like I don’t think any of your companies are going to let a model pick a stock and put the money, put the capital at risk, right? You’re going to use the model, maybe help you come up with some ideas, And then go validate those ideas yourself. I don’t know at what point, and maybe never. Right now That’s my hope. Yeah, right now the confidence level in AI, I hear these people say, oh, you’re never gonna hire another computer programmer.

I got we have just under 3,000 engineers working on this mortgage infrastructure. Like it’s a massive, scalable, huge network infrastructure that we’re building. And we use AI to write code and then we have a human being goes line by line through the damn code before we would ever deploy it. And so is it helpful? Yes.

Are we ignoring it? No. Has it given us these benefits where 3,000 engineers are not coming to work tomorrow? No. And will it ever?

I don’t know. So that’s a long winded way of saying the deployment is going to be gradual. And it’s going to have to build confidence.

Chris: Yeah, okay. I would say like your strategy, you talked about building sort of an end to end platform vertically integrated across the entire mortgage ecosystem. It feels like Rocket Mortgage is doing something similar, particularly post their recent acquisitions of Blackstar, Mr. Cooper. Maybe just talk about how you view Rocket as a competitor.

What do you see as your greatest differentiation to that company?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Well, I think anyone looks at what we’re building and says we have an end to end software package, then they’re missing what we’re trying to do. We’re actually building a network. It happens to have software on it. The New York Stock Exchange is a software. Like when you’re interfacing with NYSE, you’re interfacing with the software.

When you’re buying this Brent crude oil, you’re interfacing with a piece of software. It’s the value of the New York Stock Exchange is that thousands of counterparties are also attached to it and are using the software simultaneously to develop a bid offer spread. What we envision with mortgage is we’re simply building a consumer interest rate marketplace. And its value will be on the thousands of other mortgage counterparties that are there. And yes, they’re going to be using the software to underwrite and manage mortgages.

But the reality is they also need to work with each other. This is not a the industry in The U. S. Has a lot of counterparties mortgages change hands and servicing rights change hands. If nothing more than Fannie and Freddie buy the mortgage and package them into mortgage backed securities.

But those data files, which used to be sent around in boxes, don’t need to be sent anywhere. The digital record is in the network and the permissioning is changed to have access to it. And the overlay, to look at the entire industry, these models that I’m talking about, which can now just scan an entire industry, are more valuable the bigger the number of market participants. So I think we will have clients that want to have their part of their own tech stack to run part of their proprietary business. But if you want to be a part of the market, then I think you’re going to join our network.

And that’s great. And I think then the value what ICE will I’m hoping a few years from now, we’ll be talking about the mortgage network and not the individual components, which just like we don’t talk about there’s 20 software packages running around the New York Stock Exchange, preopening auction packages and limit up, limit down packages and all kinds of software that we just take for granted that that’s how a market works. And that’s where I’m hoping we’ll get to in mortgage. It’s the network effect that will make it valuable, not the software.

Chris: Okay. Just back to your point around ICE’s business has outperformed the overall market decline. Part of that has been it feels like an incremental you’ll be making more money per loan, per closed loan. So just think about it. Just can you talk about pricing power of the business as you sort of build this network over time?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Well, as I if we take as a pro form a given that it costs $10,000 to write a mortgage, to the extent we can automate all that or the bulk of it And then network it so that the person providing a flood report, the title insurance company, the credit reporting agency, the employer that may send a W-two to the borrower, condo association documents, everything that goes into people thinking about an underwriting. To the extent that’s all networked, we’re going to take those costs way down. And our view is that people will pay us a portion of that savings in order to do that. And that’s the but the reason that we think they’ll come to us to do it is that all the counterparties that I just mentioned and anybody in the industry will be on that network. So I think we have 75,000 notary republics on the network.

I mean, at some point, just it’s kind of just a ubiquitous thing that will have saved everybody money, but will have made money for our shareholders we were the ones that took all that cost out on their behalf.

Chris: And then on the mortgage business, obviously, lot of the capabilities you’ve acquired them so far. Do you think there are still major parts that you need to do more acquisitions to further the network? Or are we talking more about organic strategy going forward?

Jeff Sprecher, Founder, Chairman and CEO, ICE: It’s hard to say. First of all, we have all the major pieces. And so that’s the good news. We also have thousands of third parties that are using our network. Why do they use our network?

Well, once a major bank once we’re inside the mortgage operation of a major bank, a new market participant who wants to digitally send something around mortgage or take something around mortgage from that major bank, the bank doesn’t really want them showing up and talking to their network people and trying to figure out how to get through the firewall. They just say, hook to the ICE network. There’s a level of trust, a cyber overlay over us. We’re a trusted vendor. So we can manage that to and fro from them.

I tell you that because it means we see sort of every new startup. We see every change that’s going on in terms of what’s being digitized and who the preferred vendors are. And all those people that are using our network pay us a fee to have access to it. So there may be bolt on things where it would be better if we owned it on behalf of the industry and made it an industry utility. And so we have those conversations every day.

But those are kind of nice to have other than must have. I also think we have about 5,000 clients that use us to price their mortgage backed securities. So we’re very deep into a lot of you in the audience, your companies to the extent you have fixed income platforms. And that audience is looking also for help in organizing and pricing mortgage backed securities and structures and things that can evolve. There’s a big movement or at least a conversation with major lenders to have offer a portable mortgage where you and I as mortgage holders could take our mortgage when we sold the house if we like the lender and we like the price.

And that means you’ve got to change the mortgage backed security that it comes out of. How do you do that? Do you substitute collateral? Is there other is there an economic deal with the MBS holder? Like what but none of that can be done if we’re just shooting boxes around.

So I do think there are solutions that people are talking about and building, entrepreneurs are building and others have in that whole secondary market ecosystem that are interesting, that could be acquisition candidates. Good

Chris: stuff. Let me pivot to audience questions because there’s quite a few that’s come in. Maybe the first one is some of your peers have made a big push into retail trading. Is this a priority for ICE?

Jeff Sprecher, Founder, Chairman and CEO, ICE: It’s a good question because when Sam Bankman Fried was around, I got very worried that FTX was going to roll up the market from a retail standpoint and was going to digitize and tokenize the trading of everything and that we were going to look like a legacy company. And under by law, under U. S. Law, we’re not allowed to create, for example, NYSE Direct. It’s not that we’re idiots.

We’re we have an unbelievable like we’re known as being financial services technology, but we’re not allowed to be a broker dealer, for example. It was unclear to us whether crypto was were securities or not and whether And so we were prohibited from doing that. So there was a period in time when I was very nervous about it. And you may recall we were flirting with eBay. We were looking for who has a retail footprint that the regulators would allow us to own.

Interestingly enough, our shareholders didn’t want us to own it. So we abandoned it. But what we have now, we’ve kind of solved the problem. What we have now is 3,000 lenders that have apps that where consumers are making their mortgage payments or putting out their information to write a home loan. And we’re the white label behind all that.

Like that’s all one system. It’s one database that we see. Like we have visibility now into the consumer. They are not our client. We’re a B2B company.

But we feel much better because we feel like we control the technology. And if there are innovative things that need to be done to help the lender, we’ll just go build them and we’ll push them out. And so we won’t be disadvantaged. And that’s actually a more natural fit for us. We really are a B2B company.

We’re really a network infrastructure company. We don’t have balance sheet risk lending direct balance sheet. And we don’t have those retail customer relationships, but our clients do. And so what we have decided to do is really do better at empowering our clients. And we can do that actually as a result of the mortgage.

Like I say, none of you care about having an app that you can buy Brent crude oil. But you will care about having an app where you can make your mortgage payment.

Chris: Another question. ICE has talked about being late to the analog to digital conversion happening in fixed income trading. Is that still an ambition today?

Jeff Sprecher, Founder, Chairman and CEO, ICE: We were late. I mean, I’m trying to be transparent as to why we’re doing what we’re doing and we were late. And also the problem with securities trading, including the New York Stock Exchange, is that we don’t own the intellectual property. I spent a fair amount of time talking about the Brent situation. We own that IP.

We controlled it. We navigated it. We’ve invested in it, it’s paid big dividends. The weird thing about stocks and bonds is that you all, that my in the audience here create these things and entrepreneurs create them. And then we just are a listing venue.

And there are multiple listing venues around. And so over time, since you don’t control anything, the IP, it’s hard to have any pricing power and prices tends to collapse. We make our money at the New York Stock Exchange because we have listings and because we have data, because we have indices, because we have services that we provide to ETF providers. Like we make money around the ecosystem. But trading?

No. So we were late, but also not particularly ambitious to try to just bust our way in there because we would be number four in a list of three really good, well known competitors. And the only thing we’d be able to compete on likely is price. And that’s just not who we are. Like we view ourselves as a premium brand, not a discounter.

So but I will tell you that if you look at our peers, the bond trading business of our peers in the first quarter are generally flat. A lot of our peers did well because there was a lot of rates trading, interest rate trading, but bonds themselves were generally flat. But our bond business grew 30%. Why is that? It wasn’t because we discounted.

It was because we’ve built a whole bunch of other and by the way, it grew 30% off a small base. So I don’t want to oversell it. But we built an ecosystem around that, that’s a pretty high value

And it is sort of back handing us into a trading business. So I think we found the right place I think we there was a natural place that we would fit, and I think we found it.

Chris: Okay. So you would have been interested in getting bigger in that, say, by acquisitions?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Well, never say never. But we like to buy things where we think if you put them on our network or put them into our tech stack, they would grow. And the New York Stock Exchange, as I mentioned, the ecosystem in there, it’s multiple times bigger than it was when we bought it in 2013, but it’s a completely new tech stack. When we bought New York Stock Exchange, it had 5,000 employees and 1,000 contractors. Today, it has eight thirty.

I mean, it’s a very different business. So if you say to me, are there businesses out there where you could do a similar put technology in, take costs out? Maybe it’s going to be a GDP grower, but it’s going to the bottom line is going to grow much faster than that? Maybe. But I don’t know, those are those don’t fall off the trees.

I mean, moment in time kind of thing.

Chris: Maybe it’s a banker not happy. Can you talk about

Jeff Sprecher, Founder, Chairman and CEO, ICE: We’ve done like I literally think we’ve done 50 M and A or capital markets or disposition transactions. There’s no banker that we know in our space that doesn’t feel like they should hang around our net.

Chris: All right. Can you talk there’s another question from the audience, by the way. Can you talk about the pipeline for new mortgage deals with large banks? How much of the mortgage market is from big banks with, I guess, with internal systems? Yes.

There’s sort

Jeff Sprecher, Founder, Chairman and CEO, ICE: of two things going on. One is we saw the rise of nonbank lending over the last decade or so. And some of that was constrained by Basel rules. And there’s a pretty big conversation about potential changes or relief to those Basel rules to put more lending back into the big banks or at least give them an opportunity to compete for that lending. And so that’s a good thing because those big banks that aren’t on our platform, are thinking about, okay, maybe there’s going to be a different environment here for us and maybe we should invest ahead of it.

So those are the kind of conversations we’re having with people not on our platform. And also for the non banks, they tend to be pretty tech savvy or marketing savvy, to build their position. And they want to make sure that they stay ahead of the curve. And so a lot we’re having a lot of conversation about I mean, I mentioned that we had 100 cross sells of people that were already on our network that decided to take more services from us. So it feels like there’s a brewing competition between new versus old and big versus small and entrepreneurs versus legacy that is fueling an investment cycle, that’s what you see in our numbers.

Okay.

Chris: One more. I think you’ve already answered on M and A. I guess the question is do you intend continue with M and A as a future growth strategy? Or do you desire or do you have a desire and intention to expand your existing businesses?

Jeff Sprecher, Founder, Chairman and CEO, ICE: So we when we bought our latest acquisition, Black Knight, we levered up and we worked with the rating agencies and said, you know, we would want to get back to three times leverage before we felt like we were back to a normal environment. And we announced on our last earnings call a few weeks ago that we’re at 3.2 times leverage. So we’re weaning our way through that leverage. And we announced that we have excess capital now as a result even being at 3.2%. So we started our share buybacks.

So we tend to do our own analysis on what’s the best use of capital for our shareholders. And if we can deploy it to some business that has a high return on invested capital, we would do it. But if we can’t, we also look at our own stock price and say, if we’re undervalued in our own mind to our against our own models, we should be buying our own company. So generally speaking, you see us do a lot of share buybacks with free cash flow. And we only really think about doing M and A when we think that we can get you a higher return on capital through that transaction.

We’ve been pretty disciplined. Our share I mean, I think we’ve have pretty much perfect record on share buybacks. Will look, we’ve grown earnings every single year since we’ve been a public company. So any share buyback we did in the past looks good. It looks like we didn’t screw up.

So as long as we have that track record there, you’re going to see us we’d like to grow the dividend, but you’re going to see us lean more into share buybacks, I suspect, unless and until something comes along that was really sexy that we think we could get you a better return.

Chris: Okay. Just quickly, a couple of questions on your data business. Just given all the macro and policy uncertainty out there, are you seeing any I don’t know, is it hesitation in the end markets, any slowing of sales cycles?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Yeah. No, just the opposite, actually. A couple years ago, maybe eighteen months, two years ago, there was a lot of trepidation. Our data business broadly was growing around 5%. I think last quarter it was like 7%.

So we’ve actually seen more confidence. We’ve had more signatures, new signatures. We’ve had people that we had we could see like two years ago, people were interested and they would get a contract, but they would kind of drag the execution signature out, like waiting for another quarter, bought a wait and see attitude. We don’t feel that now. We feel like we’re engaged with people who want data, information, networking services, access to our markets.

And they’re in real time talking to us about we need this information. I don’t know if it’s the AI overlay. I mean, look, we have a lot of proprietary data to feed models and to do valuations and a lot of strategic data that underpin these markets that are foundational. And I don’t know, it just feels pretty good. Like we have a very nice pipeline and not a lot of hesitation as might be suggested by the question.

Chris: Okay. Feels like within data, connectivity has been a really and you alluded to this earlier on, has been a really source of strong growth. You have a ton of connectivity products, the network, chat, voice. Is there an opportunity to unify these platforms and build out a broader communications business over time?

Jeff Sprecher, Founder, Chairman and CEO, ICE: Yeah. What we’re seeing and we’re putting pieces in place what we’re seeing is a demand for unstructured data to be organized. So things like we all learned to write cursive in school. And there’s a whole generation now that is never going to write cursive. And they type on their phones.

And I think the generation behind them is not going to even learn to type on their phones. They’re going to talk to their phones. And all that voice data is going to that unstructured voice data is going to need to be organized, discerned, and put in buckets that can be searched and contribute to some kind of cognitive outcome. And so we’ve been making a lot of investments in kind of esoteric things so that we don’t we stay at the forefront of the way behavior around financial markets is. We have some joint ventures around turret phones, voice phones, a lot of chat functionality that has robots and AI built into them to make suggestions.

Same thing, our help desk has become very automated with AI tools for customer support. We see that as an evolution of the way the markets are going, partly because of what we think your children are going to be doing. And anyway, I’m very proud of the team. Working with unstructured data at scale is a real skill. It is a database skill that we really have.

I mean, if you ask if I’m buying ICE, what am I buying? You’re really buying database expertise coupled with high velocity networking, secure high velocity networking. That’s what we do. Whether it’s a mortgage or the New York Stock Exchange or Brent crude oil or what have you, it’s all the underpinnings to the people that built all this is just high velocity database at scale. All

Chris: right. As we round out the clock here, maybe just a longer term question here. The company celebrates twenty fifth anniversary. Maybe what’s your vision for the next decade? And then obviously you’ve done a great job as founder and CEO, but are curious how you’re thinking about planning for leadership succession over the next

Jeff Sprecher, Founder, Chairman and CEO, ICE: Yeah. Let me start with that. I do think my successor is somebody in the company. I mean, that’s our goal is that we’re training the next generation. We’ve made a lot of you may have seen, if you follow my company closely, Stuart Williams, who ran our energy business out of Europe, now in headquarters as the Chief Operating Officer Ben Jackson, who’s our President, who is really overseeing a lot of our business as the Chief Operating Officer as well, was running mortgage.

Lynn Martin, who ran our data business is now running equities. Chris Edmunds, who ran our clearing business is now running data. So we the head our General Counsel of the New York Stock Exchange is now running our clearing business. So we have moved a lot of people around in order to give them expertise, to keep them engaged because we don’t want to lose anyone, give them New Hills to climb, but also to help build a team that can work together to succeed me. So that’s my hope is that we would never you will know you already know the person who will replace me is our goal.

But also, I don’t know, I just I feel like the business is telling us where to go and the business is still better, faster, cheaper, more widely distributed, more networked, more connectivity with people, more demand for information, more automation in the way information is handled. Like that’s just what we do. And it just I don’t it’s like a magnet. It just keeps pulling us. And fortunately, it’s been of all the businesses that you’ve asked me about, it’s pulled all our businesses in that direction.

Chris: Great. I think with that, we’ll end it there. Thank you very much, Jeff, as always.

Jeff Sprecher, Founder, Chairman and CEO, ICE: Great. Thank you, Chris. And thank you all.

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