洲際交易所 (ICE) 2010 Q1 法說會逐字稿

Good day everyone and welcome to the first quarter 2010 IntercontinentalExchange earnings conference call. Today's call is being recorded. At this time I would like to turn the presentation over to your host for today's call, Kelly Loeffler, Vice President of investor Relations and Corporate Communications. Please proceed.

Good morning. To obtain a copy of the Company's first quarter earnings release and presentation please visit the Investor section of our website at theICE.com. These items will be archived and our call will be available for replay. Before we begin please be aware that our comments may contain forward-looking statements that represent our current judgment and are subject to various risks, assumptions and uncertainties as outlined in the Company's filings with the SEC, including our Form 10-Q, which was published this morning. For a description of the risks that could cause our results to differ materially from those described in the forward-looking statements, please refer to these filings. Actual results may differ materially from those that are expressed or anticipated in these forward-looking statements. We will discuss adjusted net income, operating income, operating expenses, margins, EPS and EBITDA.

These are non-GAAP measures that exclude certain non-operating charges that we believe are not reflective of our normal operating performance. While our results this quarter did not include non-GAAP adjustments, our results for the quarter of 2009 included certain non-recurring charges. This morning we will refer to adjusted first quarter 2009 results as a basis of comparison to the recent quarterly performance. The reconciliation of these non-GAAP financial measures to equivalent GAAP results and explanation of why we deem these non-GAAP measures meaningful appear in our earnings press release. With us today are Jeff Sprecher, Chairman and CEO, Scott Hill, Chief Financial Officer. Chuck Vice, our President and COO, is in Chicago meeting with the Climate Exchange Team this morning. At the conclusion of the prepared remarks, we will take your questions until 9:30 A,M. I will now turn the call over to Scott.

Thank you Kelly. Good morning and thank you all for joining us today. The first quarter of 2010 was ICE's best quarter ever in terms of revenue, volume, operating income, and net income. Due to our global positioning and unique business mix we continued to benefit from a number of long-term secular trends. And last Friday we announced the acquisition of the Climate Exchange, further diversifying our business on a product, geographic and customer basis, while ensuring that the leading emissions market will now be a permanent part of ICE's growth story. I would like to begin our discussion on slide four, which shows our track record of earnings growth consistency. The revenue and operating income growth we've delivered in each year since 2005 was enabled by our strategic vision and global business model. We've grown revenue by nearly 60% and operating cash by over 75% annually since 2005. And in the first quarter this year we grew revenues 22%, delivered the highest net margins in our industry, and achieved 50% growth in operating cash flow.

Our performance continues to distinguish ICE from our peers and demonstrates the value we are creating for shareholders. Not only have we positioned ourselves to benefit from a number of near- and long-term opportunities, but we have also built the business that has proven able to withstand changes in the business cycle. The results has been industry leading financial returns even as we invest to expand our diverse portfolio of assets. Now let's turn the our first quarter 2010 results on slide five. The first quarter of 2010 represented our sixth consecutive quarter of record quarterly revenues. Our consolidated revenues grew 22%, to $282 million over first quarter 2009. Net income grew 26% to a record $101 million, and our tax rate for the first quarter was 34%. Diluted earnings per share rose 25%, to $1.36. Moving to slide six, I will detail the components of our revenues and expenses. Starting on the left side of the chart, first quarter transaction and clearing revenues rose 23% to $251 million. This includes $123 million from our futures segment, $86 million from OTC energy business and $43 million from OTC credit execution and clearing. Market [data] and other revenues totaled $31 million.

Shifting to the right side of slide six, first quarter operating expenses increased 12% year-to-year compared to adjusted 1Q 2009 expenses. Disciplined investment and healthy revenue growth has produced steady increases in our operating margins. Our first quarter operating margin improved to 58%, compared to an adjusted 55% in the first quarter of 2009. And our non-brokerage operating margins improved to 67%. We are driving operating efficiency as revenues grow, which translates into improved margins and solid cash generation even as we invest in new businesses. Let's now turn to slide seven, where I will detail the first quarter performance of our global futures business. Total futures revenues were $123 million, up 25% over Q1 2009. Average daily volume was 1.3 million contracts, which was up 28% over last year's first quarter. This record performance was enabled by the continued expansion of our European energy market as well as the recovery of our agricultural commodity market.

As a reminder, last year's first quarter was a record quarter for ICE. Our objective is not to grow every other year, but to consistently deliver growth on top of growth every year. Continuing that trend, yesterday we reported a 41% increase in April 2010 average daily volume for ICE's futures market, including record volumes for ICE futures Europe. Year-to-date through April, our aggregate futures average daily volume is up 32%. Next, on slide eight, I will walk through the performance of our OTC business for the first quarter. Total OTC transaction revenues rose 22% to $128 million, our seventh consecutive record quarter. This was largely driven by our OTC energy market with average daily commissions of $1.4 million, up 27%, from Q1 2009. Our OTC oil and power revenues continue to come in at record levels due to strong demand for clearing. This demand for cleared products, coupled with the growing contribution of new products introduced over the past five quarters, has helped us establish an increasingly diverse platform.

The first quarter was our strongest quarter in natural gas since 2008. Lower volatility during the quarter was overridden by improved credit conditions and the steady return of hedgers to the market. Natural gas is a key product for us and we expect that it will grow over the long-term as that market continues to globalize and the number of uses for natural gas increase. That being said, in 2007, 73% of our OTC energy transaction revenues were driven by natural gas. In the first quarter this year, it comprised 60% of those revenues. So you can see that the new product rollout over the past 18 months has increased product diversification. Each of our major OTC energy markets, gas, power and oil, is turning in consistent growth. In April our OTC energy business extended its solid performance with average daily commissions of $1.4 million.

Turning to our CDS business, revenues totaled $43 million during the Q1 up 13%, compared to revenues at $38 million in Q1 2009. This include $31 million from Creditex and ICE's global CDS clearing business. Creditex electronic transaction services accounted for 43% of our first quarter Creditex revenues. Where electronic trade processing continues to yield attractive margins. While growth in the brokered CDS markets we serve remains muted, we continue to invest in innovative electronic capabilities and drive improved efficiencies, both of which contribute to relatively solid operating margin even in periods of lower revenues. These investments, coupled with our leadership position in US and European index and single name products, position us well for the eventual improvement of CDS markets. With regards to CDS clearing activity, recent volume has been driven by the launch of single name CDS contracts where our customers are moving their existing open interest into our clearinghouses.

Our 2010 guidance anticipated that dynamic, noting the expectation for a gradual ramp in revenues throughout the year as we expand our product offerings, add new customers and work our way through the backloading of existing trades. While banks, which have the greatest natural exposure to CDS, have led the way with clearing, we have also worked closely with our advisory committee, made up of representatives from [buyside] firms to develop the leading buyside solutions. We expect to launch our European buyside offerings as well as clearing of sovereign CDS in the near term, subject to regulatory approval. The CDS market continues to face structural reform, similar to what we saw in the energy markets in 2002. Again though, despite being in the early stages of this investment and the challenging market environment, our CDS clearing business is already contributing to the bottom line. Importantly, this investment positions us not only as the leader in the CDS market but also strengthens our ability to serve the much broader OTC market as it continues to evolve.

I'm going to wrap up my comments on slide nine with and overview of our acquisition of the Climate Exchange, which we announced last week. Due to UK takeover rules, we're precluded from saying much more than what we announced previously. We believe this combination is attractive both financially and operationally. We offered GBP7.50 per share or roughly GBP395 million in total. The transaction will be all cash, including $220 million drawn from our lines of credit and the rest from available cash. Notably, even after this transaction, our cash balance will remain above $200 million, we will have over $200 million of available capacity in our lines of credit and our leverage will remain low. Our valuation focused on the Climate Exchange is well established market leading European emissions business and the synergy that we believe exists with the combination of our two firms.

We took into account the uncertainty regarding the implementation of the US Cap and Trade program in making the acquisition and consider growth in global emissions market as upside opportunity. We are confident that the deal will have a negligible impact to earnings for the remainder of this year, a modestly positive impact to 2011, and most importantly, provide another attractive long-term source of growth with attractive financial returns for our shareholders. We look forward to being able to provide more information once the transaction closes this summer. I encourage you to refer to this morning's press release for further details on our quarterly performance as well as a couple of updated guidance points for the balance of 2010. We filed our 10-Q this morning as well as a new shelf registration to replace the existing shelf which expires this year. I will be glad to address your questions during the Q-and-A. Jeff, over to you.

Thank you, Scott. Good morning to you all. I'd like to first complete our discussion of the Climate Exchange acquisition, and then I'll update you on our global business by providing some context for the tremendous results that Scott just presented to you. As many of you know, ICE and the Climate Exchange have long been partners. The successful business that Richard [Sandor] and his team built is the result of a decade of dedicated research, investment and execution on a global scale. This intensive effort has resulted in their being a leader in what is a very competitive space. We began working with the Climate Exchange in 2003 and supported the emergence of this nascent market. We are pleased that we'll be able to continue working with Dr. Sandor following the close of the transaction. Over the past several years, emissions markets have proven to be among the fastest growing, and we believe they continue to hold significant potential over the longer term. For those not familiar with the Climate Exchange's business, it's a leader in the operation of traded emissions markets. These markets include the European Climate Exchange, the Chicago Climate Exchange, and the Chicago Climate Futures Exchange. So the team has established a broad geographic reach and deep market penetration.

As Scott mentioned, and it's worth highlighting, our acquisition does not represent commentary on climate change policy or the probability of legislation surrounding climate issues. But I would like to recognize that because of the European Union's emissions schemes, which has been implemented in a thoughtful, phased and market-based manner, Europe has established a healthy environment in which these markets have grown and thrived. As a result, European customers, including carbon intensive industrials, can put a price on carbon relative to other choices as they seek alternative energy solutions in a market-based environment. The addition of emissions markets further diversifies our product set and adds both an important industrial-commercial base in Europe and longer term exposure to Asia, while it offers us optionality around US market developments. This transaction is representative of the deals on which we like to focus, those that provide exposure to global markets with growth potential and those that offer attractive returns on investment. We are committed to executing on opportunities to integrate our Companies while we continue to grow the market, and we look forward to reporting back to you on our progress in this regard as soon as possible.

I would now like to turn back to the discussion of the business that has delivered the results that we presented here today. I will begin by repeating a question that we have been asked every quarter since our initial public offering in 2005. And that question is, can ICE continue to grow? We have shown that the answer to be a consistent yes, and we have taken a deliberate, strategic approach to ensure that we deliver. This morning I will briefly review a few of our growth drivers and our strategy. If you will follow me by turning to slide ten, we've listed some of the basic drivers that we believe define the broad opportunities in the derivative space. These drivers are long-term and secular in nature. And they are the building blocks of an evolving market structure, shaping everything from an addressable market size to the regulatory framework in which markets operate. First is the sustained role that commodities and derivatives play in global markets.

This trend has continued for over a decade and it is based on two key factors. One is the rising demand for commodities by a steadily growing middle class. And the other is rising demand for tools to hedge or gain exposure to this very phenomenon. Emerging economies cover about half the world's population where living standards and the resultant demand for goods are steadily rising. We are seeing this in our commodity markets, but this trend is manifesting itself in a number of ways. Anecdotally, in a recent Economist article on sugar, it was noted that the increasing wealth in developing countries has raised demand for small luxuries such as processed foods. As a result, the USDA estimates that worldwide sugar consumption is rising, including a three billion pound increase in sugar demand this year alone. Higher living standards translate into greater demand for commodities. As we have seen, cyclical disruptions in any economy can occur. However ICE's consistent performance and resiliency through the business cycle resulted from our positioning at the intersection of larger secular trends.

The recovery of western economies should further this upward momentum and provide a tail wind to capital market activities including our derivatives markets. This year to date a modest increase in confidence in economic recovery has improved market liquidity, and driven gains in our commodity volumes. I want to move on to another multi-year trend that we've spoken about many times, which is the shift towards greater price transparency and clearing. This move shows few signs of abating. The most obvious near-term example is that global financial reform is calling for an increase in market transparency and an increase for the use of clearing. In addition to providing opportunities for our business, we believe the adoption of financial reform will bring important certainty to our markets and to our customers. I would like to point out that we have demonstrated that this transition towards clearing and automation can and has taken place well in advance of legislation. However we are well positioned to support an expedited market transition due to the technology and clearing assets we own. This leads to a discussion of the tools that we have developed to position ICE at the intersection of secular trends and within this dynamic policy environment.

We believe that these assets are unique to ICE and a few of these are listed on slide ten. To our knowledge, no other exchange possesses such a broad range of market infrastructure assets. These include the automation of key over-the-counter processes for both the buy side and the sell side, front and back office connectivity, trade automation and clearing and trade repository capabilities. Most of the new legislative proposals require some or all of these tools to reduce systemic risk. Moreover, the development of these tools provides us with a unique set of assets to leverage as we address new markets. The most recent example of our success is in clearing CDS, an initiative of which we are all extremely proud. We continue to invest in billing out our OTC clearing platform and we have related initiatives underway. We are continuously adding new products, adding new buyside customers and enhancing our model. As a result, ICE leads the industry on virtually every metric. We've cleared $8 trillion across more than 200 index and single main contracts that we list in the US and Europe. ICE is supporting evolution in these markets by bringing our solution to existing market structures and then working with market participants to ensure the overall industry benefits from change.

Turning now to slide 11, I will touch on our success as an industry consolidator and as an innovator. We employ a rigorous framework for evaluating transactions and delivering on their potential. If you think about the transactions we've completed and the infrastructure we've developed in the past several years, it's difficult for us to identify any one asset that hasn't contributed to the strategic position that ICE has achieved by investing ahead of the curve. Over a decade ago and before the recognition of clearing and electronic trading, we saw an opportunity to transform the energy swaps markets. ICE continues to invest the necessary resources to build our infrastructure to serve these and other swaps markets, which are several times the size of the exchange traded markets. Our track record in the over-the-counter markets has continued now, with our seventh consecutive record revenue quarter. Turning to slide 12, you can see our solid diversification across customers, products and geographies as a result of our investments in markets globally. This diversification shows how we've positioned ICE at the center of long-term trends that we have been discussing today. With clearinghouses and multiple jurisdictions serving futures and over-the-counter asset classes, ICE has quickly become one of new leaders in the provision of risk management and market structure services through innovation, technology and in understanding of our customer requirements.

I will wrap up on slide 13 by highlighting how we've positioned the Company to capture positive secular trends. The first of these is to ensure that we maintain healthy exposure to areas of market expansion to drive earnings growth. In some cases this may be geography or product exposure, as we discussed on last quarter's earning call, with, for example, our oil products being driven by strong demand for energy commodities in Asia. ICE has also demonstrated that its strategy of extending our leadership in helping to organize and standardize global over-the-counter markets. We're leveraging our decade of experience in building out infrastructure to serve OTC markets and we've demonstrated the growth potential where clearing, transparency, automation, and increased regulation has been added. Over the past eight years we took the over-the-counter energy markets from being 2% of contracts cleared to 97% cleared. At the same time revenues grew six-fold, markets recovered and many new products were introduced. The payoff has been larger, safer markets where more trading and more risk management opportunities exist today than many thought possible just a decade ago.

Technology has been a core asset of ours since our inception. We began with the concept that modern technology coupled to the internet could transform system performance, efficiency, and distribution. And today that's playing out. ICE maintains its multi-year lead in being one of the fastest, most reliable and feature-rich trading platforms. Its flexibility in being delivered over the web enables our markets to be distributed to customers in new geographies quickly and cost efficiently without that expense that hard line networks require of customers. Conversely for [algorithmic] customers who co-locate, we have established on of the leading co-location programs, and our technology team works closely with them to ensure that our services are response. At less than three milliseconds, our round trip futures execution times are now twice as fast as our major competitor. This leadership has been driven by our work in translating customer requirements into technology requirements. And finally, our intense focus on technology has enabled us to deliver risk management solutions quickly and effectively. In the space of just two years, ICE has leveraged this capability by building two clearinghouses, one in the US and one in Europe, both of which have become leaders in their respective markets despite the existence of older and larger competitors.

ICE is a growth and results focused Company. We have a commitment to delivering the products and services that our customers are require to manage their business, and we have a commitment to shareholders to grow our returns. We aim to generate double-digit top and bottom line growth over the long run by executing on the items that I have discussed here today. First, growing and developing our existing business while we address new market opportunities. Second, we focus on generating operating and capital efficiencies by maintaining expense discipline and generating investment returns that are above our cost of capital. And third, we focus on a culture of integrity, customer service and innovation.If we do these things well we believe we will continue to out-perform. Let me say that on behalf of all of my colleagues, I would like to thank our customers for trusting us with their business last quarter. And again, I want to thank the entire ICE team for their hard work in meeting the objectives that we laid out this quarter. I'll turn it now back to April, our operator, to moderate the Q-and-A session.

Thank you. (Operator Instructions). We'll first hear from Howard [Tien] of Credit Suisse --

Good morning.

Jeff, on financial services reform, you noted broader reform could certainly help expedite a push to solve problems I guess you and ICE already serve. With that as a backdrop, could you walk through some of the puts and takes as you look at legislative proposals that sit on the floor today and the flurry of amendments we have a list of in front of us.

Sure. I'd preface that comment -- I'm not sure I know a lot more than most of you on the call because it's an incredibly dynamic environment. In that regard, I think we're viewing the process in the United States Senate right now, where US financial reform, to be dynamic and we would expect there will be a lot of amendments that will be dealt with on the floor over the next few weeks and a lot of changes made to the legislation. So we are not necessarily looking at the current drafts in the Senate or the bill that came out of the House as really being the final say on what will happen. That's why I think, Howard, we made more higher level statements in our prepared remarks that, broadly speaking, the trend is to use more clearing to provide more transparency, potentially pre-trade and then post-trade through trade repositories. And as you know ,we have trading platforms in both futures and over-the-counter markets. We have clearinghouses in various jurisdictions that serve both futures and over-the-counter markets. And we have the leading energy trade repository in the form of our e-confirm system. So all of that, I think, broadly bodes well. We just shift a little bit to Europe. Europe, the process of adopting financial reform is slightly different. The European Union has been circulating concepts and drafts to build a consensus between the member states with an expectation of trying to pass something by the end of the year.

There, we are quite pleased with what we've seen so far. They've started by a look at clearing infrastructure and they've concluded broadly the same thing that we've concluded, which is that it would be a mistake to interlink derivatives clearinghouses. That will be not much different than inter-linking a bunch of banks with derivatives on their balance sheets. Those of us that are in the clearing and markets structure business have been successful at educating people to make that point. I also think that Europe is taking a slightly more measured approach than in the US and part of that is just because the process is one of consensus building behind the scenes. So I do expect that the European legislation that's ultimately passe and US legislation may look slightly different and that may affect business and where it resides, so we are obviously are in a good position since we have a global footprint.

Thanks that's a helpful update. And I guess as a follow-up to that, Jeff, anything you and the team are more concerned about as you look at those proposals ahead of us.

Not really. I think most of the kind of technical issues that we had concerns about got fixed in the House bill and translated into the Senate bill. So we feel like at least the drafts that are floating around today are a net positive for us.

Okay, thanks. And then just a quick follow-up on the core OTC energy business as you grow and diversify that franchise. Just curious to get your thoughts on how penetrated you think we are amongst the universe of commercial players that are out there. Thanks.

Sure. I think it runs a range. And starting with natural gas, where ICE has been very involved in now about ten years in the United States, I think we have gotten pretty heavily penetrated. Remember that these are over-the-counter products and they're governed by the [CFPC] through a regulation of our platform that requires you have at least $100 million in assets or $10 million in net worth to participate. So there is almost no penetration in any kind of retail or even small business desktop. And that's by regulation. These contracts may evolve more into futures-like contracts, in which case there would be a tremendous amount of additional penetration possibility in terms of sheer numbers as we moved into smaller entities. In electric power, in the US, that is really a merchants market. It's a utility market. We don't really have algorithmic traders in there yet. We certainly don't have retail or even small business. It's a young market because the US power markets are just deregulating and still in a multi-decade process of that.

In the oil markets there is -- the penetration is very, very small. The oil markets have not in the past really focused much on credit because they involve large sovereign countries and large global energy firms and global banks, and so credit up until this recent crisis had not been an issue. You are seeing that the techniques of using clearing as credit amelioration is now coming into vogue in that market and we are very, very early. So then if I look at Europe and Asia, on the regional products there are gaps in power and coal and other related things. It's very, very young. So long winded way of saying we try to say in our prepared remarks that we've positioned ourselves at what we believe is the early stage of a very long-term and very global trend for growth in using energy commodities as hedging tools.

Thanks and congrats on the strong results

Thank you.

(Operator Instructions). Next we will hear from Michael Kerry of Deutsche Bank.

Thanks. Good morning.

Jeff, you gave the big picture overview, and I think it's one of the things that everyone struggles with with you guys because it seems like each year you are establishing new records. But I think when you look at the core business and focusing more on the futures side, when you look at the growth and the volumes whether over the past couple of years, but particularly recently, is there any way to quantify or give any granularity on how much of that is being driven by new users? Particularly when you look outside the US?

I guess it's hard to get too granular other than we do monitor because we are unique in that we dish our platform up over the web, we give out user IDs and passwords for people that have access to our own screen. And we monitor that and we continue to see strong demands as we have now for many ,many years in requesting new user IDs and passwords. But that's about the best we can do. I think really it is the stepping back and looking at the less granular aspects of where we've position the Company that I think is hard for people to understand sometimes. And that is that unlike a lot of other exchanges around the world that are centered around equities or interest rates or financial products, that tend to be local to that country or region, we've built a business that's tried to pick the products that we think are the most global.

Energy is an obvious one traded in dollars. In every country is denominated in dollars primarily for oil, 24 hours a day it has become a truly global franchise and I believe that a cull agriculture particularly the kind of AGes we have, which are coffee cocoa cotton the things that are not necessarily US centric, or growth drivers and I believe some of the over the counter markets particularly credit, because of the inter-connectivity of the world, people are going to have credit exposure to corporations that are outside of their region. And I think the asset class, credit is as an asset class that will grow, the form of credit default swap maybe materially ditch in the future I think there is a fund men it will reason for global credit toilet be traded that's why we outperformed we are not as levered to the regional products as many of of our peers.

And Mike, just a couple of data points. When I started three years ago, we looked at log-in, the user IDs, we were around 6,000. A couple of years ago it was at 9,000. Last year we passed 10,000.

These are simultaneous log-ons.

Exactly right. So it's how many people are coming into the screen. And this year we're approaching 11,000. That's one indicator. Then the other thing you can't take for granted, is the continued introduction of new products. We're getting good growth from coal and emissions in Europe. I'm sure you saw the press release but we did 24,000 contracts a day in currency futures in our ICE futures US business in the month of April. So we are seeing a growth in users, but we also continue to add products that are in key growth spaces, which helps contribute to the ability to grow quarter after quarter and year after year.

That's helpful. Then just on the -- Scott, just on expenses. It seems like there is a lot going on, whether it's on the CDS side, now with the Climate Exchange. And then some of the new opportunities, particularly with the regulation or the discussions. So just from expense standpoint, you ticked down sequentially, looking forward for this year, any update on that in terms of any noise this quarter? Is this is a good run rate versus what to expect going out?

Look. I mean, we consistently work on trying to drive our expenses down. The tick down fourth quarter to Q1 really had more to do with the fourth quarter than anything else. As you guys know, we did our bonus true-up at the end of last year and had a few other anomalies. From a first quarter standpoint, I think expense came in at levels that if you look at as a run rate, that's probably not a bad way to look at it. I think there is efficiency opportunity around the CDS clearing initiative. We had about $10 million in expense in the fourth quarter. We had around $9 million in the first quarter. That still has a fairly heavy professional services component to it as we continue through the start-up phase and the negotiation, finalizing the negotiation around some of our agreement. But I think there is opportunity for improvement there. As I mentioned in prepared remarks, we clearly think there are opportunities for synergies in the Climate Exchange. And we will give you much more guidance and more detailed guidance on that once we get that deal closed. But look, I think the thing that's impressive about the quarter is our margins at 58% are now back to virtually in line with the other big competitor we've got in this space. And that's an all-in margin. Our margin, excluding that brokerage business, is at 67%. So we continue to focus very much on our expense and our margins even as we do make some substantial investments in building businesses.

Thanks, guys.

Mike Vinciquerra of BMO Capital Markets.

Thank you. Scott, just a follow-up on that last question. The compensation, given revenue performance and given some of the seasonal effects we often have in Q1, very low comp. I mean is there anything you can point to there in terms of bonus accruals? Because obviously it was a strong quarter for you in the topline.

I'm glad you look at it positively, but the $46 million that we had in cash comp, the $12 million in non-cash, so about $58 million in total. Not that far above where we were a year ago, and not really that different than the run rate if you average out the anomaly in the fourth quarter. So look, we -- as I think we mentioned in our queue, we accrued on target for the year in terms of our bonus so there are no unusual items up or down in that number in the first quarter.

Okay. Thank you. And then just shifting to CDS, again, pleasantly surprised there at the ability to return a profit. I'm looking at your minority interest being a positive or I guess a negative from your perspective this quarter, which means you were profitable in CDS despite only a small increase in revenue. Can you touch on what the dynamic was this in terms of getting in to the black? And then also, are you seeing much participation yet in the US market from the buy side, which I think you guys have had buy side participation now for several months at least?

It's a good question. We did make money in the quarter. That line reflects an inception-to-date reflection of the profit that we've made. If you kind of look back over the past year or so we made a few million dollars in the business. I think the improvement you saw in the first quarter is similar to what I had projected coming out of the fourth quarter, which is we were very much in investment phase in that business. We are still in the investment phase but we're now starting to be able to shed some of the legal expenses, to shed some of the consulting expenses et cetera, that were in place as we built the business. So we did see a tick-up in revenue revenue from fourth quarter to first quarter, which was good and helped the profit. But I think more importantly we are starting to be able to shed some of those start-up expenses, and I think you should expect that trend to continue as we move into the second quarter, and certainly into the back half of the year.

Great, thanks. And congratulations.

Next we will hear from Alex [Cramm] with UBS.

Good morning.

Good morning.

I just want to come back to Howard's question at the beginning here on [financial regulation]. I certainly appreciate that it's still fluid discussions and you don't know the exact outcome. But I want to touch a little bit on trading versus clearing, because that's one thing that seems to be sticking here in some of the bills that we seen [it's] actually amended which was [transparency] in trading. So interested to hear how you would approach that, and in particular, how discussions are with the dealers and maybe the buy side. Because from the discussion we are having, it sounds like some dealers are certainly more willing to say, these markets are changing, we may be trading as the way [as the way] it's going. And others are certainly more resistant. So how are you navigating that in your discussions? Thanks.

Let me tackle that by talking. I want to be clear that we really view the over-the-counter markets sort of as two markets. The commodity markets, which include our energy markets and other similar markets like metals and physically delivered commodities, the market place ten years ago recognized that there was no true buy side or sell side. Ir was a many to many market even when it was on the telephone. And a result, our energy markets in the over-the-counter space look a lot like futures markets. And you can see when we publish the breakdown of those markets of who is actually pushing the button and accessing the screen. And it's heavy, heavy concentration by the commercial users that are executing on their own behalf. That's different than financial over-the-counter markets, where there is a true buy side and sell side. And it's partly why when we decided to go into CDS and try to tackle clearing for over-the-counter financial products, we decided to do that in a separate clearinghouse because I really believe that the infrastructure around that clearinghouse is going to evolve. It may ultimately look like futures but right now it doesn't. One of the things that's going on, and the reason Scott alluded there is heavily professional service fees is transition from the sell side.

And the question is, is it going to be a futures style clearing service where basically customers post collateral in the form of cash? And are mark-to-market in cash every day? Or is there going to be some hybrid where customers post other kinds of assets to their prime broker who then will basically lend against those and convert those to cash so that the clearinghouse always be holding cash? And what you are seeing right now is that transition. And I think the premise of your question alluded to you're picking up on some of that. There are some broker dealers that would prefer to move quickly to a futures style model.There are some broker dealers that would prefer to stay a more prime brokerage model. I t think if you were to really penetrate that, it depends on what assets and client bases and history those individual companies have. So as a result of that, I think we are going to end up with a hybrid. That's partly why we have been doing well in CDS clearing, is that we have respected that model and we've been evolving around it. And having to work with regulators to do a lot of messaging on how we transition from what is currently on the books to where we think ultimately regulators want to take this.

And just to add to that, it's specific to ICE's trust governance structure, we have both buy side and sell side committees that report and recommend out to our Board of Directors. We established an advisory committee over the last quarter which includes a buy side firm. So we have representatives from each of those groups who are helping us to build ICE trust. And helping to determine the right solution to serve the market. And t hen just to go back to Mike's question I didn't answer earlier in terms of buy side take-up. We have seen nearly every week this year, additional activity in our buy side solution in the US. And we have now cleared upwards of $700 million of [notional.] So we are seeing progress, and as we have said all along, we expected that to be evolution not a revolution. But we are seeing week-to-week progress and we expect to continue to see progress as we get launched in Europe in the coming months.

Great. Then just a very quick one for you Scott. I t think in the past, and I might have missed this in your prepared remarks, but in the past you gave kind of the percentage growth from some of the new initiatives, like the product that was introduced over the last year. Can you give us an update on what they contributed in this quarter? Thank you.

Yes, the new products that we had in this quarter, you may recall for the year of 2009, contributed a little over $7 million. If I recall correctly, in the fourth quarter, it was about $3.5 million. So it was a good run rate. In the first quarter, they contributed over $5 million. So nearly $0.05 of earnings. I did talk about in my prepared remarks, the additional diversification we're getting in our OTC business, the fact that natural gas while still growing has become a smaller part of that portfolio. That's largely due to the many new products we've launched in oil and in power, and those products continue to contribute not only to the topline but importantly to the bottom line in a very solid manner.

Excellent, thank you.

Chris [Brensler] of Stifel Nicolaus.

Thanks, good morning.

Good morning.

Follow-up on an earlier question, when you were talking about the growth opportunities outside the moe developed markets in the US and Europe. Any sense of how much of your growth is coming from areas like Asia? I think discussion on unique log-ins and user names and passwords, do you have any idea how those break out? Or if you can actually track where those users are coming from just to give us a sense of how much of your growth is coming from non-traditional markets?

I wish I could. It's hard. I know some of our competitors tried to break out the hours that they receive of volume as maybe a proxy for where volume is coming from. We don't necessarily look at the markets that way, because what we have seen, is that the people that are sort of the merchants that are penetrating, particularly let's say Asia as emerging market, tend to be westernized companies that have operations where they are going global. And the hedging that they do may come from any one of their offices around the world. So we strongly believe that our outperformance is coming to a large degree from these emerging economies as they demand the products that we have on our platform. But the actual trades and where they are entered and where we recognize the revenue, comes from all around the world. So it's very, very difficult to give you a good answer.That's why we talk a lot at high levels.

That's just part in parcel having a global marketplace.

Yes. And I will tell you we continue to invest in obviously our Asian footprint and products for Asia and connectivity for Asia and our office in Asia., obviously. But very, very hard to say beyond that.

Okay. A follow-up question on the regulatory front. It seems like -- you mentioned th net positive. I would agree. But is there any areas you think you could expand into that would better position ICE to take advantage of the new regulatory environment. It seems like your Company from a management standpoint and from a products standpoint, you have some of the pieces in place, but is there anything else you think you could use to take advantage of that, something that you could potentially add?.

No, amazingly we sit here today feeling like when we go through every part of the supply chain from a technology and risk management provision and then look at the various asset classes that may be most affected, we feel like we have a solution for almost everything. I think it's under appreciated that for example, we have a product called ICE Link which we acquired in the Creditex acquisition, which is network that is hooked to the buy side and sell side, hundreds and hundreds of desks that give us straight-through processing to put transactions through, whether they are conducted electronically or on the telephone, whether it is pre-trade or post-trade. I think people don't really focus much on our e-confirm platform, which is the trade repository for most of the energy market around the world. And increasingly, regulators have recognized that we have a data base here that has most of the energy business that's done around the world, including done by our competitors in one data base. So the combination of the obvious things we have, which are OTC trading platforms, futures trading platforms, OTC clearinghouses and futures clearinghouses. And you couple that with connectivity and trade repository, we really are well positioned, I believe.

How much of a risk do you think the open access to OTC is in the current regulatory reform? Is that likely to be part of the final bill in your opinion?

In the United States I suspect it will be. Less sure about that outside the United States. I think that it's why we designed our ICE Trust the way we designed it. We designed it specifically to be an OTC platform that's open. Most of the transactions that are coming into ICE Trust right now are not done on our own platforms, they are done on other platforms. It really does have connectivity to multiple platforms right now because of the way we've hooked the trade work close together. We think that while regulators may put that into the statute, it's already happened in that regard. In energy, we take trades from brokers and other people as does our competitor. Many, many people have tried to launch electronic platforms, including our main competitor and some of the large brokers. Because the over-the-counter energy markets and commodity markets are so broad and so interrelated and so diverse with no one group of customers that dominate the business, no one has been able to do that just because of the network effect. Unlike equities, which a lot of people think about when we talk about open clearing, which where most order flow goes through a handful of brokers and a small number of algorithmic traders that are playing in that market, you don't have that phenomenon in energy. So we really have an open clearinghouse right now again, and we have been growing. I think that the main thrust is that it's been important for us to get into the clearing business and control the technology, the risk management and the processes in there. I think we will strongly benefit by more trades coming into clearing.

Great. Thanks, Jeff.

Roger Freeman of Barclays.

Hi. Good morning. Coming back to trading, OTC, I guess specifically CDS. Jeff, with your knowledge of this market now, just sort of map out what if any changes would ultimately need to take place for CDS to trade in a sort of electronic exchange model. Because just thinking about the number of trades that get done daily and the average size of those trades from a notional perspective, it just feels like it's not going to exist outside of a block trading platform. Can you shrink the size of the contracts down? What are the challenges there?

Interestingly, we've disclosed in our prepared remarks now that 43% of the business revenues in Creditex is now coming from electronic trading. So we are moving our business from analog to digital, and doing it in a hybrid manner with our broker team, dramatically raising the operating margins. We are not focused on parts of the markets where the other brokers are focused. We do not have a big presence in trading sovereign CDS, which drove some of the results that you are seeing in other people. We do not have a big presence in the structuring business, where right now many people that owned structured CDS, in other words CDS that have been put into various tranches, are being unwound. Those are interesting markets I suppose, from a one-time perspective. You are dealing with a bubble right now and people are making money in that regard.

We are playing for for long term which is index and corporate credit. Corporate credit and the indices that are made up of corporate credit becoming an asset class and going electronic. It is amazing how quickly in my mind that is transitioning, and it's amazing how well the Creditex brokerage team has evolved around that hybrid structure and allowed their own pocketbooks to benefit as well as the Company's pocketbooks in raising the margins. We are not advocating in the US that things should be forced onto electronic platforms. We have been very open in Congress and with our main regulators, the CFPC and the SEC, that we think it's a natural outcome anyway. And we think that ICE can benefit regardless of such regulation and our customers don't really want it. So we are supporting the status quo because we will benefit from it.

But there are a lot of fundamental reasons to be positive about where this market is headed. As I meet with the various commercial banks from time to time, there is a lot of credit that is going to come to the market in 2011 and 2012, and CDS facilitates that credit coming to market because it allows the people providing the credit to hedge the risk exposure they have to. That's going to be, as Jeff said, in the index, in the single name while we continue to be positioned as the number one or number two player in the US and European markets. So we've got not only hybrid platform, but we're well positioned in markets where there are clear indications there is growth in front of us.

Great that's helpful. Okay, and then changing gears. Is the iron ore contract that you guys launched, does that have some reasonable potential to it? Our mining analyst was talking about some changes going on in that market, moving to a more indexed spot or near [front month] pricing versus longer term supply contracts. A lot of this is being driven by the emerging markets. It seems like there is going to be some real growth there.

That's why we launched that contract when we did. For those not as familiar, a lot of that iron ore was sold under very long-term bilaterally negotiated agreements, and now there is a -- because there was market volatility somebody was a winner and loser under a long-term agreement. S there is a trend towards moving to shorter-term agreements with more market-based pricing structures. That's why we've launched the contract. It's still a heavily brokered kind of contract, it's not a two-way bid offer market yet. I suspect it will be that for a while, while the market itself changes. But we want that market to grow up immediately using clearing. That would be in our best interest. So it's why we launched it when we did.

Okay. Thanks.

Chris Donat of Sandler O'Neill.

Hi. Good morning, everyone.

Good morning.

First, on the OTC side, Jeff, you made the comment that the CDS market you're experiencing there has positioned ICE for the broader OTC market. I'm wondering if you can flush out that comment a little bit, because clearly you're already on the credit side and on the energy side. Where else might you be going if you care to comment?

I actually don't care to comment I think where you are wanting me to comment. But I'll say to you that when we started clearing CDS and when we started thinking about the Creditex platform, we were very focused on the index part of the CDS business, for example. We pretty quickly rolled into single names. Now that the market is pushing us o clear sovereign CDS, as you can imagine, to net down those positions and show the true exposure to regulators. And so even in CDS, the market keeps taking us into new areas where we really didn't even anticipate six or eight months ago. And the kinds of things that the market is asking us to do just in the credit space continues to broaden. You can even take my earlier comments, which is the clearinghouse itself is being involved in a market structure on how the prime brokerage business will work, how collateral will be held, how money will be earned on collateral and other things. So there is an extension of banking functionality in other parts around the clearinghouse. That's the great thing about getting into these emerging markets. They take you somewhere. I use analogy all the time that you jump into a stream and the current will take you somewhere. But it's important to get into the stream and that's where we are. Beyond that, that asset class I would rather not speculate.

The point is of the remark, is that you look at what you need to serve the OTC market. You trade repository, data, clearing, processing, execution, and we've built those assets now. And so as opposed to we are building them or this is what we are going to bring to market, we've got those assets existing to today. We've got connectivity just as one example through ICE Link, and over 300 of the buy side firms and all of the major sell side firms. And that's an asset that can be useful and leveraged in any market.

Okay. I figured at least I would try asking. Then on Climate Exchange, just want to make sure we understand the comment about about the accretion in 2011. Is that basically assuming the European business continues as is. Because it doesn't look -- if we look at Chicago Climate Exchange volumes, they dropped off tremendously in 2010 from 2009. So I know that recognizes the reality of Copenhagen and US politics. But anyway, what is embedded in the accretion assumption?

I have to be very careful in how I answer these questions because there are very stright rules related to UK takeover, so I'm going to revert back to what we've said in the prepared remarks and our announcement. Our evaluation focused on the European business and synergies that we expect to be able to deliver related to the deal. Anything outside of that we would view as upside opportunity and opportunity to deliver even more value to our shareholders. What I can tell you, because it's publicly available, is [OI] and volumes in the first quarter of this year grew well in the European business. And then April volumes were actually about 60% to 70% higher than the run rate of volumes in the first quarter. And all of this is in advance of emission credits, which today are freely provided, going out to a bid process in the future. So again, the valuation focused on the European business, it focused on the synergies that we can deliver. Current indications on actual results as announced by The Climate Exchange for the European business have been solid, and in April improved significantly.

Okay, thanks. That helps.

(Operator Instructions). Don [Sandetti] of Citigroup.

Good morning. Jeff, as you look at the regulatory landscape and uncertainty and what is going on with Goldman, do you think there is any risk in the overall swaps market of a structural slow down or just a decline in volumes? Or do you think the business just gets done somewhere no matter what?

I don't want to comment on Goldman or any other one of our customers specifically, but broadly speaking, there has clearly been a strong growth in demand by people to buy swaps and derivatives to hedge their business or participate in the market pricing in commodities. And a lot of money has been paid by people wanting that exposure. So I think at 50,000 feet, you would say that that business is there, and regardless of what in the US our Congress may do to restructure where that business goes, it does seem like it's a fundamental need that will be met. And it's amazing. You've even got people like Warren Buffet, who talks about derivatives as being potentially dangerous, with quite a portfolio of derivatives. They've really extended through corporate America. ICE itself uses derivatives to hedge our foreign currency risk now routinely. I think that the demand for derivatives is bigger than the market participants right now.

Okay. Thank you.

Mark Lane, William Blair & Company.

Okay, thanks. Just two quick ones. First, Scott on the expense, I guess I don't really understand the comp expense. If you take out the $4 million of severance in the fourth quarter, the run rate for the first quarter is up 1% versus last year, your revenue growth is over 20%. And you're saying that your head count is going to be up 5% to 7% this year. So how are you able to keep comp expense that low?

You've got to remember in the first quarter of last year, and I think -- I'm going to pull the chart out in front of me. I think we had this on the chart that we showed. Yes, if you adjust -- the comp and benefits is actually up 12% year-to-year if you adjust for the severance payments we made in first quarter of last year. So comp was up in line with our total expense growth at 12%. And that is reflective of us growing some head count as we continue to invest in our new initiatives and our technology. The reason it's growing slower than revenue is because that's how we manage the business. We've committed to growing and expanding our margins, and so we -- literally Jeff and Chuck and I spend time every quarter going through every single hire we are going to do in the business, and looking at where the hire is going and whether or not it's a hire we need to make. And so I think the comp expense, if you back out the $3 million from last year, that 12% growth is right in line with what you would expect from a Company growing over 20% and committed to expanding margin.

Okay, second quick one is, Jeff, on the credit brokerage business, you mentioned that you are not in all the different areas -- sovereign debt, structured credit. There has been some rumblings whether when you did the Creditex acquisition, what was the motivation for it? Was it just to get into CDS clearing and entrance in that business. Some of your competitors questioned your commitment to that business. Are you really committed to the credit brokerage business long-term and making the necessary investments in that business to expand it?

We are making those investments. And again, just to peel back the covers a little bit further, the decline you saw year-over-year in the Creditex revenues was 100% related to fewer credit events, less compression, and less of the D&A offerings that we had last year. And again, if you go back to a year ago, we are coming out of the credit crisis, we're having defaults, we get paid to do that. The compression is largely now irrelevant because of clearing. That decline is solely due to that. If you then peel back another step further, our US index and single name business is combined. We're up about 25% year-over-year. Our index and single name in Europe was down a little bit. But overall, index and single name, which is the area where we're focused, was up 8% on a year-over-year basis. So we are investing. What we are not doing, is we're not going out and just hiring bodies to deliver revenue. We are focused on generating revenue at expense ratios that are closer to 60% not the 70% that you see at some of our competitors. We're focused on revenues that deliver double-digit operating margins as opposed to single-digit margins. So we are making investment that we need to grow, as Jeff alluded to earlier, in the more liquid products where we see the opportunity for more future growth and demand. But we are doing that investment in what I would characterize is a different manner in the broker business.

Okay. Thank you.

Celeste Brown of Morgan Stanley.

Hi , good

Good morning.

Good morning.

You talked a little bit about this sort of lack of visibility into what is going to happen in Congress which, based on the events, seems to be the case. But on top of that, it seems like a lot is going to be left if the hands of the regulators. Given your platforms and everything else, how long do you think it will take you and your customers to react once the rules are sort of in place and implemented before we start to see the market evolve in the way that the regulation today is contemplating?

My understanding is that the way the bill is being crafted right now, which I would expect will probably not change, is that it would go into effect 180 days after passage. So obviously we have to get something through the US Senate and then the House, and there would have to be a conference and make the House and Senate bill similar, which I believe the leadership is committed to do quickly. And so it would be 180 days before it would go into effect. All of the kinds of things you are alluding to would have to then be taken up by regulators to figure out some kind of rule-making or policies on how these things would be implemented. After the 180-day period I would expect that there would be a lot of rule making, a lot of hearings, a lot of process in which then parts and pieces would be implemented. So I do believe it's going be a phased-in approach and it's going to play out over a number of years.

And then in terms of the readiness, not your own readiness but in terms of the readiness of your potential customers, are they nowhere near where they need to be given how this bill is evolving? Or are there some further along than others?

What is amazing is that I don't believe that markets wait for the ultimate result. I think markets are anticipating the results and that's why you are seeing $8 trillion worth of CDS already being cleared. The major dealers have made a commitment that over 90% of new trades they put on, they are going to put in to the clearinghouse in CDS. You see huge initiatives going on to get interest rate swaps into clearing. And so the neat thing about markets, and particularly where we are positioned, being relatively small and flexible and dynamic, is these things are going to be in place I think before regulators really do them. There was an earlier question about the Chicago Climate Exchange, which is a voluntary carbon market which has unbelievable pedigree in terms of the companies that are participating in that. They are doing that voluntarily market, which has unbelievable pedigree in terms of the companies that are participating in that. They are doing that voluntarily because they want to build domain knowledge, they want to build infrastructure, they want to price carbon before Congress does so that they can get a sense on what it will do to their businesses. So it's amazing to watch markets, and so I think it's why we are building things now and there is a lot going on to position ourselves. Because I do believe that this can happen quite quickly.

Okay. Thank you.

Patrick O'Shaunessy of Raymond James.

Good morning. I was wondering if you could speak for a minute about the competitive environment you see with carbon and emissions trading. I know that CME Group and the Green Exchange is trying to reload and step up their activities in the space. So if you can talk about what you see as far as competition and how the Climate Exchange is going to fare in that environment..

Sure. First of all, the Climate Exchange has been in very, very competitive space right now. In Europe there are many competitors and Climate Exchange has emerged as the clear leader. To give you a sense, I think their complex has in total about 850,000 contracts in open interest. That's about the same amount of Brent oil that we have. It has grown quickly in Europe and has a very large footprint. And we have been a partner with them, and one of the reasons that we've made a good partner, is that ICE is really one of the dominant venues for trading electric power. And some of the industries most affected by carbon climate trading is the electric power industry. We have those people already in our clearinghouse, we have money on deposit by these people. And we are in a good position now that we control clearing, to use technology to give offsets against carbon versus electric energy, coal and other related materials. In the US, we are the dominant player in electric power. We probably have at least a 90% market share I would think in electric power trading. Recall, that's where I came out of, the electric power industry, as did Chuck Vice, and we started the Company to really focus on that. So it's long been at our core. And so I would anticipate that -- we already have the major industrials trading voluntary relationships with those people. We are the dominant place for clearing the regional greenhouse gas initiatives that go on in various parts of the US. And so we are very well positioned if there is US regulation for some kind of cap and trade. But beyond that, it's a natural fit for the current product suite that we have.

Understood. Thanks.

Thank you.

Jonathan Casteleyn of Susquehanna.

Is there any way to flush out any further details of the better credit conditions you are seeing from some of your users? And do you think there's further benefits coming? Or do you think we've fully corrected the former macro weakness?

Credit markets generally, Jonathan, I think are significantly better than where they were a year ago. And frankly even better than they were six months ago. Just in terms of -- as I've again through and thought about the refinancing of our lines of credit which we did earlier this year and as we talked about the [CLE] transaction, I don't think there is any question that credit markets have improved and you are starting to see some of the -- certainly the larger banks more willing to provide their balance sheet to customers and presumably also to trading.

I will say, you saw recent news of the IDC transaction purchased by private equity that has got a lot of leverage in it. Our understanding is there are some legacy funds that are out there that have lending capacity, funds that were raised before the credit crisis. I don't think yet we've seen the kind of money flowing into the banking system that's really looking to provide a lot of lending and leverage in the corporate markets. But we have seen the early stages of a lending recovery. That's why Scott mentioned that we are bullish on 2011 and 2012 in terms of our forward outlook in the credit default swap business.

Makes sense. And then just on the Yellow Jacket announcement last week, you talked about a new messaging product in equity options. Is there any way we can get more details on exactly what the product is and any kind of guidance or impact on results for this year or next?

We haven't specifically broken that out. Let me just give you a high level. What we've seen is that that product has been in high demand, and customers have asked us to move it into various asset classes outside of where we started. We really though this would be a great product for trading energy options, and now here we are already trading cash equity and equity options products on it. It's a very, very neat tool and I think again, depending upon how legislation gets impacted, it could become an incredibly useful tool for doing more complicated deals in a transparent electronic environment. Which is not something, frankly, that we had thought about when we acquired the product. But it definitely gives us another tool to use depending upon how regulation unfolds.

Thank you.

Our final question for today will come from Rob [Rudchow] with CLSA.

Hi, good morning. Thanks for taking my questions. First, I wanted to delve into the power market a little bit more. You've touched on it some. Can you give us idea of what your market penetration is in US power trading and how many customers you have there? And then what would be the drivers, whether macro, or company-specific among the customers that would drive additional growth?

Let me give you a higher level than I think what you are asking, but hopefully be responsive to you. First of all, the power industry is in a long-term deregulation phase. And what is helping drive the growth of trading is public utility commissions that hold their local utilities accountable for increasing increase in fuels and other expenses and don't let them pass 100% through to the rate payers. That one fact then causes utilities and others to need to hedge, drives them into the gas and coal markets but also into the power market. Broadly speaking, we are seeing a movement that we were somewhat involved with, of moving away from trading physical power to trading financially [settled] power. And that trend has happened over the last decade/ Again,by trading financially settled power, it allows market participants outside of a [NERC] region to take economic exposure to the price of power. It's still a nascent market in the sense that it is very, very volatile, it's kind of a big boys market.

We have specifically not allowed a lot of algorithmic traders in there. We have specifically not allowed smaller entities in there out of concern that you really need to understand the dynamics of power markets because they are so volatile. And at the core is this fact that if there is a localized blackout or brownout, the local utility will pay almost any amount of money for short-term power to cover that consequence, because it is not acceptable in our society to go without power even for a minute. So it becomes incredibly volatile for the upside. And as such, we sort of bring people in with a lot of education in a bit of a metered way. That being said, it's one of our fastest growing products and it's still quite nascent. We haven't really seen Europe and Asia adapt to trading power. It's still quite localized, quite physical and quite dominated by regional utilities outside the US. So I think there is potential globally for the growth of power that will happen over the next decade or more.

Okay. That's helpful. If I could follow up I will take one more run at OTC question. In terms of looking outside of CDS, are you actually having conversations with potential clients for other asset classes? And then secondly, would you use the existing ICE Trust clearinghouse if you were to clear other asset classes? Or would you create a separate legal entity for risk purposes?

I don't think we want to answer any of those questions.

Well formulated differently to ask.

Although it's fair to say, we are always talking to people about ideas. It's kind of what we do here. It's actually become part of my job. We've institutionalized within the Company a group of entrepreneurs, if you can do that as such, where we meet every week and lay out game boards and other things and discuss conversations that we have been having and take information back to the market. So we are active in all kinds of conversations that are going on. But we are trying to pick the areas where we think we can build a long-term sustainable business model that meets the criteria that we've had and partly why you see that our return on invested capital is so high, because we do have some discipline around where we go.

Jeff to me three years ago when I joined, that he doesn't like to talk about what we're going to do in the future. He likes to talk about the execution plans that we are working on right now. And I'm sure as we get down that path, that's when we will come back to you with what our specific objectives are.

Okay. Thanks, guys.

I will turn the conference back over the speakers for additional or closing comments.

Thank you for your patience with us. We ran a bit long but we wanted to make sure we got to everybody. Let me just say we will talk to you next quarter and I hope you a very nice and happy Cinco do Mayo.

That does conclude today's teleconference. Thank you all for your participation