IntercontinentalExchange (ICE), an Atlanta-based operator of regulated futures exchanges and over-the-counter (OTC) markets, said Monday that all cleared OTC products listed on its OTC energy market will be transitioned to futures products in January. These products will continue to be traded on the ICE trading platform and cleared at ICE Clear Europe, which in 2010 was approved as a derivatives clearing organization by the Commodity Futures Trading Commission (CFTC).
The transition from OTC swaps to futures is subject to approvals from the CFTC and the UK's Financial Services Authority. All uncleared swaps will continue to be listed on ICE's OTC platform, which will register as a swap execution facility as required by the Dodd-Frank Wall Street Reform Act, the exchange said.
Cleared North American natural gas, electric power, environmental products and natural gas liquids swaps will be listed as futures on the energy division of ICE Futures U.S. Cleared oil products, freight and iron ore swaps will be listed as futures on ICE Futures Europe.
"Jurisdictions around the world are enacting policies designed to further regulate OTC markets...We believe that these policies will increase the cost and complexity for swaps market participants, both in absolute terms and relative to that of futures market participants. [Nevertheless] we anticipate a seamless transition [to a regulated OTC market] that will largely preserve existing methods of transacting in ICE's markets," said ICE President Chuck Vice.
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