Interview: ICE seeks acquisitions to boost clearing business

Jeff Sprecher, chief executive officer of IntercontinentalExchange speaks during the Sandler O'Neill global exchange and brokerage conference in New York June 10, 2011.

SINGAPORE (Reuters) - The IntercontinentalExchange (ICE)(ICE.N) is looking at potential acquisitions to grab a bigger share of the clearing business, its chief executive said on Friday, adding that the London Metals Exchange (LME) could add value to his company.

Jeffrey Sprecher stopped short of confirming that ICE, named as a potential suitor for the LME, is bidding for the world's biggest metals marketplace.

"I consider every opportunity, there is no opportunity that comes up that we don't consider," ICE Chairman and CEO Sprecher said in an interview with Reuters in Singapore on the sidelines of the Thomson Reuters Asia Petroleum Lunch.

"LME has built up a great franchise and has been one of the beneficiaries of growth in Asia. Potentially, it could add value."

ICE, whose key products include Brent crude and gasoil futures contracts, has invested heavily in building up its clearing business and acquiring the LME could expand its presence in another commodities market.

"We think that (clearing) is the area where exchanges can provide the most value for our customers, and to the extent that that can apply to other asset classes, we are interested."

When the LME said it had at least 10 takeover approaches, it did not name any of the potential suitors. The list may include CME Group Inc (CME.O), ICE and U.K-based ICAP ICAP.L, sources have told Reuters.

ICE partnered Nasdaq in April last year to bid $11.3 billion for NYSE to thwart the Big Board's friendly merger with Germany's Deutsche Boerse AG (DB1Gn.DE). The pair backed down over a month later after the U.S. Department of Justice blocked the bid on antitrust grounds.

The rejection of the deal reflected a growing scrutiny of markets by regulators around the world following the collapse of U.S. investment bank Lehman Brothers in 2008, Sprecher said.

"The kind of (exchange M&A) deals that are going to get done have to focus on the end user and less on pure shareholder value, so you will have to find a balance," he said.

Sprecher sees revenue growth from clearing rising in coming years as regulators increasingly demand that OTC activity be made more transparent, but expects the business to become more complex due to tighter regulations. He declined to give any figure for revenue growth from clearing.

Average daily commissions for its OTC energy business were up 21 percent to a record $1.6 million last year, the company has said.

BRENT GROWTH

Brent's liquidity has grown strongly in recent years, especially in Asia-Pacific where more producers are pricing their crude on the European marker and as rival U.S. crude futures get dislocated from the market on logistics constraints at its delivery point in Cushing, Oklahoma.

The average daily volume for ICE Futures Europe, where energy contracts are traded, was about 1 million in 2011, up 22.4 percent from the previous year.

Energy volume at the CME Group Inc (CME.O), which owns the New York Mercantile Exchange where the U.S.-benchmark West Texas Intermediate is traded, averaged 1.8 million contracts per day, up 7 percent compared with 2010, the exchange had said.

"I don't know which contract will overtake which first but the reality is there is a lot of tailwind coming out of Asia," Sprecher said.

"As long as there is this growth outside the United States, we're going to see growth in Brent," he said.

WTI will regain its importance as a U.S. marker once higher growth resumes at the world's largest oil consumer, he said.

Brent's premium to WTI hit a record $28 a barrel in 2011 on a supply glut in WTI's delivery point, but it has narrowed in recent months on expectations new pipelines would divert supply away from U.S. Midwest.

(Editing by Manash Goswami)