Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business, the dream drivers that have made the NYSE an indispensable institution for global growth for more than 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism, right here, right now at the NYSE and at ICE's 12 exchanges and seven clearing houses around the world. Now, here's your host, Josh King, head of communications at Intercontinental Exchange.
Josh King:
Welcome to the podcast, bringing the ICE House to the Windy City on location in Chicago, Illinois, one of the major annual gatherings for the futures industry and a city where Intercontinental Exchange back in 2007 made a name for itself with an ultimately unsuccessful takeover bid of the Chicago Board of Trade, the old CBOT. But one miss in two decades of hits has resulted in a company that's grown to include 12 global exchanges, six central clearing houses, and one of the largest data vendors in the world. Lots of organic growth in there, but also a deliberate strategy of mergers and acquisitions. Each deal, from large to small, gets the ICE integration, effort, modernization, electronification, and increased transparency, but also comes with a unique set of challenges.
Josh King:
Our guest today, the man responsible for leading the integration plan landing and the execution of ICE's acquisitions and joint ventures, Ben Jackson, president of Intercontinental Exchange. The company's record this year shows a focused on fixed income, a space long overdue for overhaul. Our conversation with Ben Jackson, right after this.
Speaker 2:
As US oil markets evolve and production continues to increase, exports have risen to be demand for light, sweet crude. The ICE Permian WTI Futures Contract reflects this changing landscape with price discovery, settlement, and delivery in Houston, transported directly from the Permian on the Bridgetex and Longhorn pipelines, this well known quality crude will be shipped to across the globe from multiple ports along the Gulf Coast and offers additional hedging and trading opportunities in a transparent electronic marketplace. Intercontinental Exchange, shaping tomorrow's oil markets.
Josh King:
Our guest today is Ben Jackson, president of Intercontinental Exchange, and we're getting together in Chicago at the FIA's Futures and Options Expo. In addition to overseeing M&A for ICE, Ben oversees ICE's global futures and its OTC trading business. Since joining ICE Futures US as its president in 2011, he's held several roles at the firm with a front row seat for its last seven years of growth. Welcome to the show, Ben.
Ben Jackson:
Thank you, Josh.
Josh King:
So we're here in Chicago, lots of keynote speakers in front of thousands of people, but a lot of action behind the scenes. What's on the plate for the president device when you arrive in the Windy City?
Ben Jackson:
One of the things that I'm happy about when we come to and gather here in Chicago is it's an opportunity for us to gather with many, many of our customers all around the world that utilize all of our products across asset classes. And our mission since the beginning of the company has been to look at each asset class that people trade, that they want to get exposure to, that they want to hedge risk, that they want to take risk, and we want to make it as easy, efficient, and effective for them to trade and manage their risk.
Josh King:
So what kind of schedule do you have over these few days? We often talk about I's values in terms of problem solving, listening to customers, helping customers attack their most complex issues. You're listening, taking notes. What kind of feedback do you get?
Ben Jackson:
Well, the agenda is back to back customer meetings. Because I utilize these opportunities to be able to see dozens and dozens of our customers all in a compact period of time. And the feedback that we continue to get is that we're providing a lot of benefit to our customers, that we're providing a lot of benefit to our end corporate customers that are out there that need to hedge their exposure to price risk in a number of different asset classes. And most interesting has been the feedback we've been getting recently on our story in fixed income, and how that suite of services that we've developed that comprehensively solves solutions for our customers that want to get exposure to fixed income or hedge their price exposure risk to fixed income, we're providing them a very easy ability to do that.
Josh King:
We've now entered the final quarter of 2018. Ben, it's been an eventful year so far for ICE with the acquisitions of the Chicago Stock Exchange in the city we're sitting in now, BondPoint, TMC Bonds and MERSCORP Holdings, just to name a few. How would you characterize the strategy behind the deals of this year compared to, say, 2015 and the $5.2 billion purchase of Interactive Data?
Ben Jackson:
Well, when you think about that journey that ICE has been on with our customers and providing transparency to different asset classes, in each asset class, there's unique dynamics that are going on that create some of the historical inefficiencies that we've tackled to try to make more efficient. In many asset classes like commodities, we started on the execution side, and in clearing. In fixed income, we tackled it from a different angle. The real challenge in fixed income is it's very difficult to get transparent pricing is very difficult to find the particular inventory that you want to trade. And many, many different service providers have tried to start with just building an execution platform and have failed.
Ben Jackson:
So we took a different angle and back in 2014, 2015, and 2016. What we did is we assembled and looked at, what are the assets out there that are really the golden record for data? We found a company called IDC that was really the golden record for reference data. And by reference data, I mean, what are the terms and conditions of all the different bonds that are out there? Thousands and thousands, millions of bonds that are out there.
Ben Jackson:
And then second, what IDC gave you is the golden record on pricing, so gave you the ability to you as a trader and fixed income assets could go and look at transparently, what is the real price of this bond that I may execute or this bond that's sitting in my portfolio that I may want to sell? It's very difficult to get that information. IDC was the golden record for that. And IDC was also moving towards taking end of day pricing and fixed income in a innovative way towards real time.
Ben Jackson:
The third piece that IDC had that was interesting is an analytics platform. And with analytics, remember what I said, some of the challenges in fixed income were pricing and data, but also, who has the inventory? IDC has a market-leading analytics platform that thousands and thousands of customers are using every day to manage their portfolios. And they're doing scenario analysis to say that, hey, today, I want to lessen my exposure in the telecom sector and I want to increase in the automotive sector. And it tells them, our analytics platform, not only has their positions that in the platform, but it also gives them informed analytics on what's the most efficient way for them to trade out of that telecom sector, trade into the automotive sector. Which obviously, being at the heart of those trading decisions that are being made, then bridges to where we are now in 2018, where we've started to invest in execute platforms.
Josh King:
So if you go back to that moment in 2014, thinking about the golden record, I remember reading the stories about ICE and how the headquarters in Atlanta is covered with whiteboards. Is it immediately clear to you that IDC is the source of the golden record and that's what you need to go after?
Ben Jackson:
Yes, and that's why that was an asset that we aggressively went after and brought into our portfolio, and our customers overwhelmingly, just seeing the growth that we've seen in that business since we've had it, continue to come to us and continue to choose us for their reference data analytics and pricing needs.
Josh King:
Your boss, ICE's Chairman and CEO Jeff Sprecher, recently described our M&A strategy as twofold. And I'm quoting him here. "We buy large established companies that are a strategic fit, but that may be in need of some modernization. We streamline them and spin out operations that aren't a natural fit and integrate those that are, and we buy small companies and integrate them into our network to help them grow faster through a bigger distribution channel to our customer base." Sound like a fair a synopsis?
Ben Jackson:
I think that describes them well, and I would characterize both the IDC deal, and then just shortly after the IDC, we bought the SNP evaluations business, both of those as being the former, businesses that were established that needed really a refresh, and a new technology, a new brand, and a new distribution capability out to the client base. And we were able to bring that to life. The more recent deals with TMC and BondPoint, fantastic order execution platforms and the cash bond markets, are more the latter, where they're younger companies, they are established with the younger companies that needed a broader distribution and bringing them onto our global network of customers, we're encouraged, is really going to enable those to grow.
Josh King:
We're going to dive deep into BondPoint and TMC Bonds, but there were also other headlines this year. The MERSCORP acquisition was a result of a two year process where ICE acquired an equity majority in the company 2016 and began to overhaul the MERS technology. How do you think MERS will revolutionize the mortgage industry?
Ben Jackson:
For MERS and the mortgage space, what we found is, in any asset class, when you look at how they're trading and how inefficient or efficient they are, when you look at the mortgages as an asset class, it's one of the most inefficient places in the market. And with MERS, what it gave us an opportunity is to really be the golden record, to really be the golden record of mortgages and mortgage securities documents and mortgage processing.
Josh King:
You mean the pile of paper, this big is not an efficient way of transferring real estate assets?
Ben Jackson:
You got it, you got it. And it's amazing that how paper based and how analog that business actually is. And where we're starting is with that golden record of that type of documentation and being that almost social security number to how mortgages are trade and transferred through their different life. We think that puts us at a central place in that ecosystem to then be able to expand and to solve real inefficiencies in that market.
Josh King:
So the move into the mortgage business for ICE is new, but the Chicago Stock Exchange became the 12th exchange under the ICE umbrella. We know Chicago was on the market for a long time. Another outfits deal for it fell through. But what made you jump into acquire it? And how does its model complement the other exchanges in NYSE group and ICE at large?
Ben Jackson:
For the Chicago Stock Exchange, we saw it as an opportunity to bring a long-established company that is relatively small in its reach out to the customer base, to bring that long-established company onto a refresh technology stack that we have at the New York Stock Exchange on our pillar technology that we've talked to the market a lot about it and it's providing a lot of benefit to our customer base, that by bringing that exchange, modernizing it, bringing it onto a new technology stack, we think the feedback from customers is going to be extraordinarily positive.
Josh King:
So in the first quarter, Ben, and I think in the third quarter, ICE announced completion of two major acquisitions in the fixed income industry. We talked about them earlier, BondPoint and TMC Bonds. Why was it important to make those investments?
Ben Jackson:
The piece of the ecosystem that we were really missing was the execution side. And we decided that time is right in looking at these two assets to step into the execution space and focus primarily on what's really a central order book trading-oriented platform, which both BondPoint and TMC are. BondPoint is in the US corporates, primarily. TMC is in the US municipal markets as the main services that they provide to their customers.
Ben Jackson:
And what's unique about these two platforms compared to other platforms that are out there, such as a MarketAxess or Bloomberg or a Tradeweb that people see, is that those platforms tend to be ... those being MarketAxess Bloomberg and Tradeweb ... tend to be RFQ-driven. And an RFQ, that's, for example, Josh, if you wanted to go out and buy a bunch of Ford Motor Company bonds, in order to get a price on that order that you'd want to put out there, you'd have to tell the world, "I want to do this trade." When you tell the world you want to do a trade, you're signaling to the world and giving them information and putting yourself at an informational disadvantage, because you've exposed that you want to do that trade and prices can move away from you.
Ben Jackson:
Compare that to both a BondPoint and a TMC. Those are central order books, where you have thousands and thousands of CUSIPs, so individual bonds that are on the platform that every day are getting streamed in quotes of people that are willing to buy and sell those bonds at prices. So you can see, go onto a screen, just like you'd go on to look at IBM stock or Ford Motor Company stock, you can in a transparent way, see in real time where somebody's willing to buy or sell that bond. And you can aggress, you can click on that actual bond instrument, and trade it.
Ben Jackson:
So we were encouraged that, A, this is unique because they're central order book trades, which really don't exist in the fixed income space. B, the community of people that were attached to both of these platforms was incredible. These platforms started in really the retail space, where you'd have wealth advisors facing off to market makers and inventory holders that would want to interact with that flow. And the reality is over the decades that these platforms have been around, that community has expanded to a lot of corporates, a lot of insurance companies that are on these platforms on both the buy and the sell side. You have asset managers on these platforms.
Ben Jackson:
So people are getting more and more comfortable with trading in a central order book environment in fixed income. And we also saw that the order sizes were trending up. So not only were people getting more comfortable executing onto these platforms, but also we saw a positive trend of this average size of order trending up and these platforms growing significantly in terms of volume. And that's what got us excited about them.
Josh King:
If you think about this picture that you've just laid out, it bears a lot of resemblance to 2000, 2001, 2002, the original effort by ICE to create more of essential order book for energy, almost repeating the same formula now in fixed income in the corporates and municipals.
Ben Jackson:
And it is another page out of the playbook that has worked well, I'd say in this case, we're even bolstered more so because we've started with a golden record of data, pricing, analytics, and passive investing tools. And what of the interesting things that I see as a sign that the strategy is really playing out and that customers are really embracing us as a new, fresh take and a new, fresh solution to a long time challenge that they've had is through a recent announcement we had where we're partnering with BlackRock to solve a significant challenge in the ETF space.
Ben Jackson:
In some ways, it's a good challenge to have if you're in the ETF space, because the ETF space for passive fixed income investing has been growing at a 30% CAGR over the last 10 years. It's hard to find another asset class that's grown. But along with that growth has come challenges in the infrastructure that supports it. And if you look at the asset that we have, BlackRock came proactively to us to partner with them on solving some of the inefficiencies that are in that ETF landscape, because they saw us as the only partner that had all the pieces. In order to solve and create more efficiency in the creation or the redemption of a single ETF share, the tools that are needed to do that, our instant messaging platforms, our reference data, our golden record pricing data, experience in the passive investing space as well as order execution platforms. And we, they saw, are the only one that have that whole ecosystem to be able to bring to bear to solve the inefficiencies that are in that market.
Josh King:
You mentioned that it was BlackRock that came to you. How did the partnership come about and how will the platform simplify primary market trading?
Ben Jackson:
They came to us. They've been very vocal for the last couple years about this being a real strain and a real stress, that as the ETF landscape has grown, the fact that if you want to ... In today's market, believe it or not, in today's market, when you want to create a share of an ETF, all of the systems that take part in that creation process of a single share of an ETF are completely disconnected from one another. So you, as the issuer, BlackRock would send out a list, say of 50 bonds. So you want to buy a high yield bond fund that they have. You want to buy one share. They'll send out a list because in that bond fund there'll be thousands, thousands of bonds. But the reality is for one share, it has to be a subset of that. So they'll send out a list every day of 50 bonds and say, hey, if you come to my doorstep with these 50 bonds, that's good to create one share of this ETF.
Ben Jackson:
That file gets published, and picture all those RFQ platforms that I had mentioned before, are now blasting out the same list of inventory to anyone that has inventory to see if they can find those 50 bonds. What oftentimes happens is that each of the market makers and authorized participants that are facing off to these issuers won't find a perfect set. They won't find all 50. They'll find 47 or 48 of them. So then there's a whole negotiation process that happens back and forth between the people that have the inventory now and an issuer like BlackRock to say, "Are these 48 bonds, plus these other two that you didn't ask for, are they good enough to be selected?"
Ben Jackson:
So you have this complicated negotiation process. Once it's accepted, the creation process occurs and a share is issued. But behind the scenes, behind the scenes in that workflow, the instant messaging systems, the order management systems, the RFQ platforms that are blasting out to all these market participants are completely disconnected from one another. So imagine that now in 2018, you have market participants that are re-keying this information manually no less than four or five times during the life cycle of a single transaction. And there are thousands upon thousands of these transactions every single day that are happening. And it's continuing to grow.
Josh King:
You look at the podium of the New York Stock Exchange, the opening bell, the closing bell, new ETFs coming on the market every day. Jeff Sprecher said recently, "Fixed income ETFs have grown rapidly over the past decade, growth that we believe is still in its early innings." In real baseball, Ben, we're watching the ALCS and the NLCS. We're counting down days to the world series. But in the fixed income ETF space, is Jeff right? What are you seeing in the recent volatility of the equities and bond markets that suggests that we really are in the early innings?
Ben Jackson:
I brought up that to that in the passive investing space for fixed income, that that's had a 30% growth rate over the last 10 years. I think that's a sign alone. And that trend is continuing, as far as people can see. It's very easy for you or I as an investor, if you want to get access to a broad sector of the fixed income landscape, it's one of the easiest ways do it. So I think that trend is going to continue, and that the more that we can provide infrastructure solutions to make it even more efficient and hopefully less costly for people to get access to these types of instruments by creating that efficiency that we'll create with our new partnership with them and with that ecosystem, that will also help the high tide raise all boats.
Josh King:
So on that note of rising tides, all boats, we'll take a quick break. And after the break, Ben and I discuss how the recent acquisitions fit into the ICE lineage and now his career paralleled ICE's development right after this.
Speaker 2:
The growth of Brent Crude is the story of a global benchmark. It' the story of managing risk as market dynamics, technology, and economies evolve. And it's the story of Intercontinental Exchange. Oil was largely considered a landlocked commodity until Brent was discovered and extracted from the North Sea floor in the 1970s. As production became commercialized, market participants needed protection against price moves. In response, the Brett Futures Contract was developed by the oil industry in the 1980s. Brett quickly became the global price benchmark for crude oil as a waterborne supply easily transported across trade grounds, and is the basis for refined products, such as diesel and jet fuel.
Speaker 3:
In 2001, when ICE first acquired the International Petroleum Exchange, the Brent contract had just begun its ascent towards being recognized as a global benchmark. We worked with the industry to shift towards electronic trading and it transformed the market, boosting transparency and market access. We've worked close with our customers to manage their oil price risk across global markets. We've expanded our oil complex to include more than 500 related instruments. We serve a wide range of customers from commercial users and producers to financial players
Speaker 2:
Today, over one billion barrels of Brent Crude change hands in ICE's markets. With over 20 consecutive years of record volume, ICE Futures Europe is the world's leading global oil exchange. Two thirds of the world's oil is price relative to Brent, providing security and liquidity to the global market. And at ICE, we're working with customers to shape tomorrow's oil markets.
Josh King:
Welcome back. Before the break, Ben Jackson, president of Intercontinental Exchange, was giving us a peak under the hood of how the recent acquisitions for ICE fit into the company's long term plans. This isn't a new statement, Ben. In fact, it's kind of a cliche now. Data is the new oil, but raw data is not nearly as valuable as data employed to solve a problem. I wonder how you think about data?
Ben Jackson:
Today, with the explosion of information that there is out there, the ability for investors, if you're looking at different asset classes, the ability for investors to go out there and just get inundated with data. And it can be overwhelming. And what we see as our mission is being able to take all these individual data points, help you make sense of them. And the reality is that each investor and investors are becoming more and more sophisticated in the way they want to see the information, the way they want to slice and dice that information, what information sets they want to combine with one another. And what we've done through really our ICE global network is we've made it ultra safe and secure and effective for people to consume significant sets of data, combine them in various ways that they want to, and create their own rich analytics sets off of that data and offer that information to help inform their hedging or trading strategies.
Josh King:
How did you get turned onto the power of information originally?
Ben Jackson:
It's funny. My roommate in college, his father was a trader down on the Nimex. And I had an opportunity in one of our spring breaks to go to New York City to visit him. And I went down there to the floor and just watched how trading was happening in the oil markets at that time.
Speaker 4:
Commodity trading is a brutal business, six hours in the pit constant shouting of offers to buy and to sell. The person who shouts the loudest often gets the business. A case of laryngitis for a commodity broker can be a disabling and expensive injury, as Ira Huff discovered last summer.
Speaker 5:
My two best brokers lost their voice. And I had to do something to make sure that this would never happen again because it cost me anywhere between $15-25,000 for those two weeks for both of them to be out of action.
Ben Jackson:
And if you wanted to get a price on how to trade a barrel of oil, it boggled my mind that if you're anywhere in the world, you had to call down to this floor, down in lower Manhattan. A broker took that order. A broker then walked into a pit and you could clearly see that in that pit, there were certain people, certain connected people that had certain premium spots in that pit, the orders being shown to that group of people. And you could watch in real time price formation happening, but also watching prices fade depending on what was happening in the market at that point in time.
Ben Jackson:
And then once the trade was filled, there's literally paper order cards getting filled out and being thrown at these clerks to go ahead and enter into their systems, and then eventually those executions would get entered into a system that then gets broadcast around the world. But very inefficient, very manually driven, prone to mistakes.
Josh King:
Did you see it as a 20 something year old, "Boy, this is inefficient"? Or did you say, "What a spectacle"? What were you thinking when you watched your friend's dad in the pits?
Ben Jackson:
I was blown away that this is how it happens. I just could not believe that this is actually, at that time, that this is how price formation's happening in the oil markets. Or if somebody wants to be able to just understand, where is the price of oil today? If they're trying to gleam, what is that efficient price off of the process that I was watching there, it's not really where the price is. And that really informed my decisions then on how I tackled the rest of my career. And I loved the world of trading. I loved the world of price and price formation. I've been in around the commodities markets the vast majority of my career, but more on the technology side and the system side of seeing how technology can be used to create a lot more efficiency into how that price formation occurs.
Josh King:
So you get back to Cleveland with this inspiration, or at least this idea that trading can be made more transparent, made more efficient. What are the first steps you take out of John Carroll University to pursue this dream?
Ben Jackson:
I joined Anderson Consulting in New York City. So Cleveland boy goes to New York City and gravitated right back towards those pits down in lower Manhattan that I'd mentioned. So at Anderson, learned how to code. Learned how to hand on code and code information systems at that time. And I stayed much more towards the trading and asset management side of the business there at Anderson.
Josh King:
Were your parents in this space at all?
Ben Jackson:
No. Mom was in real estate, is also into recruiting as she was going through her career. And my father had a long time career at a company called Lincoln Electric, one of the world's largest suppliers of small motors and welding equipment.
Josh King:
So, last year, ICE went back to its roots with the new endeavor to transform energy markets when it acquired NGX and Shorcan energy as part of its sale of Trayport. And at the time, Ben, you said, and I'm quoting here, "The addition of NGX's products and clearing services offer our customers an expanded range of energy products and risk management solutions across physical and financially settled markets." Sounds like a complex deal between ICE and TMX. Can you take us behind the scenes to give our listeners the vision for the ultimate outcome?
Ben Jackson:
Sure. And just like in all of the asset classes that we provide value to our customers in making it more efficient and effective for them to trade, the commodity markets are really where we started. And the angle that we took in commodities wasn't about the speculative trader. It was about the corporate hedger. Because at the end of the day, price formation in any futures markets, we believe, starts at the fundamental people that have to hedge their exposure to price risk. The people that literally needed make or take delivery of that particular commodity at a particular location point.
Ben Jackson:
And if you take natural gas, for example, which is your example with NGX, with natural gas, we took a very different angle than businesses like CME. CME has a single contract when you boil it down, a single contract called Henry Hub that's in Louisiana. And the angle hook on is the corporate customers around the world don't really care about the price of natural gas in Louisiana. What they care about is if you're a power plant operator in Southern California, you care about the price of natural gas in Southern California. If you're in the Northeastern United States, you care about the Northeastern United States. If you're in London, England, you care about NBP, the contract that trades over in the UK. If you're in Japan, you care about LMG prices.
Ben Jackson:
So what we did is we built a suite of contracts that give people the ability to hedge their price exposure to where they're actually consuming the wellhead that they actually need to consume that gas from. Because the reality is the difference in the price from Southern California to Louisiana can be substantially different.
Josh King:
Depends on the weather.
Ben Jackson:
It's Economics 101. Supply and demand dynamics are completely different. You can have pipeline constraints. You can have completely different weather constraints affecting that price formation process. And what NGX was all about, bringing it back to NGX, is NGX gave us the ability to have even more precise locations, physical locations for our customers to be able to trade natural gas and to be able to effectively manage their exposure to price risk.
Josh King:
We're both here in Chicago who attend the FIA Expo, where the theme this year is From the Growth of Digital Assets to Reinventing Futures for Today and Tomorrow's Demand. Several ICE executives, Ben, including Jeff Sprecher, are appearing on panels. When ICE talks, people listen. And what's the message that ICE will be bringing to the industry this year?
Ben Jackson:
The message we're trying to send to our customers is continue to engage us. We want to engage you. We want to engage you with this explosion of data that there is, that you're faced with every day, with the volatility that you're exposed to and whatever asset class you're exposed to, whether it's fixed income, whether it's commodities, whether it's interest rates, whether it's foreign exchange, you name it, engage us. We'll listen. We'll be there. And we're here to continue to innovate and provide the products that you need to most precisely manage your exposure to price risk.
Josh King:
We've been talking a lot today about the deals that we've done, Ben, and it's got to affect the company that's grown from a simple energy trading platform with just a handful of employees to this global diverse operator of data and listings, commodity and financial markets, this company that you just talked about that wants to engage with customers all around the world in clearing and technology infrastructure, that now employs, I think, of around 5,000 people. How do you ensure that ICE's culture and mission that started to form nearly 20 years ago gets ingrained into the businesses that you've acquired and the company continues to grow as one team?
Ben Jackson:
It's the number one thing we focus on in every deal that we do. And strategically, Jeff and I really married the functions of doing the deal, so doing an M&A transaction with integration. And part of the reason that we did that is we wanted the team that's accountable for putting together the model around the transaction and how we're going to drive shareholder return with the team that's going to be responsible for delivering that. And with me having accountability for both, the number one thing that I focus, even before the transaction's done, what is the culture of the entity that we're acquiring? And how do we take and shift the culture of that company oftentimes to align much more to ours?
Ben Jackson:
Because the fact of the matter is we have not changed our culture through all these acquisitions and we've prided ourselves on putting our imprint on each individual company that we acquire. And the important parts of that are just empowering everybody in the organization to engage in a healthy debate, flatten the organizations, make it a much more communicative community, making it open door policy and eliminating the politics so that people can engage in healthy debates. Because in today's world of trading and hedging, the environment is moving so fast that the best way for us to make the best decisions on complex challenges that our customers have and that we have trying to solve those problems for our customers, the best way to get the best decision done is by getting as much mind share to the table as possible to have those debates.
Ben Jackson:
The second thing that we find culturally is that in a lot of the companies, especially companies of size and scale that we acquire, you find that almost each little division of the company operates as its own little fiefdom. And that is the other thing that we really focus on changing right away, is changing the mindset that it's not about your own little individual P&L, but it's about all of the businesses working in concert with one another. That's where the real magic happens. That's where the value is that we deliver to our customers. And you'd be amazed at how many companies you buy where you almost have certain divisions competing with other divisions within them and not thinking about it from a broader customer perspective and what's best for our shareholder.
Josh King:
Can you see, when you walk into a room to start due diligence, whether the culture ultimately will be able to fit or it won't be a fit? And do you say to yourself, "This asset is very valuable for us to have, but it's not going to be easy enough to integrate and walk away from"?
Ben Jackson:
It's very easy to see that in the dynamics. Walk into any room when you're doing due diligence and you can just see in the dynamics of the room as to who who's engaged. Is it one person talking or is it a collective group giving opinions that might even differ with one another? And what kind of a healthy debate do you have? And if you have that, I think that's a really good sign, a really good alignment. So we do look for that cultural alignment. You're not always going to get it, but one of the things that's important is we need to identify a path that we can take that company on, a journey that we can take that company on to evolve to our culture.
Josh King:
Each of the deals and acquisitions we've discussed so far this morning, Ben, revolve around one thing: the customer. How do you drill into what their needs are and how do these acquisitions help meet their efficiently?
Ben Jackson:
It's going back to why I'm here in Chicago and why I enjoy these types of events. And one of the things that we encourage our entire team, from the top of the organization to multiple levels into the organization, is to be out and think about the customer first. Engage them, get that feedback, bring that feedback in. So yeah, it's great to get feedback, but we need to make sure that that feedback is vocalized and that each person in the organization, as we're having that healthy debate around the table around what's that next new hedging instrument that we want to develop or that next new analytics product that we want to develop, that we want to make sure that in that prioritization process, that all the people that are getting that customer feedback are inserting that customer feedback into those debates so that we can make sure that we're making the best decisions at the end of the day.
Josh King:
As we wrap up, Ben, finishing your fur full year as president of Intercontinental Exchange, let's take a quick look into the crystal ball. What are the future trends in the markets that you're watching with interest that you think will be making headlines a year, five years from now?
Ben Jackson:
What I find most exciting is the level of engagement that our customers have with us right now around how do they manage the vast ocean of data that they're consuming, the vast amount of information that they're consuming. How do they organize it better to make better trading decisions? And it just validates the strategy that we've had for a long time, of how do we engage with our customers to find the most efficient and effective ways for them to get access to the right information for them to make the right trading decisions? And then once they've made those trading decisions, give them access to the world's most robust markets to do that, the most efficient, effective, most liquid and deep markets to provide that.
Ben Jackson:
And the feedback that that we've gotten is that we continue to partner with the customers in the commodity side and in the rate side and the equity derivative side, and we continue to get very positive feedback on that. In fixed income, it's early days. But I take the signs of the example I gave you earlier in the conversation of BlackRock engaging us, and we're working with other issuers now to get them on board into this ETF creation and redemption process. While it's early days, I think the signs are really positive that we're going to be able to provide a lot of value to a lot of inefficiencies that there are in the fixed income marketplace.
Josh King:
Ben, thanks so much for joining us in the ICE House. Let's get onto FIA Expo.
Ben Jackson:
Thanks, Josh.
Josh King:
That's our conversation for this week. Our guest was Ben Jackson, president of Intercontinental Exchange. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected], or tweet at us at @NYSE. Our show is produced by Theresa DeLuca and Pete Ash with production assistance from Damen Level and Ian Wolff. I'm Josh King, your host, signing off from the ICE House in Chicago. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of this information and do not sponsor, approve, or endorse any of the content hearing, all of which is presented solely for informational and educational purposes. Nothing here constitutes an offer to sell or a solicitation of an offer to buy any security or recommendation of any security or trading practice.
