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The ICE Vox

Official posts from ICE and NYSE Communications

Thursday, Sep. 28, 2023

Why a government shutdown could not come at a worse time

From Lynn Martin, President, NYSE Group

Now is not the time to threaten companies’ ability to raise capital.

Our U.S. capital markets are the envy of the world, allowing companies across a broad range of industries to raise the capital they need to drive growth and innovation. Following a lengthy slowdown, the IPO market recently began to regain momentum, starting with transactions that took place at the New York Stock Exchange in the second quarter of this year.

A government closure would impede federal regulators from processing filings for IPOs and other transactions, and potentially impact investor confidence and market performance. I’d urge our elected leaders to seek common ground in support of our capital markets at this critical time for the global economy.

Monday, Sep. 25, 2023

Celebrating the intersection of climate and capital at ICE and NYSE during NYC Climate Week

From Elizabeth King President, Sustainable Finance & Chief Regulatory Officer, ICE

For those who live and work in New York City, the start of fall is not only characterized by the changing of leaves or aroma of pumpkin spice, but also the road closures and traffic delays that accompany the UN General Assembly and coinciding Climate Week.

Against the backdrop of the IPO of Klaviyo on the New York Stock Exchange, signaling the increasing energy returning to the IPO market, we hosted a number of events last week at the NYSE, where the intersection of climate and capital is embodied and celebrated. To kick-off NYC Climate Week, the NYSE hosted the launch of the Taskforce on Nature-Related Financial Disclosures (TNFD) Natural Capital Standards on Monday.

TNFD Co-Chairs David Craig and Elizabeth Maruma Mrema addressed the audience, sharing their excitement of the launch and bringing some bees and plants on the trading floor “to bring nature into the financial markets.”

The NYSE proudly hosted this milestone event as an organization that understands the importance of transparency to financial markets and the global economy, as well as the key role of standardization in delivering the transparency on which our markets rely.

Our community of NYSE listed companies and ICE’s data and exchange clients have a growing appreciation of the importance of natural capital and the need to understand and measure the risks to which assets are exposed. The launch of the TNFD framework is a valuable partner to companies as they measure and disclose the risks associated with nature’s critical enabling role in their businesses.

On Wednesday, ICE hosted its annual Climate and Capital Conference to bring together industry leaders across the investment, business and climate communities to discuss emerging climate-related challenges and opportunities. With the positive response of last year’s event and the many connections and conversations it generated, we decided to make this an annual meeting and welcomed Accenture this year as a co-host and sponsor.

To open the conference, David Craig’s keynote remarks shared with the audience that “[t]he financial industry is starting to realize the magnitude of nature and climate risks. Nature risk is quite larger than what many companies thought.”

The event was structured around three interconnected themes: adaptation, innovation, and regulation.

Adaptation is an important element to our success living in a world where we’ve greatly impacted the natural environment. Innovation is a key component of how we're going to solve the climate problem. And regulation continues to be an important issue to shareholders, stakeholders, and customers of companies that are driving disclosure and commitments to reducing emissions and net zero goals.

During the conference, I had the privilege of talking to Kamran Khan, Managing Director and Head of ESG in Asia Pacific at Deutsche Bank, in a fireside chat to discuss how to measure impact with the right data. “Investors can only make smart decisions with effective, useful, and timely data. In the ESG world, it’s important to think about private versus publicly available data, which is being created as we speak and different metrics being presented by TCFD, TNFD, ISSB, among others,” Khan shared.

“When thinking about making smart business decisions that are also impactful, players like ICE who can combine financial data with well-monitored non-financial data into the same package are very well placed,” he added.

We were also pleased to welcome Jeffrey Ubben, Founder and Managing Partner of Inclusive Capital Partners, to open the Innovation portion of the day, and also appeared on a recent episode of Inside the ICE House.

According to Ubben, “The urgency of this situation around atmospheric CO2 is how do we decarbonize now and how do we do it at scale.” He added, “The best way to do it now is to work with carbon emitters themselves, who are often left out of the conversation or run away from by the ESG community.”

To round out the week, the NYSE hosted the UN Sustainable Development Goals Investment Forum on Thursday, where the conversation centered around investment in critical areas of sustainable development. As demand for impact investing continues to grow, the UN SDGs remain as one key framework of measuring impact for investors.

We at ICE look forward to continuing the conversation around climate and capital at COP28 in UAE later this year.

Tuesday, Aug. 22, 2023

An impactful first year for the NYSE Institute

From John Tuttle, NYSE Vice Chair, NYSE Institute President

When we first announced the NYSE Institute’s launch a little more than a year ago, the response was overwhelmingly positive. Members from all parts of our community immediately understood the power of codifying the New York Stock Exchange’s efforts in global affairs and policy in support of our listed companies and markets.

Since that time, the NYSE has been at the center of many of the biggest policy issues of the day, from the war in Ukraine to the federal debt-limit debate, the future of our markets to collaboration with exchanges across the globe. By the numbers, it’s been quite a first year for the Institute.

The NYSE has hosted delegations from more than 30 countries and met with seven current heads of state. Our in-person programs have brought more than 1,500 attendees to the NYSE, including nearly 500 representing our listed companies. We have welcomed to 11 Wall Street four U.S. cabinet secretaries, met in person with one-quarter of the U.S. Senate, commented on six SEC or PCAOB rulemakings, and signed memorandums of understanding with five global exchanges.

Numbers alone, though, don’t fully capture the NYSE’s impact over the past year. The NYSE is the destination for world leaders and government officials who wish to reach the global business community and the Institute’s work has underscored this unique position.

When Ukraine President Volodymyr Zelenskyy needed to appeal for the world’s economic support, he gave a speech from the NYSE. When U.S. House Speaker Kevin McCarthy sought to kick off debate on the federal debt ceiling, he addressed the nation from 11 Wall Street. When Treasury Secretary Janet Yellen wanted the global business community’s feedback on the administration’s China policy, she visited the exchange. When Japanese Prime Minister Fumio Kishida wanted to outline his economic plan for Japan, he spoke from our Board Room.

“For inspiration, we need look no farther than to the dynamism of NYSE, which remains ever-vibrant, ever-renewing and ever-changing,” Kishida said during his remarks. World leaders. Local officials. Republicans. Democrats. The NYSE provides a platform for those seeking to share ideas on issues that matter.

Since our July 2022 launch, the NYSE has continued working to shape the world around us. Our collaborations with global exchanges, for example, have resulted in the introduction of active ETF listings in Japan. At home, we have worked with regulators to craft key rules that govern our markets. We have traveled on the road to host half a dozen roundtables for issuers on public company issues such as clawbacks, SEC climate disclosures and proxy advisors, with more to come. Our policy newsletter for listed companies now reaches an active readership of nearly 10,000.

Next month, the United Nations General Assembly convenes in New York City, and we have been hard at work creating activities around this annual diplomatic gathering. Stay tuned for much more from the NYSE Institute. We are just getting started!

Wednesday, Aug. 02, 2023

The failed promise of unregulated crypto

From Chris Edmonds, ICE Chief Development Officer

Markets have short memories. Four years ago, ICE created a fully-regulated, physically-delivered crypto futures market, with institutional-grade custody provided by ICE’s then-subsidiary, Bakkt. The custodian was regulated by the New York State Department of Financial Services - a license which is, rightly, not easy to obtain - and all crypto transactions were protected by our highly regulated clearing house.

Why did we start here? The answer is simple. The history of markets shows that physically delivered commodities provide price signals and allowing such pricing to occur in a transparent manner with clear rules INCREASES consumer confidence.

Working with Bakkt, ICE spent two years building from the ground up the safest version of a custody solution for digital assets. We built a custodian to store physical bitcoin with round-the-clock, state of the art security. We offered the most regulated environment for institutions to trade an unregulated asset class.

It was months and months of work, not without setbacks, and requiring copious amounts of perseverance and patience. But we were propelled by a vision to bring a regulated, connected infrastructure to digital assets to build confidence in crypto. And in doing so, we were applying a vision that has been consistent with our focus these past two decades – to bring transparency and trust to unregulated markets.

That was in 2019. The market did not then - and we believe evidence continues to show still does not - value the fully regulated, physically delivered crypto market. Rather, the market continues to congregate around the unregulated or cash-settled crypto markets, even despite news of some crypto firms defrauding customers of their money. So, we are perplexed by the supposed disappointment in the market on the recent news that another venture to bring a regulated custodian crypto service was recently abandoned.

The success of the regulated, cleared model has proven itself over again - through the volatility of the pandemic, the Ukraine war, and the UK’s mini budget. When the market was sucked into the hype around FTX, we consistently said that the crypto market remained immature and volatile, and that it was at risk of market manipulation, fraud, illicit finance and lack of governance, with economic, technical, ethical and public policy issues that needed to be addressed. The well-publicized failures in crypto over the last year show that the “traditional” finance model - with aspects like segregated customer funds - exist to keep customers’ money safe and secure.

The exchange and clearing industry provide critical financial infrastructure so that markets can discover the price of an asset and manage risk. And over the past 18 months, the industry has done that consistently through some of the most volatile trading days ever witnessed. Belts and braces of trading finance have an underappreciated mature role. We should not forget these strengths and we must not allow rules around crypto to create regulatory arbitrage which would be detrimental to the stability of the market. Crypto can only develop as a true asset class if it follows existing regulation under which markets in the real world operate.

Thursday, Mar. 16, 2023

How higher taxes on share buybacks will hurt public companies and their shareholders

From John Tuttle, NYSE Vice Chair, NYSE Institute President

Quadrupling the tax on share buybacks, as the White House recently proposed, is an idea that never should have made it off the drawing board.

Publicly traded companies, including those listed on the New York Stock Exchange, use share buybacks as a tax-efficient tool to return excess capital to their shareholders. Who are these shareholders? Ultimately, the vast majority are millions of ordinary Americans saving for retirement, college education and their financial freedom.

The Biden administration thinks increasing the tax rate on this important tool, from 1% to 4%, will force companies to allocate their capital in a different way.

Could this work? Rather than rely on opinion, we surveyed the leaders of some of our largest NYSE-listed companies about the moves they’d make if the envisioned tax hike becomes law. The answers to our informal poll were informative.

  • The majority of NYSE-listed company leaders who responded said they would rely more on dividends or special dividends to return capital to shareholders if the buyback tax was quadrupled.
  • These leaders responded unanimously that the proposed policy would not prompt them to increase capital expenditures, hiring, or research and development.

Analyzing the results suggests that not only would the proposed buyback tax increase fail to achieve its goals, but it would harm ordinary investors. It would also threaten the public company ecosystem that is so critical to the U.S. economy.

Capital allocation is a core responsibility of management teams and their boards of directors. Returning capital to the real owners of a company — its shareholders — has real value. A company repurchasing its stock avoids the pressure to invest sub-optimally. Instead, the company is giving its investors the choice of where those funds are allocated. It’s their money, after all.

The fact that listed-company leaders answered that they would not alter their approach to capital expenditures, hiring and R&D — the central premise of the tax increase — if buyback taxes are increased makes perfect sense. This is because the decision to return capital to shareholders typically takes place after decisions about reinvesting in the business. It is the unused money left over, once those decisions are made, that is commonly used for buybacks.

The shift our NYSE leaders foreshadow — from buybacks to dividends and special dividends — points to a serious problem with the proposed tax increase. Dividends can trigger taxable events for investors. So, rather than changing companies’ approach to capital allocation, taxing buybacks would simply take money out of the pockets of ordinary investors at a time when they are already contending with rising interest rates, inflation and geopolitical uncertainty.

Finally, it’s important to note that in addition to stockholders, the buyback tax also stands to harm our ecosystem of public companies — and all the jobs those companies create. In a market awash in private capital, this artificial barrier to returning capital to shareholders represents yet another disincentive for companies to go public, or remain public. We need more public companies to invest in, not fewer.

The truth is this: A higher tax on stock buybacks stands to hurt all of us, public companies, shareholders and employees alike.

Monday, Mar. 06, 2023

Proposing an implementation path for the SEC’s market structure reforms

From Lynn Martin, NYSE President

The New York Stock Exchange today, and throughout history, occupies a pivotal position as the world’s largest and most iconic platform for capital raising and trading. We do not take our responsibility at the intersection of the listing, trading and regulatory oversight of securities on our markets lightly. Our focus is always on continuing to improve the U.S. markets to ensure they remain the envy of the world.

In December, the U.S. Securities and Exchange Commission proposed a set of market structure reforms that are ambitious in scope and have, at their heart, goals that I believe we all share: modernizing the rules that govern our markets while maintaining their status as a shining example for the world financial community. That said, we need to carefully implement any changes to avoid an unintended set of circumstances that may do more harm than good.

To that end, we have worked with Citadel Securities, the U.S. equity markets’ largest market maker, and Charles Schwab & Co., the largest retail brokerage firm, to offer a thoughtful compromise that we believe will quickly achieve the SEC’s core policy objectives while reducing the risk of negative outcomes. Our proposal is outlined in a joint comment letter filed today with the SEC.

At a high level, we recommend pressing forward with two of the package’s four proposed rule changes and suggest withdrawing two of them until the impact of the initial changes is understood. The two proposals that we, as a group, would advocate pursuing (with some suggested modifications) are, first, the harmonization and tightening of pricing increments across all market centers and, second, strengthening disclosures on the execution quality of orders.

As market participants and the Commission consider the many viewpoints that will be offered during the comment period on this market structure reform package, I hope they will consider our joint recommendations as intended — in the spirit of compromise and collective progress — to ensure the “gold standard” status of our markets is maintained.

Wednesday, Feb. 22, 2023

Former United Nations’ Climate Action Champion for COP26, Nigel Topping, becomes board member of ICE Benchmark Administration

From ICE Communications

Nigel served as the United Nations’ High-Level Climate Action Champion for COP26, hosted by the U.K. in Glasgow in 2021. Nigel was appointed to the position in January 2020 by then U.K. Prime Minister Boris Johnson, and held the role until the completion of COP27 in November 2022.

The role of Climate Action Champion was created in 2015 as part of the Paris Agreement and aims to connect governments and the private sector to mobilize a stronger response to climate change. Nigel was responsible for delivering action from businesses, investors, organizations, and cities on climate goals and coordinating these towards the UN Framework Convention on Climate Change.

“Markets can and will play a key role in directing capital towards the mitigation of climate change,” Nigel Topping explains. “I am excited to be joining IBA at a time when it increasingly turns its focus to delivering solutions to support more predictability that bring scale to environmental markets.”

Before his time with the United Nations, Nigel was the CEO of We Mean Business, where he drove collaboration for climate action among non-governmental organisations working with global businesses. The coalition played a key role in businesses supporting the Paris Agreement. He was also part of the management team at the Carbon Disclosure Project (CDP) from 2007-2014, an international non-profit organization that helps companies and cities disclose their environmental impact with a goal to make environmental reporting and risk management a business norm.

“Nigel has spent decades building organizations, coalitions and collaborative systems to support the business community as it progresses towards meeting decarbonization goals,” said Clive de Ruig, President of IBA. “Nigel brings valuable knowledge, skills and experience to our Board as we deploy our governance and technology expertise to support ICE’s customers and markets in responding effectively to the challenges inherent in achieving climate goals.”

IBA is one of the world’s most experienced administrators of regulated benchmarks. Last year it launched the ICE Carbon Reference Data Service (ICE CRED) to facilitate the management of carbon credits across the trade lifecycle.

Designed to help reduce operational risk and cost, and deliver scalability, ICE CRED gives buyers and sellers of carbon credits enhanced reference data to manage their carbon credit trading processes. The reference data service assigns a unique ICE Carbon Credit Reference Identifier (ICE CREF) to carbon credits for each project and vintage, providing a universal reference code to facilitate their use.

If you’re interested in using ICE CRED, please visit https://www.ice.com/marketdata/reports/285 or contact [email protected] and read our ICE CRED FAQs.

Tuesday, Nov. 29, 2022

ICE plans to launch its first ammonia futures contract

From ICE Communications

In an expansion of ICE’s alternative fuels complex, plans are underway to launch an ammonia futures contract on January 16, 2023, subject to regulatory approval.

Created for market participants who want to manage their exposure to ammonia price risk, the cash settled futures contract will be based on Argus Media’s daily price assessment for delivered ammonia cargos into northwest Europe.

"We’re excited about the potential that the ammonia contract has. Given the multiple use applications for ammonia including, increasingly, as a viable alternative fuel source, this contract fits well into our global energy product offering. We look forward to working with our customers to develop the market further,” said Jeff Barbuto, Global Head of Oil Markets at ICE.

Today, an estimated 70% of the supply of global ammonia is used in agriculture as a fertilizer, particularly in Europe. Other uses include in chemical production, cold storage and pharmaceutical manufacturing.

In addition, one of the reasons ammonia has become more interesting to the market is due to its possible development as an alternative energy carrier. Ammonia’s use in agriculture means there is existing global infrastructure in place to produce, store and transport the gas, and discussion continues around its use as a large-scale energy and transport sector solution.

“The contract is based on an established ammonia assessment and we believe this futures contract also has the potential to be used as a barometer against which other ammonia contracts can be created, providing further price discovery and transparency as new technologies and markets evolve,” continued Jeff Barbuto.

Ammonia is being suggested as an additional source for marine fuel, as a means to transport hydrogen, and as an energy storage solution. The gas could also play a significant role in a green-energy future with “clean ammonia” showing promise as a carbon-free alterative. Blue ammonia is produced from fossil sources with carbon capture and storage, while green ammonia is produced from renewably-sourced hydrogen in a process called electrolysis.