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Trefis TeamTrefis Team , Contributor

After a solid performance in the previous three quarters, IntercontinentalExchange‘s derivative trading volumes saw a year-over-year decline in November. Commodity volumes declined by 3%, and financial derivatives saw a 10% dip. Among commodities, energy derivatives were 4% below the year-ago figure. This is largely due to the fact that energy derivatives saw strong demand towards the end of 2016, with the surge in oil prices due to cuts in production. However, the volumes did see impressive growth compared to the previous month, with a more than 9% increase. With the improvement in U.S. macro conditions, we expect the overall trading volumes to grow further going forward.

Due to the rate hike in June 2016, and the expectations of further rate increases by the end of 2016 (which did occur), IntercontinentalExchange’s interest rate derivative volumes registered a sharp increase in November 2016. Consequently, November 2017 saw a 10% decline in financial derivatives volumes due to the difficult year-on-year comparison. However, we expect further growth in trading volumes with the Fed’s expectation of further hikes in the year ahead. Meanwhile, we expect that metals – despite having shown a slight decline – will likely remain in demand as a safe investment asset, leading to fairly steady volumes.

We have a $70 price estimate for ICE’s stock, which is about in line with the current market price.

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