ICE Faces Potential Sale of Trayport Over CMA Inquiry into Lessening of Competition

ICE's acquisition of the UK-based platform from BGC Partners was finalized in December last year for $650 million; however an inquiry into the deal was opened by the CMA in January and then referred for an "in-depth" investigation in May by an independent panel.

Outlining its findings, the CMA raised concerns over a potential lessening of competition as a direct result of the acquisition, stating that "not only traders, but also the brokers, exchanges and clearinghouses that compete with ICE depend on the Trayport platform to carry out their energy trading activities effectively."

The ultimate concern of the CMA is the possibility of ICE diverting trades to its own platforms, as well as increasing fees for execution and clearing, and worsening terms offered to traders. As a result, one potential remedy proposed by the authority is for ICE to completely divest its ownership of Trayport.

"We examined the merger's competition risks and given the high level of dependence of market participants on Trayport's integrated software offering, we provisionally concluded that the merged entity would have the ability and incentive to harm ICE's main rivals' ability to compete effectively," said Simon Polito, chair of the CMA inquiry, in a statement. "This could lead to higher prices, a general worsening of terms and less innovative trading solutions offered to traders in wholesale energy markets."