US-based financial clearinghouse network IntercontinentalExchange (ICE) announced Friday that it was buying SuperDerivatives, whose options and derivative trading platform is used by banks and financial institutions around the world. The company, which was founded in Israel in 2000, has offices in eight cities around the world, and does most of its back-office and development work in Tel Aviv.
According to reports, ICE is acquiring SuperDerivatives for about $350 million. The company has around 250 employees in Israel.
ICE owns and operates 23 marketplaces in the US, Canada and Europe, among them the New York Stock Exchange and Euronext. Headquartered in Atlanta, ICE has offices in New York, London, Chicago, Houston, Winnipeg, Amsterdam, Calgary, Washington, D.C., San Francisco and Singapore.
Derivatives are one of the more esoteric trading contracts, which derives its values from the performance of an underlying asset.
Options contracts, such as where a company will pay for commodities such as oil or wheat months before they are refined or harvested, are one type of derivative. The contract price is based not on market value, but on the expectations of the market. If the price of the commodity rises, the owner of the contract can exercise their option and buy the commodity at the lower contract price (called the strike price). Other derivatives include even more complicated contracts such as futures, forwards, and swaps.
SuperDerivatives developed technology to enable banks and financial firms to accurately analyze and price derivatives, allowing rational trading on a single platform that allows customers and institutions to efficiently make trades. The company also manages a financial derivatives information platform. SuperDerivatives counts among its clients some of the world’s largest banks, including Deutsche Bank, Citigroup, Credit Suisse, and Barclays. ICE, its new owner, was also a SuperDerivatives customer.
The ICE purchase is a cash transaction, Israeli media reports said. It is set to close in the fourth quarter of this year.
Jeffrey C. Sprecher, ICE Chairman and CEO, said “SuperDerivatives is an innovative developer of valuable derivatives data and technology, and will play a key role in extending our financial market clearing and data capabilities. We already work with SuperDerivatives in our existing businesses and we look forward to extending that work with the global SuperDerivatives team as we grow our risk management services across our global exchanges and clearing houses.”
David Gershon, SuperDerivatives Chairman and CEO added that “over the past few years ICE has taken the lead in shaping the evolution of the financial markets. We strongly believe that with the data, technology and the broad suite of products SuperDerivatives offers there are great benefits we can deliver to the market including efficiency, transparency and innovation. We believe that joining with ICE opens a tremendous opportunity for us to deliver our innovative products and services across the globe.”