Fundamentally any exchange or market place or ecn' business model is designed to be such that it is a monopoly or atleast never loses a dime doing its business, since all the cost (impact cost) is passed on to the end participants.
And thanks to the network effect at economy of scales it is a win win to all.
Good business to be in , cause by default you become quasi regulatory since you have the power to make rules.
So when I read this bbc report which Said that US Regulators believe that Speculators(whom they call as manipulators) are the reason for the high price of Oil my eyes popped out and prayed that prakash karat never ever reads this, This contract accounts for almost a quarter to a third of my firms volumes and even by mistake if any of these cpi/cpi m read this then as far as the Crude Oil Contracts are concerned in India it is curtains or QED or worse still differential margining for hedgers and speculators (like Bursa Malayasia).
This is the news for sake of some
US regulators have announced plans to impose limits on oil trades overseas.
The US Commodity Futures Trading Commission said the London-based electronic exchange would have to comply with US rules.
The move comes as oil prices notch up record highs, amid fears that speculators are distorting the market.
As a result, fuel costs have shot up hitting the global economy. Airlines have been hit badly, with near record losses expected for 2008 in the US.
US airlines were forecast to report $10bn (£5bn) of losses this financial year as sky-high fuel costs erode profits, according to the industry group Air Transport Association (ATA).
Oil prices slipped from their record highs near $140 a barrel reached during Monday trade as investors were cautious ahead of plans by Saudi Arabia to increase production in July.
US sweet, light crude finished down 60 cents at $134.01, while London Brent settled 99 cents lower at $133.72.
Speculators to blame?
But, oil prices are still almost 40% higher than they were at the beginning of the year and, increasingly, this surge is being blamed on speculation by large investors, including hedge funds and banking giants.
They are being accused of pushing commodity prices way above the level they would trade at to satisfy supply and demand trends.
Representing US airlines, the ATA is one group pressing for tighter regulation and increased transparency in the energy markets.
Its head James May told a joint US Senate hearing on speculative oil trading that up to 200 US communities could lose airline service as a result of capacity cuts to save money.
"This nation's economy is inextricably linked to the viability of its air transportation system. If the airlines continue to spiral downward, so will the economy," he said.
Earlier, Air Canada announced that it would have to shed 2,000 jobs - a 7% reduction in its workforce - and ground 7% of its services to survive the rising fuel charges.
More disclosure
Under the plan announced by the US Commodity Futures Trading Commission (CFTC), trading of the West Texas Intermediate oil contract on the ICE Futures Europe - which hosts up to 30% of total trades - will by October be subject to stricter limits on individual positions.
It is hoped this will prevent the ability of a single entity to move oil prices.
Under the measures, European authorities will also share trading data with their US counterparts to improve transparency and crack down on market manipulation.
The ICE exchange said it would comply with US regulatory requirements subject to approval by the Financial Services Authority.
The acting head of the CFTC Walter Lukken said in testimony at a Senate hearing committee: "During these turbulent market conditions for crude oil, the environment is ripe for those wanting to illegally manipulate the markets," he said.
about ICE
IntercontinentalExchange (NYSE: ICE) is an American financial company that operates Internet-based marketplaces which trade futures and over-the-counter (OTC) energy and commodity contracts as well as derivative financial products. While the company's original focus was energy products (crude and refined oil, natural gas, power, and emissions), recent acquisitions have expanded its activity into the "soft" commodities (e.g. sugar, cotton and coffee), foreign exchange and equity index futures.
Currently ICE is organized into three business lines:
ICE Markets - futures, options, and OTC markets. Energy futures are traded via ICE Futures Europe; soft commodity futures/options are handled by ICE Futures U.S.
ICE Services - electronic trade confirmations and education.
ICE Data - electronic delivery of market data, including real-time trades, historical prices and daily indices. Contracts sold through ICE Futures U.S. are processed through a subsidiary, ICE Clear U.S. Energy futures and OTC contracts are currently cleared externally, through LCH.Clearnet, Ltd., but ICE has announced plans to transition these operations to a new subsidiary, ICE Clear Europe, by mid-2008.
Headquartered in Atlanta, ICE also has offices in Calgary, Chicago, Houston, London, New York and Singapore, with regional telecommunications hubs in Chicago, New York, London and Singapore.
In the late 1990s, Jeffrey Sprecher, ICE’s founder, chairman, and Chief Executive Officer, acquired Continental Power Exchange, Inc. with the objective of developing an Internet-based platform to provide a more transparent and efficient market structure for OTC energy commodity trading. In May 2000, IntercontinentalExchange (ICE) was established, with its founding shareholders representing some of the world’s largest energy traders. The company’s stated mission was to transform OTC trading by providing an open, accessible, multi-dealer, around-the-clock electronic energy exchange. The new exchange offered the trading community better price transparency, more efficiency, greater liquidity and lower costs than manual trading.
In June of 2001, ICE expanded its business into futures trading by acquiring the International Petroleum Exchange (IPE), now ICE Futures Europe, which operated Europe’s leading open-outcry energy futures exchange. Since 2003, ICE has partnered with the Chicago Climate Exchange (CCX) to host its electronic marketplace. In April of 2005, the entire ICE portfolio of energy futures became fully electronic.
ICE became a publicly traded company on November 16, 2005, and was added to the Russell 1000 Index on June 30, 2006. The company expanded rapidly in 2007, acquiring the New York Board of Trade (NYBOT), ChemConnect (a chemical commodity market), and the Winnipeg Commodity Exchange. In March of 2007 ICE made an unsuccessful $9.9 billion bid for the Chicago Board of Trade, which was instead acquired by the Chicago Mercantile Exchange.
In January 2008 ICE partnered with TSX Group's Natural Gas Exchange, expanding their offering to clearing and settlement services for physical OTC natural gas contracts
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