NYMEX Clearing Firm Says ICE Froze It Out

NEW YORK (HedgeWorld.com)–MBF Clearing Corp., a clearing member of the New York Mercantile Exchange, filed a civil antitrust action against the Intercontinental Exchange, Atlanta, Thursday [Feb. 2], alleging that ICE breached a contract in order to maintain a monopoly in the markets for electronically traded natural gas and oil futures contracts.

Kelly Loeffler, ICE vice president of investor and public relations, said Friday that she hadn’t seen the complaint, and she declined to comment on any of its contentions.

The complaint makes reference to the “intense rivalry” between ICE and NYMEX, one of the most recent manifestations of which is the announcement that NYMEX will introduce an electronically traded contract for Brent Crude, a contract approved by the United Kingdom’s Financial Services Authority for trading beginning Jan. 26.

MBF plans to be a market maker for those contracts.

In November 2005, MBF and ICE entered into a contract allowing MBF and its customers direct access to ICE. Before that, ABN Amro, an ICE clearing firm, had mediated MBF and its customers’ access to ICE. This agreement provides for 30 days’ written notice in the event of its termination by either party.

But on Dec. 7, John Hill of ICE informed an MBF employee “flatly that ICE had shut down MBF’s access.” The complaint alleges that Mr. Hill was explicit that the shutdown was the result of the competitive threat that MBF posed to ICE by virtue of its role as a volume creator on NYMEX’s developing electronic platform. He offered another reason for the cut-off too: that MBF’s clients weren’t conducting enough business on ICE to justify the continued connection.

The complaint maintains that this cut-off of MBF was one instance of a broader and illegal pattern of anti-competitive conduct on ICE’s part, and asks for a monetary award for the damage the action has done to MBF (under antitrust law, the actual damages are trebled in the award) as well as injunctive relief.