Global exchange operator Intercontinental Exchange (ICE) has been told to sell its energy trading firm it bought last December.
That’s the final decision from the Competition and Markets Authority (CMA) following an investigation, which states the $650 million purchase of Trayport could reduce competition between ICE and its rivals to launch new products, find innovative trading solutions and enter markets with new offerings.
The watchdog also found it could lead to increased fees for execution and clearing and worse terms offered to traders.
Trayport’s software products form an integrated platform which underpins around 85% of European utilities trading, according to the CMA.
It added ICE will have to sell Trayport to a new owner, to be approved by the CMA, in order to preserve competition.
Simon Polito, Inquiry Chair said: “Participants in this market have a high level of dependence on Trayport’s integrated software offering, alternatives are weak and barriers to entry in this market are high.
“We found that the merged company would have the ability and incentive to use its ownership of Trayport to restrict the competitiveness of ICE’s rivals. This could lead to a range of adverse consequences for traders and venues in the vitally important wholesale energy markets including higher prices, a general worsening of terms and quality and less innovative trading solutions.”
Earlier this week, the CMA launched a consultation on measures to help microbusinesses and households on the most expensive tariffs find better deals.
Market trends and the effects of Brexit will form part of the discussions at the Energy Live 2016 conference on November 3rd in London. Limited free tickets available for energy end users and university students.