ICE agreed to buy Trayport from BGC Partners in November 2015, completing the deal the following month.
The UK’s Competition and Markets, which began reviewing the takeover in January 2016 and launched an in-depth investigation of the deal in May, said in an October 17 statement that the “only effective way to preserve competition is to require ICE to sell Trayport”.
A spokesman for ICE said: “ICE is disappointed by the decision, having presented a compelling clearance case, and will now consider its options including the possibility of an appeal.”
Trayport’s software underpins more than 85% of European utilities derivatives trading, according to the CMA. The firm licenses its technology platform to brokers, allowing them access to the European over-the-counter utility markets.
Simon Polito, chairman of the CMA’s inquiry, said in the statement: “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.”
He said that could create a range of adverse consequences for traders and venues in the “vitally important” wholesale energy markets.
Polito added: “Having looked at this in detail and sought views from a range of market participants, we believe that the only effective way to preserve competition is to require ICE to sell Trayport.”
Atlanta-based ICE has quickly grown into one of the world’s largest exchange and clearing groups, covering energy, agriculture and financial derivatives. It bought the London-based International Petroleum Exchange in 2001 and, through its 2011 acquisition of NYSE Euronext, also acquired the London derivatives market Liffe.