Quote:
Originally Posted by newflyer
You obviously don't know securities regulations.
The commodity clearing house is based in Winnipeg and is fixed in Winnioeg by charter. It can't nor will be moved to Atlanta or anywhere else. Winnipeg will become the centre of derivitive trading in Canada, backed by the marketing power of the Chicago Board of trade. ICE needed to purchase a chartered Canadian exchange with clearing house .. and the WCE is the one they picked, due to its involvement in commodities to match with the CBT, making it ICE world's largest commodity company in the world, with chartered exchanges in the States and Canada. Canada having massive amounts of commodity trading .. and Winnioeg to pick up that business.
Talking to a few in the industry they say look for significant expansion, especially if Winnipeg gets into base metals and energy trading, which is ICE stated intensions. This could be huge for Winnipeg.
Alberta can dig it up ... and Winnipeg can sell it.  |
The Intercontinental Exchange has been the biggest commodity trading house for years (it surpassed NYMEX two years ago). It didn't need the WCE to reach that milestone. The ICE has been buying companies at a rate of 4-5 per year over the past couple of years and the WCE is barely a blip in their financials.
As for energy trading there MIGHT be the possibility of some temporary equity derivatives trading. However the TSX is set to release their platform in early 2009 (delayed due to an agreement with the Montreal Exchange) so it could be short lived based on the dominance that it has over the publically traded equities in the energy and resources sectors.
As for physical energy trading in Canada most of the natural gas is traded at NGX (TSX owned with an ICE alliance). NGX made an alliance with ICE earlier this year in which NGX will act as the clearing house and all trades will be executed on the ICE screen. Thus increasing physical liquidity on the ICE screen and more clearing business for NGX. As a result the NGX screen will probably be shut down by the end of the year. The Alberta Securities Commission has no issues with this as the trades are still "NGX trades" and in terms of legal aspects are still "in Calgary".
I suspect that this will be much like what will happen to WCE. The trades will legally be under Manitoba jurisdiction but the trades will occur electronically on the ICE screen. As I said earlier you will see infrastructure, software development and other jobs getting axed and the people remaining in Winnipeg will be more of a marketing, listings and legal staff. There is no doubt that this is good for those that own ICE shares and that the WCE-related business will be a boost (albeit a small one) for the ICE shares, however don't expect hundreds of jobs to be created or new office expansion. I expect that the ICE will reduce the Winnipeg office probably by half. Any growth mentioned will be financial, trade volumes and overall market liquidity. The profits will reside in Atlanta and will be distributed to ICE shareholders accordingly and business taxes will be paid in the US. Manitoba will be lucky to get any taxes other than income tax from the WCE after the sale is complete.
The WCE was sold for basically one reason. The fact that the ICE is HUGE and provides them visibility on thousands of traders desktops throughout the world. The WCE had no way of competing and was essentially required to sell or sink. There is no way that the WCE could have ever had a derivatives screen that would rival ICE.