FIA EXPO: ICE’s Brian Norris talks ESG investment, carbon credits and market data

This fall, more than 3,000 industry attendees gathered at the Sheraton Grand Chicago Riverwalk to meet with the most innovative technology and service providers.

FinanceFeeds Editor in Chief Nikolai Isayev sat down with Brian Norris, VP of Global Sales and Trading Solutions at Intercontinental Exchange (ICE), to discuss challenges and opportunities for exchange-traded markets and the role of their respective offerings in the years ahead.

This interview touches on the need for the industry to adopt the latest technologies to enhance investor protection and sustainable business, his motivation to continually improve things and keep ICE at the heart of the derivative industry.

Firstly, we asked Mr. Norris about his impression of this particular show and if he had the opportunity to attend any panels or meet with partners over the course of the expo.

Brian told us that market participants assessing industry    trends, seeking ways to increase efficiency, or looking for new growth opportunities will find answers at FIA Expo. From sessions featuring industry experts, top regulators, exchange leaders, to the exhibit hall that brings innovative,  diverse solutions to the forefront, the prestigious event has everything they need.

“There were some good panels, a lot of very informative sessions. It’s a diverse set of topics, usually seen at the FIA. So when you talk about futures and options, we have a very strong, knowledgeable scope of industry participants. And from the exchange perspective, ICE had a good representation, multiple panelists, ranging from CEO Jeff Sprecher, who sat on the fireside chat, and other ICE Senior execs that participated on relevant panels. So it was a great opportunity to showcase some of our views on the industry and trends where ICE is driving innovation , and most importantly, how we’re helping customers in very dynamic markets like equities, fixed income, currencies, commodities, and across the global spectrum of asset classes.”

Norris elaborated that they view themselves as a technology company providing solutions to help automate workflows and transform business processes to a more automated fashion.

Speaking about the recent expansion of ICE’s wireless capabilities in Europe, ICE’s VP of Trading Solutions said the move highlights their commitment to their customers and  industry participants  with innovative connectivity  to the global data centers and key liquidity in Frankfurt, Bergamo, and London. He explained that their wireless solutions are designed to provide customers with consistent, low-latency performance and high performance connectivity between major trading hubs across the UK and Europe.

Following Euronext’s migration to Bergamo, the exchange operator expanded its wireless network to connect markets in London and Frankfurt to the new location. Similarly, ICE plans to add the new London Stock Exchange data center in the London Docklands to its wireless portfolio when it goes live next year.

“Providing access to multiple markets via wireless is a very sophisticated technology, capital intensive to build from scratch. We’ve done that in North America, and also leveraged key partners in Asiafor wireless networks in both geographies.  Europe was just the next logical step for us to help democratize some of that access to trading venues  for customers who not only need low latency access, but also high performance uptime, which is critical to a viable wireless offering.”

We asked Brian Norris about recent announcements from BlackRock and Vanguard, which involved trials to give investors more say over how their shares are voted at corporate meetings.

Norris didn’t explicitly comment on voting programs offered by BlackRock and Vanguard. But he said it’s clear that investors don’t want to sit on the sidelines anymore; they have a view on corporate governance, and they want a meaningful way to express those views.

“I don’t want to make any assumptions about Blackrock or Vanguard, but it’s growing in popularity among retail participants and opening the door to new investors.”

He added that a sharper focus on sustainability means that market participants are looking beyond traditional ways to assess risks and opportunities, and are factoring in environmental, social and governance (ESG) issues into their decision-making.

Norris also pointed out that ICE already offers a range of cross asset sustainable finance data and tools that provide a comprehensive view of ESG issues across the market to help customers uncover opportunities, manage risk, and ensure transparency.

In a related context, we discussed ICE’s new products that provide a carbon credit futures contract portfolio and allow market participants to buy, sell and hedge carbon credits.

Brian notes that the United States and other countries are obviously taking climate change seriously. He also highlighted that many global companies   have pledged to reach net zero emissions, and they may seek to use nature-based credits to help compensate for emission reductions they are unable to cut from their operations. ICE has introduced 11 new Nature Based carbon credit futures contracts that were welcomed by several big name companies and trading houses.

On its part, ICE’s structure for the carbon credit vintages was developed through extensive discussions with a wide community covering corporate buyers, developers, trading houses, and financials. He believes that the new carbon credit futures satisfy the key demands of the market and provide a forward curve out to 2030, while customers can extend carry trades for multiple years.

ICE has operated environmental markets for over a decade, having traded the equivalent of $1 trillion in notional value of carbon allowances in 2021. That amount is equal to over half the world’s estimated total annual energy-related emissions footprint. The exchange’s EU ETS accounts for 95% of the global environmental commodity futures complex, and is the most liquid of all, he said.

Brian also sees a lot of room for growth and demand in these products as global voluntary carbon markets are growing exponentially with more corporations seeking to meet net-zero pledges. He thinks that this trend provides opportunity for investors looking to capture exposure to the rapid growth that is expected to continue. As such, ICE helps many stakeholders move to a cleaner energy environment and meet climate targets to support a sustainable future.

Turning to ICE’s commodities franchise, we spoke about its effort to drive more transparency to the crude oil market with the launch of real-time North American physical crude pricing.

Brian said the move is set to further establish the exchange within the Gulf Coast and the Midland WTI futures contract. ICE came out with live calculations of the volume weighted average price for 12 grades of oil traded across major hubs.

Explaining the rationale behind the move, Brian believes that transparent pricing for crude oil on the water in the Gulf Coast and in the production basin has never been more relevant to global oil markets. Out pricing data comes from a partnership with Link Data Services, in cooperation with Link Crude Resources, which he described as the most active physical broker of North American crude.

Our last question was about possible inconsistencies in the market data industry’s pricing, which, according to some FIA EXPO participants, continue to exist and pose challenges for customers who need to navigate through a lack of transparency.

Nikolai indicated to Brian that “some of the comments heard throughout the conference were that the price of data just continues to gradually go up. Unfortunately, individuals or companies that have a data services component have to transfer those costs to the end users. From a regulatory standpoint, the regulators understand that this is sort of the case today. However, they haven’t necessarily moved on creating any legislation or any practices that would somehow create the playing field in the sense. “

To this end Brian noted: “[ICE] generates data, as part of ICE’s Fixed Income and Data Services business, and a lot of the services we offer as an Exchange or as a data services vendor are actually regulated.”

“We hope the new cloud initiatives that we’re undertaking would help reduce some of the costs for our customers, either for historical data collection, or many other use cases across different asset classes. So yeah, our hope is that the value that we’re providing and the very innovative nature of the data services that we’re offering exceed the expectations of our customers and justifies the investment.”

Finally, Brian Norris spoke extensively about ICE’s data solutions that cover a broad range of asset classes, delivered to help customers address their investing, trading, compliance and risk management requirements. He believes that ICE has tailored a very robust, innovative and comprehensive set of services and information to address different industry needs with pricing, analytics, price discovery, and exchange data in a flexible manner.