Lynn Martin, NYSE president and chair of fixed income & data services at ICE, said the group is uniquely positioned to benefit from the trend of further automation, adoption of large language models and artificial intelligence.
Martin was interviewed at the UBS Fintech Leaders Conference on 14 September.
She explained that ICE’s connectivity business will benefit from the increased use of AI because the power required for these models continues to increase, which translates into more demand for more access.
“Demand for power in our data centres is at a record high and I do not see that declining,” Martin added.
The number of users oN the ICE Chat platform, which is powered by AI, has also grown at a 15% cumulative annual rate over the last five years to reach around 125,000.
Demand has grown as regulation has increased and ICE Chat has a compliance tool for logging conversations. In addition ICE has invested in developing recognition software which is based on a proprietary large language model and is only open in its ecosystem.
“The software can detect if you are talking about a trade idea and pop in a fair value based on the data we see in the market,” said Martin. “If an option product is being discussed, it will throw in some greeks as well.”
Once a price has been agreed, the trade can also automatically be submitted to ICE’s execution platforms and clearing house. Clients started to meaningfully use ICE Chat about two years ago in the energy segment, and trade volume has increased, although it is still small.
Martin said: “We think there is a lot of applicability across different asset classes so there is a bunch of room to run. Given our expertise and the fact that we have been such a trusted source for data, I think the AI trend positions us incredibly well, which is why I am so bullish on the data business.”
Fixed income data and analytics
Martin admitted that revenue growth from ICE’s fixed income data and analytics had been slowing but to the challenging environment for fixed income over the last eight years but the environment is improving and more funds are launching.
“We started to see an uptick in the amount of fixed income funds being created at the end of the second quarter and that has continued in the third quarter,” she added.
There are also record levels of assets benchmarks against ICE’s fixed income indices at $526bn according to Martin.
“This is tremendous considering that when we acquired the Bank of America indices five years ago we had less than $100bn,” she said.
In addition, there has also been a recalibration away from lower capture into the higher revenue capture indices which she said would start to manifest itself in the bottom line, and debt issuance may soon pick up.
“We are very confident in the mid single-digit growth and have been executing on that since 2015 when we formed the fixed income & data services business,” Martin added. “We have developed an amazing ability to take unstructured data in markets, distil that into useful pieces of data, integrate it with better known market datasets that the market is used to consuming and that is where we see the biggest tailwind.”
