Given the record growth in our industry, which regions and asset classes will lead in 2025 and beyond?
The new US administration has pledged to increase US energy production, which could change the supply chain dynamics of the world’s energy supply – and, hence, the global risk that will need management. Energy demand growth, particularly in Asia, coupled with power deregulation trends in Japan, increased US energy exports, and the multi-decade non-linear energy transition all point to a growing use of market-based pricing and risk management tools. Global natural gas markets continue to benefit from natural gas being both mobile (in the form of LNG) and cleaner than other fossil fuels.
With new governments in the US, UK and EU Commission, we expect new policy decisions that will impact inflation and employment, which could drive continued demand for interest rate risk management in 2025.
And, when thinking about the current robust artificial intelligence investment environment, access to low-interest costs of capital and abundant, low-cost energy could further play into global risk management needs, as well as stimulate
the US equity markets forward relative to other regions.
What do you see as the biggest risk to continued growth in trading volume?
Unfortunately, this is an easy answer – government action and regulation. Poorly constructed regulations and misguided government actions have had some of the most lasting impacts on global economies. Whether they are already highly developed, or still on their way, one of the biggest growth inhibitors is poorly conceived government policy.
As a result, we work very closely with regulators and other government officials to encourage clear, principles-based regulations, aligned with international best practices. Markets, by nature, span geographic borders – so consistent standards alongside regulatory deference are important to the health of global markets.
Have regulators struck the appropriate balance between addressing risk and promoting innovation?
Since the financial crisis, the trend has been for regulators to move away from principles-based regulations and rely more on rules-based regulations. The problem is that prescriptive rules, by definition, only work for a prescribed set of circumstances and can become a point of friction any time circumstances change.
Principles-based regulations are, by design, more flexible, which is important for both innovation and managing risk – as there is flexibility for a reasonable regulator to apply principles that best mitigate risk when circumstances change, without having to write more rules. It is not a linear tradeoff between innovation and risk management in the sense that simple but well-conceived principles-based regulations better support both innovation and risk management. Overly complex and prescriptive rules-based regulations do neither well, creating a “tick box” environment with compliance burdens that divert attention from making markets work better.
And thinking about innovation, which technology advances offer the most opportunity looking forward?
We are likely going to see hardware play a larger role in leading and enabling product development than we’ve seen in the recent past. We have found that whenever you add computing capacity, which is clearly happening in the race to AI, the market finds a way to use it. So, with all the capacity that is being rolled out right now, whether it is for AI models or other needs, the market will be innovating around the big increase in compute. Those massive upgrades in hardware will lead to innovations in software.
We are also seeing real advances in material science driven by advances in AI, paving the way for further innovation in compute, networking, power generation and storage.
What is the biggest challenge ahead for your exchange or the industry as a whole?
One obvious area regulators need to get right is cryptocurrency regulation. As regulations continue to evolve around the world, we need to make sure that crypto operates in a manner consistent with proven market protections, and that new regulation does not introduce new risks into the markets.
More than any other asset class, crypto trading has shown the risk of having different regulations in different countries. And, tested, smart rules and infrastructure can encourage innovation and efficient access to capital while mitigating risk.
Given the rapid pace of new products introduced in 2024, which three excite you most?
ICE’s recent launch of EU bond index futures will be interesting. It’s not often that you get to see a new rates market created by government fiat. We are continuing to see several products mature from existing over-the-counter structures, such as US Treasury clearing and total return swaps converting into total return futures.
Energy markets may also continue to be full of interest, as we witness potential shifts in energy production and delivery.
ICE has built a robust US home mortgage platform, covering the lifecycle of a loan from origination through to servicing and the capital markets. With each step in that process, data collection may offer more intelligence and transparency to other markets that we serve. We are already using such data in new indices that benchmark investments and ETFs.
We are also working on several new services that will leverage our deep experience in mortgages and financial markets in ways that can create excitement.
What more can the industry do to improve diversity in financial markets?
I think one of the more interesting things we are seeing in the US is a shift away from Northeast colleges, including the Ivy League. We see a cascade of students applying to state schools, where they are choosing strong academics coupled with a laid-back lifestyle that attracts diversity, particularly at many southern and midwestern schools. This trend is good for recruiting at our Atlanta headquarters. It’s one reason why we are expanding in Jacksonville, Florida, surrounded by one of the best state university systems in the country.
What was the most interesting film or play you saw in 2024?
That’s not the way I spend my free time. Nada.
What was the best book you read in 2024?
Paper Soldiers, by Saleha Mohsin, about the global growth of the US dollar and the role that Treasury has played in that evolution.
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