Clearing Operations

We operate six clearing houses, each of which acts as a central counterparty that becomes the buyer to every seller and the seller to every buyer for its clearing members. Through this central counterparty function, the clearing houses provide financial security for each transaction for the duration of the position by limiting counterparty credit risk. Our clearing houses are responsible for providing clearing services to each of our futures exchanges, and in some cases outside of our execution venues, and are as follows, referred to herein collectively as "the ICE Clearing Houses":

ICE Clearing House Portion of Guaranty Fund Contribution

ICE Exchange Portion of Guaranty Fund Contribution

As of December 31,
(in millions)

Clearing House

Products Cleared

Exchange where Executed

Location

2018

2017

2018

ICE Clear Europe

Energy, agricultural, interest rates and equity index futures and options contracts and OTC European CDS instruments

ICE Futures Europe, ICE Futures U.S. and ICE Endex

U.K.

$150

$56

ICE Clear U.S.

Agricultural, metals, FX and equity index futures and options contracts

ICE Futures U.S

U.S.

ICE Clear Credit

North American, European, Asian-Pacific and Emerging Market CDS instruments

Creditex and third-party venues

U.S.

—

ICE Clear Netherlands

Approved to offer clearing of Dutch equity options

ICE Endex

—

ICE Clear Singapore

Energy, metals and financial futures products

ICE Futures Singapore

Singapore

—

ICE NGX

Physical North American natural gas, electricity and oil futures

ICE NGX

Canada

N/A

—

ICE Clear Canada

Canola contracts transitioned to ICE Clear U.S. on July 30, 2018 and ICE Clear Canada ceased operations.

N/A

Canada

N/A

—

Total

$253

$254

$67

As of December 31, 2018, ICE NGX maintains a guaranty fund utilizing a $100 million letter of credit discussed below.

We previously operated ICE Clear Canada for the clearing and settlement of our canola contracts traded through ICE Futures Canada. On July 30, 2018, and in connection with the transition of the trading in those contracts to ICE Futures U.S., we transitioned the clearing of those contracts to ICE Clear U.S., after which ICE Clear Canada ceased operations.

Original & Variation Margin

To reduce their exposure, the ICE Clearing Houses have a risk management program with both initial and ongoing membership standards. Each of the ICE Clearing Houses generally require all clearing members or participants to establish guaranty fund (discussed below) and collateral accounts, and require them to maintain cash on deposit or pledge certain assets. Such amounts in total are known as “original margin.” In addition, they may make intraday original margin calls in circumstances where market conditions require additional protection. The daily profits and losses to and from the ICE Clearing Houses due to the marking-to-market of open contracts is known as “variation margin.” With the exception of ICE NGX’s physical natural gas and physical power products discussed separately below, the ICE Clearing Houses mark all outstanding contracts to market, and therefore pay and collect variation margin, at least once daily.

The amounts that the clearing members and participants are required to maintain are determined by standardized parameters established by each ICE Clearing House and reviewed by the risk committees and the boards of directors of the respective ICE Clearing House and may fluctuate over time. Each of the ICE Clearing Houses is a separate legal entity and is not subject to the liabilities of the others, or the obligations of the members of the other ICE Clearing Houses.

Should a particular clearing member or participant fail to deposit its original margin, provide its collateral, or fail to make a variation margin payment, when and as required, the relevant ICE Clearing House may liquidate or hedge its open positions and use their original margin and guaranty fund deposits to make up any amount owed. In the event that those deposits are not sufficient to pay the amount owed in full, the ICE Clearing Houses may utilize the respective guaranty fund deposits or collect additional funds from their respective clearing members on a pro-rata basis for that purpose.

As of December 31, 2018 and 2017, the ICE Clearing Houses have received or have been pledged $121.4 billion and $92.6 billion, respectively, in cash and non-cash collateral in original margin and guaranty fund deposits to cover price movements of underlying contracts for both periods.

Guaranty Funds & ICE Contribution

Mechanisms have been created, called guaranty funds, to provide partial protection in the event of a clearing member default. Each of the ICE Clearing Houses generally require that each clearing member make deposits into a guaranty fund.

We have contributed our own capital, or “skin-in-the-game” on a voluntary basis which could be used if a defaulting clearing member’s original margin and guaranty fund deposits are insufficient, recorded as long-term restricted cash and cash equivalents in our balance sheets, and included in the table above.

The contributions to ICE Clear Europe include $100 million for futures and options and $50 million for CDS. These contributions, as well as those for ICE Clear U.S. and ICE Clear Credit, would be used after the funds of the defaulting clearing member but before other amounts within those guaranty funds.

Our risk management framework for our CDS markets through ICE Clear Credit and ICE Clear Europe is separate from our non-CDS clearing operations. Our CDS clearing houses are open-access, consistent with regulatory requirements, and we accept qualifying trades for clearing that are executed on other venues. As of December 31, 2018, our CDS clearing houses collectively clear 515 single name instruments and 154 CDS indexes.

Beginning in March 2018, certain of our exchanges are required to make similar contributions to be utilized pro rata along with the clearing contributions in the event of a clearing member default, subject to a minimum $10 million and based on average guaranty fund contributions for futures and options contracts per exchange. These are recorded as long-term restricted cash and cash equivalents in our balance sheet (Note 6), and were $67 million combined for ICE Futures Europe, ICE Futures U.S. and ICE Endex as of December 31, 2018 and included in the table above.

On January 31, 2019, we increased our contribution to ICE Clear Europe’s guaranty fund by $27 million due to changes in the size of its futures and options guaranty fund which included an increase to our exchange contribution to reflect an increase in the size of the average guaranty fund contributions.

Cash and Cash Equivalent Deposits

We have recorded cash and cash equivalent margin deposits and amounts due in our balance sheets as current assets with corresponding current liabilities to the clearing members. As of December 31, 2018, our cash and cash equivalent margin deposits are as follows (in millions):



	ICE Clear Europe ⁽¹⁾		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Other ICE Clearing Houses		Total
Original margin	$	27,597	$	22,770	$	6,260	$	—	$	3	$	56,630
Unsettled variation margin, net	—		—		—		417		—		417
Guaranty fund	3,267		2,456		460		—		5		6,188
Delivery contracts receivable/payable, net	—		—		—		720		—		720
Total	$	30,864	$	25,226	$	6,720	$	1,137	$	8	$	63,955

As of December 31, 2017, our cash and cash equivalent deposits, are as follows (in millions):



	ICE Clear Europe ⁽²⁾		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Other ICE Clearing Houses		Total
Original margin	$	19,792	$	20,703	$	3,898	$	—	$	126	$	44,519
Unsettled variation margin, net	—		—		—		227		1		228
Guaranty fund	3,037		2,607		299		—		23		5,966
Delivery contracts receivable/payable, net	—		—		—		509		—		509
Total	$	22,829	$	23,310	$	4,197	$	736	$	150	$	51,222

⁽¹⁾ $25.8 billion and $5.1 billion is related to futures and options and CDS, respectively.

⁽²⁾$18.5 billion and $4.3 billion is related to futures and options and CDS, respectively.

Our cash and cash equivalent margin and guaranty fund deposits are maintained in accounts with national banks and reputable financial institutions or secured through direct investments, primarily in U.S. Treasury securities with original maturities of less than three months, or reverse repurchase agreements with primarily overnight maturities. Details of our cash and cash equivalent deposits are as follows (in millions):



		As of December 31,
Clearing House	Investment Type	2018		2017
ICE Clear Europe	National Bank Account⁽¹⁾	$	8,647	$	4,002
ICE Clear Europe	Reverse repo	18,097		13,927
ICE Clear Europe	Sovereign Debt	4,035		4,868
ICE Clear Europe	Demand deposits	85		32
ICE Clear Credit	National Bank Account⁽²⁾	19,484		18,445
ICE Clear Credit	Reverse repo	1,935		1,680
ICE Clear Credit	Demand deposits	3,807		3,185
ICE Clear U.S.	Reverse repo	4,380		3,033
ICE Clear U.S.	U.S. Treasuries	2,340		1,164
ICE Clear Canada	Demand deposits	—		140
Other ICE Clearing Houses	Demand deposits	8		10
ICE NGX	Unsettled Variation Margin and Delivery Contracts Receivable/Payable	1,137		736
Total		$	63,955	$	51,222

⁽¹⁾As of December 31, 2018, ICE Clear Europe held €7.0 billion ($8.0 billion based on the euro/U.S. dollar exchange rate of 1.1466 as of December 31, 2018) at De Nederlandsche Bank, or DNB, and £500 million ($638 million based on the pound sterling/U.S. dollar exchange rate of 1.2756 as of December 31, 2018) at the Bank of England, or BOE. As of December 31, 2017, ICE Clear Europe held €3.3 billion ($4.0 billion based on the euro/U.S. dollar exchange rate of 1.2003 as of December 31, 2017) at DNB.

⁽²⁾ ICE Clear Credit is a systemically important financial market utility, or SIFMU, as designated by the Financial Stability Oversight Council, and holds its U.S. dollar cash margin in cash accounts at the Federal Reserve Bank of Chicago.

Other Deposits

In addition to the cash deposits above, the ICE Clearing Houses have also received other assets from clearing members, which include government obligations, and may include other non-cash collateral such as certain agency and corporate debt, letters of credit or gold to mitigate credit risk. For certain deposits, we may impose discount or “haircut” rates to ensure adequate collateral if market values fluctuate. The risks and rewards of these assets remain with the clearing members. Any gain or loss accrues to the clearing member. The ICE Clearing Houses have not sold or re-pledged these assets or experienced an event of a default. These pledged assets are not reflected in our balance sheets, and are as follows:



	As of December 31, 2018
	ICE Clear Europe		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Other ICE Clearing Houses		Total
Original margin:
Government securities at face value	$	29,887	$	12,990	$	10,208	$	—	$	—	$	53,085
Letters of credit	—		—		—		2,556		—		2,556
ICE NGX cash deposits	—		—		—		605		—		605
Total	$	29,887	$	12,990	$	10,208	$	3,161	$	—	$	56,246
Guaranty fund:
Government securities at face value	$	654	$	256	$	264	$	—	$	—	$	1,174



	As of December 31, 2017
	ICE Clear Europe		ICE Clear Credit		ICE Clear U.S.		ICE NGX		Other ICE Clearing Houses		Total
Original margin:
Government securities at face value	$	23,496	$	5,699	$	9,581	$	—	$	18	$	38,794
Letters of credit	—		—		—		1,663		—		1,663
ICE NGX cash deposits	—		—		—		233		—		233
Total	$	23,496	$	5,699	$	9,581	$	1,896	$	18	$	40,690
Guaranty fund:
Government securities at face value	$	323	$	176	$	169	$	—	$	2	$	670

ICE NGX

ICE NGX is the central counterparty to participants on opposite sides of its physically-settled contracts, and the balance related to delivered but unpaid contracts is recorded as a delivery contract net receivable, with an offsetting delivery contract net payable in our balance sheets. Unsettled variation margin equal to the fair value of open contracts is recorded as of each balance sheet date. Fair value is determined based on the difference between the original trade price and the settlement price. There is no impact on income for either delivery contracts receivable/payable or unsettled variation margin, and an equivalent amount is recognized as both an asset and a liability. ICE NGX marks all outstanding contracts to market daily, but only collects variation margin when a clearing member's or participant’s open position falls outside a specified percentage of its pledged collateral.

ICE NGX requires participants to maintain cash or letters of credit to serve as collateral in the event of default. The cash is maintained in a segregated bank account that is subject to a collateral agreement between the bank and ICE NGX, the trustee, and the cash remains the property of the participant, only accessed by ICE NGX if a default occurs. Since the cash is held in trust and remains the property of the participant, it is not included in our balance sheets. ICE NGX maintains the following accounts with a third-party Canadian chartered bank which are available in the event of physical settlement shortfalls:

Because it is not our policy to guaranty credit facilities of our clearing houses which maintain contingent liquidity facilities secured by highly liquid assets, in February 2018 we eliminated a $100 million guaranty that we had previously provided ICE NGX. As of December 31, 2018, ICE NGX maintains a guaranty fund utilizing a $100 million letter of credit that has been entered into with a major Canadian chartered bank and backed by a default insurance policy underwritten by Export Development Corporation, or EDC, a Canadian government agency. In event of a participant default, where a participant’s collateral becomes depleted, the remaining shortfall would be covered by a draw down on the letter of credit following which ICE NGX would pay the first $15 million in losses per its deductible and recover additional losses under the insurance policy up to $100 million.

Clearing House Exposure

The net notional value of unsettled contracts was $2.8 trillion as of December 31, 2018. Each ICE Clearing House bears financial counterparty credit risk and provides a central counterparty guarantee, or performance guarantee, to its clearing members or participants. Excluding the effects of original and variation margin, guaranty fund and collateral requirements, the ICE Clearing Houses’ maximum estimated exposure for this guarantee is $101.0 billion as of December 31, 2018, which represents the maximum estimated value by the ICE Clearing Houses of a hypothetical one-day movement in pricing of the underlying unsettled contracts. This value was determined using proprietary risk management software that simulates gains and losses based on historical market prices, volatility and other factors present at that point in time for those particular unsettled contracts. Future actual market price volatility could result in the exposure being significantly different than this amount.

We also performed calculations to determine the fair value of our counterparty performance guarantee taking into consideration factors such as daily settlement of contracts, margining and collateral requirements, other elements of our risk management program, historical evidence of default payments, and estimated probability of potential default payouts by the ICE Clearing Houses. Based on these analyses, the estimated counterparty performance guaranty liability was determined to be nominal and no liability was recorded as of December 31, 2018 or 2017. The ICE Clearing Houses have never experienced an incident of a clearing member default which has required the use of the guaranty funds of non-defaulting clearing members or the assets of the ICE Clearing Houses.

Account Type

As of December 31, 2018
(In C$ millions)

As of December 31, 2018
(In $USD millions)

Daylight liquidity facility

Overdraft facility