LONDON, 19 January 2003— Enraged members of London’s International Petroleum Exchange (IPE) are planning to buy their market back from its American owner, the Intercontinental Exchange (ICE).
Trading members of the IPE, which include major oil companies, investment banks and independent dealers, have been forced into action because they feel the Atlanta-based ICE has so far failed to realize the full potential of the IPE.
The five organizing members of the buyout, who are keeping their identity secret, claim they have received enough support throughout the close-knit trading community to be "quietly confident" that the deal can be made to work.
The ICE, an electronic trading platform set up and owned by a combine of energy companies and banks, bought the 20-year-old IPE in 2001 at a stage when the market believed electronic trading was the natural future for the exchange. Despite a series of assurances from ICE, and the fact that a conversion was a central part of the deal, the IPE has still not been fully converted to electronic trading.
Another source of intense anger among IPE members is that they sold out to the ICE in an all-paper deal on the understanding the US exchange would float itself off, giving them their only chance to reap the financial rewards of the deal.
As one IPE member said: "Let’s face it, a flotation really isn’t going to happen now." IPE members have made repeated attempts to exact firm answers from the ICE management. Some of them have written to Richard Ward, the IPE’s chief executive, to demand status reports on the conversion to electronic trading and other accounting details.
In one letter to Ward, a member said: "In hindsight we apparently have agreed to a bad deal. We accept responsibility for that mistake.
However, we also believe accountability for the ICE/IPE failures to move forward should be reviewed in a similar light and appropriate changes made to either enable the deal to go through as presented or be canceled." The deal by which the IPE was bought has also come under attack in the post-Enron scrutiny of trading practices in the US. Some IPE members believe the share options they received when the market was sold had been artificially inflated by fake trades — a claim denied by the ICE.
In the US, the ICE has come under investigation for its involvement in so-called "round-trip" or "wash" trading. This is a process by which simultaneous "buy" and "sell" trades are made between the same trading partners with the principal aim of inflating trading volumes. (The Independent)
