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Intercontinental (ICE) to Launch Futures Exchange in Abu Dhabi

Zacks Equity Research

Intercontinental Exchange, Inc. ICE is set to launch ICE Futures Abu Dhabi (IFAD). The contracts will be based on Abu Dhabi National Oil Company's (ADNOC) Murban crude oil.

The exchange will allow trading in Murban crude-oil future contracts. Future contracts allow different parties such as buyers, producers, sellers, refiners, traders to lock in oil prices to protect themselves from any fluctuation.

ICE Futures Abu Dhabi (IFAD), being set up in Abu Dhabi Global Market (ADGM), has been accepted as a Recognized Investment Exchange by the Financial Services Regulatory Authority. IFAD is expected to be introduced in the first half of 2020, subject to regulatory approval from key jurisdictions.

Recently, a new pricing mechanism for ADNOC's Murban crude has been declared by Abu Dhabi's Supreme Petroleum Council (SPC). As a result of such a mechanism, Murban pricing will be market-driven, forward pricing, using Murban futures contract as its price marker. ADNOC is also authorized to remove restrictions on Murban crude sales by the SPC.

The launch of IFAD next year will provide an opportunity to trade and hedge Murban in a regulated, transparent and accessible venue. The pricing and trading mechanism of Murban crude will change remarkably with the launch of IFAD and the recent decision of SPC. Additionally, Abu Dhabi's status has been boosted as a global energy hub.

The launch of IFAD will complement the company’s Energy business, which is already performing strongly. Third-quarter revenues from the Energy business increased 19% year over year. Average daily volume across its oil complex increased 15% year over year, led by 15% growth in Brent and 24% growth in other crude and refined oil complex.

Shares of this Zacks Rank #2 (Buy) industry player have gained 21% year to date, outperforming the industry’s increase of 17.1%. The company’s policy of ramping up growth and capital position should continue to drive share price higher.

Other Stocks to Consider

Some other top-ranked insurance stocks include MarketAxess Holdings Incorporation MKTX, CME Group Incorporation CME and Nasdaq Incorporation NDAQ. While MarketAxess Holdings sports a Zacks Rank #1 (Strong Buy), CME Group and Nasdaq carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MarketAxess Holdings operates an electronic trading platform that enables fixed-income market participants to trade corporate bonds and other types of fixed-income instruments worldwide. Its average four-quarter positive surprise is 1.45%.

CME Group offers a range of products across various asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, and metals, as well as fixed income products. The company delivered average four-quarter positive surprise of 2.88%.

Nasdaq provides trading, clearing, marketplace technology, regulatory, securities listing, information, and public and private company services worldwide.  It came up with average four-quarter positive surprise of 2.94%.

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