U.S. Equities Market ObservationsThomas Farley, IntercontinentalExchange

October 2013

›Global derivatives markets leadership

›Broad distribution, network effect

›Organic growth, M&A leader

›Positioned ahead of financial regulatory reform

›Innovation to serve customer needs

›Consistent growth and strong returns

* Energy volume includes cleared OTC energy contracts transitioned to futures contracts on October 15, 2012 and all periods have been adjusted to reflect these contracts as futures

Intro to ICE: Derivatives Market Leadership

Futures Markets Structure

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› Lit, regulated markets with very few order types

› No interconnectedness

› Posted prices always respected / prioritized

› All customers interact in same venue

› All customers treated the same

› Principles-based regulation

Futures Markets Performance

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› No fragmentation

› Low complexity

› Low cost

› Deep liquidity

› Significant competition

› Rapid innovation

Cash Equity Markets Structure

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› Combination of: Lit, regulated markets with dozens of

order types Dark pools Internalization of retail orders

› Mandatory interconnectedness

› Posted prices not prioritized

› Different customer segments transact in different places

› Customers given different treatment

› Rules-based regulation

Cash Equity Markets Performance

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› Highly fragmented

› Highly complex, less transparent

› Costly for most stakeholder groups

› Most liquidity resides at NBBO and is concentrated in top names

› Customer dissatisfaction with status quo

Catalysts for Improving Market Structure

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› Regulators may choose to act New regulations Review reforms Rescind prior regulations

› Market practitioners may choose to act Innovations New business practices

Regulators as a Catalyst Many of Chair White’s Key Priorities are Encouraging

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› Focus on the needs of: Issuers/public companies Investors that participate in the market

directly Investors that participate through

institutional investors

› Improve the operational integrity of markets

› Preserve transparent trading models that inspire confidence

Market Practitioners as a CatalystThe Current Environment of Concern Makes Evolution Possible

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› Discontent is shared across customer segments: Sell-side Buy-side Retail HFT

› This environment of discontent may create the best opportunity to effect change for the better

NYSE: A History of Leadership

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› Concern about the equities markets (or futures markets for that matter) is not new: for 200+ years the efficiency

and fairness of equities markets has been alternately praised and questioned

› Markets have undergone repeating cycles of fragmentation and consolidation

› Through this period, one entity has stood consistently for free and fair markets that support capital formation: NYSE

ICE Track RecordDeveloping Customer-Focused Markets

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› ICE builds markets to serve the needs of the core users of the market

› ICE markets are characterized by operational and risk management integrity

› Industry-wide initiatives involving ICE to improve and/or evolve our markets have been a key to our success

Potential Areas of Focus Post-Closing of ICE/NYSE Transaction

› Increase respect for displayed prices and price discovery throughout industry

› Reduce complexity & fragmentation of cash equities markets

› Identify the root of fragmentation and re-aggregate liquidity

› Increase transparency and fairness of practices among exchanges, ATS/ECNs and broker-dealers

› Improve operational & risk controls at each venue and market-wide

› Evolve towards fairer and simpler pricing models throughout industry

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Summary

› Equities markets have become more fragmented and complex over the past two decades

› Opportunity exists to improve market dynamics for multiple stakeholder groups

› Such improvement will rely on leadership from both market practitioners and regulators

› ICE/NYSE combination brings together cash equities market leader with customer-focused market operator

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Questions

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Extra Slides

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Example Futures Market Liquidity v. Equity Market Liquidity

ICE Russell 2000 Futures  TF

iShares Russell 2000  IWM

Index Value1 1,100.80 109.44

Contract Size1 $100 x index index value

Notional Value1 $110,080 $109.44

ADV ($)2 $12.86 bill 4.08 billValue of Open

Positions $36.44 bill $0.656 bill

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