Intercontinental Exchange continues its expansion into the municipal market, announcing Thursday it has acquired risQ and Level 11, two climate-change focused technology firms, to manage climate change risk and grow ICE’s alternative data capabilities in U.S. fixed income markets.
ICE also announced leadership changes this week, naming Lynn Martin president of the New York Stock Exchange, which ICE owns. She will continue to serve as chair of ICE Fixed Income and Data Services to help guide that business as Amanda Hindlian, currently the global head of capital markets at the NYSE, becomes its new president.
Mark Heckert, chief product officer of ICE Fixed Income and Data Services, will “add leadership of the index and desktop areas of the segment as he broadens his duties,” Jeff Sprecher, founder, chairman and CEO of Intercontinental Exchange, said in a letter to employees.
Thursday’s announcement of the risQ purchase brings another move further into munis for ICE, which has been growing its presence in the space through various partnerships and acquisitions over the past few years.
“When ICE acquired Interactive Data in 2015, and later S&P’s Securities Evaluations business, we quickly realized that munis were uniquely positioned to benefit from the strengths that ICE brings to markets,” Heckert told The Bond Buyer. “Whereas municipal bonds are an extremely broad and complex asset class with a high number of issuers and both national and regional participation, ICE has deep experience investing in innovation and is committed to technology to enhance transparency and efficiently connect participants.”
ICE had already partnered with risQ in August to create social impact scores, which allows the service’s users to compare which local communities will be socially impacted the most by their investments, a strong component in socially conscious investing, which is designed to advance environmental, social and governance issues. They began their partnership to provide climate data in January 2020.
“Understanding and measuring climate risk, and its impact on investment decisions, continues to be a growing area of focus for our customers,” Martin said. “risQ and Level 11 Analytics provide unique data sets and platforms, and their strong analytical background and focus on ESG factors, real estate and the mortgage markets, serve as fertile ground for creating innovative products that offer more insights for our customers.”
Level 11 Analytics developed much of the underlying geospatial technology and analytics and, together with risQ, offers ESG and economic data on physical land use and the financial assets tied to it in the mortgage-backed securities market.
“Bridging the gap between environmental risks and financial assets has been a key focus in the evolution of our business and the products that we offer,” said Chris Hartshorn, chief commercial officer of risQ and co-founder of Level 11 Analytics who will lead the joint group as part of ICE. “With its vast amounts of high-quality data and coverage of markets, ICE has been a great partner in launching new alternative forms of data for the fixed income market.”
Terms of the transaction were not disclosed, and the financial impact will not be material to ICE or impact the company’s capital return plans.
ICE Data Services in September acquired Andrew Kalotay Associates to enhance its fixed income analytics, bringing Kalotay’s proprietary software to ICE’s network of data, analytics and execution services for municipal bonds and other fixed-income securities.
In July, ICE Bonds integrated Investortools’ Perform fixed-income portfolio platform. In May, ICE invested in BondLink in a deal that provides data sets to BondLink’s municipal issuer clients. The year before, BondLink partnered with ICE to give issuers a cloud-based market data dashboard on a real-time basis.
In April, Lumesis made the tax-exempt ICE Municipal Yield Curve and spreads for all underlying trades available to customers using its DIVER New Issue and Secondary Pricing services.
In January, ICE partnered with ADP to launch an offering for the muni market that linked ADP insights on demographics and compensation to specific bond issuers and geographic zones.
In 2020, risQ partnered with ICE to bringing its data to the muni market by providing analysis of climate risks for issuers. And in 2019, ICE launched the ICE US Broad Municipal Index, (MUNI), which tracks the performance of more than 58,000 investment-grade tax-exempts.
“Our investments in TMC Bonds for electronic trading, and our investments in BondLink, Kalotay and now risQ deepened our ability to provide unique insights to market participants,” Heckert said. “We’re excited to keep working with investors, and other market participants to develop new products that improve transparency and enhance risk management opportunities.”