为实现这一目标，ICE和科技、咨询、零售业的巨头微软、波士顿咨询集团、星巴克以及堡垒投资集团（Fortress Investment Group）、 Eagle Seven和海纳国际集团（ Susquehanna International Group）都达成了合作关系，但ICE未立刻披露各投资伙伴的总投资额。
Bitcoin could be on the verge of breaking through as a mainstream currency. At least that’s the goal of a startup that is soon to be launched by one of the most powerful players on Wall Street, with backing from some of America’s leading companies.
On the morning of August 3rd, the Intercontinental Exchange—the trading colossus that owns the New York Stock Exchange and other global marketplaces—announced that it is forming a new company called Bakkt. The new venture, which is expected to launch in November, will offer a federally regulated market for Bitcoin. With the creation of Bakkt, ICE aims to transform Bitcoin into a trusted global currency with broad usage.
To achieve that vision, ICE is partnering with heavyweights from the worlds of technology, consulting, and retail: Microsoft, Boston Consulting Group, and Starbucks. ICE did not immediately disclose the total investment of the investment partners, a group which also includes Fortress Investment Group, Eagle Seven, and Susquehanna International Group—or the ownership stakes.
The founding imperative for Bakkt will be to make Bitcoin a sound and secure offering for key constituents that now mostly shun it—the world’s big financial institutions. The goal is to clear the way for major money managers to offer Bitcoin mutual funds, pension funds, and ETFs, as highly regulated, mainstream investments.
The next step after that could be using Bitcoin to replace your credit card.
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant, and consumer participation in digital assets by promoting greater efficiency, security, and utility,” said Kelly Loeffler, ICE’s head of digital assets, who will serve as CEO of Bakkt, in the press release announcing the launch. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce.”
In an exclusive interview, Loeffler (pronounced “Leffler”) told Fortune that ICE and its partners have been “building the factory” that will power Bakkt in the strictest secrecy for the past 14 months. The name of the company was only decided in the past two weeks. Loeffler explains that “Bakkt” is a play on “backed,” as in “asset-backed securities,” and it’s meant to evoke a highly-trusted investment.
If the Bakkt blueprint works as planned, a panoply of new Bitcoin funds would tap the pent-up demand for the cryptocurrency, making it a safe and easy choice for everyday investors—notably millennials getting their first 401(k)s. Wall Street could then tap Bitcoin’s popularity as an alternative to stocks and bonds to generate giant trading volumes. And that flood of institutional buying and selling, in turn, would take the terror out of Bitcoin by smoothing its wild swings in price.
The volatility of the cryptocurrency has both attracted individual speculators and scared off institutional money. In the fall of 2017, the price of Bitcoin spiked from $6,400 to nearly $20,000; it has since fallen back to around $7,700.
Cracking the 401(k) and IRA market for cryptocurrency would be a huge win for Bakkt. But the startup’s plans raise the prospect of an even more ambitious goal: Using Bitcoin to streamline and disrupt the world of retail payments by moving consumers from swiping credit cards to scanning their Bitcoin apps. The market opportunity is gigantic: Consumers worldwide are paying lofty credit card or online-shopping fees on $25 trillion a year in annual purchases.
Bakkt’s founders tell Fortune that the institutional investor campaign is the first of two phases. They’re a little coy about the second phase. But the presence of Starbucks and Microsoft strongly suggests that Bakkt will strive to revolutionize the way consumers pay at the mall and online. The coffee giant is already a leading player in encouraging customers to pay with the their smartphones rather than their credit cards. And Microsoft, through its Azure cloud business, serves a huge base of retailers, handling back-office tasks from invoice processing to e-commerce.
“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted, and regulated applications for consumers to convert their digital assets into U.S. dollars for use at Starbucks,” said Maria Smith, vice president, Partnerships and Payments for Starbucks, in the press release.
Bakkt is the brainchild of Jeff Sprecher, the founder, chairman, and CEO of ICE, and a disrupter par excellence. Sprecher (pronounced “Sprecker”) stands alone as the leading force in modernizing the world’s exchanges in recent years from open-outcry pits into super-efficient electronic marketplaces. Along the way, Sprecher built a flailing electricity exchange that he reportedly purchased for $1 into a global trading and data empire now worth $44 billion. “In 25 years he’s gone from nothing to the most powerful exchange entrepreneur in the world,” says Larry Tabb, chief of consultancy the Tabb Group. “He hasn’t failed yet.”
斯普雷彻想把加密货币带给大众的想法和比特币支持者们的通常想法背道而驰。纯粹主义者支持比特币的“分散化”结构，坚决反对把大交易所放在比特币投资或支付体系的中心。“在交易中间设置监护人进行规范交易违悖了比特币的基本理念。”风投公司Draper Associates的加密货币分析员阿布舍克· 普尼亚说。“比特币的设计理念是去中心化，没有中间人收取费用。在规范的交易所进行交易的方式可能会流行一阵子，但无法代表未来。比特币的未来是坚持个人对个人交易的原始理念。”
Today ICE is the world’s second largest owner of financial exchanges by revenue behind the CME, and one of the largest purveyors of market data. ICE’s 2017 revenues of $4.6 billion divide pretty evenly between those two main franchises. ICE owns twelve exchanges, served by six clearing houses. And to the delight of shareholders, Sprecher has delivered profitability as much as growth. Since going public in 2006, ICE has delivered annual total returns of 24.1%. The company’s towering 54% margin of net profits ranked fourth in the S&P 500 last year.
Even in the heavily-fragmented galaxy of stock and bond trading, ICE has established a Brobdingnagian footprint. The NYSE is by far world’s largest stock market, trading 1.5 billion shares a day—or nearly one-in-four of all equity transactions. ICE also owns NYSE American, the leading platform for mid-cap companies, as well as Arca, the world’s largest marketplace for ETFs. ICE is the world leader in almost all categories of futures for “soft” agricultural commodities such as sugar, coffee, and cotton, chiefly through its 2007 acquisition of the New York Board of Trade. And ICE Futures Europe is the dominant global marketplace for the Brent crude, the global oil price benchmark.
Now Sprecher, the visionary who assembled this empire, is crusading to make Wall Street asset managers and Main Street consumers love Bitcoin.
Sprecher and his investment partners are putting this one-of-a-kind mission in the hands of a first-time CEO who’s Sprecher’s soulmate in both business and in life: Kelly Loeffler. The ICE executive has ridden shotgun alongside Sprecher since the company’s fledgling days in 2002. In 2004, they married. Loeffler long ran marketing, investor relations, and communications for ICE. Now she’s giving up her ICE roles to run Bakkt.
Over the past two months, Sprecher and Loeffler sat for several hours of exclusive interviews with Fortune. Above all, they emphasized how Bakkt, in part by exploiting ICE’s trading infrastructure, could provide precisely the tools Bitcoin needs to achieve broad acceptance.
At a recent meeting with the couple in the plush Bond Room at the NYSE, Sprecher stressed that Loeffler has been a collaborator in charting ICE’s next big move. “Kelly and I brainstormed for five years to find a strategy for digital currencies,” says Sprecher.
At first glance, the pair present an unusual twosome: At over six-feet in her high heels, Loeffler, 47, stands much taller than her 63-year old husband. But their bond is quickly apparent—a passion for gig ideas that need lots of tinkering to succeed. “I’m an engineer who likes to fix things that are broken,” says Sprecher, who repairs his vintage Porsche racecars on weekends. “And Bitcoin was the epitome of a broken model that if fixed, could change the world.”
Adds Loeffler, “Jeff and I get excited about big things that for most people, seem to have no answer.”
If they succeed with Bakkt, it could be the biggest development in the churning, hazardous frontier of cryptocurrencies since a mysterious programmer (or programmers) under the pseudonym Satoshi Nakamoto unveiled Bitcoin in 2009.
Sprecher’s plan for bringing crypto to the masses runs contrary to what Bitcoin supporters typically champion. The purists favor Bitcoin’s “distributed” architecture, and adamantly oppose putting a big exchange at the center of the both the Bitcoin investment and payments systems. “A regulated exchange with a custodian in the middle contradicts the basic idea of Bitcoin,” says Abhishek Punia, a crypto-currency analyst with venture capital firm Draper Associates. “Bitcoin was designed to be decentralized, without intermediaries taking fees. A regulated exchange may be popular for a short period of time, but it’s not the future. The future will be the original idea of a peer-to-peer network.”
Sprecher and Loeffler disagree, arguing that a strong central infrastructure is precisely what’s needed, and that ICE and its partners are the ones to supply it. The challenge is getting the banks, asset managers, and endowments to embrace Bitcoin. “Being from the exchange world, we looked at the problem differently,” says Loeffler.
The big institutions are ICE’s main customers, and Sprecher and Loeffler understood their thinking about crypto-currencies. They reckoned that Bitcoin could thrive as a mainstream investment because the big money managers recognize that ten of millions of their current and future investors want to own it––if it can be packaged as mutual funds and ETFs. “The institutions saw that Bitcoin had lots of appeal as a store of value like gold or silver,” says Loeffler.
To study how digital currencies work, ICE in early 2015 took a minority stake in the largest U.S.-based marketplace for digital currencies, Coinbase. “Coinbase has twice as many customers as Charles Schwab,” says Loeffler. “Many of the people who have opened accounts on Coinbase are millennials who use it to make small investments in crypto-currencies.”
Adds Sprecher: “Millennials don’t trust traditional financial institutions. To gain their trust, banks, brokerages, and asset managers can use a currency that millennials believe in, like Bitcoin. Using digital currencies brings a lot of sizzle.”
So far, cryptocurrencies have gained little traction with asset managers like Fidelity and Vanguard. The reason, says Sprecher, is that “Bitcoin does not have a good market structure.” For consumers, it’s expensive to exchange dollars for Bitcoin, in part because trading is spread thinly across too many venues that individually do too little trading. He notes that more than 200 marketplaces trade over a dozen major digital currencies, from ether to Ripple to Litecoin. “Even for Bitcoin, different markets are posting lots of different prices,” says Sprecher. “And you can pay an up to 6% spread to exchange dollars for Bitcoin, meaning Bitcoin needs to rise by as much 6% before you break even.”
Cryptocurrencies today serve primarily as a vehicle for speculation by daredevil traders, and by the hedge funds that own 80% of the roughly $300 billion in digital currencies worldwide. (Bitcoin is by far the biggest cryptocurrency for now, with a recent total value of around $134 billion.) The combination of rampant betting and relatively arid liquidity sent Bitcoin careening through four bear markets in the decade since its creation. “The result is a crisis of confidence,” says Loeffler.
In addition, the freewheeling Bitcoin ethos clashes with the ultra-cautious, post-financial crisis mindset on Wall Street that emphasizes safeguarding the investor at all costs. “People at the big institutions have the view that cryptocurrencies can be unsavory actors procured by elicit means,” says Loeffler.
Not to mention that some on Wall Street still view cryptocurrencies as being run by “kids” whose motivation can be summarized as, “Let’s screw the banks and do it all ourselves.”
But Sprecher and Loeffler concluded that fragmented marketplaces and alien culture weren’t the real reasons the institutions avoided Bitcoin. In their view, a broad universe of fans wanted to invest in Bitcoin or other digital tokens, but couldn’t find the right products. The solution: A new ecosystem that provided Bitcoin the same protections afforded the stocks, bonds, and commodities futures traded on ICE’s exchanges. That would open an investor universe far beyond a relatively small group of retail customers and adventurous hedge funds.
So why aren’t the Vanguards and Blackrocks taking a “serve them and they shall come” approach? For Sprecher and Loeffler, the reason is fundamental—and fixable. “Two things are missing,” says Sprecher. “Trading on an official exchange, and safe storage for digital currencies on an institutional scale.”
Put simply, Sprecher says, the big money managers won’t create digital currency funds unless they can first buy the tokens on a federally regulated exchange, and, second, store the tokens for their investors in accounts rendered super-secure by the safeguards provided by those exchanges.
Today, the tokens for cryptocurrencies such as Bitcoin and Ether aren’t traded at all on the major futures or securities exchanges. Official exchanges are overseen by the Commodities Futures Trading Commission (CFTC) for futures, and the Securities and Exchange Commission (SEC) for securities. The venues where folks exchange dollars or Euros for digital currencies—including the biggest ones such as Coinbase and Gemini—are often called “exchanges,” but they’re actually marketplaces that are licensed under state laws.
These platforms fall under three main regulatory regimes: First, Coinbase and many other marketplaces are licensed in the individual states as “money transmitters.” Second, Gemini, the platform founded by Cameron and Tyler Winklevoss, is licensed in its home state of New York as trust company, and that designation is its passport to operate in a number of other states. The third category are markets called SEFs; more on them in a bit.
虽然比特币不被认定为证券，但被认为是商品。CFTC的职责是监管商品期货和这些期货的期权，涵盖范围极广，包括从原油到大豆到黄金等各种商品的合约。由于比特币的商品属性，比特币期货只能在受到CFTC监管的期货交易所交易，这些交易所被称为指定的合约市场。（与其他货币交易市场类似，在“现货”基础上简单地将美元或欧元兑换成比特币的场所不需要由 CFTC 监管。）
重要的是要明白SEC或CFTC监管的大型交易所可以提供三种受到严格监督的服务： 交易、清算和安全储存（证券托管或期货仓库) 。交易所在交易中要确保基金经理点击的价格是他们为股票或期货合约支付的费用。交易所也针对清算和托管或交割仓储制定了严格的规则。这些规则必须通过SEC或CFTC的批准，并受其监管。
Bakkt将提供迄今为止最大的比特币交易市场。但它不会是第一个或唯一一个 CFTC监管的比特币交易平台。多德-弗兰克法案创造了被称为掉期执行设施或SEFs的交易市场，此类市场由CFTC监管。（这是我们前面提到的第三类市场。）例如，LedgerX 拥有一个使用互换合同将法定货币与“Next Day Bitcoin”进行交易的SEF；它还提供了由 CFTC监管的托管服务。（Gemini和Coinbase也提供托管服务。）SEFs的规模远不及诸如美国ICE期货交易所等大型交易所，机构客户的基础也小得多，但它们是日后的潜在竞争对手。
无论是管理比特币共同基金的机构还是用比特币进行跨境付款的公司，都可以将比特币委托给Bakkt。那这些客户如何使用他们的比特币支付？利用“私钥” 。私钥类似于数字签名，是由数字和字母随机生成的字符串。大多数比特币所有者将其密钥存储在个人电脑或服务器上，或者存放在不受管制的交易市场账户中。这些设备很容易受到黑客攻击，如果黑客窃取了密钥，被盗的比特币就归黑客了。Autonomous Research的数据表明，网络窃贼2011年来已经窃取了价值超过16亿美元的加密货币。
为了使比特币成为主流，Bakkt必须克服加密货币的主要缺点：速度极慢。比特币运行在一个称为区块链的系统上，在一个由数以百万计的个人成员组成的网络上进行操作，人们在网络上竞相进行打包和交易验证。事实上，每当网络中有比特币所有者使用数字钱包购物时，这笔交易就会被 “广播” 到网络中的所有“节点”也就是计算机上。每一个节点争相证明交易的合法性，因为赢家将获得免费比特币作为奖励。问题在于无论你是花1.50美元买杯咖啡还是6万美元买辆SUV，所有的交易都必须一笔一笔地广播到所有节点。
The reason why these trading platforms aren’t governed by either of the two federal watchdogs—the SEC or the CFTC—relates to how the two bodies classify cryptocurrencies. The SEC, which oversees stocks, bonds, and other securities, has said that the two biggest cryptocurrencies, Bitcoin and Ether, are not securities. The SEC is taking a wait-and-see approach to the others. So far, none of the current marketplaces have secured the SEC imprimatur as regulated securities exchanges for digital tokens.
While Bitcoin isn’t considered a security, it is deemed to be a commodity. It’s the job of the CFTC to regulate commodity futures and options on those futures—a vast portfolio comprising contracts for everything from crude oil to soybeans to gold. As it is a commodity, Bitcoin futures could only trade on a CFTC-regulated futures exchange, called a Designated Contract Market. (Similar to other currency trading marketplaces, a venue that simply exchanges dollars or Euros for Bitcoin on a “spot” basis do not need to be regulated by the CFTC.)
Today, the Chicago Board Options Exchange and Chicago Mercantile Exchange both trade futures contracts on Bitcoin. The contracts aren’t settled by delivering the actual coins. They’re settled in cash based on the movement of the price of Bitcoin. So in effect, they’re a vehicle for betting on the future price of the cryptocurrency.
Bitcoin’s designation as a commodity opens a rich opportunity for ICE: It now operates the two of the largest commodities futures exchanges on the planet—ICE Futures U.S., and ICE Futures Europe. For Sprecher and Loeffler, these venues provide exactly the type of protections needed to, as Loeffler puts it, “get the institutional engine running.”
It’s important to understand that the major exchanges regulated by the SEC or CFTC provide a broad package of three heavily-regulated services: trading, clearing, and either safe storage in the form of custody (for securities), or “warehouses” (for futures). On trades, the exchange ensures that the posted price the money manager clicks on is what they pay for a stock or futures contract. But the exchanges also set exacting rules for clearing and custody or warehousing. And those rules must be approved, and are overseen, by the SEC or CFTC
The federally-regulated exchanges require clearing services that effectively remove credit risk for both the buyer and seller. The clearing house guarantees that the seller will deliver the sugar, coffee, or gold as agreed under a futures contract, and that the buyer will make the full payment. If either fails to perform, it’s the clearing house––which is jointly funded by the trading firms that are members of the exchange and its owner, in this case ICE––that makes good on the delivery or the cash. As for safe storage, it comes in two flavors: custody for stocks and bonds, and warehousing for futures. SEC-regulated exchanges like the NYSE require that a mutual fund or pension fund hold their stock or bond certificates in super-safe accounts at such independent custody houses as State Street or BNY Mellon.
For futures, ICE and the other CFTC-regulated exchanges mandate that the coffee, gold, or silver that a party has agreed to purchase be stored in a licensed warehouse or other storage facility when the contract expires and the commodity is due for delivery. In effect, the buyer, whether a money manager like Vanguard or a user such as Cargill, can “pick up” the gold bars or bales of cotton at the warehouse. If the items aren’t there for pickup, or if the seller doesn’t pay, once again, it’s the clearing house that covers the losses.
Bakkt would provide the first fully-integrated package combining a major federally-regulated exchange, as well as with the clearing and storage overseen by the exchange. ICE owns six clearing houses that are vertically-integrated with ICE Futures U.S. and its other exchanges. By utilizing a CFTC regulated futures exchange for cryptocurrencies, Bakkt would provide two main layers of security that money managers regard as absolutely essential. The first is purchasing a security or commodity—in this case a digital token—through a regulated broker-dealer that’s a member of the ICE futures exchange.
The exchanges stipulate that depositors submit passports and articles of incorporation, and identify the source of funds used to purchase the assets. They also search for patterns of illegal activity. If one investor is, say, repeatedly losing money on oil trades to the same counter-party, those trades would raise a red flag, because the “loser” could be laundering money and getting kickbacks from the buyer.
Only broker-dealers and futures commission merchants (FCMs) that are fully vetted by the regulated exchanges are allowed to trade on those venues as “members” of the ICE Futures U.S. On SEC and CFTC regulated exchanges, the exchange-approved members are trading with one another, on behalf of money managers that they, in turn, have fully vetted. Granted the same protections, investors could be absolutely sure they’re not buying Bitcoin from warlords who hacked a hedge fund to pilfer the tokens.
The second essential is furnishing regulated storage for digital currencies. “A qualified warehouse is the difference between institutional investors’ getting in or staying out,” says Loeffler.
Bakkt’s approach is furnishing what amounts to super-safe lockboxes resembling the vaults that hold gold bars for investors. The warehouses serving futures exchanges provide two main services. First, they ensure that assets can’t be stolen. In Bitcoin’s case, that would mean safeguarding the tokens in digital lock-boxes protected by multiple layers of cyber-security. Second, the policies and procedures followed by the exchanges verify the identities of the investors whose assets are held in the warehouses, guaranteeing that that the gold or oil stored for delivery wasn’t obtained illegally.
Bakkt plans to offer a full package combining a major CFTC-regulated exchange with CFTC-regulated clearing and custody, pending the approval from the commission and other regulators. Bakkt will provide access to a new Bitcoin trading platform on the ICE Futures U.S. exchange. And it will also offer full warehousing services, a business that ICE doesn’t have. “Bakkt’s revenue will come from two sources,” says Loeffler, “the trading fees on the ICE Futures U.S. exchange, and warehouse fees paid by the customers that buy Bitcoin and store with Bakkt.”
Bakkt will provide the biggest marketplace to date. But it won’t be the first or only CFTC-regulated platform trading Bitcoin tokens. The Dodd-Frank legislation created marketplaces called Swap Execution Facilities, or SEFs, that are overseen by the CFTC. (This is the third category of markets we mentioned earlier.) LedgerX, for example, owns a SEF that uses swap contracts to trade fiat currencies for Bitcoin called “Next Day Bitcoin”; it also provides custody services regulated by the CFTC. (Gemini and Coinbase also provide custody services.) The SEFs are far less established, and have far smaller base of institutional customers than the big exchanges such as ICE Futures U.S., but they are potential competitors in the years ahead.
Here’s how Bakkt’s exchange for trading Bitcoin tokens, if approved, would operate. It would trade Bitcoin using what are known as “one-day futures,” contracts that would take the same amount of time to settle as trades in the current cash market, meaning in a single day. The broker-dealer would click on a posted price at anytime during the trading day on behalf of a money manager client. By the market close, the ICE clearing house would have arranged to route the cash from the buyer’s to the seller’s bank account, and the Bitcoin tokens would be en route the to the Bakkt digital warehouse.
The clients entrusting their Bitcoin to Bakkt could be either institutions managing Bitcoin mutual funds, or companies making cross-border payments in Bitcoin. So how do those clients spend their Bitcoin? Control of “private keys” allow Bitcoin to be spent. Those keys are a randomly generated string of numbers and letters that resemble digital signatures. Most Bitcoin owners store their keys on PCs or servers, or in accounts at unregulated marketplaces. But private keys on those devices are vulnerable to hacking, and if the hacker steals the key, the hacker keeps the pilfered Bitcoin. Cyber-thieves have stolen more than $1.6 billion in cryptocurrencies by hacking investors’ accounts since 2011, according to Autonomous Research.
Bakkt would solve that problem by storing the private keys “offline” in its heavily-guarded digital warehouse. When a fund manager or company wants take Bitcoin out of the warehouse, Bakkt would confirm the client’s identity and release the Bitcoin using the private key. The warehouse will also hold a second key, called the public key, that opens the recipient’s account to receive Bitcoin. The double-key security resembles how it takes a bank rep and the customer, both with their own keys, to open a safety deposit box.
How about trades that occur all inside the warehouse? Bakkt would be connected to the ICE Futures U.S. exchange, so that customers could seamlessly trade Bitcoin for dollars or Euros. Then, the Bitcoin would simply shift from the seller’s lockbox in the ICE warehouse to the buyer’s lockbox, as if a forklift were transferring gold bars from one storage locker to another.
To make Bitcoin mainstream, Bakkt must overcome the cryptocurrency’s chief drawback: its extremely slow speed. Bitcoin runs on a system known as blockchain, operated by a network of millions of individual members who compete to package and verify transactions. Essentially, every time a Bitcoin owner on the network buys anything using his or her digital wallet, the transaction is “broadcast” to all the “nodes,” or computers in the network. The nodes battle to prove the transactions are legitimate, and the winner is rewarded with free Bitcoin. The rub is that since all transactions—from purchasing a $1.50 cup of coffee to a $60,000 SUV—must be individually broadcast to all the nodes.
As a result, the existing system can manage only around seven transactions per second. That’s much too slow to ever work on the institutional scale that Sprecher and Loeffler envision.
Bakkt, however, would transform Bitcoin’s architecture to run at high speed. Imagine that dozens of mutual funds, pension funds, and endowments hold Bitcoin in the Bakkt warehouse. If Asset Manager A buys $200 million in Bitcoin from Asset Manager B, the Bitcoin tokens simply move from B’s account at Bakkt to A’s account at Bakkt, via a trade on the ICE exchange. The total number of Bitcoins held at Bakkt doesn’t change. Let’s assume that millions of those transactions happen every day, all inside the Bakkt ecosystem. Bakkt simply keeps a ledger of those offsetting Bitcoin debit and credits. The individual purchases and sales don’t need to be broadcast to the blockchain. What does need to be broadcast are any payments coming into or exiting Bakkt’s warehouse.
斯普雷彻已经一次又一次地展现了自己用技术改造全球工业的愿景。ICE涉足数据领域足以证明斯普雷彻的敏锐。在2015年年末以52亿美元收购 IDC之前, ICE在数据服务领域只是中等体量，而IDC是为机构投资者提供债券定价的龙头企业。
斯普雷彻的时机掌握得刚刚好：两年内，数据业务迅速增长，已经跻身ICE收入最高的业务行列。数据业务主要有两个渠道——交易定价和分析。ICE提供不同类型的交易定价服务并收取费用，既包括向经纪公司和电视网络提供 “证券买卖记录带（tape）”等常规产品，也包括向高频交易者提供交易兴旺市场的数据。ICE的大部分数据通过一个叫ICE全球网络的光纤和无线网格专有安全系统运行，该系统是纽交所在9/11 袭击后建立的超级安全型骨干网络。可以说，世界各地的主要基金经理都接入了该网络。
斯普雷彻的目标是颠覆成本高昂的老式债券交易行业，目前行业里大多数业务仍然通过电话进行。斯普雷彻收购 IDC时，公司每天对固定收益产品进行一次定价。现在ICE每天联系不断地追溯270万债券和非流动性股票的实时报价。他希望通过让僵化的债券领域彻底电子化来实现行业现代化，这是其中一步。为了推进这个项目，ICE今年花了11亿美元收购了两个固定收益数字平台——行业领导者Virtu BondPoint和最大的市政债券电子交易网站TMC。
20世纪90年代末，在斯普雷彻的加利福尼亚发电厂建成十几年后，他想在现货市场上出售过剩电力。那时几乎所有的电力交易都通过电话进行。斯普雷彻希望能让多家机构通过电子交易市场同时出价竞买他们公司的电力。他只能找到一个这样的交易市场，这是亚特兰大一家电力公司旗下的平台，虽然该平台已经签下了63家公用事业公司，但业务量极小，每月损失100万美元。1997年, 斯普雷彻用著名的1美元买下了这个平台。（也可能是1000美元; 他说他想不起来了。）
大约就在同期，斯普雷彻在伦敦买下了国际石油交易所，这同样是一间老式的公开喊价式交易市场，所里挤满了大声喊出指令的交易员。像往常一样，交易员不认可斯普雷彻想要电子化的举措，所以斯普雷彻让交易所下午关门，这样客户就别无选择，这半天只能在他们的终端上交易。因此所有的活动都挪到了晚上。到了 2005年，IPE，即今天的欧洲ICE期货交易所实现了完全电子化。两年后ICE 收购了正在苦苦挣扎的纽约贸易委员会，开始了另外一次痛苦但利润丰厚的变革，推动实现了电脑化。
然后，在 2013年，斯普雷彻完成了他迄今最大也最出名的收购，他以97.5亿美元收购了纽约泛欧证交所。关于纽交所，我们一会再详谈。2015年ICE又收购了IDC，因此成为市场数据行业的主要参与者。ICE为什么一直在做这些大交易？斯普雷彻说： “我们就像一个不断增加热门节目的网络。”
Hence, so long as Bakkt controls a big share of the market, it would need to report only a tiny sliver of transactions to the blockchain, enabling its system to operate at warp speed.
“Our system would operate on a layer above the blockchain, and we’d keep our own omnibus ledger apart from the blockchain,” explains Loeffler. The Bakkt design isn’t revolutionary. It closely resembles a technology called “the lightning network” that’s already in use. In the lightning network, the same two participants, say an appliance-maker and a parts supplier, engage in multiple Bitcoin transactions. As long as the parties are using a fixed number of Bitcoins to buy, sell from one another, and store for that purpose, the transactions aren’t reported to the blockchain, and zap back and forth within the same ecosystem.
Once Wall Street gets the flywheel whirring, Bitcoin would gain the liquidity to become a bona fide currency. Sprecher and Loeffler predict that multinationals would then adopt Bitcoin for international payments. “The banks control international payments, and the system is very expensive,” notes Sprecher.
When an U.S. auto parts manufacturer buys components from Japan, for example, it can pay stiff fees to convert dollars to yen. The purchase, at a minimum, involves a broker-dealer that makes the trade, and the purchaser’s and the seller’s banks. It might take two days before the seller can collect the yen, costing the U.S. producer interest while the funds are in transit. By contrast, if both parties use Bitcoin the payments could bypass the brokers and banks, flowing via the ICE exchange from the buyer’s to the seller’s vault held at Bakkt, and reaping big savings.
”Bitcoin would greatly simplify the movement of global money,” says Sprecher. “It has the potential to become the first worldwide currency.”
Sprecher has demonstrated time and again the vision to transform global industries with technology. ICE’s foray into data, for example, is a testament to Sprecher’s agility. The company was a medium-sized player in data services until late 2015, when it purchased IDC, the leading provider of bond prices for institutional investors, for $5.2 billion.
Sprecher’s timing was spot on: In two years, data has mushroomed into ICE’s biggest revenue category. The business splits into two main channels—exchange pricing, and analytics. For the former, ICE collects fees for dispensing different types of pricing from its exchanges, from such routine products as furnishing the “tape” to brokerage houses and TV networks to providing deep market data to high frequency traders. Most of ICE’s data runs through a secure, proprietary system of fiber and wireless grids called the ICE Global Network, built as a super-secure backbone by the NYSE following the 9/11 attacks. The IGN is connected to virtually every major money manager around the globe.
Sprecher correctly predicted that money managers would need more and more data to create sharply-targeted mutual funds and ETFs. ICE supplies the data signaling when stocks should be added or dropped from, for example, a Japanese small cap value index fund. ICE doesn’t manage money. But besides selling data to fund managers, it purchased the former Bank of America family of indexes, and licenses them to investment managers. The ICE BofAML funds now boast $1 trillion in assets.
Not surprisingly, Sprecher is aiming to disrupt the costly, old-fashioned bond trading universe, where most business is still conducted over the phone. When Sprecher bought IDC, the firm priced fixed income products once a day. Now, ICE sources real-time quotes on 2.7 million bonds and illiquid equities around the clock. That effort is part of his campaign to modernize bond trading by making the hidebound field fully electronic. To advance the project, ICE this year spent a total of $1.1 billion to purchase two digital fixed income platforms—Virtu BondPoint, a leader in corporates, and TMC, the largest electronic trading site for municipal bonds.
Sprecher is a blend of an engineer and an adventurer. He grew up in Madison, Wisc., the son of a financial planner who sold insurance on the side. “Our mother says that when he was six years old, he took apart a toaster and put it back together,” says his sister Jill Sprecher, who with a second sister, Karen, forged a distinguished record making independent films. “Then at sixteen he rebuilt a Toyota in the garage and traded it for an ‘hugger orange’ Camaro.”
Sprecher, in fact, longed to be a professional race car driver, attending the famous Road America driving school in Wisconsin. “Mario Andretti said the best drivers aren’t the bravest, but the smartest,” says Sprecher. “He was wrong. I was smart, but feared for my life. In tense situations, I took my foot off the gas, and hit the brake.”
He now indulges more in the nitty-gritty than the romance racing by lying on a mechanic’s creeper, wrench in hand, to repair exhaust systems and rocker panels on his collection of a dozen decades-old Porsches that competed at Le Mans, heirlooms that he loans out for vintage rallies.
Following a dozen years building power plants in California, Sprecher in the late 1990s sought a way to sell his surplus electricity on a spot market. In those days, almost all electricity trading happened over the phone. Sprecher wanted to get multiple utilities bidding for his power on an electronic marketplace. He could only find one, a platform owned by an Atlanta power company that had signed 63 utilities to its exchange, but was doing minimal business––and losing $1 million a month. In 1997, Sprecher bought it for that famous $1 sum. (Or it might have been $1,000; he says he can’t recall anymore.)
The fledgling exchange stumbled for three years. “We were selling old routing equipment on eBay to raise a few thousand dollars,” says Chuck Vice, now ICE’s vice-chairman in charge of technology.
Sprecher was about to lose his house to the bank when a trip to Manhattan in 2001 brought a reversal of fortune. At the time, Enron was pioneering energy trading, but it was the buyer or seller in every transaction. Only Sprecher was offering a major marketplace where utilities could trade directly with one another. On that trip to Manhattan, Goldman Sachs and Morgan Stanley told Sprecher they were wary of Enron’s dominance, and loaned $15 million to his exchange, saving the enterprise and Sprecher’s endangered residence. Then, in an astounding gambit, Sprecher handed 90% of his equity, basically for free, to thirteen banks, energy companies, and utilities, in exchange for their commitment to conduct a guaranteed volume of trades on his marketplace. In November of 2001, Enron collapsed. The next month, the volumes on Sprecher’s exchange soared 180%.
Meanwhile, Kelly Loeffler––who grew up weeding soybean fields on her parents’ farm in Illinois––had traded a stint as a retail analyst in Chicago for a private equity position in Texas. Loeffler had spent about a year at the new job when her boss, the current Secretary of the Navy, Richard V. Spencer, announced that he was joining a struggling power exchange in Atlanta. Loeffler had studied the natural gas market, and was convinced the time was ripe for electronic trading. So she told Spencer she wanted to go with him. “I see a house that’s burning down like old fashioned trading in natural gas, and I want to run in and fix it,” says Loeffler. She joined ICE in 2002 when it still had fewer than 100 employees.
Around that time, Sprecher bought the International Petroleum Exchange in London, once again, an antiquated open-outcry marketplace choked with floor traders shouting orders. As usual, the traders fought his campaign to go electronic, so Sprecher closed the exchange in the afternoons so that clients had no choice but to trade on their terminals half the day. All the action shifted to the evening hours, and by 2005, the IPE, now ICE Futures Europe, went fully electronic. Two years later, ICE bought the floundering New York Board of Trade, and engineered another painful but highly profitable transition to computerized trading.
Late in 2008, Sprecher noted that the world’s big banks had no vehicle for selling the trillions of dollars in credit default swaps that would repay part of their losses on derivatives suffered in the financial crisis. Sprecher established a special clearing house for CDS that by 2010 auctioned off an astounding $50 trillion in CDS, helping to surmount a towering hazard to the financial system.
Then, in 2013, Sprecher made his biggest and most prestigious acquisition to date by purchasing NYSE Euronext for $9.75 billion—more on the NYSE shortly––and in 2015, grabbed IDC in the deal that made ICE a major player in market data. Why does ICE keep making these big deals? “We’re like a network that keeps adding hit shows,” says Sprecher.
Sprecher isn’t shy about telling anyone who’ll listen that he’s got the solution to their problem—and not just in business. “He’s a know-it-all who really knows it all,” says Jill Sprecher. Loeffler recalls that at a dinner with Robert Spano, conductor of the Atlanta Symphony, where Loeffler serves on the board, Sprecher began lecturing the maestro on what was really needed to promote the symphony. According to Loeffler, Sprecher kept saying, “You need to get out of the building, get out of this shell. You need to do pop-ups at the mall to appeal to young people!” “I was mortified, but that’s Jeff,” says Loeffler. “There was no stopping him.”
Two distinct currents distinguish his management style: His instinctive, improvisational approach to hiring key people, and his ability marry entrepreneurship with a steady performance that appeals to public shareholders. “I’ve never regretted hiring anyone when I followed my instincts,” he says. “Only when I was swayed by their resume instead.”
In one of his signature stories, Sprecher relates that at a raucous board meeting for his condo association in Atlanta years ago, an argument erupted about a couple whose two dogs were regularly pooping in the elevator, sans cleanup by their owners. “Then this guy gets up and volunteers for what nobody else wanted to do,” says Sprecher. “He says, ‘I’ll take care of the pooping dogs problem.’ I was really impressed that he jumped right in.” Sprecher was looking for a can-do manager to run the exchange’s help desk, which was overwhelmed by customer complaints. So he hired the guy who tackled the canine problem—Mark Wassersug, who is now ICE’s chief operating officer.
Sprecher also trusted his gut in promoting Stacey Cunningham in June to be president of the NYSE—the first woman to head the exchange in its 226-year history. Cunningham didn’t have the fanciest of resumes. She’d served for eight years as a specialist broker at the Big Board, then left to pursue a culinary degree. After a stint at NASDAQ, she returned to the Big Board, rising to lead sales management. Sprecher then chose her to straighten out a small legacy NYSE business that provided listed companies advice on corporate governance.
“It was a nightmare,” he says. “The employees were always calling the whistleblower hotline with nothing to complain about. Stacey really straightened it out, and we were able to sell it.” Sprecher had no doubt that Cunningham could perform brilliantly running his trophy business.
Sprecher’s second trademark talent is keeping an artful balance between investing in breakthrough ideas, and producing consistent growth in earnings. Fred Salerno, ICE’s lead independent director and a former top executive at Verizon, marvels at how Sprecher adjusted from nurturing a startup to guiding a huge public company. “Most entrepreneurs don’t recognize that it’s not just all about the next idea,” says Salerno. “Once they’re running a public company, they see no problem with taking margins down 3 or 4 points because they just made a big investment or acquisition.”
In Salerno’s view, investors take a long-term outlook, but they also want to see a smooth ascent in profits. “Jeff understood that as soon as you do a deal, you need to mine unnecessary expenses out of the business, so you can generate the savings to fund future projects. His culture isn’t, ‘We’ll just promise something in the future.’ You need to deliver performance at the same time. Jeff understands that, and most entrepreneurs don’t.”
Sprecher revitalized the Big Board by deploying just that strategy––radically paring bloated costs and channeling the savings into rebuilding one of the world’s great brands. When ICE bought the NYSE in 2013, Sprecher quickly raised roughly $2 billion by spinning off its European exchanges as Euronext. Even so, the NYSE still had over 3,000 employees and around 1,000 consultants. It was running six divergent tech platforms to operate its three major exchanges—NYSE, Arca, and American. It consistently lost trophy tech listings to the Nasdaq, then the darling of Silicon Valley. Its legendary building, the symbol of its iconic stature, was a wreck. The paint on its once grand, baroque Board Room was peeling, and the instead of opening what were once impressive meeting rooms on its sixth and seventh floors to its listed companies for fancy events, the NYSE had transformed those spaces into warrens of tiny offices.
Many Wall Street traditionalists fretted that Sprecher would kill the Big Board’s allure by going all-electronic. But he did just the opposite, restoring the landmark at Wall and Broad Streets to its former splendor, and enhancing the legendary buzz on the trading floor. He found the money by radically improving the Big Board’s efficiency. A bunch of brainiacs sequestered on the 21st floor created a single tech platform called Pillar that replaced the crazy-quilt of trading systems, a coup that helped lower the headcount to 900.
Sprecher stopped chasing small IPOs, and concentrated on the big fish, since newly-listed companies pay fees based on the number of shares outstanding. The NYSE established a streak of winning 38 straight IPOs that raised over $700 million. Surprising for an apostle of electronic trading, Sprecher recognized that a crucial part of the brand was the specialist traders who brought so much color to the Big Board’s floor. “Electronic trading went too far,” he remarks. “The specialists perform a service by smoothing out the spikes and valleys in prices by using their own capital.”
But it’s also clear that the folks in the blue smocks are a visual symbol of the U.S. capital markets. “There are 250 places to trade equities,” says Sprecher. “Of those, 249 are the same. Which one would you want to own? That’s why we want the NYSE to be one of a kind.”
To restore its fading mystique, Sprecher cleared out the maze of offices and moved the employees to cubicles on the upper floors. Sprecher installed a spectacular staircase composed of backlit marble slabs to join the sixth and seventh floors. Those refurbished floors now house three giant reception halls and fifteen smaller conference rooms. “The idea was to turn the NYSE into a clubhouse for the Fortune 500,” says Sprecher. It’s happened. On one two-day stretch in early June, for example, no fewer than 10 companies held events at the NYSE.
Retail payments is an industry that appears ripe for Sprecher-style disruption. Today, Americans charge $7 trillion in goods and services every year—around 60% of GDP—on credit and debit cards, and through digital portals such as PayPal. The stores and restaurants that accept those cards typically pay 2% to 3% to around six intermediaries, including “merchant acquirers” who sign up the merchants, credit card giants such as Visa and MasterCard, and the banks that issue the cards.
It’s hard to overstate how drastically a shift to Bitcoin could crunch those lofty fees. Consumers could pay for groceries or detergent directly from the Bitcoin wallets on their iPhones or PCs, right from a scanner at Walmart or Starbucks, with no banks taking fees in the middle. If Bitcoin became the chief currency for retail, it’s likely that credit cards would disappear.
So would ICE and Bakkt be antagonizing ICE’s main customers, the major banks? Not necessarily. Despite the large fees, banks typically make little money processing purchases, since they mainly return those fees to provide services such as fraud monitoring, call centers, and providing rebates that go to such rewards as frequent flyer miles and rental car discounts. Where the banks make big money is on the interest charged on balances on credit cards. Changing the purchasing system wouldn’t alter the amounts that folks borrow, just where they hold those balances.
According to payment industry experts, the banks might cooperate with Bakkt, because the new system could actually encourage different forms of borrowing. For example, a customer whose Bitcoin purchase is declined because of a low balance could get an immediate loan from his or her bank, right at the checkout counter, to cover the shortfall.
At the interview in the Bond Room, featuring walls festooned with framed bond certificates chronicling the great railroad and infrastructure financings that built America, Sprecher drew a parallel between the exchange famously born in 1792 under the buttonwood tree and the technology that could transform the way consumers and companies buy just about everything. “Bitcoin can’t survive as a rogue idea,” he says. “To evolve, the cryptocurrencies need to run on established infrastructure. They need the trust and rules that have been built into our financial system for many years. They need the kind of trust that the Big Board represents.”
Sprecher restored what may be the greatest icon in financial markets. We’ll soon see if he can bring respectability to the token that he thinks can change the world.