ICE takes a chance and develops its own clearinghouse

2009 InfoWorld CTO 25 Awards: Edwin Marcial

2009 InfoWorld CTO 25 Awards

Edwin Marcial


After a year of development, on Sept. 13, 2008, IntercontinentalExchange (ICE) Clear Europe switched from a third-party clearinghouse to its own to process energy derivatives trades (ICE processes about half the world's oil derivatives trades). The very next day, a Sunday, the worst-case scenario happened: ICE had to roll back billions of dollars of transactions and revert to the old system, as the financial meltdown began that day, and regulators require transactions to be reversed in such volatile times. ICE did so without disruption or customer impact. (A few weeks later, ICE switched back again to its new system.)

ICE built its new clearinghouse to get faster turnaround on making new services available to customers and not be dependent on a third-party service that had other high-volume clients to juggle. Plus, the clearinghouse was meant to bring $60 million in new revenue through additional services. The clearinghouse required the development and integration of a dozen systems -- such as electronic banking, physical delivery systems, risk management, billing, and reporting -- which had to switch over seamlessly at the appointed time. Plus, the clearinghouse had to work with the previous system in case a rollback was required with clients' systems. (The clearinghouse handles about 29 million customer accounts.)

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ICE's CTO Edwin Marcial led the development of and transition to the new clearinghouse, while he and his team simultaneously managed a wide range of initiatives that support ICE's other businesses, including the continued build-out of the core ICE derivatives trading platform that operates all of ICE's exchange business to achieve 3ms transaction rates. But Marcial did more than manage the technology effort; bringing the clearinghouse in-house was his idea, and management was skeptical. One big reason: The company needed to put up extra capital as insurance to the regulators if it used its own platform. The other big reason: Marcial's team had never done anything like this before.

Despite the resistance, Marcial decided to proceed anyhow. He brought in some of the needed talent through an acquisition, and other talent from a European subsidiary, then spent six months showing prototypes and enhancements to existing systems meant to demonstrate the benefits and convince the executives that his team could pull off the work. And he provided a long testing cycle that included the business staff so that they would gain comfort with the new clearinghouse's ability to work for them and their customers.