ICE To Launch U.S. Residential Mortgage Rate Lock Index Futures – NMP Skip to main content

ICE To Launch U.S. Residential Mortgage Rate Lock Index Futures

David Krechevsky
Mar 31, 2022
Intercontinental Exchange Inc. (ICE)

ICE says the futures contracts will offer investors a more refined hedge to manage exposure to U.S. residential mortgage rates.

Intercontinental Exchange Inc. (ICE), a global provider of data, technology, and market infrastructure, said today it intends to launch its first mortgage futures contracts on June 13, subject to regulatory approval.

The two futures contracts will be cash-settled and based on the ICE U.S. Conforming 30-year Fixed Mortgage Rate Lock Index and the ICE U.S. Jumbo 30-year Fixed Mortgage Rate Lock Index, ICE said. The indices are published daily and track U.S. residential mortgage loan applications in which borrowers and lenders have committed to lock-in the interest rate prior to closing. 

“By being underpinned by primary market rates, the futures contracts offer investors a more refined hedge to manage exposure to U.S. residential mortgage rates than the existing suite of available products,” ICE said in a news release.

ICE said the primary market indices are part of a suite of 80 U.S. residential mortgage indices it launched in October 2021, based on a daily data pool of tens of thousands of anonymized locked-rate applications processed by ICE Mortgage Technology. ICE Mortgage Technology processes nearly half of all residential mortgages in the U.S., the company said.

Securitized residential mortgages comprise about a third of the U.S. fixed-income market, meaning they occupy a large weighting in many fixed-income portfolios institutionally and in the average American’s retirement portfolio, ICE said.

“ICE Mortgage Technology’s industry-leading network coverage allows it to deliver a unique risk management instrument based on actual mortgage lending activity across the U.S.,” David Farrell, chief operating officer of ICE Futures U.S. said. “As inflationary pressures challenge all major economies and interest rates are being changed more frequently, we believe these mortgage futures will provide a better hedge to manage portfolio exposure to U.S. residential mortgage rates.”

The launch comes just under two years after ICE announced plans to acquire Ellie Mae in August 2020 as part of its strategy “to accelerate the analog-to-digital conversion underway across the mortgage industry.” At the time, ICE signaled its intent to deliver new products in the mortgage market.

“This is the next step in how ICE is leveraging the rich data ICE Mortgage Technology receives from having the largest electronic network of mortgage stakeholders in the industry,” Joe Tyrrell, president of ICE Mortgage Technology said. “ICE is combining this data with its technology and expertise within futures markets to create products to help customers in the mortgage lending and mortgage-backed security market to price, analyze and now manage risk associated with their mortgage exposure.”

The contracts will trade on ICE Futures U.S. and clear through ICE Clear U.S. The ICE U.S. Residential Mortgage Locked Rate Indices are available over the ICE Index Platform. For more information, please visit www.theice.com.

Published
Mar 31, 2022
KBRA Assigns Preliminary Ratings to RCKT 2022-4

RCKT Mortgage Trust offering comprises 330 residential mortgages with an aggregate principal balance of $337.9 million.

Investor Loans
May 23, 2022
Fitch Assigns Expected Ratings To Angel Oak Non-QM Offering

The certificates are supported by 747 loans with a balance of $394.59 million; of the loans, 66.4% are designated as Non-QM.

Non-QM
May 03, 2022
KBRA Assigns Preliminary Ratings To $569.1M Non-QM Offering

The CSMC 2022-NQM3 Trust RMBS offering comprises 1,137 residential mortgages characterized by a significant concentration of loans underwritten using alternative income documentation.

Non-QM
Apr 27, 2022
Fitch Expects To Rate Non-QM RMBS Offering

With a balance of $346.1 million, the New Residential Mortgage Loan Trust notes are secured mainly by Non-QM loans.

Non-QM
Apr 25, 2022
KBRA Assigns Preliminary Ratings To EFMT 2022-2

The $425.7 million non-prime RMBS transaction comprises 998 residential mortgages characterized by a notable concentration of alternative income documentation.

Non-QM
Apr 12, 2022
KBRA Assigns Preliminary Ratings To IMPRL 2022-NQM3

Approximately 49.8% of the loans in the pool were categorized as non-qualified (non-QM) mortgages.

Non-QM
Apr 11, 2022