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CNBC TRANSCRIPT: BREAKING NEWS: CNBC EXCLUSIVE: CNBC'S "THE STRATEGY SESSION" TALKS WITH JEFFREY SPRECHER, CHAIRMAN AND CEO OF INTERCONTINENTALEXCHANGE, TODAY

Jefferey Sprecher
CNBC
Jefferey Sprecher

WHEN: FRIDAY, APRIL 1, 2011

WHERE: CNBC'S "THE STRATEGY SESSION" AT 12PM ET

Following is the unofficial transcript of a CNBC EXCLUSIVE interview today with Jeffrey Sprecher, Chairman and CEO of IntercontinentalExchange, on CNBC's "The Strategy Session."

The full interview can be found on CNBC.com: http://www.cnbc.com/id/15840232?video=3000014322&play=1

All references must be sourced to CNBC.

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DAVID FABER: WELCOME TO THE STRATEGY SESSION IM DAVID FABER MY CO-HOST GARY KAMINSKY FINAL DAY OFF WILL BE BACK ON MONDAY WERE GOING TO BEGIN THE BROADCAST TODAY WITH THE LATEST ON THE NASDAQ AND ICE'S UNSOLICITED BID FOR THE NEW YORK STOCK EXCHANGE. IT IS THUS FAR A HIGHLY CONDITIONAL PROPOSAL WITH ANTI TRUST RISKS AND NO FINANCING COMMITMENT BUT THAT ISNT STOPPING SHAREHOLDERS OF THE NYSE FROM JUDGING THAT NASDAQ AND ICE'S BID TO ACQUIRE THE COMPANY IS THE REAL THING. YOU CAN SEE THE SHARES OF THE NYSE UP OVER 11% AFTER NASDAQ AND ICE EMBARKED ON WHAT ONCE SEEMED A HIGHLY IMPROBABLE HOSTILE BID INVOLVING 2 DIFFERENT STOCKS AND A DECENT AMOUNT OF DEBT GETTING THEM TO A $42.50 A SHARE PROPOSED OFFER. NOW THIS BATTLE WILL NOW PLAY OUT OVER WHATS GOING TO BE A LONG TIME PERIOD AND EITHER POTENTIAL DEAL THE NASDAQ LED PROPOSAL OR FRANKLY THE DEUTSCHE BOERSE DEAL TO ACQUIRE NYSE COULD BE DEALT A SIGNIFICANT BLOW BY REGULATORS BOTH HERE IN THE STATES OR POTENTIALLY IN EUROPE. WHILE IT IS FAR FROM A CERTAINTY IT DOES SEEM LIKELY AT THIS POINT THAT THE NYSE WILL REJECT TODAY'S PROPOSAL MEANING THIS COULD COME DOWN THE VOTE OF NYSE SHAREHOLDERS SOME TIME OFF. WITH SO MANY QUESTIONS TO ASK LETS TRY TO GET SOME ANSWERS FROM ONE OF THE ARCHITECTS OF TODAYS PROPOSAL. JEFFREY SPRECHER IS CHAIRMAN AND CEO OF INTERCONTINENTALEXCHANGE AND HE HUSSLED HIMSELF UP TO 30 ROCK AND GOT IN THAT CHAIR. JEFF THANK YOU VERY MUCH FOR BEING HERE.

SPRECHER: THANK YOU DAVID.

FABER: FIRST OFF WHY ARE YOU DOING THIS?

SPRECHER: WELL THE NEW YORK STOCK EXCHANGE MANAGEMENT AND BOARD DECIDED THAT THEY NEEDED TO FIND ADDITIONAL SCALE AND TO TAKE COSTS OUT OF THEIR BUSINESS TO BE COMPETITIVE AND OBVIOUSLY CAME UP WITH A DEAL WITH THE DEUTSCHE BOERSE. BOB GREIFELD OF THE NASDAQ AND I LOOKED AT THAT AND SAID OH MY GOSH IF THEY REALLY NEED SCALE AND THEY REALLY NEED TO TAKE COST OUT WERE PROBABLY THE BETTER PARTNERS BECAUSE WE CAN GIVE THEM MORE SCALE AND TAKE OUT MORE COSTS. THERE WAS JUST AN OPPORTUNITY THAT WAS PRESENTED TO US BY THE MARKETPLACE AND BOB GREIFELD AND I DECIDED TO ACT ON IT.

FABER: YOU KNOW WHY DIDNT YOU ACT EVEN MORE AGGRESSIVELY AND BY THAT I MEAN AS I SAID IN THE OPEN OF THE SHOW THIS IS STILL A PROPOSAL AND CONDITIONAL AND YOU DONT HAVE YOUR FINANCING OR NASDAQ DOESNT HAVE THE FINANCING FIRMLY COMMITTED TO IT WHY NOT HAVE GONE WITH AN EXCHANGE OFFER AND SAID TO THE MARKET WE ARE ABSOLUTELY POSITIVELY WE ARE HERE FOR REAL.

SPRECHER: WELL WHAT WE DECIDED TO DO IS SHOW THE MARKET WHAT WE COULD DO AND LET THE MARKET SPEAK BACK TO US ITS QUITE INTERESTING THING BECAUSE ALL OF THE PRINCIPALS INVOLVED IN THIS TRANSACTION RUN MARKETS WE BELIEVE IN THE SIGNALS THE MARKETS GIVE US SO WE DECIDED TO SHOW THE MARKET WHAT WE COULD DO SHOW THE SYNERGIES WE COULD HAVE SHOW HOW THE MARKET COULD EVOLVE WITH THIS DEAL WE DO HAVE FINANCING IN PLACE WE JUST SIMPLY HAVENT SIGNED THE A FINANCING COMMITMENT LETTERS. BUT IF THE BOARD OF THE NYSE WOULD LIKE US TO DO THAT IF THAT WOULD BRING THEM TO THE TABLE WE CERTAINLY COULD DO THAT ALMOST IMMEDIATELY.

FABER: WHY DID YOU CHOOSE TO USE ICES STOCK IN THIS TRANSACTION WHY NOT PERHAPS MORE CASH ITS ABOUT TWO THIRDS STOCK AND ONE THIRD CASH AND OF COURSE I HAVE TO SAY JEFF IN COVERING M&A FOR MANY MANY YEARS I DONT KNOW IF I HAVE EVER SEEN TWO SEPARATE STOCKS BEING USED IN AN OVER THE TOP BID FOR A DEAL.

SPRECHER: WELL WHATS HAPPENING IN THE EXCHANGE WORLD IS THAT THE WAY THAT INVESTORS ARE LOOKING AT THESE BUSINESSES IS AS A SUM OF THE PARTS AND THEY LOOK AT STOCK TRADING BUSINESSES DIFFERENTLY THAN STOCK OPTIONS AND DIFFERENTLY THAN THE DERIVATIVES PIECE AND SO THATS HOW SHARE PRICE IS BEING BUILT UP. WE DECIDED TO SIMPLY UNLOCK THAT AND SAY HEY WOULD YOU LIKE TO OWN THE LEADING STOCK AND STOCK OPTIONS BUSINESS ALONG WITH ONE OF THE FASTEST GROWING IF NOT THE FASTEST GROWING DERIVATIVES BUSINESSES IN THE FORM OF NEW EQUITY. SO THATS THE PROPOSAL WE DECIDED TO OPEN WITH TO SEE HOW THE MARKET WOULD REACT TO IT.

FABER: YOU SAID OPEN WHAT DOES THAT ULTIMATELY MEAN HERE YOU KNOW LISTEN I KNOW ITS VERY EARLY OF COURSE BUT I WILL TELL YOU HAVING DONE AGAIN YOU KNOW TALKED TO PEOPLE THEYRE PROBABLY GOING TO SAY ITS NOT SUPERIOR SO I GUESS THE QUESTION THEN IS JEFF YOU JUST MENTIONED THIS AS AN OPEN WHAT DO YOU DO IN FACT IF THEY COME BACK AT SOME POINT DOWN THE ROAD AND SAY SORRY GUYS WERE NOT INTERESTED.

SPRECHER: WELL WE DO THINK ITS SUPERIOR AND ULTIMATELY SHAREHOLDERS WILL BE THE ONES WHO DECIDE WHICH BID THEY WANT TO GO WITH BOB GREIFELD AND I HAVE A REPUTATION OF RUNNING VERY LEAN BUSINESSES AND BEING VERY AGGRESSIVE MANAGERS AND WE HAVE ALSO BEEN VERY AGGRESSIVE IN OUR M&A IN TERMS OF HAVING DISCIPLINE BUT PUTTING REASONABLE VALUE ON THE TABLE SO THATS HOW WE DECIDED TO GO TO THE MARKET IN THIS CASE. WHERE IT GOES AND HOW THE OTHER SIDE REACTS I DONT KNOW BUT IM VERY PROUD OF WHAT WE HAVE BEEN ABLE TO OFFER A SIGNIFICANT INCREASE OVER THE BID THATS ON THE TABLE RIGHT NOW.

FABER: YOU MENTIONED OF COURSE YOU BOTH RUN LEAN BUSINESSES AND MANY PEOPLE HAVE NOTED INCLUDING MYSELF 740 MILLION DOLLARS IN COMBINED SYNERGIES THAT NUMBER WELL ABOVE THE NUMBER THAT HAS BEEN GIVEN TO US BY DEUTSCHE BOERSE AND THE NYSE DOES THAT MEAN THEYRE GOING TO BE A LOT MORE JOB CUTS ASSOCIATED WITH THIS DEAL IF IT WERE TO HAPPEN?

SPRECHER: NOT NECESSARILY THERE WILL BE JOB LOSSES IN ANY MERGER THATS DONE BUT WHERE WE GET A LOT OF THESE SYNERGIES IS BY INTERNALIZING SOME OF THE OUTSOURCE BUSINESSES AND ALSO BY MOVING TECHNOLOGY ON TO COMMON PLATFORMS MOVING OUT OF MULTIPLE DATA CENTERS INTO SINGLE DATA CENTERS BUT ITS AN INTERESTING POINT YOU SHOULD MAKE BECAUSE ONE OF THE THINGS THAT CAPITAL MARKETS DO IS THEY FUEL ECONOMIES AND THE BUSINESS THAT WE ARE IN IS THERE SO PEOPLE CAN RAISE CAPITAL TO CREATE JOBS SO ITS REALLY IMPORTANT TO ME THAT WE GET THE MARKET STRUCTURE RIGHT THATS THE THING THAT FUELS GROWTH WE ARE A DERIVATIVE EXCHANGE AND WE ARE A DERIVATIVE OF THE GROWTH OF THE UNDERLYING ECONOMY SO THATS WHERE JOB CREATION IS ITS NOT GOING TO BE IN THE FEW PEOPLE WE ARE TALKING ABOUT IN THE COURSE OF THIS MERGER

FABER: WELL IS IT A FEW PEOPLE THOUGH THERE ARE A DECENT AMOUNT OF OVERLAPS NOT NECESSARILY YOUR BUSINESS BUT CERTAINLY BETWEEN THE NASDAQ AND THE NYSE NEW YORK CITY MAY NOT BE A HAPPY PLACE TO BE FOR A LITTLE BIT

SPRECHER: WELL I THINK WHAT BOB GREIFELD IS TRYING TO DO IS MAKE NEW YORK CITY AGAIN AN IMPORTANT CAPITAL MARKET THE DATA SHOWS THAT WE IN THE UNITED STATS ARE NO LONGER THE PLACE WHERE PEOPLE WANT TO BRING THEIR IPOS IN FACT WE ARE GETTING LESS THAN 10% OF THE GLOBAL IPOS ON LARGE MAJOR DEALS. WERE WATCHING TODAY COMPANIES LIKE PRADA SAY THAT THEY MAY LIST OUTSIDE OF THE UNITED STATES THAT WOULD HAVE BEEN THE KIND OF COMPANY YOU WOULD HAVE LIKED TO HAVE ATTRACTED HERE. YOU HAVE REALLY INTERESTING YOUNG ENTREPRENEURS WHO ARE CHOOSING NOT TO GO PUBLIC AND CHOOSING TO RAISE MONEY IN PRIVATE MARKETS THAT ARE NOT ACCESSIBLE TO THE GENERAL POPULATION THAT DONT HAVE EASY ACCESS TO CAPITAL. SO WHAT WE ARE REALLY TRYING TO DO AT THE END OF THE DAY IS SAY CAN THE UNITED STATES RECONFIGURE THE WAY OUR CAPITAL MARKETS OPERATE IN THE FORM OF A MERGED NYSE NASDAQ AND DOESNT THAT ULTIMATELY PROMOTE THE KIND OF GROWTH THAT ALL OF THIS IN THIS COUNTRY ARE LOOKING FOR.

FABER: THE SHERMAN ANTI TRUST ACT AS LAST I READ IT AND I DONT READ IT VERY OFTEN IS NOT CONCERNED NECESSARILY WITH SOME OF THE THINGS YOU ARE TALKING ABOUT NAMELY GLOBAL COMPETITION IT APPLIES TO DOMESTIC COMPETITION AND AGAIN JEFF WE DONT HAVE GREIFELD HERE SO IM DEALING WITH YOU RIGHT NOW ON THESE QUESTIONS EVEN THOUGH HE MAY BE BETTER TO ANSWER THESE QUESTIONS. US LISTINGS BUSINESS IS GOING TO BE ONE COMPANY OWNED BY ONE COMPANY THAT TO ME DOES NOT SEEM TO BE SOMETHING THE SHERMAN ANTI TRUST ACT IF IT IS APPLIED AS IT HAS BEEN IN THE PAST IS GOING TO ALLOW FOR

SPRECHER: WELL THE INTERESTING THING ABOUT THE LISTINGS BUSINESS IS THAT IT IS HIGHLY REGULATED EVERY NEW LISTING IS APPROVED BY GOVT SO THERE IS NO OPPORTUNITY TO USE MONOPOLY POWER IN THE US LISTINGS BUSINESS WITHOUT THE CONSENT OF GOVT AND WHERE YOU CAN NORMALLY SEE BUSINESSES MERGE QUITE EASILY IS WHERE THEY ARE HIGHLY REGULATED. I MENTIONED TO MANY OF MY SHAREHOLDERS, I CAME OUT OF THE ELECTRIC POWER INDUSTRY AND STARTED MY COMPANY REALLY TO TRADE DERIVATIVES IN THE ENERGY SPACE AND IN THE ELECTRIC POWER INDUSTRY FOR EXAMPLE WE HAVE MANY LARGE HIGHLY REGULATED COMPANIES BUT THEY ARE ALLOWED TO MERGE BECAUSE ITS IN THE PUBLIC GOOD TO DO SO

FABER: BUT IS THAT GOING TO CHANGE THE REGULATORY STRUCTURE THEN THAT WOULD OVERSEE THE US LISTINGS BUSINESS IN SOME WAY? OR REQUIRE THAT TO BE THE CASE?

SPRECHER: THATS THE QUESTION WE ARE GOING TO ASK THE REGULATORS AND I THINK IT SHOULD BE MET FAVORABLY BECAUSE AT THE END OF THE DAY THIS ADMINISTRATION AND THE PEOPLE THAT ARE OVERSEEING THESE REGULATIONS WANT THEIR TO BE A STRONG HEALTHY CAPITAL MARKET THATS REALLY THE ULTIMATE GOAL IM SURE THAT MOST PEOPLE WILL HAVE IN REVIEWING THE TRANSACTION.

FABER: POLITICS IS CERTAINLY GOING TO BE A PART OF THIS ON BOTH SIDES OF COURSE WE SAW IT EARLY ON WITH DEUTSCHE BOERSE AND THE NYSE HAVE YOU LINED UP OR SPOKEN PERHAPS TO ANY PEOPLE IN THE POLITICAL REALMS TO GET ALLIES ON THAT SIDE?

SPRECHER: WELL BOB GREIFELD AND I HAVE BEEN WORKING ON THIS TRANSACTION FOR WEEKS NOW KNOWING THAT WE WERE WORKING TOGETHER WE HAVE BEEN LAYING THE GROUND WORK BOTH OF OUR COMPANIES ARE OVERSEEN BY MANY REGULATORS IN MANY COUNTRIES SO WEVE HAD AN OPPORTUNITY TO PREVIEW WHAT WE WERE THINKING TO LAY THE GROUND WORK SO THAT WHEN WE DO GO IN FOR FORMAL APPROVALS PEOPLE WILL UNDERSTAND THE CONTEXT WE ARE TALKING ABOUT

FABER: SO YOU DO FEEL AS THOUGH YOU HAVE AT LEAST AS YOU SAY LAID THE GROUND WORK YOU HAVE HAD CONVERSATIONS BOTH IN THE US AND IN EUROPE WITH PEOPLE WHO MAY ULTIMATELY RULE ON WHETHER THIS DEAL MAY ALLOW TO OCCUR

SPRECHER: ABSOLUTELY

FABER: AND NOW FINALLY JEFF YOU HAVE HAD A VERY GOOD TRACK RECORD TURNING ICE AND GROWING THAT COMPANY. THE CBOT DEAL YOU DIDNT GET AND IT WAS ANOTHER SIMILAR SITUATION COMING IN AND COMPETING AGAINST THE CME. WHAT LESSONS DID YOU LEARN THERE THAT YOU ARE GOING TO APPLY HERE? ARE YOU GOING TO HANG AROUND FOR WHATS GOING TO BE A VERY VERY LONG DRAWN OUT FIGHT?

SPRECHER: WELL IN THE CASE OF THE CHICAGO BOARD OF TRADE WE WERE GOING UP AGAINST A MUCH BETTER CAPITALIZED AND LOCAL PARTNER IN THE CHICAGO MERCANTILE EXCHANGE. AND IN THAT CASE WE LOST THAT OPPORTUNITY BUT IN THIS CASE WE ARE GOING UP AGAINST A COMPANY THAT IS SAYING WE NEED MERGER SYNERGIES AS A JUSTIFICATION AND BOTH BOB GREIFELD AND I CAN CERTAINLY GIVE BETTER MERGER SYNERGIES TO THE SHAREHOLDERS MANAGEMENT AND EMPLOYEES OF THE NEW YORK STOCK EXCHANGE.

FABER: WHY DO YOU FEEL CONFIDENT WITH THAT?

SPRECHER: BECAUSE AT THE END OF THE DAY THE MARKETS HAVE REALLY CHANGED AND WHAT WE ARE SEEING IS CAPITAL FREELY FLOWING AROUND THE WORLD AND INCREASINGLY BYPASSING THE UNITED STATES

FABER: ALTHOUGH THEY WOULD SAY THE NYSE DEUTSCHE BOERSE WOULD SAY THE SAME THING THAT THE REASON WERE DOING THIS DEAL BECAUSE OF GLOBALIZATION.

SPRECHER: MY TAKE ON IT IS SLIGHTLY DIFFERENT AND I DONT MEAN TO SOUND CYNICAL BUT TO A CERTAIN DEGREE THEY ARE SAYING WE NEED TO LEAVE THE CASH EQUITIES BUSINESS AND MOVE TOWARD THE MORE LUCRATIVE DERIVATIVES BUSINESS AND ONE OF THE GREAT THINGS OF BOB GREIFELD IS HES SAYING NO, LETS FIX THE US CASH EQUITIES BUSINESS I CAN MAKE MONEY IN THAT BUSINESS AND ITS AN IMPORTANT SOCIAL GOAL FOR ME TO DO THAT AND IF I CAN COMBINE THE SOCIAL GOALS WITH MY ASPIRATIONS FOR EARNINGS I THINK THAT CAN BE A GREAT BUSINESS

FABER: WE SHOULD SAY WE ASKED MR GREIFELD TO JOIN US AS WELL AND HE DECLINED BUT MR SPRECHER VERY HAPPY THAT YOU ACCEPTED AND THANK YOU FOR YOUR TIME WE APPRECIATE IT.

SPRECHER: THANK YOU DAVID ALWAYS GOOD TO TALK TO YOU.

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