Good day everyoneand welcome to the IntercontinentalExchange third quarter earnings results conferencecall.  Today’s call is beingrecorded.  At this time for openingremarks and introductions, I will turn the call over to Ms. Kelly Loeffler,Vice President of Investor Relations and Corporate Communications. Kelly,please go ahead.

Good morning. To obtain a copy of the company’s thirdquarter earnings release and presentation, please visit the investor relationssection of our website at theICE.com. These items will be archived andavailable for replay. Please be aware that our comments may containforward-looking statements. These statements represent our current judgmentsand are subject to various risks, assumptions, and uncertainties as outlined inthe company’s filings with the SEC. Actual results may differ materially fromthose that are expressed or implied in any forward-looking statements. With us on the call today are Jeff Sprecher, Chairman andCEO; Scott Hill, Chief Financial Officer; and Chuck Vice, Chief OperatingOfficer.  We’ll follow the same format ason our last call where Scott will begin with a review of ICE’s financialperformance and Jeff will provide an update of our growth initiatives.  At the end of the prepared remarks we willtake your questions. I’d now like to turn the call over to Scott.

Thank you, Kelly, and thanks to everyone for joining ustoday. I’ll begin by highlighting ICE’skey financial and operating metrics for the third quarter, and then we’lldiscuss a few of our key initiatives. Let’s start on slide 4 with an overview of ICE’s third quarterresults. I’m pleased to report that we delivered another solidquarter including record consolidated revenues of $152 million, up 60% year overyear. Our operating income increased 54%to $101 million during the quarter. Ouroperating margin was 66%. Net income for the quarter was $67 million, an increase of53%. Earnings per diluted share were $0.93. By virtually any measure, ICE remains a leader within therapidly growing exchange sector. Weended the quarter with $193 million in cash and short-term investments and $231million in debt. Our debt level remainslow, we have full access to our $250 million line of credit and we continue togenerate strong growth in operating cash flow. All of this gives us the financial flexibility to be opportunisticwithin a dynamic industry. We’veincluded a summary balance sheet in the appendix of the earnings presentation. Next on slide 5, you’ll see a breakdown of consolidatedrevenues. Transaction revenues compriseour European and two North American regulated futures exchanges and our globalOTC segment. Transaction revenuestotaled $131 million, up 56% year to year. These revenues accounted for 87% of our consolidated revenues in thequarter. Consolidated market data revenues increased 77% to $17 million andaccounted for 11% of consolidated revenues. Moving on to slide 6, third quarter consolidated operatingexpenses were $51 million, up 74% compared to last year’s third quarter. As in prior quarters this year, the largestdriver of the increase was expense associated with the addition of ICE FuturesU.S. to our consolidated results. We remain on target to achieve the increased synergiesannounced in the second quarter and we continue to identify additional costsavings opportunity in…

Thank you, Scott. Nowthat you have the numbers, I’ll update you on the strategy we’re pursuing toensure that ICE remains a growth leader. We’ve been aggressively pursuing both organic growth and expansionthrough mergers and acquisitions since our inception seven years ago and weintend to continue to pursue both types of growth in the future. We’ve spent much of the past couple of years putting inplace a diverse and unique product offering, as well as establishing aleading-edge technology infrastructure to serve a global customer base. Today,we operate three futures exchanges, two clearinghouses with a third one underconstruction, our own technology infrastructure, a global over the countermarketplace, and a rapidly growing market data and trade confirmationbusiness. We’re constantly seeking ways to increase our reach, ourproducts, and our value for customers and shareholders. This focus on growth is evidenced by the factthat year-to-date ICE has remained a leader in terms of growth in revenue, EPSand volume. Importantly, we’re working to sustain and build on thisperformance. Year-to-date, we’vecompleted five transactions and a number of strategic partnerships. The first acquisition was NYBOT, which is nowcalled ICE Futures U.S. and that closed in January. The second was our acquisition of theWinnipeg Commodity Exchange, which closed in August. Our OTC and market data businesses have beenaugmented by acquisitions of ChemConnect, Chatham Energy, and Commoditrack andwe have quickly and smoothly integrated these operations and are leveragingtheir unique assets together with our own strengths. ICE Futures U.S. is well on-track to achieve expense andrevenue synergies that we anticipate, and we continue to evaluate opportunitiesto increase operational efficiencies and identify additional synergies. Most recently, in addition to expanding its clearingoperations, we’ve begun to enhance the equity index and foreign exchangecomplexes that until very recently have only traded on the open outcry tradingfloor. In November, we’ll roll out the first tranche…

Your first question comes from Daniel Harris - GoldmanSachs.

Over the past couple of weeks, there were a couple ofreports out indicating that there may or may not be a review of things that youguys are going to be doing down at the NYBOT in terms of the pits and keepingthem open. While clearly a lot of the volumes have certainly trended tothe electronic screen, I’m just wondering if you can update us on your thoughtsregarding that?  I know a lot of this hasto go through the board and be approved by member vote, but I just want to hearwhat you’re thinking at this point.

I think generally speaking today, about 85% of the volume ofthe NYBOT Futures complex is electronic and about 15% remains on thefloor.  That does not include options,which is still largely floor-based. The reason that these press reports have come out is thatour management has been out talking to the marketplace to ask the market aboutthe efficacy of the 15% that remains on the floor and whether or not it’s animportant component to the market. More importantly, since we’ve acquired the NYBOT, we’verolled out a lot of new technology, technology in addition to the obviouselectronic trading platform, that allows some of the kinds of things that weredone on the floor to be taken upstairs. As a result of these conversations that our colleagues arehaving with the marketplace, we’re trying to gather information and we’re goingto take the results of that to the board of the NYBOT and see what kind ofdecisions come out of that. Generally speaking, there is a dialogue going on right nowwith the trade, and this includes people on the floor and brokers that aresupporting floor operations about their needs and wants and desires forcontinued floor-based trading. We don’t have an exact answer as to what’s going to happen nowbecause we’re still in that dialogue, but the fact that we’ve hit this 15%level has really stimulated a pretty broad dialogue within the industry aboutwhether or not the rest of the business should move upstairs.

One thing I’d add, Daniel, and it is important to keep inmind, is this has not gotten in the way at all of the cost synergies.  As I mentioned in my remarks, we’re on trackto the increased synergies we talked about in the second quarter. As we looked at the results in the third quarter, thatbusiness actually has doubled its operating margin and doubled its operatingprofit on a year-over-year basis, so we continue to make good progress there.

Jeff, can you help me think about how your traders -- bothinstitutional, financial and the underlying -- have changed their tradingstrategy in this type of oil pricing environment?  As oil really spikes up here, how do peoplethink about hedging, or taking advantage of that in both the near and near termand sort of further out in the curve?

I think one thing that you tend to see in trading of oilgenerally, but particularly so in times of high volatility, is that people arenot necessarily trying to make a bet on the absolute price of oil because it isso volatile. As all of us know, something could happen elsewhere in the worldwhile we’re asleep at night that could dramatically affect the price ofoil.  People tend to play oil tradingwith spreading and they tend to look at differences between months ordifferences between products so that they effectively build in a hedge. One of the things that is emerging around oil trading todaythat did not exist very much let’s say at the time we started ICE, is theincreased use of options as another way of building a hedging strategy aroundthe price of oil.  That’s why we haveacquired Chatham Energy to try to get more options expertise in the company,and we’ve been pretty open about the fact that we’ve been building for quitesome time an enhanced options trading platform that we’re going to be rollingout here in the near future. That’s an area wherewe want to address.  That options marketin energy is still a very interpersonal market. It’s done largely over the telephone and even to the extent that otherfutures exchanges have electronic options capability, a lot of that business isarranged upstairs through dialogue before it hits the electronic system. Sowe’re looking for ways to build efficiency into that so that we can capture partof that business.

Your next question comes from Howard Chen - Credit Suisse.

Jeff, it appears that there continues to be widening gapbetween your over-the-counter revenues and that of your primarycompetitor.  I guess in your mind, what’sdriving that widening gap and apparent growth in the over-the-counter marketshare for ICE?

A couple of things. One is, we really do believe in this idea of having futures and OTC onone screen and cross-selling products. and so we have the benefit of ICEFutures Europe and their oil platform that’s being distributed globally.  We’re able to expose these over-the-countermarkets on ICE, which traditionally have been very U.S.-centric to a globalaudience, and so that gives us a bit of an edge. Secondly, we have started to move into the options businesswhere we didn’t have a presence before, so there was really a lack ofcompetition in part of the space. I think we intend to make good progressthere. It’s obviously an area where management’s been putting a lot ofattention. I think we have been engaging the clearing community throughthe conversations about trying to build a global clearing strategy and to theextent that a clearer can bias a customer trade, I think increasingly you seeit coming our way. I do think that some of the concepts that we’re trying toput in place will ultimately be very beneficial for the clearing community. So I don’t think it’s any one thing, it’s just a combinationof going out every day and trying to address needs and problems and the sumtotal of that seems to be doing well for us.

Scott, a quick one on the numbers. Market data revenuescontinue to trend higher, can you parse out the drivers of that strength? Is itmore users, the impact of some fill-in acquisitions like ChemConnect, are therefee schedule adjustments that you did?

The biggest driver of the year-over-year growth, as you areaware, is the addition of the New York Board of Trade, now the ICE Futures U.S.business. We continue to see trends also in our ICE data business, which doescome from additional users that we have. I may have the numbers a little off,but I think we’re now above 7,000 connections overall and we started the yearat roughly about 6,000. So those increases will also help drive our data fees.

On the sequential quarter strength in particular, anythingto speak of there?

It’s really the same two drivers. As I stare at the data andlook back over, frankly, the last six quarters, it really has been theincreased ICE data fees and the introduction or the inclusion of the ICEFutures U.S. business.

Our next question is from Rob Rutschow - Deutsche Bank.

I’m wondering if you might be able to give us a little moredetail on the clearing build out in terms of how many employees you’ll havewhen you launch in the third quarter? How much head count growth will you haverelated to increased regulatory requirements?

We are in the midst right now of recruiting and hiring out thatorganization. We’ve got a target somewhere between 12 and 16 employees, thoseare all London-based employees, and that ICE Clear Europe will have primaryoutsourcing arrangement with ICE, Inc., the parent. Part of the integration with NYBOT has been integrating theIT resources, the clearing IT recourses, both the systems and the people in New York with those we have in Atlantato support the ICE Clear Europe business unit, which as Jeff gave some detailson in his remarks, is on schedule for a July launch next year.

The only thing I’d add to that is we do have a few resourceson board. We’ve said previously that there would be about $7 million to $10million of transition expenses. We’re still in that range. On an ongoing basis,we had guided previously that we expected about $9 million to $14 million ofongoing operational costs, and what Chuck just talked about is an element ofthat guidance.

You mentioned the data center relocation to Chicago.I’m wondering if you’re going to have any additional costs related to that inthe first quarter, and whether or not there’s going to be any change in the taxrate if you’re transitioning revenues out of Georgiaand into Illinois?

I didn’t get the second part of your question. Could yourepeat it?

The first part was any additional costs associated with therelocation, and the second part was any change in the tax rate due to a changein venue?

We’ve looked at both. In terms of cost, we basically havebeen making the capital investments throughout this year to get that datacenter up and running. It’s actually acting now as a backup facility for uswhile the primary center is here in Atlanta.There won’t be a lot of incremental costs because that capital has come in andhas started to depreciate into the income statement. You shouldn’t expect asyou go into first quarter, second quarter of next year to see any kind of spikein the expense due to that. In terms of the tax rate, we did do a lot of work looking atthat, and actually there is an immaterial impact in terms of overall taxes fromthat action.

You have interest from algorithmic traders at this pointthat you think moving will benefit you there?

Absolutely, We have a much larger co-location suite,actually a separate suite there in that facility in Chicago.In fact one of the reasons we chose it is that it’s so heavily occupied by thetrading firms themselves already. So they’re actually already there and it’s asimple matter of just cross-connecting to our suite, our cage there where ourcomputers are.

Your next question comes from Rich Repetto - SandlerO’Neill. Rich Repetto -Sandler O’Neill: On the over-the-counter segment, I know you did answer onequestion already, but I’m just trying to see a little bit more color where thevolume -- I’m looking through the slides and volume was up 4%, but you stillsaw a nice 21% increase in the average daily commissions, even with a lack ofmajor, major  hurricane volatility. Is there anything that is primarily driven by natural gas --it still doesn’t seems like an answer or a summary on this, or how tounderstand this; more the growth, I guess. Are the options being more reflectedin the average daily commission?

As we looked at it, there are a couple of drivers.  Number one is we saw a good strength in thepower business and the mix in that business and the rates associated with thatbusiness are good relative to some of the other products.  So to the extent we see strength there, wesee stronger revenues relative to simple volume. Wecontinue to see increases in the oil area, particularly as the agreement withPlatts comes online. Frankly, that’s something that we think will stay with us.  Also just in terms of overall ratesmanagement -- and I don’t recall in which quarter it occurred -- but there wasan adjustment in the clearing fee previously where we held our rates.  So to some extent, you’ve started to see someof the transition of that revenue to our company. Those three things combined helped drive the revenuestrength relative to the volumes at 4%. Rich Repetto -Sandler O’Neill: Jeff, more of a broader exchange question. You saw the Middle East players get active in the exchange space this past quarter;very helpful to NASDAQ.  You’ve got tobelieve that they would be interested in energy. I think you were right inpredicating the failure of these solid crude contracts. Is there any activity or conversations going on with theplayers out there that have these balance sheets that are starting to impactthe exchange landscape globally?

I’ll avoid giving any specifics about current conversations,but I will try to be somewhat responsive. We, at the time of our IPO which was in 2005, had thought that maybesome of these Middle East sovereign funds might beinterested in our stock.  We did, as partof our road show, reach out to them.  Atthat time, there was not really much interest. I think they were curious but there wasn’t specific interest in exchangeinvestment. You’ve obviously seen through the actions around NASDAQ, OM,LSE  that view has been changing.  The one backdrop that I take away is that Ithink this phenomena of sovereign investment is probably something that’srelatively recent.  But there is clearlya large pool of capital that is coming out of many emerging nations that arelooking to buy infrastructure. One of the unique things about exchanges it that they stillhave symbolic importance to many countries, symbolizing that they are afinancial center and that capital formation can happen in their country.  So one can imagine that this may be thebeginning of a trend, given the volume of capital that’s being accumulated bymany emerging countries. Rich Repetto -Sandler O’Neill: It just seems like there’s more agreements, with the CMEyesterday. But you got to believe that they’d be very, very interested in yourhelp growing something over there?

You used up your follow-up. Rich Repetto -Sandler O’Neill: Fair.  Thanks.

Your next question comes from Ken Worthington – JP Morgan.

My question goes to the liquidity provider stats that youprovide in the Qs and Ks.  What is theprocess that algorithmic, black box, the liquidity providers, what process dothey need to go through to begin trading on ICE?  How long does this process take?  Is it different for futures than OTC? Given the new technology would you expect theirparticipation or their portion of your volume growth to be bigger?  I think those stats have been stuck around30% for a while.  Should that be a biggerpart of your business?

You have a couple of questions there. Let me do my best. First, to the extent that we’re talking aboutliquidity programs around our European Futures business, the FSA has some verystrong views of how order flow is accumulated and so we put together veryformal programs for liquidity providers. They tend to be limited as to the number of liquidityproviders, so they tend to be somewhere around three, four, five or six liquidityproviders. You have to apply to become amember. They tend to have a shortduration so that it allows new applicants to apply and current participants toreapply so that the mix of individual companies may change. They don’t necessarily allow payment for orderflows so these things tend to be volume metric commission discounts, largely. In our over-the-counter business, to the extent that we tendto look at targeted programs, we tend to look at our markets with a criticaleye and try to figure out where we could use some liquidity and it may be in aspecific product, or it may actually be in a specific part of the forwardpricing curve on our product. There we,just through market conversation, try to find market participants that willhelp interject liquidity. Again, those tend to take the shape of some kind ofvolumetric commission discount, and it’s a bit more ad hoc. In Winnipeg,which we just acquired, they have had a longstanding program with a handful ofliquidity providers; I think it’s aboutfive. We just renewed that program to go through the month of February of nextyear. The Winnipeg Exchange is goingelectronic in December of this year, so we’ll have an opportunity to look atthe electronic market-making capabilities around Winnipeg. With respect to ICE Futures U.S. or the former NYBOT, wehave liquidity programs for various products. Again, they tend to be ad hoc andthe ag liquidity programs…

The question was poorly asked but well answered, so thankyou. Picking on Russell a little bit, can you just expand a little bit moreabout what you are doing and maybe other programs or things you plan to do overthe next couple of quarters to migrate that volume away from the competition toICE?

Sure.  First of all, we are getting the products outthere, getting them listed and getting them distributed, which is a whole newinfrastructure for us. Thesecond thing -- and it’s an important part of what we’ve been trying to do -- iswe’re in negotiations with the Options Clearing Corp., the OCC, to putin a cross-margining agreement that would allow equity options on Russellproducts to have economic offset, if you will, against futures.  A lot of the people that trade equity optionson the numerous equity options exchanges hedge their position using futures. Sothat’s an important relationship.  That,I think, will be wound up relatively quickly. We’re well along in that negotiation. And then really it is just marketing. We’ve been out talkingto people and trying to build interest as to exactly when this transition willtake place in bulk.  A couple noteworthyfacts is that obviously the last few months there has been tremendousvolatility in the equity markets and trying to move something in the middle ofa chaotic market is difficult.  So, we’reactually hoping for a little less volatility. It does seem and feel like we’recertainly in a less volatile period this month than we were late summer.   So,we’ll hope for a continued period where we can target that. The Russell actually reconstitutes the index; I think it’sduring the summer.  We want to try toavoid movement during that period because, again, there will be a bit of chaos,if you will, or uncertainty about the reconstituted index. So I think what Scott’s prepared remarks had suggested thatsometime next year in the first to second quarter we’re going to make a concertedpush to try to build liquidity on that product so that it happens in advance ofthe reconstituted index, and it also happens in advance of the loss of thelicense by the current competitor that has Russell trading.

Your next question comes from Mark Lane - William Blair.

First on the over-the-counter business, following up onRich’s question, you both threw out a number of reasons for the growth and theapparent market share gains, new products, new users, and higher rates, etcetera, et cetera.  Can you put anydetail around that just to give us any more transparency into that?  It seems there is like a mosaic theory atthis point.

Yes. I think it actually is. It’s not necessarily that easy to find any one driver, but one thingthat has happened as you’re quite aware of is that our competitor has takentheir floor-based products onto the screen and so there’s now the ability toarbitrage and lever electronically off of each others’ markets, whichhistorically, we’ve found has driven growth in both venues. I think that’s adriver.  We’ve been bringing in thesealgorithmic traders into the OTC markets; that’s a driver. As Scott mentioned, there’s been a mix shift around the OTCproducts that have traded.  There isdefinitely more oil trading and power trading going on as we get deeper intonew markets. There was a small price increase, it would effectively be,as we internalized some of the clearing savings that have gone on.  All of that together is what has driven theperformance, and all of those things, I think, continue.  Those were not one-time things.  We haven’t seen any of those trends thatwe’re talking about be abated.

A follow up on the regulatory question, the way that youpositioned it was that increased regulation is not a negative, but can it be abig positive?  I mean, given the factthat so much of the over-the-counter market is opaque? If there’s any part ofthe market that’s transparent, it all would be electronic format?

Yes. I’m an optimistic person generally and as a company, welook for opportunities when there’s change. We’ve been really net beneficiariesof being at the center of a lot of change. When you really step back and thinkabout what’s been going on, I’ve said repeatedly that I think as these marketsbecome bigger and more transparent and broader, they’re going to naturallyattract more oversight. What’s going on in the debate in Washingtonis just a dialog about what that means. Given that for the last year we’ve given the bulk of our OTCtrades in real time to the CFTC the real debate is now, if there is a problemin these markets, who is going to take action and what should the actionbe? That’s a natural extension of thefact that the data is being provided broadly to government and there is moreoversight. What you’re going to see and what we’ve said that we wouldembrace is that if the government wants us to take on more oversightresponsibility, we’re happy to do that. If the government wants to keep it itself, we’re also happy to cooperatewith them. But given that we have three regulated futures exchanges, wecertainly have the infrastructure here and the knowledge and the understandingand the platform is designed to produce the kind of reports that one would lookfor. We’ve looked at our own markets with a critical eye over thelast year and we think that they are very, very properly functioning marketsthat are growing not because of some kind of regulatory arbitrage, but they’regrowing because of the need for hedging and the increased investment that’sgoing on in commodities. Having a more regulated market will do a couple of thingsfor us. One is I’m hoping that it will bring more confidence to the smallercommercial user. These would be municipal utilities and gas and power…

Mark, just to go back to your first question to give you andRich a data point for the mosaic. Underneath the 4% OTC ADV growth, it’s about6% for total volume and power would be 20% underneath that. So that’s some ofthe mix shift that you see.

Your next question comes from Jonathan Casteleyn - WachoviaSecurities.

Jeff, I really always appreciate your detailed andhistorical perspective on your strategy. I’m just trying to boil it down toyour top three growth initiatives. Is there any way you can just rank and filethose for me?

First is clearing, it probably won’t be an immediate benefitbut I think structurally, my view is that this part of the market is going tobecome increasingly more important. So it is an expense that we’re incurringahead of revenues. Secondly, I think moving into equity indices and foreignexchange, given that we’re coming on from almost a zero base in those marketswill be very, very important. As you know, those are very big markets. Foreignexchange had a lot of electronification already and is sort of a disjointedmarket so I think there’s room for new entrants into that market as opposed tomany other asset classes. Lastly, I do think that the over-the-counter markets, as wemove into this more regulated type environment, will attract new marketparticipants. When you couple that with the fact that we’re doing this Canadiandeal with NGX and that we’re doing a global oil deal with Platts, and we haveChemConnect, so I think while none of those individually is revolutionary,together I think they continue to be evolutionary and I do think you willcontinue to see growth in the OTC part of our business.

Scott, $193 million in cash, what’s the amount of cash orliquidity needed to run the business to support working capital and alsoprovide a potential backstop for the clearinghouse as you get in there in theback half of ‘08?

We’re still doing the analysis on what will be required interms of liquidity as you go into the ICE Clear Europe. But I’d tell you, asI’ve looked at it, I think $75 million to $100 million is a comfortable cashand short-term investment balance in terms of running the day to daybusiness.  I think given the strong cashgeneration of this business, you could dip down below that for a while becauseyou come back fast. Just to give you a sense, we’re sitting with $193 million ofcash right now, which is only down slightly from a year ago and that’s after$164 million spent on the New York Board of Trade, it’s after $50 million spenton Russell, it’s after nearly $50 million spent on Winnipeg. So I don’t think you need a large cash balance in order torun the business. I think what we do have, though, with $193 million in cashwith full access to the line of credit, is we’ve got tremendous flexibility toact opportunistically as we see right investment opportunities which will helpus grow the business.

Your next question comes from Chris Allen - Banc of AmericaSecurities.

I just wanted to ask quickly about your take on the CME andthe BM&F transactions, given CME’s ag business and then BM&F’s, justthe Brazilian economy, the focus on sugar; do you regard this as somewhat of acompetitive threat or do you see it as potentially additive to the future pies aswe’ve seen with other products?

Generally speaking, I think, we have the Andy Grove viewaround here that only the paranoid survive so we view everything as acompetitive threat. But I will say that I think it was a very good investmentfor the CME and I did reach out yesterday and called Chairman Duffy tocongratulate him because I think that is a very unique asset and an opportunityto work together. So in terms of direct competition, I guess we’ve always beenthe underdog and so we don’t shy away from that. Maybe more importantly, Ithink that when you have multiple venues that trade, you create tradingopportunities and actually drive growth. We’ve seen that with our West Texas intermediate crude oil contract and what have you. I think that it’s possible that over time Brazilcould get more drivers coming out of sugar, maybe ethanol, given their economy. I think those will be symbiotic withwhat we’re doing at NYBOT and together the two will drive growth.  So, the paranoia has not reached the levelthat we feel that we have to do something really novel.

Your next question comes from Edward Ditmire - Fox-PittKelton.

The Russell expense guidance that you gave in the releasefor the second half of ‘08, the $6.3 million to $7.8 million per quarter, thedifference between that and the current rates and what you guys talked about onthe last call, is that all volume related?

No. I am going to try and make this an easy answer, but it’sa fairly complicated topic so I apologize going in. Fundamentally, what we’ve done is we have created the $50million upfront payment and the present value of the future minimum paymentthat we’ve agreed to. We’ll begin the process of amortizing that into ourincome statement started this quarter. What we’ve done is we’ve looked at thisas if it were two assets. One is a non-exclusive asset over the first year, andthe second is an exclusive asset over the subsequent six years. As you would imagine, the value of the non-exclusive elementis de minimus. The value of the exclusive element is the most significantportion. When you do this, when you take the present value, the differencebetween that and the expected payment is an imputed interest. So you are going to see two components.  When you look at our income statement thisquarter and for the next three quarters, the $1.5 million I’ve talked about isall going to look like interest expense. So there will be very little left inthe depreciation and amortization line. As you get into the third quarter of next year and then forevery quarter for the following six years, you will see about $6.2 million,give or take, of amortization and then a slowly dwindling amount of interestexpense as that asset comes into the income statement.

Can I just ask a simple question? I know that the Russellhas strategic implications and what not, but on a standalone basis, what kindof volumes do you guys think you need to breakeven on this thing?

I haven’t really looked at it. This is a rare circumstancewhere we know the types of volumes that occur today. We can look at the volumesthat are trading and I don’t know what the latest figures are, but it’ssomewhere in the 220,000 to 250,000 contract per day range. That’s how we’velooked at it. Our expectation is, as Jeff and I talked about a little bitin our prepared remarks, that we’ll start to see some of that volume move inthe first and second quarter of next year. It will all have moved by the timewe get to the third quarter of next year. We are working with customers andworking with Russell to take today’s volume and grow it. The way I’ve looked at this, and we did look at it as abusiness case is, when we get the volume that we have seen historically to ourplatform and when we take the actions necessary to grow it, what does that looklike in terms of the financial return, just as if it was M&A? And it’s avery attractive return. In the near term, as you saw this quarter, we had verylittle Russell-related revenue. It will probably be modest to minimal in thefourth quarter as well, but we’ll have this bit of expense.  Our expectation is the volume and the expensewill start to ramp in the back half of next year.

Your next question comes from Mike Vinciquerra - BMO CapitalMarkets.

Jeff, can I follow up on this thing on the Russell?  You had mentioned you had discussions withthe OCC and looking for cross-margining; that goes to the bigger question aboutportfolio margining, in general. Is that topic being broached in yourdiscussions as well, or do you see this being more of a product by productdiscussion, because equity futures connect more fully with options on the sameequity?

We definitely are having broader discussions. One of thethings that’s gone on around here is we’ve brought in two really topnotchclearing experts in Tom Hammond in the U.S.and Paul Swann in Europe. I’ve asked them to think outside the box, and let’s be aleader in driving change around clearing which is kind of an oxymoron, becauseobviously clearing is managing risk and so it needs to be dealt with very, verydelicately and with a lot of thought and foresight. I think the kinds of broad, sweeping changes that may comethrough clearing are things that are going to be evolutionary, notrevolutionary and they are going to take time because you are dealing with riskand you are dealing with the infrastructure of our industry as you broach thesethings. We definitely have a pretty broad mindset here. We have thelicense to do that as being the younger company entering this business andlooking for opportunities.

You made it sound as though the timeframe might berelatively soon on this. Is that the next couple of quarters? Is it even soonerthan that?

I don’t want to give you any guidance in that regard becausethere are all kinds of discussions and conversations going on with lots ofvarious parties.  They may or may not befruitful and they may or may not be meritorious when you boil it all down. Ithink it’s fair to say that we’re looking at what can we do to improve thebusiness? Improve it for our customers, improve it for the clearing community,and improve it, ultimately, for our shareholders. I think clearing has been an under-invested asset in ourindustry, and maybe the most important asset in our industry. So it’s with thatkind of mindset that we’re looking at these things.  Beyond that, I don’t want to give youanything specifically.

No. That’s fine. Thank you, Jeff.  On the RPC inthe U.S. Futures I think, Scott, you mentioned it was $2.18 in September andcontinues to expand.  Is this just a mixshift?  Is there something in particularthat will allow that rate potentially to stay at those levels or even gohigher?

Clearly there is mix at play.  If you look at the trends over the last coupleof quarters, we had $1.85 in the second quarter that was up from $1.59 in thefirst quarter and at $2.07 for this quarter. You may recall that we had the fee increase that we introduced June 1, Ibelieve, is when we put that fee increase in place which helped with the Q2rates, helped with the Q3 rates.  Clearly,from a month-to-month standpoint, mix can impact the rates. What we’ve looked at and what we’re going to talk about aswe move forward is really the three months rolling average.  That’s the $2.07 for the quarter. I thinkthat’s the way you ought to think about rates.

I will say that we’re so early in the electronic migrationof that business that just the power of electronification is bringing newcustomers into the business.  At somepoint, I’m sure as management, we’ll sit down and look at the rate structurethere and look at do we need more aggressive market maker programs or do weneed to look at the mix and put new things in there? It’s just so new and so young and there’s still so muchgoing on with the migration of trading that we haven’t really played around somuch with that.  So in terms of what doesthe long-term rate structure look like, it may change but if it does, it willprobably be because management believes that we can increase revenue by puttingour mix change in there. Obviously, we’ll signal that to you if we ultimately do putsome programs in place.

The thing I’ve found really remarkable about the performancefor this business in the quarter, if you set the rate aside, is we had 23%growth in ICE Futures U.S. ADV and that was in a world where we had the lowestvolatility that we’ve seen in sugar in about a year-and-a-half with a productthat represents 45% to 50% of our total contract volume, with slow to minimalgrowth, we grew the overall volumes about 23%. I think that’s a good news story for the quarter.

Having no other questions in queue, Mr. Sprecher, I’ll turnit back to you for closing remarks.

Thank you all again for your attention and for following us.I appreciate the provocative questions. We look forward to talking to you again next quarter.