Jeffrey Sprecher
Chair and Chief Executive Officer at Intercontinental Exchange
Thank you, Ben. I want to start my prepared remarks by highlighting our vision of how ICE is contributing to both the U.S. home mortgage and U.S. equity markets to bring increased efficiencies to consumers in these two asset classes. To take you back, ICE was initially founded to build and operate digital commodity exchanges. Modern digital exchanges provide an essential service, efficiently matching buyers and sellers with operational neutrality. Our modern exchanges are regulated. But more importantly, their growth and efficacy depend on the industry's trust of our neutrality. ICE does not take a position on the price of any commodity or security. We simply provide the software and network that efficiently facilitates a buyer and seller finding one another and allows them to determine their transaction price. Today, millions of traders, investors, brokers and regulators around the world are attached to our exchange networks. And they all benefit from the transparency and standardization that we enable. We followed up our launch into the exchange business by building digital data networks to disperse information separate from our exchanges, networks that thrive on the neutrality and confidentiality of our data management. It is likely obvious to you that our data networks would contain financial information generated by our own exchanges, but it may be less obvious that our growth has been accelerated by opening these networks to third parties, including most of our global exchange competitors who also access our customer base.
Today, hundreds of third-party exchanges, brokers and market data generators publish their data to users across our networks. Our growth in the U.S. mortgage industry builds on the same management tenets: trust, transparency and neutrality. Our mortgage software and network are open and impartial. ICE has been at the forefront of building a mortgage platform so that industry participants can better communicate with one another, reduce their costs, pass these savings on to consumers in the form of better prices and appropriately implement the government's homeownership policies. And it is in this vein that we have agreed to acquire Black Knight to connect their market participants to ours, open up its platform, reduce cost per mortgage origination, overlay the safety and soundness practices that we've developed for businesses like the systemically important New York Stock Exchange and create new products and services for lenders to increase homeownership, including in underserved communities. As a part of the budget that we previously guided you to, ICE plans a significant financial outlay to open and upgrade the Black Knight technology stack, a commitment that we believe would have been hard for Black Knight's other potential acquirers to make potentially in a contracting mortgage environment. This is the same strategy and commitment that we made when taking over the Mortgage Electronic Registrations System, which today has durable and scalable operations and technology built by ICE, systems that are prepared to manage the difficult risk environments in the U.S. housing market. And as shown on slide 10, these MERS processes can identify and deregister failed lending firms who become zombies to borrowers and regulators.
You may have recently heard Sandra Thompson, the Federal Housing Finance Agency's Director, lamenting how stakeholders in the mortgage manufacturing process seemingly lack the will to adopt technology that changes their entrenched methods. This is precisely the challenge that ICE is laser-focused on solving. Gillian Tett pointed out in her book, The Silo Effect, that the U.S. mortgage industry is so siloed that the federal government's past attempts to help troubled homeowners stay in their homes by reducing mortgage payments actually exacerbated the foreclosure problem because lenders lowered monthly payments and servicers mistook this as consumers falling behind and initiated foreclosure proceedings. As Austin Gulsby once said, the silos were so strong, they did the exact opposite of what everyone expected. With the explosive growth of the fintech industry over the last decade, the U.S. has seen a dramatic upsurge in the number of alternative home lenders and mortgage technology providers who, like ICE, are building solutions to benefit lenders and borrowers. Slide 10 also shows the number of new lending firms that just this year have registered to do business with MERS. And surprisingly, the number of lending firms have increased in a year where consumer demand for mortgages has decreased. This increased lender competition presents opportunities for ICE to take costs out of the mortgage manufacturing process so that these lenders can compete more effectively, passing no savings on to borrowers.
The high cost of manufacturing and funding a home mortgage that we target are particularly acute for the most marginalized borrowers, which further exacerbates the wealth divide in the United States. Our acquisition of Black Knight remains subject to review by the Federal Trade Commission. ICE has provided the FTC with extensive information and certified its completeness. And as is often customary, we agreed to extend the FTC's statutory review period and intend to continue ICE's cooperation with the FTC staff. Our estimate is that the Black Knight merger will close in the first half of next year. While we'll be unable to answer any questions on this call relating to our transaction with Black Knight, please note that our participation in this FTC review, coupled with the comprehensive conversations that we've been having with our customer base, has further convinced us that our merger will afford significant benefits to U.S. homeowners and industry stakeholders. And while on the subject of regulators, I'd like to comment on the recent remarks from the Securities and Exchange Commission focused on the structure of the U.S. equities market. In his June eight speech, Chair Gensler noted the key elements of the national market system rules haven't been updated since year 2005. And since that time, the U.S. equity markets have become increasingly opaque. Today, most retail order flow is executed through off-exchange bilateral trading relationships with a small number of wholesalers. These wholesalers are able to trade against customers without exposing those orders to competition. In some cases, wholesalers pay retail brokers for the privilege of this first look at their clients' order flow.
This practice is known as price improvement, and it refers to occasions where trade is made at prices better than the national best bid and offer ticker displayed by the public exchanges, trades that often contain fractions less than one whole penny per share. What's often left out of this price improvement narrative, however, is the fact that public exchanges like the New York Stock Exchange under current SEC rules are actually prohibited from displaying orders at price increments less than one whole penny. As a result, public investors are, in fact, prevented from narrowing the national best bid and offer ticker to sub-penny price increments. But ask yourself this. Is the national best bid and offer ticker really the best market price that we should all be relying upon if investors can routinely buy a share of stock cheaper than what's displayed? We measure the opportunity for investor price improvement savings to the tune of $1.8 billion a year if there were a simple harmonization of the quote and trade increments across the entire market. We hope that this opportunity will be considered by the SEC. ICE has been consistent in its strategy of promoting standardization, fair, transparent markets and networks using state-of-the-art technology.
We embrace opportunities to transform businesses to create efficiencies and lower customer costs, not only in home mortgage, but even in a 230-year-old business like the New York Stock Exchange. I'll conclude my remarks on slide 11. The third quarter of this year has been marked by rising inflation, fluctuating interest rates and central bank activity, concerns over energy and food security and global political uncertainty. And I can't think of any firm that has been better positioned to help manage these risks than ICE. Our customers rely on our data, technology and liquid markets to navigate through this environment. In the third quarter, we once again grew revenues, grew adjusted operating income and grew adjusted earnings per share. These record-setting third quarter results against our extraordinary third quarter results of last year reflect the all-weather nature of our business model. We have intentionally positioned the company to provide customer solutions in numerous geographies and economic conditions to facilitate all-weather results. I'd like to end by thanking our customers for their continued business and their trust. And I want to thank my colleagues at ICE for their contribution to this record third quarter following up on our unsurpassed first half results.
And with that, I'll now turn the call back to our moderator, Charlie. And we'll conduct a question-and-answer session until 9:30 Eastern Time.