RISK FACTORS

      The purchase of our common stock involves significant investment risks. The risks described below comprise all material risks of which we are aware. You should consider these risks carefully before making a decision to invest in our common stock. In addition, there may be risks of which we are currently unaware, or that we currently regard as immaterial based on the information available to us, that later prove to be material. These risks may adversely affect our business, financial condition and operating results. As a result, the trading price of our common stock could decline, and you could lose some or all of your investment.

Risks Relating to Our Business

We face intense competition from regulated exchanges, voice brokers and other electronic platforms, which could adversely affect our business. If we are not able to compete successfully, our business will not survive.

      The market for commodities trading facilities is highly competitive and we expect competition to intensify in the future. Our current and prospective competitors, both domestically and internationally, are numerous.

      Our principal competitor, NYMEX, is a regulated, predominantly open-outcry futures exchange that offers trading in futures products and options on those futures in the crude oil, gas and metals markets, among other commodities markets. NYMEX has also established two electronic platforms: NYMEX Access and ClearPort. NYMEX is larger than we are and has greater financial resources, a broader participant base and a longer operating history. NYMEX also operates its own clearinghouse, which may give it greater flexibility in introducing new products and clearing services than we are able to offer through our relationship with LCH.Clearnet, formerly known as the London Clearing House, a clearinghouse based in London. Unlike NYMEX, we may be limited in the number of cleared OTC contracts that we are able to offer, since we must first obtain approval from LCH.Clearnet to offer such products. Our relationship with LCH.Clearnet is also subject to termination by either party upon one year’s notice. See “— We do not own our own clearinghouse and must rely on LCH.Clearnet to provide clearing services for the trading of futures and cleared OTC contracts in our markets. We cannot continue to operate our futures and cleared OTC businesses without clearing services.”

      In November 2004, NYMEX opened an open-outcry trading floor in Dublin for trading in a contract that directly competes with our most important futures contract, the IPE Brent Crude futures contract. Similarly, on April 8, 2005, NYMEX began offering trading in a Northwest European gas oil futures contract that directly competes with the IPE Gas Oil futures contract. On September 12, 2005, NYMEX opened a new open-outcry trading floor in London, simultaneously closing its Dublin trading floor and shifting trading in Brent crude futures contracts and Northwest European gas oil futures contracts to London. Given the recent closure of our open-outcry trading floor on April 7, 2005 and the fact that we now conduct all futures trading exclusively in our electronic markets, a NYMEX trading floor may appeal to traders who prefer the open-outcry method of trading. If we lose participants to NYMEX, we would lose trading volume, which could negatively impact our results of operations and profitability. See also “— We may lose trading volume in our futures business due to our transition to electronic trading”. We also have been involved in litigation with NYMEX, in which NYMEX asserted against us claims of intellectual property infringement related to our use of and reference to NYMEX settlement prices in our cleared OTC swap contracts for Henry Hub natural gas and West Texas Intermediate crude oil. The federal district court granted our motion for summary judgment in September 2005, dismissing the claims filed against us by NYMEX. On October 13, 2005, NYMEX filed a notice of appeal. If NYMEX is successful in its appeal, and the matter is determined adversely to us, our business would be materially and adversely affected. See also “— Any infringement by us on the intellectual property rights of others could result in litigation and adversely affect our ability to continue to provide, or increase the cost of providing, our products and services” and “Regulation and Legal Proceedings — Legal Proceedings —NYMEX Claim of Infringement”.

      In addition to NYMEX, we also currently compete with:

      We may also face additional competition from new entrants to our markets. Competition in the market for commodities trading could increase if new electronic trading platforms or futures exchanges are established, or if existing platforms or exchanges that currently do not trade energy commodities products decide to do so. Additional competition from new entrants to our markets could negatively impact our trading volumes and profitability.

      In addition, some of the exchanges, trading systems, dealers and other companies with which we currently or in the future could compete are substantially larger than we are and have substantially greater financial, technical, marketing and other resources and more diverse revenue streams than we do. Some of these exchanges and other businesses have long standing, well established and, in some cases, dominant positions in their existing markets. They may offer a broader range of products and services than we do. In addition, our competitors may:

      Our ability to continually maintain and enhance our competitiveness and respond to threats from stronger current and potential competitors will have a direct impact on our results of operations. We cannot assure you that we will be able to compete effectively. If our markets, products and services are not competitive, our business, financial condition and operating results will be materially affected. In addition, even if new entrants or existing competitors do not significantly erode our market share, we may be required to reduce significantly the rates we charge for trade execution to remain competitive, which could have a material adverse effect on our profitability.

Our business is primarily transaction-based, and declines in trading volumes and market liquidity would adversely affect our business and profitability.

      We earn transaction fees for transactions executed in our markets and from the provision of electronic trade confirmation services. Historically, we have also earned transaction fees under order flow agreement shortfalls. We derived 87.9%, 83.9%, 86.9% and 94.7% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively, from our transaction-based business. Of our consolidated revenues, 1.0%, 7.6% and 2.6% for the years ended December 31, 2004, 2003 and 2002, respectively, represented shortfall payments made under order flow agreements with our Initial Shareholders, the Gas and Power Firms and order flow agreements in the OTC European gas markets, all of which are no longer in effect. Even if we are able to further diversify our product and service offerings, our revenues and profitability will continue to depend primarily on our transaction-based business. Accordingly, the occurrence of any event that reduces the amount of transaction fees we receive, whether as a result of declines in trading volumes or market liquidity, reductions in commission rates or regulatory changes, will have a significant impact on our operating results and profitability. See also “— Our business depends in large part on volatility in energy commodity prices and has benefited from record-high oil prices in recent years”.

      Participants in the markets for energy commodities trading pursue a range of trading strategies. While some participants trade in order to satisfy physical consumption needs, others seek to hedge contractual price risk or take speculative or arbitrage positions, seeking returns from price movements in different markets. Trading volume is driven primarily by the degree of volatility — the magnitude and frequency of fluctuations — in prices of commodities. Higher volatility increases the need to hedge contractual price risk and creates opportunities for speculative or arbitrage trading. Energy commodities markets historically have experienced significant price volatility. We cannot predict whether this pattern will continue, or for how long, or if this trend will reverse itself. Were there to be a sustained period of stability in the prices of energy commodities, we could experience lower trading volumes, slower growth or even declines in revenues as compared to recent periods.

      In addition to price volatility, we believe that the increase in global energy prices, particularly for crude oil, during the past three years has had a positive impact on the trading volume of global energy commodities, including trading volumes in our markets. As oil prices have risen to record levels, we believe that additional participants have entered the markets for energy commodities trading to address their growing risk-management needs or to take advantage of greater trading opportunities. This is particularly true in the case of increased trading due to the effects of Hurricanes Katrina and Rita, which may be temporary and unlikely to continue. If global crude oil prices decrease or return to the lower levels where they historically have been, it is possible that many market participants, particularly the newer entrants, could reduce their trading activity or leave the trading markets altogether. Global energy prices are determined by many factors, including those listed below, that are beyond our control and are unpredictable. Consequently, we cannot predict whether global energy prices will remain at their current levels, nor can we predict the impact that these prices will have on our future revenues or profitability.

      Factors that are particularly likely to affect price volatility and price levels, and thus trading volumes, include:

      Any one or more of these factors may reduce price volatility or price levels in the markets for energy commodities trading, which in turn could reduce trading activity in those markets, including in our markets. Moreover, any reduction in trading activity could reduce liquidity — the ability to find ready buyers and sellers at current prices — which in turn could further discourage existing and potential market participants and thus accelerate any decline in the level of trading activity in these markets. In these circumstances, the markets with the highest trading volumes, and therefore the most liquidity, would likely have a growing competitive advantage over other markets. This could put us at a greater disadvantage relative to our principal competitor, whose markets are larger and more established than ours.

      We are unable to predict whether or when these unfavorable conditions may arise in the future or, if they occur, how long or severely they will affect our trading volumes. A significant decline in our trading volumes, due to reduced volatility, lower prices or any other factor, could have a material adverse effect on our revenues, since our transaction fees would decline, and in particular on our profitability, since our revenues would decline faster than our expenses, many of which are fixed. Moreover, if these unfavorable conditions were to persist over a lengthy period of time, and our trading volumes were to decline substantially and for a long enough period, the liquidity of our markets — and the critical mass of transaction volume necessary to support viable markets — could be jeopardized.

      Our revenues depend heavily on trading volumes in the markets for IPE Brent Crude futures contracts, IPE Gas Oil futures contracts and OTC North American natural gas and power contracts. Trading in IPE Brent Crude futures contracts accounted for 26.7%, 29.7%, 30.4% and 17.6% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. Trading in IPE Gas Oil futures contracts accounted for 9.2%, 11.3%, 10.6% and 6.8% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. Trading in OTC North American natural gas contracts accounted for 37.8%, 26.8%, 17.9% and 33.3% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. Trading in OTC North American power contracts accounted for 11.1%, 8.7%, 6.1% and 17.7% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. Our trading volume or market share in these markets may decline due to a number of factors, including:

If our trading volume or market share in these markets declines, our revenues would likely decline, which would negatively impact our ability to remain profitable and to grow our business.

      Several of the largest and most active commercial participants in our North American natural gas and power markets terminated or substantially reduced their energy commodities trading activities beginning in mid-2002. This was due, in part, to highly publicized problems involving energy companies and significant declines in liquidity and trading volumes, increased regulatory scrutiny and enforcement actions brought against certain market participants. While some of these participants later resumed their trading activities, several new participants began trading in our markets — most notably financial institutions, hedge funds and proprietary trading firms. Competition for these new market entrants among exchanges and trading operations across a variety of markets is intense.

      We derived 86.9%, 82.1%, 79.1% and 92.0% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively, from exchange fees and commission fees generated from trading in commodity products in our futures and OTC markets. The volume of contracts traded in the futures and OTC markets for any specific commodity tends to be a multiple of the physical production of that commodity. If the physical supply or production of any commodity declines, our participants could become less willing to trade in contracts based on that commodity. For example, the IPE Brent Crude futures contract has been subject to this risk as production of Brent crude oil peaked in 1984 and began steadily falling in subsequent years. We, in consultation with market participants, altered the mechanism for settlement of the IPE Brent Crude futures contract to a mechanism based on the Brent/ Forties/ Oseberg North Sea oil fields, known as the BFO Index, to ensure that the commodity prices on which its settlement price is based reflect a large enough pool of traders and trading activity so as to be less susceptible to manipulation. Market participants that trade in the IPE Brent Crude futures contract may determine in the future, however, that additional underlying commodity products need to be considered in the settlement of that contract or that the settlement mechanism is not credible. Exchange fees earned from trading in the IPE Brent Crude futures contract accounted for 61.7%, 58.0%, 58.0% and 57.9% of our total revenues from our futures business, net of intersegment fees, for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively, or 26.7%, 29.7%, 30.4% and 17.6% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. Any uncertainty surrounding the settlement of the IPE Brent Crude futures contract, or a decline in the physical supply or production of any other commodity, could result in a decline in trading volumes in our markets, adversely affecting our revenues and profitability.

      In response to the increasing acceptance and adoption of electronic trading, and to maintain and enhance our competitive position in our futures business, we closed our open-outcry trading floor and fully transferred all trading in futures contracts to our electronic platform on April 7, 2005. We cannot assure you that the market will continue to use our electronic platform to trade contracts that previously were traded both electronically and through our open-outcry trading floor, or that we will be able to maintain our recent growth in market share and liquidity in our products. During the period following the closure of our open-outcry trading floor, average daily futures trading volumes initially decreased to 137,000 contracts traded in April 2005 from 151,000 contracts traded in March 2005, but have since increased to a daily average of 183,000 contracts traded during the three months ended September 30, 2005. The initial decline in April was due in part to the displacement of floor-based traders following the floor closure on April 7, many of whom later began trading electronically along with new participants. On September 12, 2005, NYMEX established an open-outcry trading floor in London for trading in Brent crude futures contracts and Northwest European gas oil futures contracts. NYMEX’s London trading floor may attract certain traders, who may migrate their trading to NYMEX from our electronic platform. NYMEX may also offer financial incentives that we are unable to match to traders to trade on their open-outcry trading floors, as it has done in the past. Any decline

in our trading volumes as a result of the floor closure in the short-term or long-term will negatively impact our transaction fees and, therefore, our revenues. Historically, we have derived a substantial portion of our futures business revenues from transaction fees generated from trades executed on our open-outcry trading floor. During the year ended December 31, 2004, only 6.9% of our gross transaction fees and only 4.3% of our net transaction fees in our futures business segment were derived from exchange fees generated by trades executed on our electronic platform. Declining trading volumes may also make our futures markets less liquid than those of competing markets that trade exclusively on an open-outcry trading floor or on both an open-outcry trading floor and an electronic platform. Over time, this decision may prove to be ineffective and could ultimately adversely affect our profitability and competitive position. We also incurred charges in the second quarter of 2005 of $4.8 million in connection with the closure of the open-outcry trading floor. See also “— We face intense competition from regulated exchanges, voice brokers and other electronic platforms, which could adversely affect our business. If we are not able to compete successfully, our business will not survive”.

      Furthermore, our ability to retain existing participants and attract new participants to our futures markets, and to maintain market share and liquidity in our products, may be impaired as a result of any technical problems or failures associated with our platform. See “— Our business may be harmed by computer and communications systems failures and delays” for a more detailed discussion of risks related to the operation of our electronic platform.

      We have contracted with LCH.Clearnet, to provide clearing services to us for all futures contracts traded in our markets pursuant to a contract for an indefinite term that is terminable by either party upon one year’s prior written notice, if not otherwise terminated in accordance with its terms. LCH.Clearnet also provides clearing services to participants in our OTC business that trade designated contracts eligible for clearing. These services are provided pursuant to a separate contract we have entered into with LCH.Clearnet, which continues in force unless either party gives one year’s prior written notice. Our cleared OTC contracts have become a significant component of our business, and accounted for 65.0%, 44.5%, 13.4% and 1.4% of the revenues, net of the intersegment fees, generated by our OTC business for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively.

      The interruption or cessation of these clearing services and our inability to make alternate arrangements in a timely manner could have a material adverse effect on our business, financial condition and results of operations. In particular, if our agreement with LCH.Clearnet with respect to our futures business were terminated, and we could not obtain clearing services from another source, we may be unable to operate our futures markets and would likely be required to cease operations in that segment of our business. For the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, transaction fees generated by our futures business, which are also referred to as exchange fees, accounted for 36.6%, 42.0%, 42.6% and 25.1%, respectively, of our consolidated revenues.

      If our agreement with LCH.Clearnet relating to our OTC business were terminated, we may be unable to offer clearing services in connection with trading OTC contracts in our markets for a considerable period of time. While we would still be able to offer OTC trading in bilateral contracts, our inability to offer trading in cleared contracts, assuming that no other clearing alternatives were available, could significantly impair our ability to compete, particularly in light of the launch of a competing swaps-to-futures clearing facility by one of our competitors and the ease with which other competitors can introduce new cleared OTC and futures products. For the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, transaction fees derived from trading in cleared OTC contracts accounted for 36.9%, 21.7%, 6.4% and 0.9%, respectively, of our consolidated revenues. Our principal competitor owns its own clearing facility and thus does not face the risk of losing the ability to provide clearing services to participants that we do. Moreover, because it owns its own facility, it may be able to provide clearing services more cost-effectively and can extend clearing services to new products faster than we can. For example, our ability to introduce new

cleared OTC products is subject to review by and approval of LCH.Clearnet. In addition, all clearing fees are determined by LCH.Clearnet and may be set at prices higher than those set by our competitors or at levels prohibitive to trading. As discussed below, as an alternative approach, we may establish or acquire our own clearinghouse. However, the number of clearing facilities that are not owned by our competitors is limited, and developing our own clearing facility would be costly and time consuming. Requiring our participants to change clearing facilities may also be disruptive and costly.

      LCH.Clearnet could elect for strategic reasons to discontinue providing clearing services to us for our futures and OTC businesses at any time with appropriate notice. For example, LCH.Clearnet could decide to enter into a strategic alliance with a competing exchange or other trading facility. In addition, according to the terms of our contract with LCH.Clearnet with respect to our OTC business, our relationship may be terminated upon a change in control of either party. The commodity markets have experienced increased consolidation in recent years and may continue to do so, and strategic alliances and changes in control involving various market participants are possible. LCH.Clearnet is owned by its members, which include banks and other financial institutions whose commercial interests are broader than the clearing services business. We cannot assure you that our futures or OTC businesses would be able to obtain clearing services from an alternate provider on acceptable terms or in sufficient time to avoid or mitigate the material adverse effects described above.

      In order to address the competitive disadvantages of not owning our own clearinghouse, we may in the future decide to establish a clearinghouse that would clear transactions executed in our markets. Alternatively, we might decide to purchase or acquire an interest in an existing clearinghouse for that purpose. Establishing or acquiring a clearinghouse, and subsequently operating the clearinghouse, would require substantial ongoing expenditures and would consume a significant portion of our management’s time, potentially limiting our ability to expand our business in other ways, such as through acquisitions of other companies or the development of new products and services. We cannot assure you that these clearing arrangements would be satisfactory to our participants or would not require substantial systems modifications to accommodate them. The transition to new clearing facilities could also be disruptive and costly to our participants. There are substantial risks inherent in operating a clearinghouse.

      In addition, our establishment or acquisition of a clearinghouse might not be successful and it is possible that the clearinghouse would not generate sufficient revenues to cover the expenses incurred, which would subject us to losses. Moreover, by owning our own clearinghouse, we would in any event be exposed to the credit risk of our participants, to which we are not currently subject and defaults by our participants could subject us to substantial losses. We would also be subject to additional regulation as a result of owning a clearinghouse.

Many of our current shareholders are also our participants and their interests may differ from those of other shareholders.

      Many of our Initial Shareholders and the Gas and Power Firms are both our principal shareholders and participants in our markets. Revenues from these investors accounted for 15.2%, 23.3%, 45.8% and 60.8% of our revenues generated by our OTC business, net of intersegment fees, for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. Revenues from all our shareholders that own in excess of 1% of our outstanding common stock accounted for 22.1%, 27.1%, 36.3% and 50.6% of our consolidated revenues for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively. As market participants, these shareholders may have strategic interests that are different from, or that could conflict with, your interests. For example, in their capacity as participants, these investors may favor lower fees for trade execution or other concessions that would presumably reduce our revenues, and therefore, the value of your ownership interest in us. Because of their common interests as participants in our markets, these investors may vote in the same way. They, collectively, will own 68.7% of our outstanding common stock upon the closing of this offering. If these investors vote together on a given matter, they collectively may have the ability to influence the decision,

which could involve the election of our directors, the appointment of new management and the potential outcome of any matter submitted to a vote of our shareholders, including mergers, the sale of substantially all of our assets and other extraordinary events. In addition, three of our Initial Shareholders are affiliated with Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and SG Americas Securities, LLC, each an underwriter for this offering.

We are currently subject to regulatory oversight. Failure to comply with existing regulatory requirements, and possible future changes in these requirements, could adversely affect our business.

      We operate our electronic platform as an “exempt commercial market” under the Commodity Exchange Act. As such, we are subject to access, reporting and record-keeping requirements of the Commodity Futures Trading Commission, or the CFTC. However, unlike a futures exchange, our OTC business is not generally regulated by the CFTC. In contrast, ICE Futures, through which we conduct our futures business, operates as a Recognized Investment Exchange in the United Kingdom. As a Recognized Investment Exchange, ICE Futures has regulatory responsibility in its own right and is subject to supervision by the Financial Services Authority pursuant to the Financial Services and Markets Act 2000. ICE Futures is required under the Financial Services and Markets Act 2000 to maintain sufficient financial resources, adequate systems and controls and effective arrangements for monitoring and disciplining its members. ICE Futures’ ability to comply with all applicable laws and rules is largely dependent on its maintenance of compliance, audit and reporting systems. We cannot assure you that these systems and procedures are fully effective. Failure to comply with our regulatory requirements could subject us to significant penalties, including termination of our ability to conduct our regulated businesses.

      Future legislative and regulatory initiatives, either in the United States, the United Kingdom or elsewhere, could affect one or more of the following aspects of our business:

      The implementation of new regulations or unfavorable interpretations of existing regulations by courts or regulatory bodies could require us to incur significant compliance costs and impede our ability to operate, expand and enhance our electronic platform as necessary to remain competitive and expand our business. Regulatory changes inside or outside the United States or the United Kingdom could materially and adversely affect our business, financial condition and results of operations.

The OTC commodities trading industry in North America has been subject to increased regulatory scrutiny in the recent past, and we face the risk of changes to our regulatory environment in the future, which may diminish trading volumes on our electronic platform.

      Our OTC business is currently subject to only limited regulatory oversight. As an exempt commercial market, we are not subject to registration as an exchange nor to the type of ongoing comprehensive oversight to which exchanges are subject. Instead, we are required to comply with access, reporting and record-keeping requirements of the CFTC. In recent years, however, the market for OTC energy commodities trading has been the subject of increased scrutiny by regulatory and enforcement authorities due to a number of highly publicized problems involving energy commodities trading companies. This increased scrutiny has included

investigations by the Department of Justice, the Federal Energy Regulatory Commission and the Federal Trade Commission of alleged manipulative trading practices, misstatements of financial results, and other matters. As a result of the foregoing, in 2002 several significant commercial participants in the energy trading markets ceased all trading operations. Primarily as a result of this, our trading volumes declined from 44.0 million contracts for the year ended December 31, 2002 to 24.3 million contracts for the year ended December 31, 2003. While volumes have since increased to 31.0 million contracts for the year ended December 31, 2004 and 44.4 million contracts for the nine months ended September 30, 2005, we cannot predict whether these trading volumes will remain at these levels or continue to grow in the future.

      In connection with the above referenced investigations, governmental bodies became concerned that various market participants may have used our OTC electronic platform, among other venues such as voice brokers, to conduct potentially manipulative trading activity, and, during this time, we were required to provide extensive information to the authorities in connection with their investigations. This process was costly and the resulting publicity may have discouraged other participants or potential participants from using our platform.

      Furthermore, in the wake of suggestions that manipulative trading practices by certain market participants may have contributed to unseasonably high prices in the wholesale power market in California and other western states in the summer of 2000, and in response to a number of other factors, including the collapse of Enron Corporation and recent energy shortages following Hurricanes Katrina and Rita, legislative and regulatory authorities at both the federal and state levels, as well as political and consumer groups, called for increased regulation and monitoring of the OTC commodities markets in general and the North American natural gas and power markets (currently our most important OTC markets), in particular. For example, regulators in some states publicly questioned whether some form of regulation, including price controls, should be reimposed in OTC commodities markets, particularly in states where power markets were deregulated in recent years. In addition, members of Congress have, at various times in the last several years, introduced legislation seeking to restrict OTC derivatives trading of energy contracts generally and to bring electronic trading of OTC energy derivatives within the direct scope of CFTC regulation. Separate pieces of legislation have recently been introduced in Congress that would (i) provide the CFTC with the authority to require exempt commercial markets to comply with additional regulatory requirements and to require some participants on exempt commercial markets to file reports on their positions, and (ii) place price controls on natural gas derivatives and make those derivatives tradable only on a designated contract market, which is a regulatory status we do not presently hold. If adopted, this legislation could require us and our participants to operate under heightened regulatory burdens and incur additional costs in order to comply with the additional regulations, and could deter some participants from trading on our OTC platform. In addition, the energy bill that was recently signed into law by the President on August 8, 2005, grants to the Federal Energy Regulatory Commission the power to prescribe rules related to the collection and government dissemination of information regarding the availability and price of natural gas and wholesale electric energy. On October 20, 2005, the Federal Energy Regulatory Commission issued a proposed rule designed to prevent manipulation of natural gas and power markets. The proposal clarifies the agency’s authority over market manipulation by all electricity and natural gas sellers, transmission owners and pipe lines, regardless of whether they are regulated by the Federal Energy Regulatory Commission. This proposal and possible future exercises of the Federal Energy Regulatory Commission’s rulemaking powers could adversely impact demand for our data products in the United States.

      We cannot assure you that future unanticipated events in the markets for energy commodities trading will not lead to a recurrence of regulatory scrutiny or to changes in the level of regulation to which our OTC business is subject. Increased regulation of our participants or our markets could materially adversely affect our business. The imposition of stabilizing measures such as price controls in the power or other commodities markets could substantially reduce or potentially even eliminate trading activity in affected markets. New laws and rules applicable to our business could significantly increase our regulatory compliance costs, delay or prevent us from introducing our products and services as planned and discourage some market participants from using our electronic platform. New allegations of manipulative trading by market participants could subject us to regulatory scrutiny and possibly fines or restrictions on our business, as well as adverse publicity. All of this could lead to lower trading volumes and transaction fees, higher operating costs and lower profitability or losses.

If we are unable to keep up with rapid changes in technology and participant preferences, we may not be able to compete effectively.

      To remain competitive, we must continue to enhance and improve the responsiveness, functionality, accessibility and reliability of our electronic platform and our proprietary technology. The financial services industry is characterized by rapid technological change, change in use patterns, change in client preferences, frequent product and service introductions and the emergence of new industry standards and practices. These changes could render our existing proprietary technology uncompetitive or obsolete. Our ability to pursue our strategic objectives, including increasing trading volumes on our platform following our recent transition to an all electronic marketplace, as well as our ability to continue to grow our business, will depend, in part, on our ability to:

      We cannot assure you that we will successfully implement new technologies or adapt our proprietary technology to our participants’ requirements or emerging industry standards in a timely and cost-effective manner. Any failure on our part to remain abreast of industry standards in technology and to be responsive to participant preferences could cause our market share to decline and negatively impact our profitability.

Our operating results are subject to significant fluctuations due to a number of factors. As a result, you will not be able to rely on our operating results in any particular period as an indication of our future performance.

      A number of factors beyond our control may contribute to substantial fluctuations in our operating results — particularly in our quarterly results. As a result of the factors described in the preceding risk factors, you will not be able to rely on our operating results in any particular period as an indication of our future performance. The energy commodities trading industry has historically been subject to variability in trading volumes due primarily to five key factors. These factors include geopolitical events, weather, real and perceived supply and demand imbalances in the underlying energy commodities, the number of trading days in a quarter and seasonality. As a result of one or more of these factors, trading volumes in our markets could decline, possibly significantly, which would adversely affect our revenues derived from transaction fees. If we fail to meet securities analysts’ expectations regarding our operating performance, the price of our common stock could decline substantially. See also “— Risks Relating to this Offering — The market price of our common stock may fluctuate significantly, and it may trade at prices below the initial public offering price”.

Our cost structure is largely fixed. If our revenues decline and we are unable to reduce our costs, our profitability will be adversely affected.

      Our cost structure is largely fixed. We base our expectations of our cost structure on historical and expected levels of demand for our products and services as well as our fixed operating infrastructure, such as computer hardware and software, hosting facilities and security and staffing levels. If demand for our products and services declines and, as a result, our revenues decline, we may not be able to adjust our cost structure on a timely basis. In that event, our profitability will be adversely affected.

Fluctuations in currency exchange rates may adversely affect our operating results.

      We currently generate a significant portion of our revenues and net income and corresponding accounts receivable and cash through sales denominated in pounds sterling, which is the functional currency of our foreign subsidiaries. Of our consolidated revenues, 38.3%, 46.1%, 47.1% and 33.7% were denominated in pounds sterling for the nine months ended September 30, 2005, and for the years ended December 31, 2004, 2003 and 2002, respectively, and we expect our exposure to foreign currency exchange risk to increase to the

extent we are able to expand our futures business. We have foreign currency translation risk equal to our net investment in these subsidiaries. As of September 30, 2005, $59.3 million of our cash and cash equivalents, short-term and long-term investments and restricted cash, $6.5 million of our accounts receivable, $78.3 million of our goodwill and other intangible assets and $142.6 million of our net assets were denominated in pounds sterling.

      We also have foreign currency transaction risk related to the settlement of foreign receivables or payables incurred with respect to trades executed on our electronic platform, including for our OTC European gas and power markets, which are paid in pounds sterling, and for cash accounts of our U.K. subsidiaries held in U.S. dollars. For example, we had foreign currency transaction gains of $1.4 million for the nine months ended September 30, 2005 and foreign currency transaction losses of $1.4 million, $644,000 and $149,000 for the years ended December 31, 2004, 2003 and 2002, respectively. While we currently enter into hedging transactions to help mitigate our foreign exchange risk exposure, primarily with respect to our net investment in our U.K. subsidiaries, these hedging arrangements may not always be effective, particularly in the event of imprecise forecasts of the levels of our non-U.S. denominated assets and liabilities. Accordingly, if there is an adverse movement in exchange rates, we may suffer significant losses, which would adversely affect our operating results and financial condition.

Any infringement by us on the intellectual property rights of others could result in litigation and adversely affect our ability to continue to provide, or increase the cost of providing, our products and services.

      Patents and other intellectual property rights of third parties may have an important bearing on our ability to offer certain of our products and services. Our competitors as well as other companies and individuals may have obtained, and may be expected to obtain in the future, patent rights related to the types of products and services we offer or plan to offer. We cannot assure you that we are or will be aware of all patents that may pose a risk of infringement by our products and services. In addition, some patent applications in the United States are confidential until a patent is issued, and therefore we cannot evaluate the extent to which our products and services may be covered or asserted to be covered in pending patent applications. Thus, we cannot be sure that our products and services do not infringe on the rights of others or that others will not make claims of infringement against us. For example, in November 2002, NYMEX filed claims against us in the U.S. District Court for the Southern District of New York asserting that, among other things, we infringed copyrights NYMEX claims exist in its publicly available settlement prices that we use in connection with the clearing of certain of our OTC derivative contracts. While the court granted a motion for summary judgment in our favor in September 2005 dismissing all claims brought against us by NYMEX, NYMEX filed a notice of appeal with the court on October 13, 2005. In addition, NYMEX may pursue certain state law claims in New York state court that were dismissed from the federal court case on jurisdictional grounds. If NYMEX successfully appeals the court’s judgment and we are subsequently found to have infringed on NYMEX’s intellectual property rights after a trial, we may incur substantial monetary damages and we may be enjoined from using or referring to one or more types of NYMEX settlement prices. If we are enjoined from using or referring to NYMEX settlement prices, we could lose all or a substantial portion of our cleared trading volume in Henry Hub natural gas and West Texas Intermediate crude oil contracts and the related commission revenues. We derived 28.6% and 17.2% of our consolidated revenues for the nine months ended September 30, 2005 and the year ended December 31, 2004, respectively, from Henry Hub natural gas and West Texas Intermediate crude oil contracts cleared and settled on the basis of, or by reference to, NYMEX settlement prices. See “Regulation and Legal Proceedings — Legal Proceedings — NYMEX Claim of Infringement”. In addition, we recently settled a patent infringement litigation with EBS in exchange for a payment of $15.0 million to EBS. See “Regulation and Legal Proceedings — Legal Proceedings — EBS Claim of Infringement”.

      In general, if one or more of our products or services is found to infringe patents held by others, we may be required to stop developing or marketing the products or services, to obtain licenses to develop and market the products or services from the holders of the patents or to redesign the products or services in such a way as to avoid infringing the patents. We also could be required to pay damages if we were found to infringe patents held by others, which could materially adversely affect our business, financial condition and operating results. We cannot assess the extent to which we may be required in the future to obtain licenses with respect to

patents held by others, whether such licenses would be available or, if available, whether we would be able to obtain such licenses on commercially reasonable terms. If we were unable to obtain such licenses, we may not be able to redesign our products or services at a reasonable cost to avoid infringement, which could materially adversely affect our business, financial condition and operating results.

      Our business is dependent on proprietary technology and other intellectual property that we own or license from third parties. Despite precautions we have taken or may take to protect our intellectual property rights, third parties could copy or otherwise obtain and use our proprietary technology without authorization. It may be difficult for us to monitor unauthorized use of our intellectual property. We cannot assure you that the steps that we have taken will prevent misappropriation of our proprietary technology or intellectual property.

      We have filed U.S. patent applications for our electronic trade confirmation service, our method to allow a participant to engage in program trading while protecting its data (referred to as ICEMaker), our method for displaying both cleared and bilateral OTC contracts in single price stream, our method for locking prices on electronic trading screens, and our method for exchanging OTC contracts and futures contracts in similar base commodities on an electronic trading platform. We have also filed patent applications in the European Patent Office and Canada for our electronic trade confirmation service and our method for displaying cleared and bilateral OTC contracts in a single price stream, as well as having made a filing under the Patent Cooperation Treaty with respect to ICEMaker. We cannot assure you that we will obtain any final patents covering these services, nor can we predict the scope of any patents issued. In addition, we cannot assure you that any patent issued will be effective to protect this intellectual property against misappropriation. Third parties in Europe or elsewhere could acquire patents covering this or other intellectual property for which we obtain patents in the United States, or equivalent intellectual property, as a result of differences in local laws affecting patentability and patent validity. Third parties in other jurisdictions might also misappropriate our intellectual property rights with impunity if intellectual property protection laws are not actively enforced in those jurisdictions. Patent infringement and/or the grant of parallel patents would erode the value of our intellectual property.

      We have secured trademark registrations for “IntercontinentalExchange” and “ICE” from the United States Patent and Trademark Office, as well as registrations for other trademarks we use in our business. We also have several U.S. and foreign applications pending for other trademarks we use in our business. We cannot assure you that any of these marks for which applications are pending will be registered.

      We may have to resort to litigation to enforce our intellectual property rights, protect our trade secrets, and determine the validity and scope of the intellectual property rights of others or defend ourselves from claims of infringement. We may not receive an adequate remedy for any infringement of our intellectual property rights, and we may incur substantial costs and diversion of resources and the attention of management as a result of litigation, even if we prevail. As a result, we may choose not to enforce our infringed intellectual property rights, depending on our strategic evaluation and judgment regarding the best use of our resources, the relative strength of our intellectual property portfolio and the recourse available to us.

      We began operations in 2000. As a result, we have a limited operating history for you to evaluate in assessing our future prospects. In addition, while the International Petroleum Exchange (which we renamed ICE Futures in October 2005) was established in 1980, we did not begin to operate the business until we acquired the International Petroleum Exchange in June 2001 and integrated it into our business. We also did not offer trading in futures contracts or options on futures contracts exclusively in our electronic markets prior to the closure of our open-outcry trading floor on April 7, 2005. Accordingly, our historic and recent financial results may not be representative of what they may be in the future. We cannot assure you that our growth will continue at the same rate or at all, or that we will not experience declines in revenues and profitability in the future. You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company with a limited operating history.

We face significant challenges in implementing our strategic goals of expanding product and service offerings and attracting new market participants to our markets. If we do not meet these challenges, we may not be able to increase our revenues or remain profitable.

      We seek to expand the range of commodity products that can be traded in our markets and to ensure that trading in those new products becomes liquid within a sufficiently short period of time to support viable trading markets. We also seek to expand the number of contracts traded in our futures markets following the closure of our open-outcry trading floor. In meeting these strategic goals, however, we face a number of significant challenges, including the following:

      Even if we resolve these issues and are able to introduce new products and services, there is no assurance that they will be accepted by our participants, attract new market participants, or be competitive with those offered by other companies. If we do not succeed in these efforts on a consistent, sustained basis, we will be unable to implement our strategic objectives. This would seriously jeopardize our ability to increase and diversify our revenues, remain profitable and continue as a viable competitor in our markets.

      We expect to experience pressure on our commission rates as a result of competition we face in our futures and OTC markets. Some of our competitors offer a broader range of products and services to a larger participant base, and enjoy higher trading volumes, than we do. Consequently, our competitors may be able and willing to offer commodity trading services at lower commission rates than we currently offer or may be able to offer. As a result of this pricing competition, we could lose both market share and revenues. We believe that any downward pressure on commission rates would likely continue and intensify as we continue to develop our business and gain recognition in our markets. A decline in commission rates could lower our revenues, which would adversely affect our profitability. In addition, our competitors may offer other financial incentives such as rebates or payments in order to induce trading in their markets, rather than ours. To date, we have not offered our participants similar incentives except as described below.

      We have offered our trade execution services to market participants without charge for trading West Texas Intermediate crude oil bullets in our OTC market in an effort to increase the liquidity of this market. This fee waiver began in November 2004 and extends through the end of 2005. We recognized $113,000,

$240,000 and $858,000 in commission fee revenues for West Texas Intermediate crude oil bullet contracts for the years ended December 31, 2004, 2003 and 2002, respectively. Assuming trading volumes for the period would have remained unchanged if we had charged our customary fee, we would have generated commission fees for West Texas Intermediate crude oil bullets of $1.1 million during the nine months ended September 30, 2005. Similar efforts by us or our competitors in the future could have an adverse effect on our profitability.

      We support and maintain many of the systems that comprise our electronic platform. Our failure to monitor or maintain these systems, or to find replacements for defective components within a system in a timely and cost-effective manner when necessary, could have a material adverse effect on our ability to conduct our business. Our systems are located primarily in Atlanta, Georgia and our backup facilities fully replicate our primary data center. Our redundant systems or disaster recovery plans may prove to be inadequate.

      Our systems, or those of our third party providers, may fail or, due to capacity constraints, may operate slowly, causing one or more of the following:

      We could experience system failures due to power or telecommunications failures, human error on our part or on the part of our vendors or participants, natural disasters, fire, sabotage, hardware or software malfunctions or defects, computer viruses, intentional acts of vandalism or terrorism and similar events. In these instances, our disaster recovery plan may prove ineffective. If any one or more of these situations were to arise, they could result in damage to our business reputation, participant dissatisfaction with our electronic platform, prompting participants to trade elsewhere, or exposure to litigation or regulatory sanctions. As a consequence, our business, financial condition and results of operations could suffer materially.

      We regard the secure transmission of confidential information on our electronic platform as a critical element of our operations. Our networks and those of our participants and our third party service providers, including LCH.Clearnet, may, however, be vulnerable to unauthorized access, computer viruses, firewall or encryption failures and other security problems. We may be required to expend significant resources to protect ourselves and our participants against the threat of security breaches or to alleviate problems caused by security breaches. Although we intend to continue to implement industry standard security measures, we cannot assure you that those measures will be sufficient to protect our business against losses or any reduced trading volume incurred in our markets as a result of any significant security breaches on our platform.

      Our future success depends, in part, upon the continued contributions of our executive officers and key employees who we rely on for executing our business strategy and identifying new strategic initiatives. These individuals possess extensive experience in the energy commodities trading industry and financial services markets generally, and possess extensive technology skills. We rely in particular on Jeffrey C. Sprecher, our chief executive officer, Charles A. Vice, our president and chief operating officer, Richard V. Spencer, our chief financial officer, Edwin D. Marcial, our chief technology officer, and David S. Goone, our head of business

development and sales, as well as certain other employees responsible for product development and technological development within our company. Although we have entered into employment agreements with each of the executive officers and key employees described in the previous sentence, it is possible that one or more of these persons could voluntarily terminate their employment agreements with us. Any loss or interruption of the services of our executive officers or key product development or technology personnel could result in our inability to manage our operations effectively or to execute our business strategy. We cannot assure you that we would be able to find appropriate replacements for these key personnel if the need arose. We may have to incur significant costs to replace key employees who leave, and our ability to execute our business strategy could be impaired if we cannot replace departing employees in a timely manner. Competition in our industry for persons with trading industry and technology expertise is intense.

      In addition to our dependence on LCH.Clearnet as a clearing service provider, we depend on a number of suppliers, such as online service providers, hosting service and software providers, data processors, software and hardware vendors, banks, and telephone companies, for elements of our trading, clearing and other systems. For example, we rely on Atos Euronext Market Solutions Limited for the provision of a trade registration system that routes trades executed in our markets to LCH.Clearnet for clearing. Atos Euronext Market Solutions Limited and other companies within the Euronext, N.V. group of companies, are potential competitors to both our futures business and our OTC business, which may affect the continued provision of these services in the future. In addition, we rely on a large international telecommunications company for the provision of hosting services. If this company were to discontinue providing these services to us, we would likely experience significant disruption to our business until we were able to establish connectivity with another provider.

      We cannot assure you that any of these providers will be able to continue to provide these services in an efficient, cost-effective manner or that they will be able to adequately expand their services to meet our needs. An interruption in or the cessation of an important service or supply by any third party and our inability to make alternative arrangements in a timely manner, or at all, would result in lost revenues and higher costs.

      In addition, our participants may access our electronic platform through ten independent software vendors, which represent a substantial portion of the independent software vendors that serve the commodities markets. The loss of a significant number of independent software vendors providing access could make our platform less attractive to participants who prefer this form of access.

      Many aspects of our business, and the businesses of our participants, involve substantial risks of liability. These risks include, among others, potential liability from disputes over terms of a trade, the claim that a system failure or delay caused monetary loss to a participant or that an unauthorized trade occurred. For example, dissatisfied participants that have traded on our electronic platform, or those on whose behalf our participants have traded, may make claims regarding the quality of trade execution, or alleged improperly confirmed or settled trades, abusive trading practices, security and confidentiality breaches, mismanagement or even fraud against us or our participants. In addition, because of the ease and speed with which sizable trades can be executed on our electronic platform, participants can lose substantial amounts by inadvertently entering trade orders or by entering them inaccurately. A large number of significant error trades could result in participant dissatisfaction.

      As a result, we could incur significant legal expenses defending claims against us, even those without merit. The adverse resolution of any lawsuits or claims against us could result in our obligation to pay substantial damages, and cause us reputational harm. Our participants may face similar legal challenges, and these challenges could affect their ability or willingness to trade on our electronic platform. The initiation of lawsuits or other claims against us, or against our participants with regard to their trading activities, could adversely affect our business, financial condition and results of operations, whether or not these lawsuits or

other claims are resolved in our favor. If we violate the terms and provisions of the Commodity Exchange Act under which we operate our OTC business, or if the CFTC concludes or believes we have violated other provisions of the Commodity Exchange Act, we could also be exposed to substantial liability. See also “— We are currently subject to regulatory oversight. Failure to comply with existing regulatory requirements, and possible future changes in these requirements, could adversely affect our business”.

      While we have self regulatory status in our futures business, we currently do not assume responsibility for enforcing compliance with applicable commercial and legal standards by our participants when they trade OTC contracts in our markets. If we determined that it was necessary to undertake such a role in respect of OTC products — for example, to deter unfavorable regulatory actions, to respond to regulatory actions or simply to maintain our participants’ confidence in the integrity of our OTC markets — we would have to invest heavily in developing new compliance and surveillance systems, and our operating expenses could increase significantly. Our assumption of such a role could also increase our exposure to lawsuits from dissatisfied participants and other parties claiming that we failed to deter inappropriate or illegal conduct.

      Our ability to comply with applicable laws and rules is largely dependent on our establishment and maintenance of compliance, audit and reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. Our policies and procedures to identify, monitor and manage our risks may not be fully effective. Management of operational, legal and regulatory risk requires, among other things, policies and procedures to record properly and verify a large number of transactions and events. We cannot assure you that our policies and procedures will always be effective or that we will always be successful in monitoring or evaluating the risks to which we are or may be exposed.

      If appropriate opportunities present themselves, we may acquire businesses, products or technologies that we believe have strategic value. We may not be able to identify, negotiate or finance any future acquisition successfully. Even if we do succeed in acquiring a business, product or technology, we have limited experience, other than with respect to ICE Futures, in integrating a significant acquisition into our business. The process of integration may produce unforeseen operating difficulties and expenditures and may absorb significant attention of our management that would otherwise be available for the ongoing development of our business. If we make future acquisitions, we may issue shares of our stock that dilute shareholders, expend cash, incur debt, assume contingent liabilities or create additional expenses related to amortizing intangible assets with estimable useful lives, any of which could harm our business, financial condition or results of operations.

Risks Relating to this Offering

      Prior to this offering, there has been no public market for our common stock. We cannot assure you that an active trading market will develop or be sustained after this offering. Although our common stock has been approved for listing on the New York Stock Exchange, we do not know whether third parties will find our common stock to be attractive or whether firms will be interested in making a market in our common stock. Also, if you purchase shares of common stock in this offering, you will pay a price that was not established in public trading markets. The initial public offering price of our common stock will be determined through negotiation between us and the representatives of the underwriters and thus may not be indicative of the

market price for our common stock after this offering. Consequently, you may not be able to resell your shares above the initial public offering price and may suffer a loss on your investment.

      The lead underwriters for this offering, Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co., are affiliates of Morgan Stanley Capital Group Inc. and The Goldman Sachs Group, Inc., respectively, each of which is participating as a selling shareholder in this offering. In addition, SG Americas Securities, LLC, an underwriter for this offering, is an affiliate of Société Générale Financial Corporation, which is participating as a selling shareholder in this offering. We expect that Morgan Stanley Capital Group Inc. will sell 1,173,095 shares, or 14.9% of its interest in us, The Goldman Sachs Group, Inc. will sell 1,100,000 shares, or 14.6% of its interest in us, and Société Générale Financial Corporation will sell 806,515 shares, or 17.9% of its interest in us. There may be a conflict of interest between their interests as selling shareholders (i.e., to maximize the value of their investment) and their interests as underwriters (i.e., in negotiating the initial public offering price). As affiliates of participants in this offering that are seeking to realize the value of their investment in us, the lead underwriters have interests beyond customary underwriting discounts and commissions.

      The significant equity ownership in our company that each of Morgan Stanley Capital Group Inc. and The Goldman Sachs Group, Inc. will hold following completion of this offering will require them to comply with SEC rules governing purchases and sales of our common stock. See “Principal and Selling Shareholders”. These rules will make it impracticable for the lead underwriters of this offering, Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. (affiliates of Morgan Stanley Capital Group Inc. and The Goldman Sachs Group, Inc., respectively), to make markets in our common stock after the completion of this offering. Although Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. will be permitted to purchase shares of our common stock in the secondary market on behalf of the underwriting syndicate in connection with covering any short position established by the syndicate and to execute unsolicited customer agency orders, they will not be able to make a market in our common stock. See “Underwriting”. Other members of the underwriting syndicate may engage in market-making activities with respect to our common stock. However, they are under no obligation to do so and may stop market-making activities at any time. Although these syndicate members may engage in market-making activities, restrictions on the ability of Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. to engage in market-making may adversely affect the trading market for our common stock.

      The market price of our common stock after this offering may fluctuate significantly from time to time as a result of many factors, including:

      In particular, announcements of potentially adverse developments, such as proposed regulatory changes, new government investigations or the commencement or threat of litigation against us or our major participants, as well as announced changes in our business plans or those of our competitors, could adversely affect the trading price of our stock, regardless of the likely outcome of those developments. Broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, our common stock may trade at prices significantly below the initial public offering price.

      If our existing shareholders sell substantial amounts of our common stock in the public market following this offering, or if we issue a large number of shares of our common stock in connection with future acquisitions, the market price of our common stock could decline significantly. Sales by our existing shareholders might also make it more difficult for us to raise equity capital by selling new common stock at a time and price that we deem appropriate.

      Based on shares outstanding as of September 30, 2005, upon completion of this offering we will have 55,466,753 shares of common stock outstanding. Of these outstanding shares, the 10,000,000 shares sold in this offering will be freely tradable in the public market. The remaining 45,466,753 shares will be restricted securities as defined in the SEC’s Rule 144 and may be sold by the holders into the public market from time to time in accordance with Rule 144. Over 90% of these restricted shares will be eligible for sale under Rule 144 following expiration of the lockup agreements described below.

      We have granted Continental Power Exchange, Inc. and other designated Class A2 shareholders, including Morgan Stanley Capital Group Inc. and The Goldman Sachs Group, Inc., each an affiliate of the lead underwriters in this offering, the right to require us to register their shares of our common stock that they will receive upon conversion of their Class A2 shares from time to time following the consummation of this offering, which represents approximately 42.4 million shares. Accordingly, the number of shares subject to registration rights is substantial and the sale of these shares may have a negative impact on the market price for our common stock. These shares are subject to the lock-up agreements described below. See “Shares Eligible for Future Sale” for a discussion of the registration rights applicable to Continental Power Exchange, Inc. and those applicable to designated Class A2 shareholders.

      We and the holders of approximately 94.6% of our shares outstanding and all of our shares issuable under options and restricted stock award agreements outstanding as of September 30, 2005 — including our directors and officers — have agreed to a 180-day lockup, meaning that, for a period of 180 days following the date of this prospectus, we and they will not sell shares of our common stock. However, this lockup is subject to several exceptions, and our lead underwriters in their sole discretion may release any of the securities subject to the lockup, at any time without notice.

      After this offering, we intend to register initially 9,100,000 shares of our common stock for issuance of shares pursuant to, or upon the exercise of, options granted under, our employee stock option plans, restricted stock plans or equity incentive plan. We may increase the number of shares registered for this purpose from time to time. Once we register these shares, they will be able to be sold in the public market upon issuance.

      Provisions of our charter and bylaws may have the effect of delaying, deferring or preventing a change in control of our company. A change of control could be proposed in the form of a tender offer or takeover proposal that might result in a premium over the market price for our common stock. In addition, these provisions could make it more difficult to bring about a change in the composition of our board of directors, which could result in entrenchment of current management. For example, our charter and bylaws will:

      In addition, Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our common stock. Delaware law prohibits a publicly held corporation from engaging in a “business combination” with an “interested shareholder” for three years after the shareholder becomes an interested shareholder, unless the corporation’s board of directors and shareholders approve the business combination in a prescribed manner or the interested shareholder has acquired a designated percentage of our voting stock at the time it becomes an interested shareholder.

      Our employment agreements with our executive officers also contain change in control provisions. Under the terms of these employment agreements, all of the stock options granted to these officers after entering into the agreement will fully vest and become immediately exercisable if such officer’s employment is terminated following, or as a result of, a change in control of our company. In addition, the executive officer is entitled to receive a significant cash payment. See “Management — Employment Agreements and Benefit Plans — Termination — Termination Following a Change in Control” for a discussion of these provisions.

      These and other provisions of our organizational documents, employment agreements and Delaware law may have the effect of delaying, deferring or preventing changes of control or changes in management of our company, even if such transactions or changes would have significant benefits for our shareholders. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.

      If you purchase shares of our common stock in this offering, you will experience an immediate and substantial dilution of $16.74 per share (assuming the common stock is offered at $19.00 per share, the midpoint of the estimated price range set forth on the cover of this prospectus) because the price that you pay will be substantially greater than the pro forma net tangible book value per share of such stock based on the pro forma net tangible book value per share as of September 30, 2005. This dilution is due to the fact that when our existing shareholders purchased or were otherwise issued shares of our common stock in the past, they did so at prices that were significantly lower than the price at which our common stock is being offered to the public in this offering.

      We do not anticipate paying any dividends to our shareholders for the foreseeable future. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend upon our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law or the SEC and other factors our board deems relevant.

      We will have broad discretion to use the net proceeds to us from this offering, and you will be relying on the judgment of our board of directors and management regarding the use and application of these proceeds. Although we expect to use the net proceeds for working capital and general corporate purposes, we have not allocated these net proceeds for specific purposes and cannot assure you that we will use these funds in a manner of which you will approve.