By Telis Demos in New York

Chinese banks are filling in for European lenders in US agricultural finance, helping preserve trading activity in sugar and other commodities in the wake of MF Global?s collapse, according to a US exchange chief.

Jeffrey Sprecher, chief executive of IntercontinentalExchange (ICE), told analysts that volumes in its US futures business, formerly the New York Board of Trade, had been affected by the bankruptcy of MF last year, as MF was one of the largest sugar brokers in the market.

However, he said that volumes for ICE Futures US had rebounded, in part because while European banks such as BNP Paribas and Rabobank had been pulling back from lending to US agricultural businesses, Chinese banks were emerging to provide that finance. Businesses needed to pay for hedging expenses and for warehouse space.

?A bigger impact [than MF Global] has been restructuring of European banks,? said Mr Sprecher. ?But what we have seen in recent times is that [the] gap is being filled by new banks coming into this market. We have started to see a recovery of open interest . . . in sugar.?

Data from the exchange show that open interest in sugar has rebounded to 695,000 contracts after bottoming out at fewer than 500,000 leading up to MF?s bankruptcy in late October. ICE Futures US still recorded a 7 per cent decline in average daily volume in the fourth quarter of last year.

However, strong commodities trading across US and UK markets run by ICE drove a rise in profits and revenues. Net income rose 28 per cent on the year to $127m, on the back of a 15 per cent jump in revenues to $327m.

ICE?s shares rose 5.8 per cent to $129.79, their highest level since last

October.

While volumes at rival CME Group, which also had large markets in financial futures, fell 2 per cent in the fourth quarter on the previous year, ICE?s overall average daily volumes increased by 12 per cent in futures and 10 per cent in over-the-counter derivative markets.

The exchange has benefited from a shift in the universal benchmark for oil trading from US West Texas Intermediate, which is primarily traded by CME, to many traders looking at Brent crude, which is traded by ICE Futures Europe in London.

Mr Sprecher said that natural gas trading volumes had been holding up despite record low prices in the US following a boom in shale gas drilling, because businesses? worries about storage capacity were driving longer-term hedging activity.

? The Financial Times Limited 2012