INTERCONTINENTALEXCHANGE’S (ICE) quarterly earnings rose a better-than-expected 18 per cent, and the exchange operator said regulatory changes would help it continue a multi-year growth trajectory.
ICE, whose growth depends on taking advantage of global derivatives market reforms, said yesterday it expects revenue from its two-year-old credit derivatives clearing house to rise 15 to 20 per cent this year, from $166m (£103.1m) in 2010.
The company has increased profits the last five years.
A jump in derivatives trading and new business lines helped revenue in the fourth quarter rise 11 per cent to $285m, slightly better than Wall Street expected. The company earned $99m, or $1.34 per share, up from $84m, or $1.13 per share, a year earlier. Excluding special items, earnings were $1.35 a share.
ICE runs exchanges and clearinghouses in North America and Europe. Profits are still driven by its core energy futures trading business, helped recently by the growing prominence of its Brent crude benchmark.
Futures trading jumped 21 per cent in the quarter, while overall revenue from transactions and clearing rose 10 per cent.
The company has moved quickly to capitalise on swaps market reforms on both sides of the Atlantic, meant to avoid another financial crisis. Legislators and regulators want as many over-the-counter swaps as practicable run through trading venues and through clearinghouses, which guarantee and shed light on the trades.
ICE started clearing US-based credit default swaps (CDS) early in 2009, and later expanded to Europe, gaining an edge over rivals.
City A.M. Reporter