UPDATE 2-ICE profit beats Street on record futures trading

NEW YORK, Nov 3 (Reuters) - IntercontinentalExchange Inc said on Tuesday quarterly earnings rose 16 percent, beating expectations, as record futures trading boosted the derivatives exchange operator that is starting to benefit from sweeping regulatory reforms. The company, which focuses on energy and runs clearinghouses on both sides of the Atlantic, said average daily futures volume jumped 24 percent in the third quarter. ICE has taken the lead among exchanges in clearing credit default swaps and is seen as very sensitive to the pending revamp of U.S. and European derivatives markets, meant to avoid a repeat of the financial crisis and global recession. "We believe that the financial market reforms currently under way will provide greater certainty to market participants, as well as additional opportunities for ICE..." Jeffrey Sprecher, its chief executive, said in a statement. ICE earned $86.9 million, or $1.18 in the quarter that ended Sept. 30, up from $75.0 million, or $1.04 per share, a year earlier. Revenue was up 27 percent at $256.3 million. Analysts on average expected the Atlanta-based company to earn $1.15 per share on $255.6 million in revenue, according to Thomson Reuters I/B/E/S. Average daily commissions in ICE's OTC energy business climbed 12 percent in the quarter, helping boost total transaction and clearing fees 34 percent.

The commissions jumped another 12 percent to $1.4 million in October, according to a separate company presentation. "If you're going to continue that pace, it's a pretty strong rebound," Patrick O'Shaughnessy, an analyst at Raymond James and Associates, said of the October growth. The analyst said ICE is still a growth stock, and likely beat consensus due to better-than-expected quarterly expenses. Expenses jumped 41 percent to $116.3 million, due partly to last year's purchase of Creditex, a CDS processor. Regulators want more standardized over-the-counter derivatives exchange-traded and cleared. The $27 trillion OTC CDS market is seen to have exacerbated the financial crisis that claimed Lehman Brothers and nearly toppled American International Group. ICE -- which operates futures exchanges in New York, London and Winnipeg, Canada -- began clearing U.S. CDS in March, and European CDS in July. Revenue and expenses from the venture have grown quarter over quarter this year. The company could benefit as more over-the-counter contracts are exchange-traded and cleared, but could suffer if U.S. regulators impose new commodity-market position limits. ICE shares were little changed before markets opened. They have not fully recovered from a tumble in early July, when the head of the Commodity Futures Trading Commission said it was considering limits on speculators to clamp down on oil price volatility. (Reporting by Jonathan Spicer, editing by Maureen Bavdek) Keywords: INTERCONTINENTALEXCHANGE/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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