ICE Unphased By Possible Regulations – US-FOREX.US
Analysts don’t anticipate that The IntercontinentalExchange will be hurt by possible upcoming regulatory changes. Meanwhile, ICE continues to try to build a transparent market place for derivative securities and credit default swaps.Kenneth Worthington and Funda Akarsu at JPMorgan Chase
set a target price of 118.00 for the stock, which is currently trading at about 93.00. Niamh Alexander and Nassime Ruch-Kamgar at Keefe, Bruyette & Woods set their target at 98.00. The Commodity Futures Trading Commission is holding hearings at summer’s end to look into position limits, speculative trading and the dealer hedge exemption. Position limits aren’t likely to impact the ICE much, Worthington and Akarsu say, as position limits only make up about 15% of the exchange’s revenue. Worthington and Akarsu recommend the ICE’s stock based on its “exceptional management team, revenue opportunities at Creditex.” The ICE acquired Creditex, which deals with the execution and processing of credit default swaps, on June 3. Creditex operated in the U.S., Europe and Asia; the Creditex transaction was 625 million. The J.P. Morgan analysts project 4.41 in earnings per share for this year, with 1.14 from this quarter. They anticipate earnings per share will continue to grow next year with 5.87 EPS in 2010.ICE will face stiff competition from NYSE Euronext
, which is expanding its options trading capabilities and will also compete for CDS and derivatives volume. The CME Group
, which runs the Chicago Board Options Exchange is also making in-roads there. The Nasdaq OMX Group
competes in the options space as well, having recently acquired the Philadelphia Options Exchange.
Though ICE has built up its CDS market rapidly, most transactions still take place in private transactions between parties. ICE might need some regulatory help to change that.