It is increasingly starting to look like any reform legislation will call for a big chunk of the $600 trillion over-the-counter derivatives market to be traded on an exchange.
While that's bad news for JPMorgan Chase (JPM) and other Wall Street banks, it's good news for the publicly traded exchanges, including NYSE Euronext (NYX), Chicago Mercantile Exchange operator CME Group (CME) and Nasdaq OMX Group (NDAQ).The biggest beneficiary, however, may be IntercontinentalExchange (NDAQ). ICE didn't exist until 10 years ago, but it has quickly become the leading clearinghouse for credit default swaps. Originally backed by a group of Wall Street banks, it is now independent, but CEO Jeff Sprecher remains a favorite among top Wall Street executives like Goldman President Gary Cohn, who helped set him up in business. If Wall Street is forced to share its highly lucrative OTC derivatives business, it is a good bet Sprecher and ICE will grab a big chunk of it. While clearing of interest rate swaps is the biggest opportunity and ICE has no offering in this area yet, it has proven itself to be the most nimble U.S. exchange in recent years. The fact that it lags competitors on interest rate swaps only means there's more upside in the stock should it appear out of nowhere to snatch away this market, or another one that hasn't been identified yet. -- Written by Dan Freed in New York.