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TheStreet Open House

5 Rocket Stocks Worth Buying This Week

IntercontinentalExchange

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Even though Atlanta-based IntercontinentalExchange (ICE) is a relative newcomer to the financial world, the firm has done a good job of establishing itself as a go-to exchange and clearing house for global derivatives markets. Today, the firm operates four regulated exchanges located in the U.S., Canada and the United Kingdom.

While legacy exchanges battle it out for a larger share of extremely low-margin businesses, IntercontinentalExchange has worked to carve itself a more defensible niche. The firm is a major player in the OTC market for "less commoditized commodities", helping to match buyers and sellers of less vanilla securities. The firm's clearing business is a very attractive complement to its exchange and OTC trading arm -- it essentially lets ICE fill a role that a third-party would otherwise get a piece of.

>>5 Big Stocks to Trade for Gains in April

ICE will need to continue to work hard to keep its share of the exchange and OTC derivatives markets. Competition among exchanges has made it harder than ever to make money in this business, a factor that puts a big target on ICE's back when the firm is making money hand over fist.

Even so, traders know that they can turn to IntercontinentalExchange to find liquidity for more exotic products, and that should provide the company with a more defensible moat than peers.

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