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might well become the trading platform of choice for the complex derivatives the U.S. now wants to regulate. That's what investors were betting on Thursday, at least, sending shares of the big Chicago exchange operator up as much as 5%.

On Wednesday, the Obama administration released details of its plan to keep a tighter watch over the market for so-called over-the-counter derivatives -- those complex instruments that contributed to the near collapse of the financial system last year.

In a letter to Congressional members, Secretary Treasury Timothy Geithner sketched out the administration's plan, which calls for the use of a central electronic exchange where the instruments -- among them the notorious credit default swap -- can be cleared and traded. Since CME is arguably the world's leading exchange for more common derivatives such as futures and options, it would appear to be in a position to benefit from any fresh legislation.

CME's shares were trading Thursday at $288.49, up 5%, on heavy volume. JPMorgan analysts upgraded the stock to neutral from underweight with a price target of $274. CME rival

Intercontinental Exchange

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saw its shares jump 6% to $102.34, while

NYSE Euronext


stock was up 2%. All three exchanges have already initiated credit default swap clearinghouses, though these mechanisms stop short of the kind of standardization and risk-management procedures that the administration's plan calls for.

The administration's plan also calls for increased capital requirements at the firms that issue and sell derivatives.

As it stands now, derivatives are traded privately in a market that is not only unregulated but also controlled by the handful of behemoth Wall Street firms that issue and sell the instruments. That being the case, those firms -- including all the usual suspects:

Goldman Sachs

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-- are expected to deploy a squadron of lobbyists in Washington to attempt to stave off the legislation.

Most infamously,


(AIG) - Get American International Group, Inc. Report

financial products unit underwrote hundreds of billions of dollars in credit-default swaps, or CDOs, which caused a black hole to open in the financial system after the subprime mortgage collapse.

"As the AIG situation has made clear, massive risks in derivatives markets have gone undetected by both regulators and market participants," Geithner said in a press release. "But even if those risks had been better known, regulators lacked the proper authorities to mount an effective policy response."

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