Updated from 10:30 a.m.

The InterContinental Exchange

(ICE) - Get Report

is taking a lot heat these days over the big blow-up at Amaranth. But at least one analyst says investors shouldn't be punishing the ICE for the hedge fund's $4 billion loss.

Richard Repetto, an analyst with Sandler O'Neill, says the "Amaranth issue is likely overdone'' and finds little justification for last week's late sell-off in the stock.

At the same time, Repetto, after meeting with ICE management last week, says he's raising his earning estimates for the electronic commodities exchange.

Meanwhile, the ICE issued a press release Monday saying "Amaranth's business is not individually material to ICE's revenues."

While Repetto says there's no doubt that Amaranth made some of its ill-fated natural gas trades over the ICE, there's indications that a lot of the hedge fund's trading involved options. And options, he says, are rarely traded on the ICE.

"While ICE acknowledged that Amaranth certainly traded on its platform, the company highlighted the fact that the hedge fund likely used options on energy futures to establish its highly leveraged positions,'' says Repetto.

In a related development, the Securities and Exchange Commission has begun looking into the events surrounding the big loss at Amaranth, which ultimately caused the onetime $9 billion fund to lose a little over half of its value. The investigation is being conducted by the SEC's Boston office.