Intercontinental Exchange Reports Strong Earnings from Stock Market Volatility
As a general rule, financial stocks abhor market volatility. Stock market volatility is almost invariably associated with a tightening of credit and reduced liquidity. Banks and most real estate investment trusts (REITs) will struggle in this environment. That said, if there is one sector that benefits from financial stress, it is the stock exchanges. Higher volatility will trigger increased volumes, which means higher revenues. In many ways, the exchanges can be thought of as financial defensive stocks, or stocks that are less negatively affected by financial stress.
Intercontinental Exchange (NYSE: ICE) is an operator of securities exchanges and a provider of financial data. It is best known for owning the New York Stock Exchange, but it also owns the International Petroleum Exchange, the New York Board of Trade, and Euronext. Intercontinental Exchange also has a mortgage business, providing services to the industry via MERS (an electronic registry) and Simplifile, which helps streamline the mortgage origination process. The mortgage services business looks poised to do well over the next year, as the mortgage origination business is booming with low interest rates.
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Source Fool.com
