Nov. 3 (Bloomberg) -- Intercontinental Exchange Inc., the second-largest U.S. futures market, said third-quarter earnings rose 16 percent on higher trading volumes and increased revenue from guaranteeing over-the-counter energy transactions.

Net income climbed to $86.9 million, or $1.18 a share, from $75 million, or $1.04, a year earlier, the Atlanta-based company said today in a statement. That topped the $1.15-a-share average estimate of 18 analysts surveyed by Bloomberg. Revenue rose 27 percent to $256 million from $201 million.

Chief Executive Officer Jeff Sprecher has boosted volume even as the financial crisis cut the amount of borrowed money available to use for trading on derivative exchanges. CME Group Inc., the world’s largest futures exchange, saw third-quarter volume drop 23 percent. Trading rose last quarter in all three of Intercontinental’s futures markets in the U.S., Canada and Europe.

“They’ve actually had better growth in energy” than CME Group’s New York Mercantile Exchange, Rich Repetto, an analyst with Sandler O’Neill & Partners LP in New York, said before the earnings announcement. Financial futures for Russell equity indexes, which Intercontinental added on an exclusive trading basis last September, also helped the exchange boost trading, he said.

Volume at the company’s ICE Futures Europe exchange jumped 19 percent in the quarter, compared with a 1 percent rise in trading at Nymex.

Shares Fall

Intercontinental fell $1.52, or 1.5 percent, to $101.31 in New York Stock Exchange composite trading. The shares have gained 23 percent this year.

Intercontinental earned an average $1.25 million a day from clearing energy over-the-counter contracts such as natural gas and crude oil, the company said last month. That was up 13 percent from the year-ago total. Daily revenue from OTC energy averaged $1.4 million in October, Intercontinental said today.

Sprecher, 54, has expanded from clearing energy over-the- counter contracts into credit-default swaps as Congress seeks to regulate the $592 trillion private derivatives market for the first time.

Intercontinental has beat CME Group and NYSE Euronext to guarantee the first credit swaps with its ICE Trust clearinghouse. Intercontinental’s two clearinghouses for credit- default swaps in the U.S. and Europe have processed $3.5 trillion of the contracts.

Clearing Revenue

Eurex AG’s Credit Clear system had cleared 95 million euros ($139 million) of credit swaps as of Oct 29. CME Group hasn’t yet processed a credit-swap trade and NYSE Euronext stopped investing in its effort in July.

ICE Trust had revenue of $13 million from clearing credit- default swaps in the third quarter, Chief Financial Officer Scott Hill said on a conference call with analysts today. The company expects to generate at least $30 million in revenue from credit clearing this year, he said.

The credit clearinghouse has faced delays in offering bank clients access to its services. While Intercontinental said earlier this year the plan would be available by October, it is now set to begin by Dec. 15.

“Regulatory reviews have taken substantially longer than we expected,” Sprecher said on today’s call. Representatives from 14 different regulatory agencies were in the company’s offices today looking at its plans to guarantee credit trades made between dealers and money managers, hedge funds and other investors, Sprecher said.

Operating Costs

The company expects to earn at least the weighted cost of capital it has invested in creating the credit-default swap clearinghouses, Hill said, a figure he put at 11 percent to 12 percent.

Total operating expenses increased 41 percent to $116 million, with compensation and benefit costs up 36 percent compared with the year-ago quarter.

The exchange plans to list a futures contract on the Argus Sour Crude Index after Saudi Arabia’s state-owned oil producer said last week it will abandon the main U.S. crude contract amid viability concerns.

Saudi Aramco said Oct. 28 it will start using an index of sour crudes next year to price oil for sale to U.S. customers in place of the West Texas Intermediate benchmark contract offered by Intercontinental’s ICE Futures Europe and CME Group’s Nymex. Intercontinental obtained its non-exclusive license to offer Argus futures “in anticipation of this,” Sprecher said.

He didn’t give a date for when the contract would be available. CME Group said last week it would offer cash-settled swap futures on the index beginning Nov. 23.

“We will be a player in that market,” Sprecher said.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net

Last Updated: November 3, 2009 17:23 EST