* Adjusted EPS $1.51 vs Street view $1.41
* Fifth big exchange operator to beat expectations in Q2
* Trading boon may sputter in second half of year
* ICE shares jump despite tempered carbon expectations (Adds CEO and analyst comments, regulatory reform, rivals, graphic, byline)
By Jonathan Spicer
NEW YORK, Aug 4 (Reuters) - IntercontinentalExchange Inc's (ICE.N) profit soared 41 percent on the back of record trading in a volatile second quarter, continuing the drumbeat of big exchange operators topping Wall Street expectations.
The company, known as ICE, recorded its eighth sequential revenue rise as trading rebounded in its core energy and commodities contracts.
Shares of the clearinghouse and exchange operator, very sensitive to regulatory reform, jumped 2.4 percent to their highest level in over a month even as it tempered expectations for the growth of its newly acquired Climate Exchange.
With the results, ICE joined CME Group Inc (CME.O), Deutsche Boerse (DB1Gn.DE), and other trans-Atlantic exchanges that flexed their operating leverage; exchange revenues swelled as investors piled into markets in May, while their expenses slipped or remained flat.
"That is the theme across the board," said Richard Repetto, analyst at Sandler O'Neill. "But volumes have since softened up."
Transaction and clearing revenue was up 19 percent as ICE set monthly average daily volume records in Europe, Canada and the United States in the quarter.
But trading dropped 15 percent from June to July -- ICE's worst month this year -- suggesting the trading boon could sputter in the second half of the year.
ICE has a good record of pouncing on new businesses, such as the credit default swap (CDS) clearinghouse it launched early last year in response to early signs of global over-the-counter swaps reform.
"We'll be very proactive on the opportunities that come with change," ICE Chief Executive Jeffrey Sprecher said on a conference call with analysts and media, promising even more growth for the 10-year old company.
Opening the door to carbon markets, ICE bought Britain's Climate Exchange in the latest quarter. That deal should yield cost savings of up to $14 million next year, though ICE said Wednesday it should not impact earnings this year.
U.S. Senate Democrats late last month cut a provision that would cap carbon emissions from its new energy reform bill, seen as a setback for ICE's U.S.-based carbon growth. [ID:nN28200714]
"They bought (Climate Exchange) for a call option, and the call option doesn't have a lot of value at this point," Repetto said.
ICE earned $101.7 million, or $1.51 per share on an adjusted basis, in the quarter, up from $72.1 million, or $1.13 per share, a year earlier.
Revenue climbed 18 percent to a better-than-expected $296.2 million.
Analysts on average expected Atlanta-based ICE to earn $1.41 per share, according to Thomson Reuters I/B/E/S. Expenses, tax rates and certain revenue streams were credited for the surprising results.
The results showed a spike in futures and OTC trading. Europe's debt woes and growing concern over the global economic recovery rattled stock and debt markets in the quarter, helping drive trade in ICE's contracts. (For a graphic of U.S. stock trading volume and market volatility, please see: link.reuters.com/feq56m)
NYSE Euronext NYX.N and Nasdaq OMX Group Inc (NDAQ.O), both expanding into derivatives markets, were the other of the five market operators to post better-than-expected earnings. [ID:nLDE672082] [ID:nN27256551]
The industry is expected to benefit as lawmakers globally clamp down on derivatives in the wake of the financial crisis.
Elsewhere on the regulatory front, Sprecher said the company would apply for designation as a so-called swap execution facility, or SEF, which is a new category for platforms that trade swaps.
SEFs are included in the Dodd-Frank U.S. financial reform bill that requires far more OTC swaps to run through exchanges and clearinghouses.
Sprecher said regulators will have to define how SEFs will work, adding the industry is abuzz with talk on the issue. (Reporting by Jonathan Spicer; editing by John Wallace, Dave Zimmerman)