Tickers in this Article: NYX, DBOEY, NDAQ, CBOE, ICE, CME, KIE, TMXGF
With the overall market returning to its roller coaster ways, volatility is having its way with the average investor's portfolio. Each day, as every bit of good or bad news is digested by investors, a variety of asset classes surge upwards and down. While this surge in volatility is enough to make the average Joe pull his hair out, those who operate the various exchanges that stocks, bonds and commodities trade on, are having a field day. For investors, betting on the "house" could be the one of the best ways to profit from the recent "craziness."

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Tremendous Growth
The various global exchanges have come a long way, since 17th century Amsterdam and the creation of the first stock exchange. Today, the size of the total world stock market is worth around $40 trillion and the total world derivatives market has been estimated to be worth about $791 trillion. Each day millions of shares, options and futures contracts trade hands, and the various public exchanges function as a tollbooth facilitating the trades. For the exchanges, there's big money in providing that gateway. Receiving fees from both listed companies and firms wanting to use the exchange to buy/sell, the bourses generally exhibit very attractive and high margins.

When traders buy or sell stock, they pay a fee per 100 shares. Futures, options, and other derivatives trading also require various fees. Firms wanted to be listed on the various major exchanged will pay annual six-figure fees, for the privilege. In addition, the exchanges play a policy role in deciding the various listing and compliance standards, for companies that wish to go public. (For related reading, see The Birth Of Stock Exchanges.)

While the groups steady tollbooth-like nature is enough for many investors to be interested in the public exchanges, the sector has another catalyst for growth; mergers. The larger the exchange, the easier it is to reach certain economies of scale, especially in the derivatives market. To that end, a variety of national exchanges have gone on the hunt, to gobble up rivals.

The London Stock Exchange's recent failed $3.2 billion bid to acquire TMX Group (OTCBB:TMXGF), the owner of the Toronto Stock Exchange, is just one example of the consolidation. Analysts predict that these mergers will continue as global markets become ever-more intertwined.

Betting On The Market's Toll Ways
For investors, the various publicly-traded exchanges offer a unique way to participate in the stock market. As trading volumes continue to rise and the various derivatives markets gain in size, the bourses will ultimately benefit. While there are Exchange-Traded Funds (ETFs) that allow investors to bet on sub-sectors of the financial sector, such as the SPDR S&P Insurance ETF (NYSE:KIE), those looking for a broad solution to the exchanges are out of luck, for now. However, there are plenty of individual choices that are worthy of investment. (To learn more about ETFs, read Exchange-Traded Funds.)

When U.S. investors think about the stock market, they think about the New York Stock Exchange. That economic moat and leadership position has helped parent firm, NYSE Euronext (NYSE:NYX) recently record operating earnings per share of 71 cents, in third quarter 2011, well ahead of 46 cents per share recorded a year ago. Revenue from derivatives increased 20.2% year over year, which helps explain why Germany's Deutsche Boerse (OTCBB:DBOEY) is so keen on shacking up with the NYSE; the two are set to merge in 2012. Meanwhile, NYSE arch-rival Nasdaq OMX Group (Nasdaq:NDAQ) also reported stellar third quarter operating earnings per share of 67 cents.

With the big money for exchanges coming from options and futures, investors may want to look at the derivatives exchanges. The CME Group (Nasdaq:CME) is the major player in the derivatives markets, providing futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather and real estate. In addition, both the CBOE Holdings (Nasdaq:CBOE) and the Intercontinental Exchange (NYSE:ICE) are great plays, as well. (For more information, read Derivatives 101.)

The Bottom Line
While the recent market volatility has been a pain for the average investor, the firms that own the various equity and derivatives exchanges are seeing great gains. By investing in the publicly traded bourses, investors can profit right along with the growth in trading volumes. The previous firms along with ASX Limited (OTCBB:ASXFY), who owns the Australian stock exchange, make ideal and interesting choices.

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At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.

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