CME to focus on clearing as hits its target

City A.M. Reporter
CME Group, the world’s biggest futures exchange operator, reported profit in line with Wall Street’s expectations, and pegged future growth to global expansion and its derivatives clearing business.

The operator of the Chicago Mercantile Exchange, Chicago Board of Trade and New York Mercantile Exchange benefited from a surge in Treasury futures and energy contracts trading.

But trading in contracts tied to short-term interest rates, which generates 12 per cent of fee revenue, may slow as the Federal Reserve Bank keeps overnight borrowing costs near zero.

Chief executive Craig Donohue is moving to counter such headwinds by offering clearing for the $615 trillion derivatives market, which regulators globally are forcing into clearinghouses, seen as safer than the current off-exchange system.

Donohue is also targeting global expansion, and will not be repeating the string of acquisitions that characterized his earlier tenure at the CME.

“I don’t think you will see us taking on large transactions to further expand our business when we’ve got those kinds of organic growth opportunities,” he said. Donohue added CBOT and Nymex to the company’s roster in 2007 and 2008.

CME’s third-quarter revenue rose 13 per cent to $733m, as trading increased 14 per cent. Net income rose 21 per cent to $244m, or $3.66 per share, in line with the average forecast.