Exchange operator CME's quarterly profit rises on hedging demand

[July 27, 2022]  (Reuters) - Futures exchange operator CME Group Inc reported a near 22% rise in quarterly adjusted profit on Wednesday, benefiting from higher clearing fees as fears of a looming recession forced investors to realign their portfolios to hedge against potential risks.

Men enter the CME Group offices in New York, U.S., October 18, 2017. REUTERS/Brendan McDermid/File Photo

On an adjusted basis, net income rose to $717 million, or $1.97 per share, in the quarter ended June 30, from $589 million, or $1.64 per share, a year earlier.

Global markets have seen wild swings over the quarter, also triggered by a geopolitical turmoil, with options and fixed-income products surging, while equities and cryptocurrencies plummeting on risk-off sentiment that has swept across asset classes.

Demand for CME's interest rate hedging tools has surged this year in the backdrop of rapidly rising rates as the U.S. Federal Reserve tries to tame runaway inflation by tightening monetary policy and dialing back pandemic-era stimulus.

CME's equity index average daily volumes (ADVs) surged 57%, options ADVs jumped 23%, cryptocurrency ADVs rose 89% and foreign exchange ADVs increased 24% in the quarter.

"Market users increasingly turned to our micro and E-mini contracts to customize their trading strategies," said Chief Executive Officer Terry Duffy in a statement.

Total revenue in the quarter rose nearly 5% to $1.24 billion.

(Reporting by Manya Saini in Bengaluru and John McCrank in New York; Editing by Shinjini Ganguli)

 

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