Expanding Global Footprint & Higher Volumes Lead To A Profitable Q1 For CME

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CME: CME Group logo
CME
CME Group

CME Group (NASDAQ:CME) announced its first quarter fiscal 2016 earnings on Thursday, April 28, reporting a 11% year on year (y-o-y) rise in revenues. The growth in the quarter was mainly driven by higher transaction revenues (+12% y-o-y), helped by the company’s strategy of increasing global participation. However, CME’s non-transaction segments saw lukewarm growth of approximately 3% y-o-y, led by market data revenues. The company said that it expects some headwinds in its market data revenues going forward, due to screen declines and changes in the pricing structure.

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CME is expanding its footprint globally, focusing on markets such as China, India, Taiwan, and Australia. As a result of this strategy, the exchange operator reached approximately 200,000 contracts per day in China, Taiwan, and Hong Kong combined in Q1’16, as opposed to 125,000 contracts per day in Q1’15.

Equities (+ 28% -o-y) and metals (+23% y-o-y) made the largest gains in terms of average daily volumes (ADV) in the quarter. Energy followed close behind (+ 18% y-o-y), with Asian energy business up 82% in terms of ADVs.

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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for CME Group.

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