CME Expands Offerings As It Looks To Revive Investor Confidence

by Trefis Team
CME Group
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CME Group’s (NASDAQ:CME) trade volumes have been steadily declining over the past few months, with the average daily volume (ADV) dropping from 13 million in June to 10 million in August. The decline in investor confidence in the U.S. might be due to growing concerns over national debt and a sense of uncertainty preceding the general election in November. Our $60 price estimate on CME Group’s stock is in-line with the current market price.

See Full Analysis for CME Group Here

CME is expanding its offerings to revive investor confidence in the U.S. The company recently announced the launch of futures linked to the Ibovespa index, which accounts for 69 stocks traded on the Brazilian Stocks, Mercantile & Futures Exchange, BM&FBOVESPA. [1] The index comprises a theoretical portfolio of the stocks that accounted for 80% of the volume traded in the last 12 months and that were traded on at least 80% of the trading days.

The exchange has also launched a suite of new natural gas and power markets, which includes 164 natural gas contracts available at 52 trading hubs and 48 power contracts for the four most liquid North American ISOs. [2] The new contracts will be listed on CME Globex, NYMEX and CME ClearPort and also on the new brokerage platform, CME Direct, which was launched on  May 22. (For more details on the new platform, please refer to our article : CME Looks To Boost Energy Contract Volumes With New Platform)

In addition to the new futures on offer, CME has augmented a suite of Chinese Renminbi products to include Deliverable Renminbi (CNH) futures. [3] The Renminbi market has been quite active even outside of Asian trading hours, and CME is hoping that its global reach will help resuscitate investor confidence. We currently forecast a gradual increase in both FX and energy contract average daily volumes. You can modify the chart below to gauge the effect of a change in our forecast on the Trefis price estimate for CME’s stock.

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  1. CME Group Announces Launch of Ibovespa Futures Contract, Press Release, 11th September, 2012 []
  2. CME Group Launches New Natural Gas and Power Markets, 10th September, 2012 []
  3. CME Group Expands its Global FX Product Offering with Addition of Chinese Deliverable Renminbi (CNH), 12th September, 2012 []
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