CME’s Q2 Earnings Grow On The Back Of High Trade Volumes

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CME Group

CME Group (NASDAQ:CME) saw 11% year on year (y-o-y) growth in its Q2 2016 revenues, and a 27% increase in diluted EPS, primarily driven by a surge in trading activity. In line with our expectations, daily trading volumes were significantly higher in Q2 than the comparable prior year period, supported by the impact of volatility seen in the stock market due to the U.K.’s Brexit vote. Further, CME became the first exchange to offer swaptions clearing in Q2’16. However, the company saw only a lukewarm growth in its non-transaction segments, which are responsible for approximately 20% of total revenues. Going forward, we expect growth in CME’s top line to be driven by the introduction of new and innovative product, such as Ultra 10-Year Treasury futures and S&P 500 Total Return Index futures. The company said that it expects these developments to potentially boost the trading volumes for its interest rate, foreign exchange, and equity derivatives.

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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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