How Has CME Group’s Acquisition Of NEX Changed Its Revenue Composition?

by Trefis Team
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CME Group (NASDAQ: CME) operates futures and derivatives exchanges including the Chicago Mercantile Exchange, the New York Mercantile Exchange (NYMEX) and the Chicago Board of Trade, as well as the Dow Jones Index Services. Trefis highlights the trends in key components of CME Group’s Revenues in an interactive dashboard. In 2018, clearing and transaction fees contributed 85% of CME’s total revenues but we expect the share of this revenue stream to shrink 5 percentage points to 80% due to an increased contribution from NEX’s optimization business.

 

A Quick Look at CME Group’s Revenues

CME Group reported $4.30 billion of Total Revenues in Fiscal 2018. This included three revenue streams.

  • Clearing and Transaction Fees: $3.6 billion in FY2018 (85% of Total Revenues). It comprises of CME’s electronic trading fees, private transaction surcharge, and other volume-related charges.
  • Market Data and Information Services: $450 million in FY2018 (10% of Total Revenues). It comprises of data distribution revenues from subscribers.
  • Other Revenues: $193 million in FY2018 (5% of Total Revenues). It includes income from access and communication fees, NEX’s risk management and post-trade services.

 

CME Group’s Total Revenues to expand with growing trading activity across asset classes and increasing demand for portfolio management and data analytics services

  • CME Groups’ total revenues have benefited from the growing macroeconomic uncertainty surrounding the U.S.-China trade deal, Brexit and central bank actions.
  • The company generates a bulk of its revenues from transaction and clearing fees, which surged during the second and third quarter from 20 million average daily volumes of derivative contracts.
  • Trends in CME Group’s average daily volumes by asset classes can be found in the interactive dashboard
  • However, the company’s top line also observed an upside from NEX’s optimization services – Traiana and TriOptima – which include trade and portfolio management, financial resource optimization, data analytics, and regulatory reporting.
  • As a result, CME Group’s Other Revenues have nearly doubled in 2019 due to NEX’s optimization business.

Data around how changes in CME Group’s revenues compare with that for its competitors ICE and Nasdaq are available in our interactive dashboard.

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