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CME Group Inc Class A CME

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Morningstar’s Analysis

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Capital Allocation


Another Modest Quarter for CME as Interest Rate Volatility Remains a Headwind to Trading Volume

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

Wide-moat CME Group reported third-quarter results that were largely in line with our expectations. Revenue grew 2.7% year over year but fell nearly 6% sequentially and reported earnings per share was $1.60. The sequential drop in revenue was due to a mix of lower futures trading volume and lower revenue per contract, with the firmwide average daily volume (ADV) dropping to 17.8 million contracts from 18.4 million last quarter. The decline in trading volume was driven by CME’s interest rate complex that saw its ADV fall from 8.6 million in the second quarter to 8.1 million. CME’s interest rate futures volume is still well above its 2020 lows, but low interest rates remain a headwind to a full recovery for the segment.

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Company Profile

Business Description

Based in Chicago, CME Group operates exchanges giving investors, suppliers, and businesses the ability to trade futures and derivatives based on interest rates, equity indexes, foreign currencies, energy, metals, and commodities. The CME was founded in 1898 and in 2002 completed its initial public offering. Since then, CME Group has consolidated parts of the industry by merging with crosstown rival, CBOT Holdings in 2007 before acquiring Nymex Holdings in 2008 and NEX in 2018. In addition, the company has a 27% stake in S&P/Dow Jones Indices LLC, making the Chicago Mercantile Exchange the exclusive venue to trade and clear S&P futures contracts. Through CME's acquisition of NEX in 2018 it has also expanded into cash foreign exchange, fixed income trading, and collateral optimization.

20 South Wacker Drive
Chicago, IL, 60606
T +1 312 930-1000
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 4,370