CME Group trading surges to record in May

CHICAGO, June 2 (BestGrowthStock) – CME Group Inc (CME.O: ), the
world’s biggest operator of futures exchanges, said on
Wednesday that May trading rose to a record, as investors
sought to profit from market turmoil like the May 6 “flash
crash” in U.S. stocks (Read more about the stock market today. ).

CME’s three exchanges — the Chicago Mercantile Exchange,
the Chicago Board of Trade, and the New York Mercantile
Exchange — handled an average 16.8 million contracts a day in
May, up 58 percent from a year earlier. Nearly 25.3 million
contracts changed hands on May 6, the biggest volume day of the
month for CME.

The brief crash on May 6 — which some have said may have
started with CME’s stock-index contracts and sent the Dow Jones
index into a 700-point swoon before rapidly rebounding —
contributed to CME’s record month. At a Securities and Exchange
Commission forum on Wednesday, two veteran traders blamed the
crash on poor market structure. For details, see
[ID:nN02174032]

But CME, which unlike the stock exchanges did not cancel
any trades made during the “flash crash,” had several other
days in May that were nearly as busy, as fears over the
deepening European debt crisis fed sharp declines in the euro
and in U.S. crude oil prices, added to U.S. stock market
volatility, and sent investors seeking safety in U.S.
Treasuries.

CME tends to benefit from bumpy markets, because investors
can use its contracts to hedge against, or bet on, changes in
underlying securities and assets. CME offers contracts tied to
the euro, oil, stock indexes and interest rates, to name a
few.

Analysts said CME can expect more business ahead, as
investors wager on when the Federal Reserve will begin raising
interest rates from their near-zero percent level, and
legislation requiring more clearing of over-the-counter
derivatives makes its way through Congress. CME operates one of
the world’s largest clearinghouses.

“We continue to see upside potential over the next 6-12
months given CME’s leverage to an improving rate trading cycle
(driven by volatility around potential Fed rate moves, ongoing
Treasury issuance, and potential economic growth) and the
opportunity around OTC clearing, for which we expect to see
more clarity over the next few months,” Chris Allen, an analyst
for Ticonderoga Securities, wrote in a note to clients.

Open interest — contracts at CME’s clearinghouse that have
yet to be closed out — is up 20 percent from a year earlier,
another signal of future trading growth, Allen said.

Trading in CME’s currency contracts surged 140 percent in
May, as the euro posted its worst month in more than a year.
Interest-rate contracts trading jumped 72 percent.

Trading in energy contracts rose 42 percent amid the
biggest drop in U.S. crude oil prices since 2008. And trading
in equity index contracts rose 41 percent, the CME said.

Some 7.2 million equity index contracts traded
electronically on May 6, compared with a daily average of 4.2
million for the month.

Equity index contracts trading also benefited as ongoing
European uncertainty sent stocks into late-session rallies and
dives numerous times during the month.

Shares of the Chicago-based company rose 2.41 percent to
$319.15 in mid-morning trading.

Stock Research

(Reporting by Ann Saphir; Editing by Leslie Adler)

CME Group trading surges to record in May