UPDATE 2-CME Q4 profit misses view; trading sluggish

* Adjusted EPS $3.37: Street view $3.43

* Revenue down 4 percent to $667 million

* Expenses fall 2 percent to $258 million.

CHICAGO, Feb 4 (BestGrowthStock) – CME Group Inc (CME.O: ) posted
fourth-quarter profit (Read more your timing to make a profit.) below Wall Street expectations as the
biggest U.S. operator of futures exchanges was hurt by sluggish
trading.

CME, which runs the Chicago Mercantile Exchange, the
Chicago Board of Trade and the New York Mercantile Exchange,
earned $203 million, or $3.04 per share, up from $62 million,
or 93 cents a share, a year earlier, when it recorded an
impairment charge on its investment in BM&F Bovespa SA.

Excluding a charge to write down the value of its
investment in the Dubai Mercantile Exchange and other one-time
items, the company earned $3.37 a share. On that basis, the
average Wall Street estimate was $3.43, according to Thomson
Reuters I/B/E/S.

Revenue slipped 4 percent to $667 million, in line with
Wall Street estimates. Trading fell 1 percent.

CME CEO Craig Donohue last year led the exchange through
one of its most difficult modern periods, after the financial
crisis sent trading down and raised the threat of new rules
that could crimp the exchange giant’s business.

This year, as banks rebuild their balance sheets and the
Federal Reserve prepares to end some of the extraordinary
measures it implemented in response to the financial crisis,
trading at CME is set to rise, analysts say. In January, volume
climbed 19 percent.

“Overall we have built a strong foundation for growth as
the economy continues to stabilize,” Donohue said in a
statement on Thursday.

Among achievements last quarter, he said, were the opening
of a new data center and the launch of a service to clear
credit default swaps.

CME has said it plans to offer similar clearing services
for interest rates swaps and currencies later this year.

Expenses fell 2 percent in the fourth quarter to $258
million.

Potential regulatory threats continue to pressure CME
shares. Topping the list of concerns is President Barack
Obama’s plan to limit proprietary trading at banks, which are
some of CME’s biggest customers, and the Commodity Futures
Trading Commission’s planned limits on positions in the energy
markets.

Further clouding CME’s outlook is the CFTC decision last
week to take CME to task for banning easy transfers of its
contracts to rival ELX Futures LP. CFTC called CME’s reasoning
“unpersuasive” and asked CME to better justify its stance. The
news sent CME shares sharply lower.

The average rate per contract, a key measure of
profitability, rose to 84.9 cents in the fourth quarter from
83.4 cents in the third quarter, but was down from 86.6 cents
in the year-earlier fourth quarter.

CME, which offers trading in contracts tied to interest
rates, stock indexes, oil and other commodities, has been in
talks to buy Dow Jones’ index business, according to sources
briefed on the matter. Dow Jones indexes are owned by News Corp
(NWSA.O: ).

CME had $303 million in cash and $2.3 billion in debt at
year’s end.

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(Reporting by Ann Saphir; Editing by Derek Caney and John
Wallace)

UPDATE 2-CME Q4 profit misses view; trading sluggish