CME Group earnings drop on weak trading volumes

CME Group Inc., the world's largest futures market operator, on Thursday reported lower-than-expected second-quarter earnings due to weak trading volumes.

CME Group Inc., the world's largest futures market operator, reported lower-than-expected second-quarter earnings on Thursday, blaming low levels of volatility for weak trading volumes.

Net profit for the owner of the Chicago Board of Trade and Chicago Mercantile Exchange fell to $263.8 million, or 79 cents a share, from $311.2 million, or 93 cents a share, a year earlier.

Excluding gains in foreign exchange transactions and other special items, earnings were 77 cents a share, below analysts' expectations of 79 cents, according to Thomson Reuters I/B/E/S.

“The miss was driven by lower revenues as well as higher expenses,” said Richard Repetto, a principal for Sandler O'Neill.

Revenue dropped 10 percent to $731.6 million as the average daily trading volume at CME, along with the company's clearing and transaction fees, slid 12 percent.

The average rate per contract was 74.9 cents, up slightly from a year earlier. Repetto said he had expected 75.9 cents.

“Historically low levels of volatility impacted the overall market,” CME Executive Chairman Terry Duffy said.

CME has looked overseas to boost business. On Wednesday, the Chicago-based company said it will pay about $655 million for two units of derivatives broker GFI Group Inc in an attempt to expand its reach in the European energy and global foreign exchange markets.

Separately, CME has said it would be happy to administer, with Thomson Reuters, the global price benchmark for gold. The companies this month won a battle to administer the silver benchmark.

CME's stock is down 3.3 percent this year, compared to a 12 percent drop for rival IntercontinentalExchange.


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