Profits surge at CME as chief executive rules out another wave of consolidation
DERIVATIVES giant CME yesterday posted higher-than-expected quarterly profit as heightened volatility in debt and stock markets boosted trading in the exchange operator’s futures contracts.
Chief executive Craig Donohue also said that a recent trading slump will not spur it into a buying spree. CME stands to benefit from sweeping US rule changes that will drive far more derivatives through exchanges and clearinghouses.
Although Donohue was quiet on when exactly it will begin clearing over-the-counter swaps – seen as key to the company’s growth – he said there was no need to catapult expansion with a big takeover. “We have a very bullish view of our growth opportunity organically in our core business,” he said. “We do not foresee the need for additional large-scale M&A transactions to drive growth.”
Donohue’s comments mark a change in thinking for CME, which has bought two large exchanges – the Chicago Board of Trade and the New York Mercantile Exchange – since 2007. With those companies now fully integrated, CME will no longer be the driver of consolidation it once was.
The strong second-quarter results came as trading in CME contracts hit a record in May, helped by the stock market “flash crash” and by swings in interest rate expectations as Europe’s escalating debt crisis prompted fears of a global economic slowdown.