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CME Group (CME) to Launch Electricity & LNG Futures Contracts

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CME Group Inc. (CME - Free Report) will unveil four Japanese electricity futures contracts and two LNG futures contracts, following the fulfillment of regulatory approval on Feb 8, 2021. These new future contracts will be accessible on CME Globex and will be listed with and subject to the regulations of NYMEX, one of the exchanges of CME Group.

The new electricity contracts are financially-settled in Japanese yen and include Japanese power (Day-Ahead) Tokyo base-load futures, Japanese power (Day-Ahead) Tokyo peak-load futures, Japanese power (Day-Ahead) Kansai base-load futures and Japanese power (Day-Ahead) Kansai peak-load futures.

The two new Japanese yen denominated LNG contracts include Japan/Korea Market (Platts) futures and Japan Crude Cocktail (Detailed) futures.

Japanese yen can manage risk more precisely with monthly and quarterly CAD/USD futures, weekly, monthly and quarterly options, or trading spreads on FX Link, between OTC FX spot and CME futures. It has access unrivaled liquidity and price discovery opportunities by trading directly in the central limit order book, or via blocks and EFRPs.

The four new Japanese electricity futures contracts are expected to add to the security exchange’s compelling suite of global power futures and options. Also, it fills the gap in the Japanese electricity futures market, which provides traders with a solid platform for block-trade submission to CME Clearing.

Moreover, Japanese power producers will have a competent tool to manage their price risk following the launch of the two LNG contracts. It will also will provide an opportunity to market participants to trade the spread between LNG and electricity futures.

CME Group offers a variety of futures and options contract for electricity day-ahead, real-time and capacity market participants in various regional locations to hedge and manage risk exposure. The company continues to focus on driving growth and new customer acquisition by expanding, innovating and scaling its core offerings, and increasing participation from non-U.S. customers.

This is achieved by expansion of its global sales team, cross-selling of products, expansion of the existing benchmark products, product and service launches and deepening of open interest in core futures and options offerings. The company launched bitcoin options and options on SOFR in January 2020. Also, recently it planned to introduce futures contract on Ether to Boost Crypto Trading and cash-settled Pork Cutout futures and options to boost CME Group’s array of leading agricultural benchmarks.

CME Group exchange consists of designated contract markets for the trading of futures and options contracts. It enables clients to trade futures, options, cash and over-the-counter (OTC) markets and optimize portfolios. It focuses on maximizing futures and options growth globally, diversifying business and revenues, and delivering unparalleled customer efficiencies and operational excellence.

Shares of this largest futures exchange in the world in terms of trading volume as well as notional value traded has declined 6.2% in the past year against the industry’s increase of 12.4%. Nonetheless, the company’s policy to ramp up its growth profile and capital position should help shares higher regain momentum.



The stock currently carries Zacks Rank #2 (Buy).

Other Stocks That Warrant a Look

Some better-ranked insurance stocks from the same space include OTC Markets Group (OTCM - Free Report) , Nasdaq (NDAQ - Free Report) and FleetCor Technologies (FLT - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

OTC Markets surpassed bottom-line estimates in three of the last four quarters. It has a trailing four-quarter earnings surprise of 11.96%, on average.

Nasdaq surpassed bottom-line estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 4.19%, on average.

FleetCor Technologies surpassed bottom-line estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 5.02%, on average.

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