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CME Group (CME) February ADV Drops at Six Products Lines

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CME Group Inc. (CME - Free Report) reported average daily volume (ADV) for February 2019. The month recorded ADV of 19 million contracts per day, down 27.3% year over year. However, it increased 7% from January. The company witnessed a decrease in ADV in all six product lines. Options volume increased 3.5 million contracts per day, down 42% year over year.

Energy volume of 2.3 million contracts decreased 17%. Interest rate volume of 11 million contracts per day declined 30% while Equity index volume of 2.7 million contracts per day decreased 45%. However, Metals volume of 0.5 million contracts per day declined 24% whereas Foreign exchange volumes contracted 30% to 0.8 million contracts per day. Agricultural volume of 1.7 million contracts per day too witnessed a decline of 13% year over year.

Recently, securities exchange Nasdaq Inc. (NDAQ - Free Report) and MarketAxess Holdings Inc. (MKTX - Free Report) also posted February volumes. MarketAxess’ trading volume came in at $167 billion while Nasdaq reported options and futures volume of 127.6 million contracts for February.

Volumes at CME Group were backed by solid operating leverage, which helped it maintain a solid market share of about 90% in global futures trading and clearing services. ADV increased 18% in 2018, with record volumes in four product lines. Expansion of futures products in the emerging markets plus an increase in non-transaction related opportunities as well as OTC offerings should continue to contribute modestly to its top-line growth in the years ahead.

Increasing electronic trading volume adds scalability and hence leverage to CME Group’s operating model. Efforts to expand and cross-sell through strategic alliances, acquisitions, new product initiatives and a strong global presence should also drive growth.

Shares of CME Group have underperformed the industry year to date. While the stock has declined 4.1%, the industry has registered a 1.7% rise in the said time frame. CME Group currently carries a Zacks Rank #3 (Hold).



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