By Ann Saphir
Aug 1 (Reuters) - CME Group Inc, the world's biggest
futures exchange operator, reported a 27 percent rise in
quarterly profit, beating expectations, as trading jumped both
at home and abroad.
Net income rose to $311.2 million or 93 cents a share, in
the second quarter, from $244.9 million, or 74 cents a share, a
year earlier, the Chicago-based exchange operator said Thursday.
Analysts, on average, expected net income of 89 cents a share,
according to Thomson Reuters I/B/E/S.
The rise in profits was driven in large part by renewed
market speculation over when the U.S. Federal Reserve will exit
its bond-buying stimulus program, which helped buoy trading of
CME's flagship interest-rate futures contracts.
The results suggested Chief Executive Phupinder Gill's focus
on international markets was paying off, as trading from Asia
and Latin America rose to new records.
Gill and other top executives have redoubled overseas sales
efforts, focusing on energy trading as they visited London,
Geneva, Shanghai and Tokyo on a recent trip.
CME Group is trying to attract new global customers to all
three oil benchmark contracts, and Gill said the effort is
paying off, citing a rise in trades of energy futures and
options, among its most profitable contracts.
A pipeline of brokers in China is eager to sign on to CME
Group as full members, he said, further boosting prospects
CME Group, which operates the Chicago Board of Trade and the
New York Mercantile Exchange, plans to open its first exchange
abroad, in London, later this year.
A rise in payments from Brazilian strategic partner BM&F
Bovespa boosted revenue as well, said Wells Fargo analyst
CME Group is a frequent critic of increased regulation, but
on Thursday's call, top executives suggested the exchange
operator is benefiting from recent rule changes.
Regulator scrutiny of Wall Street's trading in physical
commodities, a major headache for some of its biggest customers,
could be a "net positive" for the company if they turn to
futures markets to replace bets in the cash markets, CME
Executive Chairman Terrence Duffy told analysts on a conference
New government mandates for clearing of over-the-counter
swaps drove an increase in the company's cleared swaps business.
The volume of rates contracts tripled from the prior quarter to
$41 billion in notional value each day, Gill said.
Daily volume so far this quarter has climbed to $62 billion,
he said, as more asset managers, insurance companies and
government-backed entities used the service.
Total revenue rose to $816.1 million from $795.9 million a
year earlier as trading at its exchanges rose 16 percent to a
daily average of 14.3 million contracts.
Expenses fell to $308.3 million from $326.7 million.
CME ended the quarter with cash and marketable securities on
hand of $2 billion.
The stock rose 0.3 percent to $74.25 on Nasdaq.