How CME Group’s Electronic Trading Focus Is Improving Performance



Expanding options trade

Approximately half of CME Group’s (CME) options business is traded electronically with about 40% traded on the flow and the remainder via privately negotiated transactions. Electronic volumes in the first quarter of 2015 grew by 11% in the United States, 14% in the Europe, Middle East, and Africa (or EMEA) region, and 22% in the Asia-Pacific or APAC region. This recent increase in electronic activity has been driven by growth from European participants trading in overnight hours. In comparison, the electronification of Treasury options, which is currently around 63%, also has expanded at a good pace.

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CME has focused on increasing electronic trade for options. It has made significant progress within Eurodollar options on Globex over the last year. The percentage of Eurodollar options volume traded on Globex has grown from 11% in 2013 to 13% in 2014—and almost to 20% in March and April of this year. Electronic trading and investments in the platform have yielded strong results for the company. Since 2009, average daily volumes in foreign exchange is up ninefold. Plus, the company continues to successfully grow energy options volumes on Globex, with 41% of total energy options trading on Globex in Q1, up from just 28% in Q1 of last year.

For new investment initiatives and expansion of operations, CME has funded investments from operating cash flows as well as debt. The company’s net debt-to-equity ratio stood the highest at 40% compared to its peers:

Together, these companies form 1.91% of the Financial Select Sector SPDR Fund (XLF) and 0.35% of the SPDR S&P 500 ETF (SPY).


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