CME Profit Rises on Increased Hedging Amid Market Volatility
CME Group Inc. reported a higher fourth-quarter profit, driven by increased hedging activity as investors sought to mitigate risks amid geopolitical and economic uncertainties.
Market Volatility Fuels Trading Volumes
Market volatility remained elevated due to tensions in the Middle East, uncertainties surrounding U.S. President Donald Trump's policies, and the Federal Reserve's interest rate cuts. This volatility boosted trading volumes at exchanges, with clients increasing their hedging activities.
CME's Average Daily Volume
CME, which operates several exchanges for futures and options trading, saw its total Average Daily Volume (ADV) rise slightly to 25.5 million contracts year-over-year. Non-U.S. ADV saw a 5% increase to 7.6 million contracts in the fourth quarter.
Energy Market Impact
Ongoing tensions in the Middle East and President Trump's comments on production increases in the U.S. heightened volatility in commodity and energy markets. This led to a 16.7% surge in CME's energy ADV, reaching 2.5 million contracts.
Financial Performance
CME's clearing and transaction fees, which generate the majority of its revenue, increased by nearly 4% to $1.23 billion. Total revenue grew approximately 6% to $1.53 billion in the fourth quarter.
Net profit attributable to common shareholders reached $863.7 million, or $2.40 per share, during the three months ended December 31. This represents a rise compared to the $804.3 million ($2.24 per share) reported in the same period a year ago.
CME's shares gained moderately in pre-market trading, extending their over 10% growth from 2024.