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CME Group November ADV Rises on Solid Volume of 3 Products

CME Group Inc. CME reported solid average daily volume (ADV) for November 2018. The month recorded ADV of 21.7 million contracts per day, up 21% year over year. The company witnessed an increase in ADV in three of its six product lines. Options volume increased 4.3 million contracts per day, up 23% year over year.

Energy volume of 3.1 million contracts increased 16%. Interest rate volume of 12 million contracts per day rose 27% while Equity index volume of 3.7 million contracts per day increased 35%. However, Metals volume of 0.6 million contracts per day declined 17% whereas Foreign exchange volumes contracted 1% to 0.9 million contracts per day. Agricultural volume of 1.5 million contracts per day too registered a decline of 6% year over year.

Recently, securities exchange Nasdaq Inc. NDAQ and MarketAxess Holdings Inc. MKTX also posted November volumes. MarketAxess’ trading volume came in at $146.6 billion while Nasdaq reported options and futures volume of 153.4 million contracts for November.

Higher volumes at CME Group were driven by a solid operating leverage, which helped it maintain a solid market share of about 90% in global futures trading and clearing services. 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 outperformed the industry year to date. While the stock has rallied 28.8%, the industry has registered a 22.1% rise. CME Group currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Stock to Consider

Investors interested in securities and exchanges can look at Intercontinental Exchange Inc. ICE, also carrying Zacks Rank #2.

Intercontinental Exchange operates regulated exchanges, clearing houses, and listings venues for financial and commodity markets in the United States, the United Kingdom, Continental Europe, Asia, Israel, and Canada. It delivered a 6.25% positive surprise in the last reported quarter.

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