CME Group Q1 Profit Falls 12%, But Matches Wall St. View

CME Group Q1 Profit Falls 12%, But Matches Wall St. View
By CME Group/Henry Delforn/Allan Schoenberg (CME Group) [<a href="">CC BY-SA 3.0</a>], <a href="">via Wikimedia Commons</a>

 CME Group Q1 Profit Falls 12%, But Matches Wall St. View

CME Group Inc (NASDAQ:CME) reported first quarter earnings that were down 12 percent owing to a fall in trading fees.

For the first quarter, the company posted a profit of $235.8 million, or 71 cents a share versus a profit of 266.6 million, or 80 cents a share a year ago. Excluding $12 million foreign-exchange transaction losses, earnings per share came in at 73 cents. Revenue for the quarter was down 7.2 percent to $718.6 million primarily due to a fall in clearing and transaction fees by 5 percent to 593.2 million. CME Group Inc (NASDAQ:CME)’s earnings were in line with the analyst estimates. At the end of the quarter, the company reported $1.9 billion in cash and $2.9 billion in debt.

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The world’s largest futures exchange operator, which operates five U.S. futures exchanges and is planning to start a sixth one in London, has been struggling with sluggish trading. According to the group, a daily average of 12.5 million contracts were traded through its network in the first quarter, which was 1 percent more from the year earlier. However, the average rate per contract fell 3 percent to about 79 cents.

Trading in energy products was down 11 percent, and a key measure, average revenue per contract was down 78.5 cents from 81.1 cents in the year-ago quarter.

Earlier this week, the Wall Street Journal reported that some of the high-speed traders are able to get a head-start of one to 10 milliseconds on the movement of prices of futures for crude oil, corn and other commodities. Replying to the same, the parent company of the Chicago Mercantile Exchange said that will make every possible effort to reduce the time advantage that many traders get to “as close to zero as possible”

The Chicago based company is planning on international expansion along with new revenue from clearing over-the-counter swaps. The company plans to inaugurate a new European exchange this summer.

Beginning next month, new rules in the U.S. require hedge funds to clear most swaps for the first time. Commenting on this, CME chief executive Phupinder Gill said, “We are working with hundreds of customers and many intermediaries to ensure operational readiness.”

For April, trading was up 8 percent to 11.6 million on an average day, the Chicago based company revealed separately. This year until yesterday, CME Group Inc (NASDAQ:CME)’s stock have gained 18.7 percent. In New York yesterday, shares closed at 1.2 percent down at $60.13.

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