Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. Online
March 15, 2010 01:00 AM

Chicago exchange pins hopes on new products

Lynne Marek
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    With acquisition targets dwindling, competition increasing and regulatory threats looming, CME Group Inc. is hoping it can spark growth through new products and foreign partnerships.

    Since the first of the year, the exchange has acquired a controlling interest in Dow Jones indexes, including the ubiquitous Dow Jones industrial average, which will form the basis for new futures on stocks. Last week, CME introduced a new palm-oil futures contract. It also struck a deal with the Chicago Board Options Exchange to form futures contracts tied to volatility indexes and initiated or extended partnerships with exchanges in India, Brazil and Mexico.

    “We view the emerging markets as substantial areas of opportunities,” CME CEO Craig Donohue said. “Another exciting area of growth for us is the index services area.”

    Now that the biggest U.S. derivatives exchange has swallowed the natural acquisitions, including the Chicago Board of Trade in 2007 and New York Mercantile Exchange in 2008, it's settling back into a more workaday growth strategy: boosting revenue through product innovation. But Mr. Donohue and his boss, Executive Chairman Terrence Duffy, will be hard-pressed to get the kind of growth out of new contracts that CME posted in the past decade, as the credit bubble and acquisitions fueled a spectacular run of double-digit profit growth. From 2005 to 2009, CME's earnings more than doubled. During that time, the stock rose steadily as well, to a high of $710 in December 2007.

    And while CME shares are up 60% in the last year, at $313 they remain well below the pinnacle.

    As deal-making dries up, the exchange is facing intensifying competition. The upstart NYSE Liffe US futures exchange is laying plans to compete with CME on the Chicago exchange's biggest franchise, interest rate derivatives. And Wall Street-backed ELX Futures LP is pushing the Commodity Futures Trading Commission to break CME's hold on the right to clear all futures-trading positions opened at the exchange.

    'All about growing users'

    Most of CME's innovation in recent years was tied to acquisitions, including the launch last year of its “ultra” long-term treasury futures on the CBOT.

    The company could get a similar burst of new products if it acquires CBOE Holdings Inc., which CME has said it might consider.

    But such a bid may be delayed by the CBOE's move toward a public offering. The options exchange filed last week for a $300 million IPO.

    So while average daily trading volume is up 18% for the first quarter so far, mainly on surges in foreign exchange and metals futures, CME is moving to pack its product pipeline.

    The new index products and international partnerships have a multiplier effect on revenue because the new products become available not only to existing customers on CME's Globex trading platform but to customers of the new exchanges with which CME links, the company says.

    “The new international partners are all about growing users,” said Celeste Mellet Brown, an analyst at New York-based Morgan Stanley. “They're looking to get another wave of growth from the international side.”

    At the same time, legislative proposals under review in Congress, where the House has passed a reform bill and the Senate is working on one, are mainly in limbo and not focused on the exchanges but still could have a negative impact.

    The biggest regulatory threat to the industry is tighter regulations on other financial institutions, which could reduce liquidity and trading volumes at the exchanges, Ms. Brown said.

    Lynne Marek is a reporter at Crain's Chicago Business, a sister publication of Pensions & Investments.

    Related Articles
    Dow Jones turns 115
    Recommended for You
    martin_luther_king_day_generic_i.jpg
    No P&I Daily on Martin Luther King Jr. Day
    Closed sign
    No P&I Daily over the holidays
    Happy_Thanksgiving_i.jpg
    No P&I Daily for Thanksgiving holiday
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing