CME Group profit jumps on record trading strength

(Reuters) -CME Group reported a rise in third-quarter profit on Wednesday, as uncertainty around the U.S. monetary policy path led investors to rejig their portfolio, bolstering trading volumes for the derivatives exchange.

Trading volumes at exchanges tend to jump during periods of heightened uncertainty as clients increase hedging activity to manage risks.

This drove double-digit growth across all CME asset classes in the reported quarter.

The company's total average daily volume (ADV) jumped 27% from a year earlier to a quarterly record of 28.3 million contracts.

The ADV of interest rate products, which are often used to hedge against volatility stemming from changes in the benchmark interest rates, jumped 36% to a quarterly record of 14.9 million contracts.

Equities trading was another bright spot as volatility sparked by a sell-off in August, following a weaker-than-expected July jobs report, bolstered volumes. CME's equities ADV jumped 17% to 7.4 million contracts in the quarter.

"Q3 2024 was the best quarter in CME Group history," said CEO Terry Duffy.

Meanwhile, CME's energy ADV jumped 21% to 2.6 million contracts. Mounting geopolitical tensions in the Middle East have increased volatility in the global commodity and energy markets.

Clearing and transaction fees, CME's chief source of revenue, jumped 19.5% to $1.30 billion in the reported quarter, while market data revenue rose 6.3% to $178.2 million.

Total revenue jumped 18.4% to record $1.6 billion.

Net income attributable to common shareholders of CME Group rose to $901.3 million, or $2.50 per share, in the three months ended Sept. 30, from $740.8 million, or $2.06 per share, a year earlier.

CME shares have risen 7.4% so far this year, underperforming the 22.7% jump in the benchmark S&P 500 index.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shinjini Ganguli)