© Reuters. CME Group Inc logo is seen displayed in this illustration taken April 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -CME Group reported a better-than-expected fourth-quarter profit on Wednesday, as strong demand for its interest-rate products bolstered trading volumes at the derivatives exchange.
The U.S. Federal Reserve’s interest-rate hikes last year helped CME’s average daily volume (ADV) hit a record-high as customers increasingly hedged to manage their rate exposures and navigate uncertainty.
That helped CME’s interest rate ADV surge 35.8% to 13.3 million contracts in the quarter, driven by record U.S. Treasury futures and options volumes.
The company has continued to benefit even amid a pause in rate hikes as customers needed to manage risk against the backdrop of diverging views about where the rates were heading.
CME’s total ADV surged 17% to 25.5 million contracts in the quarter. For 2023, it rose 5% to an annual record of 24.4 million contracts.
The demand for CME’s hedging products has remained steady, driven by increased geopolitical and economic uncertainty, even as expectations grow for a soft landing for the U.S. economy.
ADV for CME’s agricultural commodities products rose 25.5% from a year ago, while energy products volume jumped 18%.
Clearing and transaction fees, which make up the largest chunk of its revenue, jumped 20.7% to $1.18 billion, while total revenue surged 19.2% to $1.44 billion.
On an adjusted basis, CME’s net income attributable to common shareholders rose to $853.8 million, or $2.37 per share, for the three months ended Dec. 31, compared with analysts’ expectation of $2.28, according to LSEG data.
This was the tenth consecutive quarter of double-digit percentage growth in adjusted earnings, CME said.
