CME profit tops estimates with futures trading up during virus-led crisis

(Reuters) - CME Group CME.O, the world's biggest futures exchange operator, on Wednesday reported first-quarter profits that beat Wall Street estimates, as trading volumes spiked during the volatility sparked by the coronavirus crisis.

The rapid spread of the pandemic has whipsawed global markets, benefiting exchange operators that make most of their money from clearing and settling trades.

CME said its average daily volume for the quarter was up 45% from a year earlier at 27 million contracts as industry participants used its futures and options contracts to hedge positions.

In response to the health crisis, CME shuttered its trading floor and moved to all-electronic trading after the close on March 13. It was unclear when the floor, where about 10% of the exchange’s business was done, will open again.

“We will not do anything irrational either way until we know exactly where health officials and government officials are going to come down as far as multiple people getting together in a single location,” CME Chief Executive Officer Terry Duffy told analysts on a conference call.

Hundreds of traders and clerks, as well as 54 CME employees, work in the trading pits, which include S&P 500 and Eurodollar options, and several equity futures pits, but the closure had little affect on trading activity, the company said.

“Participants can trade any strategy today as easily as they could prior to the closure of the floor, and in fact, our options volumes relative to futures have increased relative to last year since the closure,” Sean Tully, a senior managing director at CME, said on the call.

Net income in the quarter ended March 31 rose to $766.2 million, or $2.14 per share, from $496.9 million, or $1.39 per share, a year earlier.

Stripping out one-time items, the Chicago-based company earned $2.33 per share, topping analysts’ expectations by 10 cents, according to IBES data from Refinitiv.

Clearing and transaction fee revenues at CME, which owns the Chicago Board of Trade, soared 34.2% to $1.28 billion.

Revenue from CME’s market data and information services business, which helps investors make trading decisions and minimize risk, was up 1% at $131.5 million.

Total revenue rose 29% to $1.52 billion.

Reporting by John McCrank in New York and Abhishek Manikandan in Bengaluru; Editing by Shinjini Ganguli and David Gregorio