CME quarterly profit falls as pandemic saps demand for rate futures

(Reuters) - Futures exchange operator CME Group on Wednesday reported quarterly earnings that beat Wall Street expectations, but revenue declined as the COVID-19 pandemic and its economic fallout hurt demand for some of its top products.

FILE PHOTO: Men enter the CME Group offices in New York, U.S., October 18, 2017. REUTERS/Brendan McDermid

CME’s net income for the quarter ended Dec. 31 fell to $424 million, or $1.18 per share, from $469.5 million, or $1.31 per share, a year earlier.

Stripping out one-time items like acquisition costs, the Chicago-based company reported earnings per share of $1.39, which were 3 cents above the mean of Refinitiv IBES estimates.

Clearing and transaction fee revenue - the company’s biggest source of income - fell 6.4% to $843 million in the quarter as overall average daily volumes dropped for CME’s interest rate and energy futures amid renewed lockdowns in many parts of the world aimed at slowing the pandemic.

Equities and agriculture futures products gained, helped by growing retail participation in Asia, Europe and North America, the company said.

The number of retail traders using CME was up 50% last year, driven in part by the rollout of smaller contracts aimed at making futures and options trading more accessible to individual traders, the company said. The increase also came as younger investors entered the market, drawn by the ease of mobile trading apps and falling brokerage costs.

“There’s no question about it that the proliferation of social media, the proliferation of access to marketplaces is allowing people to participate more and more,” CME Chief Executive Officer Terry Duffy said on a call with analysts.

“And I think it’s extremely encouraging for more and more young people to have interest in financial services and financial markets,” he said.

Total revenue at CME fell 3.5% from a year earlier to $1.1 billion.

Shares of CME were down 4.6% at $183.19 early on Wednesday afternoon.

Reporting by John McCrank in New York; Editing by Matthew Lewis