CME Group Posts Massive Drop in Q3 Profits

A decrease in clearing and transaction fees contributed to this dull performance.

CME Group (NASDAQ: CME), which operates a major US derivatives exchange, has published its quarterly financial results for three months ending on September 30, showing a business downturn.

The company took a hit on both revenue and income for the third quarter, compared to the figures posted in several previous consecutive quarters.

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CME’s total revenue of the period came in at $1.1 billion, a decline of 8.3 percent quarter-on-quarter, and 15.3 percent year-on-year. The Group generates revenue mainly from clearing and transaction fees, and market data and information services. 

The decreased trading volumes affected the exchange the most as it lowered fees for clearing and settlement transactions with $835.4 million, 20 percent down from last year. The average daily volume also dropped around 23 percent to 15.6 million from last year.

The operating income for the quarter took a further hit with $525 million. In Q2 of 2020, CME had an operating income of $638 million, while it was $685 million in Q3 of 2019.

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Net income for the quarter remained $412 million and diluted earnings per share were $1.15. Last year, this number was $636.3 million, or $1.78 per share.

On an adjusted basis, CME reported a net income of $495 million or $1.38 per share.

Meanwhile, the United States’ low-interest rates and tough stance of the Federal Reserve further depleted the demand for many CME products.

Major Changes Ongoing 

“Despite the many challenges created by the ongoing pandemic, our metals, equities, agriculture, and data services businesses showed strong performance during the third quarter,” CME Group chairman and CEO, Terry Duffy said.

“In Q4, we remain focused on adding new value through the migration of BrokerTec onto CME Globex later this year, as well as providing risk management tools to help our global clients as they continue to navigate through this difficult economic environment.”

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