CME Group Q3 Net Income Dropped $74.5 Million or 24% When Compared to Q2 2013, ADV Plummeted
- With over $1 quadrillion dollars worth of volumes traded in 2012, the largest operator of commodity futures exchanges, reports third quarter financial metrics showing YoY growth despite a sharp drop over Q2 2013.
Chicago-based operator of commodity futures marketplaces, CME Group, with some of the biggest commodities exchanges across the globe, including the Chicago Mercantile Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term (CME) under its subsidiaries, reported consolidated financial results for the third quarter (Q3) ending September 30, 2013, that reflected Average Daily Volumes (ADV) had dropped from 14.3 million contracts in Q2 2013, to 12 million contracts in Q3 2013, despite a year-over-year increase in both revenues and net income. Basic Earnings Per Common Share attributable to CME Group in Q3 ending September 30, 2013, were $0.71 and 24% lower than the previous Q2 ending June 30, 2013, of $0.94 earnings reflecting a change of 23 cents as net income fell.
Total income of $816.1 million in Q2 2013, fell by $101.5 million to $714.6 in Q3, nearly 12.5% lower over the previous quarter. This affected operating income which was $107.3 million lower over the previous quarter, or down 21% in Q3 2013 resulting in $400.5 million, according to the press release. Q3 net income resulted in $236.7 million down to $74.5 million or almost 24% over Q2 2013.
Despite a lower quarter, these three key revenue metrics were higher year-over-year (when compared to the same period last year). Lower ADV across major product lines can be seen to have dropped across all segments over the previous quarter, although also higher year-over-year . The decrease was most reflected in electronic venues which fell by 2.25 million contracts from 12.45 million in the second quarter to 10.19 million contracts in the third quarter, reflecting a 18% drop. The only higher figure of the reporting venues segments was the open outcry line which saw slightly higher ADV in Q3 by 3.4% or 39,000 contracts over the previous quarter.
Source: CME Group Q3 2013 Results
Although ADV was lower over the previous quarter, the average Rate Per Contract (RPC) increased from $0.748 in the Q2 to $0.762 in Q3 2013, and attributable to primarily strong higher paying non-member participation during third quarter relative to last quarter. Commenting in the official corporate release, Terry Duffy, Group Executive Chairman and President, CME Group, highlighted growth segments and the transition from a compliance phase towards an optimization phase as industry adjusts to waves of Dodd-Frank related mandates and said:
Terry Duffy, CME Group Executive Chairman and President
"Our business continued to trend positively in the third quarter, as demand for our products increased in several major categories, most notably our over-the-counter interest rate swap Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. This gives credit to the bank where funds are deposited and a corresponding debit to the account of the paying institution. The Federal Reserve operates a nationwide check-clearing system. Clearing also is used to signify matching buyers and sellers in stock, futures, and options transactions. Understanding ClearingToday, any type of payment can be cleared. A credit card payment is cleared through the payment merchant. It can be said that clearing is the settlement of balances and transactions. There is also an act of cleaning contracts and risk through A clearinghouse, like CME Clearing, which is an intermediary between buyers and sellers in the derivatives market. As the intermediary or counterparty, to every trade, CME Clearing acts as the buyer for every seller and the seller for every buyer for every transaction on an exchange. Stocks are cleared through global stock exchanges similar to the New York Stock Exchange (NYSE). The clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities. Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. This gives credit to the bank where funds are deposited and a corresponding debit to the account of the paying institution. The Federal Reserve operates a nationwide check-clearing system. Clearing also is used to signify matching buyers and sellers in stock, futures, and options transactions. Understanding ClearingToday, any type of payment can be cleared. A credit card payment is cleared through the payment merchant. It can be said that clearing is the settlement of balances and transactions. There is also an act of cleaning contracts and risk through A clearinghouse, like CME Clearing, which is an intermediary between buyers and sellers in the derivatives market. As the intermediary or counterparty, to every trade, CME Clearing acts as the buyer for every seller and the seller for every buyer for every transaction on an exchange. Stocks are cleared through global stock exchanges similar to the New York Stock Exchange (NYSE). The clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities. Read this Term." Mr. Duffy added to the corporate statement regarding the Q3 results, "We experienced an increase in dealer-to-client market share from 5 percent in the first quarter of this year to 31 percent in the third quarter, in addition to approaching 50 percent of open interest. This is due to our strong value proposition and product expansion. Now that the three waves of the Dodd-Frank clearing mandate are completed, the market is shifting from a compliance phase to an optimization phase. Going forward, our interest rate complex will continue to benefit from our success in OTC clearing."
Phupinder Gill,CME Group Chief Executive Officer
CME Group Chief Executive Officer, Phupinder Gill, echoed progress in core segments year-over-year and said in the corporate announcement regarding the results, "Third-quarter 2013 top-line results included substantial progress in our core business as well as expansion in over-the-counter clearing." Mr.Gill concluded in the release, "Average daily volume was up 11 percent, driven primarily by continued strong performance in our interest rate and metal complexes, as well as strong growth in our options products, which increased by 31 percent. In addition, our efforts to grow the business globally continue to take root. Electronic trading volumes outside the United States grew 16 percent, with volumes up 23 percent in Latin America, 22 percent in Asia and 15 percent in Europe compared with third-quarter 2012."
According to the company's consolidated financial balance sheet in Q3 2013, Total Assets increased over the previous quarter and were higher by $2.09 billion to $48.97 billion, and may be certainly enough to weather lower trading volumes over the previous quarter as other metrics remain higher year-over-year. The earnings report today followed the company's earlier release of October volumes. CME Group Inc is currently trading down near almost six-tenths of a percent in the pre-market trading session (as of publication), according to NASDAQ ticker symbol: CME.
Chicago-based operator of commodity futures marketplaces, CME Group, with some of the biggest commodities exchanges across the globe, including the Chicago Mercantile Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term (CME) under its subsidiaries, reported consolidated financial results for the third quarter (Q3) ending September 30, 2013, that reflected Average Daily Volumes (ADV) had dropped from 14.3 million contracts in Q2 2013, to 12 million contracts in Q3 2013, despite a year-over-year increase in both revenues and net income. Basic Earnings Per Common Share attributable to CME Group in Q3 ending September 30, 2013, were $0.71 and 24% lower than the previous Q2 ending June 30, 2013, of $0.94 earnings reflecting a change of 23 cents as net income fell.
Total income of $816.1 million in Q2 2013, fell by $101.5 million to $714.6 in Q3, nearly 12.5% lower over the previous quarter. This affected operating income which was $107.3 million lower over the previous quarter, or down 21% in Q3 2013 resulting in $400.5 million, according to the press release. Q3 net income resulted in $236.7 million down to $74.5 million or almost 24% over Q2 2013.
Despite a lower quarter, these three key revenue metrics were higher year-over-year (when compared to the same period last year). Lower ADV across major product lines can be seen to have dropped across all segments over the previous quarter, although also higher year-over-year . The decrease was most reflected in electronic venues which fell by 2.25 million contracts from 12.45 million in the second quarter to 10.19 million contracts in the third quarter, reflecting a 18% drop. The only higher figure of the reporting venues segments was the open outcry line which saw slightly higher ADV in Q3 by 3.4% or 39,000 contracts over the previous quarter.
Source: CME Group Q3 2013 Results
Although ADV was lower over the previous quarter, the average Rate Per Contract (RPC) increased from $0.748 in the Q2 to $0.762 in Q3 2013, and attributable to primarily strong higher paying non-member participation during third quarter relative to last quarter. Commenting in the official corporate release, Terry Duffy, Group Executive Chairman and President, CME Group, highlighted growth segments and the transition from a compliance phase towards an optimization phase as industry adjusts to waves of Dodd-Frank related mandates and said:
Terry Duffy, CME Group Executive Chairman and President
"Our business continued to trend positively in the third quarter, as demand for our products increased in several major categories, most notably our over-the-counter interest rate swap Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. This gives credit to the bank where funds are deposited and a corresponding debit to the account of the paying institution. The Federal Reserve operates a nationwide check-clearing system. Clearing also is used to signify matching buyers and sellers in stock, futures, and options transactions. Understanding ClearingToday, any type of payment can be cleared. A credit card payment is cleared through the payment merchant. It can be said that clearing is the settlement of balances and transactions. There is also an act of cleaning contracts and risk through A clearinghouse, like CME Clearing, which is an intermediary between buyers and sellers in the derivatives market. As the intermediary or counterparty, to every trade, CME Clearing acts as the buyer for every seller and the seller for every buyer for every transaction on an exchange. Stocks are cleared through global stock exchanges similar to the New York Stock Exchange (NYSE). The clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities. Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. This gives credit to the bank where funds are deposited and a corresponding debit to the account of the paying institution. The Federal Reserve operates a nationwide check-clearing system. Clearing also is used to signify matching buyers and sellers in stock, futures, and options transactions. Understanding ClearingToday, any type of payment can be cleared. A credit card payment is cleared through the payment merchant. It can be said that clearing is the settlement of balances and transactions. There is also an act of cleaning contracts and risk through A clearinghouse, like CME Clearing, which is an intermediary between buyers and sellers in the derivatives market. As the intermediary or counterparty, to every trade, CME Clearing acts as the buyer for every seller and the seller for every buyer for every transaction on an exchange. Stocks are cleared through global stock exchanges similar to the New York Stock Exchange (NYSE). The clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities. Read this Term." Mr. Duffy added to the corporate statement regarding the Q3 results, "We experienced an increase in dealer-to-client market share from 5 percent in the first quarter of this year to 31 percent in the third quarter, in addition to approaching 50 percent of open interest. This is due to our strong value proposition and product expansion. Now that the three waves of the Dodd-Frank clearing mandate are completed, the market is shifting from a compliance phase to an optimization phase. Going forward, our interest rate complex will continue to benefit from our success in OTC clearing."
Phupinder Gill,CME Group Chief Executive Officer
CME Group Chief Executive Officer, Phupinder Gill, echoed progress in core segments year-over-year and said in the corporate announcement regarding the results, "Third-quarter 2013 top-line results included substantial progress in our core business as well as expansion in over-the-counter clearing." Mr.Gill concluded in the release, "Average daily volume was up 11 percent, driven primarily by continued strong performance in our interest rate and metal complexes, as well as strong growth in our options products, which increased by 31 percent. In addition, our efforts to grow the business globally continue to take root. Electronic trading volumes outside the United States grew 16 percent, with volumes up 23 percent in Latin America, 22 percent in Asia and 15 percent in Europe compared with third-quarter 2012."
According to the company's consolidated financial balance sheet in Q3 2013, Total Assets increased over the previous quarter and were higher by $2.09 billion to $48.97 billion, and may be certainly enough to weather lower trading volumes over the previous quarter as other metrics remain higher year-over-year. The earnings report today followed the company's earlier release of October volumes. CME Group Inc is currently trading down near almost six-tenths of a percent in the pre-market trading session (as of publication), according to NASDAQ ticker symbol: CME.