CME Group's profit rises in Q4 as hedging demand lifts trading volume

Exchange operator CME Group reported a higher fourth-quarter profit on Wednesday, helped by increased hedging activity by investors looking to mitigate risks from geopolitical and economic uncertainty. 

Market volatility remained high in the quarter due to tensions in the Middle East, uncertainty around US President Donald Trump's policies and the Federal Reserve's interest-rate cuts. 

Trading volumes at exchanges tend to jump during periods of heightened uncertainty as clients increase their hedging activities.

CME, which owns and runs several markets where futures and options are traded, including the Chicago Mercantile Exchange and New York Mercantile Exchange, saw its total Average Daily Volume (ADV) rise marginally from a year earlier to 25.5 million contracts. 

Non-US ADV climbed 5 per cent to 7.6 million contracts in the fourth quarter, compared to the year-ago period. 

Ongoing tensions in the Middle East and Trump's comments around production boosts in the US have increased volatility in commodity and energy markets, helping CME's energy ADV to jump 16.7 per cent to 2.5 million contracts. 

"With volume growth across every asset class, we hit new records in interest rates, including US Treasury and SOFR complexes, as well as in agricultural, foreign exchange and metals markets," said CME's CEO Terry Duffy in a statement. 

Clearing and transaction fees, from which CME makes most of its revenue, edged up nearly 4 per cent to $1.23 billion. Its total revenue rose about 6 per cent to $1.53 billion in the fourth quarter. 

Net profit attributable to the common shareholders of CME stood at $863.7 million, or $2.40 per share, in the three months ended December 31, compared with $804.3 million, or $2.24 per share, a year ago. 

CME's shares, which gained a little over 10 per cent in 2024, were up marginally in trading before the bell.