CME growth rough ride in the near-term

Marketplace Staff Apr 23, 2009
HTML EMBED:
COPY

CME growth rough ride in the near-term

Marketplace Staff Apr 23, 2009
HTML EMBED:
COPY

TEXT OF STORY

Steve Chiotakis: In a few hours, we’ll get a first-quarter report from the CME Group. as in Chicago Mercantile — “The Merc” as it’s affectionately known. In case you didn’t know, it’s the world’s largest derivatives exchange. Shares are trading for less than half what they were a year ago, and that means the fallout’s doing a number on another side of the financial industry. From Chicago Public Radio, Adriene Hill reports.


Adrienne Hill: CME Group is the massive exchange made up of the Chicago Board of Trade, the Chicago Mercantile Exchange and NYMEX. It facilitates futures and options trading — everything from gold to interest rates to pork bellies. Trading volume is the name of the game.

Michael Wong is an analyst with Morningstar:

Michael Wong: Unlike the investment banks where they may make money by taking the other side of transactions, CME Group just matches buyers and sellers together.

And that match-making has been slipping recently. The trading volume so far this year is much lower than the beginning of 2008, causing analysts like Mark Lane from William Blair and Company to raise a red flag and downgrade the stock’s rating.

Mark Lane: The key driver in getting volume growth going and getting the company growing once again is a stabilization in credit markets and an increase in risk tolerance.

Lane says he thinks the future of the company is promising, but the near-term, he says, will be tough.

From Chicago, I’m Adriene Hill for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.