CME Group reveals 24% slump in operating income in its Q1 report

CME Group has recently revealed its financial results for Q1 of 2021, with some numbers beating initial estimates. The report details an operating income of $725 million for the first quarter of the year, with a revenue of $1.3 billion. Compared to Q1 of last year, these figures show a 24% slump in operating income and a significant drop of nearly 18% in revenue.

When comparing this quarter’s results to last year’s, however, it is important to note the unusual circumstances in which financial firms such as CME Group found themselves in at the start of 2020, with the global pandemic meaning that trading demand increased significantly and uncharacteristically.

Net income for the derivatives company was reportedly around $641 million, with diluted earnings at $1.79 per share on an adjusted basis. Before adjustments, these figures show a 25% drop quarter-over-quarter for CME Group, with last year’s net income at $766.2 million and share price at $2.14. Despite this, adjusted share numbers beat analyst expectations, with Refinitiv revealing an initial estimate of just $1.75 per share.

CME Group

Terry Duffy, Group Chairman and Chief Executive Officer at CME Group, said:

Terry Duffy, CME Group

Terry Duffy

Since the start of 2021, we have experienced strong demand for our products as clients looked to manage risks associated with the potential for a post-pandemic economic recovery.

The recent report showed that the derivatives exchange recorded an ADV of approximately 21.8 million contracts within the first quarter of 2021 alone. CME Group also recorded a non-US ADV of around 6.1 million contracts, and traders were said to have paid an overall average rate per contract of $0.658. As well as the significant number of contracts recorded within the quarter also detailed its impressive generation of  $1 billion from transaction and clearing fees.  The Q1 report also revealed a generated revenue from its market data business of $144 million.

Duffy also added:

Trading volumes in Q1 have returned to pre-pandemic levels, with ADV in the first quarter representing our third-highest quarterly ADV ever, and open interest climbing above 100 million contracts. Additionally, we continue to deliver against our growth objectives, introducing several innovative, new products, completing migration of BrokerTec to CME Globex and agreeing to form a joint venture for post-trade services in OTC markets.

Derivatives market CME Group has recently announced that it has worked to integrate its FX Link resource with MarkitSERV messaging services from IHS Market alongside Refinitiv Trade Notification.

In March, CME Group revealed it is set to expand its crypto derivatives suite in the near future by introducing a brand new Micro Bitcoin futures contract. The planned launch date for this new feature is currently said to be 3 May, pending review from regulators.

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