CME Group targets China, India for higher-margin products to sustain profits


CME Group Inc (NASDAQ: CME), the world’s largest futures market is said to be exploring opportunities  for growth in China and India as it searches for the best markets to enter for higher-margin products to keep up recent profit growth according to reports from Bloomberg.

This year CME Group has beat out Hong Kong Exchanges & Clearing as the biggest exchange operator in the world. CME will look to initially offer futures on Chinese equity indexes and commodities as well as Indian indexes and commodities as the two populous countries continue opening up and reforming their markets for global access.

“China happens to present more opportunities at this time; India is a focus area also important to us,” CME CEO Phupinder Gill said in an interview this month in Shenzhen, China. “Our growth rates around the world are highest in Asia.”

Other Highlights:

  • CME’s business outside the U.S. enjoys better profit margins than its domestic operations.
  • The firm’s international assets generated 32 percent of revenue in the third quarter, but only accounted for some 25 percent of volumes from electronic trading.
  • One of the first higher-margin products will be futures on the CSI 300 Index, a benchmark of the biggest companies listed on either the Shanghai or Shenzhen stock exchanges.
  • CME plans to offer the contracts to investors outside China through its partnership with China Securities Index.

It can also be speculated on that CME will look to get into the growing Renminbi and Rupee markets by offering futures and options on the Chinese and Indian currencies. The Renminbi continues to gain credibility internationally as last month it was voted to be included within the International Monetary Fund’s SDR basket. Outside of China (and Hong Kong), the Singapore Exchange has been doing a robust business in Renminbi with Taiwan Futures Exchange joining the mix last summer offering Renminbi futures contracts. To possibly beat back CME Group’s impending approach…back in October Hong Kong Exchanges introduced even more Renminbi based futures contracts. Outside of India, the Dubai Gold and Commodities Exchange has been producing strong business in Indian Rupee contracts, as noted by CME CEO Mr Gill the volume potential within China remains greater than India at the moment. With CME setting their targets towards these regions, it’s obvious that 2016 will continue to be a year of growth and change in Chinese and Indian financial markets.

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CME Group targets China, India for higher-margin products to sustain profits

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