FMX | Connect – www.fmxconnect.com - (Reported 7/22/2010)
CME 2Q10 Earnings Call Thursday, July 29th at 8.30 am ET
We expect CME to report 2Q10 EPS of $4.34 (+30% y/y; +20% q/q), 4c above consensus estimates of $4.30
Revenues should reach $822m (+27% y/y; +19% q/q) and operating expenses $268m (+22% y/y; +10% q/q)
Recent news:
President Obama signed into law on Wednesday the financial regulation reform which mandates central clearing of standardized derivatives. The bill allows banks to engage in proprietary trading within separately capitalized subsidiaries and engage in derivatives trading to hedge risks. Banks will still be allowed to trade freely to perform customer-related and market-making activities.
Clearport will serve as Clearinghouse for a buy-side sponsored interest-rate swap exchange. Getco, DRW, Infinium, Chicago Trading and Nico Trading will launch Eris, an electronic interest rate swaps exchange. The contracts (which will be designed as swap look-alike futures contracts) will be cleared by CME’s Clearport and susceptible to cross-margining and will fall under current CFTC regulation (which already approved the contracts).
Volumes
· Interest rate 2Q10 volumes were up +38% y/y.
July ADV is tracking at 4.2m contracts, down -31% from 2Q10 and flat y/y.
· Equity Index 2Q10 volumes were up +16% y/y.
July ADV is tracking at 2.9m contracts, down -16% from 2Q10 and up +15% y/y.
· Energy 2Q10 volumes were up +29% y/y.
July ADV is tracking at 1.45m contracts, down -19% from 2Q10 and +2% y/y.
· CME is trading at 15.6x consensus 2011 earnings, a 36% premium to the S&P 500 Index.
ELX volumes and market share have declined during the past couple of months. ELX launched Eurodollar Futures contracts on 18-June, but didn’t get any market traction yet.
Eurodollar ADV was 2.9m contracts during 2Q10 (+23% y/y; +21% q/q) as recent events in Europe lead to a sudden increase in volumes. Volumes have decreased to levels below the 2009 average during July. Even though the low realized and expected inflation coupled with a persistent zero rate policy reduced the need for interest rate hedging, volumes are expected to rise when ED’s implicit rate increase.
Equity Index volumes were up +16% y/y and +23% q/q; and July volumes are -16% from 2Q10 as volatility decreased.
Source: ERDesk
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