CME Group Inc. (CME – Free Report) reported an impressive average daily volume (ADV) for November 2020. Average daily volume of 19.3 million contracts per day was up 6% year over year, attributable to higher volumes in three of the six product lines. Moreover, it increased 25.3% sequentially. There were 20 trading days in November this year as well as in November 2019.
Interest rate volume of 8.7 million contracts per day decreased 15% year over year. Energy volume of 2.1 million contracts decreased 7% year over year. Foreign-exchange volume increased 10% to 0.7 million contracts per day. Agricultural volume of 1.6 million contracts per day increased 10% year over year. Equity index volume of 5.4 million contracts per day surged 98%. However, Metals volume of 0.7 million contracts per day increased 12%.
Volume at CME Group was backed by solid operating leverage, and a compelling suit of products is expected to help CME Group record higher volume, going forward. The company maintains a solid market share of about 90% in global futures trading and clearing services.
Expansion of futures products in the emerging markets plus an increase in non-transaction-related opportunities as well as OTC offerings should continue to contribute modestly to its top-line growth in the years ahead.
Increasing electronic trading volume adds scalability and hence leverage to CME Group’s operating model. Efforts to expand and cross-sell through alliances, acquisitions, new product initiatives and a strong global presence should also drive growth.
Shares of this largest futures exchange in the world in terms of trading volume as well as notional value traded have underperformed the industry in the past year. The stock has lost 11.2% against the industry’s growth of 5.5%. Nevertheless, its solid fundamentals will likely help the stock retain its growth momentum.
Recently, Nasdaq (NDAQ – Free Report) reported November volumes. While U.S. equity options volume increased 77.9% year over year to 242 million contracts, European options and futures volume decreased 25.3% year over year to 5.9 million contracts. Also, MarketAxess Holdings Inc. (MKTX – Free Report) reported total trading volume of $503.9 billion for November 2020, which marked a 9.4% improvement year over year.
CME Group currently carries Zacks Rank #5 (Strong Sell).
Stock to Consider
Another better-ranked insurance stock is OTC Markets Group Inc. (OTCM – Free Report) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
OTC Markets surpassed bottom-line estimates in three of the last four quarters. It has a trailing four-quarter earnings surprise of 11.96%, on average.
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