CME Group Inc.
) has launched an instant messaging ("IM") platform called the CME
Direct Messenger. The new service will leverage the messaging
platform of Pivot Inc which was recently taken over by CME Group.
This initiative is primarily targeted to provide convenience and
facilitate traders in the energy markets.
CME Direct Messenger will be a part of CME Direct, the company's
recent technological investment that offers exchange listed and
over-the-counter ("OTC") markets simultaneous trading
opportunities. This latest platform will offer messaging
facilities instantly, "content parsing" and also broadcast
CME Direct Messenger will bring together the technology that is
used to distribute and negotiate various orders in the energy and
equity markets. This is expected to simplify pre-trade, trade and
post-trade workflows of traders and brokers.
The platform will connect front-to-back-office to facilitate
trading in CME Group's listed and OTC energy products. It will also
be fully automated, first of its kind and will boost trading
opportunities, improve efficiency and complement the existing
electronic trading platform for energy markets.
While it represents a positive step by the company to be at par
with its peers with respect to technological advancements and
simplification of the trading process, we feel that it should be
cautious regarding its increasing expenditures and declining top
CME Group is also expected to begin preparation for the second
phase of the co-location build-out, which is projected to start
during the second half of 2012. Also, this is expected to escalate
the overall expenses of the company.
In the last reported quarter, CME Group's total revenues
declined 5.1% year over year and total operating expenses climbed
7.5%, exceeding management's projections. However, its earnings per
share of 89 cents surpassed the Zacks Consensus Estimate of 82
cents and the year-ago quarter's earnings of 88 cents. The earnings
per share include the effect of a 5-for-1 common stock split on
July 20, 2012.
CME Group should be wary of its peers as one of its closest
NYSE Euronext, Inc.
), is equally proactive and a combative rival. In an effort to
furnish investors an alternative way to execute their trading, NYSE
Euronext was granted permission by the U.S. Securities and Exchange
Commission ("SEC") to introduce its innovative Retail Liquidity
The RLP will allow shares to be traded separately even before it
is available for trading on the New York Stock Exchange ("NYSE")
floor. This technology would allow sufficient cost savings and
ensure better pricing with respect to retail equity trading for
NYSE and NYSE MKT listed and NASDAQ UTP-traded equity
NYSE Euronext is geared to kick start the first-of-its-kind
program this month. It is also expected that with the introduction
of RLP, the company will outpace its peers to become the only
U.S. bourse to offer such technology.
Currently, CME Group carries a Zacks Rank #3, which translates
into a short-term Hold rating. We maintain our long-term Neutral
recommendation on the stock.
CME GROUP INC (CME): Free Stock Analysis Report
NYSE EURONEXT (NYX): Free Stock Analysis Report
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