) provides trading across major asset classes including interest
rates, equity indexes, foreign exchange and energy. Interest rate
contracts constitutes about 23% of
out $323 price estimate
for CME Group. Notably, interest rate trading volume for CME Group
increased by 25% in Q1 2011. The company competes with NYSE
) as well as others like BATS Global and Direct Edge.
Interest rate contracts are primarily based on Eurodollars, U.S.
Treasuries, swaps and other dollar-related instruments that
customers can utilize to manage short, medium and long term
interest rate risk. Interest rate contracts are the largest class
of financial products traded on CME Group.
The average daily volume of interest rate contracts increased by
almost 25% in Q1 2011 compared to the same quarter of the prior
year. Growth in average daily volume is attributable to a strong
rise in Treasury and Eurodollar volume, which increased by 30% and
23% respectively. In January 2011 CME Group launched weekly
Treasury options, which saw a positive reception from customers.
Eurodollar futures and options trading also picked up, bolstering
average daily volume for the company.
We expect average daily volume of interest rate contracts to
increase to 12.5 million by the end of our forecast period, from
about 5.46 million in 2010 because of improvements in the company's
trading platform, declines in average transaction fees and CME
Group's initiatives to expand globally.
See our full analysis for CME Group stock here