Fortifying its non-U.S. revenue sources,
CME Group Inc.
) finally sought the approval from the UK authorities to build a
derivative exchange in London. After being rejected twice, the
company will finally launch the new trading platform on Apr 27,
Accordingly, UK's Financial Conduct Authority (FCA) and the
Bank of England agreed to CME Group's derivative exchange in
London, thereby ceasing a long process of application. The
company was previously supposed to launch the exchange in Sep
2013 but delayed it twice due to non-recognition by the UK
authorities, who dreaded of systematic market risks to foreign
currency trading from the birth of CME Group's exchange.
Nonetheless, the launch of a derivative exchange in London
will directly help CME Group tap clientele from across Europe,
Middle East and Asia Pacific, particularly amid the rising demand
for interest rate futures. Consequently, the company also plans
to launch biodiesel and foreign exchange futures on Apr 27, which
is expected to be followed by more interest rates, commodities,
metals and equities derivatives within a year of operation.
The company's London-based CME Clearing Europe, launched in
May 2011, is also functioning at its optimum capacity and
delivering positive results now. Meanwhile, the latest expanse of
derivative exchange in London not only enhances CME Group's
revenue growth opportunities from the international quarters of
Europe and Asia but also helps gain operating efficiencies and
Additionally, CME Group's new exchange will boost its
competitive position in Europe, where
IntercontinentalExchange Group Inc.
) Liffe and Deutsche Börse's Eurex primarily rule the local
markets. With an achievement of largest trading volumes of more
than $3 billion in futures and options derivative contracts in
2013, the company now looks forward to lead the European
We believe that the expansion into international avenues
follows CME Group's organic growth strategy and should boost its
financials in the future. This is crucial in the current scenario
given that the company is facing restricted top-line and margins'
growth due to sluggish volumes, higher expenses and regulatory
While both CME Group and IntercontinentalExchange Group carry
a Zacks Rank #3 (Hold), some better-ranked financial stocks are
Global Payments Inc.
VeriFone Systems Inc.
). Both these stocks bear a Zacks Rank #2 (Buy).
CME GROUP INC (CME): Free Stock Analysis
GLOBAL PAYMENTS (GPN): Free Stock Analysis
INTERCONTNTLEXC (ICE): Free Stock Analysis
VERIFONE SYSTMS (PAY): Free Stock Analysis
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