CME Group (CME) Revenues to Accelerate When Interest Rates Rise; Will Benefit from Regulation of OTC Derivatives

April 2, 2013

CME Group (CME) is an early-stage, interest-sensitive stock set to see accelerating revenues from rising interest rates and the regulation of OTC derivatives, says Brad Hintz, Equity Research Analyst at Sanford Bernstein & Co., LLC.

“The CME has a 98% market share of U.S. dollar interest rate futures. As investors anticipate rising U.S. interest rates, hedging activity on the exchange will increase, and CME revenues will accelerate,” Hintz said.


Hintz says that CME is near a turning point, as it offers hedging products to the marketplace and as the economy recovers, hedging will become more important. Additionally, CME will be a winner out of the regulation of OTC derivatives, Hintz says.

“We expect the revenues from CME central clearing platform to rise sharply over the next two years both from direct clearing fees but also from the expected electronic linkage of CCP-cleared OTC derivatives and the listed futures market,” Hintz said.