UPDATE 2-CME Group profit rises; interest-rate trading volume soars

Tue Feb 4, 2014 11:02am EST
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By Tom Polansek

CHICAGO Feb 4 (Reuters) - Exchange-operator CME Group Inc reported higher quarterly earnings on Tuesday as trading in its flagship interest rate contracts surged 29 percent.

The quarterly profit still fell short of analysts' expectations due to unexpected expenses related to a cyber-attack and a drop in the average fee paid per contract to CME, which owns the Chicago Board of Trade and Chicago Mercantile Exchange.

Shares of the company dipped.

Interest-rate trading volume jumped in the fourth quarter as the U.S. Federal Reserve started to trim bond purchases in its extraordinary economic stimulus program.

The company will see volume gains as the Fed winds down the program since a "tremendous" number of traders are waiting for the Fed program to end before they re-enter markets, CME Executive Chairman Terry Duffy told analysts on a conference call.

"The Fed tapering has clearly been beneficial to volumes," Christopher Harris, a Wells Fargo Securities analyst who covers CME, said on the call.

Net profit rose to $193.1 million, or 58 cents a share, from $166.8 million a year earlier, or 50 cents a share. Adjusted earnings were 64 cents a share. Analysts expected 68 cents, according to Thomson Reuters I/B/E/S.   Continued...