CME Group Inc., the world’s largest futures exchange, is seeing its Asian business expand 35 percent a year, driven by grains, currencies, gold, energy and financials, Chief Executive Officer Phupinder Gill said.
About 25 percent of the 12 million futures contracts traded daily come from outside the U.S., said Gill, without providing a breakdown. Volumes in Asia emanate mostly from Taiwan, Hong Kong, Singapore and Tokyo, he said in an interview in Kuala Lumpur yesterday, where he was attending a palm oil conference arranged by Bursa Malaysia Bhd.
CME is benefiting from sustained growth in Asia as the rest of the world struggles to regain momentum after the global financial crisis. China, the largest user of metals, energy and cooking oils, will expand 8.3 percent in the second quarter, economist estimates compiled by Bloomberg show. Palm oil trading jumped 86 percent on Bursa Malaysia Derivatives since the CME bought a 25 percent stake in 2009, said the exchange.
“We had two people in Asia five years ago and we have 45 people in Asia now and that’s not going to stop,” said Gill.
The company’s strategy involves alliances with exchanges such as Bursa Malaysia, extending education efforts, building its client base and putting products on its platform 24 hours a day, he said. While the focus in China is on increasing and educating the client base, “access issues are going to be quite important at least for the next little while,” he said.
Open interest in palm oil futures on Bursa Malaysia Derivatives climbed to a record 185,630 contracts on Jan. 23 from 98,333 contracts on Oct. 6, 2009, while so-called “foreign market demography” jumped to 31 percent in 2012 from 19 percent in 2009 as business expanded after futures moved onto the Globex electronic trading platform, the Bursa said.
CME approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation last month. Deutsche Boerse is hesitant about entering into talks, the people said. The German company has said in a statement it’s not in merger talks. Gill declined to comment yesterday.
Net income at CME Group dropped to $166.8 million in the fourth quarter from $746 million a year earlier, it said on Feb. 5. The comparative period included a $528 million Illinois state tax benefit. Average daily volume fell 13 percent, led by equity index, energy and interest rate contracts, it said in January. CME Group shares climbed 8.3 percent in the past year to $60.88 in New York yesterday.