Exchange operator CME tops profit views as trading volumes surge

(Reuters) - Futures exchange operator CME Group Inc reported third-quarter profits that beat expectations as volatility in the global markets amid high inflation, aggressive rate hikes and recession fears, drove trading volumes higher.

Stripping out one-time items, such as M&A costs, CME earned $1.98 per share in the three-months ending Sept. 30, compared with the consensus expectation of analysts of $1.94, according to Refinitiv IBES data.

CME shares rose 0.31% to $176.35 shortly after the results were released.

The earnings beat came from a combination of modestly higher-than-expected revenues and lower-than-anticipated expenses, said Jefferies analyst Daniel Fannon.

The demand for hedging tools has soared in an increasingly uncertain macroeconomic environment as investors try to dump risky assets while navigating a tough market.

CME's volumes are up 23% year-to-date over a year earlier, Chief Executive Officer Terry Duffy said on a call with analysts.

"When there is uncertainty driving activity in our interest rate business, the impacts cascade to other asset classes," said Duffy.

The volatility in rates also drove activity in the futures exchange operator's equities and foreign exchange products, while Russia's war in Ukraine boosted demand for risk management tools in commodities, agriculture and energy, he said.

CME's bitcoin futures volumes rose 66% compared with the third quarter of 2021, as cryptocurrencies remained under pressure along with other risk-linked assets.

Clearing and transaction fees, that make up the largest chunk of CME's revenue, climbed nearly 14% in the quarter to $998.6 million.

Total quarterly revenue at the Chicago-based company rose about 11% to $1.23 billion.

(Reporting by John McCrank; Editing by Shailesh Kuber and Mike Harrison)