Exchange operator CME's profit beats estimates on record trading volumes

By Jaiveer Shekhawat

(Reuters) -CME Group on Wednesday beat analyst estimates for its second-quarter profit, as the exchange operator notched record trading volumes, with investors rushing to manage risks in the wake of ongoing geopolitical and economic uncertainties.

Latest economic data showing signs of easing inflation has fueled hopes of a possible rate cut in the current half of the year that has helped markets reach new highs.

"Looking at the uncertainty around the U.S. political landscape, with the disparity of opinions and policies, the need to mitigate and manage risk has never been more paramount," Chairman and Chief Executive Officer Terry Duffy said in an analyst call.

"On top of that, the ongoing uncertainty in the Middle East coupled with the unrest between Russia and Ukraine are continuing issues with no end in sight that market's definitely need to manage. These are just a few of the geopolitical events that highlight the need for our risk management products."

Market volatility helped increase CME's average daily volume (ADV) in the quarter as customers used its offerings to manage risks. The exchange had its best-ever second-quarter ADV.

ADV grew 13.5% year over year to 25.9 million contracts per day.

Clearing and transaction fees, from which CME makes the most of its revenue, was up nearly 12% at $1.25 billion. Its total revenue rose nearly 13% to $1.53 billion.

On an adjusted basis, the exchange operator recorded a profit of $2.56 per share for the quarter. Analysts on average had expected a profit of $2.53 per share, according to LSEG data.

Shares of the company rose 1% in early hours of trading.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Maju Samuel)