We estimate that, along with Wall Street reforms, a shift to algorithmic and electronic trading will fuel growth in the average daily trading volume of energy contracts at CME from about 1.7 million in 2010 to 3.7 million by 2017.
We currently feel that the threat to CME Group from the merger of NYSE Euronext and Deutsche Boerse is low as CME already competes with them individually and still managed to increase its average daily volume of energy contracts, its most valuable segment in our estimates, from 1.35 million contracts in 2008 to 1.67 million in 2010.
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As the new rules are implemented, derivatives exchanges like CME should benefit from the increase in trading volumes.
In December, Lukken foresaw increased competition in the portfolio margining process from CME.
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As a broker-dealer, MF Global also added liquidity to the system, adding another layer of systemic risk: on Monday, MF Global traders were barred from the CME Trading floor, substantially limiting liquidity in futures markets.
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Representatives from the CME Group, NYSE Euronext, the Consumer Federation of America, the Managed Funds Association and the AFL-CIO will all be there to talk about over-the-counter derivatives, the role of intermediaries and hedge funds, consumer protection and hedge funds.
The prospect of stricter regulation of CME member firms and reputational damage from the MF Global episode has weighed on its stock, though shares rallied Thursday as the firm boosted its dividend by 59% and outlined plans for a regular special payout.
The CME trades futures on 13 currencies, from the Australian dollar to the Swiss franc, with expiration dates in March, June, September and December.
We forecast the average daily volume of energy contracts traded on CME to reach 3.7 million in the coming years from its current level of 1.7 million, implying a growth rate of around 12% annually.
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In 2005, average daily volume at the Chicago Mercantile Exchange (nyse: CME - news - people ) soared 34% from a record 2004, and the number of contracts traded for the year surpassed 1 billion.
In January 2011 CME Group launched weekly Treasury options, which saw a positive reception from customers.
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The average trading volume at CME Group reached 13.4 million contracts per day, up 10% from 2010.
However, from a look at the weekly chart above, my money is on CME eroding further.
Some have moved from there into trading options, or into trading futures on the likes of CME Group.
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