Business is booming for Illinois firm amid banking turmoil

SVB collapse
SVB collapse
Published: Mar. 15, 2023 at 10:19 PM CDT
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CHICAGO (25News Now) - CME Group Inc., parent company of the Chicago Mercantile Exchange and the Chicago Board of Trade, is benefiting from the turmoil created by the collapse of two U.S. banks.

The derivatives exchange recorded its highest-ever daily trading volume on Tuesday, with 66.25 million contracts changing hands.

CME makes its money from charging fees for each contract, so the company is earning more revenue during turbulent times.

Among the markets traded at CME are futures and options tied to stock indexes and interest rates, allowing investors to hedge their risk or profit from market volatility. In this case, markets are especially volatile due to uncertainty about the banking system and what action the Federal Reserve might take on interest rates.

“Given the extreme volatility in today’s environment, exacerbated by the recent failures of Silicon Valley Bank and Signature Bank, we are seeing a flight to futures as participants turn to our deeply liquid markets,” said CME Group Chairman and Chief Executive Officer Terry Duffy in a prepared statement.

“The importance of risk management cannot be overstated. Our futures and options on futures products are doing what they were designed to do, as investors seek to protect their portfolios amid heightened volatility,” Duffy also said.

Individual volume records were established Tuesday for interest rate futures and options, with 41.9 million contracts traded. Futures and options on various stock indexes posted a volume record of just over 17.8 million contracts.