CME Has Benefited From Higher Trading Volume as Volatility Remains High in 2024

CME Group has enjoyed favorable market conditions in 2024 as volatility across multiple asset classes drove increased trading volume, leading to strong revenue growth. Before 2022, the most significant headwind for the company had been the impact that low short-term interest rates had on its interest-rate futures, which are its largest source of revenue. When interest rates are expected to stay low, there is less need for interest-rate hedging and less incentive for speculation, creating a drag on CME's trading volume. With interest rates now well above the 0% rate we saw during much of the past decade, the drag has been removed, benefiting the company's growth. After multiple years of elevated volume growth, however, we think this tailwind has played out, and we expect interest-rate futures growth to be slower going forward.