(Reuters) -Derivatives exchange CME Group beat Wall Street estimate for third-quarter profit on Wednesday, as lower expenses helped counter a decline in trading volumes across most asset classes.
The company, which facilitates futures and options trading, experienced a slowdown as easing market volatility and stable energy prices curbed investor hedging activity. Lower volatility typically reduces traders' need to hedge or speculate, leading to softer trading volumes.
Total average daily trading volumes
(ADV) for the world's largest derivatives marketplace fell about 10.5% over a year earlier to 25.3 million contracts.
Energy markets cooled off after driving trading activity for several quarters, as volatility in oil prices fell to the lowest levels in about 18 months. CME's energy ADV dropped 10.7% to 2.3 million contracts.
Interest rates ADV declined 10% during the quarter.
Clearing and transaction fees, which make up the bulk of CME's revenue, fell 5.3% to $1.23 billion.
The company's shares were down 1.34% in premarket trading, but they have risen 15.8% so far this year.
Cryptocurrency trading, however, hit a record, with ADV surging to 340,000 contracts during the quarter.
"We remain focused on delivering efficiencies, new products and expanded access for market users, including through our new partnership with FanDuel and 24/7 trading in our cryptocurrency futures and options," said CEO Terry Duffy.
CME's adjusted expenses came in at $486.6 million during the quarter ended September 30, compared with $488.8 million a year ago. Analysts estimated $499.5 million, according to data compiled by LSEG.
Its revenue was $1.54 billion, compared with $1.58 billion a year ago.
Excluding one-time items, profit attributable to CME shareholders was $966.1 million, or $2.68 per share, while analysts estimated $2.63 per share.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Shilpi Majumdar)
