As exchange rivals push on with consolidation plans, CME Group appears to be sticking to its own organic growth strategy and enjoying success. The first three months of 2016 saw the US derivatives exchange post record first-quarter financial performance. 

“It was an exceptional start to the year,” explains Phupinder Gill, chief executive officer, CME Group. “We saw record quarterly average daily volume, which was up 13% compared with an already strong first-quarter last year.” 

There was balanced growth in both financial and commodity products, each up double digits. More recently, May 2016 volumes averaged 14.9 million contracts per day, up 6% year-on-year. 

The numbers are impressive and have perhaps been overshadowed by events in Europe, particularly Deutsche Borse’s plans to merge with the London Stock Exchange. For Gill, recent consolidation isn’t surprising as exchanges and all businesses seek new opportunities and work hard to achieve further efficiencies. 

“At CME Group, we are focused on growing our business organically and through strategic partnerships with other exchanges. Risk management is more important than ever. For example, we have consistently expanded global participation in our markets in spite of the challenging macro environment.” 

Gill says the group is delighted that it had record volume coming from outside the US in the first quarter of 2016. It was 25% of its total, the highest non-US proportion of the business since CME started tracking the information. 

In terms of CME’s own growth plans, the aim is to give customers the tools required to help them better manage risk in volatile market conditions under a range of regulatory regimes. “For us, diversity of product and global reach is key, so our company provides access to all major asset classes on one platform,” Gill adds. “That’s a very strong value proposition for our customers.” 

It’s also a reason to keep innovating. Over the last 12 months, new product launches have included CME’s Ultra 10-Year US Treasury Note futures. This is the first time in CME Group’s history that a new product hit the one-million contracts mark in only a few short weeks. 

In April, the firm launched interest rate swaption clearing, a first-ever capital efficient clearing solution that offers customers greater capital efficiencies and helps them to mitigate counterparty risk. 

Most recently, CME announced plans to launch physically delivered European Union Wheat futures and options, responding to industry demand for a contract that better reflected physical storage practices in the EU. 

Meanwhile, regulation in the derivatives space is beginning to take effect and continues to be a major focus for CME post crisis. “We have always been supporters of robust, fair regulation in the global financial markets as it is fundamental to the confidence of market participants. Equally fundamental is that it not cross the line and undermine innovation, competition and economic growth,” says Gill. 

“We actively participate with the relevant regulatory and industry bodies on technical standards in all the regions in which we operate.” 

Ensuring safe financial market infrastructure environment is a goal for both the regulators and the industry and Gill claims regulatory certainty is a must. Given the complexity of the issues, the regulatory environment should provide maximum certainty to the industry in order to ensure smooth implementation. 

It is also one of the reasons CME is so focused on capital efficiency as requirements such as Basel III are implemented. “We know our customers are looking for the most capital-efficient solutions, and our compression and coupon blending services have already helped deliver margin efficiencies. We have compressed over $21trn in notional at CME Group, while removing over 360,000 line items.” 

Looking ahead, Gill says CME will continue to invest in its core business to drive growth, as risk management needs are increasing around the world. “We see growth coming from existing clients, and our marketing and sales efforts are designed to generate new account growth in Europe and Asia. 

We’ve increased our presence and product set in both regions, which are both long-term opportunities for us. European-based volume was up 28% in Q1 while Asiabased volume was up 13% during the same period.”