Financial market turmoil in the past few days may be bad for investors, but such frenzied buying and selling is good for Chicago’s exchange operators CME Group and Cboe Global Markets as well as the city’s trading firm industry.
CME Group, which operates the biggest futures market in the world, said it had a record day of trading yesterday, with 55.3 million contracts trading hands. At Cboe, parent to the Chicago Board Options Exchange as well as stock exchanges in the U.S. and abroad, there was also a significant jump in trading, according to an analyst report today from the bank Piper Sandler.
“Looking for beneficiaries in an ugly market—trading volumes at exchanges and trading companies SURGE over the past two days,” said a headline on the report from Piper Sandler analyst Richard Repetto.
The trading is driven by investor fears that the coronavirus may put a damper on the world economy, including in the U.S., which has been experiencing a longer than usual expansion.
CME’s average trading volume for the month prior to this week was 20.9 million contracts, but volume jumped to 47.8 million on Feb. 24 before hitting the record yesterday. At Cboe, option volume tied to contracts that trade on its exchange as well as other exchanges also hit a record of 10.8 million contracts traded on Feb. 24, the report said.
That wave of activity at the exchanges is pushing up the two Chicago companies’ stocks, despite the downward pressure on the overall stock market. CME’s shares rose 5.69 percent today, closing at $220.18, while Cboe shares climbed 1.48 percent, closing at $123.91.
The Piper Sandler report also noted that trading firms, sometimes referred to as market makers, can also benefit from such a boom in trading. “Elevated equity trading paired with spikes in volatility also provide opportunity for market makers,” Repetto said in the report, citing a publicly traded New York company he follows, Virtu Financial.
Most of Chicago’s big trading firms, including Citadel Securities, Jump Trading and DRW Trading, are privately held, but they would also likely benefit from the increased activity too.
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February 27, 2020 at 04:24AM
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CME posts record trading on coronavirus-driven market frenzy - Crain's Chicago Business
"Trading" - Google News
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