2nd UPDATE: December Brings Record Forex Trade At CME Group

CME Group Inc. (CME) on Tuesday said trading activity in its foreign exchange futures products reached a new peak in December as it outlined a new push into the asset class.

The Chicago-based exchange operator said it set a new trading record for forex futures Dec. 4, with notional contract volume of $185 billion, with overall currency activity up over 80%.

The bump in forex trade helped CME close out 2009 on a strong note, with a 13% daily volume increase in December from a year ago, though overall trading activity came in below November levels due to the year-end seasonal slowdown.

CME shares were recently flat at $342.41.

The world's largest derivatives exchange operator by volume has grappled with a slowdown in trade across multiple products for most of the year as its biggest customers struggled with the effects of the financial crisis.

Its first year-on-year growth in 2009 came in November, as performance began to be measured against the post-crisis period.

As a result, average daily contract volume in the fourth quarter fell just 1%, by far the best performance of 2009 for CME. For the quarter, daily volume for CME's core interest-rate products jumped 18%.

Last month CME's average daily volume came in at 9.2 million contracts, up 13% from a year earlier. Rate futures volume jumped 42%, with eurodollar trading up 38% and Treasury futures surging 64%.

CME's forex product group saw an 81% year-on-year jump in volume in December, lifting annual volume to a new high with an average 624,000 contracts traded each day, according to Derek Sammann, managing director of financial products and services for CME.

In a conference call Tuesday, Sammann said that investors' shift to exchange-listed forex products came amid counterparty credit concerns linked to the economic chaos of late 2008, which saw the global foreign exchange market shrink by an estimated 10% to 20%.

Forex represented 6% of CME revenues in the third quarter of 2009, up from 4% in the first quarter. The products carry a higher rate per contract than interest rate- and equity-linked derivatives, making them more profitable for CME.

The exchange operator also seeks to clear over-the-counter forex swap transactions via its ClearPort facility, a new effort that Sammann said is "internally ready" and will be tested by customers over the coming weeks.

Metals futures trade at CME jumped 111% over year-ago levels in December as gold corrected from November's historic price run, while energy trade rose 21%. Equity index derivatives were the only decliner in volume, down 27%.

Separately, average daily volume at IntercontinentalExchange Inc. (ICE) rose 17% to 988,212 contracts last month, as fourth-quarter volume climbed 13% from a year earlier.

ICE's energy-focused European platform posted a 24.4% year-on-year increase in trading across its crude oil and gasoil markets. In the U.S. ICE reported a 160% jump in its Russell 2000 equity index futures, amid growth across currency and agricultural product lines.

Looking at the full year, ICE said its 2009 volume in both futures and over-the-counter energy commissions hit new highs, adding that each of ICE's futures exchanges established annual volume records during the year.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com; and Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com

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