CME Sees No Need For Large-Scale M&A Deals; 2Q Up 22%

The chief executive of CME Group Inc. (CME) said Thursday that the futures exchange operator sees no need for large acquisitions as it focuses on potential opportunities from U.S. financial reforms.

Craig Donohue said the company would focus on share buybacks that could start early next year, dimming speculation that it could make a near-term bid for CBOE Holdings Inc. (CBOE), the recently-floated options exchange.

Donohue's comments on a call with analysts came after it beat analysts' expectations with a 22% rise in second-quarter profit, driven by rising trading volume.

CME benefited from rising market volatility, especially in May, as well as rising business from overseas. Donohue said the exchange was also capturing market share from the over-the-counter business, especially in foreign exchange.

Building revenue from clearing more OTC deals has been a long-term objective of the Chicago-based company, but Donohue said the opportunities from the recent overhaul of the U.S. financial system remained unclear.

He said he expects more clarity when regulators develop new rules for comment, which he believes will come in November or December.

The credit crunch had curtailed volume growth in exchange trading until earlier this year, but the sector is returning to a track that has seen 15% annual compound growth.

CME's open interest -- a measure of outstanding contracts and a guide to future trading -- has been rising. Jamie Parisi, chief financial officer, said the pace of decline in the number of trading screens had also abated, with a return to expansion seen in the near future.

The company reported a net profit of $270.7 million in the June quarter compared with $211.8 million a year earlier. Earnings-per-share of $4.11 compared with $3.33 last year.

Revenue rose 26% to $813.9 million and the operating margin climbed to 63.3% from 61.6%. Average daily trading volume was 31% higher in the June quarter.

CME shares were recently up 1.2% at $286.81.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com

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