CME Takes Up More Service Initiatives - Analyst Blog
October 11 2011 - 7:21AM
Zacks
Yesterday, CME Group Inc. (CME) announced its
plan of launching CME Co-Location Services in the US on January 29,
2012, in an attempt to enhance the efficiency of its Globex
platform.
Accordingly, CME Co-Location Services will operate from the
company’s data center located in the suburbs of Chicago. This
service is expected to help in well-organized trading for its
buyers and sellers athwart on the Globex platform
Besides, the new co-location services are aimed at offering
hosting, connectivity and support services that will
comprehensively substantially minimize the latency connectivity for
all the trading products that are being traded on CME Group’s
Globex platform.
Therefore, the new the co-location service will not only boost
the operational efficiency with lowest latency factor but will also
offer fair access as it initiates equal pricing to all customers.
This enhanced efficiency, fair pricing and similar terms across its
customer base are likely expected to further increase the demand
for CME Group’s co-location services.
Besides, CME Group also expects to launch the clearing of
over-the-counter (OTC) metal products in UK through CME Clearing
Europe by the end of this year. The company had previously
intimidated about the plan in June this year.
The clearing of metals have been developing at a rapid pace
recently, primarily since the London Stock Exchange (LSE) announced
its plans to build its own clearing house in May of this year.
Moreover, the new regulatory reforms are also aiming at increasing
competition among exchanges, which further allows for the launch of
new post-trading clearing initiatives and hence, offer an open
business model for markets.
Overall, we believe that co-location and OTC clearing of metals
are likely to trigger growth opportunities for CME Group in the
long run. These efforts are also crucial for the company given the
demanding regulations and intense competitiveness in these areas
from other exchanges, such as NYSE Euronext Inc.
(NYX), NASDAQ OMX Group Inc. (NDAQ) and LSE,
across the US and Europe.
On Monday, the shares of CME Group closed at $266.06, up 4.8%,
on the NASDAQ Stock Exchange.
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