CME Signs MoU with Bank of China - Analyst Blog
March 05 2012 - 7:00AM
Zacks
Last week, CME Group Inc. (CME) and Bank of
China signed a Memorandum of Understanding (MoU) to look at
possible business collaboration opportunities, particularly in
commodities futures and options trading. Additionally, the two
institutions will help each other through investor education,
employees training and product marketing.
Consequently, CME group will train the employees of Bank of
China’s subsidiary – BOCI Commodities & Futures Limited
(“BOCI”). Additionally, the exchange will share information on
investor education and business development to help BOCI in
expanding its product portfolio.
Meanwhile, CME Group will benefit from the large clientele of
Bank of China as banks play an important role in informing and
influencing customers about available products. Thus, Bank of China
will help CME Group in increasing the awareness about its products
and services in China, thereby attracting potential clients.
BOCI is already a clearing member of CME Group and helps in
increasing the accessibility of the exchange’s listed futures and
options offerings, thereby boosting its customer base. The alliance
will fortify the part played by BOCI as a clearing member.
CME Group is the largest futures exchange in the world in terms
of trading volume and keeps forming international alliances to
further increase its volume, product portfolio and earnings. In
January 2012, the company announced an agreement with China’s
leading ferrous price and indexing service provider – Mysteel – to
develop risk management products for the ferrous industry based on
Mysteel's market-leading price data services.
Additionally, CME Group signed a MoU in Ukraine and formed
various strategic alliances in Mexico, Brazil, Malaysia and Korea
in the past few years, leading to substantial expansion of its
global footprint. The company’s peers such as NYSE Euronext
Inc. (NYX) and Nasdaq OMX Group Inc.
(NDAQ) are also global players, which actively form international
alliances and mergers.
Currently, CME group carries a Zacks #3 Rank, which is
equivalent to a short-term ‘Hold’ rating. Additionally, considering
the fundamentals, we maintain our long-term ‘Neutral’
recommendation on the stock.
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