The head of CME Group Inc. (CME) said Thursday that a rising appetite for risk and hedging tools supported the view that the economy was stabilizing.

The world's largest futures exchange and its rivals have suffered from the broad deleveraging of the financial sector over the past year as banks and hedge funds cut trading activity.

Craig Donohue, CME's chief executive, said it was positioned for "more dynamic interest-rate expectations" and rising intermediate and long-term hedging in the market.

His comments on a conference call came as a partial recovery in volume helped lift CME earnings by 10% in the quarter to June 30, with tightening bid/ask spreads and far deeper order books across its products signifying a return to hedging and speculation by many market participants.

Proprietary traders remain the dominant force for CME, accounting for over half of volume on its financial and agricultural commodity complex.

Donohue told Dow Jones Newswires that the client mix remained stable, though it was continuing its push into new segments such as sovereign wealth funds. The globalization of the business now saw a fifth of volume come from outside North American trading hours, the best measure it has of international flows.

With volume trends improving, CME and other exchanges view renewed efforts by U.S. lawmakers to tighten oversight of energy and other commodity markets as as key risk.

Donohue, who is due to testify on Capitol Hill next week, said that any fresh oversight of the derivatives market should emerge by early fall, though implementation may take far longer.

CME is preparing its defense against a push by regulators that could crimp some market activity by raising position limits.

Donohue said there were positives and negatives in the proposals that have emerged so far from regulators and lawmakers, largely in response to concern over "excessive speculation" in the energy markets.

He said that there was "no clear point of view" about how fresh oversight may evolve, though noted that much of the debate among lawmakers revolved around markets and platforms that are more lightly regulated than CME and other listed exchanges.

Terry Duffy, chairman, said on its earnings' call that implementation of any proposals will hinge on whether they require fresh legislation from Congress.

Donohue said the regulatory uncertainty was hindering efforts to clear credit default swaps. He said its plans "remained very fluid" and gave no timescale for eventual launch. IntercontinentalExchange Inc. (ICE) started its U.S. CDS clearing platform in March.

CME's second quarter profit rose to $221.8 million, or $3.33 a share, from $201.2 million, or $3.67 a share, a year earlier. Revenue increased 15% to $647.8 million, and its operating margin rose to 61.6% from 61%.

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