In an attempt to facilitate trading of exchange-listed stock futures and over-the-counter (“OTC”) energy products on a single platform, Chicago Mercantile Exchange Group (CME) launched a new service called CME Direct. The brokers will not have to switch between the exchange's Globex and Clearport systems as the new technology will allow them to handle customer accounts on one platform.
CME Direct will enhance client’s exposure to the market as well as offer increased access to global liquidity and price discovery functionality. The new service seeks to blend the advantages of electronic trading with the flexibility of voice brokering executed through the participating brokers.
The services of the CME Direct technology are linked with CME ClearPort for straight-through clearing to CME Clearing and CME Clearing Europe and CME ConfirmHub for straight-through processing (“STP”) to ensure a swift transaction.
The services have been specifically designed to allow CME Group’s energy futures markets to be traded along with OTC energy swaps through brokers. This will include products traded on CME Globex, NYMEX WTI crude oil, NYMEX Brent, DME Oman crude oil, RBOB Gasoline, New York Heating Oil and Henry Hub Natural Gas futures contract.
CME Direct is deemed to be an added feather in the company’s cap. Previously, the company has provided superior technology services to resolve complex demands of the traders.
Following the launch of this service, we expect the company’s customer base to increase significantly, resulting in top-line expansion. Moreover, we believe these services will provide CME Group with a competitive edge over its peers – NYSE Euronext, Inc. (NYX) and IntercontinentalExchange (ICE).
The company currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We also maintain a long-term Neutral recommendation on the stock.
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