(Reuters) -Derivatives exchange CME Group’s first-quarter profit fell slightly short of expectations on Wednesday, as a surprise jump in costs overshadowed the gains from record trading volumes.
The company’s operating expenses rose 1.1% to $534.4 million, chiefly due to higher spend on technology. Analysts were expecting a 5.6% drop in costs, according to estimates compiled by LSEG.
In a rapidly evolving market, exchanges often have to ramp up their spend on technology to stay competitive, especially against newer upstarts.
Still, CME’s core business was a bright spot. The company, which facilitates trading of futures and options, saw heightened activity during market volatility as clients hedged their investments and managed risks.
In the first quarter, concerns over inflation — fueled by U.S. President Donald Trump’s tariff rhetoric and geopolitical tensions — drove increased demand for derivatives.
CME reported record average daily volume (ADV) of 29.8 million contracts, up 13% from a year earlier. All of the company’s products including interest rate futures and options, equity index futures and options and cryptocurrency saw record quarterly growth.
“Amid heightened economic uncertainty, CME Group operated with exceptional resilience,” the company’s chief executive officer, Terry Duffy, said.
Profit grew 12% to $956 million for the three months ended March 31. Excluding one-time costs, CME earned $2.80 per share, while analysts were expecting $2.81, according to estimates compiled by LSEG.
Revenue came in at record $1.64 billion, jumping 10% from a year earlier.
The results will set the tone for a crucial year as CME prepares for potential competition with BGC Group’s FMX Futures, an upstart with a high-profile investor base that analysts say could be a disruptor.
CME’s shares were marginally lower before the open. They have gained 14% so far this year, while those of rival exchanges Cboe Global and NYSE-owner Intercontinental Exchange rose 10% and 8%, respectively.
(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli)
