Expanding its market data business and continuing to rein in costs are the CME Group’s top two themes for 2017, according to Chairman and CEO Terry Duffy.
After doing an in-depth review of our strategy, we believe that through derived data and additional services like our cloud-based and more robust audit functions, we can deliver a 5 to 6% annual growth in this business, said Duffy during the CME Group’s fourth-quarter earnings call.
Much of the expected growth for 2017 will be back-end-loaded, added John Pietrowicz, CME’s CFO.
On the savings side, Duffy plans to keep future expense growth within the single digits.
- “A lot of the work that we have done in 2016 is carrying over into 2017 like subletting excess office space and closing the trading floor in New York this month,” he said. “We have done that, and we will continue to benefit from the technology work we have done in terms of using software-as-a-service as well as consolidate our data center and working with our partner CyrusOne, which is making us more effective in terms of cost relative to our data center usage.”
The CME Group reportedly also divested itself of its 5% equity stake in Brazilian exchange operator BM&FBovespa as of January 27.
“It wasn’t because the relationship wasn’t good or anything of that nature,” said Duffy. The relationship was great. We did it because the commercial arrangements were basically done and we did not have to invest in it. If shareholders want to invest in BMF stock, the shareholders can do it themselves.”
When asked his views on the Trump Administration’s potential regulatory rollback and the possible effects on the CME Group, Duffy sounded bullish.
“You have to look at today’s compliance for regulatory matters, which is about $2 trillion,” he said. “That up significantly over the past 20 years. I think we are getting to the point where the market has finally seen some clarity that we have a lot of laws on the books. No one is saying that it is bad to have rules and laws and we have yet to see such a rollback.”
However, Duffy noted that the market could view the lack of new regulations as a rollback in itself.
Since the 2010 passage of the Dodd-Frank Act, the Commodity Futures Trading Commission has written 80% of the mandated rules and the Securities and Exchange Commission something shy of that, he explained. “I believe some of the rules that are yet to be proposed and written may never happen. Then you have other laws, banking laws are others of that nature, that are still yet to come out of the legislation.”
