CME Group Closes Curtains On Most Open Outcry Trading Pits; Launches Micro Bitcoin Futures


Derivatives marketplace CME Group (CME) will not be reopening its physical open outcry trading pits, which have been closed since the onset of the COVID-19 pandemic last year.

The Group’s Eurodollar options pit, however, will continue to operate, as it has done since its reopening in August 2020.

Furthermore, CME Group announced that subject to approvals, it will delist floor-based S&P 500 futures and options contracts once its contracts expire in September 2021.

Post this delisting, the remaining open interest will be shifted to E-mini S&P 500 futures and options contracts. These contracts are available in electronic format on CME Globex. (See CME Group stock analysis on TipRanks)

One day before it announced the closing of its trading pits, CME Group launched Micro Bitcoin futures, thereby increasing its crypto derivatives product offerings.

CME Group Global Head of Equity Index and Alternative Investment Products Tim McCourt said, “At one-tenth the size of one bitcoin, Micro Bitcoin futures will provide an efficient, cost-effective way for a broad array of market participants- from institutions to sophisticated, active traders- to fine-tune their bitcoin exposure and enhance their trading strategies, all while retaining the benefits of CME Group’s standard Bitcoin futures.”

On April 28, Raymond James analyst Patrick O’Shaughnessy reiterated a Buy rating on the stock and maintained a $218 price target (6.7% upside potential).

Reacting to the company’s Q1 performance, O’Shaughnessy said, “While 1Q21 faced difficult year-on-year comp, trends were generally healthy as a rising rate environment jump-started rate volatility and CME’s interest rates franchise.”

O’Shaughnessy believes “CME enjoys a very high barrier to entry business model, an attractive incremental margin profile, and upside to interest rates moving higher from here.”

Consensus on the Street is that CME Group is a Moderate Buy based on 6 Buys, 6 Holds, and 2 Sells. The average analyst price target of $206.25 implies the stock is fairly priced at current level. Shares have gained about 18.4% over the past year.

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