CME Group Overview
The Economist magazine once described CME Group as "The biggest financial exchange you have never heard of". At first glance, this may appear to be an over-the-top description, but on closer scrutiny of CME Group's financial records, you might think that it was a very conservative writing style.
According to the latest figures provided by CME Group, it made a revenue of US$2.9636 billion, operating income of US$1.637 billion & net income of US$976.8 million (2013). The company commands total assets of US$54.2778 billion & total equity of US$21.1605 billion (2013). It employs 2,300 people (December 31, 2008). Among its subsidiaries are the Kansas City Board of Trade (KCBOT), the Chicago Mercantile Exchange (CME), the Chicago Board of Trade (CBOT), the New York Mercantile Exchange (NYMEX) & the S&P Dow Jones Indices.
Even this short summary is awe-inspiring. In many ways, CME Group is the US financial sector - which begs the question: if CME Group faltered, how would the gap in the global market be filled?
The CME Crash
CME Group's stock price hasn't been doing well during the last 3 months. During this time, it has dropped over 2% at the NASDAQ. Its diverse portfolio would indicate that the fault for this decline in value does not lie with company executives, but is simply a manifestation of the state of the American economy as a whole. Indeed, the last week's figures show that CME Group is struggling valiantly to compensate for current market conditions.
Companies like P&G or Pepsi have come a long way from their roots. But no matter how many companies they acquire, P&G will always be associated with household cleaning products & Pepsi will always bring soft drinks to mind. In the same way, no matter how much diversification CME Group introduces, its core business will always be what it started out doing: trading in grain futures.
CME wheat, corn & soybean futures registered a decline last Wednesday. While corn & soybean losses stayed below about 1%, wheat stumbled mightily with a precipitous plunge of over 4% in a matter of hours! The exchange authorities scrambled to compensate for the losses (& have managed to partly repair the damage), but there has been no coherent answer to the burning question of what triggered the crash in the first place?
CME Group's stock price hasn't been doing well during the last 3 months. During this time, it has dropped over 2% at the NASDAQ. Its diverse portfolio would indicate that the fault for this decline in value does not lie with company executives, but is simply a manifestation of the state of the American economy as a whole. Indeed, the last week's figures show that CME Group is struggling valiantly to compensate for current market conditions.
Companies like P&G or Pepsi have come a long way from their roots. But no matter how many companies they acquire, P&G will always be associated with household cleaning products & Pepsi will always bring soft drinks to mind. In the same way, no matter how much diversification CME Group introduces, its core business will always be what it started out doing: trading in grain futures.
CME wheat, corn & soybean futures registered a decline last Wednesday. While corn & soybean losses stayed below about 1%, wheat stumbled mightily with a precipitous plunge of over 4% in a matter of hours! The exchange authorities scrambled to compensate for the losses (& have managed to partly repair the damage), but there has been no coherent answer to the burning question of what triggered the crash in the first place?
China's Farmland Protection Policy & The China-Pakistan Economic Corridor
While the world media makes educated guesses about the connection between the remarkably fine wheat crop in the US & the consequent drop in wheat prices, they forget to take an equally-important international factor into account: the Asian policy on agricultural land is changing. The Governor of Okinawa is engaged in a heated debate about the effect of military activity on agriculture in his Prefecture; the Chinese President has clearly underlined the importance of protecting agricultural land from the ravages of unnecessary development projects (both public & private sector). All this is because, in a few words, a thousand beautiful plazas & malls can't fill an empty stomach.
In addition, the Chinese Government has just announced that they have set aside approximately US$900 billion for investments aimed at accelerating the progress of the Belt & Road Initiative. The first project in this Initiative is the China-Pakistan Economic Corridor (CPEC). According to Pakistani Minister for Planning, Reforms & Development Ahsan Iqbal, most CPEC projects will be carried out under the aegis of the private sector - which basically indicates that, since Pakistan is basically a thriving agricultural economy, the majority of the Pakistan-China joint ventures will be in the agricultural sector.
So, if the emphasis on agriculture is set to skyrocket yet further (keeping in mind that Pakistan, China & Japan are very important trade partners to the United States), why is CME facing a rough patch? The jury is out on when the world will get a sensible answer to that question.
While the world media makes educated guesses about the connection between the remarkably fine wheat crop in the US & the consequent drop in wheat prices, they forget to take an equally-important international factor into account: the Asian policy on agricultural land is changing. The Governor of Okinawa is engaged in a heated debate about the effect of military activity on agriculture in his Prefecture; the Chinese President has clearly underlined the importance of protecting agricultural land from the ravages of unnecessary development projects (both public & private sector). All this is because, in a few words, a thousand beautiful plazas & malls can't fill an empty stomach.
In addition, the Chinese Government has just announced that they have set aside approximately US$900 billion for investments aimed at accelerating the progress of the Belt & Road Initiative. The first project in this Initiative is the China-Pakistan Economic Corridor (CPEC). According to Pakistani Minister for Planning, Reforms & Development Ahsan Iqbal, most CPEC projects will be carried out under the aegis of the private sector - which basically indicates that, since Pakistan is basically a thriving agricultural economy, the majority of the Pakistan-China joint ventures will be in the agricultural sector.
So, if the emphasis on agriculture is set to skyrocket yet further (keeping in mind that Pakistan, China & Japan are very important trade partners to the United States), why is CME facing a rough patch? The jury is out on when the world will get a sensible answer to that question.
Other Trading Platforms?
Given below are the Top 10 replacement exchanges that have the qualifications & experience to pick up the slack while CME Group finds its bearings:
China:
1. The Zhengzhou Commodity Exchange (ZCE) established in 1990.
2. The Dalian Commodity Exchange (DCE), established in 1993.
4. The Osaka Dojima Commodity Exchange (ODE) established in 1952.
8. The Pakistan Mercantile Exchange (PMEX) established in 2005.
9. The Trieste Commodity Exchange established in 1755.
10. The London International Financial Futures & Options Exchange (LIFFE) established in 1982.
Given below are the Top 10 replacement exchanges that have the qualifications & experience to pick up the slack while CME Group finds its bearings:
China:
1. The Zhengzhou Commodity Exchange (ZCE) established in 1990.
2. The Dalian Commodity Exchange (DCE), established in 1993.
3. The Mongolian Agricultural Commodity Exchange (MCE) established in 2013.
Japan:
4. The Osaka Dojima Commodity Exchange (ODE) established in 1952.
5. The Tokyo Commodity Exchange (TOCOM) established in 1984.
Singapore:
6. The Singapore Exchange (SGX) established in 1999.
7. The Singapore Mercantile Exchange (SMX) established in 2010.
Pakistan:
8. The Pakistan Mercantile Exchange (PMEX) established in 2005.
Italy:
9. The Trieste Commodity Exchange established in 1755.
United Kingdom:
10. The London International Financial Futures & Options Exchange (LIFFE) established in 1982.
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