CEO of CME Craig Donohue Talks Dow Acquisition, Emerging Markets and Real Estate

httpv:// Interesting interview on Bloomberg TV with CME Group CEO Craig Donohue. Video to the left, highlights below:

On areas of growth for CME Group:

“Because we operate on a global basis, we see a lot of opportunities in global and emerging markets in terms of increasing our distribution and broadening further the range of products that we trade, but we’re also beginning to provide, very successfully, over-the-counter clearing services for more complex derivative transactions that aren’t
really executed on exchanges.”

On whether the company will be making more acquisitions like the Dow Index:

“We’ve been very conservative as a company in terms of mergers and acquisitions. It’s been very cost synergy focused. I think it was quite logical that we would be the acquirer of, you know, exchanges like the Board of Trade and NYMEX. So our focus right now is really more on strategic investments, commercial relationships with exchanges in emerging markets, and I think it’s not likely that mergers and acquisitions will be a key part of that growth strategy.”

On CME moving into the OTC market:

“First of all, we do have a very successful business in OTC clearing through CME ClearPort. We’ve got a very broad range of products and a roughly $300 million a year business in oil, gas and power clearing and now we’re beginning to extend ourselves into credit default swaps and interest rates. One of the things that we’ve had to do is really
step back and focus on the customer needs and what the market participants want. And what we’ve heard loud and clear is they want central counterparty clearing more than they want execution services.

“We’ve had to really say look, we’ve got to find a way to partner with the large investment banks that have a tremendous business in the over-the-counter derivatives markets, and I think we’re successfully doing that.”

On the next asset class CME might be looking into:

“Obviously with the concentration of wealth that people have in real estate, you know, primarily residential but even commercial, it’s a huge asset class and it’s one of the only asset classes that hasn’t yet matured into, you know, using hedging and risk management products. We are working on that…Green products are a whole other very
fertile area of opportunity for us. So we’re working on both of those and they have the potential over time, I think, to be significant, but some of that is going to depend on legislation in energy and green policy.”

Got thoughts on real estate of CME’s new acquisition of the Dow Index? Share your comments below …