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Company Analysis: Chicago Mercantile Exchange (cme)

Autor:   •  March 8, 2011  •  Case Study  •  993 Words (4 Pages)  •  1,257 Views

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Company Analysis: Chicago Mercantile Exchange (CME)


Price as of 9/26/10


Market Capitalization $20.18B

Enterprise Value $??

52-wk High / Low $234.50 / $347.50

12-mo Target Price $343.99

1 Yr-Price History for CME

Historical Analysis

This section should present a historical overview of CME (going back to their acquisition of the Chicago Board of Trade (CBOT) in 2007). The analysis should discuss CME's business strategy, industry and competitive environment, focusing on its strengths and weakness compared to its competitors. Your analysis should rely on an assessment of the company's financial performance (relative to some benchmark / set of competitors), as well as an analysis of how its strategy in combination with other important external factors (e.g., market conditions, economic cycles) has affected its past performance and positioned them for the future.

This is your opportunity to show that you understand CME's business and how its strategy and environment have lead to their current and past performance, and positioned them for the future. Your future projections (in Part II) will build on your understanding of how CME's business strategy and environment relates to its financial performance. Use the tools and frameworks you learned in class but do not apply them mechanically or "blindly" if you are not using them in later on.

Company Description/History:

CME Group was founded in 1898 and is headquartered in Chicago, Illinois. The Chicago Mercantile Exchange began as the Chicago Butter and Egg Board, so named because it only traded contracts in butter and eggs. In 1919 it became known as the Chicago Mercantile Exchange. The exchange greatly expanded its product line over the years, beginning with the introduction of frozen pork belly futures in 1961. In 1964, the exchange began trading live cattle futures, in 1972 it issued the first futures on foreign currencies, and in 1982 stock index futures were added to its product list.

In 1992, the Chicago Mercantile Exchange introduced GLOBEX for electronic trading. This system did not replace the traditional open outcry system, but was used alongside it in order to enhance trading efficiency and extend trading hours. On its first trading day, 2,063 futures were traded on this system. GLOBEX was improved upon in 1998, creating GLOBEX2 which is still in use today. It now trades approximately half of the exchange's contracts each day.

In 2000, the CME demutualized, becoming


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