CME – Market expectations are for Uniform ROA to expand significantly, but management is concerned about contract volume and their NEX acquisition

• CME Group Inc. (CME:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 51.3x Uniform P/E. At these levels, markets have bullish expectations for the firm, but management has concerns about contract volume and their NEX acquisition
• Specifically, management may be concerned about the progress they have made towards integrating their NEX acquisition, and they may lack confidence in their ability to improve run rates. Furthermore, they may be concerned about their ability to manage expenses and to sustain recent improvements in returns on cash balances. Moreover, they may have concerns about the upcoming adjustment to noncash collateral, and they may lack confidence in their ability to continue growing their customer base in the Henry Hub futures market. Finally, they may be concerned about the sustainability of 2-year note futures volume increases, and they may lack confidence in their ability to sustain recent growth in their gasoline and natural gas business.