Standard & Poor’s Ratings Services placed CME Group Inc.’s credit ratings on watch for downgrade, saying the clearinghouse’s new service for fixed-income traders may weaken its financial safeguard system.
CME, the world’s largest futures exchange by trading volume, said Monday it was launching the service for fixed-income traders that lowers trading costs for interest-rate futures. The plan in is response to NYSE Euronext teaming with the Depository Trust & Clearing Corp. to develop a facility that will let investors pool collateral posted against dealings in the interest-rate futures and cash Treasurys markets.
At stake is CME’s most heavily traded market that brought in about $175.5 million in revenues the fourth quarter and has been positioned as a key growth area for NYSE Euronext’s push into U.S. futures trading.
“We are concerned this program incrementally weakens the clearinghouse’s financial safeguard system and represents a step toward the demututalization of risk,” said Standard & Poor’s credit analyst Charles D. Rauch.
The ratings firm, which has CME’s rating at AA, two steps below the highly coveted AAA, said it will assess the competitive threat from the NYSE offering and whether it could hurt trading volume of CME’s listed interest-rate products and the group’s financial performance.
Shares rose 2.1 percent, to $310.29, amid a broad market rally.
