Updates CEO's comment, share price, byline

By Pritam Biswas and Laura Matthews

Feb 12 (Reuters) - Exchange operator CME Group CME.O reported a higher fourth-quarter profit on Wednesday, helped by increased hedging activity by investors looking to mitigate risks from geopolitical and economic uncertainty.

Market volatility remained high in the quarter due to tensions in the Middle East, uncertainty around U.S. President Donald Trump's policies and the Federal Reserve's interest-rate cuts.

Trading volumes at exchanges tend to jump during periods of heightened uncertainty as clients increase their hedging activities.

CME, which owns and runs several markets where futures and options are traded, including the Chicago Mercantile Exchange and New York Mercantile Exchange, saw its total Average Daily Volume $(ADV)$ rise marginally from a year earlier to 25.5 million contracts.

Non-U.S. ADV climbed 5% to 7.6 million contracts in the fourth quarter, compared to the year-ago period.

Ongoing tensions in the Middle East and Trump's comments around production boosts in the U.S. have increased volatility in commodity and energy markets, helping CME's energy ADV to jump 16.7% to 2.5 million contracts.

"Shifting views around the global economy, persistent inflation, potential for changes in tariffs and ongoing geopolitical tensions all contribute to potential market movement and the need for effective risk management, which we will continue to provide to our clients," said CME's CEO Terry Duffy on an analysts' call.

As a result, CME saw volume growth across all six asset classes, and hit new records in interest rates, including U.S. Treasury and SOFR complexes, as well as in agricultural, foreign exchange and metals markets.

Clearing and transaction fees, from which CME makes most of its revenue, edged up nearly 4% to $1.23 billion. Its total revenue rose about 6% to $1.53 billion in the fourth quarter.

On an adjusted basis, CME posted a net profit of $918.9 million, or $2.52 per share, in the three months ended December 31, compared with $864.7 million, or $2.37 per share, a year ago.

Analysts were expecting an adjusted net profit of $892.2 million in the fourth-quarter, as per LSEG data.

CME's shares, which gained a little over 10% in 2024, were last up 3.7% at $250.56 in morning trading.

(Reporting by Pritam Biswas in Bengaluru and Laura Matthews in New York; Editing by Sriraj Kalluvila, Tasim Zahid and Franklin Paul)

((Pritam.Biswas@thomsonreuters.com;Laura.Matthews@thomsonreuters.com))