Derivatives key to exchanges" fortunes Exchange groups are on a tear. Shares in London's LSE, Chicago's CME and the IntercontinentalExchange are all up more than 40 per cent this year. Equity trading volumes have recovered strongly in 2013 as global stocks have hit record levels. But that is only part of the story. The CME and ICE do not trade cash equities, and even at the LSE, stock trading accounts for barely 10 per cent of revenues. Trading Post Far more important to today's exchanges are derivatives. Principal among them are instruments linked to interest rates. Trading in interest rate derivatives is expected to rise sharply as traders position for an eventual hike in interest rates by the Federal Reserve. Regulators have also mandated clearing of interest rate swaps. The CME, which is active in both these areas, has outperformed peers, while Nasdaq OMX, a more traditional equity exchange, has lagged behind. This explains why the LSE and ICE have bought into the rates business with the acquisitions of LCH.Clearnet and NYSE Euronext respectively. The underlying message is that markets no longer view exchanges simply as stock exchanges.