By Arasu Kannagi Basil

(Reuters) -Derivatives exchange Cboe Global Markets (NYSE: CBOE ) reported a record first-quarter profit on Friday and boosted its annual revenue growth forecast as tariff news drove up market volatility and fueled strong growth in options trading.

Exchanges thrive during times of market turmoil as trading volumes surge and investors hedge their portfolios to manage risk, driving up transaction and clearing fees for companies such as Cboe.

Rivals CME Group (NASDAQ: CME ) and NYSE-parent Intercontinental Exchange (NYSE: ICE ) also had record-breaking quarters as headlines about rapid changes in U.S. trade policy and the emergence of Chinese startup DeepSeek’s low-cost AI model led to heightened market volatility.

Shares of Cboe rose 1.4%.

Revenue from its options trading arm jumped 15% to an all-time high of $352.4 million. Average daily volume in index options hit a quarterly record of 4.8 million contracts.

Cboe now expects full-year revenue growth in the mid- to high-single-digit percentage range, up from its previous forecast of mid-single-digit growth.

"It is a remarkable outcome given the macro challenges," Oppenheimer analyst Owen Lau said.

Outgoing CEO Fredric Tomczyk told analysts Cboe had a robust beginning to the second quarter and while volumes may ease from the exceptional levels seen in recent months, the market ecosystem remains healthy and supportive of volume growth moving forward.

Executives said retail investors remain engaged, but with a disciplined approach to the market, accounting for less of the volume increases around the volatility spikes.

NEW GUARD

Cboe late on Thursday named rival CME’s former top boss Craig Donohue as its new CEO, effective May 7.

He succeeds Tomczyk, who has been at the helm since September 2023 and steered Cboe through a challenging time after the abrupt departure of former CEO Edward Tilly.

Jefferies analysts said organic growth outside the U.S. was likely to remain unchanged as a strategic priority, but it expects additional M&A to compliment the strategy.

Excluding one-time costs, Cboe earned a record $2.50 per share for the quarter, beating analysts’ expectations of $2.36, according to estimates compiled by LSEG.

Revenue jumped 13% to a quarterly record of $565.2 million.