(Adds financial details, executive comments from conference call, background on NEX deal)
By John McCrank
July 26 (Reuters) - CME Group Inc, the world's largest futures exchange operator, said on Thursday its second-quarter earnings rose on the back of higher trading volumes and market data fees, as it works toward the close of its $5.5 billion acquisition of NEX Group.
Net income at CME, which owns the Chicago Board of Trade, rose to $566.1 million, or $1.66 per diluted share, from $415.8 million, or $1.22 per diluted share, a year earlier.
On an adjusted basis, the company earned $1.74 per share, beating analysts' average estimate by two cents, according to Thomson Reuters I/B/E/S.
CME said average daily volume rose 12 percent to 18.4 million contracts, which pushed clearing and transaction fees, CME's biggest revenue stream, up 14 percent to $906 million.
The Chicago-based company added, however, that global markets trading activity was down 5 percent so far in July.
"When you add in the uncertainty of geopolitical issues and lower volatility, which we are seeing on top of a traditionally slow month, the 5 percent down isn't a surprise to me," CME Chief Executive Officer Terry Duffy said on a call with analysts.
Market data revenue surged 18 percent from a year earlier to $113.8 million, primarily due to a fee increase put in place in April, the company said.
CME executives also said the company was making progress in its integration plans for London-based NEX Group, which matches buyers and sellers of bonds, swaps and currencies. The deal is expected to close in the second half of the year.
The combination of the firms would enable investors to access cash and futures trading and over-the-counter services via one provider for the first time, improving access to market.
CME is currently working with the Fixed Income Clearing Corp arm of the Depository Trust & Clearing Corporation on cross-margining arrangements as a result of the deal, said Sunil Cutinho, president of CME Clearing.
"We believe we can bring a lot more benefits to market participants who trade both cash treasuries and our interest rate futures products," Cutinho said on the conference call.
Total revenue at CME rose 15 percent in the quarter to $1.06 billion.
CME shares were up 1 percent at $171.22 around mid-morning. (Reporting by John McCrank Editing by Bill Trott)