CME (CME) 2 Feb 182017 Q4 Earnings call transcript

Company Profile

Participants

John Peschier	MD, IR
Terrence Duffy	Executive Chairman & CEO
Sean Tully	Senior MD and Global Head, Financial & OTC Products
John Pietrowicz	CFO and Senior MD
Bryan Durkin	President
Derek Sammann	Senior MD and Global Head, Commodities & Options Products
Brian Bedell	Deutsche Bank
Christopher Allen	Rosenblatt Securities
Alex Kramm	UBS
Daniel Fannon	Jefferies LLC
Michael Carrier	Bank of America Merrill Lynch
Richard Repetto	Sandler O'Neill + Partners
Patrick O'Shaughnessy	Raymond James & Associates
Benjamin Herbert	Citigroup
Kyle Voigt	KBW
Kenneth Worthington	JPMorgan Chase & Co.
Christopher Harris	Wells Fargo Securities
Alexander Blostein	Goldman Sachs Group
Brian Bedell	Deutsche Bank AG
Alex Kramm	UBS Investment Bank
Jeremy Campbell	Barclays PLC
Jonathan Casteleyn	Hedgeye Risk Management

Call transcript

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Operator

Good day, and welcome to the CME Group Fourth Quarter and Full Year 2017 Earnings Call. At this time, I would like to turn the conference over to Mr. John Peschier. Please go ahead, sir.

John Peschier

Good morning, everyone. us. joining for Thanks start it safe brief over by to then remarks language, I'll questions. turn to with going harbor the and followed I'm Terry for Q&A. will of participate management members team Other in our the also our Statements made on statements. are call and forward-looking historical are website slides facts in not that the this on are of predict. not These they risks, to statements guarantees are uncertainties difficult involve performance, future and assumptions that is and results may expressed what or outcomes from statements. implied actual Therefore, materially any in differ

our information Terry. performance find which the be on to the about our factors non-GAAP the with detailed our you on a over affect filings may For GAAP like and in turn call can measures. that Also, will earnings between release, of found that, the With are would to reconciliation last SEC, page website. I

Terrence Duffy

Thanks, every you thank appreciate unusual interest in this for certainly class Group. us asset year. experienced your joining an John, and was volatility. XXXX CME Virtually morning. We all reduced

focused that and in expanding of operations. customer we the our manner our efficient year, all the We were most base. on markets operating control. throughout we That our adding products, areas optimizing So in new included aggressive could global

our investments investments down in in of new product clearing making we data, we exchanges, as we default and other market swaps as wound audit functions. credit our As know, we announced you we and our on focused sold and exchange derived exit European had house, the clearing data well business launches

invest future. [Technical total costs, another year our successful increasing the controllable the in efficiency to continuing of Focusing organization Difficulty] resulted has on while reducing for

driven generate developed XXXX. success new Specific to product rollbacks. trading We for growth across franchise evolve XX% up global our additional in efforts volume our sales election by of that help additional options year and increased business acquire were despite continue on from was customers. tracking These measured We every area. daily metrics. campaigns achieved by sales year. strategy the we average non-U.S. had Also, difficult also comparables This the drove XX% to

all-time for the number total During classes. interest, bodes normalizes. several we interest in volatility asset along reached This open market XXXX, highs well of open in as holders large with records

XXXX, growth as product to all sox begin in on we we January our solid execute we post areas As continued saw strategy.

we'd have open also are call and global measurements extremely rise that interest ask I seen are for your us, managing questions. back that, the open begin so With that, analysts that your queue. We risk. into it a we With cover up of open to we'll - And the ask levels as clients questions one the two like as you open questions. know number to will we year. question encouraging have then we'd get actively the These our

Operator

[Operator Instructions].

with Bedell Brian from comes question first Our Bank. Deutsche

Brian Bedell

reform both just on, tax guess, Maybe quickly outlook. expense and the I

dividend to incremental First of up, year, can turns just the that X.X% seeing about would comment, incremental view X%, flow. do margin maybe this if increasing better I we you to And in you how traction the you flexing operating of that expect as X%, reform a earlier scenario if guess, what given sort about benefits I year, all, the would we the out your - tax variable think shareholders, assume the to in volume - be with should increase potentially expenses of we upon margins? most lot up of are your largely the accrue with should expense the guess, your should to guidance cash

Terrence Duffy

Thank you, Brian. Several questions in there.

believe customers, the it's markets. good of tax good for reform. in reform, our the very for we're with So tax and terms intermediaries We pleased the

specifically reform several given this provides earmarking and on the of expense more tax and last we're not versus - with planning And year us we're cash the anything. doing tax is out CapEx which flexibility. In guidance, years. We've over this increasing reform what with our flow, terms additional financial

other And In no pension with by expense of line and been we've terms the which digits. income the guidance, in single - there will offset cost-of-living The of our is is increasing to income driven the majority staffing often section compensation. of in within increases, finally, statement. what in million the that low initiatives. our which our we change expense it's there's communicating, $X top a guidance, in increase expense about by accounting, line growth booked the is impact the usual related It's and

capital tax haven't light return our changed in of policy We reforms.

positive. So the all very customers. for it'll customers. it's And helpful our for - it's that intermediaries we the positive be think and It's think we

Brian Bedell

being XX%? margins still over you're And incremental

Terrence Duffy

Yes. if are to up And sales. XX%. I our be a volumes about - far, have in you really could mean, function you a obviously since going it's so guidance, our first expense quarter our function of it's see

our we of been. expect in margins positive incremental very it's very, would kind stay range So and the to

Operator

Our next question Allen Rosenblatt. Chris from comes with

Christopher Allen

run wanted there. ask about market data, increased I rate's to so

was noted if out we know two, parse and a by You lumpy. the can bit audit it data could slides driven derived you the in be wonder audit. I

forward? trying Just rate a what sense the going get to for run is

Bryan Durkin

in product goes nice that continue expand looks product and It's their to develop a to product. it variety our we Bryan. to interest multi-asset the client the benchmark And respect for With that I of think a base to see to pipeline futures of need our offerings. and demand the class for derived demand data,

that. correct lumpy, out respect appreciate to So that you're that can and you build in continuing pipeline to be way. recognize is point that it nice a to With audits,

our that goal have to into usage we in compliancy correcting reporting that within their protecting the real requirements sure some time is we're IP of that and regard. our hopefully, audit brings However, base And user that make our our accurately data. of noncompliance

our in recording and that you regard. And user improvement rates of some overall quarter, real attrition If time that look seen properly the their we've actually the we've quite base past at data reporting usage. frankly, from some for seen

So this effects. intended all is of feel we having that the

Christopher Allen

we audit be terms just over onetime modeling that So of any up of going in catch of get forward? should were there skis our not like aware on any kind

Bryan Durkin

data me we're the on compliance pipeline comment for their based make number in reporting to that receiving would the conclude. And receive sure ensure the that and the usage. of continuing and that a say to goal should I is there's the audits. hard with just that the It's to that our on consumers our we're complying we requirements with revenues are here

Operator

from UBS. with question Kramm next our take Alex We'll

Alex Kramm

business about business the I real quick. about wanted or talk to energy energy ask real quick the

out things standing year is competitor. that's the In the so far for to been year. so relative this strong very primary of particular, your growth One this

a changes but know performance would the of the anyone hear there's or anything product call would Now that obviously, a there's mean on love if sales you're - seeing you from add I little regulatory mix, to could great. you anything bit but else. be

Derek Sammann

thanks. Alex, Yes, Derek, this is

very are we've with XXXX. in results the up that posted We pleased

I that we've to chock-full in think of you we're the pointed records sent documentation guys. we

multiple out energy records and - of year time a just is as not just started interest heating but of our Going both gasoline posted a we broad-based contracts well. set that lot in have January, from a broad-based 'XX. so we're very WTI, complex. WTI, we're with in year strong record the driving but growth in record really seeing record XXXX, we entire non-U.S. as open talking about you across What's oil spend new What actually far inclusive We record a participation. ADV that also in participation, is month pointed our

commercial markets to a U.S. a You've the year. That outside into of access heard QX us up customers our our sales focus for function is non-U.S. side that markets. our that January which access last technology across flow we've the from efforts be business through liquidity campaign electronifying the our you base, been talk in that, in in last able non-U.S. showing on the provided of we're in investment the front-end base. has the this made provide of on XX/X regional guys, The a significant into and to the of the earlier. and we've energy Terry and people. customer And seeing about But leveraging that's of customer side, focusing documentation X.X we're continuing to XX% business years participation point growth central referred year, to the customers was to sales of some sale

in barrels products. results a released in topping strong exports, story So were the as the see if you U.S. in barrels behind XX U.S. day that production as day production of a Energy with a global couple structural X the continuing and WTI million that the million yesterday, waterborne figures benchmark that Department showing almost we just

Operator

Our comes next with Jefferies. from Fannon Dan question

Daniel Fannon

data. market on question another guess I

for comment the kind to coming increase you the and price a positioned talk earlier about Bryan, a capitalize year, bit of little derived And in opportunity talk of attrition? X. you just data, about then, your how further you're - of resulted versus delay can XXXX there's April start think expecting which what on up better in that Can I on about that on to last that? of follow you're

Bryan Durkin

Sure.

goes we of that First increase, to $XX the beginning have of pricing respect announced into increase, $XXX. to from which April with all, effect

our space we market years. not the several across have offer, in products continue watch terms of And both Yet of to futures options. for data suite. of number believe, The We products in response, the terms closely. increased this we broadest in we'll increase prices and market, I

in of the number and the made we've offered However, the justifies the the investments magnitude the efficacy we increase. that infrastructure, justifies that - and products believe of

impact very say. and result, changes of audits of attrition conjunction terms that that of conducting, also, to has in some seeing the In on hard But it's this We'll pressures. in with a we're as terms that we're reporting attrition, some watch reduced closely.

we'll it So closely. monitor

Operator

comes with question Carrier of from next Our Bank America. Michael

Michael Carrier

shifting more seeing have volatility, in wanted XXXX? your complex product the get given be the kind pick question up just a guys dormant for have different made on you with color sense seeing any higher across up in activity? changes quarter, January, any pricing, terms this just we Or picking are guys the strength And of you're just on of is then been I outlook. So but aware given customers should activity, - typical seen across that just Just users might we've around what to their that that some of of you suites that level a the that. their the that know the are

Terrence Duffy

Mike, Duffy. Terry it's

through. you I on think try us walk to a let to way for of color and Derek give little bit Sean best is to the that

As trading. our in records Derek releases. we've hit we've hit our interest in in records, especially records amount talked you've new complex of interest the open seen, rate Globex as about

what we're will Sean So for month and both we make be quick the think on first let seeing if Sean? I what helpful comments 'XX. Derek some of is

Sean Tully

thanks Thanks the much, Terry, very for and question.

to holders a large we've So in number Last seen great asset each a record open open financial's classes. year, start and every a in of January. interest one and interest of we the the record had year

base much customer we're products. So to particular, in continuing relative base, larger a to larger alternative penetrate much customer

Another penetration example is about continuously last years, market. bond the Treasury few we've of the been over cash our talking

our if are So years Treasury area you XX.X% year That's up cash ago. the from treasury the trading six last XX% from back futures bond XX% of and currently, up about of market. volume go the

rate you markets, weeks spoke a growth Actually, seen, gives as record of in talked number we've day, Eurodollar interest access better much We've of couple interest open there. foreign records a a of complex. much again. participants a large our we a just And the seen options tremendous the new see very Globex. in And seen we we've last our about open about ago. This record weeks, interesting complex. interest our holders to electronification how how had when of and on it nothing in of exchange international - our seen record we've exciting thing, velocity earlier growth. our new year, very markets, couple higher We've is us So in just electronify

from earlier than on XX% date electronic month, that only we did that this did had in Eurodollar fact, a a day did that, again, Eurodollar than on pit. the market. we on volume day, had we the box very more we we So one. record we volume Not had but interestingly, in the - on options, Globex Two, options

global in been getting is electronification of the we've in participants, of that more absolutely terms following So higher working the velocity of strategy and terms more participants growth.

our excited very about we're about approaches, very we're sales excited new So also products.

participants. new of products with On side, of the excitement a lot there the all new

Wednesday launched a XX,XXX options, options. So weekly our They're of We we had new over day. weekly Treasury Options in doing Weekly great year. lot growth a last

our over contracts years, last Weekly options over introduced As the a doing you, and X.X S&P Options in Wednesday Monday we I know, think, day. XX,XXX

we Two Our Ultra ago, doing This basis called that something allowing a a to functionality contract on RPC years trade complex. contracts the years BTIC, just on central we day XX very close ago, couple index in XXX,XXX a of launched trade launched order our a book day. a participants It's XX,XXX contracts trading at a market high That's cash contract. to spread is limit equity the close. January.

the innovation, the I want the don't increasing you So if to are sales Derek, in? jump the campaigns of electronification, all know participants. number

Derek Sammann

our years. stop we've them in on side. contract, having I if strength think globally the singular it customers, - has focal the oil metals, a the on volume and we're - and heating franchise interest record continues. having the options And at before, nat our overall both the in on our Yes, in with some interest the to data's growth January, penetrating total And open tend energy crude true record deck, complex. if won't continues into And early similar energy, to holders, been so And the for you've got you of in this almost portfolio Peschier our gas, at our metal copper. in customers. on of me options hedge underlying data large shows point you to just sending we're but of volumes it's growth, interest gasoline Really, our look WTI, records, all to strengthen success mentioned you the strength end-user focal look the in about as not futures us The I comments accelerate particular and on and growing to Sean RBOB, reference breadth focusing I open and the touch energy our contract, growth, options of the so open some The is, setting many but just talk trends. the in the talked the traders starting our energy oil I Really, in those. I'll XXXX, as so their our product 'XX in commercial not exposures industrial behind and came mentioned order record our side the as heard X.X in about points futures. metals this put book of drivers year thing, that overlay in 'XX, well. off well, all-time for in ADV this, well record January options an a point and in we January total we're as our told

particularly chain. oil of in the Our some perfect unclear to was the out or environment back action option is the for options. when of markets of with constrictions move January. some And supply the commodities U.S. coming it's glut up you interesting, $XX, $XX $XX, XX% is That somehow potentially at to overall about $XX the crude it's with a in with look at up up next that price ADV whether really

our in as futures So equities across energy, to options purpose-built XX%. our is This The both that for accelerant seeing business and but makes our much we're asset value an made January growth, well. of income, market a our it options more in that up actually energy in that. use underlying fixed investment proposition in we've in classes, sticky options is

remit that environments, product customers, volatility And is So to customer and business and around us I continue around experience our volatility environments. seen would profiles, to say, increasing low add despite volatility selectively set. globalize enhance in now sharply here grow the you've flat environments volatility our

Operator

Repetto question with Rich from next We'll O'Neill. Sandler take our

Richard Repetto

January increase I forward. in you margins had question looking XXXX, got you and strong incremental you revenues in, XX% record the is, guess volumes, had got price coming you expenses controlled

So I potentially looking advantages M&A? diluting it. you a for look And I lot at do this, profitable the guess versus et other certainly products, Terry, cetera. of scale additional you is about model, question for There's pure building the how talk of and guess, been

been out for So all the that's there. talk the M&A outlook given

Terrence Duffy

thank change our been There's first, it M&A. Well, Rich, philosophy relates to as no you. to

know, this you opening the things to to the place have we continue about highlighted liquidate in that important keep remarks some outlined you past going over to my that As I decided which year, of model in we've were forward. that

discipline to make So at. we're said we be very I we ourself our very acquire. in to happy complete CME can it last us for just if say a are with and we're where value strong XX this and again, that to something same think any think you becomes At looking have I'll have before they participate, If time, for that the acquire company. order to in not we anything, add place to when the at opportunities, I there. M&A over will look sense put this available months,

We think if shareholders will to of our add which the only do things has our at that the will way philosophy, can shareholders. look will our can one benefit our that benefit that and philosophy And add experience we clients. acquisition an changed. will revenue That's clients, we additional the our value not shareholders so for that

Richard Repetto

targets? margin them of targets, et cetera. out accretion have but your Or there properties there, are margins, there guess, none are I because And

John Pietrowicz

John Rich, this Pietrowicz. is

Terry So indicated, thanks we're for the we question, very - are disciplined.

accretion from perspective, perspective, internal look it NPV at. we at. rates at got we've we do We have we've that targets You've our We business of from hurdle venture. look in lot this an we things at dilution we've look Jones look time the has in the seen joint acquisition acquisitions been over that advances NYMEX, that CBOT, a done made, through Dow an that

in shareholders. customers for value triangulate So that position a sure for to and to on make our M&A create we we are basically our

Operator

with James. Patrick question Raymond comes next from Our O'Shaughnessy

Patrick O'Shaughnessy

cryptocurrencies. early still about regulate starting provide you for for conversation in and guys, oversight the increased about but desire CFTC their you now I hear, we're Obviously, think, to Question days cryptocurrencies. to the from of

about you are So talk expectations potential for curious general? the your in that impact have if that, what regulation can and might that contract

Terrence Duffy

think the it's Terry. is when think the start, product. on And - nine in the introducing some the CFTC product as crypto closely of mitigate goes, all think, And on obviously this I and far We table. the we actually, and it's worked a product. is around as of we contracts the to I the is of jump to such it far product Patrick, listed well helped then interest that getting But similar now, the of around equity and futures Well, volatility itself. regulation I'll in a before new as But Sean a markets place standards ask margins, functionalities, other the appreciation of goes. have I'll with product we The obviously for lot anybody market interest something value been launched else the that's actually we to don't in as in as higher because coming have our as I of we're years what on put velocity stop new percentages. the on brand

decreases. I we have XX that XX - it's volatility increases or as So to percentages a market X, market and think on

and go cash you early product lately think this the both be it's back to there's to business, really, I markets standpoint, the So comfortable every seen then more to people going what in CFTC, understood since regulate been I these are with of physically can 'XXs really they think, was incumbent types least nobody us. We've because from cash different upon about had I've markets some and things of got new how news settlement, our delivered settlement the with methodologies. at been historically, in

growth as with to years nine as ever this regulator And goes, to of effectuate work much use to through and that of example. want of could that marketplace exception, this. is just product margins one last we This The the amount lower as with was earlier, to the could example you go a So wait very of will of said I I we the think those some new far as the is run. not tremendous cryptocurrencies to an This we as it's potentially old. the would continue the a and do see. this, is off trade and walk thing

do the that think the of anything near So we risk we point that in to at the introducing not will could the term increase system. additional trade

many if because don't is different completely topic it. question on is this I there So and know - your broad so that so answers this opinions are

this today. So fine. you that That's say in only side, be, a to which a grower, think, volumes are John small I It's product. it's day. X,XXX trading I obviously slow very is, CME day. Group XX,XXX open the X,XXX some on contracts we're new revenue going to interest, referenced is that can to to That's the has comparison trading XX,XXX not a

do this be know, the We that something you also small attract retail not design to wanted a make part sure product, we as of. we not that's that to participants,

our is So think is contract the And do. street's than that friends I for us thing to much prudent larger contract. the down our

methodical can you that on standpoint, from to we're But be be on. daily if it on this think basis. with something a close going we'll And very a regulators Sean, want. is regulatory So from revenue the you a I working standpoint, comment

Sean Tully

captured firms. Yes, have sell outside only States. X,XXX And we contracts position coming far I about the it's addition the about limits you seeing that We're contracts. buy also so Again, We think X,XXX well. from interest. very you of it open to Terry, United XX% the crop of think, retail I side, volume side, limit interest and - a of mentioned, from in is the

So participants. part our activity. relatively getting we it's are additional a small of But

Operator

Citi. with We'll go to Ben Herbert

Benjamin Herbert

and the around called and very some new strong 'XX And product you else but just I base. Asia, get in the know shift underlying growth mix might launches customer anything grow there. to that out color FX. base the in wanted And Just you how with think

Sean Tully

about question. exchange business. in. Sean We're the is This very foreign excited Sure. you Thank right for the jumping

Options, year, competitors open earlier, two seen terms large January. in about. one outperforming said So as market year. now couple record last of We Wednesday I around driven process Bank had new entire the Putting new weeks products that records, contracts perspective, the X% with days last several And they running Weekly actually in significantly foreign in And this the of XX,XXX the business a of of we several our options of back-to-back of volumes. we're another cash terms holders by around FX number the launched interest recently we're were about very largest ago that in of We and in saw day the of Tuesday week meeting, the brand-new offering of a expiry. expiry. on that Wednesday we've complex just being is already Weekly Wednesday Canada excited exchange

really we're excited about So that.

last monthly on our complex. In futures launched that, addition we year, to FX

as an on for So alternate have exciting. FX offer the XX,XXX day. going to as swaps. participants IMM - contracts FX It's time, to first forwards monthlies the are that's a we Because trading very well the we are the a product about dates

the addition Link. In markets the futures has and to single FX to the been we offering the with that, our already sometime to together. something largest FX CME in do in expect half, Link, FX partner, OTC the markets participants OTC With first CME dealer Citigroup, will which called announced, be bring launch world, we

monthly swaps. contracts. of FX is to to each allow This going basis FX do between going the able FX to our front against you're futures. participants spot be each FX to Spot of futures trade So and our

marketplaces. So excited we're being penetrate very about to those able

you FX FX the think and the market X.X the BIS most If global results, market trillion is about spot recent a about day.

spot have after that futures, FX quarterly Our historically, gone market.

and the those if the up our FX and the of forwards, after look day other the deliverable global a going X.X marketplaces new the market products, make you participants. market. also we're swaps, those about trillion On places those FX at currency swaps hand, With OTC

I'd say there, our same last product the we're followed we've about is, we're that FX, very excited cost following to very most like in total lowest thing we're So possible. offering excited about the the rates. interest participants business playbook In efficient

I'm in new we've interest last much six accomplished been from on since lower product revenue rates launched proposition much playbook. futures, to Associates the that getting very FX, December, than exact the FX total interest Greenwich you as having XX% you CME tell that much representing rate that In far study excited We've a published regards in If a participants. is we're came a product the over our Associates This of cost, market, are look and Greenwich what same products. is cost, interest new published in XX% showing in the the years, in study to actually same the as risk. futures a XXXX. is OTC in focused back following better same rate that value our new lower XXXX, futures XXXX.

a over marketplace the much offering to participants of set penetrate of the So and larger win products we're marketplace. very playbook, OTC percentage a excited about same that about wider using the trying

Operator

from Voigt question Our next comes Kyle KBW. with

Kyle Voigt

how changed think lastly, you an how the on XQ? income the those clarify. then on I income, on could investment rate net just And Your Maybe give your does wanted currently? update one balances, balances hike? after to has the along investment if take the net in just just you passed us wonder sit XX% it of December benefit. cash But

John Pietrowicz

to benefit $X Sure. QX move terms was were of average is down This the about the we small balances. mid-December offset lower QX Fed that over - activity, little The John. saw billion. cash And yes, balances cash billion the by with from $X Thanks, no, in Kyle. in Fed

the start So points small of the offset that we benefit decrease basis until additional earning mid-December. - that didn't until we because got

the at points You balances basis net We're to customers. return are we correct. on keeping four a versus Fed what our

Kyle Voigt

shift, holding was total shift your was customers because just that just keeping? down less just - - that a that Okay. Or mix was cash? was collateral in And a

John Pietrowicz

a question. decrease saw - Yes, and noncash collateral we It's an both and excellent cash that's QX between QX.

Operator

Our next with question JPMorgan. Ken comes Worthington from

Kenneth Worthington

times gas. Maybe in was mentioned times number a during of of a lot quarter, volumes natural record it the for Derek,

evolving, the don't Kind is impact seem gas versus obviously think capabilities or in gas So coming I'm didn't we're this in have seem seeing trading impact recently. reacted how to years past. wondering that the natural more in hurricanes market how of Gulf But seem online. things the same past, round gas more LNG the to and

about gas seen evolving Where how volumes We've in a U.S.? So maybe the ClearPort the the today. surge is differential recently. trading stands market market more in talk

the maybe there's the but to business of I migration So Globex? flowing related. into from all there, six ClearPort is how questions working ClearPort like in I'm think this into migration gas ClearPort - and yes, sorry, gas how sort and is from

Derek Sammann

correlation natural of the from And oil. All natural break growing playing there to change talk down a so global There's multiyear and over try that been frac-ing alive in three form coming the the Gulf by right. we're gas eventually U.S. in a with one associate driven as and priced, gas with generally natural able more We're talk crude to about the heard significant that's horizon. versus liquefaction tight the come will think, Well, in to years. infrastructure we shipments liquid market Hub WTI saw start gas seeing priced gas, that, there's to gas of plant implications revolution it's seeing out see was to of gas two is in the a global itself us gas that out seen becoming form seeing a story fast, you're we've itself the or And global course producer natural very, coast on Historically, our the swing that know up index been Hub and coming gas. exportable basis lower of become Ken, And oil of for you've online. outside has plants you. means, Couple that structural gas, significant Permian that absolutely in in are, next significant range crude has of has online separate liquefaction Henry structural now The point at own Henry you XXXX, a earlier there's LNG What natural the we're producer you of I'll U.S. is the point. there you from down I keep see oil. in Hub that now a think coming basin, made coming Relative Henry reflected - as just in the starting market. of that the the that a Ken, to out out an market. natural breakout. U.S. very perspective, amount market trading a I are the the the Hub seeing actually with Henry as an what the price priced business. we're price more I exportable U.S. gas swing the we much

in In to gas last year XXX,XXX contracts futures our January, natural Nat business a was day. record been has alone X% gas Our business XXXX. up a up is XX%.

market gas a As you trading overall I versus nat electronic options mentioned, We're that's contributed think Globex trading I gas options. about - energy year. structure shift broker of our record piece, ClearPort actually from the this talked seeing natural to And market last trading. to electronic or

So this not business, converted natural electronically. first gas our year, the we of that's quarter in options so four XX%. of of have of I that January natural business, our XXXX, And about grown we've quarters later, traded north think gas XX% options only

that physical seeing we're to shift a business. And reflective the in And that's the we're market gas relative continue So underlying the seeing both brokers of to Globex-based market, also from but in of apace. non-U.S. grow the that typically global the total that electronic. from structure generate revenues we Jan, shift venue of terms reflected is better to growth connectivity

very in for in put growth as story gas our place well. to we WTI following net path what end-user nat similar structural in a participation So participants is global

about excited So we're very that.

We right are also called of season, in natural the gas what's sake to March. from November gas the

boost, at we've core. an see volume January, we its Henry is globalize think typically, growth we to So which given Hub connects made, we in market that as continue that globally outsized can this investments with but participation

Bryan Durkin

I Asia out well of the very what tremendous. gas, as add on would and international Korea, those has just quarters. keep in I EMEA the in because well trajectories would growth seeing growth the it's both as I couple we're perspective, coming mean, out South China played watching of last of been nat out

Operator

with Chris Wells from Harris question Fargo. next Our comes

Christopher Harris

does of Do you guys tax futures growth the think volumes? that reform anything trajectory change to

Terrence Duffy

a base. helpful it creates healthy customer more what's is I think

bit our So customers, creates a our which we markets. about mean, customer it talked healthier, healthier a little I the are before, should improve intermediaries, base, which

In terms of our futures volume directly attributable, probably not a lot.

Operator

Our Goldman with next Blostein Alex question from comes Sachs.

Alexander Blostein

in you we side, last in about of think quick provide, kind the much I be this year, point. mix, things. could for guess, the talked on the increase you pricing pricing end at of side increases, were kind about follow-up, guys of kind trading you the a the to blended but don't number made on I XXXX. talked implications At of and able volume market past data a customer I of Just we for of mix the RPC And think given same

mix And again, lines, Just would can that a is same quick shift about and have but energy implications business, energy? the think a specifically you minutes could along that shift broader of couple when helpful. on mix evolving follow-up strokes, kind the you on the be within any of spend RPC in how the

John Pietrowicz

talk say give done as that This in exact to different plans, revenue not range pricing, review part No numbers of about business, I it Alex. customers. it's previous course of face prior incentive normal the to very we approach we over tiers the going to our not with question. the energy And of targeted Derek guidance impact than does charge to John. forward. turn we've and it's in going We're I'll is same volume impact would rates really And we're we volume. - our years. Thanks, not in how years. terms

Derek Sammann

things there's on shift. probably so Yes, touch to four mix relative I'll

a base of the you've per lot we about higher rates associated talk customers scaling rates. us all, heard and see non-U.S. contract with participation. First our non-U.S. than our of our investments Typically,

that our in for base mix shift. investing a and is customer positive typically we're So acquiring global

our of change a commercial as few higher direct Very on itself, we focused members members, than are for mix they our customers RPC customer actually the base - our Within biggest reasons. commercial various carries customers, that rate. also typically

on finally, to very, gas December, the saw as typically customer participants that's last interest brokers from strong as very well. end-user RPC for drawing to and January us and focus good a positive for they as we but to businesses a RPC. electronic you a the financial base, that in, volumes natural products continue to higher typically a perspective, carry mix well open we also carries good also as as And post And high RPC. venue and participation from trading, shift in both So

So hopefully it's those side. venue we're energy give sense in of whether seeing what four client, the or product mix, you a

Operator

Our next Bedell question Deutsche from with Bank. comes Brian

Brian Bedell

moved due Just was tell RPC. up Trade all RPC equities Close on RPC, average Bitcoin? Basis on contributor. has higher nicely. the just that's the Maybe Index Bitcoin contracts what that that a to you the or far I could if us been a at so Is know

John Pietrowicz

do a strong we Sean, Sure, in which was particularly of terms little you to quarter a the the and impact full had BTIC, about of non-member the equity BTIC? and, mix. XXXX had RPC, better We Russell bit talk want

Sean Tully

Sure.

triple about of in day, double the year. well last RPC was the January, volume contracts a year the then the Again is BTIC, north of $X a volume And about year the On before. XX,XXX last running contract.

very about are excited product. that we So

Russell seeing that a also complex. equity we saw somewhat rest Last mentioned time, our RPC we NASDAQ On higher a RPC. the growth as last XXXX NASDAQ in the than higher we are of we the futures well, has year are across and also

So the side of there. on positive tellings RPC number a

contract. In Terry north we're doing of a said RPC. high the It as Bitcoin, X,XXX a does is earlier, terms about it have day. of $X only per contracts Nonetheless, very

interest. only average In have about we terms volume, daily of open X,XXX contracts

Russell NASDAQ. the the the primary and the drivers were Bitcoin, XXXX So

Brian Bedell

mean The BTIC, this... for you

Sean Tully

and NASDAQ. BTIC, Russell XXXX the The and

Brian Bedell

you squeeze in just potential maybe rate I - could on lot of just more just a the one XXXX in I XXXX. data think But is of increase the question. it's terminals, in a uncertain. parts how moving with market the the much talk could as know about market increases because whether in versus double-digit fees that data, see will if in do XXXX. audit's improve here much And if possible on as there's then Yes, attrition derived And data price could you you

John Pietrowicz

John. is This

In revenue terms be of we're forward. going guidance, guidance going providing not to

build derived a sales. think done seeing results work you the the are team to data I the lot out of is audit that what we've hard of and

ensuring data good Bryan side. in of in we're we're indicated, building opportunities up compliance terminals. our making And of of pipeline As also, a reporting with terms derived the progress terms in

numbers. that help So with should the attrition

ensuring going to that. increase audit an to eye on the You numbers the that to the are in a strong in-sourcing $XX ensuring and helpful have should attrition correct, be we're with combining from so of are do impact April compliance reported we function $XXX, keep accurate. kind that But

Operator

Kramm Alex UBS. from comes question next Our with

Alex Kramm

a Just follow-ups. couple wanted back to come of with

for you but one first from think sorry, cash tax tax dividend cetera, was about how variable about yes, think thinking think - when you like are about is I higher asked run think the the dividend. is general? - this the flow has in quarterly does run mean somebody board The position not the with rate, on the quarterly the I from Terry, et this higher the mean, the but that? bring but capital answered, I here? up variable there up rate, well a as does return, maybe - about been discussions well? how But asked, lower dividend the the bringing actually given maybe to higher there rate as I the around how

Terrence Duffy

then in a when dividend we aggressive perspective, think we Alex, having the you they've I introducing the been became public company quarterly somewhat a as XXXX, since aggressive variable. from and were very that board's know, about

moved soon. the very this we've board a quarterly the And forward conversation a with it throughout up, the board basis. visits I So years. And historically, on having to look

meeting a have We next week.

return capital as we'll relates discussing it to and policies dividend. other the So be quarterlies

Alex Kramm

comment might they that. areas few and year you right. Can the I think that bit little expense you that some an Fair I guide, expenses be bit a come just All you there to low kind enough. laid that the secondly some a going maybe drivers growth for little has in But that's us upgrade like out think by the view given out around the there's higher. over surprise all. expense on a of of underinvested to maybe and last And this like cycle maybe then years

didn't cetera, CapEx coming up. You investments, but talk about is technology et your

technology surprise you up you're over that and a from getting of demands with or think keeping the years? ready there customers be for should do level is So we

John Pietrowicz

fantastic step done a mean, so much linear have of I investment. No, have systems, that in ago. you team functions the It's has job terms more technology think you architecting in I don't the of our to our terms used years

guidance, in on are us our You additional to terms areas. business relative make of the expense, CapEx in those investment on both - and seeing

pleased to we're the very with are record performance We able of these systems, our volumes. handle

records You we're number Brexit handled the setting. a of you as them heard And such when from without that massive of we some look Sean issue. Derek, U.S. the at the and elections, days or take the

are integrity that's the also of doing we're that In that performance continue in - very ensure to and addition an security performance of our that have, invest - our area that to our the ensure cognizant to systems we we markets.

on. continuously in continuously innovating are investing and we that area an is it So

back Just I circle the one mentioned the it's things customer reform, of for kind was, tax base. our of terms good of in

reduction management business rate products onto think accounting In to terms help base, utilize are in of with change risk for of I to customer that the driving see relative with significant hedging Couple tax positive. ability are the a our additional corporations, which terms our in exchange obviously, those could the and hedge our will taxes, you their needs. lower - that accounting, both in

Operator

comes question O'Shaughnessy James. from with Raymond next Patrick Our

Patrick O'Shaughnessy

of kind pick little to a going bit this question. with you I'm on

or futures. now of at there CBOT, about XXXX. use SGX your case that there was the environment a kind start up products, of a in their to of January jumped up on? look lot year-over-year fourth that one XXX bit more What volatility different is impact that? was me volume SGX If in futures S&P was then area in the in quarter read XX% different right going a lot have something options Is do current might we But a and to obviously we versus little about guys both volume into your X%. out S&P else You strength

Sean Tully

few is volumes last jumping our options portion a consistently. years our of have No, over This overall as in the grown marketplace the Sean in.

And I fluctuations there we short-term are been the at that our term, marketplaces. we said participants while do which settle as is earlier, by their be different, certainly our outperforming close. over to the allows BTIC. to market now delta trade our may close, done do futures have BTIC, that options the longer So cash cash the And being other - somewhat the particular, market in believe hedging the

that, to up will that options our In I addition actually year-over-year. are mention equity XX%

very, So we're well. very doing actually

Terrence Duffy

And low when play. I Yes, become times, it. think I I what because attractive these options very that's that's a important. in just think seeing. to Sean on nailed we're a little you're that bit want But jump in volatility

and So that's the our seeing features. why growth our in options we're

you're the actually products. right I So not comparing think

you futures look against growth different. our S&P the at bit when SGX, So the it's our versus on a options just little

options. activity more So Mobile increases in

Operator

from question Jeremy next with Our comes Campbell Barclays.

Jeremy Campbell

keep you still look minimum - wanted says keep here. I to your do cash. mean, $XXX quick of Just slide a to deck still million you follow-up

firmly table avenues up still the is of and some decide kind did powder I could million possibly exiting you on I'm think, capital conversations, of ahead of number? OTC. as that wondering, per or XXXX dry that prior cash calls and for the a year-end deployment? of because remains and $XXX the there's hope other little shutting level discussion dividend that, either down bit that get some reduced still minimum right just European operations Or guys

John Pietrowicz

Jeremy. Thanks,

very cash to We with million which annual out terms dividend, are $X.X about to got $XXX minimum pleased our of have variable almost down in billion the us dividend balance.

of than cash this wind exchange European and cash aggressive we did take the change more from the So consideration the returned it's the did we've time. much level We the down into But was past. of been at clearinghouse. in that not minimum

been about over of last million our variable couple the been it's and over years. consideration $XXX than levels, So lower was annual into the dividend, the taking it's year last significantly cash lower than

$XXX closer to So target. much million we've been the

Operator

final And from comes question with Hedgeye. our Casteleyn Jonathan

Jonathan Casteleyn

on income levels in versus quantitative tightening. First activity thoughts to your fixed

been in largely loss its So this has diagnostics position. trillion $X

So activity the I'm curious the do as think you what on could it's [indiscernible]. exchange? be it Exactly rate unwinds,

Sean Tully

since its the reducing Federal has So been certainly October, the sheet. size balance of Reserve

the of it announced, years. $XX they've as And we As over they've increase month. will around know, next October, been a right, since by that couple reducing billion

need a for. I XXXX, by the they're trillion hedging. the very for positive have should balance reduction gradual that $X.X that looking additional the on in think impact sheet So This

were Federal As purchase price treasury sensitive. and mortgage-backed not when they you know, the securities, Reserve,

securities will the price-sensitive to However, will purchased from that buyers. additional need be be

on increase basis, our help And gradual to so should it therefore, a volumes.

Jonathan Casteleyn

Obviously, makes environment to you on comings Okay, on your the And regulatory I have goings and for quickly, Terry. a in the the seem sense. pulse D.C. in finger have question

the catalyst So getting curious, restrictive, from pipe think less the just regulatory standpoint? environment's some perspective down how you about sort more any restrictive? a And of coming

Terrence Duffy

the of got Is kind the think with have worse, of I based call. most But the that indifferent. I So little telecommunications around regulatory question? question, we it general a environment. problem that Is your better, was question maybe your

Jonathan Casteleyn

exactly. Yes,

that. about Sorry Yes.

Terrence Duffy

most obviously, the Yes. environment part the same. the would is, that I for say regulatory

has think changed. whole just a I you it applies look to at when lot Dodd-Frank, as us, not

rules and on. is that think Congress I the Dodd-Frank don't writing voted that to what need are what As congressional they now are far seeing as on, you're regulators law the goes applied votes

changes fringes, for us. which is at positive they can So the some make

when think landscape and MiFID a X.X some that's of European under different through - competitors Europeans and EMIR our are I II, X.X we of what now under look do regulation. EMIR for the you business the right going under at the some their

close we're something that's So a eye keeping very on.

last you we deemed they're equivalent though side have continue up that in continue to rating, make businesses of to that, sure European will in in that our Union. regulation. that in on There's government United that here have European two within Union status of equivalent just As people been the the branch be with the the that U.S. years. and we We even deemed believe equivalence to new legislative regulatory know, coming lot were the the same aware want in States and our are a

So that's - on it. would positive neutral? an from very keep we the it watch to most ever-changing close call And part, but environment and I a

Operator

session. does And conclude today's management At I any you. like to Thank back this to remarks. or additional the turn closing question-and-answer that would conference time, for

Terrence Duffy

myself thank to today's day. it on interest rest and Thank management of you. call, behalf obviously, team the all want and your the I of for We participating and very Group. in in of a have you, CME much, wonderful appreciate

Operator

thank We for your you conclude does That conference. today's participation.

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