CME - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the CME Group First Quarter 2018 Earnings Call. At this time, I'd like to turn the conference over to Mr. John Peschier. Please go ahead, sir.

John Peschier

Good morning, and thank you all for joining us today. questions. with over Harbor then Terry it for start I'll and we'll to up it turn for your going the language, Safe then open I'm brief remarks, also Other participate members management of team in Q&A. our the will the Statements website on are statements. that and facts our historical slides made not call on forward-looking this in are statements guarantees future of These performance. are not They involve to difficult predict. risks, uncertainties are and assumptions that results expressed and outcomes may or in actual from is differ Therefore, what statements. implied any materially performance about can with information that factors our are affect our found detailed filings be More the on may in our which SEC, website. of Also, on the earnings will last GAAP measures. page find between a and non-GAAP the reconciliation you release, would Terry. to With the call like that, over to I turn

Terrence A. Duffy

this I and in said, Thanks, as provided morning. earnings you've thank hope we appreciate John morning. you we document your QX a earlier through CME the to this read interest chance joining commentary to Group. John, want We had us all for

broad strength focus turn were led As Group. At the revenue, products NEX we driving clearly to you first efforts additional growth in actually delivering we were risk. those share efficient remaining and trading the to of as on see, and CME's customers the pleased additional over client this the the and transaction display hours Many innovative Those to can combination quarter with quarter. diluted markets of end the about XX the themes net few drive manage of income past day, futures side. per and and meet based significant options of XX% to QX. have that announce quarter, our needs the earnings geographies a expense on The adjusted years their products across a number of include was spoken volume the on to

we XX. are now has call. the for been next May set the diligently on analyst on We shareholder working outlined timeline The vote

approvals, introduction, that regulatory and for the we in and open half With call to of we'll to close like begun second have seeking the now. short transaction expect we'd continue questions, start year. We process the your the to this of

Operator

Thank first Fannon our take Dan we you. question Jefferies. of And will from

Daniel Thomas Fannon

guess the decline, market question's Thanks. and decline on you the the sequential a color outlook first fees. in I We saw on I there. highlighted data. morning. Good little more the guess, audit

we April the any price had progression about early attrition, Maybe of the thinking just that X there's item. XXXX terms for You how signs line if should increase. and kind in be of for

Terrence A. Duffy

John?

John W. Pietrowicz

We you, million came you. in Market Dan. other million revenue. to $XX Good data this Thank $X Thank reclass at market morning. quarter. had from a data

approximately settlements. similar with QX, running there in In to that be those including in-house down at we bringing of three line the of $X realization quarter-to-quarter quarters mentioned the of up we on And settlements. levels fluctuations audit this million depending reclass, So as we function last saw of the first and we're benefits some previously, year. as expect

that We worked, expect to is fluctuations do building we have being those been continue. pipeline so a

market to the is over market price the revenue, subscribers. data as per a in of bit real-time level coming seen big little talk Bryan announcement $XXX majority the it to screen which accounts turn the what to of into market of per the April. price for from and screen seeing is data we've since increases, went effect he's data data change I Before in which Real-time the market a going increase stable indicated, $XX the about you business,

Bryan? So,

Bryan T. Durkin

quite quarter. hopper protracted. that There's hope in resolve forward would resolution next we to are point can out that I that the the now number and respect in with the in settlements to look just to the right audits, a be

that even took settlements You saw more is correction amount behavior. to us imperative what happened place. last the the What's of quarter of with

have in of the is may time $XXX of So be of what April derived of X seeing be negotiate took are the That you those from quite the combination what real-time a decline are in adjustment able in an is screens. in those in of can you reporting respect arrangements need agreements. contractual screen to to past to stabilization of to that $XX seeing in data, which chunky closely. and counts. something to take effect themselves with with terms some is context keep terms seen can Also, improvement we'll $XX that we watching the some be What we mind going

temper I kind areas in and just how quarter-by-quarter of context So the two of hit. bit would that little a those

Daniel Thomas Fannon

Great. Thank you.

Terrence A. Duffy

Dan. Thanks,

Operator

go will Allen And Rosenblatt. Chris to we next with

Chris Allen

guys. Morning,

Terrence A. Duffy

Good morning, Chris.

Chris Allen

in to you wondering for subs, driven in that quarter if S&P can AUM Wondering was what's about the equity give increased some by gains thinking us I if the been rate us run should been be forward? record and assuming saw we color moving us a give think could what's to and on about help by venture. we you related the the driven joint sense it's unconsolidated maybe the how activity

John W. Pietrowicz

Yeah, Dow Sure. Thanks, the pleased of been we've with Chris. S&P Jones joint performance venture. very the

specifically majority is of management, As assets JV derivatives the CBOE. also here you a portion based But significant and know, trading, the on revenue. which the S&P at of under consists revenue is

performance equities our this So seen quarter up XX%. you've in

license DJO So earnings back we from it very get that the good of us them, activity through then also then has JV. well. gets paid the XX% through had and as in (XX:XX:XX) to fee a

our just business a they have, impacting model are that business happy to So positively participate and tremendous been again, we're and it's very one that a positively in. the it's that lot their business, is of impacting dynamics

Chris Allen

AUM ballpark activity? XX/XX about, to that kind about roughly it or... good a Is think of Is to

John W. Pietrowicz

earnings most I the think it's - they're right now, they'll their so reporting recent – have

Chris Allen

it. Got

John W. Pietrowicz

terms of for Nasdaq performed positive both in very you positive recent with the I also, like has said, also regard been S&P, activity, ...the again, equity and it's our well. But really breakdown to there. futures a

Chris Allen

guys. Thanks, Great.

John W. Pietrowicz

Thanks.

Operator

move Rich with now Repetto Sandler O'Neill. will to We

Richard Repetto

morning, Yeah. John. Good Good Terry. morning,

Terrence A. Duffy

Good morning, Rich.

Richard Repetto

guess the or on I Terry, acquisition on the I And views going this; to but I whether but I know the Group timeline, quickly extend you any timeline? down the use out, I'll dividend? updated would how guess, are the said I'll know whether keep NEX get answer, question the don't an the leverage long how – you mix you how debt? you would the pay and

John W. Pietrowicz

that. I'll Rich. take part Yeah, of

do working mentioned, the the through We half process Also, year. shareholder the update of So there's been timeline the second still what mentioned. closing expect to approval on really Terry May on vote now. We XX. no this regulatory scheduled. It's than on other plan we're as Terry new

on update real no So the timeline.

the agreement, of to we shareholders we over you announcement, to to returning announcement. be of terms couple that as more really put approached and or you the approach on the over to down I than and similar leverage the In and paying saw, debt. are down debt, in did to should levels we investing in business, say, the where the nothing today. X.X to what in the is we terms of X.X next couple our we capital what we, to stand paying down years years balanced And And expect our next structure the delever really in update transaction

So objective. that's our

Richard Repetto

Thank you. Okay.

John W. Pietrowicz

Thanks, Rich. All right.

Terrence A. Duffy

Thanks, Rich.

Operator

And Bank. our question from comes Bedell next Brian with Deutsche

Brian Bedell

Hi. Good folks. morning,

Terrence A. Duffy

Brian. morning, Good

Brian Bedell

the Link FX a detail on just is could I how bit if more little ask going. Maybe

I of XX, platform, on upbeat on go pretty rules. detail – volumes also time very guys on how that just I and futures also uncleared But margin with and usage think BTIC that significantly you you March FX you're launched see about a increasing and new into know at products over it, maybe the if the TACO? little could while we're you in you're

Terrence A. Duffy

Sean?

Sean Tully

great you Sure. for This in. is jumping Sean Thank those questions.

as FX Link. folks the launched know, XX, we March on So

very right excited that We I'd clients. of good in contracts hundred are several important about that. very day. got more The we've participation from the a is doing set say there We're thing a

So contracts But and see trading. If do we less exciting weeks a trading. market, are look to firms year, a is futures to OTC several particular of With for out, new a participants at the using think, know where we're This year. expect and purpose. We passing automated XX,XXX point-and-click traders. the this over build couple build day. Last prop additional take I automated firms going for who currently right, primarily, together is time it end-users the say, their a large and are we months innovation, contracts the the that to BTIC, We're very clients building this fully volumes for averaging defined than bringing in year XX,XXX market coming automated a to trading. around, the seeing such is out more product than day. BTIC; greater it the we you're are not but I'd of averaged number building of results that

than $X RPC. more volume the a tripled Great innovation in BTIC. nearly last So It's the got we've year.

peso, SOFR the very, TACO. entire launch renminbi So we coming asking on launching interest new Thanks May over up or the equity for May rate indices. and great Chilean We've then On for number XX, to very the XX, about got And that clearing. going Colombian month. for innovation. coming equity May launch to futures. complex, going a we're launches are TACO the the we're on peso but positive are obviously RPC the of On X, a swap CNY

launches. about So the we're excited product very new

opening we with and set them, the the around Index equivalent at set opening so a market a TACO, bit TACO, smaller, similar as BTIC, market similar are Trade hearing of a of close, expect Basis the It which of so it. is delivered a a do market to it not of Close. Cash efficiencies terms In to is we lot is participants as excitement large Trade Open, but

Brian Bedell

– just go is through Citi. that's do the FX, an good back to you need those I platform? on That's folks think any guess, And platform? with can bank, I or just do that open-architecture Citi color. through that

Sean Tully

who but is the central up Citi prime have different broker, prime brokers several signed are now we available. all So,

end-customer will I'd the build the that a of to automated trading. doing own up But automated systems, again, is participants in set So the yeah, it. their of their Again, an really it most right, But because news advantage a people process point-and-click take trading side the got, in good right who again, be to takes there good of time, long access we said they're we've brokers to who and participants are trading. of number particular, the able news the for up that to ecosystem. is set have, of very solid time on say in it prime building have the now, takes

it's So, good a very start.

Brian Bedell

for Great. color. the Thanks

Operator

And we with to Bolu now Christian move Bernstein. will

Christian Bolu

morning, Good morning, Good Terry. John.

Terrence A. Duffy

morning, Good Christian.

Christian Bolu

guess, the longer significant contract of contracts? it sounds for of contracts guess, on Hey. I view ago. the LIBOR-based you'll curious there's and minute just viability I the that term, you in like be launching a long-term kind appetite SOFR Curious about spoke how May. about your informs customer LIBOR

Sean Tully

is This Sean jumping Sure. in.

We are SOFR excited the about launch.

designing of launch. design with sales met in our the our terms very clients, the about order XXX and contracts, with face-to-face the than more working research In contracts, excited is to team marketplace team we and the

weeks, calls recent XX% SOFR asking regards incoming about are in the it. So of customers from in actually to

So in with Actually, products. it that, closely clients to also is rate Group very engage opportunity on gives a the natural product. CME us terms home big for of the our interest

delivering customers, Fed We SOFR and offering futures futures to futures. Funds efficiencies intercommodity our between Eurodollar are looking new efficiencies we're at our to because marketplace, always and the the spreads our

the single will most execute We future contracts. place be to those efficient

have the huge Eurodollar the and Treasury on futures that, going interest well see as terms efficiencies. benefits side, as clearing to capital greatest in futures, and we Funds futures to because of addition open margin Fed you're In in possible

uncertain. In terms uptake, highly of the think that's I

of of Committee the several on from large a as open worth of of hundreds maturity, Reference think order $X we very Rate LIBOR. Alternative those of terms trillions trillion, dollars' derivatives years. I the securities in the last trillion in of there's, in for I And portion of and securities think many out, know, and in worth interest particular, estimate was go

don't going away I LIBOR time So see any personally soon.

in seeing opportunities extremely for think I basis be new between and we're two. complementary or will trading SOFR remain it I – the create that's marketplace. But the think the the risk healthy, what will

in us So see existing for products. to SOFR really opportunity the I as a new a addition

volumes, mention thing interest, our complex futures record Eurodollar like recently greater record I'd before. in see Eurodollar Another than ever we options to open and our see to excitement continues so is

away see So I don't going LIBOR soon. time any

Christian Bolu

always. as Thank answers, Awesome. Great you.

Terrence A. Duffy

Thanks, Christian.

Operator

We with Patrick will O'Shaughnessy to now go James. Raymond

Patrick J. O'Shaughnessy

morning, Good guys. Hey.

Sean Tully

Patrick. morning, Good

Patrick J. O'Shaughnessy

alternative view to of what that curious to be competitive Shanghai to oil early observations would hear launch on and a WTI? I'm your the the contract, that trading you new extent and crude to

Derek L. Sammann

Hey, more seeing actually Chinese we for encouraged are regional we proving hedged complementary physical which Patrick, broader bulk at or to story domestic some it's either is regional us international the over We benchmark. over years. the WTI, regional four product They is the watching been the pushed of to in participation launch back think WTI of on I into dates of the highly three can as world benchmarks. And a is last a Derek years. trading look that contract, global last over that the benchmark. Dubai outpacing Chinese more the launch, over the Sammann. as it's which of sour of. five very launch performance Brent, are the to owner Mercantile that Yeah, versus the the WTI open we're they and What you WTI is look had Exchange three be couple see gets tell majority terms of development that or DME's is of been rise at participants Brent, and that hearing last the we've or benchmarks at a benchmark like waterborne Oman crude you've of of that demanding the results look by trades case. The last of we levels global the business benchmarks years opportunity out now-surpassed of expecting When set be our versus product whether if WTI a franchise a out years, Chinese Brent you the likely, market

energy far levels. Asian tradeable energy So, between so series to record the the market of the is likely oil the we be provides in against positive business correlation benchmarks in global WTI regional benchmarks a at Results think proving regional our year-to-date benchmark.

complex XX% of pacing so energy growth that's our globally. developments and Our volume really business was in Asian up QX, the energy

and will see to a that market connectedness seen over it between global the contract as We've the we we see DME and evolve So, positive. that WTI, and likely time.

Patrick J. O'Shaughnessy

right. All Thanks.

Operator

over And to any back to remarks. management further like I'd with questions, no call the for or closing turn additional

Terrence A. Duffy

Well, we at joining to to we forward much. quarter. want for much us you morning, next you thank all talking and the look to you this Thank very very

Operator

conclude does today. call Thank for that And participation. for you your our

may disconnect. You now

CME (CME) 26 Apr 182018 Q1 Earnings call transcript