CME - Earnings call transcript Q2 2018

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Operator

Good day, and welcome to the CME Group's Second Quarter 2018 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, and thank you all for joining us today. with over harbor for to followed questions. start will then brief to by it turn Terry going a language, safe I remarks, I'm and John the management also Other team of our participate members in Q&A. will Statements made the our forward-looking that website are and not facts, slides historical on are statement. this on call in are not performance. These of statements future guarantees They involve predict. to uncertainties risks, and difficult assumptions that are expressed may or and actual results differ materially what outcomes in implied is any statements. Therefore, from performance about can with information More factors our are affect our found that filings be detailed the on may in our which SEC, website. of Also, on the earnings will last GAAP measures. page see between a and non-GAAP the reconciliation you release, would Terry. to With the call like that, over to I turn

Terrence A. Duffy

appreciate got And I line, as up We classes was Average the in QX, transaction Thank thank May end the We morning. of quarter, announced day your had record we the chance volumes you a strong product grew first John in quarter you digits. a peak four for our this earlier we more At more quarter. contracts CME a to the document day read We with earnings hope commentary trading thank daily had reached agricultural double contracts following Group. record QX XX volume and XX than in Group. million very QX. asset per in through today. provided XX. than the additional million XX% on of you you. said, interest to We joining volume us second the NEX

on was XX] NEX first shareholder As [May was which business (sic) XX the the you know, (XX:XX). May completed order of approval

NEX. process high-level integration and teams with working have the are We our closely planning begun at

slower period down roughly is to a Total closing the the X%, of the historically during of activity at We month slowed When three has we this our on me. a CME the down areas traditionally of year. date surprise of down lower of have continue a during are while are one ADV product half add down. July. of actually the you and time of month uncertainty Global to month, months is grown year. X% three isn't markets trading July the which top issues this to in second volatility but target in seeing, the other slow geopolitical

this this ago, and As year. is time ebbs XXX It the which we and our know, year worth roughly contracts, versus July. a that always flows built noting of a all of nicely of has are morning there million is point open interest this during is XX% up as month

few strong. we'll data a is In that, I'm highlights addition, make six to over areas a large to going open questions. it get this John interest remains product to better very your into measurement. And, the turn holder With across to and John? me, financial

John W. Pietrowicz

clearing this XX% million joint screen By during fee Terry. pushing our operating by Thanks, venture fee data higher S&P performance income to driven $XX saw year. RPC by second in by the went XX% at we increase, quarter. house. driven Revenue Market mix total a to expense maintaining million year, and during quarter earnings the On the of the non-operating an the $X.XXX delivered product rose transaction We to year primarily this from first last basis, adjusted higher of quarter our was up discipline, was the revenue driven QX total on record similar margins positive cash our in increased held this the adjusted effect XX%. quarter with $XX up primarily XX% April. into which which

holding which lower and quarter. to held participants as adjusted for in to cash. yield revenue rotated by the up XXXX, amount summary, second QX. into strong With The the that a saw treasuries, than net expense your careful we'd cash through compared at customers XX% from XX% managing we'll we cash up management, quarter, was the a now. house With balances sequentially, QX However, average clearing earned during call higher down net open but short both questions the income was start like of growth and grew and over EPS offered

Operator

with of question the first line from Our comes Fannon Dan Jefferies.

Daniel Thomas Fannon

John, Thanks. is Good question data. morning. first I my on market guess,

can the you what You line item that's year? maybe of as to remainder a how think the about for I increase. result about remarks attrition highlighted historically help been about in prepared the in and of price this that us think growth guess,

John W. Pietrowicz

revenue. We of the Dan. break thanks, Yeah, components out data don't our market

compliance can real-time fees a of job the As helped the the those ensure mitigate impact helped to and in from that has increase, XX% any our the team attrition. by to increase the done revenues, comes audit It's with in went continues team our from of and early sequential in revenue effect impacts. agreement has our you assess work increase good soften majority attrition, impacts telegraphing to see the The of impacted in-house to April. has price function bringing to of was the

you over on hearing there from he's However, historically, increases, the price see can Bryan customers. times Turn as that is comment to some done that it rationalization from occurs. what we've to

Bryan T. Durkin

increase, past didn't attrition a period news the in was to to, the which that of for positive shift very us. we John experienced are sizeable introduction what see on fee rates as based alluded stable. Quite frankly, is and key the this We

what's think seeing play what subscribers coming Also, to another we more correcting usage so observation subscriber into which a compliance. which, we're effects increased notable important that increase significant is seeing conducting, We're wrong again, audits in of those is as are because is note audits, very the been region result is I positive. a behavior APAC of the the we a in positive. have is

Daniel Thomas Fannon

you. Thank Great.

Terrence A. Duffy

Thanks, Dan.

John W. Pietrowicz

Dan. Thanks,

Operator

you. Thank

question next Bolu from comes Our Christian Bernstein. with

Christian Bolu

regulatory made pay what could to I'm what you driven? I and of international, has growth? numbers. in very guys. is Europe drive understand those On good specifically get growth changed trying as some you little is morning, are but Asia. the good speak in to a more that segment, Good just you behind of structurally this targeting really, really bit it distribution, new investments just regions meat to of Are you've seen a out customer off

Terrence A. Duffy

a him. touch little the is bit report I'm his, – since a Christian, above. this of it's got on bit of Terry all Bryan – it that under to people to Bryan? the let little going more

Bryan T. Durkin

Really very all, I We've our activity a our contract perspective. from overall has average in close Thank ground first day X.X million seen you. million of increase we've been mean, is coming averaging out represented story on to positive to of XX% on focused it's Asia. We're volume We're year our the now a in as this you XXX,XXX international and as investment people contracts activities Asia. X.X having sales the in the year daily from a up past. EMEA. and of from and XX% note, of average about marketing volume, getting

XX%; year-on-year heard were international the growth, country-specific highlight, up across countries nice planning segment being able target asset to throughout XX%. led me up regions. speak customer our of XX%; managers You've and by within up these retail, to commercials about just each up banks growth And were was XX%; our focus

overall international. Our XX% year up growth on non-member was year in

Terrence A. Duffy

to Bryan just said. add And, Chris, what me let

passed sustainable will being growth. think with You way to and mentioned regulatory the don't Dodd-Frank them or that's the I Act regulatory is they're and But topic a certainty people many it's years you different there understanding brings what there migrate that for this not like regions, a obviously look And not always they regulatory. already (XX:XX). uncertainty, the at does you to the future is States, of at. tell is people ago, yet some In where whether We when when at United point but so been look European which there that for the breed volume rules discussion, less are, uncertainty done. a is, implemented

Bryan T. Durkin

many the hours. story during The the now. we've other focus I is point you our many, for note all This quarters to want growing volume telling on regional been a of that would is

XX% saw European hours, our we XXXX, activity, in QX during XX% increase hours. During a Asian trading trading during

look I occurring have activities that's if these portion domain occurring hours, So it's very substantial a your know growth if of volumes you are overall the during regional look, and their hours, you you story. important the at during appendices, those to

Christian Bolu

having Terry, mentioned have and one things there. that's really It to even tariffs follow-up you volume. July. volumes agree the slowed that color are that impact any is volumes seems question. ag One do seasonal. if like weaker end as Curious on quick somewhat or in expect. just surprising the I slow a are slow, your Great. think why maybe The any you would it's one little than

Terrence A. Duffy

then that I'll Derek small ahead and go complex. going and think bit give I'll to the a it. I has let ahead a Chris, Derek about and ag But afterwards. He about let talk I'm talk and little up go opinion

Derek L. Sammann

of significant concern the our volume Yeah, volume, quarter in total and we record, track, of It's continuing participants. about a June, has we as of we interest actually risk. had the the QX, that record what's by levels interest back of participation those, Trump is the open contracts. large drove non-U.S. holders story is is answered, important, also market. record in push board the that with to tying in announcing monthly seeing holders. the record, on year. most overall lot We hi, into represented we're What on that day non-U.S. back directions. Christian. We're This from large course series a this volume participation open that come question our tariffs And very a just interest complex Derek. importantly over had on seeing saw records volumes saw open growth price we had Bryan have a record open our interest we're record record In a record the in created environment, risk-on much so also and That

not, So as in. board or relative seeing on pile concerns to tariffs we're come regulatory actually people

example, the positive ag volumes seen come had meeting, the announcement We've impact. amount. twice Trump-Juncker in overnight that roughly For with very a our yesterday, at

in this about see contracts also and XXX,XXX X:XX We're a months QX. slowdown record We highs As of and the had of into QX. set contracts. going ag record coming our morning, of QX, typically ag over volumes summer a our course in the we QX from

as we're, levels slowdown, record So now, global Terry of open right mentioned we're but seeing seasonal to from starting participation. before, interest, some and basis

is So see to the have the positive on immediate we arisen we what bring, about questions volumes based our in balance far. we feel impact the going think of so and good year that

Terrence A. Duffy

add... just think I And to

Christian Bolu

Just...

Terrence A. Duffy

the pricing benchmark mechanism add story because the I here what for not think are as Christian, much agriculture on is to world. the that, to the so are, the Just we volumes throughout said, that real Derek

here Derek U.S. partners prices, be regional just referenced it's globally, hence go prices, will the being conversations told, and for we're impact between will in farmers you price, think story I the the the that that's Brazilian that the of overall just when the ironed U.S. difference think do saw most with I it between hopeful where but out; with soybean the U.S. Europe the same soybean versus on is so – hopeful I'm what U.S. that the the Asia. way really

Christian Bolu

all color. Great. the Thanks so much for

Terrence A. Duffy

you. Thank

John Peschier

Christian. Thanks,

Operator

We'll our question Bank. Brian you. Deutsche from Thank take Bedell next with

Brian Bedell

Great. morning, folks. Good Thanks.

Terrence A. Duffy

Good morning, Brian.

Brian Bedell

– just morning. Maybe good

start me John. for of just with clarifications a Let couple

net could earning on If at June so clarification you in talk on far. down clearing rate. you could earned the XQ those a the just the the on earning Maybe if market were you're net that basis then to held They balances the hikes about XQ client data. about after average the cash And an house. rate talk rate

pricing I'm what XX guys extent fees you April if number the impacted on to correct on think And in I XQ? that that. market audit data raised

John W. Pietrowicz

Thank of walk data you then this market Sure. the I'll and accounts you, what hit and Brian. through Fed quarter; occurred the kind I'll question.

In the impact more the down net That on QX. had as amount could commercial than be $XX.X as QX we accounts on treasury for the at held driver versus average, pushed higher issuance holding balances cash. average about the the billion. funds billion went at made well so bills managing of or of lower and Fed includes quarter earn terms first the down, has they in main is $X.X that cash increasing cash, the T in of yields funds about that for Fed. banks to U.S. held we $XX.X which held So that were cash the Treasury bills, returns the been they billion, attractive The balances has

So treasury a for month neighborhood T-bill points. XXX the example, of one yields about basis

$XX our cash million quarter. take balances from reduction in in million reduced has about overall from the $XX So that to managing about the the the quarter average in second first

what should occurred some color you to as there. that give So

In had the in quarter, about minimal. quarter $X the audit the than little second terms market were second audit findings findings less data. in in of audit findings, million We impacting

I there's that compliance that numbers the terms is said gave are the Bryan which is, most important that associated obviously confidence audit to agreements the turn, bill we think function that bringing ensure impacts us what which reported, data. more has allowed of in go-forward in-house is with market being and that with amount in us our

So perspective some pretty positive with from a go-forward audits.

Brian Bedell

the And April date price it I'm started was increase? the Is that on sorry, that that? XX you

John W. Pietrowicz

was it X. think I April

Brian Bedell

Oh, it was April X.

Okay.

on just rate the a I'm cash sorry, So the have third the quarter you Fed? full client quarter. And that then, the is it balances net for at

John W. Pietrowicz

the rates what give our go we F&O, the to retain, our and XXX our – we on customers, of – the options. XX points basically overall and solely basis that's at XXX so Fed, cash put the basis the up at for – that's for points Fed So points, basis we futures

We OTC, basis effective Fed the points what points, rate, put currently basis less have different is which for the about with the our which a going is OTC, up to basically XXX is customers. associated XX rate

Brian Bedell

your changes quarters? just then versus course see of That's months like in over and that's next Maybe developing perfect. see several that you the nicely. Eurodollar the And contract, opinion LIBOR, SOFR sounds given the the developing just your maybe on potential quite of the you how franchise how of development it

Sean Tully

Sean in. Yeah, this jumping is

Eurodollar our see there. performance growth options very this volumes have to We and done very very, continue growth in a in year, well open futures So interest, right? and strong

So we're very excited about that.

we've one for know, In industry terms last leaders, years. few you the now of as been of SOFR, the

very futures has been Committee entire with In and SOFR rate, the XX good. back as terms Alternative We've in you more far had May the the closely new And Reference participants. the of we launched the working uptake know, industry. than and Rate so

We than that's but contracts SOFR have built using about People using day, our seeing open but normal SOFR we've a our X,XXX for terms Fed futures. in in XX,XXX commodity between Funds functionality futures our only of a futures spreads more and and that interest futures contract. our contracts also new Eurodollar are we're and

we So are excited about it.

webinar we one last a well well number to clearing marketing and of actually we SOFR a the a they of week the as more weeks rate Yesterday, on market. XXX than continue terms in had events, very almost attended. participants. SOFR We We've and three swap futures had in are held as interest for

that the In well. we're rate SOFR-based terms of excited clearing swap about we interest plan September interest on and launching do rate as very in swaps,

are we the from The So for to floaters announcement step we look and they is next forward the issuance an see it. industry one soon. that really corporate issuers, SOFR-based agencies of yesterday from begin did issuing going to have to government

develop. to should that marketplace the So help

Brian Bedell

substitution think perspective, that will a futuristic that very guess, in there intermediate event you as a some do or just the you I Eurodollar, of Okay. do from term? And be versus the

Terrence A. Duffy

we lost you see do second. a Sean, – So for we

Sean Tully

I apologize, can repeat? you

Terrence A. Duffy

it say you the from was future... Did

Brian Bedell

just... Yeah,

Terrence A. Duffy

future will past, the a what still asked is I From part eventually LIBOR correct, the migrate? SOFR that Eurodollar Brian? is he complex Is think or of will be

Brian Bedell

Yeah. right. That's Yeah.

Sean Tully

complex right in a time. long Well, to remain we terms Eurodollar of for expect our LIBOR

see the post panel from time has And more to hedge, need we've XXXX, until FCA we an there alternative we need more that right, begins SOFR the know, develop, trade to you So long as to issuance of to and much to But got expect at be transition volume. right? continue banks expect LIBOR. a occur. to will So as to rates gotten end for do to agreements more the to grow

of volumes So very intercommodity in we relative growth we our transacting Eurodollar terms for cost of SOFR again, and good are continue futures our and natural lowest product and the in allow open efficiencies. to being of Eurodollars, with our Funds, that the to in exists complex see home the in optimal in spreads interest, the as terms between the and LIBOR-based which industry the Fed Treasuries, we post as with that marketplace huge margin the trade open the marketplace, have kind across capital Eurodollars interest well complex

So the home. we natural are

about excited different a it. two the coexisting We long see are for We rates time.

Brian Bedell

That's very you. That's helpful. Thank great.

Operator

you. Thank

question from next Kyle comes Our KBW. Voight with

Kyle Voigt

rate June Hi. ask your X the lower Good June on cap hike. a changes, quarter morning. third hikes, an I Is If or incremental in on you I the else could pressure it correct they're I or on expect like one investment I after filings from clarification it then would that calculated mean, income, balances the XX that nothing follow-up blended in guess, if ticking net fee bps regulatory of think we basis? near-term? seems And just something was already. those lower continued bp

John W. Pietrowicz

is This Kyle. John. Hi,

In terms of the increase customers. our rate kept we customers, to zero what we passed and back entire to passed our

in to is the XXX that customers. Fed, increase it our points, XXX first So to at entire basis quarter, points basis from passed went and the this so was

Sunil Cutinho

So the Fed a the in increase change the not IOER same is Fed IOER. rate make Funds target. The did as

increased the basis basis passed the we XX and by XX IOER points customers. through all the Fed only points to So

John W. Pietrowicz

Yes.

terms and last July. through roughly Group at about total So they're terms in with cash $XX of of average current of in $XX Kyle, quarter. in CME first – here line terms billion balances, billion – the It's balances of in on weeks between

house In and many in a are factors alternative investment whether or alternative. an their up customer there cash to vehicles the of and their or not impact these historical the collateral investments including balances as what levels, calls, use customers, are not clearing previously or to exposures terms the in the put decisions, the has, that returned all to really, of factor at for terms we've mentioned customers whether to cash And there customers many it's of the the alternative funds work. risks, yield play the on

Kyle Voigt

clarity. you announced in the Thank just on oil the of Great. oil one Derek competitor contract yours markets. recently a And follow-up a for me. for Maybe Houston. futures deliverable question for A crude

strategy. that to contract? you spread Just for from but Houston-based hearing whether to know thoughts you've want been the Thanks. here demand on contracts today, some customers oil offer love updated thoughts some a dynamics on I your hear and hear there's

Derek L. Sammann

thanks great about Yeah, Kyle. – actually It's a marker. as your excited a We're Houston for question.

a and crude about X XXXX, contract outright Feb I a oil growth to of As an in the actually WTI open XXX interest worth open million seen actually you launched sitting records, a point. of contract, X actually already XXX between the and Houston we to and million right contract now, We're back contract our where with mentioned, contract. the trading very happy that's of day barrels both back we've to set barrels continue interest Houston million at spread

a contract The same that spread adopt, launched what pleased contract the we up, we to WTI. time, and a at actually we it's set the what so actually outright back reason and the is to has an the complement spread the we're performance letting adopted far, Cushing with actually market and So think contract. to high market choose it's wanted the

market provided cash the which and market Houston deep coast. on with exactly the liquidity very delivered of the go-backs, is the So to a cash WTI has back wants equivalent barrel on the contract in contract spread is the what the happy

Houston opportunity. all the then of and markets and worlds the did ability and ago spread it's is actually two WTI best barrels the all the deep about think cash out liquid excited that at water. we're go-backs of which with to got what and the the validation We So market's years to we

Kyle Voigt

you. Thank

Operator

you. Thank

Chris comes question from with next Our Compass Point. Allen

Chris Allen

closing. update to change made wondered wanted Group around if move I guys. forward. maybe on NEX to clearing an and how you are about I structure how at deal the there treasury all some opportunities to to you're market talking the morning, opportunities participants, was comments, no you've and closer of as that centered that's Good market thinking and evolution. I get about just know thinking kind evolved clearly are margin moving you there,

Terrence A. Duffy

relates changing On that it structure, the BrokerTec, Chris, market are as to not one we bit.

market a a forward. won't, very to we So of change, lot that participants we'll thinking the BrokerTec it's and model so move and hasn't related very efficient our those and changed, again, as lucrative it structures model decisions let it's make a won't the

margin, to As other benefits it relates comment. ask the I'll Sean to of Sunil the and

Sunil Cutinho

program with clearing Hi, with that We improve Chris. income currently curve, a actually work we the model. and cross-margining This Sunil. FICC is have fixed to to continue a

lot benefits to So both rate market can cash participants our a we we interest who believe trade products. increase more bring futures and

Sean Tully

is Sean jumping Yeah. in. This

most participants. products excitement In taking over we're as that with as and attractive the on NEX attractive platform risk and the ever, terms it's got possible high way efficient making focused for the most of most possible sure constantly of market we've the

business So allowing we rates about cash X,XXX new global markets to the go thing in new years that efficiencies together expected and and client foreign both futures the that, all rules to the And very so what you do creating efficiencies we markets futures the same uncleared for the (XX:XX) (XX:XX-XX:XX) affecting to seeing, clients. time. more from market looking base efficiently today XX margin and addition a excited world. is, and than markets across about the access is we're for the can And markets as these, there that, the margin to CME few addition cash in as and marketplace. provide combining exchange for total that are years' participants cost to more in know, participants optimization (XX:XX) the capital,

I'd and going well. it bringing excited excited the very very So is together, in firms two about very say integration, overall the

Chris Allen

Thanks, Okay. guys.

Terrence A. Duffy

your answer Chris? that question, Did

Chris Allen

guys. thanks, Yeah,

Operator

Thank you.

comes Rich O'Neill. Repetto question with next Sandler from Our

Richard Henry Repetto

you Yeah, Can guys. hi, hear me?

Terrence A. Duffy

Yeah, Rick.

Richard Henry Repetto

system like Yeah, here. the I

want ask to first about anyway. So volumes. just I

year, were down volumes over volumes overall up X%. XX% option were year Your but

a option cause trying so year-over-year just I'm the So understand basis? drop that to volumes what off changed on to much have would dynamics

Terrence A. Duffy

give two Sean the and kind it sectors that. flavor little of major into and out a you then with So to I'll let's Derek break

start? don't Derek, So you why

Derek L. Sammann

question. appreciate We're Rich, franchise year-to-date Yeah, the bit overall XX%, overall. the volumes is strong growth seeing the what continued XX-ish-percent, so outpacing in were electronification year-to-date up actually efforts. Overall, XX% XX%, little really up

us heard say relative directly on able our the up in to complex year-to-date. talk at more to I'm somebody front we've go-backs, we're on making You've to got that our line? being happy trading electronic about end, capture the investments There's spread percentage XX%

John W. Pietrowicz

Yeah.

I from think getting ahead. other operator. line we're feedback the through the Go

Derek L. Sammann

Okay.

So our traded our energy total so year-to-date XX%, this rates biggest electronic about The going XX% year. that's up year, going from of each options well. gains XX% up with as and from last X% interest XX% are there metals to

on So box investments, to we're easier it to continuing for complex options to customers make spread trade electronically. make the

to across a healthy back other We a now to in that of back six options one the seeing the we're levels asset the in energy classes. in asset five some our and in of options of we're seeing there, nat back up, the been three is of levels seasonal starting growth we're are seeing lower asset energy record strong low volatility where return in It's classes levels. we're full dip gas place a board record downdraft – right so some down see five low QX options are classes seeing volatility volatility at

down bit. a across growth we're good of flattish the outlier, nat that, with gas nat strong are the franchise, seeing one WTI gas is option with So options most

financial hand on I over of on it Sean to the the can side. details So some

Sean Tully

Eurodollar in two the it talk long-dated I'll the options pieces. to the up or on financial side, then Treasury options. about Yes, and break I'll the

difficult. options, to we've year relative are so as growth comps over terms last you know the In seen four enormous of five last Eurodollar years, very the very, the or

complex more than doing If million options day. contracts X.X you look a at our is Eurodollar

massive the as So we up But that as with it's tougher X.X% fast to bit options seen, Eurodollar have we've growth about the little year-over-year. is still, been. a grow

doing On of or much better Treasury complex. the basically in and ahead other our futures year-over-year options much, slightly hand, at XX% up our line

tough side, specifically on a think the options So comp. I Eurodollar

Derek L. Sammann

And seeing Asia I on Europe XX%. most kind U.S. the in put and were up the infrastructure and in is XX%. globalizing That's non-U.S. outpaced net growth volumes, capture to about electronification complex think up excited their clients is of trading allowing ability spreads – growth of XX%, on we're what new the time we're up the business We're year-to-date investment of our is theme our our zones. electronically options boxes, was us reflection to making and the

excited growth about again, the are globalizing theme and, trajectory is business here the from participation we options we're the So U.S. the and outside of increasing the and overall business the

Sean Tully

One earlier, last it to we have mentioned we might innovating, add should I I continue is thing are innovate.

did we So launch Eurodollars quarterly this earlier our year. a fifth Mid-Curve on option

launched you options Mid-Curve Term options, three-month also recently take We whites short-term, new two, very that allows or on one, contracts. our so to front four

So those even though they were recently launched, we've contracts. traded well over XXX,XXX

innovate. So to we continue

growth. see But to comps. continue We tougher

Terrence A. Duffy

think hope you your but flavor. got answers a question, I good I that Rich, So

a bit tougher comps it and the ebbs of relates of little on as just side business. to cyclical little financial a the gas So and side the and bit flows

all, a healthy, all in So healthy complex.

Richard Henry Repetto

a what increase? had why like, another for here I four us now, to potentially feel the guess pick you on increase of will going attrition months after price do the attrition tell now, the we've months Got it. this I question And – is and what guess it forward, could market four and of data so up you it question get feel is, price

Terrence A. Duffy

Go ahead, Bryan.

Bryan T. Durkin

months the this price level increase do subscriber counts several just very last stable have our took since track a and closely these that Rich, I maintained over What say we is years. think an where effect. can was banking lot more past sector interesting we've is the area we attrition of indicative in which more were I actually and seeing seen a deceleration in very a

a been to function, audit the performing. that think tied lot is I of again, that we've

we're reporting As up the relationships, the building we're counts. a field of in we're in correction the in those behavior and screen seeing

these at audits behavior. interested that's have to numbers. making that's very we're mentioned. that this in obviously in terms I as reflecting is a most of look sure So as closely. And What we're area, itself And in we going correct well, lumpy

Richard Henry Repetto

publicly report alternatives it legally exploring to you I got of I they basically interested last is is, just then service, service. has for then company wrap Terry, out aware are how this these question trades it. wraps prominent trade the exchanges, thing they talked Got type This I in about there trades the it. its I'm sure post strategic a guess guess and and clearing post trade traded you're services? business. houses; well services

Terrence A. Duffy

way, approve on authorities the the Rich, for the and being and standpoint shareholder that now, the I our U.S. our NEX to the nothing strategy Until as NEX both from right completed, else go in now, we NEX, ahead get way our of said Europe, of earlier, the in vote waiting and and on in the is process focus that's the right is. announcement done, UK. integration

So we have on don't trade answer we because give services possibly really we to start do further, to look I want on only so could for anything can't integrate that. to comment the at but as post NEX until the that's we I that business, the close, that

Richard Henry Repetto

you. Thank it. Got

Terrence A. Duffy

you. Thank

Operator

you. Thank

Harris Our next Fargo. Chris Wells comes question with from

Christopher Harris

Thanks. Hey, guys.

slowing that you I from sticky? there pretty part feel think, like stock there has risk still going obviously been gets do market quite in good. volumes volumes, you good, are question So guess, worse a correct. in but the to we've economic China seems situation China over those the do to of getting is growth the yet you're be very or in the My if world in to Economic be Asia growth is seen obviously the

Bryan T. Durkin

and does targeted they've been important as of start. Asia-Pacific few that to feel but revenue, planning I Bryan. the these to the a to multitude example, to look really that last our it's quarters, We is in we countries. of perform it's been that we've of represent really within significant to at, mind think outreach generate our China attributable portion I'll the to do are for well able going across top able target as the each well as Asia-Pacific. across We're and countries XX This continue keep efforts countries. these volumes a

numbers outreach are the product bear and to we sectors have plans the which do and in We continuing across fruit. sectors client those

Derek L. Sammann

on unique market, seeing service product-specific benchmark. to structural where changes now client that structural to energy jumping global for opportunities a that us we're base side, like the with you're waterborne if I now open is what we think is WTI have is us provide the changes a actually

the our volumes look is terms in our of business up the and piece WTI out a XX%, energy you So just at of business in large we're when pushing that in is Asian utilization. business growth alone, that

the shape opportunity curve of we make the cycles, sure relevant in is are to part economic we're build paid What yield that volatility to addressing thrive, seeing more industrial franchises that make to that tied products curve, best regardless that cycles. are when growth. is global but portfolios to we of So and that to going yes, of and sure or become can position we're the participants we're this

of some revenue And showing through training, so franchise we're our growth energy's ability happy intermediaries, we've about effort XX% markets for China, in access into and point, and the product to of the and selection strong Bryan's that's education, in a example. put the lot through to in growth, our

together we product us mix long-term. So we and positive – a coming that that's think are a structural think is and for the set the shift in client

Terrence A. Duffy

a And particular it's enough is putting about any they CME economic Derek extent, any sales world, to to I say, outlined tell sales as you place on globally. the but of difficult this, growth but one's never part that the just Historically, into has been don't think I around effort will organization. really we're and of much touched

to organization. the never we new completely that have to have used are different as able get by in our the The on globally believe understand are markets, got regulation, so of Asia clients initiatives that market will be sure We sales that markets. infrastructure We've that. our that untapped really excited bolstered parts putting such to markets new things we're we're make our use people

do educate people marketplace believe quite we're all is and what untapped I client the sending there. finding make people sure and and to we're base an over there really understand that So over the is excitement, U.S. again about

have So community. clients an downturns, throughout go subset think even additional I be though could opportunity there after to the we economic of Asia

Operator

Thank you.

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

Sameer Murukutla

guys. Murukutla morning, on This is Good for Hey. Michael. Sameer actually

of second you like expenses. kind half expect the on guidance quick year would but the to second expense grow seems half back given the grow the a X% faster and year. in to half the question expenses would guidance, around Just of unchanged it Usually only over year, X% the

details what to wanted maybe forward into just the have I on get So put expenses you might half. first

I you maybe And might hold think there. other you segments guys and called bonuses. expenses out compensation Thanks. what back

John W. Pietrowicz

here the of first for year. for let's Yeah, into the a perspective Thanks Sameer. put question. half the morning, this Good Hi.

the It's you growth year half in XX% last of versus stock-based largest this is – compensation. by in living is is comp, compensation driven $XX of So terms some have compensation half in bonus primarily compensation, of million of as increase indicated, line head first expenses. of about and increases The count. cost did year. that is up the first we our in incentive and balance base so is increase

you and last for adjusted flat exclude you total adjusted if the year expenses incentive-based a if compensation, our on expenses grew basis So incentive-based quarter with were exclude X.X% only compensation. year-to-date

looking So rolling quarter the of but heavier would to of I compared second expect the spend year. quarter similar expect growth, fourth forward, would last it X% the pattern less than to the year, the with than into fourth quarter, first half I to the so be X%, our remain

targeted to and of expense other services half management great of what through you're expense the to is incentive growth would And allow into X%. think, which rolling and still second the so organization. I achieve expenses entire And we've our first marketing year, to for been the of up guidance the be our professional us I really, seeing able half expect will the offset year compensation lower across

Terrence A. Duffy

Is other there questions? any

Operator

in the have to I like At management this remarks. time, turn further company we the conference to over no queue. would questions for closing

Terrence A. Duffy

Well, you next you questions you. in quarter. your talking for We to we the today in address CME your forward want all to and opportunity Group. out thank Thank to to look interest of the

Operator

concludes teleconference. gentlemen. today's ladies and you, This Thank

now may disconnect. You

CME (CME) 26 Jul 182018 Q2 Earnings call transcript