CME (CME) 28 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

John Peschier	IR
Terrence Duffy	Chairman and CEO
Julie Winkler	Chief Commercial Officer
John Pietrowicz	CFO
Sean Tully	SMD, Global Head, Financial and OTC Products
Derek Sammann	SMD, Global Head of Commodities & Options Products
Rich Repetto	Piper Sandler
Dan Fannon	Jefferies
Alex Kramm	UBS
Jeremy Campbell	Barclays
Brian Bedell	Deutsche Bank
Mike Carrier	Bank of America
Chris Allen	Compass Point
Owen Lau	Oppenheimer
Alex Blostein	Goldman Sachs
Ken Worthington	JPMorgan
Simon Clinch	Atlantic Equities
Kyle Voigt	KBW

Call transcript

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

Operator

Good day, and welcome to the CME Group Third Quarter 2020 Earnings Call. At this time, I would like to turn the conference over to John Peschier. Sir, please go ahead.

John Peschier

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

Terrence Duffy

time Thank referenced, as We us the this directly commentary Also me around you, best, said spend look answering can John we challenging you all which our John, provided you and our third your I the have brief many for forward details world. Julie thank so you to we morning this and were My I as all and for John, morning all of executive quarter. addressing during on situation Derek majority today. Winkler the questions. questions. comments extensive John joining this released to and today families your with be wish will Sean,

of levels asset second in quarter. We see historically began in continue to low several our which of volatility classes, the

product in the quarter, second broad We're the day XX.X quarter. XX.X a we contracts million averaged million contracts to During per third portfolio. from per day down fortunate have

average quarter contracts contract and volume day, third QX of we in growth equity per delivered an than in metals volume QX per the During products rate strength XXX,XXX recovered, QX. higher FX our agricultural our business, saw and higher in

quarter with exceptional quarter the the $XXX during business data history. our million, had revenue results in of market Our highest

operational onto our not two new continue the and classes, products. have a permanent largest BrokerTec to for rates for and the lack is launch quarter. reality to innovative is impacting our of energy. the volatility one. later of but achieving Clearly, this We cutover capital committed efficiencies That clients. a And Globex remain prepared We we asset current

efforts is We which side, our we have control. intensified on can expense the something

plan moment, in As our we initial provided John let Realizing guidance management we into to a are are in very about the deliver also by John environment, guidance to over in will million going call $XX With expense results. strong to the little February. XXXX. we from we discuss XXXX a a reducing short turn expense tough talk that the me intro, financial bit

John Pietrowicz

remote environment, Terry. year, third last Thank X.X% $XXX you, the working expense to the the expenses license year-to-date. we down and excluding quarter X% and with finished adjusted million With period discipline operating same of our strong down compared fees

managing costs we to company are possible spending efficiently as that our focused as the operating We as extremely ensure on This environment. reflects effort of Terry entire the level in face expense actively tough mentioned. are a

expenses we $X,XXX is $XX down excluding year, reduced from license at of which down full the million EPS adjusted rest quarter our operating for XX the on for Based XXXX up Our slightly is been billion fees our has the and last $X.XX start outlook the from $X.XXX of year our year. for to through and for guidance three diluted of which is midpoint the last year, quarters initial guidance the our from estimate quarter. billion, is adjusted $X updated

free one to the like of call deferring we the open questions analysts the us, to -- focus are limit We employees that up back cover short With freezing and recently our and we'd the and we expect to to to beginning next now, spending. into discretionary expense that please for for number process are intense jump covering carry then know based wages into we yourself reduce let year, to year. over into opportunities we're going promotions queue. your Finally, Thank our budgeting other feel XXXX you. looking for at summary, on next question,

Operator

Thank you [Operator Instructions] Thank you.

Our first with question will Piper from Rich come Repetto Sandler.

Rich Repetto

John. morning. well. I And Hope hope is Good good safe Yes, and good is -- everybody everybody Terry. morning, morning,

interest about but the -- talked you fourth the cutover this You environment migration the have quarter. rate low environment, in do

platforms recognizing savings besides in BrokerTec So are behavior got Will new -- I a guess, have changes, and what it, it? sort from of And change that the ATS. know whether on the that I I'm from idea regulations Terry think to a the behavior feel you some savings any for and trading trying also, like a the of see better you've cutover? get and them there that as we whether expect on margin out treasury could just from better SEC you impact

Terrence Duffy

am, Yes, the do as I this the thank talked efficiencies about platform. perceive the behavior family you we've deliver about single potential announcement I don't underestimate transaction, on hope everybody think to excited are the going to what organization, as I'm and futures on I a very relates that I BrokerTec platform a we Globex. up. you I'll the cash before changes when I onto like to that, the value to of of Globex you around made can Rich, having platform and John first But it well. few remarks ask as to and come comes your make

we futures, liquid really the we've platform it like because never seen are against before. So

integration of we the And excited continuing the tremendous that. by the place policies a stop the as managing as very go, though are to disappointing marketplace, mean we've onto going are see rates, people we're will going, as their into that that. a the we're BrokerTec even discussed in Fed far amount end issuance rates, doesn't of especially see still it to long So

But manage So having point the behavior, SEC, to comment. a as the others manage I’ll as and questions John contact I to of asked, this that lot I've the participants it heard think single how behaviorally, to around from of positive that risks, things other risk. the excited base to are a that they're looking ask about make you client relates the

Sean Tully

this Can Terry, you in. jumping Sean hear is me?

Terrence Duffy

ahead. go Yes, Yes.

Sean Tully

in. Yes, so right I'll jump in then

technology, very about the Globex. to about I'm customers and terms the significant base. excited Globex the migration the increase our excited offers it very to client In that Globex technology are determinism in of

In It technology. will on launch to trade plan Relative called first I'm securities. to Value launching, This, do RV shortly functionality that the will types. Globex, available spread allow we we're you time, to for migrate available very we the after for to order trading. about different something allow previously, addition excited us will between going to Curve or that, excited, markets the previous BrokerTec Globex very have wasn't that cash I'm on BrokerTec the we In particular, on

simultaneously of By buying five-tens, be such So values there actually, and a the number as securities to tens-bonds. added market selling will that is different that, first. different two-Xs, doing

done to You'll that Treasury probably no leg longer of market We trades. have is XX% XX% curve to the believe those trades. in spread

are Although BrokerTec, as today trades. on individual legged they done

So first, you'll eliminate that legging risk.

type, type have a Secondly, spread in increments at minimum price tighter we're order going to a by much putting order than that spread outright contracts.

to got outright that say fives for Eurodollar versus going twos use futures functionality our two in an when an been a order, successful have then where that extremely year and year in let's notes. has we're Third, you've example, notes, implies on order order outright you spread five, Globex, in implied five

overall cost the of reducing of trade, lowering about trade excited the the very the in we're the risk liquidity enhancing it, and So platform.

are the excited that couple we might So at I very about things a of time. we're mention that. other investing same

to Driven that bilaterally call Now Markets market. X.X art foreign us much something investing is to X.X. in round technology This brand times the allow new technology the we exchange traded will better we another platform or have QDM state are faster the for trip overall, Quote much a side is EBS and technology of

I'll So also futures equally platforms Terry be to about analytics excited mention we to both out sometime cash We that now. we begun clients and that deliver it able that. out Last excited about we're before have We're stopping. the are mentioned new to rolled rolling having fully very next that expect year, earlier. do maybe

of all the the at traded your EBS market using for It Analytics bilaterally chosen also we're allows to to EBS spreads new EBS to So or foreign bid are the order to that look next Analytics liquidity you cost market. you launching on at in look current book. cost depth the that a providers look on allows a other you platform. allows currently offer Quant is book our liquidity trade central you limit a using, the and to transaction Quant the providers, be we're at analysis total exchange week, tool it currently going it not

profile. So In adding particular, process of something tool. to futures that we're in going be to we're market adding the called analytical

the trade and both value So of the anyone this of the And need the you both cash will pool. minimize really cost. futures in pools pool will show it to the advantages transacts who having liquidity great order the globally overall to in and for liquidity liquidity show

So we're provide we're platform. that technology all investments the should that excited about growth making and the of the very

Terrence Duffy

-- behavioral about cutover I Rich, and and Sean. how hopefully some gives the hope migration that Thanks, to feel color we issues. the

you I think your other around touch the question And Sean, on? SEC. was part did of your

Sean Tully

apologize. I Yeah,

new here There the a the ATS of not. In mortgage we that most regulations. had platforms, will on do of of cash are of regulations terms the terms in number FCC, platforms Reg to already

historically, exemptions under advantage SEC Canadian U.S. for So government BrokerTec as Treasury take traded while there NEX since of exemptions. as well for are BrokerTec those mortgages. certain rules not did exemptions platforms, and Treasuries, U.S. bonds

that may generally adherence BrokerTec to there the rules to expect So required. is new required. already be that be some adheres we

Terrence Duffy

Thanks, Sean.

Rich Repetto

much. very you Thank you. Thank

Terrence Duffy

Thanks Rich. Appreciate it.

Operator

you. Thank

comes Dan question next from Jefferies. Fannon Our with

Dan Fannon

the customer morning. the a XQ this you type year kind the subscriber as of kind into Can about next or maybe for business Thanks. and next the think incremental about, talk subscriber highlighted on heading some here good of and you outlook Good year, that of trends. demand and data, is please? My into quarter momentum we the obviously growth of market question

Terrence Duffy

Julie?

Julie Winkler

that the for a in data. majority QX million. that Yes, was time that counts revenue had the by a thanks $XXX to question. driven Sure, was of for real subscriber And great we up higher quarter

more data. trading many as so financial of being demand, it there is that well as though to and home real usage for good automated CME environment, products we're seeing is into data time are other be as additional firms continuing work services. data also inputs, the We're And in a from what to solutions, used access into in our necessitating seeing

it's, be this strong. but to environment So still work-from-home largely I continues by think driven

of we data Smart are Stream. as about forward, out And We talked think from We're build to over quarter NEX putting it the CME there. last capabilities. our well. about on from customers And continuing look about distribution for been customers much to integrating expectations. the into say cloud I it's interest based definitely we scalability cloud, focused data came would we've I our as I pleasantly they're access. for surprised that exceeded that easier the the think being it has

to the that. And market includes activities. those due have pipeline and continue a term enforcement our we're And data also rate so good our that in continuing And on later benchmark ARC SOFR on to the coming clients strengthening month. into that's to business lastly, of pricing, and this and work policies related we also, our participation working RFP

Dan Fannon

you. Thank Okay.

Operator

Thank you.

next comes UBS. Alex Our Kramm question from with

Alex Kramm

hey, good Yeah, morning.

us early, maybe the but one you Obviously think a about then about you about how think next not quick increase seasonality the timing maybe kind this etcetera One, had -- because COVID? side. back the that And that, just as that lower expect -- expense any that year bit from bit or is XQ should the of is year talk savings it of you T&E, more COVID, obviously like can will this how little assumes a XXXX, little uncertain, importantly, updated Just i.e., come of to we savings we a guidance, think saw we year? there. recur but much next remind I on you had just but

John Pietrowicz

year. year which increase in and of this deferred Marketing Alex, anticipated start has spend John, has in is the in. jumping lower been QX, some a spend, annual the level higher significantly but last is historically and we of level picked of Hey at spending. QX, up than thanks from contractual a spend is still the Yes, QX

We our center of efforts the and systems with put also out production anticipate build data data Globex, the associated expenses migration New Jersey the center. York, the being into additional on consolidation New with associated and with

see to the So current line other would based from the biggest the on forecast, cost changes expect I QX. depreciation and as

However, we throughout to will for cost and synergies QX. continue still look additional reductions the

the in same over we're in process. In and now. the our next we year. early year, terms entire tremendous to development a of expect job But next process And organization do has bit the the in costs, a managing years it's budget the done

our expense in I already taken action As in we've our mentioned manage XXXX. prepared growth to remarks,

flexible, to managing is environment be opportunities but our costs, objective diligent should themselves. and Our present to the change be

Terrence Duffy

what Let me said. just add John to

race [ph] is we And we COVID? do I and much will -- how XXXX be that think because of that them. over look sending trade. you not decided, you think one As We through COVID, other just what if world save can't all do still like? to XXXX what for are side or we're people the only receiving country the people do be

meetings U.S. all So in on here it taken depend about to the how jurisdictions will and place. abroad are be

sure doing more our we will make from light anticipating be XXXX. schedule realize savings. to can travel cost those people So encourage I'm in again that Zoom I And to going things am

can't But I in do it need And and think important some front you we, give of don't. realize number an are now. it's others that, I So we to exact people. do to evaluating we we be there's

So we it that those relates as savings sure achieve will to travel. we the make

Alex Kramm

Sounds guys. good, thanks,

Terrence Duffy

Thank you.

Operator

Thank you.

Campbell Jeremy from Barclays. comes with question next Our

Jeremy Campbell

thanks for taking Hey guys, question. the

contract about with wondering new that Just water NASDAQ.

in have live said guys go December. to You

or wondering, users? a from start different this base, from new could this did kind bubble current potential little the of and/or development your just natural kind product product if user be of expansion forward? users base going future other are potential around these Just up user wondering of a renewables resources Or

Terrence Duffy

about NASDAQ of with kind want the futures contract? to little agreement a the water bit you talk Sean,

Sean Tully

with very growth success big in Sure. extend We last a year been year. NASDAQ NASDAQ excited; were license obviously, and the to the have futures very this

a of to Water as we In addition and [ph] it Veles to indices out extended that they have and access contract that part we that Index. to the offer other

the will that well be, customers by these are products. customers, as We products. customer new this that cases Nonetheless, farmers, believe of potential our believe these base. growing users, some will industrial customers are farmers firms for an the have farmers. about industrial excited or We interest large do -- Obviously as new manufacturers so do we for already municipalities, in

our new terms it if at products. it I customers. excited are should Winkler yes, we don't launch an of to in to of comment So, product But about expansion could the know would expansion Julie to and all? innovative lead lead it itself, an like on

Terrence Duffy

Go Julie Yes, ahead, will and I as Julie. well. Sean, will

Julie Winkler

like modify, set which or very certificates, and that goals they to while firms the this I will with help contract, things the continue talked and carbon enhancements suite a longer and that make a are just of the point, that, over wrappers. be on think aggressive, context products innovative, I it's existing is are of there's think, addition, customers, around their in products. our good have meet Sean right to water term, we we're another working they're contracts, this completely their may And broader our that initiatives news new, clients to fits ESG to about philosophy of ESG that within

robust And in from product of broader doing the it so we've that of program investment a got in up flow. Since really we've the development ESG and that's the things, picking scope pretty class virtually only seen around at is funds start investment of was XXXX, place ESG.

increasingly with conversation APAC. a our the major I well Europe, as clients, And would topic of so in driven, say, in it's as but primarily U.S.

cornerstone see So lot existing rollout certainly from why starting funds, around. believe attract CME contract strong showing of which what and those to Group. customers. of the certainly And products, managers, you're that got, is hedge foundation asset is we've this driven build again, help we all The of interest, we banks, everything is to client will be the driven, investment XXX that is do going S&P that new a

Terrence Duffy

add Water risk you really be going referenced water And contract have why a the that, -- of of ESG been don't heard catalyst we've time And things seen just some than, and a and to think could Jeremy. was Futures a before. forward, a manage for long under not to never to nothing that the Water program. I other that until around contract there something the we've about I've Futures I've Julie

When So, about a this contract. launch think like you That we to the NASDAQ the we're are of things with feel it's manage globe seeing good that preeminent most for of by We to with lot on risk this a Julie timing. timing. need do People not environment it. it's to because the bad the We some water, There's today, that we're Earth, undrinkable. going look are great excited especially all of of the to place right today. of equation lot timing things, partnership we that the it's -- XX% at referenced. the is makeup that is of that a the there out and ideas think

excited to and outlined, we're lives. to each with every that critical something to just in So and bring for Julie management that's of order the risk companies work NASDAQ our to one

Jeremy Campbell

Perfect. Thanks, guys.

Operator

you. Thank

Our next question Brian with Bedell Deutsche from Bank comes

Brian Bedell

Good Great, morning, folks. thanks.

Just wanted the Globex to integration do to back platform. go to to the BrokerTec on

launched? on way been you looking from interest on would that us saves potential And of John, what XXXX cost year the to you able XXXX remind this versus the the from say you you basically you revenue in XQ over this get increase capability think we might next if from a at has big kind expect be a Sean, know, synergies. XQ to relative about run talked curve. of Any potential value and size, or XQ volumes value rate having that even the XXXX that rate initiative both revenue integration. can of And the side, then Just

John Pietrowicz

and We're synergy the question. then revenue with to first business it Sean pleased Globex integrating the the the Yes, sure. on very making, part the I'll our Thanks. on progress we're toss take the capture. and with of

targeting anticipate $XXX rate XXXX And we we're achievement $XX over I'm rate a with from of XXXX, with by as anticipated so previously, year $XX migration, million the million rate of and are in achieved the achieved the million mentioned $XX synergies also, last our sorry, energy realized synergies run million we our synergies, run capture track As an to increase $XX expense our with reminder, run end million. track broad million exceeding a targeted on we $XX synergies. we our when we

year at $XX to achieve year end what $XX so million. $XX of $XXX a in So, the last million, going we this we're ended million, $XX the realized increase year at We year terms targeted million, statement. income in million our

pleased it that, it's Sean over real turn with to and that an with Company side.. the talk So I'll entire been revenue about And effort. to

Sean Tully

Thanks very much.

of about markets we with roof. migration both cash the not combining to revenues, the specific advantages in terms the revenues. as different going to available excited But initiatives several the markets one the us I'm of over of and under well In as to Globex I'm any to give very regards having guidance derivatives that have cash

are several making We adjustments to the offering.

attractive. offering benefits products. both creating greater closely of cash portfolio all, which order futures trade enhanced very new more make that analytical greater about. excited spoken launching same of between efficiencies. the At on the of them that tools, road, we going type, the that First we're to be products market new or new technology, existing show to which the All in in some bring I've We're derivatives type margining, increased migrate cash the markets and will we're technology, And Globex. to markets. be already then order trading or down further adjusting new the RV and to will and be the in working the got types the shortly trade to new we to after determinism, margining, DTCC time, trade about cross we're regards also we'll with new available

really and cash that. allow launching futures will are pool market the about well use liquidity execute, did users Quant just EBS to that mention in I We're showing Analytics and that. foreign on excited that execute. need in data synchronized each across about risk for and These need every on the they executing excited whatever XXX analytics guiding to analytical their execute the regards as we analytics or need XXX management. allow value Asia. the best banks background EBS to day. tool participants they are size very products for the sets users have quantitatively first whatever exchange to whatever type-of-book, using time U.S. to Europe but currency are in the earlier, and of of for very next they we has as this to globally, participants regional about them depth-of-book will both to in new quantitative week So to log see particular, in The And

we're very terms excited of in cross about that our sell. So

three notes significant similar going the will platform know, We quarter, tier impact the mention increments had did the that We're both cash well ago. in market. Treasury now we years minimum as on the be the doing. notes as will it launching a that the almost as on futures two on first platform additional two things you when on maybe positive for you be know next analytics year to we be I'll also year price lowering

products, and do This trading U.S. EBS platform, mentioned that technology. offering are well we analytics out new we're initiating in process existing I or QDM or Quote adjusting it platform. for rolling So Driven for, of plan Treasuries. types. again, art and for particular in Markets new We're on direct called X.X next EBS the something trade rolling year out for a X.X earlier, make as the new will we state-of-the that direct. And

across using next months, we're plan, got I'd up a we've the that different the also the next months. but I guess, of XX very initiatives three for So each excited say

Brian Bedell

RV of quarter, timing be the curve to just XQ. precise on and on the The fourth in then And timing integration the timing. the in of more launch cutover the platform

Sean Tully

significant soon platform, as Globex do as it's QX. a available on but be in launch we'll will the probably RV the Yes,

Brian Bedell

November just or cutover, that of is the the December? And timing

Sean Tully

are We November Europe doing in and the in U.S. December.

Brian Bedell

it… Got

Sean Tully

Yes. That's what's planned. currently

Brian Bedell

for Perfect. color. great Thank you all the so much

Terrence Duffy

on And Brian, a give the I -- you part the reference other of mean Julie little Julie? is going to

Julie Winkler

Yeah, completed so another It more XXX update. was where give little than QX just you a bit cross quarter of to in guys an we introductions.

us the mark little but as And is that year. to about But continues of thousand rates realizing center for we've able over been kind introduction I FX also to on opportunities sales cross talk to a into the is so from is introductions convert wanted that. what put now there. interest in a has be end how franchise that wins bit those, opportunities pipeline, many new some second of cross sales those XXX with sales and front

And we new those those services. and proof trade so clients see products that's have have, and started when that our actually to

specific been able So trading desk. to we've bring some as a examples to few repo question your

our futures options So are interest listed And they those beginning are legacy rate trade, BrokerTec clients, and to CME franchise. there onto are direct platform.

clients legacy is across were example introducing them Another the BrokerTec relevant selling cross customers of futures. number and Silver that to

sales be revenue migrations fruitful technology new are exchange. into in with to the these things are believe combined and types so And behind bring organization will a that conjunction we of do continuing as scenes can that the we happening that changes the the and

Brian Bedell

Okay. That’s helpful. you. Thank

Operator

Thank you.

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

Mike Carrier

the taking for Thanks morning. good question. Hi,

based picking you're if then, be given signs of And Given hints see more Thanks. just the on with certain inflation. in for hold industry up? seeing categories curious in COVID starting on some interest past of muted Fed the just to of demand situation, energy early the some and the periods, may what complex the backdrop

Terrence Duffy

John or Derek?

John Pietrowicz

Yes…

Terrence Duffy

on, Hang John.

Derek to to give Let we’ll comment going go then two make or you. and and first, it then a I’m

Derek Sammann

sure. Yes,

for of a catalyst of side equation Just to of in we're demand of markets. these be some the clear, looking Mike kind

Mike Carrier

typically maybe of but hints it's potentially Yes, of inflation them some see with are interest most how just saying pressure kind and on I'm spur because those more you we’ve and energy, on whether the that or just of hold, rates activity, the correlated. seen fed could

Derek Sammann

Yes.

metal up mean mean, growing on I'll market on on think pick what I our there. fastest two the start the probably of probably been I'll year. we've gold I this the So I pieces has one seen -- maybe markets side.

growth store as at of been that a both actually a gold growth it's look function the And certainly in directly from been Fed that up of through times inflation. the metal opened push comments to inflation that that's by seen door well. back we've the value demand We've driven precious product actually and the that a you largely out demand, that story uncertain build going times that's of us. of If i.e., for been Asia we've that's seen and global that's been of the being global, XXXX heard to

the see range records you over of sheet, were the from that forward course the materials summary we on the a hit put If you'll see of quarter.

precious a metals gold set silver. in fact, In in led records by both very quiet QX, and we a series all-time of

precious the prices that on excited commercials, across well. on participation buy we've sell-side seen metals. equation we're gone that demand really -- more and focus been in retail side increase of significant and as strong as What a our have the that's up seen from we've a is resulting customers as So, side, about

and used forward $X make of whereby collateral balance be forward to billion we've XX available or collateral bring less we of about a as gold actually is clearinghouse rolled we gold forward on because and capital loans our can sheets out through debt they use Mike, in why efficiencies for warrants that's to of in seen all collateral forward gold system customers allow to trading ago bring Just brought than by which the months, post important banks assets which the those fit XX clearinghouse. months And to typically put to clearing classes. our asset

doing really our growth mean, the story asset we're client market billion in of parts of our there's one focused -- about of talk monetizable used liquidity we creating as So, across to a $X the be set assets effective uncertain strong of different of customers, franchise. all seeing classes. in which providing there, a for in our we're we're where light another the things of customers for way an in I on benefits

in So to with it to Terry. Sean or that, turn -- over I'll fact

Terrence Duffy

X% comments Yes, during And couple rate of me let but if hold ago, I'm have a Sean. this make think because on last But us. look on just front pandemic. we about you business had change. over they're over in Mike during gone lose the moved that forget, I lot the a few have year at that sight have up, of not eight of to this how on quickly you think because look think a are the dramatically think a markets And The or I a us just things of important. pandemic. people saying yield. seven, so of XX-year the of back can do trading going months catalysts I I they're policies the

knowing One tell that us this projected in but when I'm of elect options predicting I The and like. have willing of could go processes of will X, to we front will our government of of and for be, what that of potentially it’s makeup will a November do I of markets, pay you at look the government November through those we're of options, when not period treasuries. not things the needs President for the not question X, what looking time. see catalysts to The is be still and possibility people come a

trading a of this from the price we some if three people around looking world how I'm The on see process. roughly, XX the could of marketplace. out go election percent uncertainty years, United not the the contested the I'm States, lot price into today. roughly of the yield on of out quarters around the XX just years around equities, you perceive debt reflecting So of coming at kind of

dramatically just down months over XX, it's so ago. And XX

So cautious about. is here swing. people is make rate need that do the the market think I'm something do that factors be change predicting going think story, that to on to But I there there's And not I could in a dramatically.

I'm a looking perspective. are So things at. those we the are And business managing from that

Mike Carrier

lot. a thanks Great,

Sean Tully

me jump Terry, shoots maybe some -- I'll So in, want you Terry, I'm green that just seeing? do to maybe

Terrence Duffy

quick. real ahead go Yes,

Sean Tully

Yes.

needs funding U.S. all-time And in already think I year, approaching Treasury records know, the to increases. X this in by we're debt to time, all the GDP, deficit all massive relative to trillion debt. Treasury records record So, this record we increased deficit, year increase the time so massive issuance

of long see shoots terms further and are the the to curve. its inflation In to intent out increase Reserve, green term starting Federal we

of if question, are average of ultra-bond of at ultra average your in at of XX their its it in you X% the terms bond daily to futures average volume. look actually XX% is growth volume, is terms terms up the The volume. XX% month daily October, and in the up year-over-year specifically, its So up month-to-date. daily is The year

Thanks. starting curve, to down So curve. as the expect the over increases we would environment are we further in see should, time move to up this that activity relative

Mike Carrier

John. Thanks,

Terrence Duffy

that was helpful. Thanks Mike. Hopefully,

Operator

Thank you.

Chris question comes next from Compass Our Allen with Point

Chris Allen

other and fourth is Morning, in bump the XX a it implies specifically you by for your which year, about revisit quarter. marketing expenses, quarter, guidance sorry, guys. million to implies increase not about the full in see I that's for conference, a wanted occurring. the sequential XX below million driven Normally, it I'm fourth

So into to the that's kind going on and What's data of And by and be you for next is much build of year? the increase? over rate time. in the shut some around the time be as how wondering, out center down savings some run trading BrokerTec just of then offset platforms, And EBS any there nature? to what's of granularity that going one

John Pietrowicz

Sure, on in Chris, I'll this is John. that. jump Yes.

first of what and quarter of quarter. the third as into is we've the the and the the of a So quarter half fourth our two into back push from part I previously, mentioned out spend seen quarters, marketing third

that is spend nature. some in And contractual marketing of

normally gets later turned and spend have, half migrate and build into been So on, quarter of to year. correct, we have goes out but of, our that in postpones process, and we center, that it events as got facing in some they're, the fourth work expecting, it have you is in some into that, that we then goes is, the Also, Globex data are contractual on of customer are when depreciation. pushed the and our as that we have we marketing into

of you're equipment. depreciation our to maintenance see in some have expense, to Those and where the on third pay software technology are spend as relative the So, going and in items we to on party increase the in those.

see to going you're the where into that's up So go costs next year.

have XXXX. be Now terms got impacting of the for that year. in we've rate out synergies the next majority what targeted synergies, is And going we synergies the comes of to run

additional cost to expect year would we end XX So synergy, of in XXX run that base end the rate next million $XXX by runway synergies year with million go down million. we so to and with our expect

very, into indicated in Now we our on expenses focus we're would we in where to the year. we realize XXXX. determining synergy the of still through accelerate strong process. going process looking But a we'll budgeting be have very capture, And can XXXX, our very in that next amount

expect, should you Chris? what that's So

Chris Allen

quick comp how terms from do I follow line? much and mean, a promotions of in raises you usually the Just see in up, impact

John Pietrowicz

amount if you terms employees In by notified of year, a to leaving look our that and you of range be, that increased be not expect next million have the been that will at our now, would to they the year. that on that in will a take avoiding are $XX look of we be at of, end the million -- the we if have $XX they take employees of that costs I

Chris Allen

guys. Thanks

Terrence Duffy

Okay.

Operator

Thank you.

Lau next Oppenheimer. Our from Owen question comes with

Owen Lau

you you. Good Thank taking for And my questions. thank morning.

and engagement in Thank around bit Now volume? future? interest higher in derivatives products demand dramatically. VOLQ to could monetize that then you. drive increased of any comment does about sales your please quite the the client futures? quickly clients engagement And you has take force, VOLQ for trading conversation a it with the the on other your Is What

Terrence Duffy

So this Terry. Owen, is

was That quickly comment partnership just me VOLQ contract Let the with futures. just in NASDAQ. real listed on

take And in -- contract excited that think by of to early it's try going how very are We a that is of the But that I contract. potential launch to predict to success business. you big is anything that component be. time how We've seen long a in do certain we've this been nurture. contracts to timing again, of long and around all

for So, of futures. I give interest bit little the it's conclusions want, us there's clients more a around bit Sean any from to but if hard to in buy both efficiencies products some use can of it the sell and offset they how product relates to the side and some a on space. quite can around know equity that really or color you VOLQ draw you other of sides, our as mitigate it

benefits to open have that it's until But starts And part product equity was a to really products get the question our what? one today savings second we the more then, is So on just that the here as conclusion that build. suite of draw your hard interest to with potentially of yet. of

Owen Lau

XXX%. party? interest and has client was trading think It by about open drive that it increased I the over take What engagement to monetize engagement and sales does force, your higher

Terrence Duffy

Yeah, and really. we the answered well -- question we VOLQ VOLQ

just the let’s So about talk force. sales

Julie Winkler

We Yes, as you period about QX, thank you for the a had was Client mentioned. busy up the question, versus same last year. XXX% engagement Owen.

a calls, new been this we're sell meetings, And still being so on and actually cross seeing activity supporting busy environment about previous emails, of other What increased quite quarters these QX is earlier. we've talked what work VOLQ client virtual that, is that introductions I other driven to home in been that and products. number in, we've in the is from by

the auction options SOFR had Basis executed as campaigns, Soybeans, earlier that client the to And high-profile a hundreds E-mini Swap of month. sales well Micro we've Brazilian we calls so, the of this we've for had successful treasuries, number as three-year launch, prepare

So us monetizing to has environment responsiveness clients throughout attentiveness, that and shown the that, just terms point I continue in to the of a this team lot out of these think also just capital are efficiencies. are the other an initiatives not to people there where constrained. to this I ongoing just And point is, new deliver products innovative is environment number but

to futures, in our been last portfolio on billion for billion in XXXX, we've what to-date average at saved look margining terms you swaps and our clients $X.X when clients already up deliver able and that's $X.X of we've so, of from And year.

to we helping uncertainty. as we continue to them their those believe help going helpful quite efficiencies that's so deliver manage risk, And navigate be and us this and in them

Owen Lau

Thank helpful. you much. very That's

Operator

you. Thank

Our next comes Blostein with from Sachs. question Alex Goldman

Alex Blostein

softer of talk and WTI markets how Thanks for everybody. And to related, much U.S. versus recently I what in hoping to, of is maybe bit production Hey, the we're about control, question. of the think lower a morning. the could trends. in trying I sort dynamics was really oil obviously Good get to some is that outside your the of seeing I'm volatility, guess, little we lower which you

would any we of to volumes U.S. related if sweep producers curbs frame So of does any translates way that I but around understand that, framework putting bigger incremental are result and if How helpful? sort production? get kind to kind numbers this Thanks. election, oil volumes directly CME production of on U.S. of oil to a a we and in blue of seeing picture, kind franchise, how that to impact that the difficulties just be help us oil

Derek Sammann

a this in what for short-term last looking OPEC and $XX higher In the market, and stocks a dollar. market a in the weakening prices going in is Derek. effectively we've globally what's the oil you Alex, to $XX, demand. saw question. $XX, you level drift agreed the cuts, kind and we X.X is Hey on finding August, the look oil -- saw months at at Great When equilibrium been between supply Cushing decline actually

we in counteracting look fuel look have is miles I the if the not still XX%. jet the metric destruction that at you fact COVID, of with you demand been mean whether at it's mode out down driven, come still Now demand, that we've of

You're just economic not the return normal activity. seeing to

You globally see no activity. traveling. We're not

lot we're I of firms there. think of representative probably a out

been are by side demand small seeing would So, upwards being offset put you've upticks the that equation. of the pressure the

band, a got trading crude. flat spread forward I'm market that's talking $X it's So, right Brent, strength true you're We and the Middle a got between effectively in stable with $X trading a range. it's now. a This WTI, a talking East. in global true and looking about with roughly $X Brent is and true we about at the with curve We're WTI Murban

is the think phenomenon. is This I your demand equation, oil. not look -- point impacts you impacting are of U.S. of is, the a global these the of So, the it at question impact global equally if side

production. U.S. on down certainly are We

day barrels down XX.X are million, XX from million. we of the peak think about I down million a XX

be around source We between million X in the for WTI trailed the slowed exports. a barrels growth much. across demand we’re barrels and We where has and at demand side, to three, That on a off were production haven't domestic necessarily seen exports a continued that trailing global brands global X.X seeing has day driver board.

So this when that across global see you impact we as all a see markets.

a the perspective, to of XX% interest. That's year-to-date last If the XX% CME, CME, we this you Brent, seeing look of if volumes market volume, and XX%, world half, at open for about at from look quarter. market a plus or continue share you the of We're even to share maintain traded average two years. maintain word of three of that we roughly WTI continue

businesses. So there's of each an impact equal these across

how into the the The sideways. whether is players got it's we've side market, of asset of hedge So reality the seen that trade we Well, out question And is where reflected our return? the retail start slowly buy superior when funds, demand core energy we've clients. volumes? I to managers, is, markets in one go a would see think be specific distribution issues financial the do of the

pullback, little the of a side. bit So we WTI see volume underperformance typically on

situation. that we see temporary as a Now

one So see is result I market natural in we think of we in we see likely demand gas. in issues But will the be that a participant in volumes that as returning, energy the upswing an globally.

the market oil been negative gas the for a portfolio. market, of natural -- where really is While it's that's strength crude our

up up, is of at is on And this volume look Henry RPC is have, RPC our at only If year-to-date business it actually, you $X.XX business look share it's RPC $X.XX this our you options Hub the a Hub in -- Henry market futures, business, it's side. we the XX%. futures not business, high this the that

business course and the our Hub Hub non-U.S. that's as by why the global options a futures is ours important our is this up And market up fact Henry Henry volume is year, the participation up nature And shown Hub global of this benchmark. in Asia it of European highlight in was over Our XX%. to that our business of Henry XX%. growth XXX% continues XX%.

finishing we're -- trading complex So in within and continue. RPC that within So, see crude. there's so, we're high seeing business energy the a energy significant And the as trading to a We're nat-gas -- whole role seeing Terry, turn we're likely alternative, unknown the sideways and in growth to to a sideways relative gas whole, we're continuing an crude, from see a and look some fuels that over to the natural that play I'll side, we grow. while to you then pressure has see it the business, fossil energy at Reg might you complex clean as if

it there, we're fact that in turn given So the position good a market. that over With I'll that, own Terry. think we to we XX% of

Terrence Duffy

a So, let especially me when a of potential things, add to it blue because couple comes sweep, find I interesting. quite this

export just who administration. of of let's It ban supportive Democratic very one-off Barack quick be was That history. the the was a sure that administration making oil is did oil the ago on who a little production President an exporter. Obama's do side, Remember United a you States that, On the know America lifted administration business.

on is Democratic is little bit states. some nominee around the today, as topic. relates this his always having past And you the of a it the a of great fracking So with which around as to politics some versus comments is seaboard of associated can trouble current see, rhetoric his Green, Eastern comments

me surprise doesn't that So, a bit.

low I'm hanging is, taxes see looking fruit. are When that, fruit. you'll low-hanging think what say I I more for

Republican colleagues ban States exporting why sweep both. seems assuming country important who bit about some the to friends that address Trying that in our supported the history to Administration the this a of the address. to to will or will oil will production of a and lift try to or not I'm Obama of it's on of sanctity as prior blue that America. be stretch. and saying just And But going United a to personal administration of a I'm low-hanging energy Now, the be corporate be safety a I -- Democratic did fruit on this time of the remind it's first think

as does. that change Washington always Now, could

believe is major get now. in really right much political rhetoric So, this done. days only these of into either. in put I years pieces XX going a -- too to difficult I are seen wouldn't It's to of stock last But We've that three lot [Phonetic]. the things legislation

Dodd-Frank the had we we Sarbanes-Oxley, -- it. that's resolutions. continuing and Act, else President had ACA So is we Everything had

So, government keep I resolution the was think best. built this oil the at even will the ban done difficult open. continuing lifting -- a be of to through And

want think That the for see things the Democratic and energy to against still States in that So going will some other aren't you to there referenced to arguments who production ammo doesn't be people United support that people and that be plenty mean the to have of of ESGs States their Julie can how of here rest very in destroying are colleagues. we front short center I be things. it'd difficult until going term, oil of United the and be alternative production on But doing in us have a the the use. viable can

can't ability have to have be the automobiles and X% don't of get electric them. of the rest You the us

wouldn't XX So, quite I months. XX for bank the think to politics, with it's I fascinating conversation next the on on but that

Alex Blostein

much. very Thanks Great.

Terrence Duffy

you. Thank

Operator

you. Thank

Worthington Our Ken comes next with JPMorgan. question from

Ken Worthington

according doubled the Reserve, morning. to my wealthy, to code, for the fourth dividend? your the as on good all strategy tax brought much tax sense the around week, the a to the there in the pulling how dividend doubling payment are which shareholders impact changes to then in as the changes quarter fourth stocks be U.S. elections outlook of the consider of and after quarter? code. Federal including annual related, of into And you form the about I If proposed, would make changes does environment? tax much that payment And concerns management your dividend a XXXX you funds in your tax the the were next forward rate to over again excess guess the dividend XX% when that recurring to Thank the proposing tax of tax cash The thinking in mutual payout Hi, nearly would Where dividend questions. Democrats taking for your capital of you higher

Terence Duffy

on Obviously, incentives. high are to the dividend you in nature, knows. office. going stocks these of These five paying in stocks or are ways held So stocks as will tax prior of very six no comments, Terry might the look question of. look into others think I a they one people other companies, Ken, said because base not But who traditionally really get that of are it's trying flying revenue your thinking by massive speculative these is to voted I they that I people banks the potentially off my to people the tax at or Duffy. get potential for When dividends, be they're believe,

of surprising it Again, do would very just a see a don't difficult very to dividend said, take the benefits That capital think be I can shareholders tax in that be doubling bottom our that return to I policy the most going on tax return to so. way line proposal will that. certain -- capital to efficient holders. being will enough we flexible return it forward. make be the

dividends we doesn't mean in we've possibly over because can't. can't not do place. repurchase we're one we capital most about we mean of So on out programs at return returning there. look now But It highest doesn't -- have going we share I'm the path things at not going right lot a how that other It years. talked on don't the will we even dividend tax that capital. suggesting down

just again, affect to dividends. Democrats very I think it of companies see is won't a it the are to but the don't So proposal raise happen kind I those order they trying -- affect. for difficult that in that taxes because on

Ken Worthington

Great. Thank you.

Terence Duffy

you. Thank

Operator

you. Thank

comes Atlantic Clinch question Our Equities. next from Simon with

Simon Clinch

of us that your you client like Could of How terms and could other year? of Hi, that for forwards collateral your I just that question. clients that capital? with that guys, give happened my expect out might your you've going redeploy flush wondering was if X in taking how historically, spreading is areas think the it across, sense business? savings that into how thanks this one you I have you'd saved million, a

Terrence Duffy

that, Okay. also Simon. Thank then for bit. John that? like. Julie Sean, you’d comment And talk little to ask you if like about maybe to and John a I'll you'd

Sean Tully

Sure.

attractive a things that margining much how current platform swaps. I it we new starting this it's portfolio rate, going portfolio our against is the much interest exactly see one we're very redeployed interest to think gets excited is, addition about alternatives. margining in as test we're to into But And to certainly opportunity, we're marketplace. rate actually relative very facility more making week starting to a quantify sorry be new the of between difficult do about, options that us futures rate of portfolio excited that This interest Eurodollar and margining to trade in we're swaps.

And This participants growth growth So is at area as we we the only offer we relative growth, our well increase. to say. where have margining seen to see Enormous we in the as huge that do advantage amount efficiencies. the are both it. other taking opportunities, I'd new number tends portfolio looking saved platforms not when of of

to a run our for for runs, compression equity efficiencies we've also, over year little by we So we of business. example, started year the outstanding, that we've we've over a listed increases million. little XX And ago, ago. contracts since compression customers X.X of options which very We're say a our a reduced excited number introduced it

to the saves the they to customers, when our record loans cost rates Euro when efficiencies creating use futures. they futures. in excited business, We recently, open FX one interest in lowered minimum our increments, done of equity new over saw We're We've looking This in held it's growth excited the say asset terms price to on for is products growth constantly our exchange we're our for the see actually trade the futures. execute of the business, and all-time the the the USD them managers product business, foreign futures. year roles greater we're in futures. in at And exchange record, across low we've the efficiency. an exchange mention massively according reduced of saw and also foreign very all-time So the in these [ph] by whether in participants -- CFTC the last from our the roles we board foreign that maybe the

in? we examples provide to know. want do those of to the when you So jump efficiencies, I revenues. are quantify growth, its don't of where but these do hard where impacts exactly margin on some -- see the Julie, we portfolio and

Terrence Duffy

to for because the bit Julie it's But sure. point, we that $X.X earlier, as part hard multiple there's So, swaps that think is is, do benefits billions quantify, other billion the well. and on I that us have it's seen north referenced a really actually market hard to what little the what in has achieved of for historically

of us classes they're that's But we've deploying lot again, deploy but risk seen day-to-day that them traditionally that of whole have capital to here managing into a at historically that seen. into historical we quantify CME. basis have for asset a capital. that's breadth on We a of And what perspective how a really it's hard

Simon Clinch

here. as I for well. things going of the which contract contracts was where wondering wondering I contracts more got E-mini And much think But toward across skewing -- just per been was about numbers futures -- I rates and sort you've Great, of could longer-term know per in ticked your revenue parts lower And for -- with I one how particularly there question, thanks. a the areas all have could looking terms in those forwards, they think moving think different if a as those are follow-up are of interest Micro to segments, one. if at lots sequential I housekeeping shift just pretty on revenue the basis. you E-mini about like help me

Terrence Duffy

John And Yeah, [Indiscernible]. want -- before to John does you thanks. that,

go Okay, ahead. John,

John Pietrowicz

Simon. Great you, Thank question. Yes.

our what is per go see really contracts generally The So you in mix rate don't face down. issues. a rates

mix So of of a customers, mix products, a of it's venues. really a mix

types products, different customers shift different products. are multiple got enormous is that used utilize and of there and as those is an number customer different different that happen. our mixes we've and great And about many So products markets change, what's business

rate So, our in to see They contract. you that's related. per mix generally what be tend all

end treasuries terms versus lower generally curve So, speaking, Eurodollars short class. average end the of same look in you so of XX% than two of your tend interest the about long the for the average When in the the tend the to to rates be quadrant, curve; questions. -- about of and or specific than be or higher rate curve at the the end the asset interest short

longer the shorter that's RPC mix end, of -- so there, higher end. So that's heavier a so -- the less on on kind the the

our -- class our across primarily asset In metals the the terms have micros across been micros, successful tremendously and class. equity of asset

terms X in the day grew equities, about XX% volume for they and a of micros QX our $X.XXXX increased the for equity $X.XXX XX% In quarter sequentially in represented million almost RPC And QX contracts to in compared also QX. total about to to QX. from the of in

XX% that trading addition in activity the I saw micros, of a a of they lower impacts has member on really has want as Sean we RPC the equities than blended our terms a helped the and activity And was in seeing that's on really about trading. NASDAQ in of performance contract RPC -- do as equities a have higher and also up proportion before touched trading which NASDAQ and the the the as sequentially, on which RPC. NASDAQ particular, that higher in So we're that's hit trading [Indiscernible] to well something proportion to average. higher of

So a to as it couple of equities. on other RPC points relates

to the As to the QX you micros at last the from in in versus that $XX.XX RPC if QX [ph] $X.XXX excluding $XX.XX And a up take I mentioned last quarter year. same increased increased the $XX.XX micros, QX equities look that's from year. and

So both to last the year. micros and compared the mini RPCs increased

taking metals micro Metals something best metals, the was sequentially. XX% story. A XXX,XXX and in been CME was our XXX% RPC, again again, modeling up So RPC. It's In was in it's a sequentially. class for successful analysts, sequentially the mixed and in a the over of you're Group. micros, a also which that factor key when approaching seeing very it's -- it at are you day look the asset for terms made similar The and activity. increase again up contracts difficult performing

micros in the total about $X.XX XX% So quarter that's Micro the for XX% of year. QX accounted RPC from Gold up for QX last is in quarter $X.XX approximately the this versus and and volume

on pleased So again, in mix relative point that's with a we successful. really are to it's big mix But a And been our the shifts impact very story. metals. your to very micros, RPCs,

Simon Clinch

Thanks, John.

John Pietrowicz

Thank you, Simon.

Operator

Thank you.

Voigt question with final from comes KBW. Kyle Our

Kyle Voigt

thanks the for here. at squeezing in end Hey, me

really quick. Just a on pricing question

several adjustments adjustments the a past, you've I business. the over futures You stated typically pricing also years during that think But periods pricing made of come the these volume of growth. in number past in

this thinking volume Just given wondering potential certain the we see just for you more futures increases or about headwinds into pricing next broadly year. the in still you're whether you're products I'm year, for adjustments head facing and as how pricing

Terrence Duffy

try challenging, time growing from John value-added pricing value-added tier we fundamentals here pricing be parts increases. for the always being But up It's prohibit advantage many bring to these we take our I'm the we not we client. any it's factors, we of effect That that think I with you this are to globally, are -- States enhancing all I'II proposal take value. historically but we time, Obviously, our I to and going in proposition. changes EBS what's experience does Terry need but as with pricing integration advantage it's Any in of. my comment said only a how appropriate we in follow, correct of I've we that as to been other relates that say changes, bring changes. us business always things you of pricing of lie to all is mindful up type clients well. not the -- business. going steadfast are our the situation Kyle, to pricing what the to make said, the easy that we it let with That are on and need of will same always when not when you're will take our And to going this these look the and forward. is mind-set have and sure United and whether that to use pricing is. saying BrokerTec at bring I've to will into very price marketplace, be it feel we associated overall at the very

further? cross won't them, the but we want will comment are it. to -- but John, you same time factors into at get bridge we many that that go forgo we to So when And it. there

John Pietrowicz

quick a couple lot put take of I of mean and plans. is right, thought a lot just points. Terry our of we Yeah, a time pricing into

through to valuable we're our time and process really take, budgeting we again, velocity what's hard have platform very across but to absolutely our liquidity going much to for really pricing. is obviously, we that's another earn the hours look us, Terry's that is a XX we money it, also going day. But beneficial First, now liquidity when as want a for the at increased critical That is point. customers, because

spread, attractive. times it more offering that at much that bid So, our makes add

we lever. enhancing careful and really really multiple we our We our impacting robust sure to at eye good a create we the things marketplace pricing on and So liquidity. the and clients when make that for pull not -- we're of take very dimensions look with

Kyle Voigt

very Thank much. you

Terrence Duffy

Kyle, belabor eight add or country, just of months world. our I but of to of the the we're seven it, in history strangest a want time probably on that the and to in don't -- to our

little So times bit difficult. a during up pricing to normal try a is to that put sense strategy makes

on side continuing business this, we change we'll our continue hopefully evolve in get the So as of the goes. a we're our way -- to to back see and

Terrence Duffy

Thanks, Kyle.

Operator

the all time now for remarks. over That's for turn we you. have the today. will back I Thank call closing

Terrence Duffy

stay out talking your we go safe We for all time and Please to questions. thank and healthy, to you much soon. today very it. appreciate you We forward through to look taking

Operator

gentlemen. ladies you teleconference. Thanks and This today’s concludes

You may disconnect. now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.