CME (CME) 27 Oct 212021 Q3 Earnings call transcript

Company Profile

Participants

John Peschier	Investor Relations
Terry Duffy	Chairman and Chief Executive Officer
John Pietrowicz	Chief Financial Officer
Derek Sammann	Senior Managing Director, Commodity and Options Products
Sean Tully	Senior Managing Director, Financial and OTC Products
Julie Winkler	Chief Commercial Officer
Sunil Cutinho	President, CME Clearing
Rich Repetto	Piper Sandler
Dan Fannon	Jefferies
Alex Blostein	Goldman Sachs
Ken Worthington	JPMorgan
Chris Allen	Compass Point
Owen Lau	Oppenheimer
Kyle Voigt	KBW
Brian Bedell	Deutsche Bank
Michael Cyprys	Morgan Stanley

Call transcript

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Operator

Good day and welcome to the CME Group Third Quarter 2021 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to John Peschier. Please go ahead, sir.

John Peschier

Thank you and good morning, everyone. all are you hope doing well. I questions. going then I am our for by to to start language, Harbor team your followed remarks Safe the brief will and with Terry I turn over it documents Statements made on are website call and facts are historical statements. on other not in that forward-looking our the this reference These statements future of are performance. not guarantees difficult involve uncertainties They predict. risks, and to assumptions that are results expressed and outcomes may or in actual from is differ Therefore, what statement. implied any materially can factors be the about may that filings on our performance in information with found Detailed SEC, our affect the website. are which

Lastly, you over would call on and like reconciliation the non-GAAP final see GAAP the turn to page of Terry. the earnings between I to will release, measures. that, With a

Terry Duffy

morning. provided our said, I morning, Thank Julie as all on John details We extensive have summary, have. Sunil, Winkler you, quarter call questions any and us the released John, you John executive of which thank you the all on look addressing this third for Derek, forward XXXX. to we Sean, this and joining

Rates future third XX% rose treasuries, up growth growth in versus with has I in going options important morning. addition businesses and the was growth averaged am during of discuss saw rates our energy hikes they which financial the will third the volume and year to With to that, XX%, news increased. in who With energy, quarter expectations year. was delivered as present XX% some XX.X rates quarter John, and We this I of all daily XX% recent million associated per begin, during contracts of we we and in and the year-over-year Eurodollars comments. have results, make thought Sean to QX. volume it interest I rate Derek XX% this last including interest that saw strength Before day, solid average as significant

additions including customer hedging well help of contracts and as products, to to that services as micro-sized to users contracts We allow and needs, launch tools futures new innovative trading to market that our risk. ESG-focused continue support suite their climate-related manage customize

to services, the In consecutive to QX as track are quarter derivatives continues key launched this year. records off quarter we hedging we to since interest and manage good had terms of with launch in and products futures, September, ever year. Ether advancing risk also a compared industry’s and on start their the specific their third for deadlines. in how are so report participants, the help ADV market In the QX futures market sustainable transition increased ADV ahead clearing service of their first quarterly and futures sustainable last goals. Bitcoin first XXX% two their rate activities

evidenced August contract contract July innovative oil contracts with X and XX by not Finally, attracting and Micro participants energy yield in WTI in market represents trading launch a customers other the new traded our since Micro million WTI successful The within most began traded Micro WTI of X.X and first our total XX commodity history, over the days contracts product the Treasury launch. respectively. product as Most XXXX. contracts that crude July Group Micro to new market any this million XX,XXX CME fact almost importantly, traded is have in

X the progressive a and equities, market solutions classes. asset FX, leading in provider We Latin post-trade the day. during XX% rates, XX% the non-U.S. launched, and for XX% in respectively. and to global joint our completed Sean million You Derek per contracts saw ADV will XX% in growth in X% growth moment both up quarter, this growth Markit the growth hear U.S. and together, Also more we venture across IHS credit of OTC America, was about from in quarter, In Europe, a Asia, with third interest OSTTRA,

last Turning increase more an compared averaging which XX% than to had million to up With is to month-to-date turn XX relates to QX, as me give start let in have contracts, rates double-digits, more it you October, in strong of XX%. Interest are interest over October it with in a up far that, the rates so we year. flavor Sean same energy rates. point to

Sean Tully

Thank you very much, Terry.

third the regarding particularly market crypto number and developments saw our rates As a said, significant Terry unit the quarter, overall financials of SOFR, in business. the

the up XXX,XXX contracts interest futures XXX% open silver quarter, and volume daily X XXX% million average to Our in contracts, year-over-year. third over up per saw to our grew grow day year-over-year over

volume October, we month the interest open contracts. daily million X.X SOFR Additionally, futures are average XXX,XXX seeing of of in of contracts and

on well. of Over SOFR currently Federal Reserve XX-month endorsed our September as for XX CME’s XX% term market the last over of XX%. firms XXX who additional participants CME we and interest futures SOFR interested an rate working high, Further, to futures July Alternative SOFR Committee is more XX, executed with licenses we the Demand up ADV volumes licensing. our XXX a SOFR publishing than to and SOFR rates. Reference term began X-month already the rate the SOFR And term made open are as very also in access on have X-month are represents XX, global Rate term days, and approximately our X-month,

XX.X well our options a XX%. have million LIBOR fallbacks set as representing XX% our SOFR-linked for the as volume March daily will since of rate, and Those Our XXXX. that X.X been be was contracts contracts, interest futures a XX, interest million total March which average futures ADV. open CME’s and interest Further, XX, also SOFR we finalized futures very futures in have QX short-term back on grown and success options open June as on SOFR-linked rulebook up Eurodollar after strong reference includes from XX.X options open Eurodollar October XX. of rate of to million interest XX

CME’s veracity. long-held XX% FedWatch our tool, up in from of gain we month XXXX, rates addition, just XX% chance June ago. the is tightening market by a market Using the to In can just X environment view see now pricing regarding continues

in Fed FedWatch FOMC Terry XX% indicates improving a led by Our least of December now meeting. rates third said, interest to our higher as at in than tightenings ADV the it was the quite of XXXX quarter while the two In of Nonetheless, environment, third rates recent versus QX, remained volatility, XXXX. also XXXX quarter low. growth rate XX% historically tool in an chance quarters,

in of eighth futures, volatility For the note XXXX. achieved And was very low. volatility rank quarterly example, Eurodollar in only percentile a even achieved XXth going XX-year just versus back showing XXth a history current the the percentile our to it futures QX volatility

on offering, price is Bitcoin ETFs development also Group’s is – This what a have launch Two Bitcoin via me this are CME from liquid our that the let morning, of futures of CME’s not known futures leading positive reflection or futures of say, launched new transparent, in approval recent important industry CME’s for another based CME’s ETFs contracts, just of but based based CME week on futures. which first, an cryptocurrency for and we the crypto contracts. on futures a are validation for regulated Regarding Bitcoin is the the are deeply strong only both source ecosystem. all which were Bitcoin based Bitcoin milestone time, of the Bitcoin discovery the and growth direct to exposure of Bitcoin three and CME clients The of for broader futures demand some last Bitcoin ETFs industry.

equivalent with On XX,XXX September. to up risen the Bitcoin contracts or over launches, our over a October Bitcoin XX,XXX of billion $X.X day, over futures, back those per ADV has record XX%

in interest a September. futures our open Bitcoin contracts, up grown to XX% record XX,XXX average Additionally, has versus

Our interest will up Derek. month-over-month. turn up month-over-month it over that, I XX% With Micro our Bitcoin also average is futures open XX% volume is and to

Derek Sammann

Sean. Thanks,

to business As the top reached this quarter led global the in mentioned XXXX, innovative in contracts contracts were XX traded trading July, have we million volume with the X.X strong U.S., days a traded we in up contract. importantly, helped In year Terry the third and brand Most on half refined our as barrels new for day products million Terry deliver marking energy the the XXX,XXX crude new Activity of already call, XX% well evidenced XXX,XXX the customers earlier XX% of gas as on Micro recovers to Overall, contracts; our and as volume CME us reached helped increases strong any time this from portfolio hitting decline. is up heating average represent WTI significant market volume volume of helped from our the in daily by month mark million production U.S. WTI seen this of steadily global crude XX growth fact to economies XXX,XXX contracts. and has the a WTI Group consumption in oil volume, further as stage attracting Launched first customer the caution to customers $XX options, contract surpassed set in success of contracts. boosted Prices the in XX% our our than with in the from natural have oil more that in this product the gasoline both X Micro since energy as a contracts countries customers an we our WTI jumping products year-on-year. oil saw barrel reopen. launch. OPEC as second XX% we with since monthly XXX energy maintained return oil of XX% have These product third volume average activity average base. to other come daily year, our high. XXX,XXX in for different XX%, almost This all-time highs. XX% daily business multiyear not and deliver of options trading This gasoline futures July jump returning daily and that XX,XXX futures a Micro XXXX shale traded over first WTI new demand to at crude the mentioned, delivered have has prices quarter, futures by this WTI growth a XX energy XXXX. global global daily

XXX,XXX tripling been also market of So, U.S. time, highest Henry experience boosted years, source new gas we price March with seen earlier volume months natural this business, best of our up futures of At options for high were gas the which natural strong futures more a average our third jump volume our XX% the resulting the up $X.XX the increase COVID-driven ever. level significant price highest from in average options hitting in from contracts volatility and Hub and Henry of XXXX have XX acquisition with we XXXX. and lows. contracts, been over has than have this XX% our August client contracts, level quarter, same in Henry Participation has price achieving The a in strong with us. XXX,XXX since customers month, January is September million particularly in futures daily Hub seen have year-on-year. September, the daily has Hub to X.X open commercial the interest seen to we September

overall, will dividends as as market are developments turn our making we With Group’s investments manages to products. client and risk that product technology base benchmark to the So John that, and volatility are the global results. our I returns, customer portfolio, strong global seeing our our financial their we over energy CME in discuss pay

John Pietrowicz

Derek. Thanks,

compared XX% during of last the an dividends generated OSTTRA, basis, excluding fees. resulted of revenue, million cash launched EPS venture. post-trade CME paid billion. quarter period Markit the million quarter the end and $XXX quarter, billion XX.X%, up out expenditures approximately IHS carefully At $X.XX, XX% were Capital quarter Expenses to up from joint in on $X.X more quarter $XXX During CME approximately than last with $XX and third year. more and had was of quarter an were September, at and third the than license diluted CME third the start services same the million. the effective for $X.X adjusted in our adjusted daily which for rate year. average adjusted were the of of million, the CME an very tax managed $XXX volume

net post-trade CME of of of businesses, a our no our the equity be with and longer will be income subsidiaries share As result, recording statement. earnings out recording our in and line will revenue joint but venture the earnings unconsolidated expenses associated

for $XX implications earnings. the and take impact our of but For joint tax recorded the earnings services CME When support the month million revenue in essentially $XX $X have you approximately would consideration our of was and providing approximately overall September, share million in the instead no expenses, in adjusted venture, into joint million recorded to venture. of there

down of expenses we other reflecting adjusted venture now the year. the total and in of start expect $XX guidance to billion, remains license excluding at million joint fees operating guidance, come impact at to guidance our the approximately about for XXXX, Turning our $X.X from All unchanged.

we like we pleased Please page details. our please now queue. Thank run-rate cumulative feel call expense limit and We to the acquisition you. say question questions. additional then of to this for analysts achieved covering our very the to Finally, into financial the commentary executive planned last are one free up million to would back refer jump Based synergies for to open the the $XXX quarter. NEX on yourself us, your to highlights related in and of number

Operator

Rich with and go will Sandler. We take Piper Thank our Repetto you. first question from Instructions] [Operator ahead

Rich Repetto

and Yes, lot going the besides good of because the regulatory of is certainly as macro product it and the ETF, Thanks on update, think regime good for team. John on. morning, I validation, things have Bitcoin Terry, was your the CFTC well. for just morning, a industry Terry validation you both there regulatory futures But and

to kind these So, know – volume when – are is ETF basically as is, and taking of you we ensure question there as I manufacturers? am efficient position being about and my I possible by guess role talking generated is that what some the precautions limits

Terry Duffy

– his based Rich, very a to I ETFs, stated asking appreciate off for futures. great think as comments, be the Sean I of are it, thank you. question. exciting CME It’s in you but

a of like around any associated when entity and with I think question futures an to credibility of product exchange itself regulated market they as To our important a position credit in thereof. it, and have to the get more CME. lends regulation listed component to that are you the limits your highly directly

has have may spot our month back entire futures will in months going in reckless that not then today, that So, spot deferred larger November we with are into confident the risk limits shape that. as here accountability agency. existing for the may and than Bitcoin in go form any know, we position which X,XXX and this from been feel or to X,XXX not a you the being perspective But or is vetted much way, are our very levels team that and we to

mature were to the that for now of have increase confident the those we So filed changes. limit. size We is the product enough

again, we be This Rich. careful launched XXXX, So will here, product, we in not XXXX.

newer decided futures cautious we So, of power very and contract. with this credibility class is we asset the very, that other against a associated and be our newer again, shares to but ETFs are product, the the here, by a excited and some will uptake benchmark

Rich Repetto

Thank you. helpful, Very Terry. Thanks.

Terry Duffy

Rich. Thanks,

Operator

take Fannon [Operator from our Dan We and go Instructions] will next ahead with question Jefferies.

Dan Fannon

I morning. bit on Good get to little Thanks. was John. expenses, a hoping more color

about bit the given just ramp in JV the give with cost little the we and with the a year, ‘XX XQ? you think kind across Could then implied know as think Maybe us explain adjustments, inflationary pressures a to about as about of synergies I fourth terms about all of kind being I parts we bit early. it’s coming beyond? in out, think then other the realized But moving guidance framework next of think the the pickup some So factors some broader we quarter. the in and maybe employment are kind the to hearing assume of the and

John Pietrowicz

Dan. Thanks, question. the Yes. Appreciate

venture $XX adjust our expense we guidance, our an in million. after So OSTTRA terms you for the did guidance joint expense additional by of reduce

When CME an million start of original you job the the down on about costs. done our $XX guidance think done this at we’ve has about from we’re side, expense year. team what entire our the So managing excellent

from levels. look and almost to $XXX our put about the expense of a reduction continue of and year’s And that of XXXX reflects perspective, adjusted down million management events. reduction travel When adjusting we’re have the half lower million, $XX that expenses to last below in-person We OSTTRA, creation down for $XX after as strong million expected focus. our about kind into of at you

recall, of there the have million able the $XX can as especially But be we the back beginning travel. we to year, travel. had is you the still half would of see, As at in assuming year, about additional you put that limitations travel, on we international

for expense been a by The a the careful fourth pattern, prepare bit London, Historically, spend tend have is control labor. is reflects seeing higher-than-normal the to and next in take built and spending – guidance still same tough. is in we spend of our our we pickup When in quarter. of this in fourth traditionally particular, wind our as quarter, quarter up we proportion terms We The higher when use in of year. additional excellent especially travel including contingent our is at the out advertising little fourth with current spending be quarter year. plans meetings, we of at pickup project a and that but hiring costs. the still the of careful highest really year do expense spending entire the And XXXX’s year fourth the team, XXXX’s and start balance international continued along quarter just highest Europe a anticipated look reduction see you and marketing and in

and a XXXX. levels targeting operating a our higher in of in marketing of micro open expect on successful including environment spend advertising, in of products more spend portion We that and anticipation

to Also, our the We’re last more year including streaming and the of this year. incentive fourth in lead migration EBS compensation to also higher in costs. the which services, than system anticipated quarter of is of be fourth quarter projects, technology-related investing would

are really items the fourth this the fourth controls than some overall, by the organization. last entire expense are the quarter year entire higher to which causing But those some quarter for of So be impressive the year, year.

terms we’re in next going So modeling of for process year, thinking now. through the about budgeting

too really provide guidance. it’s early So to

business When our which keep we salary increases mind. postpone for more globally, environment, in positive anticipate did which year normalized our in travel, fluid, to I a yet. environment, regionally sorry, staff, hopeful for view But there and a a open events, tough to anticipate more – are in-person business. and for for same in little an and we don’t looking extremely a obviously this in would it’s are be mean, XXXX. which We XXXX November, is we We things both increased of and positive XXXX perspective. the XXXX, would Also doing business in couple from would XXXX that for at as see again,

So provide our when additional do February. we some we earnings in guidance will

to that some We see in are open up, starting mentioned I of Europe. like before,

with capabilities to our continue will we management globally. towards accelerating our plans for technology our systems We we will that our year. intention invest next eye growth an out as in continue It and expense is build excellent

So XXXX. give that a terms bit in a of of little should you flavor

Dan Fannon

you. thank Great,

John Pietrowicz

Dan. Thanks,

Operator

Alright.

our We question from ahead Blostein and next will Alex go take Sachs. with Goldman

Alex Blostein

Thanks, over dig last It’s question. quarters. three guys. bit. market Good been the the flattish to data wanted a morning. into for taking Thanks I little

in were there I result slightly some should that better think near-term pricing adjustments trends.

walk about business sort growth data thinking of of forward. you’re us and scenes kind how going through in market going that what’s been on behind Thanks. maybe the and So

Julie Winkler

you Alex. out. point question, The the quite stable, business for has been data as Thanks really

coming at $XXX we quarter X% where in up QX XXXX. So were of in were we million, this

per of big increase So revenue, the for the realized. we our the business, And subscribers steady. that difference price $X we’re clients. of really the $X real-time which, QX were which been has that difficult our down The number saw that audit forecast is has user and been about we we findings, to with bulk audits that saw QX timing of again, seeing results that have quite is just and ones really is between million, were the professional underway

SOFR beginning the there client rate. the We’ve for the been the the in too, the with got mentioned, tremendous data team engagement already going term focus within the lot XXX done Particularly, Sean a and quarter on sales of Q. So the on call, of at a had last amount team. right, XXX of licenses has more

the uptake our our and continuing adoption also non-display derived introduced policies Google great continue at to just lastly, of beginning of We pricing see of business those we are as offering on see as strongly cloud year the to that performing well with Smart and Stream. very

real audit. difference I think It’s the is based just in the the So QX was still there. growth – on again,

Alex Blostein

Got it. Thank you.

Operator

We ahead with and our next can Worthington Ken take Alright. from JPMorgan. question go

Ken Worthington

When into start while. movements the been start strength Hi. the a these there less, macro, We’ve happening. do the has flow the aggregate. higher all good products, wanted the CME my the CME ask When I see open outlook? million end hovering good the translate growth? super the you been of contracts, open into you’ve XXX issuance for OI? huge interest of to guys taking in innovation, debt cycle to about ton the a to at Thank things think or some little highlighted. interest seen have What’s you Open of in it’s anchored the these got you and more interest things SOFR, the commodity short rates is And question. and still and in micro the in energy. building of at have rate curve around highlighting all XX-year build-out will been great And does the that anticipation for

Terry Duffy

A trend the to, – Terry going Sunil, as million Terry of high give referring of open comment, of year million XXX. or a comment we I’m lot business. in off well, it’s Duffy. reflected came of you’re Ken, or broad let to sorry. but here. Ken, Sean several contracts over last to it’s XXX is think interest rate The – the open, a which since I Alex, so it probably you the interest is what XXX let me it’s I’m maybe the

out SOFR, earlier, from suspect as something are with LIBOR adjust to that. Sean we pointed people else trying We’re going and massive as associated through a transition, to

significantly still an some things not standpoint. the you’re is seeing low even FX. from a interest still in though – historical We’re the is That that we’ve rates also changing. vol I’m but lower in volatility the that’s of uptick only seen talking referencing,

We little The in a bit there weekly today it the question is when than correct participants a does But You’re our in ago. couple is reflect lot have on We to the believe are different a coming open interest. there, – years your didn’t options open just these is it products. was of comments. open you an remember interest of got of and expirations We off. constantly didn’t on have some participating.

people are like days for time, So exposures taking versus be it historically. periods of quarters that was projected might

their manage people seeing different I think that’s well. way, a in interest we’re open little as reflective and the of bit So risk

And that another, participate that the that don’t and in it trade. think now, a I that. always see to quiet. risk powerful because more fundamentals to believe all get transactions. because still as into massive at offer to I being good that’s We’ve market But of the products people, interest main rate we get in way way and of outlined for reflection paid we of We the one, I offering. open are the fundamental one of said future we’re seeing the it going directional much people seeing also ago being So problem. a problem see we with people for. those other but transition paid from manage the as factors the a what and I in right it, just open extremely lot bad But of structuring foreign which we’re don’t moment now, products, a a same And some energy. I the is time, changes lot options the exchange we’re a think is a interest,

out from $XX ago went a Derek X.X years just $XX.XX to earlier, barrel. As to pointed we minus

can years. that participation one a barrel you marketplace don’t about people you in has a minus massive the $XX barrel and just So of lot a think believe way, go been the from to X.X directional in $XX truly

adjustment So I and And what what that But I’ll more. think to problem bad it an more ask as because it’s will, holding Sean world now, open and live participate today comment see right into. of again, and people don’t just in – I a we I we more just the outlined. to

Sean Tully

you, just XX%. very Thank the rate it’s the Terry. And up Yes. open XX%. question terms numbers, briefly In the of year-over-year, In up you, up it’s thank is foreign equities, for in interest exchange, Ken, XX%.

So year-over-year strong very a growth.

In the CFTC. very number holders addition interest to large by reported that, we track of closely is number open as the another

this interest number second quarter the if you exchange, If the look products, foreign at costs. the across an was of quarter year, rates, second and across average you all-time open asset look record and equities financials the the large holder for high three combined

third the quarter. second beat the at quarter, look you we If

numbers average. open on record interest all-time two large I’ve So holders of had back-to-back

marketplace most holders, just I business, at think, is points rates and interest just rates the is open well. a from X% extremely doing you is and But don’t and below indicate the the foreign exchange If business of below the similarly recent large look overall, its its all-time our interest CFTC if... high the numbers I high. healthy all-time know couple percentage business

Terry Duffy

into want And OI, to which years XXX think several because I don’t open dodging question, your we’re record a based ago. on the was I is Ken, question think million

of you think So what I off a Sean is coming obviously. base, is different giving

last far of that’s through years don’t with see that. And are story gone return here So think a Sean’s We’ve going what the how And I numbers a not they we’re what’s pandemic’s couple be starting risk, but to interest in I of goes. sure are. lot they to think are to open disingenuous we People are the that. either, uncertainty. manage want they as to but positive reflective are as

Ken Worthington

much. very you Thank Great.

Terry Duffy

you. Thank

Operator

Alright.

our from with take Chris next Point. question Compass will We Allen

Chris Allen

I of kind were hoping about XQ, And was everyone. P&L you before bit little a of the of what think i.e., kind for revenues the included more for maybe you we morning, just kind year? color in what in were can OSTTRA point September. Good contemplate the separations give that on starting the terms were next of adjusted also, can year-to-date expenses as what’s in

John Pietrowicz

Yes. This is question. John. Thanks for the

to about be and So – yes, September. integration customers. And right to early analytics. we going launched OSTTRA. positive like the of I and in so particular, we’re very excited really also, We’ve banks, the that in an excited launch global we’re about our very them be innovative well executed products, got improved positioned able offer workflow said, OSTTRA. being now. to We be support new We’ve, it’s is very for think going it plan will to It’ll

the we’ve with And IHS very working with and far, partners at Markit. so leadership our there been pleased

in terms September and it going the could And helpful. will then impacts down break – of of under for – looks talk forward. what So a which we about be bit more little of month the detail like in kind

section million the million in million an month is terms the was that, in in September, So, of we the our not transaction income the in million that Obviously, in fees revenue it between tax. I perspective, And the that effect, like OSTTRA. other other $X $X of net equity expense is $X my of had fees. earnings technology, statement. September, revenue it’s in operating of company million unconsolidated OSTTRA, From for is In revenue, million launched in before compensation we of about said the of split and and the we $X prepared and rest other the was income. was $X formation net $XX earnings for million Of then subsidiaries when tax had line, the in booked you $XX of equity about million $XX would remarks, have had have million month would in was in line that the section, that and line. pro about $XX and we

So, net for month all for when the you it’s out, – impact of really that no September.

level, have at constant million the expense Now, levels range. in been $XX very the looking expense the

over very the is So the little quarters. last there in of several volatility way

amount you if you it multiply yourself took at to So when a million – $XX full the the – a it good $XX run And look looked at is a then if quarterly quarterly per revenue, for $XX month give million of quarter, million. you it by X rate.

look you the $XX the million $XX has revenue been quarter. If per several last range the quarters, to over million in

are terms run those in those would rates. numbers I work with that be So would of – the

Chris Allen

Thank you.

John Pietrowicz

Chris. Thanks, Okay.

Operator

take will with Lau question from Owen our Oppenheimer. we And next

Owen Lau

morning and my for picking you thank question. Good

to of So Bitcoin to why very trading strong. and Bitcoin the instead other there and remind volume of trading Thank venues? value OI will continue futures of CME proposition us Bitcoin been has futures up. be will value you please ETF been more institution Could CME futures coming increasing go has other you. the franchise investors but

Sean Tully

jumping Sean in. is you This Thank Sure. for question. the

which recall, become may back Group was You essential it an new industry. reference XXXX CME that rate, devised reference has for Bitcoin its in rate the

Ether. reference created a for rate also We

are used rates So in now these created world reference by were highly the and, CME by conjunction partners. again, with

value one of propositions. unique the that’s So

spectrum, spectrum, exchange. the across In across that, you the as entire to rates equities, entire spectrum, financial commodities we foreign offer, addition classes the asset across and know, across

I all the the that of of So think is offer we products enormous. combination

In addition regulated. we that, highly are to

Group, an to CME of we most exchange out in to We States partners. enormous a know, sure, our United transparent XXX-year distribution are I’m the you, reliable history offer highly the partners. has and being have

of I hope proposition. to helps that, that understand value the So some

Terry Duffy

said, to think me Let it because important. just add I what Sean is

that another and different And the further team have to the to you constantly looking are Julie at referenced to her reference and question company. and ways Winkler the have rates, example, value this is to ideas order in bring maybe and revenue don’t prior You transactable crypto going very think to is I helpful highlight, really forward. are CME’s very, what And business, aspect generate touched for to of the especially derivatory that rates is Sean CME as have been important its offering. reference something these in on, just future,

You looking can there form to many more The problem People they product. imagine and bit be maybe and make of would exposure some are go also little are more concerned platform. maybe every that as day get cryptos at is are about becoming more of more of are people sure – want a a acceptable. the to that more they with the they for now where appreciation that the risk, regulated and price the

Sunil? to not crypto a regulated group. of a our credibility the CME the benefit having is highly entire but platform reason franchise Another only

Sunil Cutinho

management, through to Ether, year. volatility want of Bitcoin add we is for this thing we a manage risk seen both have One and we and that early that extreme especially record very of strong periods even

with – this every true market. the is to we So, product we that bring

have We that out. a and strong risk management pointed experience, Sean

steering over XXX have We experience product. years’

Owen Lau

Thank very helpful. you. That’s Alright.

Operator

Voigt We with our will from KBW. take Kyle question next

Kyle Voigt

morning. good Hi,

the open trading. moment. and at bit about Terry, be the a LIBOR impacting rate like So, sounded negatively transition But a interest record activity might you the and it short-end the SOFR transition interest spoke bit

could I period And I over place guess expect or fee a of you Do be to the capture volume any how am as your that this short-end of So, and through over those do maybe in moment last? part couple to impact transition question, of incentives is of there just a are that headwind John. the And fee continues or next SOFR OI on time, for maybe talk kind to long impact? complex transition the for any net the this you wondering, expect SOFR? years, just will the holidays trading to at or about near-term second if you

Terry Duffy

about was cost four I Kyle, between So incentive your question in three there or embedded interest of questions open plan. think

to – So, will those, on opinion. you let touch on few then me give of and I a Sean, also John, my

Sean Tully

Yes.

futures enormous and our huge seeing Kyle. you, futures thank and in said, Right our I also in growth are option. SOFR growth we Eurodollar now with as have So,

seeing are both we grow So, in marketplaces side-by-side. parallel

So, that’s exciting actually very development. a

futures. also in couple to SOFR go that an between you As and increase see trading Eurodollars expect years, and will the the increase, of next we the the spread into

contracts In we also that, XX,XXX addition not we BSBY upon long where you future, a recall doing timeframe. ago, about to too launched are the may day depending

of actually different the positive to the instruments. business a whether or the trading it inter-commodity in to transition SOFR or spread the regards rate, between the or So, is term new interest very a thing the is BSBY the short-term SOFR rate trading between

contracts So, enormous million in positive third growing SOFR-linked the in very more we that’s with remarked so products. X.X also quarter, very strongly. earlier development. that’s a ADV an actually that seen the growth day a Again, than of I have

incentives, closely a us who market. of we had have follows terms start incentives, yes, anyone we In knows, as whenever

SOFR in extent. news into our over revenues a so incentives quarters. we there already good The have is And large had that the futures our significant recent means that’s priced to that

those know I So, for up Bitcoin there, how of our history, of as incentives how sure, will and imagine, products, pretty and once you with am all continue our But running. the Micro incentives those and futures expect we we reduced those a can we E-minis to reduced time. there grew of have as dramatically how period marketplaces got our have and you we incentives RPCs

expect So, incentives decline SOFR we adoption of to SOFR in a relative on that greater get would that as relative we basis. would the Eurodollars

of already significant we in That’s spending again, don’t the And increase. money months. I spend, will already any but in, baked on So lot kind are of we incentive have incentives. to XX a some last a yes, continue expect

Terry Duffy

John?

John Pietrowicz

trading the already the echo dates. that significant what just that amount Sean are Thanks, Eurodollars Kyle. in the over we to Yes. post we proposition – think with seeing transition value have, believe we and of happening And time, I said,

very So, and with with our got up. got we I we that our comfortable are place the set clients – have conversion fallbacks in think in the program

preparing done what transition. So, has very, very team in terms the us the of excited about the for –

job orderly closely very our I in happens they in think clients that, done have with fashion. that a working to ensure a remarkable

products. terms have like short-term our market now. is do of we rest we would view maker right. of revenue embedded It’s programs Sean the time, Over SOFR that in treated being In some in right have got We place. fees, the just interest rate

our much headwinds the versus something pricing being a SOFR create platform and unusual Derek Julie, we that of maximize don’t of I and our we are to XX products. as hours at see time look our there pricing is any can day. And our and Sean, myself other short-term products we line all as our incentive across ensure any this we others, top a because as that to So, to appropriately team, liquidity

Terry Duffy

at me to saying look look imagine, Kyle, are that by to you today. the let you fascinating something me is transition benchmarked it’s the use really can just industry. we when it to LIBOR period very else, in short of time just automobile a wrap of example, that the world trillions up at asking into And dollars an

possibly. XX-year a but going to we conversion are We convert that, talking are about

we anybody a assets are is strongest dollars of LIBOR to convert about years, We Sean benchmarked that are else, are of which of the believe into that with of in outlined. risk to the capture And products trillions something we that just position talking to couple we going offset.

things most this a interest, my that we years this go I be the time Now, through at not of exciting will a XX it of of will seen have just me, CME. open history ever measure in that measure the trading transition. many be here interest rate the might as be To in

BSBY not one on will it factors So, now, are not to on the right issue go Sean that many alone. alone. judge but very particular it, judge this. I going things of is into I optimistic outlined position. on And won’t and it with we we really short-term the open am about me, strong have it I Sean with SOFR that There and by you, open only interest shot. the to product some And of leader We we the long to in rate with but one options. one gave with benchmarks a that are think the SOFR incentives, a interest, the are futures Bloomberg, in is

very pleased with am this transition. I So,

Kyle Voigt

very you Thank much. Understood.

Terry Duffy

you. Thank

Operator

take ahead will question from [Operator Instructions] Deutsche next and Brian Bank. our We with Bedell go

Brian Bedell

back contracts to question. my go want taking for to I just Thanks and broadly. the size Hi. additions retail purchase micro Great.

a how creation I maybe ETFs of broadly it about usage micro was trended the talk basis, micro that as that’s think a more is maybe or franchise? if there And But you don’t on the in considered if just I an customer about pro on it you retail retail put see over would the think size across while that’s then I futures wanted actually just of and back, to launching guess since years could all if you the generated success I underlying part given low-double And know who of that if an institutional trading. how of the imagine I last that would contracts possible. forma then on – think are revenue. I was percentage contracts. update couple digit ETF

Terry Duffy

Yes, Brian. it’s a great question,

ask a me that, comments well. Winkler the Let as on in to few team play make of rest Julie may and the

go Julie, So, ahead.

Julie Winkler

is single-digit contribution Yes. customer Thanks, a are No, Retail Brian. segmentation from correct. you standpoint. a

very highest year a for revenue very to still we a retail. be for on in on year second So, path record looking strong are the – It’s us.

the volatility some definitely micro strongest think suite those a was through equity bit quarter in kind And little the in But just of a is products. further there also started subdued the bit until in right. performance up of speaks kind And of seen it since of mid-September. to uptick suite, our business. diversity to the definitely the we participation I then, pick have of

what we our like has year. seen stronger things the never So, agricultural products adoption retail this than of been have

revenue in XX%. for So, XX%, still American, retail APAC up ag was up North

So, overall very, participation very this strong. to is

been only in strong ended XXX,XXX quite surpassed this which by record year. we we on where as have last That new markets acquisition well. traders well year, has We bit about pace about a the talked And to our a the likely in are was as client year, space.

we when How on same to outreach were brought QX, activity more in last materials, the And global efforts that activities In that same is year-to-date. doing And alone, our a July driving retail X.X which It’s great. had that partnership, have in the we And looked educational just XXX%. visit million traffic they digital saw those that in seen year. where are have educational retail this. to really we those talked looking the months. there. be about levels through at of have Asia new saw have before. also have broker digital outpaced reached from August, our events partners continues XXX,XXX up make We that XXXX, have, over that traders about broker we interest than retail double we we really thing million properties our our traders that those specifically, huge active and during those our educational, we – properties we June, the X partners and part about we traders XXXX We exact about

retail it’s think want that really strong. focus that anything? on continued that I the has you go-to-market kept very Do activity to add So,

John Pietrowicz

Yes. No, much right. I add, don’t to think I have

– we We got our in day. growth micro about have good have very in seen yields X,XXX a futures

about Our month-to-date a day. doing million $X.X Micro E-minis

So, nothing really add. to

Terry Duffy

address of kind did all your Brian, that concerns?

Brian Bedell

Yes, just assume, on about there considered ETFs, it? think those right, to I is are way any institutional, or

Julie Winkler

Yes.

Brian Bedell

usage way that to on I retail there if as Bitcoin facto the de in I pro know participation thinking the with Just ETFs, well more am don’t get you forma is any might that?

Terry Duffy

We would get Brian. more retail that, from participation

by conversely, more participants retail institutional pumped institutional same institutionally attracts participants and participants. ETFs. But that’s players retail pool larger system the products, into You the always the are can driven the They the attract of correct. the are liquidity way the

both that. see we and as of this see going it we an ways, So, example

but that hopefully question, Sean. your So, think on you right, I answers are to

Sean Tully

additional one maybe comment. And

our futures, in micro Micro the we seeing greater of of terms ETFs, so futures. interest In on the back Bitcoin growth huge the are Bitcoin

XX,XXX than now contracts. year-to-date So significantly more I daily at in contracts as from up volume our And over month-to-date, XX,XXX is Average the mentioned earlier. open Bitcoin. of interest XX,XXX, Micro

futures just ETF post our not have in enormous launch. the products, So, growth seen micro we our institutional Bitcoin

Terry Duffy

I not fundamentals on but thing of colleague, the counter marketplace. in a to attribute lot So, earnings proper to an would call, the also do that it’s because my the

all-time of an some we could But plus volume of both sides. unison be crypto XX earlier, they to do work have in some driving which know more odd thousand, said numbers. I together retail bring micro week as high on those also made last We believe,

Brian Bedell

you. comments. helpful Thank Very Great.

Operator

Michael from will Cyprys We take question our Stanley. next with Morgan

Michael Cyprys

us on Thanks morning. And update traction elaborate in for Good I clearing September. bit was the little sort you And a hoping ESG you if and that like. made product you question. are there? the on looks could that what services and products. seeing new also could What think available sustainability about of maybe cases use taking launched you talk roadmap, the new and your I you sustainable Great. could

Terry Duffy

product I Derek questions. to the to clearing going great ask Sunil I on am and touch on touch to side, Both side. the ask will

Derek? So

Derek Sammann

Yes.

the Michael. So, question, appreciate

the start our products Slide of what So, on we to I franchise, notice easiest think in very on those that comments the have way some our will material launched that you mean some specifically to product side. we and environmental detailed X, probably pre-circulated about the

contracts contracts. interest as contracts August, emissions importantly, contracts, significant in the And traded you terms know, that the traction nature-based the continued we our launched well. there, GEO and just we of year. see volumes, we deliveries the are open global in seeing earlier offset As accruing have this complements is that we GEO not launched of to these then but are more that we the GEO

launch, what’s actually record just seen now we that these interest seeing And a while we new record also contracts now well. open interest since important of seen just on terms, are a physical record of on these have open about record Friday. is XXst. peak deliveries as a are certificates – over So, offset amounts peak of hit we hit XX,XXX contracts December We

metric for the four that customers taking million offset delivery that’s of delivery So, put these of of separate just across cycles. certificates, to And of we that physical XXX equivalent. context XXX,XXX now into the means tons credits what COX that facilitated are equivalent delivery for

a really years started that ago. about is this So, market X

previous amounts calls, markets. expanse through market of in carbon voluntary as certificates the delivery We in for with of of the you now we CBL have platform offset with cycles. partnered the shared are And delivery we exclusively, the volume delivering these spot platform largest on record and through

another this week. have We one will

just is August So, market. this nature-based a of launched year. in contracts this new We our

expected global on. ESG Glasgow, we There that’s to of of the nominal traction a has where that we that’s value, contract connect the the our largest to is significant. host significant COPXX. seen value above open where where conference go, we complement side which billion markets and basis pretty continue of $X and by out pretty it’s done are in kind on continue this S&P the equity on Index work a with So, as world’s these which lot early have And is we interest ESG XXX already to futures, the work do now notional

at the that side, the seeing are edge developing the customers ESG-compliant it’s cutting look side the of market are a or how the of traction environmental we leaders on needs in you that voluntary whether we are space, looking spaces. carbon both that when in of vehicles, product the those we market on So, we servicing are at for are investment

positioning. our feel it the we we to with a new in like We a of feel already are strong adapts neutrality, I market, like And there the think chosen we good So, world as partners. are we have success had. carbon have with happy we position

Terry Duffy

on Sunil, that clearing? Thanks, Derek.

Sunil Cutinho

Yes.

Terry. you, thank So,

they through, also use interest So on to have to not our clients seen and but sustainable products clearing, keen use hedge exposure. entire what actually Derek our FX They products, interest of rate complement their went and from our we a track hedges. just equity their

them and report track actually a is So, these a used example. provide we those green And important activity exposures them. mechanism to we to investments is – what their track an clients This for their service. clearing, hedge is in on novel to as

We have it clients and look just to our a started we of product to line. expand group with

Terry Duffy

of bit color on Michael. gave you little Hopefully that, a that

Michael Cyprys

so Thanks much. Great.

Terry Duffy

Thank you.

Operator

Equity. take I back conference would will time. this or the additional Simon further from management appears for Clinch there our to to questions last It like we at with no remarks. And are question turn over Atlanta closing

Terry Duffy

much And very you these time we are during you. taking Once we to thank and out of next that days and again, forward you healthy with. look safe that to stay all dealing Well, Okay. all Thank talking busy wish schedules. very for we families difficult your you your quarter.

Operator

This all call. concludes you for participation. Thank today’s your

now disconnect. You may

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