CME (CME) 26 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Adam Minick	Senior Director, Investor Relations
Terry Duffy	Chairman & Chief Executive Officer
Lynne Fitzpatrick	Chief Financial Officer
Sean Tully	Senior Managing Director & Global Head, Rates & OTC Products
John Pietrowicz	Special Advisor
Julie Winkler	Chief Commercial Officer
Sunil Cutinho	Chief Information Officer
Tim McCourt	Senior Managing Director and Global Head, Equity & FX Products
Derek Sammann	Senior Managing Director and Global Head, Commodities, Options & International Markets
Rich Repetto	Piper Sandler
Dan Fannon	Jefferies
Alex Kramm	UBS
Brian Bedell	Deutsche Bank
Kyle Voigt	KBW
Owen Lau	Oppenheimer
Alex Blostein	Goldman Sachs
Chris Allen	Citi
Ken Worthington	JPMorgan
Michael Cyprys	Morgan Stanley
Simon Clinch	Atlantic Equities
Craig Siegenthaler	Bank of America

Call transcript

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Operator

Greetings and welcome to the CME Group First Quarter 2023 Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, April 26th, 2023.

It is now my pleasure to turn the conference over to Adam Minick, Senior Director, Investor Relations. sir. ahead, go Please

Adam Minick

I all and well hope morning doing you’re today. Good

then first be the financial and over discussing will quarter Terry. Safe turn to CME language with We start Group’s XXXX it will results. Harbor I’ll I

actual and the to of made on and reference what involve future outcomes historical are performance. our Statements statements predict. These uncertainties, not documents forward-looking are They other statements. implied differ and assumptions that are may this difficult materially call expressed facts is on Therefore, in that in are website statement. not any results risks, guarantees from or

information in may the Detailed are affect found the with can SEC, which be that factors filings website. on our about our performance

release, GAAP reconciliation you will Lastly, the on see and measures. earnings between final page the non-GAAP a of

With call turn to the Terry. that, I’ll over

Terry Duffy

you, this us current brief today, first Lynne for summarize a I'll financial and morning. commentary our outlook, will thank provides make We quarter details Thank you earlier all quarter and executive the on the on XXXX. which our joining and Adam, of comments results. released few

In to questions the addition of remarks. other have prepared answer after team management to we our Lynne, present members

John to first CFO John to work the Investor with for But on call of at not also to is will be will is this other company. things, a John's the CME year John Pietrowicz the be Special continue responsibilities Among Relations with with as activities. least the us on on role. the the this staying end morning. through the in Advisor be to call

speaking. in jump don't So John, please is Lynne when

years. balance we John thank business the XX you, to year. of continually we company as for important as forward contributions many has a that. our look thank of work last milestone with John, at throughout part And your for him I'd years the and to his over well to the prior has over your major key CFO John been our CME every achieved working as like eight to

comments regarding that, new was With era evidence continued I of uncertainty. will which quarter, first to the few a this turn of

from star portfolios I my elevated the investors As in risk are attraction to from Times management near been as supporting a February, constant market player managing Financial has with challenges. said op-ed

million best record the CME quarter first contracts year XXXX XXXX to daily strong quarter of first quarter from in increased average of average an in Following volume X% and history, Group's daily the short XX all-time of contracts. was first quarterly million our XX.X just volume extremely XXXX

single-day contracts This of included our March million highest volume on XX.X XXth. all-time quarter

to development the and this there million increasing drove growth of the the All of other well in significant interest continued need us the history Fed's March things XX.X banking shifting CME SOFR record in Throughout of perceptions quarter, market diluted risk. to the path in and the This of management for adjusted were concerns rate the as about Group. led near-term XX% led rate to have highest the the as EPS ADV interest contracts. entire our rate

futures. of open April ADV SOFR without to million previous successfully interest future's Eurodollar migration quarter contracts SOFR on the since Record Eurodollar X.X we our exceeded seen completed March XXth. issue of in And record end,

risk backdrop, building off. in macroeconomic our out an tool. In turbulent such are franchises options addition, management past investments paying important options are With our increasingly

including to interest million non-US XX% First and record growth a XX% metals contracts, equities activity. double-digit rates, X.X growth trading year-over-year grew quarter options ADV in across and

record XX% to grew revenue a options quarter $XXX First million.

sector activity quarter further some provide turmoil spikes can the by systemic management example most was The practices important no affecting significant are quarter risk certainty. a institutional first guarantees, hedging There The first manage but of highlighted banking do. to trades are that risk. March in sound CME importance Group highlighted And designed today's participants. of volatility and the doing seamlessly of what great to are we associated significant the

The geopolitical will future participants relevant to and risk. than know economic is more persist. capital diverse uncertain of manage and across to and meaningful a ever, innovating we continue operational And to focus hurdles on expect but set offering a efficiencies we we can market product and global whirlwind their

our With Fitzpatrick, results. that, cover the over first new the turn call will quarter I Lynne to financial to CFO,

Lynne Fitzpatrick

the Thanks, history. results quarterly best had Terry. our CME in

compared data billion X% growth The risk in manage had seen up market During revenue a our products the strength XXXX. quarter, build versus of CME the quarter X%. volume record environment generated last first year. on Market uncertain a X% million. first strong with and revenue revenue, to $X.X Overall over up QX to need outpaced in in an to for $XXX XXXX quarter, data continued growth

highest tax adjusted in $XXX quarter on up of from and income last approximately the an income net the shareholders and the to rate adjusted migration. year per which XX.X%, first license fees towards net Expenses $XX cloud an million quarterly basis of excluding EPS million million, and effective $XXX CME earnings had for history. diluted adjusted resulted were of our adjusted quarter, $XXX $X.XX, and our adjusted an common XX% share in million

billion, and million. team $X expenditures billion. of was clients balance quarter were during our growth paid our remains Capital over our providing The risk shareholders. needed focused cash driving first dividends Group CME the earnings $XX CME for and by for management quarter products on $X.X ending the at approximately approximately the

for going hand your Before back up call it briefly we to to Terry. the questions, open I'm

Terry Duffy

team few to Tully, Lynne to SOFR. Since successful This joining he decision growth from no in to business to announced acknowledge said, his our I before transformation. the of job June Lynne. continuing year. Sean his this XXXX, want a did strong in has for take questions, retire especially LIBOR Group tremendous moment products interest in Sean And from to to for of small CME Thanks, to and the we who through your get rates was that a Sean feat. period outstanding to financial leader us transition been recognize a – and his want just as the grow I and that facilitate

people an As call conversations be do. others to the this to to and going did prior used an and amazing futures about job SOFR others Group. the accomplishment. or business bringing be. of largest to now are many CME able we're going XX.XX% Aga where what It's world, the on Sean to where supplanting in remember, had transition here it's of we the many Eurodollar And transition really amazing to contract

broader assume cryptocurrency Tim the financial been organization has to June, responsibilities who in in our and business equity lead the portfolio. our Sean's OTC and products confident utmost retirement will Sean's as manage overseeing index and covering McCourt, ability foreign Following exchange Tim's this well,

behalf to say maybe of done, you've we'll talking a on Sean, the words you have everybody been accolades you you more few for off and with call. But years. could So, people here, everything you've for to thank that many so

Sean Tully

Terry. and Yes. an with with Thank Group with work you CME of years our It much, at our to customers, our analysts these our investors, CME and outstanding to all XX has work been with team with past honor the Terry, at so regulators. entire you,

market margin CME XX-year term futures, products, clearing, options, many participants, to many efficiencies delivered currencies futures and new options, several in OTC many new SOFR and day including ultra including SOFR. and we new enormous Together, billion value per in swap

since quarter best-ever compounded all-time historically we of of X.X% revenue in the business options for the and as ADV the first XXXX, And investors in business rates SOFR a delivered ADV with for for annual Eurodollar well for rates delivering XXXX. futures as first futures record quarter and our exceeding quarter rate revenue growth options the

again, Last, capable the business to hands Tim McCourt am going all having in worked extremely our Terry. colleagues, thank Thank Aga and to with several over I all the forward. Thank closely years, confident very of is customers. and my that you financials last you you

Terry Duffy

With you, going that Sean. very much. questions now. be said, will Appreciate we're participating Thank that. into your being And get in Sean to it

answers will So, enjoy his as you always. sure I'm

we'll turn over So, it for questions. to with you that, your

Operator

go with Piper is Sandler. Please of you. Our Thank the line from question [Operator Rich first Instructions] ahead. Repetto

Rich Repetto

But and morning management you brought Terry that focus -- to risk Anyway, and so your transitions. team. good congrats, and the I'd And as on just John up that you like Terry, Sean, Yes, echo impact P. first, that term comments well pretty banking a two editorial with CME your longer FIA, management crisis on could the afterwards. at we the have timely down weeks it risk product. in sort of of about the utilization talked and

just trying might an with the I after get some to has So, going was the it focus Sean Terry guess, banks, you and CME have what to and about might passed I and mid-tier forward? insight, these change, on risk from just what management conversations time what mean update get

Terry Duffy

and that things in on history, say because our did on have we -- hard return to business grow for risk because referring seeing predict because the and Boca the to stay the what's of but some people themselves. that business in Rich, future, manage conference need It's they of order to understand at you if on going you're gone look to continue at to then to of down

by and by their some sell. this of big and So Tim their team also second a Sean some cross McCourt push is of sales these to portfolios, teams did not Winkler who and banks not third-tier her only Julie hedge and but

which and swap the of third-tier we Group. be is think a doing will larger banks But actually going important for because we here bank that and CME doing talked the a again, larger mostly us is I they're against be in doing think be swaps, to what's normally layoff bank, some will second fine about

net work been and in see here, our that. Rich, and we internally saw positive, putting folks a Boca that we other through we've down that's with probably each own this So since more as into how going

and banks for you're a lay Julie the from we're let Sean that with comment. risk at that push Tim, So we there's even I'll them to that to along we is team the benefits a doing that benefit doing provide swap, been and to a and out show that liquidity looking people think swap. the if big her the But have

Julie, talk or you Tim to that? or Sean want about

Sean Tully

have say specifically products just in firm. and regional on rate a initiated focused are with sales the interest their the swaps they order need on better very other we we that focused providing manage campaign to banks risk. across And that I'll them

clearing. treasury by swap our back increasing potentially swaps of either BrokerTec our interest be they offering hedged platform. swap or And We swaps with do excited addition business, as using side them futures will US especially are that, to clearing banks the in whatever about OTC those larger said, Terry OTC the very our

So the for it is and CME people manage better the and better the themselves, it CME is shareholders. for risk, better

Terry Duffy

Tim or Julie, anything else?

Julie Winkler

SOFR term lot I a CME been the we've regional I the was of on benchmark with key this has Group. at of banks asset think relationships access these here to we've would a needed just firms This as individuals, something been these definitely add, which rate. working got these

those activity getting X.X firms last an doing so been licensing the that we've over And was out, years. up

And so long key history a have part not these this. I those doing of relationships education, are very clients' is with well our do that of something and we'll but are relatively still the is new, that lot something and CME to them fact it is firms. a within Group that outreach has we of very And continue mean, this -- a

Terry Duffy

Rich…

Rich Repetto

And definitely. John. both working more been with focus couldn't timely. management have great the Thanks. been risk It's Yes, and Sean on

Sean Tully

Rich. Thanks appreciate a Really it. lot,

John Pietrowicz

Thank you, Rich.

Operator

Dan is Please from question Fannon Jefferies. go with next ahead. Our

Dan Fannon

is some sequential and both of also went on John increase Thanks. guess, and well. growth as subscribers. you Good record question market Sean increasing talk effect I data. price and revenue. A that the But drove about Obviously, morning, into to the congrats

off it subscribers jumping market So business? just think about this or for starting from? where ultimately, these mostly in revenue. retail, how point here coming we the And curious momentum about Is a or off then good is can data are

Terry Duffy

I then have to we'll start, and Lynne Julie? go don't Why

Lynne Fitzpatrick

Sure. Thanks, Dan.

you of X% the we market if at grow So revenue look the year. did this year, first off data last quarter

went increase, January. have the the impact price effect which in into You of

and activity. $X million tend about Also period this a These you was audit do for increase payments fees have do that reminder, be prior for catch-up more in a about line, data. market to X% episodic. As within

For million $X comparison, in fees in there was type this of QX. about

as seeing what well turn So count, it's which I as there. talk Julie to can increased a increase about subscriber combination of that she's pricing to the

Julie Winkler

Yes.

largest question, last the Certainly, demand real-time suite saw professional devices year, XXXX, the our We of also strong continued for proprietary data. thanks data our and And anyone. for we offer throughout So, of are and receiving fact sets the I think and they continued technology invest and have offer especially value seen in how that people post-pandemic the that in that the we we've that the data. to data Dan.

we So, our saw the business, as that of of under think organic aspects QX, just non-display also, continuation we particularly other licensing. growth And a about trend. there's

have other is this So, applications. needs where and to and our trading data people algorithms utilize

is business, the this so part X%. another And of up almost

a alongside is having set last the are years all results, historically, And available. I this, that and sales without had we've on We in team. starting some two to we there actually saying well. as And position in the out up be right? that I'd explaining see where selling been And this was from an of think uplift dedicated what data market to not remiss people impact we're

institutional your coming not question. it to So, participants. users from is is retail This new

Dan Fannon

Great. Thank you.

Operator

with is UBS. Alex from question go next Kramm Our Please ahead.

Alex Kramm

the to have you lot in bit and a every this volatility, wounds changes the first lot question off but know little with we Yes, quarter when April see lick a people hey time get quiet is to we environment, to time everyone. a be a I every again, we we in have it time things of guess ask quarter, like I have I a like bit. start. this, a a slow throwaway had after has big little obviously, asked time, that their and good of morning then feel again,

to But know that in the fundamentals market, underlying that it's around to this or but far you hard anything if speak be what it's make think the so curious, would slowdown would I quarter? differently got asked. there's predict, to particular of any any seeing types point to client you're particular anything Terry, you

Terry Duffy

a historically does and it that years. I couple to of the slowest a be whatever is need No, of been one here I think different things in that, Alex, asked. play at for and appreciate April. reason. industry It's And months and of way in the for number April

why reason that is the case. have Don't the

I be that them, guess, a April. in we have would One of role don't

really I the talking thought world. So, were the only we that's I a And the things one if month is look gaining, environment across else not at while Board. our thing only bit of company. look volume the was interest. concerned. everybody one But at one I'm I suffering industry of broader And that apples-to-apples more little lower the April, in in I'd futures in a be of just the

in historically. kind So, case. of the that April same been as is is they've on the pace not Everybody

for it's phenomenon So, a this is nothing new. And on that's gone years.

being a When down Things we traditionally things the saw move just because kind of was holiday younger, of slower a August I European month one around and shutting bit. nature. of that of

has to whatever For interesting this years. up. several what's metals But slower the we've complex April seen had reason, month as that we've last happens about been our the be over

energy, up Our ag our for running X% energy metals complex XX%, say, and up, of XX% is the and over still month ag April. around

So that is sign. bright a

just one of as organization. beauty we're not class We're a multi-asset the So, CME Group, know, asset you Alex, class.

pickups million, think volume this are an others, other said do others in of see uptick are the but an we and So, seeing historically not definitely of that that, is maybe in example classes seen down. for asset when XX.X have we when we slowdowns, I

Alex Kramm

All right, enough. back queue. the fair jump in I'll

Terry Duffy

Alex. you, Thank

Operator

next is Deutsche Bank. go ahead. Brian from Our with question Bedell Please

Brian Bedell

Maybe that's I the around Fed impacting the as for just -- and two-parters Great. And in as Thanks. question, could the Sean. debt curve, well. negotiations are and some as the and And volatility long congrats negotiations debate the Question commentary continued how do and mostly Good occur the the that. two-part one, but Lynne -- ceiling John on guess XX-year, maybe see end the morning. just and to then you on focused cycle also well that the Sean on of number volumes?

this debt impact scenario, then reconciled how what is view negotiations? we Terry, on guess futures? be then And your past maybe the And of negotiations, treasury think -- Do just you is ceiling that whether default a time well, have will time different? if this would to similar I do the or things

Terry Duffy

question down imagine, speaker last was out go watch literally Brian, around President then and purely XXXX to between clock you is And then negotiation as the the speculation negotiation to Obama. best, on I've a enough Barack before this spending. the government at hour been can ran debt there So, because long a

going never happen. what's So, you know to

over look things. as a So, my only is got to offering XX House, to is is propose the debt things President saying the may the at the may House. much, lifting pass that's see cuts can where they going or is I'm so That And not I that, and piece the to like right? things doesn't folks one trillion tell legislation That's but in it votes, can ceiling. of $X.X lose Speaker this one you a at the far only the it five the few setup The massive going to in the in may the next years. speaker return, to organization then you be not today look of go, with you going associated I here the up if of Congress, as when in legislation. pass

So, pretty right interesting dynamic now.

That the won't Senate go it in the go probably with won't probably administration. or anywhere anywhere

of on negotiations. So, next then go we the to round

So, how in at think Washington a negotiations now. right little let's the work about bit

place, a a votes was on. if saw As things. of a going trying got what feet part on handful to finally assume was you which people was means going a because you there but of benefit, the there's maybe for rounds, the to rounds that those holding the can their of the negotiation it, was only certain Speaker's votes student things XX to not And there on fire I politics, in anybody of certain going Speaker extract recall, were of the is you that for XX House.

difference and telling on, a the make time to with Republicans to that agree decision. you cuts. majority, will So, extract is me just of it the not dealing looking see. but that not, obviously, a with lot different it's much assuming what Congress with the I'm side or negotiation I'm in you're this for then holding House you Whether I continue

don't wouldn't have then goes. the I of gate. to but So, where they see And be we'll passed something get it surprised if -- out

but economy US be to country could Historically, not people or for to firm happening are look theirs. saying and a you person a downgrade hurt not -- back this I'm and lift, that that want the before. at there the did are vote not my these out words, again, in districts the which it's people ceiling debt have is government picture, they had their These who to US never spending are go the of control. have --. We the beliefs long hurt

just want that. sure I say to I make So,

So, cycle maybe to bit to to means it what little a as let tricky means, historical than it that treasuries, it's ceiling I Fed And goes, as we've us. going and what think it, the Sunil if more about that, comment on comment Sean can far the I'll anything, be seen. debt then

Sean Tully

Yes. Terry. you, Thank question. Thanks the very much for

just at basis upcoming points rates terms over our by the XXX markets, of and tighten looking points. FXC futures In likely and Fed the Fed, year at reduce that basis a by the it's half, next meeting will XX then expected the

there's obviously, yield going uncertainty people to So, into to manage. curve need built that huge that are

uncertain excuse exact easing people hedge of the tightening cycle. quick, to are an creates to large to a environment extraordinary cycle, it And very timing risk. where incredibly going Going need this from me, that,

think us. will So, that, for positive be cycle that continue to I

ceiling, net the billion the to this of only coupons. in in treasury of $XX in Treasury picture terms of quarter year, regards first US Bigger debt the issuance issued

of unsustainable. the treasury $XX able $X.X is billion So, obviously, issuing new not that. to is in general down the driving a a account And lot They've treasury to with issuance order do been trillion coupons. in be deficit,

and I business. our Sunil. that US cover expect very I'll forward point, order some hand that, nice a So, would to it provide at over in large increase in for would, that, very large tailwind that to issuance And very a deficit going with Treasury

Sunil Cutinho

and the put a has securities to is out practices One Treasury industry risk. cover Market SIFMA operational is Group other coupons. on and operational on best perspective, two with areas. works Practitioners From operational actually the other the maturing align CME on bodies side. those document I'll handling an and

handled also past. the And have -- we political pointed environment, into side, we a scenarios in these environment. lightly. risk account are take the a We On Terry as scenarios out, similar taking different don't it

collateral market, and So, of risk an And rate those our example, taking as with and end. the as our into we well as long account, manage all end both respect interest one short And well. members rates. March can the has of the that and stressful clearing clearing you that in periods the clearing manage very most its see has was really -- for CME to

the So, do no I have doubt they'll same.

Terry Duffy

might attention. do and people very are is is in who day out. So, the a here People is think say, do we only a debt manage and to XX can rounds with Brian, I nothing to to relevant that here. lot for that it has can as your play question to We one ceiling? analyzing in My well, what Speaker, to elect nothing day do there of We're other. the -- situations comments risk could these the relates

limited right now. And can of information have have. what information amount amount You analyze we of the that's only you the

Sean So And manage agree we prepared we for and our risk. make Sunil to said, clients have are preparing, Sean. are as with sure I to that

think one I how us creates irrespectively settles or on of the for way a it another. outcome tailwind this the government

your question. for you thank So

Brian Bedell

great lot Thanks a of that’s Yes, Thanks. so much everyone. color.

Terry Duffy

Brian. Thanks

Operator

next KBW. go Kyle Please Voigt question Our is from with ahead.

Kyle Voigt

in Eurodollar just interest we at a the But transition product transitioned. Hey a step-up time. to didn't really futures dynamics sure open did that Because correctly. want you LIBOR as SOFR I down in futures see I'm good interest understanding in material as noted earlier open see the April, make step around we commensurate the morning.

couple rate OI to whether we user short-term LIBOR rates related that So, or result just across trend understand to more extreme more of broadly months past futures a for to the complex, whether volatility deleveraging if aggregate the and we March OI any look dynamic it's if trying this I'm is in not change as interpret interest the over in at the caused year-on-year. of base. that transition saw around a down your

OI pieces very any here color kind be of what's So, of us given changes some rates understand helpful. would in additional driving specifically, moving helping the the

Terry Duffy

Kyle. do Sean, and start to want you Thanks, then--

Sean Tully

for Very good you Kyle, up Thanks, but look business at up largest question. X%, interest is was to interest very Kyle. The open through Yes, if the single rate in transition year-over-year only entire the And really say gone just its X%, that history. X%. that I'm went the interest rate it having futures and through it's options is complex transition. up glad

only We You open in correct. the small. overall a but uplift saw are interest, small

look SOFR each If did future future SOFR and options. into and each April and you Eurodollar what converted option every on at we and XX is every respective its Eurodollar we

would imagine, have As two those have those you trades there different can are And participants had compressed. instruments. would positions who therefore, between offsetting

was was basis another at gotten first look SOFR about quarter, question and or the trading futures. futures the the a contracts first that between what day. quarter, And historically we've XXX,XXX in you the a trading If lot is Eurodollar spread

level, the confidential positions. FCMs. the a my And individual perspective. and do are we was at So, It from uncertain individual the see we not inside very saw compression. accounts my account They

that open overall, futures compression through options of in you level see listed what interest up known am have not heartened year-over-year. the would that And can would have process. is gotten Again, results. we we and I So,

Terry Duffy

such you did at the is else a pick I also if anybody And why things product interest look of get it. some you open as listed concern, SOFR up in a think and Kyle, we didn't had

my is said XX.XX% And I open at of interest CME here Group. all in comments, as earlier

And risk or down that. risk. see didn't we people reason, whatever decision. So, their take add is That for

here said we we're earlier, As to it. manage

open forever. we've fluctuations something in and seen historically that up business all this So, interest are down

Kyle Voigt

Very Thank you. helpful.

Terry Duffy

Kyle. Thanks

Operator

next Owen Please Our with Oppenheimer. Lau go from is question ahead.

Owen Lau

you for my taking and question. Good morning thank

to would So, update M&A CME valuation has that any Could down like bit? quite give locally strong and that the the sheet. have gaps given strategy? And many please us of Thank you on fill you internationally, both a companies balance you. a an come

Lynne Fitzpatrick

Owen. Thanks Sure.

with certainly, most the investment ventures of to S&P with tools in that we different last So, index used number year. from A recent are large-scale M&A to something joint creation M& the a comfortable is over our and we've joint of venture years

out do a for to create always We past in is We're feel looking for us at are the our position value that from shareholders. some though, we transactions. strength and looking of of market for coming what our opportunities given

we to a pressure don't that something can we see where So, feel value. really unless we create act

So, of tool I that happy something regard. It's nothing the would right we we that has changed opportunity in that that say when part our see use is up. chest are to come

Owen Lau

it. Got

very you thank Okay, much.

Operator

is Goldman line Our Blostein go next from with the of Sachs. Alex question Please ahead.

Alex Blostein

space. seen sort Obviously, minute understanding guys. a on the from came it I derivative growth, seeing if mostly complex? at guys. substitution for it's [indiscernible] morning customer any really SPX lot the your product group mini away good prevalent and you a Hi, E-mini a thanks. different set competitive of what spend of that options dynamics in Thanks micro for the equity question. is from so, was dailies, But futures hoping and you could in? that and than And evidence nice you are of

Terry Duffy

Thanks, and Alex. do Tim, ahead want you address that? go to

Tim McCourt

Yes. the you, question. for Alex, Thank

certainly very we strong it's the I at a growth equity growth we're option in complex, And growth the growth seeing at versus think CME. here look when story.

XXXX. of QX million QX X.X we've on is options full a When at which XX% versus record equity of we at futures, contracts, the X% ADV up options versus CME for complex year had over XXXX look and up

result S&P to every of The some more where step the short-dated five options increasingly coming the look can't When also the you in zero risk growth, trend this precise we at management. or wanting of the is zero ignore of of DTEs as out DTEs market multiyear market day for same-day in trend, the expiring that latest CME options weeks. has a week

also in QX when important in introduce we've continue same-day versus full to products But we expiring They're XX% in look options XX% the customers than those seen important various year over versus to one we and our at volume. year XXXX these XXXX expiration. that often. are CME longer that over expirations, in that week We note growth at to in our QX it's growth have are up full

just at CME same-day expiring the not story option. The is

X.X strong interest We in average X% year-over-year. growing our for QX being up and complex interest open contracts, equity have growth about with open very the options million

look equity is not CME. broadly just an also story. more let's But at This option

record XXXX growth options QX also with equity only of QX in quarterly very our options rate interest across offering a set ADV versus also X.X contract CME CME. with not at records and but all XX% options strong at We have of of million

very And up had about period our metal last options, XX% over also our growth is We've up same non-US complex year. XX%. option ADV in strong the about

only turn are can participants not manage not growing, their certainly option-related other we not seeing -- risk to we're here markets all they at of So, our CME. because

Terry Duffy

Derek?

Derek Sammann

-- future, got in not Yes, more importantly, differentiating just for Tim options. every I but I'd asset liquidity cost, Group, talked broadly. major is where CME add more this in we've the factor benchmark just the mean, core such a in

our efficiencies for capital options a of because customers because Options the the of in are clearinghouse. and actually environment futures offsets critical operational stickier create

quarter that just this was top we success QX across to growth And mentioned had the of broad the franchise. in Tim and record whole. a the across $XXX revenue year, as that what the Terry at a call, we've the franchise million repeat entire had said of of

options management to story, are we're it value as We options. set to across the the yes, actually seeing that in sticky as our XX% tools. shift of overall using not contracts, whole of franchise what customers short-dated the about drove our particularly a as proposition, record a options That X.X to part as relates their X.X it represented million ourselves broader record weekly but options a was relates from And quarter. risk And a that XX% set complex million. of last down actually

franchise products. open tools risk using across segment interest curve. So, buy driver growth the the is tells holders, our is our entire out growth our term users, you in who management for client with That side. biggest End

ring particularly natural natural franchise. difficult true our against options -- our strongly true we Not up gas comps energy business gas of only And and in really did particularly, we saw complex XX% see Henry to that but futures. business X% in year, as in energy referenced, a part gas up about due seeing in up we're April, we're large year, what Hub again that this Henry options Terry and seeing whole last Hub as

a client term open it's It's interest, means So, that volume revenues broad-based and to It's competitors. story. know differentiates and open from interest us what capture. and you our transactional one

needs great speak building globally. our end. I of the So, We've shared we're and to And we options. futures customers serve continue in strengthening We'll a to excited points think about success today data franchise the that. had front strong for

Alex Blostein

products clear, detail. substitution you're just Okay. Thanks announcing to for be competitive with equity the But and options?

Derek Sammann

That is correct.

Alex Blostein

Thanks.

Terry Duffy

Thanks Alex.

Operator

Allen go question Citi. Chris next Please ahead. is from with Our

Chris Allen

basis on if could if Yes, just a full morning any had everyone. been Maybe you give what quarter price price wondering was could might rate bit about and talk I little there? the like per you pricing look a increases contract. the color

mix has term trend? a whether I this FX the been that. or other efforts of or asset it first shifting, classes, and on players seeing different sales regional quarter just you're on too, something banks longer know like it's things you've in And this new had member the year, is in

So, sense get just trying trajectory better forward. pricing to of a moving

Lynne Fitzpatrick

I'll this start Chris, is that. on Lynne. Sure.

increases at on $X.XXX saw you increase we pricing overall, the If increase a look sequentially. volumes in XX%

bit XX about saw to a we more uplift where similar we're So, we XX real day year, X% a day seeing we going look volume a last if in this saw a RPC. contracts What million capture are from strong nearly contracts a QX year-over-year, there. million levels

step and that guidance take still based look increase with we overall, provided X% comfortable feel X% to the on at similar if back a year, XXXX. volume we we to full So, the assuming

these feel And across that excited we're through. and What to on continued tight impact really bid-ask spreads not products. about strong We we changes. seeing based are pulled liquidity like we're has is an our most seeing markets the

it changes ebb I don't the member overall It time. the product, depends on on that. is see depends on an mix, long-term the of terms on that flow. going the and trend to and In

Chris Allen

you. Thank Great.

John Pietrowicz

Chris, you quarter out a of full impact. months only two saw

full So, impact in you'll QX. see quarter a

Chris Allen

Thanks. Understood.

Terry Duffy

Chris. Thanks

Operator

with ahead. go from Ken Worthington Our next JPMorgan. Please question

Ken Worthington

you the If investors? this continue? futures? you pricing institutional of makers to delta And versus market follow-up used zero Alex's to in of how on see morning. options. are We're sort using options do much any wouldn't I estimate why trend to Hi, more is really hearing that by good question advantage so, on an zero them wanted of have date there Is E-mini date business your delta hedge hedge.

Tim McCourt

Ken. Thanks Yes.

are future intraday products that question, I interesting I dramatically risk very concept DTE replacement right? of the One, do I the necessarily does. a for form with it's are think one agree have mean, profiles options with don't that line options fundamentally, up an nonlinear movement not So, index that different futures. zero the that a

I So, of a not replacing it's because hedge think I fit-for-purpose E-mini in think necessarily that don't replace is options.

the will formation we of complex ecosystem, products when the the The at say thing that's CME totality that great equity for E-mini across price one index leading I look our is is globe. the at equity

vehicle we options, hedge are OTC whether for on, the hedging goes of hedging the also As whether that's totality SPX it's activity. that index that's whether hedging ETF preferred such, swaps, trading

these see for market that as equities. all are risk our we primary venue things into that the So, recycling

economics members for CME. what's is also of though or at the in E-minis maker think market in available relating as from not happening that When of the is fundamental function at activity I cost-effective a your a available those from just necessarily trading we to RPC, question don't market makers versus options publicly strategy other And CME venues. look lieu

Terry Duffy

what there's management, think in example some it But hearing, talking So Ken, your is. gave a question, Tim about their pretty think but appreciate your book. I true specific we I risk appreciate

for though. So that thank you question,

Ken Worthington

Great. Thank you.

Operator

with from is ahead. Stanley. Michael Please question next go Our Cyprys Morgan

Michael Cyprys

theme you. about set? options record the across broad-based that level activity? seeing. Good sustainability your the is that are activity options guys Great. with the here, customer but of you and morning. back just you Can this to Continuing coming How talk Thank of a question strong different

development And what would And here? you steps from to XX to about talk maybe say is the the and opportunity months for you're continued XX options of growth drive to some next over usage set? planning across continued product take the around options your could you that customer

Terry Duffy

Derek?

Derek Sammann

The growth in of the future. our options is question. is growth great our reality Yes, accelerating

for we portfolio As customers it's hedging value can't cross using are in efficiencies mentioned proposition before, and a they get their options the margin that sticky anywhere else.

over across as To of in side, us, in options Props mentioned for in commercials segments, growth before, up broad in that's up and -- saw a quarter side buy mid-XX%. your kind question growth. set the driving participation a XX%. We kind our participation banks was spread on We our buy the is I are this of client participants record We saw of of retail. participate.

participation. So, broad-based this is

I to customers across that they're before, reason options because out stress here their mentioned curve. enough As adding I using is of increasing the the the portfolios can't are amounts that

the we well. So, Tim the in classes asset that open seeing equity the mentioned interest business. growth that of side position have in all We're across as

What is at growth I non-US faster being franchise even before with US, record overall the our our think XX%. growth was that inside than growing briefly levels, mentioned up the at

rates options We customer options up So, our business, XX%, see the up you we across When across out of business saw growth EMEA actually our board, we at Asia-Pacific LatAm up XX%. business, our look growth across geographies. segments. and the XX%, see growth client

to relates our or as our is revenue which front work access through in front-end record connection we've end. Direct, record got front which to So, done expanding generation us participation the it and as through relates for it to client is end, own the the to sustainability, base, to relates it well. our either our We've directly partners client own efforts, CME

in seeing that's to build of out significant our increase options were that any more training we to place of can a have On amount across Julie access fruits that. regions assets top end we their participation and front execute to to year that, speak the Asia not the customers we've put in been in campaigns board. staff and that customers We're Europe of on in the Europe that in US our in only draw continuing the with educational how sales but to given sales option-specific and Asia. resources

the and addresses that growth scale the set. the of So, opportunity hopefully, of kind

We And develop US. that needs. and continue continue outsized products we'll to suit the customer growth grow see outside to those

Michael Cyprys

Derek. it. Thanks Appreciate

Terry Duffy

you, Thank Michael.

Operator

with next the Simon go is of from Our Atlantic Equities. line ahead. question Please Clinch

Simon Clinch

and cash well, collateral sort for I was Hi wondering the was I taking if you numbers my terms the collateral please? of rate noncash as the some housekeeping everyone. what of from could for earned cash Thanks question. in just on get versus

Terry Duffy

Lynne?

Lynne Fitzpatrick

sure. Yes,

$XX were we XX this balances from down to if the points turn last So, those XX average at collateral balances. from did earned bit cash on quarter, we look increase points. basis a for but million The quarter, basis

XXX.X QX. XXX.X So, averages, average if were we if the look we that at in balances cash. in we at look saw at we QX, to That in compares

$XX.X on revenue other that's collateral the billion QX. may $XX.X the the balances saw We that had those of line. that side, On non-cash we be our up for in QX well. reminder non-cash from earnings And -- comes in as billion, a helpful through average collateral

Simon Clinch

you. Thank great. Okay,

Terry Duffy

Thanks Simon.

Lynne Fitzpatrick

Sure.

Operator

Please Bank question with ahead. of Siegenthaler go next Craig Our America. from is

Craig Siegenthaler

Thanks. Good morning everyone.

Terry Duffy

Good morning.

Craig Siegenthaler

question, despite follow-up wanted to was Chris' on RPC the hike. rates down X% XQ the but focus The I to have business. really quarter-on-quarter a rates

hikes? underlying on So explain revenues the and comment the I'm trended impacted blended you can per if wondering RPC which trends organic why the lower contract despite

Terry Duffy

Sean?

Sean Tully

do Yes, happy sure. to that. I'm

If first actually, you overall year-to-date, of are and you our terms only their X% at the volumes. futures treasury at if in the up look year-to-date quarter look

[indiscernible] times, about growth below RPC So, first know on and complex short-term saw we futures. the huge the by complex. STIRs we interest reported many $X.XX you as is the quarter the our that our as rate have driven in was And

some saw by RPC. the we that options as well led So, silver have volume the a increase futures right, tiers, massive the short as growth on do end lower we that somewhat where driven huge and to

the futures and post SOFR at options of RPC futures and matching Eurodollar increase, now and the the RPC look SOFR futures you options. options for If historic Xst are levels February

not delivered expected. the the volumes much as STIRs have RPCs the relative drop surprise, And growth RPC So we that those and in in is to for a it's products. stronger

Lynne Fitzpatrick

Craig, if volume level, the higher rates look just at QX, the you up growth it our XX%. versus I to could was if And business Yes. in take

offsetting really shows volume. incentives, higher volume So roll-off the strong all including in in would seeing pricing, that you're the see tiers is that SOFR that that growth of X% that the of that RPC decrease of with you in changes some really

in result So particularly was strong that rates. RPC

Craig Siegenthaler

Great. Thank you. Appreciate it.

Operator

Piper is question Rich next with Our ahead. follow-up Sandler. from Repetto question a Please go

Rich Repetto

Yes.

XQ. a relief for of comps go down my as got friend, Just from a energy. in sigh XQ the you And to to breathing follow-up little year-over-year Derek, be dramatically

energy last the XX%. impact but the after think the settled went Ukraine year, or I out, didn't down out out, sort of volumes crisis settled settle

And you health is, I the or update give energy can an comps energy question Derek, going on easier of so overall the you've the be complex? with is us will seen XQ So, much just But million guess ADV. again, forward. it X

Derek Sammann

Rich. That's a Thanks, point. great Yes.

had QX. comp it's up that actually at huge the XX% If QX of X.X that you it's full yes, full sequentially XXXX, that's and of ADV, you first tough facing below the we're bump million to up just energy XXXX that year X% that look this compare quarter when versus versus actually in year that in year,

is only trend expected see, we actually is more what to much not important. this very the and -- So,

based If drift it -- interest, that that futures rebuild restacking contracts to the our Brent about kind in and open of and of interest we're same trend up down. you at WTI followed X.X look million open our

of Over year, up. back it came the the course

players, a reflected participation And funds, the we're from financial in seeing players, nice of open we're that ETFs, financial interest managers. resumption trends. So, hedge asset seeing

saw So, players margins seeing that of participation, deleveraging begin ETF a as brought whole. the more the the broadening financial we higher once in. kind impact some to recede, back of We're complex

the of for exports. the talk things our us energy as I record you've a of centrality We've in levels the market. certainly business, excited WTI crude most lot we're global two heard seen in of the about benchmark the about think that oil

a the exported QX, WTI US of over just markets. X million squarely in think That I energy barrels middle puts day. global

the in market. So, are resumption of the recognized global export in we needed doing energy a we about seeing WTI, what structural but the to have community. a years five We ago, connected Well, benchmark that? be activity are only seen not being to we about shift WTI explicitly that

of Midland WTI call a are So, in to primarily grades as our trade built Houston suite contract that and we that contracts crude and the contract. basis XXXX, contracts back basis products in Permian a our we

So, customers involved including are market that the contracts. export in either or activity more are increasing their in domestic those grades

Again, just mentioned a I of reason interest is those -- below contract. to we we sitting that -- contracts those in open we're our just record because as open. The just had contracts XXX,XXX a recent WTI trade basis

the connects the and day So, both record explicitly WTI on at global of Xth export reinforces XX,XXX contracts. of WTI set volume trading market. to it We an individual February

serve futures similar replacing the in And the that primary and basis franchise, -- the that, coming on the gas we're US, trading Henry XX% Russian development and we're competitive of to actually US as franchise a success Hub to on low-price the share And seeing the Europe market. point leaving Hub saw back in Henry want cargoes here lost the there that not in Asia. I coming increase the last remiss gas for the US above the online market story side the think point up our and increasingly pricing an last LNG that significant and and point I'd LNG is speaking make in participation with to we'd players. The commercial in is facilities that seeing be physical from and

a follow commodity generally are month-to-date in think QX April, in seeing earlier well So, the mentioned quarter. with as we're trend led bit in X%, by And really the are volumes energy separate Hub. question side volumes in trends second up volume a our Terry answering that up that energy Henry solid. little so far we the

global questions take market basis there, So, we market. off-line. detail going in to a the natural Happy have in to like those like position what's both lot gas on. lot crude we more but the of of oil and a There's

Rich Repetto

you. Thank

Terry Duffy

Rich. you, Thank

Rich Repetto

Derek. Thanks

Operator

ahead. Alex Kramm question next also our with follow-up Please And a UBS. from is go

Alex Kramm

Yes, hey guys. thanks again

also SOFR-LIBOR the lift of in One, industry. was both a squeeze but on to couple guys transition. wanted huge then a follow-ups the this for you Just I know

So, that. into resources a went lot of

behind SOFR what's I need you to there in maybe mean lot education educate is SOFR think being the you comes a LIBOR SOFR? guess, how SOFR guess Is I do the or I us, the you fully different? wondering flourish is So, to -- to that basically about future? it's of it's even do What's can is in do question the done? more just next, past? think different, still now is, that like all it when used

just secondly, a quick one. And then

I think transition OTC went on Friday. the

volumes clearing I observed. think that huge we

in rate wondering for compare actually can just Maybe we expect you need second can to Maybe quarter. because maybe so revenue if you not that. it for to have think clarify first surprised I number you OTC were what just a charging quarter you. too the seems a been of huge saw It like revenue run may day there. we we're good in the in terms

Sean Tully

Alex. Yes,

So really good questions. Really appreciate your pointing those out.

So, two there. questions

you Eurodollars and In it's just quarter LIBOR, futures quarter in the Eurodollar options all-time ever all options the futures terms clear as options and the extensively were. of or of and are answering SOFR the first intensively first And futures best as with SOFR from beating and one being used history just options. SOFR and and as very XX-year replacing futures

So, a that's very positive sign.

been has the the and its world, the before history. I that CME has it than futures. are $X.X long-term based different better that global business rates positioning that, There of based reason interest countries, the to today across of SOFR in positioned XX the to worth trillion banking business, in are ever I argue addition term And of nearly for than the on now entire SOFR SOFR think system there lending. part terms strategic CME CME's loans is turned term more on In of is now would are

us worth individual and through our relative regional relationship over with create license us a increase licensed, earlier, term have where more opportunity loans, like which that. penetration trillion have mentioned CME in $X.X X,XXX than So, and to huge been Julie to to our folks that had of they institutions gives opportunities that cross-selling of banks

that's think ICE Harbor. by FCA a Safe that owned for selected by and US US very know, the SOFR recently LIBOR the again, everyone us, knows, been dollar in term especially, and the UK LIBOR law under I under Benchmark you CME positive So, Administration is the Act

used starting SOFR order contracts. their Administration in by will US in legacy on term Benchmark CME So, LIBOR synthetic be July ICE manage dollar Xst to

and So, we for a again, That's huge have dollar better strategically positioned. LIBOR. opportunity replaced US us

heard In many as I'm am, terms you've of on years I growth, call. future on excited always me hugely as this

we We redesigned traded. particularly the when redesigned bundles issue, and are technical how we it's and and a quoted redesigned futures bundles, launched options, in way but and market SOFR we packs packs the

That's many easier packs options so this than on to cost heard hopefully, are much Those clear say make and contracts it listed, for to and lower SOFR SOFR us the me you've year, bundle, options to equivalent. we before packs this bundle. going times, have later that love launch on total OTC standardized

lower be cleared, alternative total standardized, to listed, going the bundles are swaptions Well, market swaptions to The cost options on isn't and packs market. clear.

the that mind in that I'm options, So, have designed designed that because SOFR with excited we massively SOFR we day for the Eurodollars had didn't in opportunity Eurodollars originally business we about one. When with and that futures from mind. weren't

very we're futures excited very rate most launched. is in our In our short-term features European TBA contract addition to And we've that, about liquid other future about that excited €STR, and the we're the world. risk-free €STR

development us the been. very strong would further I the pipeline have it's So, strongest is front ever say and that in for we of it's

Terry Duffy

try up put because to just repeat on -- ahead. -- to I would finishing them never So Sean's point, go and

Sean Tully

I conversion question. and that OTC fees, did miss Sorry,

Sorry.

So, we did charge.

charge And correct. lower and I think we posted We charge it charge conversion. a $XX. we are You was did normally that much than

published swap. So, the is That it was fee. per $XX

So yes, for charge did that event. we

Terry Duffy

were and you point But Alex, to our thereof. right futures into market the out the conversion growth about

to do this believe And are Sean excited marathon, obviously part heard distraction from allows to for standpoint of franchise. things just Eurodollars we continue build look our this But this. is my that to we to you the us where referenced. As other future. and I exciting moving over, at the the from That's that which will an is SOFR the we on ongoing Sean,

the So you perspective a your very growth for is forward. exciting going question. Thank

Alex Kramm

again. Thanks Excellent.

Terry Duffy

Thank you.

Operator

questions And closing back appears turn at further for time. have it this remarks. I'll call to the no we management

Terry Duffy

today's global at world you the call. want for Well, able were throughout entire you to to able thank to has team present employee participating Group. to deliver I want thank The that especially CME all today. base to been in I we And all of my results the

do And opportunities that, and we you. continue massively to drive because I your I you efficiencies much. think all want very important to we live. it's again entire shareholders. team. to drive to will our value That's the customers to we Thank We as thank equation my thank

Operator

you day your conclude that that And does kindly Have We you great conference the for all lines. thank ask participation call your for please and disconnect everyone. today. a

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