CME (CME) 24 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Adam Minick	executive
Terrence Duffy	executive
Lynne Fitzpatrick	executive
Patrick Moley	analyst
Sunil Cutinho	executive
Benjamin Budish	analyst
Derek Sammann	executive
Simon Alistair Clinch	analyst
Daniel Fannon	analyst
Kendal Vroman	executive
Kwun Sum Lau	analyst
Christopher Allen	analyst
Craig Siegenthaler	analyst
Tim McCourt	executive
Kyle Voigt	analyst
Julie Winkler	executive
Michael Cyprys	analyst
Alexander Blostein	analyst
Brian Bedell	analyst
Kenneth Worthington	analyst

Call transcript

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

Operator

Welcome to the CME Group Second Quarter 2024 Earnings Call. [Operator Instructions] I would now like to turn the call over to Adam Minick. Please go ahead.

Adam Minick

Good morning. I hope you're all doing well today. commentary second morning, will quarter on call. executive details provides be our this the on XXXX released earlier which this extensive discussing We which we

turn Therefore, predict. safe this or statements. to outcomes difficult on and statement. website. These are be that are guarantees assumptions the with that in from documents not may expressed and may and found I'll results are is Statements Detailed that reference call harbor filings of other statements our materially can They our the with implied to Terry. actual are the differ then our factors start involve future uncertainties and any performance forward-looking SEC, affect in I'll on on it the information which what not over made facts about risks, language, performance. in website are historical

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

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

Terrence Duffy

you, the Thank make comments you brief us joining overall few a going for about morning. all I'm and this to the environment. and quarter Adam, thank

Following quarter financial will our of second that, provide Lynne results. an overview

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

growth single volume, first class. quarterly the revenue, since open to This strong record turn to manage for delivered again year-over-year broad-based benchmark that grow, most Our second every in with across average We set by asset where reinforced continues of participants results this risk XXXX. quarter and need products. growth both risk interest across and driven is management quarter how the market CME daily is diverse Group the

daily robust will represented QX quarterly of This XX.X earnings, Lynne X.X daily contracts average detail XX% increased which up in history, quarterly or activity million non-U.S. record the average adjusted drove volume our million year-over-year. contracts quarter shortly. a including XX% Second volume highest for ADV of and record

energy products growth XX% contracts, respectively. ADV products XX% year-over-year metals and commodity to across all our both year-over-year X.X delivered million and double-digit at included for which We XX% physical growth, growth

overall representing Importantly, XX% XXXX, transaction revenue has our of million, half versus to $XXX XX% record half year-to-date in in our the revenue and of of year. commodities last the over fees the clearing first up portfolio year first generated

Turning the increased treasury to from record million last including ADV contracts financials. our were of Total X.X ADV XX%. complex across XX% up year, QX

XX.X even deficit XX. rate high Our on set of versus quarter year. in million U.S. grew tailwinds, foreign XX% quarter volume continuing treasuries new exchange QX financing last absence during The are the of a ADV and second issuance of May daily the Also, Fed record contracts levels changes.

Within unmatched impressive in provide capital In resulted per for rates options customers. results, and our our day addition clients again, savings futures volume margin to quarterly interest and for we our efficiencies our the to of I'll with franchise. say offsets rates unmatched efficiencies unique nearly combination these alone, of it continue billion through $XX

one offsets else capital exchange cross interstate with rate million is the approval basis, the unparalleled. and with a XX offers options efficiencies, no depth has cash treasuries on the cleared daily of liquidity, margining one-pot our Our clients at complexes coupled and our margin and regulatory which provide, traded CME book, to swaps futures versus interest savings

period will integration. during step our announce a to on the the provide to of consistently of growth, needs detail long-term eye with excited to Cloud. the towards we room pleased the partnership deliver are with innovate an quarterly in results significant particularly customers. Near Q&A earnings with continue were our and forward with we quarter, have While the quarterly Ken ability our we our end who I Google in Vroman the me more

colocation a computing. networking build This Illinois, in trading next-generation will of latency in faster through product to and on plan connectivity with Aurora, and build of cloud our facility Cloud region ultra-low today technology, broader markets and next-generation designed private the options cloud futures development. We a options support new global provide to the platform and a range high-performance our benefits clients Google we

to addition trading trading their and also our help infrastructure, clients utilize to In will risk state-of-the-art to Google's to develop, and data test manage efficiently. be artificial intelligence more our implement able capabilities strategies

U.S. half uncertainty most more political in manage Middle these forward need to of the to working markets paramount. sight. begin the with encounter the efficient this and to of with at that for the a Russia issues liquid the manage need issues These few has and events between just ongoing Finally, sure make disparity never that, around uncertainty with top of and have markets look to no we management are manage. they the been On are geopolitical coupled need and in the risk end unrest definitely continuing we of year, That mitigate clients and in products. the the world. opinions second others policies, landscape as our looking the the with the highlight Ukraine We risk all that to our East,

to turn to results. now I'll call review the our QX over Lynne financial

Lynne Fitzpatrick

Group the quarterly our and all highest up $XXX earnings quarter billion, at transaction you starting quarter, million. ever us the strongest second joining in of our Thanks, revenue Terry, this this $X.X from the year-over-year grew over in CME and in and X/X XX% physical clearing classes delivered thank history the represented with Quarterly XX% over at fees XXXX. commodities for quarter for asset revenue morning.

million Market same to $XXX data and XX% X% year, over increased increased million. other quarter last revenue of from the $XXX revenue

$XXX adjusted of quarter excluding for expenses $XXX million the Continued led million, cost fees. strong and license discipline to

$X.XX up the Group highest had from last quarter represents the Our second adjusted the demand management for year. XX%. up margin share per tax earnings and and income our per both million from robust $XXX in we This risk delivered net for XX.X%. net history income an the of XX% was an period Driven of rate at operating XX.X%, adjusted margin year. last share, quarter adjusted CME quarterly adjusted same in products, our the effective XX.X% by

expenditures for implementing were period shareholders in cash of dividends the million, approximately billion. million, quarter the the form we've policy XXXX. was Group returned dividends in the and during Capital $X the and dividend $XX quarter $XX paid to $XXX early approximately of end and CME second billion over variable of the at

half consistent XXXX. the A demand to XX% quarter, above half of for trading evidenced our XX% million first of in this in year XX of days products higher continued compared the our first second contracts of the in by being level

for first business, year proud all-time quarter. set including of records, this all of efforts X for industry need shareholders efficiencies future continues on driving clients X evolve. months the as our X the earnings management team providing while volume to addition, focusing to our this they our and the months with the the also growth their and efficiently capital products risk In We're very

call We'd for to questions. your now like the open

Operator

first from Sandler. with Our Piper comes Instructions] Moley Patrick [Operator question

Patrick Moley

a provides how think how the what And margining? potentially understand first just your then that you portfolio of daily time what we competitor to provide that you that also buckets is investors maybe of compares customers splits it billion. was or elaborate the just about of margining, margin or when I could today maybe looking between margin $XX help moat disclosed buckets, the you and type savings cross offering the think breakout Can you elsewhere? that aggregate that of amount

Terrence Duffy

question. Patrick, thank out Sprague Suzanne for to today. going first your you sick is the answer Sunil is Cutinho as part,

question. headed because I ahead, up latter you was as know, Suzanne question be many short competitor it our but Sunil, of relates answer So offer will to the a -- will the one, who years, for on many, they it informed part what that that go Sunil. clearinghouse and as very

Sunil Cutinho

same cash options, trade futures, The swaps clients both products. and

for billion So options. split the futures then with and rough for and including options billion $XX $X is billion, flow. swaps futures the cash and around $X

Terrence Duffy

if any business, to efficiencies efficiencies they to with who people competitor exactly less futures Patrick, compete have date. as you're are announced any And so their going they referring to don't a X, can't have they're have such

get don't they have know speculate Sunil? to what your what answer you I they're think the to want not But do going X efficiencies. is question, or So on to me you get.

Sunil Cutinho

an additional cannot I . provide thing efficiencies add either. would our to -- competition relative is other option any only The

Terrence Duffy

Correct.

Sunil Cutinho

It's very unique to CME.

Patrick Moley

at Okay. X% those X% you Could where the by sense -- just Great. on you beginning in And you of you directionally you're how then announced you're year maybe you revenues. maybe how ranges? behind in with half towards that? feeling of come have a and the within And us, increased the us expected tracking that then update X.X% maybe year increases or you said can just futures about one to the on bump revenues pricing data to market X% X%

Terrence Duffy

Patrick. Lynne? Thanks,

Lynne Fitzpatrick

Yes.

Patrick. thanks, So

with first So half, guidance. the consistent far, in the very we're

on we products, well the So of through X% X% on of clearing on the getting line X.X% the tracking very to to impact to say we're said X.X% X%. various total first somewhere X% each transaction And revenue a data and to would I between that and those items half. then fees,

Operator

from question Ben next Our with comes Budish Barclays.

Benjamin Budish

update efficiencies looking the think been of you first Maybe the you you to you process how And are just DTCC of on signaling? are where are Patrick's following you've give where be where us there then what to? getting on margining question. with an up cross Can you'll program, kind in versus getting

Terrence Duffy

it turn to Sunil that to answer. going I'm with Again, Ben. Thanks, Sunil?

Sunil Cutinho

advantage have XX taking participants clearing of it. We

We And onboarded continue billion I have as mentioned pipeline a before, and about in that grown shortly. $X we savings, few grow will that. we'll more in be to to the have

on participants, that there. the also an all trying would to require provide efficiencies indirect approval way are working We with to but

Terrence Duffy

exponentially reported savings quarter. then up So last last the since out we gone has

billion for watermark of record is near hitting a next number that So $X a us. high

Benjamin Budish

Okay. maybe energy just follow-up the side. on That's a And very helpful.

taking white that Could WTI were paper Brent an just that unpack increasing setting the may have think, existing been a would is Are of you talking increasing of seeing and trading price from amount other of happening and other color during Any you that how hours. there helpful. I . platform, little the posted European it share exchanges? You customers seeing, new joining the trading be on a WTI previously use about you customers bit?

Terrence Duffy

Ben. Thanks, Derek?

Derek Sammann

Yes. Ben. Thanks,

part of of a revenue record is first a this As at we that. top Energy mentioned had side. big call commodity for year the the half on you the heard the Terry

year seen overall this up volumes also XX% as XX% Our our energy to contracts. growth, X.X open million interest are well. We've

at this of at complex, production growth we in business, When crude the is creating actually look U.S. you out net said, is exposures non-U.S. export amounts we've as with new EMEA that's look across for oil side. on see you record WTI WTI energy volume where that WTI from side, the both and market, When our XX%. coming customers on side our

this year. XX% up So European customers volumes from European

WTI Just side, the from customer up XX% on base. futures that's European

as to Europe oil to up not using options expected, that physical hits we U.S. side global oil as where on we're imports market, the directly now this manage is well that acutely WTI exposed in products U.S. were So option as customers crude year. expecting risk. most WT the XX% that We're seeing see to

As year. we're our also seeing it where from coming And we're relates the to December X share competitors in to going flat growth customer from, in the now we're new on options, of that's shares XX%. and our the months increase last between of and to but XX% WTI net WTI share side WTI kind actually basically back seeing seeing Europe,

continue we growing and in growing. terms. growing that see So in absolute we're to terms, We're relative

Operator

from comes Atlantic. Clinch question next with Our Simon Redburn

Simon Alistair Clinch

I competitive been could would you wondering maybe signals what expand the if FX looking going kind you'd to done that's And was forward? you how competition the because a back was here. be pulling. respond on competitive been can Just to has I if could you of consider always historically environment. you to as of this reference And you levers process wondering circle

Terrence Duffy

you're if Simon, question launch . do I'm going is if what they actually confused is we to and going we're asking. to what what are actually they your do business? get

Simon Alistair Clinch

responding you a how happen, would what that for? terms will looking No, And think more of about those you they necessarily in signals. Not to what might do a of might case but... and it's be

Terrence Duffy

X And I could cite to over billion $XX made that we of it clear numbers position of we for last have a ourselves years possible. industry. something made have number the to a I've on of to that strongest done I perfectly we said, efficiencies investments put things the base. the last not didn't time the in the client period XX long if the unparalleled, as create the is in call make our that is over

position in very are today. We strong a

potential a be that a go seems direct to to to bit a unproven people a from venue. stretch fiduciary business billion So an margin basis to walk $XX away for of daily of savings model on to in

the So we strong are to announced with today competitors. position compete including in anybody, a

been is And prepared believe always something We always this competition so for. that And preferred are I prepared better. we've makes always do for. everybody

and take -- That's that's I the investments made to for continue along everything We the that's done the our why seriously. and So what do. we'll we've we reason way. clients have we've what

-- this have to of see part additional to what First question are they're offer steps. I wait going those and here.

of Let me to foreign on United outstanding list another England. the rules treasuries that to of run country, debt the United sovereign of United Treasury clear There's anybody the Kingdom States, of the legal government U.S. There's and of the not jurisdiction the this trillion under no depends the the sovereign outside in $XX U.S. States, foreign that clear. debt the United or be under Bank approval rules for debt in United in in States States.

will how we proceeds if that see So goes and that wait anywhere. offering

some I the there's to the some jurisdiction with forward track nation other had about records they've of Britain of LME with a of gone of think issues lot the and a with. giving up size Great they've concern

to have wait Simon. So we'll and see,

X. long you they'll So horse, the the why do. X want can decided efficiencies that's to but of go in what and there's cart way I I That's a think don't front to the even are before put cannot stay and been

Simon Alistair Clinch

I appreciate that.

Just follow-up question. as a

-- options. the in pricing a on Could I positive futures to declines rates? together. long-term the within that despite from RPC, what's from shift Just to just a just you that sort we're on expand back of trying and and piece dynamics franchise. perspective going to particularly really in just be back towards year-on-year mix rates should And noticed in what that ultimately I'm mix going

Lynne Fitzpatrick

I'll increase. price take the

you're question. your So the -- so Simon, looking year-over-year rate total. at That's RPC in

Simon Alistair Clinch

well with. impact the and as from Yes rates Yes.

Lynne Fitzpatrick

on So were XX% if rates at they you up year-over-year basis, a look volume-wise.

increased you some the -- pressure So going volume to are tiering. from see pressure downward

block last a You have of you also and this is higher decrease higher quarter, some members but the have volume you in a a contribution have treasuries, that of saw which year. positive, do do we

a the to in that number at I rates which that there's impactful RPC, a probably is volume, revenue say is for would but number pressure the there. XX% downward the So volume complex, growth of factors most play a going uplift given that have on strong still growth.

Operator

Dan question Our next comes from Fannon with Jefferies.

Daniel Fannon

about Was hoping, for expenses bit. Lynne, a just to talk

First in guidance, half run tracking below the that rate is half. typical seasonality second of the well building

time? talked partnership So hoping Google, that of guidance about that then what on? and/or you've you're bit announced the that kind also in that from about you investment what means could partnership colocation perspective And flush terms expense facility terms spending out Google of of with thinking in you the over new versus an of just and a in that

Lynne Fitzpatrick

Happy Sure, to. Dan.

that half with comfortable the half, still back are we in of $XX a the the we things guidance, few versus would keep the million a about saw in increase what first the full yes, in imply there's So year year to mind. guidance

new typical the brokers supporting more marketing like uplift that mentioned fourth in marketing in event You is coming other some we're spend are space. to items have some we continue, things spending that our as the but are where and retail you into on going also quarter, that

going is be to migration. increase that of piece Another Google the around

our So line will increases consumption some item. see of cloud the you in technology

as to the see year. through will to of the balance continue few past go in that quarters, see that starting we You're you the

spending spend. more less more out you're come of consumption offset the that will the CapEx, we move on as seeing that we and is see of applications Remember well. you into cloud, depreciation are As

mind on we've The things work compensation. are that be the things to other like of treasury of keep going balance the increase that in and some the in is project project-based to announced clearing

just number fourth in factors in the the past. that So of seen we it's a and that we've remain comfortable beyond marketing spend typical increase, quarter with the

Terrence Duffy

Jim, you more talk of about the guide? market do and part . you to the want second

Adam Minick

Ken? mean, You

Terrence Duffy

Ken, I'm sorry.

Kendal Vroman

capabilities little and Vroman. what to respect Terry Terry. one-of-a-kind and At will to resiliency purpose-built this facility base. We're This just the Ken engineering on products customer new next advantage time, Google. thanks, markets allowing Maybe cloud, is excited the operate latency there provide services. that of delivering that new CME alluded that very Yes. And for context ultra-low with Maybe the -- about in cloud to in what's our an we announced our in to for a bit scale we same the customers cloud, to amount next into take not both of the scale, that to innovative efficiency, and will of allow cloud. think is went

So excited burn as XXXX extended to that. about of with capability. have respect that as our in to that, ensure out relationship we're that with we We've goes far very plenty to Google this time

] process. drive and NEX [ that facility are we make technology sure in the for Aurora. working to we that out So and customers in the We're out get reaching as iteration our us, and with now for correct a we build ecosystem the

At time, talking non-ultra parallel the low are same Lynne's CFTC approval we from that latency our the received our to the of cloud. core about, the business things in some to clearing regular cloud, to the related to run we migrating business, and in

the latency continue progress business there. to shortly be go the to way about that running great and make through expect We to We're will and cloud with of other respect cycles in it. non migration respect ultra-low to applications our X/X with

Lynne Fitzpatrick

in impact forward. the of give finish, it going guidance expense have the in will the impact and we guidance, on the piece as out on And current Dan, doesn't any just an to layer that, we years

. financial colo from the guidance facility. back no on So our yet

Operator

Oppenheimer. Lau Our next with comes question from Owen

Kwun Sum Lau

go about administration not election. change we have could that potential XX comment mainly upcoming trend broad interested election back the hear because know the to a about does and more CME to I asset classes, it's question how next the but secular over XX I'm of upcoming and may there many different impact potential Is Terry's So to some it in appreciate? volatility? Or fully months. is you

Terrence Duffy

who that President have several administration this House, Depending a here. in with be very so last it putting come the agenda same assumes careful and back again, is we the White over his speculation, policies Or on the place. is is we've years? Trump seen it Owen new to in

for regulation, more taxes, the that less You for of agenda issues know is domestic to is, more less his more attention try things country, domestic what to eliminate those. nature, security to pay

So does that what markets. the with question will to have be do

X of the the people no in uncertainty, look different say opening to sits on regardless is are office once And to they House, at to manage think what trail matter and I the who fact. markets they going things. White I and need normally in will comments, risk there said history, as campaign -- that you'll because find if a what my that are do assume that you be

very the of some rhetoric the on that campaign with say you It's through to difficult follow trail.

to I a doing. get think independent which them like the job So has, so markets excited tried Trump next skittish as going prior, like sit another, make or the of President not day, or the get Fed he great you excited did very has to stay on done way the rates take to down? of get Or one fun does to Fed Fed the is X

So lot there pressure in about out there's rhetoric. a

could advice if, current X think wait administration, he that than people in know obviously We've a office. been. and the a years new President new cabinet I have going completely And where Vice we're if does new has we he see. whole X. the office, that with might the the does the If in fact, the And around a be to first you'll So him different cabinet assumes administration and have a have had change had office, of reassume man. to

any don't there's And there. so think I surprises

around France, a is say So has surprise. and that's I the be bit markets very because overall, the to was We We U.K., a saw need I in a at that to it. it the in dog tail what the of happened U.S. with way what it, the look of world is effects long-term a the surprise, this little because issue the best important. little attention a the bit on volatility can to happened pay going that, saw markets think,

the rid So Lynne? of manage forward, again, rhetoric, and markets to we'll we've how to get see wins, then the got move who but seem that's it.

Lynne Fitzpatrick

would our dynamic, I of that a this through play Owen, of markets that lot today. add volatility And we're Yes. just in regardless seeing

we about both the in records quarter, talked interest. the volume up So open that classes fact X the asset in all and were

that If you basis, year-to-date same have a we look on trend.

this continued volumes continuing up towards X ahead So all-time an XX% and use be up, such across that this that risk need strong, product, see and asset hold something these if fairly that July current unusual. trending record are broad-based in last that's are we're has won't Typically, all year-to-date a classes, the and people levels across we to be management is to of interest environment of running have. of the all we offerings but open it July, that's the seeing our

Kwun Sum Lau

to the That's competition persists because approach not I stock situation capital interest acquisition have has Got about all? year my been maybe your narrative. then record at change continues about or rate mean the follow-up pressure the this the how but priority strategy Do if company And of you it. stock. and quarter, the -- helpful. we and under allocation

Terrence Duffy

is it your your Fed Is I fair? that think to a little then It Is was policy. bit we And I pressure the on got due Or it the But question came announced capital about, market? to question your was through competition? due question. think, return. scrambled.

Kwun Sum Lau

approach mean out the are change has even you been quarter. you that it company say -- is continue I under dynamic record achieve priority. would though pressure how stock I to capital your dynamic option

that's I question. think your

Terrence Duffy

Okay.

and start, jump head then go to going is Lynne I'll So in.

Lynne Fitzpatrick

Yes.

performance And the stock certainly, to we continue on price. help do the record can we what we have side equation. seen between the to certainly, and performance the that So disconnect

something something something undergoing on as capital we review it's On the the policy, to we're returning of periodically are return capital manner. that do new shareholders to consistently look effective the at. in It make capital we most stewards we a that that is good again. sure It's

So should communicate both change, and anything we'll be certainly And we'll to with continuing analyst shareholders go that the process. through community.

Operator

next Chris with question Our comes from Allen Citi.

Christopher Allen

I currently I wonder out not, wanted what to help data call of you the natural expect talk centers to And could in opportunities, us frame on impact hedge structural from just there demand why? energy could if And gas X see data the some be material any growth energy through center AI-driven on opportunities you specifically natural around volumes? to impact gas, thoughts any a next, exposure? see on potential years. whether it, it if over XX you on the color

Terrence Duffy

of Are before gas, take you So and that gas will with the about I'm suggesting so. which your be answers the favor? favor will natural it a understand or because to on and natural run compute Derek more . question. that in gas we good to of natural talk will he out to that have AI story trying AI

Christopher Allen

Yes.

pretty natural work demand from energy Our here material energy filled driven increase. around by a gas, by demand is And AI. XX% the incremental centers to expected has -- be team data done

I a it So positive as catalyst. see

Just are that framing out. guys wondering how you

Terrence Duffy

just understood I question. sure want make to we your

Derek Sammann

for But the gas disagree that just AI. to going the don't the premise demand that's frankly, with and Yes. increased energy there's think transition I natural that story. be Chris,

seeing seeing seeing we're nat So gas I replace a mean, real We're other, you're I adoption all of not eliminated. coal reduced just nuclear. mean

solution. So natural gas that is

outside we results you both that natural we record the in now. up options gas at This coming seeing gas basis compacts year-to-date Hub gas fastest domestic When story Henry multiple a this year, with is nat story already basis our growth U.S. a look global and quarterly we're the from set because as XX%, up up records year business options our We're a much futures as more important already on in the our seeing in put and nat for XX%.

the terms right of now, our at are in part globalization of look XX% participation, of a consumption up XXXX options records We're as seeing year-on-year. you when growth So business Hub, that EMEA Henry year-to-date setting big well. we're and

And see limited as this future. nat as position about not transition and increased that to is -- of share but our fuel, XX%. a being options by shared just story, futures fuel So XX% energy that being gas broader Henry natural in but we're well AI, to business we a we're a not market a consumed business, gas that we've for Hub

feel that premise gas Hub a position about source with the and we'll that. natural agree we So like be We our good energy Henry we see global bigger time, over there. of consumption in

Terrence Duffy

Chris, that. follow to on just And up

handful to X%. that's the energy, grid in States guys fossil or power as The which powered are you continue you up, as well and and a at think I by fuels system AI anybody, nuclear Derek's use just your story. them to the the significantly would green are United are X% is, When of know question right. as the to look they grids of call point, grids down know I but don't what today you America, if and I would

about needs to our bigger of the gas and have natural play out running how So because parts today. lighting world computing AI, not don't a role homes -- We so power our country. we're only of in the powering

it's lot agree just with your we So lot bigger but -- there's story premise. AI, a than a

Christopher Allen

just how dig rooms But ways what other I relationships areas of what areas with just relationships. wanted on I'm would in terms bit top are I'm would dealer for a their a always there just And CME? wondering of asking is dealers. going dealers to follow-up, little for the improve view to to they list. be wondering for imagine improvement be in price

Terrence Duffy

I maybe that always run return heard people you good, CEOs a I the doing. but team. relationships their by street the does a the hate and on for Harper very the for closely I work I over with dealers, the think to bridges and something world, the the And who way what the the we them invest And FCMs down only worked you years, not But this, capital-constrained in savings with $XX got giving pleased enhanced trading. think are that but we billion as you lot up keep them on are very daily when them. basically I and is with Chris, with relationships are didn't. the of all give of them like of imagine can makes them crosses to basis my

have The tendency bit relationships exchange does So a dealer little the turn good. I think more the to over a community. community are than

working bolster those relationships. we're the things. form. the as any out I fracture because But that's there I trying of them So fractured other his think And brands don't and promote that see pricing is in in shape XX or promoting there way, constantly to to guy

you remember, What smart and think, to this, affected smallest enough effective that. cost. The of and the transaction cost what to know the got are that any and participants, the I understand you're they is transaction dealers Chris, spreads really

daily the that issue. lot is a on goes $XX billion We a and way to bring of cost value basis. the So a not it, long

Operator

Bank with Our Craig question America. from Siegenthaler next of comes

Craig Siegenthaler

you Can hear okay? guys me

Terrence Duffy

now. Go Craig. you We ahead. Yes, got

Craig Siegenthaler

Perfect. right. All

efficiency the we a capital So rates topic. had follow-up on

is capital versus cross-margining So in future your But that reduce held actually was mostly efficiency a XX% heavily disclosed that that skewed call CME America do swaps SOFR of you given to that than the the swaps futures efficiency less towards with a rate clearing. CME business capital XX% Latin rate to and based? business quarter, the would future interest CME was

Terrence Duffy

call Craig. I'm that. you're on, not We didn't sure we say

to can did not it you but we have not follow-up is through true, Sunil now, that -- So a as right say that. happy we're walk and

Sunil Cutinho

We rates all across have products. rich and of liquidity deep our

but rate. in that pointing efficiencies is house we futures, we significant out Latin And market share options, clearing and capital swaps dollar very cash the rightfully have between market dollar You're provides or American currencies, strong. our only that are

well. of So are pointed The Lynne structure the the growth very has been themselves in the the of out, open interest capital open as the a And efficiencies interest. strong. has grown of and and portfolio as function

Terrence Duffy

what was swaps maybe move were portfolio swaps I what in look margining, offsets their we're CME swaps business get you've you today. clearing, they to to those heard some against of is if would Craig, the you So we rates out, assure but future anybody on those think American Latin at up if giving our clearing pointing today, I dominant portfolio probably

everybody trying to CME that's to $XX billion. to we that's the the is achieve business offsets reason So bring got this and

we Asians Sunil? Is think we that clearing. I the swaps dominance in were of fair, So American Latin reporting their have the

Sunil Cutinho

open important here holders. have over That's is fair. then And the most X,XXX we metric large interest

carrying And are Terry out, day. who those day. So they are every as have to pointed inventory every fund they positions ones

So material. this in billion $XX capital efficiencies is

Terrence Duffy

ones open And because holders, that's important the they're go the an number, of direct they rest to where call, for of large and $XX that interest driving benefits their X,XXX the the billion. Craig, they trade the

X So which trading that's people convincing proprietary lot people, of a convince XX to it's are not of firms.

Craig Siegenthaler

provide SOFR efficient rate total margin margin futures Got futures initial rates may portfolio as guess balance was as in be swaps. might rate lots U.S. have that to swaps it. the I U.S. that to savings and our and not interest U.S. between benefit not rate enough CME worry

but would you don't the between of efficiency if I high-level commentary any So that kind know be X, helpful. can provide

Terrence Duffy

Tim?

Tim McCourt

those Craig, think across of yes, how to be I you're permutations product get is and various efficiencies the extracted can think there's what types. capital various interesting trying what's at -- calculations I

options. we I interest and about think open think have takeaway futures right what the the main SOFR silver of XXX% should is now, across

afford who to actually of saving. part that the or only unlock the as mechanic can So that calculation we're ones a a

SOFR with made improvements used can SOFR options can that cleared in the the January against at be cash gross can futures used the now futures. SOFR used and margin. be FICC on side could against, treasury enhanced with against that used we OIS So be swaps against be positions

the here just mathematical So necessarily not is result. a real takeaway

the CME combination. the the just computation possible gravity clients rate have is the more any records things sort across of one are those to that You at of look trade access not the pool the efficiencies, the that of holders, open risk important interest complex, by because how capital the cornerstone growing at was with here the open large individual

Terrence Duffy

-- color you, give for Does that more Craig? that help does

Craig Siegenthaler

helpful. . No, that's

Operator

Kyle KBW. comes question next with from Our Voigt

Kyle Voigt

terms a a could a expand migrating a on bit follow-up clients the utilizing you versus just Google infrastructure. practice just in potentially a infrastructure Maybe might that towards announcement. cloud if of wondering service on how I'm as in offering work self-managed

rolling new or or material feed positive impact, latency data on I'm specifically, any the connectivity, and the if subsequent CME's matching low more negative, out colocation revenue? And wondering engine colocation facility and migration whether have client will

Terrence Duffy

use data facility. that, for think going because deal their disruptive concerns of Ken when data in the one make How where but I to let to important. be? that I'm that would comment one announced that We've this our center I'm be? facility going be, you, who Kyle, clients street. announced potentially that cloud we cloud to And main across listen of We is XXXX it's where would could it that answer

disruption the from So there perspective. is client no

them at CME's we heard build we and to Google worked clear loud to Ken, bespoke it So facility with turn and I'll partners for one-of-a-kind for clients. you. our a

Kendal Vroman

Yes.

of services. about We to floor similarly. models, just number It Globex the customers for One products that, first when new for allowed to wasn't think replacement migration and but the things a on were business floor. as over to the developed, around this, migrate a We as us strategies, put alongside the new was very of build to was this enable it choose cloud our and time.

advantage manage there. have take can or do because own gear to today move various capabilities will forward and do They said, what as they the ability managed the solution and we migrate our can of today, cloud, customers, their because what the location, the So of continue of Google into with they Terry the they choose. to

But to pull important of the it certain the us based to ultimately, it on allow pushing happen proposition, direction. was migration for us not in a value the

leverage manner seamless we're tomorrow of So that that. because a out Aurora happen facility infrastructure in have and in they the it to will infrastructure there building migration for the leverage today, allows the

input And so do we as that are now we a that sure daily I can that. be we both all intentional and with get careful a basis with said to earlier, on right. our we're customer process we where customers' make iterating our interest again, And in as

Terrence Duffy

electronic a one clarify an was of just me a product my colleague floor outside thing said because Globex let -- product product. the that not distributed it's was So was trading that Globex was important, plan.

So it's not a floor-based product.

clear the Just are make all sure want to layers that's for listening. that that,

Kyle Voigt

one infrastructure. of elect clients positive the happen colo to you Just a and does the revenue migrate net that point CME does but latency kind revenue neutral pull the when there, bucket? to connectivity, those is net that negative Google net and data happen feed clarify for perspective, From they or to when at migration or though, a or low look

Lynne Fitzpatrick

pieces Kyle, at point. there's moving in this of that Yes. a lot

too at So to there's that a that that once number more existing potentially facility. have guidance, that, number data, of changes streams this you be early access just to can There's comment streams. to to going we ways closer to probably will excess ways can you on we get the but of point. to be It's a going going new be there's

Kyle Voigt

from sales just on is side. question I point, value buy-side from more in kind about of questions has so futures bank competition. ] just market has Obviously, maker around or announcements if you're XQ. more communication your my on if other asset this team the force, the But [ firms with constant end wondering, funds, we your saw at sales the this I I'm And the FMX up managers, CTAs, large Okay. users, discussion and FMX then end in of platform hedge could client products. CME just the your guess or partners follow proposition? been any a just on the any fielding users of

Terrence Duffy

Yes.

deals Julie Commercial want -- answer Chief let who you our Julie, the us want to clients I'll end with most rest of Officer, user Winkler, to So that.

Julie Winkler

thanks force question. has engage we're our each every of our sales And is part for a opportunity great this the with No, to customers, certainly, continue and been doing what for Yes. day. to which

continuing resilience. with lot us customers. is just volume demonstrate business and it's rates XX% talk our strength This record a Our surge to futures giving to about treasury in ADV, and

to listen do as the we value fees very And piece And pointed what -- are offered. key one part of the is customers. feedback, being small earlier, our we're that is out a Terry proposition of transaction

are the aspects we efficiencies understand And capital we're to they're hearing on what the being that and so of offering, all that as key focused very do which really sure also have, and the BrokerTec we options is that well well people dynamics what our sure making proposition, dynamics that call but and our complex value liquidity, across both and been talked make the is this of has of of futures trying highlighting with we treasury futures today our that as on focus of SOFR conversation. about aware with our our those

people extremely anything quarter. So shown volume earlier have constituents would their those that's over we're the that that or not assessing with spoke happy to concern us from exchange and on trading past hearing that our are you that

Terrence Duffy

fielded of I'm can side not together anything the these calls I do Those business that feeling, are offering. feeling continue been In what any create from to to the other the call calls we about of that more me Kyle, more that have efficiencies. I'm

What me business bottom CME's community. business III. calling and the more the together together. talking Basel more for about work can line? about they're we Talking from So their the continue mean real calls How to to business That's I'm efficiencies. . that to that does creating build

Operator

comes from next Stanley. Our with Michael Morgan question Cyprus

Michael Cyprys

wanted rates Just a couple as ask on the cut to franchise the to expected begins rates in of months. Fed

to impact then if even that trade we think as maybe how extend might about the capture any well of specifically, capture? activity. impact how rate you do do example, will the the duration as how it the investors, shift that to from anticipate for of instruments types Just customers impacting level And or of future? Just sort options

Terrence Duffy

Thanks, Tim? Michael.

Tim McCourt

Michael. Thanks, Yes.

is think continues to when that what's of said, in, increasing rate our our needs we and long-term both the over is backdrop I near-term conflict as the interesting horizon. serve only the the Terry at uncertainty look clients

or expecting end cuts the rate reviews continuing the have thing use of whether by We've the long at sort by perspective, XXXX is innovation do the curve. on maybe the all pricing like figure on additional important complex option T end positioned of we're now capital that CME to gone or already our difference as you short curve. the across ways the the of will also want and amount end take the tools said, out a X year. X SOFR year, to the SOFR we've to on where a the of tremendous on the what short curve one to to product from invest X continuing, We've the introduced true that unlock around of the that. So to seen advantage those is trade, Fed expressions of efficiencies to We're to is maybe and the well that and market of end bills We're end side. of Terry of things complex add expiries we

tough that to predict. How or the capture rate that's the complex, sort manifests the of into for RPC

also is and of versus well member is nonmembers. in lectures the block or impact It as as said Lynne earlier, also on Globex pit RPC. is As between ex on the and the function mix stories of what being done element a trade one

large that very as fact of healthy robust Sunil of X,XXX Terry traders that -- diversified have earlier, growing. the and So with a complex, traders over in is interest community record open recent and complex said we that a large holder

if just a it's will the but RPC also increase participant to the nonmember hard that important or that insurance need more is online, there in. in So of increase additional difference, factor forecast It's itself, the in forward. nonmembers additional impact coming than participation, to managers, these just it participants going biocide rate the volume companies, also to member, mix note we that of and asset growth is all coming

Michael Cyprys

you Can follow-up. Yes. Great. a And guys hear me? just

Terrence Duffy

Yes. Go ahead, Michael.

Michael Cyprys

to point efficiencies. question, from Terry, on phone you're a calls more Just your customers for getting follow-up asking the

might the maybe for there in any about thinking you're with help any there able how to there? term, for opportunities actions bolster might that? take to be that, term to And also where strategic are curious ways Just steps efficiencies and be longer the near customers what

Terrence Duffy

are could Well, action, that, going I'll conversations but we on some strategic. be there to about relates be more careful strategic it how talking as

with pointed is which billion against for you is with in -- that out very I more bringing exciting them. in something growing exponentially, at think offsets Sunil more into that earlier, and when look what the bringing new is clients $X FICC,

other banks, need this of on These to another of some these is free activities. continue up And to continually at sheet it. with do ways just dealers their their balance so look they to can continuing way

conversations strategic focused entities. other conversations So more There had on some communities that going on are with and our dealer are with of that. I've some the

around it's I efficiencies. So think

together. Let that. and clear do what cannot or can me we be mostly about They're dealing with efficiencies

So a with have we continue conversations. can exciting as it's go that's Michael. we'll I to where more time pretty marketplace the and at moment, to for report have But the

Operator

with from comes Goldman Blostein question next Our Sachs. Alex

Alexander Blostein

to the hoping longer-term get thoughts growth firm's of algorithm One on. revenue I slightly your was that around picture question bigger kind

the part you're getting more of of So over of competition digits, maybe various pricing call become it's increases what X% model market, due think rigs to is sort thinking And to challenged? single the X% you still you forward, kind of about are think from X% And or it, by, do can reasonable? business to -- the that and that? X%. kind whether low parts years, offsetting as the you how thinking feedback And pricing of CME across

Terrence Duffy

price shareholders. because we and think term prices Alex, for do increases all, of just And lasting can long of value-add believe them that's all the first don't you strategy. So what's we time we more do We raising how I and it our at because in strategy. and look

our them market exciting they environments value I them This a do we're AI else So working to thinking an our for able clients market to emphasize that strategically, risk can participants. books this participants, in to about time can't what enhance way. quick it own for relates will nobody be effectuate tools. test bringing going with Google enough do management opportunities, can what into different our such is risk different other for as and their about opportunities

across the raise you inflation in strategy strategy. spectrum, of bad value-added a because prices have look clients those don't just can or proposals my all our that at mind. we of with we So we That's

do that's of what it value. not we So Lynne We do. because let comment further. I'll

Lynne Fitzpatrick

Yes.

mean and market, customer looking bottoms-up a think It's it. at health, market value. Terry I health, I created always we've it's covered where by market approach.

think that any that to is do intact I we'll something strategy still about making So changes. we as continue and think it's

Operator

Bedell with Deutsche from Our next question Brian comes Bank.

Brian Bedell

much would to -- on time? Globex of would Maybe the Cloud. new when And it migrate any that views the versus expectations that can people be platform could think available? portion faster when over what on on Google about about the migrating over of base And back and the Maybe most become client if was superior. it just maybe early new talk if you how be will just platform you timing

Terrence Duffy

question, there's the let that some into to cloud as give don't to and it baked as information color some we he have you you move to can Ken Brian, Great we as going fully I'm now transition give yet. relates forward. much as possibly the right

Kendal Vroman

now. Brian, as a building you can imagine, building we're physical actually

that's So that takes little nice that the of in things And capability Dallas. there a time. is is One of bit

environment Dallas. in in heard So we disaster up And also our in will customers have site early be and announce will testing you that our us around in 'XX. recovery that playing

prepared. about our is the time our ecosystem more sure and longer frame is making said we What about customers

notice specifics to give start the online, our tend about market before we talk we a that going so minimum bringing XX migrating And in at have to -- more markets. we when months' migration order we're

said what that's really timing. So about we've

customers to long which proposition said most customers. it them available And models and we as our then days relates they process. the for before, of And iterating understand how business in will optionality that and And to value their the we're they as very further and them. are that decisions sense will do, early which venue about I choice and to and take get and are things individual makes will that Those providing advantage make as ability the with their take. what

do I that We our that say this will to think capability. we're it'd gone be has premature innovative. will what. customers. going engineering on enabling But very I So We about think speculate into excited it it's it's who's think and to the be differentiating for think we

specifics. so And give a excited that, we're but about to soon too little

Terrence Duffy

you to to said, just you Brian, what referenced Ken on the add when how latency set it. to And

I've platform that we or today. not does if, As is forth have since the and has that in put not will we Google as what XXXX, cloud, fact, said good go than a X changed faster into not bit.

associated they decision make still So We know the ultimately we exciting have are the get on that said to don't Ken going markets see but we and part what go associated the impressive with will functionality Google platform I think speed. kind the with much tools of made. that sure is that to can speed. think replicate. pretty that is. right before will distribution, be is where there, ultimate important We're to others it what be it it's Cloud than hard point that to to where functionality continually faster at any the now make able But I the and is not and

Brian Bedell

that just fee That's the into the Lynne could non-op second quarter, great I you're and of with line? getting paying spreads and exiting other the rates you're terms on quarter in line the collateral color. third the balances And on both maybe follow the up coming

Lynne Fitzpatrick

Yes.

and averaged those the million. So balances billion for we the fairly QX. similar saw to same averaged what noncash $XXX balances quarter, Both the in of $XX cash

is down bit. we've the and both we've down collateral a So of those a far total little come bit in seen seen July, lines

cash billion, the so So, is far, in average noncash $XX billion. $XXX balance July, the and average is

Brian Bedell

that this? on you're paying the And rates out

Lynne Fitzpatrick

out It on XX was paying noncash. on XX basis is portion. cash, rather on cash noncash on the points our points, XX then XX was basis And the the the we're fee

Brian Bedell

when the you maintain to Or able Okay. Too spread? be to where say go think early this the cuts stage? Fed do at to you you might might

Lynne Fitzpatrick

been bit points It's but level mind the at actually we're and a less charging last that XX say, that early than it's IORB I Yes. basis rate, since keep it's would the spread June. in to that

consistent at XXX, . level it stayed was IORB since if that's a the So at helpful.

Operator

comes from Our next question JPMorgan. Worthington with Ken

Kenneth Worthington

give you'll get approvals and dig more might clearing of wanted are I Can into when detailed And still ready that running? a offer, there any up plans. launch? needs you're to what and CME's planning be this us to for you built to be what out need picture regulatory treasury it to

Terrence Duffy

a with the clearing Chair now. and we did I -- proposal in staff staff be in yes Ken. announced, confident approval with we've will mid-September by Friday, yes public. again the the the we're Yes, treasury SEC there, feel with A working need the that call do all SEC very be on the and of and my to They they an then go and they will may hands which through have SEC. information it is -- process approve and complete

you'll So that, see Ken.

will As -- what assuming I'm launch? you're products our as asking, far plans, what what

Kenneth Worthington

Please.

Terrence Duffy

be reference the is is, to And offering We say structure more offering. FICC into important it I'll I again, are think when focused said even I that getting today kicks don't the publicly really know and going. on the and this our before, new that. I've Tim let what's we're mandate and a facility come the the And up I'll approval getting going dominant the of and Yes. XXXX, again, go ahead where incumbent. world think But is They place. clearing

if, be ready will and to. need in we prepared fact, So we

you you. today. time very a honest period When moment, your tool that's very offsets, with with be the offer your $X savings FICC of with take at I But to short in to just those got up billion powerful to a clients

done because I good over be my we'll us. offering progress at dismissive they we'll and but DTCC again, side-by-side see of how they've Tim? colleagues to don't with and job, FICC long a be want as So prepared, the

Tim McCourt

Thanks, Yes. absolutely to is Again, just Terry right. Terry. reinforce,

that can service done additive we're FICC positions to it is that a We be savings is we're only looking and participants. are as well U.S. sure presented to to to our have And amount that repo deals away When a will clearing. unlocks the in looking when to the with with with a we that the at respect we or treasuries this of at a want we tremendous part from to it both fashion, partnership some on as to bring building, how not how the engaging long-standing of some providing. market issues trade satisfy way and make activity with offering the it's services market, but work market mandate active clients of we're of with clients, whether complementary

notice it, know be solution our to of important also we clients It's to we as partnership with when is look important the the at and to utmost we market. going bring look

repo. ready half working for As year, the Stay tuned U.S. the actives Terry deadline towards we're January for that, June year, test to such be the strokes next for. this approval for to 'XX said, of can we've line 'XX looking that's broad we're meet and but time in second the provided the that deadline we and for

Kenneth Worthington

what's the by for payback paid paying cost Yes. Google? your Like And just Is of the a on all be being the you? on dollar Google expect it facility, would this do of is you investment? And sort have for you investment?

Terrence Duffy

to referring Ken? referring what have referring the are you -- Are arrangements itself, to? facility you you to Are we the commercial

Kenneth Worthington

facility I the with in facility Illinois. guess, itself, new today The colocation announcement, the

Terrence Duffy

want sure we're I that, Yes. Yes. make to fair on Lynne.

Lynne Fitzpatrick

Yes.

So own we building it. we won't won't the and facility be

road So the that but not our there will be some down usage, undertaking. we for are costs associated it's build a

Terrence Duffy

paying clear. more for to are building . the put it They

Operator

Craig comes America. Bank of from question Our last Siegenthaler with

Unknown Analyst

This team. Craig from [indiscernible] is

yes, You hear onboarded can the me? -- you

Terrence Duffy

Yes. Go ahead.

Unknown Analyst

Okay.

this would records this seeing a these certain you're couple can extent quarter. any year. To earlier you this some of details the share in what retail contracts you incremental micro said large you attribute know from these onboarded You clients? I clients? brokers volume new to around

Terrence Duffy

Gil. on Julie jump if well but with and let Julie. to question. a then great some Derrick I'll as the Thanks, contracts, of It's wants

Julie Winkler

Yes. growth of I growth mean Those for of really participants kind revenue. saw We this Certainly, in -- as question. retail a quarter as both business. -- strong was driven factors. thanks few for the well was our QX by a retail are really number

product was and on these are distributing had partners have a in metals fact a very lot we and one time. offering for the that just offerings diverse index new quarter client interest of first strong CME well options. for and mentioned, that we've One futures the that as focus channel also our the of that dollar-denominated We to them strong equity is that as you futures a really the saw

customer a at we So is both our have as they of marketing offering they're to content delivered and in what significant partnerships, that education experiencing really engagement clients have looked our the success new about the seeing. they're brokers support their are on that seen able and strong told us vocational with the website products, [ from that new our we've number QX, ] they're deliver that also

the growth definitely that believe sets for brokers that, of and some in second the that we hope future online success, for really part we additional this say a is blueprint early we'd to and So bring promising year.

is clients, In and equity interest seems there which terms where of extremely to retail complex, the the a dollar-denominated in think we strong. of lot be are one again, APAC index I this second one

terms our other mini NASDAQ out in suites. So competitors uptake a is ETFs micro of there. in with XX% able where in volatility. over even resulted that outpace low This were products to our is we And and and this big

retail power to metals great the as particularly investments gold And say, penetration, as where to it intellectual in activity really significantly would that having volatility well of CME prices for long-term I is access point, made speaks as think in getting there in results, up options among the to internationally, our first that has client I when then and our would complex good last QX base. record access I clients. Revenue in futures just So at levels, well time brokers, the property. our some the say, we retail ever were up, as saw some

certainly strong way a So future I up think is of us that for factors it was of growth. a those combination setting all in

that we we we're brought that brokers on the excited online and additional new about this to also ones those come So year. expect

Terrence Duffy

wrap Derek, to Thanks, you Julie. it do want up.

Derek Sammann

Yes.

at side, in XX%, second QX participants the the gold When size having significant right very the gold you growth volume risk is the in in participation this market the as Julie product we for quarter retail function is on a year. in right on, at our overall touched on appetite. saw look quickly the XX%. metals right of This Just

look gold, growth, those records So right when as have micro micro and with we silver micro and at up, we we both we saw products prices saw customers. that for pushed the copper,

So but and market to intermediaries this participants a that's broad a main and needs volume is the not users, serving customer a set well. as for of in led open function of and growth interest

Unknown Analyst

follow-up. a in squeeze could I If

just And could details be to you cases envisioning? I on You if mentioned AI Google's capabilities. makers? wondering side, market FCMs, clients more give for market participants what Is us buy access which use you'll be you'd targeting? giving was you're any this

Terrence Duffy

Yes. careful disclosing market Ken can that. but be on little We'll to color on that, we are relates give participants always what it bit more as a

Kendal Vroman

Yes.

the on to them it. and is interesting hopefully things relates and some working our coming their data with both will their AI focused years that I of that, think management over will risk and customers we're analytics to on enable And Certainly, unveiling and strategies. AI just of piece capabilities. be trading one as I very think be the

So a it'd all their about AI, much is own what I depth with frankly. clients . which premature figuring their on bit in to about that, be it think own more little out would ways, too do Beyond they're talk

Operator

no we call remarks. back questions I'd further closing time. have And at to management this like hand to the for

Terrence Duffy

for Well, us for joining our very we want call. today's thrilled thank to We're you all results. record about

We shareholders. the bring to value to efficiencies bring to to hard going our to and marketplace are work continue

for forward with to much very up We us. So you. thank you look joining following

Operator

concludes Thank you conference. That for today's Thank you. participating.

disconnect this You time. at may

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