CME Group a Aktie

All right, everyone. Welcome to -- I think the session everyone in this room has been looking forward to most. It's my pleasure to welcome Terry Duffy, Chairman and CEO of CME Group. CME is the world's largest futures exchange. Terry has led CME, I think, for over 2 decades now, around 2 decades, been a staple of this conference for many, many years. Always appreciate your support and you making the trip up here.

My pleasure, Patrick. Thank you.

Yes. Thanks for coming. All right. So I want to start off, let's just address the elephant in the room. On Friday, the CFTC moved to approve the Bitcoin perpetual futures contract for Kalshi. I know you went on CNBC yesterday. I thought you laid out your case. Can you just maybe for everyone in this audience, what do you think of that ruling and what it means for your business?

Well, first of all, I think the ruling -- can you guys hear me okay? Okay. Thanks. It was called in our world was a 40.3. So a 40.3 ruling means it goes up for a full review, meaning that if there is something there that the industry should comment on that's new or novel or complex, the CFTC does what's called a full review. They did a review in less than what's called a self-certification, which is a 40.2. So a self-certification means if there's no objection in 24 hours, you can go ahead and list that product. That's how the 2 rulings work.

So they said they did a full review, and they did it actually shorter than they did on a self-certification on something in their own words, in their own order were called novel and complex, which troubled me. Secondly, in 2000, I'm just -- I'm old enough to know all this stuff. There was something called the Commodity Exchange Act. It was the last act passed for all the core principles of the laws of our industry. And in that, there's a centerpiece that suggests -- because you have to have a centerpiece to all legislation, what is the centerpiece.

The centerpiece was what is the futures contract. And then you define the core principles afterwards. So the Commodity Exchange Act defines the futures contract as a contract to be traded with a delivery date at a later date or an expiration date at a later date. Nowhere does it contemplate that it can go on in perpetuity. So a perpetuity or perpetual is a contract that never ends and the way they keep it on track is through a funding rate. So I said that, that is not a futures contract. That is a swap if it's anything.

So I totally disagree with the government, and I'll deal with it as the way we need to move forward. So I'm concerned about this and for a whole host of reasons. Perpetuals in the European Union today trade anywhere from 20x to 250x leverage. So let's think about 20x to 250x leverage on an auto liquidation model and how it works. So at CME, we have the largest open interest of institutional crypto in the United States. The leverage that we extend is 5:1. Leverage in the European Union is anywhere from 50 to 250:1. How can that possibly be something that's sustainable?

So I have great concerns with the way these contracts are set up. They're also set up just so you understand what a perpetual is. On a perp, there's a funding rate associated with it to keep it tied to spot. So if you're long a contract and the other person is short a contract and the contract is going up, the long has to pay the short in order to keep it tied to the spot contract. So if you're American Airlines or you're an airline and you put on a perpetual hedge during the Iranian war where the crude oil went from $55 a barrel to $110 a barrel, you would have paid funding rates all the way up.

So your hedge that you thought was good would have been eroded by the funding rate cost to the short side of the market on the way up. So it does not work for institutional hedging at all. So then let's talk about the retail, why the retail likes to participate in this product. Any time you give somebody $1 and you say, listen, we'll let you leverage it for $100, they're probably going to do it. That's just the nature of what people do. That doesn't make it right. I've spent 30 years in my career building, nurturing and bringing in retail participants into the market with tools and education so they can be sustainable and help them grow.

I'm really concerned that -- and I said this yesterday, I really believe it's 2007, the housing market has been slanted by the speculation market, including predictions and everything else, and this could be a disaster waiting to happen. That doesn't suit anyone's interest. Ecosystems are important for all participants, and I don't like to see people that don't understand products to potentially get blown out of a contract that they shouldn't be in, in the first place.

So I'm concerned the way the government did this, and I'm concerned on how they go forward. And so then you have to look at the use case, and we'll see how that pans out. But as I clearly described, there's no way that anybody is going to use this from an institutional standpoint when the hedge is not a one-to-one hedge. It could be eroded against your risk on the other side of the trade.

That's helpful. So I think the one thing a lot of people in this room are wondering about is you're obviously concerned with what the CFTC has done. How are you -- like do we think that this is going to be done on a case-by-case basis and they're going to move meaningfully beyond just Bitcoin? And obviously, that's the fear, but have you had conversations with them? Is this something you think they're going to do?

I've had a lot of conversations with the agency, of which none of them have come to fruition to what they told me. So I'm very disappointed, to be honest with you on that. I don't know what they're going to do, to be honest with you, Patrick. And they believe that innovation is critical. I believe innovation is critical, too. I also believe that good, smart regulation is a hell of a lot more important than innovation because if you don't have good smart regulation, you don't -- not going to have any innovation whatsoever.

So I will -- I don't know what their plans are moving forward. They have not announced them. They haven't even talked about what the leverage they're going to offer from these products. So they're just going to adopt the European model and allow leverage like that. And if they do so, they will go against their own regulatory framework that they have at the CFTC. Today, you have to be in compliance for a futures contract to have 99% margin coverage, example being if the West Texas Intermediate has a 10% margin associated with it and you have a 15% move all of a sudden, that means you're 5% breach of the 99% because you'd be at 5% or 94% on your coverage.

Well, you can't do that. You have to be at 99%. So you have to immediately take it back up. So when you offer leverage of this nature throughout the union, the way some of these platforms that are unregulated today, whether they're on DeFi or others, they just don't fit with what the agency has on its own books. So are they going to change the rules for the sake of innovation? And that's why I say it's potentially 2007 for retail.

I'm very concerned about this because it's not healthy. And it's not a competitive issue. I mean retail is not the biggest part of CME's business. I'm an institutional exchange managing risk for the largest companies in the world. And that's what we do, and we're really good at doing that. So retail is just another component. I think people should have the ability to participate at a size level that meets their needs. It doesn't mean they should be able to do that in a reckless manner that could potentially impact prices throughout the day.

So you drew an analogy on CNBC last night that I want to touch on. You said that this reminded you of Sam Bankman-Fried and FTX, not regarding the fraud, but regarding the auto liquidation mechanism and specifically, if perps proliferate in the U.S. and exchanges were put in a position where someone like yourself, and this would be a question within a question.

But if you were forced to participate in this market, how -- where would the systematic risk actually sit? And is the U.S. clearing and market infrastructure ready to absorb it? And I get that, that might be a difficult question to answer when we don't know what the leverage is. But how do you think about that if you were forced to move forward?

Yes. So you asked a lot of questions in there. First of all, when it relates to Sam Bankman-Fried and what his model was, it was flawed. I knew it was flawed. I think I got a call last night from Tarek from Kalshi and he's all upset because he thought I gave the analogy that he is Sam Bankman-Fried. I never said he Sam Bankman-Fried. I said I've just seen leverage models like this before. I didn't say Tarek was a criminal. I guess some of his friends thought I call him a criminal. I didn't. I actually like the young man. I think he's an interesting guy. But your question is how would I operate in a world of perpetual.

Yes. Well -- so when it came to prediction markets, one of the things you said when people were saying is this gambling is not gambling. Well, you said it doesn't matter what I think. But if the regulators are going to allow it, I'm going to be prepared to...

I said that as it relates to prediction markets. I never said that as it relates to the definition of a futures contract. So the definition of a futures contract, and I'll say it again, is a contract that is listed for trade with a future expiration. That is not a perpetual contract. So you can't draw the same distinction, Patrick, between prediction markets and the definition of a futures contract. Those are 2 different things. I won't fall for that trap. You want to talk about predictions, I'll talk about them. You want to talk about perps, I'll talk about them, but they're not one and the same.

Yes. No, I'm not trying to trap it. I'm just saying if -- so your stance is that if this is to proliferate and the CFTC starts approving these perps, you CME as an exchange will not act to participate.

I never said such a thing. I didn't say that. I didn't say I would or I would not. I don't know what we would do if, in fact, that the world believes that this is a new world order. I already described how they do not work for institutional participants.

So when 85% to 90% of my business is institutionally driven, do you think it's a smart move or my investors think it's a smart move for me to pull all the stops out to try to go after a few percent of business on something that doesn't even work because a perpetual is unhedgeable. A perpetual is tied to the spot market. So if I was to list perpetuals, I would be saying to myself, well, I think the spot market might be broke and here's maybe a better way to help fix the spot market, but it's not a futures market. Does that make sense to you?

Yes.

It's not your answer that you want. I get it. But I'm not going to sit there and say what I would do if perpetuals become the law of the land because they're unhedgeable and I have 90% of my markets institution who hedges products. I have 135 million open positions on CME, more than any other exchange in the world. I'm holding $400 billion of capital on behalf of the largest institutions of the world.

I'm not in there battling away for the small retail participants with no capital. My retail participants are retail participants who trade anywhere from 10 to 50 contracts every day, every single day, not once in a blue moon or taking a prediction on will somebody arrest Maduro tonight or tomorrow or will a war break out? Or will the price of oil go down if I make this comment. I'm not in that world.

Okay. Last one on perpetuals. Trade XYZ, S&P licensed the S&P 500 perpetual to the company Trade XYZ on the hyperliquid blockchain. I asked you about it on your earnings call. Have you had any discussions with S&P about it? Do you feel like this is infringing on your licensing agreement with them? Any thoughts there?

I know it's infringing on my license agreement with them, and I'm sure my lawyers are infringing right now, but that's just the way it goes. They infringed with this. We are convinced of that. I've been working with my partners at S&P Global, and I think we'll come to a solution that it might take a little time, but we'll get there, as I said on my earnings call. But yes, I feel that they infringed on my intellectual property.

All right. So let's shift gears. Let's talk about the environment for your business. So CME has posted a record quarter just in the first quarter, ADV was up 22%. Open interest was up 11%. You have records across all 6 asset classes simultaneously. How are you feeling about the macro backdrop heading into the back half of 2026?

I think that there's a lot of people being a little bit dismissive of what's going on in the world. And I've been saying this for quite some time, geopolitical risk is absolutely the biggest risk that the world has no matter what they say. And what we're not talking much about, like we're talking a lot about what's going on in Iran, and it seems like the narrative of the story changes by the second. And I understand that it is war, and we're not going to get the full information.

The intelligence in the government needs to be somewhat cooperative amongst themselves and not tell us every little thing. So I understand that. I think that the investor community might get a little bit misled because here they are hearing certain iterations coming out of the administration that this could end next week, and then it's 2 months later, and then we're probably maybe in a worse situation than we were 2 weeks ago, I don't know. So I think that's a very big issue.

No one's talking about what's going on with Russia and Ukraine. I mean Russia is taking out parts of Kyiv now. I mean no one thought that was going to get to that part because the United States was going to jump in and bail everybody out. That doesn't seem to be the case now. And then I think the biggest issue geopolitically that I think is -- it may not be the tail at the end of this year, but it's coming, and that's going to be China and Taiwan. And it will not be a war. I don't see it being -- I don't think it will be one bullet fired.

China is going to surround it, and it's going to be game over and out they go. And we are not going to be able to do a damn thing about it because I can't see us getting into a war with China. I just don't see that. So the question is, what does that mean from an investor standpoint? What does that mean if, in fact, China takes over Taiwan with the infrastructure they have in Taiwan, but it's run by the Chinese. I guess we'll have to wait and see.

But if we don't think that, that risk is coming, I think we're being a touch naive. So I think -- what does that mean? I think that from a geopolitical risk and a market potential risk and an investor risk, I think you have to be very prudent. And I'm not just talking my book. I think that risk management diversification of portfolios is critically important. I know we're all trapped in 7 stocks. I know we're all trapped in artificial intelligence.

But I think there's going to be other companies that you're going to need to mitigate your risk, whether it's energy or financials or others to diversify that because this is not going away. So I've been saying it for years, and I think it's come to fruition. And I don't -- when you have something like this happen, it's not made for TV. And we all want wars to be made for TV, but wars are ugly, and they take time, and there's a lot of costs that go into them. And unfortunately, a lot of lives get lost. So I'm concerned about that.

All right. We're running a little low on time. I'm going to try catch that...

Perpetual thing that you got all caught.

Well, I wanted to let you talk on it. I mean it's very relevant, and we all wanted to hear your perspective. So we appreciate it. In terms of product innovation, you're going to launch -- relaunch single stock futures here pretty soon. What's structurally different this time around that makes that something that you're examining?

Nothing. Timing. In 2000, when we listed One Chicago, you dropped something -- One Chicago. It was a joint venture between Chicago Board of Trade, Chicago Mercantile Exchange and Chicago Board Options Exchange, CBOE. And 3 different parties with 3 different ideas of what they wanted to see single stock futures with 2 different regulators, SEC, CFTC, none of that has changed. The world was not ready, in my opinion, for single stock futures in 2000, nor when T-bills went away, everybody said it will never come back until the short end of the funding rate became very attractive and all of a sudden T-bills are back in vogue again for a second.

I think it's about timing with single stock futures and especially as we look at some of the mega market cap stocks that we're looking at all trading at today that I referenced a moment ago, I think single stock futures, the timing is perfect for them right now for a risk management tool. So if you're long NVIDIA and you want to sell some futures against it, if you're going to own a $1.7 trillion SpaceX IPO, you may want to sell some futures against them. We'll list some of the top market cap companies in the world. We'll keep it probably around 50 companies or less.

And we think it's going to be a very attractive proposal, not just for the retail, but we think for the institutional participants because like I said earlier, a lot of us are holding the same portfolio, so we need to have some risk management tools against it. So I think the time is right. Who does it -- what does it impact? I think it impacts the stock loan business. So some of the companies that are on the stock loan business probably won't like it as much. I'll work with them. I'm working with the dealers today to make sure I don't impact their business. But at the same breath, I think people want to make sure they can get in and get out of liquid markets in order to mitigate some of the risks with single stocks that they can -- that they will be able to do versus borrowing the stock and doing it that way.

Another big opportunity product on the product front for you, I think, is compute futures. So last month, you announced the Silicon Data Compute Futures partnership. How do you think about that as a tradable asset class and that kind of opportunity it presents?

I love it. Don Wilson came to me, Don owns DRW, some of you may know Don. Don is a brilliant human being. I've known Donnie for 40 years, and -- he came to me with this concept. And we took a small piece of the company through our ventures fund also. But I like this a lot. I think if, in fact, we're going to continue down this path. We do need some kind of risk mitigation for these GPUs and CPUs. They have some other products in the pipeline, they want to list as well.

So I'm really excited by this. I'm curious how, again, the concentration -- I keep going back to it, with the concentration of ownership in stocks and especially with data and data centers, how do we start to lay out some of these risks. So I'm excited by this, but it will be the first of its kind to be traded. So we'll get it up and running. And we don't have the product specs out yet, so I can't talk about it too much in depth. I'm more excited about the potential of the asset class to be traded.

All right. And then touching on prediction markets since going live in December, you've surpassed $270 million of contracts traded, attracted over 150,000 new accounts. Walk us through where the prediction market business stands today, the partnership with FanDuel, how that's evolving and how you're thinking about bringing on additional FCMs. I saw interactive brokers recently. How does that pipeline look?

Well, I think it's interesting because with prediction markets, my whole goal and motive with FanDuel was not so much to have sports. Obviously, we didn't want to do that. But when the prediction markets came about, I think the online brokers got caught a little bit off size and they needed to do something quickly. So as a partner with FanDuel, we decided to go ahead and list some of these things that I felt we're comfortable with. They did not violate what's Core Principle 3 of the Commodity Exchange Act, which is readily susceptible to manipulation.

So outcome-based, I was okay with, even though it doesn't change my opinion, is this gambling or is this a market risk? You already heard what I said earlier. I think it's gambling, but that's just me. But it doesn't matter what I say because it's what the government says. And then as you said earlier, I participate. So now I'm talking about that asset class. I think it's relatively interesting what's going on. I didn't think that we would get much trade outside of sports. I think when you look at Kalshi, I think 80% of their trade is sports related outside of some of the other events that they list.

I think for the first time, and maybe Adam can correct me, but I think it's for the first time last month, we surpassed market event contracts versus some of our sports listed contracts, pardon me, on a couple of days. So that to me tells me that I was looking for the 13 million eyeballs that FanDuel has because most of those people participate at night.

And if they want to go ahead and look at my markets during the day, great. And I look at it as a distribution play for CME for the future. All of a sudden, this has turned into people are actually looking to participate in some of these events on economic indicators, which I find very encouraging. I'm not going to speak to the sports side of it very much because I'm not a sports guy. So I'm a sports guy, I'm just not a gambler.

Got it. Let's talk capital allocation. You returned $3.2 billion to shareholders in the first quarter, another $758 million in asset sale proceeds that are still left to deploy. How are you thinking about capital allocation priorities? And how does M&A factor in relative to continued return?

Well, I mean, I'm a big believer in returning capital to shareholders. I have been since I took CME public in 2002. I was one of the first companies back then post 9/11 that did a dividend stock when everybody told me that if I do a dividend stock, I'm not a growth stock, so the company won't go forward. I never subscribe to that model. I've been a dividend-paying stock since day 1. So I want to return capital to shareholders. I also want to do smart, good acquisitions that make sense for my users, then in return, that will make sense for my investors.

And that's what exactly what we have done. We did that with the Chicago Board of Trade. We did the New York Mercantile Exchange and COMEX. We've done that with our JV, joint venture. So some of the things that we have done, I think we've done now with Google, even though they invested in us. So M&A, I believe, needs to benefit the users because that's what benefits my shareholders. So I'm very focused on that.

And in fact, we don't go out looking to kick all the tires on everything out there or buy anything that's available. I don't think that's a smart, prudent way to run a business. you have to be a good steward of your shareholders' money. And the way to be a good steward of your shareholders' money is to understand what your clients' needs are. Because if you don't do that, you can't run money on behalf of your shareholders. So I stay focused on that. And if we don't have something that we think is meaningful to enhance the business, then I will return it through capital versus M&A.

Great. So last quarter...

We return it through dividends and other share repurchase and things of that nature as well.

Got it. All right. So ending last question. You have a lot of irons in the fire right now, retail expansion, 24/7 trading, which I think you just launched in crypto for the first time was it 2 weeks ago?

Last week.

Last week. Prediction markets, digital infrastructure, where do you see the biggest opportunity for CME over the next 3 to 5 years?

Yes. I think that there's a lot of things that could come up, so you don't ever want to put yourself into a situation where you said, well, you said this is the biggest opportunity and you went in a different direction. I think you have to keep your eyes and ears open to see how the world is shaking out with the exception of perpetuals. I couldn't help that. I had to say that. And then -- but I really believe that efficiencies are where it's at.

So when I can create $85 billion a day, which I do every single day for the largest participants in the world to free up that capital so they can deploy that in other ways of running their business. That's a very, very effective way of running your marketplace. So I think for CME, efficiencies will continue to meet the needs of the clients, whether it's through stable coins, not a floatable stable coin, but a stable coin potentially just for my ecosystem, which can eliminate friction on payments, which could help support 24/7 trading on some of my products or it just eliminates some of the cost of moving money. So there's all other ways, but I think efficiencies through some of these innovations is where CME will be at for the next several years.

All right. Well, that's all the time we have, Terry. It's been a pleasure. Thanks for joining us.

Thank you, Patrick. Appreciate it.

Welcome to the CME Group First Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. Earlier this morning, we released our earnings commentary, which provides extensive details on the first quarter 2026, which we will be discussing on this call. I'll start with the safe harbor language, then I'll turn it over to Terry.

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

Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.

With that, I'll turn the call over to our Chairman and CEO, Terry Duffy.

Thanks, Adam, and thank you all for joining us this morning. I'll make a few brief comments about our record quarter before turning it over to Lynne to provide an overview of our financial results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks.

I'm proud to announce that CME Group has achieved a record-breaking start to 2026. Our outstanding performance in the first quarter reflects the essential role we play in the global economy and the trust our clients place in our markets to manage risk during periods of significant economic transition.

The first quarter average daily volume of 36.2 million contracts was the highest quarterly average daily volume in CME Group's history and represented an increase of 22% compared to the same period last year and 6 million contracts a day higher than any previous quarter. For the first time in our history, we achieved simultaneously record volume across every 1 of our 6 asset classes: rates, equities, energy, agricultural products, metals and foreign exchange. In aggregate, our commodity sector volume grew by 38% and our financial products volume grew by 18%.

Building on the momentum of our record 2025, our global expansion continues to accelerate. International average daily volume reached a record 11.4 million contracts, a stunning 30% increase in 2025. The EMEA, APAC and Latin American regions all posted record highs. Remarkably, our international business also saw a record volume in all 6 asset classes simultaneously, proving that our value proposition is resonating globally.

We aren't just growing volume, we're growing client value. We delivered record levels of capital efficiency, saving our customers an average of over $85 billion in margin per day. Additionally, open interest ended the quarter up 11% over the past year and up 19% since the beginning of 2026. During the quarter, U.S. treasury open interest reached an all-time high of 36.3 million contracts, driven by unprecedented demand for U.S. treasury futures and options. This growth reinforces CME Group's role as the deepest and most efficient liquidity pool in the world.

We continue to innovate and provide the tools our clients need, and in an environment that is always risk on. These include last week's CME FICC, or Fixed Income Clearing Corporation, cross-margining agreements received approval from both the SEC and CFTC to expand to our end user clients beginning on April 30. 24/7 crypto trading scheduled to go live on May 29. Also, we're excited to announce that we will be filing to change our Micro Equity Index options to be financially settled to better serve the users of those products. Our new environment in Dallas is on track to open this summer, and we will provide a critical testing ground for our clients in advance of 2 of our agricultural products migrating to the cloud by the end of the year.

As we look to the rest of 2026, we are confident in our ability to continue to deliver value to our clients and shareholders. Our strong performance, coupled with our ongoing investments in technology and product innovation, provides a solid foundation for future growth.

With that, I'll now turn the call over to Lynne to review our financial results in more detail.

Thanks, Terry, and thank you all for joining us this morning. As Terry mentioned, the first quarter was record-breaking across the board. This included growth in our clearing and transaction fee revenue of 15% year-over-year. The average rate per contract for the quarter was $0.652. Our pricing strategy includes volume tiering, which results in decreasing rate for contracts at higher levels of volume. With volume records in every single asset class this quarter, this volume tiering encouraged incremental trading, providing risk management benefits to our customers and driving highly profitable incremental volume to the exchange. The combination of our volume growth and pricing structure resulted in an increase of $205 million in clearing and transaction fees for the quarter.

Market data revenue also reached a record level, up 15% to $224 million, marking 32 consecutive quarters of year-over-year market data revenue growth.

In aggregate, CME Group generated record revenue of $1.9 billion, up $238 million or 14% from the first quarter of 2025. Adjusted expenses were $512 million for the quarter and $405 million excluding license fees. Our adjusted operating income was $1.4 billion, or a 72.8% adjusted operating margin, the highest in our history.

Adjusted net income and adjusted diluted earnings per share came in at a record-setting $1.2 billion and $3.36 per share, 20% higher than Q1 2025. This represents an adjusted net income margin for the quarter of 64.9%, with $200 million of the $238 million increase in revenue accruing to adjusted net income.

We returned $3.2 billion to shareholders during the quarter, with $2.7 billion in variable and regular quarterly dividends and $536 million in shares repurchased.

This quarter delivered the highest volume, revenue, operating income, adjusted net income and diluted earnings per share in the history of CME Group. These results are a reflection of our position as the world's premier risk management destination. As our clients continue to navigate uncertain times, we remain fully committed to meeting their evolving needs through continued innovation and deep liquidity.

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

[Operator Instructions] The first question in the queue is from Patrick Moley with Piper Sandler.

Terry, you mentioned that you've received regulatory approval to expand the DTCC cross-margining agreement to end user clients. At the same time, the DTCC has been running a pilot program to tokenize U.S. treasuries as collateral. So as you think about the intersection of these 2 initiatives, I'm curious how you see enhanced collateral mobility impacting CME's clearing business. And then more specifically, with customers having the ability to move tokenized treasury collateral in real time, just what that could mean for the industry write large?

Thanks, Patrick. Suzanne Sprague is here, and she's been working very closely with both FICC and folks at DTCC and the regulator. So I'm going to ask her to opine on that question to start, and then I'll go.

Yes. Thanks, Patrick. We are continuing to work with FICC as well as internally on various tokenization efforts. So we think that there is a benefit for the industry to be able to reduce friction moving collateral, especially for collateral that does not settle naturally same day. Treasuries is a good example of that. So we will continue to explore what we could do together with FICC as well as other initiatives that we're pursuing at CME, including the tokenization of cash and our partnership with Google, as well as looking at other assets that might be of interest in the ecosystem today to be able to reduce some of those frictions and free up liquidity by moving those assets on digital technology.

Patrick, just to add on to that, I have said and the team has said, we're looking at potentially our own stablecoin here. We're looking at multiple different ways to make that $85 billion a day of margin efficiencies continue to grow, and not only just the margin efficiencies, but the capital efficiencies about how we move money back and forth each and every day and what's the best interest of every single client. So whether it's through tokenization, stable, using cash and treasuries, other forms of margin that they use with us today, we want to make it as effectively for them and efficiently for them.

So I think it's an exciting time for us, and we look forward to informing you more as we continue to roll out these proposals.

Okay. That's great color. As a quick follow-up, we've seen some pretty interesting developments in the perpetual future space this year. The S&P Dow Jones JV recently granted an exclusive license for the S&P 500 perpetual futures to a relatively lesser-known company [indiscernible] blockchain. And on that platform, we've seen volumes explode in commodity perps. So just with your goal to try and attract more and more retail eyeballs to CME's product suite, I'm curious how you're thinking about perpetual futures as a product structure that could eventually become a more meaningful driver of [ retail ] engagement. And then just if you could maybe talk about some of the regulatory or market structure hurdles that I guess would need to be cleared before we get there.

So thanks, Patrick, and I'm glad you raised that. There's a couple of things I want to unpack there. First, we'll talk about the JV venture, then I want to talk about some of the commodities, and Derek can address that, and what the true volumes are associated with that.

It looks very large in the way they're trading, but remember, those are in notional value, not in contract terms the way we calculate our business. So, and who's on those platforms, how those platforms work, what's the risk management associated with it and why would that institution potentially want to participate in something the way those are structured.

First of all, perpetuals are against the law in the United States of America. That's first and foremost. That is where it's at today. They are not allowed under the Commodity Exchange Act of 2000. The centerpiece of that act was how do you define what a futures contract is. It wasn't a bunch of other things in the act. The centerpiece was what is a futures contract. And it was defined as a contract for future delivery. It was not designed as a contract that never ended.

So I really believe that for perpetuals, I think convergence is massively important to the commercial producers and other participants that these contracts are designed for. Contracts are not designed, not, I repeat, not designed for speculators or hedgers or not to design for speculators or just a pure retail. They're designed for hedgers, commercials and producers. That's the way they -- you have to have a natural buyer, a natural seller. And they need to have convergence between cash and futures in order to run their business, which benefits the participants, not only in the United States, but globally. You need to have these markets.

As the great Dr. Milton Friedman said to me in 2002, if we did not have futures contracts today, we would need to invent them in order to move forward and progress. But that -- the way the market works between cash and futures is critically important. So the decisions that people want on perpetuals, they seem to me more of they're trying to create a contract for the speculator. That's not the mission of the commodity exchange. That's not the definition of it. So I -- that's something that I'm very much involved with as it relates to perpetuals.

Your other part about the volume going into some of these products, I assume you're referring to some on silver, some on oil, and so let's talk about that for a second. When they listed those on [ XYZ on hyper liquid], as you know, the way that market works, if in fact they were to have a tip-over in [ the auto ] liquidation, they've been very fortunate to have an orderly market for the most part, but if in fact, you had an auto liquidation, the money from the losers, it comes from the winners.

It's a very difficult proposal for any institutional hedger to use a product such as that where if they're due $1 and they get $0.45 back because the other side of the trade just got beat up and so that's where they got the money from. So I am concerned about some of those rules, and those are done on a perpetual basis.

I think the agricultural communities, the energy communities and others are not completely pleased with some of the pricing of those products. But I'll let Derek talk about that. But what's important, before he mentions it, we have to think about the timing of when those products were listed. You got to remember, silver went from $50 to $118, I believe, Derek, is that about right? High, and then back to $86. Oil went from $50 a barrel for almost 4 years to north of $100, and then back down $86. So that was where that activity kind of caught. Now the question will be, is that sustainable? So I'll let Derek comment on those particular products.

Yes. I appreciate it, Terry. I think if you look at the results of this last Q1 and even continuing into Q2 of this year, you're seeing exactly what Terry talked about. The purpose of futures contracts are to enable hedgers to be able to know that they can identify the forward curve. These products then converge to physical delivery and physical markets, whether it's corn, whether it's livestock, whether it's oil, whether it's gold, all come to physical use.

So we look at the end-user commercial need of these customers. When you look at the growth and record activity in our commodities portfolio as a whole, you'll see that every single portion of our client segments grew with double-digit growth in every single group led by commercial, corporate banks buy side and [ prop firm ]. So retail is a part of that, but financial customers will follow where the end user manages and hedges their underlying risk, and that's in our futures market.

And so on the first part of your question with the S&P listing on that, we were not made aware of that, even though we own 27% of the index business. We were not made aware of that decision. We got made aware once they listed it, literally several hours before their press release went out. Their press release went out, and which coincided with the opening of that market. We've been engaged with conversations, as you can imagine, with our partners. We both have a deep respect for intellectual property. We've made our points very aggressively on that, and I think they understand that now. And so we are continuing to work with our partners at S&P to make certain that, as we go forward, we're all on the same page.

And the next question in the queue is from Dan Fannon with Jefferies.

So Terry, I wanted to follow up on your comments about the Micro Equity Index option to change. I think you finally are making to be more financially settled. So just wanted to talk about why now and what you see is the opportunity going forward with that.

I'll let Tim chime in, but I will tell you why now is -- maybe we should have done it a little bit sooner, but why now is because the client base continues to go across multiple different versions of the equity complex, whether it's the larger [ E-mini ], whether it's the micro or something smaller, and how they participate. This client base in the micros seem to be more of a retail focus. They really don't want to deliver their options into a future where the people that are trading the larger clients do want to deliver their options into the future. So we felt very strongly that the micro contract would make more sense for that constituency.

But at the same breadth, we didn't think it made sense to change all of our equity contracts to deliver into cash settled. Basically we'll keep them as deliverable into a future. But Tim, you can add to that.

Great. Thanks, Terry, and thanks, Dan. And I think part of it is, as Terry said, as CME Group is the comprehensive leader in risk transfer for the S&P 500 and the NASDAQ complexes. It's important for us to continue to evolve our products to meet the risk management and market access needs of our customers. And that's the feedback that we're receiving. When we look at the micro-size products and how those strategies are deployed, to hedge other parts of their either stock portfolios or ETF portfolios, or looking to access the market, that they prefer the financially settled mechanisms where they could have the options expire against the futures daily settlement price. And that is the change we're looking to file.

It will then, as Terry said, be different than the institutional-grade E-mini offerings and options on those products, which serve a very specific and highly utilized function of the market of delivering the underlying futures, which is a benefit to the institutional community and the hedgers out there, particularly when they're looking to access the almost $40 billion per day of capital efficiencies in our equity complex at CME Group. We've actually seen continued adoption of our E-mini products by clients where several large buy-side clients are also switching some of their structured product strategies to utilize the efficiencies and the benefits of trading futures-based options at CME Group on the S&P 500. So we think this will further grow the complex as we remove some of the barriers to entry for clients and give them a better tool that serves the risk management needs of their portfolio.

And just so you not think I'm talking [indiscernible] my mouth, in this particular contract, we didn't design it as a financially settled in the micro because it's just for retail or speculation. It's not. You have to look at the value of the S&P 500 and who uses that contract today.

For your historians that may or may not know this, we started with an S&P 500. And then we cut the multiplier of the 250. As the contract continues to go up and value, participants, even the large ones, need to trade a smaller contract or they need to trade a bigger contract, depending on what their needs are. So we are trying to take these pools of liquidity for the constituents to across the entire spectrum of CME's equity products. And it's basically the decisions are being made for the value of the index itself, not for just the constituents who are trading in. So I think that's a really important distinction.

The next question in the queue is from Ken Worthington with JPMorgan.

Can you talk a bit about the evolution of WTI and how you see the ongoing growth of U.S. Gulf oil playing into the dominance of the Cushing's settled product? And secondly, how do you see the changes in Venezuela and the conflict in Iran changing global supply chains? And how might this feedback into CME energy activity and CME oil market share?

Ken, that's a really good question. I think a lot of people like to have the answer to that one, especially in the industry for sure. I'll let Derek talk a little bit about the TI because I think it's important. But when we get into geopolitical, like what it means for Venezuela, I mean, we know what has been said publicly by the administration, but we don't ultimately know what's going to happen. So I think we'll stick with what we think on TI right now, Derek.

Yes. I think that's a great question, Ken. It's certainly timely in light of what we've been seeing in terms of restrictions and constrictions of [indiscernible] supply. 20% of the crude oil market, as you know, comes from the Middle East, flows out in the global network. That has been disrupted. We've been talking for years about the ways in which we have continued to evolve WTI as a global benchmark. Ever since the export ban was lifted in 2014, U.S.-produced WTI, and nat gas, in fact, have been flowing out into global markets.

So I think that to us, this is just another confirmation point of the absolute essential nature of U.S. produced energy products, both WTI and Henry Hub, that is now being produced and exported at record levels outside the U.S. And this is just another marker of adoption globally of the -- what these markets mean and what these products mean to risk management across the board. We have seen outsized growth for 4 years in a row now of global adoption of commercial end-user customers in Europe and Asia as both the Russian conflict with Ukraine disrupted supplies, this is another supply disruption, meaning a greater reliance on another provider of last resort. And that is the U.S. right now.

As it relates to your specific question on the crude grades, we launched these contracts back in 2018, 2019, fully expecting a global adoption of WTI. When you have a physical contract that delivers in Cushing as we see record amounts flowing out into the U.S., we needed to provide a risk management tool to get physical in Cushing down to the Gulf Coast enter the export market. I think what you're seeing in the record volume in open interest and our crude grade contracts, it's really solidifying WTI as a dependable supplier of oil to the world. We think that continues to reinforce WTI's importance globally. And you look at the dependability of physical deliveries, we continue to dependently deliver those barrels month after month. In fact, our GME -- our state in the GME Global Mercantile Exchange in Dubai, which delivers the [indiscernible] crude contract, also physically delivered outside the Strait of Hormuz, has been uninterrupted in delivering 15 million to 20 million barrels a day as well.

So the market needs to find dependability of supply. They found that in WTI. That's the reason why we're exporting not only record amounts of WTI and Henry Hub, but also [ RBOB ] gasoline and HLR diesel contract as well. So it confirms the importance of that in global products for global customers that we are the dependable provider, and we continue to ramp up exports, and that further solidifies U.S. energy products in the portfolios of global customers.

And Ken, I don't want to be dismissive, so I want to go back to the beginning of your question on Venezuela. Can you ask that question now separately so maybe I can address it? But I may not be able to.

So it was just about how the changes in Venezuela impact global supply chains and what it means for CME activity and share?

So I think for -- not quite sure what that's ultimately going to mean with Venezuela. I think that the verdict is still out about how that country is going to run. As everybody knows, I think that their production got run way down. Their infrastructure in Venezuela was not doing what it was at peak. So those are all issues that they need to have addressed going forward. And then there's going to be a lot of politics and other people trying to deal with that particular issue.

So as far as our share goes, I think what is important, and Derek touched on it, WTI is no different than Brent, another one, these are global markets. Whether it's produced in the United States or it's produced in Saudi Arabia or UAE or Qatar, these are global markets and people are going to sell to the highest bidder. And that's just how the oil market has worked.

So I think sometimes people here in the United States think that we have this massive supply of WTI so our gas prices should be a lot lower. Our producers sell all over the world. And that's the way this market is, it's global. But the good news is, I think what Derek is saying, is the benchmark at WTI is getting a much higher visibility, and I think that will continue, which will bode well for CME's risk management [indiscernible]. Derek?

I think one little last piece that's worth noting on the share piece here is that Venezuelan crude is extremely [ heavy ]. It's going to take a long time to rebuild the infrastructure in Venezuela, import that and then actually resource some of the refineries in the U.S. to adopt that. So we think that's a term impact. If you look at the forward curve of the oil market, you'll see a backwardation, lower prices [indiscernible] expecting more U.S. flow in.

The last point I want to note is on the share piece of that. I think if you've seen record amounts of activity in global energy markets, we have seen share increases back in CME WTI north of 79%, 80%. And that's just confirmation that when markets are going through times of undue stress, market retrenches to core liquidity on the home exchange. We've seen that in WTI futures and options over this last 3 to 4 months.

And the next question is from Ben Budish with Barclays.

I wanted to maybe start with market data. It looked like this quarter's recurring revenue growth was the fastest I think you've seen in several years. I'm just curious if there's anything you can share there. To what extent are these contracts volume based? To what extent are these from new FCMs kind of joining the platform? And how sustainable do you think this growth is over the near term?

Thanks, Ben. We'll turn it over to Julie Winkler, who heads up this area for CME. Julie?

Thanks for the question, Ben. Yes, it was a great quarter. We had record $224 million in revenue. So we are up 15% from Q1 of 2025.

And I'd say one of the biggest shifts that we've seen is really a surge in the simulated trading environment. So what's happening there is really strong growth, and I would say maturity among these platforms. And so these environments are really allowing new traders access to our market data. They're learning how futures products work. And they're taking advantage of the educational resources provided within these platforms. And really using it as part of the customer journey become successful new active retail traders. And so we've seen very strong year-over-year growth in these participants utilizing these sim environments to begin their trading journey in futures, that we believe is really going to be additive over the long term to the retail ecosystem.

So sim participation was up significantly. And so that is really kind of driving that retail or nonprofessional participation in our market data business. We've also made -- we continue to make policy changes, right, in thinking about data feed licensing and how that all needs to work. That has contributed to some of that recurring revenue growth that you're seeing.

And then lastly, subscriber growth has continued on the professional side as well. We were up about 1% from Q4 and up about 2.45% from the number of professional subscribers we had a year ago. So I'd say it's a number of fronts. A lot of this is relatively sticky revenue in that sense. And we continue to work with our customers to ensure that our benchmark data is provided and they're getting the data in the way that they want it.

If I could just reinforce a little bit of what Julie said, I mean I think what we're really pleased with is kind of broad-based growth. So we're seeing that subscriber growth. We're seeing the new product growth as well as some of the changes just with pricing. But this is a really healthy ecosystem that we're seeing across the market data business.

All very helpful. Maybe just a follow-up, maybe sticking with the retail team. You mentioned in the earnings commentary that on the prediction market side, you've now seen it looks like about 15% of volumes are kind of markets related. So curious if there's any further details you can share, what, if you have any visibility on, what types of customers are trading those contracts rather than sports? I would imagine all this is happening within your 2 current FCMs. But just curious what that customer base looks like. And maybe any color you can share in terms of the pipeline of potential additional FCMs would be helpful.

Thanks, Ben. Tim, do you want to address that?

Yes. Thanks, Ben. So when we went live with our prediction markets and event contracts offering back in December, we've seen strong growth both in terms of adoption and volume where we recently surpassed the $220 million contract mark. And then when we look at the participation across those contracts, we started a marketing effort in the middle of March with our partners at FanDuel. And since then, the actual participation or the distribution of volume towards the market-based contracts across equity, crypto, energy and metals actually exceeded 30%. That's a shift that we're pleased with. And I think it speaks to the attractiveness of the offering where we're looking at attracting these next-generation traders to our markets. They're coming in through the apps through our FCM partners, and they're trading all types of the event contracts, both sports and the market space contracts. And that's something I think that reinforces the value prop of CME, that we have some of the world's leading benchmark products at CME Group and now we're making them more approachable and more accessible to the individual and next-generation trader through the fully funded or fully collateralized event contracts and prediction markets offering at CME.

And the other thing that we're pleased to see is since December, we've had over 150,000 new accounts trade at CME Group in these products, which is off to a fantastic start. We're continuing to work with our partners that are currently trading, and we have a pipeline of FCMs we're still working to get on board and offer these products to their end users. So optimistic about the future, but a first few good months here out at CME Group in our prediction market offering.

So Ben, just to emphasize a little something, when we originally negotiated this deal with FanDuel, our goal and objective was it had nothing to do with sports. Our goal and objective was to do with markets and distribution. And that is exactly what we're starting to see happen. Even though it's very, very early innings, to say the least, for baseball season, Tim is absolutely right, what's going on here. And that's exactly what we were hoping to see.

And if, in fact, both our partner, if FanDuel wanted to have [indiscernible] so we were accommodating to them, but that was never our goal and objective. Our goal and objective were markets, on events, on markets, for their participants and ours. And that's what we're starting to see. And for me, that's exactly what we wanted to see happen.

The next question in the queue is from Alex Blostein with Goldman Sachs.

I had a follow-up on the energy markets. And just curious to get your thoughts on the health of the underlying customer. Obviously, we've seen extreme volatility, which feels like it might continue for some time. There's always a debate about good vol, bad vol. This doesn't feel like great vol. So if you think about what's happening with the underlying users and the durability perhaps of the customer base on the go-forward basis, I'd love to hear your comments on that.

Derek?

Yes, it's a great question. I think that when you look at markets in times of stress, as I mentioned before, you're going to see liquidity retrench back to home markets. And we've absolutely seen that. When we think about healthy markets, we think about a couple of different markets. Number one, we want to see health across the entire breadth of the portfolio. So we saw record activity not just in WTI futures, but options. We saw record activity and open interest being held in the crude grade contract, as I mentioned before. We're seeing record uptake and actually fastest uptake in Europe and Asia. And we're seeing options set records, particularly in the short-dated part of the curve as well. So broad-based activity across all products. We're not seeing activity spikes in one.

We're also seeing, despite the fact that we're seeing some pretty unprecedented volatility times and uncertainty, open interest in energy has been extremely resilient. If you look at open interest since the deck 31, our open interest in energy is up 14%. Even on a year-on-year basis, open interest is up 1%. So open interest is a marker of the sustainability and health of activity, and that is still holding in well.

One of the other markers we look at is the breadth of activity across client segments, and every 1 of our client segments continues to perform up double digits across the board, led by our commercial customers, not surprisingly, in markets like this. Retail has returned over this last quarter as we saw in the metals markets as well, very much wanted to be actively involved in our micro contracts. But I would say the growth and the sustainability in the open interest holdings continue to be -- show positive trends. And we're seeing sustained activity. We are not seeing activity that we saw immediately following COVID, which was a spike in activity closing open interest and reduction in activity across client segments.

So we are seeing a healthy amount of activity. I would attribute at least a portion of that strength in these markets to the growth in our options business, particularly with the short-dated options business that are giving customers the ability to discretely manage event risk like we're seeing right now. And that's why we're seeing records in weekly options that I think customers are using to manage short-dated risk around longer-term core exposure. So at this point, we're seeing into April a strong participation, open interest holding there, and good participation across clients.

And just to add to that, Alex, I think you got to look at the entire industry, and it's not just oil, it's the shipping industry. These are billion-dollar ships that are sitting out there that need to be insured. Insurance companies are very nervous about extending insurance to some of these billion-dollar ships that could be blown up in a heartbeat. So they are looking to offset some of their risk on the insurance side, whether they're creating a swap or trading futures against it.

So I think the client base will continue to expand because this -- even though, whenever this gets resolved, people are still going to be very concerned. So I think we'll get a new constituency of participants, not too dissimilar from the mortgage industry and others, from insurers and reinsurers from the energy business using our products and others in order to manage that risk going forward. These are very expensive vessels that they cannot afford to have being sunk in the Strait of Hormuz or anywhere else.

So I think it's a very interesting what's going on. You mentioned good vol and bad vol, Alex. I want to touch on that for a second. So good vol is the volatility that market kind of goes orderly in a direction and it maybe goes into a different direction. When you see pockets of volatility with not much [indiscernible] that to me is bad volatility. But that's headline volatility. And headline volatility can be very disruptive to the marketplace. And there's a lot to that, but that normally is short-lasting as well on the bad volatility. So we'll see how that continues to proceed going forward.

Got it. Yes. No, super helpful. One quick follow-up just on the numbers. Obviously, with a lot of volumes coming through, RPCs came down a bit. And I was hoping you could maybe frame how to think about near-term RPC across, particularly the energy markets where we're seeing the bigger decline.

Thank you, Alex. Lynne?

Yes. So I would keep in mind a few things when you look at the energy volume and the RPC in this quarter. First, as Derek touched on, we obviously had record volume there. But you also had some real spikes in short periods of time. So March, the level of activity we saw there is certainly impacting the numbers.

So if you look at the total volume growth, you would expect additional usage of volume tiering. You also saw a mix shift towards crude, which tends to be lower priced than things like our nat gas. And Derek also touched on one other thing, the micro business really grew significantly. So we saw about 315,000 micro energy contracts a day this quarter. That was up from about 80,000 contracts a day in the same quarter last year. So that is going to have a dampening effect on the weighted average. Those are at about $0.52 a contract.

So I think those 3 factors really are what weighed in on the energy RPC. The last one that's a little bit harder to see is just the shift towards more member trading. So that's really where we saw that impact. So going forward, I would look at that overall level of volume in terms of volume tiering. And then I would look at those mixes in terms of crude versus nat gas, and then the micro versus full-sized products.

The next question is from Michael Cyprys with Morgan Stanley.

I was just hoping you could update us on your partnership with Google, including tokenizing cash, what the time frame and key milestones are there, how you see this playing out? And if you could also update us on the prospects for CME stablecoin as well.

Yes. Thanks, Michael. I'll have Suzanne and Lynne touch on both, because they're both working on those projects. So Suzanne, why don't you talk a little bit about the tokenized Google and timing and things of that nature?

Yes, thanks for the question. So we are working with the settlement banks in our ecosystem as well as clearing members to be able to advance stages of tokenizing cash. You may have seen a press release from Bank of Montreal in the last few weeks, announcing publicly that they have been working with us and Google on the tokenization project. And so the goal there really is to be able to increase the testing capabilities within the settlement bank ecosystem as well as start integrating clearing members into that testing process this year, with the goal of being able to go live by the end of this year.

And again, the tokenization of cash really for us enables movement of value outside of traditional banking hours, especially looking at 24/7 trading activity, as Terry mentioned in his opening remarks. It's a key component to being able to enable the movement of value in the off hours, as well as allow us to build upon other tokenized assets using the Google Cloud Universal Ledger.

On stablecoin, we also continue progressing that effort with regulatory engagement. And as Terry mentioned there, we are looking to be able to seek a license to be able to issue stablecoin. And we're exploring technology partners that can help us do that as well. We plan to be able to advance that effort this year, although we can't opine on the regulatory engagement time line. Happy to have Lynne add anything else as well for stablecoin.

Yes. I'll actually add 2 things that are a little further afield related to Google. So first, you heard Terry mentioned that we are getting close to opening our Dallas facility for testing with our clients with the goal of ultimately operating markets in the cloud. So we're excited about that progress that we've made with Google. That was something that has been several years in the making.

We're also -- that was a big part of the investment that Google originally made in CME. So I just want to make sure you all noted that the Google shares, which were preferred shares, the only difference between those shares and common was that they did not have voting rights. Those did convert into common during this quarter. So you will see that in the basic and diluted share count rather than seeing that separate class of preferred stock. So going forward, you will also see just that earnings that was allocated to the preferred stock, it will show up just in the basic and diluted. So you won't see that differentiation going forward. I just want to make sure you captured that.

Do you have anything on stablecoin, we'll get -- Michael, hopefully that addresses your question?

Yes. Just a quick follow-up, if I could, on the cloud. So with the contracts migrating to the cloud. I was hoping you could maybe elaborate on the benefits that you see the steps that you're taking to help facilitate that. How do you see the scope and path for migrating other contracts eventually to the cloud or what that might look like and how you sort of evaluate that and what the benefits could be?

Well, I'm a big believer that this is the future. And I think if you were to start an exchange or any other business today, you would be in the cloud. We are 175 years, 200 years old at this stage of our proceedings. I think this is the future of markets, having access to be in the cloud. I think the efficiencies that a hyperscaler like Google will be able to provide to CME and its clients will be second to none. And I think that is really exciting.

You have to start somewhere. We wanted to start with our less latency-sensitive products, which are the agricultural complex and that commodity side. So I think this will be the catalyst that show people how the benefits of having markets in the cloud and the redundancy that they will have with 20 other centers just in the United States alone, if in fact we needed to go there.

So it's pretty exciting from my standpoint. This was our vision going way back during the pandemic in '20 and '21 to do this with a big partner like Google. And I think the future, not only it was looked at, is starting to be realized. So I think it's exciting and I'm looking forward to this progressing forward, and I'm looking forward to every single product being in the cloud, as long as, and I'll say it again, as long as Google's technology and facilities are better than what we have right now. And I believe they will be.

The next question in the queue is from Bill Katz with TD Cowen.

Maybe, Terry, one for you. if you can update us on your thinking on capital allocation at this point in time. Obviously, you have the dividend, but I'm sort of curious of what your thinking is on M&A. In particular, it seems like there's a lot of different vectors of growth in the industry, both de novo and inorganic, and how that might shape your views on priorities.

I missed the latter part. But on the capital allocation, Bill, I think is what your question was, the first one, and I'll let you take the second one. But on capital allocation, I think from the beginning, Bill, going back to '02, I was a big proponent of paying a dividend at CME when everybody else said you shouldn't do that. But I thought it served our interest really well. I still think it does, and I think returning capital to shareholders is really important.

But at the same time, I don't want to be stuck in a situation where we're afraid to do something that we think can grow the business, whether it's through M&A or something else, if the opportunity presents itself. So I think instead of putting myself in a box or the company in a box about capital allocation, right now, we are in a really strong position with our dividend, we're in a strong position on repurchasing shares, as you heard Lynne talk about earlier. But again, if there's an opportunity that we see that makes sense for our shareholders, without going out too far outside of the scope of what we do, we will be evaluating those, and that might change our capital allocation at that time. But right now, we're pretty committed to where we're at on the allocation of dividend and share repurchase for now.

And what was that the latter part of your question?

It was all the same question. And then maybe just a quick follow-up, one for Lynne. If I look at your adjusted expenses, excluding licensing fees, it looks like it was up about 7% year-on-year, if I did the math correctly. I think the -- I think you affirmed your guidance for $1.695 billion for the year. Can you sort of unpack what the growth was in Q1 and how we should think about maybe the -- just sort of the pacing as we look through the rest of the year?

Yes. So certainly, and your numbers are correct, so we saw about a 7% growth rate in Q1. Obviously, with a high level of activity, you saw some of the variable expenses come in a bit higher. So you'll see that in compensation, you will also see that in technology where we did see more activity going across the system.

So we'll continue to monitor as we go forward. We sometimes see these spikes in activity. We're seeing a little bit of softer activity so far here in April, but it tends to be different periods of time over the course of the year. So we'll continue to look at that guidance as we move forward. But at this point, we're comfortable with where we're at.

I would point out that we do expect the occupancy cost to continue to grow over the course of the year as we do things like opening the Dallas facility. You will expect technology to continue to grow as we move more into the cloud environment. The others don't have as many specific drivers that I'd call out.

Next question is from Craig Siegenthaler with Bank of America.

We were looking for an update on your prediction markets FCM JV with FanDuel just given FanDuel's announcement earlier this month that they will launch a new FCM. So I assume they're going to favor the new venture where they can keep 100% of profit. So are there any major differences in the offering?

Yes. Thanks for the question, Craig. And I think there's a bit of confusion on what they can and cannot do with that potential application process. I'll let Lynne describe it to you so we're all on the same page.

Yes. So certainly, this is something that we were aware of, that they were going to make this application. I think it's important to note the difference between an application and a launch. So similar to the way we started an application process, and it took several years to get that approval, they want to be prepared for any future changes and registration requirements or the like. So this actually doesn't signify any change in our relationship or the partnership going forward. And as Terry mentioned, and as you would expect, there are some contractual restrictions in terms of operating alternative venues during our partnership.

And I think that's really important, Craig, they can't just get an FCM license, apply for one or buy one and compete with the JV that we put together with them. That is obviously contractually against what we originally stated with them. So I think it was a bit confusing to begin with at best.

That's helpful. And just one follow-up on prediction markets. Any update on the DCM side and volumes where there's multiple entities hooked up to, including DraftKings?

Is there any volume up there with DraftKings?

No, I think, Craig, just sort of to my earlier comments when we were speaking about prediction markets, we just recently crossed the $220 million contract volume threshold since going live in -- back in December of 2025.

I think the notable thing from volumes is, again, as we were covering, is that the percentage of volume in market-based contracts across the CME Group benchmark products in equities, cryptocurrencies, energy and metals is in excess of 30% since mid-March when we -- with our partner at FanDuel increased the marketing efforts, and we've had 150,000 accounts trade at CME Group. So those are the sort of numbers-based updates for prediction markets. And we would say off to a great start and optimistic about the continued growth from here.

Craig, what I think is also important is there's a lot of activity, for lack of a better term, going on around the sports prediction markets between the states and the providers. Where there's not a lot of noise, and nor should there be, is around the market event contracts or prediction markets on financial products. And I think that's why we're seeing them grow.

And I think that's a very good sign for the future. And I think you're going to start to see other people probably leaning that direction more than just looking at the pure sports itself. So we'll have to wait and see, but I think that bodes very well for CME if in fact that goes there because potentially the offsets you can be looking at against our multiple asset classes that we have here at CME Group that others don't. So I'm pretty interested to see how this all plays out in the future investments going into prediction markets on the sports side of the equation.

The next question is from Brian Bedell with Deutsche Bank.

Maybe just staying with that very line of your answer on the prediction markets, good to see that market side rising as a mix of the percentage of volume. What is your view on potentially creating company KPI types of contracts, like financial KPI contracts? And I know -- I believe, maybe you can weigh in on this, but I believe they most likely would need to be SEC regulated. So maybe your view on any kind of time line of that, if that is something that is -- that you're interested in developing. And then also if you could just confirm, I think the rate capture on the contracts for you guys is about $0.01 a contract. I just wanted to confirm that.

Okay. Thanks, Brian. So do you want to address the first on that.

Yes, sure. Brian, and thanks for the question, we're certainly seeing a lot of interest in other economic or market-based contracts where we've seen good growth in the economic indicators as well as the benchmark products at CME Group. I think with respect to anything that is financial or KPI or individual stock related, that is something that we continue to engage with customers on. But as you noted, there are some regulatory questions and clarity required about how those products would be brought to market and what the security versus commodities-based offering might be. So that's something we continue just to engage with the regulators. So I'd say stay tuned on that, but no imminent plans or a path forward for those just yet.

And in terms of pricing, we don't break out entirely, there's obviously different pieces depending on where the volume comes from either through the various channels. Obviously, the clearing and transaction fee is transparent. But again, for us, this is about getting the traction with the potential customer base and getting the eyeballs in that distribution and getting kind of that community exposure to our products, which we're seeing good uptake on that right now.

Great. And then maybe if I can ask Lynne, if you could just talk about the April collateral balances that you're seeing so far and if that's -- if you're still managing about a 30 basis point spread in those balances. I said 30 basis points -- 10 basis points on the noncash, I think, and 30 on the other, on the cash.

Sure, Brian. So in Q1, we did show an average of balances for cash of about $149 billion. That is up a bit so far here in April at $153 billion. In Q1, we averaged about 33 basis points on the cash. I don't -- typically don't disclose for the partial period how we're doing so far in April, but that held steady at about 33% versus last quarter.

Then on the noncash in Q1, we had $171 billion on average at that 10 basis points. So far in April, we're averaging $174 billion. So both up slightly in terms of the average balances.

The next question in the queue is from Ashish Sabadra with RBC Capital Markets.

This is Will Qi on for Ashish Sabadra. I appreciate you guys squeezing us in. Just wanted to maybe follow up on some of the comments around market data and information services. I think last year you guys had some data license changes in regards to the introduction of the end-of-day data category versus real-time delayed and historical. It seems like clients are still kind of generally building out the infrastructure to kind of track that data and they've been back-billed for that charge. How much of a contributor is that license change to the market data and information services growth? And are there any other policies that we should be aware of that are notable as well?

Julie?

Yes. Thank you for the question. Certainly, that was a change in policy. And part of it, right, is just to protect what we believe is a strong intellectual property of our data assets and just changing business practices within the space. So it has in the past and will continue to be of real-time professional subscribers being the core of that market data revenue line. And so while data licensing such a end of day is adding to the growth of the business. It is not a significant driver of that revenue that we talk about each quarter. That continues to be that real-time professional subscriber.

I'd say policies in general though, I mean, this is where -- and Lynne mentioned it earlier, right, there's this blend of utilizing policies, introducing things like enterprise pricing with our core partners, simulated trading environments, things like that, that we are going to continue to do, [ Term SOFR ] is another great example of our build-out of our benchmark space. So these are all things that the team is actively working on as this space continues to evolve and change. And I think it's working given the 32 consecutive quarters of year-on-year growth.

So we'll continue to update you on that. But I think, again, strategic and pricing-related initiatives as well as new product development is going to be a core of us continuing to drive this growth going forward.

The next question in the queue is from Simon Clinch with Rothschild & Co. Redburn.

I was wondering if I could just ask about [ BrokerTec ] and BrokerTec Chicago in particular. I was wondering if you give us an update on how that's progressing. Any benefits you're seeing also what kind of behavioral changes you're seeing across that treasury complex? And I guess, how we might think that could impact the overall treasury performance of BrokerTec in the future?

Thanks, Simon. Mike?

Yes, Simon, thanks for the question. While still early innings, adoption of BrokerTec Chicago is expanding as clients leverage the platform's value proposition of smaller tick sizes, and co-location alongside our core futures and options markets in Aurora.

What I like about BrokerTec Chicago is it gives our clients choice and execution venue, depending on their trading strategy and market conditions. We have over 35 clients connected to the platform already. And that includes several participants from the derivative space who exclusively trade U.S. cash treasuries on BrokerTec Chicago.

ADV grew 93% month-over-month in March, and we saw a record day of $1.2 billion on April 8. So additionally, we view BrokerTec Chicago as an important foundation in a larger effort to deliver unique new trading efficiencies by bringing our cash and futures markets closer together. So we're pleased with BrokerTec Chicago so far, and we'll keep you updated on new features as it progresses.

Great. And just a follow-up on prediction markets. Terry, could you expand a little bit more about on the -- I think you said 150,000 new contract -- new accounts that sort of started trading on CME's platform, having come through that predicting market funnel. I was wondering if you could talk about just what you're seeing, the early behaviors of those kinds of accounts, what -- how you think it might evolve as you sort of try and graduate those kind of customers across the actual traditional futures [indiscernible]?

So I'll let Tim comment, Simon. But I think when you look at those new accounts coming in to trade that particular product, it's really difficult to predict what the next 6 months or a year is going to look like with that constituency. It could be a whole new group of them. The market can get a little bit stale or could get exciting. You just don't know what's going to happen that would drive the growth of those new accounts or take it away from it.

So I hate to try to make a prediction on that. I would rather try to create efficiencies for each and every client and build the business that way. But I'll let Tim talk more about it. As I said earlier, when we originally did this deal with FanDuel, it was about distribution and having people look at our products and then participating, and then hopefully they would be graduating into the other parts of our industry, which we think they are and they will. So to me, that's the long game here, and we are going to continue to stay focused on the new client acquisition, as we talked about for many, many years. And this is just an extension of the new client acquisition through our FanDuel partnership. Tim, do you want to expand?

Yes. Thanks, Terry. I think the one thing I would expand on that is when we think about the original thesis of why we're trying to attract the next generation of trader to our markets, it's because we want to get our benchmark products and these benefits and the value prop of CME Group into the traders earlier in their life cycle as a market participant. So when we think about what is exciting about the prediction market is prior to the introduction of the full value margin of event contracts that make it easier to access some of these markets at CME Group.

We were on the life cycle of perhaps a trader started in other markets, whether it was single stocks or ETFs or options and then eventually cross over to CME Group to open a futures account, work with our futures brokers and start trading either full size or micro-sized contracts at CME Group. What's exciting though we don't know the exact motivation of all those 150,000 traders at CME Group is with the smaller-sized, full value margin contract, we now have the opportunity to perhaps be their first trade in the financial markets. And that is something that is evolving and transformational for our opportunity here at CME Group, that we can meet these clients earlier in their journey. And then as you noted, Simon, once they are then in the ecosystem at the CME Group, we're optimistic they will look at other products. But hard to say exactly what that graduation or life cycle will look like. But capturing them earlier in that journey is one of the things that we find attractive about this opportunity. And it's great to see that bear fruit this early on in the endeavor.

And the next question in the queue is from Chris Allen with KBW.

Just a quick one following up on the capital discussion from earlier. I just want to ask about the buyback philosophy. So the buyback level doubled this quarter versus the prior quarter, even with the stock improving materially this quarter. So I'm just kind of curious how you're thinking about it from a -- you view it as opportunistic buyback or is it -- is there anything related to the preferred conversion to common shares? Any color there would be helpful.

Thanks, Chris. Lynne?

Yes, sure. So Chris, one thing that you are saying is we did comment that we will be using the OSTTRA proceeds and putting those to work in the repurchase. So we will continue to be opportunistic with repurchases, but we also will be using that $1.55 billion that we received from the OSTTRA sale and putting that towards repurchases. So between last quarter and this quarter, we've completed about half of that. So we had about $758 million remaining in cash from the OSTTRA proceeds at the end of Q1.

And the last question in the queue is from Michael Cyprys with Morgan Stanley.

I was just hoping to circle back to the cross margining where you see the regulatory approval to launch the expanded treasury cross-margining to end clients in the coming weeks. So I was hoping you could help quantify the impact of that in terms of added margin and collateral efficiency for customers, how you see the scope for expanded client engagement, velocity and what that path might look like?

That's a good question, Mike. And I don't know if we're going to have complete visibility into what it's going to look like ultimately. But we are excited by the beginning of it. I'll let Suzanne talk about from her end, what she's seeing.

Yes. Yes, thanks for the question. We are excited to be bringing those 2 big liquidity pools together in the interest rate space. We think that just as we've seen in the House program, we do have the ability to offer a pretty compelling savings the 2 clearing houses. We anticipate the savings can be upward of 80% for the client book just like we've seen on the House side of the program today. We are at about 22 clearing members today that have signed the agreements for the House program. And although we've just announced the approval, we do already have 1 clearing member that signed the agreement for the customer program scheduled to go live at the end of this month, and are engaging with a number of other clearing members to offer the client program as well. .

So hard to speculate on the dollar savings, but we do anticipate the ramp-up will be similar to what we saw on the health side and that we'll be able to deliver significant savings for customers, just like we have so far on the House program.

And I would just add that this is a unique benefit that they're able to get those offsets between their activity at CME and at FICC. So it does help reinforce the value proposition of our offering.

And what were the savings on the House side?

Max savings have been about $1.5 billion. Average daily is closer to just over $1 billion.

And showing no further questions. I will now turn the call back over to management.

Well, thank you. Our record-breaking start to 2026 underscores the importance of our risk management ecosystem.

I want to harp on one thing that Lynn talked about earlier. We have continued to grow this business, exponentially grow the client base globally and bring more participants in here to mitigate and manage risk. The rate per contract is always something that's difficult to figure out. And I think when you look at that, you need to focus on that just a little bit more as we continue to grow our business because we actually think this is a really good thing as we continue to grow. So this is not new. We're growing the business and we're really excited about that because it allows multiple participants to continue to grow their business here at CME and pay a price that makes sense for them and for us and for more importantly for you. And we're seeing unprecedented engagement across all of our global asset classes today. We remain focused on disciplined execution and delivering superior value to our shareholders. Once again, I want to thank you all for joining this call today.

This concludes today's call. Thank you for your participation. You may disconnect at this time.

All right. Good morning, everybody. We'll go ahead and get started. I'm Patrick O'Shaughnessy, the Capital Markets technology analyst here at Raymond James. And up next, we have CME Group. And on their behalf, we have Derek Sammann, Head of Commodities Markets. Great time to have Derek here given what's happening in the commodities markets.

Our format is going to be a presentation. If there's time left over, we'll do a short Q&A at the end. Otherwise, there will be a breakout session downstairs afterwards.

So with that, Derek, welcome.

Great. Thanks, Patrick. Appreciate it. Thanks for all coming this morning. Probably just want to start the conversation today, the fact that I've been in this industry for 35 years. Gray hair shows it, I think. I've been at CME this year 20 years. And I would say without a doubt, this is probably the most interesting time in my career to be in financial services. And being at CME Group where the crossroads of market structure is unfolding literally before eyes is a pretty exciting place to be. So as we talk through the conversation today, for those of you that don't know the company, hopefully, you understand more about CME Group in 30 minutes from now. And for those that do know us, hopefully, you'll find some insights and if not in our presentation today, in conversation as we go into the rest of the day.

So I want to start by just noting the fact that for those that may or may not know us well, we are the world's leading derivatives exchange. And we effectively operate on a dual mandate. On one side, our core responsibility is providing price transparency in markets across the world. That comes in a couple of different ways. We have a group of benchmark products, which you'll see sort of our rate in this circle here on the graph, where we have benchmark products and benchmark liquidity in every single major asset class out there. The 6 that we typically refer to between fixed income, equities and FX on the financial side, and on commodities, we've got our energy business, our metals business, agricultural products business. We also have a crypto business that rolls up on our equities.

So no matter what price formation is taking place in any product, we've got standardized listed futures and options that provide lit, transparent markets 23.5 hours a day, 5.5 days a week that global participants access and use to either expose themselves to market risk or mitigate market risk they actually have. So that dual mandate on the price transparency side really comes in two forms. On the one side is our product set. So in every major asset class, we've got benchmark products and fixed income. It's the entire yield curve from overnight Fed funds out to 30-year treasury.

In equities, it's the whole span of the primary U.S. indices between Dow Jones, S&P 500, Russell, et cetera, futures and options and all of those. In the foreign exchange market, it's all major G7 players plus a number of nondeliverable forwards or NDFs, which are small regional currencies around the globe. On the energy side of the business, our primary benchmark markets are WTI crude oil, certainly in the news over the last 72 hours at the events of the Middle East. In fact, yesterday, we had another top 5 day in our crude and refined business, not surprisingly, with the uncertainty happening in the globe. When risk hits markets, customers come to CME to manage their risk.

On the metal side of the business, our benchmark products are mostly in the precious metals business, gold and copper. Gold, obviously, top of mind also given the rally and the flight to quality, story that we've been seeing unfold for the last year or so, particularly the last few months. We also have a business in battery metals, where we are effectively 100% of the futures market for battery metals globally, whether that's cobalt or lithium, spodumene and a few of the smaller products inside of that. And then our agricultural products, which is mostly grains and oilseeds, which is looking a lot more like an energy business every single day with renewable biodiesel and ethanol crossing over into energy land.

The other part of our dual mandate on the price transparency side is what we do on the technology side to deliver our prices to our customers. We use our system called Globex. It is a system that directly distributes liquidity out to 180,000 customers globally. We'll talk about kind of that global dispersion of participation in our markets. And we have also partnered with Google over the last 4 years in a strategic partnership. They took a $1 billion stake in CME Group, where we are building out cloud capabilities, migration and looking at ways to evolve financial services to that next iteration of what this market looks like today. So back to the point I made about being -- it's a very exciting time to be in financial services, particularly at CME Group.

The other half of that mandate is risk management. We own our own clearinghouse. So if you -- there's a nuanced difference, but a huge difference between businesses that are regulated by the CFTC derivatives like CME Group and SEC-regulated securities exchanges. In derivatives, we get to own our own clearinghouse. That means we have a vertically integrated clearing house. So all products that trade on CME only get cleared at CME. So that provides very unique, both offensive and defensive nature to our business model means high barriers to growth. It is not a horizontal model where you can put a trade on one clearing house one day and clear that at another clearing house and extinguish that position. All positions have the open and close within CME on our same clearing house. So very high defensive walls around the business. You'll see some of the margin numbers on the following pages very high. That's one of the contributors to that.

There are a number of competitive advantages that we have as a result of that, not the least of which are the deep pools of liquidity that we talked about, the benchmark product set that we have. We have an intense customer focus. We'll talk about how we're rate and how that differentiates our service and capabilities versus our peers in the space. And we have an $800 million proprietary data business that grew 13% last year and probably close to 8% or 9% cumulative average growth rate over the last 10 years. So a lot to like about this business, high barriers to entry, defensible business model, a lot of recurring revenue alongside a lot of transactional revenue.

Moving on to a very brief overview of our recent performance, as you'd expect, in a market that is replete with examples of uncertainty globally, this is exactly the market that CME is built for. Now that said, while we are thriving in conditions of high degrees of volatility, we've also proven over the last 25 years that we can also grow in 10 years of 0 interest rate policy. So we are built and we continue every day to innovate such that we can grow when we have volatility when it's blowing favorably, but we can also grow when we have headwinds of volatility or regulatory uncertainty. And we'll talk to some of the multiyear growth on a couple of following slides here.

So when you look at where we are this year, over the course of the last 12 months, so calendar year 2025, you saw that we were able to grow our volumes at 6% and our revenues at 6%. That's unique. Typically, when you see volumes growing, you would tend to see revenue grow a little bit more slowly than that. But because of a very disciplined pricing power that we exercise across our markets and the ways in which we continue to evolve, our service generate new revenue streams, we can grow our volume and our revenue and locks up with one another. You'll see some of the key highlights on the left side of the slide here, 69.4% adjusted operating margin. That's unheard of in most industries. And that is both a function of the expense discipline that we have, the network-based model that we have and kind of the fixed cost model that we have. So that as we grow our business, we continue to drop more of that marginal dollar right to the bottom line, and that means more capital return to you, our investors.

When we look at the volume last year, we averaged that 28.1 million contracts a day. ADV stands for Average Daily Volume. It's the number of contracts that trade on average every single day. The year-on-year growth up 6%. You'll see about $5.3 billion of transactional revenues. We'll talk about the non-transactional revers, which is another $1.7 billion, and that's been a pool of revenue growth for us as well.

So 28.1 million contracts a day. That was a record last year. We've set consecutive reverse for multi years in a row. Year-to-date, we are doing 35.5 million contracts a day. So we're building on that record year. That's up 16% year-to-date yesterday. We did 45 million contracts. So -- as you can see, when the market is facing risk, facing uncertainty, the world comes to CME Group, and we see that in the growth across all of these 6 asset classes that we're referring to here today.

When we think about who's in our markets and why they're in our markets. We think about our markets being either a risk-on position or a risk-off position. And for the last couple of years, this is very much a risk-on environment for our customers. So despite uncertainty, despite the headwinds of some of the challenges of whether it's global trade tariffs, whether it's disruptions in the Middle East or otherwise, meaning the number of contracts the customers are carrying, meaning carrying more risk and they're trusting CME Group to carry that risk in this market. We're seeing all of our client segments grow, and we'll talk a little bit about that in a moment. We're seeing all of our geographies growing fast. Our non-U.S. business is growing faster than our U.S. business. We're seeing growth across both futures and options. Those are all characteristics of a risk-on environment. So we see healthy growth. We see diversified growth. We see sustainable growth and the investments that we're making in technology, in product development, reaching our customers. Our partnership with Google are always to make sure that we're building on that, expanding our customer base by putting new products out there, accessing new venues to reach those customers and then pushing the technology side in partnership with Google.

This is one of those charts that is a fabulous upward to the right graph. It's just -- it's a picture of what I've been talking about, strong multiyear growth. This is a graph on the left-hand side here of our average daily volume, as you can see increasing over the last 10 years, that cumulative average growth rate, 7%, adjusted net income growth, 12% over that same time line. So think expense discipline, think scalable business model, think defensible business model. As we grow and position ourselves competitively, we're doing that in a more profitable way year after year so that you, our investors, can benefit from our capital return policy. We'll talk about that in a moment as well.

That single bar right there, just the year-to-date, as I mentioned before. Last year was a record at 28.5 million contracts a day; year-to-date, 33.5 million contracts a day; yesterday, 45 million contracts a day. So in times of stress, the market comes to CME to manage that risk with us.

A couple of other stats here that are worth noting. If you look at the number of trading days, we see in excess of 30 million contracts a day you can just see a higher proportion of plus 30 million contracts a day happening every single year over the last 5 years, more than 3/4 of our days last year or this year, year-to-date are above that 30 million contract threshold. So just significant growth, sustainable growth in ways that we continue to invest in our infrastructure to continue to grow this business.

Globalization, if you ask me for what the 3 or 4 levers of growth are, and that's one of the first questions we get in almost every investor meeting, this is always within the top 3. Our growth in non-U.S. business, non-U.S. customer growth is a huge part of what we do. I joined CME in 2006. I lived in London and Paris for 13 years as a trader. I never heard of CME. We had 3 people in our London office. I think we had maybe one person at the time in Singapore and almost the entirety of CME Group's resources this before the acquisition of Board of Trade or NYMEX and COMEX, they had salespeople only in Chicago. Fast forward to today, we have the majority of our salespeople in our London office. Our marginal growth is taking place outside the U.S. So as that business continues to grow, as you see these on the bar chart here, that average daily continue to grow, an increasing percent of that continues to take place with our non-U.S. customer base.

Now I say our non-U.S. customer base, I mean, the customer base that we're continuing to grow and expand on every single year. So this is a chart that just shows you on a stacked bar chart, the total average daily volume coming in aggregate from non-U.S. broken between Europe, Asia Pacific and LatAm markets. The biggest of that is the dark blue in the European business.

We're putting boots on the ground, have for the last 10 years and a client segmented sales force that brings in net new customers, and that also means that we're bringing new product ideas to us as well. So much of our product innovation and technology innovation is us continuing to expand our footprint with our non-U.S. client base. This is not to say that our U.S. client base is static. That's continuing to grow low single digits. We're growing our non-U.S. business, close to 10% -- actually 10% over the last 5 years. So substantial growth there.

Why that's important to you as investors? Because this non-U.S. business tends to come in at a higher margin to the company. We've got a rate per contract as the dollar value associated with every contract that trades on the exchange on average. So our non-U.S. business tends to come in at a higher rate per contract, meaning more of that drops to the bottom line for you, the investor.

Very quickly on the right-hand side of this chart, when you look at the distribution of non-U.S. participation in our markets just using fourth quarter of last year, as an example, you'll see global products tend to be the products that are most global in our world as well. So you think foreign exchange, you think markets like gold, those are global products that are positioned all over the world. It's not like a U.S. equities benchmark or U.S. fixed income. So you'd expect that a higher proportion of those truly global products trade outside the U.S. and that is true. 47% of both our foreign exchange business as well as our metals business, almost half is kind of from outside the U.S. 3 of the top 4 or the highest percent of non-U.S. businesses are commodities businesses, our metals business, our energy business, and our agricultural products business.

Think about the real economy, think about what changed in 2020 when people fundamentally rethought supply chains. We'll talk about commodities in a moment, but just over a preview on that, that's been a substantial structural growth driver for change and an accelerant to the growth in our commodities business where we're the market leader.

Retail is obviously something that's on top of mind for a lot of folks, whether it's the recent conversations around things like event markets or event contracts, prediction markets, [indiscernible] market, et cetera. We ourselves have done a strategic partnership with FanDuel and Draftkings. We've listed a number of products there that we think are additive to the overall opportunity set. But really, historically, CME Group has been and at its core will always be an institutional market. Now what we have done, I think, a fantastic job of, so I'm so excited about where we are right now, we have continued to add products and capabilities that are well suited for individual retail traders. Historically, I'd say up until about 2 years ago, our retail and everyone in this room would probably define retail slightly differently, but our retail focus has really been on what we'd consider, we define it in a made-up term that we use called Protail, Professional Retail Trader. Think about it as a very, very small institutional trader or an individual that's really -- that's the primary source of income. So our focal point has really been on a very, very small institutions, folks that come through and interact with brokers or Charles Schwab or a typical kind of broker intermediary.

With the growth of a number of what we call new to futures market participants like Tastytrade, like Plus500, Webull, Robinhood, this has opened up a whole new client segment that historically have not focused on futures that those brokers have determined that there is a desire to get access to futures markets if we have the right products to bring them in the door. So we've done a fantastic job of building products. This is the right-hand side of this chart now on building products that are well suited for the smaller retail-oriented individual. This is a graph that shows the aggregate average daily volume of what we call our micro product suite. And micro products are effectively bite-sized versions of our standard contracts. So if our gold contract is 100 ounce, our micro gold is 10 ounce. We now actually have a 1-ounce contract as well based on the significant and record-breaking growth we're seeing in this client segment.

In our equities business, we have -- we've got an E-mini and then a micro E-mini, so just much smaller versions of that. As we build out our footprint with this new mass retail segment, this is new found business for CME Group. This doesn't displace, this doesn't self-cannibalize. This is net new. And so as we continue to focus on making sure that we are the primary source and the reference price for every global major asset class, we're also making sure that we're growing with our retail broker partners and being able to develop products and partner with them to equip them to bring their customers into the futures world. This is a big source of revenue growth. If you listen to Robinhood's calls, if you listen to any of those brokers calls, you're going to hear them talk about the growth of futures, the majority of that is happening on our exchange in our product set. So we're excited about what we're seeing in this world. But I'll say again, this mass retail is a net new client base for us to add that next strata layered below our kind of professional retail crowd that sits nestled below our institutional crowd.

So interesting part of the business, and we continue to roll out products that suit their needs. For example, our benchmark silver contract is a 5,000-ounce contract. That's a big contract when Silver is trading $100 an ounce. We actually have a $2,500 or 2,500-ounce silver contract that's still -- that's a $250,000 face value contract. So we rolled out a 100-ounce contract, which is significantly smaller and suits the needs. It's $10,000 face contract. We have a 1-ounce gold contract. So you can trade clips of gold in $5,000 as opposed to $500,000. So we just continue to roll products out in partnership with our retail distribution partners. They do the heavy lifting with their end users. We partner with the sellers of our products. We educate the educators. We train the trainers. We sell to the sellers. Our relationship is with the broker, broker relationship with end customer. We get paid to the transactional chain.

And one last comment here because I want to take this back to revenue and why this is interesting to you as an investor. This client base, particularly on the commodity side of the business is where we've been able to exercise some very -- I would say, diligent but consistent pricing power. I'll use one example and I'll quickly scoop through so we don't miss any time here. But our main contracting gold is a 100-ounce contract. For a nonmember customer, call it a retail customer, they pay $1.55 a contract. Our micro contract, which is a 10-ounce contract, 1/10 the size, we charge $0.65. So call it 40% of the cost for a contract size at 1/10 size. We rolled out last year, actually at the end of 2024, a 1-ounce gold contract that is 1/100 the size of our main contract, and that's priced at 35% of the main contract. And this business still continues to set records year after year.

So there's where we can exercise, I'd say, prudent pricing power in some of the retail segments, particularly on the commodity side, there's a price in elasticity that we made able to take advantage of. So when we talk about the client growth here, which is the chart on the left, that's the number of net new clients to the CME on the retail side, that's coming in at -- on a notionalized basis, a much, much higher margin business to CME. So there's a lot to like in that story and a good chunk of this, and Adam, keep me honest, I think about 45% of our retail business comes from outside the U.S. So it's another story of high-margin business, found clients new to CME, new to futures and they're establishing their futures trading at CME Group. So it's an important part of our ongoing growth story.

Physical commodities, I'll try to be brief, but you let me, I'll spend a full hour here. There's so much happening in the commodities world, not just in the last day or week or month. This has been a multiyear growth of our commodities business. We make a little over $1.8 billion a year in transaction fees in our commodity business. That's the aggregate of our energy business. We think about the benchmarks of WTI crude oil and Henry Hub Natural Gas. And we also have kind of the complex around RBOB, which is basically diesel, which is gasoline and then HO, which is diesel. Our agriculture products business, mostly grains and oilseeds, $500 million. We make $650 million in ags, about $500 million of which is corn wheat and beans. We also have the dairy business and a livestock business that makes up the balance of that. And then our metals business, about $350 million a year in revenue, and that's probably 75-25 split between precious metals, gold, silver, platinum, palladium. And then our industrial metals business, which is a combination of kind of your base metals like copper and aluminum and then battery metals, which is a fascinating new evolving part of the market where we are 100% of that market right now.

And we do have a Venn diagram here because the reality is the lines of distinction between energy, ags and metals are blurring into one another as we used to see ag customers trade ag products, energy customers trade energy products, metals customers trade metals products. With the evolution of the energy transition that has blurred these lines. We've got our biggest ag customers that would trade soybean and soybean oil, now trade energy because soybean oil is the primary feedstock into renewable biodiesel. Corn traders are now trading a lot more energy because it's correlation because corn is the primary entry point into and the feedstock for ethanol.

We have energy traders trading a lot more metals right now because copper, aluminum and battery metals are all components into the EV transition and transmission lines generally solar panels, everything in that complex. So we're seeing these crossover client bases, and this is the benefit of being a multi-asset class exchange, where everything is cleared in the same clearing house. You have a number of correlations between these products because in the same clearing house, we unleash up to $80 billion a day. We'll talk about this in a moment, $80 billion a day in margin offsets that means capital back into our customers' pockets to deploy either into more trading or investing in different parts of their business. That is a huge part of our defensive moat around this business and it makes switching costs very, very high. If customers have more trades that are offset against one another, and they get that benefit in terms of margin return back to them, lower risk as a spread, they get that money back. They get to be more efficient in a non-zero interest rate world, that means we typically see more business from them.

It's also offensive in nature, defensive in that it makes that barriers to entry and competition really, really difficult to dislodge us. And it makes switching costs moving from our products to somebody else's very, very high. So we'll have to go in here, but we've got 6 minutes left. So I need to keep ripping, ripping along here.

When we talk about the transactional side of the business, we make $5.3 billion, $5.4 billion a year. We generated that in transactional revenue last year. We make another or made another $1.7 billion in non-transactional business, some of which you could think about as recurring revenue as well. Really, these 3 pieces here on the left-hand side is our market data business. That's a business that, over time, I think 10 to 12 years ago, we did not charge for market data. We considered that if you were trading our products, then that was going to be our monetary and financial relationship with you with the rise and value of data. And to be super clear, this market data business that grew 13% this year, generated over $800 million of revenue. This is proprietary CME Group market data. It doesn't exist anywhere else.

No one could access it unless we permission and we get paid for it. Typically, we don't do that. We like to monetize this market data ourselves. So this is a business that's been growing 8%, 9% for the last 7 to 10 years, grew 13% last year. Think of that as people buying our real-time data. So if you're in any market, and you didn't know what's going on in the treasury market, the FX market, the equities market, the oil market, the gold market, the ags market, you have to buy our data. So we've been monetizing that, and we've been growing that not only adding subscribers, but also making sure that we're selling them different kinds of even treated data, and that's a business growth opportunity going forward as well.

That second bucket there is the revenue that we -- nonoperating income that we get from our partnership with the S&P Dow Jones Indices. We own 27% stake in them. So that business means that -- not only are we making record amounts of revenue in our own S&P futures business on CME Group, as that business grows on a different exchange, we get paid for a part of that because we have a 27% ownership stake in that entity. So whether that business grows on futures or grows on another exchange trading S&P products in the SEC regulated market, we get $0.27 on the dollar back to us on that. So it just allows us to diversified footprint, and that has been just a really, really strong part of our nonoperating income story.

The last piece of this is the interest income that we generate on collateral balances that we hold in the clearing house. So as you recall, and I talked at the top of the conversation around the dual mandate of price transparency and risk management. The risk management piece, we actually get paid on because of the collateral balances that we hold, we hold that at the Fed in Chicago. We paid interest on that. We share a portion of that with our customers. We keep a portion of that. So this interest income, which was just through a little short of $600 million last year, is a nice part of that nonoperating kind of below the line additional revenue to the firm. Again, $1.7 billion here. So you've got the $5.3 billion in transactional last year and the $1.7 billion on the other side.

So I'll quickly touch on this and try to stick the landing, if I can. The -- I talked about the gross margin and the margin benefits that accrue to our customers. When customers come to CME Group, it's very rare that they trade a single product. If they're trading a single asset class, it's even more rare than just trading futures or just trading options. Almost every one of our customers, and if they're not, we have an extensive cross-sell and upsell program in our sales team to ensure that they do, trades more than one product. When you do, they're typically spreading futures against options, futures against futures, asset class against asset class. Where that happens within our benchmark products at CME Group, because that sits in the same clearing house, you get recognized as a margin offset.

Think about a very simple example of a calendar spread. I'm going to buy March and I'm going to sell June. The risk of that spread is much smaller than having just an outright March position and an outright June position. When you have offsetting positions that reduce risk, we return capital back to our customer, lower risk means lower collateral held at the clearinghouse.

When you look at that in aggregate across the firm, we continue to grow the ways in which we can offer customers to use CMG Group to be the most capital and operational efficient means to trade and risk and manage their risk. That number of margin offsets is up to $80 billion this year. You can see 40% in the equity complex, 35% in rates. Think about as a SOFR position like the old Ted spread, treasurers against Eurodollar, so front end long end, think about futures versus -- think about swaps against futures against options. And then on the other side, other products, the majority of that other bucket is energy because that's one of our biggest products and margin offsets outside of fixed income and equities.

So this matters because this also, as I mentioned, makes competing against CME very, very difficult. The switching cost, if somebody wants to compete with us in the short end of the fixed income curve by offering SOFR futures, someplace else. A customer would need to pull their SOFR futures out of CME, lose all the cross margining in products that are not missing on the competitor exchange, and they're incurring significantly increased cost to manage the same overall risk profile. So it's both offensive and defensive. And as part of the capital and operational efficiency story that makes us so valuable to our global client base. We're continuing to invest and add in that by expanding our participation in partnership with DTCC, which is a current firm for treasuries.

Stick the landing here. We have our privileged position and our hard-fought well-earned leadership position in this business, coupled with our growth orientation make CME Group what we think is a very compelling investment. I didn't even get a chance to talk about the capital return policy, but we have not only increased our quarterly dividend every single year. We've also increased our annual variable dividend every year. Our dividend yield, I think, going back here, and I neglected to mentioned this, shame on me, 4.1% dividend yield in a stock that is growing the way we are, set a new all-time high, I believe, yesterday. And at 4.1% is inclusive of the annual variable dividend that we just announced as a $6.15 return to you, our shareholders, on top of which is our recently announced and currently being executed share buyback scheme.

So with that, I'm hoping that you'll join us for a breakout session after this. And if we're going to meet with you separately, look forward to following up. But it's a great story, and this is a fabulous time being financial services. Great time to be in CME stock. So thank you. I appreciate your time.

Welcome to the CME Group Fourth Quarter 2025 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. We released our earnings commentary earlier this morning, which provides extensive details on the fourth quarter and full year results for 2025. I will start with the safe harbor language, then I'll turn it over to Terry.

Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.

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

Thanks, Adam, and thank you all for joining us this morning. I'll keep my opening remarks brief to highlight what was quite simply the most successful year in CME Group's history. Following that, Lynne will provide an overview of our financial results and our 2026 guidance. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks.

2025 marked our fifth consecutive year of record volume, with average daily volume increasing 6% to 28.1 million contracts. This growth was broad-based, including all-time record in our interest rate, energy, metals, agricultural and crypto complexes. It was also a record year for our international business, which averaged 8.4 million contracts per day, up 8% from the previous record set in 2024. Global participants continue to choose the deep and liquid markets at CME Group to manage their risk.

In addition to our record volume results, we continue to deliver unmatched capital efficiencies for our customers. In the most recent quarter, our customers' average daily margin savings reached $80 billion across all 6 asset classes, representing an increase of approximately $20 billion over the past year. The ability to offset margin across asset classes isn't just a nice benefit. It's a necessity for our clients. Due to the diversity of our asset classes, this offering is a unique benefit for our market participants.

In December, we received approval from the U.S. Securities and Exchange Commission for CME Securities Clearing. We are on track to launch this new clearing house later this year in advance of the SEC's U.S. Treasury clearing mandate. This, combined with our work to extend CME FICC cross-margining to end-user clients in early 2026, will unlock even more capital efficiencies for the industry.

Innovation continues to accelerate our growth. And in Q4, we expanded our retail footprint throughout the launch of event contracts on financial and commodity products, economic indicators and sports. This initiative represents the next step in our multiyear strategy to expand our customer base by providing greater access to markets for the next generation of traders. While still early days, these products are delivering promising initial results and generated traction with previously untapped customer segments. Over 68 million of these event contracts have traded in the 6 weeks since launch, including over 7 million markets-related contracts.

Our retail-focused products also drove strong performance in 2025 with micro products up 59% in Q4 to a record 4.4 million contracts per day. The 1-ounce gold contract that we launched last year has been successful with Q4 volume of 66,000 per day. Next week, we will be launching a 100-ounce silver contract, which will help the retail community manage exposure or invest in that commodity at a time when the precious metals markets are very active.

Finally, in 2025, was a record-breaking year for CME cryptocurrency trading at CME Group. In the fourth quarter, average daily volume across the complex of $379,000 was up 92% and represented over $13 billion in notional value traded per day. This strength has continued into 2026. And next week, we will be expanding our cryptocurrency offering with the launch of Cardano, Chainlink and Stellar futures on February 9. We'll begin offering 24/7 trading for our entire crypto suite next quarter to enable our customers to hedge exposure to the underlying cash markets for these products, which currently trade throughout the weekend.

As markets continue to evolve, we will strategically evaluate whether other asset classes would also benefit from 24/7. We've carried the momentum from a record-setting year in 2026 with new volume records in January. While the macro landscape grows increasingly complex, we remain focused on providing the premier risk management tools our clients need to navigate market shifts.

With that, I'll turn the call over to Lynne to review the financial results in more detail.

Thanks, Terry, and thank you all for joining us this morning. In addition to the volume records Terry discussed, we delivered our fourth consecutive year of record revenues and adjusted net income in 2025. Our revenue of $6.5 billion grew 6% compared to 2024 and included annual revenue records in 5 out of our 6 asset classes. Our market data revenue surpassed $800 million for the first time, up 13% from 2024. Adjusted annual expenses, excluding license fees, were approximately $1.625 billion, and our adjusted operating margin for the year was 69.4%, up 110 basis points from 2024.

We delivered $4.1 billion in adjusted net income, resulting in 9% adjusted earnings per share growth for the year. During the fourth quarter, CME Group generated revenue of $1.65 billion, an 8% increase from Q4 '24. The average rate per contract for the quarter was $0.707, driving clearing and transaction fees of $1.3 billion, up 8% from last year. Market data reached a new record level, up 15% to $208 million. Adjusted expenses were $543 million for the quarter and $447 million, excluding license fees. Our adjusted operating income was $1.1 billion or a 67% operating margin for the quarter.

CME Group had an adjusted effective tax rate of 23.7%. Adjusted net income and adjusted diluted earnings per share came in at $1 billion and $2.77 per share, 10% higher than Q4 2024. Cash at the end of the quarter was approximately $4.6 billion, including $1.3 billion in remaining OSTTRA proceeds. Our Board has approved the use of these proceeds towards share repurchases over time. We repurchased $256 million in shares during the fourth quarter, an additional 276 million in shares thus far in 2026.

CME Group paid dividends of $455 million in the fourth quarter and approximately $3.9 billion in 2025. As announced last year, the annual variable dividend declaration and payment dates have been aligned with our Q1 regular dividend and will be declared next week. Earlier this week, we published transaction fee changes, which will be effective April 1. Taken in aggregate with the market data fee change, which took effect January 1 and incentive program revisions, the fee adjustments would increase total revenue by approximately 1% to 1.5% on similar activity to 2025. We will be evaluating transaction fees on a regular basis going forward and may make changes as conditions warrant versus aggregating in December as in past years.

For 2026 guidance, we expect total adjusted operating expenses, excluding license fees, to be approximately $1.695 billion. This includes our typical core expense growth as well as reinvestment related to the new initiatives ramping up this year, including 24/7 crypto trading, securities clearing and event contracts. We are dedicated to continuously evolving our product set and offerings, a commitment that requires strategic investment for growth.

Total capital expenditures are expected to be approximately $85 million, and the adjusted effective tax rate should come in between 23.5% and 24.5%. We are proud of the record-breaking results the firm has delivered this year, driving 6% revenue growth and 9% adjusted earnings growth on top of the record set in 2024. We are encouraged by the strong activity to date in 2026 and remain focused on helping our clients navigate this complex environment.

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

[Operator Instructions] The first question will come from Dan Fannon of Jefferies.

I wanted to talk about just the current environment and activity, the health of your customer base in aggregate as well. Just given some of the volatility, you guys have raised margin requirements, I think, in the metals complex a few times. We've seen really large swings in the underlying. So I was hoping to just get a little bit more context around how you think the customer base is performing through these kind of elevated periods of volatility.

Yes, it's Terry Duffy. Thank you for your question. And I think there's a couple of interesting examples to how the customer is looking at. One, it can be a reflection of open positions, as we talk about constantly with the analysts, investors and others. I think we're sitting around 125 million open positions today. But let's specifically talk about one product which you mentioned, which is silver, and I'll ask Derek to chime in. But when we changed the margins on silver, some thought that the market would sell off.

We went to a notional margin regime because of the activity related to silver and just on that particular product. That didn't affect the customer base or the product at all because it went and made a new historic high, not went down the other way. So I would say the customer is healthy because of the market direction in which it went, which would tell you that some of the retail participants, which are traditionally long people and others set new highs in lieu of the way the margins were going forward. So I would say, overall, the customer is very healthy throughout all the different asset classes, but I wanted to call out your example of silver.

Do you want to add to that, Derek?

Yes. I think Terry made some good points there. I mean the important part about the health of that market right now is we're seeing all our client segments grow. Yes, retail is growing, but our institutional base is growing double digits right now. I think, Dan, you also look at the quality of the market in terms of open interest. Open interest is steady to increasing. we're seeing volume increases across all regions as well as futures and options.

So those are kind of indicators of a risk-on environment. I think price up and price down, but we're seeing a healthy ecosystem. I think risk management is one of the reasons why customers choose an institutional customer, specifically to do their business at CME Group.

The next question will come from Patrick Moley of Piper Sandler.

Congrats on the launch of the prediction market offering and the JV with FanDuel. I was hoping you could talk about what you've seen to date in terms of engagement and inbounds from market makers and institutions who are looking at the prediction market space, both in sports and non-sport contracts.

And then as a second part to that, Terry, would love to get your updated thoughts just on the legal and regulatory landscape around prediction markets and some of the comments that have come out of the CFTC recently, kind of pledging to create clear rules of the road and defend their jurisdiction there.

Patrick, thank you. I'm going to ask Tim to touch a little bit on the market makers as it relates to the prediction markets and sports and the other things you referenced. I'll touch on the legal and the regulatory. I just met with the new Chairman of the CFTC, which I'll update you on, but I'll let Tim go first.

Thanks, Terry, and thanks, Patrick, for the question. I think what's been interesting as we've launched the prediction markets at CME Group, we've not only seen new individual participants come to our market as we look to attract that next generation of trader and get more people to trade all products at CME Group across the traditional markets, the futures-based event contracts or sports, we're also seeing new institutional and market makers reach out to CME Group that are new to CME Group.

So I think when we look at the innovation of the product design, we are pulling market participants from other parts of the ecosystem where they may be more traditionally sports-based, and they're also coming to our market to reach out how they could market make the event contracts at CME Group, how they can take advantage of the liquidity that is existing at CME Group early days here since we launched in December.

So we've been pleased with not only the market maker performance that we've seen on screen in providing liquidity to the marketplace, but the number of clients and new clients reaching out, asking how they can get involved. That's a great thing to see for a new market, but also great to see new participants being attracted to our long-standing benchmark products and markets at CME Group as well.

So Patrick, on the regulatory and legal side of this, first, I'll touch on the legal side. The last thing I'm going to have CME Group do is get tied up in a bunch of legal battles in court over sports. That's not traditionally our business. We are very focused on the market side of this. We have a great relationship with FanDuel. They are in the sports business. They're an online gaming company, as you know.

So we thought it was a good marriage. We still believe it's a massively good marriage to distribute our product through FanDuel to touch a whole new customer base to trade our products, which I outlined in my opening remarks about the amount of contracts that are being traded on markets, not sports. So I think that's a very healthy sign for that particular marketplace. So I really don't want to get involved in the legal battles in court between the states, the tribes, the casinos and others about what if it is gaming or not. I think that's not our fight.

So on the regulatory side, I will tell you that I believe that the CFTC looks as these contracts as swaps, as you know, and they are very much wanting to regulate that. I did meet with Chairman Selig. He felt very passionate about that. I -- passionate is my word, not his. I would say that he is committed to overseeing this product. And I do believe he thinks that they are legal swaps under the CFTC's regulation. So that's what I can tell you to date.

But again, let me emphasize this. We are not going to get bogged down in a bunch of litigation over whether this is sports gambling or swaps markets. Today, they are called swaps markets, which we participate in, and we will do so. But if, in fact, there's some litigation that we don't like, we will not pursue that particular asset class and tie up our shareholders and others in court cases over this because I think there's enough people in that fight. But we will remain in the business as long as it's overseen by the Commodity Futures Trading Commission, and they deem it to be a legal swap.

The next question will come from Benjamin Budish of Barclays.

I was wondering if you could address the pricing changes made. I think there was an announcement quite recently. I know market data pricing went into effect earlier in the year. Just curious if there's any other puts and takes by asset class. Obviously, from the release, we saw that the rates -- asset class is not seeing any other changes. But just curious if there's any other context, anything else you could share around the thought process for this year.

Yes, Ben, thank you. I'm going to ask Julie Winkler, my Chief Commercial Officer, to comment on the market data, not only the pricing, but the business itself, which gives her an opportunity to talk about that because I think it's a really important component of the CME, and then Lynne can address the other part of your question. Julie?

Yes. Thanks for your question, Benjamin. We did in January 1, institute a 3.5% rack rate increase across most of our market data products. And this was really a continuation of our price-to-value adjustments in ensuring that our data business certainly remains resilient. And we have proven, given the record $800 million in annual revenue that was referenced earlier in our call. This marks the 31st consecutive quarter of growth for our data business. So Q4, we saw revenue up 15% to $208 million.

And just to dig into that a little bit more of talking about the quality of that growth. So our nonrecurring revenue items like the audit and the cash payments were actually lower than the previous quarters, which really just demonstrates that our core subscription revenue is accelerating. And our growth drivers are really kind of balanced across 3 main pillars. We saw 50% of this revenue growth coming from new user expansion, and we have been successful in really monetizing both the retail growth that you heard us reference, as well as institutional participation in our data products.

The second pillar of really around 25% of our growth being driven by product innovation. So our ability to deliver new data sets, our new cloud-based delivery models are really helping us to create more sticky recurring revenue. And lastly is that pricing integrity that I referenced earlier of that's the remaining 25% of our growth in revenue, where we're able to really capture the value of CME data, particularly given our strong benchmark products and liquid products. These really have become the golden source for futures and options and is a huge contributor to that record revenue that we saw this year.

Lynne?

Yes. So Ben, when it comes to the transaction fee changes that we announced, the most impacted for those fee changes would be in the metals complex, particularly around precious metals and the micro complex as well. We also had some changes on the crude oil side. And finally, in the grains complex. I would say those are the 3 areas you will see the most meaningful impact.

You did mention rates, though. One thing to keep in mind, those changes that you saw in that announcement was related to the rack rate fee schedule changes. We also are always looking at our incentive programs. We did make some changes in various programs, including some incentive programs related to the rates complex. We felt those were more appropriate than needing to change the fee schedule rates at this point. So overall, this increase is similar to what we've seen in the past years.

One other last note, I did mention this in the opening remarks, but we are going to move away from consolidating these type of transaction fee changes in the December time frame. With the number of new initiatives we have launching and the like, we want to make sure that we are being thoughtful in when we are making these changes. So we may do them at different times during the year versus that consolidated change in the December time frame going forward.

The next question will come from Craig Siegenthaler of Bank of America.

So we have a follow-up question to Ben's last question on your pricing strategy. We're all programmed to look for an announcement in 4Q, see the changes in 1Q. But going forward, it looks like we're not going to get that same transparency from the CME. So curious what drove the change? And does this mean that increases will be smaller in the future? Because I thought the old method worked pretty well, and it provided transparency into CME's long-term revenue growth rate.

Yes, Craig, it's Terry Duffy. Listen, we think that we need to do pricing changes as we continue to deliver value, and we don't necessarily need to do that in December every year. And so we make changes based on how we're running the business and how we think we can continue to grow that business and where the value is added. So that comes in different parts of the year. Some increases may be smaller, some increases may be larger, some may not be there at all.

I think what you're hearing us say is we're running this business on a real-time basis, and we are going to continue to do what's in the best interest of our clients and our shareholders going forward to grow the business. So I don't think there's a pattern that we need to follow in order to facilitate pricing moves one way or another.

The next question will come from Brian Bedell of Deutsche Bank.

Maybe just back to prediction markets. Can you talk about conversations that you're having with other distribution partners? I think you've got a total of like 130 retail partners all in. Maybe just characterize the interest from other potential partners to engage with prediction markets, other retail partners to engage with prediction markets on the CME platform?

And then also how you're thinking about future product rollout, the potential for you to really broaden the range of the types of contracts. I know you don't want to get into obviously political or culture, but more deeply into, say, financial and company-specific KPIs, something along the lines of fundamental investing, whether you're seeing any demand for that? Or is there any interest in launching those types of contracts?

Thanks, Brian. Let me touch on a couple of things. You did say something, I'm going to turn it to Tim McCourt in a second, but you touched on political. We're not suggesting that we would not list political contracts. We are suggesting that we would not list certain political contracts. And I think there's a big difference there.

When you have a presidential election or who's going to potentially win the House or the Senate, those are large contracts that are very diverse in nature that multiple participants can take an opinion on versus maybe a small congressional race in a district or a state race or something like that. Those are the ones we want to stay away from. But the larger ones, we are not suggesting that we would not take a look at them. But I just want to make sure you understand that we do and are looking at some of the political contracts on the larger scale, but not the smaller scale.

On the culture ones, those are a little bit different depending on how you define what the culture of the prediction is. So I would have to see what is being referred to as. If it's around some of the award shows and things like that, entertainment, some of those are a little -- I don't know if I want to get too much involved in those. But the political contracts on the larger scale are fine. There are some unique business contracts that we talk about PPI, CPI, things like that, where we're already doing.

Tim?

Yes. Thanks, Terry. And Brian, thanks for the question. We do have a few current distribution partners also live where Terry had mentioned the FanDuel Predicts app is up and running. We also have DraftKings Predictions that are connected. And we have a handful of other distribution platforms also offering our event contracts across all the types of products that we have, the traditional futures-based markets, economic indicators, cryptocurrency as well as the sports-based event contracts.

We are working with our other 120 to 130 retail distribution partners to understand what it will take for them to be ready to offer this contract. We did turn these contracts on back in December. So we still are early days in working with those partners and making sure they have the technological capabilities to connect, offer and the front end they need to offer these type of swap-based and futures-based event contracts to their participants. I would characterize that pipeline as robust, and we're actively engaged with continuing to onboard those participants.

Just to further Terry's comments about the future product pipeline at CME Group, this is something that we approach in a similar way to all of our product development. We'll continue to listen to the marketplace, our clients, our distribution partners and our market makers and liquidity providers to figure out what does make sense in terms of rounding out the event contract offering. But it is important to us that this is more than just the trade of the day or what might be happening in the marketplace.

We're really focused on getting these new users to our markets and into the known risk-based contracts of events as a way they could enter markets, and we want to make sure they're also having access to things like event contracts on gold, event contracts on NASDAQ, S&P, economic indicators as well as some of the stuff that we're seeing in the sports and cultural side of the offering. We'll continue to work with them to make sure it makes sense.

I think, Brian, about your question around some of the other financial aspects or KPIs, I think those are things that we're hearing from folks, but we have no commitment to look at those products at this time. We'll continue to engage with them. But I think as Terry's comments also suggested, we do need to make sure and make sure everyone is aware that these meet the standards at CME and are also part of the CFTC regulatory framework. Those are the things that we look at to make sure that the contracts we do bring to market, we have the comfort and confidence to make sure that the clients trade them have the consistent experience of trading at CME Group that they've been accustomed over the years.

So Brian, let me just finish the prediction comment with one other thing that I said earlier. We are committed to listing these contracts that are deemed swaps. And if they're sports event-related swaps, we will list them. When I said that we don't want to get tied up in legal battles, it doesn't mean that we're going to run away. As long as the federal government calls these swaps, we will participate in them.

That's our regulator. And if the states and others have issues with it, they should take it up with the federal government, not that the entities that they approve for these contracts to be traded under DCMs. So that's what I meant about the legal battles.

The next question will come from Bill Katz of TD Cowen.

Maybe if I could sneak a 2-part question in somewhat disparate, so I apologize in advance. But first, it's great to see you buy back some stock in the fourth quarter and early here into the new year. How do we think about maybe the prospective approach to capital and how much like sort of related to the OSTTRA proceeds and so forth as we should think about maybe the go-forward payout dynamic?

And then within your market data and information services, it was nice to see the rise quarter-on-quarter. I posit that's probably more of the activity levels. But could you speak to the durability of that given what seems to be a very frenetic change in expectation around sort of subscription and data packages given AI disintermediation risk?

Thanks, Bill. Yes, we'll talk about that in -- the AI disintermediation risk is an interesting question. We'll get to that in a second because I think that was your last one. So let's talk about the capital. I'll let Lynne discuss that. And on the market data, was that tied to the AI part of your question? Is that a fair way to assess it?

Yes, correct.

Bill, this is Lynne. So your question on the buyback, we have discussed with our Board, and we'll be using the OSTTRA proceeds towards repurchases. So you've seen us start along that path, and we will continue to be deploying those -- that capital towards repurchases over time.

And then, Julie, if you maybe want to address some of the market data questions?

Yes. I think the importance of certainly all of 2025 performance was really speaking to the recurring subscription revenue that this business generates. So the uptick in both retail participation and institutional demand for our clients serves as good momentum going into 2026, and that is something that we've seen with the historic growth of the business, up 31 consecutive quarters.

In terms of AI, we have been on top of that from the beginning. And I think a key part of thinking about data versus how our clients use data is this is a critical input for them as they back test their trading strategies and deploy those within our marketplace to both provide proper hedging as well as liquidity into our market space. And so while AI is, and the use of data is important there, it does not change how that data is being used by our trading entities. We are very much talking with our customers about how they are using AI to enhance a lot of their trading algorithms, but they still need that core source data, and we do and have been adjusting our policies accordingly as the AI has continued to develop.

So Bill, I assume your question was related to around some of our competitors as it relates to mortgage businesses and some of the surveillance businesses that could be potentially disrupted by artificial intelligence. We are not in that situation today, as Julie described. This is proprietary data that people need for risk management protocols and everything else that they do. So we're not in some of those other ancillary businesses that could be potentially disrupted by AI. We actually believe we're in a situation where AI could enhance our customer and enhance our business going forward, not disintermediate or disrupt it.

Does that make sense? I think that's where your question was going, even though you didn't ask it that way.

Well, I was trying to be a little bit more neutral on it, but thank you. Yes, appreciate it.

Bill, you know me, I'm very -- I kind of get to the point.

The next question will come from Ashish Sabadra of RBC Capital Markets.

I just wanted to ask a question on the progress on the Google Cloud migration, and if you can quantify the expense in the fourth quarter and expect it for 2026.

So why don't we talk for a second on the migration with Sunil, and then we'll talk real quick on the expenses with Lynne. So Sunil, give a quick update on the migration.

Our migration is going very well to plan. We'll complete our non- ultra-low latency migration in early this year. As far as our ultra-low latency markets are concerned, the purpose-built Chicago region by Google is coming up to plan. It is low latency technology in Google Cloud. It's very novel. So we'll be making that available to clients for testing in 2027.

I'll pass it on to Lynne.

Yes. So on the -- in the fourth quarter, we had about $29 million in spending related to the cloud environment. The majority of that was in our tech line related to the consumption charges. So our total for the year was right around $100 million related to Google. It's getting harder and harder as we go forward, though, to disaggregate the Google-related charges and our base charges because we've seen so many of the on-premises expenses start to roll off.

So I would say going forward, that expense is built into our overall guidance, but it's becoming, I think, less meaningful to separate it out just because you've taken out a lot of those on-premises expenses. So I would just start counting that in the overall expense growth, Ashish, that we guided to, the $1.695 billion, that is inclusive of all the tech-related spend, both Google and the remaining on-premises.

The next question will come from Michael Cyprys of Morgan Stanley.

Just curious how you see the role of tokenized collateral and potential benefits there? And more specifically, how do you think about some of the advantages or even disadvantages of stablecoin as collateral versus tokenized deposits versus, say, a tokenized money fund. I guess would you accept all 3? Would you treat any of them differently? Curious how you think about that? And if you can elaborate more broadly on the steps that you're taking this year to tokenize collateral.

Michael, thank you, and it's a great question. I don't know if we have enough time to answer all of it because it's pretty deep, but I will try to summarize it for you. As it relates to the tokenized cash, we have an initiative that we're rolling out with Google that will be coming out this year on tokenized cash. And that will be with another depository bank that will help facilitate those transactions.

On the tokens and what would we accept going forward, that all depends on who is issuing the token and giving it to us. And it would depend also based on the risk associated with that token, would we haircut it to a point where it's even worth taken or not? And what's the entity that's issuing the token to give us for margin.

So right now, we are looking at different forms of margin, but we are not going to put the enterprise at risk by taking something that we can't get our arms around on a token. So if you were to give me a token from a systemically important financial institution, I would probably be more comfortable than maybe a third or fourth tier bank trying to issue a token for margin. That's probably something I would not accept.

So that's kind of how we're looking at what we'd accept and how we distribute. So not only are we looking at tokenized cash, obviously, we're looking at different initiatives with our own coin that we could potentially put on a decentralized network for other of our industry participants to use. So there's multiple different ways that we're approaching this to create efficiencies for our clients going forward without introducing any additional risk to the system.

And we'll take the last question from Ken Worthington of JPMorgan.

You mentioned that the CFTC approved cross-margining for client accounts you'll be launching shortly. What sort of cross-margining programs are you launching? And what sort of adoptions do you anticipate? And along the same lines, you also got approval to launch treasury and repo clearing. How would you expect these 2 initiatives to impact collateral balances over time?

Great question, Ken. So I'll ask Sunil to comment on the first part of it. And maybe, Mike, you can touch on the second.

So the CME FICC cross-margining program for clients is operationally ready. That program has been running since 2024. We have 18 firms participating. We generated record savings for those firms of about $1 billion, $1.5 billion.

In terms of expanding to clients, while we are operationally ready, we are dependent on the approval from the SEC, which is expected sometime this year. In terms of -- generally, the -- our portfolio margin savings, we are generating about $25 billion in the interest rate complex that includes the $1.5 billion, which includes future swaps and cash products.

So Ken, just to be clear, you were referring to our treasury clearing offering and what it could do to deliver value versus what we have today with others. Is that -- just so I'm clear so we can answer it correctly.

Yes. There was 2 parts to it. One is, I thought you just got approval for client accounts from the CFTC. I know you were waiting for that for a while. I thought that was just approved and that you will be sort of launching those programs sort of imminently. And then the second part was just on the treasury repo side...

Yes, that's one that Sunil just referenced. We are still waiting from the SEC to approve. The CFTC has, the SEC has not yet. We're hoping that comes shortly.

Got it. Okay.

And then the other part of your question was around the benefits of CME treasury clearing. Is that right?

Yes. Like just on your collateral balances, what are you kind of anticipating there? When is the big deal?

Yes. So it's a little hard to forecast at this point, Ken. But certainly, with things like the mandates potentially coming for broader inclusion in need for clearing of some of these securities going forward, so some of the new types of clients that might need to clear going forward, that could be additive to the -- to that amount of collateral. But I think what's unique and what is important to remember is Sunil talked about these offsets we had within our complex, so the $25 billion a day, that's inclusive of all of our futures and options, the swaps that we're clearing here at CME as well as the offsets with FICC.

When we have our treasury clearing offering added to that and potentially the ability to offer additional cross-margining, we are bringing more into that pool of capital and the efficiencies that can be created for clients by using these different pieces of the stool. So it is just further reinforcing the value proposition for clients and freeing up their capital for potentially other uses. So we think it's important that we're addressing all these different pieces.

The interesting part about all this, Ken, is our arrangement with FICC, which is critically important to the growth of this company, especially when it comes to clearing and giving offsets going forward in the rates business to make sure that we are the dominant participant to bring your business to. That has upticked at FICC in recent months with new participants coming into it. So we were around $1 billion, I believe, a day with just the FICC offsets. That's uptick several hundred million over the last $500 million or so in the last couple of months, and we see that continuing to grow.

So the agreement we have with FICC is growing by the day. That is really the important part of this. Our treasury clearing offering is a nice-to-have. We will continue to roll it out in a methodical way, but the true value that we see right now and today is with DTCC and the FICC clearing organization. That's where the value is at, and that's where we're keeping our minds focused on.

And at this time, I will turn the call over to Terry Duffy for closing remarks.

Thank you. And while 2025 was a landmark year for CME Group, our record performance in January provides a solid foundation as we move into 2026. We are delivering on our strategic road map, launching CME Securities Clearing, expanding our event contracts and introducing 24/7 trading to meet the evolving needs of our clients. These investments reinforce our leadership as the world's premier risk management destination and will drive substantial growth for years to come.

Once again, thank you for joining us on our call today. Thank you.

This concludes today's conference call. You may all disconnect at this time.

Welcome to the CME Group Third Quarter 2025 Earnings. [Operator Instructions] I would now like to turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. We released our executive commentary earlier this morning, which provides extensive details on the third quarter 2025, which we will be discussing on this call. I'll start with the safe harbor language, and then I'll turn it over to Terry.

Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statement. Detailed information about factors that may affect our performance can be found in the filings with the SEC, which are on our website. Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.

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

Thanks, Adam, and thank you all for joining us this morning. I'm going to make a few brief comments about the quarter. and the overall environment. Following that, Lynne will provide an overview of our third quarter results. In addition to Lynne, we have other members of our management team present to answer questions after the prepared remarks.

The third quarter average daily volume of 25.3 million contracts represented the second highest third quarter average daily volume in our history, following the record quarter a year ago. Customers continue to turn to our markets to manage their risk exposures as demonstrated by year-end open interest of 126 million contracts, the highest open interest at end of September in the last 5 years and continuing to grow in October. We also set records in large open interest holders in interest rates, equity indices, and cryptocurrencies in September despite a general pullback in volatility across asset classes during the quarter.

Our team remains focused on future growth and innovation, including the extension of our product offerings. Our crypto complex traded a record 340,000 contracts per day in the third quarter and was up over 225% relative to a year ago. This growth was aided by the early success of Solana and XRP futures, which we launched earlier this year. Other new products with record volume in the third quarter include credit futures, 1 ounce gold futures and agricultural weekly options. We also introduced trading opportunities that facilitate stronger links between cash and futures markets.

FX SPOT plus, which was launched earlier this year and provides the benefits of future capital efficiencies and to spot market participants set new volume records in every month in the third quarter. BrokerTec Chicago launched just 2 weeks ago is also off to a strong start and enables participants to trade futures and cash products side by side in our facility here in Chicago. Going forward, innovation will continue to be a key driver of our performance and our ability to serve clients in an increasingly complex and volatile global market. During the quarter, we announced the upcoming extension of our cross margin agreement with DTCC to enable increased margin savings to end user clients.

We are also pleased to announce the extension of our FTSE Russell index derivatives license through 2037. This announcement will ensure the continuity efficiency and value to our clients along with our other suite of equity products. Additionally, we announced our intention to offer 24/7 trading of cryptocurrency futures and options beginning early next year. Finally, we announced a partnership with FanDuel to develop and distribute event-based contracts beginning later this year, which we look forward to talking to you about today. While we are proud of our record results, we have delivered the last several years, our focus will always be on the future needs of our customers and how we can continue to evolve to meet those needs.

With that, I'll now turn the call over to Lynne to review our financial results in more detail.

Thanks, Jerry, and thank you all for joining us this morning. During the third quarter, CME Group generated revenue of $1.5 billion, down 3% from the very strong third quarter in 2024. The average rate per contract for the quarter was $0.1702 resulting in clearing and transaction fees of $1.2 billion. Market data reached a record level, delivering over $200 million in quarterly revenue for the first time, up 14% to $203 million. Continued strong cost discipline led to an adjusted expenses of $487 million for the quarter and $405 million, excluding license fees.

Our adjusted operating income was $1.1 billion, or a 68.4% operating margin for the quarter. CME Group had an adjusted effective tax rate of 22.6%. Adjusted net income and adjusted diluted earnings per share came in at $978 million and $2.68 per share, both slightly above the extraordinarily strong third quarter last year, and represented the third highest quarter of any in our history. Capital expenditures for the third quarter were approximately $19 million, and cash at the end of the quarter was approximately $2.6 billion. CME Group paid dividends of $455 million in the third quarter and approximately $3.5 billion over the first 9 months of the year.

Turning to guidance. We expect total adjusted operating expenses for the year, excluding license fees, to be approximately $1.625 billion. That's $10 million below our prior guidance and a total of $25 million below our expectations to start the year. All other guidance remains unchanged. We're proud of the continued strong results the firm has delivered during the quarter. During the first 3 quarters of 2025, CME Group reported the 3 highest quarterly adjusted net income and adjusted diluted earnings per share in our history. Year-to-date 2025, we have grown adjusted earnings per share by [ 5% ] over a record 2024. We continue to see strong customer demand for our products as demonstrated by growing open interest and new records in large open interest holders. Our focus remains on driving earnings growth for our shareholders by expanding our customer base during the needs of our clients through innovative products and providing unmatched capital efficiencies.

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

[Operator Instructions] Our first question comes from the line of Dan Fannon with Jefferies.

Terry, can you talk about your long-term retail strategy. This quarter, you announced the partnership with FanDuel, you obviously have your micro complex. As you think about your offering today, do you think you can scale this offering organically to where you want it to be? Or is this an area where we could see potential M&A?

It's a good question, Dan. And I will tell you that the strategy evolves. I don't think that a lot of people would have seen what we saw happen over the last 5 to 7 weeks as it relates to prediction markets in the NFL with retail and they had that penciled into their analysis a year ago. So my point being is this market is ebbing and flowing every single day. Our strategy is one, and I've talked a lot about it is distribution and efficiencies. I think that the announcement with FanDuel is very important for CME.

We're looking at 1 million potential accounts that will have access to CME's products, but more importantly, have access to have a view of CME and our distribution of our product lines for the future. as we work with our retail brokers today who have continued to grow and if they didn't, you'd have to wonder why certain people's valuations are going up dramatically. So you look at the sale of like an ingatrader, to Kraken for a very large sum that goes to show you that the retail business seems to be doing quite well in our industry with the valuations being put on them. We are in a very strong position.

I will say this, and I'll say it again. I haven't said it in a while. But in 2017, when we went forward with Bitcoin, a lot of people thought, well, what are we doing? I think that our credibility of our institution, which we protect very mightily is very important to the institutional participant who wants to also participate with retail in some of these newer asset classes. And that's something I think that we can work with and partner with some of the new retail entrants coming in, whether they're in the prediction market side, whether they're in the gaming side with our partner FanDuel or whether the Robinhood or others that are opening up futures accounts by the second.

So our retail strategy is vast. It's global, and it's going to -- I think it's going to continue to grow, it doesn't necessarily mean that you have to do an acquisition to grow that strategy. I think with what we have in place and we've put in place over the years is what others are looking to utilize in order to grow their business. I will say credibility is absolutely paramount in markets. And CME is a very credible institution that's looking at different asset classes with the retail participants, and I'm excited about the future. So I don't think there's ending off the table, Dan, I don't want to say, but I think we're in a strong position to grow our retail business with or without having to do M&A. And I would suggest right now we would probably be more inclined to do it without M&A.

Our next question comes from Patrick Moley with Piper Sandler.

So we have, like you said, see explosive growth in event contracts. A lot of that growth has come from sports-related event contracts I think in the initial press release that you put out with FanDuel, there was no mention of sport contracts, but there's maybe been some media reports that suggest that you're looking at sports. So to the extent you could comment on whether that's in the cards would be much appreciated.

Thanks, Patrick. And I will comment on that because I think sometimes, unfortunately, headlines can be very deceiving and you need to read the entire article to understand what is being said. I think you're referring to the Bloomberg article that came out recently that CME is going to list sports events in their headline. And then if you go on to read it, you will see that I have said numerous times on podcast publicly on television to you to others that my partner offend when they are prepared to move forward, which with events on sports, I would be prepared on day 1 in order to offer that to them on my DCM as long as the United States government is not going to object to the self certification of these and consider these swaps and not gaming.

Well, it doesn't matter what my opinion or anybody else is that's the government's opinion and we will proceed accordingly. So that is yet to be decided, Patrick. That will be a big decision for my partners in the JV at Fanduel to decide how they want to proceed. But I think it's undeniable as I stated earlier, that no one saw this coming. And now this might be a football phenomenon because there's a lot of eyes on football. So we'll have to wait and see how the sports prediction markets play out post football. There are certain event contracts that I'm not very enamored with. When you look at some of these predictions on political events, I think those can be very dangerous to participate in.

I do understand the size of a presidential election that maybe you can say that's okay. But some of these smaller elections I get concerned about and some of these other events that are out there that to me, just are nothing more than readily manifitable markets, which is against the Commodity Exchange Act. And so I think you have to really be eyes wide open when you're looking at this. But you're correct, Patrick. Most of these are sports events contracts. And for us to say that we're going to list them or not is a decision yet to be made. And I'll make it in connection with my partner at FanDuel, which would that has not been resolved just yet.

Yes. And Patrick, just to add 1 thing. As you noted in our release, and we just put out some more information to our clients about the products that focused on markets. As Terry mentioned before, for us, this is really about distribution and getting our products in front of that retail community. So that has been and continues to be our focus.

Okay. That's great color. And then if I could just is a quick follow-up. And given that a significant amount of the user volume on some of these traditional sports books is being done in Parley, do you think it's feasible to offer parlays on a large scale in prediction markets considering that the venue doesn't act as the house? And then what are some of the considerations that would be necessary to facilitate parlays.

So before I get into the operational issues of how you would run a parlay, I guess we'd have to say, our -- these have not been out very long. They've been on what a couple of weeks, I think, right now on these parlays, I don't know how much uptake they're getting I haven't followed that market on the prediction markets. But I will say this, a swap is categorized or defined as something that's commercially or economically benefit. So when you start getting into parlays on prediction on sports, I think sometimes you might be crossing that line is this legitimate or not. Is this a sports jumbling contract? Or is this an economically beneficial and has the -- has exposure for the client that is commercially concerning which is the definition of a swap contract today. It has to have an economic benefit to it.

So I'm not sure how they're looking at these parlays at the agency. I have not spoken to them. The government has been closed. The government has been closed for 3 out of the 4 weeks, I believe, since these parlays have come out. So I don't know if they've got an opportunity to opine not to my knowledge. So Patrick, to be honest with you, I don't know from an operational standpoint. I'm not going to even ask my team to speculate because this is something that we are not taking a big look at on the Parlay side.

Our next question comes from Ben Budish with Barclays.

Maybe just 1 more follow-up on the prediction market side. Just as you think about the range of contracts you might offer over the next several years, it does seem like there's some differences to your traditional product suite, more frequent events that might require different kinds of data feeds. Is there anything structurally different about this market that might necessitate like higher -- or lower operating margin, higher spend that does it require more advertising to reach retail customers? Does it require more frequent listing of new contracts that aren't as long tenured as things like your WTI contract and SOFR contracts. Just curious how you're thinking about those other sort of operational aspects.

Thanks, Ben. And you're only strictly speaking about events on markets and not on sports, correct.

Yes. Really, any event contract. I mean I think sports are the obvious example because there's so many different events like the frequency is much higher, but more generally about event contracts and then -- so I guess...

I'm going to -- yes, I get your question, but I want to be cautious about making sure that when we answered the questions from you and others that we are defining a market prediction market on markets and a prediction market on sports because those are 2 different things that are obviously somewhere in the courts. There's some objections to others. Prediction markets on markets is allowed in all states and is not being contested in any state or opposed, I should say.

So Tim, I'll let you talk about that on the operational side, and on the sales side and the promotion of I'll ask Julie Winkler to comment as well.

Great. Thanks, Terry, and thanks, Ben, for the question. So I think even when we look at the product announcement we put out the last few days, with respect to the event contract offering at CME Group on our traditional benchmark products. We are introducing things such as hourly event contracts. We're introducing multiple enacts throughout the day. across our traditional markets as well as Bitcoin and Ether. So when we look at what makes CME Group a very useful tool for our clients across all customer segments is we have tremendous amount of scale, both on the operational and technological front that we have the capabilities to list these event contracts intraday.

We scale very well in terms of whether you look at it as our existing option complex, where we have options in every asset class on every day of the week. The ability to meet the customer demand for where they want to trade these events throughout the day is something that we're well established in doing at CME Group. And I think, frankly, differentiates us in the marketplace and why customers come to us. And then when you look at the scale that we have, both from the operational aspects, the clearing aspect as well as the distribution we have with over 130 retail partners. This is something we tap into with every new product launch that we do whether it's event contract or an institutional grade new equity index contract. So the way we approach building markets is to leverage the scale we've built over the last several decades, and this will be no exception with respect to OPEC contracts.

Julie, do you want to comment about how the cost of going forward promoting these as new products. I was asking on.

Yes. Thanks for the question, Ben. What -- how we think about this, I mean, we have 130 of these critical distribution partners that Terry referenced earlier. And when you think about that customer journey, those partners are the ones that are responsible for opening the accounts for those retail accounts, onboarding them, doing the KYC. And so for us, we certainly have cooperative marketing agreements with them to help with what Tim was referring to new product launches. But in general, those firms are going to continue to spend money of well above that in order to attract new clients to their platform. So we don't see a demonstrable change in that spend going forward to be able to offer these products.

Thanks, Julia. Thanks. Ben -- also to Dan and Patrick, I want to be perfectly clear when it comes to sports events. CME Group is not opposed to listing sports events on our contracts on our DCM. What is critically important is the federal government has to make certain that they approve these contracts I won't sit on the sidelines. It doesn't matter what my opinion is what these are or not they are. If they are allowed, CME will participate in some way if we think it's the right thing to do for our clients. and our ecosystem as it goes into what Dan was referring to earlier, our total retail strategy. So I just don't want you to think I'm dense around the question. I'm not -- we will be prepared. We are operationally ready to do this stuff. The question is we want to make sure that our partners are good to go, and this is the right thing for us. So we don't have an opinion to a point where we're not going to do it because we think they're gambling or we're not going to do it because certain people didn't ask us if the federal government allows it, we will be taking a strong look at listing these markets. I just want to make sure everybody's clear on that, that we're not shying away from that.

Our next question comes from Brian Bedell with Deutsche Bank.

Sorry to stick with prediction markets here, but maybe just to focus on the financial contracts only that are core -- can you talk about the structure of this arrangement. First of all, this central is this cleared in a cloud fashion. And in the -- with the FCM that you're cooperating here with FanDuel. Just to clarify this, would this then be open to all other retail platforms to connect into. So I guess, would you be lifting these prediction contracts on CME and therefore, your 130 retail partners can also link into these and trade them? And is that the financial arrangement around that, is that -- would that flow directly to CME for those other retail partners? Or is that part of the joint venture with Sandol.

So the answer to your latter part of your question is absolutely, everybody will have access to our contracts regardless of the relationship that we have with FanDuel. So when it relates to the economics with FanDuel, I don't know how much we've disclosed. But Lynne, if you want to comment any further on that. But we have a relationship with them in the ownership of the FCM our nonclearing FCM, I should say. And that's that.

Yes. So thanks, Brian. As Terry mentioned, our FCM would be one of many potential participants, just like any other contract on CME this is open to any of our FCMs that choose to offer that product as they meet the requirements. So this is not a not an exclusive relationship. RFCM will provide access to comments that want to come through that. And Steve, but there would be several others that provide that service to clients as well.

Brian, as far as if you're asking how we're looking at the economics going forward, I think that is something that's still a work in progress. And we have to see, as always, how new markets, how they grow, what they look like how we structure them and then how we price them. But we have many different models, as you can imagine, depending on how this goes forward on the market side and potentially on the sports side, there's the entertainment side. There's the political side. these things may not be able to concise fits all type of pricing model either. But we don't have the answer to that question yet. .

And maybe just to clarify, so the -- if the clients are coming through FanDuel, like if they're Fanta clients or they're coming through that I would imagine, obviously, then that's going -- the economics of that are consistent with the joint venture arrangement. But if it's coming through a different online broker coming directly to your markets, would that still be part of this JV or that would be just going right to the end.

You summarized it yourself properly, Brian, but I'll let Lynne finalize it.

Yes. So I think the thing you need to think about is our and DCO fees are consistent just like they are for all of our products. That's something that's available to you all participants, the FCM would be no different than any of our other FDM participants. Then would be just like the current market, the FCMs will have a fee commission that they charge to clients that come through their entity. So that piece will flow through the FCM. But what ends up being charged to the to the clients and the FCM is going to be consistent across the board because it's a requirement. That's just part of how we need to operate. So nothing is different about this arrangement that changes how those clearing and trading fees will be charged to the market.

Our next question comes from Ken Worthington with JPMorgan.

I'm not going to ask on predictive markets.

Come on, Dan, you know you got 1.

Energy volumes were down this quarter after a long run of really strong growth, like more than a year, with geopolitical risk stabilizing and moderating, I guess, what is the outlook for growth for energy, particularly in the context of particularly strong volumes you had earlier this year? And then what are the factors that might be driving share shifts in oil and gas markets? Because we've seen share move around more recently?

Yes. Ken, it's Derek. Thank you. We are certainly seeing a market that over -- let's be honest, over the last 2.5, 3 years, we've seen WTI trade in effectively $10 range. I think we had done a lot to develop and grow and expand participation in our energy markets overall, particularly in crude. You've seen us push out growth in our options contract, short-dated options in low volatility environments, those have proven to be very successful tools for adapting to a different volatility environment. We actually set some new records in volume and shortened options over the course of WTI earlier this year. You've also seen us push out very successfully a record growth in our crude scarce contracts, which actually put a moat around our physical WTI business as WTI continues to globalize where you see growth in our complex year-to-date in crude oil specifically, we're seeing that most effectively in Europe and Asia, where we continue to see double-digit growth there as U.S. crude and refined its boats hit the shores of Europe and APAC and more customers in those these are trading our products.

When you look at the share shifts this quarter, we've actually seen WTI futures shift back to CME. I think we're at 76% for Q3. That's up from 74% last quarter. We are maintaining our roughly 91% share in our WTI options market we continue to innovate there. When you step back and look at the broader drivers yet, there were very much some geopolitical tensions earlier this year that drove activity. When you look at the year-to-date business in both crude and refined as well as natural gas, both those complexes are up about 10%, 11%. When we look at Q3 specifically, while WTI drift a little bit lower that sequentially saw some decrease in growth lower volumes across the board for everybody. We saw share shifts back into CME. Where we're really focused right now is the natural gas business. Even in Q3, we saw our natural gas complex grow 2%, led by natgas options up 12%.

When you look at the continued record amount of liquefaction and export of U.S. LNG today at 15 or 16 Bcf, that will go to almost [ 25 ] in the next 3 years. That means more U.S. gas priced an index directed Henry Hub, the market that we've got 7% to 9% share of continuing to globalize. So we see very much energy as part of the overall picture. Natural gas is not just a transition fuel as a fuel for the future. So when you look at the strong growth in our OI this year, continued growth in the innovative part of the curve that we built and developed on crude and the continued push into natural gas we think we're answering customer needing growing globally. I'm confident that we can continue to do that as the world consumes more U.S. energy products.

Our next question comes from Chris Allen with Citi.

Wanted to ask about the stale. What are the proceeds after tax? And then how are you thinking about capital deployment here given your buyback flexibility, current stock price balancing that with the first dividend.

I'll let Lynne comment to start, and then I'll join when she's finished.

Yes, the proceeds from the sale were about $1.5 billion. The net proceeds are going to be very similar. We were able to bring back some cash from the SPV as well. So I would use that as your starting point. In terms of the use of those proceeds, we are bringing a recommendation to our Board in the coming weeks. We certainly have a number of balls in place that we can use, but we want to -- given the current environment, make sure we've done a full review with our Board on the potential uses of that capital.

Chris, I think it's really important that I think everybody understands our debt-to-EBITDA is the lowest in the sector. We have been very disciplined, making sure that we don't have a lot of debt. We've been able to grow organically. We've been able to do things whether it's to JVs, whether there's 2 partnerships that are not multibillion-dollar investments. So we've been very blessed to grow our business with that respect, the examples being 1 with Obviously, Google, the other with FanDuel and some of the other things that we're continuing to focus on. So we understand that we don't need to be sitting on mountains of cash like this. So we -- I don't want to front run my Board by any stretch of the imagination. So we will be forward to bringing in a proposal that how we return that capital very shortly to you and the rest of the team.

Our next question comes from Michael Cyprus with Morgan Stanley.

I wanted to focus on 24/7 trading understand in crypto markets, you're going to be enabling that early next year. I was hoping you could elaborate on some of the hurdles you've had to overcome -- and what could be the scope to enable 24/7 trading for other products? What could make sense next the time frame around that? And then just more broadly, how do you think about the role of tokenization as a catalyst to support 24/7 trading over time? How are you experimenting with that today? or May over the next year or so?

Michael, thank you. All 3 of those are very good questions. And I'm going to take them in reverse order because in order to get to 24/7 and do some of the things that you referenced you need to have potentially a tokenization of tokenized cash in order to facilitate. So I will ask Ms. Sprague give you a little update as our project with Google on tokenized Cash is looking, how was going with that, and then she can even go into the 24/7 from a risk management standpoint. We'll save the other products for myself, and I'll talk about that at the end of [indiscernible] Suzanne and Sunil can comment on the operational and then the tokens cash.

Yes. So thanks for the question. So as Terry mentioned, we do know that tokenization is a hot topic, and you've been fortunate to be partnering with Google over the past few years towards that initiative. So we do continue to progress our efforts with them, starting with tokenizing cash to begin with. The technology that they bring to the table through the Google Cloud Universal ledger does enable tokenization of other types of assets, both on the product side and the collateral side. So we plan to continue progressing with our initial phase, tokenizing cash through the end of this year and enabling that for go live in 2026, that will allow a value outside traditional banking hours you're in with cash and then actually other assets in the future. It is an important element to risk management, as Terry mentioned.

On the general risk management side, we also think it's prudent to make sure that our collateralization in the system supports those exposures that can accumulate especially over the weekend. And so our approach will be to make sure that collateralization in the system is consistent with the risk that participants can bring over the weekend, just how we monitor that activity today knowing the markets open on Sundays, for example. So we look forward to the operating building in many phases and think that the tokenization efforts we have under way with Google are timely and being able to roll it out for 2026 as well. .

So you really had -- on the operational side, I think the -- we were the first exchange to operate 23 hours every day of the week. Here, we are just adding additional sessions over the weekend. We are well positioned to do so, especially because of our investment in our Google transformation. This gives us the ability to actually give our clients access to our markets and our clearing services while also continuing to do maintenance and upgrades. So that's the challenge that not just us, but our industry has to overcome to provide 24/7 services across markets, I'm clearing.

And Michael, as it relates to other asset classes, I have said this for a while now that I think 24/7 is coming across the world, whether we like it or not. And again, this is not something that we're leading I think going forward, with crypto makes a ton of sense for CME Group because they do have a market that go 7 days a week today, we do have the reference rate pricing associated with it because there's cash markets that are facilitating 7 days a week, some of these other asset classes, there's not been a huge conversation or a demand coming from them to go 24/7. It doesn't mean that won't change I think we'll have to do a wait and see how it comes out with crypto to begin with, again, I don't know if we'll be a leader or a fast follower on other asset classes on 24/7.

We'll analyze that as time goes on. But I will tell you there has not been a big demand coming from my other asset classes to trade on 7 days a week. There's a cost associated to the FCMs, there's a cost associated to many different entities that they're not quite sure if the squeeze is worth the juice as they say. So we're waiting to see how all that plays out. So we're not saying that's not going to happen, but we're not leading with that, obviously, and we'll keep a close watch on that. But I will tell you what we will always be prepared if in fact, that's where the market has gone.

Got it. So it sounds like you're preparing for 24/7 to be in the position for that -- would that be for next year, but it seems like you're waiting maybe for client interest before you pull the trigger on is that...

We're prepared for 24/7 for crypto for 2026. I would say that internally, we've looked at other asset classes if in fact, we needed to go there or wanted to go there or there's a demand to go there. I think operationally, Sunil said it right, where we're 23.5 hours a day, 5.5 days a week now, 6 days a week, I guess, on Sunday. So we are basically there if we wanted to go there. So we have to add in Saturday and it's just adding in a couple of sessions. The question is, what's the cost associated with for the client and what's the demand for the clients. So I don't see a big hurdle we're talking to my team if, in fact, we want to go to these other asset classes -- but again, there's other factors that take in place. The U.S. Treasury market might be different than the ag market and the ag market might be different than the equity market. You have to align with different associations, different cash markets, what they want to do, not do. the crypto market is pretty much a [indiscernible] right now because of the structure it has in place.

Our next question comes from Alex Blostein with Goldman Sachs.

This is Anthony on for Alex. I wanted to hit on collateral balances and to what extent maybe you're seeing the 30% cash minimum affecting client allocation decisions? And if you could give an update on what that looked like in the third quarter and what that stands at now?

Thanks, Anthony, and I'll let Lynne comment.

Sure. So our averages in the third quarter for cash, we averaged $135 billion. we earned 33 basis points on that. On noncash collateral, we averaged $156 billion earning 10 basis points. So far in the first half of October, the cash balance has been fairly steady. We're at $134 billion on average. And the noncash has ticked up a bit. We're at $164 billion on average. So if you look at the percentage, the 30% minimum, we are still seeing a bit more in cash. So this third quarter, we were at about 46% in cash. That's obviously a customer decision on how they want to allocate their collateral. We also have seen in past volatile times where we might see more cash upfront and it might kind of normalize over time. So I wouldn't be surprised if there's a little bit more optimization going forward, but it's held pretty steady at that mid-40s percent last quarter and this quarter.

Our next question comes from Kyle Vogt with KBW.

Maybe a follow-up on the Google partnership, but more related to the Google-related investment spend. Can you just give us an update on where you expect that to ultimately shake out in 2025. And then remind us how you expect that component of trend into 2026 as we're thinking about the building blocks for 2026 expense growth. And Lynne, outside of the Google spend, any other notable puts and takes on the expense side we should be aware of as we look out into 2026.

Thanks, Kyle. Lynne?

Yes. So expenses related to Google this quarter were about $27 million. The vast majority of that $26 million you'll see in the technology fees with about $1 million in professional fees. So year-to-date, we're running at about $71 million in total spend related to Google. Our guidance embeds within that, about $100 million in total expense, that is down, and that's part of the reason why we did cut our guidance. At the beginning of the year, we were expecting more like $115 million. So we were able to identify a number of savings opportunities working closely between the technology and finance team. We've really been managing that spend in the cloud as we're getting more fast with some of the different tools we have.

So we've generated a fair bit of savings there. And also, we've been really moving a lot more towards internal support. So those prophy numbers last year were more in the $4 million to $5 million per quarter, and they're now down to about $1 million. So that is where you're seeing some of those savings come through on the expense side. In terms of 2026, we'll certainly provide detail on that. It will be part of our overall guidance. I would say with our changes to expenses this year, some of these savings, we've been able to generate, not just on the pro fees and the cloud expenses, but also you've seen our depreciation and our occupancy expense come down pretty meaningfully. Over the course of the year. So our cost growth this year is relatively low when you look at that versus our historical levels. I would view this as kind of the baseline that we will be building off. But just some of these opportunities are more ones that we were able to find and take advantage of, but these aren't necessarily annual type of events where we'll have that level of cost offset. So we'll provide more guidance in February. But I would say this cost growth being lower is more the ability to take advantage of some of those opportunities that we had.

Our next question comes from Simon Clinch with Rothschild & Co.

I was wondering maybe, Terry, if you could talk about the BrokerTec Chicago and just give us a sense of, I guess, what how this strategy might actually change the fortunes of BrokerTec within the context of U.S. treasuries. And actually, from a competitive standpoint between all the different protocols, is this something that can actually provide the fortunes of say club versus streaming, et cetera, et cetera?

Yes, that's a great question, Simon. I'm going to ask Mike Dennis to chime in and then I'll make a comment when he's finished, but I'll have Mike chime in since he's been leading this initiative. Mike?

Yes. Thanks, Terry and Simon. Appreciate the question. Broker tech Chicago went live on October 6. And it's very exciting is this is the first time in CME Group history, that we have our cash fixed income market with our core futures and options markets. We had a very successful market on Open, and we experienced 2 sided markets and all 7 of our cash instruments. We had trades happen in the overnight session on Sunday and into the first day of trading. And over $1 billion of notional has traded since launch across all 7 tenders, and we launched about 2.5 weeks ago. The full curve is being quoted more than 90% of the trading day. What's also exciting is that over 25 firms have connected to the new central limit order book, including banks, drops and brokers.

To kind of answer a little bit of your question, 66% of the volume has traded at price points, not available on the BrokerTec New York lab, which gives clients choice depending on their trading strategy. And market conditions. And we've also seen some new to broker tech clients continue. We've also seen to be new to broker tech clients connect to the new club and place trades already. we're pretty excited about new client acquisition and also what we can do next with BrokerTec Chicago on different trading modalities, product enhancements, et cetera. So just to add to that, I think what's really important in I don't want to gloss over it, Simon, is when you looked at our press release on BrokerTec Chicago and you had dealers in there being quoted about how important this offering was to them.

They were a driver of that with Mike and his team about putting these side-by-side for the efficiencies thereof. As you know, you referenced it in your question, the treasury market and go to multiple different places. But when you have some of the largest participants in the world looking for this type of offering from CME Group, which we gave them, it does attract other participants, which Mike referenced from the props to the hedge funds. So we think this could continue to grow, and we're excited by the leadership of the dealers pushing this going forward. So we're excited by BrokerTec Chicago and what we think it can do for our cash franchise, which in return will help grow our futures franchise.

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

So market data revenues were strong and up 14% in the quarter. Can you provide any context behind the good quarterly result? And also, can you talk about opportunities to raise pricing in data next year?

Thanks, Greg. Julie? .

Yes. So it was our 30th consecutive quarter of revenue growth, a quarter of record. So we're very excited about that over 14%. Really what we're seeing, Craig, is increased growth across nearly all of the segments of the business, both on the professional and the nonprofessional subscriber side. And I think it just speaks to the depth of our product offering. I particularly point out this quarter of just the growth overseas of subscribers. And so our market data business significantly based on our international customer base. And so seeing really good signs in APAC and EMEA of demand for our market data, which typically then leads us to see transaction-based revenue to come at a later point in time. So I think in terms of pricing, we have already announced and did so in August about the price increases for next year of 3.5%, and that will be across many of our data products across the rack rates. So that will -- that change will take effect on January 1, 2026.

And Craig, just to emphasize what Julie said, not would be directed to your question. But when you look at the value of market data, especially CME's market data, what it can do to help some of our clients grow through risk management to other protocols that they use our data for it's very exciting about the growth of that business along with our product lines that are tradable. So we're excited by the growth of this business and -- you got to remember, just 10, 12 years ago, we were charging 0 for market data. So we've come a long way growing this business 15 years ago now. But we've come a long way growing this business. And again, I think it's been a very prudent strategy for us.

We also had a follow-up on BrokerTec Chicago to Simon's question. Where do you expect the volume mix to end up balancing or normalizing between broker tech Chicago and BrokerTec a caucus. And I know it's very early innings here. I think you launched on October 6. But roughly what percent of the volumes have been from new clients to brokerage. Can you just highlighted that in Simon's question.

No, are you referencing [indiscernible] or Chicago or both or combined?

So the -- you had kind of 2 part of there, but what is the -- what do you think the mix ends up between broker tech Chicago and broker [indiscernible], like [ 20 80 ].

Yes, I got it out, Craig. Yes. Yes. Mike, do you want to, a speculative answer, but...

No, I appreciate the question, Craig. It's hard to say. It's been about 2 weeks since we launched BrokerTec Chicago. I think forecasting how volumes are going to be split or are going to how volumes are going to look is very difficult. I do think you saw in the press release dealers that are excited about the launch. We mentioned Morgan Stanley, we mentioned Citi, we mentioned JPMorgan I think it's going to be dependent on market conditions. There could be times when people point to the Chicago Club, just because they might be trading a relative value strategy where the market might be a little quieter and they can trade in I think people will continue to trade on the New York Club, especially in terms of heightened volatility, where they want to move large stacks of liquidity. So early days, it's hard to speculate, but we're excited to see it live. We're excited to have these products sit side by side with our core futures and options products and we're excited to attract new clients to the venue. Like I said, earlier, we've seen some new clients who have never traded on BrokerTec, trade on BrokerTec already. So we're excited about new client acquisition as well.

Our next question comes from Ashish Sabadra with RBC Capital Markets.

This is Qi on for Ashish Sabadra. Maybe if you could just provide a little bit of commentary on RPC. I know there's a lot of moving parts there. But I think at the summary, you guys mentioned that it was kind of a lower proportion of micros and decreased volume tiering could you give us a sense of maybe the impacts of those 2 effects? And does the shift in micros have any shifts in retail trading behavior?

Lynne?

Yes. So where are you going to see the largest impact on the shift in micro, that's really going to impact the equity portion of our RPC. We saw kind of a similar contribution in metals from micros is about 36% of Micro's volume in equities, it went from 47% last quarter down to about 43% this quarter. So you saw an uplift in our equity RPC largely due to that shift from the gross to ports full side in the mix. So it's hard to disaggregate entirely these shifts in which were the pieces that impacted that rise in RPC because it's going to get into not just that shift, but also the customer mix between member and on member.

Our final question comes from Michael Cyprus with Morgan Stanley.

Just wanted to ask about credit futures. I was hoping you could elaborate on the progress there, how you see the use cases versus other alternatives in the marketplace. And if you could elaborate on some of the steps that you're taking to broaden out user engagement in credit futures. And then more broadly, as you facilitate a stronger link between cash and futures markets and rates and FX I guess, to what extent might connectivity with cash credit markets makes sense to enhance client value and support growth.

Thanks, Mike. Mike Dennis .

Yes, Michael, it's a great question. I'll talk a little bit about credit futures and kind of some things we're thinking about in the cash markets. we highlighted a cash market initiative BrokerTec Chicago. I'll ask Tom McCourt to talk about another cash market initiative we had this year, FX. For Credit Futures, we saw strong growth this quarter in credit futures OI at a record in September. The outreach with Julie's team, the CF team has been very strong. There is a great mix of clients that are reaching out to the CME, who are reaching out to talk about credit futures, many asset managers, hedge funds, banks and props. What we're hearing from the customer base is that our central limit order book for credit futures is very liquid, and there's tight bid-ask spreads.

And credit futures are just an extremely valuable product for the fixed income markets place because it allows asset managers greater flexibility in managing credit exposure. And these products are unique. We have margin offsets for treasury futures as well as S&P 500 futures. So we're excited to see this product growing and feedback from our clients has been very positive. We have about 300 sales opportunities in the pipeline for credit futures. So those 300 opportunities are across all different client types. It takes time for folks to onboard often for products, but we're very happy about the directory. And Tim, I don't know if you want to share a little bit on FX spot plus.

Sure. Thanks, Mike. I think a consistent theme that you've heard in our opening remarks is around continued product innovation and meeting customers where they are to make sure they have the risk management tools they need to access our markets and manage the risks. And I think certainly, credit futures is a great example of that. And another one we mentioned where it's really about bringing these markets together and offering new transactional handshakes to allow clients to act our market is FX SPOT plus. That is something we launched back in April. And since its launch, over 70 entities have traded on FX SPOT plus, including 40 banks the majority of which have not previously interacted with the FX futures market. And as Terry mentioned, off to a great start, where we had a single day record of over $5.6 billion on September 11 and we've had single day volumes exceeding $5 billion for SPOT plus over 4 days throughout September and continue to grow from here. So when you look at the innovations we've rolled out over CME, we continue to introduce new products, new offerings and combining cash and futures markets to make sure our clients can access all the liquidity they need during these continued uncertain times when they might need it the most.

And Mike, I think it's interesting when you look at the U.S. corporate -- or U.S. debt today at $37.5 million, $38 trillion, god knows what. And that market versus the corporate market, people are deciding where they want to participate. they feel more comfortable in a corporate bond versus U.S. government, okay, I'm not so sure they do. But because there's such leverage in both right now or such debt in both, it's a very interesting dynamic the way I look at it. So I think both of these different markets between the cash, U.S. treasury market and the corporate or the credit markets will be very active over the next several years as we continue to go through these cycles of high valuations of corporation on the stock market and then the demand for people needing to sell debt. So it will be quite fascinating to see how this all plays out.

Thank you. I would like to hand the call back to management for closing remarks.

Well, thank you all very much. We appreciate your interest in CME and have a great holiday season to be safe. Thank you.

Thank you for participating in today's conference. You may now disconnect.Thank you for participating in today's conference. You may now disconnect.

Welcome to the CME Group Second Quarter 2025 Earnings Call. [Operator Instructions]. I would now like to turn the call over to Adam Minick. Please go ahead.

Good morning, and I hope you're all doing well today. We released our executive commentary earlier this morning, which provides extensive details on the second quarter 2025, which we will be discussing on this call. I'll start with the safe harbor language, and then I'll turn it over to Terry.

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

Lastly, in the earnings release, you will see a reconciliation between GAAP and non-GAAP measures following the financial statements.

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

Thanks, Adam, and thank you all for joining us this morning. I'm going to make a few brief comments about our quarter and the overall environment. Following that, Lynne will provide an overview of our second quarter results. In addition, to Lynne, as usual, we have other members of our management team present to answer questions after the prepared remarks. .

Our record-breaking performance in the second quarter demonstrated the growing need for risk management globally. For the first time in CME Group's history, average daily volume exceeded 30 million contracts for this quarter.

Second quarter average daily volume of 30.2 million contracts represented an increase of 16% compared to the same period last year and included all-time records in each month of the quarter. In an environment of heightened headline risk and macro uncertainties, clients are increasingly choosing the transparency and capital efficiency of our essentially cleared benchmark products as they look to manage and mitigate risk.

The strong growth this quarter was broad-based with year-over-year volume growth in all 6 asset classes, including all-time quarterly volume records in interest rates, agricultural commodities and metals. In aggregate, our financial products volume grew by 17% and our commodity sector volume grew by 15%.

This continues to be a risk-on environment as evidenced by the continued growth in open interest or positions open on the books at CME, up by 7% from the end of Q2 2024 and 10% from year-end 2024. We are also seeing strong levels of large open interest holders with new records in both interest rates and crypto futures set earlier this month.

We had our highest ever quarterly volume from our international business, which averaged 9.2 million contracts per day, up 18% from the prior year. This was led by a record 6.7 million average daily volume from EMEA, which was up 15%; and a record 2.2 million contracts per day from APAC, or up 30%. This record international volume was driven by growth across all asset classes and customer segments and reflects our deep integration into global markets.

In recent quarters, we've talked extensively about our growing focus on retail traders and highlighted some of the large retail broker partners that have joined our multi-asset class marketplace to meet the increasing demand from this particular segment.

In the second quarter, over 90,000 new retail traders participated in our markets for the first time, a 56% increase versus same period last year. These new customers contributed to our Micro's ADV record of 4.1 million contracts in Q2 and demonstrated the appeal of our products to a broader base of users.

The Micro E-Mini NASDAQ 100 Futures contributed 1.7 million of those 4.1 million contracts. Year-to-date, NASDAQ 100 Futures and Options trading volume at CME Group has climbed to more than 2.5 million contracts per day, or up 22% versus last year.

Also, we're pleased yesterday, we were able to announce a 10-year extension of CME Group's exclusive license to offer futures and options on futures based on the NASDAQ 100 and other NASDAQ indexes. This license will go through 2039.

This extension ensures that our customers will continue to have the ability to trade NASDAQ equity index products alongside our S&P, Dow Jones and FTSE Russell products and benefit from the related capital and operational efficiencies for years to come. In addition to the impressive volume records, we delivered record financial results for the second consecutive quarter.

I'll now turn the call over to Lynne to review our financial results in more detail and look forward to your questions.

Thanks, Terry, and thank you all for joining us this morning. During the second quarter, DB Group generated revenue of $1.7 billion, up 10% from the second quarter in 2024. The average rate per contract for the quarter was $0.69, resulting in the highest quarterly clearing and transaction fees in our history of $1.4 billion, up 11% year-over-year.

Market Data revenue also reached a record level of 13% to $198 million. Continued strong cost discipline led to adjusted expenses of $491 million for the quarter and $395 million, excluding license fees. Our adjusted operating income came in at a record $1.2 billion, up 14% year-over-year.

Our adjusted operating margin for the quarter was 71%, up from 69.1% in the same period last year. CME Group had an adjusted effective tax rate of 23.3%. Driven by the strong demand for our risk management products, we delivered the highest quarterly adjusted net income and adjusted diluted earnings per share in our history at $1.1 billion and $2.96 per share, respectively, both up 16% from the second quarter last year.

This represents an adjusted net income margin for the quarter of 64%. Capital expenditures for the second quarter were approximately $19 million, and cash at the end of the quarter was $2.2 billion. CME Group paid dividends of $455 million in the second quarter and approximately $3 billion over the first half of the year.

Turning to guidance. We now expect total adjusted operating expenses for the year, excluding license fees, to be approximately $1.635 billion, that is $15 million below our prior guidance and represents 3% growth from last year's adjusted expense levels, although the guidance remains unchanged.

We're very proud to deliver the highest quarterly volume, revenue, operating income and diluted earnings per share in our history. These strong results are the continuation of the growth and demand for our products over the last several years. Following 3 consecutive years of record annual earnings and double-digit earnings growth, the need for our products has turned a 14% earnings growth in the first half of 2025.

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

[Operator Instructions]. Our first question will come from Owen Lau with Oppenheimer.

So trading volume and hedging activities were very strong in the first half. CME had a record quarter again. But could you please talk about the macro backdrop for the second half? What are the key drivers that can sustain these strong hedging activities going into the second half? Is it going to be interest rates, commodities, crypto or something else? .

This is Terry Duffy. Your question is about the second half of the year, I assume, right, in total, not this quarter?

Correct. Second half, correct.

Yes. And so it's -- obviously, it's really hard to predict volumes. We've always said that since the day we took this company public, it's difficult to predict. But we have seen, without a doubt, many things going along globally that need to be managed and mitigated through risk management.

The markets have been massively resilient through a lot of the policies that have been going through, whether it's on tariffs or other issues in the United States. But it doesn't negate the fact that we're sitting at record levels of debt, not only here in the United States, we're sitting at increasing levels of debt throughout Europe now. I just -- you just saw the other day where the U.K. government had to issue more debt to continue to run its country.

It is at levels that I think they're obviously unprecedented. And I think that people are going to need to manage and mitigate that risk. The question is, well, how does that transition into volume? It's really hard to predict. But I think that unless I missed something in the news, there's still massive unrest between Russia and Ukraine.

There's still massive unrest between Israel and Palestine in the West Bank there. And so there is so many different things going on right now politically that could have impacts on multiple different asset classes. We feel very strongly that we can be here to help mitigate and manage that risk.

Now we're not hoping for any disasters. I'm only pointing out factual things that are in the news and that are fundamentally math problems such as debt and issuance going on right now. So I don't know how that translates into volume, but I don't know how it does

Our next comes from Brian Bedell with Deutsche Bank.

If I can just put bundle 2 into 1, so 2-parter, and focus mostly on retail and then the crypto ecosystem. So Terry, you've talked a lot about retail emergence and your bullish views on how this is becoming a much bigger client base.

Can you just talk about the recent take-up? You said 90,000 customers -- new traders. How you're measuring that? And are you seeing that from new online brokers -- new research from online brokers coming in? And maybe how you expect them to trade different asset classes within the CME ecosystem? I think mostly equity and crypto.

And then the second question is around the crypto ecosystem broadly, how you see that unfolding over the next several years? What would CME's role be in that? Could that include listing perpetual futures or doing some acquisitions potentially on the tokenized front or establishing a tokenized capability at CME, if that's something you believe in?

Brian, thank you for that 2-part question. Much appreciate it. It seemed like a little more parts than 2, but that's okay. So let me try to address it. And I'll ask my team to join in where I think they're all vigorously taking some notes on some of your points. So Julie and Tim McCourt will both join in as well and maybe others.

So let me say a couple of things. One, in my prepared remarks, I referenced 90,000 new users for the first time, which I think is something that I've been here a long time, it's really not -- it's very unprecedented to see that type of growth, I think, is up 56% is what I referenced.

So to me, that is very, very exciting from the retail perspective and the growth. I don't believe that's going away. I've said just to you, Brian, and the rest of the analysts and others that cover us, these people want access to markets and we're going to make certain we give it to them.

And I'm very, very optimistic about this segment. I'm never trying to predict direction of markets, so I will never do that. But I will say that people have access to markets they never had before. And I don't see that slowing down. I think it only accelerates for many more years to come as people start to participate in different markets.

As far as the different asset classes, I think Brian was part of your question, do they go from trading crypto to maybe gold or other asset classes here at CME. I think as people evolve people always seem to evolve into different asset classes. And as you know, Brian, very well, when one asset class seems to be getting a lot of attention, a lot of people follow it.

Right now, we're seeing a lot of people follow the crypto. We can talk about some of the legislation that has passed and reasons why they're following crypto. So we've seen a massive uptick in the crypto markets as has others. So not a surprise. We saw a lot of people attracted to gold when gold hit $3,500 an ounce just a few months back. So that is not a surprise.

When crude oil traded up to $125 a barrel, you see a lot of people -- this was several years ago, going after that trade. So I think that there is not any 1 particular asset class, that's the beauty of CME. We have multiple different asset classes that people will follow, but they also follow things that are -- that have attention to them at that given moment in time.

And they have the ability to do that now were maybe 10, 20 years ago, they did not. So they can move from asset class to asset class relatively quickly and seamlessly. That was one of your questions. So I think they participate in all of our assets, depending on what's going on fundamentally.

Your other question was around crypto, I believe, as it relates to what we continue to accelerate our entry into crypto. From my standpoint, right now, we are hardly a first-mover in crypto. I think that we are a fast follower, to say the least, and we have a lot to offer in our crypto franchise. I think there's a lot of people that like to have the regulated platform on crypto, and it gives them confidence.

I think that's one of the reasons we've seen massive growth in people that are more mainstream in today's financial system trading it because they're using CME's reference prices to do that and are based off of our futures contracts.

So we will continue to participate in that venue. As far as perpetuals go, Brian, I think is one of your other questions, I thought I heard you say, perpetuals are something that are illegal in the United States of America. They do have them in Europe.

So the question is we will have to wait and see how the regulations shake out on perpetuals. There are certain products that are not conducive to perpetuals, mainly deliverable products are not conducive to perpetuals. So cash settled maybe more so such as the crypto markets could be more of a perpetual-type contract, but there are many products that just would not be efficient as a perpetual as it relates to risk management that are deliverable.

So when you look at energy, you look at rates, you look at all these products that are extensively delivered and people are counting on that delivery mechanism in order to manage the risk to take delivery or make delivery, perpetuals do not work. So I think it will go back and forth, and we'll see how the shake out. That's about what I heard. Maybe the team has to pick up more, Julie or...

Yes. I mean, Brain, thanks for the call out on the retail business. I think I'll just double-click a little bit with some additional stats to support the points that Terry was making earlier.

This was another record for the Retail segment. We certainly did see a extremely robust entry of new traders to that 90,000 that we talked about earlier. And this is now our fifth consecutive quarter of double-digit retail client acquisition growth.

And what has been fundamental across is just that 3-pillar strategy that we've talked about on previous calls, which is partnering with those new-to-futures brokers that you referenced, expanding market access and that is because of our diverse product speed and also enhancing our trader education.

So a few other things: I mean total participation across our marketplace for retail, a significant 16% increase this quarter as well. And what was also great to see was overall growth across all major regions. So we saw North American leading that with a 19% increase in total participants, a very healthy growth coming out of EMEA as well as APAC.

So those strategic partnerships with those new-to-future brokers have been driving, I would say, instrumental and instrumental in driving growth as well. Yet if we look across our top 25 partners, we are seeing strong performance throughout all those partners. They are a key part of how we are able to continue to grow the complex and reach retail traders.

And on the product side, we've mentioned the micro records earlier, certainly, 4.1 million across the whole suite, 3.6 million of that ADV was from equities. But I will also call out gold, which was up over 37% among retail crypto with Micro Bitcoin up 94%, Micro ether up 212%. So we're seeing that retail traders are accessing far more than just our micro equity suite, which is great.

And we also saw a nice jump in our rate per contract. We were up 7% from Q1 to 34.9%. So we're happy with where things are at and clearly highly focused on the educational aspects what we're doing with our brokers as well. We held over 100 client events just in Q2 to help educate traders. So we feel pretty good about the outlook going forward in the second half of the year.

Thanks, Julie. I'm going to ask, Tim, real quick to comment on crypto or anything else that Brian referenced and then we'll get on to the next question.

Great. Thanks, Terry, and thanks, Brain, for the question. I think the one thing just to add to [indiscernible] was about 190,000 contracts traded up over 130% year-over-year. Just want to point out that momentum continues here in July. We're through sort of end of last week, we're doing almost 260,000 contracts per day in our crypto complex which is over $12 billion of notional of the complex continues to grow, it's now over $26 billion of notional about 232,000 contracts here in July.

And just reinforce Terry's earlier comment, with our new record large open interest holder in the complex of almost 800 large traders. The great momentum is continuing here in July, and we look forward to continuing to serve the needs of our clients in the cryptocurrency complex as one of the most trusted exchanges doing so.

Our next question comes from Chris Allen with Citi.

I wanted to ask how you guys are thinking about capital deployment here, just given the level of cash balances sitting on the balance sheet right now and then the closing last year in the back half of the year? How are you thinking about prioritizing buybacks versus dividends, just given where the stock is? Any thoughts on inorganic growth opportunities in the current environment?

Thanks, Chris. I got a little in the background here, sorry about that. But I think we caught your question. I'll ask Lynne if you heard it, to go ahead and respond it.

Yes, of course. Thanks, Chris. I think the way we're thinking about capital deployment has not changed really since we announced the buyback program, we've discuss that that's going to be an opportunistic program.

So we still have our variable dividend structure and the ability to return cash through that valve, and we have the addition of the share repurchase that we can look to utilize if we see some disconnects in terms of trading versus performance. So I think that's going to be our approach when we think of that mix, and it will be dependent on market activity.

On the inorganic side, as you know, we get approached, just given our capital structure and our size kind of ability to participate in those type of activities. It is always difficult in the exchange space, particularly in kind of international M&A I would say we look as much as we always have.

We just tend to be a bit more choosy in terms of when we pull that trigger, but we may look at other ways to execute on growth initiatives, things like the joint ventures, so we've executed were things like our commercial agreement and the extension with NASDAQ yesterday that you saw. So we look at growth opportunities, not just in the M&A lens but all different types of structures.

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

This is [indiscernible] on for Craig. Can you discuss the impact of tariffs on your physical commodities business? Specifically, has the growing basis between your products and some of the European alternatives affected trading, particularly in the commercial channel?

Yes. Thank you for the question. I'll ask Derek Sammann, who heads up that part of our business for us [indiscernible] what he's seeing over there?

Yes. Thanks, I appreciate the question. When you look at the uncertainty across the globe right now, whether it's tariff-related specific question or geopolitical uncertainties, ongoing Middle East unrest and Ukraine-Russia tensions that Terry referenced, trade disputes, all of this is leading to a realignment of a number of the global physical supply chains.

With the benchmark markets we run and the fact that U.S. is now exporting record amounts of energy, we're seeing that, that is leading to the record results, not just for the first half of this year across the commodities complex, ag, energy and metals; on the volume side, but also record revenues there as well.

When you specifically drill down into the tariff impacts themselves is leading to 2 effective impacts. On one side, the tariff impacts are creating both short and long-term dislocations in markets. It creates a cost base of differential, that all needs to be risk management.

We're seeing our volume and activity increase across all of our client segments and we're seeing record activity across both APAC, up almost 40%; and EMEA, up over 22% this year. So we've seen global participation increase.

Not only did you see record activity in April when a number of these tariffs were announced, but we actually saw that perpetuate through into records in metals and energy in June. We're seeing that particularly express itself in options. But specifically to the question of the tariffs themselves, that's leading to a differential in price between our futures markets and the cash market that's known as a basis and that we're seeing that reflected in increased levels of, what was called, the EFPs or exchange of physical.

And that means managing the price between fiscal delivery contracts and futures moves around. We've seen volatility in that, and that is what is leading to our record activity and particularly on the option side across each of our asset classes. So we're seeing that both on the institutional side with the commercial business at record levels. We're also seeing that create opportunities for folks that are looking to gain access to that price activity.

You heard Julie mention that before, record activity in gold, as Terry mentioned, but record activity in our gold micros through the retail community. So it's a risk for some and they come to CME group to manage that basis risk. And it's an opportunity for others, and we see that in activity from the speculative side as well. So to Terry's point, we're here to solve customer risk no matter what side of the trade they're on.

And our focus is on markets across geographies, across client segments, and in each one of these markets, some physical commodities, it's a risk-on environment, and we see that record activity this quarter and first half of this year.

Our next question comes from Dan Fannon with Jefferies.

So given all the records that you guys have had in the first half of the year, curious what drove the expense guide take down? So in terms of priorities, Lynne, is this just timing in terms of spend or are there other changes in terms of expense outlook that you guys are making proactively?

Yes. Thanks, Dan. I would say there's a couple of things that led to the change in guidance. One was the refinement of our views on the spending on the Google migration. So we have been looking to optimize that spend. And as we're getting kind of more applications into that environment, we're finding ways to minimize the incremental spend. So certainly, just a refinement on kind of the additional expense load from new applications moving and also a refinement of the model in terms of timing and level of increased spend from new things that we expect to come on over the course of the year.

The other area I would point out is we are coming in a bit later on the professional services thus far this year. So we're using a bit less of consulting health, not just on the migration product, but overall across the board. So those 2 items are leading to that $15 million change in guidance.

Our next question comes from Alex Kramm with UBS.

Two of the, I guess, newer buzzwords or topics over the last few months has been stable coins and tokenization. I think Brian actually mentioned tokenization this question. I don't think you really responded to that. But not sure if I have a really smart question on the topics, but just wondering from your perspective, where you're spending your time? Where do you see opportunities on both of those issues? And are there any potential risks as well that you see here? Any efficiencies you could gain as well, sorry.

Yes. Alex, thank you. The risks and benefits will be cautious not to speculate on those, but I do want to give you an update where we're at. As you know, we put out a press release as it relates to some of the stable coins that we're looking to implement.

So I'll ask Suzanne Sprague who's been spearheading that on behalf of the company, where we're at and how it's progressing? So Suzanne?

Yes, thanks, Terry; and thanks for the question, Alex. So we are primarily focused on our partnership with Google. We did announce, as Terry mentioned, earlier this year, the Google Cloud Universal ledger partnership initiative that we're progressing with Google to be able to bring to market tokenization technology to enable 24/7 movement of value.

So for us, we're starting -- we're thinking about tokenizing cash and other noncash assets for our current ecosystem. I'm not really looking at the clearing space to start. And we've now entered the second phase of testing efforts, focusing on our relationship with settlement banks and then eventually extending that to clear numbers in clients.

So we are very optimistic about our ability to bring to market a solution in 2026. We haven't necessarily refined the use case that we'll launch at this point in time, but I recognize there is a lot of momentum with tokenization overall and that the movement of value on a 24/7 basis can really bring increased efficiencies into our ecosystem, which we always focus on anyways.

Yes. And Alex, just to add and not that I need to because Suzanne, but I don't want to be overlooked. The word efficiency is critical as it relates to our efforts here on stable claims and tokenization around that path for us to create additional efficiencies.

As you know, we've created capital efficiencies, but we also need to create other efficiencies, and we will continue to do so. And we believe with our multi-asset class exchange with the benefits that we have already, this could increase our value to our clients on a stable coin, especially as we raise through risk management and tokenizing some of the cash. So we're very excited about this. But we will do it in a way that makes sense and for the long run, not just to get something pushed out there for the short term.

Our next question comes from Ken Worthington with JP Morgan.

CME introduced new cash collateral requirements in the quarter or that got implemented early in the quarter. To what extent did the new requirements contribute to results this quarter. And I believe there was an extra 10 basis point charge for noncash collateral if certain minimums weren't maintained. To what extent the 10 basis points contribute as well? And then can you just give us average cash and noncash collateral balances for the quarter, please?

Thanks, Ken. Lynne and Suzanne, [indiscernible].

Yes. So Ken, you're right. The new soft minimum went into effect in April -- April 1. One thing to keep in mind, obviously, at the beginning of April and coming into the there's also a lot of volatility coming into effect at the same time that the new policy went into place.

So we've seen a couple of things. One, the overall level of collateral that's been posted increased pretty significantly between first quarter and second quarter. So our total collateral posted this quarter averaged $316 billion, that was up from about $290 billion last quarter.

Of that, about $133 billion was in cash and $145 billion was in noncash collateral. So of the required amount, you had almost 48% posted in cash. I would note that the floor or the soft minimum was placed at 30%, and we obviously saw a lot higher than that this quarter. In times of high volatility, it's not unusual, and Suzanne can comment on this maybe a bit more, for us to see more cash posted at the clearinghouse.

So some of the shift that we saw and that increase in cash balance likely was the result of that volatility. And as we progress through the year, as our customers get more accustomed to that soft minimum, we may see more of a rightsizing closer to that 30% target.

Yes. I think it's hard to anticipate for the remainder of the year, given all the variables we've talked about already that contribute to uncertainty in the environment, but generally, in period of higher volatility and more uncertainty, people do stay more liquid. So I think that does explain why we continue to see those elevated levels even now that we've backed off some of the earlier volatility in April.

Our next question comes from Patrick Moley with Piper Sandler.

So I had one on the trial that's currently ongoing with your former floor traders. The damages that the claims are seeking at least in the media seem to be rather large $1 billion to $2 billion-plus. So to the extent that you're able to comment on it, how are you thinking about this trial, your ability to win? And how should investors think about your reserving for any potential damages and whether that's had any impact on your capital return appetite in the near term?

Patrick, thanks for the question. And I don't mean to be short with you, but I'm just going to say, we cannot comment on pending litigation. We are -- as you just noted, we are in the middle of this trial now, so it's way too early to speculate what we would or would not do. We have said from the beginning that we have not accrued anything to date for this and that's all we can say that we've already said publicly, but I'm not going to say anything further on the trial.

Our next question comes from Michael Cyprus with Morgan Stanley.

Maybe just a question here on 24/7 trading. Just curious to hear your views on what you see as the major hurdles of roadblocks today for bringing that to the marketplace? Maybe talk about some of the steps you might take to overcome that, including even with stable coins I think you were alluding to before. Maybe elaborate on the role, how you see that perhaps helping catalyze 24/7 trading?

And then what ultimately might be the time frame that you think that could bring to the marketplace? And then just remind us with extended trading or global trading hours today, just how meaningful that is as we think about maybe thinking about the size and the demand that you might ultimately see over time for that? I'm just curious any views around how you might see that demand and use cases shaping up for 24/7?

Michael, it's Terry Duffy. Let me just again, make a couple of comments. But again, we're speculating a little bit here on the 24/7 about what the demand may or not be on the hours that are -- the markets are not open today because you don't know.

First of all, there is a cost associated with the firms in order to staff up for these 24/7 type of trading that especially on margin products, you have to be staffed up if you don't have a fully funded type of a contract. So I think it's going to be a difficult lift for the firms and so they're going to have to make a decision.

Is it worth paying their staff for, to your point, is the demand there for it. So I personally believe that 24/7 trading will eventually happen globally. I just don't know what asset classes and when. It could be 10 years down the road, 20 years down the road or 2 years down the road. I don't know.

I think the way that you look at the evolution of markets, you would think that it would have to come there. Certain products may not be conducive to certain governments that they oversee that they would allow a 24/7 trading out. So you might see more like we do today with the crypto markets being more in that realm, but I don't know about some of the other like interest rate products, how central banks would feel about that.

Foreign exchange, how central banks would feel about that. How certain energy companies would feel about that. And there's a whole host of constituents that have to have an input into what they believe is in the best interest going forward. So I think it's a difficult question to answer.

Other than I think certain products will, certain ones won't, and the timing is yet to be determined. And anybody on my team, you're not have a different viewpoint, I'd be interested in myself to hear. So that's kind of how we see it, Michael. So I don't know. I think you're right about the demand, but the cost for the demand is going to be something that people are going to have to analyze.

And if the demand is there, it will support the cost, and I assume people will do it. If it's not, I assume they will not. But I think it will be asset class by asset class driven more than anything else is the way I see it.

Any particular asset classes you think this could be more conducive for and any other hurdles beyond the demand side?

Yes. I think I said it already. I think crypto will be the asset class that's already basically there today. The question is, do crypto futures on a regulated platform, do they go there or not? Again, I don't know the answer to that. But right now, the cash market, as we all know, it goes 24/7 today. So again, that would be the asset class that appears headed in that direction.

Our next question comes from Kyle Voigt with KBW.

Just curious if we could get an update on FX Spot+ and how the client uptake has been since it launched in early second quarter? I know early days, but any sizing of how additive it's been to the broader FX franchise thus far and how you'd frame the opportunity from here?

Thanks, Kyle. I would ask Mr. McCourt to my comment on FX Spot+. Tim?

Yes. Thanks, Terry; and Kyle, thanks for the question. FX Spot+ is something that we introduced back in April. That is the combination from a technology perspective of spot and futures FX market and it's really gone exceedingly well in the rollout.

So when we look at some of the notable metrics of the Spot+ spot plus offering, we see single-day volume of $2.7 billion, which is great for contract that's only about 3 months old or an offer only 3 months old. But I think what's more impressively noted is that nearly 50 entities have actively traded on this new marketplace including a few dozen banks that are not previously interacted with our FX futures market.

That remains a central hypothesis of this offering that we can bring new participants through FX Spot+ to enjoy the benefit of both liquidity pools on the spot and future side and avail futures-based liquidity where CME Group continues to be a leader alongside our primary market designation in the spot market.

That's a powerful combination for the marketplace and our clients. It's something that we also think to point out, while still early days, we're very pleased with the market quality this has been able to deliver, where we have been able to improve the competitiveness and the market quality of a few of our spot-based currency pairs that historically semi through our EBS and FX Spot offerings have not been the leader. So we're very pleased that we're seeing new participants, better market quality and significantly added volume to our complex, all as a function of rolling out Spot+.

Our next question comes from Benjamin Budish with Barclays.

I was wondering if you could comment on your cash treasury trading business. It looks like your market share of overall treasury trading volume has stepped down a bit in the last couple of months. Curious if this is a function of competitive intensity, if you see more trading moving to voice. Any thoughts there on sort of competitive dynamics and what you're seeing in that market?

Yes. Thanks, Ben, for your question. I'll ask Mike Dennis to respond to that. Mike?

Yes. Ben, appreciate the question. Just to start off, BrokerTec had an exceptional Q2. Our average daily notional volume of 949 billion was up 24%. In April, we saw 1 of the highest volume months since February 22. -- of ADV about 151 billion, which was up 39% year-over-year. And furthermore, on April 7, BrokerTec had one of the highest volume days, reaching 322 billion in U.S. Treasury actives traded on our platform, which proves our theory that BrokerTec is the primary venue for liquidity, price discovery and risk transfer.

Now when we compare ourselves to others in the marketplace, we look to compare ourselves to like central limit order books that offer U.S. Treasury on the run actives. There's a lot of different ways to look at cash security trading.

Our platform, again, only has on-the-run U.S. treasury actives, you've gone to off the runs, you don't do bills. And so when we look at competitors in that space, we think our market share is flat from the first half of this year versus last year.

So it's also important to just understand that BrokerTec is more than just U.S. treasuries. We have a strong repo offering, and we saw another record quarter of 362.9 billion ADV. And we also have RV curve, which had a second consecutive record quarter at 2.7 billion. So some of the things that we're looking at relating to competition as BrokerTec Chicago.

We've obviously announced BrokerTec Chicago, which is a second matching engine that will sit next to our futures in the Aurora data center. Launch is scheduled for September 15. We're very excited about it. We've had a lot of clients already reach out to connect to the new API and start testing.

And we do think that this can help with new client acquisition, where clients are trading in sharper ticker comments on other platforms, and we do think it will bring new participants into the cash markets.

Our next question comes from Alex Blostein with Goldman Sachs.

I was wondering if you guys could comment on changes in bank capital requirements following CCAR and potentially other changes related to SLR and a couple of other things that could perhaps allow banks to expand balance sheet size?

And just curious how you could see your ecosystem impacted by this, whether it's in the Rates business or any other products could potentially benefit from that?

Thanks, Alex. As you know, I'm sure you do know, Alex, we've been very vocal that the SLR requirements and some of the other requirements on banks has been onerous. And we believe that the capital that was originally deployed and continues to be deployed for risk management is adequate and to be adding to something on top of that, it seemed like doubling up on something you didn't need to have done.

So actually, I was quite pleased to hear some of the recent announcements coming forward, especially on the supplemental leverage ratio as you commented on. And how does that translate into us? Hopefully, it frees up your balance sheet and others. So you can continue to do more risk management in a more prudent way and not have as much capital tied up for issues that is probably unnecessary.

But again, I think what's important is making sure the system is safe and sound and that is the overriding opinion. But I think that from our standpoint, the way we look at it, if there are changes, I see it as a net positive for us. Mike, do you want to comment any further?

Yes. I think just to add to what Terry said, there's been no formalization yet on SLR. It's currently in a public comment period, but we do think that SLR relief could provide some balance sheet flexibility for bank clients, but the actual impact is going to depend on the bank and how the final rule is calibrated.

Our next question comes from Simon Clinch with Rothchild & Co.

I wanted to jump back to the retail investors that your retail traders that you're signing on? And perhaps, Terry, could just give us a sense of how big the base of retail traders you have on the platform? And as you're bringing on like these 90,000 new traders this quarter, do you typically see those traders come on and trade very, very actively straight away? Or is there some level of graduation before these kind of retail traders reach some level of maturity in activity?

Yes. Thanks, Simon. It's a great question. It's almost unanswerable though, because when you look at a new participant to say that they have hit their stride of their peak in the first week of trading is kind of that's not possible, right? I mean you do -- there is a curve for everybody that's new into any market, whether it's your for into equity, equity options, futures, ETFs, whatever you're participating in, you're not going to go all in to begin with.

So when we talk about 90,000 new participants, we want to make certain that we participate with our clients to have a very good educational system, so they understand and -- because we want to preserve their -- and to help them grow into whatever they're going to eventually be, but to say that they're mature enough on day 1 to maximize their value, it'd be a bit of a stretch.

And from someone who participated in the market, and when I started in 1981, I assure you, I was trading a lot smaller in '81 than I was in 2001 before I became Chairman of CME. So it's just an attrition of a trader and how they go forward and depending on what they are used to trading.

So I think that's really important to have longevity in this client base. It's a massive client base, but I want to make sure they're educated and they have a good understanding of what they're getting into. So I would hope they're not going all in to begin with because I don't think that's a good thing for the future.

I think what's good is and continue to participate for a longer period of time, which will be beneficial for them and it'll beneficial for CME. So I'll ask Julie Winkler to comment further.

I think Terry said it well. I think traders come to us with different journeys. A critical part for us as well as our retail broker partners is that education point. I think what we've seen in the last 5 years is that the traders that do come to our doorstep are far more sophisticated and educated on products in general than what they were pre-COVID.

And some of that has come from the growth of simulation environment, the use of better technology within those environments trading simulators like the 1 that we just launched a new one on July 12. All of these tools are just equipping being these retail traders with more data, more analytics so that when they do start and fund their accounts, they are more ready to trade.

And as Terry pointed out, we also are highly focused on client retention. And for us, that means making sure they continue to get exposure to new products, they understand the content. We have an extensive client education defense process that I talked about earlier as well as we work with like 85 different external traders in -- that speak 13 different languages so that we make sure we're meeting these retail traders where they are and helping to bring them along in that journey.

I think you can also say like with those things, the traders that are the largest that is probably the 80-20 rule, where they are making up a large percentage of that day-to-day activity. And yet again, I think the goal is to help those traders mature along their journey.

And for us, a lot of that is about product introduction. And I think you're already seeing that in the Q2 results, where it may come to us first from a micro equity perspective, but our partners and CME have been highly effective at getting them and cross-selling them into other products like crypto and metals.

Simon, hopefully that gives you a little flavor and color about how we're looking at the retail today and going forward.

Our next question comes from Bill Katz with TD Cowen.

Okay. Just maybe a tough question to answer, but I'm sort of curious, just given the interplay of sort of a rising non-U.S. rising retail opportunity set relative to the base business and sort of the volume growth, how are you thinking about maybe the projection for RPC looking ahead?

Yes. So those are, I would say, kind of 2 competing factors that are built. So I think you need to think about as we continue to expand our international presence, that does tend to be nonmember activity, so that does tend to be at a bit higher RPC. On the flip side, when you're talking about the retail activity, they may be participating in more of the smaller contracts, some of the microbes, which does have a dampening effect on the average rate per contract.

So for us, we are not focused on growing RPC. We're focused on growing that revenue base and growing kind of the opportunities that our clients have to trade. So I would focus more on that overall revenue picture than the RPC growth per se.

Our next question comes from Ashish Sabadra with RBC Capital Markets.

This is [indiscernible] on for Ashish Sabadra. Maybe I just wanted to double-click on the international markets there. Continue to see great momentum. I'm wondering if you guys can provide a little bit more color on the drivers from geographic segments, maybe also how that sales and efforts are progressing on those major geographies as well?

Thank you for that question. Julie, you want to talk a little bit about the sales in the international business real quick?

Sure. Yes. I mean I think the record quarter of 9.2 million contracts, 18% increase, as Terry mentioned earlier. What was great was the fact that we saw international records really across nearly every single asset class, rates up 14%; equity indices up 38%; energy 23%; ags 3%; and metals 14%. So I would say solid performance across all of the diverse asset classes and across our key customer segments as well.

So we saw EMEA leading the charge there with that PDV up 15%. And what we saw similar to Q1 is significant growth from all of those Tier 1 countries. So those areas where we have our sales resources most focused on sales execution.

So countries such as France, the U.K., Switzerland, UAE and the Netherlands. But also, I think in APAC, a great second quarter of volume up 30% and significant increases there from Singapore, India and China.

In terms of what are the drivers behind some of that, Derek mentioned it a little bit earlier in his answer, definitely is commercial participants continuing to diversify their commodity hedging. We're seeing the sell side that are seeking global benchmarks, the ones that we offer and the liquidity that we are able to provide around the clock and also really some strong performance from the buy side who I think are seeking the capital efficiency offering that we have here, particularly after the tariff announcement.

So we see a lot of growth initiatives still on the horizon. Certainly, retail is a key aspect of our international volume, but also just the investments that we're making in other key strategic markets and leveraging things like other incentive programs to acquire new clients and continuing to offer regionally relevant products and expanding our data services. So a continued focus on that going forward. And we believe that, that will help to continue to fuel that international growth.

And just to add to what Julie said. What Julie and her team do is no different than what they do here in the U.S. as far as doing the sales, getting out there, she has a sales team that's global, it's just not a U.S.-based sales team. The education is critically important, especially internationally.

And when you look at -- when you go out there with your teams on sales and education and you show them the deep pools of liquidity, that's very attractive for any participant anywhere in the world. And again, what we talk about all the time is people see the market efficiencies that they can achieve by trading CME's products is, again, a very attractive component for our international clients, and you're seeing more and more of it on a daily basis because of Julie and her team. So thank you for your question.

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

I was wondering if you could elaborate on the NASDAQ licensing agreement? Do the economics of the agreement change after yesterday's renewal?

There's no changes to the economic structure [indiscernible] just the extension [indiscernible] just to 2039, but at the same economics.

And our last question comes from Benjamin Budish with Barclays.

I just wanted to circle back on the collateral balances. And curious if you could unpack a little bit how cash versus non-cash traded month-over-month? I think you mentioned in the prepared remarks or perhaps earlier in the Q&A that given the higher volatility in April, you saw a bigger influx of cash. What does the exit rate sort of look like into Q3, just as we're trying to calibrate our models for the next quarter?

Yes. So it's still early, Ben, but so far in July, the average cash balance has held relatively steady at about $132 billion versus the $133 billion I mentioned for Q2. We have seen a bit of an increase in the noncash collateral that's up to $153 billion so far in July, and the total collateral average is at $321 billion.

We have no further questions. I would like to hand the call back to management for closing remarks.

Thank you all again for joining us this quarter. We appreciate it very much. We're very excited by the results we were able to produce. Again, record a quarter. We will continue to stay focused on creating efficiencies, bringing new clients to our marketplace and all the other initiatives that we discussed today. So thank you again, and have a great day. Be safe.

Thank you for participating in today's conference. You may disconnect at this time.

Welcome to the afternoon session of the 2025 Global Exchange and Trading Conference. I'm Patrick Moley, senior Research Analyst covering the exchanges, brokers and trading companies. It's a pleasure to welcome my next guest, CME Group Chairman and CEO, Terry Duffy. CME is the largest futures exchange in the world. We always love having Terry here. Terry, thanks for joining us.

Pat, thank you very much, buddy.

So volumes at the CME have been off to a great start this year. The interest rate complex has been strong. Open interest is up significantly. I always loved to get your thoughts on the macro picture. How are you feeling about the momentum you're seeing across the business? And what are your broad market expectations as we head into the back half of the year?

Well, I think that when you look at the volumes over the last several years, they've been continuing to escalate. And then again, we saw another record year in 2024 and then a huge first quarter. And then again, we just announced in May, another record month in May. So the question is macro, what does that mean as far as managing risk and what do people need to do.

I hear from some folks that maybe that the Trump tariff chasing is going to slow down to some degree and what does that mean for you? So then I'll hear other things that would maybe counter that. So I'll meet with members of Congress, and I had one as a very senior member of the Senate in CME a couple of weeks ago, and there's still a tremendous amount of concern what's going on between Iran and what they are going to do or not do and what is going to happen with Israel.

I don't think that, that has anything to do with a tariff. That has a lot to do with human life and what the future is going to look like and how are people looking at managing those risks from a financial perspective. Yet alone, the God forsaken risk of human life, which is the most important, but there's also the aftermath of what does it mean to marketplaces.

So I think that's going to continue to be a part of it. So whether people are following the trade up and downs or not, I think, is almost irrelevant because the world is a very dangerous place. So you look at what's going on in Eastern Europe, and you had Zelenskyy doing some things that offensively that people didn't think he could do. So okay, what does that mean for that part of the world. Then you have Putin then sending some stuff over, he killed a few people yesterday, including a baby or what does that mean to the world? And how does the people -- how do they look at that? And what does that mean from a risk perspective associated with that for markets as well.

Again, human life is the most important thing. But the reality is there's a cost to all of this too and how do you manage that. So I think when you look at the macro events, I think it's a very frightening place, I think that the one that scares me just as much as anywhere else is in China and China associated with Taiwan. So I would hope that our country would figure out a way to get the semiconductor business back into the U.S., the pharmaceutical business back into the U.S., the U.S. consumers should pay for that.

The taxpayers should pay for that and protect us because I don't think anybody on either side of the aisle after the pandemic or what they're seeing with the future of artificial intelligence and technology would argue that the United States of America should not have those facilities in here.

The rest of the stuff on tariffs, I don't know. But I do think there's a tremendous amount of risk out there and people are getting very itchy. So the thing that scares me the most right now besides that is also when you look at where Iran is at, what their nuclear capabilities and what they're going to do. And I'm very concerned about the Middle East right now, Patrick.

So I think there's a tremendous amount of risk out there. So I don't see that changing. And so I think that the Trump tariff trade chasing is almost irrelevant to some part of it. And I think the macro events are going to come on the roost. $37 trillion of debt in the United States going to a $2 trillion deficit. And I don't know one Republican that wants to get in front of that freight train to stop it where every single one of those people should be willing to stop it. And if you sit down and talk with them, they're not going to and they can't.

So what does that mean for the rest of us? And how does that look for our debt. People say that the Chinese are liquidating their U.S. foreign sovereign debt out of China. Yes. Well, how much are they buying out of their European entities coming out of Europe back into the U.S. They haven't liquidated anything. They've probably added to their positions and not liquidated their positions.

So it's kind of a strange phenomenon how things are working right now in the marketplaces, and they're just different than they were 6 months ago, and they're definitely different than they were 6 and 16 years ago. So I think it's a fascinating place right now and you better be able to manage that risk.

So that's on the institutional side. I think retail is another big area of focus for you recently. When I've heard you speak, we've seen this resurgence in trading activity. Really since COVID, you had retail go from cash equities, they moved on to options. And it seems like now the next big frontier for retailers futures.

Robinhood launched CME futures recently. What role do you see retail playing in CME's growth going forward? And how many of these partnerships do you think are out there from like a retail brokerage perspective to where you can really cross-sell or sell those products into that channel?

I think retail is going to change a lot of industries, not just the financial services. Retailers got something they have never had before and that is the technology I mentioned it a moment ago, technology. So if, in fact, artificial intelligence is becoming to available to all, so all you got to do is google something on your phone, the first thing you're going to get is an artificial intelligence answer whether it's right or not, pretty close to being right, most of them. We all have that information and the technology that the average retail participant that they have today is so much different than what they used to have before. So the ebbs and flows of retail where your retail comes in, you blow them out, then they're gone, then they've got to replenish and come back.

I think you're going to start to see more of a static line of retail because there's just more people participating in retail. Why do I say that? If you look at the proliferation of gaming or gambling online today, it's probably most of the people in this room have some kind of an app where they're doing something as it relates to some type of activity on a gaming app. So a lot of people younger than the people in this room all have them, and they're all learning the markets. And so the original market gaming apps where historically, who wins, who loses? Now nobody even cares about who wins, who loses, they care about what's going to -- how many downs, how many rushes, how many passes, how many kicks, how many timeouts. Those are all called prop bets. And if you look at prop bets and you look at trading, prop bets and trading are the same exact thing. So people trading -- they trade in, they trade out, they trade in, they trade out. That's exactly what they're doing in gaming today.

So these people, the younger people today are so sophisticated on the retail side. I think that you're going to start to see the divergence and collision of institutional and retail come together, you're not going to know it because they're going to have information that they never had before.

And I'm going to give you an example. I traded on the trading floor back in 1981 [ that I ] took over in 2002. All the information came from trading floors and proliferated out to the public. The reason why trading floors went away, everybody thinks just because of electronic trading was because technology took the information from the outside, they got it first and then the people on the trading floors were the last one to get the information and they got destroyed.

So that's really how the trading floors technically went away, the proliferation of information. And now the retail has that. Now they may not have the same capital as Citadel. But I will tell you what they're going to have the same type of information. So I think the growth of retail is really exciting globally. And I don't think you're going to see as many ebbs and flows in retail as you have historically, you're going to start to see more of a constant and they're going to be a participant for many, many years to come and grow.

Yes. They've been pretty resilient this year, which I think has surprised a lot of people with the volatility.

I think it goes to the information they have.

So another thing, retail or at least in the CFTC-regulated contract space, event contracts are starting to grow in popularity. You have a smaller event contract offering. What do you think of event contracts? And what role could they potentially play in CME's future growth and exposure to retail.

I'll go back to what I said a moment ago. I think we have event contracts that we are offering to the wrong constituency of clients today. And you might think that they need to say something derogatory about his own business. No, I'm just saying something very honest. I think that when you look at the event contracts the way they're structured, they're structured not for the most sophisticated users of markets such as you referenced earlier, I'll call Robinhood plus 500s, some of these other big retail firms or the institutional participants. They don't want those contracts, they could trade other things. Event contracts are truly a retail-based contract.

When I talk about retail, I'm talking about the everyday retail participant, the gamers and things of that nature. So I think you need to offer them up to that type of a constituency for those contracts to be successful.

So I think it's an interesting concept, but I think you have to make sure you have the right audience in place in order to make them successful because otherwise, they're just going to go to trade margin products that do the same exact thing on their terms, not on the event terms.

So moving on international growth. Your ADV overseas has been pretty outstanding 19% year-over-year in the first quarter, 8.8 million contracts. You're seeing strong growth there. Is it mostly just the macro backdrop driving this and the need for these international players to hedge. What other sorts of things have you been doing to drive growth internationally?

I think both. I think we've always had a decent historic business internationally and it has grown. It's grown with the overall growth of the company, too. So you could just say the market has gotten bigger and the international has benefited from that or you could say some of the things that you have done internally have helped spark that growth. It's a combination of both. There's no question when the tide goes up, all boats can rise. So the markets have gotten bigger. The volumes have gotten bigger, international volumes have gone -- coincided and gone along with it. We've also done a lot of other things.

Historically, we never had much of a sales force. I think we had 10 people selling our products back in 2008. Now we have hundreds, and we have people educating people all over the world about what we can do to help manage and mitigate risk. And we don't just do that in New York, Chicago, Los Angeles. We do it globally.

And I think that's sparked a lot of our user base to understand what our products are for. You mentioned it in your comments at the outset, where you said to hit retail was at this level, then they went to CBOE and now they're finding futures. Well, we've been doing that with our international business historically over the last several years, but we've really pushed on the sales effort, the efficiency effort, the data efforts that we have done here in the States globally and it's paying dividends for us, Patrick.

So crypto is a pretty hot topic right now. I don't think people fully understand that you're one of the leading crypto firms globally when it comes to derivatives, it does seem like competition is increasing as people started to dip the toe into the water in crypto. How do you feel about your digital asset presence today? Do you think there's more you can be doing? And how do you see it evolving over time?

I think crypto, like a lot of things in life is all about timing. When I listed crypto in 2017, people came to me for years prior to them and said we got to list crypto, we got to list crypto and I said, no, no and no. And then I call some folks into my office one day in April of 2017. I said we're listing crypto and let's do it tomorrow. It's about timing. And I think you have to be very conscious of that, who's ready, who's not ready for it.

And I'm not saying 2017 was the year everybody was ready for it. I even had calls from some of my biggest FCMs saying, "if you list this, the only way I can offer it is that people are long, I won't be able to offer them a 2-sided market because they can destroy us." And I said, "Well, that's the stupidest thing I've ever heard in my life." But that's some of the things that you heard.

So you have to understand who your constituents, your FCMs are, futures commission merchants, and see how they feel about certain products. I am a huge believer that crypto needs that ultimate use case that it has not been seen yet for the masses. And I'm also a huge believer that there's -- it's not going away.

I don't get fixated on the price like everybody else. And I think that's where people miss the boat. They get fixated on the value of the crypto versus what is the use case for the crypto because that's, to me, is the true value of crypto.

So I think that is continuing to be worked out. And I think one of the -- one of the things that could really accelerate that is the acceptance of non-tradable USD-pegged stablecoins. And once these stablecoins get more into circulation using the blockchain network and then also associating some Bitcoin or other cryptocurrencies with them, you'll start to see more of an acceptance going along with it because the friction that some of the fiat currencies have today, some of the friction in the marketplace we have today, we need to eliminate that and create efficiencies. This is a way to do it.

So I am cautiously optimistic about the ultimate use case for crypto. But until we can walk outside and does literally seamlessly use it like we do credit cards, debit cards and cash. Even cash has become nonexistent. I was going to the bathroom about a minute ago. I think I dropped $5,000 out of my pocket and nobody picked it up.

I wish I would have been there.

Nobody knew what it was.

Where's that.

[ Doubt the Kleenexer ], okay thank you.

So in the past, you've married derivatives markets and spot markets. Do you think it would ever make sense in the future where you marry spot crypto market with the derivatives market that you have?

I don't know if it would make sense or not. And I don't think you should ever draw a conclusion that you would or would not do something. I think you have to see how it evolves. So when you're looking at the spot markets today, how they trade versus the derivatives and how they trade, I guess I would look at it the same way I do the United States Treasury market. The United States Treasury market does not have a forward market. It is a cash market where you cannot manage future risk.

So you have to use the futures market to do that. So as crypto fall into that same realm where the spot becomes very important for that given moment in time, and then the forward market helps you manage and mitigate risk for your uses for that product down the line. The question is, what's our uses for that product down the line other than the value of the coin. Right now, it's only the value of the coin. Yes. So it'd be a difficult to say, to give you a definite answer, yes or no.

Yes. So sticking with the tokenization theme, you recently announced that you were piloting solutions for wholesale payments in tokenization on the Google Cloud Universal ledger?

Yes.

Can you talked about your efforts there and what adoptions look like and what you think that will bring?

Yes, I'm excited about this is something that I've been personally involved with. I like it a lot. I think, again, I'm all about how do I create efficiencies and eliminate friction. And I was saying that I need to take $1, make it look like $5 and take the risk of $0.75. And I actually think that we can do that through some of our efforts and like I always like to tell people, if we took do, we passed it around this room by the time it got back to you and I, Patrick, could be worth about $0.03, right, because we all took something off it. We have to figure out ways to create the push the dollar around the room. Everybody can benefit, but it still comes back to us at $1. And that's how I look at some of these stablecoins and some of the other tools that are out there to help manage risk and mitigate it and to make it more efficient.

So I am excited by this, but at the same time, like Bitcoin, I will not rush into it. I will do it properly. I had the pleasure of sitting with French Hill, who is the Chairman of the House Financial Services Committee in my house Saturday, and we were talking about stablecoins. There's legislation coming out in Washington and just thinking about that.

And one of the things he said to me, and I don't think he said it or I can't repeat it. He says, "this has to be done right the first time." And I said, "you are absolutely correct." Because if this is not done right the first time, it will be 1 step forward, 40 steps backwards.

And with anything new like this, that's what it could potentially happen. So I told them that I thought that maybe systemically important banks should be able to issue stablecoins, systemically important institutions. I told them, I mean, listen, I'm a stiff move myself. So would that benefit us? Maybe, maybe not, I don't know. But I think that you have to be careful how you go forward with these stablecoins and how they are overseeing because they have a potential to do a lot of good.

So switching gears. Last year, one of the big topics of conversation was the competitive landscape in the interest rate complex. FMX as a challenger emerged. You launched treasury futures for the first time a few weeks ago. We haven't seen much in terms of volume.

I personally don't get as many questions as I did a year ago, and it's been on the decline. How do you feel about just the overall competitive landscape in rates and this competitor specifically, do you feel better about it? Do you feel worse about it? How do you think about it?

I feel the same, Patrick, to be honest with you. I take every competitor very seriously. And I'll go back to the theme, but I've answered almost every 1 of your questions with is I look to figure out ways to create efficiencies, understanding that we live in a very competitive dynamic world. People are going to constantly look to compete with whatever you have.

I believe in innovation and looking at that. And I think when you look at what we've been able to accomplish this over the last several years, my rate complex alone, I save $25 billion a day to the largest participants every single day in efficiencies for that treasury and SOFR market. When you look at the rest of CME's asset classes, we're up to $60 billion a day in efficiencies for our clients. It's a very difficult proposition to replicate. And I'm not saying you can't try, but it takes a lot of work and you can't do it overnight.

So this is something that we've been working on creating efficiencies between portfolio margin, cost margining with FICC and margining against our own products. This is a very big benefit to the end users. So I know that some have said historically that LCH's swap book is bigger than CMEs, which falls under the NS, no s***, category. I understand that. I know that. But at the same time, when you look at futures and you look at the offsets against futures, our swap book offers the same amount if that anybody around the world can offer today as far as the offsets go.

So you can't -- the only way you can use LCH and swap book to make it bigger than what we have today is to grow your futures book, not your swap book. So our swap book is big enough today to give the offsets to the clients because of our futures portfolio, meaning if you're going to compete with me on offsets. You can't just tell me that because they got 90% of the swaps book, and I have 10% of USD swap book, they're going to do better, wrong. That 10% is already given the efficiencies against the futures market.

So the futures market would have to grow in order to make that philosophy or they make that math work and it is what it is right now. So we've been able to grow it and when we grow it, we get more swaps business. So that's the way it looks. It's a very dynamic marketplace. We're excited by it. And listen, when there's $37 trillion of outstanding debt today in the United States, $27 trillion, $28 trillion in U.S. treasuries going to a $2 trillion a year deficit spend, interest rates are going to bounce around no matter what. And we think it's a marketplace that we want to be able to manage and mitigate risk futures, as we all know, they settle into cash treasuries.

They don't settle into a synthetic of another product like a swap does, a swap is a cash-settled product. And it's a fixed versus floating U.S. treasury futures settled into U.S. treasury cash. And I think that's very important. And I think our government understands that. So we need to make sure we run a very efficient marketplace and we also understand that people want to compete with that.

All right. With the time we have left, I got 2 quick questions for you. The first is on M&A. Your stock's trading at all-time -- near all-time highs. You have very low leverage. What's the appetite for M&A like today? Is there anything out there that interests you? And if you look across the business, where do you think M&A could be most impactful?

Again, I'll be cautious on what I say, but I think my record speaks for itself. I've been very strategic on what we want to do for M&A. When I did the Chicago Board of Trade and the New York Mercantile Exchange along with Comex, I thought that was critically important to the future of our industry, and it has been. I tell people all the time, if we didn't do those transactions, we wouldn't be sitting in this room today as a stand-alone company as the Chicago Mercantile Exchange.

But because of that, we are the CME Group, and it's benefited us immensely. I think that M&A is something that -- first of all, cross-border M&A is something very difficult to get done. So if you're going to stay in your vertical of an exchange M&A, that's pretty hard to do. And what's left here in the United States is pretty de minimis. So you would have to look at things that you think can benefit your shareholders, first and foremost.

And I guess, I should say first and foremost, you have to do things that will benefit your users. If your users can benefit your shareholders will benefit. So that's how I look at M&A. And right now, when I did the deal with NEX, I still think that, that transaction was a good one because we've taken a lot of that BrokerTec business, and we've transacted at into futures. We've transitioned it into futures, I should say and we futurize that business, which has helped grow our treasury complex immensely. The EBS business is doing better, and we just announced the optimization business, as you've all seen, with our deal to spin that out to BRK.

So we're excited by what we've been able to do. I think when you look at the transaction we did with Google, where you took $1 billion stake in CME Group to help us develop the next leg of technology. I think if you look at proprietary technology, especially in exchanges, you're going to try to keep up with what's next is massively expensive. And if you don't have a good strong partnership with one of these big cloud providers, I think you're going to be left out.

So for us, I think it's pretty exciting for that, but I'm not opposed to doing an M&A transaction. I just haven't seen something that makes sense for my users, most importantly, which in return would benefit my shareholders. And when I find that, I won't be shy, but it will be well thought out.

Sure. All right. So last question right now, Terry, your contract with CME extends through the end of 2026. Do you have any potential succession plans at the end of that contract? Or do you think you'll stick around?

I don't know. As far as potential successors, I have a great team. I really like my team a lot. I've made some changes over the years to my team. So I think we're all rowing in the same direction. And I think that's important, especially on some of the topics I touched on today. I'm not a kid. I'm 66. I've been doing this a long time. I still feel like I have a lot in the tank. But at the same time, I want to make sure that I have the pieces of CME in place for the next generation to take over and continue to grow. And I should just quietly walk away and say thank you very much. And CME, hopefully, will say thank you to me and well, that's the way it should be.

But I have to get to that point. I'm not there yet with my Board. I'm not there to see where we're going to be at as far as succession goes. Someone said to me the other day, they said, "How do you feel about retirement?" And I said it's a strange question, and I've given it some thought. I said, I know a lot of people that the day they retire, they walk out the door, it's the worst day of their life. And I know it's the same person, if you put them back in that office and say you're going to stay another 2 years, they say, that's the worst day of their life.

So it's a very, very difficult situation that you're in, especially with me being in this industry for 42 years now coming in as a young kid, as a young trader back in 1980 and becoming a member in '81. It's been an amazing place. So I want to make sure that I do the right things on behalf of the company. I think I owe that to the company. So the next year will be very important for the succession of CME, but it has to come to that point, but I've got good strong people there and a good board that understands that.

Great. All right. Terry, that's all the time we have, but thank you so much.

Thank you, Patrick. I felt like I was in a lightning round there. Thank you.